Forest Service
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Committee for Purchase From People Who Are Blind or Severely Disabled
Census Bureau
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International Trade Administration
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Federal Energy Regulatory Commission
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Agency for Toxic Substances and Disease Registry
Centers for Disease Control and Prevention
Centers for Medicare & Medicaid Services
Food and Drug Administration
National Institutes of Health
Public Health Service
Coast Guard
Transportation Security Administration
Indian Affairs Bureau
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National Park Service
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Committee for the Implementation of Textile Agreements
Agency for Toxic Substances and Disease Registry
Federal Aviation Administration
Federal Highway Administration
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Surface Transportation Board
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Internal Revenue Service
Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, reminders, and notice of recently enacted public laws.
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Federal Aviation Administration (FAA), DOT.
Final special conditions; request for comments.
These special conditions are issued to Garmin International, Inc., 1200 E. 151st St., Olathe, KS 66062, for a Supplemental Type Certificate for the Diamond Aircraft Industries DA-40. This airplane will have novel and unusual design features when compared to the state of technology envisaged in the applicable airworthiness standards. These novel and unusual design features include the installation of an electronic flight instrument system (EFIS) display, Model G-1000, manufactured by Garmin International, Inc. for which the applicable regulations do not contain adequate or appropriate airworthiness standards for the protection of these systems from the effects of high intensity radiated fields (HIRF). These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to the airworthiness standards applicable to these airplanes.
The effective date of these special conditions is October 22, 2003. Comments must be received on or before December 8, 2003.
Comments on these special conditions may be mailed in duplicate to: Federal Aviation Administration, Regional Counsel, ACE-7, Attention: Rules Docket Clerk, Docket No. CE199, Room 506, 901 Locust, Kansas City, Missouri 64106. All comments must be marked: Docket No. CE199. Comments may be inspected in the Rules Docket weekdays, except Federal holidays, between 7:30 a.m. and 4 p.m.
Wes Ryan, Aerospace Engineer, Standards Office (ACE-110), Small Airplane Directorate, Aircraft Certification Service, Federal Aviation Administration, 901 Locust, Room 301, Kansas City, Missouri 64106; telephone (816) 329-4127.
The FAA has determined that notice and opportunity for prior public comment hereon are impracticable because these procedures would significantly delay issuance of the approval design and thus delivery of the affected aircraft. In addition, the substance of these special conditions has been subject to the public comment process in several prior instances with no substantive comments received. The FAA, therefore, finds that good cause exists for making these special conditions effective upon issuance.
Interested persons are invited to submit such written data, views, or arguments, as they may desire. Communications should identify the regulatory docket or notice number and be submitted in duplicate to the address specified above. All communications received on or before the closing date for comments will be considered by the Administrator. The special conditions may be changed in light of the comments received. All comments received will be available in the Rules Docket for examination by interested persons, both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerning this rulemaking will be filed in the docket. Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this notice must include a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. CE199.” The postcard will be date stamped and returned to the commenter.
On March 6, 2003, Garmin International, Inc., 1200 E. 151st St., Olathe, KS 66062, made an application to the FAA for a new Supplemental Type Certificate for the Diamond Aircraft Industries DA-40 airplane. The DA-40 is currently approved under TC No. A47CE. The proposed modification incorporates a novel or unusual design feature, such as digital avionics consisting of an EFIS that is vulnerable to HIRF external to the airplane.
Under the provisions of 14 CFR part 21, § 21.101, Garmin International, Inc. must show that the Diamond DA-40 aircraft meets the following original certification basis provisions or the applicable regulations in effect on the date of application for the change to the DA-40: Type Certification under 14 CFR part 21, § 21.29, including the following requirements: Joint Aviation Requirements (JAR) 23, Initial Issue, dated March 11, 1994. The DA-40 was certificated using the FAA/JAA validation certification procedures and significant regulatory differences were addressed. Therefore, the certification basis is equivalent to 14 CFR part 23, effective February 1, 1965, including Amendments 23-1 through Amendment 23-51. 14 CFR part 36, effective December 1, 1969, including Amendments 36-1 through Amendment 36-21. Special Condition 23-107-SC, applicable to the Model DA-40 for protection of systems for High Intensity Radiated Fields, published on June 7, 2001. Exemptions, if any; and the special conditions adopted by this rulemaking action.
If the Administrator finds that the applicable airworthiness standards do not contain adequate or appropriate safety standards because of novel or unusual design features of an airplane, special conditions are prescribed under the provisions of § 21.16.
Special conditions, as appropriate, as defined in § 11.19, are issued in accordance with § 11.38 after public notice and become part of the type certification basis in accordance with § 21.101.
Special conditions are initially applicable to the model for which they are issued. Should the applicant apply
Garmin International, Inc. plans to incorporate certain novel and unusual design features into the Diamond DA-40 airplane for which the airworthiness standards do not contain adequate or appropriate safety standards for protection from the effects of HIRF. These features include EFIS, which are susceptible to the HIRF environment, that were not envisaged by the existing regulations for this type of airplane.
Recent advances in technology have given rise to the application in aircraft designs of advanced electrical and electronic systems that perform functions required for continued safe flight and landing. Due to the use of sensitive solid-state advanced components in analog and digital electronics circuits, these advanced systems are readily responsive to the transient effects of induced electrical current and voltage caused by the HIRF. The HIRF can degrade electronic systems performance by damaging components or upsetting system functions.
Furthermore, the HIRF environment has undergone a transformation that was not foreseen when the current requirements were developed. Higher energy levels are radiated from transmitters that are used for radar, radio, and television. Also, the number of transmitters has increased significantly. There is also uncertainty concerning the effectiveness of airframe shielding for HIRF. Furthermore, coupling to cockpit-installed equipment through the cockpit window apertures is undefined.
The combined effect of the technological advances in airplane design and the changing environment has resulted in an increased level of vulnerability of electrical and electronic systems required for the continued safe flight and landing of the airplane. Effective measures against the effects of exposure to HIRF must be provided by the design and installation of these systems. The accepted maximum energy levels in which civilian airplane system installations must be capable of operating safely are based on surveys and analysis of existing radio frequency emitters. These special conditions require that the airplane be evaluated under these energy levels for the protection of the electronic system and its associated wiring harness. These external threat levels, which are lower than previous required values, are believed to represent the worst case to which an airplane would be exposed in the operating environment.
These special conditions require qualification of systems that perform critical functions, as installed in aircraft, to the defined HIRF environment in paragraph 1 or, as an option to a fixed value using laboratory tests, in paragraph 2, as follows:
(1) The applicant may demonstrate that the operation and operational capability of the installed electrical and electronic systems that perform critical functions are not adversely affected when the aircraft is exposed to the HIRF environment defined below:
(2) The applicant may demonstrate by a system test and analysis that the electrical and electronic systems that perform critical functions can withstand a minimum threat of 100 volts per meter, electrical field strength, from 10 kHz to 18 GHz. When using this test to show compliance with the HIRF requirements, no credit is given for signal attenuation due to installation.
A preliminary hazard analysis must be performed by the applicant, for approval by the FAA, to identify either electrical or electronic systems that perform critical functions. The term “critical” means those functions whose failure would contribute to, or cause, a failure condition that would prevent the continued safe flight and landing of the airplane. The systems identified by the hazard analysis that perform critical functions are candidates for the application of HIRF requirements. A system may perform both critical and non-critical functions. Primary electronic flight display systems, and their associated components, perform critical functions such as attitude, altitude, and airspeed indication. The HIRF requirements apply only to critical functions.
Compliance with HIRF requirements may be demonstrated by tests, analysis, models, similarity with existing systems, or any combination of these. Service experience alone is not acceptable since normal flight operations may not include an exposure to the HIRF environment. Reliance on a system with similar design features for redundancy as a means of protection
As discussed above, these special conditions are applicable to the Diamond DA-40 airplane. Should Garmin International, Inc. apply at a later date for a supplemental type certificate to modify any other model on the same type certificate to incorporate the same novel or unusual design feature, the special conditions would apply to that model as well under the provisions of § 21.101.
This action affects only certain novel or unusual design features on one model of airplane. It is not a rule of general applicability and affects only the applicant who applied to the FAA for approval of these features on the airplane.
The substance of these special conditions has been subjected to the notice and comment period in several prior instances and has been derived without substantive change from those previously issued. It is unlikely that prior public comment would result in a significant change from the substance contained herein. For this reason, and because a delay would significantly affect the certification of the airplane, which is imminent, the FAA has determined that prior public notice and comment are unnecessary and impracticable, and good cause exists for adopting these special conditions upon issuance. The FAA is requesting comments to allow interested persons to submit views that may not have been submitted in response to the prior opportunities for comment described above.
Aircraft, Aviation safety, Signs and symbols.
The authority citation for these special conditions is as follows:
49 U.S.C. 106(g), 40113 and 44701; 14 CFR 21.16 and 21.101; and 14 CFR 11.38 and 11.19.
Each system that performs critical functions must be designed and installed to ensure that the operations, and operational capabilities of these systems to perform critical functions, are not adversely affected when the airplane is exposed to high intensity radiated electromagnetic fields external to the airplane.
Federal Aviation Administration, DOT.
Final rule.
This amendment adopts a new airworthiness directive (AD), applicable to certain Bombardier Model CL-600-1A11 (CL-600), CL-600-2A12 (CL-601), and CL-600-2B16 (CL-601-3A, CL-601-3R, and CL-604) series airplanes. This amendment requires revising the airplane flight manual to provide the flightcrew with procedures and limitations for operating the airplane with out-of-tolerance angle of attack (AOA) transducers. This amendment also requires, among other actions, measuring the vane angles and voltage of the AOA transducers; reworking the AOA transducer assemblies; repetitive measurements of the resistance of both AOA transducers; and follow-on and corrective actions, as applicable. This action is necessary to prevent flat spots on the potentiometers of the AOA transducers due to wear, which may cause a delay in the commands for stall warning, stick shaker, and stick pusher operation. This action is intended to address the identified unsafe condition.
Effective December 12, 2003.
The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of December 12, 2003.
The service information referenced in this AD may be obtained from Bombardier, Inc., Canadair, Aerospace Group, PO Box 6087, Station Centreville, Montreal, Quebec H3C 3G9, Canada. This information may be examined at the Federal Aviation Administration (FAA), Transport Airplane Directorate, Rules Docket, 1601 Lind Avenue, SW., Renton, Washington; or at the FAA, New York Aircraft Certification Office, 10 Fifth Street, Third Floor, Valley Stream, New York; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.
Luciano Castracane, Aerospace Engineer, Systems and Flight Test Branch, ANE-172, FAA, New York Aircraft Certification Office, 10 Fifth Street, Third Floor, Valley Stream, New York 11581; telephone (516) 256-7535; fax (516) 568-2716.
A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to certain Bombardier Model CL-600-1A11 (CL-600), CL-600-2A12 (CL-601), and CL-600-2B16 (CL-601-3A, CL-601-3R, and CL-604) series airplanes was published in the
Interested persons have been afforded an opportunity to participate in the making of this amendment. Due
The commenter concurs with the proposed rule.
After careful review of the available data, including the comment noted above, the FAA has determined that air safety and the public interest require the adoption of the rule as proposed.
On July 10, 2002, the FAA issued a new version of 14 CFR part 39 (67 FR 47997, July 22, 2002), which governs the FAA's airworthiness directives system. The regulation now includes material that relates to altered products, special flight permits, and alternative methods of compliance. However, for clarity and consistency in this final rule, we have retained the language of the NPRM regarding that material.
After the proposed AD was issued, we reviewed the figures we use to calculate the labor rate to do the required actions. To account for various inflationary costs in the airline industry, we find it appropriate to increase the labor rate used in these calculations from $60 per work hour to $65 per work hour. The economic impact information, below, has been revised to reflect this increase in the specified hourly labor rate.
The FAA estimates that 424 airplanes of U.S. registry will be affected by this AD, and that the average labor rate is $65 per work hour. The estimated cost impact for airplanes affected by this AD are as follows:
The cost impact figures discussed above are based on assumptions that no operator has yet accomplished any of the requirements of this AD action, and that no operator would accomplish those actions in the future if this AD were not adopted. The cost impact figures discussed in AD rulemaking actions represent only the time necessary to perform the specific actions actually required by the AD. These figures typically do not include incidental costs, such as the time required to gain access and close up, planning time, or time necessitated by other administrative actions. Manufacturer warranty remedies may be available for labor costs associated with this AD. As a result, the costs attributable to the AD may be less than stated above.
The regulations adopted herein will not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, it is determined that this final rule does not have federalism implications under Executive Order 13132.
For the reasons discussed above, I certify that this action (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and (3) will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A final evaluation has been prepared for this action and it is contained in the Rules Docket. A copy of it may be obtained from the Rules Docket at the location provided under the caption
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
49 U.S.C. 106(g), 40113, 44701.
This AD applies to each airplane identified in the preceding applicability provision, regardless of whether it has been modified, altered, or repaired in the area subject to the requirements of this AD. For airplanes that have been modified, altered, or repaired so that the performance of the requirements of this AD is affected, the owner/operator must request approval for an alternative method of compliance in accordance with paragraph (n) of this AD. The request should include an assessment of the effect of the modification, alteration, or repair on the unsafe condition addressed by this AD; and, if the unsafe condition has not been eliminated, the request should include specific proposed actions to address it.
To prevent flat spots on the potentiometers of the AOA transducers due to wear, which may cause a delay in the commands for stall warning, stick shaker, and stick pusher operation, accomplish the following:
(a) Before the accumulation of 300 total flight hours, or within 7 days after the effective date of this AD, whichever occurs later: Revise the Limitations, Emergency Procedures, Normal Procedures, and Abnormal Procedures Sections of the applicable Canadair Challenger AFM by inserting a copy of the Temporary Revisions listed in Table 2 of this AD, as applicable. Table 2 is as follows (some Temporary Revisions listed in Table 2 of this AD contain Product Support Publication (PSP) identifiers):
(b) Before the accumulation of 300 total flight hours, or within 200 flight hours after the effective date of this AD, whichever occurs later: Measure the vane angles and voltage of the angle of attack (AOA) transducers by doing all actions specified in “PART A—Initial Special Check” of the Accomplishment Instructions of the applicable alert service bulletin listed in Table 3 of this AD, per the applicable Bombardier alert service bulletin. Table 3 is as follows:
(c) If, during the measurement required by paragraph (b) of this AD, any recorded voltage is found to be outside the tolerances specified in the applicable Bombardier alert service bulletin identified in Table 3 of this AD, before further flight: Replace the stall protection computer (SPC) with a new SPC and do the follow-on actions (
(d) If, during the measurement required by paragraph (b) of this AD, all of the recorded AOA vane angles for both AOA transducers are found to be within the tolerances specified in the applicable Bombardier alert service bulletin listed in Table 3 of this AD, before further flight: Do the follow-on actions (
(e) If, during the measurement required by paragraph (b) of this AD, one or more of the recorded AOA vane angles for either or both AOA transducers are found to be outside the tolerances specified in the applicable Bombardier alert service bulletin listed in Table 3 of this AD, but all recorded AOA vane angles are within the expanded tolerances specified in “Table A—Tolerances” of “PART A—Initial Special Check” of the Accomplishment Instructions of the applicable Bombardier alert service bulletin identified in Table 3 of this AD: Do
(1) Before further flight, do the actions specified in paragraph (g) of this AD.
(2) In lieu of doing the actions required by paragraph (e)(1) of this AD, do the actions specified in paragraphs (e)(2)(i) and (e)(2)(ii) of this AD.
(i) Before further flight, measure the baseline resistance of the other AOA transducer (with recorded AOA vane angles within the tolerances specified in the applicable Bombardier alert service bulletin listed in Table 3 of this AD) per “Table A—Tolerances” of “PART A—Initial Special Check” of the Accomplishment Instructions of the applicable Bombardier alert service bulletin identified in Table 3 of this AD.
(ii) Within 150 flight hours after doing the measurement required by paragraph (b) of this AD, do the actions specified in paragraph (g) of this AD.
(f) If, during the measurement required by paragraph (b) of this AD, any recorded AOA vane angle of the AOA transducers is found to be outside the expanded tolerances specified in “Table A—Tolerances” of “PART A—Initial Special Check” of the applicable Bombardier alert service bulletin listed in Table 3 of this AD, before further flight: Do the actions specified in paragraph (g) of this AD.
(g) Except as provided by paragraph (e)(2) of this AD, before further flight after doing the measurement required by paragraph (b) of this AD: Rework the AOA transducer assemblies and measure the baseline resistance of the applicable AOA transducers by doing all actions specified in “PART B—AOA Transducer Assembly Rework/Baseline Resistance Check” of the Accomplishment Instructions of the applicable Bombardier alert service bulletin identified in Table 3 of this AD, per the applicable Bombardier alert service bulletin. After doing the rework, the applicable AFM revision required by paragraph (a) of this AD may be removed from the AFM.
(h) Within 300 flight hours after doing the measurement required by paragraph (b) of this AD: Measure the resistance of both AOA transducers by doing all actions specified in “PART C—Repetitive Resistance Check/AOA Transducer Assembly Rework” of the Accomplishment Instructions of the applicable alert service bulletin listed in Table 3 of this AD, per the applicable Bombardier alert service bulletin. Repeat the measurement at least every 300 flight hours.
(i) If, during the measurement required by paragraph (h) of this AD, any recorded resistance is found to be outside the tolerances specified in the applicable Bombardier alert service bulletin listed in Table 3 of this AD (
(j) For airplanes identified in paragraphs (j)(1), (j)(2), and (j)(3) of this AD: Before or at the same time with accomplishment of the requirements of paragraph (b) of this AD, inspect the left- and right-side AOA vane decal to verify that the correct decal is installed per paragraph (j)(1), (j)(2), or (j)(3) of this AD, as applicable.
(1) For Model CL-600-2A12 (CL-601) and CL-600-2B16 (CL-601-3A and -3R) series airplanes having serial numbers 3001 through 3066 inclusive, and 5001 through 5194 inclusive, respectively, on which AOA calibration decals, part numbers (P/N) 600-52267-5 and 600-52267-6, have been installed: Inspect per Bombardier Alert Service Bulletin A601-0519, dated July 30, 1999.
(2) For Model CL-600-1A11 (CL-600) series airplanes having serial numbers 1004 through 1085 inclusive, on which AOA calibration decals, P/Ns 600-52267-5 and 600-52267-6, have been installed: Inspect per Bombardier Alert Service Bulletin A600-0693, dated July 30, 1999.
(3) For Model CL-600-2B16 (CL-604) series airplanes having serial numbers 5301 through 5990 inclusive, on which AOA calibration decals, P/Ns 600-52267-5 and 600-52267-6, have been installed: Inspect per Bombardier Alert Service Bulletin A604-11-009, dated July 30, 1999.
(k) If either of the AOA vane decals is found to be incorrect during the inspection required by paragraph (j) of this AD, before further flight: Replace the AOA vane decal(s) with new vane decal(s), and ensure that the new decal(s) is the correct type, per the applicable alert service bulletin identified in paragraph (j)(1), (j)(2), or (j)(3) of this AD; except as provided by paragraph (l) of this AD.
(l) If replacement decals are not available, before further flight: Remove existing decals and do the alignment check(s) of the AOA vane transducers per the applicable alert service bulletin identified in paragraph (j)(1), (j)(2), or (j)(3) of this AD.
(m) As of the effective date of this AD, no person shall install an AOA transducer assembly on any airplane, unless the actions required by paragraphs (b) through (l) of this AD, as applicable, have been done.
(n) An alternative method of compliance or adjustment of the compliance time that provides an acceptable level of safety may be used if approved by the Manager, New York Aircraft Certification Office (ACO), FAA. Operators shall submit their requests through an appropriate FAA Principal Maintenance Inspector, who may add comments and then send it to the Manager, New York ACO.
Information concerning the existence of approved alternative methods of compliance with this AD, if any, may be obtained from the New York ACO.
(o) Special flight permits may be issued in accordance with sections 21.197 and 21.199 of the Federal Aviation Regulations (14 CFR 21.197 and 21.199) to operate the airplane to a location where the requirements of this AD can be accomplished.
(p) The actions shall be done in accordance with the following Bombardier service bulletins and Temporary Revisions to the applicable Canadair Challenger Airplane Flight Manual, as applicable:
The subject of this AD is addressed in Canadian airworthiness directive CF-2002-05, dated January 18, 2002.
(q) This amendment becomes effective on December 12, 2003.
Federal Aviation Administration (FAA), DOT.
Direct final rule; confirmation of effective date.
This document confirms the effective date of the direct final rule which revises Class D and Class E airspace at St. Joseph, MO.
0901 UTC, December 25, 2003.
Brenda Mumper, Air Traffic Division, Airspace Branch, ACE-520A, DOT Regional Headquarters Building, Federal Aviation Administration, 901 Locust, Kansas City, MO 64106; telephone: (816) 329-2524.
The FAA published this direct final rule with a request for comments in the
Food and Drug Administration, HHS.
Public meetings on interim final rules; correction.
The Food and Drug Administration (FDA) is correcting a document that announced a series of domestic meetings to discuss the interim final regulations, issued on October 10, 2003, to implement two sections of the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (Bioterrorism Act) regarding the registration of food facilities and prior notice of imported food shipments. The document that published in the
Joyce A. Strong, Office of Policy and Planning (HF-27), Food and Drug Administration, 5600 Fishers Lane, Rockville, MD 20857, 301-827-7010.
In FR Doc. 03-27182, appearing on page 61340 in the
1. On page 61341, in the third column, the Internet address for online registration is corrected as follows:
Coast Guard, DHS.
Temporary final rule.
Temporary special local regulations are being established for the World Championship Super Boat Race held offshore of Deerfield Beach, Florida. These special local regulations restrict the movement of non-participating vessels in the regulated race area and provide for a viewing area for spectator craft. This rule is needed to provide for the safety of life on navigable waters during the event.
This rule is effective from 11 a.m. on November 4, 2003, until 4 p.m. on November 9, 2003.
Documents indicated in the preamble as being available in the docket are part of docket [CGD07-03-099] and are available for inspection or copying at Coast Guard Group Miami, 100 MacArthur Causeway, Miami Beach, FL 33139 between 8 a.m. and 4:30 p.m., Monday through Friday, except Federal holidays.
Chief Daniel Vaughn, Coast Guard Group Miami, FL at (305) 535-4317.
We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM. Publishing an NPRM, which would incorporate a comment period before a temporary rule could be issued, would be impracticable and contrary to public interest since immediate action is needed to minimize the potential danger to the public posed by the powerboat race and the number of expected spectator craft.
For the same reasons, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the
Super Boat International Productions Inc. is sponsoring a high speed power boat race that will take place on November 4, 6, and 9, 2003, from 11 a.m. until 4 p.m. in the Atlantic Ocean off Deerfield Beach, Florida. The race organizers anticipate 80 participants and 200 spectator craft. The event will take place outside of the marked channel and will not interfere with commercial shipping. Recreational vessels and fishing vessels normally operate in the waters being used for the event. This rule is required to provide for the safety of life on navigable waters because of the inherent dangers associated with power boat races. The rule prohibits non-participating vessels from entering the regulated race area offshore of Deerfield Beach, Florida during the event. A Coast Guard Patrol Commander will be present during this event to monitor compliance with this regulation.
This rule will create two regulated areas, a race area and a viewing area. These regulated areas assist in providing for the safety of life on navigable waters and minimizing the inherent dangers associated with power boat races. These dangers include race craft traveling at high speeds in close proximity to one other, and in relatively close proximity to spectator craft. Due to these concerns, public safety requires the creation of these two regulated areas.
This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS). The rule will be in place in a limited area offshore of Deerfield Beach, Florida. Although the rule will be effective from November 4 until November 9 the rule will only be enforced on November 4, 6 and 9, from 11 a.m. until 4 p.m. each day, corresponding with the scheduled races.
Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule will have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.
This rule may affect the following entities, some of which may be small entities: the owners or operators of vessels intending to transit or anchor in a portion of the Atlantic Ocean near Deerfield Beach, Florida from 11 a.m. until 4 p.m. on November 4, 6, and 9, 2003. The Coast Guard certifies under U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities because this rule will be in effect for a limited duration, the rule regulates a very small area, and commercial and recreational vessels may be allowed to transit through the zone during breaks in the racing. Moreover, all vessel traffic can pass safely around the zone. Before the effective period, we will issue maritime advisories over VHF-FM radio to allow the maritime community to plan accordingly.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we offer to assist small entities in understanding the rule so that they can better evaluate its effects on them and participate in the rulemaking process. Small entities may contact the person listed under
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247).
This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt state law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for Federalism.
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this will not result in such expenditure, we do discuss the effects of this rule elsewhere in this preamble.
This rule will not effect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.
This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.
We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children.
This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.
We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.
We have analyzed this rule under Commandant Instruction M16475.1D, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(h), of the Instruction, from further environmental documentation. A final “Environmental Analysis Check List” and a final “Categorical Exclusion Determination” are available in the docket where indicated under
Marine safety, Navigation (water), Reporting and record keeping requirements, Waterways.
33 U.S.C. 1233; Department of Homeland Security Delegation No. 0170.1.
(a)
(2) The regulated viewing area encompasses all waters located within a line connecting the following positions located offshore of Deerfield Beach, Florida—Point 1: 26°15.50 N; 080°04.20 W; Point 2: 26°15.50 N; 080°04.00 W; Point 3: 26°19.39 N; 080°03.90 W; and Point 4: 26°19.39 N; 080°04.05 W. All coordinates referenced use Datum NAD: 1983.
(b)
(c)
(d)
United States Patent and Trademark Office, Commerce.
Final rule; modification to suspension of applicability dates.
The United States Patent and Trademark Office (USPTO) is modifying a temporary postponement of those provisions of the Trademark Rules of Practice that require electronic transmission to the USPTO of applications for international registration, responses to irregularity notices, and subsequent designations submitted pursuant to the Madrid Protocol. That postponement was announced in a document published in the
The USPTO is also modifying a temporary suspension, announced in the same
The temporary postponements and the temporary suspensions of the Rules of Practice, as well as the modifications to these postponements and suspensions that are announced herein, are in effect from November 2, 2003, to January 2, 2004. If it becomes necessary to extend the suspensions and postponements, and/or the modifications thereto, the USPTO will issue a notice announcing these extensions at least 10 business days before the extensions commence.
The modifications announced herein are procedural in nature and do not affect any substantive rights.
The applicability date for regulations at 37 CFR 2.190(a), 2.198(a)(1), 7.7(a) and (b), 7.11(a) introductory text and (a)(9), 7.14(e), 7.21(b) introductory text and (b)(7) remains suspended from November 2, 2003, to January 2, 2004.
Ari Leifman, Office of the Commissioner for Trademarks, by telephone at (703) 308-8910, ext. 155, or by e-mail to
The Madrid Protocol provides a system for obtaining an international trademark registration. The Madrid Protocol Implementation Act of 2002, Pub. L. 107-273, 116 Stat. 1758, 1913-1921 (MPIA) amends the Trademark Act of 1946 to implement the provisions of the Madrid Protocol in the United States.
On September 26, 2003, the USPTO published new regulations to implement the MPIA. 68 FR 55748, posted on the USPTO Web site at
On October 24, 2003, the USPTO published a notice in which it announced that it would permit international applications, responses to irregularity notices, and subsequent designations to be submitted on paper rather than through TEAS, for a temporary period of time. The notice accordingly postponed the applicability of 37 CFR 7.11(a), 7.21(b), and 7.14(e), to the extent that those provisions require transmission through TEAS. The notice further provided that this postponement would remain in effect until January 2, 2004, and that if the postponement was extended beyond January 2, 2004, a notice announcing such an extension would be published at least ten days before the extension commenced.
The postponement remains in effect, but is modified. The notice of the postponement provided that applicants could make their submission either on paper or through TEAS. However, certain technical difficulties will delay the deployment of those TEAS forms that will be used for Madrid submissions until some time after November 2, 2003. Therefore, the USPTO hereby announces that all Madrid submissions must be made on paper, until such time as the TEAS forms are posted on the USPTO web site.
The USPTO will issue a notice announcing the posting of the TEAS forms at least five days before such posting occurs.
If the TEAS forms are posted while the postponement of the applicability dates of 37 CFR 7.11(a), 7.21(b), and 7.14(e) is still in effect, then notwithstanding the modifications to the postponements that are announced herein, applicants will be able to file international applications, responses to irregularity notices, and subsequent designations either on paper or through TEAS. Under any circumstances, there will be a transition period during which the USPTO will accept both electronic and paper submissions.
In addition to requiring that certain submissions that are made to the USPTO in connection with the Madrid Protocol be transmitted using TEAS, the Rules of Practice that take effect on November 2, 2003, also require that international application fees be paid at the time of submission. However, with respect to Madrid submissions that are to be made on paper, the notice of October 24, 2003, temporarily suspended the applicability of those requirements. Thus, the notice suspended 37 CFR 7.11(a)(9), to the extent that it requires that international application fees for all classes and the fees for all designated Contracting Parties identified in an international application be paid at the time of submission. Likewise, the notice suspended 37 CFR 7.21(b)(7), to the extent that it requires that all international fees for a subsequent designation be paid at the time of submission.
The notice of October 24, 2003, further provided that (1) applicants who file Madrid submissions on paper must pay the USPTO certification fee at the time of submission, but must pay the international fees directly to the IB, and that (2) applicants who submit a subsequent designation on paper must pay the USPTO transmittal fee at the time of submission, but must pay the international fees directly to the IB. Additionally, the notice provided that applicants may pay the international fees to the IB either before or after submission of the international application or subsequent designation.
All provisions of the notice of October 24, 2003, that pertain to payment of fees remain in effect. However, the following is noted: these provisions of the notice of October 24, 2003, apply in cases where Madrid submissions are made using paper. Pursuant to the present notice, all Madrid submissions must be made on paper. Hence, the provisions of the notice of October 24, 2003, regarding the payment of fees now apply in all cases where Madrid submissions are made.
If the TEAS forms are posted while the postponement of the effective dates of 37 CFR 7.11(a)(9) and 7.21(b)(7) remains in effect, then applicants who elect to use those forms will pay the international fees (1) at the time of submission, and (2) through the USPTO.
Applicants making Madrid submissions should use forms provided
Pursuant to 37 CFR 2.190(a), all trademark-related documents submitted on paper must be mailed to the USPTO address at 2900 Crystal Drive, Arlington, Virginia 22202-3514. However, the notice of October 24, 2003, waived that rule with respect to international applications, subsequent designations, and responses to notices of irregularities that are filed on paper. The notice further provided that all Madrid submissions made on paper should be mailed to the following address: Commissioner for Trademarks, PO Box 16471, Arlington, Virginia 22215-1471, Attn: MPU.
The limited waiver of 37 CFR 2.190(a) remains in effect. However, the following is noted: pursuant to the notice of October 24, 2003, the waiver, and the instruction to utilize the above-identified address, applied to Madrid submissions made on paper. Pursuant to the present notice, all Madrid submissions must be made on paper. Hence, the provisions of the notice of October 24, 2003, regarding the USPTO mailing address apply to all Madrid submissions.
Please note that any trademark-related correspondence other than international applications, subsequent designations, and responses to irregularity notices that is sent to the above-identified address will not be accepted, and will be returned to the sender.
If a submission mailed to the above address pursuant to this notice and to the Notice of October 24, 2003, is delivered by the Express Mail service of the United States Postal Service, the USPTO will deem that the date of receipt of the submission in the USPTO is the date the submission was deposited as Express Mail, provided that the submitter complies with the requirements set forth in 37 CFR 2.198.
Environmental Protection Agency (EPA).
Notice of final action on reconsideration; amendment to final rules.
On December 31, 2002 and March 10, 2003, EPA revised regulations governing the major New Source Review (NSR) programs mandated by parts C and D of title I of the Clean Air Act (CAA or Act). Following these actions, the Administrator received a number of petitions for reconsideration. On July 30, 2003, EPA announced its reconsideration of certain issues arising from the final rules of December 31, 2002. We (the EPA) requested public comment on six issues for which we granted reconsideration. As a result of this reconsideration process, we have concluded that two clarifications to the underlying rules are warranted, which are: To include a definition of “replacement unit” and to clarify that the plantwide applicability limitation (PAL) baseline calculation procedures for newly constructed units do not apply to modified units. With respect to all other issues raised by the petitioners, we deny the requests for reconsideration.
This final action is effective on January 6, 2004.
Ms. Lynn Hutchinson, Information Transfer and Program Integration Division (C339-03), U.S. Environmental Protection Agency, Research Triangle Park, NC 27711, telephone (919) 541-5795, or electronic mail at
Entities potentially affected by the subject rule for today's action include sources in all industry groups. The majority of sources potentially affected are expected to be in the following groups.
An electronic version of a portion of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. Interested persons may use EPA Dockets at
Certain types of information will not be placed in the EPA Dockets. Information claimed as CBI and other information whose disclosure is restricted by statute, which is not included in the official public docket, will not be available for public viewing in EPA's electronic public docket. EPA's policy is that copyrighted material will not be placed in EPA's electronic public docket but will be available only in printed, paper form in the official public docket. To the extent feasible, publicly available docket materials will be made available in EPA's electronic public docket. When a document is selected from the index list in EPA Dockets, the system will identify whether the document is available for viewing in EPA's electronic public docket. Although not all docket materials may be available electronically, you may still access any of the publicly available docket materials through the docket facility identified in section I.B.1. EPA intends to work towards providing electronic access to all of the publicly available docket materials through EPA's electronic public docket.
For additional information about EPA's electronic public docket visit EPA Dockets online or see 67 FR 38102, May 31, 2002.
In addition to being available in the docket, an electronic copy of this final action will also be available on the WWW. Following signature, a copy of the notice will be posted on the EPA's NSR page: http://www.epa.gov/nsr.
The information presented in this preamble is organized as follows:
For a brief history of the NSR rulemaking process that preceded today's final action, see our discussion at 68 FR 44623 (July 30, 2003). On December 31, 2002, we issued a final rule (67 FR 80186) that revised regulations governing the major NSR programs (final rules).
On February 28, 2003, we sent notice to affected States that, consistent with our proposal in 1996, we were revising the references to 40 CFR 52.21 in delegated States' plans to reflect the December 31, 2002 changes in the Prevention of Significant Deterioration (PSD) Federal Implementation Plan (FIP) (40 CFR 52.21(a)(2) and (b) through (bb)). This FIP applies in any area that does not have an approved PSD program in the State Implementation Plan (SIP), and in all Indian country. The notice was subsequently published in the
Following publication of the December 31, 2002 and March 10, 2003
On July 11, 2003, we received another petition for reconsideration filed by Newmont USA Limited, dba Newmont Mining Corporation. This petition was subsequently joined by the National Cattlemen's Beef Association and the National Mining Association. We are not responding to that petition at this time, but will do so in the near future.
On July 30, 2003 (68 FR 44624), we granted reconsideration on six issues raised by petitioners who had filed petitions prior to July 2003.
The first of the six issues on which we granted reconsideration involves a document we released in November 2002, entitled “Supplemental Analysis of the Environmental Impact of the 2002 Final NSR Improvement Rules.”
• Using potential-to-emit (PTE) to determine baseline actual emissions for an emissions unit on which actual construction began after the 24-month PAL baseline period when establishing a PAL;
• Eliminating synthetic minor limits [(r)(4) limits] under the PAL;
• Including a “reasonable possibility” requirement for triggering recordkeeping and reporting provisions;
• Using the actual-to-projected-actual test for replacement units; and,
• Effect of redesignation of an area from attainment to nonattainment on Clean Unit status.
We describe these issues at 68 FR 44624. For the reasons indicated at 68 FR 44624, we did not grant a stay of the final rules pending our reconsideration of these issues.
On August 14, 2003, we held a public hearing on the issues for which we granted reconsideration. Twenty-two individuals gave oral presentations at the hearing. The transcript of their comments is located in Docket OAR-2001-0004 (Legacy Number A-90-37), which can be accessed on the internet at
We provided a public comment period on the reconsideration issues that ended on August 29, 2003. For issues arising out of the August 14th public hearing, the comment period was extended until September 15, 2003. More than 400 written public comments on the reconsideration issues were received. The individual comment letters can be found in Docket OAR-2001-0004 (Legacy Number A-90-37).
At this time, we are announcing our final action after reconsideration of these six issues. We are also announcing our final decision on reconsideration of the remaining issues that were raised by the petitioners. Today, we are making available a document entitled, “Technical Support Document for Prevention of Significant Deterioration (PSD) and Non-attainment New Source Review (NSR): Reconsideration,” EPA 456/R-03-005 (Technical Support Document). This document contains (1) a summary of comments received on the issues for which we granted reconsideration and our responses to these comments, and (2) a summary of petition issues for which we are not granting reconsideration, and our rationale for denying reconsideration. This document is available on our Web site at
We received numerous responses to our request for comment on the “Supplemental Analysis of the Environmental Impact of the 2002 Final NSR Improvement Rule.” After carefully considering the information that was submitted, we have determined that none of the new information presented leads us to conclude that the analysis was incorrect or substantially flawed. Therefore, we are re-affirming the validity of the original conclusions. A summary of the comments received and our responses to these comments can be found in our Technical Support Document.
With respect to the five remaining issues on which we granted reconsideration, we have concluded that two clarifications to the underlying rules are warranted. These changes relate to issues raised as a result of our request for comment on: (1) Whether replacement units should be allowed to use the actual-to-projected-actual applicability test to determine whether installing a replacement unit results in a significant emissions increase; and, (2) using potential-to-emit (PTE) to determine the baseline actual emissions for an emissions unit on which construction began after the 24-month baseline period when establishing a PAL. As explained below, while we are not making any changes to the general approach in the final rules with respect to these issues, we are making two clarifying changes to the regulations. First, we are adding a definition of replacement unit to the final rules. Second, we are clarifying that the potential-to-emit approach for determining baseline actual emissions when establishing a PAL is only available to emissions units that are added to the major stationary source after the 24-month baseline period, and is not available to emissions units that existed during the baseline period whether or not they have been modified since that time.
We are not making any changes to the final rules with respect to eliminating synthetic minor limits [(r)(4) limits] under the PAL, the “reasonable possibility” requirement for triggering recordkeeping and reporting provisions, or the effect of redesignation of an area from attainment to nonattainment on Clean Unit status. Our reasons for this conclusion, and our response to significant comments received, are summarized in our Technical Support Document.
1. Replacement Units
We have decided to continue to allow the owner or operator of a major stationary source (you) to use the actual-to-projected-actual applicability test to determine whether installing a replacement unit results in a significant emissions increase. However, as we reconsidered this issue and reviewed comments, we found one commenter that recommended that EPA include a definition of “replacement unit” in the regulations. The commenter asked that this definition describe how the replacement unit may differ from the replaced unit. The commenter also recommended that we indicate that the replaced unit must be removed from the site or rendered permanently inoperable.
We believe that the current rules, as supplemented by the discussion in the December 2002 preamble, are self-implementing for replacement units. Nevertheless, we agree with the commenter that a definition of “replacement unit” would render implementation easier. Thus, today we are adding regulatory language to further clarify our intentions regarding replacement units. Today's action revises the definition of “emissions unit” to clarify that a replacement unit is considered an existing emissions unit (
In addition, today's rule revisions add a definition of “replacement unit” that codifies longstanding policy and practice. In the preamble to the 1992 WEPCO rule, we first stated that we would “consider a unit to be replaced if it would constitute a reconstructed unit within the meaning of 40 CFR 60.15,” which is the section of the New Source Performance Standards (NSPS) General Provisions that governs reconstruction.
We note that we have never considered “replacement units” to include replacements that significantly change the nature of the replaced unit; it is this inherent limitation that makes the application of the actual-to-projected-actual applicability test appropriate. It is reasonable to compare the baseline actual emissions from the replaced unit to the projected actual emissions of the replacement unit because the units are effectively the same existing emissions unit. Thus, consistent with the recently finalized equipment replacement exclusion provisions, the limiting principle here is that the replacement unit must be identical or functionally equivalent and must not change the basic design parameters of the affected process unit (
We also believe that it has always been implicit in the concept of a replacement unit that the replaced unit must cease operation. Today's rule makes this principle explicit by requiring you to remove or permanently disable the replaced unit, or take a permit condition to permanently prohibit its operation. In general, if you bring the replaced unit back into operation, it must be treated as a new emissions unit, to which the actual-to-potential emissions test applies.
Finally, today's rule spells out that you cannot generate an emissions reduction credit from emissions reductions that are attributable to the shutdown of the replaced emissions unit.
We have decided to retain the calculation method that uses potential-to-emit (PTE) to determine the baseline actual emissions for an emissions unit for which you began actual construction after the 24-month PAL baseline period when establishing a PAL. As we reconsidered this issue and reviewed comments, however, we decided it was appropriate to clarify that this method of calculation applies only to emissions units initially constructed after the PAL baseline period.
As reflected in the July 30, 2003
However, in providing for the inclusion of PTE for some units, the language of the rule referred only to “units on which actual construction began” after the PAL baseline period.
We deny the petitioners' requests for reconsideration on the remaining issues raised in the petitions, because they have failed to meet the standard for reconsideration under section 307(d)(7)(B) of the CAA. Specifically,
On December 31, 2002, we finalized rule changes to the regulations governing the NSR programs mandated by parts C and D of title I of the Act. With today's action we are promulgating two minor clarifications to the final rules. Accordingly, we believe that the rationale provided with the final rules is still applicable and sufficient.
Under Executive Order 12866 (58 FR 51735, October 4, 1993), the Agency must determine whether the regulatory action is “significant” and therefore subject to Office of Management and Budget (OMB) review and the requirements of the Executive Order. The Order defines “significant regulatory action” as one that is likely to result in a rule that may:
(1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities;
(2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or
(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.
Pursuant to the terms of Executive Order 12866, OMB has notified EPA that it considers this a “significant regulatory action” within the meaning of the Executive Order. EPA has submitted this action to OMB for review. Changes made in response to OMB suggestions or recommendations will be documented in the public record.
This action does not impose any new information collection burden. We are not promulgating any new paperwork (
Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9.
The EPA has determined that it is not necessary to prepare a regulatory flexibility analysis in connection with this final rule.
For purposes of assessing the impacts of today's action on small entities, a small entity is defined as: (1) A small business that is a small industrial entity as defined in the U.S. Small Business Administration (SBA) size standards (
After considering the economic impacts of today's action on small entities, EPA has concluded that this action will not have a significant economic impact on a substantial number of small entities. In determining whether a rule has a significant economic impact on a substantial number of small entities, the impact of concern is any significant adverse economic impact on small entities, since the primary purpose of the regulatory flexibility analyses is to identify and address regulatory alternatives “which minimize any significant economic impact of the proposed rule on small entities.” 5 U.S.C. 603 and 604. Thus, an agency may conclude that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, or otherwise has a positive economic effect, on all of the small entities subject to the rule. A Regulatory Flexibility Act Screening Analysis (RFASA), developed as part of a 1994 draft Regulatory Impact Analysis (RIA) and incorporated into the September 1995 ICR renewal analysis, showed that the changes to the NSR program due to the 1990 Clean Air Act amendments would not have an adverse impact on small entities. This analysis encompassed the entire universe of applicable major sources that were likely to also be small businesses (approximately 50 “small business” major sources). Because the administrative burden of the NSR program is the primary source of the NSR program's regulatory costs, the analysis estimated a negligible “cost to sales” (regulatory cost divided by the business category mean revenue) ratio for this source group. Currently, and as reported in the current ICR, there is no economic basis for a different conclusion.
We believe the rule changes in the December 31, 2002 final rule will reduce the regulatory burden associated with the major NSR program for all sources, including all small businesses, by improving the operational flexibility of owners and operators, improving the clarity of requirements, and providing alternatives that sources may take advantage of to further improve their operational flexibility. Today's action consists of two minor clarifications to the December 31, 2002 final rule and does not change our overall assessment of regulatory burden. We have therefore concluded that the rule changes in December 31, 2002 final rule, as clarified by today's action, will relieve regulatory burden for all small entities.
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, EPA generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, and tribal governments, in the aggregate, or to the private sector, of $100 million or more in any 1 year. Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most cost-effective or least burdensome alternative if the Administrator publishes with the final rule an explanation as to why that alternative was not adopted. Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of the UMRA a small government agency plan.
The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements.
We have determined that today's action does not contain a Federal mandate that may result in expenditures of $100 million or more for State, local, and tribal governments, in the aggregate, or the private sector in any 1 year. Although initially the changes in the December 31, 2002 final rule are expected to result in a small increase in the burden imposed upon reviewing authorities in order for them to be included in the State's SIP, as well as other small increases in burden discussed under “Paperwork Reduction Act” in the preamble to the December 31, 2002 final rule, those revisions will ultimately provide greater operational flexibility to sources permitted by the States, which will in turn reduce the overall burden of the program on State and local authorities by reducing the number of required permit modifications. In addition, we believe the 2002 rule changes will actually reduce the regulatory burden associated with the major NSR program by improving the operational flexibility of owners and operators, improving the clarity of requirements, and providing alternatives that sources may take advantage of to further improve their operational flexibility. Today's action does not increase regulatory burden but merely clarifies two aspects of the 2002 rule changes. Thus, today's action is not subject to the requirements of sections 202 and 205 of the UMRA. For the same reasons stated above, we have determined that today's action contains no regulatory requirements that might significantly or uniquely affect small governments. Thus, today's action is not subject to the requirements of section 203 of the UMRA.
Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.”
Today's action does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. While the final rule published on December 31, 2002 will result in some expenditures by the States, we expect those expenditures to be limited to $331,250 per year. This figure includes the small increase in the burden imposed upon reviewing authorities in order for them to revise the State's SIP. However, the revisions contained in the December 31, 2002 final rule provide greater operational flexibility to sources permitted by the States, which will in turn reduce the overall burden of the program on State and local authorities by reducing the number of required permit modifications. Today's action does not increase regulatory burden but merely clarifies two aspects of the December 31, 2002 final rule. Thus, Executive Order 13132 does not apply to today's action.
Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” Today's action does not have tribal implications as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this action.
The purpose of the December 31, 2002 final rule is to add greater flexibility to the existing major NSR regulations. Those changes will benefit permitting authorities and the regulated community, including any major source owned by a tribal government or located in or near tribal land, by providing increased certainty as to when the requirements of the NSR program apply. Taken as a whole, the December 31, 2002 final rule should result in no added burden or compliance costs and should not substantially change the level of environmental performance achieved under the previous rules.
EPA anticipates that initially the changes in the December 31, 2002 final rule will result in a small increase in the burden imposed upon Reviewing Authorities in order for them to be included in the State's SIP. Nevertheless, those revisions will ultimately provide greater operational flexibility to sources permitted by the States, which will in turn reduce the overall burden of the program on State and local authorities by reducing the number of required permit modifications. In comparison, no tribal government currently has an approved tribal implementation plan (TIP) under the Clean Air Act to implement the NSR program. The Federal government is currently the NSR permitting authority in Indian country. Thus, tribal governments should not experience added burden from the December 31, 2002 final rule, nor should their laws be affected with respect to implementation of that rule. Additionally, although major stationary sources affected by the December 31, 2002 final rule could be located in or near Indian country and/or be owned or operated by tribal governments, such sources would not incur additional costs or compliance burdens as a result of that rule. Instead, the only effect on such sources should
In our July 30, 2003 notice, EPA specifically solicited additional comment on today's final action from tribal officials.
Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), applies to any rule that: (1) Is determined to be “economically significant” as defined under Executive Order 12866; and (2) concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency.
Today's action is not subject to the Executive Order because it is not economically significant as defined in Executive Order 12866, and because the Agency does not have reason to believe the environmental health or safety risks addressed by this action present a disproportionate risk to children. We believe that the December 31, 2002 final rule as a whole will result in equal or better environmental protection than provided by earlier regulations, and do so in a more streamlined and effective manner. Similarly, today's action merely clarifies two aspects of the December 31, 2002 final rule and does not change substantially the level of environmental protection provided by that rule. As a result, today's action is not expected to present a disproportionate environmental health or safety risk for children.
Today's action is not a “significant energy action” as defined in Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The December 31, 2002 final rule improves the ability of sources to undertake pollution prevention or energy efficiency projects, switch to less polluting fuels or raw materials, maintain the reliability of production facilities, and effectively utilize and improve existing capacity. That rule also includes a number of provisions to streamline administrative and permitting processes so that facilities can quickly accommodate changes in supply and demand. It provides several alternatives that are specifically designed to reduce administrative burden for sources that use pollution prevention or energy efficient projects. Today's action merely clarifies two aspects of the December 31, 2002 final rule and thus is not likely to have a significant adverse effect on the supply, distribution, or use of energy.
Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical.
Voluntary consensus standards are technical standards (for example, materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards.
Today's action does not involve technical standards. Therefore, EPA did not consider the use of any voluntary consensus standards.
The Congressional Review Act, § 5 U.S.C. 801,
The statutory authority for this action is provided by sections 101, 111, 114, 116, 301, and 307 of the CAA as amended (42 U.S.C. 7401, 7407, 7411, 7414, 7416, and 7601).
Under section 307(b)(1) of the Act, judicial review of the December 31, 2002 final rule is available only by the filing of a petition for review in the U.S. Court of Appeals for the District of Columbia Circuit by March 3, 2003. Any such judicial review is limited to only those objections that are raised with reasonable specificity in timely comments. Under section 307(b)(2) of the Act, the requirements that are the subject of the December 31, 2002 final rule may not be challenged later in civil or criminal proceedings brought by us to enforce these requirements.
Environmental protection, Administrative practice and procedure, Air pollution control, Carbon monoxide, Hydrocarbons, Intergovernmental relations, Lead, Nitrogen oxides, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides.
23 U.S.C. 101; 42 U.S.C. 7401-7671q.
The revisions read as follows:
(a) * * *
(1) * * *
(vii) * * *
(B) An existing emissions unit is any emissions unit that does not meet the requirements in paragraph (a)(1)(vii)(A) of this section. A replacement unit, as defined in paragraph (a)(1)(xxi) of this section, is an existing emissions unit.
(xxi)
(A) The emissions unit is a reconstructed unit within the meaning of § 60.15(b)(1) of this chapter, or the emissions unit completely takes the place of an existing emissions unit.
(B) The emissions unit is identical to or functionally equivalent to the replaced emissions unit.
(C) The replacement does not alter the basic design parameters (as discussed in paragraph (h)(2) of this section) of the process unit.
(D) The replaced emissions unit is permanently removed from the major stationary source, otherwise permanently disabled, or permanently barred from operation by a permit that is enforceable as a practical matter. If the replaced emissions unit is brought back into operation, it shall constitute a new emissions unit.
(f) * * *
(6)
(ii) For newly constructed units (which do not include modifications to existing units) on which actual construction began after the 24-month period, in lieu of adding the baseline actual emissions as specified in paragraph (f)(6)(i) of this section, the emissions must be added to the PAL level in an amount equal to the potential to emit of the units.
The revisions read as follows:
(b) * * *
(7) * * *
(ii) An existing emissions unit is any emissions unit that does not meet the requirements in paragraph (b)(7)(i) of this section. A replacement unit, as defined in paragraph (b)(32) of this section, is an existing emissions unit.
(32)
(i) The emissions unit is a reconstructed unit within the meaning of § 60.15(b)(1) of this chapter, or the emissions unit completely takes the place of an existing emissions unit.
(ii) The emissions unit is identical to or functionally equivalent to the replaced emissions unit.
(iii) The replacement does not change the basic design parameter(s) (as discussed in paragraph (y)(2) of this section) of the process unit.
(iv) The replaced emissions unit is permanently removed from the major stationary source, otherwise permanently disabled, or permanently barred from operation by a permit that is enforceable as a practical matter. If the replaced emissions unit is brought back into operation, it shall constitute a new emissions unit.
(w) * * *
(6)
(ii) For newly constructed units (which do not include modifications to existing units) on which actual construction began after the 24-month period, in lieu of adding the baseline actual emissions as specified in paragraph (w)(6)(i) of this section, the emissions must be added to the PAL level in an amount equal to the potential to emit of the units.
42 U.S.C. 7401,
The revisions read as follows:
(b) * * *
(7) * * *
(ii) An existing emissions unit is any emissions unit that does not meet the requirements in paragraph (b)(7)(i) of this section. A replacement unit, as defined in paragraph (b)(33) of this section, is an existing emissions unit.
(33)
(i) The emissions unit is a reconstructed unit within the meaning of § 60.15(b)(1) of this chapter, or the emissions unit completely takes the place of an existing emissions unit.
(ii) The emissions unit is identical to or functionally equivalent to the replaced emissions unit.
(iii) The replacement does not alter the basic design parameters (as discussed in paragraph (cc)(2) of this section) of the process unit.
(iv) The replaced emissions unit is permanently removed from the major stationary source, otherwise permanently disabled, or permanently barred from operation by a permit that is enforceable as a practical matter. If the replaced emissions unit is brought back into operation, it shall constitute a new emissions unit.
(aa) * * *
(6)
(ii) For newly constructed units (which do not include modifications to existing units) on which actual construction began after the 24-month period, in lieu of adding the baseline actual emissions as specified in paragraph (aa)(6)(i) of this section, the emissions must be added to the PAL level in an amount equal to the potential to emit of the units.
Federal Communications Commission.
Final rule; petition for reconsideration, comments requested.
This document seeks public comment on petitions filed for reconsideration of certain rules adopted by the Commission in the
Interested parties may file comments in this proceeding on or before October 20, 2003. Reply comments may be filed on or before October 30, 2003. Parties that may have already submitted comments in this proceeding need not resubmit those comments unless they choose to update them.
Federal Communications Commission, 445 12th Street, SW., Washington, DC 20554.
Dana Jackson, Consumer & Governmental Affairs Bureau, Disability Rights Office at (202) 418-2247 (voice), (202) 418-7898 (TTY), or e-mail at
When filing comments, please reference CC Docket No. 98-67. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS) or by filing paper copies.
Parties who choose to file by paper must file an original and four copies of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, commenters must submit two additional copies for each additional docket or rulemaking number. Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Services mail (although we continue to experience delays in receiving U.S. Postal Service mail). The Commission's contractor, Natek, Inc., will receive hand-delivered or messenger-delivered paper filings for the Commission's Secretary at 236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of before entering the building. Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton
Parties who choose to file by paper should also submit their comments on diskette. These diskettes should be submitted, along with three paper copies, to: Dana Jackson, Consumer & Governmental Affairs Bureau, Disability Rights Office, 445 12th Street, SW., Room 6-C410, Washington DC 20554. Such a submission should be on a 3.5 inch diskette formatted in an IBM compatible format using Word 97 or compatible software. The diskette should be accompanied by a cover letter and should be submitted in “read only” mode. The diskette should be clearly labeled with the commenter's name, proceeding (including the lead docket number in this case, CC Docket No. 98-67), type of pleading (comment or reply comment), date of submission, and the name of the electronic file on the diskette. The label should also include the following phrase “Disk Copy—Not an Original.” Each diskette should contain only one party's pleadings, preferably in a single electronic file. In addition, commenters must send diskette copies to the Commission's copy contractor, Qualex International, Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554.
Pursuant to § 1.1206 of the Commission's rules, 47 CFR 1.1206, this proceeding will be conducted as a permit-but-disclose proceeding in which
Copies of any subsequently filed documents in this matter will be available for public inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street, SW, Room CY-A257, Washington, DC 20554. The complete text of this
To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an e-mail to
On September 23, 2003, AT&T Corp. (“AT&T”) filed a petition for limited reconsideration to the
On September 29, 2003, Verizon filed a petition for reconsideration to the
Federal Motor Carrier Safety Administration (FMCSA), DOT.
Interim final rule; delay of compliance date; request for comments.
The FMCSA amends the Federal Motor Carrier Safety Regulations (FMCSRs) prohibiting States from issuing, renewing, transferring or upgrading a commercial driver's license (CDL) with a hazardous materials (hazmat) endorsement unless the Transportation Security Administration (TSA) has first conducted a background records check of the applicant and determined the applicant does not pose a security risk warranting denial of the hazardous materials endorsement. The compliance date provisions being revised require States to collect fingerprints from individuals applying for, renewing, upgrading or transferring a hazmat endorsement for a CDL beginning November 3, 2003. FMCSA and TSA are changing that date to April 1, 2004, and TSA may postpone that date, in individual cases, to not later than December 1, 2004.
You may submit comments identified by DOT DMS Docket Number FMCSA—2001-11117 by any of the following methods:
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Comments received after the comment closing date will be included in the docket and we will consider late comments to the extent practicable. The FMCSA may, however, issue a final rule at any time after the close of the comment period.
Mr. Robert Redmond, Office of Safety Programs, (202) 366-9579, FMCSA, 400 7th Street, SW., Washington, DC 20590. Office hours are from 8:30 a.m. to 5 p.m., e.t., Monday through Friday, except Federal holidays.
This IFR is being adopted without prior notice and public comment. However, interested parties are invited to participate in this rulemaking by submitting written data, views, or arguments. All comments received, as well as a report summarizing each substantive public contact with FMCSA personnel on this rulemaking, will be filed in the public docket. The docket is available for public inspection before and after the comment closing date.
See
The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996 requires FMCSA to comply with small entity requests for information or advice about compliance with statutes and regulations within FMCSA's jurisdiction. Any small entity that has a question regarding this document may contact the person listed in the
On September 11, 2001, several terrorist attacks were made against the United States. Those attacks resulted in catastrophic human casualties and property damage. In response to those attacks, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act was enacted on October 26, 2001.
A State may not issue to any individual a license to operate a motor vehicle transporting in commerce a hazardous material unless the Secretary of Transportation has first determined, upon receipt of a notification under subsection (c)(1)(B), that the individual does not pose a security risk warranting denial of the license.
Section 5103a(a)(2) subjects license renewals to the same requirements.
Section 5103a(c) requires the Attorney General, upon the request of a State in connection with issuance of a hazardous materials endorsement, to carry out a background records check of the individual applying for the endorsement and, upon completing the check, to notify the Secretary of the results. The Secretary then determines whether the individual poses a security risk warranting denial of the endorsement. The term “Secretary” originally referred to the Department of Transportation, but these functions have been transferred to the Secretary of the Department of Homeland Security (DHS), and subsequently delegated by the Secretary to the TSA Administrator. The background records check must consist of: (1) A check of the relevant criminal history databases; (2) in the case of an alien, a check of the relevant databases to determine the status of the alien under U.S. immigration laws; and (3) as appropriate, a check of the relevant international databases through Interpol-U.S. National Central Bureau or other appropriate means.
Congress enacted the Safe Explosives Act (SEA) on November 25, 2002.
However, 18 U.S.C. 845(a)(1) provides an exception to section 842(i) for “any aspect of the transportation of explosive materials via railroad, water, highway, or air which are regulated by the United States Department of Transportation and agencies thereof, and which pertains to safety.” Under this exception, if DOT regulations address the transportation security issues of persons engaged in a particular aspect of the safe transportation of explosive materials, then those persons are not subject to prosecution under 18 U.S.C. 842(i) while they are engaged in the transportation of explosives in commerce.
To comply with the mandates of the USA PATRIOT Act, and to trigger the exception in 18 U.S.C. 845(a)(1) for the transportation of explosives, TSA and FMCSA issued interim final rules on May 5, 2003.
The rules also established conditions under which an individual who has been determined to be a security threat could appeal the determination, and procedures TSA follows when
The FMCSA rule places States on notice that failure to comply with those portions of the TSA rule applicable to States by November 3, 2003, will result in the withholding by DOT of certain Federal-aid highway funds.
The TSA rule requires States to begin collecting fingerprints from individuals applying for, renewing, or transferring a hazmat endorsement for a CDL on November 3, 2003, and to submit those fingerprints to TSA so that TSA can conduct fingerprint-based criminal history records checks (CHRCs).
Elsewhere in today's issue of the
TSA received comments from departments of motor vehicles and other agencies in over 23 States stating they have neither the infrastructure nor the funding to comply with the requirements of the rule. The main costs identified by States included the costs of purchasing fingerprinting equipment, and hiring and training personnel to operate the fingerprinting equipment. Most of the States requested Federal funding for these costs. The TSA rule discusses the cost issue in more detail.
Many States also commented that compliance with the Patriot Act rule, specifically the fingerprinting requirements, would require legislative changes. In many States, the State legislatures meet only once a year with a few State legislatures meeting biennially. These States requested additional time to make necessary legislative changes.
For these reasons, FMCSA and TSA are moving the date that States must begin collecting fingerprints to April 1, 2004, with the possibility of postponement to a later date.
FMCSA is amending 49 CFR 383.141 paragraphs (a) and (c) to move the date on which States are required to collect fingerprints from individuals who are applying for, renewing, or transferring a hazmat endorsement for a CDL from November 3, 2003, to April 1, 2004, though TSA may extend the compliance date to not later than December 1, 2004. Section 383.141(c) requires States to notify drivers at least 180 days before the expiration date of a hazardous materials endorsement. Because FMCSA's May 5 IFR allowed only slightly more than 180 days before States were required to begin collecting fingerprints, part of which the States would need to establish notification procedures, § 383.141(c) provides that “Before November 3, 2003, a State must give the holder of a hazardous materials endorsement as much advance notice as practicable” [68 FR at 23850]. In view of today's postponement of the States' compliance date, which will allow them to give drivers a full 180 days of advance notice, the sentence quoted above has been deleted.
FMCSA is issuing this IFR without prior notice and opportunity to comment pursuant to its authority under section 4(a) of the Administrative Procedure Act (5 U.S.C. 553(b)). This provision allows the agency to issue a final rule without notice and opportunity to comment when the agency for good cause finds that notice and comment procedures are “impracticable, unnecessary or contrary to the public interest.” If the agency fails to immediately adopt this interim final rule, States could lose certain Federal-aid funding due to the short implementation deadline for TSA requirements announced in the May 2003 interim final rule (68 FR 23852) and an inability to meet those requirements due to lack of infrastructure and funding through no fault of their own and circumstances beyond their control.
This IFR changes the date on which States are required to collect fingerprints from individuals who are applying for, renewing, or transferring a hazmat endorsement for a CDL. Because this IFR does not impose any new burdens on stakeholders, FMCSA believes that notice and comment procedures are “unnecessary.” Due to the short deadline, the agency finds good cause under 5 U.S.C. 553(d)(3) to make this rule effective upon publication.
Executive Order 12866, “Regulatory Planning and Review” (58 FR 51735, October 4, 1993), provides for making determinations whether a regulatory action is “significant” and therefore subject to Office of Management and Budget (OMB) review and to the requirements of the Executive Order. FMCSA has determined that this is a significant regulatory action within the meaning of Executive Order 12866 and under the Department's regulatory policies and procedures because of substantial public interest. This rule does not impose any costs on any public, private, or government sector, therefore further economic analysis is unnecessary.
The Regulatory Flexibility Act of 1980 (RFA), as amended, was enacted by Congress to ensure that small entities (small businesses, small not-for-profit organizations, and small governmental jurisdictions) are not unnecessarily or disproportionately burdened by Federal regulations. The RFA requires agencies to review rules to determine if they have “a significant economic impact on a substantial number of small entities.” I certify that the IFR will not have a significant economic impact on a substantial number of small entities. As noted above, this IFR will not impose any costs on any public, private, or government sector.
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520), a Federal agency must obtain approval from the Office of Management and Budget (OMB) for each collection of information it conducts, sponsors, or requires through regulations. This IFR does not contain any information collection requirements.
Executive Order 13132 requires FMCSA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have
Although this IFR has direct effects on the States, they are not substantial because the IFR will continue the status quo while allowing States more time to comply with the May 5, 2003, interim final rules. Thus, FMCSA has determined that this IFR does not have sufficient Federalism implications to warrant the preparation of a Federal Assessment.
As discussed in detail in the May 5 IFR [see 68 FR at 23847-23848], the provisions of 49 U.S.C. 31314, which require DOT to withhold certain Federal-aid highway funds from States that fail to comply substantially with the requirements for State participation in the CDL program, apply also to State compliance with those portions of the Transportation Security Administration (TSA) rule implementing Sec. 1012 that apply to States. In addition, 49 U.S.C. 31312 authorizes DOT to prohibit States from issuing CDLs if the Secretary determines “that a State is in substantial noncompliance” with 49 U.S.C. chapter 313. These penalties are available for DOT to use when and if appropriate to encourage State compliance with TSA's Sec. 1012 rule.
The Trade Agreement Act of 1979 prohibits Federal agencies from engaging in any standards-related activities that create unnecessary obstacles to the foreign commerce of the United States. Legitimate domestic objectives, such as safety and security, are not considered unnecessary obstacles. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards. FMCSA has assessed the potential effect of this IFR and has determined that it will not impose any costs on domestic or international entities and thus would have a neutral trade impact.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires Federal agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of more than $100 million in any one year (adjusted for inflation with base year of 1995). Before promulgating a rule for which a written statement is needed, section 205 of the UMRA generally requires FMCSA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least burdensome alternative that achieves the objective of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows FMCSA to adopt an alternative other than the least costly, most cost-effective, or least burdensome alternative if the agency publishes with the final rule an explanation why that alternative was not adopted.
This IFR will not result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of more than $100 million annually. Thus, FMCSA has not prepared a written assessment under the UMRA.
FMCSA has analyzed this rulemaking action for the purposes of the National Environmental Policy Act. The agency has determined that implementation of this IFR will not have any significant impact on the quality of the human environment.
FMCSA has assessed the energy impact of this rule in accordance with the Energy Policy and Conservation Act (EPCA), Public Law 94-163, as amended (42 U.S.C. 6362). FMCSA has determined that this IFR is not a major regulatory action under the provisions of the EPCA.
Administrative practice and procedure, Commercial driver's license, Commercial motor vehicles, Highway safety, Motor carriers.
49 U.S.C. 521, 31136, 31301
(a)
(c)
Transportation Security Administration (TSA), Department of Homeland Security (DHS).
Interim final rule; amendment.
The Transportation Security Administration (TSA) is amending its Interim Final Rule (IFR) that establishes standards for security threat assessments of individuals applying for, renewing, or transferring a hazardous materials endorsement (HME) for a commercial drivers license (CDL). TSA is adding a definition and moving the date on which fingerprint-based criminal history record checks must begin. TSA will not authorize a State to issue HME unless the State is collecting the biographical and criminal history information required with fingerprints and submitting fingerprints by April 1, 2004. If a State is unable to collect this information by April 1, 2004, the State must submit a request for extension to TSA on or before April 1, 2004. TSA may approve the extension request, but will not extend the due date beyond December 1, 2004. If the State cannot begin submitting fingerprints of HME applicants as of April 1, 2004, the State must submit a plan to TSA outlining the fingerprint process that it will deploy and a timeline to ensure that the State will be submitting fingerprints by December 1, 2004. The plan must be submitted by April 1, 2004, and be consistent with Federal Bureau of Investigation (FBI) fingerprint collection and submission procedures. TSA is not changing the provision in the IFR that requires individuals with a HME to surrender their endorsement if they do not meet the threat assessment standards in the rule.
For technical questions: John Berry, Credentialing Program Office, Transportation Security Administration Headquarters, East Building, Floor 8, 601 12th Street, telephone: 571-227-1757, e-mail:
For legal questions: Dion Casey, Office of Chief Counsel, Transportation Security Administration Headquarters, West Building, Floor 8, TSA-2, 601 South 12th Street; Arlington, VA 22202-4220 telephone: 571-227-2663; e-mail:
TSA is not requesting comments to this amended interim final rule. Instead, TSA will publish a notice of proposed rulemaking shortly to address the criminal history background check process for HME applicants, and will solicit comments at that time. With publication of the NPRM, TSA will open a new docket and request comments on the security threat assessment process for HME applicants in its entirety.
You can get an electronic copy of this interim final rule (IFR) using the Internet by:
(1) Searching the Department of Transportation's electronic Docket Management System (DMS) Web page (
(2) Accessing the Government Printing Office's Web page at
(3) Visiting the TSA's Laws and Regulations Web page at
In addition, copies are available by writing or calling the individuals in the
The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996 requires TSA to comply with small entity requests for information or advice about compliance with statutes and regulations within TSA's jurisdiction. Any small entity that has a question regarding this document may contact the persons listed in the
On May 5, 2003, TSA published an IFR that requires a security threat assessment of commercial drivers who are authorized to transport hazardous materials.
TSA requested and received comments from the States, labor organizations, and trucking industry associations. In addition, TSA held working group sessions with the States to discuss potential fingerprinting systems that would achieve the statutory requirements, but would not adversely impact the States.
Based on the comments received and our working sessions with the States, it appears that the States are in the best position to develop a plan to ensure that HME holders will be fingerprinted. TSA, however, is best situated to examine whether an individual poses a security threat under the other provisions of the rule, such as alien status, and terrorist connections. Under this scheme, TSA would continue to make the final determination as to whether an individual poses a security threat, combining the criminal history information the State develops with the terrorist-related background information, including alien status and terrorist-related databases, that TSA develops. In addition, TSA would continue to administer appeals of the terrorist-related background information for individuals who believe the records on which TSA's determination is made are incorrect or involve mistaken identity. Finally, TSA would administer the waiver program set forth in the IFR for all HME applicants. Shortly after publication of this amended IFR, TSA is issuing a separate notice of proposed rulemaking (NPRM) to explain and solicit comments on the revised process.
The Uniting and Strengthening America by Providing Appropriate Tools Required To Intercept and Obstruct Terrorism (USA PATRIOT) Act was enacted on October 25, 2001.
A State may not issue to any individual a license to operate a motor vehicle transporting in commerce a hazardous material unless the Secretary of Transportation has first determined, upon receipt of a notification under subsection (c)(1)(B), that the individual does not pose a
Section 5103a(a)(2) subjects license renewals to the same requirements.
Section 5103a(c) requires the Attorney General, upon the request of a State in connection with issuance of a HME, to carry out a background records check of the individual applying for the endorsement and, upon completing the check, to notify the Secretary (as delegated to the Administrator of TSA) of the results. The Secretary then determines whether the individual poses a security risk warranting denial of the endorsement. The background records check must consist of: (1) A check of the relevant criminal history databases; (2) in the case of an alien, a check of the relevant databases to determine the status of the alien under U.S. immigration laws; and (3) as appropriate, a check of the relevant international databases through Interpol-U.S. National Central Bureau or other appropriate means.
Congress enacted the Safe Explosives Act (SEA) on November 25, 2002.
However, 18 U.S.C. 845(a)(1) provides an exception to section 842(i) for “any aspect of the transportation of explosive materials via railroad, water, highway, or air which are regulated by the United States Department of Transportation (DOT) and agencies thereof, and which pertain to safety.” Under this exception, if DOT regulations address the transportation security issues of persons engaged in a particular aspect of the safe transportation of explosive materials, then those persons are not subject to prosecution under 18 U.S.C. 842(i) while they are engaged in the transportation of explosives in commerce. TSA issued the interim final rule in coordination with agencies within DOT, the Federal Motor Carrier Safety Administration and Research and Special Programs Administration, and triggered this exception. For the reasons set forth below, the action TSA takes now does not affect the application of the exception.
To comply with the mandates of the USA PATRIOT Act, and to trigger the exception in 18 U.S.C. 845(a)(1) for the transportation of explosives, TSA issued the IFR (68 FR 23852). Under the IFR, TSA determines that an individual poses a security threat if he or she: (1) Is an alien (unless he or she is a lawful permanent resident) or a U.S. citizen who has renounced his or her U.S. citizenship; (2) is wanted or under indictment for certain felonies; (3) has a conviction in military or civilian court for certain felonies; (4) has been adjudicated as a mental defective or involuntarily committed to a mental institution; or (5) is considered to pose a security threat based on a review of pertinent databases.
The IFR also establishes conditions under which an individual who has been determined to be a security threat can appeal the determination, and a waiver process for those individuals who otherwise could not obtain an HME because they had a disqualifying felony, or were adjudicated as a mental defective or involuntarily committed to a mental institution. Finally, the IFR prohibits an individual from holding, and a State from issuing, renewing, or transferring, an HME for a driver unless the individual has met the TSA security threat assessment standards.
This amended IFR adds a definition and changes language in the original IFR (68 FR 23852) regarding the date on which the States cannot issue, transfer, or renew HME unless a fingerprint-based background check has been completed. TSA provides a definition for the term “revoke” in response to comments received from the States. In some States, legislative language does not permit “revocation” of a hazardous material endorsement, but does permit removing authority to transport hazardous materials through disqualification, suspension, cancellation or other similar term. However, the IFR uses “revoke” when referring to individuals who are disqualified from holding a HME. Therefore, as requested by the States, we provide a definition to make clear that revocation is equivalent to cancellation, suspension, annulment, disqualification, or similar term.
TSA is delaying the date on which fingerprint-based criminal history record checks must be underway from November 3 for several reasons. First, TSA received comments from 23 States requesting an extension of time so that they can garner needed State legislative changes, funds, and infrastructure to implement the new background check portion of the HME program. The primary concerns identified by States include the cost of purchasing fingerprinting equipment; time needed to hire and train personnel to operate the fingerprinting equipment; and State legislative changes necessary to collect fees and implement the program. Most of the States requested Federal funding to assist with development of the program.
Second, TSA has worked closely with the States and pertinent nongovernmental organizations since the IFR was published and has determined that a “one size fits all” approach for fingerprint collection and adjudication is impractical. Each State currently has a system in place to license commercial drivers and award hazardous material endorsements. Also, each State currently has a system in place to collect fingerprints for criminal justice purposes and transmit them to the Attorney General. The States' systems vary widely in terms of size, complexity, automation, and funding. The States have consistently stated that TSA should not prescribe one detailed fingerprinting program, but should set minimum standards so that the States can make use of their current resources and programs. This should minimize costs, take into account unique State legislative requirements, and accommodate the level of automation each State currently possesses. Based on the foregoing, TSA is delaying the date
With respect to the first requirement, as of April 1, 2004, the States must be collecting the biographical and criminal history information currently required in section 1572.5(e), with the applicant's certification under penalty of criminal prosecution that the information is correct. This requirement applies only to individuals who are applying for, renewing or transferring a HME. The State is not required to gather this information for all current HME holders as of April 1, 2004; however, it must be collecting the information as drivers become due for renewal or seek to transfer or obtain a HME.
This requirement enhances the State's ability to determine whether individuals with disqualifying offenses continue to transport hazardous materials in violation of the law. The individual's signature on the application required in section 1572.5(e) is a certification under penalty of 18 U.S.C. 1001 that the individual meets the security threat assessment standards set forth in the IFR. If the individual intentionally provides inaccurate information, an enforcement action can be initiated that may include imprisonment of not more than five years or a fine of up to $250,000, or both. The government believes this adds a deterrent for HME holders who have committed disqualifying offenses but have not surrendered their HME as required by section 1572.5(b). However, it is important to note that nothing in this requirement alters an individual's ability to apply for a waiver under section 1572.143, if they have committed a disqualifying offense.
If the State is unable to collect the information required in section 1572.5(e) by April 2004, the State may submit a written request to TSA to delay the collection requirement. TSA understands that some States may need to seek legislative changes and fee authority, or raise funds in order to accomplish the collection requirement, and it may be impossible to do so by April 2004. However, TSA will not grant any delays beyond December 1, 2004.
With respect to the second requirement concerning fingerprint collection, the amended IFR provides that the State must be collecting fingerprints from individuals applying for, renewing, or transferring a HME and submitting them to the FBI as of April 1, 2004. The fingerprint collection must be accomplished in a manner consistent with FBI procedures. If the State is unable to collect fingerprints on or before April 2004, the State must submit a plan to TSA by April 1, 2004 outlining the system it will put in place to capture fingerprints and pertinent information. The States must be collecting fingerprints and the required information for HME applicants no later than December 1, 2004.
As indicated in State comments to the IFR, most if not all States have devoted considerable attention to determining how the fingerprinting of HME applicants can be accomplished and coordinated within the existing hazardous material endorsement and commercial driver licensing programs. In meeting with the States, it has been evident that many States have a clear plan in mind to collect fingerprints and the other information required in section 1572.5(e), including the number of staff needed to administer the program, appropriate training for personnel involved in capturing fingerprints, and electronic upgrades necessary to handle increased data. Therefore, TSA does not anticipate that the States will have to expend significant time on developing the fingerprint collection plans. Many States will submit the plans they have been working with since publication of the IFR.
Also, each State currently has fingerprint collection procedures in place that meet the FBI's collection standards, in order to process fingerprints through the FBI for criminal enforcement. These procedures may include electronic capture, or paper capture that can be digitally transmitted to the FBI. In addition, the procedures require an applicant to present proof of identity when the fingerprints are captured and sign a document certifying that all information provided with the fingerprints is true, under penalty of 18 U.S.C. 1001. The State plan must include these procedures or others that the FBI approves in the collection portion of the program in order to be acceptable to TSA.
Prior to December 2004, pursuant to § 1572.107, TSA will conduct name-based background checks of Federal and international databases relating to terrorist activity. TSA will then conduct (1) checks for wants and warrants for the crimes listed in § 1572.103; (2) checks of an individual's citizenship status under § 1572.105; and (3) checks utilizing the Interstate Identification Index.
If TSA discovers during the course of these name-based checks that an individual poses a security threat, has committed a disqualifying offense, or is evading law enforcement, consistent with § 1572.5(c)(1), TSA will contact the appropriate law enforcement agency and/or direct the State to revoke the individual's HME. If the individual challenges TSA's assertion, TSA or the State will provide the individual with an opportunity to correct underlying records or cases of mistaken identity by submitting fingerprints or corrected court records.
With an estimated population exceeding 3.5 million drivers, the government must prioritize the background check process. TSA believes that these name-based checks enable the agency to focus on individuals who may pose a more immediate threat of terrorist or criminal activity, such as those who are wanted or under a warrant for one of the disqualifying crimes listed in § 1572.103, those who are not citizens or lawful permanent residents of the U.S., and those who may present a potential terrorist threat.
TSA has assessed the risks associated with the transportation of hazardous materials via commercial vehicle and has determined that in conducting name-based checks prior to December 2004 and initiating fingerprint-based criminal history checks as early as April 1, 2004, the risks are effectively addressed. The terrorist-related information that TSA will search prior to December 2004 is the best indication of an individual's predisposition to commit or conspire to commit terrorist acts. Evidence that an individual has been convicted recently of a felony such as theft or assault is important, and may indicate a security threat; but TSA has determined that the more imminent threat is an individual whose background includes terrorism-related information. This approach is consistent with the Patriot Act and the Safe Explosives Act, and meets the needs of the States.
Also, it is important to note that TSA is not delaying the September 2, 2003 compliance date set forth in § 1572.5(b) for surrendering a HME. This section requires any HME holder who does not meet the security threat assessment standards in part 1572 to surrender the endorsement beginning on September 2, 2003. For instance, an individual who knows that he or she has committed a disqualifying offense within the prescribed time periods, is required to relinquish their HME beginning September 2, 2003. Nothing in this
The surrender requirement buttresses TSA's determination that we should attempt to identify potential terrorist threats from terrorism-related information databases before analyzing criminal history records. As of today, all HME drivers are required to self-report any disqualifying offenses that would appear on a fingerprint-based criminal history records check. TSA will work closely with the State Departments of Motor Vehicles, labor organizations, and the trucking industry to communicate this surrender provision widely and to inform affected drivers of the existing waiver process.
Based on the foregoing, the exception found in 18 U.S.C. 845(a)(1) continues to apply, and persons otherwise prohibited from lawfully possessing explosives who are transporting explosives in commerce would not be subject to criminal prosecution under section 842(i).
TSA is adding a definition to § 1572.3 to make certain that the current IFR, which requires revocation of a HME under certain conditions, will not impose a condition in the HME process that the States cannot complete. As discussed earlier, in some States legislative language prohibits the ‘revocation’ of a HME legal, but permits the State to cancel, suspend, withdraw, or disqualify a hazardous material endorsement. TSA's new definition resolves this conflict with certain State legislation.
TSA makes several changes to § 1572.5 concerning the date on which TSA's threat assessment based on fingerprint-based criminal history record checks will begin. In paragraphs 1572.5(b) and (c), the new dates reflect TSA's decision to delay the date on which the States must be collecting information and submitting fingerprints to the FBI from November 3, 2003 to April 1, 2004, or under certain conditions to December 1, 2004 at the very latest.
Paragraph 1572.5(c)(4) establishes the requirement that TSA will not authorize a State to issue, renew, or transfer a HME unless it is collecting the information required in § 1572.5(e) and submitting fingerprints as of April 1, 2004. If the State cannot collect the required information by that date, the State may submit and TSA may approve a request to delay the collection requirement to December 1, 2004. Also, if the State cannot submit fingerprints from HME applicants by April 1, 2004, the State must submit a plan to TSA explaining how fingerprint collection and submission will be accomplished before December 1, 2004.
As discussed in detail in the IFR published by FMCSA on May 5, 2003, the provisions of 49 U.S.C. 31314, which require DOT to withhold certain Federal-aid highway funds from States that fail to comply substantially with the requirements for State participation in the CDL program, apply also to State compliance with those portions of the TSA rule implementing the Patriot Act that apply to States. In addition, 49 U.S.C. 31312 authorizes DOT to prohibit States from issuing CDLs if the Secretary determines “that a State is in substantial noncompliance” with 49 U.S.C. chapter 313. These penalties are available for DOT to use when and if appropriate to encourage State compliance with TSA's rule.
It is important to note that TSA will publish a NPRM shortly after publication of this amended IFR, to propose minimum federal standards for the fingerprint collection, criminal history adjudication, and appeal process for HME applicants. In the NPRM, TSA will provide greater detail about what each State program should include, minimum standards for adjudication of the criminal history record check results, minimum standards for establishing an appeal process for the adjudication of the criminal history checks, and the potential costs for each portion of the background check.
TSA will rely heavily on the comments the States provide to ensure that no State is forced to adhere to a rigid form beyond its financial or technological capacity. The NPRM will propose minimum components that each State program should include, but would permit the States to determine how it meets the minimum standards.
The NPRM process will also provide TSA with the empirical data and information necessary to complete a comprehensive regulatory evaluation. TSA understands that the IFR and the amended IFR impose financial burdens on the States, some of which may be minimized through State and Federal fee authority. However, there may be States in which this is not possible, and TSA must seek a regulatory regime to prevent unnecessary financial burdens. TSA can achieve this through active participation of the States, the trucking industry, and private entities that may be able to provide low cost operational assistance.
In addition, on October 3, 2003, legislation was enacted
TSA is issuing this final rule without prior notice and opportunity to comment pursuant to its authority under section 4(a) of the Administrative Procedure Act (5 U.S.C. 553(b)). This provision allows the agency to issue a final rule without notice and opportunity to comment when the agency for good cause finds that notice and comment procedures are “impracticable, unnecessary or contrary to the public interest.”
The catastrophic effect of the attacks on the World Trade Center and Pentagon on September 11, 2001, revealed the vulnerability of the nation's transportation system to terrorism. National security and intelligence officials have warned that future terrorist attacks are likely. The number of commercial vehicles that carry hazardous materials is far greater than the number of aircraft that might be hijacked by terrorists. A vehicle carrying hazardous materials, if used as a weapon in a terrorist attack, could cause significant loss of life and property damage.
Section 1012 of the USA PATRIOT Act is a measure to increase the security of highway transportation of hazardous materials. Because of the likelihood of future terrorist attacks, and the potential for significant casualties and property damage in the event of a terrorist attack involving a vehicle carrying hazardous materials, TSA believes that immediate action is warranted, and TSA finds that notice and public comment procedures under 5 U.S.C. 553(b) are impracticable and contrary to the public interest.
It is important to note that TSA is not making fingerprint collection or submission of the State plan due upon publication of this document. The intervening months between the date this amended IFR is published and April 1, 2004 will provide additional time for the States to develop a plan for
By making the rule effective as of the date of publication, however, TSA can begin name checks of individuals against international and terrorist-related databases as soon as TSA has accurate driver data and is able to adjudicate the results of the checks.
Executive Order 12866, “Regulatory Planning and Review” (58 FR 51735, October 4, 1993), provides for making determinations whether a regulatory action is “significant” and therefore subject to Office of Management and Budget (OMB) review and to the requirements of the Executive Order.
TSA has determined that this action is a significant regulatory action within the meaning of Executive Order 12866 because there is significant public interest in security issues since the events of September 11, 2001. This amended interim final rule responds to the background check requirements of section 1012 of the USA PATRIOT Act by establishing the criteria that will be used in determining whether an individual applying for, transferring, or renewing a HME poses a security risk warranting denial of the endorsement.
TSA has performed a preliminary analysis of the expected costs of this interim final rule, but the figures may change when a full Regulatory Evaluation is completed in the proposed rulemaking that will follow publication of this document. TSA will prepare a full regulatory evaluation based on comments received from the States, the trucking industry, and pertinent nongovernmental organizations, which will improve the reliability of the cost and benefit estimates.
The Regulatory Flexibility Act of 1980, as amended, (RFA) was enacted by Congress to ensure that small entities (small businesses, small not-for-profit organizations, and small governmental jurisdictions) are not unnecessarily or disproportionately burdened by Federal regulations. The RFA requires agencies to review rules to determine if they have “a significant economic impact on a substantial number of small entities.” TSA has determined that the amended interim final rule will not have a significant economic impact on a substantial number of small entities.
Current industry practice is for drivers to obtain their CDL certification as a condition of employment. Individuals are required to have a current CDL with appropriate endorsements to be eligible for employment. This is an employment cost typically borne by the individual employee. This amended IFR will affect the States, but they are not considered “small governmental jurisdictions”, such as small towns or boroughs. Therefore, the burden on small business entities from this rule is expected to be
TSA conducted the required review of this rule accordingly, pursuant to the Regulatory Flexibility Act, 5 U.S.C. 605(b) TSA certifies that this rule will not have a significant impact on a substantial number of small entities.
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501,
The agency is soliciting comments to—
(1) Evaluate whether the proposed information requirement is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.
Individuals and organizations may submit comments on the information collection requirement by January 6, 2004, and should direct them via fax to the Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: DHS-TSA Desk Officer, at (202) 395-5806. Comments to OMB are most useful if received within 30 days of publication.
As protection provided by the Paperwork Reduction Act, as amended, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control number for this information collection will be published in the
Executive Order 13132 requires TSA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” are defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” Under the Executive Order, TSA may construe a Federal statute to preempt State law only where, among other things, the exercise of State authority conflicts with the exercise of Federal authority under the Federal statute.
This action has been analyzed in accordance with the principles and criteria in the Executive Order, and it has been determined that this interim final rule does have Federalism implications or a substantial direct effect on the States. The amended interim final rule requires States to collect fingerprints or to submit a plan to TSA outlining how the fingerprint collection process would work. TSA will publish a NPRM shortly that will solicit comments from the States on the fingerprint collection process and other aspects of implementing the HME background check program. TSA will continue to consult extensively with the States to ensure that any burdens are minimized to the extent possible.
TSA notes that FMCSA has communicated with the States on the requirements of the USA PATRIOT Act. The Assistant Administrator of FMCSA wrote to licensing officials in each State on October 31, 2001, briefly summarizing section 1012 of the USA PATRIOT Act, and asking them to continue issuing and renewing hazardous materials endorsements until the regulations implementing section 1012 were completed. Some States have already enacted legislation they consider necessary to carry out the mandates of section 1012.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires Federal agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of more than $100 million in any one year (adjusted for inflation with base year of 1995). Before promulgating a rule for which a written statement is needed, section 205 of the UMRA generally requires TSA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least burdensome alternative that achieves the objective of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. In addition, section 205 allows TSA to adopt an alternative other than the least costly, most cost-effective, or least burdensome alternative if the agency publishes with the final rule an explanation why that alternative was not adopted.
This interim final rule will not result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of more than $100 million annually. Thus, TSA has not prepared a written assessment under the UMRA.
TSA has analyzed this rulemaking action for the purposes of the National Environmental Policy Act. The agency has determined that implementation of this final rule will not have any significant impact on the quality of the human environment.
TSA has assessed the energy impact of this rule in accordance with the Energy Policy and Conservation Act (EPCA), Public Law 94-163, as amended (42 U.S.C. 6362). TSA has determined that this rule is not a major regulatory action under the provisions of the EPCA.
The Trade Agreement Act of 1979 prohibits Federal agencies from engaging in any standards or related activities that create unnecessary obstacles to the foreign commerce of the United States. Legitimate domestic objectives, such as safety, are not considered unnecessary obstacles. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards. TSA will continue to consult with Mexico and Canada under the North American Free Trade Agreement to ensure that any adverse impacts on trade are minimized. This rule applies only to individuals applying for a State-issued hazardous materials endorsement for a commercial drivers license. Thus, TSA has determined that this rule will have no impact on trade.
Commercial drivers license, Criminal history background checks, Explosives, Hazardous materials, Motor carriers, Motor vehicle carriers, Security measures, Security threat assessment.
49 U.S.C. 114, 5103a, 40113, 46105.
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(i) From November 3, 2003 to December 1, 2004, an individual may submit fingerprints, in a form and manner specified by the State and TSA, when a State revokes the individual's hazardous materials endorsement under paragraph (c)(1) of this section.
(ii) When so notified by the State, an individual must submit fingerprints, in a form and manner specified by the State and TSA, when he or she applies to obtain, renew, or transfer a hazardous materials endorsement for a CDL, or when requested by TSA.
(c)(1) Each State must revoke an individual's hazardous materials endorsement if TSA informs the State that the individual does not meet the standards for security threat assessment in paragraph (d) of this section.
(2) No later than December 1, 2004:
(3) From November 3, 2003 to June 1, 2005, while TSA is conducting a security threat assessment on an individual, if the individual holds a CDL with a hazardous materials endorsement, and is applying for renewal or transfer of the endorsement, the State that issued the endorsement may extend the expiration date of the individual's endorsement until the State receives a Final Notification of Threat Assessment or Notification of No Security Threat from TSA.
(4) TSA will not authorize a State to issue, renew, or transfer hazardous material endorsements unless the State issuing the endorsement is —
(i) Collecting the information required in § 1572.5(e) as of April 1, 2004; or the State provides written justification for an extension of time not to exceed December 1, 2004 and TSA grants the extension; and
(ii) Submitting fingerprints in accordance with fingerprint collection standards of the Federal Bureau of Investigation and in accordance with procedures approved by TSA as of April 1, 2004; or the State submits a plan to TSA that describes how the State will collect fingerprints of individuals applying for, renewing, or transferring a hazardous materials endorsement no later than December 1, 2004.
Railroad Retirement Board.
Proposed rule.
The Railroad Retirement Board (Board) proposes to amend its regulations to permit the filing of applications and claims for benefits under the Railroad Unemployment Insurance Act via the Internet. The Government Paperwork Elimination Act provides that Federal agencies are required to provide “for the option of the electronic maintenance, submission, or disclosure of information, when practicable as a substitute for paper”. This proposed new part will permit the filing of applications and claims for benefits under the Railroad Unemployment Insurance Act electronically.
Submit comments on or before January 6, 2004.
Address any comments concerning this proposed rule to Beatrice Ezerski, Secretary to the Board, Railroad Retirement Board, 844 North Rush Street, Chicago, Illinois 60611-2092.
Marguerite P. Dadabo, Assistant General Counsel, (312) 751-4945, TTD (312) 751-4701.
The amendments would add a new part 321 to the Board's regulations (20 CFR 321) to permit the filing of applications and claims for benefits under the Railroad Unemployment Insurance Act via the Internet. The Government Paperwork Elimination Act, Public Law 105-277, sections 1701-1710 (codified as 44 U.S.C. 3504n) provides that Federal agencies are required to provide “for the option of the electronic maintenance, submission, or disclosure of information, when practicable as a substitute for paper”. The proposed part 321 will permit the filing of applications and claims for benefits under the Railroad Unemployment Insurance Act electronically.
The new part 321 provides that both an application and claims for benefits under the Railroad Unemployment Insurance Act may be filed electronically through the Board's Web site utilizing a User ID/PIN/Password system. The new part further provides that determinations regarding those applications and claims will be adjudicated in accord with established procedures.
In establishing the authenticity of the person who is filing an application or claim for benefits, the Board intends to use a User ID/PIN/Password system for identification as a substitute for a signature.
The Board currently uses a User ID/PIN/password system to allow employers access to RRBLINK to make electronic tax deposits and submit Form DC-1, “Employer's Quarterly Report of Contributions Under the RUIA” (Railroad Unemployment Insurance Act) electronically. A PIN/password system is used to access the Pay.gov website. The U.S. Department of the Treasury operates the Pay.gov website. Such a system also is consistent with the guidance provided by the Department of Justice regarding the use of electronic processes. The Board has also proposed amending its regulations to permit the filing of an application for benefits under the Railroad Retirement Act using the same User ID/PIN/password system.
The Board, with the concurrence of the Office of Management and Budget, has determined that this is not a significant regulatory action under Executive Order 12866. Therefore, no regulatory analysis is required. The Office of Management and Budget has approved information collections associated with this rule under control numbers 3220-0022, 3220-0039, and 3220-0198.
Claims, Railroad unemployment insurance, Reporting and recordkeeping requirements.
For the reasons set out in the preamble, the Railroad Retirement Board proposes to amend title 20, chapter II, of the Code of Federal Regulations by adding a new part 321 to read as follows:
45 U.S.C. 355 and 362(l).
(a)
(b)
(c)
(a)
(b)
(c)
By Authority of the Board.
Alcohol and Tobacco Tax and Trade Bureau (TTB), Treasury.
Notice of proposed rulemaking; extension of comment period.
We are extending the comment period for TTB Notice No. 15, a notice of proposed rulemaking published in the
We must receive written comments on or before January 6, 2004.
You may send comments to any of the following addresses—
• Chief, Regulations and Procedures Division, Alcohol and Tobacco Tax and Trade Bureau, P.O. Box 50221, Washington, DC 20091-0221 (Attn: Notice No. 15);
• 202-927-8525 (facsimile);
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You may view copies of the petition, the notice of proposed rulemaking, the appropriate maps, and any comments we receive by appointment at our library, 1310 G Street, NW., Washington, DC 20005; phone 202-927-8210. You may also access copies of the notice and comments on our Web site at
Jennifer Berry, Regulations and Procedures Division, Alcohol and Tobacco Tax and Trade Bureau, P.O. Box 18152, Roanoke, Virginia 24014; telephone 540-344-9333; e-mail
On September 8, 2003, the Alcohol and Tobacco Tax and Trade Bureau (TTB) published a notice of proposed rulemaking (Notice No. 15, 68 FR 52875) to establish “Eola Hills” as an American viticultural area in Oregon. The comment period was to end November 7, 2003.
We have, however, received a request for a 60-day extension of the comment period from Kevin Crawford, an attorney representing a winery with a similar name to that of the proposed viticultural area, Eola Hills Wine Cellars Inc. of Salem, Oregon. Mr. Crawford requested the extension to allow his client more time to gather evidence to support its comment. In consideration of this request, and in light of the impact that the approval of the proposed Eola Hills viticultural area may have on the Eola Hills Wine Cellars' wine labels, we are extending the comment period for an additional 60 days.
See the “Public Participation” section of TTB Notice No. 15 for detailed instructions on submitting and reviewing comments. We will carefully consider comments received on or before the new closing date.
We will not recognize any submitted material as confidential. All comments are part of the public record and subject to disclosure. Do not enclose in your comments any material you consider confidential or inappropriate for disclosure. The name of the person submitting a comment is not exempt from disclosure.
Jennifer Berry of the Regulations and Procedures Division, Alcohol and Tobacco Tax and Trade Bureau, drafted this notice.
Wine.
TTB Notice No. 15 was issued under the authority of 27 U.S.C. 205.
Environmental Protection Agency (EPA).
Request for comment on proposed policy.
Today, EPA is inviting comment on a proposed policy regarding NPDES permit requirements for treatment plants in publicly owned treatment works (POTWs) under peak wet weather flow conditions. Regulatory agencies, municipal operators of POTWs, and representatives of environmental advocacy groups have expressed uncertainty about the appropriate regulatory interpretation for such situations. Today's document describes both a proposed interpretation of regulations, as well as draft guidance to implement such an interpretation. EPA's intention is to ensure that NPDES requirements be applied in a nationally-consistent manner that improves the capacity, management, operation and maintenance of POTW treatment plants and collection systems and protects human health and the environment.
Written comments on this proposed policy must be received by EPA or postmarked by January 9, 2004.
Comments may be submitted electronically, by mail, or through hand delivery/courier. Follow the detailed instructions as provided in section I.B. of the
For questions about the substance of this proposed policy, contact Kevin Weiss (e-mail at
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An electronic version of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. You may use EPA Dockets at
Certain types of information will not be placed in the EPA Dockets. Information claimed as CBI and other information whose disclosure is restricted by statute, which is not included in the official public docket, will not be available for public viewing in EPA's electronic public docket. EPA's policy is that copyrighted material will not be placed in EPA's electronic public docket but will be available only in printed, paper form in the official public docket. To the extent feasible, publicly available docket materials will be made available in EPA's electronic public docket. When a document is selected from the index list in EPA Dockets, the system will identify whether the document is available for viewing in EPA's electronic public docket. Although not all docket materials may be available electronically, you may still access any of the publicly available docket materials through the docket facility identified in section I.A.1. EPA intends to work toward providing electronic access to all of the publicly available docket materials through EPA's electronic public docket.
For public commenters, it is important to note that EPA's policy is that public comments, whether submitted electronically or in paper, will be made available for public viewing in EPA's electronic public docket as EPA receives them and without change, unless the comment contains copyrighted material, CBI, or other information whose disclosure is restricted by statute. When EPA identifies a comment containing copyrighted material, EPA will provide a reference to that material in the version of the comment that is placed in EPA's electronic public docket. The entire printed comment, including the copyrighted material, will be available in the public docket.
Public comments submitted on computer disks that are mailed or delivered to the docket will be transferred to EPA's electronic public docket. Public comments that are mailed or delivered to the docket will be scanned and placed in EPA's electronic public docket. Where practical, physical objects will be photographed, and the photograph will be placed in EPA's electronic public docket along with a brief description written by the docket staff.
For additional information about EPA's electronic public docket visit EPA Dockets online or see 67 FR 38102 (May 31, 2002).
You may submit comments electronically, by mail, or through hand delivery/courier. To ensure proper receipt by EPA, identify the appropriate docket identification number in the subject line on the first page of your comment. Please ensure that your comments are submitted within the specified comment period. Comments received after the close of the comment period will be marked “late.” EPA is not required to consider these late comments. Late comments may be considered if time permits.
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Do not submit information that you consider to be CBI electronically through EPA's electronic public docket or by e-mail. You should send information that you consider to be CBI in one of two ways: (1) By U.S. Mail to: Kevin Weiss, Office of Wastewater Management, U.S. Environmental Protection Agency (Mailcode 4203M), 1200 Pennsylvania Ave., NW., Washington, DC 20460—Attention Docket ID No. OW-2003-0025; or (2) By courier or delivery to: Kevin Weiss, Office of Wastewater Management, U.S. Environmental Protection Agency, EPA East Building (Room 7334), 1301 Constitution Ave., NW., Washington, DC 20004—Attention Docket ID No. OW-2003-0025. You may claim information that you submit to EPA as CBI by marking any part or all of that information as CBI (if you submit CBI on disk or CD ROM, mark the outside of the disk or CD ROM as CBI and then identify electronically within the disk or CD ROM the specific information that is CBI). Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.
In addition to one complete version of the comment that includes any information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket and EPA's electronic public docket. If you submit the copy that does not contain CBI on disk or CD ROM, mark the outside of the disk or CD ROM clearly that it does not contain CBI. Information not marked as CBI will be included in the public docket and EPA's electronic public docket without prior notice. If you have any questions about CBI or the procedures for claiming CBI, please consult the person identified in the
You may find the following suggestions helpful for preparing your comments:
1. Explain your views as clearly as possible.
2. Describe any assumptions that you used.
3. Provide any technical information and/or data you used that support your views.
4. If you estimate potential burden or costs, explain how you arrived at your estimate.
5. Provide specific examples to illustrate your concerns.
6. Offer alternatives.
7. Make sure to submit your comments by the comment period deadline identified.
8. To ensure proper receipt by EPA, identify the appropriate docket identification number in the subject line on the first page of your response. It would also be helpful if you provided the name, date, and
Wastewater collection systems collect domestic sewage and other wastewater from homes and other buildings and convey it to wastewater sewage treatment plants for proper treatment and disposal. The collection and treatment of municipal sewage and wastewater is vital to public health in our cities and towns, and to the viability of our receiving waters. The proper functioning of wastewater systems is among the most important factors responsible for the general level of good health enjoyed in the United States. The United States Centers for Disease Control and Prevention named clean water and sanitation technology one of the twentieth century's great public health achievements (see Morbidity and Mortality Weekly Report, April 2, 1999, v. 48, no. 12, pp. 241-243), while the National Academy of Engineering included such technology on its list of the 20 engineering achievements that had the greatest impact on quality of life in the twentieth century. (National Academy of Engineering, press release, February 22, 2000).
Municipal collection systems and treatment facilities are an extensive, valuable, and complex part of the nation's infrastructure. In the last twenty years, communities have spent $1 trillion in 2001 dollars on drinking water treatment and supply and wastewater treatment and disposal (see The Clean Water and Drinking Water Infrastructure Gap Analysis, EPA, September 2002). Another source estimates that wastewater treatment and collection systems represent about 10-15 percent of the total infrastructure value in the United States. (Fragile Foundations: A Report on America's Public Works. Final Report to the President and Congress. National Council on Public Works Improvement. February 1988.) The collection system and treatment facilities of a single large municipality can represent an investment worth billions of dollars.
The efficiency of wastewater treatment at a wastewater treatment plant depends strongly on the design and performance of the collection system. Many collection systems in the United States are subject to high volumes of infiltration (including rainfall-induced infiltration) and inflow during wet weather conditions. High levels of infiltration and inflow (I/I) increase the hydraulic load on treatment plants, which can reduce treatment efficiency, can exceed the capacity of components within the treatment process, and in extreme situations make biological treatment facilities inoperable (
In 1972, the Federal Water Pollution Control Act, also referred to as the Clean Water Act (CWA), dramatically increased the role of the Federal government in protecting water resources by establishing a framework for upgrading the nation's wastewater infrastructure. With respect to the municipal wastewater infrastructure, the 1972 Act: established a minimum pollution control standard based on the application of secondary treatment; mandated the development of more stringent standards where necessary to protect water quality; established the National Pollutant Discharge Elimination System (NPDES) permit program to ensure implementation of standards; and dramatically increased Federal funding for municipal treatment works.
During the 1970's and 1980's the nation's municipal wastewater infrastructure dramatically expanded and improved, particularly with respect to treatment plants. In 1968, 72 percent of the Nation's municipal wastewater plants were providing secondary treatment and less than one percent were providing greater than secondary treatment (out of 14,051 facilities). By 1996, 59 percent of the Nation's municipal wastewater plants were providing secondary treatment and 27 percent were providing greater than secondary treatment (out of 16,024 facilities). During this time, the overall number of people served by municipal wastewater treatment facilities increased from 140.1 million in 1968 to 189.7 million in 1996 (a 35 percent increase).
In the mid-1980's and 1990's EPA increased its emphasis on addressing wet weather conditions and discharges from municipal collection systems and at treatment facilities. In 1989, EPA published the National Combined Sewer Overflow (CSO) Control Strategy which provided recommendations for NPDES permits for CSOs. See 54 FR 37370 (September 8, 1989). In 1994, EPA issued the CSO Control Policy to provide greater national clarity and consistency in the way NPDES requirements apply to flows in combined sewers and to CSO discharges. See 59 FR 18688 (April 19, 1994). In addition, the Agency increased compliance assistance and enforcement activities associated with sanitary sewer overflows (SSOs) during the 1990s. In 2000, EPA issued the Compliance and Enforcement Strategy Addressing Combined Sewer Overflows and Sanitary Sewer Overflows. This strategy called for each EPA Region to develop an enforcement response plan, including an inventory of SSO violations and a description of how 20% of the priority systems with SSO violations would be addressed each year.
Reducing the frequency and volume of collection system overflows and backups of sewage into buildings, and improving the structural integrity of collection systems have been some of the major objectives of EPA's emphasis on wet weather discharges. Typically, an important component of strategies to reduce collection system overflows and backups into buildings is to increase the conveyance of wet weather flows to the treatment plant. The volume of wet weather flows delivered to treatment facilities can also be increased by measures that reduce exfiltration of wastewater out of a collection system. Increased wet weather flow volumes at treatment plants, along with increased attention to water quality problems caused by wet weather flows have lead to increased attention to the manner by which POTWs manage wet weather flows.
As these issues received greater attention, regulatory agencies, municipal operators of POTWs, and representatives of environmental advocacy groups have expressed confusion over and requested clarification regarding the proper interpretation of certain regulatory provisions in the context of wet weather flow management at POTW treatment plants. Of particular concern are National Pollutant Discharge Elimination System (NPDES) permit requirements for peak wet weather discharges from a publicly owned treatment works (POTW) treatment plant when the portion of the flow that exceeds the capacity of the biological treatment units is routed around biological treatment units and blended with the flows from the biological units (or other advanced treatment units) prior to discharge. Such re-routing where the capacity of biological (or other advanced) treatment units is exceeded might be necessary to avoid damaging the treatment units. Questions have focused primarily on the situation where the final discharge of these blended waste streams would meet effluent limitations based upon the secondary treatment regulations and any more stringent limitations necessary to meet water quality standards.
Today's proposed policy may affect certain actions under consideration by NPDES permit authorities to address comprehensive sewer collection system and treatment activities by POTWs. The Agency seeks comment on what, if any, impact today's proposed policy may have on Federal or State enforcement actions under the CWA or citizen suit actions under section 505 of the Act, including assurance of implementation of the various criteria identified in the proposed interpretation and draft guidance.
After review of public comments, and following any appropriate revisions, EPA intends that ultimately such policy would provide a framework that (1) ensures appropriate management of wet weather flows at a POTW consistent with generally accepted good engineering practices and criteria for long-term design, (2) clarifies technology-based requirements (3) uses water quality-based effluent limitations to address residual site-specific health and environmental risks, and (4) provides appropriate safeguards, including comprehensive monitoring and protection for sensitive waters.
Although a number of sewage treatment processes are used to comply with Clean Water Act requirements, most municipalities typically use a series of unit operations and processes to treat wastewater prior to discharge. The typical series of unit processes includes: preliminary treatment or screening to remove large solids; primary clarification (or preliminary sedimentation) to remove floating and settleable solids; and biological treatment units (also referred to as secondary treatment units) to remove biodegradable organic pollutants and suspended solids. The most common type of conventional biological treatment unit, an activated sludge process, typically consists of aerator tanks (also called reactors) followed by separate settling basins or clarifiers. Many treatment facilities also provide disinfection to deactivate pathogens and achieve microbial water quality standards. Some facilities also provide advanced treatment which are designed to reduce constituents, such as nitrogen and phosphorus, that are not significantly removed by biological treatment processes, or are designed to provide greater solids and pathogen reductions than traditional biological treatment processes.
During periods of wet weather, flows received by a POTW's collection system and treatment facility typically increase. Significant increases in influent flow caused by wet weather conditions (
Generally, biological treatment units are designed and operated to maintain a relatively stable population of microorganisms. See 48 FR 52258, 52275 (November 16, 1983). This means that biological treatment units generally cannot be designed to accommodate wide variations in flow volumes and influent strength. Primary clarification units are less sensitive to variations in flow volumes and influent strength. In addition, primary clarification units can be brought into operation and taken out of operation to respond to changes in flow volume.
Many POTW treatment plants have been designed with primary treatment capacity that is significantly greater than the biological treatment capacity. These treatment plants often have multiple primary clarification units that are operated in parallel, with one or more primary clarification units not operating during low flow conditions, and brought into service during high flow conditions. These POTWs typically provide screening and primary clarification of all flows entering the plant, and, in order to protect their biological treatment units, route flows in excess of full capacity of the biological treatment unit around the biological treatment units. In some cases, chemicals are added to the portion of the flow that is routed around the biological treatment units to enhance solids and/or pathogen removal. Another option is to provide other forms of enhanced physical/chemical treatment for the portion of the flow that is routed around the biological units. Some POTWs discharge flows routed around biological treatment units directly to a surface water, while others blend the flows routed around the biological treatment units with flows that have gone through the biological treatment unit (
Other design and operational options routinely employed to enhance treatment of wet weather flows without damaging biological treatment capabilities include:
• Increasing the size of secondary clarifiers to accommodate a pre-determined amount of peak wet weather flow;
• Providing alternative feed patterns in the aeration basin(s);
• Increasing the returned activated sludge capacities relative to those needed for steady flow;
• Providing flow equalization (
• Decreasing peak flow volumes through I/I removal, sewer separation or rerouting flows to a different treatment plant.
See Design of Municipal Wastewater Treatment Plants Fourth Edition, 1998, Water Environment Federal Manual of Practice 8, ASCE Manual and Report of Engineering Practice No. 76, Volume 2, page 11-5; Prevention and Control of Sewer System Overflows Second Edition, 1999, Water Environment Federation Manual of Practice FD-17.
Other facilities may employ other modifications to manage peak wet weather flows. For example, some facilities divert dilute wet weather flows around primary clarifiers to the biological treatment units in order to ensure adequate organic loadings in the biological units. Given the complexity and site-specific nature of collection systems and treatment facilities, site-specific planning processes are necessary to identify the optimal mix of peak wet weather management measures.
Many States have developed detailed design criteria and/or operating practices for municipal wastewater treatment facilities. EPA has also developed guidance on design considerations and operation of POTWs, including guidance on the composite correction program approach to identify and address performance limitations and to obtain improved performance at POTWs. EPA Technology Transfer Handbook: Retrofitting POTWs, 1989, Hegg, B.A., L.D. DeMers, and J.B. Barber. This guidance identifies specific low cost modifications that can be used to optimize an existing facility's performance which can result in significant improvements of performance at many wastewater treatment facilities without major capital improvements. Hegg, B.A., K.L. Rakness, and J.R. Schultz, 1979,
The CWA requires that most POTWs achieve effluent limitations based upon secondary treatment as defined by EPA and any more stringent limitations necessary to meet water quality standards prior to discharging to waters of the United States. NPDES permits are issued by EPA or States, U.S. Territories, or Tribes authorized by EPA to do so. Currently, 45 States and one U.S. Territory administer the NPDES permit program. EPA issues NPDES permits in the remaining States and Territories, and in Indian country.
Section 301(b)(1)(B) of the Clean Water Act, 33 U.S.C. 1311(b)(1)(B), requires that publicly owned treatment works (POTWs) achieve effluent limitations based upon secondary treatment as defined by the Administrator of EPA pursuant to section 304(d)(1) of the Act. Section 304(d)(1) of the Act directed EPA to publish information, in terms of amounts of constituents and chemical, physical, and biological characteristics of pollutants, on the degree of effluent reduction attainable through the application of secondary treatment. Section 304(d)(4) of the Act, 33 U.S.C. 1314(d)(4), deems treatment facilities such as oxidation ponds, lagoons, ditches and trickling filters to be the “equivalent” of secondary treatment. That section directed the Administrator to provide guidance on design criteria for such facilities, taking into account pollutant removal efficiencies. Section 304(d)(4) further requires that water quality not be adversely affected by deeming such facilities to be the equivalent of secondary treatment.
EPA promulgated the secondary treatment information regulations at 40 CFR part 133 to define minimum levels of effluent quality for publicly owned treatment works (POTWs) prior to discharge. The secondary treatment regulations were based on performance data for a sample of well-designed and well-operated secondary treatment plants. The 30-day average effluent limitations in the secondary treatment regulations were based on the 95th-percentile value of data representing well-operated POTWs, excluding values attributable to upsets, bypasses, operational errors, or other unusual conditions. With the exception of section 304(d)(4) facilities eligible for treatment equivalent to secondary treatment, the secondary treatment regulations do not otherwise specify the type of treatment process to be used to meet secondary treatment requirements nor do they preclude the use of non-biological facilities. Rather, the basic decisions on the choice of a technology or alternative waste management technique were left to a case-by-case cost-effectiveness analysis. See 48 FR 52258, 52260 (November 16, 1983).
The requirements of the secondary treatment regulations are expressed as concentration limitations (seven-day and 30-day average effluent
For most types of POTWs, the secondary treatment regulations establish a 30-day average percent removal requirement of 85 percent for SS and BOD
(i) The treatment facility will consistently meet its permit effluent concentration limitations but its percent removal requirements cannot be met due to less concentrated influent,
(ii) to meet the percent removal requirements, the facility would have to achieve significantly more stringent limitations than would otherwise be required by concentration-based standards, and
(iii) the less concentrated influent is not the result of excessive I/I. Excessive I/I is the quantities of I/I that can be economically eliminated from a sewer system as determined by a cost-effectiveness analysis that compares the costs for correcting the I/I conditions to the total costs for transportation and treatment of the I/I to a treatment facility.
For these separate sanitary sewer systems, the determination of whether the less concentrated wastewater is the result of excessive I/I uses the definition of excessive I/I in 40 CFR 35.2005(b)(16) plus the additional criterion that inflow is deemed nonexcessive if the total flow to the POTW (
EPA adopted this approach to provide flexibility to address facilities experiencing various degrees of less concentrated influent that cannot meet the 85 percent removal requirement without significant additional construction, and, at the same time, encourage cost effective I/I reduction. See 40 CFR 133.101(m) and 133.103(d)(3). The approach was based on the following considerations: (1) In general, I/I programs had not been as successful in reducing excessive I/I as expected; (2) many treatment systems without excessive I/I had relatively low concentrations of BOD
The NPDES regulations define standard permit conditions which are to be included in all NPDES permits, except that authorized NPDES States are not precluded from omitting or modifying a standard permit condition to impose a more stringent requirement. 40 CFR 122.41 and 123.25 (note). One of those standard permit condition is the “bypass” provision at 40 CFR 122.41(m).
The bypass provision defines bypass to mean the “intentional diversion of waste streams from any portion of a treatment facility.” The regulation prohibits bypasses except for where necessary for essential maintenance to assure efficient operation. 40 CFR 122.41(m)(2). In such cases, the bypass cannot cause effluent limitations to be exceeded. For all other bypasses, the Director of the NPDES program may take enforcement action against a permittee for a bypass, unless:
(A) Bypass was unavoidable to prevent loss of life, personal injury, or severe property damage;
(B) There were no feasible alternatives to the bypass, such as the use of auxiliary treatment facilities, retention of untreated wastes, or maintenance during normal periods of equipment downtime. This condition is not satisfied if adequate back-up equipment should have been installed in the exercise of reasonable engineering judgment to prevent a bypass which occurred during normal periods of equipment downtime or preventative maintenance; and
(C) The permittee submitted the required notices. 40 CFR 122.41(m)(4)(i).
In order to satisfy the “no feasible alternatives” criterion, adequate back-up equipment should be installed in the exercise of reasonable engineering judgment to prevent a bypass. 40 CFR 122.41(m)(4)(i)(B). The “no feasible alternatives” provision of 40 CFR 122.41(m) requires, among other things, that consideration be given to the feasibility of additional construction to prevent any bypasses that occur because of inadequate capacity. See
The regulation at 40 CFR 122.41(m) also provides that the Director of the NPDES program may approve an anticipated bypass, after considering its adverse effects, if the Director determines that it will meet the three conditions listed in the bypass provision at 40 CFR 122.41(m)(4)(i). As discussed below, EPA provided guidance on approval of anticipated bypasses at POTWs served by combined sewers in the 1994 Combined Sewer Overflow (CSO) Control Policy. An approved anticipated bypass would be a recognition that the permitting authority had considered the adverse impacts of the bypass and has found that the bypass would or does meet the criteria of 40 CFR 122.41(m)(4)(i)(A), (B) and (C), and would not take enforcement action against a permittee for the bypass. Compliance with 40 CFR 122.41(m)(4)(i), in and of itself, would not shield a permittee from citizen suits for conducting a prohibited bypass.
The bypass regulation does not dictate that any specific treatment technology be employed. Instead, the regulation requires that a system be operated as designed and according to the conditions of the NPDES permit. See
As noted earlier, all NPDES permits are required to contain a prohibition on bypasses consistent with or more stringent than 40 CFR 122.41(m). See 40 CFR 123.25 (note). The bypass provision at 40 CFR 122.41(m) defines bypass to mean the intentional diversion of waste streams from any portion of a treatment facility. However, the term “treatment facility” is not defined in the bypass regulation. Today's action requests public comment on: (1) A proposed interpretation of the bypass regulations regarding the term “treatment facility” as it relates to the treatment plant at a POTW; and (2) draft guidance on how NPDES authorities can characterize the “treatment facility” in a specific permit for a POTW treatment plant to account for the flow routing scenario. The Agency's proposed policy would be restricted to POTW treatment plant discharges under peak wet weather conditions where flows in excess of the biological or advanced treatment units are routed around the biological or advanced treatment units and blended with the wastewaters from the biological units (or other advanced treatment units) prior to discharge, and where the final discharge would meet effluent limitations based upon the secondary treatment regulations and any more stringent limitations necessary to meet water quality standards.
EPA has provided guidance on the planning, selection and implementation of controls to meet technology- and water quality-based requirements for CSOs under the NPDES program in the National CSO Control Strategy, 54 FR 37370 (September 8, 1989), and the CSO Control Policy, 59 FR 18688 (April 19, 1994). The 1994 CSO Control Policy provides comprehensive guidance for developing site-specific NPDES permit requirements for combined sewer systems to address wet weather CSO discharges from designed overflow points. The Wet Weather Water Quality Act of 2000 amended the CWA to provide that each permit, order or decree issued after December 15, 2000, for a discharge from a municipal combined sewer shall conform to the CSO Control Policy. 33 U.S.C. 1342(q)(1).
Under the CSO Control Policy, permittees with combined sewer systems were to immediately undertake a process to accurately characterize their sewer systems, to demonstrate implementation of nine minimum controls identified in the Policy, and to develop and implement a long-term CSO control plan that would ultimately provide for compliance with the requirements of the CWA. See 59 FR 18688 (April 19, 1994). The CSO Control Policy identifies EPA's major objectives for long-term control plans.
When developing the CSO Control Policy, EPA recognized that some POTW treatment plants may have primary treatment capacity in excess of their biological treatment capacity. See 59 FR 18693, column 2. The Policy indicates that one effective strategy to abate pollution resulting from CSOs is to maximize the delivery of flows during wet weather to the POTW treatment plant for treatment. This strategy can maximize the use of available POTW facilities for wet weather flows and ensure that combined sewer flows receive at least primary treatment prior to discharge. In addition, this strategy may enable the permittee to eliminate or minimize overflows to sensitive areas. In recognition of the significant water quality benefits of maximizing flow to the POTW treatment plant, the CSO Control Policy includes it as a minimum element of a long-term control plan.
To further the objective of maximizing treatment at the POTW treatment plant, the CSO Control Policy provides guidance on the use of an NPDES permit to recognize approval of anticipated bypasses where the criteria of the bypass provision for such approvals are met. The CSO Control Policy clarifies that normally it is the responsibility of the permittee to document, on a case-by-case basis, compliance with 40 CFR 122.41(m) in order to have an anticipated bypass approved in a permit. The Policy indicates that for some CSO-related permits, the study of feasible alternatives in the long-term control plan, along with other information in the permit record, may provide sufficient support for approval of a CSO-related bypass in the permit, and to define the specific parameters under which a bypass can be approved. The Policy provides that where a permit includes an approval of a CSO-related bypass, the permit would define the specific wet weather conditions under which a CSO-related bypass would be allowed and would also specify what treatment, monitoring, and effluent limitations would apply to the bypass flow.
The Policy provides that permits with approved bypasses should also make it clear that all wet weather flows passing the headworks of the POTW treatment plant will receive at least primary clarification, solids and floatables removal and disposal, and disinfection where necessary, and any other treatment that can reasonably be provided.
The CSO Policy further indicates that the “no feasible alternatives” requirement of the bypass regulation can be met if the record shows that the secondary treatment system is properly operated and maintained, that the system has been designed to meet secondary limits for flows greater than the peak dry weather flow, plus an appropriate quantity of wet weather flow, and that it is either technically or financially infeasible to provide secondary treatment at the existing facilities for greater amounts of wet weather flow. See 59 FR 18694, column 3. The feasible alternative analysis should include, for example, consideration of enhanced primary treatment—
In 1986, EPA published Ambient Water Quality Criteria for Bacteria—1986, which contained EPA's recommended water quality criteria for bacteria for protection of bathers from gastrointestinal illness in recreational waters. The water quality criteria established levels of indicator bacteria, namely Escherichia coli (E. coli) and enterococci, that demonstrate the presence of fecal pollution and which should not be exceeded in order to protect bathers in fresh and marine recreational waters. Prior to its 1986 recommendations, EPA recommended specific levels of fecal coliforms to be
The data supporting the 1986 bacteria water quality criteria were obtained from a series of epidemiological studies that examined the relationship between swimming-associated illness (namely, acute gastrointestinal illness) and the microbiological quality of the waters used by recreational bathers. The epidemiological studies demonstrated that fecal coliforms, the indicator originally recommended in 1968 by the Federal Water Pollution Control Administration of the Department of Interior, are correlated less strongly with swimming-associated gastroenteritis than other possible indicator organisms. Two indicator organisms, E. coli and enterococci, exhibited a strong correlation to swimming-associated gastroenteritis, the former in fresh water only and the latter in both fresh and marine waters. The strong correlation is due to the indicator organisms being more similar to many of the pathogens of concern in their ability to survive treatment and in the environment. Enterococci are also resistant to saline environments, enhancing their utility as an indicator in marine waters. In addition, E.coli and enterococci are less frequently found than fecal coliforms in environmental settings where fecal contamination is known to be absent.
The Beaches Environmental Assessment and Coastal Health (BEACH) Act was enacted on October 10, 2000. Public Law 106-284, 114 Stat. 870 (2000). The BEACH Act addresses pathogens and pathogen indicators in coastal recreation waters. Among other things, the BEACH Act added section 303(i) to the Clean Water Act to require States and Tribes with coastal (and Great Lake) recreation waters to adopt new or revised water quality standards by April 10, 2004, for pathogens and pathogen indicators for which EPA has published criteria under section 304(a). The BEACH Act also directs EPA to promulgate standards for States and Tribes that fail to adopt standards for pathogens and pathogen indicators for coastal recreation waters that are as protective of human health as those published by EPA.
EPA has received requests from many stakeholders to clarify the NPDES requirements for discharges from POTWs where peak wet weather flow is routed around biological treatment units and then blended with the effluent from the biological units prior to discharge where the final discharge meets permit effluent limitations based on the secondary treatment regulation (40 CFR part 133) or any more stringent limitations necessary to attain water quality standards. Today's proposed policy has two components, (1) a proposed interpretation of the bypass provision (40 CFR 122.41(m)) as it applies to alternative wet weather treatment scenarios at POTW treatment plants that involve blending; and (2) draft guidance on how such an interpretation should be implemented. EPA requests comments on both the proposed interpretation and the draft guidance.
Peak wet weather discharges from POTWs that consist of effluent routed around biological or other advanced treatment units blended together with the effluent from the biological units (or from other advanced treatment units) prior to discharge would not be a prohibited bypass and could be authorized in an NPDES permit if all of the following principles were followed:
1. The final discharge meets effluent limitations based on the secondary treatment regulation (40 CFR part 133), including applicable 30-day average percent removal requirements, or any more stringent limitations necessary to attain water quality standards. For treatment works served by sanitary sewers, the Director of the NPDES permit program may substitute lower 30-day average percent removal requirements or a mass loading limit for the percent removal requirement only if the permittee demonstrates the criteria in § 133.103(d) are met, including that the less concentrated influent is not the result of excessive I/I. For treatment works served by combined sewers, § 133.103(a) provides that the decision must be made on a case-by-case basis as to whether any attainable percentage removal level can be defined during wet weather flows, and, if so, what the level should be.
2. The NPDES permit application for the POTW provides notice of, and specifically recognizes, the treatment scenario that would be used for peak flow management. The treatment scenario, including designed capacity of various units, should be consistent with generally accepted practices and long-term design criteria, and designed to ensure that discharges meet effluent limitations based on the secondary treatment regulation and any more stringent limitations necessary to meet water quality standards (including limitations necessary to meet applicable total maximum daily loadings). The application of the generally accepted practices and long-term design criterion typically would include an evaluation of changes to the base and peak design flows at the treatment plant from the time the peak flow treatment scenario was last recognized by the NPDES authority, and, if circumstances have materially and substantially changed, an evaluation of the cost-effectiveness of a reasonable range of alternatives, which may entail construction of facilities to provide additional wet weather capabilities, such as equalization and/or storage facilities, or high-efficiency physical/chemical treatment for diverted flows. The application of the generally accepted practices and long-term design criterion should be reevaluated as circumstances change materially and substantially, and at permit reissuance. Any permit issued after EPA evaluates public comments received and takes further action on today's proposed policy should specifically recognize or incorporate by reference the treatment scenario that would be used for peak flow management. EPA notes that requiring documentation of the treatment scenario in the permit would ensure that EPA would have an opportunity to review the documentation during its review of permits issued by an authorized NPDES State. In addition, the public would have an opportunity to review and comment on the specific conditions under which blending would be authorized prior to final approval and issuance of the permit.
3. The treatment scenario that would be used for peak flow management should provide, prior to blending, at least the equivalent of primary clarification for the portion of flow routed around biological or other advanced treatment units.
4. The peak flow treatment scenario chosen by the permittee for use when flows exceed the capacity of storage/equalization units, biological treatment units or advanced treatment units should be operated as it is designed to be operated and in accordance with the treatment scenario reflected in the permit record and conditions set forth in the permit. A portion of the flow should only be routed around a biological or advanced treatment unit when the capacity of the treatment unit is being fully utilized. Additionally, for permits issued after EPA evaluates public comments received and takes further action on today's proposed policy, such a peak flow treatment scenario should only be used when flows exceed the capacity of storage/equalization units based on generally accepted good engineering practices and long-term design criteria aimed at protecting the structural integrity and function of the treatment units and
5. The permit must require monitoring, including type, interval and frequency sufficient to yield data which are representative of the final blended discharge to ensure compliance with applicable water quality-based effluent limitations. See 40 CFR 122.48(b). The permit should require reporting of the date and volume of blended discharges along with appropriate pollutant parameter concentrations. In addition, the permit should ensure that permittees develop additional information to support the development of water quality-based effluent limitations in subsequent permits, including information to: (a) Assess potential water quality impacts associated with blended effluent; (b) evaluate the effectiveness of the treatment of key parameters, such as pathogens, resulting from alternative flow routing scenarios; and (c) characterize ambient levels of such pollutant parameters.
6. The permit must require, at a minimum, that the permittee properly operate and maintain all parts of the collection system over which the permittee has operational control in a manner consistent with 40 CFR 122.41(e). For POTWs served by combined sewers, any permit issued after December 15, 2000, shall conform to the provisions of the 1994 CSO Control Policy, including the development and implementation of a long-term control plan (LTCP), and appropriate requirements for the collection system. As applied to POTWs serving separate sanitary sewers, EPA would interpret “proper operation and maintenance” to include appropriate removal of infiltration and inflow from parts of the collection system over which the permittee has operational control as well as measures to evaluate the structural integrity of the system. Such a demonstration may be made with a program self-evaluation report, appropriate to the size of the system, which includes an identification of program deficiencies and steps to respond to them.
In situations where one or more of the above principles would not be met, EPA would continue to interpret the “intentional diversion of waste streams from any portion of a treatment facility” at a POTW treatment plant to be a bypass subject to the restrictions of the bypass provision as reflected in the permit. The proposed policy upon which EPA invites comment today is not intended to modify the provision for approval of anticipated bypasses at 40 CFR 122.41(m)(4)(ii). See 59 FR 18693, column 3.
The principles described above for characterizing the “treatment facility” at a POTW plant (as it relates to the bypass provision) are not intended to address or apply to NPDES permit requirements for treatment of flows at a POTW during dry weather conditions or to discharges from facilities other than POTW plants, including industrial facilities where storm water is treated with non-storm water wastewater. The matters addressed in today's action focus on situations with elevated I/I levels in municipal collection system resulting from wet weather conditions. EPA has not evaluated and does not propose to interpret its regulations to apply to other circumstances.
EPA requests comment on the use of the six principles listed above to define the conditions under which the blending of effluent routed around the biological treatment unit with effluent from the biological treatment unit, prior to discharge would not be a prohibited bypass and could be authorized in an NPDES permit. EPA specifically requests comment on the following issues:
(1) Is the current interpretation of “excessive I/I” under 40 CFR 133.103(d) adequate? What challenges, if any, would facilities face in meeting the percent removal requirements or obtaining an adjustment to percent removal requirements under § 133.103(d), including the excessive I/I provisions, as a pre-condition for authorization of blending in an NPDES permit?
(2) In principle 4, which would require that flow only be routed around the biological or advanced treatment unit when the capacity of treatment and storage units is being fully utilized, should EPA define the term “fully utilized'? Are there situations where system operators might need to keep some treatment or storage capacity in reserve, for example, to help prevent overflows or address other peak flow concerns where exceedences of treatment capacity is likely but has not yet occurred? If so, the commenter should describe the situations.
(3) Principle 5 of this draft policy is designed to ensure compliance with applicable water quality-based effluent limitations, including those based on water quality criteria for bacteria. Would this principle be sufficient to protect against discharges of pathogenic organisms or should principle 5 of this draft policy include an explicit requirement for disinfection of blended effluent prior to discharge, where appropriate?
(4) In developing principle 6, what factors should be considered when evaluating if a permittee is properly operating and maintaining their collection system in a manner consistent with 40 CFR 122.41(e)?
Additional considerations for permit writers addressing POTW plants that use peak flow treatment scenarios that consist of effluent routed around biological or other advanced treatment units blended together with the effluent from the biological units prior to discharge should include:
A. To the extent practicable, NPDES permit requirements for discharges of peak wet weather flows at the POTW should be developed in a manner that encourages the permittee to consider the relationship between the performance of the collection system and the performance of treatment plants serving the system.
B. Any POTW receiving wastes from an industrial user to which a categorical pretreatment standard applies may, at its discretion and subject to the conditions of 40 CFR 403.7, grant removal credits to reflect removal by the POTW of pollutants specified in the categorical pretreatment standard. The POTW may grant a removal credit equal to or, at its discretion, less than its consistent removal rate. The permit writer should ensure that the POTW's determination of the consistent removal rate adequately reflects the frequency of use of and treatment effectiveness of the peak flow treatment scenarios in a manner that is consistent with 40 CFR 403.7(b). In a similar manner, the permit writer should ensure that the POTW adequately reflects the frequency of use of and treatment effectiveness of the peak flow treatment scenarios in developing local limits for industrial users.
Under the interpretation proposed today, NPDES authorities would be able to characterize the term “treatment facility” in a specific permit for a POTW treatment plant to account for peak flow treatment scenarios that are consistent with generally accepted good engineering practices and criteria for long-term design in a manner consistent with the principles previously identified. Where all of the identified principles are followed, flows through a treatment system that is operated as designed and according to the permit would not be considered a bypass, and the permittee would not be required to make each of the demonstrations otherwise required under the bypass provision at 40 CFR 122.41(m)(4)(i),
Where a POTW treatment facility has multiple primary clarification units operating in parallel to provide excess primary treatment capacity for high flow conditions, removing one or more primary clarification units from operation during low flo conditions would not be considered a bypass provided the capacity of the primary clarification units remaining in operation is not exceeded. Similarly, where chemical addition is used to enhance wet weather treatment performance (
The NPDES regulations require that NPDES permits must include water quality-based effluent limitations to control all pollutants or pollutant parameters which the Director of the NPDES program determines are or may be discharged at a level which will cause, have the reasonable potential to cause, or contribute to non-attainment of any water quality standard (see 40 CFR 122.44(d)). The potential impact of either blended peak wet weather flows discharged from POTWs or peak wet weather flows that receive biological treatment may raise a number of site-specific water quality issues depending on the performance of treatment technologies under peak flow conditions, the volume of discharges, receiving water conditions, the uses of receiving waters and other factors. Ensuring appropriate characterization of potential human health and environmental risks associated with peak flows with enhanced effluent and ambient monitoring data describing peak flow conditions is important for discharges to receiving waters with designated uses for primary contact recreation and/or drinking water. Additional information may be needed to determine if POTW discharges that occur under peak wet weather flow conditions would cause, have a reasonable potential to cause, or contribute to non-attainment of a water quality standard. Modeling of the collection system, treatment facility and receiving water may be necessary to characterize the impact of peak wet weather flows on receiving water quality and to predict the improvements that would result from different treatment scenarios.
The NPDES regulations authorize permitting authorities to modify permits for cause. See 40 CFR 122.62 and 124.5. In addition, permits often contain a reopener clause. Examples include general reopener clauses that mirror the causes for modification in the NPDES regulations. Permits also often contain specific reopener clauses for the purpose of modifying conditions based on results of specific pollutant monitoring required in the permit, such as for toxic pollutants. EPA requests comment on whether permits that authorize blending should contain a specific reopener clause. Such a reopener clause could address situations where additional controls are necessary to assure attainment of water quality standards or where new monitoring information justifies the application of different permit conditions.
One of EPA's highest priorities in developing control strategies for wet weather discharges is ensuring adequate control of such discharges to sensitive receiving waters. Sensitive receiving waters, as determined by the NPDES authority in coordination with State and Federal agencies, as appropriate, include: Designated Outstanding National Resource Waters; National Marine Sanctuaries; waters with threatened or endangered species (and associated habitat;) waters with primary contact recreation (
EPA strongly encourages States that have not already done so to adopt the recommendations set forth in Ambient Water Quality Criteria for Bacteria—1986 or other protective water quality criteria for bacteria based on scientifically defensible methods as their water quality standards to replace water quality standards based on total or fecal coliforms.
Today's proposed policy would provide guidance to EPA Regional and State permitting authorities as well as to municipal permittees and the general public on how EPA intends to exercise its discretion in implementing the statutory and regulatory provisions related to discharges from POTWs where peak wet weather flow is routed around biological treatment units and then blended with the effluent from the biological units prior to discharge and where the final discharge meets permit effluent limitations based on the secondary treatment regulation (40 CFR part 133) or any more stringent limitations necessary to attain water quality standards. The guidance is designed to implement national policy on these issues.
The statutory provisions and EPA regulations described in this document contain legally binding requirements. Today's document would not substitute for those provisions or regulations, nor is it intended to be a regulation itself. In fact, today's action invites public comment on a proposed interpretation of EPA regulations in a specific context and invites comment on guidance to implement such a proposed interpretation. Thus, this document would not impose legally binding requirements on EPA, States, or the regulated community, and may not apply to a particular situation based upon the circumstances. EPA and State decisionmakers would retain the discretion to adopt approaches on a case-by-case basis that differ from this proposed policy where appropriate. Any decisions regarding a particular facility should be made based on the statute and regulations. Therefore, interested parties are free to raise questions and objections about the substance of this proposed policy and the appropriateness of the application of this proposed policy to a particular situation. EPA intends to and States should, consider whether or not the recommendations or interpretations in the proposed policy are appropriate in that situation. EPA may revise today's proposed policy after consideration of public comment, or at some other time in the future. EPA welcomes public comments on this document and will consider those comments in any future revision of today's proposed policy.
EPA's intention is to reduce confusion regarding appropriate consideration of blending at POTWs. Because of significant interest from various stakeholders, the Agency is inviting public comment on the proposed policy, including the proposed interpretation of
National Marine Fisheries Service (NMFS), National
Proposed rule; 2003 management measures for tuna purse seine fisheries in the Eastern Pacific Ocean
NMFS proposes this rule to implement the 2003 management measures to prevent overfishing of eastern tropical Pacific Ocean (ETP) tuna stocks, consistent with recommendations by the Inter-American Tropical Tuna Commission (IATTC) that have been approved by the Department of State (DOS) under the Tuna Conventions Act. The purse seine fishery for tuna in a portion of the Convention Area would be closed for the month of December, 2003. This action is taken to limit fishing mortality caused by purse seine fishing in that portion of the Convention Area and contribute to long-term conservation of the tuna stocks at levels that support healthy fisheries.
Comments must be submitted in writing by November 19, 2003.
Copies of the regulatory impact review/regulatory analysis may be obtained from the Southwest Regional Administrator, Southwest Region, NMFS, 501 W. Ocean Blvd., Long Beach, CA 90802-4213.
Svein Fougner, Sustainable Fisheries Division, Southwest Region, NMFS, 562-980-4040.
This
The United States is a member of the IATTC, which was established under the Convention for the Establishment of an Inter-American Tropical Tuna Commission signed in 1949. The IATTC was established to provide an international arrangement to ensure the effective international conservation and management of highly migratory species of fish in the Convention Area. The IATTC has maintained a scientific research and fishery monitoring program for many years and annually assesses the status of stocks of tuna and the fisheries to determine appropriate harvest limits or other measures to prevent overexploitation of the stocks and promote viable fisheries. The Convention Area is defined to include waters of the eastern tropical Pacific Ocean bounded by the coast of the Americas, the 40° N. and 40° S. parallels, and the 150° W. meridian. Under the Tuna Conventions Act, NMFS must publish proposed rules to carry out IATTC recommendations that have been approved by DOS. The Southwest Regional Administrator, also is required by rules at 50 CFR 300.29(b)(3) to issue a direct notice to the owners or agents of all U.S. purse seine vessels that operate in the ETP of actions recommended by the IATTC and approved by the DOS.
At its annual meeting held on June 25-27, 2003, the IATTC provisionally adopted a resolution dealing with conservation of ETP tuna stocks. However, one Party to the IATTC indicated that it would have to obtain higher level concurrence before it could officially agree to those measures and ultimately indicated it could not agree. The IATTC then held another meeting October 6-7, 2003, and agreed to measures for 2003. The IATTC agreed to recommend that purse seine fishing for tuna be prohibited in December 2003 in waters bounded by a line from the point where the 95° W. long. meridian intersects the west coast of the Americas, south to 10° S. lat, then west to 120° W. long., then south to 5° S. lat., then east to 100° W. long., then north to 5° N. lat., then east to 85° W. long., and then north to the point of intersection with the west coast of the Americas. This is a smaller closure than originally agreed to but will target fishing which has higher catches of juvenile tuna. Thus, there should be improved yields from the stocks later in the year. The IATTC action came after considering a variety of measures, including the use of quotas and partial fishery closures as in 1999, 2000, and 2001 and the full month purse seine closure used in 2002. In addition, the IATTC agreed to broader measures for 2004, which NMFS will consider in a future rulemaking, including a 6-week closure of all purse seine fisheries in the eastern Pacific Ocean beginning August 1, 2004, and limitation of longline fisheries to the bigeye tuna catch levels achieved in 2001. This approach should provide protection against overfishing of the stocks in a manner that is fair, equitable and readily enforceable. The DOS has approved this recommendation.
The proposed 2003 time/area closure is based on 2003 assessments of the condition of the tuna stocks in the ETP and historic catch and effort data for different portions of the eastern Pacific Ocean, as well as records relating to implementation of quotas and closures in prior years. To ensure the continued health of the stocks, the IATTC recommended and the DOS approved a closure in a portion of the Convention Area for the month of December 2003. The closure is targeted to areas with high catches of bigeye tuna in the purse seine fishery and, together with agreed upon restriction for 2004, is believed by the IATTC scientific staff to be sufficient to reduce the risk of overfishing of that stock, especially when considered in combination with the measures recommended for 2004. The IATTC will meet in June 2004 and review new tuna stock assessments and fishery information and will consider that new information in evaluating the need for management measures for 2005 and future years.
The Acting Regional Administrator, Southwest Region, sent a notice October 10, 2003, to owners and agents of U.S. tuna purse seine fishing vessels of the actions that were recommended by the IATTC and have been approved by the DOS.
This action is authorized by the Tuna Conventions Act, 16 U.S.C. 951-961 and 971
On December 8, 1999, NMFS prepared a biological opinion (BO) assessing the impacts of the fisheries as they would operate under the regulations (65 FR 47, January 3, 2000) implementing the International Dolphin Conservation Program Act (IDCPA). NMFS concluded that the fishing activities conducted under those regulations are not likely to jeopardize the continued existence of any endangered or threatened species under the jurisdiction of NMFS or result in the destruction or adverse modification of critical habitat. This rule will not result in any changes in the fisheries such that there would be impacts beyond those considered in that BO. The IATTC has also taken action to reduce sea turtle injury and mortality from interactions in the purse seine fishery so impacts of the fisheries should be lower than in the past. Because this closure does not alter the scope of the fishery management regime analyzed in the IDCPA rule, or the scope of the impacts considered in that consultation, NMFS is relying on that analysis to conclude that this rule will not likely jeopardize the continued existence of any endangered or threatened species under the jurisdiction of NMFS or result in the destruction or adverse modification of critical habitat. Therefore, NMFS has determined that additional consultation is not required for this action.
The eastern Pacific Ocean tuna purse seine fisheries occasionally interact with a variety of species of dolphin, and dolphin takes are authorized and managed under the IDCPA. These quotas do not affect the administration of that program, which is consistent with section 303(a)(2) of the Marine Mammal Protection Act (MMPA). Therefore, this rule is consistent with the MMPA.
This proposed rule has been determined to be not significant for the purposes of Executive Order 12866.
The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration that this proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities as follows:
The purpose of this action is to prohibit the use of purse seine gear to harvest tuna in a portion of the Convention Area in December 2003, consistent with the October 2003 IATTC recommendation. The closure is intended to promote conservation of tuna stocks by eliminating purse seine fishing mortality by vessels from all parties to the IATTC. The proposed closure would apply to the U.S. tuna purse seine fleet, which consists of 10-20 small vessels (carrying capacity below 400 short tons (363 metric tons)) and 4-6 large vessels (carrying capacity 400 short tons (363 metric tons) or greater). The large vessels generally fish outside U.S. waters and deliver their catch to foreign ports or transship to processors outside the mainland United States. The large vessels are categorized as large business entities (revenues in excess of $3.5 million per year). The closure should not significantly affect their operations as they are capable of fishing in other areas that would remain open. The small vessels are categorizes as small business entities (revenues below $3.5 million per year). They fish in the U.S. exclusive economic zone most of the year for small pelagic fish (Pacific sardine, Pacific mackerel) and for market squid in the winter. However, some small vessels harvest tuna seasonally when they are available, usually late in the summer and early fall. The proposed time/area closure should have little effect on small vessels because there is little tuna fishing by small vessels in that time/area stratum. The small vessel fleet should not be affected by the time/area closure as the closed waters are out of the range of almost all the small vessels. In addition, the small vessels will be able to target market squid or sardine in December as is their normal pattern. As a result, an Initial Regulatory Flexibility Analysis was not prepared.
16 U.S.C. 951-961 and 971
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of availability of an amendment to a fishery management plan; request for comments.
NMFS announces that the Pacific Fishery Management Council (Pacific Council) has submitted Amendment 16-2 to the Pacific Coast Groundfish Fishery Management Plan (FMP) for Secretarial review. Amendment 16-2 would amend the FMP to include overfished species rebuilding plans for lingcod, canary rockfish, darkblotched rockfish, and Pacific ocean perch (POP). Amendment 16-2 is intended to address the requirements of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) to protect and rebuild overfished species managed under a Federal FMP. Amendment 16-2 is also intended to partially respond to a Court order in which NMFS was ordered to provide Pacific Coast groundfish rebuilding plans as FMPs, FMP amendments, or regulations, per the Magnuson-Stevens Act.
Comments on Amendment 16-2 must be received on or before January 6, 2004.
Comments on Amendment 16-2 or supporting documents should be sent to D. Robert Lohn, Administrator, Northwest Region, National Marine Fisheries Service, Sand Point Way NE., BIN C15700, Seattle, WA 98115-0070, attn: Becky Renko
Copies of Amendment 16-2 and the Environmental Impact Statement/Regulatory Impact Review/Initial Regulatory Flexibility Analysis for the amendment are available from Donald McIsaac, Executive Director, Pacific Fishery Management Council, 7700 NE Ambassador Place, Portland, OR 97220.
Becky Renko (Northwest Region, NMFS), phone: 206-526-6150; fax; 206-526-6736 and e-mail:
This
The Magnuson-Stevens Act requires each regional fishery management council to submit fishery management plans or plan amendments to NMFS for review and approval, disapproval, or partial approval. The Magnuson-Stevens Act also requires NMFS, immediately upon receiving a fishery management plan or plan amendment, to publish notification in the
NMFS declared the POP and lingcod stocks overfished on March 3, 1999. This was followed by canary rockfish, which was declared overfished on January 4, 2000 (65 FR 221) and darkblotched rockfish, which was declared overfished on January 11, 2001 (66 FR 2338). Because the spawning stock biomass levels for these stocks were determined to be below the minimum stock size threshold defined by the FMP, rebuilding plans had to be implemented to return the stocks to their maximum sustainable yield biomass levels (target biomass). Amendment 16-2, would revise the FMP to include overfished species rebuilding plans for lingcod, canary rockfish, darkblotched rockfish, and POP.
The rebuilding plans being adopted under Amendment 16-2 were approved by the Pacific Council at its June 2003 meeting. These rebuilding plans specify rebuilding parameters for individual stocks and are intended to address the Magnuson-Stevens Act requirement to protect and rebuild overfished species, in particular National Standard 1 on overfishing and section 304(e). When making the recommendation to implement these rebuilding plans, the Pacific Council sought to balance the rebuilding risks to each stock with the short and long-term socio-economic costs borne by groundfish buyers, commercial harvesters, and recreational operators as a result of constraining the fisheries to reduce total mortality of these overfished species.
On August 18, 2003 (68 FR 49415), NMFS published a notice of availability for Amendment 16-1 to the FMP. Amendment 16-1 will amend the FMP to require that Pacific Coast groundfish overfished species rebuilding plans be added into the FMP via FMP amendment, and then implemented through Federal regulations. For each approved overfished species rebuilding plan, the following parameters are to be specified in the FMP: estimates of unfished biomass and target biomass, the year the stock would be rebuilt in the absence of fishing, the year the stock would be rebuilt if the maximum time period permissible under the National Standard Guidelines were applied, and the target year in which the stock would be rebuilt under the adopted rebuilding plan.
As required by the standards proposed in Amendment 16-1, the rebuilding plans under Amendment 16-2 for lingcod, canary rockfish, darkblotched rockfish, and POP include estimates of unfished biomass and target biomass, the year the stock would be rebuilt in the absence of fishing, the year the stock would be rebuilt if the maximum time period permissible under the National Standard Guidelines were applied, and the target year in which the stock would be rebuilt under the adopted rebuilding plan for each species. Amendment 16-2 would add these parameters to section 4.5.4. of the FMP. Other relevant information on each of these overfished stocks, such as stock distribution, fishery interaction, and the rebuilding strategy would also be added to section 4.5.4 of the FMP. The information described above would be included in the FMP to serve as management benchmarks.
NMFS plans to publish a proposed rule that would codify in Federal regulations the two rebuilding parameters needed to establish annual or biannual optimum yields (OYs). These parameters are the target year for rebuilding and the harvest control rule that is to be used during the rebuilding period. The target rebuilding year is the year the stock will have been rebuilt under the adopted rebuilding plan. The harvest control rule expresses a given fishing mortality rate that is to be used over the course of rebuilding, unless modified in a subsequent rulemaking.
An approved rebuilding plan will be implemented through setting OYs and establishing management measures necessary to maintain the fishing mortality within the OYs to achieve objectives related to rebuilding requirements.
Public comments on Amendment 16-2 must be received by January 6, 2004, to be considered by NMFS in the decision whether to approve, disapprove, or partially approve amendment 16-2. A proposed rule to implement Amendment 16-2 has been submitted for Secretarial review and approval. NMFS expects to publish and request public comments on proposed regulations to implement Amendment 16-2 in the near future.
16 U.S.C. 1801
11 a.m. to 5 p.m.
ADF Headquarters.
Monday, November 17, 2003.
Open.
If you have any questions or comments, please direct them to Doris Martin, General Counsel, who may be reached at (202) 673-3916.
Pursuant to the Agricultural Trade Development and Assistance Act of 1954 (Pub. L. 480, as amended), notice is hereby given that the Public Law 480 Title II FY 2005 Development Program Policies and Guidelines are being made available to interested parties for the required thirty (30) day comment period. Individuals who wish to receive a copy of these draft guidelines should contact: Office of Food for Peace, Agency for International Development, RRB 7.06-153, 1300 Pennsylvania Avenue, Washington, DC 20523. Individuals who have questions or comments on the draft guidelines should contact Kathy Hunt at the above address or at (202) 712-1446.
The thirty-day comment period will begin on the date that this announcement is published in the
Forest Service, USDA.
Notice of meeting.
The Siskiyou County Resource Advisory Committee will meet in Yreka, California, November 17, 2003. The meeting will include routine business and a discussion of larger scale projects.
The meeting will be held November 17, 2003, from 4 p.m. until 6 p.m.
Don Hall, RAC Coordinator, Klamath National Forest, (530) 841-4468 or electronically at
The meeting is open to the public. Public comment opportunity will be provided and individuals will have the opportunity to address the Committee at that time.
Grain Inspection, Packers and Stockyards Administration, USDA.
Notice and request for comments.
We propose to post five stockyards. We have received information that the stockyards meet the definition of a stockyard under the Packers and Stockyards Act and, therefore, need to be posted. Posted stockyards are subject to the provisions of the Packers and Stockyards Act.
We will consider comments that we receive by November 24, 2003.
Send comments via electronic mail to
The Grain Inspection, Packers and Stockyards Administration (GIPSA) administers and enforces the Packers and Stockyards Act of 1921, as amended and supplemented (7 U.S.C. 181-229) (P&S Act). The P&S Act prohibits unfair, deceptive, and fraudulent practices by livestock market agencies, dealers, stockyard owners, meat packers, swine contractors, and live poultry dealers in the livestock, poultry, and meatpacking industries.
Section 302 of the P&S Act (7 U.S.C. 202) defines the term “stockyard” as follows:
Section 302(b) of the P&S Act requires the Secretary to determine which stockyards meet this definition, and to notify the owner of the stockyard and the public of that determination by posting a notice in each designated stockyard. After giving notice to the stockyard owner and to the public, the stockyard will be subject to the provisions of Title III of the Packers and Stockyards Act (7 U.S.C. 201-203 and 205-217a) until the Secretary deposts the stockyard by public notice.
This document notifies the stockyard owners and the public that the following five stockyards meet the definition of stockyard and that we propose to designate the stockyards as posted stockyards.
7 U.S.C. 202.
Grain Inspection, Packers and Stockyards Administration, USDA.
Notice.
We posted two stockyards. We determined that the stockyards meet the definition of a stockyard under the Packers and Stockyards Act and, therefore, needed to be posted. Posted stockyards are subject to the provisions of the Packers and Stockyards Act.
The Grain Inspection, Packers and Stockyards Administration (GIPSA) administers and enforces the Packers and Stockyards Act of 1921, as amended and supplemented (7 U.S.C. 181-229) (P&S Act). The P&S Act prohibits unfair, deceptive, and fraudulent practices by livestock market agencies, dealers, stockyard owners, meat packers, swine contractors, and live poultry dealers in the livestock, poultry, and meatpacking industries.
Section 302 of the P&S Act (7 U.S.C. 202) defines the term “stockyard” as follows:
Section 302(b) of the P&S Act requires the Secretary to determine which stockyards meet this definition, and to notify the owner of the stockyard and the public of that determination by posting a notice in each designated stockyard. After giving notice to the stockyard owner and to the public, the stockyard remains subject to the provisions of Title III of the Packers and Stockyards Act (7 U.S.C. 201-203 and 205-217a) until the Secretary deposts the stockyard by public notice.
This document notifies the public that the following two stockyards meet the definition of stockyard and that we posted the stockyards. To post stockyards, we assign the stockyard a facility number, notify the owner of the stockyard facility, and send notices to the owner of the stockyard to post on display in public areas of the stockyard. The date of posting is the date on which the posting notices are physically displayed.
7 U.S.C. 202.
Rural Housing Service (RHS), USDA.
Proposed collection; comments requested.
In accordance with the Paperwork Reduction Act of 1995, this notice announces the intention of the above-named Agency to request an extension for a currently approved information collection in support of the Community Facilities Grant Program.
Comments on this notice must be received by January 6, 2004 to be assured of consideration.
Derek L. Jones, Loan Specialist, Community Programs, RHS, USDA, 1400 Independence Ave. SW, Mail Stop 0787, Washington, DC 20250-0787. Telephone: (202)720-1504. E-mail:
Information will be collected by the field offices from applicants, consultants, lenders, and public entities. The collection of information is considered the minimum necessary to effectively evaluate the overall scope of the project.
Failure to collect information could have an adverse impact on effectively carrying out the mission,
Copies of this information collection can be obtained from Tracy Givelekian, Regulations and Paperwork Management Branch, at (202) 692-0039.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility; (b) the accuracy of the Agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology. Comments may be sent to Tracy Givelekian, Regulations and Paperwork Management Branch, U.S. Department of Agriculture, Rural Development, STOP 0742, 1400 Independence Ave. SW., Washington, DC 20250-0742. All responses to this notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.
Committee for Purchase from People Who Are Blind or Severely Disabled.
Proposed Additions to and Deletion from Procurement List.
The Committee is proposing to add to the Procurement List products and services to be furnished by nonprofit agencies employing persons who are blind or have other severe disabilities, and to delete a product previously furnished by such agencies.
December 7, 2003.
Committee for Purchase From People Who Are Blind or Severely Disabled, Jefferson Plaza 2, Suite 10800, 1421 Jefferson Davis Highway, Arlington, Virginia, 22202-3259.
Sheryl D. Kennerly, (703) 603-7740.
This notice is published pursuant to 41 U.S.C. 47(a)(2) and 41 CFR 51-2.3. Its purpose is to provide interested persons an opportunity to submit comments on the proposed actions.
If the Committee approves the proposed additions, the entities of the Federal Government identified in this notice for each product or service will be required to procure the products and services listed below from nonprofit agencies employing persons who are blind or have other severe disabilities.
I certify that the following action will not have a significant impact on a substantial number of small entities. The major factors considered for this certification were:
1. If approved, the action will not result in any additional reporting, recordkeeping or other compliance requirements for small entities other than the small organizations that will furnish the products and services to the Government.
2. If approved, the action will result in authorizing small entities to furnish the products and services to the Government.
3. There are no known regulatory alternatives which would accomplish the objectives of the Javits-Wagner-O'Day Act (41 U.S.C. 46-48c) in connection with the products and services proposed for addition to the Procurement List. Comments on this certification are invited. Commenters should identify the statement(s) underlying the certification on which they are providing additional information.
The following products and services are proposed for addition to the Procurement List for production by the nonprofit agencies listed:
I certify that the following action will not have a significant impact on a substantial number of small entities. The major factors considered for this certification were:
1. If approved, the action will not result in any additional reporting, recordkeeping or other compliance requirements for small entities.
2. If approved, the action will result in authorizing small entities to furnish the product to the Government.
3. There are no known regulatory alternatives which would accomplish the objectives of the Javits-Wagner-O'Day Act (41 U.S.C. 46-48c) in connection with the product proposed for deletion from the Procurement List.
The following product is proposed for deletion from the Procurement List:
Committee for Purchase from People Who Are Blind or Severely Disabled.
Additions to Procurement List.
This action adds to the Procurement List services to be furnished by nonprofit agencies employing persons who are blind or have other severe disabilities.
December 7, 2003.
Committee for Purchase From People Who Are Blind or Severely Disabled, Jefferson Plaza 2, Suite 10800, 1421 Jefferson Davis Highway, Arlington, Virginia, 22202-3259.
Sheryl D. Kennerly, (703) 603-7740.
On September 12, 2003, the Committee for Purchase From People Who Are Blind or Severely Disabled published notice (68 F.R. 53710) of proposed additions to the Procurement List. After consideration of the material presented to it concerning capability of qualified nonprofit agencies to provide the services and impact of the additions on the current or most recent contractors, the Committee has determined that the services listed below are suitable for procurement by the Federal Government under 41 U.S.C. 46-48c and 41 CFR 51-2.4.
I certify that the following action will not have a significant impact on a substantial number of small entities. The major factors considered for this certification were:
1. The action will not result in any additional reporting, recordkeeping or other compliance requirements for small entities other than the small organizations that will furnish the services to the Government.
2. The action will result in authorizing small entities to furnish the services to the Government.
3. There are no known regulatory alternatives which would accomplish the objectives of the Javits-Wagner-O'Day Act (41 U.S.C. 46-48c) in connection with the services proposed for addition to the Procurement List.
Accordingly, the following services are added to the Procurement List:
This action does not affect current contracts awarded prior to the effective date of this addition or options that may be exercised under those contracts.
November 12, 2003; 1 p.m.-4:30 p.m.
Broadcasting Board of Governors, 330 Independence Avenue, SW., Washington, DC 20237.
The members of the Broadcasting Board of Governors (BBG) will meet in closed session to review and discuss a number of issues relating to U.S. Government-funded non-military international broadcasting. They will address internal procedural, budgetary, and personnel issues, as well as sensitive foreign policy issues relating to potential options in the U.S. international broadcasting field. This meeting is closed because if open it likely would either disclose matters that would be properly classified to be kept secret in the interest of foreign policy under the appropriate executive order (5 U.S.C. 552b.(c)(1)) or would disclose information the premature disclosure of which would be likely to significantly frustrate implementation of a proposed agency action. (5 U.S.C. 552b.(c)(9)(B)) In addition, part of the discussion will relate solely to the internal personnel and organizational issues of the BBG or the International Broadcasting Bureau. (5 U.S.C. 552b.(c)(2) and (6))
Persons interested in obtaining more information should contact either Brenda Hardnett or Carol Booker at (202) 401-3736.
U.S. Commission on Civil Rights.
Friday, November 14, 2003, 9:30 a.m.
U.S. Commission on Civil Rights, 624 9th Street, NW., Room 540, Washington, DC 20425.
10 a.m. Briefing on Lewis Mumford Center Study “How Race Counts for Hispanic Americans”.
Les Jin, Press and Communications (202) 376-7700.
DOC has submitted to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act (44 U.S.C. chapter 35).
U.S. Census Bureau.
The Census Bureau will expand the SAS to provide data on product composition of service industry output and to provide data that will improve the quality of value-added measures for these service industries.
We will begin to implement, incrementally, the collection of detailed service products defined in the provisional North American Product Classification System (NAPCS) into the 2003 SAS. Provisional NAPCS products were added to the 2001 SAS for most of the Information Sector (NAICS 51, except 512) and Computer Systems Design and Related Services (NAICS 5415). For 2003, we plan to add provisional NAPCS products to the Motion Picture and Sound Recording Industries (NAICS 512). In the 2004 Service Annual Survey, we will begin collecting NAPCS product detail for Professional, Scientific, and Technical Services (NAICS 54); Administrative Support and Waste Management and Remediation Services (NAICS 56); and Hospitals and Nursing and Residential Care Facilities (NAICS 622 and 623). We will complete NAPCS product coverage of all remaining industries in the 2005 Service Annual Survey.
We will also collect annual data on the cost of materials and supplies other than for resale, contract labor, and purchased services in the 2003 SAS for the following: Information (NAICS 51); selected Financial Services (NAICS 5231 and 5239); Professional, Scientific, and Technical Services (NAICS 54); Administrative and Support and Waste Management and Remediation Services (NAICS 56); and Hospitals and Nursing and Residential Care Facilities (NAICS 622 and 623). For the 2004 survey, we will begin collecting these data for all remaining industries covered in the SAS.
Key data items include:
• expensed materials and supplies;
• contract labor;
• computer services with detail breakouts between custom coded software and data processing services;
• purchased communication services;
• purchased electricity;
• purchased fuels (except motor fuels);
• management consulting, administrative services, and other professional services;
• lease and rental costs,
• and all other purchased services.
The availability of these data will greatly improve the quality of the intermediate-inputs and value-added estimates in BEA's annual input-output and GDP by industry accounts. Annual data on purchased services and materials also will be used as indicators to update census year data collected on the Business Expenses Survey.
Copies of the above information collection proposal can be obtained by calling or writing Diana Hynek, Departmental Paperwork Clearance Officer, (202) 482-0266, Department of Commerce, room 6625, 14th and Constitution Avenue NW., Washington, DC 20230 (or via the Internet at
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to Susan Schechter, OMB Desk Officer either by fax; (202) 395-7245, or email;
Proposed collection; comment request.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(A)).
Written comments must be submitted on or before January 6, 2004.
Direct all written comments to Diana Hynek, DOC Paperwork Clearance Officer, (202) 482-0266, Department of Commerce, Room 6625, 14th and Constitution Avenue, NW., Washington, DC 20230.
Requests for additional information or copies of the information collection instrument(s) and instructions should be directed to Ms. Marna Dove, BIS ICB Liaison, (202) 482-5211, Department of Commerce, Room 6622, 14th & Constitution Avenue, NW., Washington, DC, 20230.
The United States and several other countries have undertaken to increase the effectiveness of their respective controls over international trade in strategic commodities by means of an Import Certificate procedure. For the U.S. importer, this procedure provides that, where required by the exporting country with respect to a specific transaction, the importer certifies to the U.S. Government that he/she will import specific commodities into the United States and will not reexport such commodities except in accordance with the export control regulations of the United States. The U.S. Government, in turn, certifies that such representations have been made.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they will also become a matter of public record.
Proposed collection; comment request.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(A)).
Written comments must be submitted on or before January 6, 2004.
Direct all written comments to Diana Hynek, Departmental Paperwork Clearance Officer, Department of Commerce, Office of the Chief Information Officer, 202-482-0266, Room 6625, 14th and Constitution Avenue, NW., Washington, DC 20230.
Requests for additional information or copies of the information collection instrument(s) and instructions should be directed to Marna Dove, BIS ICB Liaison, Department of Commerce, BIS Office of the Chief Information Officer, Room 6622, 14th and Constitution Avenue, NW., Washington, DC 20230.
Section 7(g) of the EAA, as amended by the Export Administration Amendments Act of 1985 (Pub. L. 99-64), exempts from foreign policy controls exports of donations to meet basic human needs. Since the enactment of Public Law 99-74, an exporter had to apply for a bulk Humanitarian license, permitting the export of goods identified in a supplement to the regulation without restriction as to quantity or number of shipments to any of the embargoed destinations. New License Exception procedures contained in this regulation reduce the regulatory burden on these exporters by enabling them to make humanitarian donations with only minimal recordkeeping.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they will also become a matter of public record.
Import Administration, International Trade Administration, Department of Commerce.
Notice of preliminary results of antidumping duty administrative review, request for revocation of the antidumping duty order, and determination not to revoke, in part.
We preliminarily find that helical spring lock washers from the People's Republic of China were being sold in the United States below normal value by the Hangzhou Spring Washer Co., Ltd. (also known as Zhejiang Wanxin Group, Ltd. (ZWG)) (collectively, Hangzhou) during the period October 1, 2001 through September 30, 2002. We have also preliminarily determined not to revoke the antidumping duty order on the subject merchandise with respect to this company. Interested parties are invited to comment on these preliminary results.
November 7, 2003.
Ryan Langan and Audrey Twyman, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-2613 or (202) 482-3534.
On October 19, 1993, the Department published the antidumping duty order on certain helical spring lock washers (HSLWs) from the People's Republic of China (PRC) (58 FR 53914), as amended on November 23, 1993 (58 FR 61859). The Department notified interested parties of the opportunity to request an administrative review of this order on October 2, 2002 (67 FR 61849). The petitioner, Shakeproof Assembly Components Division of Illinois Tool Works, Inc. (Shakeproof), requested that the Department conduct an administrative review of Hangzhou on October 22, 2002. Hangzhou requested an administrative review and revocation of the antidumping duty order with respect to itself on October 31, 2002. The notice of initiation of this administrative review was published on November 22, 2002 (67 FR 70402).
On January 21 and 22, 2003, Hangzhou responded to the Department's December 5, 2002 questionnaire. Next, on February 4, 2003, the Department provided parties with an opportunity to submit information regarding appropriate surrogate values. On February 28, 2003, Hangzhou submitted surrogate value comments. The petitioner submitted factual information, including surrogate value comments, on March 20, 2003. The Department received petitioner's comments on Hangzhou's questionnaire responses on March 14, 2003, and its additional deficiency comments and verification comments on March 26, 2003.
The Department issued its first supplemental questionnaire to Hangzhou on March 31, 2003, and received Hangzhou's responses on April 11 and 15, 2003. On April 22, 2003, Hangzhou submitted additional information about its platers. Shakeproof submitted its second and third sets of deficiency comments on April 29 and May 15, 2003, respectively.
On June 4, 2003, the Department published
The Department verified Hangzhou's questionnaire response on September 1 through 4, 2003, in Xiaoshan City, Xinjie Town, People's Republic of China (PRC). Hangzhou submitted its pre-verification corrections on September 9, 2003, and new databases on October 17, 2003. The Department issued its verification report on October 23, 2003.
The products covered by the order are HSLWs of carbon steel, of carbon alloy steel, or of stainless steel, heat-treated or non-heat-treated, plated or non-plated, with ends that are off-line. HSLWs are designed to: (1) Function as a spring to compensate for developed looseness between the component parts of a fastened assembly; (2) distribute the load over a larger area for screws or bolts; and, (3) provide a hardened bearing surface. The scope does not include internal or external tooth washers, nor does it include spring lock washers made of other metals, such as copper.
HSLWs subject to the order are currently classifiable under subheading 7318.21.0030 of the
This review covers the period October 1, 2001, through September 30, 2002.
To establish whether a company operating in a state-controlled economy is sufficiently independent to be entitled to a separate rate, the Department analyzes each exporting entity under the test established in the
In each of the previous administrative reviews of the antidumping duty order on HSLWs from the PRC, covering successive review periods from October 1, 1993, through September 30, 2001, we determined that Hangzhou and its predecessor, ZWG, merited separate rates. We found, in each review, an absence of government control, both in law and in fact, with respect to Hangzhou's export activities according to the criteria identified in
Pursuant to section 782(i) of the Tariff Act of 1930, as amended (“the Act”), we
Because Hangzhou sold the subject merchandise to unaffiliated purchasers in the United States prior to importation into the United States and constructed export price methodology is not otherwise indicated, we have used export price in accordance with section 772(a) of the Act.
We calculated export price based on the FOB price to unaffiliated purchasers. From this price, we deducted amounts for foreign inland freight, and brokerage and handling pursuant to section 772(c)(2)(A) of the Act. We valued these deductions using surrogate values. We selected India as the primary surrogate country for the reasons explained in the “Normal Value” section of this notice.
The Department has determined the PRC to be an NME country in all previous antidumping cases. In accordance with section 771(18)(C)(i) of the Act, any determination that a foreign country is an NME shall remain in effect until revoked by the administering authority. None of the parties to this proceeding has contested such treatment in this review. Moreover, parties to this proceeding have not argued that the PRC HSLW industry is a market-oriented industry and, consequently, we have no basis to determine that the information in this review would permit the calculation of normal value (NV) using PRC prices or costs.
Section 773(c)(1) of the Act provides that, in the case of an NME, the Department shall determine NV using a factors-of-production methodology if: (1) The merchandise is exported from an NME, and (2) the information does not permit the calculation of NV using home-market prices, third-country prices, or constructed value under section 773(a) of the Act. Because information on the record does not permit the calculation of NV using home-market prices, third-country prices, or constructed value, and no party has argued otherwise, we calculated NV based on factors of production in accordance with sections 773(c)(3) and (4) of the Act and 19 CFR 351.408(c).
Because we are using surrogate country factors-of-production prices to determine NV, section 773(c)(4) of the Act requires that the Department use values from a market economy (surrogate) country that (1) is at a level of economic development comparable to that of the PRC, and (2) is a significant producer of comparable merchandise. We have determined that India, Pakistan, Indonesia, Sri Lanka and the Philippines are market economy countries at a comparable level of economic development to that of the PRC. (
We selected, where possible, publicly available values from India which were: (1) Average non-export values; (2) representative of a range of prices within the POR or most contemporaneous with the POR; (3) product-specific; and, (4) tax-exclusive. Also, where we have relied upon import values, we have excluded imports from South Korea, Thailand, and Indonesia. The Department has found that these countries maintain broadly available, non-industry specific export subsidies, and that the existence of these subsidies provides sufficient reason to believe or suspect that export prices from these countries are distorted.
In its submission of June 20, 2003, the petitioner argues that the Department should exclude any import values into India where the exporting country maintains subsidies,
In past proceedings, we disregarded input prices where particular and objective record evidence provided the Department with a reason to believe or suspect that these prices may be distorted by subsidies.
The information provided by the petitioner in this proceeding (with the exception of certain steel products) does not identify the particular products or the particular subsidies which allegedly distort the prices of these products. Without such evidence, we cannot preliminarily conclude that these input prices should be disregarded. We acknowledge that there may be other information, outside the record of this proceeding, which may be material to the question of whether other input prices are distorted by subsidies. However, it would be impractical for the Department to attempt to identify and consider such information without the parties first having demonstrated, on the basis of record evidence, that certain countries maintained broadly available, non-industry specific export subsidies, or that certain countries provided industry-specific subsidies which may
During the POR, Hangzhou imported a portion of its steel input (carbon steel wire rod (CSWR)) from the United Kingdom (UK) and it paid for this input in a market economy currency. The petitioner, in its submission dated June 20, 2003, argues that the Department should disregard the steel import prices reported by Hangzhou because there is “reason to believe or suspect” the steel benefitted from subsidies. In support of its claim, the petitioner points to the Department's finding in the sunset review of cut-to-length carbon steel plate from the UK, in which the Department found a subsidy rate of 12 percent for all UK producers and exporters (
Instead, we have used the value of imports of CSWR into India, based on information from the
The remaining inputs are addressed below:
• To value the hydrochloric acid used in the production process, we used per kilogram values obtained from the Indian publication
• To value other chemicals used in the production of HSLWs, we used per kilogram import values obtained from
• To value plating, we used a March 14, 2003, price quote supplied by the petitioner in its submission dated March 20, 2003, subsequently resubmitted as a public document.
• To value coal, we used a per kilogram value obtained from the
• To value electricity, we used the electricity price data from the Energy Data Directory and Yearbook (1999/2000) published by the Tata Energy Research Institute. We adjusted the value to reflect inflation using the electricity sector-specific inflation index published in the
• To value water, we used the
• For labor, we used the regression-based wage rate for the PRC in “Expected Wages of Selected NME Countries,” located on the Internet at
• For factory overhead, selling, general, and administrative expenses (SG&A), and profit values, we used information from the September 12, 2002,
• For packing materials, we used the per kilogram values obtained from the
• To value foreign brokerage and handling, we used information reported in the
• To value truck freight, we used the freight rates published in the Indian publication
• To value shipping freight, we used a rate reported in a July 14, 1997, letter from the Inland Waterways of India which was used in
For a complete description of the factor values used,
The Department “may revoke, in whole or in part” an antidumping duty order upon completion of a review under section 751 of the Act. While Congress has not specified the procedures that the Department must follow in revoking an order, the Department has developed a procedure for revocation that is described in 19 CFR 351.222. This regulation requires,
Pursuant to 19 CFR 351.222(e)(1), Hangzhou requested revocation of the antidumping duty order as it pertains to that company. According to 19 CFR 351.222(b)(2), upon receipt of such a request, the Department may revoke an order, in part, if it concludes that (1) the company in question has sold subject merchandise at not less than NV for a period of at least three consecutive
Based on our analysis of the sales and factors of production information submitted by Hangzhou, we preliminarily determine that Hangzhou sold the subject merchandise in the United States below normal value during the POR. Thus, we find that Hangzhou has not sold the subject merchandise below NV for a period of at least three consecutive years. Therefore, pursuant to 19 CFR 351.222(b)(2), we preliminarily determine that Hangzhou does not qualify for revocation of the order on HSLWs from the PRC and that the order, with respect to Hangzhou, should not be revoked.
We preliminarily determine that the following dumping margin exists:
The Department shall determine, and the U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries. Upon completion of this administrative review, the Department will determine, and the CBP shall assess, antidumping duties on all appropriate entries. In accordance with 19 CFR 351.212(b)(1), we have calculated an exporter/importer (or customer)-specific assessment rate for merchandise subject to this review. We calculated importer (or customer)-specific
Furthermore, the following cash deposit rates will be effective upon publication of the final results for all shipments of HSLWs from the PRC entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided for by section 751(a)(1) of the Act: (1) For Hangzhou, which has a separate rate, the cash deposit rate will be the company-specific rate established in the final results of review; (2) for all other PRC exporters, the cash deposit rate will be the PRC rate, 128.63 percent, which is the “All Other PRC Manufacturers, Producers and Exporters” rate from the
This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
Pursuant to 19 CFR 351.224, the Department will disclose to parties the calculations performed in connection with these preliminary results within five days of the date of any public announcement, or, if there is no public announcement, within five days of the date of publication of this notice. Interested parties may request a hearing within 30 days of the date of publication of this notice (
The Department will publish the final results of this administrative review, including the results of its analysis of issues raised in any such briefs or hearing, within 120 days of publication of these preliminary result.
This administrative review and notice are in accordance with sections 751(a)(1) and 777(i)(1) of the Act.
Import Administration, International Trade Administration, U.S. Department of Commerce
: In response to a timely request from an interested party, the Department of Commerce (the Department) initiated an administrative review of the antidumping duty order on iron construction castings (castings) from the People's Republic of China (PRC).
November 7, 2003.
Sean Carey, AD/CVD Enforcement Group III, Office 7, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington D.C. 20230; telephone (202) 482-3964.
The Department published in the
On July 24, 2003, counsel for Powin entered an appearance on behalf of Weifang Fangzi Tongbao Foundry and Weifang Fangzi Mucun Foundry, producers of subject merchandise, and Shandong Machinery I/E Corp., a company which facilitated Shandong Himight's exports to the United States. On July 25, 2003, the Department issued its antidumping duty questionnaire. The Department extended the deadline for the questionnaire response on September 3 and again on September 16, 2003 pursuant to Powin's request for an extension of the deadline. In a letter to the Department filed September 30, 2003, Powin withdrew its request for an administrative review.
The Department is rescinding the antidumping duty administrative review of Powin, covering the period May 1, 2002 through April 30, 2003, in accordance with section 351.213(d)(1) of the Department's regulations. Although Powin's withdrawal request for this review was not within the normal time limit as prescribed in section 351.213(d)(1) of the Department's regulations, we find that, under the circumstances of this review, it is appropriate to accept the withdrawal request and rescind the review with respect to Shandong Himight.
According to section 351.213(d)(1) of the Department's regulations, the Department will rescind an administrative review “if a party that requested the review withdraws the request within 90 days of the date of publication of notice of initiation of the requested review.” The regulations further provide that the Secretary “may extend this time limit if the Secretary decides that it is reasonable to do so.” In the instant case, Powin's withdrawal request was not filed within the 90-day time limit. However, the Department has determined that rescinding the review is appropriate since continuing the review would only require Powin, the domestic industry and the Department to expend time and resources on a review in which the only party that requested the review is no longer interested. Powin has not filed a questionnaire response with respect to Shandong Himight, and the Department has neither released supplemental questionnaires nor conducted verification at this point in the proceeding. Accordingly, the Department does not believe the administrative review has proceeded to a point at which it would be “unreasonable” to rescind the review.
The Department, therefore, determines that it is reasonable to extend the 90-day time limit and to rescind the administrative review for the period May 1, 2002 through April 30, 2003. The Department will issue appropriate assessment instructions directly to the U.S. Customs and Border Protection (Customs) within 15 days of publication of this notice. The Department will direct Customs to assess antidumping duties for this company at the cash deposit rate in effect on the date of entry for entries during the period May 1, 2002 through April 30, 2003.
This notice serves as a final reminder to importers of their responsibility under section 351.402(f) of the Department's regulations to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and subsequent assessment of double antidumping duties. The Department will issue appropriate assessment instructions to the U.S. Bureau of Customs and Border Protection.
This determination and notice are issued and published in accordance with 19 CFR 351.213(d)(4) and sections 751(a)(1) and 777(i)(1) of the Act.
Import Administration, International Trade Administration, Department of Commerce.
Notice of Partial Rescission of Fourth Antidumping Duty Administrative Review.
November 7, 2003.
Brian Smith or Jim Mathews, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202) 482-1766 or (202) 482-2778, respectively.
On February 3, 2003, the Department published in the
On May 7, 2003, Raoping and Shenzhen Qunxingyuan requested that the Department rescind their respective reviews because they did not export to the United States during the period of review (“POR”). We confirmed the claims of Raoping and Shenzhen Qunxingyuan by reviewing data from U.S. Customs and Border Protection.
On June 12, 2003, the petitioner requested an extension of the deadline to withdraw its requests for review. On June 16, 2003, the Department granted the petitioner's request and extended the deadline until July 10, 2003. On August 7, 2003, the petitioner withdrew its request for an administrative review of Zhongjia and Minhui, following the Department's preliminary decision to rescind the new shipper review with respect to these companies due to the filing of improper certifications.
Pursuant to section 351.213 (d)(1) of the Department's regulations, the Secretary will rescind an administrative review in whole or in part if a party that requested the review withdraws its request within ninety days of publication of the
Zhongjia and Minhui contest the petitioners request and argue that the Department should continue with the administrative review covering their sales of subject merchandise. For purposes of our analysis, it is important to distinguish that Zhongjia and Minhui each requested a new shipper review but did not request an administrative review. This is in contrast to the situation in which a respondent requests both a new shipper review and an administrative review. Section 351.214(j) of the Department's regulations provides that if a party requests multiple reviews, the Department may choose to initiate one and not the other after consulting with the party. For example,
Furthermore, as neither Raoping nor Shenzhen Qunxingyuan exported the subject merchandise to the United States during the POR, we are rescinding this review of the antidumping duty order on certain preserved mushrooms from the PRC as to both Raoping and Shenzhen Qunxingyuan. This review will continue with respect to Gerber, Green Fresh, China Processed, Guangxi Yulin, Shantou Hongda, Shenxian Dongxing and Jingxiang.
This notice is published in accordance with section 777(i) of the Tariff Act of 1930, as amended, and 19 CFR 351.213(d)(4).
Import Administration, International Trade Administration, Department of Commerce.
Notice of Decision of the Court of International Trade.
On October 17, 2003, in
November 7, 2003.
David J. Goldberger at (202) 482-4136 or Rebecca Trainor at (202) 482-4007, Office of Antidumping and Countervailing Duty Enforcement, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 20230.
On February 19, 1999, the Department of Commerce (the Department) published notice of its amended final determination of less-than-fair-value (LTFV) investigation of certain preserved mushrooms from the People's Republic of China (PRC) and the antidumping duty order.
On January 6, 2000, producers/exporters, Mei Wei Food Industry Co, Ltd, Tak Fat Trading Co., Leung Mi International, Tak Yeun Corp., and U.S. importer Genex International Corp. (collectively, Tak Fat), requested that the Department determine that certain marinated or acidified mushrooms produced in the People's Republic of China (PRC) are outside the scope of the antidumping duty order on certain preserved mushrooms.
Tak Fat appealed this ruling to the Court of International Trade (CIT). On October 17, 2003, the CIT issued its decision granting Tak Fat's request to vacate the scope ruling.
In its decision in
Import Administration, International Trade Administration, Department of Commerce.
Notice of the Final Rescission of Antidumping Duty Administrative Review of Stainless Steel Plate in Coils from Taiwan.
On June 4, 2003, the Department of Commerce (“the Department”) published in the
We preliminarily rescinded this review based on record evidence supporting the conclusion that there were no entries into the United States of subject merchandise during the POR by respondents.
November 7, 2003.
Catherine Bertrand or Robert Bolling, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-3207 or (202) 482-3434 respectively.
On May 21, 1999, the Department of Commerce (“Department”) published the antidumping duty order on stainless steel plate in coils from Taiwan.
On July 10, 2002, the Department issued its antidumping duty
On June 4, 2003, the Department preliminary rescinded the administrative review with respect to Ta Chen and YUSCO based on record evidence and the Customs inquiry, both of which it determined supported the conclusion that there were no entries of subject merchandise during the POR.
For purposes of this review, the product covered is certain stainless steel plate in coils. Stainless steel is an alloy steel containing, by weight, 1.2 percent or less of carbon and 10.5 percent or more of chromium, with or without other elements. The subject plate products are flat-rolled products, 254 mm or over in width and 4.75 mm or more in thickness, in coils, and annealed or otherwise heat treated and pickled or otherwise descaled. The subject plate may also be further processed (
Although the HTS subheadings are provided for convenience and Customs purposes, the written description of the merchandise under investigation is dispositive.
The POR is May 1, 2001 through April 30, 2002.
All issues raised in the case brief and rebuttal brief by parties to this administrative review are addressed in the “Issues and Decision Memorandum” (“
A complete list of the issues which parties have raised and to which we have responded, are in the
Pursuant to 19 CFR 351.213(d)(3), the Department may rescind an administrative review, in whole or only with respect to a particular exporter or producer, if the Secretary concludes that, during the period covered by the review, there were no entries, exports, or sales of the subject merchandise, as the case may be. In this case the Department is satisfied, after a review of information on the record, that there were no entries of stainless steel plate in coils produced and exported from Ta Chen or YUSCO during the POR. Therefore, we are rescinding this review with respect to Ta Chen and YUSCO in accordance with 19 CFR 351.213(d)(3). The cash deposit rate for YUSCO will remain at 8.02 percent, for Ta Chen the cash deposit rate will remain at 10.20 percent, and for “all other” producers/exporters of the subject merchandise the cash deposit rate will remain at 7.39 percent, the rates established in the most recently completed segment of this proceeding.
We have made no changes from the
This notice serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption
This notice also serves as a reminder to parties subject to administrative protective orders (“APOs”) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305, which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanction.
This issuing and publishing this determination in accordance with sections 751(a)(1) and 777(i) of the Act.
International Trade Administration, Trade Development.
Environmental Technologies Trade Advisory Committee (ETTAC), request for nominations.
The Environmental Technologies Trade Advisory Committee (ETTAC) was established pursuant to provisions under Title IV of the Jobs Through Trade Expansion Act, 22. U.S.C. 2151, and under the Federal Advisory Committee Act, 5 U.S.C. App.2. ETTAC was first chartered on May 31, 1994. ETTAC serves as an advisory body to the Environmental Trade Working Group of the Trade Promotion Coordinating Committee (TPCC), reporting directly to the Secretary of Commerce in his capacity as Chairman of the TPCC. ETTAC advises on the development and administration of policies and programs to expand United States exports of environmental technologies, goods, and services and products that comply with United States environmental, safety, and related requirements.
Membership in a committee operating under the Federal Advisory Committee Act must be balanced in terms of economic subsector, geographic location, and company size. Committee members serve in a representative capacity, and must be able to generally represent the views and interests of a certain subsector of the U.S. environmental industry. We are seeking senior executive-level company or environmental technologies association candidates. Members of the ETTAC have experience in exporting the full range of environmental technologies products and services including:
(1) Air Pollution Control/Monitoring Equipment;
(2) Analytic Services;
(3) Environmental Energy Sources;
(4) Environmental Engineering and Consulting Services;
(5) Financial Services;
(6) Process and Prevention Technologies;
(7) Solid and Hazardous Waste Equipment and Management; and
(8) Water and Wastewater Equipment and Services.
The Secretary of Commerce invites nominations to ETTAC of U.S. citizens who will represent U.S. environmental goods and services companies that trade internationally, or trade associations whose members include U.S. companies that trade internationally. Companies must be at least 51 percent beneficially-owned by U.S. persons. U.S.-based subsidiaries of foreign companies in general do not qualify for representation on the committee.
Nominees will be considered based upon their ability to carry out the goals of ETTAC's enabling legislation as further articulated in its charter. ETTAC's Charter is available on the Internet at
Nominees must be U.S. citizens, representing U.S. environmental goods and services firms that trade internationally or provide services in direct support of the international trading activities of other entities.
Self-nominations are accepted. If you are interested in nominating someone to become a member of ETTAC, please provide the following information (2 pages maximum):
(1) Name;
(2) Title;
(3) Work Phone, Fax, and, E-mail Address;
(4) Company or Trade Association Name and Address including Web site Address;
(5) Short Bio of nominee including credentials; and
(6) Brief description of the company or trade association and its business activities; company size (number of employees and annual sales); and export markets served.
Please, do not send company or trade association brochures or any other information.
This information may be e-mailed to
Corey Wright, Office of Environmental Technologies Industries, Room 1003, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; phone 202-482-5225; fax 202-482-5665; e-mail
International Trade Administration, U.S. Department of Commerce.
Notice of open meeting.
December 12, 2003.
9 a.m. to 12 p.m.
U.S. Department of Commerce, 14th Street and Constitution Avenue,
The Environmental Technologies Trade Advisory Committee (ETTAC) will hold a plenary meeting on December 12, 2003 at the U.S. Department of Commerce.
The ETTAC will discuss administrative and trade issues including the status of negotiations in regards to environmental technologies trade liberalization, the Asia Development Bank, and preparations for a paper on environmental technologies exports issues. Time will be permitted for public comment. The meeting is open to the public.
Written comments concerning ETTAC affairs are welcome anytime before or after the meeting. Minutes will be available within 30 days of this meeting.
The ETTAC is mandated by Public Law 103-392. It was created to advise the U.S. government on environmental trade policies and programs, and to help it to focus its resources on increasing the exports of the U.S. environmental industry. ETTAC operates as an advisory committee to the Secretary of Commerce and the Trade Promotion Coordinating Committee (TPCC). ETTAC was originally chartered in May of 1994. It was most recently rechartered until May 30, 2004.
For further information phone Corey Wright, Office of Environmental Technologies Industries (ETI), International Trade Administration, U.S. Department of Commerce at (202) 482-5225. This meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to ETI at (202) 482-5225.
Committee for the Implementation of Textile Agreements (CITA).
Issuing a directive to the Commissioner, Bureau of Customs and Border Protection adjusting a limit.
November 7, 2003.
Roy Unger, International Trade Specialist, Office of Textiles and Apparel, U.S. Department of Commerce, (202) 482-4212. For information on the quota status of this limit, refer to the Quota Status Reports posted on the bulletin boards of each Customs port, call (202) 927-5850, or refer to the Bureau of Customs and Border Protection website at http://www.customs.gov. For information on embargoes and quota re-openings, refer to the Office of Textiles and Apparel website at http://otexa.ita.doc.gov.
Section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854); Executive Order 11651 of March 3, 1972, as amended.
The current limit for Category 363 is being increased for carryforward.
A description of the textile and apparel categories in terms of HTS numbers is available in the CORRELATION: Textile and Apparel Categories with the Harmonized Tariff Schedule of the United States (see
Dear Commissioner: This directive amends, but does not cancel, the directive issued to you on September 3, 2002, by the Chairman, Committee for the Implementation of Textile Agreements. That directive concerns imports of certain cotton, wool and man-made fiber textile products, produced or manufactured in Brazil and exported during the twelve-month period which began on January 1, 2003 and extends through December 31, 2003.
Effective on November 7, 2003, you are directed to increase the current limit for Category 363 to 49,503,927 numbers
The Committee for the Implementation of Textile Agreements has determined that this action falls within the foreign affairs exception to the rulemaking provisions of 5 U.S.C. 553(a)(1).
Sincerely,
Committee for the Implementation of Textile Agreements (CITA).
Issuing a directive to the Commissioner, Bureau of Customs and Border Protection establishing limits and guaranteed access levels
January 1, 2004.
Naomi Freeman, International Trade Specialist, Office of Textiles and Apparel, U.S. Department of Commerce, (202) 482-4212. For information on the quota status of these limits, refer to the Quota Status Reports posted on the bulletin boards of each Customs port, call (202) 927-5850, or refer to the Bureau of Customs and Border Protection website at http://www.customs.gov. For information on embargoes and quota re-openings, refer to the Office of Textiles and Apparel website at http://otexa.ita.doc.gov.
Section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854); Executive Order 11651 of March 3, 1972, as amended.
The import restraint limits and Guaranteed Access Levels (GALs) for textile products, produced or manufactured in the Dominican Republic and exported during the period January 1, 2004 through December 31, 2004 are based on limits notified to the Textiles Monitoring Body pursuant to the Uruguay Round Agreement on Textiles and Clothing (ATC).
These specific limits and guaranteed access levels do not apply to goods that qualify for quota-free entry under the Trade and Development Act of 2000.
In the letter published below, the Chairman of CITA directs the Commissioner, Bureau of Customs and Border Protection to establish the 2004 limits and guaranteed access levels.
These limits are subject to adjustment pursuant to the provisions of the ATC and administrative arrangements notified to the Textiles Monitoring Body. However, as the ATC and all restrictions thereunder will terminate on January 1, 2005, no adjustment for carryforward (borrowing from next year's limits for use in the current year) will be available.
A description of the textile and apparel categories in terms of HTS numbers is available in the CORRELATION: Textile and Apparel Categories with the Harmonized Tariff Schedule of the United States (see
Requirements for participation in the Special Access Program are available in
Dear Commissioner: Pursuant to section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854); Executive Order 11651 of March 3, 1972, as amended; and the Uruguay Round Agreement on Textiles and Clothing (ATC), you are directed to prohibit, effective on January 1, 2004, entry into the United States for consumption and withdrawal from warehouse for consumption of cotton, wool and man-made fiber textile products in the following categories, produced or manufactured in the Dominican Republic and exported during the twelve-month period beginning on January 1, 2004 and extending through December 31, 2004, in excess of the following levels of restraint:
The limits set forth above are subject to adjustment pursuant to the provisions of the ATC and administrative arrangements notified to the Textiles Monitoring Body.
Products in the above categories exported during 2003 shall be charged to the applicable category limits for that year (see directive dated October 18, 2002) to the extent of any unfilled balances. In the event the limits established for that period have been exhausted by previous entries, such products shall be charged to the limits set forth in this directive.
Also pursuant to the ATC, and under the terms of the Special Access Program, as set forth in 63 FR 16474 (April 3, 1998), effective on January 1, 2004, you are directed to establish guaranteed access levels for properly certified textile products in the following categories which are assembled in the Dominican Republic from fabric formed and cut in the United States and re-exported to the United States from the Dominican Republic during the period January 1, 2004 through December 31, 2004:
Any shipment for entry under the Special Access Program which is not accompanied by a valid and correct certification in accordance with the provisions of the certification requirements established in the directive of February 25, 1987 (52 FR 6595), as amended, shall be denied entry unless the Government of the Dominican Republic authorizes the entry and any charges to the appropriate specific limits. Any shipment which is declared for entry under the Special Access Program but found not to qualify shall be denied entry into the United States.
These specific limits and guaranteed access levels do not apply to goods that qualify for quota-free entry under the Trade and Development Act of 2000.
In carrying out the above directions, the Commissioner, Bureau of Customs and Border Protection should construe entry into the United States for consumption to include entry for consumption into the Commonwealth of Puerto Rico.
The Committee for the Implementation of Textile Agreements has determined that these actions fall within the foreign affairs exception of the rulemaking provisions of U.S.C.553(a)(1).
Sincerely,
Committee for the Implementation of Textile Agreements (CITA).
Issuing a directive to the Commissioner, Bureau of Customs and Border Protection establishing a limit.
January 1, 2004.
Ross Arnold, International Trade Specialist, Office of Textiles and Apparel, U.S. Department of Commerce, (202) 482-4212. For information on the quota status of these limits, refer to the Quota Status Reports posted on the bulletin boards of each Customs port, call (202) 927-5850, or refer to the Bureau of Customs and Border Protection website at http://www.customs.gov. For information on embargoes and quota re-openings, refer to the Office of Textiles and Apparel website at http://otexa.ita.doc.gov.
Section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854); Executive Order 11651 of March 3, 1972, as amended.
The import restraint limit for textile products, produced or manufactured in Fiji and exported during the period January 1, 2004 through December 31, 2004 is based on a limit notified to the Textiles Monitoring Body pursuant to the Uruguay Round Agreement on Textiles and Clothing (ATC).
In the letter published below, the Chairman of CITA directs the Commissioner, Bureau of Customs and Border Protection to establish the limit for the 2004 period.
This limit is subject to adjustment pursuant to the provisions of the ATC and administrative arrangements notified to the Textiles Monitoring Body. However, as the ATC and all restrictions thereunder will terminate on January 1, 2005, no adjustment for carryforward (borrowing from next year's limits for use in the current year) will be available.
A description of the textile and apparel categories in terms of HTS numbers is available in the CORRELATION: Textile and Apparel Categories with the Harmonized Tariff Schedule of the United States (see
Dear Commissioner: Pursuant to section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854); Executive Order 11651 of March 3, 1972, as amended; and the Uruguay Round Agreement on Textiles and Clothing (ATC), you are directed to prohibit, effective on January 1, 2004, entry into the United States for consumption and withdrawal from warehouse for consumption of cotton and man-made fiber textile products in Categories 338/339/638/639, produced or manufactured in Fiji and exported during the twelve-month period beginning on January 1, 2004 and extending through December 31, 2004, in excess of 2,368,663 dozen of which not more than 1,973,889 dozen shall be in Categories 338-S/339-S/638-S/639-S
The limit set forth above is subject to adjustment pursuant to the provisions of the ATC and administrative arrangements notified to the Textiles Monitoring Body.
Products in the above categories exported during 2003 shall be charged to the applicable category limit for that year (see directive dated October 8, 2002) to the extent of any unfilled balance. In the event the limit established for that period has been exhausted by previous entries, such products shall be charged to the limit set forth in this directive.
In carrying out the above directions, the Commissioner, Bureau of Customs and Border Protection should construe entry into the United States for consumption to include entry for consumption into the Commonwealth of Puerto Rico.
The Committee for the Implementation of Textile Agreements has determined that this action falls within the foreign affairs exception to the rulemaking provisions of 5 U.S.C. 553(a)(1).
Sincerely,
Committee for the Implementation of Textile Agreements (CITA).
Issuing a directive to the Commissioner, Bureau of Customs and Border Protection.
November 7, 2003.
Naomi Freeman, International Trade Specialist, Office of Textiles and Apparel, U.S. Department of Commerce, (202) 482-4212. For information on the quota status of these limits, refer to the Quota Status Reports posted on the bulletin boards of each Customs port, call (202) 927-5850, or refer to the Bureau of Customs and Border Protection website at http://www.customs.gov. For information on embargoes and quota re-openings, refer to the Office of Textiles and Apparel website at http://otexa.ita.doc.gov.
Section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854); Executive Order 11651 of March 3, 1972, as amended.
The current limits for certain categories are being adjusted for swing.
A description of the textile and apparel categories in terms of HTS numbers is available in the CORRELATION: Textile and Apparel Categories with the Harmonized Tariff Schedule of the United States (see
Dear Commissioner: This directive amends, but does not cancel, the directive issued to you on May 12, 2003, by the Chairman, Committee for the Implementation of Textile Agreements. That directive concerns imports of certain cotton, wool and man-made fiber textiles and textile products, produced or manufactured in Vietnam and exported during the twelve-month period which began on May 1, 2003 and extends through December 31, 2003.
Effective on November 7, 2003, you are directed to adjust the limits for the following categories, as provided for under the terms of the current bilateral textile agreement between the Governments of the United States and Vietnam:
The Committee for the Implementation of Textile Agreements has determined that these actions fall within the foreign affairs exception to the rulemaking provisions of 5 U.S.C. 553(a)(1).
Sincerely,
Department of Defense (DoD).
Notice and request for comments regarding a proposed extension of an approved information collection requirement.
In compliance with section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), DoD announces the proposed extension of a public information collection requirement and seeks public comment on the provisions thereof. DoD invites comments on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of DoD, including whether the information will have practical utility; (b) the accuracy of the estimate of the burden of the proposed information collection; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the
DoD will consider all comments received by January 6, 2004.
Respondents may submit comments via the Internet at
Respondents that cannot submit comments using either of the above methods may submit comments to: Defense Acquisition Regulations Council, Attn: Mrs. Karen Fischetti, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Facsimile (703) 602-0350. Please cite OMB Control Number 0704-0332.
At the end of the comment period, interested parties may view public comments on the Internet at
Mrs. Karen Fischetti, at (703) 602-0288. The information collection requirements addressed in this notice are available electronically via the Internet at:
DFARS Appendix I-111(a) requires mentor firms to report on the progress made under active mentor-protege agreements semiannually for the periods ending March 31st and September 30th. The September 30th report must address the entire fiscal year. Reports must include—
(1) Data on performance under the mentor-protege agreement, including dollars obligated, expenditures, credit taken under the Program, applicable subcontract awards under DoD contracts, developmental assistance provided, impact of the agreement, and progress of the agreement; and
(2) For each contract where developmental assistance was credited toward an SDB subcontracting goal, a copy of Standard Form 294, Subcontracting Report for Individual Contracts, with a statement identifying—
(i) The amount of dollars credited to the applicable subcontracting goal as a result of developmental assistance provided to protege firms under the Program; and
(ii) The number and dollar value of subcontracts awarded to the protege firm(s), broken out per protege.
DFARS Appendix I-111(b) requires the mentor firm and the protege firm to annually provide data on the progress made by the protege firm in employment, revenues, and participation in DoD contracts during each fiscal year of the Program participation term and each of the two fiscal years following the expiration of the Program participation term. During the Program participation term, the firms may provide this data as part of the mentor report required by I-111(a) for the period ending September 30th.
Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).
Notice of request for public comments regarding an extension to an existing OMB clearance.
Under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the Federal Acquisition Regulation (FAR) Secretariat will be submitting to the Office of Management and Budget (OMB) a request to review and approve an extension of a currently approved information collection requirement concerning debarment and suspension. The OMB clearance expires January 31, 2004.
Submit comments on or before January 6, 2004.
Submit comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden to the General Services Administration, FAR Secretariat (MVA), 1800 F Street, NW., Room 4035, Washington, DC 20405. Please cite OMB Control No. 9000-0094, Debarment and Suspension, in all correspondence.
Craig Goral, Acquisition Policy Division, GSA (202) 501-3856.
The FAR requires contracts to be awarded to only those contractors determined to be responsible. Instances where a firm or its principals have been indicted, convicted, suspended, proposed for debarment, debarred, or had a contract terminated for default are critical factors to be considered by the contracting officer in making a responsibility determination. This certification requires the disclosure of this information.
Department of Education.
The Leader, Regulatory Information Management Group, Office of the Chief Information Officer invites comments on the submission for OMB review as required by the Paperwork Reduction Act of 1995.
Interested persons are invited to submit comments on or before December 8, 2003.
Written comments should be addressed to the Office of Information and Regulatory Affairs, Attention: Lauren Wittenberg, Desk Officer, Department of Education, Office of Management and Budget, 725 17th Street, NW., Room 10235, New Executive Office Building, Washington, DC 20503 or should be electronically mailed to the internet address
Section 3506 of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35) requires that the Office of Management and Budget (OMB) provide interested Federal agencies and the public an early opportunity to comment on information collection requests. OMB may amend or waive the requirement for public consultation to the extent that public participation in the approval process would defeat the purpose of the information collection, violate State or Federal law, or substantially interfere with any agency's ability to perform its statutory obligations. The Leader, Regulatory Information Management Group, Office of the Chief Information Officer, publishes that notice containing proposed information collection requests prior to submission of these requests to OMB. Each proposed information collection, grouped by office, contains the following: (1) Type of review requested,
Responses: 80.
Burden Hours: 1,002,000.
Requests for copies of the submission for OMB review; comment request may be accessed from
Comments regarding burden and/or the collection activity requirements should be directed to Sheila Carey at her e-mail address
Department of Education.
The Leader, Regulatory Information Management Group, Office of the Chief Information Officer invites comments on the submission for OMB review as required by the Paperwork Reduction Act of 1995.
Interested persons are invited to submit comments on or before December 8, 2003.
Written comments should be addressed to the Office of Information and Regulatory Affairs, Attention: Lauren Wittenberg, Desk Officer, Department of Education, Office of Management and Budget, 725 17th Street, NW., Room 10235, New Executive Office Building, Washington, DC 20503 or should be electronically mailed to the internet address
Section 3506 of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35) requires that the Office of Management and Budget (OMB) provide interested Federal agencies and the public an early opportunity to comment on information collection requests. OMB may amend or waive the requirement for public consultation to the extent that public participation in the approval process would defeat the purpose of the information collection, violate State or Federal law, or substantially interfere with any agency's ability to perform its statutory obligations. The Leader, Regulatory Information Management Group, Office of the Chief Information Officer, publishes that notice containing proposed information collection requests prior to submission of these requests to OMB. Each proposed information collection, grouped by office, contains the following: (1) Type of review requested,
Responses: 150.
Burden Hours: 6,000.
This information collection is being submitted under the Streamlined Clearance Process for Discretionary Grant Information Collections (1890-0001). Therefore, the 30-day public comment period notice will be the only public comment notice published for this information collection.
Requests for copies of the submission for OMB review; comment request may be accessed from
Comments regarding burden and/or the collection activity requirements should be directed to Kathy Axt at her e-mail address,
Department of Energy.
Notice of subsequent arrangement.
This notice has been issued under the authority of Section 131 of the Atomic Energy Act of 1954, as amended (42 U.S.C. 2160). The Department is providing notice of a proposed “subsequent arrangement” under the Agreement for Cooperation Concerning Civil Uses of Atomic Energy between the United States and Canada and Agreement for Cooperation in the Peaceful Uses of Nuclear Energy between the United States and the European Atomic Energy Community (EURATOM).
This subsequent arrangement concerns the retransfer of 266,197 kg of U.S.-origin natural uranium hexafluoride, 180,000 kg of which is uranium, from Cogema Resources Inc., Saskatoon, Saskatchewan, Canada to Eurodif Production, Pierrelatte France. The material, which is now located at Cameco Corp., Port Hope, Ontario, will be transferred to Eurodif for enrichment. Upon completion of the enrichment, the material will be retransferred to the Kansai Electric Power Co. Inc, Osaka, Japan, the Chugoku Electric Power Co. Inc, Hiroshima, Japan, and the Tohoku Electric Power Co Inc., Miyagi, Japan for use as fuel. The uranium hexafluoride was originally obtained by the Cameco Corp. from Power Resources, Inc. pursuant to export license number XSOU8744.
In accordance with Section 131 of the Atomic Energy Act of 1954, as amended, we have determined that this subsequent arrangement is not inimical to the common defense and security.
This subsequent arrangement will take effect no sooner than fifteen days after the date of publication of this notice.
For the Department of Energy.
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Notice of petition for waiver and solicitation of comments.
Today's notice grants an Interim Waiver to Fisher & Paykel Appliances Limited (Fisher & Paykel), publishes Fisher & Paykel's Petition for Waiver from the existing Department of Energy (DOE or Department) clothes washer test procedure for its IW model clothes washer which has an adaptive control system, and seeks comment on that Petition for Waiver. The DOE clothes washer test procedure requires manufacturers of non-conventional clothes washers with adaptive control systems other than adaptive water fill control systems to seek such a waiver.
Fisher & Paykel seeks a waiver because its clothes washer model IW has an adaptive control system with two sensing modes, water level sensing and fabric sensing, to assess the type of load in the washer. This model does not have the conventional “normal” cycle used by the DOE clothes washer test procedure set forth in 10 CFR part 430, subpart B, appendix J, or the energy test cycle for washing cotton or linen clothes used in Appendix J1. Instead, Fisher & Paykel seeks to test the washer by determining a cycle that is equivalent to the normal cycle and the energy test cycle. The company proposes to test the default cycle that begins when a user pushes the power button to start the washer. This default cycle is the midpoint of the five settings controlled by the washer's “How Dirty” button, setting three. This waiver seeks only to confirm which test cycle to use. Fisher & Paykel will then follow the remaining steps of the existing test procedure to determine the energy consumption of the clothes washer. The Department is soliciting comments, data, and information regarding the Petition for Waiver.
The Department will accept comments, data, and information regarding this Petition for Waiver not later than December 8, 2003.
Please submit comments, data, and information electronically if possible. Comments should be sent to the following Internet address:
Written (paper) comments may be submitted to: Ms. Brenda Edwards-Jones, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Program, EE-2J, Case Number CW-012, 1000 Independence Avenue, SW., Washington, DC 20585-0121, (202) 586-2945. Please submit one signed copy—no telefacsimiles.
You may read copies of the public comments received in the resource room of the appliance office of the Building Technologies Program, room 1J-018 of the Forrestal Building at the U.S. Department of Energy, 1000 Independence Avenue, SW., Washington, DC, between the hours of 9 a.m. and 4 p.m., Monday through Friday, except Federal holidays. Please call Ms. Brenda Edwards-Jones at the above telephone number for additional information regarding visiting the resource room.
Barbara Twigg, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, EE-2J, 1000 Independence Avenue, SW., Washington, DC 20585-0121, (202) 586-8714, e-mail:
Title III of the Energy Policy and Conservation Act (EPCA) sets forth a variety of provisions designed to improve energy efficiency. Part B of title III (42 U.S.C. 6291-6309) provides for the Energy Conservation Program for Consumer Products Other Than Automobiles. Among its provisions, it requires DOE to prescribe standardized test procedures to measure the energy consumption of certain consumer products, including clothes washers. The intent of the test procedures is to provide a comparable measure of energy consumption that will assist consumers in making purchasing decisions. The test procedures for clothes washers are set forth in 10 CFR part 430, subpart B, appendix J and J1.
The Department's regulations in 10 CFR 430.27, set forth a process by which an interested person may seek a waiver and an interim waiver from the test procedure requirements for a covered consumer product. The waiver process allows the Assistant Secretary for Conservation and Renewable Energy (now known as the Assistant Secretary for Energy Efficiency and Renewable Energy) to waive temporarily test procedures for a particular basic model when a petitioner shows that the basic model contains one or more design characteristics which prevent testing according to the prescribed test procedures, or when the prescribed test procedures may evaluate the basic model in a manner so unrepresentative of its true energy consumption as to provide materially inaccurate comparative data. Waivers generally remain in effect until a revised test procedure becomes effective, thereby resolving the problem that is the subject of the waiver.
An Interim Waiver will be granted by the Assistant Secretary for Energy Efficiency and Renewable Energy if it is determined that the applicant will experience economic hardship if the Application for Interim Waiver is denied, if it appears likely that the Petition for Waiver will be granted, and/or the Assistant Secretary determines that it would be desirable for public policy reasons to grant immediate relief pending a determination on the Petition for Waiver. 10 CFR 430.27 (g). An Interim Waiver remains in effect for a period of 180 days from the date of issuance or until DOE issues its determination on the Petition for Waiver, whichever is sooner, and may be extended for an additional 180 days, if necessary. 10 CFR 430.27(h).
In addition to the waiver process outlined in 10 CFR 430.27, the clothes washer test procedure published August 27, 1997, specifically requires manufacturers of clothes washers with an adaptive control system, other than an adaptive water fill control system, to obtain a waiver to establish an acceptable test procedure for each such clothes washer. 62 FR 45501, 45514. Neither Appendix J (in effect through December 31, 2003) nor Appendix J1 (effective January 1, 2004) of that test procedure provides a means for determining the energy consumption of a clothes washer with an adaptive control system.
On March 26, 2003, Fisher & Paykel filed an Application for Interim Waiver and a Petition for Waiver regarding its clothes washer model IW which has an adaptive control system that affects more than the water fill and cannot be tested accurately using the existing test procedure. Instead of having a means to select a “normal” cycle for testing (per Appendix J) or an energy test cycle for washing cottons and linens for testing (per Appendix J1), the machine features two sensing modes, water level sensing and fabric sensing, to determine the wash action. Both sensing modes employ specific agitator strokes and then assess the load's response to those agitator strokes. When a customer pushes the start button, the IW washer will, like many washers, go through an automatic sensing process to determine the water level. However, it will also sense the fabric type of the load and assign an agitator profile for that cycle. With additional input from the “How Dirty” setting, the washer will automatically select the appropriate wash action. Although users can adjust the “How Dirty” setting according to their assessment of the dirtiness of the load of clothes, if no choice is made, the power/start button will automatically select the midpoint of the “How Dirty” response as the default setting. This midpoint, setting three out of five possible settings, instructs the washer to wash on a medium soil level, the soil level suggested in the Fisher & Paykel user guide for washing a normal wash load with the IW model. Fisher & Paykel proposes to test the IW clothes washer on this midpoint, default setting activated by the power/start button, believing that it is the closest equivalent to a “normal” cycle. After the initiation of the default cycle, Fisher & Paykel will conduct the remainder of the energy consumption test according to the established test procedure.
Fisher & Paykel states that the “How Dirty” setting only affects the energy consumed by the motor, a small proportion of the total energy consumed by the wash cycle. The company provided test data to show the energy used per cycle by the five “How Dirty” settings, ranging from 0.086 kWhr/cycle to 0.121 kWhr/cycle. Since the variation in energy consumption among the five “How Dirty” settings will be insignificant compared to the total energy consumption of the clothes washer, the selection of the default cycle at the midpoint setting would seem to provide a fair equivalent of the traditional “normal” cycle for testing.
On August 4, 2003, Fisher & Paykel certified to the Department that it had circulated copies of its Application for Interim Waiver and Petition for Waiver to all known clothes washer manufacturers for comment. On September 15, 2003, the Department received copies of questions submitted by members of the Association of Home Appliance Manufacturers (AHAM) to Fisher & Paykel, in response to the circulated waiver, along with minutes from a conference call held on August 21, 2003, between AHAM Home Laundry Specialists and Fisher & Paykel, to discuss the waiver. The AHAM members requested clarifications on two points: (1) Confirmation that the #3 “How Dirty” setting met the 70 percent minimum run time requirement for the test procedure, and (2) Fisher & Paykel's intent regarding the selection of both maximum and minimum spin cycles. Subsequent to this discussion, Fisher & Paykel made changes to the waiver to clarify these issues. It added a table to show the wash times for each “How Dirty” setting and language to make clear that both the maximum and minimum spin speeds would be included in the test. Fisher & Paykel resubmitted its waiver to the Department with the revisions requested by the AHAM clothes washer manufacturers on August 31, 2003. On September 15, 2003, AHAM reported to the Department that the changes made to the waiver by Fisher & Paykel were acceptable to its members. DOE received no additional comments.
Based on the above, the Department agrees that the Fisher & Paykel IW clothes washer, using an adaptive control system without a “normal” cycle, has a design characteristic which prevents the company from testing that model according to the prescribed test procedures. Because Fisher & Paykel has suggested a reasonable method for selecting an equivalent cycle for testing and will conduct the remainder of the test procedure according to the established DOE test procedure, the Department believes that it is likely that this Petition for Waiver will be granted. To deny Fisher & Paykel the ability to test and market an adaptive control clothes washer in the United States would discourage innovation, deny consumers new options in clothes washer features, and create economic hardship for the company.
The Department is therefore granting Fisher & Paykel the Interim Waiver it has requested for its IW clothes washer. Fisher & Paykel shall be permitted to test its adaptive control clothes washer using the default cycle which begins when a consumer presses the power/start button and does not manually select an alternative “How Dirty” setting.
This Interim Waiver is based upon the presumed validity of statements and all allegations submitted by the company. This Interim Waiver may be removed or modified at any time upon a determination that the factual basis underlying the Application is incorrect.
This Interim Waiver shall remain in effect for a period of 180 days after issuance or until DOE acts on the Petition for Waiver, whichever is sooner, and may be extended for an additional 180-day period, if necessary. Pursuant to 10 CFR 430.27(b), DOE is hereby publishing the “Petition for Waiver” in its entirety. The Petition contains no confidential information. The Department solicits comments, data, and information respecting the Petition. Any person submitting written comments to DOE concerning either the Petition for Waiver or Interim Waiver must also send a copy of such comments to the petitioner. 10 CFR 430.27(b)(1)(iv) and 430.27(d).
Western Area Power Administration, DOE.
Notice of rate order.
This action is taken to extend the existing Pacific Northwest-Pacific Southwest Intertie Project (AC Intertie) firm point-to-point transmission service rate for the 230/345-kilovolt (kV) transmission system, Rate Order No. WAPA-76, and firm point-to-point transmission service rate for the 500-kV transmission system, and the nonfirm point-to-point transmission service rate for the 230/345/500-kV, Rate Order No. WAPA-91, through December 31, 2006. AC Intertie Project rates will expire December 31, 2003.
Mr. Jack Murray, Rates Team Lead, Desert Southwest Customer Service Region, Western Area Power Administration, P.O. Box 6457, Phoenix, AZ 85005-6457, (602) 352-2442, or e-mail
By Delegation Order No. 00-037.00 effective December 6, 2001, the Secretary of Energy delegated: (1) The authority to develop long-term power and transmission rates on a non-exclusive basis to Western's Administrator; (2) the authority to confirm, approve, and place such rates into effect on an interim basis to the Deputy Secretary; and (3) the authority to confirm, approve, and place into effect on a final basis, to remand, or to disapprove, such rates to the Federal Energy Regulatory Commission (FERC).
Western's firm point-to-point transmission service rate for the AC Intertie 230/345-kV transmission system was revised through Rate Order No. WAPA-76 and submitted to FERC for confirmation and approval on February 8, 1999. On June 22, 1999, in Docket No. EF99-5191-000, 87 FERC ¶ 61,346, FERC issued an order confirming, approving, and placing into effect on a final basis the firm point-to-point transmission service rate of $12.00/kilowattyear for the AC Intertie 230/345-kV transmission system. The rate was approved for 5 years from January 1, 1999, to December 31, 2003.
During the firm point-to-point transmission service rate development for the AC Intertie 230/345-kV transmission system (Rate Order No. WAPA-76), Western determined that it would take about 10 years for the AC Intertie 500-kV transmission system to be subscribed to a level sufficient to meet its own revenue repayment requirements. The ratesetting Power Repayment Study (PRS) established for the AC Intertie 230/345/500-kV transmission system (Rate Order No. WAPA-76) reflected the phasing-in of AC Intertie 500-kV transmission system revenues starting in fiscal year (FY) 1999 through FY 2008. The projected firm transmission sales in the 500-kV transmission system PRS assume that in 10 years the 500-kV Project will be economically viable and capable of demonstrating repayment. The PRS was programmed for first year sales of 62.5 megawatt (MW) and annual increases of 100 MW through the tenth year. Based on that projection, the total sales target projected at the end of fiscal year 2003 was 562.5 MW. The 500-kV system contractual commitments are currently 664 MW. The 230/345-kV system contractual commitments are 1,059 MW. The total combined firm transmission sales beginning in FY 2004 is projected to be 1,723 MW. This ratesetting PRS methodology remains valid. Projected revenue levels from sales of firm and nonfirm point-to-point transmission service and miscellaneous items will recover project expenses and capital requirements through FY 2049 for the AC Intertie 230/345/500-kV transmission system.
On August 15, 2000, the Deputy Secretary approved Rate Order WAPA-91. This extended the existing firm point-to-point transmission service rate of $17.23/kilowattyear for the AC Intertie 500-kV transmission system, and the existing nonfirm point-to-point transmission service rate of 2.00 mills/kWh for the AC Intertie 230/345/500-kV transmission system through December 31, 2003.
Western has decided to extend the existing firm point-to-point transmission service rate of $17.23/kilowattyear for the AC Intertie 500-kV transmission system, firm point-to-point transmission service rate of $12.00/kilowattyear for the AC Intertie 230/345-kV transmission system, and the nonfirm point-to-point transmission service rate of 2.00 mills/kilowatthour for the AC Intertie 230/345/500-kV transmission system through December 31, 2006. This extension will also allow Western time to evaluate impacts of combining revenue requirements of the Desert Southwest Region's transmission systems and to determine a methodology to put in place a multi-system transmission rate. Western proposes to extend the current rates pursuant to 10 CFR 903.23. Upon its approval, Rate Order No. WAPA-76 and Rate Order No. WAPA-91 will be extended under Rate Order No. WAPA-108. Under 10 CFR 903.23(a)(2), Western did not have a consultation and comment period. Western held an informal public information forum.
Following review of Western's proposal within the Department of Energy, I approved Rate Order No. WAPA-108, which extends the existing firm point-to-point transmission service rate of $17.23/kilowattyear for the AC Intertie 500-kV transmission system, the firm point-to-point transmission service rate of $12.00/kilowattyear for the AC Intertie 230/345-kV transmission system, and the nonfirm point-to-point transmission service rate of 2.00 mills/kilowatthour for the AC Intertie 230/345/500-kV transmission system on an interim basis through December 31, 2006. Rate Order No. WAPA-108 will be submitted to FERC for confirmation and approval on a final basis.
The Pacific Northwest-Pacific Southwest Intertie Project (AC Intertie) transmission service rates were established following section 302(a) of the Department of Energy (DOE) Organization Act (42 U.S.C. 7152(a)). This act transferred to and vested in the Secretary of Energy (Secretary) the power marketing functions of the Secretary of the Department of the Interior and the Bureau of Reclamation under the Reclamation Act of 1902, ch. 1093, 32 Stat. 388, as amended and supplemented by subsequent enactments, particularly section 9(c) of the Reclamation Project Act of 1939, 43 U.S.C. 485h(c), and other acts that specifically apply to the project system involved.
By Delegation Order No. 00-037.00 effective December 6, 2001, the Secretary of Energy delegated: (1) The authority to develop long-term power and transmission rates on a non-exclusive basis to Western's Administrator; (2) the authority to confirm, approve, and place such rates into effect on an interim basis to the Deputy Secretary; and (3) the authority to confirm, approve, and place into effect on a final basis, to remand, or to disapprove, such rates to the Federal Energy Regulatory Commission (FERC). This rate extension is issued following the Delegation Order and the DOE rate extension procedures at 10 CFR part 903.
Western's firm point-to-point transmission service rate for the AC Intertie 230/345-kV transmission system was revised through Rate Order No. WAPA-76 and submitted to FERC for confirmation and approval on February 8, 1999. On June 22, 1999, in Docket No. EF99-5191-000, 87 FERC ¶ 61,346, FERC issued an order confirming, approving, and placing into effect on a final basis the firm point-to-point transmission service rate of $12.00/kilowattyear for the AC Intertie 230/345-kV transmission system. The rate was approved for 5 years from January 1, 1999, to December 31, 2003.
On August 15, 2000, the Deputy Secretary approved Rate Order WAPA-91. This extended the existing firm point-to-point transmission service rate of $17.23/kilowattyear for the AC Intertie 500-kV transmission system, and the existing nonfirm point-to-point transmission service rate of 2.00 mills/kWh for the AC Intertie 230/345/500-kV transmission system through December 31, 2003.
During development of the firm point-to-point transmission service rate for the AC Intertie 230/345-kV transmission system (Rate Order No. WAPA-76), Western determined that it would take about 10 years for the AC Intertie 500-kV transmission system to be subscribed to a level sufficient to meet its own revenue repayment requirements. The ratesetting Power Repayment Study (PRS) established for the AC Intertie 230/345/500-kV transmission system (Rate Order No. WAPA-76) reflected the phasing-in of the AC Intertie 500-kV transmission system revenues starting in fiscal year (FY) 1999 through FY 2008. The projected firm transmission sales in the 500-kV transmission system PRS assume that in 10 years the 500-kV Project will be economically viable and capable of demonstrating repayment. The PRS was programmed for first year sales of 62.5 MW and annual increases of 100 MW through the tenth year. Based on that projection, the total sales target projected at the end of fiscal year 2003 is 562.5 MW. The 500-kV system contractual commitments are currently 664 MW. The 230/345-kV system contractual commitments are 1,059 MW. The total combined firm transmission sales beginning in FY 2004 is projected to be 1,723 MW. This ratesetting PRS methodology remains valid. Projected revenue levels from sales of firm and nonfirm point-to-point transmission service and miscellaneous items will recover project expenses and capital requirements through FY 2049 for the AC Intertie 230/345/500-kV transmission system.
Western has decided to extend the existing firm point-to-point transmission service rate of $17.23/kilowattyear for the AC Intertie 500-kV transmission system, the firm point-to-point transmission service rate of $12.00/kilowattyear for the AC Intertie 230/345-kV transmission system, and the nonfirm point-to-point transmission service rate of 2.00 mills/kilowatthour for the AC Intertie 230/345/500-kV transmission system through December 31, 2006. This extension will also allow Western time to evaluate impacts of combining revenue requirements of the Desert Southwest Region's transmission systems and to determine a methodology to put in place a multi-system transmission rate. Western proposes to extend the current rates pursuant to 10 CFR 903.23. Upon its approval, Rate Order No. WAPA-76 and Rate Order No. WAPA-91 will be extended under Rate Order No. WAPA-108. Under 10 CFR 903.23(a)(2), Western did not have a consultation and comment period.
In view of the above and under the authority delegated to me by the Secretary, I hereby extend from December 31, 2003, to December 31, 2006, the existing firm point-to-point transmission service rate of $17.23/kilowattyear for the AC Intertie 500-kV transmission system, the firm point-to-point transmission service rate of $12.00/kilowattyear for the AC Intertie 230/345-kV transmission system, and the nonfirm point-to-point transmission service rate of 2.00 mills/kilowatthour for the AC Intertie 230/345/500-kV transmission system on an interim basis. The existing AC Intertie transmission system rates for transmission service shall remain in effect pending FERC confirmation and approval of their extension or substitute rates on a final basis through December 31, 2006.
Availability of EPA comments prepared pursuant to the Environmental Review Process (ERP), under section 309 of the Clean Air Act and section 102(2)(c) of the National Environmental Policy Act as amended. Requests for copies of EPA comments can be directed to the Office of Federal Activities at (202) 564-7167. An explanation of the ratings assigned to draft environmental impact statements (EISs) was published in FR dated April 4, 2003 (68 FR 16511).
ERP No. D-AFS-J65390-CO Rating EC1, Arapaho National Recreation Area Forest Health and Fuels Reduction Project, Pre-Suppression Measures for Mountain Pine Beetle Infestation Reduction in Stands of Lodgepole Pine, Implementation, Arapaho National Forest, Sulphur Ranger District, Grand County, CO.
ERP No. D-FHW-G40177-LA Rating LO, Kansas Lane Connector Project, Construction between U.S. 80 (Desiard Street) and U.S. 165 and the Forsythe Avenue Extension, U.S. Army COE Section 10 and 404 Permits Issuance, City of Monroe, Quachita Parish, LA.
ERP No. D-FRA-E40799-FL Rating EC1, Florida High Speed Rail from Tampa to Orlando, Transportation Improvement, NPDES Permit and US Army COE Section 404 Permit, Hillsborough, Orange, Osceola and Polk Counties, FL.
ERP No. D-NOA-A91069-00 Rating EC2, Atlantic Tunas, Swordfish, and Sharks Fishery Management Plan, To Prevent Overfishing and Rebuild Overfished Species, Update Essential Fish Habitat, Atlantic, Gulf of Mexico and Caribbean Sea.
ERP No. F-AFS-K26002-CA, South Tahoe Public Utility District (STPUD) B-Line Phase III Wastewater Export Pipeline Replacement Project, Luther Pass Pump Station to U.S. Forest Service Luther Pass Overflow Campground Access Road, Special Use Permit, U.S. Army COE Section 404 and U.S. Fish and Wildlife Service Permits Issuance and EPA Grant, El Dorado and Alpine Counties, CA.
ERP No. F-DOD-A11077-00, Ground-Based Midcourse Defense (GMD) Extended Test Range (ETR) Project, Construction and Operation, CA, AK, AS, HI and WA.
ERP No. F-FHW-J40157-MT, US 89 from Fairfield to Dupuyer Corridors Study, Reconstruction, Widening,
ERP No. F-NPS-F65031-MN, Grand Portage National Monument General Management Plan, Implementation, Cook County, MN.
This document is available on the Internet at:
This document is available on the Internet at:
Revision of FR Notice Published on 9/19/03: CEQ Comment Period Ending 11/03/2003 has been Extended to 1/2/2004.
Environmental Protection Agency (EPA).
Notice.
This notice announces the availability of the revised Interim Reregistration Eligibility Decision (IRED) document for the pesticide active ingredient atrazine. EPA has completed its revised IRED for atrazine consistent with the August 8, 2002, consent decree
Comments, identified by docket ID number OPP-2003-0367, must be received on or before February 5, 2004.
Comments may be submitted electronically, by mail, or through hand delivery/courier. Follow the detailed instructions as provided in Unit I. of the
Eric R. Olson, Special Review and Reregistration Division (7508C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001; telephone number: (703) 308-8067; fax number: (703) 308-8041; e-mail address:
This action is directed to the public in general. This action may, however, be of interest to persons who are or may be required to conduct testing of chemical substances under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) or the Federal Food, Drug, and Cosmetic Act (FFDCA); environmental, human health, and agricultural advocates; pesticide users; and members of the public interested in the use of pesticides. Since other entities may also be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under
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An electronic version of the revision to the atrazine IRED is available electronically through the EPA Internet at
An electronic version of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. You may use EPA Dockets at
Certain types of information will not be placed in the EPA Dockets. Information claimed as CBI and other information whose disclosure is restricted by statute, which is not included in the official public docket, will not be available for public viewing in EPA's electronic public docket. EPA's policy is that copyrighted material will not be placed in EPA's electronic public docket but will be available only in printed, paper form in the official public docket. To the extent feasible, publicly available docket materials will be made available in EPA's electronic public docket. When a document is selected from the index list in EPA Dockets, the system will identify whether the document is available for viewing in EPA's electronic public docket. Although not all docket materials may be available electronically, you may still access any of the publicly available docket materials through the docket facility identified in Unit I.B. EPA intends to work towards providing electronic access to all of the publicly available docket materials through EPA's electronic public docket.
For public commenters, it is important to note that EPA's policy is that public comments, whether submitted electronically or in paper, will be made available for public viewing in EPA's electronic public docket as EPA receives them and without change, unless the comment contains copyrighted material, CBI, or other information whose disclosure is restricted by statute. When EPA identifies a comment containing copyrighted material, EPA will provide a reference to that material in the version of the comment that is placed in EPA's electronic public docket. The entire printed comment, including the copyrighted material, will be available in the public docket.
Public comments submitted on computer disks that are mailed or delivered to the docket will be transferred to EPA's electronic public docket. Public comments that are mailed or delivered to the docket will be scanned and placed in EPA's electronic public docket. Where practical, physical objects will be photographed, and the photograph will be placed in EPA's electronic public docket along with a brief description written by the docket staff.
You may submit comments electronically, by mail, or through hand delivery/courier. To ensure proper receipt by EPA, identify the appropriate docket ID number in the subject line on the first page of your comment. Please ensure that your comments are submitted within the specified comment period. Comments received after the close of the comment period will be marked “late.” EPA is not required to consider these late comments. If you wish to submit CBI or information that is otherwise protected by statute, please follow the instructions in Unit I.D. Do not use EPA Dockets or e-mail to submit CBI or information protected by statute.
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Do not submit information that you consider to be CBI electronically through EPA's electronic public docket or by e-mail. You may claim information that you submit to EPA as CBI by marking any part or all of that information as CBI (if you submit CBI on disk or CD ROM, mark the outside of the disk or CD ROM as CBI and then identify electronically within the disk or CD ROM the specific information that is CBI). Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.
In addition to one complete version of the comment that includes any information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket and EPA's electronic public docket. If you submit the copy that does not contain CBI on disk or CD ROM, mark the outside of the disk or CD ROM clearly that it does not contain CBI. Information not marked as CBI will be included in the public docket and EPA's electronic public docket without prior notice. If you have any questions about CBI or the procedures for claiming CBI, please consult the person listed under
You may find the following suggestions helpful for preparing your comments:
1. Explain your views as clearly as possible.
2. Describe any assumptions that you used.
3. Provide any technical information and/or data you used that support your views.
4. If you estimate potential burden or costs, explain how you arrived at your estimate.
5. Provide specific examples to illustrate your concerns.
6. Offer alternatives.
7. Make sure to submit your comments by the comment period deadline identified.
8. To ensure proper receipt by EPA, identify the appropriate docket ID number in the subject line on the first page of your response. It would also be helpful if you provided the name, date, and
EPA has completed its revised IRED for atrazine consistent with the August 8, 2002, consent decree between the Natural Resources Defense Council and EPA and consistent with the January 31, 2003, Atrazine IRED released to the public through a notice published in the
The revised IRED also includes an ecological monitoring and mitigation program developed to address indirect ecological effects of atrazine in watersheds. The ecological level of concern and the monitoring and mitigation program were developed by a cross-Agency workshop that includes the Office of Pesticide Programs (OPP), Office of Water (OW), and the Office of Research and Development (ORD), along with Syngenta Crop Protection, Inc. Concurrent with the release of the revision to the atrazine IRED, EPA's OW is publishing its draft aquatic life criteria document for atrazine for comment elsewhere in this issue of the
Provided that the measures outlined in the revised IRED are adopted, atrazine remains eligible for reregistration. EPA's next step under FQPA is to complete a cumulative risk assessment and risk management decision for the triazine pesticides, which share a common mechanism of toxicity. This revision to the IRED document for atrazine cannot be considered a final reregistration
When the cumulative risk assessment for the triazine pesticides has been completed, EPA will issue its final tolerance reassessment decision for atrazine and further risk mitigation measures may be needed.
The legal authority for this IRED falls under FIFRA, as amended in 1988 and 1996. Section 4(g)(2)(A) of FIFRA directs that, after submission of all data concerning a pesticide active ingredient, “the Administrator shall determine whether pesticides containing such active ingredient are eligible for reregistration,” before calling in product specific data on individual end-use products, and either reregistering products or taking “other appropriate regulatory action.”
Environmental protection, chemicals, pesticide(s) and pests.
Environmental Protection Agency (EPA).
Notice.
This notice announces the initial filing of a pesticide petition proposing the establishment of regulations for residues of a certain pesticide chemical in or on various food commodities.
Comments, identified by docket ID number OPP-2003-0255, must be received on or before December 8, 2003.
Comments may be submitted electronically, by mail, or through hand delivery/courier. Follow the detailed instructions as provided in Unit I. of the
Barbara Mandula, Biopesticides and Pollution Prevention Division (7511C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001; telephone number: (703) 308-7378; e-mail address:
You may be potentially affected by this action if you are an agricultural producer, food manufacturer or pesticide manufacturer. Potentially affected entities may include, but are not limited to:
• Crop production (NAICS 111)
• Animal production on (NAICS 112)
• Food manufacturing (NAICS 311)
• Pesticide manufacturing (NAICS 32532)
This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under
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An electronic version of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. You may use EPA Dockets at
Certain types of information will not be placed in the EPA Dockets. Information claimed as CBI and other information whose disclosure is restricted by statute, which is not included in the official public docket, will not be available for public viewing in EPA's electronic public docket. EPA's policy is that copyrighted material will not be placed in EPA's electronic public docket but will be available only in printed, paper form in the official public docket. To the extent feasible, publicly available docket materials will be made available in EPA's electronic public docket. When a document is selected from the index list in EPA Dockets, the system will identify whether the document is available for viewing in EPA's electronic public docket. Although, not all docket materials may be available electronically, you may still access any of the publicly available docket materials through the docket facility identified in Unit I.B.1. EPA intends to work towards providing electronic access to all of the publicly available docket materials through EPA's electronic public docket.
For public commenters, it is important to note that EPA's policy is that public comments, whether submitted electronically or on paper, will be made available for public viewing in EPA's electronic public docket as EPA receives them and without change, unless the comment contains copyrighted material, CBI, or other information whose disclosure is restricted by statute. When EPA identifies a comment containing copyrighted material, EPA will provide a reference to that material in the version of the comment that is placed in EPA's electronic public docket. The entire printed comment, including the copyrighted material, will be available in the public docket.
Public comments submitted on computer disks that are mailed or
You may submit comments electronically, by mail, or through hand delivery/courier. To ensure proper receipt by EPA, identify the appropriate docket ID number in the subject line on the first page of your comment. Please ensure that your comments are submitted within the specified comment period. Comments received after the close of the comment period will be marked “late.” EPA is not required to consider these late comments. If you wish to submit CBI or information that is otherwise protected by statute, please follow the instructions in Unit I.D. Do not use EPA Dockets or e-mail to submit CBI or information protected by statute.
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Do not submit information that you consider to be CBI electronically through EPA's electronic public docket or by e-mail. You may claim information that you submit to EPA as CBI by marking any part or all of that information as CBI (if you submit CBI on disk or CD ROM, mark the outside of the disk or CD ROM as CBI and then identify electronically within the disk or CD ROM the specific information that is CBI). Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.
In addition to one complete version of the comment that includes any information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket and EPA's electronic public docket. If you submit the copy that does not contain CBI on disk or CD ROM, mark the outside of the disk or CD ROM clearly that it does not contain CBI. Information not marked as CBI will be included in the public docket and EPA's electronic public docket without prior notice. If you have any questions about CBI or the procedures for claiming CBI, please consult the person listed under
You may find the following suggestions helpful for preparing your comments:
1. Explain your views as clearly as possible.
2. Describe any assumptions that you used.
3. Provide copies of any technical information and/or data you used that support your views.
4. If you estimate potential burden or costs, explain how you arrived at the estimate that you provide.
5. Provide specific examples to illustrate your concerns.
6. Make sure to submit your comments by the deadline in this notice.
7. To ensure proper receipt by EPA, be sure to identify the docket ID number assigned to this action in the subject line on the first page of your response. You may also provide the name, date, and
EPA has received a pesticide petition as follows proposing the establishment and/or amendment of regulations for residues of a certain pesticide chemical in or on various food commodities under section 408 of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a. EPA has determined that this petition contains data or information regarding the elements set forth in FFDCA section 408(d)(2); however, EPA has not fully evaluated the sufficiency of the submitted data at this time or whether the data support granting of the petition. Additional data may be needed before EPA rules on the petition.
Environmental protection, Agricultural commodities, Feed additives, Food additives, Pesticides and pests, Reporting and recordkeeping requirements.
The petitioner summary of the pesticide petition is printed below as required by FFDCA section 408(d)(3). The summary of the petition was prepared by W. F. Stoneman Company LLC and represents the view of the petitioner. The petition summary announces the availability of a description of the analytical methods available to EPA for the detection and measurement of the pesticide chemical residues or an explanation of why no such method is needed.
EPA has received a pesticide petition 3F6737 from W.F. Stoneman Company LLC (on behalf of Prophyta Biologischer Pflanzenschutz GmbH), 6307 Mourning Dove Drive, McFarland, Wisconsin 53558-9019, proposing pursuant to section 408(d) of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a(d), to amend 40 CFR part 180, to establish an exemption from the requirement of a tolerance for residues of the microbial pesticide
Pursuant to section 408(d)(2)(A)(i) of the FFDCA, as amended, W.F. Stoneman Company LLC (on behalf of Prophyta Biologischer Pflanzenschutz GmbH) has submitted the following summary of information, data, and arguments in support of their pesticide petition. This summary was prepared by W.F. Stoneman Company LLC (on behalf of Prophyta Biologischer Pflanzenschutz GmbH) and EPA has not fully evaluated the merits of the pesticide petition. The summary may have been edited by EPA if the terminology used was unclear, the summary contained extraneous material, or the summary unintentionally made the reader conclude that the findings reflected EPA's position and not the position of the petitioner.
MeloCon
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• Product name. MeloCon
• Active ingredient.
• CAS No. Not applicable
• Color. Pink
• Physical state. Non-dusty, water dispersible granules
• Odor. Odorless
• Bulk density. 500-550 kg/cubic meter
• pH. Before storage, the pH of PBP-01001-I was 6.86 (mean of two replications). After storage at a temperature of 40°C for a period of 8 weeks, the pH of the product was 5.52 (mean of two replications).
• Mode of action. Control of plant-parasitic nematodes by
In 1979.
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In most of the crops envisaged for use of the active ingredient no deposit is likely to occur, since soil drench applications rule out a direct contact between the applied product and the fruit. This applies to all crops with above ground harvest, such as grapes, tomato, and tobacco. After harvest any remaining fungal spores on potato, celery and carrots will be exposed to unfavorable conditions (e.g. dryness), and are not likely to germinate and grow on the harvested crop.
Any potentially occurring residual deposits on these crops will not harm humans because the strain shows no toxicity in appropriate tests and any such residues will be very low due to the low environmental concentration in soil predicted from maximum field use of the active ingredient.
MeloCon
In addition, the temperature profile for this strain of
In conclusion, all submitted toxicological studies and supplemental information on
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Any potentially occurring residual deposits on these crops are not relevant as a human health concern in view of the toxicological profile of this strain. The amount of residue, if any, is likely to be very low.
Residues of the active ingredient are not expected on agricultural commodities.
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No residues are expected to remain in human food and no cumulative effects of this microbial nematicide are expected.
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In most of the crops envisaged for use of the active ingredient no residue is expected on the food, since soil drench applications rule out a direct contact between the applied product and the fruit. This applies to all crops with above ground harvest, such as grapes, tomato, and tobacco. After harvest, any remaining fungal spores on potato, celery and carrots will be exposed to unfavorable conditions (e.g. dryness), and are not likely to germinate and grow on the harvested crop.
2.
There is no reason to expect any effects of
EPA no tolerance to date.
Australia has granted a Certificate of an exemption for an active constituent (National Registration Authority, Australia 1998).
Environmental Protection Agency (U.S. EPA).
Administrative order on consent.
In accordance with the requirements of the Comprehensive Environmental Response, Compensation, and Liability Act, as amended (“CERCLA”), 42 U.S.C. 9601
The NWOD is located in northern Salt Lake and in Davis Counties, northwest of downtown Salt Lake City, Utah. The NWOD is a series of former and existing unlined canals consisting of two systems, the 8.6 mile north west flowing and open section and the non-flowing section
Comments must be submitted to EPA on or before 30 days from date of publication.
Comments should be addressed to Nancy A. Mangone, (8ENF-L), Enforcement Attorney, U.S. Environmental Protection Agency, Region VIII, 999 18th Street, Suite 300, Denver, Colorado 80202-2466, and should refer to: In the Matter of: Administrative Order On Consent For Removal Action, Northwest Oil Drain Superfund Site, Salt Lake City, UT.
Nancy A. Mangone, (8ENF-L), Enforcement Attorney, U.S. Environmental Protection Agency, Region VIII, 999 18th Street, Suite 300, Denver, Colorado, 80202-2466, (303) 312-6903.
Environmental Protection Agency (EPA).
Notice of availability and request for scientific views.
This action notifies the public about the availability of a revised draft aquatic life criteria document for atrazine and requests scientific views. The Clean Water Act (CWA) requires the Environmental Protection Agency (EPA) to develop and publish, and from time to time revise, criteria for water accurately reflecting the latest scientific knowledge. When final, these criteria will provide EPA's recommendations to States and authorized Tribes as they establish their water quality standards as State or Tribal law or regulation. At this time the Agency is not making a final recomendation, rather the Agency is requesting scientific views on the draft document.
All significant scientific information must be submitted to the Agency on or before February 5, 2004.
Scientific views must be submitted electronically, by mail, or through hand-delivery/courier. Follow detailed instructions as provided in section C of the
Frank Gostomski, Health and Ecological Criteria Division (4304), U.S. EPA, 1200 Pennsylvania Avenue NW., Washington, DC 20460; (202) 566-1105;
Entities potentially interested in today's notice are those that produce, use, or regulate atrazine. Categories and entities interested in today's action include:
This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be
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An electronic version of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. You may use EPA Dockets at
Certain types of information will not be placed in the EPA Dockets. Information claimed as CBI and other information whose disclosure is restricted by statute, which is not included in the official public docket, will not be available for public viewing in EPA's electronic public docket. EPA's policy is that copyrighted material will not be placed in EPA's electronic public docket but will be available only in printed, paper form in the official public docket. To the extent feasible, publicly available docket materials will be made available in EPA's electronic public docket. When a document is selected from the index list in EPA Dockets, the system will identify whether the document is available for viewing in EPA's electronic public docket. Although not all docket materials may be available electronically, you may still access any of the publicly available docket materials through the docket facility identified in section I.B.
It is important to note that EPA's policy is that scientific views, whether submitted electronically or in paper, will be made available for public viewing in EPA's electronic public docket as EPA receives them and without change, unless your views and information contain copyrighted material, CBI, or other information whose disclosure is restricted by statute. When EPA identifies a scientific view containing copyrighted material, EPA will provide a reference to that material in the version of the scientific view that is placed in EPA's electronic public docket. The entire printed scientific view, including the copyrighted material, will be available in the public docket.
Scientific views submitted on computer disks that are mailed or delivered to the docket will be transferred to EPA's electronic public docket. Scientific views that are mailed or delivered to the Docket will be scanned and placed in EPA's electronic public docket. Where practical, physical objects will be photographed, and the photograph will be placed in EPA's electronic public docket along with a brief description written by the docket staff.
You may submit scientific views electronically, by mail, by facsimile, or through hand delivery/courier. To ensure proper receipt by EPA, identify the appropriate docket identification number in the subject line on the first page of your scientific views. Please ensure that your scientific views are submitted within the specified period. Scientific views received after the close of the review period will be marked “late.” EPA is not required to consider these late scientific views.
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You may find the following suggestions helpful for preparing your scientific views:
1. Explain your scientific views as clearly as possible.
2. Describe any assumptions that you used.
3. Provide any technical information and/or data you used that support your scientific views.
4. Provide specific examples to illustrate your concerns.
5. Offer alternatives.
6. Make sure to submit your scientific views by the deadline identified.
7. To ensure proper receipt by EPA, identify the appropriate docket identification number in the subject line on the first page of your response. It would also be helpful if you provided the name, date, and
Recommended water quality criteria are the concentrations of a chemical in water at or below which aquatic life are protected from acute and chronic adverse effects of the chemical. Section 304(a)(1) of the Clean Water Act requires EPA to develop and publish, and from time to time revise, criteria for water accurately reflecting the latest scientific knowledge. Water quality criteria developed under section 304(a) are based solely on data and scientific judgments. They do not consider economic impacts or the technological feasibility of meeting the criteria in ambient water. Section 304(a) criteria provide guidance to States and Tribes in adopting water quality standards. The criteria also provide a scientific basis for EPA to develop Federally promulgated water quality standards under section 303(c).
Atrazine is an organic chemical used as an herbicide throughout the U.S. for control of weeds in agricultural crops. Environmental exposure occurs mainly from its application as an herbicide but may also occur from industrial manufacture, distribution releases, precipitation, field runoff, and drift. Atrazine is moderately volatile and soluble in water, and resistant to natural degradation in water. Because of atrazine's chemical properties and widespread use as an herbicide, concerns have been raised over the potential risks posed by exposure of aquatic organisms to it. For these reasons, EPA has developed the following water quality criteria:
Aquatic life should not be affected unacceptably if the: One-hour average concentration of atrazine does not exceed 1,500 ug/l more than once every three years on the average (Acute Criterion) and if the Average Primary Producer Steinhaus Similarity deviation for a site is less than 5% (as determined using the Comprehensive Aquatic Systems Model (CASM)
Bartell, S.M., K.R. Campbell, C.M. Lovelock, S.K. Nair, and J.L. Shaw. 2000. Characterizing aquatic ecological risk from pesticides using a diquat dibromide case study III. Ecological Process Models. Environ. Toxicol. Chem. 19(5):1441-1453.
Bartell, S.M., G. Lefebvre, G. Aminski, M. Carreau, and K.R. Campbell. 1999. An ecosystem model for assessing ecological risks in Quebec rivers, lakes, and reservoirs. Ecol. Model. 124:43-67.
DeAngelis, D.L., S.M. Bartell, and A.L. Brenkert. 1989. Effects of nutrient recycling and food-chain length on resilience. Amer. Nat. 134(5):778-805.
Aquatic life should not be affected unacceptably if the: One hour average concentration of atrazine does not exceed 760 ug/l more than once every three years on the average (Acute Criterion) and if the thirty-day average concentration of atrazine does not exceed 17 ug/l more than once every three years on the average (Chronic Criterion).
The revised draft criteria in today's publication incorporate information on the toxicity of atrazine to aquatic plants and invertebrates that had not been available at the time of the 2001 publication. The change in critical endpoints reflects the scientific views of the Agency, the registrant, and those received from the public.
Concurrent with OW's release of the Draft Aquatic Life Criteria Document for Atrazine at 66 FR 49186, OPP released its Preliminary Ecological Fate and Effects Risk Assessment of Atrazine at 66 FR 49180. Both offices shared their aquatic toxicity data bases for atrazine in the development of their risk assessment documents. OW and OPP also shared scientific views received on their respective risk assessment documents in response to their publication for review by the public.
Today, EPA is notifying the public about the availability of this aquatic life criteria document for atrazine to expand the public's involvement in the criteria development process. Simultaneously, EPA is publishing its Ecological Fate and Effects Risk Assessment for atrazine under FIFRA (
EPA notified the public of its intent to develop aquatic life criteria for atrazine in the
The Office of Water and the Office of Pesticide Programs will continue to work together and with stakeholders (States, Tribes, manufacturers, growers, and other interested parties) to develop an implementation document for States and Tribes to use in their adoption of atrazine criteria in State and Tribal standards. The draft implementation document will be made available for public review. EPA's current thinking is that the document would include:
• Mechanisms for States and Tribes to refine the exposure duration and frequency components of the atrazine criteria to best meet their more specific needs;
• Mechanisms for States and Tribes to best define exposure duration and frequency components of their criteria to clearly establish when a water as impaired (
• Mechanisms to establish screening levels (rolling average concentrations below the criteria) that if met would alleviate the need for States and Tribes to run complex models to determine if the chronic freshwater criteria is being met;
The Office of Water expects that it will obtain the necessary data to support the implementation document through a data generation agreement between the Office of Pesticides Programs and the Registrant. The Registrant will conduct a three year monitoring program in selected waters that will generate the data that EPA would use to provide additional information on how States and Tribes may adjust standards for more localized duration and frequency components of the criteria and more refined definitions of frequency and duration components of their criteria to clearly establish when a water is impaired waters for the purposes of CWA sections 305(b) and 303(d).
Though the public is welcome to submit scientific views on any component of the atrazine aquatic life criteria document, EPA is specifically interested in scientific views on the following issues of science:
• The use of the Average Primary Producer Steinhaus Similarity deviation of 5% (as determined using the Comprehensive Aquatic Systems Model (CASM)) as protective of chronic effects to freshwater aquatic life;
• The applicability of the same approach to the protection of chronic effects to salt water aquatic life in place of a Guidelines calculated concentration stated above in II.C. Conceptually, the approach used for fresh water chronic criteria should be equally applicable to salt water chronic criteria. To date, however, salt water toxicity data have not been employed in the model. Additionally, there are fewer atrazine toxicity data available for salt water species than for freshwater species.
The Agency published detailed information about its revised process for developing and revising criteria in the
The meeting of the Board of Directors is scheduled to begin at 10 a.m. on Wednesday, November 12, 2003.
Board Room, Second Floor, Federal Housing Finance Board, 1777 F Street, NW., Washington, DC 20006.
The entire meeting will be open to the public.
Mary Gottlieb, Paralegal Specialist, Office of General Counsel, by telephone at 202/408-2826 or by electronic mail at
By the Federal Housing Finance Board.
The notificants listed below have applied under the Change in Bank Control Act (12 U.S.C. 1817(j)) and § 225.41 of the Board’s Regulation Y (12 CFR 225.41) to acquire a bank or bank holding company. The factors that are considered in acting on the notices are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)).
The notices are available for immediate inspection at the Federal Reserve Bank indicated. The notices also will be available for inspection at the office of the Board of Governors. Interested persons may express their views in writing to the Reserve Bank indicated for that notice or to the offices of the Board of Governors. Comments must be received not later than November 21, 2003.
Board of Governors of the Federal Reserve System, November 3, 2003.
The companies listed in this notice have applied to the Board for approval, pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. 1841
The applications listed below, as well as other related filings required by the Board, are available for immediate inspection at the Federal Reserve Bank indicated. The application also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the standards enumerated in the BHC Act (12 U.S.C. 1842(c)). If the proposal also involves the acquisition of a nonbanking company, the review also includes whether the acquisition of the nonbanking company complies with the standards in section 4 of the BHC Act (12 U.S.C. 1843). Unless otherwise noted, nonbanking activities will be conducted throughout the United States. Additional information on all bank holding companies may be obtained from the National Information Center website at
Unless otherwise noted, comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors not later than December 1, 2003.
In connection with this application,
Board of Governors of the Federal Reserve System, November 3, 2003.
The companies listed in this notice have given notice under section 4 of the Bank Holding Company Act (12 U.S.C. 1843) (BHC Act) and Regulation Y (12 CFR Part 225) to engage
Each notice is available for inspection at the Federal Reserve Bank indicated. The notice also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the question whether the proposal complies with the standards of section 4 of the BHC Act. Additional information on all bank holding companies may be obtained from the National Information Center website at
Unless otherwise noted, comments regarding the applications must be received at the Reserve Bank indicated or the offices of the Board of Governors not later than November 21, 2003.
Board of Governors of the Federal Reserve System, November 3, 2003.
9 a.m. (e.s.t.)
4th Floor, Conference Room, 1250 H Street, NW., Washington, DC.
Parts will be open to the public and parts closed to the public.
9 a.m. (EST) Convene Meeting.
1. Approval of the minutes of the October 20, 2003, Board member meeting.
2. Thrift Savings Plan activity report by the Executive Director.
3. Semiannual review of status of audit recommendations.
4. Presentation by the Department of Labor and KPMG LLP.
5. Investment policy review.
6. Annual ethics briefing.
7. Personnel matters.
Thomas J. Trabucco, Director, Office of External Affairs, (202) 942-1640.
Office of the Secretary, Department of Health and Human Services.
In compliance with the requirement of section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995, the Office of the Secretary (OS), Department of Health and Human Services, is publishing the following summary of proposed collections for public
Use: This data collection will enable HHS to document the extent to which state and local contracting officials in the Temporary Assistance for Needy Families and Substance Abuse Prevention and Treatment programs understand and implement federal charitable Choice regulations governing the provisions of social services by faith-based organizations. The information will be collected via a mail survey of a total of 173 respondents at the state and local levels.
Use: Involves transitioning the developed paper-based UDS modules to the Web-based prototype and will be implemented among OMH-partners. Will be regular system for reporting program management and performance data for all OMH-funded activities.
To obtain copies of the supporting statement and any related forms for the proposed paperwork collections referenced above, access the HHS Web site address at
Office of the Assistant Secretary for Public Health Emergency Preparedness, HHS.
Notice of meeting.
The Department of Health and Human Services (DHHS) is announcing the following public meeting: Innovative Administration Systems for Vaccines. The topic to be discussed is the latest scientific and clinical developments in innovative administration systems for vaccines. These discussions will facilitate the development of vaccine delivery systems relative to the storage and deployment of vaccines and the rapid implementation of mass vaccination programs. The meeting will include sessions on Jet injector, Transdermal (microneedles, patches) and Transmucosal (oral, nasal, aerosol) systems. A detailed agenda, once finalized, will be posted on the meeting Web site.
The meeting will be held on December 18,2003, from 8:30 a.m. to 5 p.m. and on December 19, 2003 from 8:30 a.m. to 4 p.m.
The meeting will be held at The DoubleTree Hotel, 1750 Rockville Pike, Rockville, Maryland.
Inquiries can be addressed to: the e-mail address
Registration is available at the following Web site until November 26, 2003:
Limited space is available for exhibitors. Potential exhibitors are asked to inquire via the e-mail address or phone number listed above. An exhibitor fee of $125 will be charged.
A notice announcing the availability of fiscal year 2004 funds to support a Public Health Conference Grant Program was published in the
Page 51783, second column, Section G. Content, after the second paragraph, insert:
The LOI should specifically describe the following requirements:
These changes apply only to Cycles B and C of the conference support application and funding process.
In accordance with section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463), the Agency for Toxic Substances and Disease Registry (ATSDR) and the Centers for Disease Control and Prevention (CDC) announce the following meeting.
For Further Information Contact: Lorine Spencer, Designated Federal Official, or Marilyn Palmer, Committee Management Specialist, Division of Health Assessment and Consultation, ATSDR, 1600 Clifton Road, NE., M/S E-32, Atlanta, Georgia 30333, telephone 1-888-42-ATSDR(28737), fax (404) 498-1744.
The Director, Management Analysis and Services Office has been delegated the authority to sign
Agency for Toxic Substances and Disease Registry (ATSDR), U.S. Department of Health and Human Services (HHS).
Notice.
The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund), as amended by the Superfund Amendments and Reauthorization Act (SARA), requires that ATSDR and the Environmental Protection Agency (EPA) revise the Priority List of Hazardous Substances. This list includes substances most commonly found at facilities on the CERCLA National Priorities List (NPL) which have been determined to be of greatest concern to public health at or around these NPL hazardous waste sites. This announcement provides notice that the agencies have developed and are making available a revised CERCLA Priority List of 275 Hazardous Substances, based on the most recent information available. Each substance on the priority list is a candidate to become the subject of a toxicological profile prepared by ATSDR and subsequently a candidate for the identification of priority data needs.
In addition to the Priority List of Hazardous Substances, ATSDR has developed a Completed Exposure Pathway Site Count Report. This report lists the number of sites or events with ATSDR activities where a substance has been found in a completed exposure pathway (CEP). This report is included in the Support Document of the Priority List.
Requests for a copy of the report, the 2003 CERCLA Priority List of Hazardous Substances That Will Be The Subject of Toxicological Profiles and Support Document, including the CEP report, should bear the docket control number ATSDR-196, and should be submitted to: ATSDR Information Center, Division of Toxicology, Mail Stop E-29, 1600 Clifton Rd., N.E., Atlanta, Georgia 30333. Requests must be in writing.
Electronic Availability: The 2003 Priority List of Hazardous Substances will be posted on ATSDR's World-Wide Web server on the Internet located at
This is an informational notice only, and comments are not being solicited at this time. However, any comments received will be considered for inclusion in the next revision of the list and placed in a publicly accessible docket; therefore, please do not submit confidential business or other confidential information.
ATSDR, Division of Toxicology, Emergency Response and Scientific
CERCLA establishes certain requirements for ATSDR and EPA with regard to hazardous substances that are most commonly found at facilities on the CERCLA NPL. Section 104(i)(2) of CERCLA, as amended [42 U.S.C. 9604(i)(2)], required that the two agencies prepare a list, in order of priority, of at least 100 hazardous substances that are most commonly found at facilities on the NPL and which, in their sole discretion, have been determined to pose the most significant potential threat to human health (see 52 FR 12866, April 17, 1987). CERCLA also required the agencies to revise the priority list to include 100 or more additional hazardous substances (see 53 FR 41280, October 20, 1988), and to include at least 25 additional hazardous substances in each of the three successive years following the 1988 revision (see 54 FR 43619, October 26, 1989; 55 FR 42067, October 17, 1990; 56 FR 52166, October 17, 1991). CERCLA also requires that ATSDR and EPA shall, at least annually thereafter, revise the list to include additional hazardous substances that have been determined to pose the most significant potential threat to human health. In 1995, the agencies altered the publication schedule of the priority list by moving to a 2-year publication schedule, reflecting the stability of this listing activity (60 FR 16478, March 30, 1995). As a result, the priority list is now on a 2-year publication schedule with a yearly informal review and revision. Each substance on the CERCLA Priority List of Hazardous Substances is a candidate to become the subject of a toxicological profile prepared by ATSDR and subsequently a candidate for the identification of priority data needs.
The initial priority lists of hazardous substances (1987-1990) were based on the most comprehensive and relevant information available when the lists were developed. More comprehensive sources of information on the frequency of occurrence and the potential for human exposure to substances at NPL sites became available for use in the 1991 priority list with the development of ATSDR's HazDat database. Utilizing this database, a revised approach and algorithm for ranking substances was developed in 1991, and a notice announcing the intention of ATSDR and EPA to revise and re-rank the Priority List of Hazardous Substances was published on June 27, 1991 (56 FR 29485). The subsequent 1991 Priority List and revised approach used for its compilation was summarized in the “Revised Priority List of Hazardous Substances”
Since HazDat is a dynamic database with ongoing data collection, additional information from the HazDat database became available for the 2003 listing activity. This additional information has been entered into HazDat since the development of the 2001 Priority List of Hazardous Substances. The site-specific information from HazDat that is used in the listing activity has been collected from ATSDR public health assessments, health consultations, and from site file data packages that are used to develop these public health assessments. The new information may include more recent NPL frequency of occurrence data, additional concentration data, and more information on exposure to substances at NPL sites. With these additional data, 11 substances have been replaced on the list of 275 substances since the 2001 publication. Of the 11 replacement substances, 6 are new candidate substances, and 5 are substances that were previously under consideration. These replacement substances and changes in the order of substances appearing on the CERCLA Priority List of Hazardous Substances will be reflected in the program activities that rely on the list for future direction.
The 2003 Priority List of Hazardous Substances includes 275 substances that have been determined to be of greatest concern to public health based on the criteria of CERCLA Section 104(i)(2) [42 U.S.C. 9604(i)(2)]. A total of 863 candidate substances have been analyzed and ranked with the current algorithm. Of these candidates, the 275 substances on the priority list may become the subject of toxicological profiles in the future. The top 25 substances on the 2003 Priority List of Hazardous Substances are listed below.
ATSDR and EPA intend to publish the next revised list of hazardous substances in two years, with an informal review and revision performed in one year. These revisions will reflect changes and improvements in data collection and availability. Additional information on the existing methodology used in the development of the CERCLA Priority List of Hazardous Substances can be found in the Support Document to the List and in the
In addition to the revised priority list, ATSDR is also releasing a Completed Exposure Pathway Site Count Report. A completed exposure pathway (CEP) is an exposure pathway that links a contaminant source to a receptor population. The CEP ranking is very similar to a sub-component of the potential-for-human-exposure component of the listing algorithm. The CEP ranking is based on a site frequency count, and thus lists the number of sites at which a substance has been found in a CEP. ATSDR's HazDat database contains this information which is derived from ATSDR public health assessments and health consultations. Because exposure to hazardous substances is of significant concern, ATSDR is publishing this CEP report along with the CERCLA Priority List of Hazardous Substances. Since this CEP report focuses on documented exposure, it provides an important prioritization based on substances to which people are exposed.
The substances on the CEP report are similar to the substances on the CERCLA Priority List of Hazardous Substances. However, there are some substances that are on the CEP report
Sorted by the ALL Sites column.
All Sites = all sites with ATSDR activities that have a CEP; NPL Sites = current and former sites on the National Priorities List, as mandated.
This gives notice under the Federal Advisory Committee Act (Pub. L. 92-463) of October 6, 1972, that the Advisory Committee on Childhood Lead Poisoning Prevention, Centers for Disease Control and Prevention, of the Department of Health and Human Services, has been renewed for a 2-year period through October 31, 2005.
For information, contact Mary Jean Brown, R.N., ScD, Executive Secretary, Advisory Committee on Childhood Lead Poisoning Prevention, Centers for Disease Control and Prevention, of the Department of Health and Human Services, 4770 Buford Highway, M/S F 30 Chamblee, Georgia 30341, telephone 404-498-1442.
The Director, Management Analysis and Services Office has been delegated the authority to sign
This gives notice under the Federal Advisory Committee Act (Pub. L. 92-463) of October 6, 1972, that the Board of Scientific Counselors, National Center for Infectious Diseases, Centers for Disease Control and Prevention (CDC), Department of Health and Human Services, has been renewed for a 2-year period, extending through October 31, 2005.
For further information, contact Steve Ostroff, Executive Secretary, Board of Scientific Counselors, National Center for Infectious Diseases, Centers for Disease Control and Prevention, of the Department of Health and Human Services, 1600 Clifton Road, NE, M/S C-12, Atlanta, Georgia 30333, telephone 404-639-3967 or fax 404-639-3039.
The Director, Management Analysis and Services Office, has been delegated
This program is authorized under Sections 301, 317(C), and 317(G) of the Public Health Service Act, (42 U.S.C. Sections 241, 247b-4, and 247b-8, as amended).
Fellowship candidates will include genetics professionals who are at the doctoral (MD and PhD) and master's levels. Typical fellowships for genetics professionals who recently completed their training will be for a maximum of two years. For mid-career professionals, typical fellowships will be for one year, although appointments of less than one year may be made under special circumstances. Varying lengths of time for fellowship appointments will be considered on the basis of CDC and project needs.
This program addresses the “Healthy People 2010” focus areas of: Arthritis, Osteoporosis, and Chronic Back Conditions; Cancer; Chronic Kidney Disease; Diabetes; Disability and Secondary Conditions; Heart Disease and Stroke; HIV; Immunization and Infectious Diseases; Maternal, Infant, and Child Health; Mental Health and Mental Disorders; Nutrition and Overweight; Oral Health; Respiratory Diseases; and Vision and Hearing.
Measurable outcomes of the program will be in alignment with the following performance goal for CDC: To develop career opportunities for genetics professionals in association with the recipient organization to work across CDC program areas to improve knowledge concerning genetics-related disease and disability; and to identify causes and risk factors for these conditions in order to develop prevention strategies and evaluate their effectiveness.
Recipient activities for this program are as follows:
• In collaboration with CDC, assist with planning and implementation of a fellowship program for genetic professionals in public health. The target number of fellows for this project is up to two a year, although this may be increased if additional funds become available. This plan should include the recruitment, training and mentoring of fellows under the program.
• Provide a senior staff member to serve as co-director to lead fellowship recruitment and assist in the selection and mentoring of fellows.
• Identify and recruit fellowship candidates with expertise in appropriate topic areas and implement a recruitment plan through advertisements, announcements, professional associations, and complementary training programs.
• Assist CDC in the selection of candidates appropriate for the public health genetics fellowship program. Selection of candidates will be made by a committee comprised of members of the recipient organization in conjunction with CDC.
• Provide opportunities for fellows to present their fellowship work and participate in national networking, policy development conferences, and workshops to expand professional growth and skill levels.
• Provide salary and benefits commensurate with the background and experience for fellows selected in the program. This includes recipient support of related costs for the fellowships, including travel and training expenses; and for recipient staff salaries and related technical and administrative costs.
• Collect and report to CDC information on status of fellows for up to five years after completion of the fellowship program in order to assess the impact of the fellowship program on public health genetics.
In a cooperative agreement, CDC staff is substantially involved in the program activities, above and beyond routine grant monitoring. CDC Activities for this program are as follows:
• Assist in the development and implementation of the overall fellowship plan and training program. In that regard, CDC will provide a senior staff member to serve as fellowship co-director in the planning and conduct of the program.
• Provide formal and informal training opportunities to the recipient organization and the assigned fellows.
• Coordinate and facilitate the placement of fellows with appropriate advanced training opportunities at CDC.
• Provide supervisory and mentoring support to fellows to assure optimal developmental experiences under the fellowship assignments.
CDC plans to make one award to a leading organization/institution which: (1) Has documented access to large number of doctoral students, genetics residents, and genetics professionals in a broad range of areas related to genetics and public health: including but not limited to; cytogenetics, molecular genetics, biochemical genetics, clinical genetics, genetic counseling, population genetics, and genetic epidemiology; and (2) demonstrates a well-established capacity through documented collaborations and affiliations with training programs such as genetic counseling training programs, genetics residencies, and association memberships to enable recruitment of highly qualified candidates for the fellowship program.
Title 2 of the United States Code Section 1611 states that an organization described in Section 501(c)(4) of the Internal Revenue Code that engages in lobbying activities is not eligible to receive Federal funds constituting an award, grant, or loan.
CDC requests that you send a LOI if you intend to apply for this program. The LOI will be used only to gauge the level of interest in this program, and to allow CDC to plan the application review. Failure to submit a LOI does NOT preclude you from submitting an application. The LOI must be written in the following format:
• Maximum number of pages: Two.
• Font size: 12-point unreduced.
• Paper size: 8.5 by 11 inches.
• Page margin size: One-inch margins.
• Printed only on one side of page
• Single spaced
• Written in English, avoid jargon
The LOI must contain the following information: Name, address, and telephone number of the proposed Principal Investigator, number and title of this program announcement, names of other key personnel, designations of collaborating institutions and entities, and an outline of the proposed work, recruitment approach, and expected outcomes.
If you do not have access to the Internet, or if you have difficulty accessing the forms on-line, you may contact the CDC Procurement and Grants Office Technical Information Management Section (PGO-TIM) staff at: 770-488-2700. Application forms can be mailed to you.
You are required to have a Dun and Bradstreet Data Universal Numbering System (DUNS) number to apply for a grant or cooperative agreement from the Federal government. The DUNS number is a nine-digit identification number, which uniquely identifies business entities. Obtaining a DUNS number is easy and there is no charge. To obtain a DUNS number, access
For more information, see the CDC Web site at:
You must submit a signed original and two copies of your application forms. The application should include a separate typed abstract of the proposal consisting of no more than one single-spaced page. The application should include a table of contents for the project narrative and all related attachments.
The application must include a project narrative with your application forms. Your narrative must be submitted in the following format:
• Maximum number of pages: 20. If your narrative exceeds the page limit, only the first pages which are within the page limit will be reviewed.
• Font size: 12 point unreduced
• Paper size: 8.5 by 11 inches
• Page margin size: one-inch margins
• Printed only on one side of page
• Single-spaced
• Held together only by rubber bands or metal clips; not bound in any other way.
Your narrative should address activities to be conducted over the entire project period, and must include the items cited under Evaluation Criteria.
Funding restrictions, which must be taken into account while writing your budget are that project funds cannot be used to supplant other available applicant or collaborating agency funds, for construction, or for lease or purchase of facilities or space.
If you are requesting indirect costs in your budget, you must include a copy of your indirect cost rate agreement. If your indirect cost rate is a provisional rate, the agreement must be less than 12 months from the application due date.
Guidance for completing your budget can be found on the CDC Web site, at the following Internet address:
Additional information may be included in the application appendices. The appendices will not be counted toward the narrative page limit. This additional information may include curriculum and resumes for key project staff, organizational charts, letters of support,
This program announcement is the definitive guide on application format, content, and deadlines. It supersedes information provided in the application instructions. If your application does not meet the deadline above, it will not be eligible for review, and will be discarded. You will be notified that you did not meet the submission requirements.
If you have a question about the receipt of your application, first contact your courier. CDC will not notify you by mail upon receipt of your application, but if you still have any-questions, contact the PGO-TIM staff at: 770-488-2700. Before calling, please wait three days after the application deadline. This will allow time for applications to be processed and logged.
Under the evaluation criteria noted below, applicants must describe precisely how they will conduct the project toward identifying and recruiting fellows in conjunction with placement opportunities at CDC, what collaborators and national affiliations are now in place to facilitate such recruitment, and how the proposed work plan will assure effective conduct of all components of the work in a timely and successful manner.
Your application will be evaluated against the following criteria:
• Organizational experience that indicates the extent of current work in the training and development of genetics professionals, and the documented capacity to identify potential fellows for inclusion in this program. (35 Points)
• Convincing evidence of, and the extent to which national collaborations, affiliations, association memberships, and internal and external outreach systems are in place for immediate and effective fellowship recruitment and placement. (25 Points)
• Approach and methods to be utilized to conduct all aspects of the project as required under this announcement. (20 Points)
• Project timelines, work plan, and the performance measures to be employed and measured. (10 Points)
• Evaluation plan to assess individual components and the overall goals and objectives of the cooperative agreement. (10 Points)
• Budget (Not Scored). This criteria includes the degree to which the budget is reasonable, clearly justified, accurate, and consistent with the purposes of this announcement. The budget justification will not be counted in the stated page limit.
For more information on the Code of Federal Regulations, see the National Archives and Records Administration at the following Internet address:
The following additional requirements apply to this project:
• AR-9 Paperwork Reduction Act Requirements.
• AR-10 Smoke-Free Workplace Requirements.
• AR-11 Healthy People 2010.
• AR-12 Lobbying Restrictions.
• AR-14 Accounting System Requirements.
• AR-15 Proof of Non-Profit Status.
• AR-16 Security Clearance Requirement.
Additional information on these requirements can be found on the CDC Web site at the following Internet address:
You must provide CDC with an original, plus two copies of the following reports:
1. Interim progress report, no less than 90 days before the end of the budget period. The progress report will serve as your non-competing continuation application, and must contain the following elements:
a. Current budget period activities objectives.
b. Current budget period financial progress.
c. New budget period program proposed activity objectives.
d. Detailed line-item budget and justification.
e. Additional requested information.
2. Financial status report, no more than 90 days after the end of the budget period.
3. Final financial and performance reports, no more than 90 days after the end of the project period.
For general questions about this announcement, contact: Technical Information Management Section (PGO-TIM), Procurement and Grants Office, 2920 Brandywine Road, Atlanta, GA 30341, Telephone: 770-488-2700.
For program technical assistance, contact: Sonja Rasmussen, M.D., M.S., Associate Director for Science, National Center on Birth Defects and Developmental Disabilities, CDC, 1600 Clifton Road, Mailstop E-86, Atlanta, GA 30333, E-Mail Address:
For budget assistance, contact: Susan Kiddo, Grants Management Officer, CDC Procurement and Grants Office, 2920 Brandywine Road, Atlanta, GA 30341, Telephone: 770-488-2605, E-mail:
In accordance with section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463), the Centers for Disease Control and Prevention (CDC) announce the following committee meeting.
Advisory Committee to the Director (ACD), National Center for Environmental Health (NCEH).
1 p.m.-5:30 p.m., December 1, 2003; 8:30 a.m.-4: 30 p.m., December 2, 2003.
Hilton Atlanta Hotel, 255 Courtland Street, NE., Atlanta, GA 30303.
Open to the public for observation, limited only by the space available. The meeting room accommodates approximately 100 people.
The Secretary, and by delegation, the Director of the Centers for Disease Control and Prevention, are authorized under Section 301 (42 U.S.C. 241) and Section 311 (42 U.S.C. 243) of the Public Health Service Act, as amended, to (1) conduct, encourage, cooperate with, and assist other appropriate public authorities, scientific institutions, and scientists in the conduct of research, investigations, experiments, demonstrations, and studies relating to the causes, diagnosis, treatment, control, and prevention of physical and mental diseases and other impairments; (2) assist states and their political subdivisions in the prevention of infectious diseases and other preventable conditions and in the promotion of health and well being; and (3) train state and local personnel in health work.
The agenda items for the meeting on December 1-2, 2003, will include but are not limited to an update and discussions on the consolidation of NCEH and the Agency for Toxic Substances and Disease Registry (ATSDR); review of discussions for consolidating the ATSDR Board of Scientific Counselors (BSC) and the ACD, NCEH; discussion on peer review background and process; and an overview of existing ACD and BSC subcommittees and working groups. Agenda items are tentative and subject to change.
Individuals interested in attending the meeting, please contact Priscilla Patin, CMP, Program Analyst, CDC, 4770 Buford Highway NE, MS F-29, Atlanta, Georgia 30341-3724; telephone 770-488-7629, fax 770-488-7024; e-mail:
The Director, Management Analysis and Services Office, has been delegated the authority to sign
In accordance with section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463), the Centers for Disease Control and Prevention (CDC) announces the following Federal advisory committee meeting.
R. Louise Floyd, DSN, RN, Designated Federal Official, National Center on Birth Defects and Developmental Disabilities, CDC, 1600 Clifton Road, NE., (E-86), Atlanta, Georgia 30333, telephone 404/498-3923, fax 404/498-3040.
The Director, Management Analysis and Services Office, has been delegated the authority to sign
Centers for Medicare and Medicaid Services.
In compliance with the requirement of section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995, the Centers for Medicare and Medicaid Services (CMS) (formerly known as the
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To obtain copies of the supporting statement and any related forms for the proposed paperwork collections referenced above, access CMS's Web site address at
Centers for Medicare and Medicaid Services, HHS.
In compliance with the requirement of section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995, the Centers for Medicare and Medicaid Services (CMS) (formerly known as the Health Care Financing Administration (HCFA), Department of Health and Human Services, is publishing the following summary of proposed collections for public comment. Interested persons are invited to send comments regarding this burden estimate or any other aspect of this collection of information, including any of the following subjects: (1) The necessity and utility of the proposed information collection for the proper performance of the agency's functions; (2) the accuracy of the estimated burden; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
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To obtain copies of the supporting statement and any related forms for the proposed paperwork collections referenced above, access CMS Web site address at
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the Paperwork Reduction Act of 1995 (the PRA), Federal agencies are required to publish notice in the
Submit written or electronic comments on the collection of information by January 6, 2004.
Submit electronic comments on the collection of information to:
Peggy Robbins, Office of Management Programs (HFA-250), Food and Drug Administration, 5600 Fishers Lane, Rockville, MD 20857, 301-827-1223.
Under the PRA (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal agencies to provide a 60-day notice in the
With respect to the following collection of information, FDA invites comments on these topics: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
Public Law 102-539, the Mammography Quality Standards Act of 1992 (MQSA) (42 U.S.C. 263b) as amended by the Mammography Quality Standards Reauthorization Act (MQSRA) of 1998 (Public Law 105-248) establishes the authority for a Federal certification and inspection program for mammography facilities; regulations and standards for accreditation bodies for mammography facilities; and standards for mammography equipment, personnel, and practices, including quality assurance. MQSRA extended the life of the MQSA program for 4 years from its original expiration date of 1998 until 2002, and also modified some of the provisions. The most significant modification from a report and recordkeeping viewpoint under § 900.12(c)(2) was that mammography facilities were required to send a lay summary of each examination to the patient.
FDA, under this regulation, collects information from accreditation bodies and mammography facilities by requiring each accreditation body to submit an application for approval and to establish a quality assurance program. On the basis of accreditation, facilities are certified by FDA and must prominently display their certificate. FDA uses the information to ensure that private, nonprofit organizations or State agencies meet the standards established by FDA for accreditation bodies to accredit facilities that provide mammography services. Information collected from mammography facilities has also been used to ensure that the personnel, equipment, and quality systems has and continues to meet the regulations under MQSA and will be used by patients to manage their health care properly. The intent of these regulations is to assure safe, reliable, and accurate mammography on a nationwide level. The most likely respondents to this information collection will be accreditation bodies and mammography facilities seeking certification.
FDA estimates the burden of this collection of information as follows:
The most likely respondents to this information collection will be accreditation bodies and mammography facilities seeking certification.
The total capital cost associated with these regulations is $50 (§ 900.3(b)(3)). This is a one-time start up cost associated with the application for approval as an accreditation body.
The total operating and maintenance cost associated with these requirements is: $19,440. This is the cost that facilities bear to maintain records under the initial and final mammography regulations.
Food and Drug Administration, HHS.
Notice of meeting.
The Food and Drug Administration (FDA) of the Department of Health and Human Services (HHS) is announcing a public meeting to present the “Quantitative Assessment of the Relative Risk to Public Health from Foodborne
If you need special accommodations due to a disability, please contact Ms. Pisciotta (see the
FDA is announcing a public meeting on December 4, 2003, to present the “Quantitative Assessment of the Relative Risk to Public Health from Foodborne
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing the availability of a draft guidance for industry entitled “Powder Blends and Finished Dosage Units—Stratified In-Process Dosage Unit Sampling and Assessment.” The draft guidance is intended to provide recommendations to manufacturers of human drug products on how to develop a single control procedure to demonstrate the adequacy of mix to ensure uniformity and homogeneity of in-process powder blends and finished dosage units.
Submit written or electronic comments on the draft guidance by March 8, 2004. General comments on agency draft guidance documents are welcome at any time.
Submit written requests for single copies of the draft guidance to the Division of Drug Information (HFD-240), Center for Drug Evaluation and Research, Food and Drug Administration, 5600 Fishers Lane, Rockville, MD 20857. Send one self-addressed adhesive label to assist that office in processing your requests. Submit written comments on the draft guidance to the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852. Submit electronic comments to
Jon Clark, Center for Drug Evaluation and Research (HFD-003), Food and Drug Administration, 5600 Fishers Lane, Rockville, MD 20857, 301-443-5103.
FDA is announcing the availability of a draft guidance for industry entitled “Powder Blends and Finished Dosage Units—Stratified In-Process Dosage Unit Sampling and Assessment.” The draft guidance is intended to respond to industry concerns regarding FDA policies on demonstrating the adequacy of in-process powder mixing and uniform content in finished products under 21 CFR 211.110(a)(3).
In the
Stratified sampling is the selection of in-process dosage unit samples to specifically target locations in the compression/filling operation that have the greatest potential to yield extreme highs and lows in test results. The test results are used to monitor the manufacturing process output that is most responsible for causing finished product variability. These test results can be used to develop a single control procedure to ensure adequate powder mix and uniform content in finished products.
This draft guidance is being issued consistent with FDAs good guidance practices regulation (21 CFR 10.115). The draft guidance, when finalized, will represent the agency's current thinking on “Powder Blends and Finished Dosage Units—Stratified In-Process Dosage Unit Sampling and Assessment.” It does not create or confer any rights for or on any person and does not operate to bind FDA or the public. An alternative approach may be used if such approach satisfies the requirements of the applicable statutes and regulations.
Interested persons may submit to the Division of Dockets Management (see
Persons with access to the Internet may obtain the document at either
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing the availability of a document entitled “Guidance for Industry: IRB Review of Stand-Alone HIPAA Authorizations Under FDA Regulations,” dated October 21, 2003. The guidance document provides clarification for institutional review boards (IRBs) of their responsibilities for reviewing and approving stand-alone authorizations under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule. A stand-alone HIPAA authorization is a document used to obtain permission from an individual for a covered entity to use and/or disclose the individual's identifiable health information for a research study and that is not combined with an informed consent document to participate in the research itself. This guidance is intended to encourage IRBs to permit enrollment of subjects in clinical investigations without the IRB's prior review and/or approval of stand-alone HIPAA authorizations, even under circumstances in which the IRB's written procedures require such review and/or approval. Because FDA has determined that prior public participation is not feasible or appropriate, this guidance document will be implemented upon posting on FDA's Web site.
Submit written or electronic comments on agency guidances at any time.
Submit written comments on the guidance document to the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852.
Submit electronic comments to
Submit requests for the guidance document to the Division of Dockets Management at the address provided. Your request should include the docket number in the heading of this document.
Catherine Lorraine, Office of the Commissioner (HF-11), Food and Drug Administration, 5600 Fishers Lane, Rockville, MD 20857, 301-827-3360.
FDA is announcing the availability of a document entitled “Guidance for Industry: IRB Review of Stand-Alone HIPAA Authorizations Under FDA Regulations,” dated October 21, 2003. This guidance is similar to a guidance published by the Office of Civil Rights, Department of Health and Human Services (HHS), entitled “Privacy Guidance about Authorizations for Research and Institutional Review Boards,” which is available on the HHS Web site at
The Privacy Rule establishes the right of individuals, including research subjects, to authorize the use and disclosure of their protected health information by signing an authorization form for uses and disclosures not otherwise permitted by the Privacy Rule (see 45 CFR 164.508). For example, in the context of a clinical investigation, a valid and properly executed HIPAA authorization explains the ways in which a subject's protected health information will be used and disclosed by the clinical investigator and permits the clinical investigator to use and disclose that information as specifically described in the authorization. An HIPAA authorization is different than a subject's informed consent in that an HIPAA authorization focuses on uses and disclosures of information that may
FDA and the HHS Secretary received requests for clarification of IRBs' responsibilities to review and approve stand-alone HIPAA authorizations under the Privacy Rule, Federal regulations governing human subject protection and IRBs (see 45 CFR part 46 and parts 50 and 56 (21 CFR parts 50 and 56)), and international guidelines (see, for example, International Conference on Harmonisation (ICH) Good Clinical Practice guidelines (E6)). The requests expressed concern that when the Privacy Rule went into effect, clinical investigations might be impeded because IRBs would be backlogged with requests to review thousands of stand-alone HIPAA authorizations. The requests further stated that some IRBs would halt enrollment in clinical investigations pending their review of these stand-alone HIPAA authorizations.
In response, the Office of Civil Rights, HHS, issued a letter, dated April 15, 2003, clarifying that IRBs are not required to review and approve stand-alone HIPAA authorizations under the Privacy Rule, HHS Protection of Human Subjects Regulations at 45 CFR part 46, ICH guidelines, or FDA regulations, so long as an IRB's written procedures, adopted under § 56.108(a), do not require such review and approval. The letter also announced FDA's intent to publish guidance on this subject, in accordance with its good guidance practice regulations.
FDA is issuing this guidance to address those cases in which IRBs have adopted written procedures that would require them to review and approve stand-alone HIPAA authorizations. Under § 56.108(a), IRBs must follow their written procedures. The guidance announces FDA's intention to exercise ongoing enforcement discretion with respect to the requirements of § 56.108(a) to the extent that an IRB's written procedures require the review and/or approval of stand-alone HIPAA authorizations. FDA is exercising this discretion in order to encourage IRBs to permit the continued enrollment of subjects in clinical investigations without IRBs' prior review and approval of stand-alone HIPAA authorizations. FDA believes that enrollment in well-designed and well-conducted clinical investigations should not be interrupted for the purpose of IRB review and approval of stand-alone HIPAA authorizations. Accordingly, FDA does not intend to take enforcement actions against IRBs that decide not to review stand-alone HIPAA authorizations even though the IRB's written procedures would otherwise require this review and/or approval. FDA's exercise of enforcement discretion in these limited circumstances is intended to allow important studies to proceed in the best interests of the public health.
This guidance is being issued consistent with FDA's good guidance practices regulation § 10.115 (21 CFR 10.115). This guidance document represents the agency's current thinking on IRBs' responsibilities under FDA regulations for reviewing and approving stand-alone HIPAA authorizations. It does not create or confer any rights for or on any person and does not operate to bind FDA or the public. An alternative approach may be used if it satisfies the requirements of the applicable statutes and regulations.
FDA is issuing this document as a final guidance that will be implemented upon posting on FDA's Web site. In accordance with § 10.115(g)(2) and (g)(3), FDA is implementing this guidance prior to seeking public comment because the agency has determined that this guidance is needed in conjunction with the HHS Office of Civil Rights guidance to help ensure that ongoing clinical trials are not halted while IRBs review HIPAA stand-alone authorizations, and therefore, prior public participation is not feasible or appropriate. However, FDA will review comments received after issuance of the guidance and revise the document when appropriate.
Interested persons may, at any time, submit written or electronic comments to the Division of Dockets Management (see
Persons with access to the Internet may obtain the document at either
National Institutes of Health, Public Health Service, DHHS.
Notice.
The invention listed below is owned by an agency of the U.S. Government and is available for licensing in the U.S. in accordance with 35 U.S.C. 207 to achieve expeditious commercialization of results of federally-funded research and development. Foreign patent applications are filed on selected inventions to extend market coverage for companies and may also be available for licensing.
Licensing information and copies of the U.S. patent application listed below may be obtained by writing to the indicated licensing contact at the Office of Technology Transfer, National Institutes of Health, 6011 Executive Boulevard, Suite 325, Rockville, Maryland 20852-3804; telephone: 301/496-7057; fax: 301/402-0220. A signed Confidential Disclosure Agreement will be required to receive copies of the patent application.
Eosinophil-derived neurotoxin (EDN) has in vitro anti-viral activity that is dependent on its ribonuclease activity. This invention discloses that EDN is a selective chemoattractant and activator of dendritic cells, resulting in dendritic
Protein kinase C is a critical component in cellular signaling, involved in cellular growth, differentiation, and apoptosis. It has been identified as a promising therapeutic target for cancer, diabetic retinopathy, and Alzheimer's disease, among other indications.
This invention relates to lead compounds that can inhibit protein kinase C isoforms through disruption of their C1 domains. The inventors also found that these compounds possess isoform selectivity, an important feature for therapeutic specificity. Finally, although the disclosed compounds are previously known molecules, novel structures are described in the invention that have further improved specificity.
HMGN1 is a protein that binds to nucleosomes, changes chromatin structure and affects transcription, and the expression of this protein changes during differentiation. Mice lacking this protein have increased growth capacity of several skin components, including epidermis, epidermal appendages, and dermis. Conceivably, this change could be related to an alteration of stem cell differentiation or to cell cycling events. The current invention relates to interference with this pathway, which might lead to increased stem cell differentiation and increased hair cycling and growth in humans as well. This invention might be useful to increase hair growth, enhance wound healing for epidermal and dermal wounds, and enhance stem cell populations for tissue regeneration, gene targeting, or gene therapeutic indications.
The current invention relates to engineered LL2 single chain antibodies possessing improved and/or unexpected properties. The first embodiment includes engineered single chain antibodies that have enhanced stability. Specific VH and VL residues were identified which might contribute to the instability, and these were substituted to create scFv variants with improved stability and biological half-life. In the second embodiment, an LL2 single chain Fv antibody was engineered with no linker between the VH and VL sequences. The antibody exhibited the surprising property of acting as a monomer (rather than a trimer or tetramer) and retained specific binding to CD22. This invention might be useful as a general method to produce therapeutic antibodies or immunoconjugates more easily, and for such antibodies or immunoconjugates to be more stable
National Institutes of Health, Public Health Service, DHHS.
Notice.
The invention listed below is owned by an agency of the U.S. Government and is available for licensing in the U.S. in accordance with 35 U.S.C. 207 to achieve expeditious commercialization of results of federally-funded research and development. Foreign patent applications are filed on selected inventions to extend market coverage for companies and may also be available for licensing.
Licensing information and copies of the U.S. patent application listed below may be obtained by writing to the indicated licensing contact at the Office of Technology Transfer, National Institutes of Health, 6011 Executive Boulevard, Suite 325, Rockville, Maryland 20852-3804; telephone: 301/496-7057; fax: 301/402-0220. A signed Confidential Disclosure Agreement will be required to receive copies of the patent application.
Cytochromes P450 catalyze the NADPH-dependent oxidation of arachidonic acid to various eicosanoids found in several species. The eicosanoids are biosynthesized in numerous tissues including pancreas, intestine, kidney, heart, and lung where they are involved in many different biological activities.
The NIH announces three specific monoclonal antibodies that strongly inhibit and/or immunoblot the human cytochrome P450 2J2 (CYP2J2). MAb 6-5-20-8 selectively inhibits CYP2J2-mediated arachidonic acid metabolism by more than 80% and also immunoblots the enzyme. MAb 6-2-16-1 also selectively inhibits arachidonic acid metabolism by more than 80%, but does not immunoblot the enzyme. MAb 5-3-2-2 is not inhibitory, but selectively immunoblots the enzyme. These antibodies can be used to identify and quantify inter-individual variation in physiological functions and to study pharmacological drug metabolism in various tissues.
This research is also described in: Sun
The action of Tumor Necrosis Factor alpha (TNF-α) has been implicated in such diseases as arthritis, sepsis, ulcerative colitis, multiple sclerosis, Crohn's disease, septic shock, graft rejection, cachexia, insulin resistance, post-ischemic reperfusion injury, tumor metastasis, tissue ulceration, abnormal wound healing, periodontal disease, bone disease, proteinuria, aneurismal aortic disease, degenerative cartilage loss, demyelinating diseases of the nervous system, and HIV infection. TNF-α converting enzyme (TACE) or ADAM 17 (A Disintegrin And Metalloprotease) is a member of a family of zinc metalloproteases, and is an important regulator of inflammation, immune regulation, and cellular proliferation as a consequence of its ability to catalyze the activation of TNF-α from a membrane bound to a soluble form.
The NIH announces the identification of a protein, corresponding to the amino-terminus of the TACE prodomain, that possesses a TACE inhibitory activity that is independent of a cysteine-switch mechanism. This TACE inhibitory protein could be used as a new therapeutic agent against chronic inflammatory diseases that are mediated by TNF-α.
Fibroid scar tissue has been associated with wound healing of the epithelial layer following tissue damage created by surgery or other means. Examples of which include the opaque scar tissue associated with cataract surgery and the fibroid scar tissue produced in several kidney diseases such as is seen in unilateral ureteral obstruction.
Smad2 and Smad3 are highly homologous cytoplasmic proteins which function to mediate signals from Transforming Growth Factor Beta (TGF-β) and activin receptors to promoters of target genes found in the nucleus. The NIH announces a technology wherein Smad 3 is now implicated in TGF-β-dependent transdifferentiation of epithelial cells to mesenchymal cells (EMT), which blocks the endpoint of fibrosis at an early stage of differentiation of epithelial cell precursors into interstitial fibroblasts. In particular, fibrosis was blocked following wounding of the lens of the eye and damage created to the kidney. It is believed that an inhibitor of Smad 3 could be used to block fibrosis following cataract surgery and lens implantation in patients, as well as slowing the progression of end-stage renal disease.
National Institutes of Health, Public Health Service, DHHS.
Notice.
The invention listed below is owned by an agency of the U.S. Government and is available for licensing in the U.S. in accordance with 35 U.S.C. 207 to achieve expeditious commercialization of results of federally-funded research and development. Foreign patent applications are filed on selected inventions to extend market coverage for companies and may also be available for licensing.
Licensing information and copies of the U.S. patent application listed below may be obtained by writing to the indicated licensing contact at the Office of Technology Transfer, National Institutes of Health, 6011 Executive Boulevard, Suite 325, Rockville, Maryland 20852-3804; telephone: 301/496-7057; fax: 301/402-0220. A signed Confidential Disclosure Agreement will be required to receive copies of the patent application.
The present invention is directed to novel indeno- and isoindenoisoquinoline compounds, their derivatives and their pharmaceutical formulations having anticancer activity, as well as methods of treating cancer. The invention is also directed to methods of preparing these novel compounds. These compounds have been tested against 55 tumor cell lines and have been found to have a strong activity against a wide variety of tumor cell lines, including lung, colon, central nervous system, melanoma, ovarian, renal, prostate and breast cancers, compared with 2-methoxy estradiols. Some of these compounds target topoisomerase I and remain active in camptothecin-resistant cancer cells. It is expected that these compounds will be very useful in the treatment of a wide variety of cancers.
Birt-Hogg-Dubé (BHD) syndrome is an inherited autosomal dominant neoplasia syndrome characterized by benign hair follicle tumors and is associated with a higher risk for developing renal cancer, spontaneous pneumothorax and/or lung cysts.
The present invention describes identification of the BHD syndrome associated germline mutations in a novel human gene, herein called BHD gene. This gene encodes for the protein, folliculin, functions of which remain currently unknown.
This discovery makes possible the development of a diagnostic method for BHD syndrome using a simple blood test. The test is particularly useful in detecting BHD mutations in asymptomatic carriers within BHD families.
Patients with kidney tumors can be evaluated for BHD gene mutations using a similar genetic diagnostic test, which will allow for a more accurate diagnosis of a kidney cancer and improved patient prognosis. The BHD encoding sequence is the third gene found to be responsible for inherited kidney cancer, and mutation testing allows for a correct diagnosis and initiation of the proper treatment, which is different for each of the types of kidney cancer caused by the three genes.
Methods of using BHD encoding sequence also allows for a differential genetic diagnosis of spontaneous pneumothorax, or collapsed lung. Since collapsed lung can be caused by several factors, a BHD diagnostic test allows a physician to determine predisposition to and possible recurrence of additional spontaneous pneumothoraces due to mutation(s) in the BHD gene.
The discovery should also lead to the development of novel pharmaceutical products and methods for treating BHD skin lesions using creams containing the BHD gene product, folliculin. Such products and methods of treatment are expected to reduce the size and appearance of the benign hair follicle tumors.
The disclosed technology will provide new and exciting methodologies to correctly diagnose BHD syndrome and should lead to the development of novel pharmaceutical reagents for treatment of BHD skin lesions as well as other skin diseases.
This research is also described in: Nickerson
National Institutes of Health, Public Health Service, DHHS.
Notice.
The invention listed below is owned by an agency of the U.S. Government and is available for licensing in the U.S. in accordance with 35 U.S.C. 207 to achieve expeditious commercialization of results of federally-funded research and development. Foreign patent applications are filed on selected inventions to extend market coverage for companies and may also be available for licensing.
Licensing information and copies of the U.S. patent application listed below may be obtained by writing to the indicated licensing contact at the Office of Technology Transfer, National Institutes of Health, 6011 Executive Boulevard, Suite 325, Rockville, Maryland 20852-3804; telephone: 301/496-7057; fax: 301/402-0220. A signed Confidential Disclosure Agreement will be required to receive copies of the patent application.
Tumor antigens are known to be poorly immunogenic and attempts to elicit immune responses against the epitopes of antigens specific to tumor cells have been largely unsuccessful. The inventors have developed a cancer vaccine comprising a defensin fused to a tumor antigen or viral antigen to enhance the immunogenicity of the tumor antigen or viral antigen. The inventors have demonstrated, with animal data, that chimeric proteins comprising a defensin fused to a model tumor antigen (lymphoma-derived single-chain Fv) generate a measurable humoral and anti-tumor cellular immune response when administered to a subject. (Biragyn
Recently the inventors have further discovered that murine beta-defensin 2 acts directly on immature dendritic cells as an endogenous ligand for Toll-like receptor 4 (TLR-4), inducing up-regulation of costimulatory molecules and dendritic cell maturation. (Biragyn
The above-mentioned invention is available for licensing on an exclusive or a non-exclusive basis.
National Institutes of Health, Public Health Service, DHHS.
Notice.
The inventions listed below are owned by agencies of the U.S. Government and are available for licensing in the U.S. in accordance with 35 U.S.C. 207 to achieve expeditious commercialization of results of federally-funded research and development. Foreign patent applications are filed on selected inventions to extend market coverage for companies and may also be available for licensing.
Licensing information and copies of the U.S. patent applications listed below may be obtained by writing to the indicated licensing contact at the Office of Technology Transfer, National Institutes of Health, 6011 Executive Boulevard, Suite 325, Rockville, Maryland 20852-3804; telephone: 301/496-7057; fax: 301/402-0220. A signed Confidential Disclosure Agreement will be required to receive copies of the patent applications.
This application describes compositions and methods related to Pigmented Epithelium Derived Factor (PEDF). PEDF is a protein, belonging to the serpin family, that has been demonstrated to have neurotrophic, gliastatic, neuronotrophic and anti-angiogenic properties. In particular, the compositions and methods described and claimed in this application are related to the isolation, cloning, expression and characterization of the putative receptor for PEDF. The PEDF receptor as described herein is a transmembrane protein having an extracellular ligand-binding domain, a transmembrane domain and an intracellular domain. The PEDF receptor shares some homology with an orphan receptor identified in the liver and the protein known as adiponutrin.
The isolation and cloning of the PEDF receptor will be useful in basic research to further elucidate the role of PEDF and its receptor in signal transduction
This work has not yet been published.
This invention relates to a method for identifying specific T cell epitopes and antigen-specific T cells through labeling with an HLA-GFP complex expressed on an antigen-presenting cell. The T cells acquired the peptide-HLA-GFP complex through T cell mediated endocytosis upon specific antigen stimulation. This basic method can be used for several purposes. First, it can be used to generate a T-cell immune response through the attachment of a reporter peptide to the antigen-presenting cell. It can also be used as a way to assay a population of cells to determine whether any T cells specific for a particular antigen are present. This might be useful in applications related to autoimmunity, infectious disease, or cancer. Third, it can be used as a therapeutic to eliminate antigen-specific T cells associated with disease, if coupled to a toxic moiety.
The technology relates to the use of cDNA microarrays to facilitate the identification of pulmonary neuroendocrine tumors. In order to identify molecular markers that could be used to classify pulmonary tumors, the inventors examined the gene expression profiles of clinical samples from patients with small cell lung cancer (SCLC), large cell neuroendocrine carcinoma (LCNEC), and typical carcinoma (TC) tumors by cDNA microarray analysis to detect hybridization between cDNA from tumor cells and DNA from a panel of 8,897 human genes. Gene expression was found to be nonrandom and to exhibit highly significant clustering that divided the tumors into their assigned World Health Organization (WH0) classification with 100% accuracy. The inventors concluded that pulmonary neuroendocrine tumors could be classified based on the genome-wide expression profile of the clinical samples without further manipulations.
The above-mentioned invention is available for licensing on an exclusive or non-exclusive basis.
National Institutes of Health, Public Health Service, DHHS.
Notice.
The invention listed below is owned by an agency of the U.S. Government and is available for licensing in the U.S. in accordance with 35 U.S.C. 207 to achieve expeditious commercialization of results of federally-funded research and development. Foreign patent applications are filed on selected inventions to extend market coverage for companies and may also be available for licensing.
Licensing information and copies of the U.S. patent application listed below may be obtained by writing to the indicated licensing contact at the Office of Technology Transfer, National Institutes of Health, 6011 Executive Boulevard, Suite 325, Rockville, Maryland 20852-3804; telephone: 301/496-7057; fax: 301/402-0220. A signed Confidential Disclosure Agreement will be required to receive copies of the patent application.
Polypeptides derived from the HIV-1 RT Catalytic site. Peptides are modified by replacement of certain key amino acid residues to increase binding to HLA-A2, the most common human class I HLA molecule. Such modified peptides are more immunogenic and can be used for further development of second-generation vaccines, therapeutics or diagnostic reagents. DNA encoding said modified polypeptides can be used as vaccines (naked DNA, bacterial or viral vector constructs).
The described technology provides for the methods, reagents and kits for the specific enrichment of microbes for further identification and diagnosis with particular emphasis on
The technology details a 2-step process in which the primary sample is held under acid conditions to inhibit or kill competitor microbes within the sample. The acidic conditions can also contain selective agents such as phage or nutrient supplements for further selectivity. After a predetermined time, the sample is then incubated under unrestricted growth conditions for the enrichment of the remaining microbes. These are then carried through for further identification and potential diagnosis.
The technology can be used to selectively enrich for potential medically important bacteria, especially
National Institutes of Health, Public Health Service, DHHS.
Notice.
The invention listed below is owned by an agency of the U.S. Government and is available for licensing in the U.S. in accordance with 35 U.S.C. 207 to achieve expeditious commercialization of results of federally-funded research and development. Foreign patent applications are filed on selected inventions to extend market coverage for companies and may also be available for licensing.
Licensing information and copies of the U.S. patents and patent applications listed below may be obtained by contacting Michael Ambrose, Ph.D., at the Office of Technology Transfer, National Institutes of Health, 6011 Executive Boulevard, Suite 325, Rockville, Maryland 20852-3804; telephone: 301/594-6565; fax: 301/402-0220; e-mail:
This invention relates to CD4 fusion proteins for use in the treatment of an immunodeficiency virus infection such as human immunodeficiency virus (HIV). These polypeptides have been shown by the inventors to inhibit the entry of primary isolates of HIV-1 into CD4+ T cells by targeting the gp120 subunit of the HIV-1 envelope. The invention claims recombinant polypeptides comprising a CD4 polypeptide ligated at its C-terminus with a portion of a human immunoglobulin comprising a hinge region and two constant domains of an immunoglobulin heavy chain. The portion of the IgG is fused at its C-terminus with a polypeptide comprising a tailpiece from the C terminus of the heavy chain of an IgA antibody. This protein is very large (greater than 800 kilodaltons), which may contribute to its ability to inhibit entry of primary isolates of HIV-1 into T cells. It presents twelve gp120 binding domains (D1D2) and can bind at least ten gp120s simultaneously. The inventors have shown that the construct efficiently neutralizes primary isolates from different HIV subgroups. Also claimed are use of the construct as a component of a vaccine and as a diagnostic.
The inventors have isolated a number of previously unknown sRNAs found in
This invention relates to bispecific fusion proteins effective in viral neutralization. Specifically, the invention is a genetically engineered chimeric protein containing a soluble extracellular region of human CD4 attached via a flexible polypeptide linker to a single chain human monoclonal antibody directed against a CD4-induced, highly conserved HIV gp120 determinant involved in coreceptor interaction. Binding of the sCD4 moiety to gp120 induces a conformational change that enables the antibody moiety to bind, thereby blocking Env function and virus entry. This novel bispecific protein displays neutralizing activity against genetically diverse primary HIV-1 isolates, with potency at least 10-fold greater than the best described HIV-1 neutralizing monoclonal antibodies. The agent has considerable potential for prevention of HIV-1 infection, both as a topical microbicide and as a systemic agent to protect during and after acute exposure (
According to data recently reported by the World Health Organization (WHO), the death rate from malaria exceeds one million individuals per year. The Public Health Service seeks exclusive or non-exclusive licensee(s) to develop and commercialize the technology claimed within the portfolio of U.S. patents issued and pending, and corresponding international patents issued and pending. These patents and pending applications claim an exceptionally broad universe of novel naphthylisoquinoline alkaloid compounds, and methods of total synthesis thereof. Representative examples of these compounds have been shown to have potent in vitro activity against malaria parasites, including parasites that are highly resistant to available antimalarial drugs.
Representative examples have also been shown to have potent in vivo activity against malaria parasites in animal models. Pharmaceutical compositions comprising these compounds, as well as methods of using the compounds to treat or prevent a malarial infection of a host, are claimed. The relative structural simplicity of this class of compounds, and the ready synthetic access thereto, provide unprecedented opportunities for structure-activity relationship (SAR), lead-optimization and antimalarial drug development. The technology is further described in the following publications: J. Nat Prod. 1997 Jul.;60(7):677-83 and Bioorg. Med. Chem. Lett. 1998 Jul.;8(13): 1729-34.
First isolated from the skin of the African clawed frog Xenopus laevis, magainin peptides have been shown by the inventors to have broad-spectrum antimicrobial properties. Both synthetic and natural magainin peptides are active against many species of bacteria and fungi and induce osmotic lysis of protozoa. Magainin peptides are water soluble, nonhemolytic at effective antimicrobial concentrations, have molecular weights of 2500 or less and are amphiphilic. Compositions and methods for their use are claimed in the patents. These inventions are available for nonexclusive or exclusive licensing. The inventions are further described in Zasloff
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. Appendix 2), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. Appendix 2), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. Appendix 2), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
Notice is hereby given of a change in the meeting of the National Institute of Environmental Health Sciences Special Emphasis Panel, November 19, 2003, 1:30 p.m. to November 19, 2003, 2:30 p.m., NIEHS/National Institutes of Health, Building 4401, East Campus, 79 T.W. Alexander Drive, 122, Research Triangle Park, NC 27709 which was published in the
The meeting will be held on November 24, 2003 at 2 p.m. The meeting is closed to the public.
Notice is hereby given of a change in the meeting of the National Institute of Environmental Health Sciences Special Emphasis Panel, November 12, 2003, 3 p.m. to November 12, 2003, 4 p.m., NIEHS/National Institutes of Health, Building 4401, East Campus, 79 T.W. Alexander Drive, 122, Research Triangle Park, NC, 27709 which was published in the
The telephone conference meeting will be held November 20, 2003 at 3 p.m. The meeting is closed to the public.
Notice is hereby given of a change in the meeting of the National Institute of Environmental Health Sciences Special Emphasis Panel, October 28, 2003, 10 a.m. to October 28, 2003, 1 p.m., NIEHS/National Institutes of Health, Building 4401, East Campus, 79 T.W. Alexander Drive, 122, Research Triangle Park, NC 27709 which was published in the
The meeting will be held November 17, 2003 at 11 a.m. The meeting is closed to the public.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. Appendix 2), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. Appendix 2), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. Appendix 2), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
Notice is hereby given of a change in the meeting of the Advisory Committee on Research on Women's Health, November 18, 2003, 9 a.m. to November 18, 2003, 5 p.m., Holiday Inn Select Bethesda, 8120 Wisconsin Ave., Bethesda, MD 20814 which was published in the
The meeting will be held at the NIH; 8600 Rockville Pike, Building 38; National Library of Medicine Conference Room. The meeting is open to the public.
The NTP CERHR announces—
(1) Availability of sections 1-4 of the draft expert panel report on fluoxetine and solicits written public comments on the report by January 6, 2004.
(2) The fluoxetine expert panel meeting on March 3-5, 2004 at the Holiday Inn Old Town Select, Alexandria, Virginia and invites the public to present oral comments at this meeting.
Questions about the draft expert panel report, submission of public comments, and the expert panel meeting should be directed to Dr. Michael Shelby, CERHR Director (contact information below).
The CERHR announces the availability of the draft expert panel report on fluoxetine hydrochloride (Prozac®; Sarafem
Each draft expert panel report has the following sections:
Sections 1-4 will be available to the public by the publication date of this notice and can be obtained electronically on the CERHR Web site (
The CERHR invites written public comments on sections 1-4 of the draft expert panel report on fluoxetine. Comments can be submitted in hard copy or electronic format and must be received by the CERHR by January 6, 2004. These comments will be distributed to the expert panel and CERHR staff for consideration in revising the draft report and in preparing for the expert panel meeting. They will be posted on the CERHR website prior to the expert panel meeting. These comments should be sent to Dr. Michael Shelby at the address provided above. Persons submitting written comments are asked to include their name and contact information (affiliation, mailing address,
The CERHR will hold an expert panel meeting March 3-5, 2004, at the Holiday Inn Old Town Select, 480 King Street, Alexandria, VA 22314 (telephone: 703-549-6080, facsimile: 684-6508). The CERHR has asked the expert panel to review the scientific evidence regarding the potential reproductive and/or developmental toxicity associated with exposure to fluoxetine. The expert panel will review and revise the draft expert panel report and reach conclusions regarding whether exposure to fluoxetine is a hazard to human development or reproduction. The expert panel will also identify data gaps and research needs.
This meeting is open to the public and attendance is limited only by the available meeting room space. The meeting will begin at 8:30 a.m. each day. On March 3 and 4, it is anticipated that a lunch break will occur from noon-1 p.m. and that the meeting will adjourn 5-6 p.m. The meeting is expected to adjourn by noon on March 5; however, adjournment may occur earlier or later depending upon the time needed by the expert panel to complete its work. Anticipated agenda topics for each day are listed below. Following the expert panel meeting and completion of the expert panel report, the CERHR will post the report on its website and solicit public comment through a
Time is set-aside on March 3, 2004, for the presentation of oral public comments at the expert panel meeting. To facilitate planning, those persons wishing to make oral public comments are asked to contact Dr. Shelby by February 25 (contact information provided above). Seven minutes will be available for each speaker (one speaker per organization). When registering to comment orally, please provide your name, affiliation, mailing address, telephone and facsimile numbers, e-mail and sponsoring organization (if any). If possible, also send a copy of the statement or talking points to Dr. Shelby by February 25. This information will be provided to the expert panel to assist them in identifying issues for discussion and will be noted in the meeting record. Registration for presentation of oral comments will also be available at the meeting on March 3, 2004 (7:30-8:30 a.m.). Those persons registering at the meeting are asked to bring 20 copies of their statement or talking points for distribution to the expert panel and for the record.
The CERHR expert panel is composed of independent scientists selected for their scientific expertise in reproductive and/or developmental toxicology and other areas of science relevant for this review.
The NTP established the NTP CERHR in June 1998 [
The CERHR invites the nomination of agents for review or scientists for its expert registry. Information about CERHR and the nomination process can be obtained from its Home page (
CERHR follows a formal, multi-step process for review and evaluation of selected chemicals. The formal evaluation process was published in the
Office of the Chief Information Officer, HUD.
Notice.
The proposed information collection requirement described below has been submitted to the Office of Management and Budget (OMB) for review, as required by the Paperwork Reduction Act. The Department is soliciting public comments on the subject proposal.
The information provides a basis for the management and administration of the property disposition program. In addition, information will determine if
Comments Due Date: December 8, 2003.
Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and/or OMB approval number (2502-0268) and should be sent to: Lauren Wittenberg, OMB Desk Officer, Office of Management and Budget, Room 10235, New Executive Office Building, Washington, DC 20503; Fax number (202) 395-6974; e-mail
Wayne Eddins, Reports Management Officer, AYO, Department of Housing and Urban Development, 451 Seventh Street, Southwest, Washington, DC 20410; e-mail
The Department has submitted the proposal for the collection of information, as described below, to OMB for review, as required by the Paperwork Reduction Act (44 U.S.C. Chapter 35). The Notice lists the following information: (1) The title of the information collection proposal; (2) the office of the agency to collect the information; (3) the OMB approval number, if applicable; (4) the description of the need for the information and its proposed use; (5) the agency form number, if applicable; (6) what members of the public will be affected by the proposal; (7) how frequently information submissions will be required; (8) an estimate of the total number of hours needed to prepare the information submission including number of respondents, frequency of response, and hours of response; (9) whether the proposal is new, an extension, reinstatement, or revision of an information collection requirement; and (10) the name and telephone number of an agency official familiar with the proposal and of the OMB Desk Officer for the Department.
This Notice also lists the following information:
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. 35, as amended.
Office of the Assistant Secretary for Community Planning and Development, HUD.
Notice.
This Notice identifies unutilized, underutilized, excess, and surplus Federal property reviewed by HUD for suitability for possible use to assist the homeless.
Mark Johnston, room 7266, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410; telephone (202) 708-1234; TTY number for the hearing- and speech-impaired (202) 708-2565 (these telephone numbers are not toll-free), or call the toll-free Title V information line at 1-800-927-7588.
In accordance with 24 CFR part 581 and section 501 of the Steward B. McKinney Homeless Assistance Act (42 U.S.C. 11411), as amended, HUD is publishing this Notice to identify Federal buildings and other real property that HUD has reviewed for suitability for use to assist the homeless. The properties were reviewed using information provided to HUD by Federal landholding agencies regarding unutilized and underutilized buildings and real property controlled by such agencies or by GSA regarding its inventory of excess or surplus Federal property. This Notice is also published in order to comply with the December 12, 1988 Court Order in
Properties reviewed are listed in this Notice according to the following categories: Suitable/available, suitable/unavailable, suitable/to be excess, and unsuitable. The properties listed in the three suitable categories have been reviewed by the landholding agencies, and each agency has transmitted to HUD: (1) Its intention to make the property available for use to assist the homeless, (2) its intention to declare the property excess to the agency's needs, or (3) a statement of the reasons that the property cannot be declared excess or made available for use as facilities to assist the homeless.
Properties listed as suitable/available will be available exclusively for homeless use for a period of 60 days from the date of this Notice. Where property is described as for “off-site use only” recipients of the property will be required to relocate the building to their own site at their own expense. Homeless assistance providers interested in any such property should send a written expression of interest to HHS, addressed to Shirley Kramer, Division of Property Management, Program Support Center, HHS, room 5B-41, 5600 Fishers Lane, Rockville, MD 20857; (301) 443-2265 (this is not a toll-free number). HHS will mail to the interested provider an application packet, which will include instructions for completing the application. In order to maximize the opportunity to utilize a suitable property, providers should submit their written expressions of interest as soon as possible. For complete details concerning the processing of applications, the reader is encouraged to refer to the interim rule governing this program, 24 CFR part 581.
For properties listed as suitable/to be excess, that property may, if subsequently accepted as excess by GSA, be made available for use by the homeless in accordance with applicable law, subject to screening for other Federal use. At the appropriate time, HUD will publish the property in a Notice showing its as either suitable/available or suitable/unavailable.
For properties listed as suitable/unavailable, the landholding agency has decided that the property cannot be declared excess or made available for use to assist the homeless, and the property will not be available.
Properties listed as unsuitable will not be made available for any other purpose for 20 days from the date of this notice. Homeless assistance providers interested in a review by HUD of the determination of unsuitability should call the free information line at 1-800-927-7588 for detailed instructions or write a letter to Mark Johnston at the address listed at the beginning of this notice. Included in the request for review should be the property address (including ZIP Code), the date of publication in the
For more information regarding particular properties identified in this notice (
Bureau of Indian Affairs, Interior.
Notice of request for comments.
In compliance with the Paperwork Reduction Act of 1995, this notice announces that we are seeking comments from interested parties to renew the clearance for Application for Training or Employment, OMB No. 1076-0062.
Written comments must be received by January 6, 2004.
Written comments should be sent to: Lynn Forcia, Office of Self-Governance and Self-Determination, Department of the Interior, 1849 C Street, NW., Mail Stop 2412-MIB, Washington, DC 20240.
For additional information or copies of the forms, call Lynn Forcia, Office of Self-Governance and Self-Determination, Department of the Interior, 1849 C Street NW., MS 2412-MIB, Washington, DC 20240 and (202) 219-5270 (This is not a toll-free number). You may send requests by facsimile to (202) 208-3664.
Pub.L. 84-959 and Pub.L. 88-230 authorize the Secretary of the Interior, to help adult Indians who reside on or near Indian reservations to obtain reasonable and satisfactory employment. The information collection documents provide information necessary to administer the program for Employment Assistance or Vocational Training. The Secretary is authorized to undertake a program of vocational training that provides vocational counseling, guidance, and training in any recognized vocation, apprenticeship, trade, or on-the-job training. The program is available to Indians who are not less than 18 years old and not more than 35 years old who reside on or near an Indian reservation. The acts authorize the Secretary to enter into contracts or agreements with Federal, State, local government agencies or associations with apprenticeship programs or on-the-job training that leads to skilled employment. The same application form is used for both 25 CFR parts 26 and 27. Information of a confidential nature is protected by the Privacy Act.
You are asked to comment on the necessity of the information collection to fulfill the functions of the bureau; whether the burden estimate is accurate and the methodology and assumptions are valid; the utility, quality, and clarity of information requested; and ways that the burden might be minimized for respondents. All comments are subject to review by the public during regular business hours. If you wish your name or address withheld, you must state this prominently at the beginning of your comments. We will honor your request to the extent allowed by the law. Individuals who represent businesses or companies will have comments available for review by the public. In some cases we may decide to withhold comments from review for good reason.
Please note that an agency may not sponsor or conduct, and a person need not respond to, an information collection unless a currently valid OMB Control Number is displayed.
Bureau of Indian Affairs, Interior.
Notice.
This notice advises the public that the Bureau of Indian Affairs (BIA), with the cooperation of the Ione Band of Miwok Indians and the National Indian Gaming Commission (NIGC), intends to gather information necessary to prepare an Environmental Impact Statement (EIS) for a proposed casino project to be located within the City of Plymouth in Amador County, California. The purpose of the proposed project is to help provide for the economic development of the Ione Band. This notice also announces a public scoping meeting to identify potential issues and content for inclusion in the EIS.
Comments on the scope and implementation of this proposal must arrive by December 8, 2003. The public scoping meeting will be held on Wednesday, November 19, 2003, from 6 p.m. to 9 p.m. or until the last comment is received.
You may mail or hand carry written comments to Mr. Clay Gregory, Acting Regional Director, Pacific Region, Bureau of Indian Affairs, 2800 Cottage Way, Sacramento, California 95825. The public scoping meeting will be held at the Amador County Fairgrounds, 18621 Sherwood and School Streets, Plymouth, California.
Mr. William Allan, (916) 978-6043.
The Ione Band of Miwok Indians proposes that 208.06± acres of land be taken into trust and that a casino, parking, hotel and other facilities supporting the casino be
The project site is located immediately east of Highway 49, and is within 2
Phase I of the Proposed Action includes the development of a 120,000± square foot casino complex, which would consist of a porte cochere, main gaming hall, food and beverage services, retail space, and administration space. Approximately 65,000 square feet of this building space would be devoted to the main gaming hall, while the balance of the facility would include administration space, small retail shops and food/beverage facilities and a small gift and art shop. The entire complex would be built on land currently within the City of Plymouth. Primary access to the casino complex would be via State Highway 49.
Phase II of the Proposed Action includes the construction of a hotel (250 rooms maximum), which will include small conference style facilities together with food and beverage services. The proposed hotel would also be fitted with a dual plumbing system for the use of potable and recycled water. In addition, site parking would be increased to supply adequate parking for hotel and conference patrons. The hotel is anticipated to be operational no sooner than the middle of year 3-4 of the project. Primary vehicle access to the hotel would be provided by the main casino and surface-parking driveway.
Areas of environmental concern to be addressed in the EIS include land use, geology and soils, water resources, agricultural resources, biological resources, cultural resources, mineral resources, paleontological resources, traffic and transportation, noise, air quality, public health/environmental hazards, public services and utilities, hazardous materials and waste/worker safety, socio-economics, environmental justice, and visual resources/aesthetics. The range of issues addressed may be expanded based on comments received during the scoping process.
Comments, including names and addresses of respondents, will be available for public review at the mailing address shown in the
This notice is published in accordance with section 1503.1 of the Council on Environmental Quality regulations (40 CFR parts 1500 through 1508) implementing the procedural requirements of the National Environmental Policy Act of 1969, as amended (42 U.S.C. 4321
Bureau of Indian Affairs, Interior.
Notice.
This notice advises the public that the Bureau of Indian Affairs (BIA), with the cooperation of the Mandan, Hidatsa, Arikara (MHA) Nation, intends to gather the information necessary for preparing an Environmental Impact Statement (EIS) for the proposed 468-acre Fee-to-Trust Transfer and Clean Fuels Refinery Project in Ward County, North Dakota. The purpose of the proposed action is to help meet the land base and economic needs of the MHA Nation.
You may submit written comments on the scope and implementation of this proposal through December 8, 2003.
You may mail or hand carry written comments to Horace Pipe, 25300 366 Street SW, Makoti, North Dakota 58756.
Horace Pipe, (701) 726-5894.
The MHA Nation proposes that 468 acres of land be taken into trust, that a clean fuels refinery be constructed on 160 acres of that land. The 468 acres of land to be taken into trust are in the northeast corner of the Fort Berthold Indian Reservation along the south side of North Dakota Highway 23, about 2 miles west of the turnoff to Makoti, North Dakota. The land and refinery, which will be owned and managed by the MHA Nation, will be in sections 19 and 20 of Township 152 North, Range 87 West.
The MHA Nation proposes to construct a petroleum refinery to process 10,000 barrels per stream day of synthetic crude from northern Alberta, obtained from a nearby, existing pipeline. The refinery will be a new state-of-the-art facility that will be able to meet current and proposed 2008 EPA regulations. The facility will be the most technologically advanced refinery in the United States and it will produce the cleanest gasoline and diesel fuel in the country. The project would employ 600 to 1000 positions during construction and 65 to 70 positions during operation.
The BIA will serve as the Lead Agency for compliance with the National Environmental Policy Act. The Environmental Protection Agency will be a Cooperating Agency.
The EIS will assess the environmental consequences of BIA approval of the fee-to-trust transfer of land and the refinery project. Areas of environmental concern include effects to socio-economics; air quality; transportation; ground and surface water; wildlife and their habitats; threatened, endangered, or special-status species; cultural
Comments, including names and home addresses of respondents, will be available for public review at the address shown in the
This notice is published in accordance with section 1503.1 of the Council on Environmental Quality regulations (40 CFR parts 1500 through 1508), implementing the procedural requirements of the National Environmental Policy Act of 1969, as amended (42 U.S.C. 4321
Bureau of Land Management (BLM), Vale District.
The National Historic Oregon Trail Interpretive Center Advisory Board will meet in a conference room at the Best Western Sunridge Inn (541-523-6444), One Sunridge Way in Baker City, OR, from 8 a.m. to 12 p.m. (Pacific time), on Thursday, December 18, 2003.
The meeting topics include: Completing the revision of the strategic plan, a roundtable to allow members to introduce new issues to the board, and other matters as may reasonably come before the Board. The entire meeting is open to the public. For a copy of the information to be distributed to the Board members, please submit a written request to the Vale District Office 10 days prior to the meeting. Public comment is scheduled for 10:15 a.m. to 10:30 a.m., Pacific time.
Additional information concerning the NHOTIC Advisory Board may be obtained from Peggy Diegan, Management Assistant/Webmaster, Vale District Office, 100 Oregon Street, Vale, OR 97918 (541) 473-3144, or e-mail
National Park Service, Interior.
Notice.
Notice is hereby given in accordance with the Federal Advisory Committee Act, 5 U.S.C. Appendix (1988), that the National Preservation Technology and Training Board (the Board) will meet November 14, 2003, in Natchitoches, LA.
The Board was established by Congress to provide leadership, policy advice, and professional oversight to the National Center for Preservation Technology and Training (NCPTT), as required under the National Historic Preservation Act of 1966, as amended (16 U.S.C. 470).
The Board will meet in Lee H. Nelson Hall, 645 College Ave., Natchitoches, LA 71457. On Friday, November 14, the meeting will start at 9:00 a.m. and end no later than 5:00 p.m. The Board meeting's agenda will include NCPTT operations, budget, and program development; NCPTT business and strategic plans; Preservation Technology and Training grants; and the Heritage Education program; PTT Board workgroup reports; and election of PTT Board chair and vice chair.
The Board meeting is open to the public. Facilities and space for accommodating members of the public are limited, however, and persons will be accommodated on a first-come, first-served basis. Any member of the public may file a written statement concerning the matters to be discussed.
Persons wishing more information concerning this meeting, or who wish to submit written statements, may contact Mr. de Teel Patterson Tiller, Acting Associate Director, Cultural Resources, 1849 C Street NW-3128 MIB, Washington, DC 20240, telephone (202) 208-7625. Increased security in the Washington, DC, area may cause delays in the delivery of U.S. Mail to government offices. In addition to mail or commercial delivery, please fax a copy of the written submission to Mr. Tiller at (202) 273-3237.
Minutes of the meeting will be available for public inspection no later than 90 days after the meeting at the office of the Acting Associate Director, Cultural Resources, 1849 C Street NW, Room 3128, Washington, DC.
National Park Service, Department of the Interior.
Notice.
This notice clarifies the meaning of the term
Several interpretations of the meaning of the term
You may view a copy of this definition through the Internet at:
Ken McMullen, Overflights and Natural Soundscape Program Manager, National Park Service, Grand Canyon NP, 823 N. San Francisco St., Suite B, Flagstaff, Arizona 86001. Telephone: (928) 779-2095, or by e-mail at
Public Law 100-91 called for the “substantial restoration of natural quiet and experience of the park” at GCNP. The NPS in its “Report on Effects of Aircraft Overflights on the National Park System” (submitted to Congress in September, 1994, and published in July, 1995) determined that “* * * substantial restoration requires that 50% or more of the Park achieve ‘natural quiet’ (
In its “Review of Scientific Basis for Change in Noise Impact Assessment Method Used at Grand Canyon National Park” (2000), the NPS provided definitions of terms used, as well as rationale, for its noise impact assessment methods. In this review the NPS defined substantial restoration of natural quiet to be “* * * a threshold not to be exceeded on any given day. * * *” (p. 16).
The term
When used in the definition of substantial restoration of natural quiet,
Clarification also provides the FAA the guidance from the NPS concerning the appropriate definition of this term and assists in the determination of how to address aircraft noise as discussed in the Department of Transportation/FAA
Significance of using
In summary, the National Parks Overflights Act of 1987 made clear that the visitors to GCNP are entitled to have the opportunity to experience substantial restoration of natural quiet. The Act did not limit that opportunity to only a portion of the park visitors or a portion of the year. The NPS, in its report to Congress, stated that such restoration would be for
National Park Service, Department of Interior.
Notice.
Following the recommendation in the recently issued National Park Service Aircraft Noise Model Validation Study, released January 23, 2003, this announcement provides notice that the NOISEMAP Simulation Model is the model of choice for calculating aircraft audibility at Grand Canyon National Park and other National Park Service units.
Copies of the National Park Service Aircraft Noise Model Validation Study report are available on computer discs (CDs) and may be requested from Grand Canyon National Park, or viewed on the Grand Canyon National Park Webpage at
Ken McMullen, Overflights and Natural Soundscape Program Manager, National Park Service, Grand Canyon National Park, 823 N San Francisco Street, Flagstaff, Arizona 86001. Telephone 928-779-2095; or by e-mail at
Public Law 100-91 (1987) tasked the National Park Service (NPS) and the Federal Aviation Administration (FAA) with developing a plan for aircraft use of Grand Canyon airspace that will succeed in “substantially restoring the natural quiet in the park”. In its “Report on Effects of Aircraft Overflights on the National Park System” (1995), the NPS defined substantial restoration of natural quiet as occurring when “50% or more of the park achieve[s] ‘natural quiet’ (
Although models that compute when aircraft are audible over large land areas have not been widely used, two models have been employed to calculate the percent of time aircraft are audible at Grand Canyon National Park. The National Park Service Overflight Decision Support System model (NODSS) was developed for the NPS to calculate aircraft-produced noise in backcountry settings; NODSS was designed to account for park terrain features, its calculations are based on one-third octave band acoustic spectra information, and it calculates audibility directly. The results from NODSS have been used by the NPS to calculate the percent of substantial restoration of natural quiet achieved by various airspace and operations alternatives at Grand Canyon National Park. A second model, the Integrated Noise Model (INM), version 5.1, is the FAA-developed, aircraft noise computation model used internationally to calculate aircraft-produced noise in airport environments. INM bases its computations on A-weighted aircraft sound levels and accounts for differences in site elevation but does not account for shielding due to terrain. Results from INM have been presented in environmental assessments associated with FAA draft and final rules on Grand Canyon National Park airspace regulations. The two models, using Grand Canyon operations data but based on different metrics, produced somewhat different results. To comply with the National Environmental Protection Act's requirement to use “the best available science”, a model validation study was designed to compare computer model results with measurements made on-site at the Grand Canyon. A third model, NOISEMAP Simulation Model (NMSIM) developed by Wyle Laboratories, the U.S. Air Force, and the National Aeronautics and Space Administration, was included in this study as was a second version of INM (Research Version). NMSIM, like NODSS, uses spectral information, accounts for park terrain, and computes aircraft audibility. In addition to these capabilities, NMSIM also simulates aircraft flying in the time sequence in which they occurred and includes the directivity of each aircraft type. The Research Version of INM uses spectral, rather than A-weighted, information but is in other major ways similar to INM.
The goal of the study was to: “Determine the degrees of accuracy and precision that existing computer models provide, in comparison with field measurement, in the calculation of the percent of time tour aircraft are audible in the Canyon. * * *” In this study, determining “accuracy and precision” is termed “validation”.
The NPS Aircraft Noise Model Validation Study was designed through a cooperative process involving the NPS, the FAA, the Volpe National Transportation Systems Center, Wyle Laboratories, and Harris Miller Miller & Hansen Inc. After a draft research approach had been developed, a Technical Review Committee (TRC) consisting of internationally recognized experts reviewed and commented on the plan. Suggestions made by TRC members were incorporated into the study design. As results were produced the full team, including TRC members, were involved in review and comment. The full team has reviewed and commented on drafts of the study report. Their comments were incorporated extensively.
Acoustic data for the NPS Aircraft Noise Model Validation Study were collected from some 39 sites at Grand Canyon over a four-day period in September 1999. The collected data were reduced to provide hourly information for modeling tour aircraft audibility and sound levels for each hour of operations, and for then analyzing the results. Each of the four models (NODSS, INM in two versions, and NMSIM) were exercised with the same set of input data. The models were run to produce for each site the hourly values of both the percent of time tour aircraft were audible and the tour aircraft hourly equivalent sound level, L
In August, 2002, as the NPS Aircraft Noise Model Validation Study report was nearing completion, the United States Court of Appeals, District of Columbia Circuit ((in United States Air Tour Association v. Federal Aviation Administration (Grand Canyon Trust, Intervenors)) declared that the FAA's practice of including only air tour aircraft-produced noise in the calculation of substantial restoration of natural quiet at GCNP should be remanded back to that agency for reconsideration. The Court indicated that noise from all aircraft overflying the park should be included in the noise calculations. Although the NPS Aircraft Noise Model Validation Study was based on data from tour aircraft conducting operations over Grand Canyon National Park, the inclusion of noise from other aircraft sources will not invalidate the results of this study. Similarly, as the models respond to the principles of acoustics and physics, the results of the NPS Aircraft Noise Model Validation Study are applicable to other National Park units.
The study concluded, “We consider NMSIM to be the model most suited for immediate use in computing percent of
Audibility is a fundamental component in the definition and measurement of natural quiet and natural sounds at Grand Canyon National Park and other NPS units. The NPS Aircraft Noise Model Validation study found NMSIM to be the model best suited for computing audibility. Further, the National Environmental Protection Act's requirement for the use of the “best available science” is met with the selection of NMSIM. Therefore, the NPS announces that the NOISEMAP Simulation Model (NMSIM) is the model of choice for calculating aircraft audibility at Grand Canyon National Park and other NPS units.
General wage determination decisions of the Secretary of Labor are issued in accordance with applicable law and are based on the information obtained by the Department of Labor from its study of local wage conditions and data made available from other sources. They specify the basic hourly wage rates and fringe benefits which are determined to be prevailing for the described classes of laborers and mechanics employed on construction projects of a similar character and in the localities specified therein.
The determinations in these decisions of prevailing rates and fringe benefits have been made in accordance with 29 CFR part 1, by authority of the Secretary of Labor pursuant to the provisions of the Davis-Bacon Act of March 3, 1931, as amended (46 Stat. 1494, as amended, 40 U.S.C. 276a) and of other Federal statutes referred to in 29 CFR part 1, appendix, as well as such additional statutes as may from time to time be enacted containing provisions for the payment of wages determined to be prevailing by the Secretary of Labor in accordance with the Davis-Bacon Act. The prevailing rates and fringe benefits determined in these decisions shall, in accordance with the provisions of the foregoing statutes, constitute the minimum wage payable on Federal and federally assisted construction projects to laborers and mechanics of the specified classes engaged on contract work of the character and in the localities described therein.
Good cause is hereby found for not utilizing notice and public comment procedure thereon prior to the issuance of these determinations as prescribed in 5 U.S.C. 553 and not providing for delay in the effective date as prescribed in that section, because the necessity to issue current construction industry wage determinations frequently and in large volume causes procedures to be impractical and contrary to the public interest.
General wage determination decisions, and modifications and supersedeas decisions thereto, contain no expiration dates and are effective from their date of notice in the
Any person, organization, or governmental agency having an interest in the rates determined as prevailing is encouraged to submit wage rate and fringe benefit information for consideration by the Department.
Further information and self-explanatory forms for the purpose of submitting this data may be obtained by writing to the U.S. Department of Labor, Employment Standards Administration, Wage and Hour Division, Division of Wage Determinations, 200 Constitution Avenue, NW., Room S-3014, Washington, DC 20210.
The number of the decisions listed to the Government Printing Office document entitled “General Wage Determinations Issued Under the Davis-Bacon and related Acts” being modified are listed by Volume and State. Dates of publication in the
General Wage determinations issued under the Davis-Bacon and related Acts, including those noted above, may be found in the Government Printing Office (GPO) document entitled “General Wage determinations Issued Under the Davis-Bacon And Related Acts”. This publication is available at each of the 50 Regional Government Depository Libraries and many of the 1,400 Government Depository Libraries across the country.
General wage determinations issued under the Davis-Bacon and related Acts are available electronically at no cost on
Hard-copy subscriptions may be purchased from: Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402, (202) 512-1800.
When ordering hard-copy subscription(s), be sure to specify the State(s) of interest, since subscriptions may be ordered for any or all of the six separate Volumes, arranged by State. Subscriptions include an annual edition (issued in January or February) which includes all current general wage determinations for the States covered by each volume. Throughout the remainder of the year, regular weekly updates will be distributed to subscribers.
Occupational Safety and Health Administration (OSHA), Labor.
Notice; extension of time to submit abstracts.
On October 6, 2003, OSHA published a notice (68 FR 57713) soliciting abstracts from persons wishing to make presentations at a symposium entitled “Musculoskeletal and Neurovascular Disorders—the State of the Research Regarding Workplace Etiology and Prevention.” This symposium is scheduled to be held in conjunction with the fourth meeting of the National Advisory Committee on Ergonomics in January 2004. Abstracts were originally due on November 5, 2003. The Agency has decided to extend the deadline for submission of abstracts. Interested persons are asked to refer to the original October 6, 2003 notice for details on content and format for abstracts.
Abstracts are due December 1, 2003. The symposium will take place on January 27, 2004.
The Symposium will be held in Washington, DC. Submit abstracts to MaryAnn Garrahan, Director, Office of Technical Programs and Coordination Activities, OSHA, U.S. Department of Labor, Room N-3655, 200 Constitution Avenue, NW., Washington, DC 20210. Phone: (202) 693-2144; Fax: (202) 693-1644.
OSHA, Office of Communications, Room N-3647, U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 20210. Phone: (202) 693-1999.
In conjunction with NACE's fourth meeting in January 2004, a symposium is being convened to enable the committee to hear from experts in ergonomics. In its October 6, 2003
Rather than repeating all of the relevant information contained in the October 6, 2003 notice, OSHA asks interested persons to refer directly to that notice for guidance in submitting abstracts. The October 6 notice is available on OSHA's Web site at
This notice was prepared under the direction of John L. Henshaw, Assistant Secretary of Labor for Occupational Safety and Health. It is issued under the Federal Advisory Committee Act (5 U.S.C. App. 2), GSA's FACA Regulations (41 CFR Part 102-3), and DLMS 3 Chapter 1600.
The U.S. Nuclear Regulatory Commission (the Commission) has granted the request of Exelon Generation Company, LLC (the licensee) to withdraw its December 20, 2002, application for proposed amendment to Facility Operating License Nos. DPR-19 and DPR-25 for the Dresden Nuclear Power Station, Units 2 and 3, located in Grundy County, Illinois.
The proposed amendment would have revised the applicability of facility technical specifications pertaining to Reactor Protection System (RPS) instrumentation, main steam isolation valve closure and turbine condenser vacuum—low functions, to eliminate the requirement for these functions be operable while in Mode 2 with reactor pressure greater than or equal to 600 psig and delete the associated Required Action to align with the revised applicability of these functions.
The Commission had previously issued a Notice of Consideration of Issuance of Amendment published in the
For further details with respect to this action, see the application for amendment dated December 20, 2002, and the licensee's letter dated October 1, 2003, which withdrew the application for license amendment. Documents may be examined, and/or copied for a fee, at the NRC's Public Document Room (PDR), located at One White Flint North, Public File Area O1 F21, 11555 Rockville Pike (first floor), Rockville, Maryland. Publicly available records will be accessible electronically from the Agencywide Documents Access and Management Systems (ADAMS) Public Electronic Reading Room on the internet at the NRC Web site,
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
Notice of availability of Environmental Assessment and Finding of No Significant Impact.
James C. Shepherd, Project Manager, Decommissioning Branch, Division of Waste Management, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Mail Stop: T-7F27, Washington, DC 20555-0001. Telephone: (301) 415-6712; Fax number: (301) 415-5398; E-mail:
The U.S. Nuclear Regulatory Commission (NRC) is considering the issuance of a license amendment to Material License Number SMB-911, issued to Fansteel, Inc. (the licensee), to authorize decommissioning of its facility located in Muskogee, Oklahoma. NRC has prepared an Environmental Assessment (EA) in accordance with the requirements of 10 CFR part 51 and to determine the environmental impacts of approving the decommissioning plan (DP), subsequent release of the site for unrestricted use (as defined in 10 CFR 20.1402), and termination of the license.
The purpose of the proposed action is to authorize the decommissioning of Fansteel's Speciality Metals facility, in Muskogee, Oklahoma, for unrestricted use to allow for license termination. The Fansteel processing facility produced tantalum and columbium metals for approximately 33 years until operations ceased in 1990. The raw materials used for tantalum and columbium production contain uranium and thorium as naturally occurring trace constituents. The concentration of radioactive species present in the process raw materials is sufficient to cause the ores and slags to be classified by the NRC as source material. Consequently, Fansteel operated under NRC License No. SMB-911 for the possession of source material. Fansteel was authorized by the NRC on March 25, 1997, to complete the processing of ore residues, calcium fluoride residues, and wastewater treatment residues containing uranium and thorium, in various site impoundments.
On July 24, 2003, Fansteel requested that NRC approve the DP for the facility, which when complete, would permit the site to be released for unrestricted use. Final approval for release of the site for unrestricted use and license termination would be contingent upon NRC approval of the licensee's final status survey report and making the findings required by the Commission's regulations following completion of the licensee's decommissioning activities. Fansteel's request for the proposed action was previously noticed in the
The staff has prepared the EA in support of the proposed license amendment to decommission the site, terminate the license, and release the site for unrestricted use. On the basis of the EA, NRC has concluded that there are no significant environmental impacts from the proposed action, and the license amendment does not warrant preparation of an Environmental Impact Statement. It has been determined that a Finding of No Significant Impact (FONSI) is appropriate. The amendment will be issued following the publication of this Notice.
The EA and the documents related to this proposed action, including the application for the license amendment and supporting documentation, are available for inspection at NRC's Public Electronic Reading Room at
For the Nuclear Regulatory Commission.
Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Rule 17Ad-11 requires all registered transfer agents to report to issuers and the appropriate regulatory agency in the event that aged record differences exceed certain dollar value thresholds. An aged record difference occurs when an issuer's records do not agree with those of securityowners as indicated, for instance, on certificates presented to the transfer agent for purchase, redemption or transfer. In addition, the rule requires transfer agents to report to the appropriate regulatory agency in the event of a failure to post certificate detail to the master securityholder file within 5 business days of the time required by Rule 17Ad-10. Also, transfer agents must maintain a copy of each report prepared under Rule 17Ad-11 for a period of three years following the date of the report. These recordkeeping requirements assist the
Because the information required by Rule 17Ad-11 is already available to transfer agents, any collection burden for small transfer agents is minimal. The staff estimates that the average number of hours necessary to comply with Rule 17Ad-11 is one hour annually. Based upon past submissions, the total burden is 150 hours annually for transfer agents.
Written comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimates of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication.
Please direct your written comments to Kenneth A. Fogash, Acting Associate Executive Director/CIO, Office of Information Technology, Securities and Exchange Commission, 450 5th Street, NW., Washington, DC 20549.
Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Rule 17Ad-13 requires approximately 200 registered transfer agents to obtain an annual report on the adequacy of internal accounting controls. In addition, transfer agents must maintain copies of any reports prepared pursuant to Rule 17Ad-13 plus any documents prepared to notify the Commission and appropriate regulatory agencies in the event that the transfer agent is required to take any corrective action. These recordkeeping requirements assist the Commission and other regulatory agencies with monitoring transfer agents and ensuring compliance with the rule. Small transfer agents are exempt from Rule 17Ad-13.
The staff estimates that the average number of hours necessary for each transfer agent to comply with Rule 17Ad-13 is one hundred seventy-five hours annually. The total burden is 35,000 hours annually for transfer agents, based upon past submissions.
Written comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimates of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication.
Please direct your written comments to Kenneth A. Fogash, Acting Associate Executive Director/CIO, Office of Information Technology, Securities and Exchange Commission, 450 5th Street, NW., Washington, DC 20549.
Securities and Exchange Commission (“Commission”)
Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (the “Act”) for exemptions from sections 2(a)(32), 18(f)(1), 18(i), 22(d), 22(e) and 24(d) of the Act and rule 22c-1 under the Act, and under sections 6(c) and 17(b) of the Act for exemptions from sections 17(a)(1) and (2) of the Act.
Applicants request an order that would permit the following: (a) An open-end management investment company, the series of which consist of the component securities of certain foreign equity securities indices, to issue a class of shares (“VIPER Shares”) that can be purchased from the investment company and redeemed only in large aggregations (“Creation Units”); (b) secondary market transactions in VIPER Shares to occur at negotiated prices on a national securities exchange, as defined in section 2(a)(26) of the Act (“Exchange”); (c) dealers to sell VIPER Shares to purchasers in the secondary market unaccompanied by a prospectus when prospectus delivery is not required by the Securities Act of 1933 (“Securities Act”); (d) certain affiliated persons of the series to deposit securities into, and receive securities from, the series in connection with the purchase and redemption of Creation Units; and, (e) the series to pay redemption proceeds, under certain circumstances, more than seven days after the tender of a Creation Unit of VIPER Shares for redemption.
Vanguard International Equity Index Funds (“Trust”), The Vanguard Group, Inc. (“VGI”), and Vanguard Marketing Corporation (“VMC”).
The application was filed on July 25, 2002, and amended on October 7, 2003.
An order granting the application will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on November 28, 2003, and
Secretary, Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Applicants, c/o Barry A. Mendelson, The Vanguard Group, Inc., P.O. Box 2600, Valley Forge, PA 19482.
Stacy L. Fuller, Senior Counsel, or Michael W. Mundt, Senior Special Counsel, at 202-942-0564 (Division of Investment Management, Office of Investment Company Regulation).
The following is a summary of the application. The complete application may be obtained for a fee at the Commission's Public Reference Branch, 450 Fifth Street, NW., Washington, DC 20549-0102 (telephone 202-942-8090).
1. The Trust is an open-end management investment company registered under the Act and organized as a Delaware statutory trust. The Trust currently has three series (“Existing Funds”). Each Existing Fund currently offers separate classes of shares for retail and institutional investors (such classes of shares collectively, “Conventional Shares”). In the future, the Trust or another registered open-end management investment company may offer other series (“Future Funds,” and together with Existing Funds, “Funds”). Any Future Fund will (a) be advised by VGI or an entity controlled by or under common control with VGI and (b) comply with the terms and conditions of any order granted pursuant to the application.
2. VGI is a Pennsylvania corporation that is wholly and jointly owned by 35 investment companies, and the series thereof (each, a “Vanguard Fund” and collectively, the “Vanguard Fund Complex”). VGI is registered as an investment adviser under the Investment Advisers Act of 1940 and as a transfer agent under the Securities Exchange Act of 1934 (“Exchange Act”). VGI provides each Vanguard Fund, with corporate management, administrative, and transfer agency services at cost. VGI also provides advisory services at cost to certain Vanguard Funds, including each of the Existing Funds. VMC, a wholly owned subsidiary of VGI, is registered as a broker-dealer under the Exchange Act. VMC provides all distribution and marketing services to the Vanguard Funds, including each of the Existing Funds.
3. Each Existing Fund seeks to track as closely as possible the performance of an international equity securities index (each, a “Target Index”).
4. Applicants state that a small percentage of investors frequently trade in and out of the Existing Funds, often as part of a market timing strategy, and that to meet these investors' redemption requests, a Fund must buy and sell portfolio securities. Applicants state that such purchases and sales of portfolio securities are detrimental in that they can increase a Fund's realization of capital gains, increase expenses, and hinder a Fund's ability to achieve its investment objective of tracking the relevant Target Index as closely as possible. Applicants further state that the Existing Funds have adopted policies designed to deter these investors but that such policies have been insufficient.
5. Each Fund proposes to create VIPER (Vanguard Index Participation Equity Receipts) Shares, a class of shares that would be listed on an Exchange and trade in the secondary market at negotiated prices. Applicants state that, by creating an exchange-traded class of shares, the Funds will offer short-term investors an attractive means of investing in the Funds.
6. Except in connection with the Conversion Privilege (as defined below) or the liquidation of a Fund (or of the VIPER Share class of a Fund), the Funds will issue VIPER Shares only in Creation Units, aggregations of a specified number of shares ranging from 20,000 to 250,000 shares. The price of a Creation Unit will range from $500,000 to $30,000,000.
7. All orders to purchase Creation Units must be received by VMC no later than the closing time of the NYSE on the date the order is placed in order to receive NAV as determined that day. VMC will transmit all purchase orders to the Funds, maintain a record of each Creation Unit purchaser, and send out a VIPER Prospectus and confirmation to such purchasers.
8. The purchaser of a Creation Unit will be able to separate the Creation Unit into individual VIPER Shares.
9. Applicants expect that purchasers of Creation Units will include institutional investors and arbitrageurs. A Specialist, in providing for a fair and orderly secondary market for VIPER Shares, also may purchase Creation Units for use in its market making activities on the Exchange. Applicants expect that secondary market purchasers of VIPER Shares will include both institutional and retail investors.
10. Applicants will make available a VIPER Shares product description (“Product Description”) for distribution in accordance with an Exchange rule requiring Exchange members and member organizations effecting transactions in VIPER Shares to deliver a Product Description to investors purchasing VIPER Shares, whether on or away from the Exchange. Applicants state that any other Exchange that applies for unlisted trading privileges in VIPER Shares will have to adopt a similar rule, requiring delivery of the Product Description. The Product Description will provide a plain English overview of a Fund, including its investment objective and investment strategies, the identity of VGI, the material risks of investing in the Fund, and the composition and frequency of distributions. The Product Description also will provide a brief, plain English description of the salient features of VIPER Shares. The Product Description will advise investors that a VIPER Prospectus and SAI may be obtained, without charge, from the investor's broker or from VMC. The Product Description also will identify a Web site address where investors can obtain information about the composition and compilation methodology of the Target Index. Applicants expect that the number of purchases of VIPER Shares in which an investor will not receive a Product Description will not constitute a significant portion of the market activity in VIPER Shares.
11. Except in connection with the liquidation of a Fund (or of a Fund's VIPER Share class), VIPER Shares will only be redeemable in Creation Unit aggregations through each Fund. An investor redeeming a Creation Unit generally will receive (a) a basket of securities (“Redemption Securities”), which in most cases will be the same as the Deposit Securities required of investors purchasing Creation Units on the same day, and (b) a cash amount equal to the difference in the value of the Redemption Securities and the NAV of a Creation Unit, which in most cases will be the same as the Balancing Amount paid (or received) by investors purchasing Creation Units on the same day. A Fund may make redemptions partly or wholly in cash in lieu of transferring one or more Redemption Securities to a redeeming investor, if the Fund determines that such alternative is warranted. The Fund may make such a determination if, for example, a foreign country's regulations restrict or prohibit a redeeming investor from holding a particular issuer's securities. In order to cover the Fund's transaction costs, redeeming investors will pay a Transaction Fee.
12. The Funds intend to offer holders of Conventional Shares (except those holding Conventional Shares through a 401(k) or other participant-directed employer-sponsored retirement plan) the opportunity to exchange some or all of those shares for the Fund's VIPER
1. Applicants request an order under section 6(c) of the Act for exemptions from sections 2(a)(32), 18(f)(1), 18(i), 22(d), 22(e) and 24(d) of the Act and rule 22c-1 under the Act; and under sections 6(c) and 17(b) of the Act for exemptions from sections 17(a)(1) and (2) of the Act.
2. Section 6(c) of the Act provides that the Commission may exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision or provisions of the Act, or any rule or regulation thereunder, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act.
3. Section 2(a)(32) of the Act defines “redeemable security” as any security, other than short-term paper, under the terms of which the holder, upon its presentation to the issuer, is entitled to receive approximately his proportionate share of the issuer's current net assets, or the cash equivalent. Applicants request an order under section 6(c) to permit VIPER Shares to be redeemed in Creation Units only. Applicants note that because of the arbitrage possibilities created by the redeemability of Creation Units, it is expected that the market price of a VIPER Share will not vary much from its NAV.
4. Section 18(f)(1) of the Act, in relevant part, prohibits a registered open-end company from issuing any class of “senior security,” which is defined in section 18(g) to include any stock of a class having a priority over any other class as to the distribution of assets or payment of dividends. Section 18(i) of the Act requires that every share of stock issued by a registered management company be voting stock, with the same voting rights as every other outstanding voting stock. Rule 18f-3 permits an open-end fund to issue multiple classes of shares representing interests in the same portfolio without seeking exemptive relief from section 18(f)(1) and 18(i), provided that the fund complies with certain requirements. Applicants state that they will comply in all respects with rule 18f-3, except the requirements that (a) each class have the same rights and obligations as each other class (other than the differences allowed by the rule), and (b) if a class has a different distribution arrangement, the class must pay all of the expenses of the arrangement. Because applicants, therefore, may not rely on rule 18f-3, they request an exemption under section 6(c) from sections 18(f)(1) and 18(i).
5. Applicants state that there are three ways in which the Conventional Shares and VIPER Shares of each Fund will have different rights: (a) Conventional Shares will be individually redeemable, while VIPER Shares will be redeemable in Creation Units only; (b) VIPER Shares will be traded on an Exchange, while Conventional Shares will not; and (c) Conventional Shares may be exchanged for VIPER Shares through the Conversion Privilege, while VIPER Shares may not be exchanged for Conventional Shares. Applicants assert that these different rights are necessary if their proposal is to have the desired benefits. Applicants note that a Fund's VIPER Shares will be tradable on an Exchange and redeemable only in large aggregations, and that its Conventional Shares will be exchangeable for VIPER Shares in order to encourage short-term investors to conduct their trading activities in a way that does not disrupt the management of the Fund's portfolio. Applicants assert that there is no reason to make Conventional Shares tradable and that it would be counterproductive to facilitate the ability of market timers to disrupt a Fund by making VIPER Shares individually redeemable or exchangeable for Conventional Shares.
6. Applicants assert that the different rights do not implicate the concerns underlying section 18 of the Act, including conflicts of interest and investor confusion. With respect to the potential for investor confusion, applicants will take a variety of steps to ensure that investors understand the key differences between Conventional Shares and VIPER Shares. Applicants state that the VIPER Shares will not be marketed as a mutual fund investment. Marketing materials may refer to VIPER Shares as an interest in an investment company or fund, but will not make reference to an “open-end fund” or “mutual fund,” except to compare or contrast the VIPER Shares with the shares of a conventional open-end management investment company. Any marketing or advertising materials addressed primarily to prospective investors will emphasize that (a) VIPER Shares are not redeemable from a Fund other than in Creation Units, (b) VIPER Shares, other than in Creation Units, may be sold only through a broker, and the shareholder may have to pay brokerage commissions in connection with the sale, and (c) a selling shareholder may receive less than NAV in connection with the sale of VIPER Shares. The same type of disclosure will be provided in the Conventional Prospectus, VIPER Prospectus, Product
7. Applicants currently allocate distribution expenses among funds in the Vanguard Fund Complex according to a cost-sharing formula approved by the Commission in 1981 as part of an order allowing the Vanguard Fund Complex to internalize its distribution services (“1981 Order”).
8. Applicants propose to apply the Multi-Class Distribution Formula to each Fund's class of VIPER Shares. Applicants acknowledge that, because VIPER Shares may have a distribution arrangement that differs from that for Conventional Shares, the proposed allocation method is inconsistent with rule 18f-3. Applicants contend, however, that the Multi-Class Distribution Formula is a fundamental feature of Vanguard's unique, internally-managed structure, and that the proposed allocation method is consistent with the method approved by the Commission in the 1981 Order. The Multi-Class Distribution Formula has been approved by the board of trustees (“Board”) of each Fund, and the Board of each Fund, including a majority of the trustees who are not interested persons, as defined in section 2(a)(19) of the Act (“Disinterested Trustees”), will review the application of the Multi-Class Distribution Formula on an annual basis and determine that the proposed allocation is in the best interests of each class of shareholders and of the Fund as a whole.
9. Section 22(d), among other things, prohibits a dealer from selling a redeemable security that is currently being offered to the public by or through an underwriter, except at a current public offering price described in the prospectus. Rule 22c-1 generally requires that a dealer selling, redeeming, or repurchasing a redeemable security do so only at a price based on its NAV. Applicants state that secondary market trading in VIPER Shares will take place at negotiated prices, not at a current offering price described in the VIPER Prospectus, and not at a price based on NAV. Thus, purchases and sales of VIPER Shares in the secondary market will not comply with section 22(d) and rule 22c-1. Accordingly, applicants request exemptions from these provisions under section 6(c) of the Act.
10. Applicants assert that the sale of VIPER Shares at negotiated prices does not present the opportunity for any of the abuses that section 22(d) and rule 22c-1 were designed to prevent. Applicants maintain that while there is little legislative history regarding section 22(d), its provisions, as well as those of rule 22c-1, appear to have been designed to (a) prevent dilution caused by certain riskless trading schemes by principal underwriters and contract dealers, (b) prevent unjust discrimination or preferential treatment among buyers resulting from sales at different prices, and (c) ensure an orderly distribution of investment company shares by eliminating price competition from dealers offering shares at less than the published sales price and repurchasing shares at more than the published redemption price. Applicants state that secondary market trading in VIPER Shares would not cause dilution for existing Fund shareholders because such transactions would not directly or indirectly affect the Fund's assets. Applicants further state that secondary market trading in VIPER Shares would not lead to discrimination or preferential treatment among purchasers because, to the extent that different prices exist during a given trading day or from day to day, these variances will occur as a result of market forces. Finally, applicants contend that the proposed distribution system will be orderly because, among other things, arbitrage activity will ensure that the difference between the market price of VIPER Shares and their NAV remains narrow.
11. Section 22(e) generally prohibits a registered investment company from suspending the right of redemption or postponing the date of payment of redemption proceeds for more than seven days after the tender of a security for redemption. The principal reason for the requested exemption is that settlement of redemptions for the Funds is contingent not only on the settlement cycle of the United States market, but also on currently practicable delivery cycles in local markets for underlying foreign securities held by the Funds. Applicants state that local market delivery cycles for transferring certain foreign securities to investors redeeming Creation Units of VIPER Shares, together with local market holiday schedules, will under certain circumstances require a delivery process in excess of seven calendar days for the Funds. Applicants request relief under section 6(c) of the Act from section 22(e) to allow the Funds to pay redemption proceeds up to 12 calendar days after the tender of VIPER Shares for redemption. At all other times and except as disclosed in the relevant SAI, applicants expect that each Fund will be able to deliver redemption proceeds within seven days.
12. Applicants state that section 22(e) was designed to prevent unreasonable, undisclosed and unforeseen delays in the payment of redemption proceeds. Applicants assert that their requested relief will not lead to the problems that section 22(e) was designed to prevent. Applicants state that the SAI for each Fund will disclose those local holidays (over the period of at least one year following the date of the SAI), if any, that are expected to prevent the delivery of redemption proceeds in seven calendar days, and the maximum number of days needed to deliver the proceeds for the Fund.
13. Section 24(d) provides, in relevant part, that the prospectus delivery exemption provided to dealer transactions by section 4(3) of the Securities Act does not apply to transactions in a redeemable security issued by an open-end investment company. Applicants request an exemption under section 6(c) of the Act from section 24(d) to permit dealers selling VIPER Shares to rely on the prospectus delivery exemption provided by section 4(3) of the Securities Act.
14. Applicants state that VIPER Shares will be listed on an Exchange and will be traded in a manner similar to other equity securities, including the shares of closed-end investment companies. Applicants note that dealers selling shares of closed-end investment companies in the secondary market generally are not required to deliver a prospectus to the purchaser. Applicants contend that VIPER Shares, as a listed security, merit similar treatment, reducing compliance costs and regulatory burdens that result from the imposition of a prospectus delivery requirement on secondary market transactions. Applicants state that because VIPER Shares will be exchange-listed, prospective investors will have access to several types of market information about the VIPER Shares. Applicants state that information regarding market price and volume will be continually available on a real-time basis throughout the day on brokers' computer screens and other electronic services. The previous day's price and volume information also will be published daily in the financial section of newspapers.
15. Applicants further state that investors that purchase VIPER Shares in the secondary market will receive a Product Description, describing the Fund and its VIPER Shares. Applicants state that, while not intended as a substitute for a prospectus, the Product Description will contain information about VIPER Shares that is tailored to meet the needs of investors purchasing VIPER Shares in the secondary market.
16. Sections 17(a)(1) and (2) generally prohibit an affiliated person of a registered investment company, or an affiliated person of an affiliated person, acting as principal, from selling any security to, or purchasing any security from, the company. Sections 2(a)(3)(A) and (C) of the Act define “affiliated person,” respectively, as any person who owns 5% or more of an issuer's outstanding voting securities and any person who controls the fund. Section 2(a)(9) of the Act provides that a control relationship will be presumed where one person owns 25% or more of another person's voting securities. Applicants state that a large institutional investor or the Specialist could own 5% or more, or more than 25%, of a Fund's outstanding voting securities and, as a result, be deemed to be an affiliated person of the Fund under section 2(a)(3)(A) or (C). Applicants further state that, because purchases and redemptions of Creation Units would be in-kind, rather than for cash, those investors would be precluded by sections 17(a)(1) and (2) from purchasing or redeeming Creation Units from the Fund. Accordingly, applicants request an exemption under sections 6(c) and 17(b) of the Act to permit these affiliated persons, and affiliated persons of such affiliated persons who are not otherwise affiliated with the Fund, to purchase and redeem Creation Units through in-kind transactions.
17. Section 17(b) of the Act authorizes the Commission to exempt a proposed transaction from section 17(a) if evidence establishes that the terms of the transaction, including the consideration to be paid or received, are reasonable and fair and do not involve overreaching, and the proposed transaction is consistent with the policies of the registered investment company involved and the general purposes of the Act. Applicants contend that no useful purpose would be served by prohibiting persons affiliated with a Fund, as described above, from purchasing or redeeming Creation Units from the Fund. Applicants represent that Fund affiliates making in-kind purchases and redemptions would be treated no differently from non-affiliates making the same types of transactions. Applicants state that all purchases and redemptions of Creation Units would be at the Fund's next calculated NAV. Applicants also state that, in all cases, Deposit Securities and Redemption Securities will be valued in the same manner and using the same standards as those securities are valued for purposes of calculating the Fund's NAV. Applicants assert that, for these reasons, the requested relief meets the standards of sections 6(c) and 17(b).
Applicants agree that the order granting the requested relief will be subject to the following conditions:
1. No Future Fund will issue a class of VIPER Shares unless (a) applicants have requested and received with respect to such Future Fund either exemptive relief from the Commission or a no-action letter from the Division of Investment Management of the Commission, or (b) the Future Fund's VIPER Shares will be listed on an Exchange without the need for a filing pursuant to rule 19b-4 under the Exchange Act.
2. The VIPER Prospectus and the Product Description for each Fund will clearly disclose that, for purposes of the Act, VIPER Shares are issued by the Fund and the acquisition of VIPER Shares by investment companies is subject to the restrictions of section 12(d)(1) of the Act.
3. As long as a Fund operates in reliance on the requested order, the VIPER Shares will be listed on an Exchange.
4. The VIPER Shares of a Fund will not be advertised or marketed as shares of an open-end investment company or mutual fund. The VIPER Prospectus of each Fund will prominently disclose that VIPER Shares are not individually redeemable and will disclose that holders of VIPER Shares may acquire the shares from the Fund and tender the shares for redemption to the Fund in Creation Units only. Any advertising material that describes the purchase or sale of Creation Units or refers to redeemability will prominently disclose that VIPER Shares are not individually redeemable and that holders of VIPER Shares may acquire the shares from the Fund and tender the shares for redemption to the Fund in Creation Units only.
5. Before a Fund may rely on the order, the Commission will have approved pursuant to rule 19b-4 under the Exchange Act, an Exchange rule requiring Exchange members and member organizations effecting transactions in VIPER Shares to deliver a Product Description to purchasers of VIPER Shares.
6. On an annual basis the Board of each Fund, including a majority of Disinterested Trustees, must determine, for each Fund, that the allocation of distribution expenses among the classes of Conventional Shares and VIPER Shares in accordance with the Multi-Class Distribution Formula is in the best interests of each class and of the Fund as a whole. Each Fund will preserve for a period of not less than six years from
7. For six years following the issuance of a Fund's VIPER Shares, the Fund will (a) record and preserve any investor complaints or reports of confusion concerning the Conversion Privilege that are communicated to the Fund, VGI and/or VMC and (b) record data tracking the number of investors that, after VIPER Shares are offered, purchase the Fund's Conventional Shares and, within 90 days, convert those shares into VIPER Shares. The Fund will preserve this information in an easily accessible place, and the information will be subject to examination by the Commission and its staff.
8. Applicants' Web site, which is and will be publicly accessible at no charge, will contain the following information, on a per VIPER Share basis, for each Fund: (a) The prior business day's closing NAV and the midpoint of the bid-asked spread at the time the Fund's NAV is calculated (“Bid-Asked Price”) and a calculation of the premium or discount of the Bid-Asked Price in relation to the closing NAV; and (b) data for a period covering at least the four previous calendar quarters (or the life of a Fund, if shorter) indicating how frequently each Fund's VIPER Shares traded at a premium or discount to NAV based on the Bid-Asked Price and closing NAV, and the magnitude of such premiums and discounts. In addition, the Product Description for each Fund will state that applicants' Web site has information about the premiums and discounts at which the Fund's VIPER Shares have traded.
9. The VIPER Prospectus and annual report will include, for each Fund: (a) The information listed in condition 8(b), (i) in the case of the VIPER Prospectus, for the most recently completed calendar year (and the most recently completed quarter or quarters, as applicable), and (ii) in the case of the annual report, for no less than the immediately preceding five fiscal years (or the life of the Fund, if shorter); and (b) the cumulative total return and the average annual total return for one, five and ten year periods (or the life of the Fund, if shorter) of (i) a VIPER Share based on NAV and Bid-Asked Price and (ii) the Fund's Target Index.
For the Commission, by the Division of Investment Management, pursuant to delegated authority.
On February 12, 2002, the American Stock Exchange LLC (“Amex” or “Exchange”) filed with the Securities and Exchange Commission (“Commission” or “SEC”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
Given the number of series traded for each option class and the necessity for the re-calculating and re-quoting of each series in response to changes in the price of the underlying security, the Exchange developed an automated quotation updating system known as XTOPS. The specialist and registered options traders rely upon XTOPS to calculate and disseminate a single immediately updated quotation for each option series. XTOPS uses option valuation formulas (such as the Black-Scholes Model) to generate options quotations based on a number of variables.
The Exchange is now proposing new Commentary .04 to Amex Rule 933, to allow registered options traders' direct access to the Electronic Entry Device (“EE Device”) to input their own quotes for dissemination as the best bid or offer.
Once the registered options trader or systems clerk inputs the quote into the EE Device, the proposed rule would require that: (i) The price improving registered options trader announce loudly and audibly in the crowd that he has improved the displayed market to ensure that other crowd participants are aware that the market has been improved, enabling other crowd participants to also quote competitively; and (ii) the specialist be specifically alerted so that a “book bid or offer” indicator is activated and the next otherwise Auto-Ex eligible trade is routed directly to the Amex Options Display Book (“AODB”) for allocation to the registered options trader that caused the improved quote to be disseminated. In addition to blocking an otherwise eligible Auto-Ex order from being executed and allocated by the Auto-Ex system, activation of the “book bid or offer” indicator would block an XTOPS calculated quote that is worse than the registered options trader's disseminated quote from being disseminated. Activation would not, however, block a quote that is better than the registered options trader's disseminated quote from being disseminated.
Once an execution occurs and/or the price improving registered options trader is no longer entitled to priority, the specialist would be required to remove the “best bid or offer” indicator so that Auto-Ex eligible orders would again be sent to Auto-Ex and the dissemination of XTOPS calculated quotes is resumed. The EE Device would not automatically decrement the size of the disseminated quote when an execution occurs. The quote would be required to be manually adjusted to reflect any revision to the disseminated size.
The price improving registered options trader would be permitted to cancel his quote at any time prior to the execution of a trade through the use of the EE Device (regardless of whether inputted by the registered options trader or the systems clerk), if that was the method in which the quote was entered, or through the specialist, if that was the method chosen. The registered options trader would be required also to alert the specialist that he is removing his quote, so the specialist can in turn remove the “book bid or offer” indicator in XTOPS, and announce loudly and audibly that he is canceling his quote.
Pursuant to the requirements of the Quote Rule and Exchange Rule 958A, the registered options trader as the responsible broker or dealer is obligated to execute any customer order at his bid or offer up to the disseminated size. To be relieved of that obligation with respect to a specific quote, one of the exceptions to the Quote Rule must apply, which generally provide that the responsible broker or dealer must communicate a revised quotation to the Exchange prior to the presentation of an order. Thus, a registered options trader using the EE Device to disseminate quotes would continue to be obligated pursuant to the Quote Rule until he has communicated a revised quote to the Exchange through the removal or cancellation of the quote on the EE Device.
Registered options traders would be required to improve the best bid or offer by an amount equal to at least the minimum price variation as set forth in Exchange Rule 952 for the quote to be inputted into the EE Device. The minimum size quote that could be inputted into the EE Device by or on behalf of a registered options trader would be 20 contracts, unless the Auto-Ex eligible size parameter for that option class is less than 20 contracts, in which case the minimum quote size would be the same as the lesser Auto-Ex eligible size parameter for that option class. Currently, the EE Device disseminates a default size for each new quote. The disseminated size may be set at a higher or lower amount or increased by the specialist to reflect additional liquidity at that quote. The default size would be set at the minimum quote size as discussed above.
The Exchange represents that there is at least one EE Device unit at every trading post and multiple units at posts where active option classes trade and that the number of devices currently in place on the trading floor would be sufficient to provide registered options traders with ready and easy access to a means for disseminating their quotes. However, since this is a new use for the EE Device, the Exchange represents that it will monitor the uses of the EE Device by registered options traders and activity in the option classes at each trading post and will add additional devices when necessary. The Exchange is able to install additional EE Devices at the trading posts with, preferably, a one-day notice so that they can be installed either before or after trading hours.
The specialist in a given option class may also disseminate or cause to be disseminated his own individual, price improving quote separate from the XTOPS calculated quote, provided he is physically located at the trading post at the time he inputs his quote, has only disseminated one quote per series on the same side of the market, has announced loudly and audibly to the crowd that he has improved the disseminated bid or offer, has improved the best bid or offer by an amount equal to at least the minimum price variation set forth in Rule 952, and has disseminated the minimum quote size. The specialist would not be able to use the EE Device to disseminate his individual price improving quote since he already has the means to input a quote into the Market Data System through XTOPS in the same manner used today to disseminate a customer limit order. Once the specialist has caused his individual quote to be disseminated, he will activate the “book bid or offer” indicator and the next otherwise Auto-Ex eligible trade is routed directly to the AODB for allocation to the specialist.
The specialist would be required to use best efforts to attempt to ensure that the registered option trader responsible for disseminating the best bid or offer receives an allocation of the next incoming order for the amount he is entitled to pursuant to Exchange rules. A specialist who failed to use best efforts to attempt to ensure that the next Auto-Ex execution is appropriately allocated to the price improving registered options trader would be fined pursuant Amex Rule 590(g) of the Exchange's Minor Rule Violation Fine System. In addition to the fine assessed pursuant to the Minor Floor Violation Fine System, violations of this provision would require the payment of
If more than one registered options trader and/or the specialist has disseminated or caused to be disseminated the same price improving quote, priority would be established for the registered options traders in the order in which the quotes were announced loudly and audibly to the trading crowd. If, however, the sequence in which the disseminated quotes were made cannot be reasonably determined, priority would be afforded to the price improving registered options traders and/or specialist as a group. Exchange Rule 950(d), Commentary .06 and Exchange Rule 950(n), Commentary .03 govern allocations of contracts when more than one registered options trader and/or the specialist has disseminated the same price improving quote and time priority cannot be established.
However, pursuant to the proposed rule change, the price improving registered options traders' quote would retain priority until one of the following occurs: (i) Auto-Ex execution depleted the disseminated size; (ii) an amount equal to the minimum quote size has been allocated; (iii) the registered options trader withdraws the quote; (iv) the quote is matched or improved by the specialist's automated quotation system quote, provided specialists using an Exchange-approved proprietary automated quotation updating system have not programmed the system to immediately match or improve the price improving registered options trader's quote; (v) the quote is improved by another registered options trader; or (vi) the market is improved by an order placed on the limit order display book. With respect to subparagraph (iv) above, the Exchange represents that it will monitor the use of proprietary automated quotation updating systems through the review of complaints from members in the trading crowd as well as observations of Floor Officials and Exchange personnel to determine if the system has been programmed to immediately match or improve the price improving registered options trader's quote.
The Exchange notes that Exchange rules regarding customer priority and parity would continue to apply to the allocation of trades pursuant to the proposed rule change. Exchange Rule 111, Commentary .07 provides that a registered options trader, when establishing or increasing a position, may not retain priority over or have parity with an off-Floor order. Thus, only registered options traders closing or decreasing a position may be on parity with a customer order.
After careful review, the Commission finds that the proposed rule change, as amended, is consistent with the Act and the rules and regulations promulgated thereunder applicable to a national securities exchange and, in particular, with the requirements of Section 6(b) of the Act.
The Commission believes that the proposed rule change, by permitting registered options traders to use an EE Device at the trading post to input their own quotes for dissemination as the best bid or offer and then providing price improving registered options traders with an allocation of the next Auto-Ex execution, should help to encourage competitive quoting. In addition, the Commission believes that providing a method for specialists to input their own price improving quotes separate from the autoquote, and then routing the next otherwise Auto-Ex eligible order to the AODB for allocation to the specialist, should provide an additional incentive for specialists to quote competitively. The Commission believes that the proposal is an important first step towards achieving compliance with the Order's directive to substantially enhance incentives to quote competitively and substantially reduce disincentives for market participants to act competitively.
The Commission notes that the proposal requires the specialist to use best efforts to ensure that a price improving registered options trader receives his allocation. The Commission believes that imposition of a fine, under the Exchange's Minor Rule Violation Plan, on a specialist who fails to use best efforts to ensure that the next Auto-Ex execution is appropriately allocated, as well as the requirement that such specialist pay restitution to the injured registered options trader, should provide sufficient safeguards to help ensure that the manual allocation to the appropriate registered options trader occurs.
For the foregoing reasons, the Commission finds that the proposed rule change, as amended, is consistent with the Act and the rules and regulations thereunder applicable to a national securities exchange, and, in particular, with Section 6(b)(5) of the Act.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange is proposing to adopt a new section entitled “Equity Compensation Plans” in Chapter XXVII,
Below is the text of the proposed rule change, as amended.
Secs. 1-2, no change.
Sec. 3(a)-(d), no change.
Secs. 4-6, no change.
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The limited transition period described in the preceding two paragraphs will end upon the first to occur of:
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In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
In conjunction with a review of its corporate listing standards with the goal of enhancing accountability, integrity and transparency of listed companies, the Exchange is proposing listing standards related to shareholder approval of equity compensation plans.
The Exchange is proposing to adopt a new section entitled “Equity Compensation Plans” in Chapter XXVII,
In addition, the proposal, as amended, provides for certain types of grants that are exempted from shareholder approval. These limited exemptions include: (1) Inducement awards to person's first becoming an employee of an issuer or any of its subsidiaries, to rehires following a bona fide period of employment interruption, and for grants to new employees in connection with a merger or acquisition;
The Exchange is also proposing to provide a non-exclusive list of “material revisions” to a plan that would require shareholder approval. Within this list of revisions, the Exchange proposed to define the concepts of “evergreen plans” (
Shareholder approval will be required for plans adopted before the effective date of these proposed amendments that have not been approved by shareholders and have neither an evergreen formula nor a specific number of shares available under the plan. The Exchange is proposing to provide transition rules to clarify when shareholder approval will be required for these pre-existing plans. In addition, during the period prior to the approval, pre-existing plans may be utilized, but only in a manner consistent with past practice. The transition rules provide that an evergreen plan that was approved by shareholders but does not have a ten-year term must be: (1) Approved by shareholders before any shares that become available as a result of a formulaic increase are utilized, or (2) amended to include a term of no more than ten years from the date the plan was adopted or last approved by shareholders. If the plan were amended to include such term, shareholder approval would not be required. No action would be required, however, if a plan were frozen at the level of shares available at the time the rule becomes effective. The transition rules also provide that repricings that have commenced prior to the effectiveness of the proposal (
Finally, the Exchange is also proposing to amend Section 3 in Chapter XXXVI,
The Exchange believes that the proposed rule change, as amended, is consistent with Section 6 of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
Written comments on the proposed rule change were neither solicited nor received.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying at the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. All submissions should refer to File No. SR-BSE-2003-16 and should be submitted by November 28, 2003.
After careful review, the Commission finds that the Exchange's proposal, as amended, is consistent with the Act and the rules and regulations promulgated thereunder applicable to a national securities exchange and, in particular, with the requirements of Section 6(b) of the Act.
The Commission has long encouraged exchanges to adopt and strengthen their corporate governance listing standards in order to, among other things, restore investor confidence in the national marketplace. The Commission believes that the Exchange's proposal, as amended, which requires shareholder approval of equity compensation plans and which follows the Commission's approval of similar proposals by the NYSE, Nasdaq, and Amex
In addition, the Commission notes that the Exchange's proposal, as amended, is similar and almost
The Commission believes that the requirement that the issuance of all inducement grants be subject to review by either the issuer's independent compensation committee or a majority of the board's independent directors, under the Exchange's amended proposal, should prevent abuse of this exemption from shareholder approval. In addition, the Exchange proposes to limit its exemption for inducement grants to new employees or to previous employees being rehired after a bona fide period of interruption of employment, and to new employees in connection with an acquisition or merger. The Commission believes that these limitations should help to prevent the inducement exemption from being used inappropriately.
The Commission notes that the Exchange is proposing to include a requirement, similar to the requirement under the NYSE and Nasdaq's recently approved shareholder approval rules, that, promptly following the grant of any inducement award, companies must disclose in a press release the material terms of the award, including the recipient(s) of the award and the number of shares involved.
The Commission notes that the Exchange's exemption from shareholder approval for mergers and acquisitions contains safeguards that should prevent abuse in this area. First, only pre-existing plans that were previously approved by the acquired company's shareholders would be available to the listed company for post-transactional grants. In addition, shares under those previously approved plans could not be granted to individuals who were employed, immediately before the transaction, by the post-transaction listed company or its subsidiaries. The Commission also notes that, under the Exchange's proposal, as amended, any shares reserved for listing in connection with a merger or acquisition pursuant to this exemption would be counted by the Exchange in determining whether the transaction involved the issuance of 20% or more of the company's outstanding common stock, thereby requiring shareholder approval. Finally, the Commission notes that the Exchange proposes an additional requirement that an issuer must notify it in writing when it uses this exemption, and/or any other exemption, from its shareholder approval requirement. Based on the above, the Commission believes that the Exchange has provided measures to ensure that the exemption for mergers and acquisitions is only used in limited circumstances, which should help reduce the potential for dilution of shareholder interests.
The Commission believes that, given the extensive government regulation—the Internal Revenue Code and Treasury regulations—for tax qualified plans and the general limitations associated with parallel nonqualified plans, shareholders should not experience significant dilution as a result of this exemption. In addition, the Commission notes that the Exchange proposes to add a limitation under this exemption that a plan would not be considered a nonqualified parallel plan under its proposal if employees who are participants in such a plan receive employer contributions under the plan in excess of 25% of the participants' cash compensation. The Commission further notes that the Exchange proposes an additional requirement that an issuer must notify it in writing when it uses this exemption, and/or any other exemption, from its shareholder approval requirement. The Commission believes that, taken together, these limitations should reduce concerns regarding abuse of this exemption from the shareholder approval requirements.
In addition, the Commission notes that, similar to the exemptions in the NYSE and Nasdaq's recently approved shareholder approval rules, the Exchange proposes to adopt an exemption from the shareholder approval requirements for an equity compensation plan that provides non-U.S. employees with substantially the same benefits as a comparable Section 401(a) plan, Section 423 plan or parallel excess plan that the listed company provides to its U.S. employees, but for features necessary to comply with applicable foreign tax law. The Commission believes that this change will conform the Exchange's shareholder approval rule to that of the NYSE and Nasdaq and will provide greater clarity for issuers regarding tax qualified, non-discriminatory employee benefit plans and parallel nonqualified plans for their non-U.S. employees.
The Commission notes that the Exchange proposes to provide a non-exclusive list, similar to lists found in the NYSE and Nasdaq's shareholder approval rules,
The Commission believes that the Exchange's non-exclusive list of what would constitute a material revision to a plan provides companies with clarity and guidance for when certain amendments and revisions to plans would require shareholder approval. The Commission also believes that the Exchange's amended proposal to conform its non-exclusive list with the NYSE and Nasdaq's rules on material amendments/revisions should help to ensure that the concept of material amendments/revisions is consistent among the markets so that differences between the markets cannot be abused.
The Commission notes that the Exchange's proposal, as amended, provides that, if a plan explicitly contains a repricing provision, shareholder approval would be required to delete or limit the repricing provisions. The Commission further notes that the Exchange's proposal, as amended, provides that, if a plan is silent on repricing, it will be considered as prohibiting repricing and shareholder approval would be required to permit repricing under the plan. The Exchange's proposal, as amended, also clarifies that repricings that have commenced prior to the date of effectiveness of its proposal would not be subject to shareholder approval, provided that such repricing does not require shareholder approval under the Exchange's existing shareholder approval rules.
The Commission believes that the Exchange's proposal, as amended, should benefit shareholders by ensuring that companies cannot do a repricing of options, which can have a dilutive effect on shares, without explicit shareholder approval of such provisions and their terms. The Commission also believes that the Exchange's approach to repricings is similar to the NYSE and Nasdaq's respective approaches to repricings, and should offer companies clarity and guidance as to when a change in a plan regarding the repricing of options would trigger a shareholder approval requirement.
The Commission notes the Exchange's proposal, as amended, provides guidance for the treatment of evergreen/formula plans. More specifically, under the Exchange's proposal, as amended, if a plan contains a formula for automatic increases in the shares available or for automatic grants pursuant to a formula, such plans cannot have a term in excess of ten years unless shareholder approval is obtained every ten years. In addition, under the Exchange's amended proposal, if a plan contains no limit on the number of shares available and is not a formula plan, then each grant under the plan will require separate shareholder approval. Furthermore, the Exchange's proposal, as amended, provides that a requirement that grants be made out of treasury or repurchased shares will not alleviate the need for shareholder approval for additional grants.
The Commission believes that these provisions should help to ensure that certain terms of a plan cannot be drafted so broad as to avoid shareholder scrutiny and approval. The Commission also believes that the Exchange's proposed rules relating to the treatment of evergreen/formula plans and plans that do not contain a formula or place a limit on the number of shares available should provide more clarity and transparency to issuers as to when shareholder approval would be required for such plans. Finally, the Commission believes that the provision ensuring that treasury and repurchased shares cannot be used to avoid these additional shareholder approval requirements strengthens the proposal and ensures that companies cannot avoid compliance with the rule.
The Commission further notes that the Exchange has proposed a transition period for evergreen/formula plans and discretionary plans. The limited transition period would end on the first to occur of the following: (1) The listed company's next annual meeting at which directors are elected that occurs more than 180 days after the date of the effective date of the Exchange's proposal; (2) the first anniversary of the effective date of the Exchange's proposal; or (3) the expiration of the plan. The Commission believes that the Exchange's proposed transition period for evergreen/formula and discretionary plans should provide companies with additional clarity and guidance as to when shareholder approval would be required for such plans while in the transition period, and should provide companies with more time to comply with the Exchange's new shareholder approval requirements for evergreen/formula type plans. The Commission believes that this period is not so long as to permit abuse of the shareholder approval requirement, and at most, will last one year from the date of this Commission approval order.
The Commission notes that the Exchange's amended proposal similar to the NYSE and Nasdaq's recently approved shareholder approval rules
The Commission notes that the Exchange's proposal, as amended, provides that pre-existing plans, which were adopted prior to the SEC's approval of the Exchange's proposal, would essentially be “grandfathered” and would not require shareholder approval unless the plans were materially amended. Under the Exchange's amended proposal, however, shareholder approval is required for each grant made pursuant to any pre-existing plans that were not approved by shareholders and that do not have an evergreen formula or a specific number of shares available under the plan. This is consistent with the NYSE, Nasdaq, and Amex shareholder approval rules on this matter. The Commission believes that this clarification should provide companies with guidance as to which plans would be subject to the Exchange's new shareholder approval requirements.
The Commission believes that the Exchange's proposed provision, BSE Section 3(e), to preclude broker voting on equity compensation plans is consistent with the Act. The Commission notes that equity compensation plans have become an important issue for shareholders. Because of the potential for dilution from issuances under such plans, shareholders should be making the
The Commission also notes that the Exchange proposes to implement a transition period that would make the new rule eliminating broker voting on equity compensation plans applicable only to shareholder meetings that occur on or after the 90th day from the effective date of the Exchange's proposal.
Overall, the Commission believes that the Exchange's proposal, as amended, is similar to the NYSE and Nasdaq's recently approved shareholder approval rules.
The Commission believes that the Exchange's proposal, as amended, which is similar to the NYSE and Nasdaq's shareholder approval rules,
The Commission finds good cause for approving the Exchange's proposal and Amendment Nos. 1 and 2 thereto prior to the thirtieth day after the date of publication of notice thereof in the
The Commission believes that accelerated approval of the Exchange's proposal, as amended, is essential to allow for immediate harmonization of, and consistency in, the shareholder approval requirements for equity compensation plans among the markets. This will prevent issuers from making listing decisions based on differences in self-regulatory organization shareholder approval requirements and should provide equal investor protection to shareholders on the dilutive effects of plans irrespective of where the security trades. The Commission further believes that making the Exchange's new shareholder approval rules effective upon Commission approval will immediately impose the same requirements on the Exchange's issuers as those imposed upon NYSE, Nasdaq, and Amex issuers. Based on the above, the Commission finds good cause, consistent with Sections 6(b)(5) and 19(b)(2) of the Act,
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
The Exchange proposes to amend CBOE Rules 31.79, 31.80, 31.85 and 31.96, and CBOE Form 1 under “Forms For Listing,” to strengthen listing standards relating to shareholder approval for stock option plans or other equity compensation arrangements and to adopt interpretative material pertaining to shareholder approval for stock option plans or other equity compensation arrangements.
Below is the text of the proposed rule change.
Approval of shareholders is required [(unless exempted under paragraphs (a) and (b) below) as a prerequisite to approval of applications to list additional shares reserved for]
[
The Exchange will not require shareholder's approval as a condition to listing shares reserved for the exercise of options when:]
(a) [such options are issued]
(b) [such options are to be granted:]
[(i)] [under a]
[(ii) under a plan or arrangement for officers, directors or key employees provided such incentive arrangement for officers, directors or key employees do not authorize the issuance in any one year of more than the lesser of 1% of the number of shares outstanding common stock, 1% of the voting power outstanding, or 25,000 shares and provided that all arrangements adopted without shareholder approval in any five-year period do not authorize, in the aggregate, the issuance of more than 10% of outstanding common stock or voting power outstanding. (For the purpose of calculating the percentage of stock issued in the aggregate, stock to be issued pursuant to options which have expired and/or been canceled shall not be included.)
For purposes of the above policy, the term “options” includes not only the usual type of nontransferable options granted in consideration of continued employment but also any other arrangement under which controlling shareholders, officers, directors or key employees may acquire (other than as part of a public offering) stock or convertible securities of a company at a price below market price at the time such stock is acquired or through the use of credit extended, directly or indirectly, by the company. Thus, the sale to such a person(s) of common stock purchase warrants or rights (not part of a public offering) or the sale of stock to such person who has borrowed money from the company, will normally necessitate shareholder approval.]
.01 Rule 31.79 requires shareholder approval when a plan or other equity compensation arrangement is established or materially amended. For these purposes, a material amendment would include, but not be limited to, the following:
.01 Any additional shares available for issuance under a stock option or purchase plan or other equity compensation arrangement acquired in connection with a merger or acquisition are counted in determining whether the transaction involved the issuance of 20% or more of the company's outstanding common stock as provided in Rule 31.80(b).
(a) No change.
(b) When a member organization may not vote without customer instructions—A member organization may not give a proxy to vote without instructions from beneficial owners when the matter to be voted upon:
(1)-(8) No change.
(9) involves a waiver or modification of preemptive rights[, except when the company's proposal is to waive such rights with respect to shares being offered pursuant to stock options or purchase plans involving the additional issuance of not more than 5% of the company's outstanding common shares];
(10)-(11) No change.
(12) [authorizes the issuance of stock, or options to purchase stock to directors, officers or employees in an amount which exceeds 5% of the total amount of the class outstanding]
(13)-(18) No change.
(c)-(h) No change.
(A)-(G) No change.
(a)-(i) No change.
(j) Any diminution in the supply of the security available for trading caused by deposit of the security under voting trust, tender offer or other agreements; [and]
(k) The existence of any technical default or default in interest or principal payment, cumulative dividends, sinking funds, or redemption fund requirements of the Company or any controlled corporation, whether consolidated or unconsolidated
(2)-(28) No change.
In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend its non-option rules (
Proposed CBOE Rule 31.79(a) amends the current exception set forth in CBOE Rule 31.79(a) to provide for inducement grants to new employees or to previous employees following a bonafide period of non-employment with the listed company. The proposed rule change would delete the reference that limits the grant to five percent of the company's outstanding common stock, which would align proposed CBOE Rule 31.79(a) with the Nasdaq/NYSE Proposals. The Exchange does not believe that shareholder approval is necessary for these types of inducement grants since in these cases a company has an arm's length relationship with
Proposed CBOE Rule 31.79(b), a new exception based on the Nasdaq/NYSE Proposals, does not require shareholder approval for tax qualified, nondiscriminatory benefit plans, as these plans are regulated under the Internal Revenue Code and Treasury Department regulations. However, the listed company's independent compensation committee or a majority of the listed company's independent directors must approve these plans. Along with tax qualified, non-discriminatory employee benefit plans, proposed CBOE Rule 31.79(b) also proposes an exception for parallel nonqualified plans. The proposed rule change would not impact any shareholder approval or other requirements under the Internal Revenue Code or other applicable laws or requirements for such plans. Additionally, an equity compensation plan that provides non-U.S. employees with substantially the same benefits as a comparable tax qualified, non-discriminatory employee benefit plan or parallel nonqualified plan that the issuer provides to its U.S. employees, but for features necessary to comply with applicable foreign tax law, is also exempt from the shareholder approval requirements.
Proposed Interpretation .01 to CBOE Rule 31.79 makes clear that a company would not be permitted to use repurchased shares to fund options plans without prior shareholder approval. However, plans that merely provide a convenient way to purchase shares on the open market or from the issuer at fair market value would not require shareholder approval.
With respect to plans or arrangements relating to an acquisition or merger, as set forth in proposed CBOE Rule 31.79(c), proposed Interpretation .01 to CBOE Rule 31.79 makes clear that these plans or arrangements would not require shareholder approval in two situations. First, shareholder approval will not be required to convert, replace or adjust outstanding options or other equity compensation awards to reflect the transaction. Second, shares available under certain plans acquired in acquisitions and mergers may be used for certain post-transaction grants without further shareholder approval. This exception applies to situations where the party that is not a listed company following the transaction has shares available for grant under pre-existing plans that were previously approved by shareholders. These shares may be used for post-transaction grants of options and other equity awards by the listed company (after appropriate adjustment of the number of shares to reflect the transaction), either under the pre-existing plan or another plan, without further shareholder approval, so long as (1) the time during which those shares are available for grants is not extended beyond the period when they would have been available under the pre-existing plan, absent the transaction, and (2) such options and other awards are not granted to individuals who were employed by the granting company or its subsidiaries at the time the merger or acquisition was consummated. The Exchange would view a plan adopted in contemplation of the merger or acquisition transaction as not pre-existing for purposes of this exception. The Exchange believes that this exception is appropriate because it believes that it would not result in any increase in the aggregate potential dilution of the combined enterprise.
Finally, proposed CBOE Rule 31.79(d) sets forth a new exception for warrants or rights offered generally to all shareholders. The Exchange believes that this issuance does not raise the same concerns regarding self-dealing and dilution as other, more exclusive stock option plans or arrangements may create.
The Exchange's proposal also clarifies that only material amendments to plans (including existing plans) will require shareholder approval. Proposed Interpretation .01 to CBOE Rule 31.79 specifies a non-exclusive list of plan amendments that would be considered material. While broad, general authority to amend a plan would not obviate the need for shareholder approval, if a plan permits a specific action without further shareholder approval, then no such approval would be required.
Proposed Interpretation .01 to CBOE Rule 31.80 reflects the concept set forth in proposed Interpretation .01 to CBOE Rule 31.79, that additional shares available for issuance under a stock option or purchase plan or other equity compensation arrangement acquired in connection with a merger or acquisition are counted in determining whether the transaction involved the issuance of 20% or more of the company's outstanding common stock. Furthermore, the Exchange proposes to amend CBOE Rule 31.96 and the Listing Agreement set forth on CBOE Form 1 to require issuers to notify the Exchange in writing prior to the use of any of the exceptions set forth in paragraphs (a) through (d) of CBOE Rule 31.79.
In addition, the Exchange proposes to amend CBOE Rule 31.85 to preclude the Exchange's member organizations from giving a proxy to vote on equity compensation plans unless the beneficial owner of the shares has given voting instructions.
The Exchange believes that the proposed rule change is consistent with Section 6 of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
Written comments on the proposed rule change were neither solicited nor received.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying at the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. All submissions should refer to File No. SR-CBOE-2003-45 and should be submitted by November 28, 2003.
After careful review, the Commission finds that the Exchange's proposal is consistent with the Act and the rules and regulations promulgated thereunder applicable to a national securities exchange and, in particular, with the requirements of Section 6(b) of the Act.
The Commission has long encouraged exchanges to adopt and strengthen their corporate governance listing standards in order to, among other things, restore investor confidence in the national marketplace. The Commission believes that the Exchange's proposal, which requires shareholder approval of equity compensation plans and which follows the Commission's approval of similar proposals by the NYSE, Nasdaq, and Amex
In addition, the Commission notes that the Exchange's proposal is similar and almost identical to proposals by NYSE and Nasdaq requiring shareholder approval of equity compensation plans that have previously been approved by the Commission.
The Commission believes that the requirement that the issuance of all inducement grants be subject to review by either the issuer's independent compensation committee or a majority of the board's independent directors, under the Exchange's proposal, should prevent abuse of this exception from shareholder approval. In addition, the Exchange proposes to limit its exception for inducement grants to new employees or to previous employees being rehired after a bona fide period of interruption of employment, and to new employees in connection with an acquisition or merger. The Commission believes that these limitations should help to prevent the inducement exception from being used inappropriately.
The Commission notes that the Exchange is proposing to include a requirement, similar to the requirement under the NYSE and Nasdaq's recently approved shareholder approval rules, that, promptly following the grant of any inducement award, companies must disclose in a press release the material terms of the award, including the recipient(s) of the award and the number of shares involved.
The Commission notes that the Exchange's exception from shareholder approval for mergers and acquisitions contains safeguards that should prevent abuse in this area. First, only pre-existing plans that were previously approved by the acquired company's shareholders would be available to the listed company for post-transactional grants. In addition, shares under those previously approved plans could not be granted to individuals who were
The Commission believes that, given the extensive government regulation—the Internal Revenue Code and Treasury regulations—for tax qualified plans and the general limitations associated with parallel nonqualified plans, shareholders should not experience significant dilution as a result of this exception. In addition, the Commission notes that the Exchange proposes to add a limitation under this exception that a plan would not be considered a nonqualified parallel plan under its proposal if employees who are participants in such a plan receive employer contributions under the plan in excess of 25% of the participants' cash compensation. The Commission further notes that the Exchange proposes an additional requirement that an issuer must notify it in writing when it uses this exception, and/or any other exception, from its shareholder approval requirement. The Commission believes that, taken together, these limitations should reduce concerns regarding abuse of this exception from the shareholder approval requirements.
In addition, the Commission notes that, similar to the exceptions in the NYSE and Nasdaq's recently approved shareholder approval rules, the Exchange proposes to adopt an exception from the shareholder approval requirements for an equity compensation plan that provides non-U.S. employees with substantially the same benefits as a comparable tax qualified, non-discriminatory employee benefit plan or parallel nonqualified plan that the issuer provides to its U.S. employees, but for features necessary to comply with applicable foreign tax law. The Commission believes that this change will conform the Exchange's shareholder approval rule to that of the NYSE and Nasdaq and will provide greater clarity for issuers regarding tax qualified, non-discriminatory employee benefit plans and parallel nonqualified plans for their non-U.S. employees.
The Commission notes that the Exchange proposes to provide a non-exclusive list, similar to lists found in the NYSE and Nasdaq's shareholder approval rules,
The Commission believes that the Exchange's non-exclusive list of what would constitute a material amendment/revision to a plan provides companies with clarity and guidance for when certain amendments and revisions to plans would require shareholder approval. The Commission also believes that the Exchange's proposal to conform its non-exclusive list with the NYSE and Nasdaq's rules on material amendments/revisions should help to ensure that the concept of material amendments/revisions is consistent among the markets so that differences between the markets cannot be abused.
The Commission notes that, under the Exchange's proposal, if a plan is amended to permit repricing, such an amendment would be considered a material amendment to a plan requiring shareholder approval. In addition, the Exchange recommended in its proposal that plans meant to permit repricing should explicitly and clearly state that repricing is permitted.
The Commission believes that the Exchange's proposal should benefit shareholders by ensuring that companies cannot do a repricing of options, which can have a dilutive effect on shares, without explicit shareholder approval of such provisions and their terms. The Commission also believes that the Exchange's approach to repricings is similar to the NYSE and Nasdaq's respective approaches to repricings, and should offer companies clarity and guidance as to when a change in a plan regarding the repricing of options would trigger a shareholder approval requirement.
The Commission notes the Exchange's proposal provides guidance for the treatment of evergreen/formula plans. More specifically, under the Exchange's proposal, if a plan contains a formula for automatic increases in the shares available or for automatic grants pursuant to a formula, such plans cannot have a term in excess of ten years unless shareholder approval is obtained every ten years. In addition, under the Exchange's proposal, if a plan contains no limit on the number of shares available and is not a formula plan, then each grant under the plan will require separate shareholder approval. Furthermore, the Exchange's proposal provides that a requirement that grants be made out of treasury or repurchased shares will not alleviate the need for shareholder approval for additional grants.
The Commission believes that these provisions should help to ensure that certain terms of a plan cannot be drafted so broad as to avoid shareholder scrutiny and approval. The Commission also believes that the Exchange's proposed rules relating to the treatment of evergreen/formula plans and plans that do not contain a formula or place a limit on the number of shares available should provide more clarity and transparency to issuers as to when shareholder approval would be required for such plans. Finally, the Commission believes that the provision ensuring that
The Commission notes that the Exchange's proposal—similar to the NYSE and Nasdaq's recently approved shareholder approval rules
The Commission notes that the Exchange's proposal provides that pre-existing plans, which were adopted prior to the SEC's approval of the Exchange's proposal, would essentially be “grandfathered” and would not require shareholder approval unless the plans were materially amended. Under the Exchange's proposal, however, shareholder approval is required for each grant made pursuant to any pre-existing plans that were not approved by shareholders and that do not have an evergreen formula or a specific number of shares available under the plan. This is consistent with the NYSE, Nasdaq, and Amex shareholder approval rules on this matter. The Commission believes that this clarification should provide companies with guidance as to which plans would be subject to the Exchange's new shareholder approval requirements.
The Commission further notes that the Exchange proposes to adopt an exception from the shareholder approval requirement for warrants or rights offered generally to all shareholders. This exception would exclude stock purchase plans available on equal terms to all security holders of the company (
Finally, the Commission notes that the proposed amendments to CBOE Form 1 concerning Listing Agreements, which requires advance written notice to the Exchange when issuers use any of the exceptions from shareholder approval, should help the Exchange to ensure that the use of any exception is consistent with the intent of the shareholder approval requirements for equity compensation plans.
The Commission believes that the Exchange's proposed amendment to CBOE Rule 31.85 to preclude broker voting on equity compensation plans is consistent with the Act. The Commission notes that equity compensation plans have become an important issue for shareholders. Because of the potential for dilution from issuances under such plans, shareholders should be making the determination rather than brokers on their behalf. The Commission further notes that NASD rules do not provide for broker voting on any matters and NYSE rules prohibit broker voting on equity compensation plans.
Overall, the Commission believes that the Exchange's proposal is similar to the NYSE and Nasdaq's recently approved shareholder approval rules.
The Commission believes that the Exchange's proposal, which is similar to the NYSE and Nasdaq's shareholder approval rules,
The Commission finds good cause for approving the Exchange's proposal and Amendment No. 1 thereto prior to the thirtieth day after the date of publication of notice thereof in the
The Commission believes that accelerated approval of the Exchange's proposal is essential to allow for immediate harmonization of, and consistency in, the shareholder approval requirements for equity compensation plans among the markets. This will prevent issuers from making listing decisions based on differences in self-regulatory organization shareholder approval requirements and should provide equal investor protection to shareholders on the dilutive effects of plans irrespective of where the security trades. The Commission further believes that making the Exchange's new shareholder approval rules effective upon Commission approval will immediately impose the same requirements on the Exchange's issuers as those imposed upon NYSE, Nasdaq, and Amex issuers. Based on the above, the Commission finds good cause, consistent with Sections 6(b)(5) and 19(b)(2) of the Act,
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The CBOE proposes to amend CBOE Rule 6.8, Interpretation and Policy .01 to allow broker-dealer orders that are eligible for execution on CBOE's Retail Automatic Execution System (“RAES”) to automatically execute against limit orders on the CBOE book in classes designated by the appropriate Floor Procedure Committee. The text of the proposed rule change is set forth below. Proposed new language is in italics.
(a)-(g) No change.
.01 (a) Notwithstanding Rule 6.8(c)(ii), the appropriate Floor Procedure Committee (“FPC”) may determine, by class and/or series to allow the following types of orders to be executed on RAES in accordance with the requirements of Rule 6.8, subject to the conditions set forth below in subparagraphs (b) and (c):
1. Broker-dealer orders; or
2. Broker-dealer orders that are not for the accounts of market-makers or specialists on an exchange who are exempt from the provisions of Regulation T of the Federal Reserve Board pursuant to section 7(c)(2) of the Securities Exchange Act of 1934.
(b) The appropriate FPC may permit broker-dealer orders to be automatically executed pursuant to this Interpretation and Policy .01, subject to the following provisions:
1. Broker-dealer orders entered through the Exchange's order routing system will not be automatically executed against orders in the limit order book
2. The maximum order size eligibility for the broker-dealer orders may be less than the applicable order size eligibility for non-broker-dealer orders.
3. Non-broker-dealer orders may be eligible for automatic execution at the NBBO pursuant to Interpretations and Policies .02 of Rule 6.8, while broker-dealer orders may not be so eligible. In the event broker-dealer orders are not so eligible, they shall instead route to either PAR or BART.
4. The appropriate FPC may determine, by class and/or series, to prohibit access to RAES for broker-dealer orders after 3 pm.
(c) CBOE market-makers must assure that orders for their own accounts are not entered on the Exchange and represented or executed in violation of the following provisions: Interpretations and Policies .02 of Rule 6.55 and Interpretations and Policies .06 of Rule 8.9 (concurrent representation of a joint account), Rule 6.55 (concurrent representation of a market-maker account), and section 9 of the Securities Exchange Act of 1934 (wash sales).
.02-.09 No change.
In its filing with the Commission, the CBOE included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed
The Exchange's RAES system was created to allow for the automatic execution of retail customer options orders against CBOE market makers at their disseminated prices. In 1999, the Exchange expanded the RAES system to allow incoming RAES orders to execute against customer limit orders on the CBOE book when such booked orders constitute the CBOE's best bid/offer.
The Exchange now proposes to allow broker-dealer orders that are eligible for execution on RAES pursuant to CBOE Rule 6.8, Interpretation and Policy .01 to automatically execute against customer limit orders on the CBOE's book in classes designated by the appropriate Floor Procedure Committee.
Because the proposed rule change will expand the number of orders eligible to trade automatically with booked customer limit orders, the Exchange believes the proposed rule change is consistent with section 6(b)
The Exchange believes that the proposed rule change will not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
No written comments were solicited or received with respect to the proposed rule change.
Within 35 days of the date of publication of this notice in the
(A) By order approve such proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposal is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street NW., Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of CBOE. All submissions should refer to File No. SR-CBOE-2003-42 and should be submitted by November 28, 2003.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to amend certain provisions of its rules to strengthen listing standards relating to shareholder approval for equity compensation plans.
Below is the text of the proposed rule change, as amended. Proposed new language is
RULE 19. The following Rule 19 applies [only] to Tier I issuers: (a)-(i)No change to text.
(j)
(1)
[(i) A stock option or purchase plan is to be established or other arrangement made pursuant to which stock may be acquired by officers or directors, except for warrants or rights issued generally to security holders of the company or broadly based plans or arrangements including other employees (
[In the case of the establishment of a plan or arrangement under which the amount of securities which may be issued does not exceed the lesser of 1% of the number of shares of common stock outstanding, 1% of the voting power outstanding or 25,000 shares, shareholder approval will generally not be required, provided that all arrangements adopted without shareholder approval in any five-year period do not authorize, in the aggregate, the issuance of more than 10% of outstanding common stock or voting power outstanding. (For the purpose of calculating the percentage of stock issued in the aggregate, stock to be issued pursuant to options which have expired and/or been cancelled shall not be included).]
([ii]
([iii]
([iv]
([v]
([vi]
([vii]
.01 No change to text.
RULE 21. The following Rule 21 applies only to Tier II issuers:
([1]
([2]
([3]
([4]
([a]
([b]
([c]
([d]
([e]
([f]
([g]
([h]
([i]
([j]
([k]
([l]
([m]
([n]
([o]
([p]
([q]
([r]
RULE 3. A member organization shall give a proxy for stock registered in its name, at the direction of the beneficial owner. If the stock is not in the control or possession of the member organization, satisfactory proof of the beneficial ownership as of the record date may be required.
A member organization may give a proxy to vote any stock registered in its name if such organization holds such stock as executor, administrator, guardian, trustee, or in a similar representative or fiduciary capacity with authority to vote.
A member organization which was transmitted proxy soliciting material to the beneficial owner of stock and solicited voting instructions in accordance with the provisions of Rule 2, and which has not received instructions from the beneficial owner by the date specified in the statement accompanying such material may give a proxy to vote such stock,
In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the
The Exchange proposes to amend certain provisions of the Exchange's rules to strengthen listing standards relating to shareholder approval for equity compensation plans.
Current CHX Article XXVIII, Rule 19, generally requires issuers to seek shareholder approval of stock option or purchase plans pursuant to which officers or directors might acquire stock. The Rule, however, contains an exception for broadly based plans or arrangements that include other employees, as well as for plans that meet a specific
The Exchange believes that these exceptions are narrowly-tailored and appropriate. The Exchange believes that shareholder approval should not be separately required under the Exchange's listing standards for tax qualified, nondiscriminatory employee benefit plans because those plans are regulated under the Internal Revenue Code and Treasury Department regulations, which may already contain provisions requiring shareholder approval. Where that approval is not required, the Exchange believes that the additional protections from any inappropriate use of these plans and parallel non-qualified plans is provided through the requirement that these plans be approved by the issuer's independent compensation committee or a majority of the issuer's independent directors. Similarly, the Exchange believes that shareholder approval of inducement grants to new employees and directors is not appropriate because of the impracticality of seeking shareholder approval during the recruiting process and because these transactions occur when the company has an arm's-length relationship with the new employee and its interests are directly aligned with the interests of its shareholders. The Exchange believes that the exceptions associated with mergers and acquisitions are appropriate because they do not result in any increase in the aggregate potential dilution of the combined enterprise.
In its proposed rules, the Exchange includes a definition of the types of “material revisions” of a plan that would cause shareholder approval to be required. Specifically, the rules confirm that a material revision includes, but is not limited to, a material increase in the number of shares to be issued under the plan (other than to reflect a reorganization, stock split, merger or similar transaction); a material increase in benefits to participants; a material expansion of the class of participants eligible to participate in the plan; and an expansion in the types of options or awards provided under the plan.
As a final change, the Exchange proposes to amend CHX Article XXXIII, Rule 3, to mirror requirements now set out in NYSE Rule 452 to prohibit a member from giving a proxy to vote on a matter that establishes or materially amends an equity compensation plan, unless the member has instructions from the beneficial owners of those shares.
The Exchange believes that the proposed rule change, as amended, is consistent with Section 6 of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
Written comments on the proposed rule change were neither solicited nor received. The Exchange, however, did notify its issuers of the types of proposed rule changes that it was contemplating and has not received any objections to those proposals.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying at the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. All submissions should refer to File No. SR-CHX-2003-31 and should be submitted by November 28, 2003.
After careful review, the Commission finds that the Exchange's proposal, as amended, is consistent with the Act and the rules and regulations promulgated thereunder applicable to a national securities exchange and, in particular, with the requirements of Section 6(b) of the Act.
The Commission has long encouraged exchanges to adopt and strengthen their corporate governance listing standards in order to, among other things, restore investor confidence in the national marketplace. The Commission believes that the Exchange's amended proposal, which requires shareholder approval of equity compensation plans and which follows the Commission's approval of similar proposals by the NYSE, Nasdaq, and Amex
In addition, the Commission notes that the Exchange's proposal, as amended, is similar and almost identical to proposals by NYSE and Nasdaq requiring shareholder approval of equity compensation plans that have previously been approved by the Commission.
The Commission believes that the requirement that the issuance of all inducement grants be subject to review by either the issuer's independent compensation committee or a majority of the board's independent directors, under the Exchange's amended proposal, should prevent abuse of this exception from shareholder approval. In addition, the Exchange proposes to limit its exception for inducement grants to new employees or to previous employees being rehired after a bona fide period of interruption of employment, and to new employees in connection with an acquisition or merger. The Commission believes that these limitations should help to prevent the inducement exception from being used inappropriately.
The Commission notes that the Exchange is proposing to include a requirement, similar to the requirement under the NYSE and Nasdaq's recently approved shareholder approval rules, that, promptly following the grant of any inducement award, companies must disclose in a press release the material terms of the award, including the recipient(s) of the award and the number of shares involved.
The Commission notes that the Exchange's exception from shareholder approval for mergers and acquisitions contains safeguards that should prevent abuse in this area. First, only pre-existing plans that were previously approved by the acquired company's shareholders would be available to the listed company for post-transactional grants. In addition, shares under those previously approved plans could not be granted to individuals who were employed, immediately before the transaction, by the post-transaction listed company or its subsidiaries. The Commission also notes that, under the Exchange's amended proposal, any shares reserved for listing in connection with a merger or acquisition pursuant to this exception would be counted by the Exchange in determining whether the transaction involved the issuance of 20% or more of the company's outstanding common stock, thereby requiring shareholder approval under CHX Rule 19(j)(3)(B). Finally, the Commission notes that the Exchange proposes an additional requirement that an issuer must notify it in writing when it uses this exception, and/or any other exception, from its shareholder approval requirement. Based on the above, the Commission believes that the Exchange has provided measures to ensure that the exception for mergers and acquisitions is only used in limited circumstances, which should help reduce the potential for dilution of shareholder interests.
The Commission believes that, given the extensive government regulation—the Internal Revenue Code and Treasury regulations—for tax qualified plans and the general limitations associated with parallel nonqualified plans, shareholders should not experience significant dilution as a result of this exception. In addition, the Commission notes that the Exchange proposes to add a limitation under this exception that a plan would not be considered a nonqualified parallel plan under its proposal if employees who are participants in such a plan receive employer contributions under the plan in excess of 25% of the participants' cash compensation. The Commission further notes that the Exchange proposes an additional requirement that an issuer must notify it in writing when it uses this exception, and/or any other exception, from its shareholder approval requirement. The Commission believes that, taken together, these limitations should reduce concerns regarding abuse of this exception from the shareholder approval requirements.
In addition, the Commission notes that, similar to the exceptions in the NYSE and Nasdaq's recently approved shareholder approval rules, the Exchange proposes to adopt an exception from the shareholder approval requirements for an equity compensation plan that provides non-U.S. employees with substantially the same benefits as a comparable tax qualified, non-discriminatory employee benefit plan or parallel nonqualified plan that the issuer provides to its U.S. employees, but for features necessary to comply with applicable foreign tax law. The Commission believes that this change will conform the Exchange's shareholder approval rule to that of the NYSE and Nasdaq and will provide greater clarity for issuers regarding tax qualified, non-discriminatory employee benefit plans and parallel nonqualified plans for their non-U.S. employees.
The Commission notes that the Exchange proposes to provide a non-exclusive list, similar to lists found in the NYSE and Nasdaq's shareholder approval rules,
The Commission believes that the Exchange's non-exclusive list of what would constitute a material revision to a plan provides companies with clarity and guidance for when certain amendments and revisions to plans would require shareholder approval. The Commission also believes that the Exchange's proposal to conform its non-exclusive list with the NYSE and Nasdaq's rules on material amendments/revisions should help to ensure that the concept of material amendments/revisions is consistent among the markets so that differences between the markets cannot be abused.
The Commission notes that, under the Exchange's proposal, as amended, if a plan is amended to permit repricing, such an amendment would be considered a material amendment to a plan requiring shareholder approval. In addition, the Exchange recommended in its proposal that plans meant to permit repricing should explicitly and clearly state that repricing is permitted.
The Commission believes that the Exchange's proposal, as amended, should benefit shareholders by ensuring that companies cannot do a repricing of options, which can have a dilutive effect on shares, without explicit shareholder approval of such provisions and their terms. The Commission also believes that the Exchange's approach to repricings is similar to the NYSE and Nasdaq's respective approaches to repricings, and should offer companies clarity and guidance as to when a change in a plan regarding the repricing of options would trigger a shareholder approval requirement.
The Commission notes the Exchange's proposal, as amended, provides guidance for the treatment of evergreen/formula plans. More specifically, under the Exchange's proposal, as amended, if a plan contains a formula for automatic
The Commission believes that these provisions should help to ensure that certain terms of a plan cannot be drafted so broad as to avoid shareholder scrutiny and approval. The Commission also believes that the Exchange's proposed rules relating to the treatment of evergreen/formula plans and plans that do not contain a formula or place a limit on the number of shares available should provide more clarity and transparency to issuers as to when shareholder approval would be required for such plans. Finally, the Commission believes that the provision ensuring that treasury and repurchased shares cannot be used to avoid these additional shareholder approval requirements strengthens the proposal and ensures that companies cannot avoid compliance with the rule.
The Commission notes that the Exchange's amended proposal—similar to the NYSE and Nasdaq's recently approved shareholder approval rules
The Commission notes that the Exchange's proposal, as amended, provides that pre-existing plans, which were adopted prior to the SEC's approval of the Exchange's amended proposal, would essentially be “grandfathered” and would not require shareholder approval unless the plans were materially amended. Under the Exchange's amended proposal, however, shareholder approval is required for each grant made pursuant to any pre-existing plans that were not approved by shareholders and that do not have an evergreen formula or a specific number of shares available under the plan. This is consistent with the NYSE, Nasdaq, and Amex shareholder approval rules on this matter. The Commission believes that this clarification should provide companies with guidance as to which plans would be subject to the Exchange's new shareholder approval requirements.
The Commission believes that the Exchange's proposed amendment to CHX Article XXXIII, Rule 3, to preclude broker voting on equity compensation plans is consistent with the Act. The Commission notes that equity compensation plans have become an important issue for shareholders. Because of the potential for dilution from issuances under such plans, shareholders should be making the determination rather than brokers on their behalf. The Commission further notes that NASD rules do not provide for broker voting on any matters and NYSE rules prohibit broker voting on equity compensation plans.
The Commission also notes that the Exchange proposes to implement a transition period that would make the new rule eliminating broker voting on equity compensation plans applicable only to shareholder meetings that occur on or after the 90th day from the effective date of the Exchange's proposal.
Overall, the Commission believes that the Exchange's proposal, as amended, is similar to the NYSE and Nasdaq's recently approved shareholder approval rules.
The Commission believes that the Exchange's proposal, as amended, which is similar to the NYSE and Nasdaq's shareholder approval rules,
The Commission finds good cause for approving the Exchange's proposal and
The Commission believes that accelerated approval of the Exchange's proposal, as amended, is essential to allow for immediate harmonization of, and consistency in, the shareholder approval requirements for equity compensation plans among the markets. This will prevent issuers from making listing decisions based on differences in self-regulatory organization shareholder approval requirements and should provide equal investor protection to shareholders on the dilutive effects of plans irrespective of where the security trades. The Commission further believes that making the Exchange's new shareholder approval rules effective upon Commission approval will immediately impose the same requirements on the Exchange's issuers as those imposed upon NYSE, Nasdaq, and Amex issuers. Based on the above, the Commission finds good cause, consistent with Sections 6(b)(5) and 19(b)(2) of the Act,
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange is proposing to implement changes to its listing standards to adopt requirements related to shareholder approval of equity compensation plans and to amend its rules related to the voting of proxies. The Exchange represents that this proposed rule change is part of an ongoing review of the Exchange's listing standards aimed at helping to restore investor confidence by strengthening corporate governance practices.
Below is the text of the proposed rule change. Proposed new language is
(a)-(c) No change to text.
In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
In conjunction with a review of its corporate listing standards with the goal of enhancing accountability, integrity and transparency of listed companies, the Exchange is proposing to adopt listing standards related to shareholder approval of equity compensation plans and to amend its rules related to the voting of proxies.
The Exchange is proposing to adopt new CSE Rule 13.6, which would require shareholder approval of all equity-compensation plans and material revisions to such plans, subject to limited exemptions. Under the Exchange's proposal, an equity compensation plan is defined as a plan or other arrangement that provides for the delivery of equity securities (either newly issued or treasury shares) of the listed company to any employee, director or other service provider as compensation for services, including a compensatory grant of options or other equity securities that is not made under a plan. The Exchange is also proposing to provide clarification on certain plans that would not be considered equity compensation plans under this definition, such as plans that do not provide for delivery of equity securities of the issuer (
In addition, the proposal provides for certain types of grants that are exempted from shareholder approval. These limited exemptions include: (1) Inducement awards to person's first becoming an employee of an issuer or any of its subsidiaries, to rehires following a
The Exchange is also proposing to provide a non-exclusive list of “material revisions” to a plan that would require shareholder approval. Within this list of revisions, the Exchange proposes to define the concepts of “evergreen plans” (
Shareholder approval will be required for plans adopted before the effective date of these proposed amendments that have not been approved by shareholders and have neither an evergreen formula nor a specific number of shares available under the plan. The Exchange is proposing to provide transition rules to clarify when shareholder approval will be required for these pre-existing plans. In addition, during the period prior to the approval, pre-existing plans may be utilized, but only in a manner consistent with past practice. The transition rules provide that an evergreen plan that was approved by shareholders but does not have a ten-year term must be: (1) Approved by shareholders before any shares that become available as a result of a formulaic increase are utilized, or (2) amended to include a term of no more than ten years from the date the plan was adopted or last approved by shareholders. If the plan were amended to include such term, shareholder approval would not be required. No action would be required, however, if a plan were frozen at the level of shares available at the time the rule becomes effective. The transition rules also provide that repricings that have commenced prior to the effectiveness of the proposal (
Finally, the Exchange is also proposing to amend CSE Rule 13.3 to prohibit members from voting on equity compensation plans unless the beneficial owner of the shares has given voting instructions. The Exchange proposes a transition period that will make these provisions of CBOE Rule 13.3 applicable only to shareholder meetings that occur on or after the 90th day following the date of the Commission order approving the rule.
The Exchange believes that the proposed rule change is consistent with Section 6 of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
Written comments on the proposed rule change were neither solicited nor received.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be
After careful review, the Commission finds that the Exchange's proposal is consistent with the Act and the rules and regulations promulgated thereunder applicable to a national securities exchange and, in particular, with the requirements of Section 6(b) of the Act.
The Commission has long encouraged exchanges to adopt and strengthen their corporate governance listing standards in order to, among other things, restore investor confidence in the national marketplace. The Commission believes that the Exchange's proposal, which requires shareholder approval of equity compensation plans and which follows the Commission's approval of similar proposals by the NYSE, Nasdaq, and Amex
In addition, the Commission notes that the Exchange's proposal is similar and almost identical to proposals by NYSE and Nasdaq requiring shareholder approval of equity compensation plans that have previously been approved by the Commission.
The Commission believes that the requirement that the issuance of all inducement grants be subject to review by either the issuer's independent compensation committee or a majority of the board's independent directors, under the Exchange's proposal, should prevent abuse of this exemption from shareholder approval. In addition, the Exchange proposes to limit its exemption for inducement grants to new employees or to previous employees being rehired after a bona fide period of interruption of employment, and to new employees in connection with an acquisition or merger. The Commission believes that these limitations should help to prevent the inducement exemption from being used inappropriately.
The Commission notes that the Exchange is proposing to include a requirement, similar to the requirement under the NYSE and Nasdaq's recently approved shareholder approval rules, that, promptly following the grant of any inducement award, companies must disclose in a press release the material terms of the award, including the recipient(s) of the award and the number of shares involved.
The Commission notes that the Exchange's exemption from shareholder approval for mergers and acquisitions contains safeguards that should prevent abuse in this area. First, only pre-existing plans that were previously approved by the acquired company's shareholders would be available to the listed company for post-transactional grants. In addition, shares under those previously approved plans could not be granted to individuals who were employed, immediately before the transaction, by the post-transaction listed company or its subsidiaries. The Commission also notes that, under the Exchange's proposal, any shares reserved for listing in connection with a merger or acquisition pursuant to this exemption would be counted by the Exchange in determining whether the transaction involved the issuance of 20% or more of the company's outstanding common stock, thereby requiring shareholder approval. Finally, the Commission notes that the Exchange proposes an additional requirement that an issuer must notify it in writing when it uses this exemption, and/or any other exemption, from its shareholder approval requirement. Based on the above, the Commission believes that the Exchange has provided measures to ensure that the exemption for mergers and acquisitions is only used in limited circumstances, which should help reduce the potential for dilution of shareholder interests.
The Commission believes that, given the extensive government regulation—the Internal Revenue Code and Treasury regulations—for tax qualified plans and the general limitations associated with parallel nonqualified plans, shareholders should not experience significant dilution as a result of this exemption. In addition, the Commission notes that the Exchange proposes to add
In addition, the Commission notes that, similar to the exemptions in the NYSE and Nasdaq's recently approved shareholder approval rules, the Exchange proposes to adopt an exemption from the shareholder approval requirements for an equity compensation plan that provides non-U.S. employees with substantially the same benefits as a comparable Section 401(a) plan, Section 423 plan or parallel excess plan that the listed company provides to its U.S. employees, but for features necessary to comply with applicable foreign tax law. The Commission believes that this change will conform the Exchange's shareholder approval rule to that of the NYSE and Nasdaq and will provide greater clarity for issuers regarding tax qualified, non-discriminatory employee benefit plans and parallel nonqualified plans for their non-U.S. employees.
The Commission notes that the Exchange proposes to provide a non-exclusive list, similar to lists found in the NYSE and Nasdaq's shareholder approval rules,
The Commission believes that the Exchange's non-exclusive list of what would constitute a material revision to a plan provides companies with clarity and guidance for when certain amendments and revisions to plans would require shareholder approval. The Commission also believes that the Exchange's proposal to conform its non-exclusive list with the NYSE and Nasdaq's rules on material amendments/revisions should help to ensure that the concept of material amendments/revisions is consistent among the markets so that differences between the markets cannot be abused.
The Commission notes that the Exchange's proposal provides that, if a plan explicitly contains a repricing provision, shareholder approval would be required to delete or limit the repricing provisions. The Commission further notes that the Exchange's proposal provides that, if a plan is silent on repricing, it will be considered as prohibiting repricing and shareholder approval would be required to permit repricing under the plan. The Exchange's proposal also clarifies that repricings that have commenced prior to the date of effectiveness of its proposal would not be subject to shareholder approval, provided that such repricing does not require shareholder approval under the Exchange's existing shareholder approval rules.
The Commission believes that the Exchange's proposal should benefit shareholders by ensuring that companies cannot do a repricing of options, which can have a dilutive effect on shares, without explicit shareholder approval of such provisions and their terms. The Commission also believes that the Exchange's approach to repricings is similar to the NYSE and Nasdaq's respective approaches to repricings, and should offer companies clarity and guidance as to when a change in a plan regarding the repricing of options would trigger a shareholder approval requirement.
The Commission notes the Exchange's proposal provides guidance for the treatment of evergreen/formula plans. More specifically, under the Exchange's proposal, if a plan contains a formula for automatic increases in the shares available or for automatic grants pursuant to a formula, such plans cannot have a term in excess of ten years unless shareholder approval is obtained every ten years. In addition, under the Exchange's proposal, if a plan contains no limit on the number of shares available and is not a formula plan, then each grant under the plan will require separate shareholder approval. Furthermore, the Exchange's proposal provides that a requirement that grants be made out of treasury or repurchased shares will not alleviate the need for shareholder approval for additional grants.
The Commission believes that these provisions should help to ensure that certain terms of a plan cannot be drafted so broad as to avoid shareholder scrutiny and approval. The Commission also believes that the Exchange's proposed rules relating to the treatment of evergreen/formula plans and plans that do not contain a formula or place a limit on the number of shares available should provide more clarity and transparency to issuers as to when shareholder approval would be required for such plans. Finally, the Commission believes that the provision ensuring that treasury and repurchased shares cannot be used to avoid these additional shareholder approval requirements strengthens the proposal and ensures that companies cannot avoid compliance with the rule.
The Commission further notes that the Exchange has proposed a transition period for evergreen/formula plans and discretionary plans. The limited transition period would end on the first to occur of the following: (1) The listed company's next annual meeting at which directors are elected that occurs more than 180 days after the date of the effective date of the Exchange's proposal; (2) the first anniversary of the effective date of the Exchange's proposal; or (3) the expiration of the plan. The Commission believes that the Exchange's proposed transition period for evergreen/formula and discretionary plans should provide companies with additional clarity and guidance as to when shareholder approval would be required for such plans while in the transition period, and should provide companies with more time to comply with the Exchange's new shareholder approval requirements for evergreen/formula type plans. The Commission believes that this period is not so long as to permit abuse of the shareholder approval requirement, and at most, will last one year from the date of this Commission approval order.
The Commission notes that the Exchange's proposal—similar to the NYSE and Nasdaq's recently approved shareholder approval rules
The Commission notes that the Exchange's proposal provides that pre-existing plans, which were adopted prior to the SEC's approval of the Exchange's proposal, would essentially be “grandfathered” and would not require shareholder approval unless the plans were materially amended. Under the Exchange's proposal, however, shareholder approval is required for each grant made pursuant to any pre-existing plans that were not approved by shareholders and that do not have an evergreen formula or a specific number of shares available under the plan. This is consistent with the NYSE, Nasdaq, and Amex shareholder approval rules on this matter. The Commission believes that this clarification should provide companies with guidance as to which plans would be subject to the Exchange's new shareholder approval requirements.
The Commission believes that the Exchange's proposed provision, CSE Rule 3.3(d), to preclude broker voting on equity compensation plans is consistent with the Act. The Commission notes that equity compensation plans have become an important issue for shareholders. Because of the potential for dilution from issuances under such plans, shareholders should be making the determination rather than brokers on their behalf. The Commission further notes that NASD rules do not provide for broker voting on any matters, and NYSE rules prohibit broker voting on equity compensation plans.
The Commission also notes that the Exchange proposes to implement a transition period that would make the new rule eliminating broker voting on equity compensation plans applicable only to shareholder meetings that occur on or after the 90th day from the effective date of the Exchange's proposal.
Overall, the Commission believes that the Exchange's proposal is similar to the NYSE and Nasdaq's recently approved shareholder approval rules.
The Commission believes that the Exchange's proposal, which is similar to the NYSE and Nasdaq's shareholder approval rules,
The Commission finds good cause for approving the Exchange's proposal and Amendment No. 1 thereto prior to the thirtieth day after the date of publication of notice thereof in the
The Commission believes that accelerated approval of the Exchange's proposal is essential to allow for immediate harmonization of, and consistency in, the shareholder approval requirements for equity compensation plans among the markets. This will prevent issuers from making listing decisions based on differences in self-regulatory organization shareholder approval requirements and should provide equal investor protection to shareholders on the dilutive effects of plans irrespective of where the security trades. The Commission further believes that making the Exchange's new shareholder approval rules effective upon Commission approval will immediately impose the same requirements on the Exchange's issuers as those imposed upon NYSE, Nasdaq, and Amex issuers. Based on the above, the Commission finds good cause, consistent with Sections 6(b)(5) and 19(b)(2) of the Act,
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange, through PCXE, is proposing to amend its Section 3, Corporate Governance and Disclosure Policies, and more specifically PCXE Rule 5.3(d), Shareholder Approval Policy, relating to stock option plans and other equity compensation arrangements. The Exchange, through PCXE, is also proposing to amend PCXE Rule 9.4, Proxies Voting, to prohibit the holder of an Equity Trading Permit (“ETP”) from voting on equity compensation plans unless the beneficial owner of the shares has given voting instructions. The Exchange believes that the proposed changes are aimed at helping to restore investor confidence by strengthening listed companies' corporate governance practices.
Below is the text of the proposed rule change.
Rules 5.1-5.2—No change.
Rule 5.3—No Change.
Rule 5.3(a)-5.3(c)—No Change.
Each issuer shall require shareholder approval of a plan or arrangement
(1)
The Corporation will generally not require shareholder's approval as a condition to listing shares reserved for the exercise of options when:
(i) such options are issued to an individual, not previously employed by the company, as an inducement essential to the individual's entering into an employment contract with the company provided that the potential issuance of shares pursuant to such options does not exceed 5% of the company's outstanding common stock; or
(ii) the establishment of a plan or arrangement under which the amount of securities which may be issued does not exceed the lesser of 1% of the number of shares outstanding common stock, 1% of the voting power outstanding, or 25,000 shares and provided that all arrangements adopted without shareholder approval in any five-year period do not authorize, in the aggregate, the issuance of more than 10% of outstanding common stock or voting power outstanding. (For the purpose of calculating the percentage of stock issued in aggregate, stock to be issued pursuant to options which have expired and/or been cancelled shall not be included.)]
A company relying on this exception must mail to all shareholders, no later than ten days before issuance of the securities, a letter alerting them to its omission to seek the shareholder approval that would otherwise be required and indicating that the audit committee of the board or a comparable
Commentary:
.01-.02—No Change.
Rule 5.3(e)-5.3(o)No Change.
Rule 9.4. No ETP Holder shall
In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
In light of the recent failures of a number of significant companies due to the lack of diligence, ethics and controls, the Exchange, through PCXE, chose to review its corporate governance and disclosure policies. In September 2002, the PCXE Board of Directors formed a subcommittee to review the PCXE's current corporate governance and disclosure standards. The Exchange represents that the goal of the subcommittee was to enhance the accountability, integrity and transparency of the Exchange's listed companies. The Exchange further represents that it took its first step towards improving the corporate governance and disclosure standards for its listed companies by proposing revisions to PCXE Rule 5.3 to comply with the requirements of the Sarbanes-Oxley Act of 2002.
At the request of Commission staff, the Exchange reviewed its Shareholder
Approval Policy for its listed companies. The subcommittee reviewed the New York Stock Exchange, Inc. (“NYSE”) and the National Association of Securities Dealers, Inc.(“NASD”)/The Nasdaq Stock Market, Inc. (“Nasdaq”)'s new shareholder approval requirements for equity compensation plans.
The Exchange proposes to amend PCXE Rule 5.3(d) to require shareholder approval of all equity compensation plans and material revisions to such plans, subject to limited exemptions. The Exchange represents that the new standards in PCXE Rule 5.3(d) will apply to all companies listed under PCX's Tier I and Tier II designations.
Under the Exchange's proposal, an equity compensation plan is defined as a plan or other arrangement that provides for the delivery of equity securities (either newly issued or treasury shares) of the listed company to any employee, director or other service provider as compensation for services, including a compensatory grant of options or other equity securities that is not made under a plan. The Exchange is also proposing to provide clarification on certain plans that would not be considered equity compensation plans under this definition, such as plans that do not provide for delivery of equity securities of the issuer (
In addition, the proposal provides for certain types of grants that are exempted from shareholder approval. These limited exemptions include: (1) Inducement awards to person's first becoming an employee of an issuer or any of its subsidiaries, to rehires following a bona fide period of employment interruption, and for grants to new employees in connection with a merger or acquisition;
The Exchange is also proposing to provide a non-exclusive list of “material revisions” to a plan that would require shareholder approval. Within this list of revisions, the Exchange proposes to define the concepts of “evergreen plans” (
Shareholder approval will be required for plans adopted before the effective date of these proposed amendments that have not been approved by shareholders and have neither an evergreen formula nor a specific number of shares available under the plan. The Exchange is proposing to provide transition rules to clarify when shareholder approval will be required for these pre-existing plans. In addition, during the period prior to the approval, pre-existing plans may be utilized, but only in a manner consistent with past practice. The transition rules provide that an evergreen plan that was approved by shareholders but does not have a ten-year term must be: (1) Approved by shareholders before any shares that become available as a result of a formulaic increase are utilized, or (2) amended to include a term of no more than ten years from the date the plan was adopted or last approved by shareholders. If the plan were amended to include such term, shareholder approval would not be required. No action would be required, however, if a plan were frozen at the level of shares available at the time the rule becomes effective. The transition rules also provide that repricings that have commenced prior to the effectiveness of the proposal (
Finally, the Exchange is also proposing to prohibit the holder of an ETP from voting on equity compensation plans unless the beneficial owner of the shares has given voting instructions. The Exchange proposes a transition period that will make these provisions of PCXE Rule 9.4 applicable only to shareholder meetings that occur on or after the 90th day following the date of the Commission order approving this rule.
The Exchange believes that the proposed rule change is consistent with Section 6 of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
Written comments on the proposed rule change were neither solicited nor received.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying at the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. All submissions should refer to File No. SR-PCX-2003-50 and should be submitted by November 28, 2003.
After careful review, the Commission finds that the Exchange's proposal is consistent with the Act and the rules and regulations promulgated thereunder applicable to a national securities exchange and, in particular, with the requirements of Section 6(b) of the Act.
The Commission has long encouraged exchanges to adopt and strengthen their corporate governance listing standards in order to, among other things, restore investor confidence in the national marketplace. The Commission believes that the Exchange's proposal, which requires shareholder approval of equity compensation plans and which follows the Commission's approval of similar proposals by the NYSE, Nasdaq, and Amex
In addition, the Commission notes that the Exchange's proposal is similar and almost identical to proposals by NYSE and Nasdaq requiring shareholder approval of equity compensation plans that have previously been approved by the Commission.
The Commission believes that the requirement that the issuance of all inducement grants be subject to review by either the issuer's independent compensation committee or a majority of the board's independent directors, under the Exchange's proposal, should prevent abuse of this exemption from shareholder approval. In addition, the Exchange proposes to limit its exemption for inducement grants to new employees or to previous employees being rehired after a bona fide period of interruption of employment, and to new employees in connection with an acquisition or merger. The Commission believes that these limitations should help to prevent the inducement exemption from being used inappropriately.
The Commission notes that the Exchange is proposing to include a requirement, similar to the requirement under the NYSE and Nasdaq's recently approved shareholder approval rules, that, promptly following the grant of any inducement award, companies must disclose in a press release the material terms of the award, including the recipient(s) of the award and the number of shares involved.
The Commission notes that the Exchange's exemption from shareholder approval for mergers and acquisitions contains safeguards that should prevent abuse in this area. First, only pre-existing plans that were previously approved by the acquired company's shareholders would be available to the listed company for post-transactional grants. In addition, shares under those previously approved plans could not be granted to individuals who were employed, immediately before the transaction, by the post-transaction listed company or its subsidiaries. The Commission also notes that, under the Exchange's proposal, any shares reserved for listing in connection with a merger or acquisition pursuant to this exemption would be counted by the Exchange in determining whether the transaction involved the issuance of 20% or more of the company's outstanding common stock, thereby requiring shareholder approval under PCXE Rule 5.3(d)(9)(B). Finally, the Commission notes that the Exchange proposes an additional requirement that an issuer must notify it in writing when it uses this exemption, and/or any other exemption, from its shareholder approval requirement. Based on the above, the Commission believes that the Exchange has provided measures to ensure that the exemption for mergers and acquisitions is only used in limited circumstances, which should help reduce the potential for dilution of shareholder interests.
The Commission believes that, given the extensive government regulation—the Internal Revenue Code and Treasury regulations—for tax qualified plans and the general limitations associated with parallel nonqualified plans, shareholders should not experience significant dilution as a result of this exemption. In addition, the Commission notes that the Exchange proposes to add a limitation under this exemption that a plan would not be considered a nonqualified parallel plan under its proposal if employees who are participants in such a plan receive employer contributions under the plan in excess of 25% of the participants' cash compensation. The Commission further notes that the Exchange proposes an additional requirement that an issuer must notify it in writing when it uses this exemption, and/or any other exemption, from its shareholder approval requirement. The Commission believes that, taken together, these limitations should reduce concerns regarding abuse of this exemption from the shareholder approval requirements.
In addition, the Commission notes that, similar to the exemptions in the NYSE and Nasdaq's recently approved shareholder approval rules, the Exchange proposes to adopt an exemption from the shareholder approval requirements for an equity compensation plan that provides non-U.S. employees with substantially the same benefits as a comparable Section 401(a) plan, Section 423 plan or parallel excess plan that the listed company provides to its U.S. employees, but for features necessary to comply with applicable foreign tax law. The Commission believes that this change will conform the Exchange's shareholder approval rule to that of the NYSE and Nasdaq and will provide greater clarity for issuers regarding tax qualified, non-discriminatory employee benefit plans and parallel nonqualified plans for their non-U.S. employees.
The Commission notes that the Exchange proposes to provide a non-exclusive list, similar to lists found in the NYSE and Nasdaq's shareholder approval rules,
The Commission believes that the Exchange's non-exclusive list of what would constitute a material revision to a plan provides companies with clarity and guidance for when certain amendments and revisions to plans would require shareholder approval. The Commission also believes that the Exchange's proposal to conform its non-exclusive list with the NYSE and Nasdaq's rules on material amendments/revisions should help to
The Commission notes that the Exchange's proposal provides that, if a plan explicitly contains a repricing provision, shareholder approval would be required to delete or limit the repricing provisions. The Commission further notes that the Exchange's proposal provides that, if a plan is silent on repricing, it will be considered as prohibiting repricing and shareholder approval would be required to permit repricing under the plan. The Exchange's proposal also clarifies that repricings that have commenced prior to the date of effectiveness of its proposal would not be subject to shareholder approval, provided that such repricing does not require shareholder approval under the Exchange's existing shareholder approval rules.
The Commission believes that the Exchange's proposal should benefit shareholders by ensuring that companies cannot do a repricing of options, which can have a dilutive effect on shares, without explicit shareholder approval of such provisions and their terms. The Commission also believes that the Exchange's approach to repricings is similar to the NYSE and Nasdaq's respective approaches to repricings, and should offer companies clarity and guidance as to when a change in a plan regarding the repricing of options would trigger a shareholder approval requirement.
The Commission notes the Exchange's proposal provides guidance for the treatment of evergreen/formula plans. More specifically, under the Exchange's proposal, if a plan contains a formula for automatic increases in the shares available or for automatic grants pursuant to a formula, such plans cannot have a term in excess of ten years unless shareholder approval is obtained every ten years. In addition, under the Exchange's proposal, if a plan contains no limit on the number of shares available and is not a formula plan, then each grant under the plan will require separate shareholder approval. Furthermore, the Exchange's proposal provides that a requirement that grants be made out of treasury or repurchased shares will not alleviate the need for shareholder approval for additional grants.
The Commission believes that these provisions should help to ensure that certain terms of a plan cannot be drafted so broad as to avoid shareholder scrutiny and approval. The Commission also believes that the Exchange's proposed rules relating to the treatment of evergreen/formula plans and plans that do not contain a formula or place a limit on the number of shares available should provide more clarity and transparency to issuers as to when shareholder approval would be required for such plans. Finally, the Commission believes that the provision ensuring that treasury and repurchased shares cannot be used to avoid these additional shareholder approval requirements strengthens the proposal and ensures that companies cannot avoid compliance with the rule.
The Commission further notes that the Exchange has proposed a transition period for evergreen/formula plans and discretionary plans. The limited transition period would end on the first to occur of the following: (1) The listed company's next annual meeting at which directors are elected that occurs more than 180 days after the date of the effective date of the Exchange's proposal; (2) the first anniversary of the effective date of the Exchange's proposal; or (3) the expiration of the plan. The Commission believes that the Exchange's proposed transition period for evergreen/formula and discretionary plans should provide companies with additional clarity and guidance as to when shareholder approval would be required for such plans while in the transition period, and should provide companies with more time to comply with the Exchange's new shareholder approval requirements for evergreen/formula type plans. The Commission believes that this period is not so long as to permit abuse of the shareholder approval requirement, and at most, will last one year from the date of this Commission approval order.
The Commission notes that the Exchange's proposal'similar to the NYSE and Nasdaq's recently approved shareholder approval rules
The Commission notes that the Exchange's proposal provides that pre-existing plans, which were adopted prior to the SEC's approval of the Exchange's proposal, would essentially be “grandfathered” and would not require shareholder approval unless the plans were materially amended. Under the Exchange's proposal, however, shareholder approval is required for each grant made pursuant to any pre-existing plans that were not approved by shareholders and that do not have an evergreen formula or a specific number of shares available under the plan. This is consistent with the NYSE, Nasdaq, and Amex shareholder approval rules on this matter. The Commission believes that this clarification should provide companies with guidance as to which plans would be subject to the Exchange's new shareholder approval requirements.
The Commission believes that the Exchange's proposed amendment to PCX Rule 9.4 to preclude broker voting on equity compensation plans is consistent with the Act. The Commission notes that equity compensation plans have become an important issue for shareholders. Because of the potential for dilution from issuances under such plans, shareholders should be making the determination rather than brokers on their behalf. The Commission further notes that NASD rules do not provide for broker voting on any matters and NYSE rules prohibit broker voting on equity compensation plans.
The Commission also notes that the Exchange proposes to implement a transition period that would make the new rule eliminating broker voting on
Overall, the Commission believes that the Exchange's proposal is similar to the NYSE and Nasdaq's recently approved shareholder approval rules.
The Commission believes that the Exchange's proposal, which is similar to the NYSE and Nasdaq's shareholder approval rules,
The Commission finds good cause for approving the Exchange's proposal prior to the thirtieth day after the date of publication of notice thereof in the
The Commission believes that accelerated approval of the Exchange's proposal is essential to allow for immediate harmonization of, and consistency in, the shareholder approval requirements for equity compensation plans among the markets. This will prevent issuers from making listing decisions based on differences in self-regulatory organization shareholder approval requirements and should provide equal investor protection to shareholders on the dilutive effects of plans irrespective of where the security trades. The Commission further believes that making the Exchange's new shareholder approval rules effective upon Commission approval will immediately impose the same requirements on the Exchange's issuers as those imposed upon NYSE, Nasdaq, and Amex issuers. Based on the above, the Commission finds good cause, consistent with Sections 6(b)(5) and 19(b)(2) of the Act,
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to delete the introductory language and subsection (a) of Phlx Rule 850,
Below is the text of the proposed rule change.
Rule 850. [A listed company shall require shareholder approval of the issuance of securities in connection with the following:
(a) Options plans or other special remunerations plans for directors, officers or key employees.]
(b) No change.
(c) No change.
Rule 862. A member organization shall give a proxy for stock registered in its name, at the direction of the beneficial owner. If the stock is not in the control or possession of the member organization, satisfactory proof of the beneficial ownership as of the record date may be required.
Member organization holdings as executor, etc.
A member organization may give a proxy to vote any stock registered in its name if the member organization holds such stock as executor, administrator, guardian, trustee, or in a similar representative or fiduciary capacity with authority to vote.
Procedure without instructions—Instructions on stock in names of other member organizations
A member organization which has transmitted proxy soliciting material to the beneficial owner of stock in accordance with the provisions of Rule 861, and which has not received instructions from the beneficial owner by the date specified in the statement accompanying such material, may give a proxy to vote such stock, provided the person signing the proxy has no knowledge of any contest as to the action to be taken at the meeting and provided such action does not include authorization for a merger, consolidation or any other matter which may affect substantially the legal rights or privileges of such stock.
A member organization which has in its possession or control stock registered in the name of another member organization shall:
(1) Forward to such other member organization any voting instructions received from the beneficial owner, or
(2) If the proxy-soliciting material has been transmitted to the beneficial owner of the stock in accordance with Rule 861 and no instructions have been received by the date specified in the statement accompanying such material, notify such other member organization of such fact in order that such organization may give the proxy as provided in the first paragraph of this Rule.
In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to revise Exchange Rule 850 to require shareholder approval for stock option plans or other equity compensation arrangements (subject to exceptions specified in the rule), to adopt a “Commentary” pertaining to shareholder approval for stock option plans or other equity compensation arrangements, and to revise Exchange Rule 862 to preclude broker voting in connection with shareholder approval of equity compensation plans.
Specifically, the Exchange proposes to adopt an exception for warrants or rights offered generally to all shareholders. The exception would exclude stock purchase plans available on equal terms to all security holders of the company (such as a dividend reinvestment plan) from the shareholder approval requirement. In addition, the proposal would not require shareholder approval for tax qualified, non-discriminatory benefit plans as these plans are regulated under the Internal Revenue Code and Treasury Department regulations. Along with tax qualified, non-discriminatory employee benefit plans, the Exchange's proposal also provides an exception for parallel nonqualified plans, which are plans that work parallel with plans intended to qualify under the Internal Revenue Code. Additionally, an equity compensation plan that provides non-U.S. employees with substantially the same benefits as a comparable tax qualified, non-discriminatory employee benefit plan or parallel nonqualified plan that the issuer provides to its U.S. employees, but for features necessary to comply with applicable foreign tax law, is also exempt from the shareholder approval requirements.
Furthermore, the Exchange proposes to adopt an exception for inducement grants to new employees because, in these cases, a company has an arm's length relationship with the new employees, and its interests are directly aligned with the shareholders. This exception would apply to persons previously employed by the issuer following a bona fide period of non-employment. In addition, for these purposes, inducement grants would include grants of options or stock to new employees in connection with a merger or acquisition. The proposal would require that, promptly following an issuance of any employment inducement grant in reliance on this exception, a company must disclose in a press release the material terms of the grant, including the recipient(s) of the grant and the number of shares involved.
In addition, the proposal would provide that plans involving a merger or acquisition would not require shareholder approval in two situations. First, the Exchange will not require shareholder approval to convert, replace or adjust outstanding options or other equity compensation awards to reflect the transaction. Second, the shares available under certain plans acquired in corporate acquisitions and mergers may be used for certain post-transaction grants without further shareholder approval. This exception would apply to situations where the target/acquired company, which is no longer a listed company following the transaction, has shares available for grant under its pre-existing plans that were previously approved by its shareholders. These shares may be used for post-transaction grants of options and other equity awards by the acquiring/listed company (after appropriate adjustment of the number of shares to reflect the transaction), either under the pre-existing plan or another plan, without further shareholder approval, so long as: (1) The time during which those shares are available for grants is not extended beyond the period when they would have been available under the pre-existing plan, absent the transaction, and (2) such options and other awards are only granted to individuals who were employed by the target/acquired company at the time the merger or acquisition was consummated. The Exchange would view a plan adopted in contemplation of the merger or acquisition transaction as not pre-existing for purposes of this exception. The Exchange believes that this exception is appropriate because it believes that it will not result in any increase in the aggregate potential dilution of the combined enterprise.
Under the Exchange's proposal, inducement grants, tax qualified, non-discriminatory benefit plans, and parallel nonqualified plans are subject to approval by either the issuer's independent compensation committee, or a majority of the issuer's independent directors. The Exchange also notes that a company would not be permitted to use repurchased shares to fund options without prior shareholder approval. Plans that merely provide a convenient way to purchase shares on the open market or from the issuer at fair market value would not require shareholder approval.
The Exchange proposal further clarifies that material amendments to plans would require shareholder approval. The accompanying proposed “Commentary” also provides a non-exclusive list of plan amendments that are considered material, and clarifies that, while general authority to amend a plan would not obviate the need for shareholder approval, if a plan permits a specific action without further shareholder approval, then no such approval would generally be required.
The proposed “Commentary” also provides that, as a general matter, when preparing plans and presenting them for
With respect to implementation of revised Rule 850 and the accompanying Commentary, the Exchange proposes that they become effective upon SEC approval, and that existing plans be grandfathered. Any material modification to plans in place or adopted after the effective date of revised Rule 850 and the accompanying Commentary would require shareholder approval.
Under the Exchange's proposal, issuers would be required to notify the Exchange no later than 15 calendar days prior to establishing or materially amending a stock option plan, purchase plan or other equity compensation arrangement pursuant to which stock may be acquired by officers, directors, employees, or consultants without shareholder approval.
Finally, the Exchange proposes to amend Exchange Rule 862 to prohibit member organizations from voting on equity compensation plans unless the beneficial owner of the shares has given voting instructions. The Exchange proposes, however, a transition period that will make the amended rule applicable only to shareholder meetings that occur on or after the 90th day following the date of the Commission's order approving the amended rule.
The Exchange believes that the proposed rule change is consistent with Section 6 of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
Written comments on the proposed rule change were neither solicited nor received.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying at the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. All submissions should refer to File No. SR-Phlx-2003-67 and should be submitted by November 28, 2003.
After careful review, the Commission finds that the Exchange's proposal is consistent with the Act and the rules and regulations promulgated thereunder applicable to a national securities exchange and, in particular, with the requirements of Section 6(b) of the Act.
The Commission has long encouraged exchanges to adopt and strengthen their corporate governance listing standards in order to, among other things, restore investor confidence in the national marketplace. The Commission believes that the Exchange's proposal, which requires shareholder approval of equity compensation plans and which follows the Commission's approval of similar proposals by the NYSE, Nasdaq, and Amex
In addition, the Commission notes that the Exchange's proposal is similar and almost identical to proposals by NYSE and Nasdaq requiring shareholder approval of equity compensation plans that have previously been approved by the Commission.
The Commission believes that the requirement that the issuance of all inducement grants be subject to review by either the issuer's independent compensation committee or a majority of the board's independent directors, under the Exchange's proposal, should prevent abuse of this exception from shareholder approval. In addition, the Exchange proposes to limit its exception for inducement grants to new employees or to previous employees being rehired
The Commission notes that the Exchange is proposing to include a requirement, similar to the requirement under the NYSE and Nasdaq's recently approved shareholder approval rules, that, promptly following the grant of any inducement award, companies must disclose in a press release the material terms of the award, including the recipient(s) of the award and the number of shares involved.
The Commission notes that the Exchange's exception from shareholder approval for mergers and acquisitions contains safeguards that should prevent abuse in this area. First, only pre-existing plans that were previously approved by the acquired company's shareholders would be available to the listed company for post-transactional grants. In addition, shares under those previously approved plans could not be granted to individuals who were employed, immediately before the transaction, by the post-transaction listed company or its subsidiaries. The Commission also notes that, under the Exchange's proposal, any shares reserved for listing in connection with a merger or acquisition pursuant to this exception would be counted by the Exchange in determining whether the transaction involved the issuance of 20% or more of the company's outstanding common stock, thereby requiring shareholder approval under Phlx Rule 850(c). Finally, the Commission notes that the Exchange proposes an additional requirement that an issuer must notify it in writing when it uses this exception, and/or any other exception, from its shareholder approval requirement. Based on the above, the Commission believes that the Exchange has provided measures to ensure that the exception for mergers and acquisitions is only used in limited circumstances, which should help reduce the potential for dilution of shareholder interests.
The Commission believes that, given the extensive government regulation—the Internal Revenue Code and Treasury regulations—for tax qualified plans and the general limitations associated with parallel nonqualified plans, shareholders should not experience significant dilution as a result of this exception. In addition, the Commission notes that the Exchange proposes to add a limitation under this exception that a plan would not be considered a nonqualified parallel plan under its proposal if employees who are participants in such a plan receive employer contributions under the plan in excess of 25% of the participants' cash compensation. The Commission further notes that the Exchange proposes an additional requirement that an issuer must notify it in writing when it uses this exception, and/or any other exception, from its shareholder approval requirement. The Commission believes that, taken together, these limitations should reduce concerns regarding abuse of this exception from the shareholder approval requirements.
In addition, the Commission notes that, similar to the exceptions in the NYSE and Nasdaq's recently approved shareholder approval rules, the Exchange proposes to adopt an exception from the shareholder approval requirements for an equity compensation plan that provides non-U.S. employees with substantially the same benefits as a comparable tax qualified, non-discriminatory employee benefit plan or parallel nonqualified plan that the issuer provides to its U.S. employees, but for features necessary to comply with applicable foreign tax law. The Commission believes that this change will conform the Exchange's shareholder approval rule to that of the NYSE and Nasdaq and will provide greater clarity for issuers regarding tax qualified, non-discriminatory employee benefit plans and parallel nonqualified plans for their non-U.S. employees.
The Commission notes that the Exchange proposes to provide a non-exclusive list, similar to lists found in the NYSE and Nasdaq's shareholder approval rules,
The Commission believes that the Exchange's non-exclusive list of what would constitute a material amendment/revision to a plan provides companies with clarity and guidance for when certain amendments and revisions to plans would require shareholder approval. The Commission also believes that the Exchange's proposal to conform its non-exclusive list with the NYSE and Nasdaq's rules on material amendments/revisions should help to ensure that the concept of material amendments/revisions is consistent among the markets so that differences between the markets cannot be abused.
The Commission notes that, under the Exchange's proposal, if a plan is amended to permit repricing, such an amendment would be considered a
The Commission believes that the Exchange's proposal should benefit shareholders by ensuring that companies cannot do a repricing of options, which can have a dilutive effect on shares, without explicit shareholder approval of such provisions and their terms. The Commission also believes that the Exchange's approach to repricings is similar to the NYSE and Nasdaq's respective approaches to repricings, and should offer companies clarity and guidance as to when a change in a plan regarding the repricing of options would trigger a shareholder approval requirement.
The Commission notes the Exchange's proposal provides guidance for the treatment of evergreen/formula plans. More specifically, under the Exchange's proposal, if a plan contains a formula for automatic increases in the shares available or for automatic grants pursuant to a formula, such plans cannot have a term in excess of ten years unless shareholder approval is obtained every ten years. In addition, under the Exchange's proposal, if a plan contains no limit on the number of shares available and is not a formula plan, then each grant under the plan will require separate shareholder approval. Furthermore, the Exchange's proposal provides that a requirement that grants be made out of treasury or repurchased shares will not alleviate the need for shareholder approval for additional grants.
The Commission believes that these provisions should help to ensure that certain terms of a plan cannot be drafted so broad as to avoid shareholder scrutiny and approval. The Commission also believes that the Exchange's proposed rules relating to the treatment of evergreen/formula plans and plans that do not contain a formula or place a limit on the number of shares available should provide more clarity and transparency to issuers as to when shareholder approval would be required for such plans. Finally, the Commission believes that the provision ensuring that treasury and repurchased shares cannot be used to avoid these additional shareholder approval requirements strengthens the proposal and ensures that companies cannot avoid compliance with the rule.
The Commission notes that the Exchange's proposal—similar to the NYSE and Nasdaq's recently approved shareholder approval rules
The Commission notes that the Exchange's proposal provides that pre-existing plans, which were adopted prior to the SEC's approval of the Exchange's proposal, would essentially be “grandfathered” and would not require shareholder approval unless the plans were materially amended. Under the Exchange's proposal, however, shareholder approval is required for each grant made pursuant to any pre-existing plans that were not approved by shareholders and that do not have an evergreen formula or a specific number of shares available under the plan. This is consistent with the NYSE, Nasdaq, and Amex shareholder approval rules on this matter. The Commission believes that this clarification should provide companies with guidance as to which plans would be subject to the Exchange's new shareholder approval requirements.
The Commission further notes that the Exchange proposes to adopt an exception from the shareholder approval requirement for warrants or rights offered generally to all shareholders. This exception would exclude stock purchase plans available on equal terms to all security holders of the company (
The Commission believes that the Exchange's proposed amendment to Phlx Rule 862 to preclude broker voting on equity compensation plans is consistent with the Act. The Commission notes that equity compensation plans have become an important issue for shareholders. Because of the potential for dilution from issuances under such plans, shareholders should be making the determination rather than brokers on their behalf. The Commission further notes that NASD rules do not provide for broker voting on any matters and NYSE rules prohibit broker voting on equity compensation plans.
The Commission also notes that the Exchange proposes to implement a transition period that would make the new rule eliminating broker voting on equity compensation plans applicable only to shareholder meetings that occur on or after the 90th day from the effective date of the Exchange's proposal.
Overall, the Commission believes that the Exchange's proposal is similar to the NYSE and Nasdaq's recently approved shareholder approval rules.
The Commission believes that the Exchange's proposal, which is similar to the NYSE and Nasdaq's shareholder approval rules,
The Commission finds good cause for approving the Exchange's proposal prior to the thirtieth day after the date of publication of notice thereof in the
The Commission believes that accelerated approval of the Exchange's proposal is essential to allow for immediate harmonization of, and consistency in, the shareholder approval requirements for equity compensation plans among the markets. This will prevent issuers from making listing decisions based on differences in self-regulatory organization shareholder approval requirements and should provide equal investor protection to shareholders on the dilutive effects of plans irrespective of where the security trades. The Commission further believes that making the Exchange's new shareholder approval rules effective upon Commission approval will immediately impose the same requirements on the Exchange's issuers as those imposed upon NYSE, Nasdaq, and Amex issuers. Based on the above, the Commission finds good cause, consistent with Sections 6(b)(5) and 19(b)(2) of the Act,
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
In accordance with a notice received from the Department of Homeland Security—Federal Emergency Management Agency, effective October 30, 2003, the above numbered declaration is hereby amended to include Riverside County as a disaster area due to damages caused by wildfires occurring on October 21, 2003, and continuing.
All other counties contiguous to the above named primary county have been previously declared.
All other information remains the same,
The U.S. Small Business Administration Connecticut District Advisory Council, located in the geographical area of Hartford, Connecticut will hold a public meeting at 8:30 a.m., on Monday, November 17, 2003, Connecticut District Office, 330 Main Street, Hartford, Connecticut 06106, to discuss such matters as may be presented. For further information, write or call Marie Record, District Director, U.S. Small Business Administration, 330 Main Street, Hartford, Connecticut—(860) 240-4700.
Anyone wishing to attend and make an oral presentation to the Board must contact Marie A. Record, no later than Friday, November 14, 2003, via e-mail or fax. Marie A. Record, District Director, U.S. Small Business Administration, Connecticut District Office 330 Main Street, Hartford, CT 06106 (860) 240-4670 phone or (860) 240-4714 fax or e-mail
Tennessee Valley Authority.
Submission for Office of Management and Budget (OMB) Review; comment request.
The proposed information collection described below will be submitted to the Office of Management and Budget (OMB) for review, as required by the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35, as amended). The Tennessee Valley
Comments should be sent to the OMB Office of Information and Regulatory Affairs, Attention: Desk Officer for Tennessee Valley Authority no later than December 8, 2003.
Tennessee Valley Authority.
Submission for Office of Management & Budget (OMB) review; comment request.
The proposed information collection described below will be submitted to the Office of Management and Budget (OMB) for review, as required by the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35, as amended). The Tennessee Valley Authority is soliciting public comments on this proposed collection as provided by 5 CFR section 1320.8(d)(1). Requests for information, including copies of the information collection proposed and supporting documentation, should be directed to the Agency Clearance Officer: Alice D. Witt, Tennessee Valley Authority, 1101 Market Street (EB 5B), Chattanooga, Tennessee 37402-2801; (423) 751-6832 (SC: 0001MYJ). Comments should be sent to the OMB, Office of Information and Regulatory Affairs, Attention: Desk Officer for Tennessee Valley Authority no later than December 8, 2003.
Office of the Secretary (OST), DOT.
Notice of meeting.
The U.S. Department of Transportation (DOT) announces a meeting of the Transportation Labor-Management Board (Board). Notice of the meeting is required under the Federal Advisory Committee Act.
The Board will be briefed on DOT's migration to the Federal Personnel and Payroll System, the Common Access Architecture project, and the activities of the subcommittees on Human Capital, Competitive Sourcing, and the DOT Labor Relations Climate Survey.
For the Department of Transportation.
Federal Aviation Administration (FAA), DOT.
Notice of request to release airport property.
The FAA proposes to rule and invite public comment on the release of land at the Pueblo Memorial Airport under the provisions of Section 125 of the Wendell H. Ford Aviation Investment Reform Act for the 21st Century (AIR 21).
Comments must be received on or before November 21, 2003.
Comments on this application may be mailed or delivered to the FAA at the following address: Mr. Craig Sparks, Manager, Federal Aviation Administration, Northwest Mountain Region, Airports Division, Denver Airports District Office, 26805 E. 68th Ave., Suite 224, Denver, Colorado, 80249.
In addition, one copy of any comments submitted to the FAA must be mailed or delivered to Mr. John O'Neal, Director of Aviation, Pueblo Memorial Airport, 31201 Bryan Circle, Pueblo, Colorado, 81001.
Ms. Cynthia Nelson, Project Manager, Federal Aviation Administration, Northwest Mountain Region, Airports Division, Denver Airports District Office, 26805 E. 68th Ave., Suite 224, Denver, Colorado 80249.
The request to release property may be reviewed in person at this same location.
The FAA invites public comment on the request to release property at the Pueblo Memorial Airport under the provisions of the AIR 21. On September 19, 2003, the FAA determined that the request to release property at the Pueblo Memorial Airport submitted by the City of Pueblo met the procedural requirements of the Federal Aviation Regulations, Part 155. The FAA may approve the request, in whole or in part, no later than December 31, 2003.
The following is a brief overview of the request:
The Pueblo Memorial Airport requests the release of 34.07 acres of non-aeronautical airport property to the City of Pueblo, Colorado. The purpose of this release is to allow the City of Pueblo to sell the subject land that was conveyed to the City by the United States acting through the War Assets Administration by Quit Claim Deed dated July 20, 1948. The sale of this parcel will provide funds for airport improvements.
Any person may inspect the request by appointment at the FAA office listed above under
In addition, any person may inspect the application, notice and other documents germane to the application in person at Pueblo Memorial Airport 31201 Bryan Circle, Pueblo, CO 81001.
U.S. Department of Transportation, Federal Highway Administration (FHWA).
Notice and request for comments.
In accordance with the requirements in Section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995, this notice announces the intention of the FHWA to request the Office of Management and Budget (OMB) to renew its clearance for the currently approved FHWA collection of information identified below under Supplementary Information.
Please submit comments by January 6, 2004.
You may submit comments identified by DOT DMS Docket Number FHWA-2003-16310 by any of the following methods:
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Ms. Claretta Duren, (202) 366-4636, Department of Transportation, Federal Highway Administration, Office of Pavement Technology, 400 Seventh Street, SW., Washington, DC 20590. Office hours are from 7:45 a.m. to 4:15 p.m., Monday through Friday, except Federal holidays.
U.S. Department of Transportation, Federal Highway Administration (FHWA).
Notice and request for public comments.
In accordance with the requirements in section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995, this notice announces the intention of the FHWA to request the Office of Management and Budget (OMB) to renew its clearance for the currently approved FHWA collection of information identified below under Supplementary Information.
Please submit comments by January 6, 2004.
You may submit comments identified by DOT DMS Docket Number FHWA-2003-16313 by any of the following methods:
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Mr. Charles Klemstine, (202) 366-6753, Department of Transportation, Federal Highway Administration, Office of Civil Rights, 400 Seventh Street, SW., Washington, DC 20590. Office hours are from 7:45 a.m. to 4:15 p.m., Monday through Friday, except Federal holidays.
23 U.S.C. 140(a); 23 CFR 635.126; 29 U.S.C. 2; 23 U.S.C. 123; 23 U.S.C. 116; 23 U.S.C. 130; 49 CFR 1.48.
Surface Transportation Board, Transportation.
Notice of Availability of Environmental Assessment and request for comments.
The Surface Transportation Board's (Board) Section of Environmental Analysis (SEA) has prepared an Environmental Assessment (EA) in response to a petition filed by the Burlington Northern and Santa Fe Railway Company. The petition seeks an exemption under 49 U.S.C. 10502 from the prior approval requirements of 49 U.S.C. 10901 for authority to construct and operate an 850-foot long rail line in Merced, California. The EA identifies the natural and man-made resources in the area of the proposed rail line and analyzes the potential impacts of the rail line construction and operation on these resources. Based on the information provided from all sources to date and its independent analysis, SEA preliminarily concludes that construction and operation of the proposed rail line would have no significant environmental impacts if the Board imposes and the Burlington Northern and Santa Fe Railway Company implements the recommended mitigation measures set forth in this EA. Copies of the EA have been served on
The EA is available for public review and comment. Comments must be postmarked December 10, 2003.
Comments (an original and 10 copies) should be sent in writing to: Surface Transportation Board, Case Control Unit, 1925 K Street, NW., Washington, DC 20423. The lower left corner of the envelope should be marked: Attention: Mr. David Navecky, Environmental Comments, Finance Docket No. 34305.
David Navecky by mail at the address above, by telephone at (202) 565-1593 (FIRS for the hearing impaired (1-800-877-8339)), or by e-mail at
By the Board, Victoria Rutson, Chief, Section of Environmental Analysis.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Pub. L. 104-13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning final regulation, REG-209682-94 (TD 8847), Adjustments Following Sales of Partnership Interests, (§§ 1.732-1 and 1.743-1).
Written comments should be received on or before January 6, 2004, to be assured of consideration.
Direct all written comments to R. Joseph Durbala, Internal Revenue Service, room 6411, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of regulations should be directed to Carol Savage at Internal Revenue Service, room 6407, 1111 Constitution Avenue NW., Washington, DC 20224, or at (202) 622-3945, or through the internet at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Internal Revenue Service (IRS), Treasury.
Notice.
The Charter for the Information Reporting Program Advisory Committee will renew for a two-year period beginning November 5, 2003.
Ms. Lorenza Wilds, National Public Liaison, 202-622-6440 (not a toll-free number).
Notice is hereby given pursuant to section 10(a)(2) of the Federal Advisory Committee Act, 5 U.S.C. App. (1988), and with the approval of the Secretary of the Treasury to announce the renewal of the Information Reporting Program Advisory Committee (IRPAC). The primary purpose of the Advisory Committee is to provide an organized public forum for senior Internal Revenue Service executives and
Internal Revenue Service (IRS), Treasury.
Notice.
The Charter for the Internal Revenue Service Advisory Council (IRSAC) will renew for a two-year period beginning November 5, 2003.
Ms. Lorenza Wilds, National Public Liaison, 202-622-6440 (not a toll-free number).
Notice is hereby given pursuant to section 10(a)(2) of the Federal Advisory Committee Act, 5 U.S.C. App. (1988), and with the approval of the Secretary of the Treasury to announce the renewal of the Internal Revenue Service Advisory Council (IRSAC). The primary purpose of the Advisory Council is to provide an organized public forum for senior Internal Revenue Service executives and representatives of the public to discuss relevant tax administration issues. As an advisory body designed to focus on broad policy matters, the IRSAC reviews existing tax policy and/or makes recommendations with respect to emerging tax administration issues. The IRSAC suggests operational improvements, offers constructive observations regarding current or proposed IRS policies, programs, and procedures, and suggest improvements with respect to issues having substantive effect on federal tax administration. Conveying the public's perception of IRS activities to Internal Revenue Service executives, the IRSAC is comprised of individuals who bring substantial, disparate experience and diverse backgrounds. Membership is balanced to include representation from the taxpaying public, the tax professional community, small and large businesses, state tax administration, and the payroll community.
Internal Revenue Service (IRS), Treasury.
Notice of open meeting.
In 1998 the Internal Revenue Service established the Electronic Tax Administration Advisory Committee (ETAAC). The primary purpose of ETAAC is to provide an organized public forum for discussion of electronic tax administration issues in support of the overriding goal that paperless filing should be the preferred and most convenient method of filing tax and information returns. ETAAC offers constructive observations about current or proposed policies, programs, and procedures, and suggests improvements. Listed is a summary of the agenda along with the planned discussion topics.
Last-minute changes to these topics are possible and could prevent advance notice.
There will be a meeting of ETAAC on Thursday, December 4, 2003. This meeting will be open to the public, and will be in a room that accommodates approximately 40 people, including members of ETAAC and IRS officials. Seats are available to members of the public on a first-come, first-served basis.
The meeting will be held at the Ritz-Carlton Hotel “ Pentagon City, Diplomat Meeting Room, 1250 South Hayes Street, Arlington, VA 22202.
To get on the access list to attend this meeting, to have a copy of the agenda faxed to you or to receive general information about ETAAC, contact Kim Logan at (202) 283-1947 by November 26, 2003. Notification of intent should include your name, organization and telephone number. If you leave information for Ms. Logan in a voice-mail message, please spell out all names. A draft of the agenda will be available via e-mail or facsimile transmission the week prior to the meeting. Please call Ms. Logan on or
ETAAC reports to the Director, Electronic Tax Administration, who is the executive responsible for the electronic tax administration program. Increasing participation by external stakeholders in the development and implementation of the Internal Revenue Service's strategy for electronic tax administration will help achieve the goal that paperless filing should be the preferred and most convenient method of filing tax and information returns.
ETAAC members are not paid for their time or services, but consistent with Federal regulations, they are reimbursed for their travel and lodging expenses to attend the public meetings, working sessions, and an orientation each year.
United States Institute of Peace.
Thursday, November 20, 2003, 9:30 a.m.-5 p.m.
1200 17th Street, NW., Suite 200—Conference Room, Washington, DC 20036.
Open Session—Portions may be closed pursuant to Subsection (c) of Section 552(b) of Title 5, United States Code, as provided in subsection 1706(h)(3) of the United States Institute of Peace Act, Pub. L. 98-525.
November 2003 Board Meeting; Approval of Minutes of the One Hundred Eleventh Meeting (September 18, 2003) of the Board of Directors; Chairman's Report; President's Report; Program Reports; Other General Issues.
Ms. Tessie Higgs, Executive Office, Telephone: (202) 429-3836.
Veterans Health Administration, Department of Veterans Affairs.
Notice.
The Veterans Health Administration (VHA) is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the Paperwork Reduction Act (PRA) of 1995, Federal agencies are required to publish notice in the
Written comments and recommendations on the proposed collection of information should be received on or before January 6, 2004.
Submit written comments on the collection of information to Ann Bickoff, Veterans Health Administration (191A1), Department of Veterans Affairs, 810 Vermont Avenue, NW., Washington, DC 20420 or e-mail
Ann Bickoff at (202) 273-8310.
Under the PRA of 1995 (Public Law 104-13; 44 U.S.C. 3501 “ 3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. This request for comment is being made pursuant to Section 3506(c)(2)(A) of the PRA.
With respect to the following collection of information, VHA invites comments on: (1) Whether the proposed collection of information is necessary for the proper performance of VHA's functions, including whether the information will have practical utility; (2) the accuracy of VHA's estimate of the burden of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or the use of other forms of information technology.
By direction of the Secretary.
In rule document 03-27405 beginning on page 61742 in the issue of Thursday, October 30, 2003, make the following correction:
On page 61742, in the second column, in § 4.41, in amendatory instruction 10b., in the fifth line, “+40” should read “±40”.
In notice document 03-27124 beginning on page 61413 in the issue of Tuesday, October 28, 2003, make the following corrections:
1. On page 61417, in the second column, in footnote 27, in the first line, “$5.473” should read “$5,473”.
2. On the same page, in the same column, in the same footnote, in the second line, “$5.892” should read “$5,892”.
3. On the same page, in the same column, in the same footnote, in the fifth line, “$10.302” should read “$10,302”.
Centers for Medicare & Medicaid Services (CMS), HHS.
Final rule with comment period.
This final rule will refine the resource-based practice expense relative value units (RVUs) and make other changes to Medicare Part B payment policy. The policy changes concern: Medicare Economic Index, practice expense for professional component services, definition of diabetes for diabetes self-management training, supplemental survey data for practice expense, geographic practice cost indices, and several coding issues. In addition, this rule updates the codes subject to the physician self-referral prohibition. We also make revisions to the sustainable growth rate and the anesthesia conversion factor.
These changes will ensure that our payment systems are updated to reflect changes in medical practice and the relative value of services.
We are also finalizing the calendar year (CY) 2003 interim RVUs and are issuing interim RVUs for new and revised procedure codes for CY 2004.
As required by the statute, we are announcing that the physician fee schedule update for CY 2004 is -4.5 percent, the initial estimate of the sustainable growth rate for CY 2004 is 7.4 percent, and the conversion factor for CY 2004 is $35.1339.
We published a proposed rule (68 FR 50428) in the
In commenting, please refer to file code CMS-1476-FC. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission. Mail written comments (one original and two copies) to the following address ONLY:
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Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and could be considered late.
For information on viewing public comments, see the beginning of the
Pam West (410) 786-2302 (for issues related to practice expense.)
Jim Menas (410) 786-4507 (for issues related to anesthesia.)
Rick Ensor (410) 786-5617 (for issues related to Geographic Cost Price Index (GPCI).)
Mary Stojak (410) 786-6939 (for issues related to the definition of diabetes for diabetes self-management training (DSMT).)
Shannon Martin (410) 786-7939 (for issues related to rebasing of the Medicare Economic Index (MEI).)
Craig Dobyski, (410) 786-4584 (for issues related to telehealth).
Joanne Sinsheimer, (410) 786-4620 (for issues related to updates to the list of certain services subject to the physician self-referral prohibitions).
Diane Milstead (410) 786-3355, Latesha Walker (410) 786-1101, or Gaysha Brooks (410) 786-3355 (for all other issues.)
This
Information on the physician fee schedule and pricing files can be found on our homepage. You can access this data by typing the following:
1. Go to the CMS homepage (
2. Place your cursor over the word “Professionals” in the blue area near the top of the page. Select “Physicians” from the drop-down menu.
3. Scroll down and under “Payment/Billing” select “Physician Fee Schedule'.
The Physician Fee Schedule pricing information is contained in two public use files.
(1) National Physician Fee Schedule Relative Value File—This file contains all CPT/HCPCS (excluding codes beginning with B, E, L, K, and O), their short descriptions and a status indicator, which denotes whether or not the service is priced under the physician fee schedule. The file also contains the components used in the calculation of the annual pricing amount (that is., the RVUs, GPCIs, and
(2) Physician Fee Schedule Payment Amount File National/Carrier—This file contains the CPT code and the Medicare price for all services priced under the Physician Fee Schedule. These data can be downloaded for (a) the entire country, or (b) for a selected carrier (in most cases carriers correlate with states). There is no option of requesting data for selected HCPCS codes. The zip file, which is downloaded, contains a file named PF04pc.doc, which explains the data contained in each column. This file also contains a description of pricing localities used in the Physician Fee Schedule. Due to the size of the national file (as well as many of the carrier-specific files), these data are provided in a comma-delimited format, which can be used to populate database applications. Generally speaking, these data are too large for Excel, however if a carrier specific file has 3 or fewer localities, Excel can be used.
Another file that providers may find useful is the Zipcode to Carrier Locality File. This file will map ZIP Codes to CMS carriers and localities and map Zip Codes to their State and determine whether the ZIP Code has a rural designation as determined by CMS. You can access this file by typing the following:
1. Go to the CMS homepage (
2. Place your cursor over the word “Professionals” in the blue area near the top of the page. Select “Physicians” from the drop-down menu.
3. Scroll down and under “Payment/Billing” select “Medicare Payment Systems.”
4. Scroll down and under Coding Files select “Zipcode to Carrier Locality File.”
In addition, because of the many organizations and terms to which we refer by acronym in this proposed rule, we are listing these acronyms and their corresponding terms in alphabetical order below:
Since January 1, 1992, Medicare has paid for physicians' services under section 1848 of the Social Security Act (the Act), “Payment for Physicians” Services.” This section provides for three major elements: (1) A fee schedule for the payment of physicians' services; (2) limits on the amounts that nonparticipating physicians can charge beneficiaries; and (3) a sustainable growth rate (SGR) for the rates of increase in Medicare expenditures for physicians' services. The Act requires that payments under the fee schedule be based on national uniform relative value units (RVUs) that are based on the resources used in furnishing a service. Section 1848(c) of the Act requires that national RVUs be established for physician work, practice expense, and malpractice expense. Section 1848(c)(2)(B)(ii)(II) of the Act provides that adjustments in RVUs may not cause total physician fee schedule payments to differ by more than $20 million from what they would have been had the adjustments not been made. If adjustments to RVUs cause expenditures to change by more than
In the July 2000 proposed rule, (65 FR 44177), we listed all of the final rules published through November 1999. In the August 2001 proposed rule (66 FR 40372) we discussed the November 2000 final rule relating to the updates to the RVUs and revisions to payment policies under the physician fee schedule.
In the November 2001 final rule with comment period (66 FR 55246), we made revisions to resource-based practice expense RVUs; services and supplies incident to a physician's professional service; anesthesia base unit variations; recognition of Physicians' Current Procedural Terminology (CPT) tracking codes; and nurse practitioners, physician assistants, and clinical nurse specialists performing screening sigmoidoscopies. We also addressed comments received on the June 8, 2001 proposed notice (66 FR 31028) for the 5-year review of work RVUs and finalized these work RVUs. In addition, we acknowledged comments received in response to a discussion of modifier-62, which is used to report the work of co-surgeons. The November 2001 final rule also updated the list of services that are subject to the physician self-referral prohibitions in order to reflect CPT and Healthcare Common Procedure Coding System (HCPCS) code changes that were effective January 1, 2002. All these revisions ensure that our payment systems are updated to reflect changes in medical practice and the relative value of services. This final rule also conformed our regulations to reflect statutory provisions of Medicare, Medicaid, and State Child Health Insurance Program (SCHIP) Benefits Improvement and Protection Act of 2000 (Pub. L. 106-554) (BIPA) concerning: the mammography screening benefit; biennial screening pelvic examinations for certain beneficiaries; expanded coverage for screening colonoscopies to all beneficiaries; annual glaucoma screenings for high-risk beneficiaries; coverage for medical nutrition therapy services for certain beneficiaries; expanded payment for telehealth services; payment for certain Indian Health Service for some services under the physician fee schedule; and revision of the payment for certain physician pathology services.
In the December 31, 2002 final rule with comment period (67 FR 79966), we refined resource-based practice expense RVUs and made other changes to Medicare Part B policy. These included: The pricing of the technical component for positron emission tomography (PET) scans, Medicare qualifications for clinical nurse specialists, a process to add or delete services to the definition of telehealth, the definition for ZZZ global periods, global period for surface radiation, and application of endoscopic reduction rules for certain codes. In addition, this rule: Updated the codes subject to physician self-referral prohibitions, expanded the definition of a screening fecal-occult blood test, and modified our regulations to expand coverage for additional colorectal cancer screening tests through our national coverage determination process. We also made revisions to the SGR, the anesthesia conversion factor (CF), and the work values for some gastroenterologic services. We finalized the calendar year (CY) 2002 interim RVUs and assigned interim RVUs for new and revised procedure codes for CY 2003, clarified the enrollment of therapists in private practice and the policy regarding services and supplies incident to a physician's professional services, and made technical changes to the definition of outpatient rehabilitation services.
This final rule also revised the regulations at § 485.618 to allow registered nurses (RNs) to provide emergency care in certain critical access hospitals (CAHs) in frontier areas (an area with fewer than six residents per square mile) or remote locations (locations designated in a State's rural health plan that we have approved).
As required by statute this final rule also announced that the physician fee schedule update for CY 2003 was −4.4 percent, the initial estimate of the SGR for CY 2003 was 7.6 percent, and the CF for CY 2003 was $34.5920, effective March 1, 2003. However, on February 28, 2003 (68 FR 9567), after enactment of the Consolidated Appropriations Resolution of 2003 (Pub. L. 108-7), we published a final rule that revised the estimates used to establish the SGRs for fiscal years 1998 and 1999 and announced a 1.6 percent increase in the CY 2003 physician fee schedule CF for March 1 to December 31, 2003. The CF from March 1 to December 31, 2003 is $36.7856 and the anesthesia CF for this period is $17.05. All other provisions of the December 31, 2002 final rule were unchanged by the rule published February 28, 2003.
Under the formula set forth in section 1848(b)(1) of the Act, the payment amount for each service paid under the physician fee schedule is the product of three factors—(1) a nationally uniform relative value for the service; (2) a geographic adjustment factor (GAF) for each physician fee schedule area; and (3) a nationally uniform conversion factor (CF) for the service. The CF converts the relative values into payment amounts.
For each physician fee schedule service, there are three relative values—(1) an RVU for physician work; (2) an RVU for practice expense; and (3) an RVU for malpractice expense. For each of these components of the fee schedule, there is a geographic practice cost index (GPCI) for each fee schedule area. The GPCIs reflect the relative costs of practice expenses, malpractice insurance, and physician work in an area compared to the national average for each component.
The general formula for calculating the Medicare fee schedule amount for a given service in a given fee schedule area can be expressed as:
The CF for CY 2004 appears in section IX. The RVUs for CY 2004 are in Addendum B. The GPCIs for CY 2004 can be found in Addendum D.
Section 1848(e) of the Act requires us to develop GAFs for all physician fee schedule areas. The total GAF for a fee schedule area is equal to a weighted average of the individual GPCIs for each of the three components of the service. In accordance with the statute, however, the GAF for the physician's work reflects one-quarter of the relative cost of physician's work compared to the national average.
Approximately 7,500 codes represent services included in the physician fee schedule. The work RVUs established for the implementation of the fee schedule in January 1992 were developed with extensive input from the physician community. A research team at the Harvard School of Public Health developed the original work RVUs for most codes in a cooperative agreement with us. In constructing the vignettes for the original RVUs, Harvard worked with expert panels of physicians and obtained input from physicians from numerous specialties.
The RVUs for radiology services were based on the American College of Radiology (ACR) relative value scale,
Section 1848(c)(2)(C) of the Act required that the practice expense and malpractice expense RVUS equal the product of the base allowed charges and the practice expense and malpractice percentages for the service. Base allowed charges are defined as the national average allowed charges for the service furnished during 1991, as estimated using the most recent data available. For most services, we used 1989 charge data aged to reflect the 1991 payment rules, since those were the most recent data available for the 1992 fee schedule.
Section 121 of the Social Security Act Amendments of 1994 (Pub. L. 103-432), enacted on October 31, 1994, required us to develop a methodology for a resource-based system for determining practice expense RVUs for each physician service. As amended by the BBA, section 1848(c) required the new payment methodology to be phased in over 4 years, effective for services furnished in 1999, with resource-based practice expense RVUs becoming fully effective in 2002. The BBA also required us to implement resource-based malpractice RVUs for services furnished beginning in 2000.
In response to the publication of the August 15, 2003 proposed rule, (68 FR 49030), and the December 2002 interim final rule, (67 FR 79966), we received approximately 2,433 comments. We received comments from individual physicians, health care workers, and professional associations and societies. The majority of comments addressed the physician fee schedule proposals related to the dialysis G codes, “incident to” therapy services, and the geographic practice cost indices locality payment discussion issue.
The proposed rule discussed policies that affected the RVUs on which payment for certain services would be based. Certain changes implemented through this final rule are subject to the $20 million limitation on annual adjustments contained in section 1848(c)(2)(B)(ii)(II) of the Act.
After reviewing the comments and determining the policies we would implement, we have estimated the costs and savings of these policies and added those costs and savings to the estimated costs associated with any other changes in RVUs for 2004. We discuss in detail the effects of these changes in the Regulatory Impact Analysis in section XIII.
For the convenience of the reader, the headings for the policy issues correspond to the headings used in the August 15, 2003 proposed rule. More detailed background information for each issue can be found in the December 2002 interim final rule with comment period and the August 2003 proposed rule.
Section 121 of the Social Security Act Amendments of 1994 (Pub. L. 103-432), enacted on October 31, 1994, required us to develop a methodology for a resource-based system for determining practice expense RVUs for each physician's service beginning in 1998. In developing the methodology, we were to consider the staff, equipment, and supplies used in providing medical and surgical services in various settings. The legislation specifically required that, in implementing the new system of practice expense RVUs, we apply the same budget-neutrality provisions that we apply to other adjustments under the physician fee schedule.
Section 4505(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), enacted on August 5, 1997, amended section 1848(c)(2)(B)(ii) of the Act and delayed the effective date of the resource-based practice expense RVU system until January 1, 1999. In addition, section 4505(b) of the BBA provided for a 4-year transition period from charge-based practice expense RVUs to resource-based RVUs.
Further legislation affecting resource-based practice expense RVUs was included in the Medicare, Medicaid and State Child Health Insurance Program (SCHIP) Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113) enacted on November 29, 1999. Section 212 of the BBRA amended section 1848(c)(2)(B)(ii) of the Act by directing us to establish a process under which we accept and use, to the maximum extent practicable and consistent with sound data practices, data collected or developed by entities and organizations. These data would supplement the data we normally collect in determining the practice expense component of the physician fee schedule for payments in CY 2001 and CY 2002. (In the 1999 final rule (64 FR 59380), we extended, for an additional 2 years, the period during which we would accept supplementary data.)
Effective with services furnished on or after January 1, 1999, we established a new methodology for computing resource-based practice expense RVUs that used the two significant sources of actual practice expense data we have available—the Clinical Practice Expert Panel (CPEP) data and the American Medical Association's (AMA) Socioeconomic Monitoring System (SMS) data. The methodology was based on an assumption that current aggregate specialty practice costs are a reasonable way to establish initial estimates of relative resource costs for physicians' services across specialties. The methodology allocated these aggregate specialty practice costs to specific procedures and, thus, can be seen as a “top-down” approach.
A brief discussion of the major steps involved in the determination of the practice expense RVUs follows. (Please see the November 1, 2001 final rule (66 FR 55249) for a more detailed explanation of the top-down methodology.)
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(i) Direct costs—For direct costs (which include clinical labor, medical supplies, and medical equipment), we used the procedure specific CPEP data on the staff time, supplies, and equipment as the allocation basis.
(ii) Indirect costs—To allocate the cost pools for indirect costs, including administrative labor, office expenses, and all other expenses, we used the total direct costs combined with the physician fee schedule work RVUs. We converted the work RVUs to dollars using the Medicare CF (expressed in 1995 dollars for consistency with the SMS survey years).
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For services with physician work RVUs equal to zero (including the technical components of radiology services and other diagnostic tests), we created a separate practice expense pool using the average clinical staff time from the CPEP data and the “all physicians” practice expense per hour.
We then used the adjusted 1998 practice expense RVUs to allocate this pool to each service. We have removed services from the nonphysician work pool if the requesting specialty predominates utilization of the service. Also, for all radiology services that are assigned physician work RVUs, we used the adjusted 1998 practice expense RVUs for radiology services as an interim measure to allocate the direct practice expense cost pool for radiology specialties to the most appropriate SMS specialty.
Since many specialties identified in our claims data did not correspond exactly to the specialties included in the SMS survey data, it was necessary to crosswalk these specialties to the most appropriate SMS specialty.
Because we believe that most physical therapy services furnished in physicians' offices are performed by physical therapists, we crosswalked all utilization for therapy services in the CPT 97000 series to the physical and occupational therapy practice expense pool.
The nonphysician work pool is a special methodology that we used to determine practice expense RVUs for many services that do not have physician work RVUs. While the nonphysician work pool is of benefit to many of the services that were originally included, we have allowed specialties to request that their services be removed from the pool. Because the nonphysician work pool includes a variety of services performed by many different specialties, we use the “all physician” average practice expense per hour in place of a specialty-specific practice expense per hour.
As discussed in the August 15, 2003 proposed rule, we are continuing to study the alternatives that are available and any modifications to the nonphysician workpool would be published in proposed rulemaking.
As required by the BBRA, we established criteria to evaluate data collected by organizations to supplement the data normally used in determining the practice expense component of the physician fee schedule. We have required supplementary survey data to be submitted by August 1 to be considered for computing practice expense RVUs for the following year. We proposed to change the required submission date to March 1, which would allow us to publish our decisions regarding survey data in the proposed rule and provide an opportunity for public comment on survey results. We also proposed to extend for an additional 2 years the period for accepting survey data that meets the criteria set forth in the November 2000 final rule (as modified in the December 31, 2002 final rule). The deadline for submission of the supplemental data to be considered in CY 2005 and CY 2006 would be March 1, 2004 and March 1, 2005, respectively.
The College of American Pathologists (CAP) submitted supplemental survey data for independent laboratories for consideration for CY 2004. Our contractor, The Lewin Group, evaluated the data and has recommended acceptance.
While we typically assign all staff, equipment and supply costs for services with professional and technical components (PC and TC) to the technical portion of the service, in the proposed rule we discussed limited instances where it is appropriate to assign direct inputs to a PC service. We proposed to modify the practice expense methodology to allow direct inputs to be added to PC services when these inputs are clearly associated with the professional service, including when the PEAC makes such recommendations. Specifically we proposed to add the PEAC recommended staff times to the PC of the following cardiac services: CPT codes 93508, 93510, 93511, 93514, 93524, 93526, 93527, 93528, 93529, 93530, 93531, 93532, 93533 and 93624.
We use Medicare utilization data in the development of specialty-specific practice expense RVUs that are then weight averaged to determine a single practice expense RVU per code. Prior to 2003, we used the most recent complete year of utilization data to determine the practice expense RVUs. In the December 31, 2002 final rule (67 FR 79982), we adopted a policy of using the 1997 through 2000 Medicare utilization in the practice expense methodology. For new codes created since 2000, there are no Medicare utilization data. In the August 15, 2003 rule we proposed to follow a similar practice to the one described above and use specialty-specific Medicare utilization data for codes created after 2000 at the first opportunity they become available to us. Since we will not have any utilization data at the time we first establish practice expense RVUs for a new code, we proposed that we continue, whenever possible, to make an assumption about the specialty that will likely provide the service or to use the “all physician” average when we do not have sufficient information to assign any given specialty.
We believe the initial practice RVUs for photodynamic therapy were too high, because the later information on Medicare utilization indicates that we should have used the dermatology scaling factor which would have produced a lower practice expense value. As we indicate above, we are working to minimize changes that will occur in the practice expense RVUs for a service by making an initial assumption about which specialty will likely bill us for a service. However, we believe our policy for new codes should be consistent with how we determine the practice expense RVUs for existing codes, even if updates to the Medicare utilization data lead to increases or decreases in the practice expense RVUs.
Though we believe that it is appropriate to use the updated utilization that results in a reduction in payment for CPT code 96567, we will pay separately for the light activating agent beginning January 1, 2004. However, we are also further considering whether Medicare should pay separately for certain topical drugs in certain circumstances. Any change in policy would be discussed in future rulemaking.
The PEAC, a subcommittee of the RUC, has, since 1999, been providing us with recommendations for refining the direct practice expense inputs (clinical staff, supplies, and equipment) for existing CPT codes.
In the December 31, 2002 proposed rule, we responded to the PEAC recommendations for the refinement to the CPEP direct practice expense inputs for over 1200 codes, including refinements to codes from almost every major specialty. In addition, the recommendations included standardized times for office-based clinical staff for services provided during a patient's hospitalization and for discharge day management services, as well as pre-service clinical staff times for 323 neurosurgery procedures. We reviewed and accepted all of the recommendations. We received the following comments on these revisions.
In the August 15, 2003 proposed rule we included the PEAC recommendations from meetings held in September of 2002 and January 2003 as well as recommendations on the refinements to the clinical staff time for all 90-day global services. In addition, the PEAC convened a workgroup to make recommendations on the refinement of all the 116 remaining evaluation and management codes. We reviewed the submitted PEAC recommendations and proposed to accept them.
However, specialty societies representing chest physicians and thoracic physicians disagreed with our decision to change our previous practice of including the PEAC recommendations in the final, rather than the proposed rule, because this meant that the recommendations from the March PEAC meeting were not included for this year. The society argued that changing this long-standing policy without announcing it in the
CPT code 11450—missing 1 minute of staff time
CPT codes 10080, 10081, 11770, 12032, 12035, 12046, 12047, 21550, 21920, 37609, 38300, 45300-45327, and 46600-46615—missing correct number of gloves.
CPT codes 45900, 45905, 45910, 47382, 49320, 49321, 49322, 49422, 49429—supplies listed incorrectly—have nonfacility inputs when PEAC recommended none in office setting.
The American Academy of Family Physicians (AAFP) supported our acceptance of the PEAC recommendations for the E/M nursing facility services. The commenter noted that current practice expenses are higher for services provided in the non-SNF nursing facility than those provided in the SNF facility. The commenter contended that the direct practice expense inputs should not vary based on the type of nursing facility setting and supported the elimination of the current differential in the practice expense RVUs between the SNF and non-SNF facility setting.
However, the American Medical Directors Association (AMDA) representing long term care physicians, the American Geriatrics Society (AGS) and a health care management company, Health Essentials, all disagreed with our decision to accept the E/M nursing facility PEAC recommendations and asked us to reconsider our decision to implement them in 2004. The request to delay implementation was echoed by the American Academy of Home Care Physicians and AGS relating to the two E/M home visit codes.
The home care physicians argued that the PEAC recommendations for the two home visit codes are flawed because these codes have not yet been surveyed by the specialty performing this service. The commenters also contended that their views were not represented when the PEAC considered the refinements of the E/M home visit codes. Similarly, the AMDA noted that the PEAC workgroup responsible for formulating the recommendations for the nursing facility codes did not include long term care physicians. The AMA also commented on this issue and expressed concern that the PEAC recommendations did not include the views of all the relevant medical specialties and requested that we delay implementation of these E/M code recommendations to allow impacted medical specialties an opportunity to present new information to the PEAC.
In addition, the AMDA expressed concern regarding the current work RVUs for nursing home visit services.
With regard to the concern expressed about the work RVUs for the nursing home visits, in the 2004 final rule we will solicit recommendations on codes to be reviewed during the next 5-year review of work and we suggest that the society recommend review of these codes.
We use the practice expense inputs (the clinical staff, supplies, and equipment assigned to each procedure) to allocate the specialty-specific practice expense cost pools to the procedures
We contracted with a consultant to assist in obtaining current pricing information and also to recommend revisions to improve the uniformity and consistency of the CPEP supply database. On the basis of these recommendations, in the August 15, 2003 proposed rule, we proposed updates to the cost information for supplies in the database. In addition, we proposed the following database revisions:
We proposed that supplies be assigned to one of 14 categories.
We proposed combining items which appeared to be duplicative and modifiying descriptions using a key first word when possible for easier identification of items. For example, “mayo stand cover” and “drape, sterile Mayo” have both been changed to “drape, sterile, for Mayo stand.”
The current CPEP database contains over 72 unit descriptions associated with supplies (for example, item, gram, and cup). To provide consistency and ensure that inputs in the database accurately reflect the quantity of an item used, we proposed to standardize the unit description of items. We also proposed to specifically identify items intended for single use through the use of “uou” (unit of use) following the unit. These changes were reflected in Addendum D of the proposed rule.
There were also items that had not been identified or for which pricing information was not found that were included in Table 1 in the August 15 proposed rule. Items that we proposed to delete from the database were also identified in this table. We requested that commenters, particularly the relevant specialty groups, provide us with the needed pricing information with appropriate documentation. We also stated if we did not obtain verified pricing information for an item, it would be eliminated from the database.
The societies also disagreed with our contention that a Seldinger needle is reusable; rather a Seldinger needle is single-use and should not be removed as a supply item. It is the commenter's understanding that hospitals are not in the practice of resterilizing Seldinger needles.
While generally favoring reorganization of CMS' supply listing for ease of use and not directly opposed to supply categories, one of the commenters was concerned over the potential loss of granularity of cost data associated with the use of supply categories and would oppose the averaging of costs for the supply categories unless it is appropriate to average from a cost and clinical standpoint. A similar comment was sent by the radiology specialty society.
With regard to the comment on the use of “unit of use,” we selected the “unit of use” (uou) term to indicate any item that is packaged for single use, even if the item is not completely used up. This most often occurs with items that are packaged sterile. For example, “bacitracin (0.9gm uou)” refers to one 0.9gm foil package. The quantity entered would be 1 and not a smaller amount such as 0.3. Once this foil package is broken, it is considered “used up” and therefore the unit of use is 0.9gm. Specifically, any item with a “unit of use” designation is meant to be indicated in whole number “unit of use” quantities, not partials (
The following table, “Table 1 Items Needing Specialty Input,” lists those items on which we had requested specialty input, comments we received and the actions we are taking.
We proposed to assign, on an interim basis, the following practice expense inputs to CPT code 99183,
The additional supplies requested include disinfectant for cleaning the hyperbaric chamber after each patient, two otoscope covers to check patients' ears pre and post treatment, and a denture cup and urinal. An additional 24 minutes of clinical staff time (using the standard staff blend) was also requested for preparing the room, greeting and gowning the patient, patient education, taking vital signs before and after treatment, positioning the patient and cleaning the room.
We proposed to eliminate the special practice expense pool for maxillofacial prosthetic services and to use otolaryngology as the crosswalk for oral surgeons and maxillofacial surgeons as a more appropriate approximation of the specialties' practice expense per hour.
We proposed revising the practice expense inputs for holter monitoring codes to remove items that were not needed to perform the services. Specifically, we proposed deleting the ECG electrodes and laser paper, as well as the electric bed, computer and holter monitor from CPT codes 93225 and 93231 and deleting the razor, nonsterile gloves, alcohol swab and tape, as well as the electric bed and exam table from CPT codes 93226 and 93232.
We also received a comment from the RUC stating that the direct practice expense inputs for these above holter monitoring services will be reviewed by the PEAC at the January 2004 meeting.
A manufacturer of endoscopic and surgical supplies and equipment expressed concern that several urology services which had previously been priced in the non-facility setting, are no longer priced in that setting. The commenter contended that the procedures can be performed safely in the office and that patients will be forced to go to a hospital or ambulatory surgical center for these procedures if the office payment does not reflect the direct costs incurred by the physician. The services in question are three cystourethroscopy procedures, CPT codes 52224, 52275, 52276, and two destruction of penile lesion procedures, CPT codes 54057 and 54065.
A consultant representing non-hospital based providers of LDL apheresis, CPT code 36516, requested that we price this procedure in the nonfacility setting and provided some cost data for this code. The commenter stated that this procedure is commonly provided outside of hospitals. A medical technology company requested that we price the percutaneous implantation of neurostimulator electrodes procedure, CPT code 64561, in the nonfacility setting. This service had previously been priced in the office.
In 1997, CPT created new codes to differentiate between open and percutaneous abscess drainage. Unlike their open procedure counterparts, all of the percutaneous codes were assigned a global period of 000 days with no follow-up visits assigned. However, CMS crosswalked the direct inputs from the open codes, which have a different global period, to the percutaneous codes, including the time assigned for post-procedure office visits. The percutaneous abscess drainage codes identified are CPT codes 32201, 44901, 47011, 48511, 49021, 49041, 49061, 50021, 58823. The comment stated that each of these codes is currently priced in the facility setting only. Because these procedures are predominately performed in the inpatient setting, the comment further recommended that we assign zero direct practice expense inputs for these codes.
The commenter also pointed out that CPT code 67875, Closure of eyelid by suture, has an assigned global period of 000 and includes no post-procedure visits in the work relative value. However, the original CPEP process appears to have assigned the code clinical staff time, supplies, and equipment related to a follow up visit.
In response to the commenter's work RVU concern, next year's final rule will solicit recommendations of codes to be considered for review under the five-year review of work that is to occur in 2005.
The Act requires that payments vary among Medicare physician fee schedule (MPFS) areas according to the extent that resource costs vary, as measured by the Geographic Practice Cost Indices (GPCIs). Section 1848(e)(1)(C) of the Act requires us to review, and, if necessary, adjust the GPCIs at least every 3 years. This section of the Act also requires us to phase in the adjustment and implement only
The malpractice GPCI is the most volatile of the three indices with relatively large variations existing between geographic payment localities. We proposed using actual 1999 through 2002 malpractice premium data and forecasting the malpractice premium rates for 2003. We were unable to include proposed malpractice GPCIs based upon this revised malpractice premium data in the August 15, 2003 proposed rule because we were still in the process of collecting the data. We stated that the revised malpractice GPCIs published in this year's final physician fee schedule regulation would be considered interim and subject to public comment.
For purposes of the 2004 update to the malpractice GPCIs we collected actual malpractice premium data for years 1999 through 2001. For 2002 we were able to obtain actual malpractice premium data for 32 states plus Puerto Rico. Where actual malpractice premium data were obtained, premiums were collected from the 20 physician specialties with the largest share of total Medicare RVUs for 2002. Premiums were collected from those insurers with the largest market share and those insurers that when summed with other large insurers comprised at least 50 percent of the state market share for claims-made policies with a $1 million individual case limit and $3 million aggregate case limit.
For those 18 states plus the District of Columbia for which we were unable to obtain actual 2002 premium data, we estimated the 2002 premium based upon an examination of growth rates from 1999 to 2001.
Malpractice premium data were not available for 2003. Two statistical approaches were examined to forecast 2003 malpractice premiums, simple extrapolation and projections based upon the average of historical year-to-year changes (mean rate of change). In most instances, the forecast 2003 premiums were similar using either approach. There was a tendency for the linear extrapolation method to yield slightly more extreme values (positive and negative) so the more conservative, mean rate of change approach was chosen.
The current methodology projects 2003 malpractice premiums based upon actual malpractice premiums for 1999 through 2002. Since we will continue to collect updated malpractice premium data, we do not think it is appropriate to project through 2004 absent actual 2003 malpractice premium data.
Acquiring data on malpractice insurance rates and using that data to adjust Medicare payments for future malpractice insurance prices is a difficult task. Malpractice insurance rates are quite volatile due to a variety of factors. Some of these factors are changes in State insurance laws, business decisions of malpractice insurance carriers, and changes in how medicine is practiced.
The volatility of malpractice premium data was quite evident in the data we collected in conducting our review of malpractice GPCIs. Based on these data and the comments received on the August 15, 2003 proposed rule, we have modified some of our GPCI calculations and assumptions.
We are very concerned about implementing sharp changes in malpractice GPCIs for 2004, which directly impact physician fee schedule payment amounts. At the same time, we recognize the importance of updating malpractice GPCIs to ensure local differences in physician costs are included in payment amounts. To be sensitive to both of these considerations, we decided to apply a modulating factor of .5 to the changes in the malpractice GPCIs. In other words, as part of our review and analysis of the malpractice GPCIs, we reduced the difference between the new and previous malpractice GPCIs by 50 percent.
As directed by the statute, we will implement
In the August 15, 2003 proposed rule we requested comments on the composition of the current 89 Medicare physician payment localities to which the GPCIs are applied.
The November 1, 2001 final rule (66 FR 55269) included a discussion of CPT Category III codes (also known as CPT tracking codes) and stated that carriers have discretion for coverage and payment of services described by these CPT tracking codes unless we have made a national coverage determination (NCD). We have received requests to create national payment amounts for some CPT tracking codes even if there has been no NCD. Based on these requests, we proposed to change our policy regarding payment for CPT tracking codes and create national payment policy and determine national payment amounts for CPT tracking codes when there is a significant programmatic need for us to do so. This policy change would not change the contractor's discretion over coverage for the CPT tracking codes, but could establish a payment level to be used if the contractor finds that coverage is warranted. In addition, carriers would not be required to establish a payment amount for a tracking code until they receive a claim for the code.
We will finalize our proposal to create national payment policies and determine national payment amounts for CPT tracking codes when there is a significant programmatic need for us to do so. We note that, as discussed in the August 15, 2003 proposed rule, this policy change would not change the contractor's discretion over coverage for CPT tracking codes, but would establish a payment level if the contractor finds that coverage is warranted.
The definitions for excision of benign lesions (CPT codes 11400 through 11446 inclusive) and excision of malignant lesions (CPT codes 11600 through 11646 inclusive) were substantively changed for 2003. These codes are now reported based on the excised diameter (actual skin removed) rather than on the size of the lesion. Based on these changes to the code descriptors, we proposed to make the work RVUs the same for removal of all skin lesions with the same excised diameters that are from the same area of the body, whether the lesions are benign or malignant. For example, the work RVUs for the removal of benign skin lesions from the trunk, arms or legs with excised diameter 1.1-2.0 cm, CPT code 11402, would be the same as the work RVUs for CPT code 11602, which is the removal of
As explained in the August 15, 2003 proposed rule, technological advances have made cardiac telemetry equipment, typically used in hospitals, available in the home setting. Coverage of this technology is currently at the discretion of the local Medicare contractors because there is no national coverage determination for this service. We proposed to establish new HCPCS codes to specifically describe this service along with proposed RVUs and PE inputs for payment as follows:
We proposed 0.52 physician work RVUs and 0.24 malpractice RVUs for this service and proposed crosswalking the practice expense inputs from CPT Code 93268
GXXX2—
We proposed 0.07 malpractice RVUs and crosswalked the practice expense inputs from CPT Code 93270,
GXXX3—
We proposed 0.15 malpractice RVUs and crosswalked the practice expense inputs from CPT Code 93271,
We proposed 0.52 physician work RVUs and 0.02 malpractice RVUs and also crosswalked the practice expense inputs, from
The commenters recommended that we allow this technology to be utilized on a local level before implementing a national coding solution. The commenters further supported that when this new technology warrants a national coding solution, a CPT coding application should be initiated and then the code should be sent to the RUC for review. The commenting specialties stated their willingness to provide medical input into the evaluation, coding and reimbursement for this new technology. Two commenters also stated that the descriptors and the proposed reimbursement do not reflect the monitoring systems that have been developed. Other commenters also requested that we withdraw or reconsider our proposal, as it did not follow the established process for creating and valuing new codes. One specialty society representing clinical endocrinologists supported the establishment of these HCPCS codes, while another commenter, a cardiac monitoring company, provided a general outline of how the various cardiac monitoring technologies can best be used for maximum quality and value. Another commenter suggested that until efficiency of the new technology is demonstrated this proposal should be postponed.
Flow cytometry is a technique to analyze single cell suspensions from blood, bone marrow, body fluids, lymph nodes, and other tissues. The technique, currently coded as CPT code 88180,
In the August 15, 2003 rule, we proposed to make CPT codes 90918, 90919, 90920, and 90921 for the monthly capitation payments (MCP) invalid for Medicare. We also proposed to create 3 new G codes in place of each CPT code with payments varying with the number of visits provided within each month to an end stage renal disease (ESRD) patient. Under our proposal, there would be separate codes when the physician provides 1 visit per month, 2-3 visits per month and 4 or more visits per month. The code for 1 visit per month would have the lowest payment while a higher payment will be provided for 2 to 3 visits per month and the highest payment for 4 or more visits per month. These new codes would be reported once per month for services performed in an outpatient setting that are related to the patient's ESRD. These physician services would continue to include the establishment of a dialyzing cycle, outpatient evaluation and management of the dialysis visits, telephone calls, and patient management provided during a full month. These codes would not be used if a hospitalization occurred during the month.
The proposed codes are as follows:
GXXX5—End Stage Renal Disease (ESRD) related services per full month, for patients under 2 years of age to
GXXX6—End Stage Renal Disease (ESRD) related services per full month, for patients under 2 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 2 or 3 face-to-face physician visits per month.
GXXX7—End Stage Renal Disease (ESRD) related services per full month, for patients under 2 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 1 face-to-face physician visit per month.
GXXX8—End Stage Renal Disease (ESRD) related services per full month, for patients between 2 and 11 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 4 or more face-to-face physician visits per month.
GXXX9—End Stage Renal Disease (ESRD) related services per full month, for patients between 2 and 11 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 2 or 3 face-to-face physician visits per month.
GXX10—End Stage Renal Disease (ESRD) related services per full month, for patients between 2 and 11 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 1 face-to-face physician visit per month.
GXX11—End Stage Renal Disease (ESRD) related services per full month, for patients between 12 and 19 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 4 or more face-to-face physician visits per month.
GXX12—End Stage Renal Disease (ESRD) related services per full month, for patients between 12 and 19 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 2 or 3 face-to-face physician visits per month.
GXX13—End Stage Renal Disease (ESRD) related services per full month, for patients between 12 and 19 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 1 face-to-face physician visit per month.
GXX14—End Stage Renal Disease (ESRD) related services per full month, for patients 20 years of age and over; with 4 or more face-to-face physician visits per month.
GXX15—End Stage Renal Disease (ESRD) related services per full month, for patients 20 years of age and over; with 2 or 3 face-to-face physician visits per month.
GXX16—End Stage Renal Disease (ESRD) related services per full month, for patients 20 years of age and over; with 1 face-to-face physician visit per month.
We based the proposed payments on the assumption that many physicians would provide 4 or more visits to their ESRD patients and a smaller proportion would provide 2-3 visits or only 1 visit per month. Using Medicare utilization data from 2002, we proposed the following relative value units for the new G codes that would make Medicare's aggregate payments for ESRD related services under the physician fee schedule approximately equal to current payments for procedure codes 90918 to 90921:
As part of the proposed rule we also solicited comments on how to further revise our payment methodology to improve quality of care and outcomes. We requested information that could help us design future demonstrations that would study both dimensions of care (quality and utilization) and help ensure that payment is based on appropriate patient-specific care that has been shown to lead to improved outcomes for this complex patient population.
Many comments concerned the large variation in proposed payments to physicians who see a patient only once a month, compared to the proposed payment for seeing a patient either two or three times during the month or four or more times during the month. In addition, commenters stated there is more work involved in managing care of the ESRD patients between visits.
First, we determined the appropriate relative relationship among different codes. For instance, we believe that approximately 25 percent more physician work is involved with providing two to three visits than with a single visit, and 50 percent more physician work is associated with providing four or more visits. By paying a single amount regardless of how often the patient is seen, we believe our current policy pays too much if the patient is seen fewer than four times per month. Thus, we revised our payment to be consistent with different levels of physician work associated with providing monthly management of dialysis patients. We are setting our aggregate revised payments equal to aggregate current payments. Consistent with these assumptions, we determined the following RVUs:
We used the above principles to establish our monthly capitation payments (MCP) for patients 20 or older. For patients younger than 20, we are using the same relationship that exists among the current MCP codes for different age groups for the new codes that we are creating. For example, the current MCP code for a patient under 2 (CPT code 90918) has work RVUs that are approximately 2.5 times the work RVU for a patient 20 or older (CPT code 90921). Thus, Medicare's work RVU for each code for a patient 2 years or younger will be 2.5 times the amount of the corresponding service provided to a patient 20 or older. These values can be considered as interim and we plan to seek the advice of the RUC in evaluating these codes once the policy has been implemented. There are efforts underway (for example, in their 2004 workplan, the OIG has indicated they will conduct a review of ESRD monthly capitation payments and physician services) which will provide data on the type frequency and content of physician
We received comments regarding the impact of these proposed changes on the sustainable growth rate (SGR) calculations. Commenters expressed concern that, if physician behavior changes and physicians increase the number of visits provided per month, actual expenditures would surpass the target projection, resulting in a future payment reduction for all of medicine.
Many comments were received regarding home dialysis because patients who dialyze at home typically see their physicians less frequently than other ESRD patients. One commenter suggested that home dialysis patients be excluded from the proposed change and that we continue to pay the current MCP rate for services to these patients.
The new G codes for the monthly management of home dialysis patients will be as follows:
G0320—End stage renal disease (ESRD) related services for home dialysis patients per full month; for patients under two years of age to include monitoring for adequacy of nutrition, assessment of growth and development, and counseling of parents.
G0321—End stage renal disease (ESRD) related services for home dialysis patients per full month; for patients two to eleven years of age to include monitoring for adequacy of nutrition, assessment of growth and development, and counseling of parents.
G0322—End stage renal disease (ESRD) related services for home dialysis patients per full month; for patients twelve to nineteen years of age to include monitoring for adequacy of nutrition, assessment of growth and development, and counseling of parents.
G0323—End stage renal disease (ESRD) related services for home dialysis patients per full month; for patients twenty years of age and older.
The American Society of Nephrology also commented that “reimbursement should be constructed so that home dialysis patients should see their nephrologist at least monthly, with further visits on an as needed basis.” We will not specify the frequency of required visits at this time but expect physicians to provide clinically appropriate care to manage the home dialysis patient.
If home dialysis patients are hospitalized during the month, four new G codes have been created: G0324, G0325, G0326, and G0327. These codes will be used to report daily management of home dialysis patients for the days the patient is not in the hospital. CPT codes 90922, 90923, 90924, and 90925 will be considered inactive for Medicare because they are now redundant as other codes are to be used by physicians billing for services to ESRD patients.
The new G codes are as follows:
G0324—End stage renal disease (ESRD) related services for home dialysis (less than full month), per day; for patients under two years of age.
G0325—End stage renal disease (ESRD) related services for home dialysis (less than full month), per day; for patients between two and eleven years of age.
G0326—End stage renal disease (ESRD) related services for home dialysis (less than full month), per day; for patients between twelve and nineteen years of age.
G0327—End stage renal disease (ESRD) related services for home dialysis (less than full month), per day; for patients twenty years of age and over.
For example, if a home dialysis patient is in the hospital for 10 days (counting the calendar day of admission and the calendar day of discharge) and is cared for 20 days in his or her home, then 20 units of the code for the appropriate aged patient is billed.
If a home dialysis patient receives dialysis in a dialysis center or other facility during the month, the physician is still paid the management fee for the home dialysis patient and cannot bill the codes in the range of G0308 through G0319 or CPT codes 90935 or 90937, even though the physician may see the patient during his/her center dialysis.
We received comments about the role of nonphysician practitioners. It was not clear to the commenters whether visits by these practitioners could count as face-to-face encounters by the MCP physician. The commenters also asked about billing by physicians (for example, a “rounding” physician or fellow) other than the physician who is billing the monthly capitation rate.
It is also possible for the physician to use another physician to provide some of the visits during the month, but the physician who provides the complete assessment, establishes the patient's plan of care and provides the ongoing management should be the physician who submits the bill for the monthly service. The non-MCP physician must have a relationship with the billing physician such as a partner, employees of the same practice, or supervising physician and fellow doing sub-specialty training.
Each practitioner should document in a shared medical record services he/she personally performed. Only one practitioner can bill for the management of the ESRD patient in any month. In addition, when a nonphysician practitioner or a “rounding physician” sees a dialysis patient for management of ESRD, they cannot bill an evaluation and management service for the same patient unless there is a separate, substantial and documented service evaluating the patient for care unrelated to the patient's dialysis.
Commenters indicated that the lack of geographic considerations would negatively impact physicians and patients in rural and some urban settings where physician visits require significant travel time. Extended travel time can make it difficult for physicians to see patients as often as patients can be seen when the physician's office is near the dialysis facility.
Commenters noted that the proposed rule did not provide enough detail regarding alternative billing procedures if hospitalization occurs during the month.
G0308—End Stage Renal Disease (ESRD) related services during the course of treatment, for patients under 2 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 4 or more face-to-face physician visits per month.
G0309—End Stage Renal Disease (ESRD) related services during the course of treatment, for patients under 2 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 2 or 3 face-to-face physician visits per month.
G0310—End Stage Renal Disease (ESRD) related services during the course of treatment, for patients under 2 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 1 face-to-face physician visit per month.
G0311—End Stage Renal Disease (ESRD) related services during the course of treatment, for patients between 2 and 11 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 4 or more face-to-face physician visits per month.
G0312—End Stage Renal Disease (ESRD) related services during the course of treatment, for patients between 2 and 11 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 2 or 3 face-to-face physician visits per month.
G0313—End Stage Renal Disease (ESRD) related services during the course of treatment, for patients between 2 and 11 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 1 face-to-face physician visit per month.
G0314—End Stage Renal Disease (ESRD) related services during the course of treatment, for patients between 12 and 19 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 4 or more face-to-face physician visits per month.
G0315—End Stage Renal Disease (ESRD) related services during the course of treatment, for patients between 12 and 19 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 2 or 3 face-to-face physician visits per month.
G0316—End Stage Renal Disease (ESRD) related services during the course of treatment, for patients between 12 and 19 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 1 face-to-face physician visit per month.
G0317—End Stage Renal Disease (ESRD) related services during the course of treatment, for patients 20 years of age and over; with 4 or more face-to-face physician visits per month.
G0318—End Stage Renal Disease (ESRD) related services during the course of treatment, for patients 20 years of age and over; with 2 or 3 face-to-face physician visits per month.
G0319—End Stage Renal Disease (ESRD) related services during the course of treatment, for patients 20 years of age and over; with 1 face-to-face physician visit per month.
In addition we have created the following G codes for home dialysis patients:
G0320—End stage renal disease (ESRD) related services for home dialysis patients per full month; for patients under two years of age to include monitoring for adequacy of nutrition, assessment of growth and development, and counseling of parents.
G0321—End stage renal disease (ESRD) related services for home dialysis patients per full month; for patients two to eleven years of age to include monitoring for adequacy of nutrition, assessment of growth and development, and counseling of parents.
G0322—End stage renal disease (ESRD) related services for home dialysis patients per full month; for patients twelve to nineteen years of age to include monitoring for adequacy of nutrition, assessment of growth and development, and counseling of parents.
G0323—End stage renal disease (ESRD) related services for home dialysis patients per full month; for patients twenty years of age and older.
G0324—End stage renal disease (ESRD) related services for home dialysis (less than full month), per day; for patients under two years of age.
G0325—End stage renal disease (ESRD) related services for home dialysis (less than full month), per day; for patients between two and eleven years of age.
G0326—End stage renal disease (ESRD) related services for home dialysis (less than full month), per day; for patients between twelve and nineteen years of age.
G0327—End stage renal disease (ESRD) related services for home dialysis (less than full month), per day; for patients twenty years of age and over.
Medicare payment under the physician fee schedule for the physician work is the same in all practice settings. However, the practice expenses are reimbursed differently depending on the practice site. Practice expenses associated with procedures performed in the outpatient departments (OPDs) or ambulatory surgical centers (ASCs) are paid under the OPD or ASC payment system respectively. Practice expenses associated with procedures performed in the physician's office are paid through the physician fee schedule payment system.
In the August 15, 2003 rule we proposed to adopt the definition of diabetes used to determine beneficiary eligibility for Medical Nutrition Therapy (MNT) for purposes of coverage for outpatient diabetes self-management training when the beneficiary has a diagnosis of diabetes. Specifically, we stated that the criteria currently set forth at § 410.141(d), would be replaced with definition of diabetes used for medical nutrition therapy at § 410.130 which reads as follows:
A technical error in the proposed rule on page 49070, placed the revised eligibility requirements in § 410.141(f). The eligibility requirements will replace those currently in § 410.141(d).
In almost all settings, our regulations specify that outpatient therapy services can be delivered only by qualified physical therapists, occupational therapists, physical therapy assistants, occupational therapy assistants, and speech-language pathologists as defined by § 484.4. Section 1862(a)(20) of the Act requires that any therapy services furnished incident to a physician's professional services must meet the standards and conditions that would apply to such therapy services if they were furnished by a therapist, with the exception of the licensing requirement. While there are currently no national standards for qualifications of individuals providing outpatient therapy services incident to physicians' services, we believe that standards similar to those in § 484.4 are appropriate. In the proposed rule, we stated that we are considering adopting the existing qualification and training standards (with the exception of licensure) in § 484.4 for individuals providing therapy services independently and incident to physicians' services. While we did not propose a change at this time, we requested comments from the public, particularly physicians and staff who would be affected, on adoption of the existing standards in § 484.4, for services of independent therapists and “incident to” services, as well as comments regarding alternatives that we might use to ensure that qualified staff are providing “incident to” therapy services.
We received comments from major therapy organizations and individual therapists representing therapy services, physician organizations and individual physicians and associations and individuals representing other health care professionals, such as athletic trainers, kinesiotherapists and exercise physiologists. A wide spectrum of views was expressed by these commenters. Commenters representing therapists were supportive of establishing consistent training standards in all settings, while physicians favored reliance on the individual physician for quality control. The non-therapist health care providers were concerned about their role in providing therapy services and cardiac rehabilitation and pulmonary service providers were concerned that their services might be affected.
We will review and consider these comments as we determine whether to make a future proposal. Meanwhile, contractors may continue to develop local medical review policies that are consistent with the statute, applying to physical therapy, occupational therapy and speech-language pathology services the same standards and conditions that would apply to such therapy services if they were furnished by an independent therapist, with the exception of the licensing requirement.
In the December 2002 final rule, we modestly increased the work of anesthesia services. These changes were based on the analysis submitted by the RUC of its review of the work of 19 high volume anesthesia codes. The RUC had provided us with its analysis but did not furnish us with a definitive recommendation. The increase in anesthesia work resulted in an increase in the national anesthesia conversion factor. (We increased the physician work component of the anesthesia conversion factor by 2.10 percent to reflect a 9.13 percent increase in anesthesia work applied to 23 percent of anesthesia allowed charges represented by the 19 codes. As a result of this increase, we applied a 1.6 percent increase to the anesthesia CF.) The American Society of Anesthesiologists expressed concern about the completeness of the review of anesthesia codes under the five-year review. Therefore, in February 2003 we asked the RUC to continue its review of anesthesia work values so that we could develop a final recommendation for a change in the anesthesia CF involving all anesthesia codes. In the proposed rule we stated we were waiting on the RUC's response to our request.
The RUC has spent a considerable amount of effort of studying this issue. The RUC's anesthesia workgroups consisted of a range of physician specialists, including various surgical specialists, who have knowledge about the anesthesia services studied. As a result of their review, the RUC approved and presented the following recommendations to CMS:
1. The RUC position is that the 5-year review has been completed.
2. The RUC anesthesia workgroup analysis only applies to the 19 anesthesia codes and associated 19 surgical codes.
3. The Workgroup recommendations to the RUC stated that there are structural differences between the anesthesia coding system and the remainder of the physician coding system, which contributes to the difficulties in making extrapolations to the entire set of anesthesia services. Among other things, the workgroups and the RUC were concerned that the anesthesia codes cover too large a number of surgical codes making it necessary to examine surgical codes within the anesthesia code, and the 19 selected anesthesia codes may not be the most representative codes.
The ASA disagrees with the RUC's recommendations and asked that we extrapolate from the 19 surveyed procedures to all anesthesia codes.
When we developed the 2002 final physician fee schedule rule on the second five-year review, one of our concerns was that the RUC's initial findings were not presented as specific recommendations. We wanted to pursue approaches consistent with RUC recommendations. Therefore, in early 2003, we asked the RUC to more clearly present their recommendations.
Based on our review of the history and analysis of this issue and the final recommendation of the RUC, we have decided not to extrapolate from the surveyed procedures to the entire universe of anesthesia procedures; we will make no further adjustments to anesthesia work under the second five-year review.
There are differences in Medicare payment policies between a teaching anesthesiologist involved with two concurrent cases with residents and a teaching CRNA involved with two concurrent cases with student nurse anesthetists.
Currently, if a teaching anesthesiologist is involved with two concurrent cases with anesthesia residents, the medical direction rules apply. Payment for the physician's medical direction is based on 50 percent of the allowance otherwise allowed if the anesthesiologist performed the anesthesia case alone.
For anesthesia services furnished prior to July 1, 2002, we allowed full payment if a non-medically directed certified registered nurse anesthetist (CRNA) supervised a single case involving a student nurse anesthetist. No payment was made if the teaching CRNA supervised two cases involving student nurse anesthetists. In August 2002, we released the Medicare Carriers Manual Transmittal 1766 relating to the involvement of a non-medically directed teaching CRNA with two student nurse anesthetists. The American Association of Nurse Anesthetists (AANA) noted that their standards for approved nurse anesthesia training programs allow the teaching CRNA to supervise two concurrent cases involving student nurse anesthetists. The new policy allows the teaching CRNA to be paid, for his/her involvement with two concurrent cases with student nurse anesthetists, but not at the full fee level. If a teaching CRNA is involved with two concurrent cases with student nurse anesthetists, payment may be based on the base unit plus the time that the teaching CRNA is present with the student nurse anesthetist. To bill the base unit, the teaching CRNA must be present with the student nurse anesthetist throughout the pre- and post-anesthesia care. This payment per case is usually higher than the 50 percent paid to the teaching anesthesiologist for medically directing resident cases.
In the proposed rule, we asked for comments on the appropriateness of applying the CRNA teaching/resident policy to teaching anesthesiologists.
The ASA requested that, at least, in the interim, we allow teaching anesthesiologists to be paid similarly to teaching CRNAs for two concurrent cases. However, ASA specifically requested that this policy be used in addition to the current medical direction payment policy. In other words, the ASA wants the teaching anesthesiologist to be able to choose case-by-case, whether to seek payment similar to the teaching CRNA (that is, full base units and time units based only on actual presence with the resident) or based on the medical direction rules (that is, 50 percent of the full base and time units).
According to the ASA, a number of anesthesiology department heads believe the nurse anesthesia payment rule is not appropriate to the teaching of already-licensed physicians. They question the need for the teaching physician to participate in the pre- and post-op anesthesia care (to obtain full base units), they think that participation of the teaching anesthesiologist in the key portions of the procedure is far more important than the number of minutes present with the resident (which is the relevant consideration under the teaching physician policy for a single case with a resident).
We have decided to allow teaching anesthesiologists to bill, similarly to teaching CRNAs, for their involvement in two concurrent cases involving residents. This will apply to anesthesia services furnished on or after January 1, 2004.
The anesthesiologist can bill base units and actual time, based on the amount of time the physician is present with the resident during each of two concurrent cases. To bill base units, the physician must be present with the resident during the pre- and post-anesthesia care included in the base units. If the physician is not present with the resident during the pre- and post-anesthesia care, the physician may bill the case as a medically directed case.
The anesthesiologist must document his/her involvement in cases with anesthesia residents. The documentation must be sufficient to support the payment of the fee and available for review upon request. We have revised § 414.46 to incorporate this change.
CPT Code 96155
This code describes a visit with a patient's family without the patient being present and was first included in the November 1, 2001 final rule. It was incorrectly listed as an active code for which payment could be made under the physician fee schedule. Our longstanding payment policy is that we do not pay for visits with family where the patient is not present. Payment for such visits is included in the pre- and post-service work of a visit where the patient is present. Consistent with this policy, this code is not payable under the physician fee schedule.
Section 1834(d)(3) of the Act requires that the payment amount for a screening colonoscopy be set at the level for a
In addition, several commenters urged CMS to resolve the process issues associated with publishing the proposed and final rule. They indicated that the delayed publication of the proposed rule, combined with missing information from addendums and impact tables, makes review and analysis problematic. The commenters also expressed concern that CMS has insufficient time to evaluate public comments and this is contrary to the spirit of the Administrative Procedures Act.
Furthermore, the statute does not provide that the comment period commences with publication in the
Section IV.B of this final rule describes the methodology used to review the comments received on the RVUs for physician work and the process used to establish RVUs for new and revised CPT codes. Changes to codes on the physician fee schedule reflected in Addendum B are effective for services furnished beginning January 1, 2004. The tables and discussions in this section concerning the work RVUs do not reflect the effect of the adjustment to work RVUs to match the MEI weights as discussed in section VI. The referenced work RVUs may differ from the work RVUs in Addenda B and C that reflect this adjustment.
Our December 31, 2002 final rule (67 FR 79966) announced the final work RVUs for Medicare payment for existing procedure codes under the physician fee schedule and interim RVUs for new and revised codes. The RVUs contained in the final rule applied to physician services furnished beginning March 1, 2003. We announced that we considered the RVUs for the interim codes to be subject to public comment under the annual refinement process. In this section, we summarize the refinements to the interim work RVUs published in the December 2002 final rule and our establishment of the work RVUs for new and revised codes for the 2004 physician fee schedule.
Although the RVUs in the December 2002 final rule were used to calculate 2003 payment amounts, we considered the RVUs for the new or revised codes to be interim. We accepted comments for a period of 60 days. We received substantive comments from many individual physicians and several specialty societies on approximately 10 CPT codes with interim work RVUs. Only comments on codes listed in Addendum C of the December 2002 final rule were considered.
To evaluate these comments we used a process similar to the process used in 1997. (See the October 31, 1997 final rule (62 FR 59084) for the discussion of refinement of CPT codes with interim work RVUs.) We convened a multispecialty panel of physicians to assist us in the review of the comments. The comments that we did not submit to panel review are discussed at the end of this section, as well as those that were reviewed by the panel. We invited representatives from the organization from which we received substantive comments to attend a panel for discussion of the code on which they had commented. The panel was moderated by our medical staff, and consisted of the following voting members:
• One or two clinicians representing the commenting organization.
• One primary care clinician nominated by the American College of Physicians/American Society of Internal Medicine.
• Four carrier medical directors.
• Four clinicians with practices in related specialties, who were expected to have knowledge of the service under review.
The panel discussed the work involved in the procedure under review in comparison to the work associated with other services under the physician fee schedule. We assembled a set of 300 reference services and asked the panel members to compare the clinical aspects of the work of the service a commenter believed was incorrectly valued to one
We then analyzed the ratings based on a presumption that the interim RVUs were correct. To overcome this presumption, the inaccuracy of the interim RVUs had to be apparent to the broad range of physicians participating in each panel.
Ratings of work were analyzed for consistency among the groups represented on each panel. In addition, we used statistical tests to determine whether there was enough agreement among the groups of the panel and whether the agreed-upon RVUs were significantly different from the interim RVUs published in Addendum C of the December 2002 final rule. We did not modify the RVUs unless there was a clear indication for a change. If there was agreement across groups for change, but the groups did not agree on what the new RVUs should be, we eliminated the outlier group and looked for agreement among the remaining groups as the basis for new RVUs. We used the same methodology in analyzing the ratings that we first used in the refinement process for the 1993 physician fee schedule. The statistical tests were described in detail in the November 25, 1992 final rule (57 FR 55938).
Our decision to convene multispecialty panels of physicians and to apply the statistical tests described above was based on our need to balance the interests of those who commented on the work RVUs against the redistributive effects that would occur in other specialties.
We also received comments on RVUs that were interim for 2003, but for which we did not submit the RVUs to the panel for review for a variety of reasons. These comments and our decisions on those RVUs commented upon are discussed in further detail below.
The table below lists those interim codes reviewed under the refinement panel process described in this section. This table includes the following information:
• CPT Code. This is the CPT code for a service.
• Description. This is an abbreviated version of the narrative description of the code.
• 2003 Work RVU. The work RVUs that appeared in the December 2002 rule are shown for each reviewed code.
• Requested Work RVU. This column identifies the work RVUs requested by commenters.
• 2004 Work RVU. This column contains the final RVUs for physician work. (These work RVUs may differ from the work RVUs in Addenda B that reflect the adjustment to work RVUs to match the MEI weights.)
CPT code 17310
Prior to 2003, this code was reported once for all specimens over five generated during a particular stage of Mohs surgery. Beginning in 2003, the code is used to report each specimen over five during a particular stage of Mohs surgery. The RUC recommended maintaining 0.95 work RVUs for this code as an interim value. We disagreed and assigned a work value of 0.62 work RVUs to this code pending further recommendations from the RUC. We believed this value was appropriate for the new descriptor since it allows reporting of CPT code 17310 for each specimen rather than reporting once for all specimens. It also places this code in the correct rank with the other Mohs surgery services, CPT codes 17304-17307, and with the codes for pathology consultation during surgery, CPT codes 88331 and 88332.
Commenters disagreed with the rationale we had used to arrive at the interim work value and indicated that we used inappropriate time/intensity data and failed to include surgery work, focusing only on pathology work. Commenters also stated that the intent of this code has not changed and that CMS had ignored past policy which recognizes CPT code 17310 as an add-on service and thus allows the separate billing of services for each additional specimen beyond the first five. Based on these comments, we referred this code to the multispecialty validation panel for review.
CPT Code 38204
We disagreed with the RUC recommendation of 2.00 work RVUs for CPT code 38204. We believed we are already making payment for any physician work associated with this service as part of our payment for other bone marrow transplant codes (that is, CPT codes 38205, 38206, 38240, 38241, and 38242) and have significant concerns about how this code would be used in actual practice. Therefore, we assigned CPT code 38204 a status indicator of “B,” meaning that we will not make separate payment for this service.
As explained in the December 31, 2002 final rule, the work RVUs for these codes were revised by CMS to finalize outstanding issues related to the five-year review of the gastroenterology codes. For CPT code 43219, we maintained the work RVU of 2.80. Review of information supplied by specialty societies did not provide compelling evidence that the work RVUs should be changed. Based on a review of the physician time data and a comparison to other stent placement codes, we assigned 4.35 work RVUs to CPT code 43256 and 2.94 work RVUs to CPT code 44383, in order to place these services in proper rank order to the other stent placement codes.
CPT code 45335
The RUC recommended work RVUs of 1.46 for CPT code 45335 based on a comparison to CPT code 45330, with incremental work RVUs added to reflect increased pre-, intra-, and post-service work. We disagreed with the RUC recommendation and compared this service to the analysis and recommendation provided by the RUC for CPT code 43201, which is also a new submucosal injection code. Based on the increased risk of complications (resulting in higher intra-service intensities) and the fact that several sites are being injected instead of one, we assigned a work RVU of 1.36 to CPT code 45335.
CPT Code 45340
The RUC recommended a work RVU of 1.96 for this code, which includes 1.00 RVU for the incremental work based on the need for conscious sedation to perform this procedure. (Other flexible sigmoidoscopies do not require conscious sedation.) In the December 31, 2002 rule we stated that we did not believe it is appropriate to assign a work RVU for CPT code 45340 that is based on the presumption that a portion of the work value is for the provision of conscious sedation. Rather, we compared the RUC recommendations for work and physician time for other endoscopic dilation codes to the incremental times for CPT code 45340 and assigned a work RVU of 1.66 to CPT code 45340.
CPT Code 51798
The RUC recommended 0.38 work RVUs based on a urology survey that reported that this procedure is performed 75 percent of the time by the physician and also based on a comparison of this procedure to CPT code 76857,
CPT Codes 58545-58554
We accepted the RUC recommendations for work RVUs for these services.
CPT code 75954
The RUC agreed with the specialty societies and recommended a value of 2.93 work RVUs based on comparing this code to CPT codes 75952,
In the December 2002 final rule, this CPT code replaced HCPCS code G0195, which had a work RVU of 1.50 in 2002. The Healthcare Professionals Advisory Committee (HCPAC) recommendation of a work RVU of 0.00 for CPT code 92610 was accepted by CMS.
We did not accept the RUC recommendations for work RVUs for these services (0.99 for 92613, 0.88 for 92615 and 1.10 for 92617) and assigned each of these CPT codes a work RVU of 0.00. We stated that these three services refer only to a separately identified physician review and interpretation of the fiberoptic endoscopic evaluation and that we consider this physician interpretation and report bundled into an E/M service. We stated that the physician who does not perform the testing should only bill for the patient when performing an E/M service, not as the supervisor of another professional performing and reviewing the initial fiberoptic endoscopic evaluation. The interpretation is an integral part of the testing itself and, if a nonphysician professional has the credentials and experience to perform this testing, then that professional should also provide the interpretation of the findings.
In the December 31, 2002 final rule (67 FR 79966), we also responded to the RUC recommendations on the practice expense inputs for the new and revised CPT codes for CY 2003. There were no comments received on these and therefore we are finalizing our proposals.
As we indicated in the August 15, 2003 proposed rule, RUC recommendations for RVUs for 23 new CPT codes for 2003 were received too late for incorporation in the December 31, 2002 final rule. We proposed interim RVUs for these codes and, as with all interim values, these were subject to comment. In their comments on the December 2002 final rule, the AMA-RUC requested that we consider their late recommendations for these codes during refinement. Several specialties also requested that we consider the late RUC recommendations. We had considered addressing these as part of the refinement process, but determined that we should follow the process used for all RUC recommendations and solicit public comment on the valuation
CPT codes 38208, 38209 and 95990 are addressed later in this section (new and revised codes for 2004)and are also included in table 4. Also these work RVUs may differ from the work RVUs in Addenda B and C that reflect the adjustment to match the MEI weights.
We continue to have the same concerns as outlined in the December 31, 2002 final rule (67 FR 80007) with respect to moving these codes off of the laboratory fee schedule. We are maintaining a status indicator “I” for these services making them not valid for Medicare purposes.
CPT Codes 93784
The RUC recommendations for these codes were received too late for inclusion in the 2003 final rule. We had established the following work RVUs for these services during 2002 in response to a national coverage determination: CPT code 93784-0.17 work RVUs; 93786-0.00 work RVUs; 93790-0.17 work RVUs and had indicated that CPT code 93788 was not covered. We stated we would maintain these work RVUs until we receive a RUC recommendation.
We received the following comments on HCPCS codes established in the December 31, 2002 final rule.
GO262
We created this code to describe a new diagnostic test for which we will make separate payment under the physician fee schedule. We assigned a work RVU of 2.12 to the code based on a comparison to the work of other diagnostic tests and procedures that require review of significant amounts of data.
This code was created to allow payment to a physician who removes impacted cerumen on the same date as his or her employed audiologist performs audiologic function testing. We noted that routine removal of cerumen is not paid separately, because it is considered to be part of the procedure with which it is billed (for example, audiologic function testing). This code is to be used only in those unusual circumstances when an employed audiologist who bills under a physician uniform provider identifier number (UPIN) performs audiologic function testing on the same day as removal of impacted cerumen requiring physician expertise for removal. This code should not be used when the audiologist removes cerumen, because removal of cerumen is considered to be part of the diagnostic testing and is not paid separately.
We created this code due to the inappropriate reporting of this service with codes for such procedures as “blood vessel repair” and “repair of arterial pseudoaneurysm”, and indicated that there would be no separate payment for this service as the work, practice expense, and malpractice risk is included in the main invasive procedure.
We indicated we were creating this code for use until an identical CPT code can become effective. We assigned this code a work RVU of 0.32.
We created G0273 to describe radionuclide scanning to determine the biodistribution of Zevulin. We assigned 0.86 work RVUs to this code based on a comparison to CPT code 78802,
We created these add-on codes to assure proper reporting of and payment for renal and iliac angiography performed at the time of cardiac angiography. We determined the work value of 0.25 for these two add-on procedures by using the work values for CPT codes 75625,
In the December 31, 2002 final rule we incorrectly established RVUs for CPT code 0020T,
GO288
We created this code, which is a technical component code, to assure accurate reporting of this service by independent diagnostic testing facilities (IDTFs) that perform this service. This service includes receipt of a Computed Tomographic Angiogram (CTA), post-CTA processing using specialized software, and burning the 3D model onto a CD and returning it to the operating surgeon. This 3D only model is used to assist vascular surgeons in planning for, or monitoring the results of, endovascular aneurysm repair. The service is a technical service provided under the general supervision of a physician according to the supervision requirements for IDTFs.
Commenters also suggested that the payment for this code be revised so that it is more in line with the payment for these services when administered in the outpatient setting.
G0288
However, we are not expanding this service to include the use of enhanced computed tomography scans or magnetic resonance, as we have not been presented with information to support its use with these other data sources. We assume that physicians providing this service will abide by the FDA labeling requirements for the specific equipment used. Payment for services under the outpatient prospective payment system is based on a different methodology than services paid under the physician fee schedule. As required by section 1848 of the Act, payment under the physician fee schedule is based on national relative value units based on resources used in furnishing the service. We believe the RVUs established for this service are reflective of the resources used, and therefore do not believe this should be carrier priced.
GO289
We created this add-on code to permit appropriate reporting of arthroscopic procedures performed in different compartments of the same knee during the same operative session. We stated that this code should be reported only when the physician spends at least 15 minutes in the additional compartment performing the procedure. It should not be reported if the reason for performing the procedure is due to a problem caused by the arthroscopic procedure itself. We noted that this code is to be used when a procedure is performed in the lateral, medial, or patellar compartments in addition to the main procedure. We assigned a work RVU of 1.48 to this code RVUs based on a comparison to CPT codes 29874, 29877 and 29870, the base procedure for this family of codes.
Establishment of Interim Work Relative Value Units for New and Revised Physician's Current Procedural Terminology (CPT) Codes and New Healthcare Common Procedure Coding System Codes (HCPCS) for 2004 (Includes Table titled American Medical Association Specialty Relative Value Update Committee and Health Care Professionals Advisory Committee Recommendations and CMS's Decisions for New and Revised 2004 CPT Codes)
One aspect of establishing RVUs for 2004 was related to the assignment of interim work RVUs for all new and revised CPT codes. As described in our November 25, 1992 notice on the 1993 physician fee schedule (57 FR 55983) and in section III.B. of the November 22, 1996 final rule (61 FR 59505 through 59506), we established a process, based on recommendations received from the AMA's RUC, for establishing interim work RVUs for new and revised codes.
This year we received work RVU recommendations for approximately 132 new and revised CPT codes from the RUC. Our staff and medical officers reviewed the RUC recommendations by comparing them to our reference set or to other comparable services for which work RVUs had previously been established, or to both of these criteria. We also considered the relationships among the new and revised codes for which we received RUC recommendations. We agreed with the majority of the relative relationships reflected in the RUC values. In some instances, when we agreed with the relationships, we nonetheless revised the work RVUs to achieve work neutrality within families of codes. That is, the work RVUs have been adjusted so that the sum of the new or revised work RVUs (weighted by projected frequency of use) for a family will be the same as the sum of the current work RVUs (weighted by projected frequency of use). We reviewed all the RUC recommendations. We accepted approximately 95 percent and we disagreed with approximately 5 percent of the RUC recommended values. In the majority of these instances, we agreed with the relativity established by the RUC, but needed to adjust work RVUs to retain budget neutrality.
We received 2 recommendations from the HCPAC. We agreed with both of the HCPAC recommendations.
Table 5, titled “AMA RUC and HCPAC Recommendations and CMS Decisions for New and Revised 2004 CPT Codes”, lists the new or revised CPT codes, and their associated work RVUs, that will be interim in 2004. This table includes the following information:
• A “#” identifies a new code for 2004.
• CPT code. This is the CPT code for a service.
• Modifier. A “26” in this column indicates that the work RVUs are for the professional component of the code.
• Description. This is an abbreviated version of the narrative description of the code.
• RUC recommendations. This column identifies the work RVUs recommended by the RUC.
• HCPAC recommendations. This column identifies the work RVUs recommended by the HCPAC.
• CMS decision. This column indicates whether we agreed with the RUC recommendation (“agree”) or we disagreed with the RUC recommendation (“disagree”). Codes for which we did not accept the RUC recommendation are discussed in greater detail following this table. An “(a)” indicates that no RUC recommendation was provided.
• 2004 Work RVUs. This column establishes the 2004 work RVUs for physician work. These work RVUs may differ from the work RVUs in Addenda B and C that reflect the adjustments to work RVUs to match the MEI weights.
Table 6, which is titled “AMA RUC ANESTHESIA RECOMMENDATIONS AND CMS DECISIONS FOR NEW AND REVISED 2004 CPT CODES”, lists the new or revised CPT codes for anesthesia and their base units that will be interim in 2004. This table includes the following information:
• CPT code. This is the CPT code for a service.
• Description. This is an abbreviated version of the narrative description of the code.
• RUC recommendations. This column identifies the base units recommended by the RUC.
• CMS decision. This column indicates whether we agreed with the RUC recommendation (“agree”) or we disagreed with the RUC recommendation (“disagree”). Codes for which we did not accept the RUC recommendation are discussed in greater detail following this table.
• 2004 Base Units. This column establishes the 2004 base units for these services.
The following is a summary of our rationale for not accepting particular RUC work RVU or base unit recommendations. It is arranged by type of service in CPT order. Additionally, we also discuss those CPT codes for which we received no RUC recommendations for physician work RVUs. This summary refers only to work RVUs or base units.
CPT code 43752
The RUC recommended a work RVU of 0.82 for this service based on a comparison of this procedure to CPT code 44500. While we agree that CPT code 43752 is similar in work intensity to CPT code 44500, we feel the intra-service time is more appropriately valued at the 25th percentile (15 minutes of intra-service time vs. 20 minutes of intra-service time). This reduces the total time associated with CPT code 43752 from 30 minutes to 25 minutes. We applied the ratio of the RUC recommended value of 0.82 work RVU over 30 minutes to the revised intra-service time of 25 minutes to assign 0.68 interim work RVUs for CPT code 43752.
CPT code 63103
The RUC recommended a work RVU of 5.00 for this service based on a comparison of this procedure to CPT code 63088. It was unclear from the clinical vignettes supplied by the specialty society whether the additional corpectomy would more commonly involve the lumbar or the thoracic region of the spine. There is a significant difference in work intensity associated with the resection of an additional corpus in the thoracic region as opposed to the lumbar region. For this reason we applied the ratio of the reference service (CPT code 63088) to its primary service (CPT code 63087) to CPT code 63101 (primary service associated with CPT 63103) to assign 3.90 interim work RVUs for CPT code 63103.
CPT code 61863
The RUC recommended a work RVU of 19.00 for CPT code 61863 and 31.34 work RVUs for CPT code 61867. These two new CPT codes replace existing CPT code 61862 (work RVU=19.34). Although we agree with the relative relationship established by the RUC for these services, in order to retain budget neutrality, we adjusted the RUC recommended values. Thus, the recommended values were adjusted in order that the total relative values remain constant before and after the inclusion of the new CPT codes.
We assigned 13.92 work RVUs to CPT code 61863 and 22.96 work RVUs to CPT code 61867.
CPT code 38208
We continue to have the same concerns as outlined in the December 31, 2002 final rule (67 FR 80007) with respect to moving these codes from the laboratory fee schedule and thus establishing relative values under the physician fee schedule. We are maintaining a status indicator “I” for these services, making them not valid for payment under the Medicare Physician Fee Schedule.
CPT code 96111
Although we agree with the RUC recommended work RVU of 2.60 for CPT code 96111, we note that the tests under this code will no longer be paid on a per hour basis. That is, total payment for the services under CPT code 96111 is based on one hour of provision of the tests. It is our understanding that these tests can be completed typically in one hour. That is, some of the tests can be administered in less than one hour and some may require a little more than one hour, so that the average time for all of the tests works out to be one hour. Therefore, regardless of the total number of hours it takes to complete the services under CPT code 96111 or whether the services are split up and spread over a number of days, payment will be made for 96111 based on only one unit/hour at 2.6 RVUs.
We have developed a process for establishing interim practice expense RVUs for new and revised codes that is similar to that used for work RVUs. Under this process, the RUC recommends the practice expense direct inputs, that is, the staff time, supplies and equipment, associated with each new code. We then review the recommendations in a manner similar to our evaluation of the recommended work RVUs.
The RUC recommendations on the practice expense inputs for the new and revised 2004 codes were submitted to us as interim recommendations. We, therefore, consider that these recommendations are still subject to further refinement by the PEAC, or by us, if it is determined that such future review is needed. We may also revisit these inputs in light of future decisions of the PEAC regarding supply and equipment packages and standardized approaches to pre- and post-service clinical staff times.
We have accepted, in the interim, almost all of the practice expense recommendations submitted by the RUC for the codes listed in the following table titled “AMA RUC and HCPAC RVU Recommendations and CMS Decisions for New and Revised 2004 CPT Codes.”
We made the following minor changes to the inputs where relevant:
• We deleted the 3-minute phone calls in the post service period to conform to our established standard for all codes with 10 and 90-day global periods.
• We also deleted equipment when individual items did not meet the minimum $500 requirement.
• We deleted certain equipment items that represent indirect, rather than direct costs, including lead shielding, lead lined radioactive waste box and lead-lined sharps box.
• We deleted the L-Block table shield because it is included in the price and description of the dose calibrator, another CPEP equipment item.
• We made minor changes to clinical labor and supplies, for several central venous access (CVA) codes in order to bring uniformity to this new family of codes.
• We assigned, on an interim basis, the clinical labor RN designation for CPT code 95991, physician administered refilling and maintenance of spinal or brain implantable pump, until the PEAC has an opportunity to review the necessity for this clinical assignment.
On January 4, 2001 we published in the
In the January 2001 final rule, we stated that we would update the list of codes used to define these designated health services (the “Code List”) in an addendum to the annual physician fee schedule final rule. The purpose of the update is to conform the Code List to the most recent publications of CPT and HCPCS codes. The last update of the Code List was included in the December 31, 2002 physician fee schedule final rule in Addendum E and was subsequently corrected in a notice that was published in the
The updated all-inclusive Code List effective January 1, 2004 is presented in Addendum F in this final rule. We intend to publish annually the all-inclusive Code List in an addendum to the physician fee schedule final rule. The updated all-inclusive Code List will also be available on our Web site at
We received public comments on three issues relating to the most recent Code List. The comments and our responses are stated below.
Tables 7 and 8, below, identify the additions and deletions, respectively, to the comprehensive Code List last published in Addendum E of the December 2002 physician fee schedule final rule and subsequently corrected in the May 30, 2003 correction notice (68 FR 32400). Tables 7 and 8 also identify the additions and deletions to the lists of codes used to identify the items and services that may qualify for the exceptions in § 411.355(g) (regarding EPO and other dialysis-related outpatient prescription drugs furnished in or by an end-stage renal dialysis (ESRD) facility) and in § 411.355(h) (regarding preventive screening tests, immunizations and vaccines).
We will consider comments with respect to the codes listed in Tables 8 and 9 below, if we receive them by the date specified in the
The additions specified in Table 8 generally reflect new CPT and HCPCS codes that become effective January 1, 2004 or that became effective since our last update. It also reflects the addition of codes recently recognized by Medicare for payment purposes.
Additionally, we are adding two G-codes (G0173, “Stereo radiosurgery, complete” and G0251, “Linear acc based stero radio”) to the category of radiation therapy services and supplies. These codes became effective for Medicare payment purposes in August 2000 and July 2002, respectively and should have been reflected in previous Code Lists.
Table 8 also reflects the addition of 2 new HCPCS codes (Q4054 and Q4055) to the list of dialysis-related outpatient prescription drugs that may qualify for the exception described in § 411.355(g) regarding those items. The physician self-referral prohibition will not apply to these drugs if they meet the conditions set forth in § 411.355(g). Table X also reflects the addition of a screening mammography code (CPT 76083) and a flu vaccine code (CPT 90655) to the list that identifies preventive screening tests, immunizations and vaccines that may qualify for the exception described in § 411.355(h) for such items and services. The physician self-referral prohibition will not apply to these services if they meet the conditions set forth in § 411.355(h) concerning the exception for preventive screening tests, immunizations, and vaccines.
Table 8 reflects the deletions necessary to conform the Code List to the most recent publications of CPT and HCPCS codes, as well as additional deletions that we have determined are necessary as described below.
Under the category of physical therapy, occupational therapy and speech-language pathology services, we are removing CPT code 0020T, extracorporeal shock wave therapy for plantar fascia consistent with the response to the comment discussed in section IV.C.2 and VI.B of this preamble.
Under the category of radiology and certain other imaging services, we are deleting CPT code 76831 for an echo exam of the uterus. This code should never have appeared on the Code List.
Under the category of radiation therapy services and supplies, we are removing HCPCS code G0274 for radiopharmaceutical therapy for non-Hodgkin's lymphoma because it is a nuclear medicine service. Our definition of “radiation therapy services and supplies” at § 411.351 specifically excludes nuclear medicine procedures. Thus, HCPCS code G0274 should never have appeared on the Code List.
The physician fee schedule update is determined using a formula specified by statute. Under section 1848(d)(4) of the Act, the update is equal to the product of 1 plus the percentage increase in the Medicare Economic Index (MEI) (divided by 100) and 1 plus the update adjustment factor (UAF). For CY 2004, the MEI is equal to 2.9 percent (1.029). The UAF is −7.0 percent (0.930). Section 1848(d)(4)(F) of the Act requires an additional −0.2 percent (0.998) reduction to the update for 2004. Thus, the product of the MEI (1.029), the UAF (0.930), and the statutory adjustment factor (0.998) equals the CY 2004 update of −4.5 percent (0.9551).
The negative physician fee schedule update occurs under a mandatory statutory formula. The law gives us no alternative to reducing the physician fee schedule rates. Only Congress can change the law and avert a reduction in 2004 physician fee schedule rates. Without a congressional act to change the law, the Department is compelled to announce a physician fee schedule update for CY 2004 of −4.5 percent. The Department's calculations are explained below.
The Medicare Economic Index (MEI) is required by section 1842(b)(3) of the Act, which states that prevailing charge levels beginning after June 30, 1973 may not exceed the level from the previous year except to the extent that the Secretary finds, on the basis of appropriate economic index data, that a higher level is justified by year-to-year economic changes.
Beginning July 1, 1975, and continuing through today, the MEI has met this requirement by reflecting the weighted sum of the annual price changes of the inputs used to produce physicians' services. As such, the MEI attempts to be an equitable measure of price changes associated with physician time and operating expenses.
The current form of the MEI was detailed in the November 25, 1992
We are rebasing and revising the MEI for the 2004 physician fee schedule update. The terms “rebasing” and “revising”, while often used interchangeably, actually denote different activities. Rebasing means moving the base year for the structure of costs of an input price index, while revising means changing data sources, cost categories, or price proxies used in the input price index. As is always the case with a rebasing and revising exercise, we have attempted to use the most recently available, relevant, and appropriate information to develop the MEI cost category weights and price proxies. We detail below the updated cost weights for the MEI expense categories, our rationale for selecting the price proxies in the MEI, and the results of rebasing and revising the MEI.
The MEI was last rebased and revised in 1998 for the 1999 physician fee schedule update (63 FR 58845). The base year for that version of the MEI was 1996, which means that the cost weights in the index reflect physicians' expenses in 1996. However, we believe it is desirable to periodically rebase and revise the index so that the expense shares and price proxies reflect more current conditions. For this reason, we are rebasing the MEI to reflect physicians' expenses in 2000. In addition, we are revising the cost categories in the MEI and changing three of the proxies we currently use to ensure that the index is appropriately reflecting price changes. We will continue to adjust the MEI using economy-wide multifactor productivity.
The expense categories in the rebased and revised MEI were primarily derived from the 2003 AMA Physician Socioeconomic Characteristics publication (2003 Patient Care Physician Survey data), which measures physicians' earnings and overall practice expenses for 2000. The AMA data were used to determine expenditure weights for total expenses, physicians' earnings, and malpractice expenses, the only information detailed in this survey. To further disaggregate the weights into subcategories reflecting more detailed expenses, we used data from previous AMA surveys, the 1997 Bureau of Economic Analysis Benchmark Input-Output table (I/O), the 2003 Bureau of Labor Statistics (BLS) Employment Cost Index (ECI), and the 2002 Bureau of the Census Current Population Survey (CPS).
Developing a rebased and revised MEI requires selecting a base year and determining the number and composition of expense categories and their associated price proxies. We are rebasing the MEI to CY 2000. CY 2000 was chosen as the base year for two main reasons: (1) CY 2000 was the most recent year for which data were available from the AMA, and (2) we believed that the CY 2000 data were representative of the changing distribution of physicians' earnings and practice expenses over time.
While we agree that it would be optimal to develop MEI weights based on more recent data, we recognize the lack of data to do so. We also recognize that an alternative would be to use price changes in each of the proxies to update the weights to a more recent base year, similar to the methodology we used to develop the distribution of detailed practice expense categories in the current structure. In that case, we used price changes from 1998 to 2000 to develop weights for 2000.
However, as we indicated in the proposed rule, this method has a major drawback in that it assumes that the quantity of inputs would increase at the same rate as the price of those inputs. This may not be the case over longer time periods (for instance, 2000-2004) where there is likely to be substitution away from more costly inputs toward those which are less costly. Our experience with rebasing indexes has also shown that the weights for major categories do not change very much over time, even though the individual price changes for those categories can differ significantly. In addition, because the MEI is a Laspeyres-type index, the price changes between the base period and the current period are reflected in the relative importance of each category in determining the overall increase. Therefore, we feel that basing the index on CY 2000 data and reflecting current price changes likely represents a reasonable estimate of physicians' current experience.
We determined the number and composition of expense categories based on the criteria used to develop the current MEI and other CMS input price index expenditure weights. These criteria are timeliness, reliability, relevance, and public availability. For more information on these criteria, see the May 9, 2002
To determine the expenditure weights for the rebased and revised MEI, we used currently available and statistically valid data sources on physician earnings and practice expenses. While we consulted numerous data sources, we used five data sources to determine the MEI expenditure weights: (1) The 2003 AMA Physician Socioeconomic Statistics (2000 survey data) for self-employed physicians, (2) the 2000-2002 AMA Physician Socioeconomic Statistics (1998 data) for self-employed physicians, (3) the March 2003 BLS Employment Cost Index, (4) the 2002 Bureau of the Census Current Population Survey, and (5) the Bureau of Economic Analysis (BEA) 1997 Benchmark Input-Output tables (I/O). No one data source provided all of the information needed to determine expenditure weights according to our criteria. The development of each of the cost categories using these sources is described in detail below.
The rebased and revised MEI uses AMA data on mean physician net income (physician earnings) for self-employed physicians to develop a weight for physician earnings. The weight for this expense category is based on AMA data for 2000 and is calculated as a percentage of total mean expenses (physician earnings and practice expenses, including malpractice). The physician earnings expenditure category also includes employee physician compensation.
To obtain further detail for both wages/salaries and benefits, the ratio between these categories for 1996 (based on the 1996-based MEI) was updated to 2000 using the growth in the overall Employment Cost Index for private employees for wages/salaries and benefits. Alternative data for determining this split were not readily available from any other source. The main shortcoming of this method is that any changes in quantity and intensity (mix of physicians) are not reflected. However, faced with the lack of alternative data, we deemed this approach to be the most feasible, and the results appear to be consistent with anecdotal evidence on this ratio. Its application resulted in a wage-fringe benefit split of 81.4 and 18.6 percent, respectively, in the revised and rebased MEI compared with a wage-fringe benefit split of 81.2 and 18.8 percent, respectively, in the 1996-based MEI.
To determine the remaining individual practice expense weights other than malpractice expense, we updated AMA expense data from 1998 to 2000 using the relative price change in an appropriate price index. After the levels were updated to 2000 values, it was necessary to normalize these levels to equal the 2000 mean total expense data provided by the 2003 AMA survey. The detailed explanations for the derivation of the individual weights are listed below.
The cost share for nonphysician employee compensation was developed by updating the 1998 AMA Socioeconomic Survey data on nonphysician employee compensation costs for self-employed physicians to 2000, using the current proxy for this category, and dividing the resulting amount into total expenses (physician earnings plus practice expenses) for 2000 from the AMA survey. We further divided this cost share into wages/salaries and benefits using BLS Employment Cost Index data. The ECI survey contains data on the proportion of total compensation accounted for by wages/salaries and benefits (including paid leave) by private industry health services occupational category. These proportions can be used to distribute the total nonphysician employee compensation weight to wages/salaries and benefits for non-physician employees. We used 2000 data from the March 2003 publication. Although this survey does not contain data specifically for offices of physicians, data are available on wage/fringe shares for private industry health services, which include hospitals, nursing homes, offices of physicians, and offices of dentists. We believe the data for health services from the survey do provide a reasonable estimate of the split between wages and fringe benefits for employees in physicians' offices. Data for 2000 in the ECI survey for total health services indicate that wages and fringe benefits are 74.02 percent and 25.98 percent of compensation, respectively. As in the 1996-based MEI, we will use CPS data on earnings by occupation to develop cost shares for wages for nonphysician occupational groups shown in Table 6. To arrive at a distribution for these separate categories, we multiplied the overall share for nonphysician employee wages/salaries by each of the occupational proportions from the 2000 CPS. This distribution for the 1996-based and 2000-based MEI are presented in Table 10.
The weight for professional liability expense was derived from the 2003 AMA survey (2000 data) and was calculated as the mean professional liability expense expressed as a percentage of total expenses (physician earnings plus practice expenses). This calculation resulted in a 3.865 percent share of total costs in 2000 compared to a 3.152 percent share in the 1996-based index. The increase in weight for professional liability insurance represents the increases in both premiums and the amount of coverage purchased by physicians in 2000 compared to 1996. While the weight does not reflect the cost experience for 2001 and 2002, the proxy used in the rebased and revised index does reflect the price increases associated with the recent rise in malpractice costs.
We also indicated that while the weights do not reflect the more recent
The 2003 AMA survey provides less detail for expenses with respect to prior years' publications. Therefore, we calculated the share of each of the above categories by updating the AMA data for 1998 to 2000 using an appropriate price proxy. The primary reason for using the price proxy was that we lacked other data to develop cost weights for each of these categories. As stated previously, the main deficiency of this method is that it does not directly account for changes in the quantity or intensity associated with these expenses. Our belief, however, was that it was important to continue using these detailed breakouts so that each would be proxied by an appropriate price index and that the quantity/intensity effects over a short period of time are not likely to be large. In fact, we have found that even over longer periods of time, the distribution of costs tends to be relatively similar.
Office expenses and medical equipment levels were moved to 2000 using the growth from 1998 to 2000 in their respective MEI price proxies. In the case of office expenses, we used the growth in the CPI-U Housing; for medical equipment expenses, we used the growth in the PPI for Medical Instruments and Equipment.
The share for pharmaceuticals (prescription drugs) and medical materials and supplies was calculated by separating out pharmaceuticals and other medical materials and supplies using 1997 BEA Benchmark Input-Output data. First, the sum of all the pharmaceuticals and medical supplies categories from the Benchmark Input-Output tables for 1997 was calculated. The share of pharmaceuticals and medical supplies was then calculated as a percentage of this total and applied to the 1997 AMA medical supplies data. These calculated levels were then aged to 2000 using the growth in an appropriate price proxy. We thought it was important and appropriate to account for each of these categories separately so that differences in relative price growth between pharmaceuticals (prescription drugs) and other medical materials and supplies would be more accurately represented. The resulting 2000 data for the two separate categories were then aggregated (summed) together to form the overall total for the share for the pharmaceuticals and medical materials and supplies category in the rebased and revised MEI. The pharmaceuticals category was aged using the Producer Price Index (PPI) for Pharmaceutical preparations and the medical materials and supplies category was updated using the PPI for surgical appliances and supplies.
Finally, the Other Expenses category was calculated as a residual (total expenses less the percentage of all categories currently accounted for). The additional detail for transportation expenses found in the 1996-based MEI was removed because the data were not readily available for measurement of a cost share for 2000. The effect on the MEI of removing the detail is negligible.
After the 2000 cost weights for the rebased and revised MEI were developed, we reviewed the current set of price proxies to determine whether they were still the most appropriate for each expenditure category. As was the case in the development of the 1996-based MEI (57 FR 55901), most of the indicators we considered are based on BLS data and are grouped into one of the following five categories:
Producer price indices (PPIs) measure price changes for goods sold in other than retail markets. They are the preferred proxies for physician purchases at the wholesale level. These fixed-weight indices are a measure of price change at the producer or at the intermediate stage of production, a more likely mode of purchase for physicians.
Consumer price indices (CPIs) measure change in the prices of final goods and services purchased by consumers. Like the PPIs, they are fixed-weight. Since they may not represent the price changes faced by producers, CPIs were used if there were no appropriate PPI or if the expenditure category was similar to expenditure of retail consumers in general.
Average hourly earnings (AHEs) are available for production and nonsupervisory workers for specific industries as well as for the nonfarm business economy. They are calculated by dividing gross payrolls for wages/salaries by total hours. The series reflects shifts in employment mix and, thus, is representative of actual changes in hourly earnings for industries or for the nonfarm business economy.
These ECIs measure the rate of change in employee wage rates per hour worked. These fixed-weight indices are not affected by shifts in industry or occupation employment levels and measure only the pure rate of change in wages.
These ECIs measure the rate of change in employer costs of employee benefits, such as the employer's share of Social Security taxes, pension and other retirement plans, insurance benefits (life, health, disability, and accident), and paid leave. Like ECIs for wages/salaries, the ECIs for employee benefits are not affected by changes in industry output or occupational shifts.
When choosing wage and price proxies for each expense category, we evaluate the strengths and weaknesses of each proxy variable using four criteria. The first criterion is relevance. The price variable should appropriately represent price changes for specific goods or services within the expense category. Relevance may encompass judgments about relative efficiency of
The second criterion is reliability or low sampling variability. If the proxy wage-price variable has a high sampling variability or inexplicable erratic patterns over time, its value is greatly diminished, since it is unlikely to accurately reflect price changes in its associated expenditure category. Low sampling variability can conflict with relevance, since the more specifically a price variable is defined in terms of service, commodity, or geographic area, the higher the possibility of sampling variability.
The third criterion is timeliness of actual published data. For this reason, we prefer monthly and quarterly data to annual data. The length of time the time series data have been published is also important. A well-established time series is needed to assess the reasonableness of the series and to provide a solid base from which to forecast future price changes in the series. We need to forecast the MEI to make Federal budget and Trustees Report estimates.
The fourth criterion is public availability. We prefer to use data sources that are publicly available for our indices so that the public may track each of the individual components in the MEI.
The BLS price proxy categories previously described meet the criteria of relevance, reliability, timeliness, and public availability. Below we discuss the price-wage proxies for the rebased and revised MEI (shown in Table 5).
In the rebased and revised MEI, we are using the AHE for the private nonfarm economy as the proxy for the physician wages/salaries component; this is the same price measure used in the 1996-based MEI. In our judgment, this proxy still most closely comports with Congressional intent as expressed in the Senate Finance Committee's 1972 report (S. Rept. No. 92-1230 at 191 (1972)). It should be noted that AHEs change in accordance with changes in the type and mix of workers.
As we discussed extensively in the November 2, 1998 final rule (63 FR 58848) and again in the December 31, 2002 final rule (67 FR 80019), we believe that the current price proxy for physicians' earnings—AHE in the nonfarm business economy—is the most appropriate proxy to use in the MEI. The AHE for the nonfarm business economy reflects the impacts of supply, demand, and economy-wide productivity for the average worker in the economy. Using this measure as the proxy for physicians' earnings ensures parity in the rate of change in wages for the average worker and those for physicians. In addition, use of this proxy is consistent with the original legislative intent that the change in the physicians' earnings portion of the MEI parallel the change in general earnings for the economy. Since earnings are expressed per hour, a constant quantity of labor input per unit of time is reflected. The use of the AHE data is also consistent with our using the BLS economy-wide multifactor productivity measures since economy-wide wage increases reflect economy-wide productivity increases.
Using the ECI for professional and technical workers or other occupational-specific wage proxies has a major shortcoming; in many instances, occupations such as engineering, computer science, and nursing have unique characteristics that are not representative of the overall economy or the physician market. Specifically, wage changes for such occupations can be influenced by excess supply or demand for these types of workers. We believe it would not be appropriate to proxy the physician earnings portion of the MEI with a wage proxy that reflects these other occupation's unique characteristics. The 2000-based MEI will use the ECI for fringe benefits for total private industry as the price proxy for physician fringe benefits, the same proxy used for the 1996-based MEI. This means that both the wage and fringe benefit proxies for physician earnings are derived from the nonfarm private sector and are computed on a per-hour basis.
As in the 1996-based MEI, we used Current Population Survey data on earnings and employment by occupation to develop labor cost shares for the nonphysician occupational groups shown in Table 10. BLS maintains an ECI for each occupational group, and we use these ECIs as price proxies for nonphysician employee wages in the 2000-based MEI.
The skill mix shift in employees of physician offices in the last few years has been towards managerial occupations. While these skill mix shifts are captured in the expenditure weights, they are appropriately held constant in a Laspeyres price index such as the MEI. Skill mix shifts, which may reflect the changing intensity of services provided in physicians' offices, are accounted for in the payment system outside of the MEI. The 2000-based MEI will use the ECI for fringe benefits for white collar employees in the private sector as a proxy for nonphysician benefits since most nonphysician employees in physicians' offices are white-collar employees. This is the same proxy used for the 1996-based MEI.
Office expenses include rent or mortgage for office space, furnishings, insurance, utilities, and telephone. We continue to use the CPI-U for housing because it is a comprehensive measure of the cost of housing, including rent, owner's equivalent rent, and the types of goods and services associated with running an office. This proxy covers about 80 percent of the population.
This cost category includes drugs, outside laboratory work, x-ray films, and other related services. There is not one price proxy that includes this complete mix of materials and supplies. In the absence of one index, we separately accounted for pharmaceuticals and medical materials and supplies in the 2000-based MEI.
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We equally weighted two proxies together (the PPI Surgical Appliances and Supplies and the CPI-U for Medical Equipment and Supplies) since one proxy does not accurately measure the price change associated with these types of products used nor the mode of purchase used in physicians' offices. While both indexes include such items as bandages, dressings, catheters, I.V. equipment, syringes, and other general disposable medical supplies and nonprescription equipment, the indexes reflect significant differences in the mode of purchase. The PPI measures actual transaction prices at the wholesale level, the mode most likely used by physicians, while the CPI measures prices at the retail level or the final stage of production. The price movements in these two indexes can be different and we believe that it is appropriate to combine these indexes into one proxy since physicians likely use both purchasing methods when obtaining medical supplies.
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The PPI for pharmaceutical preparations is used to proxy pharmaceutical prices in other CMS market baskets and reflects the price change associated with the average mix of pharmaceuticals purchased economy-wide. We use the PPI for pharmaceutical preparations, rather than the CPI for prescription drugs, because physicians generally purchase drugs directly from a
It is vital that the MEI accurately reflect the price changes associated with professional liability costs. Accordingly, we continue to incorporate into the MEI a price proxy that accomplishes this goal by making the maximum use of available data on professional liability premiums.
Each year, we solicit professional liability premium data for physicians from a small sample of commercial carriers. This information is not collected through a survey form but instead is requested, on a voluntary basis, from a few national commercial carriers via letter. Generally between 5 and 8 carriers volunteer this information. For the CY 2004 update we were able to obtain data from 7 carriers, all of which were in the top 15 companies in 2001 in terms of market share. While the sample size certainly does not cover the entire professional liability insurance market, we have attempted to maximize the market share in terms of both national coverage and coverage within States.
As we require for our other price proxies, the professional liability price proxy should reflect the pure price change associated with this particular cost category. Thus, it should not capture changes in the mix or level of liability coverage. To accomplish this result, we obtain premium information from commercial carriers for a fixed level of coverage, currently $1 million per occurrence and a $3 million annual limit. This information is collected for every State by physician specialty and risk class. Finally, the State-level, physician-specialty data are aggregated by effective premium date to compute a national total, using counts of physicians by State and specialty as provided in the AMA publication,
The resulting data provide a quarterly time series, indexed to a base year consistent with the MEI and reflect the national trend in the average professional liability premium for a given level of coverage. From this series, quarterly and annual percent changes in professional liability insurance are estimated for inclusion in the MEI.
Our research has indicated that the most comprehensive data on professional liability costs are held by the State insurance commissioners but these data are available only with a substantial time lag and, therefore, the data currently incorporated into the MEI are much more timely. We believe that, given the limited data available on professional liability premiums, this methodology adequately reflects the price trends facing physicians.
Medical equipment includes depreciation, leases, and rent on medical equipment. We will use the PPI for medical instruments and equipment as the price proxy for this category, consistent with the price proxy used in the 1996-based MEI and other CMS input price indexes.
This category includes the residual subcategory of other expenses such as accounting services, legal services, office management services, continuing education, professional association memberships, journals, professional car expenses, and other professional expenses. In the absence of one price proxy or even a group of price proxies that might reflect this heterogeneous mix of goods and services, we use the CPI-U for all items less food and energy, consistent with the price proxy used in the 1996-based MEI. We also condensed the structure compared to that used in the 1996-based MEI because we lack the data to develop a representative weight for transportation, as discussed above. This change resulted in only a negligible effect on the overall MEI over the past 8 years; the average annual increase differs by less than a tenth of a percentage point over that time.
In the December 2002 final rule, we indicated that we were changing the methodology for adjusting for productivity in the MEI. The MEI used for the 2003 physician payment update reflected changes in the 10-year moving average of private nonfarm business (economy-wide) multifactor productivity applied to the entire index; we had previously used economy-wide private nonfarm business labor productivity applied to the labor portions of the index. We will continue to use the new method, adjusting for multifactor productivity applied to the entire index, in the rebased and revised MEI.
As described in the December 31, 2002 (68 FR 9568) final rule, we use multifactor productivity because: (1) It is theoretically more appropriate to explicitly reflect the productivity gains associated with all inputs (both labor and nonlabor); (2) the recent growth rate in economy-wide multifactor productivity appears to be more consistent with the current market conditions facing physicians; and (3) the MEI still uses economy-wide wage changes as a proxy for physician wage changes. We also believe that using a 10-year moving average change in economy-wide multifactor productivity produces a stable and predictable adjustment and is consistent with the moving-average methodology used in the 1996-based MEI. The adjustment will be based on the latest available actual historical economy-wide multifactor productivity data, as measured by BLS. For the 2004 update, this means using the multifactor productivity data through 2001, the latest available information.
Because the rebased and revised MEI is similar in structure to the 1996-based MEI, updating the MEI from a 1996 base year to a 2000 base year resulted in small changes in expense category weights. Physicians' earnings dropped slightly, from 54.5 percent of the index in 1996 to 52.5 percent in 2000. The expense shares for non-physician employee compensation, office expenses, professional liability insurance, and medical equipment all rose slightly, while expense shares for medical materials and supplies and other expenses declined.
The update using the rebased and revised MEI for the 2004 Physician Fee Schedule is an increase of 2.9 percent. This incorporates historical data through the second quarter of 2003.
As is the case with this index rebasing, our experience in previous rebasing and revising indexes has been that there is usually a very small effect on the overall percent change. The difference is typically between zero and 0.3 percentage points per year on average. The rebased and revised MEI overall percent increase for the CY 2004 update is only 0.1 percentage point higher compared to the 1996-based MEI. This is also the case for this final rule. When the MEI was last rebased, there was no difference in the average annual percentage change from 1985 to 1998. When the PPS hospital indices were rebased, the average difference in the percentage change was less than one-tenth of a percentage point from 1995 to 2002.
The first reason for this small difference between the 1996-based and 2000-based MEI percent changes is that the weight of professional liability insurance increased, giving it a higher relative importance in the index in 2000. This category also increased at a faster pace than other index categories during 2002 and projected for 2003, resulting in an even greater relative importance for this index by 2004 and causing it to have a larger effect on the overall index compared to the 1996-based MEI.
In addition, the pharmaceuticals from the medical materials and supplies category grew faster than the overall medical materials and supplies in the 1996-based MEI. In addition, the faster growth in the aggregate medical materials and supplies category combined with a higher weight in the 2000-based index gave the category a higher relative importance. However, these increases were mostly offset by declines in weight of some of the other categories, most notably physician earnings.
As discussed in the August 15, 2003 proposed rule, section 1848(c)(2)(B)(ii)(II) of the Act requires that increases or decreases in RVUs may not cause the amount of expenditures for the year to differ by more than $20 million from what expenditures would have been in the absence of these changes. If this threshold is exceeded, we make across-the-board adjustments to preserve budget neutrality. Therefore, if we adjust the work, practice expense and malpractice RVUs to match the new MEI weights, we are required by statute to ensure that the adjustments do not increase or decrease Medicare expenditures by more than $20 million. To meet the requirements of the statute and ensure that aggregate pools of RVUs match the proposed new MEI weights, we considered two options. We considered either making no adjustments to the physician work RVUs and adjusting only the practice expense and malpractice RVUs or adjusting all 3 categories of RVUs. We proposed adjusting all 3 categories of RVUs rather than adjusting only the practice expense and malpractice RVUs, which would have resulted in a reduction to the physician fee schedule conversion factor in addition to the -4.2 percent reduction that was forecasted. Specifically, we proposed to reduce the physician work RVUs by an estimated 0.35 percent (0.9965) and the practice expense RVUs by an estimated 1.15 percent (0.9885) and to increase the malpractice RVUs by an estimated 21.7 percent (1.217) to match the rebased MEI weights.
We also received several comments that expressed support for maintaining stability in the practice expense RVUs. The comment stated “much like what is done with work relative values, any code-level refinements due to annual coding changes that result in a non-budget neutral impact should not result in a reduction of all practice expense relative values. The comment requested that CMS present an analysis of this issue in an upcoming proposed rule and recommended that adjustments related to the MEI rebasing not be applied to the practice expense relative values.
We have considered the comment suggesting that we use the Secretary's section 1848(c) “ancillary” policies authority to adjust the RVUs to match the MEI weights but not maintain budget neutrality. Section 1848(c) states that the Secretary may establish ancillary policies (with respect to the use of modifiers, local codes, and other matters) as may be necessary to implement this section.” We believe that this section of the statute must, nonetheless, be read consistently with the requirements of section 1848(c)(2)(B)(ii)(II) of the Act requiring that changes to RVUs cannot cause the amount of expenditures to increase or decrease by more than $20 million from the amount of expenditures that would have been made if such adjustments had not been made. We believe the statute is clear and any increase in the malpractice expense RVUs must be offset by decreases to the work and practice expense RVUs or the conversion factor.
We also do not believe that the work RVUs should be maintained and a separate “work adjustor” established. While such policy was adopted following the 5-year review of physician work in 1997, we used this procedure only because the effect of the work adjustor could be removed once resource-based practice expense RVUs were adopted in 1999. We did not find the work adjustor to be desirable. It added an extra element to the physician fee schedule payment calculation and created confusion and questions among the public who had difficulty using the RVUs determine a payment amount that matched the amount actually paid by Medicare.
We acknowledge the comments that indicate that the work RVUs are used for many purposes other than Medicare payment. While our proposal would slightly reduce the absolute value of the physician work RVUs, it would not change their relative values since there would be a uniform decrease to all of the RVUs. We believe the relative relationship among the values for the services makes them useful for analysis for purposes other than Medicare payment. Since the relative values will be left unchanged, we do not believe the work RVUs will lose their utility for these other uses.
We disagree that our proposed rule did not provide enough information upon which to determine the impact on payment for a given service. The proposed rule provided the specific level of the estimated adjustments. While we did not actually apply the adjustments to the RVUs shown in Addendum B, any interested party could determine the effect of our proposal on any given service with the information we provided. We further noted that the adjustments we provided were estimated and would change once we made final determinations of the work, practice expense and malpractice RVUs for 2004. For the final rule, we will reduce the work RVUs by 0.57 percent (0.9943), the practice expense by 0.77 (0.9923) percent and increase the malpractice RVUs by 19.86 percent (1.1986). We have also modeled the impact of our proposal by specialty in the impact section of this final rule.
With respect to the comments about our proposal and the large increases in professional liability premiums, we
Section 1848(d) of the Act provides that the physician fee schedule update is equal to the product of the MEI and an “update adjustment factor” or UAF. The UAF is applied to make actual and target expenditures (referred to in the law as “allowed expenditures”) equal. Allowed expenditures are equal to actual expenditures in a base period updated each year by the SGR. The SGR sets the annual rate of growth in allowed expenditures and is determined by a formula specified in section 1848(f) of the Act.
Under section 1848(d)(4)(A) of the Act, the physician fee schedule update for a year is equal to the product of—(1) 1 plus the Secretary's estimate of the percentage increase in the MEI for the year, divided by 100 and (2) 1 plus the Secretary's estimate of the UAF for the year. Under section 1848(d)(4)(B) of the Act, the UAF for a year beginning with 2001 is equal to the sum of the following—
• Prior Year Adjustment Component. An amount determined by—
• Computing the difference (which may be positive or negative) between the amount of the allowed expenditures for physicians' services for the prior year (the year prior to the year for which the update is being determined) and the amount of the actual expenditures for such services for that year;
• Dividing that difference by the amount of the actual expenditures for such services for that year; and
• Multiplying that quotient by 0.75.
• Cumulative Adjustment Component. An amount determined by—
• Computing the difference (which may be positive or negative) between the amount of the allowed expenditures for physicians' services from April 1, 1996, through the end of the prior year and the amount of the actual expenditures for such services during that period;
• Dividing that difference by actual expenditures for such services for the prior year as increased by the sustainable growth rate for the year for which the update adjustment factor is to be determined; and
• Multiplying that quotient by 0.33.
Section 1848(d)(4)(E) of the Act requires the Secretary to recalculate allowed expenditures consistent with section 1848(f)(3) of the Act. Section 1848(f)(3) specifies that the SGR (and, in turn, allowed expenditures) for the upcoming calendar year (2004 in this case), the current calendar year (2003) and the preceding calendar year (2002) are to be determined on the basis of the best data available as of September 1 of the current year. Allowed expenditures are initially estimated and subsequently revised twice. The second revision occurs after the calendar year has ended (that is, we are making the final revision to 2002 allowed expenditures in this final rule). Once the SGR and allowed expenditures for a year have been revised twice, they are final.
Table 13 shows annual and cumulative allowed expenditures for physicians' services from April 1, 1996 through the end of the current calendar year, including the transition period to a calendar year system that occurred in 1999.
Consistent with section 1848(d)(4)(E) of the Act, table 13 includes our final revision of allowed expenditures for 2002, a recalculation of allowed expenditures for 2003, and our initial estimate of allowed expenditures for 2004. To determine the update adjustment factor for 2004, the statute requires that we use allowed and actual expenditures from April 1, 1996 through December 31, 2003 and the 2004 SGR. Consistent with section 1848(d)(4)(E), we will be making further revisions to 2003 and 2004 SGRs and 2003 allowed expenditures. Because we have
We are using figures from table 13 in the statutory formula illustrated below:
Section 1848(d)(4)(D) of the Act indicates that the UAF determined under section 1848(d)(4)(B) of the Act for a year may not be less than −0.070 or greater than 0.03. The calculated UAF of −0.090 is less than the statutory limit of −0.070. Therefore, the UAF for 2004 will be −0.70.
Section 1848(d)(4)(A)(ii) of the Act indicates that 1 should be added to the UAF determined under section 1848(d)(4)(B) of the Act. Thus, adding 1 to −0.070 makes the update adjustment factor equal to 0.930.
The SGR is an annual growth rate that applies to physicians' services paid for by Medicare. The use of the SGR is intended to control growth in aggregate Medicare expenditures for physicians' services. Payments for services are not withheld if the percentage increase in actual expenditures exceeds the SGR. Rather, the physician fee schedule update, as specified in section 1848(d)(4) of the Act, is adjusted based on a comparison of allowed expenditures (determined using the SGR) and actual expenditures. If actual expenditures exceed allowed expenditures, the update is reduced. If actual expenditures are less than allowed expenditures, the update is increased.
Section 1848(f)(2) of the Act specifies that the SGR for a year (beginning with 2001) is equal to the product of the following four factors:
(1) The estimated change in fees for physicians' services.
(2) The estimated change in the average number of Medicare fee-for-service beneficiaries.
(3) The estimated projected growth in real GDP per capita.
(4) The estimated change in expenditures due to changes in law or regulations.
In general, section 1848(f)(3) of the Act requires us to publish SGRs for 3 different time periods, no later than November 1 of each year, using the best data available as of September 1 of each year. Under section 1848(f)(3)(C)(i) of the Act, the SGR is estimated and subsequently revised twice (beginning with the FY and CY 2000 SGRs) based on later data. (The Consolidated Appropriations Reduction Resolution of 2003 (P.L. 108-7) contained a provision permitting revision of the FY 1998 and FY 1999 SGRs. See the February 28, 2003
Section 1848(f)(4)(A) of the Act defines the scope of physicians' services covered by the SGR. The statute indicates that the term “physicians' services” includes other items and services (such as clinical diagnostic laboratory tests and radiology services), specified by the Secretary, that are commonly performed or furnished by a physician or in a physician's office, but does not include services furnished to a Medicare+Choice plan enrollee. We published a definition of physicians' services for use in the SGR in the
• Physicians' services.
• Services and supplies furnished incident to physicians' services.
• Outpatient physical therapy services and outpatient occupational therapy services.
• Antigens prepared by or under the direct supervision of a physician.
• Services of physician assistants, certified registered nurse anesthetists, certified nurse midwives, clinical psychologists, clinical social workers, nurse practitioners, and clinical nurse specialists.
• Screening tests for prostate cancer, colorectal cancer, and glaucoma.
• Screening mammography, screening pap smears, and screening pelvic exams.
• Diabetes outpatient self-management training services.
• Medical nutrition therapy services.
• Diagnostic x-ray tests, diagnostic laboratory tests, and other diagnostic tests (including outpatient diagnostic laboratory tests paid through intermediaries).
• X-ray, radium, and radioactive isotope therapy.
• Surgical dressings, splints, casts, and other devices used for the reduction of fractures and dislocations.
• Bone mass measurements.
Section 211(b)(1) of the BBRA amended section 1848(f)(1) of the Act to require that three SGR estimates be published in the
Our preliminary estimate of the 2004 SGR is 7.4 percent. We first estimated the 2004 SGR in March and made the estimate available to the Medicare Payment Advisory Commission and on our website. Table 13 shows our March estimates and our current estimates of the factors included in the SGR:
Consistent with section 1848(f)(2) of the Act, the statutory factors are multiplied, not added, to produce the total (that is, 1.027 × 1.017 × 1.028 × 1.000 = 1.074.) A more detailed explanation of each figure is provided below in section G.1.
Our current estimate of the 2003 SGR is 6.7 percent. Table 14 shows our preliminary estimate of the 2003 SGR that was published in the
A more detailed explanation of each figure is provided below in section G.2.
The SGR for 2002 is 8.3 percent. Table 16 shows our preliminary estimate of the SGR published in the
A more detailed explanation of each figure is provided below in section G.2.
All of the figures used to determine the 2004 SGR are estimates that will be revised based on subsequent data. Any differences between these estimates and the actual measurement of these figures will be included in future revisions of the SGR and allowed expenditures and incorporated into subsequent physician fee schedule updates.
This factor is calculated as a weighted average of the 2004 fee increases for the different types of services included in the definition of physicians' services for the SGR. Medical and other health services paid using the physician fee schedule are estimated to account for approximately 80.3 percent of total allowed charges included in the SGR in 2004 and are updated using the MEI. The MEI for 2004 is 2.9 percent. Diagnostic laboratory tests are estimated to represent approximately 7.4 percent of Medicare allowed charges included in the SGR in 2004 and the costs of these tests are updated by the CPI-U. The CPI-U for 2004 that will be used to update clinical diagnostic laboratory tests is 2.1 percent. Drugs represent 12.3 percent of Medicare allowed charges included in the SGR. We are projecting a weighted average change in fees for drugs that are included in the SGR of 2.0 percent. Table 16 shows the weighted average of the MEI, laboratory and drug price increases for 2004:
After taking into account the elements described in table 16, we estimate that the weighted-average increase in fees for physicians' services in 2004 under the SGR (before applying any legislative adjustments) will be 2.7 percent.
This factor is our estimate of the percent change in the average number of fee-for-service enrollees from 2003 to 2004. Services provided to Medicare+Choice (M+C) plan enrollees are outside the scope of the SGR and are excluded from this estimate. Our actuaries estimate that the average number of Medicare Part B fee-for-service enrollees will increase by 1.7 percent from 2003 to 2004. Table 18 illustrates how this figure was determined:
An important factor affecting fee-for-service enrollment is beneficiary enrollment in Medicare+Choice plans. Because it is difficult to estimate the size of the Medicare+Choice enrollee population before the start of a calendar year, at this time, we do not know how actual enrollment in Medicare+Choice plans will compare to current estimates. For this reason, the estimate may change substantially as actual Medicare fee-for-service enrollment for 2004 becomes known.
We estimate that the growth in real per capita GDP from 2003 to 2004 will be 2.8 percent. Our past experience indicates that there have also been large changes in estimates of real per capita GDP growth made before the year begins and the actual change in GDP computed after the year is complete. Thus, it is likely that this figure will change as actual information on economic performance becomes available to us in 2004.
We are not projecting any change in spending in 2004 due to changes in law or regulations.
A more detailed discussion of our revised estimates of the four elements of the 2003 SGR follows.
This factor was calculated as a weighted average of the 2003 fee increases that apply for the different types of services included in the definition of physicians' services for the SGR.
We estimate that services paid using the physician fee schedule account for approximately 82.7 percent of total allowed charges included in the SGR in 2003. These services were updated using the 2003 MEI of 3.0 percent. We estimate that diagnostic laboratory tests represent approximately 7.1 percent of total allowed charges included in the SGR in 2003. These services were updated by the 2003 CPI-U of 1.1 percent. We estimate that drugs represent 10.2 percent of Medicare allowed charges included in the SGR in 2003. Pursuant to section 1842(o) of the Act, Medicare pays for drugs based on 95 percent of AWP. Using wholesale pricing information and Medicare utilization for drugs included in the SGR, we estimate weighted average fee increases for drugs of 1.9 percent in 2003. Table 19 shows the weighted average of the MEI, laboratory and drug price increases for 2003:
After taking into account the elements described in table 19, we estimate that the weighted-average increase in fees for physicians' services in 2003 under the SGR (before applying any legislative adjustments) will be 2.8 percent.
Our actuaries estimate that the average number of Medicare Part B fee-for-service enrollees (excluding beneficiaries enrolled in M+C plans) increased by 2.4 percent in 2003. Table 20 illustrates how we determined this figure:
Our actuaries' estimate of the 2.8 percent change in the average number of fee-for-service enrollees, net of Medicare+Choice enrollment for 2003, compared to 2002 is different from our preliminary estimate (1.2 percent for 2003 from the December 31, 2002 final rule (67 FR 80029)) because the historical base from which our actuarial estimate is made has changed. We now have complete information on Medicare fee-for-service enrollment for 2002 that is different than the figure we used one year ago. Further, we now have information on actual fee-for-service enrollment for the first 8 months of 2003. We would caution that our estimate of fee-for-service enrollment for 2003 could change again once we have complete information for the entire year.
We estimate that the growth in real per capita GDP will be 1.4 percent in 2003. Our past experience indicates that there have also been large differences between our estimates of real per capita GDP growth made prior to the year's end and the actual change in this factor. Thus, it is likely that this figure will change further as complete actual information on 2003 economic performance becomes available to us in 2004.
There were no statutory or regulatory changes that affected Medicare expenditures for services included in the SGR in 2003.
A more detailed discussion of our revised estimates of the four elements of the 2002 SGR follows.
This factor was calculated as a weighted average of the 2002 fee increases that apply for the different types of services included in the definition of physicians' services for the SGR.
Services paid using the physician fee schedule accounted for approximately 84.1 percent of total Medicare allowed charges included in the SGR in 2002, and are updated using the MEI. The MEI for 2002 was 2.6 percent. Diagnostic laboratory tests represent approximately 7.2 of total Medicare allowed charges included in the SGR, and are typically updated by the CPI-U. However, the BBA required a 0.0 percent update in 2002 for laboratory services. Drugs represented approximately 8.7 percent of total Medicare allowed charges included in the SGR in 2002. Pursuant to section 1842(o) of the Act, Medicare pays for drugs based on 95 percent of AWP. Using wholesale pricing information and Medicare utilization for drugs included in the SGR, we estimate a weighted average fee increase for drugs of 2.8 percent in 2002. Table 21 shows the weighted average of the MEI, laboratory and drug price increases for 2002:
After taking into account the elements described in table 21, we estimate that the weighted-average increase in fees for physicians' services in 2002 under the SGR (before applying any legislative adjustments) was 2.5 percent.
We estimate the increase in the average number of fee-for-service enrollees (excluding beneficiaries enrolled in M+C plans) from 2001 to 2002 was 3.2 percent. Our calculation of this factor is based on complete data from 2002. Table 22 illustrates the calculation of this factor:
We estimate that the growth in real per capita GDP was 1.4 percent in 2002. This is a final figure based on complete data for 2002.
Sections 101 through 104 of the BIPA added Medicare coverage for a variety of new services that will affect the 2002 SGR. In addition, section 112 of BIPA made changes that will result in additional Medicare coverage for certain drugs that will affect 2002 spending for services included in the SGR. Prior to the enactment of the BIPA, Medicare paid only for drugs that cannot be self-administered by the patient. BIPA allows Medicare to pay for drugs that can be, but are not usually, self-administered. Accordingly, we are accounting for the increased Medicare drug expenditures that will result from implementation of section 112 of the BIPA. We are also adjusting this factor to account for including screening mammography services in the SGR consistent with our discussion of this issue in the November 1, 2001
The 2004 physician fee schedule CF will be $35.1339. The 2004 national average anesthesia conversion factor is $16.43.
The specific calculations to determine the physician fee schedule and anesthesia CFs for 2004 are explained below.
Under section 1848(d)(1)(A) of the Act, the physician fee schedule CF is equal to the CF for the previous year multiplied by the update determined under section 1848(d)(4) of the Act.
We are illustrating the calculation for the 2004 physician fee schedule CF in table 23:
Anesthesia services do not have RVUs like other physician fee schedule services. Therefore, we account for any necessary RVU adjustments through an adjustment to the anesthesia fee schedule CF. We are adjusting the anesthesia CF to reflect the RVUs adjustments being made to all other physician fee schedule services to match the revised MEI weights. The 2003 anesthesia CF is $17.05. Physician work represents 79.02 percent of the anesthesia CF (0.7902). We are decreasing this portion of the anesthesia CF by 0.57 percent (0.9943). Practice expenses represent 13.75 percent (0.1375) of the anesthesia CF. We are reducing this portion of the anesthesia conversion factor by 0.77 percent (0.9923) for the adjustment to match the RVUs with the MEI weights. In addition, we are increasing the practice expense portion of the anesthesia CF by 0.18 percent (1.0018) for changes to anesthesia practice expenses resulting from the refinement of practice expense RVUs. Taken together, we are reducing the practice expense portion of the anesthesia fee schedule CF by 0.59 percent (0.9923 × 1.0018 = 0.9941). Professional liability insurance represents 7.23 percent (0.0723) of the anesthesia CF. We are increasing this portion of the anesthesia CF by 19.86 percent (1.1986). Taken together, the adjustments to the work, practice expense and malpractice portions of the anesthesia CF result in a total adjustment of 1.090 percent (0.7903 *0.9943) + ((0.1347 × 0.9941) + (0.0723 × 1.1986) = 1.0090. To determine the anesthesia fee schedule CF for 2004, we used the following figures:
Section 1834(m) of the Act establishes the payment amount for the Medicare telehealth originating site facility fee for telehealth services provided from October 1, 2001, through December 31 2002, at $20. For telehealth services provided on or after January 1 of each subsequent calendar year, the telehealth originating site facility fee is increased by the percentage increase in the MEI as defined in section 1842(i)(3) of the Act. The MEI increase for 2004 is 2.9 percent.
Therefore, for CY 2004, the payment amount for HCPCS code “Q3014, telehealth originating site facility fee” is 80 percent of the lesser of the actual charge or $21.20.
The Medicare telehealth originating site facility fee and MEI increase by the applicable time period is shown below.
This final rule with comment period adopts the provisions of the August 2003 proposed rule except as noted elsewhere in the preamble. The following is a highlight of the changes made from the proposed rule.
For geographic practice cost indices, based upon the volatility of the premium data collected, our review of the comments received on the August 15, 2003 proposed rule, and our review of malpractice GPCIs, we have modified some of our GPCI calculations and assumptions. We reduced the overall impact associated with revision to the malpractice GPCIs by a factor of 50 percent to mitigate for the volatility of the data. As directed by the statute, we will implement half of this change in the first year (CY 2004) and half of this change in the second year (CY 2005).
For the creation G codes for monitoring heart rhythms issue, based on concerns raised by commenters, we will not proceed with the proposed HCPCS codes because we want to ensure that any HCPCS codes developed, encompass the various technologies that are being utilized for such monitoring.
For changes in payments to physicians managing patients on dialysis, we are moving forward with our proposals and we are adjusting the payment rates for the established G codes. In addition we are adding additional codes to address the concerns raised about home dialysis.
For the definition of diabetes for diabetes self-management training we adopted the AACE clinical definition. We also expanded our general language to include other types of diabetes.
For excision of benign and malignant lesions, we are not moving forward with our proposal, however, we will maintain the 2003 work RVUs as interim values for 2004 to allow opportunity for the specialty to resurvey these services.
For payment policies for anesthesia services we have decided to allow teaching anesthesiologists to bill, similarly to teaching CRNAs, for their involvement in two concurrent cases involving residents.
This document does not impose information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 35).
Because of the large number of public comments we normally receive on
We have examined the impact of this rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act (RFA) (September 16, 1980 Pub. L. 96-354), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132. Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis must be prepared for final rules with economically significant effects (that is, a final rule that would have an annual effect on the economy of $100
We have simulated the effect of the physician fee schedule changes that we are adopting in this final rule. We are making several changes to the physician fee schedule RVUs in this final rule. In general, section 1848(c)(2)(B)(ii)(II) requires that changes to RVUs cannot increase or decrease expenditures more than $20 million. Thus, changes to the RVUs made pursuant to section 1848(c)(2)(B)(ii)(II) must be budget neutral. That is, increases in payments resulting from RVU changes must be offset by decreases in payments for other services and there will be redistribution in payment among physicians, practitioners and suppliers that bill Medicare for physician fee schedule services. We expect that the changes we are making to the physician fee schedule RVUs under section 1848(c) will result in a redistribution of Medicare allowed charges of more than $100 million in one year. For this reason, we are considering this final rule to be economically significant. Therefore, this final rule is a major rule and we have prepared a regulatory impact analysis.
The RFA requires that we analyze regulatory options for small businesses and other entities. We prepare a Regulatory Flexibility Analysis unless we certify that a rule would not have a significant economic impact on a substantial number of small entities. The analysis must include a justification concerning the reason action is being taken, the kinds and number of small entities the rule affects, and an explanation of any meaningful options that achieve the objectives and less significant adverse economic impact on the small entities.
Section 1102(b) of the Act requires us to prepare a regulatory impact analysis for any final rule that may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 603 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside a Metropolitan Statistical Area and has fewer than 100 beds.
For purposes of the RFA, physicians, non-physician practitioners, and suppliers are considered small businesses if they generate revenues of $6 million or less. Approximately 95 percent of physicians (except mental health specialists) are considered to be small entities. There are about 900,000 physicians, other practitioners and medical suppliers that receive Medicare payment under the physician fee schedule.
The analysis and discussion provided in this section as well as elsewhere in this final rule complies with the RFA requirements. Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditure in any 1 year by State, local, or tribal governments, in the aggregate, or by the private sector, of $110 million. This final rule would not impose unfunded mandates on State, local, or tribal governments, or on the private sector of more than $110 million dollars.
We have examined this final rule in accordance with Executive Order 13132 and have determined that this regulation would not have any significant impact on the rights, roles, or responsibilities of State, local, or tribal governments.
We have prepared the following analysis, which together with the rest of this preamble, meets all assessment requirements. It explains the rationale for, and purposes of, the rule, details the costs and benefits of the rule, analyzes alternatives, and presents the measures we propose to use to minimize the burden on small entities. As indicated elsewhere in this final rule, we are making changes to the Medicare Economic Index, refining resource-based practice based practice expense RVUs, creating new codes for dialysis patient visits to their physicians and making a variety of other changes to our regulations, payments or payment policy to ensure that our payment systems are updated to reflect changes in medical practice and the relative value of services. We provide information for each of the policy changes in the relevant sections in this final rule. While this rule revises the definition of diabetes for the purposes of outpatient diabetes self-management training, it does not impose reporting, record-keeping and other compliance requirements. We are unaware of any relevant Federal rules that duplicate, overlap or conflict with this proposed rule. The relevant sections of this final rule contain a description of significant alternatives.
As indicated above, we are making changes to the work and practice expense RVUs under the provisions of section 1848(c)(2) of the Act and section 429(b) of BIPA. Under section 1848(c)(2) of the Act, adjustments to RVUs may not cause the amount of expenditures to differ by more than $20 million from the amount of expenditures that would have resulted without such adjustments. We are making several changes under section 1848(c)(2) that would result in a change of expenditures that would exceed $20 million threshold if we made no offsetting adjustments to either the conversion factor or RVUs.
With respect to practice expense, our policy has been to meet the budget neutrality requirements in the statute by incorporating a rescaling adjustment in the practice expense methodology. That is, we estimate the aggregate number of practice expense relative values that will be paid under current and revised policy in CY 2004. We apply a uniform adjustment factor to make the aggregate number of revised practice expense relative values equal the estimated number that would be paid under current policy. We are applying this policy for all changes that we are making under section 1848(c).
Table 26 shows the specialty level impact on payment of changes being made for CY 2004. The payment impacts reflect averages for each specialty based on Medicare utilization. The payment impact for an individual physician would be different from the average, based on the mix of services the physician provides. The average change in total revenues would be less than the impact displayed here since physicians furnish services to both Medicare and non-Medicare patients and specialties may receive substantial Medicare revenues for services that are not paid under the physician fee schedule. For instance, independent laboratories receive 17 of their revenues from physician schedule services and the remainder for laboratory fee schedule services that are unaffected by this rule. We modeled the impact of all changes to the relative value units and illustrated their effect in table 26. The column labeled “NPRM” shows the combined effect of all of the changes contained in the August 15, 2003 proposed rule (see 68 FR 49033 to 49038 for a detailed discussion of each provision).
The column labeled “Practice Expense Refinements” shows the impact on payment from further changes to the practice expense inputs that we made using information that became available to us since the proposed rule. In some cases, we made changes to the practice expense inputs in response to public comments. In other situations, we may have received
The “Practice Expense Refinements” column also shows an increase in payment of 2 percent for radiation oncology and 1 percent for portable x-ray suppliers. These impacts are a result of our decision to use the non-physician work pool methodology to develop the practice expense RVUs for procedure code 77418 (Intensity Modulated Radiation Therapy).
We also modeled the effect of adjusting the RVUs to match the new MEI weights. Because we are increasing the malpractice RVUs by approximately 20 percent, adjusting the RVUs to match the new MEI weights will result in an increase in payment for those specialties that perform services with high malpractice RVUs. Payments to cardiac surgery, neurosurgery, orthopedic surgery, thoracic surgery and vascular surgery will increase by approximately 1 percent. The column labeled “Total” shows the impact of all changes that we are making to the work and practice expense RVUs for 2004.
The statutory methodology for updating physician fee schedule conversion factor is specified in section 1848(d)(4) of the Act. Consistent with the requirements of section 1848(d)(4) of the Act, as explained in section VI of this final rule, we are reducing the physician fee schedule conversion factor by approximately 4.5 percent. In table 27, we are showing the estimated change in average payments by specialty based on provisions of this final rule
Table 28 shows the impact on payments for selected high volume procedures of all of the changes previously discussed. This table shows the combined impact of the change in the work, practice expense and malpractice RVUs and the estimated physician fee schedule update on total payment for the procedure. There are separate columns that show the change in the facility rates and the non-facility rates. For an explanation of facility and non-facility practice expense refer to § 414.22(b)(5)(i).
Section 1848(e)(1)(A) of the Act requires that payments under the Medicare physician fee schedule vary among payment areas only to the extent that area costs vary as reflected by the area GPCIs. The GPCIs measure areas cost differences in the three components of the physician fee schedule: Physician work, practice expenses, and malpractice insurance. Section 1848(e)(1)(C) of the Act requires that the GPCIs be reviewed and, if necessary, revised at least every 3 years. Due to problems with the availability of U.S. Census Bureau data, which is the major resource utilized in both the work and practice expense GPCIs, we have updated only the malpractice GPCI in this regulation.
The first GPCI revision was implemented in 1995. The second revision was implemented in 1998. The third revision was implemented in 2001. This constitutes the fourth revision to the GPCIs. Section 1848(e)(1)(C) of the Act also requires that GPCI revisions be phased in equally over a 2-year period if more than one year has elapsed since the last adjustment.
In order to mitigate the volatility associated with malpractice insurance premiums, we reduced the percent change in the malpractice GPCIs by a factor of 50 percent. As directed by the statute, we will implement
An estimate of the 2004 proposed malpractice GPCI changes can be demonstrated by a comparison of area geographic adjustment factors (GAFs). The GAFs are a weighted composite of each area's work, practice expense, and malpractice expense GPCIs using the national GPCI cost share weights. While we do not actually use the GAFs in computing the fee schedule payment for a specific service, they are useful in comparing overall area costs and payments. The actual effect on payment for any specific service will deviate from the GAF to the extent that the service's proportions of work, practice expenses, and malpractice expense RVUs differ from those of the GAF. Table 27 shows the estimated effects of the revised 2004 malpractice GPCIs on area GAFs. As directed by statute, the 2004 GAFs reflect only
With the exception of Detroit, Michigan, no locality experienced an increase of more than 1 percent in total payments due to the revision of their malpractice GPCI for 2004. Alternatively, locality specific decreases in total payments due to the revision of the malpractice GPCIs do not exceed 1 percent for any given locality in 2004.
We are adopting a policy that will allow CMS to create national payment policy and determine national payment amounts for CPT tracking codes regardless of whether a national coverage determination for a specific service has been made. Our policy will have no effect on Medicare expenditures but will allow for more flexibility in determining payment rates for new services.
As previously discussed in section II.D., we have reviewed our current payment policy for the monthly dialysis capitation payment in response to concerns that have been raised over whether our payment policy is consistent with current medical practice. We are establishing new G codes for these services and are aligning Medicare's payment to recognize the higher amount of physician work associated with more frequent face-to-face visits. Aggregated Medicare payments to physicians for treating dialysis patients will not be increased or decreased by the establishment of these new procedure codes. Relative to payment based on the current CPT codes, Medicare payments to physicians for providing fewer than four visits per month will decrease. If the physician provides four or more visits per month, payment will increase. The net effect of these payment changes will not increase or decrease aggregate Medicare payment for physician services provided to dialysis patients.
Section IV.B. of this final rule discusses rebasing and revising the MEI for the CY 2004 physician fee schedule. Substituting the 2000 MEI weights in place of the 1996 weights increases the MEI by 0.1 percent for 2004. After 2004, the MEI in some years is likely to be unaffected by using more recent year weights while other years may have slightly higher increases (between 0.1 to 0.2 percentage points).
In section III.A., we revised the definition of diabetes for purposes of the Outpatient Diabetes Self-Management Training benefit and are using this definition to determine beneficiary eligibility for Medical Nutrition Therapy when the beneficiary has a diagnosis of diabetes. The streamlining of the beneficiary eligibility requirements for Outpatient Diabetes Self-Management Training will reduce administrative burden for the referring physician or qualified non-physician practitioner and for the accredited Outpatient Diabetes Self-Management Training programs by simplifying documentation requirements and eliminating the need for reconsiderations and appeals to clarify that the requirements have been met. As indicated in the February 28, 2003
In section III.D. of this final rule, we discussed Medicare payment for anesthesia services involving anesthesiologists and residents. Effective January 1, 2004, we are revising our teaching anesthesia rules to allow teaching anesthesiologists to bill, similar to teaching CRNAs, for their involvement in two concurrent cases with residents. The policy change will allow anesthesiologists to be paid either under the rules for medical direction or the same way that teaching CRNAs are paid for two concurrent cases. We are uncertain how the practice arrangements of teaching anesthesiologists will change as a result of this new policy. We believe that most teaching anesthesiologists will continue to function under the medical direction practice model for concurrent cases involving residents. Therefore, we believe there will be minimal change in Medicare program expenditures as a result of this change.
This proposed rule contains a range of policies. The preamble identifies those policies when discretion has been exercised and presents rationale for our decisions, including a presentation of nonselected options.
Although changes in physicians' payments were large when the physician fee schedule was implemented in 1992, we detected no problems with beneficiary access to care. While it has been suggested that the negative update for 2004 may affect beneficiary access to care, we note that the formula to determine this update is set by statute and this regulation cannot, and does not, change it. Nevertheless, we remain concerned about the issue and will continue to study the issue to the best of our ability with available resources.
In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget.
Health facilities, Health professions, Kidney diseases,
Administrative practice and procedure, Health facilities, Health professions, Kidney diseases, Medicare, Reporting and recordkeeping requirements, Rural areas, X-rays.
Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh).
(d) Beneficiaries who may be covered. Medicare Part B covers outpatient diabetes self-management training for a beneficiary who has been diagnosed with diabetes.
Secs. 1102, 1871, and 1881(b)(1) of the Social Security Act (42 U.S.C. 1302, 1395hh, and 1395rr(b)(1)).
(b) * * *
(6) * * *
(iii) CMS will consider for use in determining practice expense RVUs for the physician fee schedule survey data and related materials submitted to CMS by March 1, 2004 to determine CY 2005 practice expense RVUs and by March 1, 2005 to determine CY 2006 practice expense RVUs.
(e)
(1) To bill the base units, the physician must be present with the resident during the pre- and post-anesthesia care included in the base units.
(2) If the physician is not present with the resident during pre- and post-anesthesia care, then the physician may bill the case as a medically directed case in accordance with paragraph (d) of this section.
These addenda will not appear in the Code of Federal Regulations.
The addenda on the following pages provide various data pertaining to the Medicare fee schedule for physicians' services furnished in 2003. Addendum B contains the RVUs for work, non-facility practice expense, facility practice expense, and malpractice expense, and other information for all services included in the physician fee schedule.
In previous years, we have listed many services in Addendum B that are not paid under the physician fee schedule. To avoid publishing as many pages of codes for these services, we are not including clinical laboratory codes and most alphanumeric codes (Healthcare Common Procedure Coding System (HCPCS) codes not included in CPT) in Addendum B.
This addendum contains the following information for each CPT code and alphanumeric HCPCS code, except for alphanumeric codes beginning with B (enteral and parenteral therapy), E (durable medical equipment), K (temporary codes for non-physicians' services or items), or L (orthotics), and codes for anesthesiology.
1.
2.
Modifier −53 is shown for a discontinued procedure. There will be RVUs for the code (CPT code 45378) with this modifier.
3.
A = Active code. These codes are separately payable under the fee schedule if covered. There will be RVUs for codes with this status. The presence of an “A” indicator does not mean that Medicare has made a national decision regarding the coverage of
B = Bundled code. Payment for covered services is always bundled into payment for other services not specified. If RVUs are shown, they are not used for Medicare payment. If these services are covered, payment for them is subsumed by the payment for the services to which they are incident. (An example is a telephone call from a hospital nurse regarding care of a patient.)
C = Carrier-priced code. Carriers will establish RVUs and payment amounts for these services, generally on a case-by-case basis following review of documentation, such as an operative report.
D = Deleted code. These codes are deleted effective with the beginning of the calendar year.
E = Excluded from physician fee schedule by regulation. These codes are for items or services that we chose to exclude from the physician fee schedule payment by regulation. No RVUs are shown, and no payment may be made under the physician fee schedule for these codes. Payment for them, if they are covered, continues under reasonable charge or other payment procedures.
F = Deleted/discontinued codes. Code not subject to a 90-day grace period.
G = Code not valid for Medicare purposes. Medicare does not recognize codes assigned this status. Medicare uses another code for reporting of, and payment for, these services.
H = Deleted modifier. Either the TC or PC component shown for the code has been deleted, and the deleted component is shown in the data base with the H status indicator. (Code subject to a 90-day grace period.)
I = Not valid for Medicare purposes. Medicare uses another code for the reporting of, and the payment for, these services. (Code NOT subject to a 90-day grace period.)
N = Non-covered service. These codes are non-covered services. Medicare payment may not be made for these codes. If RVUs are shown, they are not used for Medicare payment.
P = Bundled or excluded code. There are no RVUs for these services. No separate payment should be made for them under the physician fee schedule.
R = Restricted coverage. Special coverage instructions apply. If the service is covered and no RVUs are shown, it is carrier-priced.
T = Injections. There are RVUs for these services, but they are only paid if there are no other services payable under the physician fee schedule billed on the same date by the same provider. If any other services payable under the physician fee schedule are billed on the same date by the same provider, these services are bundled into the service(s) for which payment is made.
X = Exclusion by law. These codes represent an item or service that is not within the definition of “physicians’ services” for physician fee schedule payment purposes. No RVUs are shown for these codes, and no payment may be made under the physician fee schedule. (Examples are ambulance services and clinical diagnostic laboratory services.)
4.
5.
6.
7.
8.
9.
10.
11.
MMM = The code describes a service furnished in uncomplicated maternity cases including antepartum care, delivery, and postpartum care. The usual global surgical concept does not apply. See the 1999 Physicians' Current Procedural Terminology for specific definitions.
XXX = The global concept does not apply.
YYY = The global period is to be set by the carrier (for example, unlisted surgery codes).
ZZZ = Code related to another service that is always included in the global period of the other service. (Note: Physician work and practice expense are associated with intra-service time and in some instances the post-service time.)
Centers for Medicare & Medicaid Services (CMS), HHS.
Final rule with comment period.
This final rule with comment period revises the Medicare hospital outpatient prospective payment system to implement applicable statutory requirements and changes arising from our continuing experience with this system. In addition, it describes changes to the amounts and factors used to determine the payment rates for Medicare hospital outpatient services paid under the prospective payment system. These changes are applicable to services furnished on or after January 1, 2004. Finally, this rule responds to public comments received on the August 12, 2003 proposed rule for revisions to the hospital outpatient prospective payment system and payment rates (68 FR 47966).
In commenting, please refer to file code CMS-1471-FC. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission or e-mail.
Mail written comments (one original and two copies) to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1471-FC, P.O. Box 8018, Baltimore, MD 21244-8018.
Please allow sufficient time for mailed comments to be timely received in the event of delivery delays.
If you prefer, you may deliver (by hand or courier) your written comments (one original and two copies) to one of the following addresses: Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201, or Room C5-14-03, 7500 Security Boulevard, Baltimore, MD 21244-1850.
(Because access to the interior of the HHH Building is not readily available to persons without Federal Government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and could be considered late.
For information on viewing public comments, see the beginning of the
Dana Burley, (410) 786-0378—outpatient prospective payment issues; Suzanne Asplen, (410) 786-4558 or Jana Petze, (410) 786-9374—partial hospitalization and community mental health centers issues.
This
To assist readers in referencing sections contained in this document, we are providing the following table of contents.
When the Medicare statute was originally enacted, Medicare payment for hospital outpatient services was based on hospital-specific costs. In an effort to ensure that Medicare and its beneficiaries pay appropriately for services and to encourage more efficient delivery of care, the Congress mandated replacement of the cost-based payment methodology with a prospective payment system (PPS). The Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), enacted on August 5, 1997, added section 1833(t) to the Social Security Act (the Act) authorizing implementation of a PPS for hospital outpatient services. The Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113), enacted on November 29, 1999, made major changes that affected the hospital outpatient PPS (OPPS). The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554), enacted on December 21, 2000, made further changes in the OPPS. The OPPS was first implemented for services furnished on or after August 1, 2000.
• On September 8, 1998, we published a proposed rule (63 FR 47552) to establish in regulations a PPS for hospital outpatient services, to eliminate the formula-driven overpayment for certain hospital outpatient services, and to extend reductions in payment for costs of hospital outpatient services.
• On April 7, 2000, we published a final rule with comment period (65 FR
• On August 3, 2000, we published an interim final rule with comment period (65 FR 47670) that modified criteria that we use to determine which medical devices are eligible for transitional pass-through payments. The rule also corrected and clarified certain provider-based provisions included in the April 7, 2000 rule.
• On November 13, 2000, we published an interim final rule with comment period (65 FR 67798) to provide the annual update to the amounts and factors for OPPS payment rates effective for services furnished on or after January 1, 2001. We implemented the 2001 OPPS on January 1, 2001. We also responded to public comments on those portions of the April 7, 2000 final rule that implemented related provisions of the BBRA and public comments on the August 3, 2000 rule.
• On November 2, 2001, we published a final rule (66 FR 55857) that announced the Medicare OPPS conversion factor for calendar year (CY) 2002. It also described the Secretary s estimate of the total amount of the transitional pass-through payments for CY 2002 and the implementation of a uniform reduction in each of the pass-through payments for that year.
• On November 2, 2001, we also published an interim final rule with comment period (66 FR 55850) that set forth the criteria the Secretary will use to establish new categories of medical devices eligible for transitional pass-through payments under Medicare's OPPS.
• On November 30, 2001, we published a final rule (66 FR 59856) that revised the Medicare OPPS to implement applicable statutory requirements, including relevant provisions of BIPA, and changes resulting from continuing experience with this system. In addition, it described the CY 2002 payment rates for Medicare hospital outpatient services paid under the PPS. This final rule also announced a uniform reduction of 68.9 percent to be applied to each of the transitional pass-through payments for certain categories of medical devices and drugs and biologicals.
• On December 31, 2001, we published a final rule (66 FR 67494) that delayed, until no later than April 1, 2002, the effective date of CY 2002 payment rates and the uniform reduction of transitional pass-through payments that were announced in the November 30, 2001 final rule. In addition, this final rule indefinitely delayed certain related regulatory provisions.
• On March 1, 2002, we published a final rule (67 FR 9556) that corrected technical errors that affected the amounts and factors used to determine the payment rates for services paid under the Medicare OPPS and corrected the uniform reduction to be applied to transitional pass-through payments for CY 2002 as published in the November 30, 2001 final rule. These corrections and the regulatory provisions that had been delayed became effective on April 1, 2002.
• On November 1, 2002, we published a final rule (67 FR 66718) that revised the Medicare OPPS to update the payment weights and conversion factor for services payable under the 2003 OPPS on the basis of data from claims for services furnished from April 1, 2001 through March 31, 2002. The rule also removed from pass-through status most drugs and devices that had been paid under pass-through provisions in 2002 as required by the applicable provisions of law governing the duration of pass-through payment.
• On August 12, 2003, we published a proposed rule (68 FR 47966) that proposed the Medicare OPPS conversion factor for CY 2004. In addition, it described proposed changes to the amounts and factors used to determine the payment rates for Medicare hospital outpatient services paid under the prospective payment system.
On August 12, 2003, we published a proposed rule (68 FR 47966) that proposed changes to the Medicare hospital OPPS and CY 2004 payment rates including proposed changes used to determine these payment rates. The following is a summary of the major changes that we proposed and the issues we addressed in the August 12, 2003 proposed rule.
We proposed the following changes to implement statutory requirements:
• Add APCs, delete APCs, and modify the composition of some existing APCs.
• Recalibrate the relative payment weights of the APCs.
• Update the conversion factor and the wage index.
• Revise the APC payment amounts to reflect the APC reclassifications, the recalibration of payment weights, and the other required updates and adjustments.
• Cease transitional pass-through payments for drugs and biologicals and devices that will have been paid under the transitional pass-through methodology for at least 2 years by January 1, 2004.
• Cease transitional outpatient payments (TOPS payments) for all hospitals paid under OPPS except for cancer hospitals and children s hospitals.
We proposed the following additional changes to the OPPS:
• Adjust payment to moderate the effects of decreased median costs for non-pass-through drugs, biologicals, and radiopharmaceuticals.
• Implement a new method for paying for drug administration.
• Create new evaluation and management service codes for outpatient clinic and emergency department encounters.
• Change status indicators for Healthcare Common Procedure Coding System (HCPCS) codes.
• List midyear and proposed HCPCS codes that are paid under OPPS.
• Allocate a portion of the outlier percentage target amount to community mental health centers (CMHCs) and create a separate threshold for outlier payments for partial hospitalization services.
• Create methodology and payment rates for separately payable drugs and radiopharmaceuticals for 2004.
• Make several changes in our current payment policy with regard to payment
• Change the status indicator and payment amount for P9010 by assigning it to APC 0957 (Platelet concentrate) with a payment rate of $37.30.
• Establish new payment bands for new technology APCs.
We received approximately 876 timely items of correspondence containing multiple comments on the August 12, 2003 proposed rule. Summaries of the public comments and our responses to those comments are set forth below under the appropriate section heading of this final rule with comment period.
We received comments from various sources including but not limited to health care facilities, physicians, drug and device manufacturers, and beneficiaries. Hospital associations and the Medicare Payment Advisory Commission (MedPAC) generally supported our proposed approach to revising the relative weights for APCs. Pharmaceutical and medical device manufacturers and some individual hospitals that furnish particular devices or drugs were concerned with the proposed reductions in payment for medical devices and drugs. We received many thoughtful comments from a wide range of commenters with regard to methodological issues in OPPS. In addition, several comments provided external data to support their assertions. The following are the major issues addressed by the commenters:
• The proposal to use $150 as the packaging threshold for separate payment of drugs.
• The proposal to pay for orphan drugs within the OPPS, basing payment on claims data.
• The proposal to pay for generic drugs at 43 percent of average wholesale prices (AWP) beginning with the time of the generic drug's Food and Drug Administration (FDA) approval.
• The proposed payments for blood and blood products under OPPS.
• The proposal to establish a separate outlier pool for community mental health centers(CMHCs).The proposal to apply an adjustment to increase payment to small rural hospitals' clinic and emergency room (ER) visit rates to ameliorate the effect of the sunsetting of the transitional corridor payments.
• The proposal to reinstitute drug and device coding requirements.
• Propose APC assignments and status indicators for numerous services.
In addition to comments regarding the policy proposals in the August 12, 2003 proposed rule, we received comments about the publication date of the proposed rule and the comment period.
Our review of the public comments is extensive, with the comments being read and considered carefully, often by many staff. We agree that it is preferable, when possible, to issue the proposed rule as early as possible. However, the important issue is whether we have sufficient time to carefully and thoughtfully consider all comments in development of the final rule, rather than the amount of time between the end of the comment period and the publication of the final rule.
Under the OPPS, we pay for hospital outpatient services on a rate-per-service basis that varies according to the APC group to which the service is assigned. Each APC weight represents the median hospital cost of the services included in that APC relative to the median hospital cost of the services included in APC 0601, Mid-Level Clinic Visits. The APC weights are scaled to APC 0601 because a mid-level clinic visit is one of the most frequently performed services in the outpatient setting.
Section 1833(t)(9)(A) of the Act requires the Secretary to review the components of the OPPS not less often than annually and to revise the groups, relative payment weights, and other adjustments to take into account changes in medical practice, changes in technology, and the addition of new services, new cost data, and other relevant information and factors. Section 1833(t)(9)(A) of the Act requires the Secretary, beginning in 2001, to consult with an outside panel of experts to review the APC groups and the relative payment weights.
Finally, section 1833(t)(2) of the Act provides that, subject to certain exceptions, the items and services within an APC group cannot be considered comparable with respect to the use of resources if the highest median (or mean cost, if elected by the Secretary) for an item or service in the group is more than 2 times greater than the lowest median cost for an item or service within the same group (referred to as the “2 times rule”).
We use the median cost of the item or service in implementing this provision. The statute authorizes the Secretary to make exceptions to the 2 times rule “in unusual cases, such as low volume items and services.”
For purposes of the proposed rule and this final rule we analyzed the APC groups within this statutory framework.
Section 1833(t)(9)(A) of the Social Security Act (the Act) requires that we consult with an outside panel of experts, the Panel, to review the clinical integrity of the APC groups and their
On November 21, 2000, the Secretary signed the charter establishing an “Advisory Panel on APC Groups.” The Panel is technical in nature and is governed by the provisions of the Federal Advisory Committee Act (FACA) as amended (Pub. L. 92-463).
On November 1, 2002, the Secretary renewed the charter. The new charter indicates that the Panel continues to be technical in nature, is governed by the provisions of the FACA, may convene “up to three meetings per year,” and is chaired by a Federal official.
To establish the Panel, we solicited members in a notice published in the
Because of the loss of 6 Panel members in March 2003 due to the expiration of terms of office, retirement, and a career change, a
We received one comment regarding our selection of Panel members.
This year, when we requested nominations for the APC Panel, the list of nominees was long, prestigious, and included representatives from all aspects of the health care industry: Doctors, nurses, hospital administrators, coders, etc. Therefore, our choices were difficult; however, since there are definite Federal guidelines governing our selections, and specific Panel and Agency needs to address, given the clinical range of services paid under the OPPS, we were able to identify the most qualified individuals. Since the needs of the Agency and the Panel change due to members leaving, we invite all concerned Medicare providers to continue to nominate qualified individuals when the need arises.
The Panel's biannual meetings are forums to discuss APCs and representatives from the CMCHs—and other organizations—are invited to attend Panel meetings and to make presentations to the Panel on relevant agenda items.
The APC Panel met on August 22, 2003 to discuss issues presented in the proposed rule of August 12. We announced the meeting in the
The Panel heard testimony by suppliers of blood and blood products and their representatives who expressed significant concerns about the proposed payment rates, particularly in light of new safety and testing requirements. These presenters to the Panel recommended that we exclude blood and blood products from the OPPS and pay for them at reasonable cost. After listening to the testimony, reviewing the median costs and proposed payments rate from our hospital claims data, and deliberating the issue, the Panel recommended that we continue to pay for blood and blood products within the OPPS. However, the Panel further recommended that we freeze the payment rates for blood and blood products at 2003 levels for 2004 and 2005 while we undertake further analysis of the cost data. The Panel also recommended that hospitals be educated on the proper billing for blood and blood products.
As discussed elsewhere in this final rule, we will accept the Panel's recommendation with respect to 2004. We will freeze the payment rates for blood and blood products at the 2003 payment levels. However, we are not making a decision with respect to 2005 at this time. Any proposals regarding our 2005 payment rates or policies for these items will be discussed in our proposed rule for the CY 2005 update. The Panel also recommended that the APCs for blood and blood products be on the agenda for the winter 2004 meeting in time for consideration of the 2005 payment rates. We agree to place this item on the agenda for the next APC Panel meeting.
The Panel heard testimony on and considered the proposed restructuring of the nuclear medicine APCs discussed in the August 12, 2003 proposed rule. The Panel recommended that we move forward with the categorization system in the proposed OPPS 2004 rule absent strong, reasoned opposition from provider groups. If strong opposition was revealed in the public comments,
We have accepted the Panel's recommendation that we move forward with the proposed restructuring, after considering public comments on this issue. As discussed in section II.A.3 of this final rule, we will implement the restructuring with certain changes to the proposed reclassification based on our review of the public comments. For reasons discussed in section VI.B.3 of this final rule, we are not accepting the Panel's recommendation to change the HCPCS code descriptors at this time.
The Panel further recommended that APCs for radiopharmaceuticals be on the agenda for the January 2004 meeting. In preparation for that meeting, the Panel recommended that our staff analyze the claims for the nuclear medicine APCs and do the following: Itemize the costs, determine what proportion of the median cost can be attributed to radiopharmaceuticals, and present the data at the Panel's January 2004 meeting. The Panel recommended that the issue of packaging the costs of radiopharmaceuticals under the 2003 threshold of $150 be placed on the agenda for the Panel's winter 2004 meeting.
We will consider this topic for placement on the agenda for the Panel's 2004 meeting. As discussed in section VI.B.3 of this rule, however, we are revising our threshold for packaging radiopharmaceuticals from $150 to $50.
The Panel recommended that we review whether the codes for needles and catheters were included in the payment rate proposed for APC 0313. The Panel also recommended that we consider outside data presented by commenters in establishing payment rates for APCs 312 and 651 to arrive at an appropriate payment rate. See our discussion, below, regarding APCs 312, 313, and 651 and our considerations concerning the claims used to set the relative weights for these APCs.
The Panel further recommended that we discontinue use of G codes for prostate brachytherapy and use appropriate Current Procedural Terminology (CPT) codes paid in clinical APCs when making payment for these services. The Panel recommended we pay separately for brachytherapy sources for the treatment of prostate cancer in the same manner by which we are paying separately for the brachytherapy sources for the treatment of other types of cancer. We have accepted the Panel's recommendation. As discussed in section II.B.4 of this final rule, we will discontinue use of the special G codes for prostate brachytherapy and allow separate payment for the sources used in these treatments.
The APC Panel heard testimony concerning radiation treatment delivery codes CPT 77412 through 77416, which we proposed to assign to APC 0301 and CPT 77417, assigned to APC 0260. The presenter stated that many hospital billing departments had not updated their charge masters since the inception of OPPS to reflect the costs of newer technology, specifically with respect to the use of x-ray guidance during external beam radiation treatment delivery. The APC Panel recommended that we review whether the use of x-ray guidance (as opposed to CT or ultrasound guidance) for radiation therapy is being properly reported and included in the payment rates for the radiation treatment delivery codes. We agree that we should review these issues further and will do so in preparation for the 2005 update. However, we did not receive sufficient or convincing information upon which to base a change for 2004. Therefore, we encourage interested parties to submit any additional information on the use of these codes and cost of providing these services in the outpatient hospital setting in response to this final rule with comment period.
The APC Panel also heard testimony concerning the proposed payment rate for CPT 77418, assigned to APC 0412 (IMRT treatment delivery). The presenter stated that the proposed amount was too low. However, the APC Panel supported the proposal in the absence of compelling evidence that the rate derived from the claims data is wrong. We concur with the APC Panel's recommendation and will retain CPT 77418 in APC 0412. We used approximately 113,000 claims to set the weight for this procedure, which we believe is a sufficiently robust set of data.
During this section of the APC Panel's August 22 meeting, the Panel members also heard testimony concerning HCPCS codes G0251 and G0173 used to report stereotactic radiosurgery. The APC Panel supported the proposed payment rates for these codes until more data become available. The APC Panel also asked to review this issue further at its winter 2004 meeting. We discuss stereotactic radiosurgery in further detail below. We have decided to make certain changes to the payment for these procedures. However, the APC assignment for these codes for 2004 is interim final. We solicit comments on the 2004 assignments, and we will also include this on the APC Panel's agenda for its winter 2004 meeting.
The final topic in this section of the APC Panel's August 22 meeting pertained to HCPCS codes G0242 and G0243 (multi source photon stereotactic planning). The APC Panel was requested to recommend that we combine the coding for these procedures under one code, with the payment for the new code derived by adding the payment for G0242 and G0243 together. The information presented to the APC Panel stated that the services represented by the two G codes represent one continuous procedure, that it is a surgical procedure, and the cost center mapping should be to a surgical cost center. The APC Panel will review this request at its winter 2004 meeting. The APC Panel is interested in receiving comments on this topic from professional societies representing neurosurgeons, radiation oncologists and others concerning this proposal.
The APC Panel heard testimony and discussed the proposals described in the August 12, 2003 proposed rule on payment for drug administration and the packaging of the costs of drugs, biologicals, and radiopharmaceuticals. The APC Panel recommended that:
• We continue to use the current “Q” codes for drug administration and not institute new “G” codes to represent the administration of either packaged or separately paid drugs.
• We allow billing of Q0081 on a per-visit basis, rather than on a per-day basis as proposed.
• We delete Q0085 and allow hospitals to use both Q0083 and Q0084 when billing for chemotherapy administered by both infusion and other techniques in a given visit.
• That we consider adopting the final option among the three new methods of paying for drug administration that we proposed, as options to the current policy, in the August 12, 2003 proposed rule.
• That we look further at hospital pharmacies' costs for preparing drugs and radiopharmaceuticals and this issue be examined more closely by the Panel during its winter 2004 meeting.
The APC Panel also expressed serious concern about the dollar threshold for
We have carefully considered each of the APC Panel's recommendations along with comments on the subject of drug administration and payment for drugs, biologicals, and radiopharmaceuticals. For the reasons discussed more fully elsewhere in this final rule, we have decided to accept the APC Panel's recommendations that we continue using Q0081 through Q0084 in 2004; that we continue to define these codes on a per-visit, rather than per-day basis; that we delete code Q0085; and that we delete code C9010. We have decided to continue paying for the drug administration “Q” codes according to our current rules and discuss that decision further in section VI.B.4 of this final rule. We will consider the Panel's recommendation that we investigate other approaches for paying for drugs and radiopharmaceuticals. However, for 2004, we have determined that we will pay separately under their own APCs for drugs, biologicals and radiopharmaceuticals for which the median per day costs are in excess of $50.
The APC Panel heard testimony from the device manufacturing community and others concerning payment for procedures that involve the implantation of devices. The presenters discussed concerns that affected such procedures in general, such as the absence of a proposal to limit payment reductions for such procedures between 2003 and 2004 and issues related to the hospital claims for these procedures. Presentations to the APC Panel also discussed inadequacies in the claims data or our methodology for using the claims data to set relative weights for specific device-related APCs (APCs 0046, 0107, 0108, 0222, 0225, 0385, and 0386. Presenters urged that the APC Panel advise us to use the best external data possible, including proprietary data that would be held confidential. Presentations to the APC Panel also addressed the multiple surgical reduction with respect to device-related APCs.
The APC Panel recommended:
• That we use credible external data that can be made publicly available for establishing the median costs for APCs 0107 and 0386.
• That we change the status indicator for CPT 61885 so that it is not subject to the multiple procedure discounting.
• That we assign the new CPT codes for central venous access devices into appropriate APCs, either clinical APCs or new technology APCs.
• That the APC assignments of the new central venous access devices be reviewed by the APC Panel at its next meeting.
• That we provide the APC Panel with median cost data for all APCs in spreadsheet format for its consideration in advance of and during its next meeting.
• That we review the presenter's suggestions with respect to APC 0046 and make recommendations for any changes to this APC to the APC Panel at its next meeting.
• That we change the status indicator for CPT 93571 and 93572 from “N” (packaged status) to an appropriate indicator that allows separate payment under the APC.
We considered the final set of recommendations from the APC Panel's August 2003 meeting and have accepted several of them. Specifically, we decided to use external data in setting the median cost for 2004 for APC 0107. We have not used external data for APC 0386. Each of these decisions is discussed in greater detail elsewhere in this final rule. We accepted the Panel's recommendation to change the status indicator for CPT 61885. In order to do so, we moved this code into its own APC, 0039, Implant neurostim, one array. We have assigned the new CPT codes for central venous access devices to New Technology APCs as displayed in Addendum B. The range of new CPT codes is 36555 through 36597, and the new APC assignments include APCs 0032, 0115, 0109, 0187, and 1541.
The assignment of these codes is subject to public comment and will be placed on the APC Panel's agenda for its next meeting. During that meeting, we will also provide the APC Panel with spreadsheet data on the median costs of all APCs. With respect to APC 0046, we are sympathetic to the presenter's concerns. However, we were not provided with data that we considered sufficient to assess whether a new coding structure with increased payment rates is warranted for the treatment of bone fractures with external fixation devices. However, we would support the specialty societies' efforts to request changes to the existing CPT coding structure. For reasons discussed elsewhere, we have not accepted the Panel's recommendation with respect to CPT codes 93571 and 93572.
While it is true that the proposed rule was placed on display on August 6, published on August 12, and the meeting was held on August 22, 2003, many interested parties attended the meeting and presented thoughtful comments on most issues discussed in the proposed rule. Nevertheless, we will take this comment into consideration for future planning of APC Panel meetings.
Although the device issues were scheduled for the last hour of the meeting, the Panel members received the written presentations beforehand, and had an opportunity to review them
In this section, we consider the Panel's recommendations affecting specific APCs. The Panel based its recommendations on claims data for the period April 1, 2002 through September 30, 2002. This data set comprises a portion of the data that will be used to set 2004 payment rates. APC titles in this discussion are those that existed when the APC Panel met in January 2003. In a few cases, APC titles have been changed for this final rule, and, therefore, some APCs do not have the same title in Addendum A as they have in this section.
The Panel's agenda included APCs that our staff believed violated the 2 times rule as well as APCs for which comments were submitted. As discussed below, the Panel sometimes declined to recommend a change in an APC even though the APC appeared to violate the 2 times rule. In section II.B of the August 12, 2003 proposed rule, we discuss our proposals regarding the 2 times rule based on the April 1 through December 31, 2002 data that we used to determine the final 2004 APC relative weights. Section II.B (68 FR 47977) of the August 12, 2003 proposed rule also details the criteria we used when deciding to propose exceptions to the 2 times rule.
Unless otherwise specified in each of the following discussions of the APC Panel's recommendations, our proposed actions are finalized in this final rule.
APC 0012: Level I Debridement & Destruction
APC 0013: Level II Debridement & Destruction
We expressed concern to the Panel that APCs 0012 and 0013 appear to violate the 2 times rule. In order to remedy these violations, we asked the Panel to consider the following changes:
(1) Move the following codes from APC 0013 to APC 0012:
(2) Move code 11057 (Trim skin lesions, over 4) from APC 0012 to APC 0013.
The Panel agreed with our staff and recommended that we make these changes. We proposed to accept the Panel's recommendation.
However, we received comments from a group of hospitals concerning the proposed change for CPT code 15851, removal of sutures under anesthesia (other than local), same surgeon. In their comments, the hospitals noted that the descriptor for CPT codes 15851 and 15850 (removal of sutures under anesthesia (other than local), other surgeon, were virtually identical with the exception of which surgeon performs the suture removal. The commenters did not believe that the identity of the surgeon could result in a significant difference in resource costs to the hospital. Our clinical staff agree and believe that the difference in hospital median costs derived from our claims data may be due to a misunderstanding about the coding. For 2004, we have decided that we will place both CPT codes for suture remove under anesthesia in APC 0016.
APC 0019: Level I Excision/Biopsy
APC 0020: Level II Excision/Biopsy
APC 0021: Level III Excision/Biopsy
We expressed concern to the Panel that APCs 0019 and 0020 appear to violate the 2 times rule. In order to remedy these violations, we asked the Panel to consider the following changes:
(1) Move the following HCPCS codes from APC 0019 to a new APC:
The APC Panel recommended that we make these changes, and we proposed to do so in our August 12, 2003 proposed rule.
(2) Move the following HCPCS codes from APC 0020 to APC 0021:
The Panel recommended that we not change the structure of APCs 0019, 0020, and 0021 at this time in the interest of preserving clinical homogeneity. In August, we proposed to accept the Panel's recommendation that we make no changes to the structure of these APCs for 2004. However, following our review of the median costs developed for the final rule, using a more complete set of claims for services from April through December 2002, we determined that CPT codes 11404 and 11623 should be moved to APC 0021. We plan to place these APCs on the Panel's agenda for the 2005 update.
APC 0071: Level I Endoscopy Upper Airway
APC 0072: Level II Endoscopy Upper Airway
APC 0073: Level III Endoscopy Upper Airway
We expressed concern to the Panel that APCs 0071 and 0072 appear to violate the 2 times rule. In order to remedy these violations, we asked the Panel to consider the changes below.
Move the following HCPCS codes as described below:
The Panel recommended that we make the above changes. We proposed to accept the Panel's recommendation, with the exception of CPT code 31720. After reviewing an additional quarter of claims data that were not available at the time the Panel convened, placement of CPT code 31720 into APC 0072 better reflects its resource consumption. Therefore, we proposed to keep CPT code 31720 in APC 0072.
APC 0097: Cardiac and Ambulatory Blood Pressure Monitoring
We expressed concern to the Panel that APC 0097 appears to violate the 2 times rule. We asked the Panel to recommend options for resolving this violation and suggested splitting APC 0097 into two APCs. The Panel recommended that the structure of APC 0097 should not be changed at this time based on clinical homogeneity considerations. We proposed to accept the Panel's recommendation that we make no changes to APC 0097 for 2004. We received no comments disagreeing with this proposal, and we will adopt it for 2004. We also plan to place this APC on the Panel's agenda for the 2005 update.
APC 0099: Electrocardiograms
APC 0340: Minor Ancillary Procedures
We expressed concern to the Panel that APC 0099 appears to violate the 2 times rule. We asked the Panel to recommend options for resolving this violation, and suggested moving CPT code 93701 (Bioimpedance, thoracic) from APC 0099 to APC 0340. The Panel believed, however, that the structure of APC 0099 should not be changed at this time based on clinical homogeneity considerations. We proposed to accept the Panel's recommendation that we make no changes to APC 0099 for 2004. We plan to place this APC on the Panel's agenda for the 2005 update.
APC 0100: Cardiac Stress Tests
A presenter to the Panel, who represented a device manufacturer, requested that we move CPT code 93025 (Microvolt t-wave assessment) out of APC 0100. The presenter believes that the actual cost for this procedure is significantly higher than for other procedures in the same APC. Since this technology is often billed in conjunction with other procedures (for example, stress tests, CPT code 93017), few single-APC claims were available to evaluate the presenter's contention.
The Panel believed the data presented are insufficient to merit moving the code and recommended that CPT code 93025 remain in APC 0100 until more data are available for review. We proposed to accept the Panel's recommendation that CPT code 93025 remain in APC 0100 until more claims data become available for review. We will adopt this proposal for 2004.
APC 0105: Revision/Removal of Pacemakers, AICD, or Vascular
We asked the Panel to review the codes within APC 0105 for an apparent violation of the 2 times rule, stating that we believe the apparent violation is a result of incorrectly coded claims. The Panel agreed and recommended no changes to APC 0105 at this time. We proposed to accept the Panel's recommendation that we make no changes to APC 0105 until more accurate claims data become available and support the need for a change. We will adopt this proposal for 2004.
APC 0146: Level I Sigmoidoscopy
APC 0147: Level II Sigmoidoscopy
We expressed concern to the Panel that relatively simple procedures such as anoscopy and rigid sigmoidoscopy have higher median costs than more complex procedures such as flexible sigmoidoscopy. Panel members suggested the high costs may be due to the need to perform an otherwise minor office procedure in a hospital setting (for example, due to the clinical condition of the patient). Panel members also suggested that claims may be incorrectly coded because coding instructions do not clearly state how to code when the procedure performed is not as extensive as the procedure planned (for example, when a colonoscopy is planned but only a sigmoidoscopy is performed). In these cases, coding instructions are unclear as to whether the planned procedure should be reported with a modifier for reduced services or with the code for the actual procedure performed.
The Panel recommended that we make no changes to APCs 0146 and 0147 at this time. We proposed to accept the Panel's recommendation that we make no changes to APCs 0146 and 0147. We will adopt this proposal for 2004. However, we plan to place this APC on the Panel's agenda for the 2005 update.
i. Anal/Rectal Procedures
APC 0148: Level I Anal/Rectal Procedure
APC 0149: Level III Anal/Rectal Procedure
APC 0155: Level II Anal/Rectal Procedure
We expressed concern to the Panel that APCs 0148 and 0149 appear to violate the 2 times rule. We asked the Panel to recommend options for resolving these violations, and suggested rearranging some of the CPT codes within APCs 0148, 0149, and 0155. The Panel recommended that we move CPT code 46040 (Incision of rectal abscess) from APC 0155 to APC 0149. We proposed to accept the Panel's recommendation, and we will adopt it for 2004.
APC 0179: Urinary Incontinence Procedures
APC 0182: Insertion of Penile Prosthesis
A presenter to the Panel representing manufacturers and providers requested that APC 0182 be split into two APCs, based on whether the procedure used inflatable or non-inflatable penile prostheses. The presenter stated that the complexity of the procedure, the cost of the devices, and related resources were all significantly higher with inflatable prostheses.
The Panel recommended that we eliminate APCs 0179 and 0182 and create two new APCs, 0385 and 0386, that contain the following CPT codes:
We proposed to accept the Panel's recommendation to eliminate APCs 0179 and 0182 and create two new APCs, 0385 and 0386, containing the above CPT code configurations.
APC 0190: Surgical Hysteroscopy
A presenter to the Panel, who represented a device manufacturer, requested that we move CPT code 58563 (Hysteroscopy, ablation) from APC 0190 to a higher paying APC. The presenter noted that endometrial cryoablation is included in a new technology APC, while a thermal ablation system is included with older, less costly
Panel members agreed that new, more expensive technologies that prove to be more effective merit review for a higher payment rate. Without substantial evidence of greater effectiveness, however, the Panel was reluctant to create APCs that provide an incentive to use a more expensive device. In its discussion of whether or not to recommend moving CPT code 58563 to a higher paying APC, the Panel recommended that we take into account different methods of endometrial ablation associated with hysteroscopy, adequately reflect the resources used for the various procedures, avoid creating a competitive advantage or disadvantage, and collect data needed to track costs on the type of technologies used for this procedure.
After consulting with experts in the field, we proposed to split APC 0190 (Surgical Hysteroscopy) into two APCs that are more clinically homogeneous. We proposed to change the description for APC 0190 from “Surgical Hysteroscopy” to “Level I Hysteroscopy” and keep the following HCPCS codes in APC 0190:
We also proposed to move the following HCPCS codes from APC 0190 to newly created APC 0387 titled “Level II Hysteroscopy”:
In addition, we proposed to move the following HCPCS codes as described below:
We believe these final changes take into account the different technologies used to perform these procedures while maintaining the clinical comparability of these APCs as well as improving their homogeneity in terms of resource consumption.
APC 0195: Level VII Female Reproductive Proc
APC 0202: Level VIII Female Reproductive Proc
A commenter requested that we place CPT code 57288 (Repair bladder defect) in its own APC because it requires the use of a device. Our staff suggested that CPT codes 57288 and 57287 remain in APC 0202, while the remaining codes in APC 0202 be moved to APC 0195:
The Panel agreed with our staff, and we proposed to accept the Panel's recommendation to move CPT codes 57109, 58920, and 58925 from APC 0202 to APC 0195. We will adopt the Panel's recommendation for 2004.
APC 0203: Level IV Nerve Injections
APC 0204: Level I Nerve Injections
APC 0206: Level II Nerve Injections
APC 0207: Level III Nerve Injections
Several commenters suggested changes in the configuration of APCs 0203, 0204, 0206, and 0207 because of concerns that the current classifications result in payment rates that are too low relative to the resource costs associated with certain procedures in these APCs. Several of these APCs include procedures associated with drugs or devices for which pass-through payments are scheduled to expire in 2003.
We requested the Panel's input regarding whether or not these APCs should be restructured. The Panel stated that the current configuration of APCs 0203, 0204, 0206, and 0207 is more clinically cohesive than the previous year's configuration and that more data should be collected before making any changes. We proposed to accept the Panel's recommendation that we make no changes to the structure of these APCs until more data become available for review. We will adopt the Panel's recommendation for 2004.
APC 0208: Laminotomies and Laminectomies
APC 0223: Implantation of Pain Management Device
A presenter to the Panel, who represented a device manufacturer, requested that we move CPT code 62351 (Implant spinal canal catheter) from APC 0208 to APC 0223 to better capture the device cost that may be involved with the procedure. The Panel believed the data were insufficient to merit moving the code and recommended that CPT code 62351 remain in APC 0208 until more data are available for review. We proposed to accept the Panel's recommendation that CPT code 62351 remain in APC 0208 until more claims data become available for review. We will adopt the Panel's recommendation for 2004.
APC 0209: Extended EEG Studies and Sleep Studies, Level II
APC 0213: Extended EEG Studies and Sleep Studies, Level I
APC 0214: Electroencephalogram
We expressed concern to the Panel that APC 0213 appears to minimally violate the 2 times rule. In order to remedy this violation, we asked the Panel to consider a commenter's suggestion that we move CPT code 95955 (EEG during surgery) from APC 0214 to APC 0213. The Panel agreed with the commenter's suggestion. We proposed to accept the Panel's recommendation to move CPT code 95955 from APC 0214 to APC 0213.
APC 0215: Level I Nerve and Muscle Tests
APC 0216: Level III Nerve and Muscle Tests APC 0218:
Level II Nerve and Muscle Tests
We expressed concern to the Panel that APC 0218 appears to violate the 2 times rule. In order to remedy this violation, one commenter requested that we move CPT codes 95921 (Autonomic nerve function test) and 95922 (Autonomic nerve function test) from APC 0218 to APC 0216, while another
After considering all of the above proposals, the Panel recommended that we move CPT codes 95858, 95870, 95900, and 95903 from APC 0218 to APC 0215. We proposed to accept the Panel's recommendation.
APC 0227: Implantation of Drug Infusion Device
APC 0227 contains only two CPT codes: Implantation of programmable spine infusion pumps, 62362, and Implantation of non-programmable spine infusion pumps, 62361. A commenter requested that we split APC 0227 into two APCs to recognize the cost difference between CPT code 62361 and CPT code 62362. However, since our cost data do not show a significant cost difference between the two devices and APC 0227 does not violate the 2 times rule, the Panel recommended that CPT codes 62361 and 62362 remain in APC 0227. We proposed to accept the Panel's recommendation, which we will adopt for 2004.
APC 0230: Level I Eye Tests & Treatments
APC 0235: Level I Posterior Segment Eye Procedures
APC 0236: Level II Posterior Segment Eye Procedures
APC 0698: Level II Eye Tests & Treatments
We advised the Panel that APCs 0230 and 0235 violate the 2 times rule but that the current configuration of these APCs reflects the Panel's previous recommendations. A presenter to the Panel, who represented a device manufacturer, expressed concern that the pass-through device category “New Technology: Intraocular Lens” was discontinued and these devices are now packaged. The presenter asked the Panel to recommend that future new intraocular lens devices be considered for a new pass-through category.
To remedy the violations to the 2 times rule, we asked the Panel to consider moving CPT code 67820 (Revise eyelashes) from APC 0230 to APC 0698 and CPT code 67110 (Repair detached retina) from APC 0235 to APC 0236. The Panel recommended that we make these changes. We proposed to accept the Panel's recommendation and monitor the data for APC 0235 for possible review next year. We will adopt this recommendation for 2004. The Panel also acknowledged that making recommendations concerning pass-through categories is beyond their purview.
APC 0341: Skin Tests and Miscellaneous Red Blood Cell Tests
APC 0345: Level I Transfusion Laboratory Procedures We advised the Panel that APCs 0341 and 0345 minimally violate the 2 times rule and suggested moving several CPT codes within these APCs into a new APC because a commenter expressed concern over the combination of skin tests and miscellaneous red blood cell tests in APC 0341, asserting that services within this APC cannot be considered comparable with respect to resource usage.
In order to remedy these violations to the 2 times rule, we suggested moving CPT code 86901 (Blood typing, Rh (D)) from APC 0345 to a new APC along with the following CPT codes from APC 0341:
The Panel recommended that we make the above changes. We proposed to accept the Panel's recommendation to move HCPCS codes 86880, 86885, 86886, and 86900 from APC 0341 to new APC 0409 and to move CPT code 86901 (Blood typing, Rh (D)) from APC 0345 to new APC 0409. We will adopt the Panel's recommendation for 2004.
APC 0363: Level I Otorhinolaryngologic Function Tests
APC 0660: Level II Otorhinolaryngologic Function Tests
We expressed concern to the Panel that APC 0660 appears to violate the 2 times rule and suggested moving CPT codes 92543 (Caloric vestibular test) and 92588 (Evoked auditory test) from APC 0660 to APC 0363. The Panel recommended that we make these CPT code changes. We proposed to accept the Panel's recommendation to move CPT codes 92543 and 92588 from APC 0660 to APC 0363, and we will adopt the proposal for 2004.
APC 0121: Level I Tube changes and Repositioning
APC 0122: Level II Tube changes and Repositioning
We expressed concern to the Panel that APC 0121 appears to violate the 2 times rule. In order to remedy this violation, we suggested moving the following CPT codes from APC 0121 to APC 0122:
The Panel recommended that we make these CPT code changes. We proposed to accept the Panel's recommendation to move CPT codes 47530, 50688, 51710, and 62225 from APC 0121 to APC 0122. We will adopt the proposal for 2004.
APC 0274: Myelography
We advised the Panel that APC 0274 minimally violates the 2 times rule and suggested moving CPT codes 72285 (X-ray c/t spine disk) and 72295 (X-ray c/t spine disk) from APC 0274 to a new APC. A presenter, from an organization representing radiologists, agreed with our proposal. The Panel recommended that we make these CPT code changes. We proposed to accept the Panel's recommendation to move CPT codes 72285 and 72295 from APC 0274 to new APC 0388. We will adopt the recommendation for 2004.
APC 0296: Level I Therapeutic Radiologic Procedures
APC 0297: Level II Therapeutic Radiologic Procedures
We advised the Panel that APCs 0296 and 0297 appear to minimally violate the 2 times rule as a result of changes recommended by the Panel and adopted by us last year. The Panel recommended that no changes be made to APCs 0296 and 0297 in the interest of preserving the clinical homogeneity of these APCs. We proposed to accept the Panel's recommendation that we make no CPT code changes to APCs 0296 and 0297, and we are adopting the proposal for 2004.
APC 0103: Miscellaneous Vascular Procedures
APC 0115: Cannula/Access Device Procedures
A commenter requested that we move CPT code 36860 (External cannula declotting) from APC 0103 to APC 0115, asserting that this procedure is more similar to other procedures in APC 0115 and does not fit well in its current miscellaneous APC. The Panel found that the claims data were insufficient to support moving CPT code 36860 from APC 0103 to the higher paying APC 0115 and recommended that CPT code 36860 remain in APC 0103 until more data are available for review. We proposed to accept the Panel's recommendation that CPT code 36860 remain in APC 0103 until more claims data become available for review. We will adopt this proposal for 2004.
APC 0279: Level II Angiography and Venography except Extremity
APC 0280: Level III Angiography and Venography except Extremity
APC 0668: Level I Angiography and Venography except Extremity
A commenter requested that we move CPT code 75978 (Repair venous blockage) from APC 0668 to APC 0280 and that we move CPT code 75774 (Artery x-ray, each vessel) from APC 0668 to APC 0279. A presenter to the Panel testified that CPT code 75978 is commonly used for dialysis patients and often requires multiple intraoperative attempts to succeed; thus, it should be paid under APC 0280. The Panel believed that APCs 0279, 0280, and 0668 were clinically homogenous and recommended that we only make changes after consulting with experts in the field. We proposed to accept the Panel's recommendation to make no changes to APCs 0279, 0280, and 0668 until we have consulted with experts in the field. We plan to place these APCs on the Panel's agenda for the 2005 update.
APC 0332: Computerized Axial Tomography and Computerized Angiography without Contrast Material
APC 0335: Magnetic Resonance Imaging, Miscellaneous
APC 0268: Ultrasound Guidance Procedures
A presenter to the Panel expressed concern that the packaging of guidance procedures for tissue ablation does not recognize the significant difference in cost and time required to perform each procedure (for example, MRI vs. CT). This presenter believed that hospitals needed more education on the appropriate application of these codes. Another commenter requested that CPT codes 76362, 76394, and 76490 be changed from a status indicator of N to a status indicator of S and be included in an appropriate clinical or new technology APC.
The Panel agreed with the above comments and stated that the packaging of these three procedures made it difficult for hospitals to track their use for the purpose of allocating funds. The Panel recommended changing the following CPT codes from a packaged status (N status indicator) to a separately payable status (S status indicator) within the indicated APCs:
We proposed to accept the Panel's recommendation to change HCPCS codes 76362, 76394, and 76490 from a packaged status to a separately payable status as indicated above. HCPCS 76490 has been deleted for 2004. However, we will pay for it under APC 0268 during the grace period from January through March 2004.
APC 0336: Magnetic Resonance Imaging and Magnetic Resonance Angiography without Contrast
A commenter requested that we change CPT code 76393 (MR guidance for needle placement) from a packaged status to a separately payable status within APC 0336. Based on clinical homogeneity considerations, the Panel agreed with the commenter and recommended that CPT code 76393 be changed from a status indicator of N to a status indicator of S and placed in APC 0335. We proposed to accept the Panel's recommendation.
APC 0260: Level I Plain Film Except Teeth
APC 0261: Level II Plain Film Except Teeth Including Bone Density Measurement
APC 0272: Level I Fluoroscopy
A commenter requested that we move CPT codes 76120 (Cine/video x-rays) and 76125 (Cine/video x-rays add-on) from APC 0260 to APC 0261. However, a presenter to the Panel argued that these CPT codes are fluoroscopic procedures that should not be grouped with Level I radiography procedures. The Panel recommended that we move CPT code 76120 from APC 0260 to APC 0272 and that CPT code 76125 remain in APC 0260. This change makes the APCs more clinically coherent. We proposed to accept the Panel's recommendation, and we will adopt the proposal for 2004.
APC 0116: Chemotherapy Administration by Other Technique Except Infusion
A presenter to the Panel requested that we split APC 0116 into three APCs according to the method of administration: (a) Subcutaneous or intramuscular administration (CPT code 96400); (b) “push” administration (CPT code 96408); and (c) central nervous system administration (CPT code 96450). The presenter also requested that existing CPT codes should replace the more nonspecific Q codes for administration of chemotherapy because the CPT codes will provide more detailed data on methods of chemotherapy administration, which could be used for future payment policy decisions. Another presenter agreed with this request and stated that CPT codes are preferable to Q codes because other payers require CPT codes.
The Panel agreed with the above suggestions to split APC 0116 into 3 APCs according to the method of
We proposed not to accept the Panel's recommendations to split APC 0116 into three APCs and to use CPT codes for administration of chemotherapy. We will consider such a split in the future but would like to first address the administration of drugs issue. Based on the comments we received on our proposed drug administration coding, we believe that making a change in APC 0116 will be too complicated and burdensome for hospitals at this time. (See a full discussion of this in section VI.B.4 of this final rule.)
We will consider such a split for APC 0116 for CY 2005. We also believe the use of CPT codes will be burdensome to hospitals, will require extensive education, and will result in a significant amount of miscoding. The CPT codes for infusion therapy are based on the service furnished per hour. We do not believe that all hospitals routinely record the start and stop time for infusion therapy and that doing so in order to be able to bill the proper number of hours of infusion therapy could be very burdensome for them. Moreover, the historic cost data on which we base the payment for the service are reported on a per visit basis (much easier to cull from the record than the number of hours of service) and if we changed to CPT codes for these services, we will be unable to convert the charge/cost data now on a per visit basis to a per hour basis (as required by the CPT code) for budget neutrality purposes.
APC 0290: Level I Diagnostic Nuclear Medicine Excluding Myocardial Scans
APC 0291: Level II Diagnostic Nuclear Medicine Excluding Myocardial Scans
APC 0292: Level III Diagnostic Nuclear Medicine Excluding Myocardial Scans
APC 0294: Level II Therapeutic Nuclear Medicine
APC 0666: Myocardial Add-on Scans
At the January 2003 meeting, we told the Panel that APCs 0290 and 0291 appear to violate the 2 times rule. Several presenters to the Panel expressed concern that our cost data are inadequate because of confusion over coding due to changes in codes and coding instructions for these procedures, poor hospital reporting of radiopharmaceutical use, and the use of single (not multiple) claims in determining costs. One presenter claimed that the current cost data used for CPT code 78122 (Whole blood volume determination) underestimated real costs because of confusion about whether to code radiopharmaceuticals on a “per dose” basis or “per millicurie” basis. This presenter requested that we move CPT code 78122 from APC 0290 to the higher paying APC 0292.
Other presenters agreed with these concerns and stated they were applicable to payments for all drugs, not just radiopharmaceuticals. These commenters were also concerned about the loss of drug-specific data due to packaging because hospitals will have no incentive to code, and thereby identify, packaged drugs.
Pass-through payments for 236 drugs, biologicals, and radiopharmaceuticals expired as of 2003, were then paid either separately or packaged with the procedures with which they are associated. Drugs and radiopharmaceuticals with median costs for administration of $150 or less were packaged. Beginning in 2003, claims data do not provide specific cost information for packaged items. We requested input from the Panel on methods for determining drug costs in the future.
Panel members were concerned that packaging the costs of radiopharmaceuticals into procedures would result in underpayments for the service because we lack adequate data on the cost of radiopharmaceuticals. They were also concerned about creating incentives to use radiopharmaceuticals based on cost rather than clinical efficacy. The Panel recommended that we consider grouping drugs and radiopharmaceuticals into new APCs taking into account both their cost and clinical use. The Panel further recommended that, if new APCs for radionuclides are created, the descriptors should be as simple as possible and use of confusing units of measure should be limited.
Due to the packaging of radiopharmaceuticals into the APC payments for nuclear medicine procedures, we, along with commenters have expressed concern to the Panel regarding whether the current nuclear medicine APC structure is homogeneous in terms of resource consumption. We have reviewed information about the use and cost of various radiopharmaceuticals and believe that restructuring the APCs for nuclear medicine will result in greater clinical and resource homogeneity. Therefore, we proposed to eliminate APCs 0286, 0290, 0291, 0292, 0294, and 0666 and create 20 new APCs for nuclear medicine.
• Split APC 0398 into three levels to account for differences in the number of sessions provided and type and amount of radiopharmaceutical used with these procedures.
• Split APC 0401 into two levels to account for the different number of sessions, type and amount of radiopharmaceuticals used, and whether or not ventilation imaging and perfusion imaging are part of the procedure.
• Delete codes G0273 and G0274 and use the newly created CPT codes 78804 and 79403. They recommended that we assign 78804 to a new APC 0406T, Tumor/Infection Imaging Level II and that we assign 79403 to the new APC for Radionucliide Therapy APC, created by combining proposed APCs 0407 and 0408.
• Move codes 78015, 78016, and 78018 from APC 0390 to APC 0406 because they are for metastatic tumor imaging rather than for one organ system.
• Move all of the nuclear medicine “add-on” codes into one APC to be named “Nuclear Medicine Add-On Imaging.” Three of the codes, 78478, Heart wall motion add-on, 78480 Heart function add-on, and 78496, Heart function first pass add-on, are assigned to proposed APC 0399. They recommended moving the remaining add-on code, 78020, Thyroid carcinoma metastases uptake, to proposed APC 0399 with the other three add-on codes, to create an APC comprised of add-on codes with a status indicator “X.”
• Move each of the codes in the series of codes, 78X99 into the appropriate APCs based on the organ system to be consistent with the proposed APC structure.
• Reassign codes 78270, 78271, and 78272 to APC 0389 because they are
• Combine APCs 0390, 0391, and 0392 to create two new APCs composed of thyroid, parathyroid, and adrenal systems. They suggest that the codes should be reassigned to two levels of endocrine imaging based on the number of sessions and radiopharmaceuticals used in the procedure. The titles suggested for the new APCs are “Endocrine Level I” and “Endocrine Level II.”
• Combine proposed APCs 0407 and 0408 into one APC because hospital claims data do not reflect any logical division between the two proposed APCs. Further, they request that all of the nuclear medicine therapy codes in the new APC should be paid separately since they know of no nuclear medicine therapeutic radiopharmaceutical that has costs below the proposed $150 threshold for packaging.
• Collapse and redistribute code assignments in APCs 0404 and 0405 to create two new APCs for Level I and Level II Renal and Genitourinary Studies. They recommended assigning only one code, 78709, Kidney imaging, multiple studies, with and without pharmaceutical intervention, to the Level II APC.
The one exception to our agreement with the commenters' recommendation is regarding the assignment of 78708, Kidney imaging with vascular flow and function, single study. Commenters recommended that it be assigned to APC 0404. We believe that it is more appropriately assigned to APC 0405 based on both clinical and resource use considerations.
Although we do not disagree with the commenters' suggestions, we also will not assign the new code 78804, pre-treatment planning, non-Hodgkins to the APC suggested by the commenters. Instead, we will assign it to new technology APC 1508. A detailed discussion of this assignment and other issues related to Zevalin is below in section VI.B.
Thus, we will finalize the nuclear medicine APCs as shown below.
We believe that the final APC structure, which takes into account the organ(s) being examined (or treated) as well as the type and complexity of the procedure, is more homogeneous both clinically and in terms of resource consumption than the current APC structure.
A presenter to the Panel expressed concern that APC 0076 apparently violates the 2 times rule and requested that we move CPT code 31631 (bronchoscopy with tracheal stent placement) from APC 0076 and into a new APC.
The Panel suggested that a new APC comprised of the four most costly procedures in APC 0076 will result in a more homogenous grouping, and recommended that we move the following CPT codes from APC 0076 and into newly created APC 0415.
We proposed to accept the Panel's recommendation that we move CPT codes 31630, 31631, 31640, and 31641 from APC 0076 to new APC 0415. We
A commenter requested that we create a new APC that will be comprised of all the gastrointestinal endoscopic stent codes. The Panel agreed with the commenter's suggestion because the resource requirements for all gastrointestinal endoscopic stents appear to be similar. The Panel recommended that we move the following CPT codes from their 2003 APCs to newly created APC 0384 for 2004:
We proposed to accept the Panel's recommendation to move the following gastrointestinal endoscopic stent CPT codes into newly created APC 0384: 43219, 43256 (from APC 0141); 44370, 44379, 44383 (from APC 0142); 44397, 45387 (from APC 0143); 45327, 45345 (from APC 0147). We received no comments disagreeing with this proposal, and we will adopt it for 2004.
Several commenters requested that the status indicators for the above APCs (all of which include high-cost devices) be changed from T (multiple-procedure discount applies) to S (multiple-procedure discount does not apply). Two presenters to the Panel stated that hospitals do not pay less for devices when they are used in the context of a multiple-procedure claim and suggested that we apply the multiple-procedure reduction to the non-device portion of the claim only. Alternatively, these presenters recommended that we apply the discount policy only when the device cost is below a predetermined proportion of the APC cost. Another presenter to the Panel requested that APCs 0222, 0223, and 0227 be exempt from the multiple-procedure discount policy because the cost of the devices used in these procedures makes up more than 50 percent of the APC cost.
We sought the Panel's input as to whether there are situations in which we should not apply our multiple procedure discount policy. The Panel recommended no changes to the status indicators for any of the device-related APCs discussed because they were concerned that exemptions from the discount policy could result in incentives to use more devices than necessary. However, the Panel asked that we analyze our data to determine if we may be underpaying for devices when the multiple procedure discounting policy is applied and recommended that we develop some methodology to track device costs. In section II.B of this preamble, we discuss the issue of device costs and multiple procedure reductions and our progress to date in developing “combination APCs” to address the Panel's concern.
A presenter to the Panel suggested that we use dates of service on multiple procedure claims to increase the number of claims we use to set payment rates. Another presenter suggested that we could further increase the number of multiple procedure claims that could be used to set payment rates by ignoring codes with status indicator K. Other suggestions were to exclude from consideration those APCs with small dollar values and to create a new code or APC specifically for the insertion and removal of devices.
The Panel recommended that our staff explore ways to increase the number of claims used to set payment rates, including the following methodologies: sort multiple claims by date of service; exclude codes with K status indicator from evaluation; exclude those APCs with nominal costs (the definition of “nominal” can be determined by modeling a variety of possible dollar amounts). In addition, the Panel recommended that we not create G codes as part of the effort to use multiple procedure claims for developing relative weights. If new codes are needed, the Panel suggested that our staff work with the American Medical Association's CPT Board to identify possible new codes.
Section 1833(t)(2) of the Act provides that the items and services within an APC group cannot be considered comparable with respect to the use of resources if the highest cost item or service within an APC group is more than 2 times greater than the lowest cost item or service within the same group. However, the statute authorizes the Secretary to make exceptions to this limit on the variation of costs within each APC group in unusual cases such as low volume items and services. No exception may be made in the case of a drug or biological that has been designated as an orphan drug under section 526 of the Federal Food, Drug, and Cosmetic Act.
Taking into account the proposed APC changes discussed in relation to the APC Panel recommendations in section II.A.4 of this preamble and the use of 2002 claims data to calculate the
• Resource homogeneity.
• Clinical homogeneity.
• Hospital concentration.
• Frequency of service (volume).
• Opportunity for upcoding and code fragmentation. For a detailed discussion of these criteria, refer to the April 7, 2000 final rule (65 FR 18457).
The following table contains the final list of APCs that we exempt from the 2 times rule based on the criteria cited above. In cases in which a recommendation of the APC Panel appeared to result in or allow a violation of the 2 times rule, we generally accepted the Panel recommendation because Panel recommendations were based on explicit consideration of resource use, clinical homogeneity, hospital specialization, and the quality of the data used to determine payment rates.
The median cost for hospital outpatient services for these and all other APCs can be found at Web site:
In the November 30, 2001 final rule (66 FR 59903), we made final our proposal to change the period of time during which a service may be paid under a new technology APC. Beginning in 2002, the policy is to retain a service within a new technology APC group until we have acquired adequate data that allow us to assign the service to a clinically appropriate APC. This policy allows us to move a service from a new technology APC in less than 2 years if sufficient data are available, and it also allows us to retain a service in a new technology APC for more than 3 years if sufficient data upon which to base a decision for reassignment have not been collected.
In the context of new technology procedures, we create HCPCS codes for services only. We do not create HCPCS codes for equipment that is used in the course of providing an item or service (except in the case of “C” codes for devices that meet the criteria for transitional pass-through payments). Equipment that is used to provide an item or service is not separately coded because it is a resource required to furnish the service. Like other resources that are required to furnish a service (for example, cost of a room, cost of staff, cost of supplies), the hospital should show charges either as part of its charge for the procedure or with a revenue code.
As described below, we proposed to delete four HCPCS codes that are currently paid in new technology APCs. We believed that these four HCPCS codes do not conform to our current policy to not create HCPCS codes for equipment used to provide a service. In addition, we stated that there soon would exist, CPT codes to describe all of the services being furnished, including any equipment that is needed to perform them, so we believe it is appropriate at this time to delete the HCPCS codes. The HCPCS codes which we proposed to delete effective January 1, 2004 were:
A full description of these HCPCS is available in the proposed rule (67 FR 47978).
We received no comments in response to this proposal. However, we have determined that our proposal to delete codes C9701 and C9703 was in error. Upon further review of this issue, we have determined that these codes were in fact established to represent complete procedures. Therefore, we will retain codes C9701 and C9703.
The commenter also commented on our August 12, 2003 proposed rule, in which we proposed assigning G0288 to new APC 0414, with a payment rate of $260.65. This commenter stated that the proposed payment is inadequate and based on flawed, imputed cost data. It also asserted that the descriptors for APC 0414 and G0288 do not restrict the use of this code to services that meet the “recognized standards and specifications” for three-dimensional computer-aided measurement planning simulation (“3D-CAMPS”) services and recommended that we revise the proposed payment for APC 0414 based on hospital acquisition cost data that they provided. The commenter also recommended that we create a revenue code specifically for APC 0414 to enable more rational charge determination for the service and that we revise the descriptors for APC 0414 and G0288 to ensure that the codes only are used for the 3D-CAMPS systems, and to clarify that the service may be applied pre- or post-surgically. The recommended descriptor is: “Three-dimensional computer-aided measurement simulation (3D-CAMPS) services for pre-surgical and post-surgical imaging.”
We agree that this can be used for treatment planning prior to surgery and for post-surgical monitoring and have revised the code descriptor to clarify this point. The descriptor for this code is revised as follows: G0288 Reconstruction, computed tomographic angiography of aorta for preoperative planning and evaluation post vascular surgery. We assume that hospitals providing this service will abide by the FDA labeling requirements for equipment used in providing this service.
We proposed to implement a comprehensive restructuring of all the new technology APCs. First, the cost intervals in the current new technology APCs are inconsistent, ranging from $50 to $1,500. Secondly, as the number of procedures assigned to new technology APCs increases, we believe that narrower cost bands are required to avoid inaccurate payment for new technology services. The increased number of new technology APCs that would result from narrowing the cost bands cannot be accommodated within the current sequence of available APC numbers. Therefore, we proposed to dedicate two new series of APC numbers to the restructured new technology APCs, which would allow us to narrow the cost bands and also afford us flexibility in creating additional bands as future needs may dictate.
We proposed to establish cost bands from $0 to $100 in increments of $50, from $100 through $2,000 in intervals of $100, and from $2,000 through $6,000 in intervals of $500. We believe that these intervals would allow us to price new technology services more appropriately and consistently. We also propose to retain two parallel sets of new technology APCs, one with status indicator “S” and the other with status indicator “T.” We solicited comments on the hierarchy of cost levels of the restructured new technology APCs.
The final list of restructured new technology APCs is in Addendum A.
We received a number of comments in support of this proposal to restructure the new technology APC bands. Therefore, we will finalize our proposal.
In the August 12, 2003 proposed rule, we discussed data development that we had undertaken to create median costs for combinations of HCPCS codes in different APCs that we believed were frequently performed on the same day. We focused our work on pairs of APCs, one of which contained a service that required an expensive device. See 68 FR 47979 for a complete description of the data development. We undertook this activity to see if creating larger classification groups of this type might increase the number of multiple procedure claims that we could use to set payment rates for these services. We also thought that the analysis might yield useful information regarding the appropriateness of the multiple procedure reduction for combinations of services that include at least one APC with an expensive device, that are commonly performed on the same date. In many cases, we found that the combination APC medians closely approximated the median that results under the current policy (that is, the sum of single medians for each APC, reducing the median for the lower cost procedure by 50 percent). In other cases, the data revealed combination APC median costs that were considerably higher or lower than under our current policy.
We concluded in the proposed rule that the results of the study provided no compelling reason to change our payment policy. We asked for comment on all aspects of the methodology, analysis, and payment options. We also asked for discussion of how we could use more multiple procedure claims were we not to create combination APCs and for an explanation of why external data should be used in lieu of our single or multiple procedure claims data to set median costs for APCs with large device costs. However, we did not propose to create combination APCs or to make payment based on the combination APC medians for 2004.
We received only a few comments on the combination APC methodology and these were in the context of why we should not apply multiple procedure reductions to specific combinations of APCs. See the discussion of multiple procedure reduction in V.D.2 for a summary of these comments and our responses.
Section 1833(t)(9)(A) of the Act requires that the Secretary review and revise the relative payment weights for APCs at least annually, beginning in 2001. In the April 7, 2000 final rule (65 FR 18482), we explained in detail how we calculated the relative payment weights that were implemented on August 1, 2000 for each APC group. Except for some reweighting due to APC changes, these relative weights continued to be in effect for CY 2001. (See the November 13, 2000 interim final rule (65 FR 67824 to 67827)).
To recalibrate the relative APC weights for services furnished on or after January 1, 2004 and before January 1, 2005, we used the same basic methodology that we described in the April 7, 2000 final rule. That is, we recalibrated the weights based on claims and cost report data for outpatient services. We used the most recent available data to construct the database for calculating APC group weights. For the purpose of recalibrating APC relative weights for CY 2004, the most recent available claims data are the approximately 127 million final action claims for hospital outpatient department services furnished on or after April 1, 2002 and before January 1, 2003. We eliminated 2.6 million claims for bill types other than OPPS bill types and claims for services furnished in Maryland, Guam, and the Virgin Islands. We matched the remaining claims that were paid under the OPPS to the most recent cost report filed by the individual hospitals represented in our claims data. We were left with about 75 million claims for which we could identify cost report data. The APC relative weights continue to be based on the median hospital costs for services in the APC groups.
We used claims for the period beginning April 1, 2002 through and including December 31, 2002 as the basis for the CY 2004 OPPS. The statute requires that we take into account new cost data and other relevant information and factors in reviewing and revising the weights, and we believe that this period will give us the most recent costs. We chose not to include the claims for the period beginning on January 1, 2002 through March 31, 2002 because they were used to set the payment rates for the 2003 OPPS and we believe that the most recent 9 months of claims data will result in payment rates that are most representative of the current relative costs of hospital outpatient services.
Since the inception of the OPPS, we have received many requests asking that we ensure that the data from claims that contain charges for multiple procedures are included in the data from which we calculate the OPPS relative payment weights. Those making the requests believe that relying solely on single-procedure claims to recalibrate APC weights fails to take into account data for many frequently performed and complex procedures, particularly those commonly performed in combination with other procedures.
We agree that it is desirable to use the data from as many claims as possible to recalibrate the relative payment weights, including those with multiple procedures. For CY 2003, we identified a number of multiple-procedure claims that could be treated as single-procedure claims, enabling us to greatly increase the number of claims used to develop the APC payment weights. However, there remain several inherent features of multiple procedure claims that prevent us from using all of them to recalibrate the payment weights. We discussed these obstacles in detail in the August 9, 2002 proposed rule (67 FR 52092, 52108 through 52111), and the November 1, 2002 final rule (67 FR 66718, 66743 through 66746).
To enable us to use more claims in the creation of median costs upon which our payment weights and rates are based, we proposed several changes to how we use claims data for the CY 2004 OPPS. Specifically, we proposed to expand the number of HCPCS codes that we “ignore” for the purpose of creating pseudo single claims from claims that contain other separately payable HCPCS codes. We also looked at dates of service on packaged HCPCS codes and packaged revenue centers, and proposed where possible, to attribute the charges to major, separately payable HCPCS codes based on the codes' dates of service. We also considered creating combination APCs for procedures that have a significant device component. Our complete discussion of the use of data to set the weights for CY 2004 OPPS follows in section III.B of this preamble.
For CY 2003 OPPS, we ignored the presence of HCPCS codes 93005, 71010, and 71020 to create pseudo-single claims where there was only one remaining separately paid, major HCPCS code on the claim. Ignoring these codes enabled us to attribute the costs of packaged HCPCS codes and packaged revenue centers to the remaining separately paid, major HCPCS codes and, thereby, create a useable psuedo single claim. We did this because we believed that the charges found in the packaged HCPCS or packaged revenue centers would be appropriately associated with the only other separately payable HCPCS that remained on the claim once the ignored codes were bypassed.
For CY 2004 OPPS, we proposed to expand the list of HCPCS codes to be ignored for purposes of creating pseudo-single claims. On claims that contain other separately payable HCPCS, we proposed to bypass the HCPCS codes in the APCs identified in Table 6. As with the previously ignored HCPCS codes 93005, 71010, and 71020, we believe that there are additional codes that are highly unlikely to have charges that are found in packaged HCPCS or in packaged revenue centers. Therefore, we believe that they also can be ignored for the purpose of creating pseudo-single claims from the remaining charges on the claim. We solicited comments on the proposed methodology to create pseudo-single claims, on the list of codes that we proposed to ignore (Table 6), and whether there are other low-cost services that we could ignore using this methodology. We also requested comments on whether we should use the charges for the codes in the APCs in Table 6 to create pseudo singles for these codes from these claims.
For CY 2004, we used dates of service on HCPCS codes and on packaged revenue centers to attribute charges to a major payable HCPCS code where the dates of service match. We could only use this approach where there are different dates of service for the separately payable major HCPCS codes. Where there are multiple major payable HCPCS codes on a claim with the same date, we could not use this approach because there was no way to tell to which major payable HCPCS code the charges from the packaged HCPCS or packaged revenue center belonged. Moreover, where the hospital did not provide dates for all packaged revenue centers, we could not attribute charges based on the date of service.
Some commenters urged us to ignore codes for procedures performed on the same day as procedures of interest to them and to package all revenue center charges and charges for packaged HCPCS codes into the code for which they were seeking a median. Some commenters gave us relatively elaborate strategies for creating pseduo-single claims out of multiple procedure claims for particular services or groups of services that were of interest to them. Some of these related to special packaging for chemotherapy services and nuclear medicine services. The commenters urged us to model our data for the 2005 OPPS according to the specifications they provided.
We did not accept the service-specific strategies for acquiring more single claims that were submitted in comments because none of them could be generalized to the entire claims population in such a way that we could be sure that they would not distort the relativity of all services. We set weights for hundreds of APCs in this system and we think it is important that the same rules governing creation of pseudo single claims from multiple procedure claims be applied across all services so that packaging occurs uniformly and the relativity of services is maintained. It is a practical impossibility to have different strategies for creating pseudo singles for each category of services.
We did not use the line items that were ignored in the calculation of medians for the APC into which they would fall because we lacked confidence that they would accurately represent the full cost of the service. We asked for comments on this in the proposed rule. Based on the comments that indicate that the data for these line items should be used in median setting, we expect to use these line items for median setting for the 2005 proposed rule.
Commenters also supported the use of dates of service on lines with revenue code charges where they could be used to attribute charges to HCPCS codes for weight setting. Some commenters advised that we should use the date of service aggregation at the beginning of the pseudo-single claim creation to achieve the best effects. Some commenters asked that we require all hospitals to use dates of service on all lines (but not before July 1, 2004), even where only revenue codes are on the lines, so that more claims could be used in future years.
Several commenters asked that we eliminate the requirement for series bills for certain services if we require a date of service for each line because the claim will grow in size as charges for multiple dates of service that are now combined on a single line with no date of service will now have to be split into multiple lines to show the date of service. The commenters fear that the increase in the lines on the claim may result in errors on the claim and there may be cashflow problems if more claims are returned to the provider. The commenters indicated that delays in payment for series bills covering 30 days of service are significant.
While we did not apply the combination APC approach, we expect to continue to explore whether this would, upon further refinement, have value in establishing correct weights for procedures performed in combination with one another. We hope to improve both of these processes next year and to develop other methods of using multiple procedure claims.
We did not use the line items for the HCPCS codes we ignored in the calculation of medians for those HCPCS codes. We asked for public comment on the issue. In view of the public comments supporting the concept of ignoring certain codes for creation of pseudo singles and supporting the validity of using these line items in the median setting for these codes, we will propose to use them for median setting for the 2005 proposed rule.
Our requirement for series bills creates efficiencies in claims processing that enable us to provide better provider service. In view of the decision to not implement the drug administration option, which would have required coding of all drugs, and seemed to be the impetus for the comment, we do not expect to revise our series bill policy.
The methodology we followed to calculate the APC relative payment weights proposed for CY 2004 is as follows:
• We excluded from the data claims for those bill and claim types that would not be paid under the OPPS (for example, bill type 72X for dialysis services for patients with end-stage renal disease (ESRD)).
• We eliminated claims from hospitals located in Maryland, Guam, and the U.S. Virgin Islands.
• Using the most recent available cost report from each hospital, we converted billed charges to costs and aggregated them to the procedure or visit level first by identifying the cost-to-charge ratio specific to each hospital's cost centers (“cost center specific cost-to-charge ratios” or CCRs) and then by matching the CCRs to revenue centers used on the hospital's CY 2001 outpatient bills. The CCRs include operating and capital costs but exclude items paid on a reasonable cost basis.
• We eliminated from the hospital CCR data 287 hospitals that we identified as having reported charges on their cost reports that were not actual charges (for example, a uniform charge applied to all services). Of these, 206 hospitals had claims data.
• We eliminated from our data claims for critical access hospitals that are not
• We calculated the geometric mean of the total operating CCRs of hospitals remaining in the CCR data. We removed from the CCR data 56 hospitals whose total operating CCR deviated from the geometric mean by more than three standard deviations.
• We excluded from our data approximately 3.11 million claims submitted by the hospitals that we removed or trimmed from the hospital CCR data.
• We matched revenue centers from the remaining universe of claims to hospital CCRs.
• We separated the remaining claims that we had matched with a cost report into the following three distinct groups: (1) Single-procedure claims; (2) multiple-procedure claims; and (3) claims on which we could not identify at least one OPPS covered service. Single-procedure claims are those that include only one HCPCS code (other than laboratory and incidentals such as packaged drugs and venipuncture) that could be grouped to an APC. Multiple-procedure claims include more than one HCPCS code that could be mapped to an APC. Dividing the claims yielded approximately 24.43 million single-procedure claims and 16.86 million multiple-procedure claims.
We converted 9.833 million multiple-procedure claims to single-procedure claims using the following criteria: (1) If a multiple-procedure claim contained lines with a HCPCS code in the pathology series (that is, CPT 80000 series of codes), we treated each of those lines as a single claim. (2) For multiple-procedure claims with a packaged HCPCS code (status indicator “N”) on the claim, we ignored line items for preoperative procedures and for those services in the APCs identified in Table 6. These are services with payment amounts below $50 (under the CY 2003 OPPS) for which we believe the charge represents the totality of the charges associated with the service (that is, that there are no packaged HCPCS or packaged revenue centers attributable to the service). If only one procedure (other than HCPCS codes in Table 6) existed on the claim, we treated it as a single-procedure claim. (3) If the claim had no packaged HCPCS codes and if there were no packaged revenue centers on the claim, we treated each line with a procedure as a single-procedure claim if billed with single units. (4) If the claim had no packaged HCPCS codes but had packaged revenue centers for the procedure, we ignored the line item for codes in the APCs identified in Table 6. If only one HCPCS code remained, we treated the claim as a single-procedure claim.
In addition, we assessed the dates of service for HCPCS codes and packaged revenue centers on each claim that contained more than one major code. Where it was possible to attribute charges for packaged HCPCS and packaged revenue centers to HCPCS codes for major procedures by matching unique dates of service, we did this and created single claims by packaging charges into the charge for the major service on the same date. We were only able to do this if the multiple major procedures had different dates of service and if there were dates of service on all of the packaged revenue centers. Dates of service on revenue centers are not required and, therefore, only claims from hospitals that submitted dates of service on revenue centers in CY 2002 could be used in this process for maximizing the number of single-procedure claims to be used for weight setting.
• To calculate median costs for services within an APC, we used only single-procedure bills and those multiple-procedure bills that we converted into single claims. If a claim had a single code with a zero charge (that would have been considered a single-procedure claim), we did not use it. As we discussed in section III.A.2 of this final rule, we did not use multiple-procedure claims that billed more than one separately payable HCPCS code with charges for packaged items and services such as anesthesia, recovery room, or supplies that could not be reliably allocated or apportioned among the primary HCPCS codes on the claim. We have not yet developed what we regard as an acceptable method of using multiple procedure bills to recalibrate APC weights that minimizes the risk of improperly assigning charges to the wrong procedure or visit.
For APCs in Table 7, we required that there be a C code on the claim for the claim to be used. These APCs require the use of a device in the provision of the service. Moreover, in 2002, hospitals were required to bill the C code in order for the device to receive pass-through
• For each single-procedure claim, we calculated a cost for every billed line item charge by multiplying each revenue center charge by the appropriate hospital-specific CCR. We used the most recent settled or submitted cost reports. Using the most recent “submitted to settled ratio,” we adjusted CCRs for the submitted cost reports but not the settled ones. If an appropriate cost center did not exist for a given hospital, we crosswalked the revenue center to a secondary cost center when possible, or used the hospital's overall CCR for outpatient department services. We excluded from this calculation all charges associated with HCPCS codes previously defined as not paid under the OPPS (for example, laboratory, ambulance, and therapy services). We included all charges associated with HCPCS codes that are designated as packaged services (that is, HCPCS codes with the status indicator of “N”).
• To calculate per-service costs, we used the charges shown in revenue centers that contained items integral to performing services. Table 8 contains a list of the revenue centers that we packaged into major HCPCS codes when they appeared on the same claim. This is a change to the packaging of revenue centers by category of service that had been done since the inception of the OPPS in the April 7, 2000 final rule (65 FR 18457). In all prior years of the OPPS, we had specific subsets of revenue centers that we packaged into major HCPCS codes based on the type of service we assigned to the HCPCS code for this purpose. For example, we had a set of revenue centers that could be packaged into visit codes and a different, but overlapping, set of revenue centers that could be packaged into surgery codes. For 2004 OPPS, we converted these categories to a single set of revenue codes (see Table 8) that would be packaged into the major HCPCS code with which it appears on a claim. We believe that this will increase the likelihood that the total charge for the major HCPCS code will capture all of the costs attributed to the services furnished. Table 8 lists packaged services by revenue center that we are proposing to use to calculate per-service costs for outpatient services furnished in CY 2004.
• We standardized costs for geographic wage variation by dividing the labor-related portion of the operating and capital costs for each billed item by the proposed FY 2004 hospital inpatient prospective payment system (IPPS) wage index published in the
• We summed the standardized labor-related cost and the nonlabor-related cost component for each billed item to derive the total standardized cost for each procedure or medical visit.
• We removed extremely unusual costs that appeared to be errors in the data using a trimming methodology analogous to what we use in calculating the diagnosis-related group (DRG) weights for the hospital IPPS. That is, we eliminated any bills with costs outside of three standard deviations from the geometric mean.
• After trimming the procedure and visit level costs, we mapped each procedure or visit cost to its assigned APC, including, to the extent possible, the proposed APC changes.
• We calculated the median cost for each APC.
To develop the median cost for observation (APC 339, HCPCS code G0244), we selected claims containing HCPCS code G0244 (Observation care provided by a facility to a patient with CHF, chest pain, or asthma, minimum eight hours, maximum forty-eight hours) that also showed one or more of the ICD-9 (International Classification of Diseases, Ninth Edition) diagnosis codes required for payment of APC 339. We ignored other separately payable codes so that the claims with G0244 would not be excluded for having multiple major procedures on a single claim. We packaged the costs of allowable revenue centers and HCPCS codes with status indicator “N” into the cost of G0244, and trimmed as was done for the calculation of the median costs for other APCs.
• Using the median APC costs, we calculated the relative payment weights for each APC. As in prior years, we scaled all the relative payment weights to APC 0601, Mid-level clinic visit, because it is one of the most frequently performed services in the hospital outpatient setting. We assigned APC 0601 a relative payment weight of 1.00 and divided the median cost for each APC by the median cost for APC 0601 to derive the relative payment weight for each APC. Using 2002 data, the median cost for APC 0601 is $58.78.
Section 1833(t)(9)(B) of the Act requires that APC revisions, relative payment weight revisions, and wage index and other adjustments be made in a manner that ensures that estimated aggregate payments under the OPPS for 2004 are neither greater than nor less than the estimated aggregate payments that would have been made without the changes. To comply with this requirement concerning the APC changes, we compared aggregate payments using the CY 2003 relative weights to aggregate payments using the CY 2004 proposed weights. Based on this comparison, we made an adjustment of 0.981635942 to the weights. The weights that we developed for 2004 OPPS, which incorporate the recalibration adjustments explained in this section, are listed in Addendum A and Addendum B.
A commenter stated that we should stabilize the APC rate when a device comes off of pass-through status. Several commenters stated that the proposed rates reverse the progress that was made in 2002 by using the manufacturer prices in the setting of medians for 2002. Commenters indicated that we should adjust the medians from claims data to ensure that no APC's median falls more than 5 percent compared to the medians used for payment in 2003. A commenter suggested that we adjust the medians whenever there is more than a 20 percent reduction from one year to the next. Another commenter indicated that all APCs that decline more than 10 percent compared to 2003 adjusted medians should be adjusted in the same way that we proposed to adjust medians for drugs, biologicals and radiopharmaceuticals and that these adjustments also should apply to brachytherapy sources.
Another commenter asked that we let no median cost used in weight setting fall more than half the difference between the loss and 15 percent because this methodology offers a buffer for hospitals to minimize annual changes. Another commenter indicated that we should freeze the 2003 payment rates, particularly for brachytherapy services and should educate providers to show all of the charges for all of the ancillary services on the claim so that they will be included in the development of relative weights for future years.
As we indicated in the proposed rule, for 2004, some of the same services had significant declines in median costs compared to the 2003 adjusted median but not compared to the 2003 median before adjustment. We did not propose to adjust the 2004 medians for procedural APCs compared to the 2003 adjusted median. Instead, we indicated that we would consider using external data that could be made publicly available if we were convinced that the medians for 2004 would result in payment rates that were grossly aberrant in the context of the service.
After reviewing the comments, and our final claims data for 2004, we decided that we would not adjust the medians for procedural APCs but that we would adjust medians for certain APCs for which we were given external data that could be made public because we were convinced that the medians from our claims data resulted in median costs that were grossly variant. We adjusted the medians for the following APCs using external data: APC 0107 (insertion of cardioverter-defibrilator), APC 0108 (Insertion/replacement/repair of cardioverter defibrillator leads and insertion of pulse generator), APC 0222 (implantation of neurostimulator), APC 0039 (which was broken out of APC 0222) and APC 0674 (prostate cryoablation). For each of these APCs we calculated an adjusted device portion of the median by taking one part of the device cost from our data and one part of the device cost supplied by external data. We added the adjusted device median to the nondevice median from our data to acquire the adjusted median. In the case of APC 0108, we used the external device cost data that was used to set the median for the 2003 OPPS because we received no outside data for the 2004 OPPS for this APC and because the proposed median of $28,685.30 set forth in the proposed rule was considerably higher than the final rule data median of $23,944.80, which resulted when additional claims were used to calculate the median cost. In other cases, we found that corrections in the APC assignment or splitting an APC into two APCs resulted in more accurate median costs.
For 2004, we will adjust median costs for drugs, biologicals and radiopharmaceuticals as proposed for reasons discussed in section VI.B.3. We will freeze payments for blood and blood products at the 2003 rates for reasons discussed in section VI.B.8. We will pay single indication orphan drugs at 88 percent AWP for reasons discussed in section VI.B.6.
Using the data available to us at the time we developed the proposed rule, we identified APCs that showed decreases in median cost of more than 10 percent compared to the adjusted medians on which their payments were based for 2003. We discussed specific APC medians to the extent that we understood the reason for the decreases or were particularly puzzled by the change. We requested comments on the medians and provided a set of criteria for external data that could be used to supplement the median costs derived from our claims data. The criteria we provided regarding the use of external data included a stipulation that the data must not be confidential because any data we use must be available to the public. We also provided a list of preferred (but not required) criteria that addressed our preferences for characteristics of the data. We indicated that to be of optimal use, the external data should represent a divergent group of hospitals by location and type, identify the number of devices billed to Medicare as well as rebates or reductions for bulk purchases, identify the HCPCS codes with which the devices would be used, identify the source of the data and include both charges and costs for each hospital by quarter for the last 3 quarters of 2002 (68 FR 47987). We did not propose to adjust the medians for procedural APCs in the manner that they were adjusted for the 2003 OPPS. For 2004 we did not apply a systematic adjustment to all medians that declined more than a specified percentage in comparison with the medians for 2003. Instead, as discussed previously, we adjusted the medians of 5 APCs based on external data where we thought it was necessary and we have split some APCs where we thought doing so would result in more accurate relative weights.
Some commenters said that we should use external data that are proprietary and maintain the confidentiality of such data. Several commenters indicated that the prices for medical devices are often covered by agreements that preclude the parties from disclosing the price of the device and that we should use the data to set prices, notwithstanding that they cannot be made available for inspection by the parties whose payments may be reduced by their use. Several commenters stated that we used external data that were proprietary for setting of 2002 weights, and for some 2003 weights and that we should do so again because data from manufacturer price lists and invoices more accurately reflect the costs attained by applying the cost-to-charge ratios for hospital departments to the charges for the devices to get costs to package into the APC medians. These commenters stated that external data should be used more widely than data based on the criteria that were used for the 2003 OPPS for the use of external data (that is, that the device-cost portion of the APC exceeded 80 percent of the total APC cost for external data to be used). These commenters stated that external data should be used for all APCs that show significant reductions since the 2002 OPPS. In particular, they cited the APC Panel recommendation that outside data be used to set the median cost for APC 107.
Some commenters had specific comments on the criteria we provided for use of external data. One commenter stated that its members did not have and could not easily acquire the data that would ensure that the data represent a diverse group of hospitals by location and type nor could they identify specific hospitals that used their devices. The commenter also stated that its members could not provide the information on discounts and rebates against their price lists that we requested. The commenter indicated that its members did not want to provide the HCPCS codes in which their products were used but instead, wanted us to require the typical applications that they feel are most appropriate. The commenters agreed that they could provide the source of the data. The commenters stated that its members could not provide data that corresponded with the same period of time being used to set the relative weights for all APCs.
We do not believe that widespread use of external data to set median costs for selected APCs is appropriate in a system that relies on relativity to establish payment amounts. We are sympathetic with the concerns of some commenters that widespread use of external data will result in payment inequities rather than appropriate payments to hospitals based on the relative weights of the services they furnish. However, we are also concerned about circumstances in which we are convinced that the payment amounts that would result from the medians from our data will discourage hospitals to provide access to needed care. Therefore, in the case of several APCs as discussed elsewhere, we used external data to adjust the medians. In general, however, we continue to have confidence in the integrity of our claims data with respect to the procedural APCs. For the future, we prefer to seek ways to refine the methodologies that we apply to our own data, such as the use of a greater percentage of claims to set the weights for certain APCs.
In preparation for 2005 OPPS, we hope to calculate OPPS amounts using the mean costs, and also mean and median charges (to circumvent the effects of cost-to-charge ratios), and the 2004 OPPS conversion factor. This should give us a more complete view of the impact of revising our methodology in this way.
Other commenters opposed the use of cost-to-charge ratios applied to charges to acquire cost data. They indicated that in many cases, we had to use overall hospital cost-to-charge ratios that had no relevance to the costs of the services being determined and therefore resulted in invalid representations of median costs. They also indicated that both the departmental and the hospital specific cost-to-charge ratios were derived in part from costs that are commingled between inpatient and outpatient services and therefore are not necessarily representative of a ratio that could be applied to outpatient services alone, as we do. Some commenters indicated that we ignore studies that demonstrate that charges are compressed, with low-cost services being marked up more than high-cost services, thus resulting in systematic underpayment of high-cost items and diminishing beneficiary access to high-cost services. A commenter suggested that, for drugs, biologicals and radiopharmaceuticals, we set a minimum payment based on the Federal Supply Schedule price plus a percentage markup to ensure that payment for drugs, biologicals, and radiopharmaceuticals was sufficient to make them available to Medicare beneficiaries who need them.
Several commenters indicated that the application of hospital specific cost-to-charge ratios at the department level where available, otherwise at the hospital level will always result in incorrect costs because hospitals do not have a consistent markup for all items and services within a department. They indicated that hospitals markup low-cost items more than high-cost items and that therefore, the application of a cost-to-charge ratio, even at the department level, will never result in the hospital acquisition cost for an item. They indicated that there is no easy adjustment to correct for charge compression and they urge us to explore using external data, developing surveys or doing studies to acquire hospital cost data that can be used in place of the median costs acquired from claims data.
Comments and responses on payment amounts for specific APCs are included in section II.B.
We proposed rule to split APC 0199, Obstetrical Care Service, into two APCs.
For 2004, we have made changes to both of these APCs. In the case of APC 0222, we removed HCPCS code 61885 from APC 0222 and we placed it in its own APC 0039 because the APC Panel recommended that its status indicator be changed from a “T” to an “S” in order to not apply the multiple procedure reduction when two devices are implanted, as is often the case. Moreover, for both APC 0222 and APC 0039, we accepted external data for the device cost and used one part external data and one part claims data for the device portion of the APC's median cost to which we added the nondevice portion of the median cost. This increased the median cost for APC 0222 from a final data median of $11,050.90 to an adjusted median cost of $13,383.79. This increased the median cost for APC 0039 from a final data median cost of $10,741.66 to an adjusted median cost of $13,555.80. We believe that this more accurately reflects the relative cost of these services to other OPPS services.
In the case of APC 0225, we split the APC into two APCs, (APC 0225) and (APC 0040). APC 0225 contains CPT codes 63655, 64553, 64573, 64580 and 64577 and for this final rule, has a median cost of $11,873.72. APC 0040 contains CPT codes 64560, 64555, 63650, 64561, 64575, 64581, and 64565 and, for this final rule, has a median cost of $3,002.98. Both APCs have a status indicator “S” (to which multiple procedure discounts do not apply).
We believe that these changes will result in more appropriate relative weights for these services in relation to other OPPS services.
For the final rule, we acquired more single procedure claims but again, none of the single procedure claims contained both sources and needles or catheters. We then revised our criteria to require only that the claims must contain sources (C1717). This gave us 27 single procedure claims that we used to acquire a median cost of $936.52, a significant increase over the median for all claims of $795.83.
In the course of discussions regarding this APC, some parties suggested that we ignore other procedure codes, such as dosimetry codes, that are typically found on claims for these services because the commenters believe that no charges billed under packaged revenue codes or packaged HCPCS should be allocated to those other procedures. We plan to explore the expansion of the codes we ignore for selection of single procedure claims for the 2005 OPPS. However, we did not believe we had sufficient information or data to make such a change for the final rule for 2004. We again note that it is important for
As we previously indicated, for the 2004 OPPS, we will pay for prostate brachytherapy using the CPT codes and the HCPCS codes for brachytherapy sources used. We expect that the majority of the CPT codes billed will be 77778 (APC 0651) and 55859 (APC 0163) and that the HCPCS codes billed will be C1718 (brachytherapy source, iodine 125) or C1720 (brachy source, palladium 103). When we calculate the total median cost on which the payment to the hospital for the services involved in prostate brachytherapy will be based, we determine that paying under APC 0651 and APC 0163 with separate payment for the sources (APC 1718 or APC 1720) will result in more payment than would be the case under the packaged payment we proposed. For example, if we assume that 100 sources are implanted during a prostate brachytherapy procedure, we would expect the hospital to bill 77778, 55859, and 100 units of either C1718 or C1720. The sum of the applicable medians will be $6,486.54 if using iodine sources and $7,261.54 if using palladium sources. This is a considerable increase over the payments in 2003, which were $5,154.34 with iodine sources and $5,998.24 with palladium sources. We believe that this circumstance will be the predominant use of APC 0651 and that the total median for the service will result in appropriate relative weights on which to set the payments.
APC 0312 was billed just over 850 times for the 9 months of data used in the final rule. Of the five CPT codes in this APC, four have median costs for the CPT code of less than $400 and one code, 77776, Interstitial radiation source application, simple has a median of $2,218.18. However, that code does not meet the test of being significant, which we define as having a frequency greater than 1,000 or a frequency lower than 99 and a percentage of larger than or equal to 2 percent. Therefore, we have not moved it from the APC.
Response: We recognize that with the device being paid as a pass-through for the first time effective April 1, 2001, it is likely that there are irregularities in the claims data regarding the number of units of the device that have probably led to a median cost that is not representative of the relative cost of the procedure with the device packaged. Therefore, for 2004, we used one part of the acquisition cost of 6 probes ($5,000 for 6 probes which are used in 64 percent of the procedures) and one part of the device cost from our claims data to create an adjusted device cost median to which we added the nondevice cost from our claims data to acquire an adjusted median of $6,915.08 on which we based the relative weight for the 2004 OPPS. This compares favorably to the median of $5,925.41 on which the August 12, 2003 proposed rule was based and also compares favorably to the final rule data median of $6,283.49 on which the payment weights would have been based had we not used external data to adjust the device portion of the median.
A new brachytherapy source, Cesium-131, came to our attention during the latter part of this year, through the pass-through device application process. We reached a decision on this application after publication of the August 12, 2003 proposed rule. We determined that this source did not meet our criteria for creation of a new pass-through category for devices. However, we believe that separate payment for a substantially equivalent new brachytherapy source is warranted, since we pay separately for other sources. The indications presented to us for Cesium-131 were substantially the same as those for Palladium-103 and Iodine-125. As such, the reasons for separate payment of brachytherapy sources, for example, variation in the number of seeds or other source forms make packaging into a clinical APC an undesirable option. Therefore, we have decided to create a separate APC so that the costs of this new source may be tracked like those of other brachytherapy sources. The payment rate for this source is $44.67 per seed. This payment rate is close to the reported price of the Cesium-131 seed and equal to our payment rate based on claims for Palladium-103, a source that is used for similar clinical indications.
In our implementing instructions for the 2004 OPPS update, we will remind hospitals and the contractors who process OPPS claims that, in order to receive payment for a procedure in APC 246, hospitals are required to report the associated IOL charge under revenue code 276. We will also consider for the 2005 OPPS update the commenter's recommendation that we use only claims with revenue code 276 to recalibrate the relative payment weight for APC 246. Our data are extremely robust for this APC (with a frequency of nearly 520,000), and they indicate that the preponderance of the claims used to establish the 2004 median does include revenue code 276.
With respect to the comment that we should add APC 0656 to the list of APCs for which a device was required to be on the claim for weight setting, we believe it would be inappropriate to do so for the 2004 OPPS. This is because the drug-eluting stent was not approved by the FDA until 2003, and, therefore, it did not appear in the 2002 data. Moreover, since there are no device codes for coronary stents for use on claims in 2003, the 2003 data will not contain the device codes that would be needed to create a subset of stent device claims to use for the 2005 OPPS. However, in view of the reinstitution of device coding for 2004, we will consider this comment in our work to develop the 2006 OPPS. Moreover, as we indicated above, we based the payment for APC 0656 on the median for APC 0104, which was calculated from claims that contained C codes for stents.
For example, several commenters expressed concern regarding the limitation imposed by the code descriptor for HCPCS code G0242, which restricts its use to planning for Cobalt 60-based treatment. While some commenters stated that planning costs for linear accelerator-based treatment and Cobalt 60-based treatment are identical, other commenters asserted that planning costs for these services differ significantly.
Commenters recommended the following options to resolve the issue:
(1) Create another G code to distinguish between linear accelerator-based SRS and Cobalt 60-based SRS, which would be consistent with the two G codes (G0173 for linear accelerator-based and G0243 for Cobalt 60-based) for SRS treatment delivery; or
(2) Modify the descriptor for HCPCS code G0242 to describe treatment planning for both linear accelerator-based and Cobalt 60-based SRS treatments. For clarification purposes, the current G codes for SRS treatment delivery services are as follows:
G codes for linear accelerator-based SRS treatment delivery:
HCPCS code G0173—Stereotactic radiosurgery, complete course of therapy in one session.
HCPCS code G0251—Linear accelerator-based stereotactic radiosurgery, delivery including collimator changes and custom plugging, fractionated treatment, all lesions, per session, maximum 5 sessions per course of treatment.
G code for Cobalt 60-based SRS treatment delivery:
HCPCS code G0243—Multi-source photon stereotactic radiosurgery, delivery including collimator changes and custom plugging, complete course of treatment, all lesions. The current G code for Cobalt 60-based SRS treatment planning is as follows:
HCPCS code G0242—Multi-source photon stereotactic radiosurgery (Cobalt 60 multi-source converging beams) plan, including dose volume histograms for target and critical structure tolerances, plan optimization performed for highly conformal distributions, plan positional accuracy and dose verification, all lesions treated, per course of treatment.
HCPCS code G0338—Linear-accelerator-based stereotactic radiosurgery plan, including dose volume histograms for target and critical structure tolerances, plan optimization performed for highly conformal distributions, plan positional accuracy and dose verification, all lesions treated, per course of treatment.
While we recognize the costs to provide multi-session image-guided robotic SRS therapy may be greater than the current payment rate for HCPCS code G0251, we received no convincing cost data supporting commenters' claims that the costs of performing each additional session subsequent to the first session of a fractionated treatment is equivalent to the costs of performing a complete session. Rather, we believe that certain economies of scale are realized when performing each additional session subsequent to the first session of a fractionated treatment. That is, based on our understanding of the therapy, we do not believe that the same exact amount of hospital resources would be utilized for each subsequent session.
Statements provided by various interested parties indicate that the costs of providing each session of a fractionated treatment range from $2700 to $9000. However, we received no convincing data to substantiate these statements. We have estimated that approximately 75 percent of the costs of a complete session would be required to provide each additional session subsequent to the first session of a fractionated treatment. Therefore, we will place HCPCS code G0340 in new technology APC 1525, which covers procedures ranging from $3500 to $4000 in payment and which pays $3750. This new technology APC range pays approximately seventy-five percent of the payment for HCPCS code G0339. We will modify the descriptor for HCPCS code 0340 to describe additional sessions (second through fifth sessions) subsequent to the first session of a fractionated treatment. In addition, we will expand the descriptor for a complete session (HCPCS code G0339) to include the first session of a multi-session treatment. To further clarify, when providers perform multi-session image-guided robotic SRS therapy, they should bill using HCPCS code G0339 for the first session. For each additional session subsequent to the first session, providers should bill using only HCPCS code G0340 up to a maximum of five sessions.
Although we received no clinical data to substantiate the use of a single session versus multiple fractionations up to five sessions, a few commenters stated that a maximum of five sessions may be utilized to treat certain conditions; therefore, we will continue to pay for the delivery of multi-session therapy (HCPCS code G0340) up to a maximum of five sessions per course of treatment. When additional data is submitted, we may reconsider this payment decision.
As described above, we will create the following new G codes to identify image-guided robotic linear accelerator-based SRS treatment delivery:
HCPCS code G0339—Image-guided robotic linear accelerator-based stereotactic radiosurgery, complete course of therapy in one session, or first session of fractionated treatment.
HCPCS code G0340—Image-guided robotic linear accelerator-based stereotactic radiosurgery, delivery including collimator changes and custom plugging, fractionated treatment, all lesions, per session, second through fifth sessions, maximum five sessions per course of treatment.
We disagree with the commenter's recommendation that a separate APC
The placement of intermediate (CPT code 77523) and complex (CPT code 77525) proton beam therapies in APC 650 in the November 1, 2002 final rule (67 FR 66718) for the 2003 OPPS was an error that was corrected in the correction notice of February 10, 2003 (68 FR 6636). We clarified in the correction notice that these CPT codes were placed in new technology APC 0712 for CY 2003 because they lacked sufficient cost data to confidently move these codes out of a new technology APC. We continue to lack sufficient cost data to move these codes into a clinical APC; therefore, we will crosswalk CPT codes 77523 and 77525 from new technology APC 0712 to the corresponding new technology APC 1511 for CY 2004. Once sufficient data is available, we will be able to determine whether intermediate and complex proton beam therapies should be placed in the same APC.
Section 1833(t)(6) of the Act provides for temporary additional payments or “transitional pass-through payments” for certain medical devices, drugs, and biological agents. As originally enacted by the BBRA, this provision required the Secretary to make additional payments to hospitals for current orphan drugs, as designated under section 526 of the Federal Food, Drug, and Cosmetic Act, Pub. L. 107-186; current drugs, biological agents, and brachytherapy devices used for the treatment of cancer; and current drugs and biological products.
For those drugs, biological agents, and devices referred to as “current,” the transitional pass-through payment began on the first date the hospital OPPS was implemented (before enactment of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act (BIPA), Pub. L. 106-554, enacted December 21, 2000).
Transitional pass-through payments are also required for certain “new” medical devices, drugs, and biological agents that were not being paid for as a hospital outpatient service as of December 31, 1996 and whose cost is “not insignificant” in relation to the OPPS payment for the procedures or services associated with the new device, drug, or biological. Under the statute, transitional pass-through payments can be made for at least 2 years but not more than 3 years.
Section 1833(t)(6)(B)(i) of the Act required that we establish by April 1, 2001, initial categories to be used for purposes of determining which medical devices are eligible for transitional pass-through payments. Section 1833(t)(6)(B)(i)(II) of the Act explicitly authorized us to establish initial categories by program memorandum (PM). On March 22, 2001, we issued two PMs, Transmittals A-01-40 and A-01-41 that established the initial categories. We posted them on our Web site at:
Transmittal A-01-41 includes a list of the initial device categories, a crosswalk of all the item-specific codes for individual devices that were approved for transitional pass-through payments, and the initial category code by which the cross-walked individual device was to be billed beginning April 1, 2001. Items eligible for transitional pass-through payments are generally coded using a Level II HCPCS code with an alpha prefix of “C.” Pass-through device categories are identified by status indicator “H” and pass-through drugs and biological agents are identified by status indicator “G.” Subsequently, we added a number of additional categories, retired 95 categories effective January 1, 2003, and made clarifications to some of the categories' long descriptors found in various program transmittals. A list of current device category codes can be found below, in Table 10.
Section 1833(t)(6)(B)(ii) of the Act also requires us to establish, through rulemaking, criteria that will be used to create additional device categories for transitional pass-through payment. The criteria for new categories were the subject of a separate interim final rule with comment period published in the
Transitional pass-through categories are for devices only; they do not apply to drugs or biological agents. The regulations at § 419.64 governing transitional pass-through payments for eligible drugs and biological agents are unaffected by the creation of categories.
The process to apply for transitional pass-through payment for eligible drugs and biological agents or for additional device categories can be found on respective pages on our Web site at
Section 1833(t)(6)(E) of the Act limits the total projected amount of transitional pass-through payments for a given year to an “applicable percentage” of projected total Medicare and beneficiary payments under the hospital OPPS. For a year before 2004, the applicable percentage is 2.5 percent; for 2004 and subsequent years, we specify the applicable percentage up to 2.0 percent. We proposed to set the percentage at 2.0 percent for the 2004 OPPS.
If we estimate before the beginning of the calendar year that the total amount of pass-through payments in that year would exceed the applicable percentage, section 1833(t)(6)(E)(iii) of the Act requires a prospective uniform reduction in the amount of each of the transitional pass-through payments made in that year to ensure that the limit is not exceeded. We make an estimate of pass-through spending to determine not only whether payment exceeds the applicable percentage but also to determine the appropriate reduction to the conversion factor.
In the August 12, 2003 proposed rule, we described in the detail the methodology we used to make an estimate of pass-through spending in 2004 (68 FR 47992). In general, we specified that after using the respective methodologies described in the proposed rule, to determine projected 2004 pass-through spending for the groups of devices, drugs, and biological agents, we would calculate total projected 2004 pass-through spending as a percentage of the total projected payments (Medicare and beneficiary payments) under OPPS to determine if the pro rata reduction would be required.
Table 9 shows our current estimate of 2004 pass-through spending for known pass-through drugs, biologicals, and devices based on information available at the time this table was developed. We specified in the proposed rule that we were uncertain whether estimated pass-through spending in 2004 would exceed $456 million (2.0 percent of total estimated OPPS spending) because we had not yet completed the estimate of pass-through spending for a number of drugs and devices. In particular, we did not have estimates for those drugs still under agency review for additional pass-through payments beginning October 2003 or the changes in pass-through spending that could result from quarterly rather than annual updates of AWP for pass-through drugs. Finally, we would incorporate an estimate of pass-through spending for items for which pass-through payment becomes effective later in 2004 (that is, April 1, 2004; July 1, 2004; and October 1, 2004) based on estimates of items that become eligible for pass-through payment on October 1, 2003 and January 1, 2004. Specifically, we would assume a proportionate amount of spending for items that become eligible later in the year while making an adjustment to account for the fact that items made eligible later in the year will not receive pass-through payments for the entire year. We invited comments on the methodology we proposed and the estimates for utilization that appeared in Table 12 of the August 12, 2003 proposed rule. We received several comments on this proposal, which are summarized below along with our responses.
We finalized our estimate of 2004 pass-through spending and, for the reasons discussed below, we have determined that no pro rata reduction will be required in 2004. As discussed below the estimate falls under the statutory limit of 2.0 percent. Therefore, the conversion factor has been increased correspondingly from the proposed rule by 0.7 percent.
Section 1833(t)(6)(B)(iii) of the Act requires that a category of devices be eligible for transitional pass-through payments for at least 2, but not more than 3, years. This period begins with the first date on which a transitional pass-through payment is made for any medical device that is described by the category. We proposed that two device categories currently in effect would expire effective January 1, 2004. Our proposed payment methodology for devices that have been paid by means of pass-through categories, and for which pass-through status would expire effective January 1, 2004, is discussed in the section below.
Although the device category codes became effective April 1, 2001, most of the item-specific “C” codes for pass-through devices that were crosswalked to the new category codes were approved for pass-through payment in CY 2000 and as of January 1, 2001. (The crosswalk for item-specific “C” codes to category codes was issued in Transmittals A-01-41 and A-01-97). We based the expiration dates for the category codes listed in Table 10, on when a category was first created, or when the item-specific devices that are described by, and included in, the initial categories were first paid as pass-through devices, before the implementation of device categories. The device category expiration dates are listed in Table 10. We proposed to base the expiration date for a device category on the earliest effective date of pass-through payment status of the devices that populate that category. There are two categories for devices that will have been eligible for pass-through payments for more than 2
A comprehensive list of all currently effective pass-through device categories is displayed in Table 10. Also displayed
The methodology used to base expiration of a device category is the same as that used to determine the 95 initial categories that expired as of January 1, 2003. A list including those 95 categories that expired as of January 1, 2003 (as well as 5 categories that continued to be paid in 2003) is found in the November 1, 2002 final rule (67 FR 66761 through 66763).
We received several comments on this proposal, which are summarized below along with our responses.
In the November 1, 2002 final rule, we established a policy for payment of devices included in pass-through categories that are due to expire (67 FR 66763). We stated that we would package the costs of the devices no longer eligible for pass-through payments in 2003 into the costs of the clinical APCs with which the devices were billed in 2001. There were very few exceptions to the policy (for example, brachytherapy sources for other than prostate brachytherapy), and we proposed to make no changes. Therefore, we proposed that payment for the devices that populate C1765 and C2618, which we proposed would cease to be eligible for pass-through payment on January 1, 2004, would be made as part of the payment for the APCs with which they are billed.
The methodology that we proposed to use to package expiring pass-through device costs is consistent with the packaging methodology that we describe in section II.B.5. For the codes in APCs displayed in Table 10 of the proposed rule, we proposed to use only those claims on which the hospital included the “C” code and to discard the claims on which no “C” code is billed. We proposed to limit our analysis to the claims with “C” codes because we are not confident that the claims for the relevant APCs include the charges for the devices unless the “C” codes are specifically billed.
To calculate the total cost for a service on a per-service basis, we included all charges billed with the service in a revenue center in addition to packaged HCPCS codes with status indicator “N.” We also packaged the costs of devices that we proposed would no longer be eligible for pass-through payment in 2004 into the HCPCS codes with which the devices were billed.
We received several comments on this proposal, which are summarized below along with our responses.
Other commenters said that CMS should reinstate the C codes for reporting of devices so that CMS and others can ensure that only correctly coded claims are used to set medians for APCs into which device costs are packaged. They said that coding for devices is needed so that CMS can be assured that the costs of the devices are packaged into the costs for the procedure when the medians for the procedure are set. They urged us to continue to use the presence of an appropriate device code as a criterion for claims used to set medians for devices.
For APC 0313 (high dose rate brachytherapy), we attempted to require both brachytherapy sources HDR Iridium 192 (C1717) and either a catheter (C1728) or needle (C1715) but we found that no single procedure claims met those criteria. Hence, the median for APC 0313 that appeared in the 2003 OPPS final rule was the median for claims that did not meet the specified criteria and it was mistakenly included in Table 10 in the NPRM. For this final rule, we again began by applying the criteria including source and needle or catheter codes, but still no claims met the criteria. Therefore, we sought only single procedure claims that contained brachytherapy sources. We found 27 single procedure claims that met the revised criteria and we used the median cost of $936.52 that resulted from those claims.
In the November 30, 2001 final rule, we explained the methodology we used to estimate the portion of each APC rate that could reasonably be attributed to the cost of associated devices that are eligible for pass-through payments (66 FR 59904). Beginning with the implementation of the 2002 OPPS update (April 1, 2002), we deduct from the pass-through payments for the identified devices an amount that offsets the portion of the APC payment amount that we determine is associated with the device, as required by section 1833(t)(6)(D)(ii) of the Act. In the November 1, 2002 final rule, we published the applicable offset amounts for 2003 (67 FR 66801).
For the 2002 and 2003 OPPS updates, we estimated the portion of each APC rate that could reasonably be attributed to the cost of an associated pass-through device that is eligible for pass-through payment using claims data from the period used for recalibration of the APC rates. Using these claims, we calculated a median cost for every APC without packaging the costs of associated C codes for device categories that were billed with the APC. We then calculated a median cost for every APC with the costs of associated device category C codes that were billed with the APC packaged into the median. Comparing the median APC cost minus device packaging to the median APC cost including device packaging enables us to determine the percentage of the median APC cost that is attributable to associated pass-through devices. By applying these percentages to final APC rates, we determined the applicable offset amount. We included any APC on the offset list for which the device cost was at least 1 percent of the APC's cost.
As we discussed in our November 1, 2002 final rule (67 FR 66801), the listed offsets are those that may potentially be used because we do not know which procedures would be billed with newly created categories.
After publication of the November 1, 2002 final rule, we received a comment indicating that in some cases it may be inappropriate to apply an offset to a new device category because the device category is not replacing any device whose costs have been packaged into the APC. We agree with this comment
We added that we could use this methodology to establish the device offset amounts for the 2004 OPPS because we are using 2002 claims on which device codes are reported. However, for the 2005 update to OPPS, we proposed to use 2003 claims that would not include device coding. Thus, for 2005, we are considering whether or not to use the charges from lines on the claim having no HCPCS code but have charges under revenue codes 272, 275, 276, 278, 279, 280, 289, and 624 as proxies for the device charges that would have been billed with HCPCS codes for these devices in previous years. We are also considering the reinstitution of the C codes for expired device categories and requiring hospitals to use one or more newly created C codes for identification of devices and costs on claims.
We proposed to review each new device category on a case-by-case basis to determine whether device costs associated with the new category are packaged into the existing APC structure.
We reviewed the device categories eligible for continuing pass-through payment in 2004 to determine whether the costs associated with the device categories are packaged into the existing APCs. For the categories existing as of publication of the proposed rule, we determined that there are no close or identifiable costs associated with the devices in our data related to the respective APCs that are normally billed with those devices. Therefore, for these categories we proposed to set the offset to $0 for 2004.
If we create a new device category and determine that our data contain identifiable costs associated with the devices in any APC, we would apply an offset. We proposed, if any offsets apply, for new categories, to announce the offsets in a transmittal that announces the information regarding the new category.
We received several comments on the proposal, which are summarized below along with our responses.
We also will publish the device percentages related to APCs on our web site. We believe this information is useful to the public even if we do not use the information to apply any particular offset to new device categories, because we use this information to apply the tests of “not insignificant cost” to a proposed new device category application. A transitional pass-through device category must have an average cost that is not insignificant in relation to the OPD fee schedule amount, according to section 1833(t)(6)(A)(iv)(II) of the Act.
In our discussion in the proposed rule of recommendations of the Advisory Panel, we noted that the Panel asked us to analyze our data to determine if we may be underpaying for devices when the multiple procedure policy is applied (68 FR 47976). We made no proposal to change our policy regarding the multiple procedure reduction for device-related APCs, but we did receive a number of comments on the topic.
Decisions regarding the application of the multiple procedure SIs are made independently for the Medicare physician fee schedule and the OPPS. The physician fee schedule decision is heavily dependent upon the work performed by the physician and the OPPS decision is made only with regard to the resources the hospital supplies for the service to be performed. There is no reason to believe that a decision to reduce or not reduce for multiple procedures in one system would necessarily justify that same decision in the other system.
For 2004 OPPS we have not changed the policy. However, as we did for 2003 OPPS, we have changed the SI for certain APCs for which we were convinced that the application of the multiple procedure reduction would result in inappropriate payment. For 2005, we hope to analyze the effects of a more systematic approach to determining when we should apply the
In the proposed rule, we expressed concern about the extent to which Medicare pays more for pass-through drugs than other payers and more than the market-based price of drugs. To address this problem of how to pay appropriately for drugs that are priced using the AWP, we are developing regulations that would revise the current payment methodology for Part B covered drugs paid under section 1842(o) of the Act. We proposed to adopt and apply the provisions of the final AWP rule to establish the AWP of pass-through drugs payable under the OPPS. If implementation of the AWP final rule necessitates mid-year changes in the 2004 OPPS payment rates for pass-through drugs, we proposed to make those changes on a prospective payment basis through our regular OPPS Transmittal process and PRICER quarterly updates. We further proposed to issue instructions by program memorandum regarding implementation of the provisions of the AWP final rule to set payment rates for pass-through drugs under the OPPS.
We stated that if the AWP final rule is not issued in time to permit us to apply its provisions to price pass-through drugs furnished on or after January 1, 2004, we proposed to use 95 percent of the AWP listed in the most recent quarterly update of the Single Drug Pricer (SDP). If a drug with pass-through status is not included in the SDP, we proposed to forward to the SDP contractor the AWP information submitted as part of the pass-through application for calculation of an allowed payment amount.
Because the January SDP would not be available in time, we proposed to announce the January 1, 2004 prices for pass-through drugs in our January 2004 OPPS implementing instructions to fiscal intermediaries and in the January 2004 OPPS PRICER rather than in the 2004 final rule, which is to be published in the
A provider expressed reservations about the impact of the AWP rule, which could precipitate a shift in care from physicians' offices to hospitals. This commenter recommended that we determine pass-through payment
We have carefully considered the commenter's concern about the confusion that could result if we were to revise the payment amounts for pass-through drugs and biologicals by installing prices from the January 2004 update of the SDP in the OPPS PRICER for implementation beginning January 1, 2004. We agree with the commenter that, because of the timing, this proposal could create operational problems both for providers and for our claims processing systems. Therefore, we will retain the payment amounts published in this final rule as the payment amounts for pass-through drugs effective January 1, 2004.
Further, to keep quarterly changes to a minimum, we have decided not to implement at this time our proposal to update the AWP for pass-through drugs paid under the OPPS on a quarterly basis in accordance with quarterly SDP updates.
At this time, we are not implementing the AWP rule. Therefore, we are not making final the OPPS changes we proposed that would have resulted from the AWP rule.
Under the OPPS, we currently pay for radiopharmaceuticals, drugs, and biologicals including blood, and blood products, which do not have pass-through status, in one of three ways: packaged payment, separate payment (individual APCs), and reasonable cost. As we explained in the April 7, 2000 final rule (65 FR 18450), we generally package the cost of drugs and radiopharmaceuticals into the APC payment rate for the procedure or treatment with which the products are usually furnished. Hospitals do not receive separate payment from Medicare for packaged items and supplies, and hospitals may not bill beneficiaries separately for any such packaged items and supplies whose costs are recognized and paid for within the national OPPS payment rate for the associated procedure or service. (Transmittal A-01-133, a Program Memorandum issued to Intermediaries on November 20, 2001, explains in greater detail the rules regarding separate payment for packaged services). As we explained in the November 1, 2002 final rule (67 FR 66757), we do not classify diagnostic and therapeutic radiopharmaceutical agents as drugs or biologicals as described in section 1861(t) of the Act.
While we have determined that radiopharmaceuticals are not drugs under the OPPS, we have chosen to establish separate payment for radiopharmaceuticals under the same packaging threshold policy that we apply to drugs and biologicals. We have also determined that we will apply the same adjustments to the median costs for radiopharmaceuticals that will apply to non-pass-through, separately paid drugs and biologicals.
Currently, payment for the radiopharmaceutical Zevalin (Ibritumomab Tiuxetan) is packaged into the payment for HCPCS codes G0273 (Pretx planning, non-Hodgkins) and G0274 (Radiopharm tx, non-Hodgkins). To ensure consistency with our payment policy for other radiopharmaceuticals (that is, making separate payment for radiopharmaceuticals whose costs are greater than $150 per episode of care), we proposed to make payment for Zevalin (ibritumomab tiuxetan) separately from payment for the procedures with which Zevalin (ibritumomab tiuxetan) is used.
We proposed to use HCPCS A9522 (Indium 111 ibritumomab tiuxetan) to report the use of In-111 Zevalin (In-111 Ibritumomab Tiuxetan) and HCPCS A9523 (Yttrium 90 ibritumomab tiuxetan) to report the use of Y90 Zevalin (Y90 Ibritumomab Tiuxetan). We proposed to place HCPCS A9522 in
Because we proposed that payment for G0273 and G0274 no longer include payment for Zevalin, we also proposed to place G0273 into newly created APC 0406 and G0274 into newly created APC 0408. These APCs include procedures that are similar clinically and in terms of resource consumption to G0274 and G0273, respectively.
Zevalin (ibritumomab tiuxetan) is a radioimmunotherapy that is used to treat patients with certain forms of non-Hodgkin's lymphoma (NHL). Medicare began payment under the OPPS for Zevalin services furnished on or after October 1, 2002.
On June 27, 2003, the FDA approved the manufacture and sale of Bexxar (tositumomab and Iodine I 131 tositumomab), which is another radioimmunotherapy used to treat patients with certain forms of non-Hodgkin's lymphoma. Both Zevalin and Bexxar are therapeutic regimens administered in two separate steps: The first step is diagnostic to determine radiopharmaceutical biodistribution of radiolabeled antibodies; the second step is the therapeutic administration of targeted radiolabeled antibodies.
On September 8, 2003, we issued a One Time Notification (Transmittal 1, Change Request 2914) to implement payment for Bexxar effective for services furnished on or after July 1, 2003. We instructed hospitals to bill for Bexxar using HCPCS codes G0273 (Pretx planning, non-Hodgkins), G0274 (Radiopharm tx, non-Hodgkins), and G3001 (Administration and supply of tositumomab, 450mg). Publication deadlines precluded our being able to address payment for Bexxar in the August 12, 2003 proposed rule.
C1082, Supply of radiopharmaceutical diagnostic imaging agent, indium-111 ibritumomab tiuxetan, per dose
C1083, Supply of radiopharmaceutical therapeutic imaging agent, Yttrium 90 ibritumomab tiuxetan, per dose
C1080, Supply of radiopharmaceutical diagnostic imaging agent, I-131 tositumomab, per dose
C1081, Supply of radiopharmaceutical therapeutic imaging agent, I-131 tositumomab, per dose
Another commenter expressed concern about the adverse impact that the proposed reduction in payments for Zevalin could have on payment for Bexxar in 2004. The commenter urged us not to base payment for Bexxar on what we proposed for Zevalin but, rather, on hospital acquisition costs for Bexxar, which approximate the wholesale acquisition cost (WAC) of $2,250 for the diagnostic dose and $19,500 for the therapeutic dose.
We received information consistent with our request for verifiable data (68 FR 47998) that indicates the payment amounts we proposed for A9522 and A9523 in the proposed rule do not reflect the price for Zevalin that is widely available to the hospital market.
Therefore, we are making final the following payments, effective for services furnished on or after January 1, 2004:
For HCPCS code C1080 (APC 1080) the payment is $2,260;
For HCPCS code C1081 (APC 1081) the payment is $19,565; For HCPCS code C1082 (APC 9118) the payment is $2,260;
For HCPCS code C1083 (APC 9117) the payment is $19,565.
Section 1833(t)(6)(C)(i) of the Act specifies that the duration of transitional pass-through payments for drugs and biologicals must be no less
To the maximum extent possible, our intention is to package into the APC payment the costs of any items and supplies that are furnished with an outpatient procedure. For 2004, we proposed to continue with our policy of paying separately for drugs and radiopharmaceuticals whose median cost per day exceeds $150 and packaging the cost of drugs and radiopharmaceuticals with median cost per day of less than $150 into the procedures with which they are billed. In the proposed rule, we set forth the methodology we used to calculate the median cost per day for drugs, biologicals, and radiopharmaceuticals (68 FR 47996-47997).
We proposed to provide an exception in 2004 to the packaging rule for drugs and radiopharmaceuticals whose payment status would change as a result of using newer data. For 2004, we proposed that:
• Currently packaged drugs and radiopharmaceuticals with median costs per day at or above $150 would receive separate payment in 2004.
• Currently separately payable drugs and radiopharmaceuticals with median costs per day under $150 would continue to receive separate payment in CY 2004.
• Drugs whose pass-through status would expire on December 31, 2003, and whose median costs per day are under $150 would receive separate payment in 2004.
• Currently packaged drugs and radiopharmaceuticals with median costs per day below $150 would remain packaged in 2004.
We requested comments on the methodology we used to determine the median cost per day, on the threshold we proposed to use for packaging drugs and radiopharmaceuticals, and on the proposal to pay separately for drugs and radiopharmaceuticals whose payment status would change based on use of recent claims data and our proposed methodology. We also requested comments on alternatives to packaging.
We received many comments on our proposals, which are summarized below along with our responses.
Commenters who disagreed with the proposal to package drugs, biologicals and radiopharmaceuticals costing $150 or less believe that the proposed rates for the drug administration codes do not adequately address the costs of hospitals to administer these drugs. Several commenters conducted their own analyses of this issue in conjunction
Several commenters indicated that the methodology and cost data we used to calculate the median cost per day for drugs and radiopharmaceuticals were based on incorrectly coded claims where the wrong number of units were reported and a very limited number of single claims were captured which failed to portray the hospitals' charges appropriately. Therefore, certain high cost items fell below the $150 threshold.
Commenters expressed concern about patient access to effective but lower cost drugs and the disincentive we may create by paying separately for those over $150 per day. One organization stated that cancer centers have reported that they have taken or are considering steps to restrict patient access to those drugs that we have packaged. One hospital estimated that it would lose approximately $490 per visit for a patient receiving chemotherapy due to the $150 packaging rule and the proposed reductions in payments for certain drugs. While some commenters expressed general concerns about packaging the costs of any drugs, biologicals or radiopharmaceuticals, other commenters recommended that we apply a $50 threshold in lieu of the proposed $150 threshold in determining which items to pay for separately. Some of the commenters recommending a $50 threshold cited statutory changes under consideration by Congress that would mandate a $50 threshold.
We analyzed our data in determining our final drug administration coding and payment policy, as discussed elsewhere in this final rule, and reviewed the median costs of all APCs under both a $150 and a $50 packaging rule. We concluded that there was not a sufficient difference in the median costs under those two scenarios, resulting in inadequate payment when drugs, biologicals and radiopharmaceuticals costing between $50 and $150 would be used by the hospital. Therefore, we agree with the majority of commenters that, for 2004, the appropriate threshold should be $50.
We also recognize, as several commenters did, that packaging creates incentives for hospital efficiencies and will continue to apply that concept to devices, most supplies and equipment associated with a procedural APC, and low cost drugs. However, we are convinced that under our current methodology for establishing relative weights, that packaging drugs, biologicals and radiopharmaceuticals costing in excess of the $50 threshold per patient per day would not provide adequate payment in 2004 and could adversely affect beneficiary access to important therapies. Nevertheless, our final decision for 2004 does not mean that a change in our methodology for establishing relative weights in the future could not cause us to revisit our packaging policy in the future. Since we have lowered the packaging threshold from $150 to $50, we will not adopt the proposal to provide an exception to the packaging rule for drugs and radiopharmaceuticals whose payment status would change from 2003 to 2004 as a result of using newer 2002 data.
However, we note several exceptions to our policy of packaging drugs, biologicals and radiopharmaceuticals for which the median per day cost is less than the $50 threshold. As discussed elsewhere in this final rule, we will allow separate payment under the OPPS for all blood and blood products and for single indication orphan drugs. We will also allow separate payment for hepatitis B vaccine under the OPPS. While the median per day costs for several hepatitis B vaccine codes fell below the $50 threshold using the final rule data, we believe that continued separate payment for these codes is warranted given the special, separate benefit category established by Congress. Separate payment for influenza and pneumococcal vaccines will continue to be made outside of the OPPS on a reasonable cost basis.
In order to establish payment rates for separately payable drugs and radiopharmaceuticals for the 2004 OPPS, we first determined median cost for each drug and radiopharmaceutical per unit. When we compared the median cost per unit used for determining the 2003 payment rate (for example, the true or dampened median cost) for separately payable drugs and radiopharmaceuticals with their 2004 median cost per unit, we found fluctuations in costs from 2003 to 2004.
We solicited comments concerning the reasons for the fluctuations in median costs from 2003 to 2004. We stated our interest in determining whether these fluctuations reflect changes in the market prices of these drugs and radiopharmaceuticals or problems in the hospital claims data (for example, inaccurate coding, improper charges) that we use for setting payment rates.
In the proposed rule, we discussed in detail several options we considered to address the fluctuations in median costs for separately payable drugs and radiopharmaceuticals (68 FR 47997-47998). The option that we proposed for 2004 was a variation of the methodology used for the 2003 OPPS. For separately payable drugs and radiopharmaceuticals whose 2004 median costs decreased by more than 15 percent from the applicable 2003 median cost, we proposed to limit the reduction in median costs to one fourth of the difference between the value derived from claims data and a 15 percent reduction (for example, for a drug whose cost decreased by 35 percent from the applicable 2003 median cost, the allowed reduction from 2003 to 2004 would be 15 percent + (
We also proposed a separate payment policy for drugs, biologicals, and radiopharmaceuticals for which generic alternatives have been approved by the Food and Drug Administration (FDA) between October 2001 and December 2002.
We solicited comment on both our proposed methodology and payment rates for separately payable drugs and radiopharmaceuticals for 2004. We requested that commenters who disagree with the proposed rate for a drug or radiopharmaceutical submit verifiable information to support their opinions that the proposed rate is inaccurate and does not reflect the price that is widely available to the hospital market.
We received a number of comments on our payment methodology options for separately payable drugs, biologicals, and radiopharmaceuticals. Those comments are summarized below along with our responses.
A number of commenters objecting to our proposed payment rates stated that the hospital data that we use to calculate those rates are flawed and that the methodology we employ to convert hospital claims data to relative weights is problematic. Commenters attributed these concerns to issues such as hospital billing practices that result in inaccurate reporting of units or charges, HCPCS coding changes, and the use of cost-to-charge ratios across all products regardless of whether an item is high or low cost.
We received numerous comments on alternatives to our proposed policies for separately payable drugs and radiopharmaceuticals. One commenter suggested that we pay the amount of the hospital's acquisition cost plus an additional 25 percent to pay for costs of receiving, processing and storing the items. Other comments suggested that we limit the decreases for all separately paid drugs to a reduction of 10 percent in the payment rates, as we proposed for blood and blood products, instead of our proposed policy of limiting reductions in median costs for those separately paid items with median costs with reductions greater than 15 percent. Another suggestion was that we establish a payment rate floor for a product that could be raised if a manufacturer submitted information demonstrating that the rate should be higher than the floor.
Several commenters indicated that we should use only claims that have the appropriate administration or procedure code and the HCPCS code for a particular drug or radiopharmaceutical when determining the median cost for that drug or radiopharmaceutical. One commenter recommended that we pay for drugs and biologicals at 95% AWP to standardize payments for drugs and biologicals across different practice settings. Another commenter requested that we establish payment floors that are equal to those in the pending Congressional Medicare legislation (for example, certain sole source drugs would be paid at least 88 percent of AWP in 2004); whereas another drug manufacturer recommended that we use the Federal Supply Schedule price plus a certain percentage (for example, 12.5 percent) as an absolute minimum payment amount for drugs and radiopharmaceuticals.
In addition to the comments regarding our proposed payment rates for drugs, biologicals and radiopharmaceuticals overall, we received comments concerning the proposed rate for specific items. For a few of those items, we received external cost data that met the preferred criteria we set forth in our proposed rule (for example, non-proprietary data that demonstrates actual, market-based prices at which a broadly-based national sample of hospitals were able to procure the item). Several commenters suggested that we substitute external data on hospital acquisition cost for median costs calculated from our claims data when determining the payment rate for drugs and radiopharmaceuticals for which we have received such data. Others recommended that we use external data to benchmark payment for drugs and radiopharmaceuticals and make appropriate adjustments to the proposed 2004 payment levels. Even though most commenters supported the use of external data in place of hospital claims data, a national hospital association expressed concern about the use of external data in OPPS. The commenter indicated that if external data is used for rate setting in 2004, then we may have to continue to collect data on acquisition cost for future years to be able to continue to adjust the weights. Instead, the commenter was supportive of using claims data to set payment rates without the use of external data and urged us to remain committed to the averaging process inherent in the prospective payment system.
As discussed in our proposed rule and elsewhere in this final rule, we used a more complete set of claims for the April-December 2002 claims period and the most recently submitted cost report data to calculate median costs for all currently separately paid drugs, biologicals and radiopharmaceuticals. Our analysis of the later and more complete data revealed that a number of these items continued to experience a decline of more than 15% in median cost. We again considered several options to address the fluctuations in medians, which for some items would result in wide fluctuations in payments to hospitals. One option was to do nothing to adjust for the fluctuations; another option was to apply a more modest give-back (for example, 50 percent instead of 75 percent, after allowing for the 15 percent reduction.) We also considered the comments we received on drug payments in general and for specific items.
We did not adopt the options that would allow no adjustments for items separately paid in 2003 where the costs declined because we were convinced by the many commenters on this topic that such fluctuations create problems for the hospitals. We were also convinced by the commenters that a less generous give-back, such as 50 percent, would not adequately address the very real concerns about patient access to some of these drugs, particularly for cancer chemotherapy. We believe that, for the majority of items paid separately in 2003 for which the more recent hospital data indicates a reduction in excess of 15 percent, the adjustment methodology we proposed and that we are adopting for this final rule provides an adequate buffer for the hospitals against dramatic fluctuations in payment amounts while at the same time not significantly affecting the budget neutrality scalar applied to the relative weights for all services.
We believe that either the use of our unadjusted medians or, where applicable, a median adjusted to limit reductions greater than 15 percent methodology, will not adversely impact beneficiary access. However, we were convinced by the external data meeting our preferred criteria and the related comments that we received for several items, the payment rates resulting from our data alone could provide a disincentive for hospitals to provide these particular therapies. Therefore, we have determined that we will use this credible and relevant external data to establish a median cost for the following items listed in table 15. For these items, as with the few device-related APCs for which we are considering external data, we have calculated an adjusted median cost by blending the median cost derived from our dampening methodology with the cost data from the external sources on a one-to-one ratio.
We note that we also received external data for other items, which we did not use for rate setting. In those cases, we determined the data was not reliable because the data did not meet the preferred criteria set forth in the August 12, 2003 proposed rule.
In order to facilitate accurate payments for drugs and drug administration, we considered whether to make several changes in our current payment policy with regard to payment for Q0081, Q0083, Q0084, and Q0085.
We proposed to continue our current policy of packaging drugs and radiopharmaceuticals that cost less than $150 per episode of care into the APC with which they are associated (for example, nuclear medicine scans, drug administration).
In the proposed rule, we presented data that showed that paying based on a median cost for the APC for each of the four current codes generally results in underpayment when packaged drugs are billed on the claim and overpayment when separately paid drugs are billed on the claim. In the proposed rule we discussed our data analysis in detail. We also discussed four alternatives to the current codes and APC payments in detail (68 FR 47999-48003). In summary, the 4 alternatives presented were:
1. Maintain the current codes and APCs with payments based on the median costs of all claims in the APC.
2. Eliminate the four current codes and create eight new codes to enable hospitals to report that they administered a packaged drug or a separately paid drug. We would pay a different APC amount for each of the eight new codes. The new code descriptors would parallel those of the current codes. This would retain the concept of using one code rather than two when both “infusion” and administration of chemotherapy by “other than infusion” occurred (as exists under the current codes). Coders would have to look up the drugs administered to know which code to bill.
3. Eliminate the four current codes and create six new codes to enable hospitals to report that they administered a packaged drug or separately paid drug and pay a different APC amount for each of the six new codes. In this option, no code equivalent to Q0085 would exist. Therefore, when administering chemotherapy by “infusion” or “other than infusion,” hospitals would report two codes, one for administration by “infusion” and one for administration by “other than infusion.” This would eliminate the need to use one code when both infusion and another method of administration of chemotherapy occurred. Coders would have to look up the drugs administered to know which code to bill.
4. Retain three of the current codes (Q0081, Q0083, and Q0084) but delete Q0085 (infusion and other administration of chemotherapy) and modify the OCE to use the drugs billed on the claim to assign an APC for packaged drugs or an APC for separately paid drugs. No drug administration code could be paid without a drug also being reported on the claim. We solicited comments on each of the options in the proposed rule.
For 2004 OPPS we will continue the use of Q0081, Q0083 and Q0084 to pay for drug administration, for both packaged drugs and separately paid drugs. These drug administration codes will continue to describe the administration of drugs per visit. As recommended by the APC Panel, we will cease to make payment under OPPS for Q0085 and will instead permit the services described by Q0085 to be billed using both Q0083 and Q0084. We believe that this will result in appropriate payment for drug administration because for 2004 OPPS we will pay separately for drugs for which the per day median cost is in excess of $50 per day.
Commenters indicated that they believed the options as presented in the NPRM would violate the HIPAA requirements that the same service be coded the same way for all payers. They urged CMS to eliminate the Q codes for drug administration and in favor of use of the CPT codes to code drugs administration. Commenters asked that CMS engage the APC Panel in a discussion of the best way to code drug administration.
One of the commenters indicated that its analysis showed that options 2, 3 or 4 have considerable financial risk for Medicare. Specifically, the commenter indicated that its analysis revealed that option 2 would result in additional payments of $107.1 million for 2004. A commenter asked that CMS create a task force to study the most appropriate methodology for payment for drug administration and for setting payment rates. A commenter supported option 4, which would continue the current coding and map the combination of a drug administration code and drug codes to the appropriate APC. One commenter suggested that we continue the current coding for drug administration, set payment rates at the packaged drug rate for the APC but offset the payment by the difference if no appropriate drug is billed for the same date of service. The commenter indicated that this would simplify the coding and the payment for drug administration and should result in greater accuracy of payment. A commenter supported options 2 or 3 as the most accurate for payment of drugs furnished in the emergency department.
As discussed in elsewhere in this final rule, for 2004, CMS will pay separately for all drugs, biologicals and radiopharmaceuticals that have a per day median cost in excess of $50. Therefore, only drugs, biologicals and radiopharmaceuticals that have a per day median cost of $50 or less will be packaged into the payment for the services. Therefore, the payment for drug administration codes Q0081, Q0083 and Q0084 will be based on the median costs for drug administration with only drugs having a median per day cost of $50 or less packaged into the cost of the administration code. We believe that separate payment for drugs with a median cost in excess of $50 will result in the drug administration codes being paid more accurately and will result in more equitable payment for both the drugs and their administration.
With regard to the issue of how often in a day Q0081, Q0083 and Q0084 may be billed, each of these codes is to be used to report all services in a single visit, regardless of the number of drugs administered during that visit. Therefore, if two chemotherapy drugs are administered by intravenous injection and 3 chemotherapy drugs are administered by infusion, the hospital would bill 1 unit of Q0083 and 1 unit of Q0084. A second unit of either code would only be billed if the patient left the OPD after completion of the first administration and then returned later for a separate encounter for administration of another chemotherapy drug. If the patient leaves the OPD and returns later in the day suffering from dehydration and requires infusion of fluids and infusion of antiemetics, the hospital would bill Q0081 for those services. If the patient returns later in the same day for another infusion of one or more chemotherapy drugs that could not be administered at the earlier infusion for medical reasons, the hospital may bill 2 units of Q0084.
CPT codes 90782-90788 each represent an injection and as such, one unit of the code may be billed each time there is a separate injection that meets the definition of the code.
As indicated above, drugs for which the median cost per day is greater than $50 are paid separately and are not packaged into the payment for the drug administration codes with which they are billed.
A commenter who is particularly concerned with immunosuppressive drugs that are needed by beneficiaries following organ transplants, indicated that in 2000, Congress directed the Secretary of HHS to prepare a report to Congress containing recommendations regarding a cost effective way of providing coverage for immunosuppressive drugs to promote the objectives of improving health outcomes by decreasing transplant rejection rates attributable to failure to comply with immunosuppressive drug therapy and to achieve Medicare cost savings by preventing the need for secondary transplants and other care related to post transplant complications (Pub. L. 106-113). The commenter believes that packaging transplant drugs into the payment for drug administration and the proposal of such a low amount of payment defeats Congress's stated intention in this case and will decrease beneficiary access to immunosuppressive drug therapy following transplant surgery.
With respect to post-transplant immunosuppressive drugs, we would note that take-home supplies of such drugs are billed to the Durable Medical Equipment Regional Carriers and paid for separately outside of the OPPS. To the extent that such drugs fall below the $50 median cost per day, we expect the frequency of administration in the hospital outpatient setting to be low.
In general, supplies that are an integral component of a procedure or treatment are not reported with a HCPCS code. The charges for such supplies are typically reflected either in the charges on the line for the HCPCS for the procedure or on another line with a revenue code that will result in the charges being assigned to the same cost center to which the cost of those services are assigned in the cost report.
In general, hospital acquisition costs for drugs, biologicals, and radiopharmaceutical agents with generic competitors are lower than the acquisition costs for sole source or multi-source drugs. In order to ensure that Medicare recognizes these lower costs in a timely manner, we proposed a new method of calculating payment amounts for drugs, biologicals, and radiopharmaceuticals that are separately paid under the OPPS and for which the Food and Drug Administration (FDA) has recently approved generic alternatives.
Because many hospitals have long term purchasing arrangements for drugs and radiopharmaceuticals, we believe that there is generally a 12-month lag between the time that generic items are made available and when our claims data will accurately reflect the costs associated with the availability of the generic alternative. Therefore, during the interval between FDA approval of a generic item and the time when we would reasonably expect claims data to reflect the cost of generic alternatives, we proposed to adopt the following methodology to price the affected drugs, biologicals, and radiopharmaceuticals under the OPPS.
We proposed to identify items approved for generic availability by the FDA during the 6 months before the first day of the claims period we use as the basis for an annual OPPS update. Where we determine that our claims data do not reflect the costs of generic alternatives for a separately payable drug, biological, or radiopharmaceutical, we proposed to base our payment rate on 43 percent of the AWP for the drug, biological, or radiopharmaceutical.
To apply this payment methodology to the 2004 OPPS update, we reviewed FDA approvals for generic drugs, biologicals, and radiopharmaceuticals issued between October 2001 and December 2002. We found six drugs, which we proposed to be separately paid under the 2004 OPPS that had generic alternatives approved during that time. These drugs are: Daunorubicin, Bleomycin, Pamidronate, Paclitaxel, Ifosfomide, and Idarubicin. Table 21 shows the dates when the FDA approved generic alternatives for these drugs.
We solicited comments on this proposed method of calculating payment for drugs, biologicals, and radiopharmaceuticals for which generic alternatives have recently been approved. Specifically, we were interested in comments concerning our proposed methodology for identifying these items, whether we properly identified all the items, and whether our proposed payment policy for these generic alternatives is appropriate.
We received many comments on our proposal regarding generic drugs and radiopharmaceuticals, which are summarized below along with our responses.
In the proposed rule we stated that we no longer believe that paying for orphan drugs at reasonable cost, outside of OPPS is appropriate, and we proposed the following payment policy:
• We proposed to continue using the same criteria to identify single indication orphan drugs (67 FR 66772).
• We proposed to discontinue retrospective cost payments and to make prospective payments under the OPPS for those identified single indication orphan drugs.
• We proposed to base payments on the same methodology we use to pay for other drugs including any limitation on payment reductions (as described above).
• We proposed to make separate payment for the single indication orphan drugs and place them in APCs.
The 11 single indication orphan drugs that would be affected by our proposal are: (J0205 Injection, alglucerase, per 10 units; J0256 Injection, alpha 1-proteinase inhibitor, 10 mg; J9300 Gemtuzumab ozogamicin, 5 mg; and J1785 Injection, imiglucerase, per unit); J2355 Injection, oprelvekin, 5 mg; J3240 Injection, thyrotropin alpha, 0.9 mg;
We solicited comments on these proposals and requested that commenters submit information meeting the same criteria as comments for other drugs (as discussed above). We received numerous comments, all of which were in opposition to our proposals regarding payment for orphan drugs.
Having weighed the concerns raised by commenters and our concerns about the increasing number of outpatient services that would be paid outside the OPPS were we to continue the current policy of paying for single indication orphan drugs on a reasonable cost basis, we have decided that beneficiaries, hospitals, and the Medicare program will be best served over the long term by our making payment for the single indication orphan drugs under the OPPS at 88 percent of the AWP. We arrived at 88 percent based on our analysis of claims data, and our intent that payment be sufficient to ensure that all beneficiaries have access to needed drugs. Among the 11 orphan drugs, the highest median cost in the claims data was approximately 78 percent of the AWP. After considering comments we received on the proposed rule, we were concerned that merely adopting the existing highest percentage of the AWP may not ensure that a sufficient payment amount is established in all cases prospectively. We therefore have provided for an additional margin of ten percentage points to account for possible future increases, and ensure sufficient payment. This results in the percentage of 88 percent that we have adopted in this final rule.
However, we received information consistent with our request for verifiable data (68 FR 47998) that indicates the payment amounts we proposed for alpha-1 proteinase inhibitor, for imiglucerase, and for alglucerase do not reflect the price at which these drugs are widely available to the hospital market. This information, combined with the concerns expressed by commenters generally that the payment amounts we proposed for the 11 drugs that meet our criteria for special payment as single indication orphan drugs are too low and may threaten beneficiary access to the drugs, have persuaded us to make final one modification to the method we proposed for setting payment rates for drugs that are paid as single indication orphan drugs under the OPPS. That is, rather than using claims data to calculate payment rates for single indication orphan drugs that meet our criteria for special payment under the OPPS, we are setting payment for all but two of these drugs at 88 percent of their AWP as established in the April 1, 2003 single drug pricer (SDP). As discussed above, we received information about the widely available market price for imiglucerase and alglucerase, and, based on that information, we have priced these two drugs at 94 percent of their AWP.
We believe that this policy is a reasonable compromise. It enables us to set a prospective payment amount under the OPPS for qualified single indication orphan drugs. But, by increasing payment levels for these low volume drugs, we minimize the risk of compromising beneficiary access to treatment for life-threatening, rare diseases.
Therefore, we have set payment rates for single indication orphan drugs in accordance with the following policy, effective January 1, 2004:
• We are using the same criteria that we implemented in CY 2003 to identify single indication orphan drugs used solely for an orphan condition for special payment under the OPPS;
• We are discontinuing payment on a reasonable cost basis for single indication orphan drugs furnished in the outpatient department of hospital that is subject to the OPPS;
• We are making separate payment for single indication orphan drugs and assigning them to APCs;
• We are setting payment under the 2004 OPPS for single indication orphan drugs at 88 percent of the AWP listed for these drugs in the April 1, 2003 single drug pricer unless we are presented with verifiable information that shows that our payment rate does not reflect the price that is widely available to the hospital market.
Outpatient hospital departments administer large amounts of the vaccines for influenza (flu) and pneumococcal pneumonia (PPV), typically by participating in immunization programs. In recent years, the availability and cost of some vaccines (particularly the flu vaccine) have fluctuated considerably. As discussed in the November 1, 2002 final rule (67 FR 66718), we were advised by providers that OPPS payment was insufficient to cover the costs of the flu vaccine and that access of Medicare beneficiaries to flu vaccines might be limited. They cited the timing of updates to OPPS rates as a major concern. They said that our update methodology, which uses 2-year-old claims data to recalibrate payment rates would never be able to take into account yearly fluctuations in the cost of the flu vaccine. We agreed and decided to pay hospitals for influenza and pneumococcal pneumonia vaccines based on a reasonable cost methodology. As a result of this change, hospitals, home health agencies (HHAs), and hospices were paid at reasonable cost for these vaccines in 2003. We are aware that access concerns continue to exist for these vaccines; therefore, we proposed to continue paying for influenza and pneumococcal pneumonia vaccines under reasonable cost methodology.
We received no comments regarding our payment proposal for vaccines, and finalize our proposal in this rule.
Since the OPPS was first implemented in August 2000, separate payment has been made for blood and blood products in APCs rather than packaging them into payment for the procedures with which they were administered. We proposed to continue to pay separately for blood and blood products.
The list of APCs containing blood and blood products can be found in the November 1, 2002 final rule (67 FR 66750). We note that the APCs for these products are intended to make payment for the costs of the products. Costs for storage and other administrative expenses are packaged into the APCs for the procedures with which the products are used.
As described in the November 1, 2002 final rule (67 FR 66773), we applied a special dampening option to blood and blood products that had significant reductions in payment rates from 2002 to 2003. For 2003, we limited the decrease in payment rates for blood and blood products to approximately 15 percent.
After careful comparison of the 2003 dampened medians with the 2004 medians from our claims data, we determined that establishing payment rates based on the 2004 median costs would, for many blood and blood products, result in payments that are significantly lower than hospital acquisition costs. In order to mitigate any significant payment reductions and to minimize any compromise in access of beneficiaries to these products, we proposed a 10 percent limit to decreases in payment rates for blood and blood products from 2003 to 2004.
We solicited comment on this proposal, especially from hospitals. Specifically, we solicited comments that include verifiable information about the widely available acquisition cost of commonly used blood and blood products.
We received several comments on this proposal, which are summarized below along with our responses.
As for the comment regarding adoption of a uniform dampening policy for both separately payable drugs as well as blood and blood products, this concern is no longer an issue because of our decision to freeze payment rates for blood and blood products at their 2003 levels for 2004.
In the proposed rule, we discussed public comments suggesting that we reclassify intravenous immune globulin (IVIG) as a blood and blood product. We stated that after a review of claims data, we believe that payment for these products is appropriate using the methodology we proposed to implement for other drugs and biologicals. Therefore, we proposed to continue to classify IVIG as a biologic. We solicited comments on this proposal.
We received several comments on this proposal, which are summarized below along with our responses.
Since implementation of the OPPS, we have assigned status indicator “E” to HCPCS code P9011, blood (split unit). Status indicator “E” designates services for which payment is not allowed under the OPPS or services that are not covered by Medicare. P9011 was created to identify situations where one unit of red blood cells or whole blood, for example, is split and half of the unit is transfused to one patient and the other half to another patient. Because use of split units is not uncommon, we proposed to change the status indicator for P9011 from “E” to “K” and assign it to a blood and blood product APC that pays approximately 50 percent of the payment for the whole unit of blood. We proposed to assign P9011 to APC 0957 (Platelet concentrate) with a payment rate of $37.30. We invited comments on this proposed change in the status indicator and payment amount for P9011.
We received a few comments on this proposal, which are summarized below along with our responses.
We proposed to continue our payment policy for Procrit and Aranesp for calendar year 2004. As explained in detail in the November 1, 2002 final rule (67 FR 66758), Aranesp and Procrit are in separate APCs, and are paid at equivalent rates with the application of a ratio to convert the dosage units of Aranesp into units of Procrit. We indicated that we might refine the conversion ratio as soon as feasible based on information not available at the time we established the current conversion ratio.
We have continued to gather information regarding an appropriate conversion ratio by reviewing recent published studies and data from alternative sources. In the proposed rule, we stated that we remain open to establishing a different conversion ratio in the final rule if we conclude that a change is warranted based on public comments and information submitted during the public comment period and/or any other information we consider in developing the final rule. Therefore, we proposed to continue with the current policy regarding payment for Procrit and Aranesp, including the current conversion ratio. We solicited comments on this issue and we stated that we would base any changes to our current payment policy for these two drugs only on data that we could make available to the public.
We received several comments on this proposal, which are summarized below along with our responses.
In the late 1980's, scientists used recombinant DNA technology to produce an erythropoietin-like protein called epoetin alfa. Epoetin alfa has exactly the same amino acid structure as the erythropoietin humans produce naturally and, when given to patients with anemia, stimulates red blood cell production.
Two commercial epoetin-alfa products are currently marketed in the United States: Epogen
Amgen developed a new erythropoietin-like product, darbepoetin alfa, which it markets as Aranesp
Because darbepoetin alfa has two additional carbohydrate side-chains, it is not structurally identical to epoetin alfa. However, the two products use the same biological mechanism to produce the same clinical results—stimulation of the bone marrow to produce red blood cells.
These biologicals are dosed in different units. Epoetin alfa is dosed in Units per kilogram (U/kg) of patient weight and darbepoetin alfa in micrograms per kilogram (mcg/kg). The difference in dosing metric is due to changes in the accepted convention at the time of each product's development. At the time epoetin alfa was developed, biologicals (such as those developed through recombinant DNA) were typically dosed in International Units (IU or Units for short), a measure of the product's biologic activity. They were not dosed by weight (for example, micrograms) because of a concern that weight might not accurately reflect their standard biologic activity. The biologic activity of such products can now be accurately predicted by weight, however, and manufacturers have begun specifying the doses of such biologicals by weight. No standard formula exists for converting amounts of a biologic dosed in Units to amounts of a drug dosed by weight.
In the clinical management of individual patients, CMS recognizes that no precise method of converting an epoetin alfa dose to a darbepoetin alfa dose has yet been established for any of the approved clinical uses. There are general guidelines for conversion and clinicians modify the dose based on the patient's hematopoietic response after the start of treatment with the new biological. For the purpose of developing a payment policy, however, it is feasible to establish a method of converting the dose of each of these drugs to the other. This payment methodology is intended to reflect average dosing requirements for the entire Medicare target population, and is not intended to serve as a guide for dosing individual patients.
As part of the process to define and further refine a payment conversion ratio between these biologicals, CMS held a series of meetings with representatives from both Amgen and Ortho Biotech. Both companies provided substantial new data, both published and unpublished. We also reviewed the Food and Drug Administration labeling for each product (EpogenTM, ProcritTM, and AranespTM), hired an independent contractor to review the available clinical evidence, and performed an internal review of this evidence as well. CMS took into consideration both published and unpublished studies as well as abstracts, conference reports, clinical guidelines, marketing material, and other reports and materials provided by Amgen and Ortho Biotech.
As noted in the OPPS final rule for 2003, CMS was interested in having a “head-to-head” comparison of epoetin alfa to darbepoetin alfa either in patients with chronic kidney disease or in cancer patients with chemotherapy-induced anemia, and in which appropriate outcome measures were used. Because no head-to-head study has yet been completed, CMS also considered clinical studies that either compared both products to each other or that linked the dose of a particular product with an appropriate health outcome measure. For the 2003 OPPS, we held a series of meetings with both Amgen and Ortho Biotech. We examined the written and published information provided by both companies, reviewed the FDA labeling for each product, hired an independent contractor to review available clinical evidence and performed an internal review of the evidence as well. In our review, we placed the greatest emphasis on published, high quality clinical studies and looked for the best possible estimates based on an evaluation of the dosing of each product that, on average, produced the same clinical response. Based on our own review of the evidence, our consultation with the independent contractor who also reviewed the evidence, and our discussions with each company, we established a conversion ratio for purposes of payment in 2003 of 260 International Units of epoetin alfa to one microgram of darbepoetin alfa (260:1).
Since publication of the OPPS final rule for 2003, we have continued to review and refine our analysis of the appropriate conversion ratio between these biologicals. In order to facilitate analysis of the non-peer reviewed materials submitted by Amgen and Ortho Biotech, we initiated a process in July 2003, in which each company shared with CMS, our contractor, and each other, a detailed description of the methods used in each of their unpublished clinical studies. Each company was then asked to submit to us their comments as well as the responses to questions raised by the other company's review. Finally, based on our analysis of this information, CMS submitted questions to each company to clarify their views. The final payment conversion ratio is based on our analysis of the information submitted during the process described above, as well as claims analysis, and other publicly available information.
Another major limitation of observational studies is that the researcher typically has no control over the manner in which the intervention under study has been delivered. In this instance, an additional difficulty with using observational studies to assess the equivalence of dosages of epoetin alfa and darbepoetin alfa in chemotherapy-induced anemia in cancer patients is that the response to these drugs may be disease-driven, dosage-driven, or both (depending for example, among other factors, on the individual cancer patient's level of endogenous erythropoietin). A large range of dosages of both epoetin alfa and darbepoetin alfa may show similar effects in any given patient and higher than necessary dosages may not be reflected in greater elevations of hemoglobin. More generally, the populations in the reported studies may show different results due to differences in demographics, health status, types of cancer, and cancer treatments.
Beyond these methodological concerns, the question of what constitutes the best indicator of drug effect remains unsettled. Studies in the literature have used one or more of the following end-points to analyze the effects of erythropoietic drugs:
Studies submitted by one of the manufacturers proposed additional measures such as “early hemoglobin response” (the hemoglobin rise from baseline at 4 or 5 weeks) and the “area under the curve” defined by hemoglobin increases from baseline. The FDA has not used these measures as criteria for registration (i.e., market approval) and they do not appear to be regularly used in the peer reviewed literature of erythropoietic drugs and their use either in kidney disease or in oncology. Therefore, their clinical significance is unclear at this time. They do, however, raise the question of how hemoglobin response patterns affect symptoms that matter most to patients. Both companies are conducting additional clinical studies to address further the potential importance of front-loaded regimens that provide high initial doses of erythropoietic drugs in order to stimulate a more rapid clinical response.
During the process of exchanging and critiquing study methods, Amgen and Ortho-Biotech each raised significant methodological concerns about the study designs used to obtain new data. In addition to the overall concern about the observational methodology and selection of the outcome chosen for purposes of comparison, the following concerns were raised:
Each company provided extensive and compelling discussions of these and other issues, highlighting the fact that conclusions regarding the relative potency of these products are inherently limited by the nature and quality of the clinical data that currently exist. Despite the limitations of the available studies, CMS believes that it has sufficient data to establish a reasonable conversion ratio for payment purposes.
Amgen submitted several observational studies, including one community-based study and three medication use evaluations (MUE). While interim results from two of these studies have been published in peer-reviewed journals, final results have not yet been subjected to full peer review. In one study (Vadhan-Raj, 2003), patients were started on darbepoetin at 3 mcg/kg every other week (QOW). The patients received up to 8 doses (16 weeks). The patients had hemoglobin (Hgb) responses comparable to that seen with epoetin 40,000-60,000 IU per week. The protocol allowed a dose increase and 43 percent of participants had their darbepoetin dose increased to 5 mcg/kg/QOW per the protocol. Virtually all of the Amgen studies produced results that suggested a conversion ratio of 400:1.
Ortho Biotech submitted early unpublished results from a multicenter head-to-head trial of 40,000 IU of epoetin weekly compared to 200 mcg of darbepoetin every other week. The primary end-point is the change in Hgb from baseline at week 5, and initial results show significantly greater increase in Hgb for patients treated with epoetin. Ortho Biotech also submitted data from several retrospective analyses of medical charts and electronic medial records, totaling several thousand patients. None of these studies have yet been peer-reviewed or published. All of the Ortho-sponsored studies provide results suggesting that the appropriate conversion ratio is 260:1 or less.
In the observational studies that directly compare Aranesp and Procrit for the treatment of CIA, and report total dose per patient per episode of both epoetin and darbepoetin, the ratio of mean total doses is 341:1 and the ratio of median total doses is 352:1. However, selection bias may affect the validity of these studies. CMS therefore believes that the above-mentioned ratios may still overestimate, at least modestly, the potency of darbepoetin alfa relative to epoetin alfa. An analysis of Medicare claims data from 2002 and 2003 determined that the ratio of utilization of Procrit to Aranesp in Medicare patients was 330:1 (units:mcg).
As noted above, a conversion ratio between the dosages of these two products is not meant to guide what should be done for individual patients in clinical practice. In addition, by using a conversion ratio CMS is not attempting to establish a lower or upper limit on the amount of either biological a physician can prescribe to a patient. CMS expects that physicians will continue to prescribe these biologicals based on their own clinical judgment of the needs of individual patients.
Based on our own review of the evidence, our consultation with the independent contactor who also reviewed the evidence, and our discussions with Amgen and Ortho Biotech, CMS concludes that an appropriate conversion ratio for the purposes of a payment policy is 330 International Units of epoetin alfa to one microgram of darbepoetin alfa (330:1) for the purpose of treating chemotherapy-induced anemia.
Amgen presented studies that examined the effect of darbepoetin on hemoglobin in this population. Two studies showed a dose conversion ratio (DCR) range between 215-330. These were observational studies similarly affected by the methodological weaknesses of this study design previously discussed for chemotherapy-induced anemia. A third study submitted by Amgen showed a DCR of 168:1 and is the only study that prospectively looked at darbepoetin and epoetin.
We estimate that no more than 10 percent of the Medicare patients who receive darbepoetin in the hospital outpatient setting receive it solely because of CKD. As a result, at this time, we believe that it could be confusing and burdensome for hospitals as well as the Medicare claims processing systems to use different HCPCS codes assigned to different APCs in order to distinguish and pay different amounts for darbepoetin used by patients with CIA from darbepoetin used by patients with CKD. Therefore, given the heterogeneity of the population, the general paucity of scientific evidence on CKD, the estimated low incidence of CKD-only indications in the OPPS population, and the potential burden on providers of requiring different codes for different indications, we are not establishing a different payment rate for darbepoetin for CKD at this time. However, CMS invites the submission of peer reviewed clinical data to further illuminate the issue. Therefore, we are going to use a 330:1 conversion ratio for CKD also and, therefore, a single APC payment rate for darbepoetin alfa, in 2004.
Section 1833(t)(2)(D) of the Act requires that we determine a wage adjustment factor to adjust for geographic wage differences, in a budget neutral manner, that portion of the OPPS payment rate and copayment amount that is attributable to labor and labor-related costs.
We used the proposed Federal fiscal year (FY) 2004 hospital inpatient PPS wage index to make wage adjustments in determining the proposed payment rates set forth in the proposed rule. We also proposed to use the final FY 2004 hospital inpatient wage index to calculate the final CY 2004 payment rates and coinsurance amounts for OPPS. Therefore, we have used the corrected final FY 2004 hospital inpatient wage index to make wage adjustments in determining the final payments rates set forth in this final rule. The corrected final FY 2004 hospital inpatient wage index published as Tables 4A, 4B, and 4C in the October 6, 2003
We received several comments on how we apply the wage index in setting rates.
Also, because the wage index is used to neutralize costs derived from charges and is a factor in the conversion factor, the $10,000 payment in the example may change. To gauge the full impact of such a change, we would have to undertake significant statistical analysis. We will continue to apply the wage index to 60 percent of the APC for 2004. However, we recognize the need to reassess whether this percentage is correct in view of the packaging of high cost devices into APCs and will make every effort to do a reassessment for 2005 OPPS proposed rule. If we determine that a change to the percentage might be appropriate, we will propose it in the 2005 OPPS NPRM.
In the November 30, 2001 final rule (66 FR 59887), we adopted a methodology that applied five rules for calculating APC copayment amounts when payments for APC groups change because the APCs' relative weights are recalibrated or when individual services are reclassified from one APC group to another. In calculating the unadjusted copayment amounts for 2004, we encountered circumstances that the methodology in the November 30, 2001 final rule either did not address or whose applicability was ambiguous. Therefore, we proposed to revise and clarify the methodology we would follow to calculate unadjusted copayment amounts, including situations in which recalibration of the relative payment weight of an existing APC results in a change in the APC payment; situations in which reclassification of HCPCS codes from an existing APC to another APC results in a change in the APC payment; and situations in which newly created APCs are comprised of HCPCS codes from existing APCs.
As we stated in the August 12, 2003 proposed rule, as a general rule, we would seek to lower the coinsurance rate for the services in an APC from the prior year. This principle is consistent with section 1833(t)(8)(C)(ii) of the Act, which accelerates the reduction in the national unadjusted coinsurance rate so that beneficiary liability will eventually equal 20 percent of the OPPS payment rate for all OPPS services and with section 1833(t)(3)(B), which indicates the congressional goal of achieving 20 percent coinsurance when fully phased in and gives the Secretary the authority to set rules for determining copayment amounts to new services. However, in no event is the proposed 2004 unadjusted coinsurance amount for an APC group lower than 20 percent or greater than 50 percent of the payment rate.
We proposed to determine copayment amounts in 2004 and subsequent years in accordance with the following rules.
1. When an APC group consists solely of HCPCS codes that were not paid under the OPPS the prior year because they were packaged or excluded or are new codes, the unadjusted copayment amount would be 20 percent of the APC payment rate.
2. If a new APC that did not exist during the prior year is created and consists of HCPCS codes previously assigned to other APCs, the copayment amount is calculated as the product of the APC payment rate and the lowest coinsurance percentage of the codes comprising the new APC.
3. If no codes are added to or removed from an APC and, after recalibration of its relative payment weight, the new payment rate is equal to or
4. If no codes are added to or removed from an APC and, after recalibration of its relative payment weight, the new payment rate is
5. If HCPCS codes are added to or deleted from an APC, and, after recalibrating its relative payment weight, holding its unadjusted copayment amount constant results in a decrease in the coinsurance percentage for the reconfigured APC, the copayment amount would not change (unless retaining the copayment amount would result in a coinsurance rate less than 20 percent).
6. If HCPCS codes are added to an APC, and, after recalibrating its relative payment weight, holding its unadjusted copayment amount constant results in an increase in the coinsurance percentage for the reconfigured APC, the copayment amount would be calculated as the product of the payment rate of the reconfigured APC and the lowest coinsurance percentage of the codes being added to the reconfigured APC.
We stated in the proposed rule that this methodology would, in general, reduce the beneficiary coinsurance rate and copayment amount for APCs for which the payment rate changes as the result of the reconfiguration of APCs and/or the recalibration of relative payment weights. We received no comments from the public on our proposal for the calculation of beneficiary copayment amounts.
The unadjusted copayment amounts for services payable under the OPPS effective January 1, 2004 are shown in Addendum A and Addendum B.
Section 1833(t)(3)(C)(ii) of the Act requires us to update the conversion factor used to determine payment rates under the OPPS on an annual basis.
Section 1833(t)(3)(C)(iv) of the Act provides that for 2004, the update is equal to the hospital inpatient market basket percentage increase applicable to hospital discharges under section 1886(b)(3)(B)(iii) of the Act.
The forecast of the hospital market basket increase for FY 2004 published in the inpatient PPS proposed rule on May 19, 2003 was 3.5 percent. To set the proposed OPPS conversion factor for 2004, we increased the 2003 conversion factor of $52.151 (the figure from the November 1, 2002 final rule (67 FR 66788) by 3.5 percent.
In accordance with section 1833(t)(9)(B) of the Act, we further adjusted the proposed conversion factor for 2004 to ensure that the revisions we proposed to update by means of the wage index are made on a budget-neutral basis. We calculated a budget neutrality factor of 1.003 for wage index changes by comparing total payments from our simulation model using the proposed FY 2004 hospital inpatient PPS wage index values to those payments using the current (FY 2003) wage index values. In addition, for CY 2004, allowed pass-through payments have decreased to 2 percent of total OPPS payments, down from 2.3 percent in CY 2003. The 0.3 percent was also used to adjust the conversion factor.
The proposed market basket increase factor of 3.5 percent for 2004, the required wage index budget neutrality adjustment of approximately 1.003, and the 0.3 percent adjustment to the pass-through estimate, resulted in a proposed conversion factor for 2004 of $54.289.
For purposes of updating the CY 2003 conversion factor to determine a final conversion factor for CY 2004 we applied an update factor based on the final hospital inpatient market basket increase for FY 2004 of 3.4 percent, as published in the final rule for IPPS on August 1, 2003. We further adjusted the conversion factor by applying a budget neutrality factor of 1.001 for wage index changes based on final FY 2004 hospital inpatient PPS wage index values as published in a correction notice to the IPPS final rule on October 6, 2003. In addition, for CY 2004, estimated pass-through payments have decreased to 1.3 percent of total OPPS payments, down from 2.3 percent in CY 2003. The conversion factor was further adjusted by the difference in estimated pass-through payments of 1.0 percent.
The increase factor of 3.4 percent for 2004, the required wage index budget neutrality adjustment of slightly more than 1.001 and the 1.0 percent adjustment to the pass-through estimate, result in a final conversion factor for 2004 of $54.561.
We received several comments concerning the conversion factor update for 2004, which are summarized below.
For OPPS services furnished between August 1, 2000 and April 1, 2002, we calculated outlier payments in the aggregate for all OPPS services that appear on a bill in accordance with section 1833(t)(5)(D) of the Act. In the November 30, 2001 final rule (66 FR 59856, 59888), we specified that beginning with 2002, we would calculate outlier payments based on each individual OPPS service. We revised the aggregate method that we had used to calculate outlier payments and began to determine outliers on a service-by-service basis.
As explained in the April 7, 2000 final rule (65 FR 18498), we set a target for outlier payments at 2.0 percent of total payments. For purposes of simulating payments to calculate outlier thresholds, we proposed to continue to set the target for outlier payments at 2.0 percent. For 2003, the outlier threshold is met when costs of furnishing a service or procedure exceed 2.75 times the APC payment amount, and the current outlier payment percentage is 45 percent of the amount of costs in excess of the threshold.
For the reasons discussed in detail in section XI.E of this preamble, we proposed to establish two separate outlier thresholds, one for community mental health centers (CMHCs) and one for hospitals. For CY 2004, we proposed to continue to set the target for outlier payments at 2.0 percent of total OPPS payments (a portion of that 2.0 percent, 0.36 percent, would be allocated to CMHCs for PHP services). Based on our simulations for 2004, we proposed to set the hospital threshold for 2004 at 2.75 times the APC payment amount, and the proposed 2004 payment percentage applicable to costs over the threshold at 50 percent. We proposed to set the threshold for CMHCs for 2004 at 11.75 times the APC payment amount and the 2004 outlier payment percentage applicable to costs over the threshold at 50 percent. In this final rule, we are setting the target amount for outlier payments at 2.6 times the APC payment for hospitals and 3.65 times the APC payment for CMHCs. For 2004, the hospital outlier threshold is met when costs of furnishing a service or procedure exceed 2.6 times the APC payment amount and the outlier payment percentage is 50 percent of the amount of costs in excess of the threshold. Similarly, for CMHCs the threshold is met when costs of furnishing a service or procedure exceed 3.65 times the APC payment amount and the outlier payment percentage is 50 percent of the amount of costs in excess of the threshold.
We received several comments concerning our proposal to establish two separate outlier pools, one for hospitals and another for CMHCs, and to determine eligibility for outlier payments by applying an outlier threshold of 2.75 times the APC payment for hospitals and 11.75 times the APC payment for CMHCs. The comments we received concerning that proposal are summarized in section XI E.3 along with our responses. Comments we received pertaining to other aspects of our proposal for outlier payments are summarized below:
Since the inception of the OPPS, providers have been eligible to receive additional transitional payments if the payments they received under the OPPS were less than the payments they would have received for the same services under the payment system in effect before the OPPS. Under 1833(t)(7) of the Act, most hospitals that realize lower payments under the OPPS received transitional corridor payments based on a percent of the decrease in payments. However, rural hospitals having 100 or fewer beds, as well as cancer hospitals and children's hospitals described in section 1886(d)(1)(B)(iii) and (v) of the Act, were held harmless under this provision and paid the full amount of the decrease in payments under the OPPS.
Transitional corridor payments were intended to be temporary payments to ease providers' transition from the prior cost-based payment system to the prospective payment system. Beginning January 1, 2004, in accordance with section 1833(t)(7) of the Act, transitional corridor payments will no longer be paid to providers other than cancer hospitals and children's hospitals. Cancer hospitals and children's hospitals are held harmless permanently
Since small rural hospitals may not be able to achieve the same level of operating efficiencies as larger rural hospitals and urban hospitals, we were concerned that the possible decrease in payments to these hospitals resulting from the elimination of the transitional corridor payments could result in these hospitals having to decrease or altogether cease to provide certain outpatient services. A reduction of services could have consequences for Medicare beneficiaries and their continued access to care in rural areas. In light of these concerns, we stated in the August 12, 2003 proposed rule that one thing we could do is to provide increased APC payments for clinic and emergency room visits furnished by rural hospitals having 100 or fewer beds. Any adjustment to payments for these hospitals would be made under the authority granted to the Secretary under section 1833(t)(2)(E) of the Act, to establish in a budget neutral manner adjustments as determined to be necessary to ensure equitable payments, such as adjustments for certain classes of hospitals. In the August 12, 2003 proposed rule, we invited comments on whether we should provide an adjustment, such as the one described above, for small rural hospitals.
We received a few comments regarding the elimination of transitional corridor payments, which are summarized below along with our responses.
One commenter opposed shifting payments from larger hospitals in order to increase payments to small rural hospitals. The commenter stated that all hospitals, regardless of size and location, struggle with gaining operating efficiencies under the OPPS. One hospital association indicated that transitional corridor payments have been a critical source of financial support for many teaching hospitals and payments to these hospitals deserve further analyses by us, which would likely result in the conclusion that a teaching hospital adjustment is warranted. Several hospital associations expressed concern about our proposal to create differential payment rates between urban and rural hospitals for clinic and emergency room visits, and one questioned our legal authority to pay differently for the same service. One of the associations added that as a preferred alternative, it is urging the Congress to allocate additional resources to extend the transitional corridor and hold harmless provisions to all providers as well as urging the Congress to increase payments for clinic and emergency room visits for all hospitals. Another of the hospital associations stated that it does not support a budget neutral, redistributive adjustment through regulation, but is instead urging the Congress to allocate additional resources to assist rural hospitals by increasing payment rates for clinic and emergency room visits for all hospitals.
The Medicare Payment Advisory Commission (MedPAC) commented that the August 12, 2003 proposed rule failed to provide a rationale for proposing increased payments for emergency room and clinic visits as a means of supporting small rural hospitals and recognized that only limited cost report data are available to assess the performance of small rural hospitals under the OPPS. MedPAC stated that we should consider other regulatory options to ensure access to care for rural beneficiaries, such as a low-volume adjustment and pointed out that any payment adjustment should be accompanied by an analysis of how small rural hospitals have fared under the OPPS, the impact of any payment adjustment, and the impact of other policies that affect rural hospitals such as conversion to critical access status. MedPAC also stated that legislative remedies could include extending the hold harmless policy or providing a transition from hold harmless status.
Facilities code clinic and emergency department visits using the same [Physicians'] Current Procedural Terminology (CPT) codes as physicians. For both clinic and emergency department visits, there are currently five levels of care. Because these codes were defined to reflect only the activities of physicians, they are inadequate to describe the range and mix of services provided to patients in the clinic and emergency department settings (for example, ongoing nursing care, preparation for diagnostic tests, and patient education).
In the April 7, 2000 final rule (65 FR 18434), we stated that in order to ensure proper payment to hospitals, it was important that emergency and clinic visits be coded properly. To facilitate proper coding, we required each hospital to create an internal set of guidelines to determine what level of visit to report for each patient. In the August 24, 2001 proposed rule (66 FR 44672), we asked for public comments regarding national guidelines for hospital coding of emergency and clinic visits. Commenters recommended that we keep the current E/M coding system until facility-specific E/M codes for emergency department and clinic visits, along with national coding guidelines, were established. Commenters also recommended that we convene a panel of experts to develop codes and guidelines that are simple to understand, implement, and that are compliant with the Health Insurance Portability and Accountability Act (HIPAA) requirements.
During its January 2002 meeting, the APC Panel made several recommendations regarding coding for evaluation and management services. After careful review and consideration of written comments, oral testimony, and the APC Panel's recommendations, we proposed the following in the August 9, 2002 proposed rule (for implementation no earlier than January 2004):
1. To develop five G codes to describe emergency department services:
GXXX1—Level 1 Facility Emergency Services;
GXXX2—Level 2 Facility Emergency Services;
GXXX3—Level 3 Facility Emergency Services;
GXXX4—Level 4 Facility Emergency Services; and
GXXX5—Level 5 Facility Emergency Services.
2. To develop five G codes to describe clinic services:
GXXX6—Level 1 Facility Clinic Services;
GXXX7—Level 2 Facility Clinic Services;
GXXX8—Level 3 Facility Clinic Services;
GXXX9—Level 4 Facility Clinic Services; and
GXXX10—Level 5 Facility Clinic Services.
3. To replace CPT Visit Codes with the 10 new G codes for OPPS payment purposes.
4. To establish separate documentation guidelines for emergency visits and clinic visits.
In our November 1, 2002 final rule (67 FR 66792), we stated that the most appropriate forum for development of new code definitions and guidelines would be an independent expert panel that would make recommendations to us. In light of the expertise of organizations such as the American Hospital Association (AHA) and the American Health Information Management Association (AHIMA), we felt that these organizations were particularly well equipped to make recommendations to us and to provide ongoing education to providers.
On their own initiative, the AHA and the AHIMA convened an independent expert panel of individuals from various organizations to develop code descriptions and guidelines for hospital emergency department and clinic visits and to make recommendations to us.
The panel recommended the following to us.
1. We should make payment for emergency and clinic visits based on four levels of care.
2. We should create HCPCS codes to describe these levels of care as follows:
GXXX1—Level 1 Emergency Visit.
GXXX2—Level 2 Emergency Visit.
GXXX3—Level 3 Emergency Visit.
GXXX4—Critical Care provided in the emergency department.
GXXX5—Level 1 Clinic Visit.
GXXX6—Level 2 Clinic Visit.
GXXX7—Level 3 Clinic Visit.
GXXX8—Critical Care provided in the clinic.
3. We should replace all the HCPCS currently in APCs 600, 601, 602, 610, 611, 612, and 620 with GXXX1 through GXXX8.
4. Based on the above recommendations, we would crosswalk payments as follows: GXXX1 to APC 610, GXXX2 to APC 611, GXXX3 to APC 612, GXXX4 to APC 620, GXXX5 to APC600, GXXX6 to APC 601, GXXX7 to APC 602, and GXXX8 to APC 620. These crosswalks and code descriptions are listed in Table 14 below.
The independent panel convened by the AHA and AHIMA recommended these levels in anticipation of the development of national coding guidelines for emergency and clinic visits that meet the following criteria we announced in the August 9, 2002 proposed rule (67 FR 52131):
1. Coding guidelines for emergency and clinic visits should be based on emergency department or clinic facility resource use, rather than physician resource use.
2. Coding guidelines should be clear, facilitate accurate payment, be usable for compliance purposes and audits, and comply with HIPAA.
3. Coding guidelines should only require documentation that is clinically necessary for patient care. Preferably, coding guidelines should be based on current hospital documentation requirements.
4. Coding guidelines should not create incentives for inappropriate coding (for example, up-coding).
We have received recommendations for a set of coding guidelines from the independent E/M panel comprised of members of the AHA and AHIMA. We proposed to implement new evaluation and management codes only when we are also ready to implement guidelines for their use, after allowing ample opportunity for public comment, systems change, and provider education. We also proposed to use cost data from the current HCPCS codes in these APCs to determine the relative weights of these APCs until cost data from GXXX1 through GXXX8 are available to set relative weights. We note that this proposal requires discontinuing the use of all HCPCS codes in these APCs and would not allow us to collect cost data for the five levels of emergency and clinic visits that are currently described by CPT codes. We further note that we would no longer be able to distinguish among the costs for visits by new patients, established patients, consultation patients, or patients being seen for more specialized care (for example, pelvic screening exams and glaucoma screening exams).
We would be using claims data from current HCPCS codes and crosswalking those data to the new codes in the same APCs; therefore, there would be no change in payment for any of these services as a result of these coding changes. Once cost data become available from the new HCPCS codes, we would use those data to set the relative weights, and, therefore, there should be no budgetary impact.
We are currently considering the set of proposed national coding guidelines for emergency and clinic visits recommended by the independent panel. We plan to make any proposed guidelines available to the public for comment on the OPPS web site as soon as they are complete. We will notify the public through our listserve when these proposed guidelines become available. To subscribe to this listserve, please go to the following Web site:
1. To make appropriate payment for medically necessary care;
2. To minimize the information collection and reporting burden on facilities;
3. To minimize any incentives to provide unnecessary or low quality care;
4. To minimize the extent to which separately billable services are counted as E/M services;
5. To develop coding guidelines that are consistent with facility resource use; and
6. To develop coding guidelines that are clear, facilitate accurate payment, are useful for compliance purposes and audits, and comply with HIPAA. Before adoption and implementation of any coding changes or coding guidelines, ample time will be provided for the public to comment on our proposal and, following announcement of any final decisions, for the education of clinicians and coders and for hospitals to make the necessary changes in their systems to accommodate the codes and guidelines. In the proposed rule, we requested comments on the amount of time hospitals believe would be adequate to implement these new codes and guidelines. We stated that we remain committed to working with appropriate organizations and stakeholders in our continuing development of a standard set of codes and national guidelines for facility coding of emergency and clinic visits.
We received comments on our proposal, which are summarized below with our responses.
Several commenters, including a hospital association and federation, commended CMS for proposing new G codes for facility coding of emergency and clinic visits, stating that existing CPT codes for E/M services correspond to different levels of physician effort and fail to adequately describe non-physician resources. These commenters stated that the proposed new G codes would appropriately capture facility resources, minimize confusion relative to physician versus facility E/M services, and adequately meet hospitals' need to comply with HIPAA regulations.
The status indicators we assign to HCPCS codes and APCs under the OPPS have an important role in payment for services under the OPPS because they indicate whether a service represented by an HCPCS code is payable under the OPPS or another payment system and also whether particular OPPS policies apply to the code. We are providing our status indicator (SI) assignments for APCs in Addendum A, HCPCS codes in Addendum B, definitions of the status indicators in Addendum D1, and definitions of code condition indicators in Addendum D2.
The OPPS is based on HCPCS codes for medical and other health services. These codes are used for a wide variety of payment systems under Medicare, including, but not limited to, the Medicare fee schedule for physician services, the Medicare fee schedule for durable medical equipment and prosthetic devices, and the Medicare clinical laboratory fee schedule. For purposes of making payment under the
We assign one and only one status indicator to each APC and to each HCPCS code. Each HCPCS code that is assigned to an APC has the same status indicator as the APC to which it is assigned.
The software that controls Medicare payment looks to the status indicators attached to the HCPCS codes and APCs for direction in the processing of the claim. Therefore, the assignment of the status indicators has significance for the payment of services.
In the August 12, 2003 proposed rule, we listed the OPPS status indicators and described how we proposed to use them in the 2004 OPPS. We also solicited comments on the appropriateness of the status indicator that we proposed to assign to each APC in Addendum A and each HCPCS code in Addendum B. Because the assignment of a status indicator designates how a particular outpatient service will be paid, either under the OPPS or under another payment system, or why payment is not made for a code, the comments that we received regarding the status indicator assigned to a particular APC or HCPCS code are discussed elsewhere in this final rule, within the context of the payment policy or rule that affect how payment is determined for the APC or HCPCS code.
Since publication of the August 12 proposed rule, we have been preparing specifications for the January 1, 2004 outpatient code editor (OCE) and PRICER, which are pivotal in determining how hospital claims for outpatient services are processed and paid. In the course of discussions with the contractors and systems maintainers with whom we work to ensure that claims are processed appropriately and in accordance with the policies and changes that we are implementing in this final OPPS rule for 2004, several issues related to status indicator definitions and claims processing edits and dispositions have arisen. As a result of these discussions, we have determined that claims would be processed more accurately if we established two additional payment status indicators to designate with greater specificity the appropriate disposition of certain codes for which payment is not made under the OPPS. Therefore, we are adding two status indicators, status indicator “B” and status indicator “Y,” to Addendum D1, which lists all of the status indicators established as part of the OPPS and describes what they signify. We have also revised and refined the status indicator definitions and clarified the explanation of what each status indicator means. None of these changes affect how services are paid under the OPPS. Rather, the changes are intended to clarify how the status indicators relate to existing payment policy and rules and to assist hospitals and our contractors in determining the disposition of individual HCPCS codes when they are billed to Medicare.
In 2004, we are adding a new Status Indicator “Y” to designate codes for non-implantable Durable Medical Equipment (DME) to assist hospitals in identifying codes that they must bill directly to the Durable Medical Equipment Regional Carrier (DMERC) rather than to the fiscal intermediary. Codes assigned Status Indicator “Y” are listed in Addendum B.
Historically, we have used Status Indicator “E” to identify certain HCPCS codes that are recognized by Medicare but that are not payable under the OPPS when they are submitted on an outpatient hospital Part B bill type (bill type 12x, 13x, or 14x). Beginning with implementation of the 2004 final rule, we are assigning Status Indicator “B” to HCPCS codes that are not payable under OPPS when submitted on an outpatient hospital Part B bill type (12x, 13x, and 14x), but that may be payable by intermediaries to other provider types when submitted on an appropriate bill type, such as bill type 75x submitted by a CORF. In some cases, another code may be submitted by hospitals on an outpatient hospital Part B bill type (12x, 13x, and 14x) to receive payment for a service or code that is assigned status indicator “B” in Addendum B. Because we did not include these status indicator changes in the August 12, 2003 proposed rule, we invite comments on their addition to Addendum D1, and on the revised definitions and explanations that we included in Addendum D1.
Addendum D2 shows the indicators that we use to designate codes that are new in 2004 for which comments may be submitted as well as codes that are deleted in 2004 either with or without a grace period.
In the November 1, 2002 update to the OPPS (67 FR 66794), we summarized and clarified previously published guidance (Transmittal A-02-026) regarding payment requirements for HCPCS code G0244, Observation care provided by a facility to a patient with congestive heart failure, chest pain or asthma, minimum of 8 hours, maximum 48 hours. We also implemented HCPCS codes G0263 and G0264 to identify patients directly admitted to observation. In January 2003, we published Transmittal A-02-129, which provides further instructions regarding billing for observation services. In the proposed rule, we did not propose anything new with regard to observation services, nor did we seek public comment on observation issues. We stated that we would update by Program Memorandum any changes in the list of ICD-9-CM codes required for payment of HCPCS code G0244 resulting from the October 1 annual update of ICD-9-CM. We also stated in the proposed rule that we would include any changes in the 2004 final OPPS rule and allow the public an opportunity to comment.
We have had an opportunity to review the October 1, 2003 update of the ICD-9-CM and we have determined that there are not changes that affect the list of diagnosis codes required for payment of HCPCS code G0244. Therefore, we are not implementing any changes in the way we pay for observation services under the 2004 OPPS.
Before implementation of the OPPS, Medicare paid reasonable costs for services provided in the outpatient department. The claims submitted were subject to medical review by the fiscal intermediaries to determine the appropriateness of providing certain services in the outpatient setting. We did not specify in regulations those services that were appropriate to be provided only in the inpatient setting and that, therefore, should be payable only when provided in that setting.
Section 1833(t)(1)(B)(i) of the Act gives the Secretary broad authority to determine the services to be covered and paid for under the OPPS. In the April 7, 2000 final rule, we identified procedures that are typically provided only in an inpatient setting and, therefore, would not be paid by Medicare under the OPPS (65 FR 18455). These procedures comprise what is referred to as the “inpatient list.” The inpatient list specifies those services that are only paid when provided in an inpatient setting. These are services that require inpatient care because of the nature of the procedure, the need for at least 24 hours of post-operative recovery time or monitoring before the patient can be safely discharged, or the underlying physical condition of the patient. As we
• Most outpatient departments are equipped to provide the services to the Medicare population.
• The simplest procedure described by the code may be performed in most outpatient departments.
• The procedure is related to codes that we have already removed from the inpatient list.
In the November 1, 2002 final rule, we added the following criteria for use in reviewing procedures to determine whether they should be removed from the inpatient list and assigned to an APC group for payment under the OPPS:
• We have determined that the procedure is being performed in multiple hospitals on an outpatient basis; or
• We have determined that the procedure can be appropriately and safely performed in an ASC and is on the list of approved ambulatory surgical center (ASC) procedures or proposed by us for addition to the ASC list.
At its January 2003 meeting, the APC Panel did not make recommendations regarding procedures on the inpatient list, and in the proposed rule, we did not propose to make any of the procedures that are currently on the inpatient list in Addendum E payable under the OPPS in 2004. We solicited comments on whether any procedures in Addendum E should be paid under the OPPS. We asked commenters recommending reclassification of a procedure to an APC to include evidence (preferably from peer-reviewed medical literature) that the procedure is being performed on an outpatient basis in a safe and effective manner. We also solicited comments on the appropriate APC assignment for the procedure in the event that we determine in the final rule, based on comments, that the procedure would be payable under the OPPS in 2004.
Following our review of any comments that we receive about the procedures in Addendum E, we indicated in the proposed rule that we would propose either to assign a CPT code to an APC for payment under the OPPS or, if the comments did not provide sufficient information and data to enable us to make a decision, to present the comments to the APC Panel at its 2004 meeting.
Procedures on the inpatient list can be found in Addendum E. CPT codes that are new in 2004 and that we believe are appropriately assigned status indicator “C” to designate that they are on the inpatient list can be found in Addendum B with condition code “NI”. We invite comment on assignment of these codes to the inpatient list.
We received a few comments regarding the inpatient list, which are summarized below with our responses.
Moreover, we welcome at any time recommendations from hospitals and/or physicians regarding procedures currently on the inpatient list that are being safely and appropriately performed on an outpatient basis. Requests for review of a code or group of codes on the inpatient list should be sent to the Director, Division of Outpatient Care, Centers for Medicare & Medicaid Services, Mailstop C4-05-17, 7500 Security Boulevard, Baltimore, MD 21244-1850. Such requests should include supporting information and data to demonstrate that the code meets the five criteria for payment under the OPPS that are listed above, and that are also discussed in the November 1, 2002 final rule (67 FR 66739). In addition, we ask that evidence be submitted, including operative reports of actual cases and peer-reviewed medical literature, to demonstrate that the procedure is being performed on an outpatient basis in a safe and appropriate manner in a variety of different types of hospitals.
In the 2003 update of the OPPS, we implemented a new modifier -CA, Procedure payable only in the inpatient setting when performed emergently on an outpatient who dies before admission. In section VI of Transmittal A-02-129, issued on January 3, 2003, we instructed hospitals on the use of modifier -CA when submitting a claim on bill type 13x for a procedure that is on the inpatient list and that is assigned payment SI “C.” (Transmittal A-02-129 can be found on our web site at
We reviewed this policy and determined that assigning payment for these services to APC 0977, which is a New Technology APC, is problematic because payment under New Technology APCs is a fixed amount that does not have a relative payment weight and is, therefore, not subject to recalibration based on hospital costs. We proposed to establish a new APC for which payment would be made under certain conditions for otherwise payable outpatient services furnished on the same date of service that a procedure with SI “C” is performed emergently on an outpatient who dies before admission to the hospital as an inpatient. Beginning in 2004, hospitals would be paid under APC 0375 instead of APC 0977 for services furnished on the same date of service that a procedure with SI “C” and modifier -CA is billed. We proposed at the outset to set the payment rate for APC 0375 in the amount of $1,150, which is the payment amount for the newly structured New Technology APC that would replace APC 0977. When the APC weights are recalibrated in 2005, we would use charge data from CY 2003 claims for line items that have the same date of service as the line with modifier -CA and that show a HCPCS code with status indicator “V,” “S,” “T,” “X,” “N,” or “K” to calculate a median cost and relative payment weight for APC 375. Once we have claims data, we would be able to determine whether it is appropriate to calculate a relative payment weight based on median costs from our claims data or to continue a fixed payment rate for these special cases. In the proposed rule, we invited comments on these proposed changes.
As we discussed in the April 7, 2000 OPPS final rule (65 FR 18452), partial hospitalization is an intensive outpatient program of psychiatric services provided to patients in place of inpatient psychiatric care. A partial hospitalization program (PHP) may be provided by a hospital to its outpatients or by a Medicare-certified community mental health center (CMHC). Payment to providers under the OPPS for PHPs represents the provider's overhead costs associated with the program. Because a day of care is the unit that defines the structure and scheduling of partial hospitalization services, we established a per diem payment methodology for the PHP APC, effective for services furnished on or after August 1, 2000.
The analysis of hospital partial hospitalization claims resulted in a per diem payment of $202.19, effective August 1, 2000. This amount was updated effective January 1, 2001 and April 1, 2002 to $206.82 and $212.27, respectively.
Effective January 1, 2003, the PHP APC amount was $240.03, of which $48.17 is the beneficiary's coinsurance. In the proposed rule, we described the methodology we followed in developing the 2003 PHP payment rate.
For CY 2004, we analyzed hospital and CMHC PHP claims for services furnished between April 1, 2002 and December 31, 2002. We intended to propose to use the same methodology for computing median costs per day for CY 2004 that was used to compute the CY 2003 PHP median cost per day. However, when we applied the methodology to the CMHC claims, the CMHC median cost per day was determined to be significantly higher than the median cost per day for hospital outpatient departments to provide the same benefit. In addition, the difference in median costs per day was significantly larger than last year.
As a result, we proposed a per diem rate for PHP services furnished during CY 2004 based solely on hospital PHP data. The proposed PHP APC 0033 amount, after scaling, was determined to be $208.95, of which $41.69 is the beneficiary's coinsurance.
However, a Program Memorandum issued on January 17, 2003, directed the FIs to recalculate hospital and CMHC cost-to-charge ratios. We anticipated receipt of the updated ratios this summer, and indicated that if the updated cost-to-charge ratios resulted in a more reasonable median per diem rate, we would use the CMHC data in developing the final rate for CY 2004.
We received 42 public comments in response to this proposal. A summary of the comments is provided below along with our responses.
Another commenter stated that our inability to process the data timely does not constitute an appropriate basis for excluding all CMHC data from the per diem calculations. The commenters suggested alternatives such as including prior years' CMHC data trended forward based on medical inflation or maintaining the CY 2003 payment rate for PHP services furnished in CY 2004. One commenter questioned why the median cost per day for hospitals was reported as $225 but the proposed rate was reduced to $208.95.
With respect to billing by CSWs, the professional component of services furnished by CSWs to PHP patients is bundled into the per diem payment amount and no billing to the Part B carrier is permitted. The rationale for this policy was explained in the interim final regulation with comment period we published on February 11, 1994 (59 FR 6570).
The OPPS is intended to pay PHP providers for the resources associated with sponsoring a PHP, for example, building maintenance, utilities, and support staff, including the cost of CSWs. Thus, where a PHP provider utilizes CSWs for psychotherapy services to PHP patients, payment for the professional costs of the CSW is made through the OPPS per diem payment. However, if a PHP utilizes psychiatrists, clinical psychologists, nurse practitioners, physician assistants, or clinical nurse specialists to furnish therapeutic services to PHP patients, the physician or practitioner may bill the Part B carrier for payment under the physician fee schedule for their professional services. When this occurs, the PHP provider may bill the FI under the OPPS for the facility resources associated with the psychotherapy service.
We note that a physician or any of the practitioners specified in 42 CFR 410.43(b) (including CSWs) may bill the Part B carrier for their professional services furnished to hospital outpatients who are
In a related matter, the use of historical cost-to-charge ratios applied to current charges has resulted in an excessive amount of outlier payments being made to CMHCs. As a result of more in-depth analysis of the 2001 data files that were used to compute the CY 2003 PHP per diem amount, we discovered a significant difference in the amount of outlier payments made to hospitals and CMHCs for PHP.
In the August 12, 2003 proposed rule, we stated that given the difference in PHP charges between hospitals and CMHCs, we did not believe it was appropriate to make outlier payments to CMHCs using the outlier percentage target amount and threshold established for hospitals. Therefore, we proposed to designate a portion of the estimated 2.0 percent outlier target amount specifically for CMHCs, consistent with the percentage of projected payments to CMHCs under the OPPS in CY 2004, excluding outlier payments. Since CMHCs were projected to receive 0.36 percent of total OPPS payments in CY 2004, excluding outlier payments, we proposed to designate 0.36 percent of the estimated 2.0 percent outlier target amount for CMHCs and establish a threshold to achieve that level of outlier payments. Based on our simulations of CMHC payments in 2004, we proposed to set the threshold for CY 2004 at 11.75 times the PHP APC payment amount. We proposed to apply the same outlier payment percentage that applies to hospitals. Therefore, for CY 2004, we
The outlier policy is intended to compensate providers for treating exceptionally resource-intensive patients. Outlier payments were never intended to be made for all patients and used as a supplement to the per diem payment amount. Our analysis showed that the CMHC average charge per day increased by 31 percent from CY 2001 to CY 2002. We do not believe this increase in charges correlates to an equivalent increase in CMHC costs. Rather, our analysis indicates that the increase in charges was made in order to qualify for outlier payments to cover CMHC operating expenses, not for patients who are exceptionally resource-intensive. We are concerned that if CMHCs continue this pattern of escalating charges, CMHCs will receive a disproportionate share of outlier payments compared to non-CMHCs that do not artificially inflate their charges, thereby limiting outlier money for truly deserving cases.
For these reasons, for CY 2004, we are establishing a separate CMHC threshold. The threshold is based on the proportion of total OPPS payments CMHCs are estimated to receive in CY 2004. As stated earlier in this section, our analysis indicated that CMHCs were projected to receive 0.36 percent of total OPPS payments in CY 2004, excluding outlier payments. Therefore, we proposed to designate 0.36 percent of the estimated 2.0 percent outlier target amount for CMHCs and establish a threshold to achieve that level of outlier payments. Based on our simulations of CMHC payments in 2004, we proposed to set the threshold for CY 2004 at 11.75 times the PHP APC payment amount. We have updated our simulations using the final CY 2004 PHP per diem rate. CMHCs are now projected to receive approximately 0.5 percent of estimated total OPPS payments in CY 2004, excluding outlier payments. We have calculated the CMHC outlier threshold to achieve that level of payment. The resulting threshold for CY 2004 is 3.65 percent times the APC 0033 payment amount. We will apply the same outlier payment percentage that applies to hospitals. Therefore, for CY 2004, we will pay 50 percent of the difference between CMHC per diem costs and the CMHC outlier threshold amount. We intend to analyze whether a separate CMHC outlier threshold will continue to be appropriate in future updates.
We received a number of general comments about OPPS data and related issues to which we respond below. Not all coding questions are addressed, however. We do not believe that the final rule is the appropriate venue in which to address specific inquiries about billing.
We also received a number of comments that were not relevant to the proposals made in the August 12, 2003 proposed rule. The commenters requested specific coding changes and requested clarification or guidance regarding certain billing requirements. Although we will provide answers to the questions raised, the final rule is not the appropriate venue for that guidance. We will consider the requests and suggestions provided, and will continue our ongoing efforts to formulate and publish billing instructions. Similarly, we will consult with our clinical experts regarding the suggestions made regarding coding of outpatient department procedures and other services.
There are several new HCPCS codes for drugs, biologicals, and radiopharmaceuticals that are new for 2004. Since these codes were not subject to public comment in the August 12, 2003 proposed rule, they have been assigned to code condition “NI” and are subject to public comments following the publication of this rule. Some of these new codes for drugs and radiopharmaceuticals are replacements for codes for which we have hospital cost data. In these cases, we cross-walked the data for the expired codes to the new codes to determine their packaging status and payment rates. For codes that did not have a predecessor, we had no means to determine associated hospital costs; therefore, we assigned the codes to packaged status for 2004. We reinforce the importance of billing for packaged codes with appropriate charges so that we can collect cost data on these codes to use for future rate setting. We invite comments on the status indicators that have been assigned to these codes. Commenters who would like us to consider their cost data for these codes may submit verifiable external information according to the criteria set forth in the August 12, 2003 proposed rule.
We made the following changes to implement statutory requirements:
• Added APCs, deleted APCs, and modified the composition of some existing APCs.
• Recalibrated the relative payment weights of the APCs.
• Updated the conversion factor and the wage index.
• Revised the APC payment amounts to reflect the APC reclassifications, the recalibration of payment weights, and the other required updates and adjustments.
• Ceased transitional pass-through payments for drugs and biologicals and devices that will have been paid under the transitional pass-through methodology for at least 2 years by January 1, 2004.
• Ceased transitional outpatient payments (TOPS payments) for all hospitals paid under OPPS except for cancer hospitals and children's hospitals.
We made the following additional changes to the OPPS:
• Adjusted payment to moderate the effects of decreased median costs for non-pass-through drugs, biologicals, and radiopharmaceuticals.
• Changed status indicators for HCPCS codes.
• Listed midyear and proposed HCPCS codes that are paid under OPPS.
• Allocated a portion of the outlier percentage target amount to CMHCs and created a separate threshold for outlier payments for partial hospitalization services.
• Created methodology and payment rates for separately payable drugs and radiopharmaceuticals for 2004.
• Changed the status indicator and payment amount for P901 by assigning it to APC 0957 (Platelet concentrate) with a payment rate of $37.30.
• We will apply a $50 threshold in lieu of the proposed $150 threshold in determining which drugs to pay for separately.
• We will set payment for all except two orphan drugs that meet our criteria for special payment under the OPPS at 88 percent of their AWP as established in the April 2003 single drug pricer (SDP). Based on widely available market prices for two orphan drugs, we will set the payment for these two orphan drugs at 94 percent of their AWP.
• We will set payment rates for 2004 for blood and blood products at 2003 payment rates.
Under the Paperwork Reduction Act of 1995, we are required to provide 60-day notice in the
• The need for the information collection and its usefulness in carrying out the proper functions of our agency.
• The accuracy of our estimate of the information collection burden.
• The quality, utility, and clarity of the information to be collected.
• Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.
The OPPS provisions set forth in this final rule do not impose information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995.
Because of the large number of items of correspondence we normally receive on
We have examined the impacts of this final rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
Executive Order 12866 (as amended by Executive Order 13258, which merely reassigns responsibility of duties) directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year).
We estimate the effects of the provisions that will be implemented by this final rule will result in expenditures exceeding $100 million in any 1 year. We estimate the total increase (from changes in the final rule as well as enrollment, utilization, and case mix changes) in expenditures under the OPPS for CY 2004 compared to CY 2003 to be approximately $0.607 billion. Therefore, this final rule is an economically significant rule under Executive Order 12866, and a major rule under 5 U.S.C. 804(2).
The RFA requires agencies to determine whether a rule will have a significant economic impact on a substantial number of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and government agencies. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $6 million to $29 million in any 1 year (
For purposes of the RFA, we have determined that approximately 37 percent of hospitals will be considered small entities according to the Small Business Administration (SBA) size standards. We do not have data available to calculate the percentages of entities in the pharmaceutical preparation manufacturing, biological products, or medical instrument industries that will be considered to be small entities according to the SBA size standards. For the pharmaceutical preparation manufacturing industry (NAICS 325412), the size standard is 750 or fewer employees and $67.6 billion in annual sales (1997 business census). For biological products (except diagnostic) (NAICS 325414), with $5.7 billion in annual sales, and medical instruments (NAICS 339112), with $18.5 billion in annual sales, the standard is 50 or fewer employees (
In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 603 of the RFA. With the exception of hospitals located in certain New England counties, for purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area (MSA) and has fewer than 100
Section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in an expenditure in any 1 year by State, local, or tribal governments, in the aggregate, or by the private sector, of $110 million. This final rule will not mandate any requirements for State, local, or tribal governments. This final rule will not impose unfunded mandates on the private sector of more than $110 million dollars.
Executive Order 13132 establishes certain requirements that an agency must meet when it publishes a final rule that imposes substantial direct costs on State and local governments, preempts State law, or otherwise has Federalism implications.
We have examined this final rule in accordance with Executive Order 13132, Federalism, and have determined that it will not have an impact on the rights, roles, and responsibilities of State, local or tribal governments. The impact analysis (
We are making several changes to the OPPS that are required by the statute. We are required under section 1833(t)(3)(C)(ii) of the Act to update annually the conversion factor used to determine the APC payment rates. We are also required under section 1833(t)(9)(A) of the Act to revise, not less often than annually, the wage index and other adjustments. In addition, we must review the clinical integrity of payment groups and weights at least annually. Accordingly, in this final rule, we are updating the conversion factor and the wage index adjustment for hospital outpatient services furnished beginning January 1, 2004 as we discuss in sections IX and VII, respectively, of this final rule. We are also revising the relative APC payment weights based on claims data from April 1, 2002 through December 31, 2002. Finally, we are removing two devices and eight drugs and biological agents from pass-through payment status. Alternatives to the changes we proposed and why we did not accept them are discussed throughout this final rule. In particular, see section V.B with regard to the expiration of pass-through payment for devices; see section VI.B with regard to the expiration of pass-through payment for drugs and biological agents.
Under this final rule, the change to the conversion factor as provided by statute will increase total OPPS payments by 4.5 percent in 2004. The changes to the wage index and to the APC weights (which incorporate the cessation of pass-through payments for many drugs and devices) will not increase OPPS payments because the OPPS is budget neutral. However, the wage index and APC weight changes will change the distribution of payments within the budget neutral system as shown in Table 15 and described in more detail in this section. The overall 4.5 percent increase does not take into account the expiration of transitional corridor payments or the end of the hold harmless provisions for small rural hospitals.
Alternatives to the changes we are making and the reasons that we have chosen the options we have are discussed throughout this final rule. Some of the major issues discussed in this rule and the sections in which they are discussed follow:
It is clear that the changes in this final rule will affect both a substantial number of rural hospitals as well as other classes of hospitals, and the effects on some may be significant. Therefore, the discussion below, in combination with the rest of this final rule, constitutes a regulatory impact analysis.
The OPPS rates for CY 2004 will have, overall, a positive effect for every category of hospital. These changes in the OPPS for 2004 will result in an overall 4.5 percent increase in Medicare payments to hospitals, exclusive of outlier and transitional pass-through payments. We also noted that both the overall 4.5 percent increase and the percent changes to individual classes of hospitals depicted in Table 15 are exclusive of any impacts to those hospitals that would result from the expiration of the transitional corridor payments or the end of the hold harmless provision for small rural hospitals. As described in the preamble, budget neutrality adjustments are made to the conversion factor and the relative weights to ensure that the revisions in the wage index, APC groups, and relative weights do not affect aggregate payments. We also note that both the overall 4.5 percent increase and the percent changes to individual classes of hospitals depicted in Table 15 are exclusive of any impacts to those hospitals that would result from the expiration of the transitional corridor payments or the end of the hold harmless provision for small rural hospitals. The impact of the wage and recalibration changes does vary somewhat by hospital group. Estimates of these impacts are displayed on Table 15.
The overall projected increase in payments for urban hospitals is slightly lower (4.3 percent) than the average increase for all hospitals (4.5 percent) while the increase for rural hospitals is slightly greater (4.9 percent) than the average increase. Again, as noted above, these numbers do not include the effect of the expiration of the transitional hold harmless payments to small rural hospitals. The introduction of a new wage index combined with changes to the APC structure will result in small distributional changes for all categories of hospitals. Rural hospitals will gain 0.2 percent from the wage index change and another 0.2 percent as a result of APC changes. Large urban hospitals will lose 0.2 percent from the APC change, whereas “other” urban hospitals show an increase of 0.1 percent from the APC changes. A discussion of the distribution of outlier payments that we project under this final rule can be found under section XV.E below. Table 16 presents the outlier distribution that we expect to see under this final rule.
The distributional impacts represent the projected effects of the policy changes, as well as statutory changes effective for 2004, on various hospital groups. We estimate the effects of individual policy changes by estimating payments per service while holding all other payment policies constant. We use the best data available but do not attempt to predict behavioral responses to our policy changes. In addition, we do not make adjustments for future changes in variables such as service volume, service mix, or number of encounters.
The OPPS is a budget neutral payment system under which the increase to the total payments made under OPPS is limited by the increase to the conversion factor set under the methodology in the statute. The impact tables show the redistribution of hospital payments among providers as a result of a new wage index and APC structure. In some cases, under this final rule, hospitals will receive more total payment than in 2003 while in other cases they will receive less total payment than they received in 2003. The impact of this final rule will depend on a number of factors, most significant of which are the mix of services furnished by a hospital (for example, how the APCs for the hospital's most frequently furnished services will change) and the impact of the wage index changes on the hospital.
Column 4 in Table 15 represents the full impact on each hospital group of all the changes for 2004. Columns 2 and 3 in the table reflect the independent effects of the final change in the wage index and the APC reclassification and recalibration changes, respectively. We excluded critical access hospitals (CAHs) from the analysis of the impact of the final 2004 OPPS rates that is summarized in Table 15. For that reason, the total number of hospitals included in Table 15 (4,378) is lower than in previous years. CAHs are excluded from the OPPS.
To a very limited extent, wage index changes favor rural hospital categories. Large urban hospitals with greater than 500 beds show the largest percent decrease (−3.0) attributable to wage index changes. Rural hospitals show modest increases of 0.2 percent for most bed sizes but show the largest gains for categories with fewer than 50 beds or 150 to 199 beds where the wage index change results in a 0.4 percent increase. Rural hospitals located in Puerto Rico show the largest negative impact (−2.5 percent) due to changes in the wage index. Hospitals located in the Middle Atlantic region also experience a large negative impact −0.6 percent due to wage index changes regardless of urban or rural designation. However, this effect is somewhat lessened by the distribution of outlier payments as discussed in more detail below.
The APC reclassification and recalibration changes also favor rural hospitals with the exception of rural hospitals with 200 or more beds that show a negative effect (−0.8 percent). Conversely, urban hospitals with greater than 199 beds show a decrease attributed to APC recalibration. Urban hospitals in excess of 500 beds show a 0.5 percent decrease as a result of APC recalibration. In general, APC changes are small and result in very few distributional changes among hospital categories.
In both urban and rural areas, hospitals that provide a lower volume of outpatient services are projected to receive a larger increase in payments than higher volume hospitals. In rural areas, hospitals with volumes between 5,000 and 20,999 are projected to experience increases larger than 5.0 percent. Urban hospitals that provide low-volume services show similar rates of increases (5.0 percent). Conversely, urban and rural hospitals providing more than 21,000 services are projected to experience a rate of increase in the 4.0 to 4.7 percent range.
Major teaching hospitals are projected to experience a smaller increase in payments (3.7 percent) than the aggregate for all hospitals (4.5 percent) due to negative impacts from both the wage index (−0.4 percent) and APC recalibration (−0.4 percent). Hospitals with less intensive teaching programs are projected to experience an overall increase (4.5 percent) that is equal to the average for all hospitals. There is little difference in impact among hospitals that serve low-income patients where increases in payments range from 4.3 to 4.7 percent higher than in 2003.
Psychiatric hospitals and long term care facilities show the largest increase in payment rates among all categories of hospital providers. Psychiatric hospitals show an increase of 18.2 percent as a result of an increase in payment rates for partial hospitalization programs and for other services such as psychotherapy. Also, payments made to psychiatric facilities represent a small portion of total spending for OPPS, approximately 60.6 million dollars for 2004. Long-term care facilities show a growth rate of 7.5 percent over payments made in 2003. We believe this is the result of a policy change that removes payments made for therapy services from the physician fee schedule to the hospital outpatient prospective payment system. Payments made for long-term care account for a small amount of OPPS payments, approximately 14.5 million for 2004.
As stated elsewhere in this preamble, we have allocated 2 percent of the estimated 2004 expenditures to outlier payments. Table 16 below illustrates the percentage of outlier payments relative to the total projected payments for the categories of hospitals that we show in the impact table.
We project, based on the mix of services for the hospitals that will be paid under the OPPS in 2004, that approximately 95 percent of hospitals will receive outlier payments. For the majority of provider groups, the table shows outlier payments as a percent of total payments in the 1.5 to 3.5 percent range. Two categories, Rehabilitation and Children's hospitals are the exception with outlier to total payment ratios of 6.7 and 11.9 percent respectively. We would point out that these hospital types represent a small number of providers with a low volume of services. The anticipated outlier payments for urban hospitals can be expected to ameliorate the impact of the wage index and APC changes on payments to urban hospitals.
For services for which the beneficiary pays a coinsurance of 20 percent of the payment rate, the beneficiary share of payment will increase for services for which OPPS payments will rise and will decrease for services for which OPPS payments will fall. For example, for a mid-level office visit (APC 0601), the minimum unadjusted co-payment in 2003 was $10.11; under this final rule, the minimum unadjusted co-payment for APC 601 will be $10.71 because the OPPS payment for the service will increase under this final rule. For some services (those services for which a national unadjusted co-payment amount is shown in Addendum B) the beneficiary co-payment is frozen based on historic data and will not change, and will therefore present no potential impact on beneficiaries.
However, in all cases, the statute limits beneficiary liability for co-payment for a service to the inpatient hospital deductible for the applicable year. This amount is $876 for 2004. In general, the impact of this final rule on beneficiaries will vary based on the service the beneficiary receives and whether the co-payment for the service is one that is frozen under the OPPS.
In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget.
Centers for Medicare & Medicaid Services (CMS), HHS.
Final rule.
This final rule will create a new process to allow certain Medicare beneficiaries to challenge national coverage determinations (NCDs) and local coverage determinations (LCDs). It will implement portions of section 522 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000. The right to challenge NCDs and LCDs will be distinct from the existing appeal rights that Medicare beneficiaries have for the adjudication of Medicare claims.
The provisions set forth in this final rule are effective December 8, 2003.
Vadim Lubarsky, 410-786-0840 for National Coverage Determinations. Misty Whitaker, 410-786-3087 for Local Coverage Determinations.
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The former name of the Centers for Medicare & Medicaid Services (CMS) was the Health Care Financing Administration (HCFA). The terms CMS and HCFA can be used interchangeably.
In addition, because of the many terms to which we refer by acronym in this final rule, we are listing these acronyms and their corresponding terms in alphabetical order below.
On August 22, 2002, we issued a proposed rule (67 FR 54534) implementing certain provisions of section 522 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA), proposing a process for the review of local coverage determinations (LCDs) and national coverage determinations (NCDs). The notice and comment period closed on October 21, 2002. We received 31 timely comments, which were quite useful in identifying issues and concerns. We have made significant changes to this final rule to address the public comments. We believe that these changes will contribute to a fairer and more efficient process. Significant changes to the proposed rule based on public comments, which are discussed in section III, below, include:
• More broadly defining beneficiaries “in need.”
• Reducing the burden for physician certification requirements.
• Allowing for participation in the BIPA section 522 adjudicatory process as an amicus curiae (friend of the court) for NCD appeals.
• Creating a mechanism to allow new evidence to be received subject to time-limited remands.
• Expanding the effect of a final decision by the Administrative law judge (ALJ) or the HHS Departmental Appeals Board (Board).
Medicare is the nation's largest health insurance program covering approximately 41 million Americans. Beneficiaries consist primarily of individuals 65 years of age or older, some disabled people under 65 years of age, and people with end-stage renal disease (permanent kidney failure treated with dialysis or a transplant).
The original Medicare program consists of two parts. Part A, known as the hospital insurance program, covers certain care provided to inpatients in hospitals, critical access hospitals, skilled nursing facilities, as well as hospice care and some home health care. Part B, the supplementary medical insurance program, covers certain physicians' services, outpatient hospital care, and other medical services that are not covered under Part A. While the original Medicare program covers many health care items and services, it does not cover all health care expenses. The Medicare statute specifically excludes from coverage certain items and services under section 1862(a) of the Social Security Act (the Act).
In addition to the original Medicare program, beneficiaries may elect to receive health care coverage under the Medicare+Choice (M+C) program under Part C of the Medicare program. This program provides beneficiaries with various options, including the right to choose a Medicare managed care plan or a Medicare private fee-for-service plan. Under the M+C program, an individual is entitled to those items and services (other than hospice care) for which benefits are available under Part A and Part B. An M+C plan may provide additional health care items and services that are not covered under the original Medicare program.
The Act gives beneficiaries specific rights to challenge particular types of decisions. We are committed to providing beneficiaries an opportunity to fully exercise these statutory rights. Moreover, we are committed to resolution of these disputes in a fair and efficient manner.
Under the original Medicare program, a beneficiary may generally obtain health services from any institution, agency, or person qualified to participate in the Medicare program that undertakes to provide the service to the individual. Assuming that a qualified provider or supplier has furnished medical care, the health care provider or supplier, or, in some cases, a beneficiary would submit a claim for benefits under
This final rule does not seek to significantly alter the existing claims appeal process. Nor does this rule significantly alter our existing regulations for M+C beneficiaries as established at § 422.560 through § 422.622. However, it does create an expanded definition of aggrieved party to include a beneficiary who received a service, but whose claim for the service was denied, extending an opportunity to that beneficiary to file a complaint under § 426.400 or § 426.500. For further discussion of the claims appeal process please consult the proposed rule.
Section 1869(f)(1) of the Act defines national coverage determination as “a determination by the Secretary with respect to whether or not a particular item or service is covered nationally under title XVIII, but does not include a determination of what code, if any, is assigned to a particular item or service covered under this title or a determination with respect to the amount of payment made for a particular item or service so covered.” For the full discussion of NCDs please consult our proposed rule at 67 FR 54535 published on August 22, 2002.
As explained in the preamble to the proposed rule, Local Medical Review Policies are contractor-specific policies that identify the circumstances under which particular items or services will be (or will not be) considered covered and correctly coded. An LMRP is not controlling authority for ALJs or the Board in the claims appeals process. These guidelines simply help to ensure that similar claims are processed in a consistent manner within those jurisdictions. LMRPs may not conflict with an NCD, but may be written in the absence of, or as an adjunct to, an NCD.
An LMRP may contain any or all of the following:
• Coding provisions.
• Benefit category provisions.
• Statutory exclusion provisions.
• Provisions related to the authority under section 1862(a)(1)(A) of the Act, which prohibits payment for any expenses incurred for services that are not reasonable and necessary for the diagnosis or treatment of illness or injury, or to improve the functioning of a malformed body member.
Some LMRPs contain only a single type of provision, while other LMRPs contain all four types. The provisions described in bullets two through four above constitute coverage provisions.
For further information on LMRPs please consult our proposed rule at 67 FR 54535.
Section 522 of BIPA does not use the term “LMRP,” but uses the term “Local Coverage Determination” (LCD). Section 522 of BIPA amends section 1869(f)(2)(B) of the Act, to define LCD as “a determination by a fiscal intermediary or a carrier under part A or part B, as applicable, respecting whether or not a particular item or service is covered on an intermediary-or carrier-wide basis under such parts, in accordance with section 1862(a)(1)(A).”
An LMRP may contain four different types of provisions (coding, benefit category, statutory exclusion, and reasonable and necessary). Section 1869(f)(2)(B) of the Act limits an LCD as a determination only under section 1862(a)(1)(A) of the Act's “reasonable and necessary provision.” For the purposes of this regulation, we will use the term “reasonable and necessary provision” to describe section 1862(a)(1)(A) of the Act. We intend to work with contractors to divide LMRPs into separate LCD and non-LCD documents; however, it is likely that LMRPs will continue to exist for the next several years. During this time, the term LCD will refer to both of the following:
• Separate, stand-alone documents entitled “LCDs” that contain only reasonable and necessary language; and
• The reasonable and necessary provisions of an LMRP.
Under our claims appeals process, ALJs may consider, but are not bound by, LMRPs or LCDs. Thus, an ALJ may rule that Medicare payment is due on a particular item or service received by a beneficiary, based on the particular circumstances represented by the case, even if the contractor's LMRP or LCD clearly prohibits payment for the particular service. (We note that a regulation which may impact ALJ consideration of LCDs in claims appeal cases has been proposed.
In addition to policy determinations, contractors may make individual claim determinations, even in the absence of an NCD, LMRP, or LCD. In circumstances when there is no published policy on a particular topic, decisions are made based on the individual's particular factual situation.
Section 522 of the BIPA created a new review process that enables certain beneficiaries to challenge LCDs and NCDs. These appeal rights are distinct from the existing appeal rights for the adjudication of Medicare claims. This section also creates additional avenues for beneficiaries to seek judicial review. Before BIPA, the statute did not provide an administrative avenue to challenge the facial validity of LCDs or NCDs.
The existing claims appeal rights were not significantly changed by section 522 of the BIPA. Our claims appeal regulations will continue to provide detailed administrative appeal rights for beneficiaries whose claims are denied. These claims appeal procedures permit beneficiaries to challenge the initial claims denial and include
Section 522 of the BIPA created a review process that is separate and
Complaints under section 522 of the BIPA are subject to standing rules. Namely, under section 1869(f)(5) of the Act “[a]n action under this subsection seeking review of a national coverage determination or local coverage determination may be initiated only by individuals entitled to benefits under part A, or enrolled under part B, or both, who are in need of the items or services that are the subject of the coverage determination.” In this final rule, we are interpreting the standing provision to include individuals who have received the item or service and whose initial claim was denied based on an LCD or NCD and, thus, are in need of Medicare coverage. We will also permit the estates of certain individuals to have standing. Only individuals who have standing may bring a challenge under section 522 of the BIPA, and in this final rule, we refer to these individuals as “aggrieved parties.”
As discussed in the proposed rule, the aggrieved party may not assign the right to bring a challenge under section 522 of the BIPA to anyone else. However, the aggrieved party is permitted to obtain assistance from any individual in pursuing the challenge. (We discuss the difference between assigning rights and receiving assistance in section IV of this final rule.)
The definition of an “aggrieved party” will permit an individual to bring a challenge to an LCD or NCD in advance of receiving an item or service, or after the LCD or NCD is applied to a claim causing the claim to be denied. As we discuss in greater detail in section IV.E of this preamble, a successful challenge would permit the individual to have his or her specific claim reviewed without reference to the challenged policy. Claims that are otherwise payable can be paid. In addition, a successful challenge to an LCD or NCD may result in the following:
• The policy being retired/withdrawn in its entirety, or
• The policy being revised to effectuate the Board decision, or the ALJ decision if it is not appealed to the Board.
We previously established a procedure by which individuals could seek reconsideration of policies established in an LCD or NCD. The procedures for NCDs were set forth in the September 26, 2003 notice (68 FR 55634, 55641). The procedures for LCDs were set forth in the Program Integrity Manual, Chapter 13, Section 11.
The section 522 review process is intended to be initiated only by aggrieved parties. However, consistent with several public comments, we are expanding § 426.510(f) to allow for limited participation in an NCD challenge by other individuals as amicus curiae when the individuals or entities meet the standards set forth in these regulations. Please note that the reconsideration process described in section I.I.3 of this preamble remains the appropriate process by which all other interested entities may submit new evidence pertaining to the review of current LCDs and NCDs.
The main difference between an LCD/NCD review under section 522 of the BIPA and an LCD/NCD reconsideration is the avenue an individual chooses to take to initiate a change to a coverage policy and who may initiate the review. All interested parties, including an aggrieved party, may request a reconsideration of an LCD or NCD, rather than filing a complaint to initiate the review of an LCD or NCD. Conversely, only an aggrieved party may file a complaint to initiate the review of an LCD or NCD. If the aggrieved party believes that we, or the contractor, misinterpreted evidence or excluded available evidence in making the coverage determination or has new evidence to submit, then the aggrieved party has the option to file a request for a reconsideration by the contractor or us, respectively, or to file a complaint to seek review by an adjudicator.
In the reconsideration process, all interested parties, not just aggrieved parties, have the opportunity to submit new scientific and medical evidence for review by individuals with medical and scientific expertise. The reconsideration process permits experts to make judgments about those policies, rather than using an adjudicatory proceeding.
For a discussion of the specific provisions of the proposed rule, please see 67 FR 54534-54563. The significant changes to the final rule, based on public comments, are reflected in section III, below.
We received 31 comments from the public on the proposed rule. Summaries of the major comments received and our responses to those comments are set forth below.
On the other hand, one commenter noted that the statute requires a beneficiary in need to initiate a review. Another commenter agreed with our proposal, and believed it would be inappropriate under the statute to permit the assignment of rights to request a review of an LCD or NCD to other interested parties. That commenter noted that the “Medicare program is fundamentally a beneficiary, or patient, program designed to assure access to clinically sound services.”
We agree with the commenter who suggested that the statute was clear in this regard. The standing provision in section 1869(f)(5) of the Act is precise. Moreover, as one commenter correctly observed, a broader standing provision, that would have enabled other interested parties to file complaints about LCDs and NCDs, existed in earlier drafts of the legislation. It appears that the Congress's narrowing of the language in the final bill was intentional and deliberate. We do not believe it would be consistent with this history to expand the scope of individuals who have a legal right to initiate and pursue a challenge to an LCD or NCD.
We do, however, agree that beneficiaries may seek assistance from knowledgeable physicians, suppliers, providers, manufacturers, and attorneys in developing the individual's request for review. The individual is free to consult with these individuals and to follow those suggestions, recommendations, or advice. Thus, while these individuals may assist the beneficiary in navigating the adjudicatory process in an efficient manner, the beneficiary may not assign his or her legal right to request a review of an LCD or an NCD to a third party.
(1) The elements of an acceptable complaint;
(2) The standards for treating physician certifications; and
(3) The elements of an acceptable appeal of an ALJ decision. We intend to prepare this educational material (including templates) and make it publicly available, but we will not delay implementation of the final rule to wait for these materials to be developed. We will work with ALJs and the Board to make available to Medicare managed care organizations and Medicaid State agencies, relevant information on complaints and decisions. We do not intend to revise ABNs as part of this educational program.
Anyone who has information that can assist the Board in reviewing an NCD challenge is permitted to request participation as an
Changes in NCDs may determine the health care services, technologies, and treatments to which beneficiaries have access. The denial of coverage for a service that is allegedly reasonable and necessary may have an adverse impact on others across the nation. Hence, it is important that the review decisions are based on a comprehensive and well-developed record.
In addition, the general public may have a substantial interest in the outcome of some NCD reviews. NCD review decisions will constitute a legal precedent with respect to the outcome. Board decisions will clarify the extent of available Medicare coverage.
Therefore, under the final rule, the Board will make available to the public information about all NCD complaints by means of posting on the Internet. This method will provide the broadest possible public notice, without unreasonably delaying review of the complaint already filed. Any request to participate as an
Although LCDs are also important, LCDs are regional in nature. Because LCD reviews generally impact only a limited geographic area, we will not require the ALJs to make public all LCD complaints.
We have eliminated the proposed automatic stay when new evidence is submitted. Instead, our final rule will require that, if new evidence has been received by the ALJ/Board that would otherwise be admissible, the ALJ/Board will review the new evidence after the period for discovery and the taking of evidence is complete, and decide if it has the potential to significantly affect the LCD/NCD provision in question. If not, the review will continue. If the ALJ/Board determines that the new evidence has the potential to significantly affect the validity of the LCD/NCD, the ALJ/Board will stay the proceedings and forward the material to the contractor or to us for a brief review. The contractor/CMS will have 10 days to provide a statement indicating whether or not: (1) A reconsideration will be initiated, or (2) the policy will be revised or retired/withdrawn. If the Agency undertakes a reconsideration, it must be completed within a period set by the ALJ/Board that is not more than 90 days. We believe this 90-day timeframe is reasonable due to the potentially large body of evidence that must be reviewed. Following a reconsideration, the contractor/CMS will prepare and submit the new LCD/NCD record, and the ALJ/Board proceedings will continue on the revised LCD/NCD. If the contractor/CMS chooses not to initiate a reconsideration, the ALJ/Board proceedings will continue on the original LCD/NCD as supplemented with the new evidence. The aggrieved party will have an opportunity to submit a statement about whether the record still fails to support the validity of the LCD/NCD. The contractor/CMS will have an opportunity to respond. No further evidence will be taken at this stage, and the ALJ/Board will proceed to make a determination on the merits.
We have also made changes to the definition of “new evidence” to clarify that new evidence means evidence that was not considered by the contractor or CMS.
We outlined another possible approach in our proposed rule at 67 FR 54542. That approach would require a party to file a statement regarding whether that party considers the record complete and adequate, and an “offer of proof” supporting factual allegations about incompleteness. The adjudicator would then decide whether the record is complete and adequate to support the decision and would prepare a written decision. If the adjudicator found that the record was complete and adequate, this decision would be a final Agency action appealable to the court.
There were two public comments on this issue. One commenter suggested that, if the adjudicator found that the record was incomplete or inadequate, the Board would be legally required to determine that the “NCD is not reasonable.” This commenter believed that the Board would be precluded from allowing discovery or any other new evidence at this point, but must automatically rule against CMS. A commenter appeared to prefer the following approach: “If, upon review of the record, the aggrieved party does not have objections to the completeness or adequacy of the LCD or NCD record, then what is the basis of the aggrieved parties complaint? Presumably the coverage policy would be challenged on the basis that it is inconsistent with current clinical or scientific evidence. In such case, a motion by the aggrieved party would appear to be a necessary part of the complaint process and an appropriate step given the limited time and resources of adjudicators, CMS and contractors.” The commenter “believed that the aggrieved party should challenge the completeness or adequacy of the record before an adjudicator should make a determination with respect thereto.”
The administrative review provisions in BIPA section 522 are unique. While
It is possible that an aggrieved party would attempt to challenge an LCD/NCD for several reasons. For instance, a challenger may believe that a policy that was correct when it was issued has become outdated and is no longer valid in light of advances in medicine. Those challengers may be most interested in presenting new medical evidence in support of changing the policy rather than challenging the original factual basis for the policy. As noted previously, we are modifying our procedures to allow a party to submit new evidence to the ALJ/Board. We have modified the procedures at § 426.340 to allow the ALJ/Board to make a preliminary determination on whether the new evidence submitted would have a significant bearing on the validity of the LCD/NCD. If the evidence is found significant, it would be sent to the contractor/CMS to determine whether the contractor/CMS agrees that the evidence warrants a formal reconsideration. As mentioned earlier, the reconsideration process would be time limited but would allow the public to submit medical and scientific evidence and allow the agency to fully develop the record in light of advances in medical science. Following the time-limited reconsideration, a supplemental record would be filed and the adjudication could continue, if necessary.
This approach will provide the contractor/CMS the initial opportunity to permit medical and scientific experts to examine the new evidence and to make findings of fact concerning the new evidence. Among other things, the statute requires that the ALJ/Board “shall defer only to the reasonable findings of fact” and it was impossible for the agency to have made findings on evidence that did not yet exist or that had not been furnished to the agency for consideration. We believe this approach is necessary to ensure that the medical and scientific opinions of the agency experts illuminate the record, since these appeals could involve very technical medical and scientific material related to the new evidence.
While it is possible that the challenger may submit credible medical and scientific studies that warrant a formal reconsideration, it is also possible that the evidence submitted would not be either relevant or persuasive, or that a challenger may seek to challenge the policy on other grounds. Because the public comments have highlighted the different types of disputes that may be presented, we have modified our procedures in attempt to fairly, yet expeditiously, resolve any type of challenge that may be presented. Our revised approach would allow the ALJ or the Board to resolve some cases without need for a reconsideration and would also allow the review proceedings to be resolved in a more expeditious manner. To resolve any confusion, we will describe the significant procedural and substantive steps of the review.
Under the revised procedures at § 426.425 and § 426.525, all aggrieved parties, after reviewing the LCD or NCD record, will be able to file a statement that includes the challenger's arguments as to why the record is not complete, or not adequate to support the validity of the LCD/NCD under the reasonableness standard. This may be the most important step in the review process from the aggrieved party's perspective because this is the opportunity to present any arguments for the LCD/NCD being held invalid. (
After evaluating the materials and the record, our revised procedures will permit the ALJ/Board to make a prompt decision in the nature of a summary judgment if the case warrants this approach. For instance, if applying the reasonableness standard, the adjudicator finds that record is complete and has adequate information to support the validity of the LCD or NCD, the ALJ or the Board may issue a decision that “the record is complete and adequate” to support the policy. (
If, on the other hand, after evaluating the materials submitted by the parties and the record, the ALJ/Board determines that the record is not complete or not adequate to support the validity of the LCD/NCD, the adjudicator will permit discovery and the taking of evidence. Following discovery and the taking of evidence as set forth in these final rules, the ALJ/Board will issue a final decision. (
Although we recognize that one commenter suggested that the ALJ or the Board would be legally required to hold invalid the LCD/NCD rather than allowing the agency to supplement the record, the case cited is not relevant given the unique language and history of BIPA section 522. The ALJs and the Board are not acting as a Federal court reviewing final agency action. The case relied on by the commenter concerned the scope of review under the judicial review provisions of the Administrative Procedure Act, 5 U.S.C. 706. Moreover, under prior provisions for court review of NCDs, even courts were required to permit us to supplement the record before declaring an NCD invalid. We believe our approach is consistent with the specific requirements of the statute.
In the proposed rule, we sought to limit disclosure of “proprietary data” based on the parenthetical phrase included in section 1862(a) of the Act in the paragraph that follows. The provision in this paragraph establishes several procedural requirements that the Secretary must follow in making NCDs. The provision states:
In making a national coverage determination (as defined in paragraph (1)(B) of section 1869(f)) the Secretary shall ensure that the public is afforded notice and an opportunity to comment prior to implementation by the Secretary of the determination; meetings of advisory committees established under section 1114(f) with respect to the determination are made on the record; in making the determination, the Secretary has considered the applicable information (including clinical experience and medical, technical, and scientific evidence) with respect to the subject matter of the determination; and in the determination, provide a clear statement of the basis for the determination (including responses to comments received from the public), the assumptions underlying that basis, and make available to the public the data (other than proprietary data) considered in making the determination.
The reference to “proprietary data” reflects a limitation on disclosure to the public. We specifically invited public comments “on the scope of proprietary data and the extent to which this material should not be disclosed” (67 FR 54541). Comments we received on this issue follow.
Other commenters opposed the concept. One commenter asked that the regulation be revised to state that the record contains “all the information presented to the Agency and/or the Medicare contractor when the coverage determination was being established[.]” One commenter suggested that the record should be expanded to include relevant information that comes to CMS “after a policy is published.” Another commenter wrote that, “a contractor or CMS can withhold from the reviewing body information it believes to be
Another commenter suggested that when we compile the record of the LCD or NCD, we should also produce an index of all material that was excluded, and then seek a protective order from the adjudicator to exclude that material from the record. We would be required to state for each document the specific basis for a claim of privilege or the specific provisions of Federal statute authorizing the withholding or prohibiting disclosure. A beneficiary would be given an opportunity to respond and object.
We are aware that there is tension in the statute between the specific right given to an aggrieved party to seek discovery during the appeal process (section 1869(f)(1)(A)(iii)(I) of the Act), and the opportunity that the Secretary is given to withhold from the public “proprietary data.” The public comments include cogent views from both perspectives. The Secretary has the discretion and challenge to balance these competing interests, and must resolve this issue in order to implement the expanded appeal rights that the Congress has provided.
We are resolving this tension by issuing this regulation to inform the public that we will withhold proprietary data from the public during the ALJ or the Board process. We do not expect to have proprietary data in our possession in most cases. In the rare instance that we obtain and consider proprietary data, this information will be presented to the ALJ or the Board under seal but will not be disclosed to any party or disclosed as part of the public record of the LCD/NCD proceedings. We believe that the Congress's concern about disclosure of proprietary information to the public in section 1862(a) of the Act suggests that the Congress did not intend to mandate disclosure of that same data during the LCD/NCD appeal. The limited assurance of maintaining confidentiality during the process of preparing an LCD/NCD, but not during the administrative appeal, would discourage manufacturers from submitting crucial confidential information.
At § 426.110, we are specifically defining “proprietary data” and “privileged information” as information from a source external to CMS or a contractor, or protected health information, that meets the following criteria: (1) It is ordinarily protected from disclosure pursuant to 45 CFR Part 164, under the Trade Secrets Act (18 U.S.C. 1905) or under Exemptions 4 or 5 of the Freedom of Information Act (5 U.S.C. 552) as specifically interpreted in our Departmental regulations at 45 CFR 5.65; and (2) the party who possesses the right to protection of the information from public release or disclosure has not provided its consent to the public release or disclosure of the information. Any information submitted by the public that is not marked as proprietary will not be considered proprietary. We may review this assertion in determining whether the information is proprietary data. Any information received that is not designated as “proprietary data” will not be considered “proprietary data.” In order for proprietary data to be considered and given weight in LCD or NCD reviews, any such proprietary data submitted by a manufacturer of a drug or device should contain true and complete records of all clinical and scientific data existent and, therefore, any submission must include an affidavit that the data consists of true and correct copies of all data submitted by the manufacturer to any other Federal or State agency or department in relation to that drug or device. This is to limit the possibility that review decisions are based on partial or biased presentations of available evidence. Consistent with this requirement, CMS will request such certifications when receiving proprietary data for its initial NCD analysis, and would anticipate a similar procedure by carriers or intermediaries in their LCD analysis.
We believe this relatively narrow exception will still provide beneficiaries adequate access to all of the evidence that is typically considered in making LCDs/NCDs. There is a great deal of helpful and useful information available in publicly disclosable documents that are relevant to the subjects that we consider. In many cases the proprietary data may just reaffirm conclusions that are consistent with publicly available sources. While we recognize that this resolution may be somewhat awkward for a party challenging an LCD/NCD, we believe this result is in the best interests of the public. This approach will support more accurate and rapid coverage determinations through greater access to more data and may lead to faster and better LCDs/NCDs that may increase access to new advances in medicine and technology.
For the comment that we provide an index of all excluded material, we are adopting this comment in part. In the rare event that we rely on proprietary and privileged data in formulating a coverage decision, these data will be given to the ALJ/Board under seal. In this rare event, these data will not be furnished to the aggrieved party; rather, we, or our contractors, will include an index that lists all of the excluded material as part of the LCD/NCD record. To implement the statutory protections for proprietary data and privileged information in section 1862(a) of the Act, we are not furnishing proprietary and privileged data as part of the public record, but the seal will be maintained on that information for use by a court in relation to an NCD review. In the event that a court seeks to obtain or requires disclosure of proprietary data or privileged information, CMS or the Department will seek to have a protective order applied to that information, to prohibit any recipients of the information from further disclosing the information or from using it for any purpose other than the challenge. The statutory protection accorded this data ensures the availability of the best relevant information whether proprietary or not, and maximizes flexibility in developing coverage determinations.
In the proposed rule, we adopted a reasonableness standard requiring the adjudicator to determine whether the findings of fact, interpretations of law, and applications of fact to law by CMS or the contractor were reasonable. Comments on this issue follow.
The logical corollary is that the ALJs and the Board must accord deference if the contractor's or CMS's findings of fact, interpretations of law, and application of fact to law are reasonable. The concept of deference is one that is generally applied by courts to administrative decisionmaking, in recognition of the expertise of a program agency. Thus, we view the statute as setting out a reasonableness standard that recognizes the expertise of the contractors and CMS in the Medicare program—specifically, in the area of coverage requiring the exercise of clinical or scientific judgment.
So long as the outcome is one that could be reached by a rational person, based on the evidence in the record as a whole (including logical inferences drawn from that evidence), the determination must be upheld. This is not simply based on the quantity of the evidence submitted, but also includes an evaluation of the persuasiveness of the material. If the contractor or CMS has a logical reason as to why some evidence is given more weight than other evidence, the ALJs and the Board may not overturn the determination simply because they would have accorded more weight to the evidence in support of coverage. In some situations, different judgments by different contractors may be supportable, especially if explained by differences
For legal interpretations, the reasonableness standard would not be met if an interpretation is in direct conflict with the plain language of the statute or regulation being interpreted. Moreover, an interpretation in an LCD would not meet the reasonableness standard if it directly conflicts with an NCD or with a CMS Ruling. So long as an interpretation is one of the readings permitted by the plain language of the law and can be reconciled with relevant policy, however, it must be upheld, even if the ALJ or the Board might have reached a different result if interpreting the statute or regulation in the first instance.
After a policy has been held invalid, it will not be applied to the beneficiary who raised the challenge or to others who receive services after the effective date of the invalidation. CMS or the contractor may issue a new or revised LCD/NCD that does not include the invalid provision(s). The new or revised LCD/NCD would be applied prospectively. The new/revised LCD/NCD would also be subject to challenge under this review process.
Please note that whenever we discuss claim relief or dates of service in the context of an ALJ or DAB decision holding invalid an LCD or NCD, the references should be read to include pre-service requests denied by an M+C organization and the dates of pre-service requests. The application of this regulation in the M+C context is discussed further below.
1. Retire/withdraw the LCD/NCD in its entirety within 30 days of the ALJ/Board decision; or
2. Issue a revised LCD/NCD removing the invalid provisions, effective for claims with dates of service after the 30th day of the ALJ/Board decision.
If the Board issues a decision finding an NCD provision invalid and the NCD is revised to reflect the Board's decision, all contractors must review and appropriately revise any related LCDs so as not to be in conflict with the revised NCD. If we choose to withdraw the entire NCD, the contractors must review and appropriately revise any LCDs so as not to rely on the withdrawn NCD as the basis for the LCD.
We have modified the final rule at § 426.476(b) to provide that the Board will review an ALJ decision on appeal to determine whether it contains any material error, including any failure to properly apply the reasonableness standard. The Board will not reverse a decision for harmless error, but may remand if a prejudicial procedural error was made. Further, if the ALJ erred in determining that the LCD record was complete and adequate to support the validity of the LCD, the Board will reverse and remand the case to the ALJ to complete discovery and the taking of evidence. We believe that this standard of review provides appropriate discretion for Board review of ALJ decisions.
We recognize the importance of ensuring timely transmission of ALJ/Board decisions and intend to work closely with the Medicare managed care industry to make certain that an effective method of communicating LCD/NCD changes is in place.
We are establishing that a Medicare beneficiary who qualifies as an aggrieved party may challenge an LCD or an NCD (or specific provisions therein) by filing a complaint concerning an LCD with the office designated by CMS on the Medicare Web site,
In this final rule, we are adding in § 400.202 a definition of “Local coverage determination (LCD)” and revising the definition of “National coverage determination (NCD).” The definitions are specific to Medicare and reflect the definitions for these terms found in section 522 of BIPA. With one exception described below, this final rule makes clear that a determination of the code assigned to a service, if any, or a determination with respect to the amount of payment to be made for the service is not included in the definition of an LCD or an NCD. We have clarified that diagnosis codes used in an LMRP to describe when a service is considered medically necessary are also part of the LCD. We use the term “Services” as defined in § 400.202 to include both “items and services.”
In § 405.732, “Review of a national coverage decision (NCD),” we revise paragraph (a) regarding appeals of Part A cases, to state that an NCD is a determination by the Secretary with respect to whether or not a particular item or service is covered nationally under title XVIII. An NCD does not include a determination of what code, if any, is assigned to a particular item or service covered under title XVIII or a determination with respect to the amount of payment made for a particular item or service. NCDs are made under section 1862(a)(1) of the Act or other applicable provisions of the Act. An NCD is binding on all Medicare carriers, fiscal intermediaries, QIOs, HMOs, CMPs, HCPPs, the Medicare Appeals Council, and ALJs.
This final rule revises § 405.732(b) to specify that an ALJ may not disregard, set aside, or otherwise review an NCD. An ALJ may review the facts of a particular case to determine whether an NCD applies to a specific claim for benefits and, if so, whether the NCD has been applied correctly to the claim.
We are revising § 405.732(c) to specify that for initial determinations and NCD challenges under section 1862(a)(1) of the Act, arising before October 1, 2002, a court's review of an NCD is limited to whether the record is incomplete or otherwise lacks adequate information to support the validity of the decision, unless the case has been remanded to the Secretary to supplement the record regarding the NCD. In such cases, the court may not invalidate an NCD except upon review of the supplemental record. For Part B appeals, we are making similar changes.
In § 405.860, “Review of a national coverage decision (NCD),” we revise paragraph (a) regarding appeals of Part B cases to specify that an NCD is a determination by the Secretary with respect to whether or not a particular item or service is covered nationally under title XVIII. An NCD does not include a determination of what code, if any, is assigned to a particular item or service covered under title XVIII or a determination with respect to the amount of payment made for a particular item or service. NCDs are made under section 1862(a)(1) of the Act or other applicable provisions of the Act. An NCD is binding on all Medicare carriers, fiscal intermediaries, QIOs, HMOs, CMPs, HCPPs, Medicare Appeals Council, and ALJs.
We are revising § 405.860(b) to specify that an ALJ may not disregard, set aside, or otherwise review an NCD. An ALJ may review the facts of a particular case to determine whether an NCD applies to a specific claim for benefits and, if so, whether the NCD has been applied correctly to the claim.
In § 405.860(c), we specify that for initial determinations and NCD challenges under section 1862(a)(1) of the Act, arising before October 1, 2002, a court's review of an NCD is limited to whether the record is incomplete or otherwise lacks adequate information to support the validity of the decision, unless the case has been remanded to the Secretary to supplement the record regarding the NCD. The court may not determine that an item or service is covered except upon review of the supplemental record.
We are also adding a new part 426, titled “Reviews of Local and National Coverage Determinations,” to title 42 of the CFR to include the following subparts:
• Subpart A contains general provisions applicable to the entire part.
• Subpart B is reserved.
• Subpart C contains the general provisions applicable to the review of LCDs and NCDs.
• Subpart D contains the provisions specific to the review of LCDs
• Subpart E contains the provisions specific to the review of NCDs.
Subpart A of part 426 specifies the general provisions applicable to the entire part. Section 426.100, “Basis and scope,” sets forth the basis (under sections 1869(f)(1) and (f)(2) of the Act), and the scope specifies the requirements and procedures for the review of LCDs and NCDs. In § 426.110, we define the terms used in part 426 whose definitions may not otherwise be implicit.
Under section 522 of BIPA, only an “aggrieved party” may file a complaint to initiate the review of an LCD or an NCD. In this final rule, we define “aggrieved party” as a Medicare beneficiary who is entitled to benefits under Part A, enrolled under Part B, or both (including an individual enrolled in fee-for-service Medicare, in a Medicare+Choice plan, or in another Medicare managed care plan), and is in need of coverage for a service that is the subject of an applicable LCD (in the relevant jurisdiction) or an NCD as documented by the beneficiary's treating physician. We revised the final rule to include also as an aggrieved party a beneficiary who has already received the service and is in need of coverage, or the estate of a deceased beneficiary in need of coverage.
Based on comments on our proposed rule, in this final rule we allow an aggrieved party's estate to pursue an LCD/NCD challenge if the aggrieved party died after filing a proper complaint and the aggrieved party received the service for which coverage is sought. We also allow the aggrieved
In § 426.110 we define the following:
• “Board” to mean the Departmental Appeals Board.
• Clinical and scientific experts that are consulted by the ALJ or the Board as independent and impartial individuals, with significant experience and/or published work pertaining to the subject of the review.
• “Contractor” as a carrier (including a DMERC) or a fiscal intermediary (FI) (including an RHHI) that has jurisdiction for the LCD at issue.
• “Deemed NCD” as a determination that the Secretary makes in response to a request for an NCD by an aggrieved party under section 1869(f)(4)(B) and (C) of the Act, that no national coverage or noncoverage determination is appropriate, or the Secretary's failure to meet the deadline under section 1869(f)(4)(A)(iv) of the Act. Section 1869(f)(4)(C) of the Act deems certain decisions of the Secretary to be NCDs for purposes of administrative review. Please see our proposed rule for further discussion of deemed NCDs (67 FR 5434).
• “New evidence” is clinical or scientific evidence that was not previously considered by the contractor or by us before the LCD or NCD was issued.
• “Party” as an aggrieved party, which is an individual or estate who has the right to participate in the LCD or NCD review process, and, as appropriate, a contractor or CMS. In the case of an LCD review, we may choose whether to be a party in the review along with or instead of the contractor. These reviews involve challenges to important CMS policies that may impact many beneficiaries. We note that we are always a party to an NCD review and contractors would not participate in an NCD review.
• “Proprietary data” and “privileged information” are information from a source external to CMS or a contractor, or protected health information that meets the following criteria: (1) It is ordinarily protected from disclosure pursuant to 45 CFR Part 164, under the Trade Secrets Act (18 U.S.C. 1905), or under Exemption 4 or 5 of the Freedom of Information Act (5 U.S.C. 552) as specifically interpreted in our Departmental regulations at 45 CFR 5.65, and (2) the party who possesses the right to protection of the information from public release or disclosure has not provided its consent to the public release or disclosure of that information. Members of the public that send us proprietary data must mark these documents as such, and include the legal basis for any such assertion. Any information received from the public that is not designated as “proprietary data” will not be considered “proprietary.”
• “Reasonableness standard” is the standard that an ALJ or the Board must apply when conducting an LCD or an NCD review. In determining whether LCDs or NCDs are valid, the adjudicator must uphold a challenged policy (or a provision or provisions of a challenged policy) if the findings of fact, interpretations of law, and applications of fact to law by the contractor or CMS are reasonable based on the LCD or NCD record and the relevant record developed before the ALJ/Board.
• “Supplemental LCD/NCD record” is a record that the contractor/CMS provides to the ALJ/Board and any aggrieved party and consists of all materials received and considered during a reconsideration. Materials that are already in the record before the ALJ/Board (for example, new evidence presented in the taking of evidence or hearing) need not be provided but may be incorporated by reference in the supplement to the LCD/NCD record. The contractor/CMS may provide statements, evidence, or other submissions to the ALJ/Board during the proceedings, as provided elsewhere in these regulations, but such submissions are not considered as supplementing the LCD/NCD record.
• “Treating physician” is the physician who is the beneficiary's primary clinician with responsibility for overseeing the beneficiary's care and either approving or providing the service at issue in the challenge.
In § 426.120, we explain how deadlines are calculated. In § 426.130, we explain that any documents submitted to the ALJ/Board after the initial challenge, excluding privileged or proprietary data, must also be served on all other parties simultaneously. These sections have been added to provide additional guidance in implementing the requirements of this final rule.
We are reserving subpart B.
The general provisions common to both the review of LCDs and NCDs are established in subpart C. In § 426.300(a), we state that the review of a challenged provision (or provisions) of an LCD is conducted by an ALJ only upon the receipt of an acceptable complaint as described in § 426.400. We also state in § 426.300(b) that the review of a challenged provision (or provisions) of an NCD is conducted by the Board only upon the receipt of an acceptable complaint as described in § 426.500. An acceptable complaint must be filed with the applicable adjudicator by an aggrieved party. Additionally, § 426.300(c) would allow for the review of deemed NCDs, a process that would parallel the review of NCDs.
In § 426.310(a), we explain that LCD and NCD reviews are largely independent of the claims appeal processes set forth in part 405, subparts F and G; part 417, subpart Q; and part 422, subpart M. In § 426.310(b), we require the aggrieved party to notify the ALJ/Board of any pending claim or appeal related to the LCD/NCD appeal.
In § 426.320(a), we explain that only an aggrieved party may initiate a review to challenge an LCD or NCD (including a deemed NCD), or an existing specific provision or provisions of an LCD or an NCD by filing an acceptable complaint. In § 426.320(b), we explain that neither an ALJ nor the Board will recognize as valid any attempt to assign rights under section 1869(f) of the Act.
In § 426.325, we describe the policies that are, and are not, subject to this review. Under this requirement, an aggrieved party would be allowed only to challenge an LCD or NCD. Conversely, an aggrieved party may not use this process to challenge anything that does not meet the definition of an LCD or an NCD (
In § 426.330, we state that the aggrieved party filing the complaint bears the burden of proof and the burden of persuasion for the issue or issues raised in the complaint. The burden of persuasion will be judged by a preponderance of the evidence.
Section 426.340 provides procedures to be followed after discovery and the taking of evidence are complete. If an aggrieved party has submitted new evidence pertaining to an LCD or NCD which the ALJ or the Board finds admissible, the ALJ/Board must review the new evidence and decide if the new evidence has the potential to significantly affect the evaluation of the LCD/NCD provision(s) in question under the reasonableness standard. If the ALJ or the Board determines that the new evidence does not have the potential to significantly affect the ALJ's or the Board's evaluation of LCD/NCD provisions, the review shall go forward to a decision on the merits. If the ALJ or the Board decides that the new evidence has the potential to significantly affect the evaluation of the policy, the ALJ or the Board must stay the proceedings and send the new evidence to the contractor or CMS. The contractor or CMS has 10 days upon receiving the evidence from the ALJ or the Board to provide a statement indicating whether a revision/reconsideration will be initiated. If the contractor or CMS informs the ALJ or the Board that a revision/ reconsideration has been or will be initiated, then the stay shall continue and the ALJ or the Board shall set appropriate timeframes (not more than 90 days) by which the revision/reconsideration will be completed. If the contractor or CMS chooses not to initiate a revision/reconsideration and does not retire/withdraw the LCD/NCD, the ALJ or the Board proceedings will continue on the original LCD/NCD.
In subparts D and E, we set forth the procedures for the review of LCDs and NCDs, respectively. The process for LCD and NCD reviews is largely the same with the exception of the following:
• LCDs are based on section 1862(a)(1)(A) of the Act; NCDs may also be based on other statutory provisions.
• LCD reviews are conducted by an ALJ; NCD reviews are conducted by the Board.
• ALJs and contractors participate in an LCD review; there is no role for ALJs or contractors in an NCD review.
• We are not always a party to an LCD review, but are always a party to an NCD review.
• Amicus participation is not allowed when reviewing an LCD, but may be allowed when reviewing an NCD.
• Board decisions regarding NCDs will be made available on the Medicare Internet site, without beneficiary-identifying information.
For the purpose of this preamble, we consolidate the discussion of the requirements and policy decisions when possible. Sections 426.400 and 426.500 contain the requirements for filing an acceptable complaint regarding a provision or provisions of an LCD and an NCD, respectively. In both cases, a complaint must be in writing and must be from an aggrieved party. In § 426.400(a), we require that complaints regarding LCDs be submitted to the office designated by CMS on the Medicare Web site,
In § 426.400(b) and § 426.500(b), we explain the circumstances under which a complaint will be considered timely received. A complaint will not be considered timely unless it is received by the office designated by CMS/Board of HHS within—(1) 6 months of the written statement from each aggrieved party's treating physician for aggrieved parties who choose to file an LCD/NCD challenge before receiving the service; or (2) 120 days of the initial denial notice for aggrieved parties who choose to file an LCD/NCD challenge after receiving the service.
In § 426.400(c)(1) and § 426.500(c)(1), we require a valid complaint to contain beneficiary-identifying information and a written statement from the treating physician indicating that the beneficiary needs the service that is the subject of the LCD/NCD. We also require the information in § 426.400(c)(2) and (c)(3) and § 426.500(c)(2) and (c)(3), which is necessary to identify the LCD or NCD (or the specific provision or provisions of the LCD or NCD) that is (are) adversely affecting the aggrieved party. In addition, we require a statement from the aggrieved party that explains the rationale for the complaint.
In § 426.400(c)(4) and § 426.500(c)(4), we also allow the aggrieved party to submit copies of material clinical or scientific evidence that supports the complaint. We require that any proprietary data submitted be marked as “proprietary data” and include the legal basis for so identifying it. In addition, in § 426.400(c)(4) and § 426.500(c)(4), we require that, in order to be considered and given weight in LCD or NCD reviews, any such proprietary data submitted by a manufacturer of a drug or device must include an affidavit that the data consists of true and correct copies of all data submitted by the manufacturer to the Food and Drug Administration in relation to that drug or device. In § 426.400(d), we state that two or more aggrieved parties may initiate the review of an LCD by filing a single written complaint with the ALJ if the conditions in § 426.400(d)(1)(i) and (ii) are met. Similarly, in § 426.500(d), we state that two or more aggrieved parties may initiate the review of an NCD by filing a single complaint with the Board if the conditions in § 426.500(d)(1)(i) and (ii) are met.
Based on public comments, we have added § 426.403 and § 426.503 to allow the aggrieved party to submit new evidence without withdrawing the complaint.
Section 426.405 specifies the authority of the ALJ during an LCD review, including authority during a hearing, if applicable. Similarly, in § 426.505, we set forth the specific authority of the Board during an NCD review, if applicable.
Sections 426.406 and 426.506 prohibit
In § 426.410, we establish the ALJ's role in docketing and evaluating the acceptability of LCD complaints. These procedures are very similar to the Board's role in docketing and evaluating the acceptability of NCD complaints in § 426.510. Under the procedures, the adjudicatory body receives and dockets the complaint, evaluates the acceptability of the complaint, and resolves any consolidation issues. The appeal will be docketed under the name of the LCD or NCD rather than the aggrieved party or parties to protect the privacy of the party/parties.
In § 426.410 and § 426.510, we establish the criteria that a complaint must meet to be considered as an acceptable complaint by an ALJ or the Board. An aggrieved party must file the complaint; the complaint must meet all of the requirements of a valid complaint regarding an LCD in § 426.400, or regarding an NCD in § 426.500, and may only challenge a policy that meets the definition of an LCD or an NCD.
If a complaint is deemed to be unacceptable after being evaluated under § 426.410(b) or § 426.510(b), the applicable adjudicator will provide the aggrieved party (or parties) one opportunity to amend the unacceptable complaint within a timeframe set forth by the adjudicator (
If, after having been evaluated under § 426.410(b) or § 426.510(b), a complaint is accepted, the adjudicator will send a letter to the aggrieved party (or parties) acknowledging the complaint and informing them of the docket number (
In § 426.410(e) and § 426.510(e), we allow for adjudicators to consolidate complaints regarding LCDs and NCDs, respectively. Under this provision, several complaints may be consolidated into one review if the complaints are appropriately similar. The review processes are not changed by a decision to consolidate complaints into one review.
In § 426.510(f) and § 426.513, we describe the opportunity and extent to which interested parties may participate in the NCD review process as amicus curiae.
In § 426.415, we explain that we may provide information to the ALJ, and all parties to the LCD review, identifying the person who would represent the contractor or CMS in the LCD review process. We can determine whether the contractor or CMS will participate in the review. Under the corresponding section in § 426.515, we provide a copy of the NCD record (as described in § 426.518) to the Board and all parties to the NCD review within 30 days of receiving the Board's order.
In § 426.416 and § 426.516, we describe the role of Medicare managed care organizations and Medicaid State agencies in the LCD and NCD review process. In § 426.417 and § 426.517, we describe the role of contractors and CMS in reviewing any new evidence.
Sections 426.418 and 426.518 describe, respectively, the elements of a contractor's LCD record and our NCD record, furnished to the aggrieved party. Sections 426.419 and 426.519 describe, respectively, the elements of a contractor's LCD record and our NCD record furnished to the ALJ or Board. These sections have been added in response to comments, and to facilitate the review process when privileged or proprietary data is submitted. Generally, an LCD or NCD record is composed of documents and materials that the contractor or we considered during the development of the LCD or NCD. Any MCAC transcripts would also be considered part of an NCD record. In the cases where comments are submitted, a “comment and response” summary document is sufficient for inclusion in the LCD record. In § 426.418(b) and § 426.518(b), we do not include privileged information or proprietary data, or any new evidence, as part of the record furnished to the aggrieved party. In § 426.419 and § 426.519, we state that official records presented to the Board may contain proprietary data or privileged information, if the information was considered in reaching the LCD or NCD under review. In these instances, the proprietary data and privileged information is filed under seal and is protected from inappropriate disclosure according to all applicable statutes and regulations, or common law privileges.
In § 426.420(a) and (b), we allow a contractor to retire the LCD under review or revise the LCD to remove or amend the provision in question before the date the ALJ issues a decision regarding the LCD. Retiring an LCD (or provision of the LCD) means that the contractor may no longer use that LCD in the adjudication of claims on a prospective basis. We also provide the aggrieved party individual claim review under § 426.460(b). Thus, in most cases, there would no longer be a need for an LCD review because relief would be provided. In § 426.520(a), we may withdraw an NCD under review or revise an NCD to remove or amend the provision in question before the date the Board issues a decision regarding that NCD. Withdrawing an NCD (or provision of the NCD) means this policy is no longer a controlling authority for our contractors and certain adjudicators. Thus, there no longer would be a need for an NCD review. In § 426.420(b), § 426.420(c), § 426.420(d), § 426.420(e) and § 426.520(b), § 426.520(c), § 426.520(d), § 426.520(e), we describe the process for LCDs and NCDs that are revised or reconsidered while under review. In cases where an LCD/NCD provision(s) has been revised, but not completely removed, the review continues because relief may not have been provided. This responds to comments received, and will ensure that aggrieved parties receive coverage relief when they prevail.
Under § 426.423 and § 426.523, we are permitting aggrieved parties who filed the complaint to withdraw complaints regarding LCDs and NCDs, respectively. We allow an aggrieved party to withdraw a complaint before the applicable adjudicator issues a decision regarding the complaint by simply sending a written notice to the ALJ, to the applicable contractor, and to us (if applicable) for LCDs, or to the Board and to us for NCDs (
In the case of a joint complaint, one or more aggrieved parties may withdraw from the review without affecting the status of any remaining aggrieved party or parties named in the complaint. The adjudicator would issue a decision dismissing the complaint for the aggrieved party or parties who wish to withdraw, and the review would continue until the adjudicator issued a decision on the merits, or until each aggrieved party withdrew its complaint. Similarly, if the adjudicator had decided to hold a consolidated review, an aggrieved party or parties who are part of the consolidated review may withdraw without affecting the status of the other aggrieved party or parties who are part of the consolidated review (
Sections 426.425(a) and 426.525(a) contain the processes for LCD and NCD reviews, respectively, that take place once the record has been filed. Section 522 of the BIPA added sections 1869(f)(1)(A)(iii) and 1869(f)(2)(A)(i) of the Act, which specify that the adjudicators of NCD and LCD reviews, respectively, “ * * * shall review the record and shall permit discovery and the taking of evidence to evaluate the reasonableness of the determination, if the [adjudicator] determines that the record is incomplete or lacks adequate information to support the validity of the determination.” Therefore, we allow the aggrieved party who submitted the complaint to file a statement alleging that the LCD record (or the NCD record
In § 426.425(c) and § 426.525(c), we explain that, after the time for filing has expired, the ALJ or the Board will evaluate whether the record is complete and adequate to support the validity of the policy by applying the reasonableness standard. If the adjudicator determines that the record is not complete, not adequate to support the validity of the coverage determination, or both, the adjudicator will notify all parties to the review of this decision and allow discovery (as proposed in § 426.432 and § 426.532 and discussed later in this section of the preamble). If the adjudicator determines that the record is complete and adequate to support the validity of the coverage determination, the adjudicator will issue a decision finding the LCD/NCD record complete and adequate to support the validity of the LCD/NCD and the review process ends. In § 426.425(d) and § 426.525(d), we state that the process described in (a), (b), and (c) applies whenever an LCD/NCD record is supplemented.
Under § 426.431 and § 426.531, we describe the process that adjudicators will use to review the provision(s) named in a complaint based on the reasonableness standard. The actions of this process include the following:
• Confining the LCD/NCD review to the provision(s) of the LCD/NCD raised in the aggrieved party's complaint;
• Conducting a hearing, unless the matter can be decided on the written record;
• Closing the LCD/NCD review record to the taking of evidence;
• Issuing a decision as described in § 426.447 and § 426.547. We further state that ALJs may consider previous ALJ decisions regarding the LCD provisions with the same issues and facts and the same clinical conditions. We also provide that ALJs must treat as precedential any previous Board decision that involves the same LCD provision(s), same specific issues and facts in question, and same clinical conditions. We also provide that the Board will follow applicable Board precedent regarding the same NCD provisions and the same clinical conditions.
In addition, the adjudicator has the option, under § 426.431(b) and 426.531(b), to consult with appropriate scientific or clinical experts, and to consider previous ALJ decisions (discussed in the section of the preamble on § 426.440 and § 426.540).
In § 426.431(c) and § 426.531(c), we explain that ALJs and the Board must follow all applicable laws and regulations, and NCDs, with the exception that the Board is not bound by the NCD that is before it.
Under § 426.432 and § 426.532, paragraph (a), if the ALJ or the Board orders discovery, the ALJ or the Board will establish a reasonable timeframe for discovery and ensure that a party to the LCD or NCD review who receives a discovery request has certain rights. In paragraph (b), we state that any party receiving a discovery request may file a motion for a protective order before the date of production of the discovery.
Under § 426.432 and § 426.532, we also set forth the rules for discovery during an LCD or NCD review, respectively.
We have eliminated proposed § 426.432(a)(3) and § 426.532(a)(3) because we do not expect any non-parties to be required to submit evidence in these proceedings.
In § 426.432(c) and § 426.532(c), we list the types of discovery that are available. In § 426.432(d) and § 426.532(d), we explain what the term discovery includes and state that discovery does not require the creation of any document. In § 426.432(e) and § 426.532(e), we identify forms of discovery that are not available. We believe that this is consistent with normal practice and will avoid unnecessary delays in the coverage determination reviews.
For proprietary data or privileged information, § 426.432(f) and § 426.532(f), we have clarified that the ALJ/Board may not, under any circumstances, disclose this material to the public without consent from the party who possesses the right to protection of the information.
In § 426.432(g) and § 426.532(g), we state that the ALJ/Board will notify all parties in writing of the date when the discovery period will close.
While reviewing a provision of an LCD or NCD, the adjudicator may, if necessary, issue subpoenas. In § 426.435 and § 426.535, we describe the process for obtaining and responding to subpoenas during a coverage determination review. A request for a subpoena to require the attendance of an individual at a hearing (or provide evidence at a hearing) must be filed with the adjudicator by a party to the coverage determination review at least 30 days before the date of a hearing. In addition to designating the witnesses (and their locations) and the evidence to be produced by those witnesses, the subpoena must state the facts that the party expects the witness to establish, and state whether these facts could be established by other evidence or without the use of a subpoena.
The subpoena sections also detail the role of adjudicators in granting subpoenas, the role of a party in serving a subpoena, and the role and rights of the individual receiving a subpoena (including the right to file a motion to quash a subpoena). In addition, in § 426.435(h) and § 426.535(h), we also set forth the remedy afforded under section 205(e) of the Act, if a subpoena is not obeyed.
We describe the rules relating to evidence in coverage determination reviews in § 426.440 and § 426.540. In § 426.440(a) and § 426.540(a), we state the ALJ or the Board is not bound by the Federal Rules of Evidence, but may apply the rules, if appropriate. In § 426.440(b) and § 426.540(b), we provide that the ALJ or the Board must exclude evidence that is clearly irrelevant, immaterial, or unduly repetitive. Sections 426.440(c) and § 426.540(c) provide admission of, and protection for the submission of proprietary/privileged information under seal. Sections 426.440(d) and § 426.540(d) address the authority of the ALJ/Board over the use of expert witnesses. Under § 426.440(e) and § 426.540(e), we require experts submitting reports to be available for cross-examination at an evidentiary hearing. Under § 426.440(f) and § 426.540(f), we require that, unless otherwise ordered by the adjudicator for good cause shown, all documents and other evidence be open to examination by all parties to the review, except as set forth in § 426.440(c) and § 426.540(c).
Under § 426.444 and § 426.544, we describe an adjudicator's dismissal for cause of a complaint regarding an LCD or an NCD, respectively. A dismissal is effectuated by the issuance of a decision dismissing a complaint. In general, an adjudicator may dismiss a complaint if an aggrieved party fails to attend or participate in a pre-hearing conference (the pre-hearing may be conducted by telephone) or hearing without good cause shown or fails to comply with a lawful order from an adjudicator (
Under § 426.444(b)(6), we also require an ALJ to dismiss a complaint if the applicable contractor notifies the ALJ that the LCD is being retired or revised to remove the provision in question. Similarly, in § 426.544(b)(6), the complaint must be dismissed when we notify the Board that the NCD (or provision of the NCD) is no longer in effect.
In § 426.445 and § 426.545, we require that witness fees, for appearances during a hearing, be paid by the party seeking to present the witness.
Under § 426.446 and § 426.546, we require that an ALJ and the Board, respectively, ensure that any hearing conducted regarding a LCD or NCD review is open to the public and electronically, mechanically, or stenographically recorded. These sections require that, except for privileged information and proprietary data, all evidence upon which the adjudicator relies for a decision be contained in the public record, and that any pertinent document or record be incorporated into the record of the LCD/NCD hearing.
Under § 426.447 and § 426.547, we set forth the procedures for the issuance and notification of ALJ and Board decisions, respectively. Within 90 days from closing the review record to the taking of evidence, the applicable adjudicator is required either to issue a decision, including a description of appeal rights, or to provide notice that the decision is pending, and an approximate date a decision will be issued. In § 426.547(b), we explain that Board decisions regarding NCDs will be available on the Medicare Web site of the Department of Health and Human Services and that steps will be taken to ensure the privacy of the parties to the review.
Under § 426.450, we describe the required elements of an ALJ's decision regarding an LCD. In § 426.550, we describe the required elements of the Board's decision regarding an NCD. Since Board decisions will be published, identifying information about beneficiaries may be placed in an accompanying cover letter giving notice of the decision. This cover letter, however, will not be published, in order to preserve beneficiaries' privacy. As discussed earlier in this section of the preamble, a decision may include the dismissal of a complaint or a finding that the LCD/NCD record is complete and adequate to support the validity of the LCD/NCD under the reasonableness standard. If the ALJ/Board decision neither dismisses the complaint nor finds that record complete and adequate, the decision must contain a statement pertaining to each provision listed in the complaint and state whether the provision is valid or invalid under the reasonableness standard. We also require that the decision include the information in § 426.450(b) and § 426.550(b), which include LCD review or NCD review identifying information, claim information (if known), the basis for the decision (including findings of fact, interpretations of laws, and application of facts to the law), a summary of the evidence reviewed during the review, and a statement about appeal rights. We provide that the materiality of any proprietary data or privileged information in the validity determination should be discussed in the decision without disclosing the substance or contents of the sealed evidence. In addition, a separate statement prepared and maintained under seal will explain the rationale for the treatment of the proprietary data or privileged information, including any necessary discussion of the data themselves. This statement will accompany the proprietary data or privileged information under seal if the decision is appealed to the next level of review.
In § 426.455 and § 426.555, we require that an ALJ or the Board decision be prohibited from doing any of the following:
• Ordering us or our contractors to add any language to an LCD or NCD or to pay a specific claim.
• Establishing a time limit for the creation of a new or revised LCD or NCD.
• Reviewing or evaluating an LCD or NCD other than the LCD or NCD under review.
• Including a requirement for us or our contractors that specifies payment, coding, or systems changes for an LCD or NCD, or deadlines for implementing these changes.
• Ordering or addressing how we or our contractors should implement an LCD or NCD.
As a result of comments we received on our proposed rule, we revised the requirements concerning ALJ or the Board decisions to allow such a decision to direct us or our contractors to delete language from a provision of an LCD or NCD, when the adjudicator finds provision(s) unreasonable with respect to the aggrieved party's clinical indications, and for same or similar conditions. While we have revised the rule accordingly, we continue to believe that ALJs or the Board should be prohibited from ordering us or our contractors to add language to a LCD or NCD provision and have maintained the prohibition in this final rule. The ALJ/Board decision requiring a contractor or CMS to strike an LCD/NCD provision may be written narrowly. In one example, an aggrieved party with condition X challenges an LCD stating that a particular service is covered for conditions Y and Z and contains the following sentence: “This procedure is considered not reasonable or necessary for all other conditions.” The ALJ may find that this sentence is invalid for condition X. The contractor would have several options for effectuating this decision. First, the contractor could remove the sentence altogether leaving coverage of all conditions other than Y and Z to individual consideration. Second, the contractor could add condition X to the list of covered conditions. Third, the contractor could revise the LCD to state that the service is covered for conditions Y and Z, individual consideration will determine coverage for condition X, and that the service is not covered for all other conditions.
In § 426.457 and § 426.557, we explain that ALJ or the Board decisions may be written narrowly to hold specific provision(s) invalid as applied to specific clinical indications and for similar conditions.
In § 426.458, we describe the ALJ's review record furnished to the public, and to the Board, and specify that proprietary data or privileged information must be under seal.
In § 426.460 and § 426.560, we describe the effect of ALJ or the Board decisions issued under § 426.447 and § 426.547. Although an ALJ or the Board will now be allowed to order us or our contractors to strike down a LCD or NCD provision, we continue to believe that the exact wording of a new coverage determination should be made by the contractor or by us. These policies affect other beneficiaries and, thus, these determinations must be made by clinicians and scientific experts who have the necessary specialized training. Thus, we and the contractor will remain the entities responsible for ensuring that the clinical and scientific policies are sound, in order to ensure the best quality of care for beneficiaries.
The effect of an ALJ or Board decision will depend on the outcome of the coverage determination review. If the
If the adjudicator found that the provision(s) listed in the complaint was (were) invalid under the reasonableness standard and the contractor or we do not appeal this decision to the Board in a timely manner, the contractor must or we will do several things. First, there would be individual claim review for the aggrieved party or parties named in the complaint(s).
• If the aggrieved party received a (fee-for-service or managed care) service that was the subject of the challenged coverage determination, then the contractor (if applicable) or Medicare managed care organization will not use the provision(s) of the coverage determination that was (were) found invalid in the adjudication of that claim.
• If the aggrieved party has not received the service, the individual may obtain the service and file a claim, which could be reviewed by the contractor, without using the provision that has been found invalid.
Neither the first level appeal reviewer nor the hearing officer is bound by the invalid provision. Specifically, we will instruct the contractor to make a claim determination without using the LCD or NCD provision(s) that has been found invalid in each of the following situations: (1) The claim has not been adjudicated or; (2) the claim was denied. It is important to note that individual claim review can only be provided to an aggrieved party if his or her individual claim or appeal has not been paid during the individual claims adjudication process. Furthermore, the contractor/CMS will not use the invalid provision as guidance to deny claims.
Second, there would be coverage policy relief. Within 30 days of the issuance of an ALJ or the Board decision, the contractor or CMS must either retire/withdraw the LCD/NCD or revise the LCD/NCD to remove the provisions found to be invalid by the ALJ or the Board. The effective date of the retirement/withdrawal or revision must be for dates of service no later than the 30th day following issuance of the ALJ or Board decision. As discussed earlier, the retirement of a coverage determination or removal of a provision of a coverage determination means that it can no longer be used in the adjudication of claims with dates of service after the effective date of the ALJ/Board decision.
Under § 426.462 and § 426.562, “Notice of an ALJ's decision,” and “Notice of the Board's decision,” we require that, after the ALJ or the Board, respectively, has made a decision regarding an LCD or NCD complaint, the ALJ or the Board send a written notice of the decision to each party. The notice must state the outcome of the review and inform each party to the determination of his or her rights to seek further review if he or she is dissatisfied with the determination, and the time limit under which an appeal must be requested.
Under § 426.463 and § 426.563, “Future New/Revised LCDs/NCDs,” we state that the contractor and CMS may not reinstitute an LCD/NCD provision found to be unreasonable by an ALJ/Board unless the contractor/CMS has a different basis (such as additional evidence). However, nothing in this regulation shall be construed to prevent contractors or CMS from developing new or revised/reconsidered LCD/NCD provisions, as long as these provisions are developed using a different basis and evidence.
In the remainder of the sections proposed in subpart D, we set forth the procedure for appealing an ALJ's decision regarding an LCD review. In § 426.465(a), we state that an aggrieved party may appeal part or all of an ALJ's decision that states that a provision of the LCD listed in the complaint is valid under the reasonableness standard or that dismisses a complaint (with certain exceptions). We also allow an aggrieved party who was part of a joint complaint or a consolidated LCD review to appeal an ALJ's decision either independently or as a group.
In § 426.465(b), we state that a contractor or CMS may appeal to the Board an ALJ decision that an LCD was unreasonable. Because we allow Board consolidation of similar appeals, we believe that it is not necessary to prohibit aggrieved parties from appealing to higher levels if one or more parties to a joint complaint withdraw from that complaint.
In § 426.465(c), we require that the implementation of the ALJ decision will be stayed pending review by the Board.
In § 426.465(d), we establish that we do not allow an aggrieved party to appeal a dismissal in certain circumstances, namely, if the aggrieved party who filed the complaint withdraws the complaint, or because the contractor retired the LCD or revised the LCD to remove the provision in question.
Under § 426.465(e), we require that an appeal would have to be submitted to the Board within 30 days of the date the ALJ's decision was issued. We believe this is a reasonable timeframe to allow a party to make a decision on whether to appeal and to prepare the necessary documents, but we permit the Board to consider a late appeal if good cause is shown by the party.
Section 426.465(f) lists the necessary components of an appeal to identify the relevant parties and issues.
In § 426.565, “Board's role in making an LCD or NCD review record available,” we require that upon a request from a Federal Court, the Board must provide to the Federal Court, a copy of the Board's LCD or NCD review record (as described in § 426.567).
In § 426.566, we state that a Board decision is subject to judicial review.
In § 426.468, we explain that an aggrieved party who initiates an LCD review, but does not appeal any part or parts of an ALJ's decision to the Board in a timely manner, waives his or her right to any further review of that part or those parts.
In § 426.470, we state that the Board's role in docketing and evaluating the acceptability of appeals of ALJ decisions is similar to the process that an ALJ would use in docketing and evaluating the acceptability of a complaint. The Board assigns a number to the appeal and determines if it meets all of the requirements of an acceptable appeal proposed in § 426.465. Unlike the evaluation of an initial complaint, however, we require, in § 426.470(c), that the Board issue a decision dismissing an unacceptable appeal, instead of allowing an opportunity to amend an unacceptable appeal.
Upon the request from the Board to provide copies of the LCD review record under § 426.470, we require that an ALJ send a copy of the LCD review record to the Board.
Once the Board has accepted an appeal to an ALJ's decision and received the ALJ's LCD review record, we describe in § 426.476 the steps that the Board will take in reviewing the ALJ's decision. In addition to reviewing the ALJ's LCD review record and the ALJ's decision, the Board must allow the contractor or, if applicable, allow us, to submit a statement to the Board and the aggrieved party responding to the appeal. The final required step in the Board review of an ALJ's decision is to issue a Board decision. We require that the Board must evaluate the ALJ's application of the reasonableness standard to determine if the ALJ's decision was erroneous.
We believe that the Board review of an appeal of an ALJ's decision should remain a paper review of existing materials. Accordingly, we establish, in § 426.476(b), that the Board will determine whether the ALJ decision contains any material error, and prohibit the Board from considering any evidence that is not a part of the ALJ's LCD review record. We establish that the Board will remand the case for discovery and the taking of evidence if the ALJ erroneously determined that the contractor's record was complete, or if the ALJ permitted a prejudicial procedural error. In § 426.476(c), we establish the Board's scope of review and that the Board is bound by applicable laws, regulations, and NCDs when reviewing appeals of ALJ decisions. These include the applicable provisions of the Act, our regulations and rulings, and NCDs.
In § 426.476(d), we require the Board to dismiss an appeal of an ALJ's decision if the contractor retired the LCD or revised the LCD to remove the provision(s) in question during the appeal.
In § 426.478, we allow the contractor to retire an LCD or revise the LCD to remove the provision(s) in question during the Board's review of the ALJ's decision. As stated in the previous paragraph, this would lead to the Board dismissing the appeal.
In § 426.480, we allow a party to withdraw an appeal of an ALJ's decision. The provisions proposed in this section, for a party acting alone or as part of a joint or consolidated appeal, would be the same as the provisions for withdrawing a complaint in § 426.423.
In § 426.482, we require the issuance and notification of a Board decision regarding an appealed ALJ decision. These provisions are the same as the provisions we described for the issuance and notification of an ALJ decision.
In § 426.484, we set forth the mandatory provisions of a Board decision regarding an appealed ALJ decision. We require the Board to either dismiss the appeal or, for each part of the ALJ's decision named in the appeal, to uphold, modify or reverse that part or all of the ALJ's decision. Because the Board is conducting a review of the ALJ's decision using the ALJ's LCD review record, and is not conducting a
In § 426.486, we prohibit the Board's decision from including those provisions that we exclude from the ALJ's decision, for the reasons discussed earlier in this preamble. In § 426.487, “Board's Record on Appeal of an ALJ Decision,” we state in paragraph (a) that except as provided in paragraph (b) of this section, the Board's LCD review record furnished to the public consists of any document or material that the Board compiled or considered during an LCD review.
Paragraph (b) states that the LCD review record furnished to the Court under appeal includes, under seal, material that is privileged or proprietary.
Paragraph (c) states that in any instance where proprietary data or privileged information is contained in the LCD record and the information goes to court, CMS or the Department will seek to have a protective order issued for that information, as appropriate.
In § 426.587, “Record for Appeal of a Board/NCD decision,” we set forth in paragraph (a) that, except as provided in paragraph (b) of this section, the Board's NCD review record furnished to the court consists of any document or material that the Board compiled or considered during an NCD review. CMS or the Department may seek to have a protective order issued with respect to proprietary data or privileged information.
We describe in paragraph (b) that the NCD review record furnished the court maintain the seal on material that is privileged or proprietary. CMS or the Department may seek to have a protective order issued with respect to those documents.
In § 426.488, we set forth the effect of a Board decision. Section 426.488(a) explains the relief that is provided to a successful challenger. Moreover, there may be coverage relief for the aggrieved party. We also describe the effect of the Board reversing an ALJ decision.
We permit the Board to remand cases to the ALJ in a limited number of circumstances. In § 426.489(a), we explain the process the Board must follow to remand a case to the ALJ. In § 426.489(b), we explain required action by an ALJ upon a Board remand. In § 426.490, a decision by the Board would constitute a final Agency action and would be subject to judicial review. Neither the contractor nor we may appeal a Board decision.
Under the Paperwork Reduction Act of 1995, we are required to provide 30-day notice in the
• The need for the information collection and its usefulness in carrying out the proper functions of our agency.
• The accuracy of our estimate of the information collection burden.
• The quality, utility, and clarity of the information to be collected.
• Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.
We have solicited public comment on each of these issues for the following sections of this document that contain information collection requirements:
Sections 426.400, Procedure for filing an acceptable complaint to a provision (or provisions) of an LCD, and 426.500, Procedure for filing an acceptable complaint to a provision or provisions of an NCD, state that an aggrieved party may initiate a review of an LCD or NCD, respectively, by filing a written complaint. These sections also identify the information required in the complaint to qualify as an aggrieved party as defined in § 426.110, as well as the process and information needed for an aggrieved party to withdraw a complaint. The required documentation includes a copy of the written authorization to represent the beneficiary, if the beneficiary has a representative, and a copy of a written statement from the treating physician that the beneficiary needs a service that is the subject of the LCD.
Based on the lack of public comments, we continue to estimate that there will be 1,000 LCD complaints per year and that it will take the aggrieved party 4 hours to draft the complaint and gather the information to send to us. The national burden would be 4,000 hours annually. We estimate that there will be 15 to 20 NCD complaints per year. It will take 4 hours, maximum, to gather the information and to write each complaint. Thus, we estimate a total of 80 hours per year to comply with the requirement.
The estimate of 4 hours is based on previous experience in both the local and national coverage development processes, and the estimated time to submit beneficiary and policy-specific information (for example, name,
If you comment on these information collection and recordkeeping requirements, please mail copies directly to the following:
We have examined the impacts of this rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), as amended by Executive Order 13258, and the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), as amended. Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more annually). Based on provider, beneficiary, and Agency costs, our analysis indicates that the costs involved with the implementation of this rule will not exceed $100 million annually. Therefore, this rule is not considered a major rule.
The RFA requires agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and government agencies. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $5 million or less annually. Individuals and States are not included in the definition of a small entity.
In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 603 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 100 beds.
For these reasons, we are not preparing analyses for either the RFA or section 1102(b) of the Act because we have determined that this rule would not have a significant economic impact on a substantial number of small entities or a significant impact on the operations of a substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditures in any one year by State, local, or tribal governments, in the aggregate, or by the private sector, of $110 million. We do not believe that this rule would have an effect on the governments mentioned, nor would the private sector costs associated with the rule be greater than $110 million.
Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. This final rule will not have a substantial effect on State or local governments.
In developing this rule, we considered how to make it user-friendly for the individual beneficiaries who qualify as aggrieved parties to initiate the review of an LCD or an NCD. Possible access obstacles for some aggrieved parties include limited financial resources, limited mobility, various disabilities, absence of legal representation, and difficulty in compiling and presenting scientific and clinical materials. We have sought to include means to alleviate these obstacles as much as possible through this rule, but would also expect the ALJs and the Board to use the flexibility in this rule to respond to obstacles that may confront individual aggrieved parties in particular cases.
Some concerns may remain about how to facilitate participation, especially when evidence is taken in person, by aggrieved parties with limited mobility or resources. This final rule seeks to address this by providing for most evidence to be submitted in written form and by allowing use of a variety of electronic means for remote attendance at any oral proceeding, if one is needed. In addition, the rule provides flexibility for ALJs and the Board to tailor proceedings in each case to best reflect the needs of the parties, the appropriate scope of participation, and the nature of the issues presented.
While we require some documentation to support a complainant's assertions of being an aggrieved party (
Our intent is to ensure that beneficiaries fully understand these rights. When this final rule is published, we expect to produce a user-friendly guide that beneficiaries may use to assist them in accessing this process.
We have also provided for appropriate measures to be taken to address confidentiality and privilege issues relating to privileged or confidential trade secrets, commercial information, or financial information.
We do not believe that the provisions of this rule will have a significant effect on providers, since the Congress developed the BIPA 522 process for beneficiaries. Providers may be requested, however, to supply documentation that an aggrieved party is in need of a specific service, and to assist in representing an aggrieved party. In addition, we have clarified in the final rule that this document may be in the form of an order or other existing language from the beneficiary's medical record and need not be newly created material. It is also possible for a provider to be subpoenaed under § 426.435 and § 426.535, but § 426.445 and § 426.545 will allow for compensation under this circumstance. While there may be time requirements placed on providers and expert witnesses in this respect, there will be no additional monetary expenses. As a
The Medicare program would incur certain significant administrative costs associated with coverage determination reviews, the cost of being a party to coverage determination reviews, the cost of reevaluating policies, and the cost of changes to the claim review and appeals procedures.
We considered various alternative approaches for implementing the ALJ or the Board decisions with respect to an LCD and NCD. One alternative we considered was to allow an ALJ or the Board to specify the type of relief that would be afforded to the aggrieved party in those instances in which an ALJ or the Board issued a finding of unreasonable under the reasonableness standard. We contemplated whether it would be feasible based on the record developed in this proceeding for an ALJ or the Board to order us to make payment for a particular claim for the individual. We determined, however, that because the record in a policy challenge adjudication focuses on the challenged policy, and not on the beneficiary's particular medical circumstances or entitlement to Medicare benefits, it is not possible to allow an ALJ or the Board to order payment in those circumstances. In some cases, other statutory restrictions may apply for a particular claim that would prevent Medicare from making payment even if the LCD or NCD were found unreasonable. For instance, if care were furnished by an excluded physician in other than an emergency situation, section 1862(e)(1) of the Act would bar Medicare payment. There are other examples where rules other than an NCD may lead to the denial of a claim (such as statutory exclusion). To avoid redundant claims/appeals processes, individual review is performed through our existing claims appeals procedures, but the LCD or NCD that was found unreasonable by the ALJ or the Board will not be applied.
Further, we do not believe that it is appropriate for an ALJ or the Board to add language to coverage determinations. LCDs and NCDs are based on clinical and scientific evidence to develop policies that are both sound and effective, and continue to ensure the highest quality of covered care for Medicare recipients. For the sake of continuing to ensure that aggrieved parties receive the same quality care as all other Medicare recipients, and for the sake of efficiently administering this process, we believe that clinicians and scientific experts are best suited to continue to develop these policies.
In accordance with the provisions of Executive Order 12866, as amended by Executive Order 13258, this regulation was reviewed by the Office of Management and Budget.
Grant programs-health, Health facilities, Health maintenance organizations (HMO), Medicaid, Medicare, Reporting and recordkeeping requirements.
Administrative practice and procedure, Health facilities, Health professions, Kidney diseases, Medicare, Reporting and recordkeeping requirements, Rural areas, X-rays.
Administrative practice and procedure, Medicare, Reporting and recordkeeping requirements.
Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh) and 44 U.S.C. Chapter 35.
(2) For purposes of review of ALJ decisions under part 405, subparts G and H; part 417, subpart Q; part 422, subpart M; and part 478, subpart B of this chapter, the Medicare Appeals Council designated by the Board Chair.
(3) For purposes of part 426 of this chapter, a Member of the Board and, at the discretion of the Board Chair, any other Board staff appointed by the Board Chair to perform a review under that part.
Secs. 1102, 1861, 1862(a), 1871, 1874, 1881, and 1888(k) of the Social Security Act (42 U.S.C. 1302, 1395x, 1395y(a), 1395hh, 1395kk, 1395rr and 1395ww(k)), and sec. 353 of the Public Health Service Act (42 U.S.C. 263a).
(a)
(2) An NCD does not include a determination of what code, if any, is assigned to a particular item or service covered under title XVIII or a determination for the amount of payment made for a particular item or service.
(3) NCDs are made under section 1862(a)(1) of the Act or other applicable provisions of the Act.
(4) An NCD is binding on all Medicare carriers, fiscal intermediaries, QIOs, HMOs, CMPs, HCPPs, the Medicare Appeals Council, and ALJs.
(b)
(2) An ALJ may review the facts of a particular case to determine whether an NCD applies to a specific claim for benefits and, if so, whether the NCD has been applied correctly to the claim.
(c)
(a)
(2) An NCD does not include a determination of what code, if any, is assigned to a particular item or service covered under title XVIII or a determination for the amount of payment made for a particular item or service.
(3) NCDs are made under section 1862(a)(1) of the Act or other applicable provisions of the Act.
(4) An NCD is binding on all Medicare carriers, fiscal intermediaries, QIOs, HMOs, CMPs, HCPPs, the Medicare Appeals Council, and ALJs.
(b)
(2) An ALJ may review the facts of a particular case to determine whether an NCD applies to a specific claim for benefits and, if so, whether the NCD is applied correctly to the claim.
(c)
Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh)
(a)
(b)
For the purposes of this part, the following definitions apply:
(1) Is entitled to benefits under Part A, enrolled under Part B, or both (including an individual enrolled in fee-for-service Medicare, in a Medicare+Choice plan, or in another Medicare managed care plan);
(2) Is in need of coverage for a service that is denied based on an applicable LCD (in the relevant jurisdiction) or an NCD, regardless of whether the service was received; and
(3) Has obtained documentation of the need by the beneficiary's treating physician.
(1) It is ordinarily protected from disclosure in accordance with 45 CFR part 164, under the Trade Secrets Act (18 U.S.C. 1905) or under Exemptions 4 or 5 of the Freedom of Information Act (5 U.S.C. 552) as specified in 45 CFR 5.65.
(2) The party who possesses the right to protection of the information from public release or disclosure has not provided its consent to the public release or disclosure of the information. Any information submitted by the public that is not marked proprietary is not considered proprietary.
In counting days, Saturdays, Sundays, and Federal holidays are included. If a due date falls on a Saturday, Sunday, or Federal holiday, the due date is the next Federal working day.
Any party submitting material, except for material for which a privilege is asserted, or proprietary data, to the ALJ or the Board after that party's initial challenge must serve the material on all other parties at the same time.
(a) Upon the receipt of an acceptable LCD complaint as described in § 426.400, an ALJ conducts a review of a challenged provision (or provisions) of an LCD using the reasonableness standard.
(b) Upon the receipt of an acceptable NCD complaint as described in § 426.500, the Board conducts an NCD review of a challenged provision (or provisions) of an NCD using the reasonableness standard.
(c) The procedures established in this part governing the review of NCDs also apply in cases in which a deemed NCD is challenged.
(a) LCD and NCD reviews are distinct from the claims appeal processes set forth in part 405, subparts G and H; part 417, subpart Q; and part 422, subpart M of this chapter.
(b) An aggrieved party must notify the ALJ or the Board, as appropriate, regarding the submission and disposition of any pending claim or appeal relating to the subject of the aggrieved party's LCD or NCD complaint. This reporting obligation continues through the entire LCD or NCD review process.
(a) Only an aggrieved party may initiate a review of an LCD or NCD (including a deemed NCD), or provisions of an LCD or NCD by filing an acceptable complaint.
(b) Neither an ALJ nor the Board recognizes as valid any attempt to assign rights to request review under section 1869(f) of the Act.
(a) Only LCDs or NCDs (including deemed NCDs) that are currently effective may be challenged.
(b) Some items are not reviewable under this part, including the following:
(1) Pre-decisional materials, including—
(i) Draft LCDs;
(ii) Template LCDs or suggested LCDs; and
(iii) Draft NCDs, including national coverage decision memoranda.
(2) Retired LCDs or withdrawn NCDs.
(3) LCD or NCD provisions that are no longer in effect due to revisions or reconsiderations.
(4) Interpretive policies that are not an LCD or NCD.
(5) Contractor decisions that are not based on section 1862(a)(1)(A) of the Act.
(6) Contractor claims processing edits.
(7) Payment amounts or methodologies.
(8) Procedure coding issues, including determinations, methodologies, definitions, or provisions.
(9) Contractor bulletin articles, educational materials, or Web site frequently asked questions.
(10) Any M+C organization or managed care plan policy, rule, or procedure.
(11) An individual claim determination.
(12) Any other policy that is not an LCD or an NCD as set forth in § 400.202 of this chapter.
During an LCD or NCD review, an aggrieved party bears the burden of proof and the burden of persuasion for the issue(s) raised in a complaint. The burden of persuasion is judged by a preponderance of the evidence.
(a) The process for review of new evidence is initiated once the ALJ/Board completes the taking of evidence.
(b) If an aggrieved party has submitted new evidence pertaining to the LCD/NCD provision(s) in question, and the ALJ or the Board finds that evidence admissible, the ALJ or the Board reviews the record as a whole and decide whether the new evidence has the potential to significantly affect the ALJ's or the Board's evaluation of the LCD/NCD provision(s) in question under the reasonableness standard.
(c) If the ALJ or the Board determines that the new evidence does not have the potential to significantly affect the ALJ's or the Board's evaluation of the LCD/NCD provision(s) in question under the reasonableness standard, this evidence is included in the review record, and the review goes forward to a decision on the merits.
(d) If the ALJ or the Board determines that the new evidence has the potential to significantly affect the ALJ's or the Board's evaluation of the LCD or NCD provision(s) in question under the reasonableness standard, then the ALJ or the Board—
(1) Stays the proceedings and ensures that the contractor or CMS, whichever is appropriate, has a copy of the new evidence for its examination; and
(2) Allows the contractor/CMS 10 days, generally, to examine the new evidence, and to decide whether the contractor or CMS initiates a reconsideration.
(e) If the contractor or CMS informs the ALJ or the Board by the end of the 10 days that a reconsideration is initiated, and then the ALJ or the Board—
(1) Continues the stay in proceedings; and
(2) Sets a reasonable timeframe, not more than 90 days, by which the contractor or CMS completes the reconsideration.
(f) The ALJ or Board lifts the stay in proceedings and continues the review on the challenged provision(s) of the original LCD or NCD, including the new evidence in the review record, if the contractor or CMS—
(1) Informs the ALJ or Board that a reconsideration is not initiated; or
(2) The 90-day reconsideration timeframe is not met.
(g) If an LCD or NCD is reconsidered and revised within the timeframe allotted by the ALJ or Board, then the revised LCD or NCD and any supplement to the LCD or NCD record is forwarded to the ALJ or the Board and all parties and the review proceeds on the LCD or NCD.
(a)
(b)
(1) 6 months of the issuance of a written statement from each aggrieved party's treating practitioner, in the case of aggrieved parties who choose to file an LCD challenge before receiving the service; or
(2) 120 days of the initial denial notice, in the case of aggrieved parties who choose to file an LCD challenge after receiving the service.
(c)
(1)
(i) Name.
(ii) Mailing address.
(iii) State of residence, if different from mailing address.
(iv) Telephone number, if any.
(v) Health Insurance Claim number, if applicable.
(vi) E-mail address, if applicable.
(2)
(i) Name.
(ii) Mailing address.
(iii) Telephone number.
(iv) E-mail address, if any.
(v) Copy of the written authorization to represent the beneficiary.
(3)
(4)
(i) Name of the contractor using the LCD.
(ii) Title of LCD being challenged.
(iii) The specific provision (or provisions) of the LCD adversely affecting the aggrieved party.
(5)
(6)
(ii) Any documents or portions of documents that include proprietary data must be marked “proprietary data,” and include a legal basis for that assertion.
(iii) Proprietary data submitted by a manufacturer concerning a drug or device for which the manufacturer has submitted information to the Food and Drug Administration, must be considered and given substantive weight only when supported by an affidavit certifying that the submission contains true and correct copies of all data submitted by the manufacturer to the Food and Drug Administration in relation to that drug or device.
(d)
(i) Each aggrieved party named in the joint complaint has a similar medical condition or there are other bases for combining the complaints.
(ii) Each aggrieved party named in the joint complaint is filing the complaint
(2)
(i) The beneficiary-identifying information described in paragraph (c)(1) of this section for each aggrieved party named in the joint complaint.
(ii) The LCD-identifying information described in paragraph (c)(2) of this section.
(iii) The documentation described in paragraphs (c)(3) and (c)(4) of this section.
(3)
(i) Before receiving the service, must file with the ALJ a joint complaint within 6 months of the written statement from each aggrieved party's treating physician.
(ii) After receiving the service, must file with the ALJ a complaint within 120 days of each aggrieved party's initial denial notice.
Once an acceptable complaint is filed, the aggrieved party may submit additional new evidence without withdrawing the complaint until the ALJ closes the record.
(a) An ALJ conducts a fair and impartial hearing, avoids unnecessary delay, maintains order, and ensures that all proceedings are recorded.
(b) An ALJ defers only to reasonable findings of fact, reasonable interpretations of law, and reasonable applications of fact to law by the Secretary.
(c) The ALJ has the authority to do any of the following:
(1) Review complaints by an aggrieved party (or aggrieved parties).
(2) Dismiss complaints that fail to comply with § 426.400.
(3) Set and change the date, time, and place of a hearing upon reasonable notice to the parties.
(4) Continue or recess a hearing for a reasonable period of time.
(5) Hold conferences to identify or simplify the issues, or to consider other matters that may aid in the expeditious disposition of the proceeding.
(6) Consult with scientific and clinical experts on his or her own motion concerning clinical or scientific evidence.
(7) Set schedules for submission of exhibits and written reports of experts.
(8) Administer oaths and affirmations.
(9) Examine witnesses.
(10) Issue subpoenas requiring the attendance of witnesses at hearings as permitted by this part.
(11) Issue subpoenas requiring the production of existing documents before, and relating to, the hearing as permitted by this part.
(12) Rule on motions and other procedural matters.
(13) Stay the proceedings in accordance with § 426.340.
(14) Regulate the scope and timing of documentary discovery as permitted by this part.
(15) Regulate the course of a hearing and the conduct of representatives, parties, and witnesses.
(16) Receive, rule on, exclude, or limit evidence, as provided in § 426.340.
(17) Take official notice of facts, upon motion of a party.
(18) Decide cases, upon the motion of a party, by summary judgment when there is no disputed issue of material fact.
(19) Conduct any conference, argument, or hearing in person or, upon agreement of the parties, by telephone, picture-tel, or any other means.
(20) Issue decisions.
(21) Exclude a party from an LCD review for failure to comply with an ALJ order or procedural request without good cause shown.
(22) Stay the proceedings for a reasonable time when all parties voluntarily agree to mediation or negotiation, and provide mediation services upon request.
(d) The ALJ does not have authority to do any of the following under this part:
(1) Conduct an LCD review or conduct LCD hearings on his or her own motion or on the motion of a nonaggrieved party.
(2) Issue a decision based on any new evidence without following § 426.340, regarding procedures for review of new evidence.
(3) Review any decisions by contractors to develop a new or revised LCD.
(4) Conduct a review of any draft, retired, archived, template, or suggested LCDs.
(5) Conduct a review of any policy that is not an LCD, as defined in § 400.202 of this chapter.
(6) Conduct a review of any NCD according to section 1869(f)(1)(A)(i) of the Act.
(7) Conduct a review of the merits of an unacceptable LCD complaint as discussed in § 426.410.
(8) Allow participation by individuals or entities other than—
(i) The aggrieved party and/or his/her representative;
(ii) CMS and/or the contractor; and
(iii) Experts called by the parties or the ALJ.
(9) Compel the parties to participate in a mediation process or to engage in settlement negotiations.
(10) Deny a request for withdrawal of a complaint by an aggrieved party.
(11) Compel the contractor to conduct studies, surveys, or develop new information to support an LCD record.
(12) Deny a contractor the right to reconsider, revise or retire an LCD.
(13) Find invalid applicable Federal statutes, regulations, rulings, or NCDs.
(14) Enter a decision specifying terms to be included in an LCD.
No party or person (except employees of the ALJ's office) communicates in any way with the ALJ on any substantive matter at issue in a case, unless on notice and opportunity for all parties to participate. This provision does not prohibit a person or party from inquiring about the status of a case or asking routine questions concerning administrative functions or procedures.
(a)
Dockets the complaint.
Determines whether the complaint is—
(i) The first challenge to a particular LCD; or
(ii) Related to a pending LCD review.
(3) Forwards the complaint to the ALJ that conducts the review. In cases related to pending reviews, the complaint generally is forwarded to the ALJ who is conducting the review.
(b)
(1) The complaint is being submitted by an aggrieved party or, in the case of a joint complaint, that each individual named in the joint complaint is an aggrieved party. (In determining if a complaint is acceptable, the ALJ assumes that the facts alleged by the treating physician's documentation regarding the aggrieved party's (or parties') clinical condition are true.)
(2) The complaint meets the requirements for a valid complaint in § 426.400 and does not challenge one of the documents in § 426.325(b).
(c)
(2) If the aggrieved party (or parties) fail(s) to submit an acceptable amended complaint within a reasonable timeframe as determined by the ALJ, the ALJ must issue a decision dismissing the unacceptable complaint.
(3) If a complaint is determined unacceptable after one amendment, the beneficiary is precluded from filing again for 6 months after being informed that it is unacceptable.
(d)
(1) Sends a letter to the aggrieved party (or parties) acknowledging the complaint and informing the aggrieved party (or parties) of the docket number and the deadline for the contractor to produce the LCD record.
(2) Forwards a copy of the complaint, any evidence submitted in the complaint, and the letter described in paragraph (d)(1) of this section to the applicable contractor and CMS.
(3) Requires CMS or the contractor to send a copy of the LCD record to the ALJ and all parties to the LCD review within 30 days of receiving the ALJ's letter, the copy of the complaint, and any associated evidence, subject to extension for good cause shown.
(e)
(i) The complaints are in regard to the same provision(s) of the same LCD or there are other bases for consolidating the complaints.
(ii) The complaints contain common questions of law, common questions of fact, or both.
(iii) Consolidating the complaints does not unduly delay the ALJ's decision.
(2)
(i) Provides notification that the LCD review is consolidated and informs all parties of the docket number of the consolidated review.
(ii) Makes a single record of the proceeding.
(iii) Considers the relevant evidence introduced in each LCD complaint as introduced in the consolidated review.
(3)
CMS may provide to the ALJ, and all parties to the LCD review, information identifying the person who represents the contractor or CMS, if necessary, in the LCD review process.
Medicare MCOs and Medicaid State agencies have no role in the LCD review process. However, once the ALJ has issued its decision, the decision is made available to all Medicare MCOs and State agencies.
(a) The contractor may review any new evidence that is submitted, regardless of whether the ALJ has stayed the proceedings, including but not limited to—
(1) New evidence submitted with the initial complaint;
(2) New evidence submitted with an amended complaint;
(3) New evidence produced during discovery;
(4) New evidence produced when the ALJ consults with scientific and clinical experts; and
(5) New evidence presented during any hearing.
(b) The contractor may submit a statement regarding whether the new evidence is significant under § 426.340, within such deadline as the ALJ may set.
(a)
(1) The LCD being challenged.
(2) Any medical evidence considered on or before the date the LCD was issued, including, but not limited to, the following:
(i) Scientific articles.
(ii) Technology assessments.
(iii) Clinical guidelines.
(iv) Statements from clinical experts, medical textbooks, claims data, or other indication of medical standard of practice.
(3) Comment and Response Document (a summary of comments received by the contractor concerning the draft LCD).
(4) An index of documents considered that are excluded under paragraph (b) of this section.
(b)
(1) Proprietary data or privileged information.
(2) Any new evidence.
The LCD record furnished to the ALJ includes the following:
(a) Documents included in § 426.418(a).
(b) Privileged information and proprietary data considered that must be filed with the ALJ under seal.
(a) A contractor may retire an LCD or LCD provision under review before the date the ALJ issues a decision regarding that LCD. Retiring an LCD or LCD provision under review has the same effect as a decision under § 426.460(b).
(b) A contractor may revise an LCD under review to remove or amend the LCD provision listed in the complaint through the reconsideration process before the date the ALJ issues a decision regarding that LCD. Revising an LCD under review to remove the LCD provision in question has the same effect as a decision under § 426.460(b).
(c) A contractor must notify the ALJ within 48 hours of—
(1) Retiring an LCD or LCD provision that is under review; or
(2) Issuing a revised version of the LCD that is under review.
(d) If the contractor issues a revised LCD, the contractor forwards a copy of the revised LCD to the ALJ.
(e) The ALJ must take the following actions upon receiving a notice that the contractor has retired or revised an LCD under review:
(1) If, before the ALJ issues a decision, the ALJ receives notice that the contractor has retired the LCD or revised the LCD to completely remove the provision in question, the ALJ must dismiss the complaint and inform the aggrieved party(ies) who sought the review that he or she or they receive individual claim review without the retired/withdrawn provision(s).
(2) If, before the ALJ issues a decision, the ALJ receives notice that the contractor has revised the LCD provision in question but has not removed it altogether, the ALJ must continue the review based on the
(a)
(b)
(c)
(2)
(3)
(a)
(b)
(c)
(2) Issuance of a decision finding the record complete and adequate to support the validity of the LCD ends the review process.
(3) If the ALJ determines that the LCD record is not complete and adequate to support the validity of the LCD, the ALJ permits discovery and the taking of evidence in accordance with § 426.432 and § 426.440 and evaluates the LCD in accordance with § 426.431.
(d) The process described in paragraphs (a), (b), and (c) of this section applies when an LCD record has been supplemented, except that discovery and the taking of evidence are not repeated. The period for the aggrieved party to file a statement begins when the aggrieved party receives the supplement.
(a)
(1) Confine the LCD review to the provision(s) of the LCD raised in the aggrieved party's complaint.
(2) Conduct a hearing, unless the matter can be decided on the written record.
(3) Close the LCD review record to the taking of evidence.
(4) Treat as precedential any previous Board decision under § 426.482 that involves the same LCD provison(s), same specific issue and facts in question, and the same clinical conditions.
(5) Issue a decision as described in § 426.447.
(b)
(1) Consult with appropriate scientific or clinical experts concerning evidence.
(2) Consider any previous ALJ decision made under § 426.447 regarding the same provision(s) of the LCD under review and for the same clinical conditions.
(c)
(a)
(b)
(2)
(i) Is irrelevant or unduly repetitive;
(ii) Is unduly costly or burdensome; or
(iii) Unduly delays the proceeding.
(c)
(d)
(e)
(f)
(g)
(a)
(b)
(1) Designate the witnesses.
(2) Specify any evidence to be produced.
(3) Describe the address and location with sufficient particularity to permit the witnesses to be found.
(4) State the pertinent facts that the party expects to establish by the witnesses or documents and whether other evidence may establish without the use of a subpoena.
(c)
(d)
(e)
(1) Be issued in the name of the ALJ.
(2) Include the docket number and title of the LCD under review.
(3) Provide notice that the subpoena is issued according to sections 1872 and 205(d) and (e) of the Act.
(4) Specify the time and place at which the witness is to appear and any evidence the witness is to produce.
(f)
(g)
(h)
(a) Except as provided in this part, the ALJ is not bound by the Federal Rules of Evidence. However, the ALJ may apply the Federal Rules of Evidence when appropriate, for example, to exclude unreliable evidence.
(b) The ALJ must exclude evidence that (s)he determines is clearly irrelevant, immaterial, or unduly repetitive.
(c) The ALJ may accept privileged information or proprietary data, but must maintain it under seal.
(d) The ALJ may permit the parties to introduce the testimony of expert witnesses on scientific and clinical issues, rebuttal witnesses, and other relevant evidence. The ALJ may require that the testimony of expert witnesses be submitted in the form of a written report, accompanied by the curriculum vitae of the expert preparing the report.
(e) Experts submitting reports must be available for cross-examination at an evidentiary hearing upon request of the ALJ or a party to the proceeding, or the reports will be excluded from the record.
(f) Except as set forth in paragraph (c) of this section or unless otherwise ordered by the ALJ for good cause shown, all documents and other evidence offered or taken for the record are open to examination by all parties.
(a) The ALJ may, at the request of any party, or on his or her own motion, dismiss a complaint if the aggrieved party fails to do either of the following:
(1) Attend or participate in a prehearing conference (the pre-hearing may be conducted by telephone) or hearing without good cause shown.
(2) Comply with a lawful order of the ALJ without good cause shown.
(b) The ALJ must dismiss any complaint concerning LCD provision(s) if the following conditions exist:
(1) The ALJ does not have the authority to rule on that provision under § 426.405(d).
(2) The complaint is not timely. (
(3) The complaint is not filed by an aggrieved party.
(4) The complaint is filed by an individual who fails to provide an adequate statement of need for the service from the treating physician.
(5) The complaint challenges a provision or provisions of an NCD. (
(6) The contractor notifies the ALJ that the LCD provision(s) is (are) no longer in effect.
(7) The aggrieved party withdraws the complaint. (
(a) A witness testifying at a hearing before an ALJ receives the same fees and mileage as witnesses in Federal district courts of the United States. If the witness qualifies as an expert, he or she is entitled to an expert witness fee. Witness fees are paid by the party seeking to present the witness.
(b) If an ALJ requests expert testimony, the appropriate office overseeing the ALJ is responsible for paying all applicable fees and mileage, unless the expert waives payment.
The ALJ must ensure that all hearings are open to the public and are electronically, mechanically or stenographically reported. Except for privileged information and proprietary data that are filed under seal, all evidence upon which the ALJ relies for decision must be admitted into the public record. All medical reports, exhibits, and any other pertinent document, either in whole or in material part, must be offered, marked for identification, and retained in the case record.
An ALJ must issue to all parties to the LCD review, within 90 days of closing the LCD review record to the taking of evidence, one of the following:
(a) A written decision, including a description of appeal rights.
(b) A written notification stating that a decision is pending, and an approximate date of issuance for the decision.
(a)
(1) A determination that the provision of the LCD is valid under the reasonableness standard.
(2) A determination that the provision of the LCD is not valid under the reasonableness standard.
(3) A statement dismissing the complaint regarding the LCD and a rationale for the dismissal.
(4) A determination that the LCD record is complete and adequate to
(b)
(1) The date of issuance.
(2) The docket number of the LCD review.
(3) A statement as to whether the aggrieved party has filed a claim for the service(s) named in the complaint, the date(s)-of-service, and the disposition, if known.
(4) A basis for concluding that the LCD was or was not valid based on the application of the reasonableness standard to the record before the ALJ, including the contractor's:
(i) Findings of fact.
(ii) Interpretations of law.
(iii) Applications of fact to law.
(5) A summary of the evidence reviewed. If proprietary or privileged data were submitted under seal, the decision must state whether the data were material and what role they played in the determination, but without disclosing the substance or contents of the evidence under seal. A separate statement of the rationale for the ALJ's treatment of the sealed evidence must be prepared and kept under seal itself. If the ALJ decision is appealed to the Board, this statement must be provided to the Board under seal.
(6) A statement regarding appeal rights.
An ALJ's decision may not do any of the following:
(a) Order CMS or its contractors to add any language to a provision or provisions of an LCD.
(b) Order CMS or its contractors to pay a specific claim.
(c) Set a time limit for CMS or its contractors to establish a new or revised LCD.
(d) Review or evaluate an LCD other than the LCD under review.
(e) Include a requirement for CMS or its contractors that specifies payment, coding, or systems changes for an LCD, or deadlines for implementing these types of changes.
(f) Order or address how a contractor(s) must implement an LCD.
When appropriate, the ALJ may limit a decision holding invalid a specific provision(s) of an LCD to specific clinical indications and for similar conditions.
(a)
(1) The LCD complaint.
(2) The LCD and LCD record.
(3) The supplemental LCD record, if applicable.
(4) Transcripts of record.
(5) Any other relevant evidence gathered under § 426.440.
(6) The ALJ's decision.
(b)
(a)
(b)
(1)
(ii) If a revised LCD is issued, the contractor, the M+C organization, and any other Medicare managed care organization within the contractor's jurisdiction uses the revised LCD in reviewing claim or appeal submissions or request for services delivered or services performed on or after the effective date of the revised LCD.
(iii) If the aggrieved party who sought the review has not yet submitted a claim, the contractor adjudicates the claim without using the provision(s) of the LCD that the ALJ found invalid.
(iv) In either case, the claim and any subsequent claims for the service provided under the same circumstances is adjudicated without using the LCD provision(s) found invalid.
(2)
After the ALJ has made a decision regarding an LCD complaint, the ALJ sends a written notice of the decision to each party. The notice must—
(a) State the outcome of the review; and
(b) Inform each party to the determination of his or her rights to seek further review if he or she is dissatisfied with the determination, and the time limit under which an appeal must be requested.
The contractor may not reinstate an LCD provision(s) found to be unreasonable unless the contractor has a different basis (such as additional evidence) than what the ALJ evaluated.
(a)
(1) States that a provision of an LCD is valid under the reasonableness standard; or
(2) Dismisses a complaint regarding an LCD (except as prohibited in paragraph (b) of this section).
(b)
(c)
(2) The appeal request must be submitted to the Board in accordance with paragraph (e) of this section.
(d)
(1) The contractor has retired the LCD provision(s) under review.
(2) The aggrieved party who filed the complaint has withdrawn the complaint.
(e)
(f)
(i) The full names and addresses of the parties, including the name of the LCD.
(ii) The date of issuance of the ALJ's decision.
(iii) The docket number that appears on the ALJ's decision.
(iv) A statement identifying the part(s) of the ALJ's decision that are being appealed.
(2) If an appeal described in paragraph (a) of this section is filed with the Board later than the date described in paragraph (c) of this section, it must include a rationale stating why the Board must accept the late appeal.
(3) An appeal described in paragraph (a) of this section must include a statement explaining why the ALJ's decision should be reversed.
(a) Failure to timely appeal without good cause shown waives the right to challenge any part(s) of the ALJ's decision under § 426.465.
(b) Unless the Board finds good cause shown for late filing, an untimely appeal is dismissed.
(c) If a party does not timely appeal any part(s) of the ALJ's decision on an LCD review to the Board, as provided in this subpart, then the ALJ's decision is final and not subject to further review.
(a)
(1) Dockets the appeal either separately or with similar appeals.
(2) Assigns a docket number.
(b)
(c)
(d)
(1) Sends a letter to the appellant to acknowledge that the appeal is acceptable, and informs them of the docket number.
(2) Forwards a copy of the appeal and the letter described in paragraph (d)(1) of this section to all parties involved in the appeal.
(3) Requires the ALJ to send a copy of the ALJ's LCD review record (maintaining any sealed documents) to the Board and a copy of the public record to all parties involved in the appeal.
(e)
(a)
(1) Permits the party that did not file the appeal an opportunity to respond to the appeal;
(2) Hears oral argument (which may be held by telephone) if the Board determines that oral argument would be helpful to the Board's review of the ALJ decision;
(3) Reviews the LCD review record and the parties' arguments; and
(4) Issues a written decision either upholding, modifying, or reversing the ALJ decision, or remanding the case to the ALJ for further proceedings.
(b)
(2) If the ALJ erred in determining that the contractor's record was complete and adequate to support the validity of the LCD, the Board remands the case to the ALJ for discovery and the taking of evidence.
(3) If a party alleges a prejudicial error of procedure, and the Board determines that such an error was made, the Board may remand the case to the ALJ for further proceedings consistent with the Board decision or may take other appropriate steps to correct the procedural error.
(4) Harmless error is not a basis for reversing an ALJ decision.
(c)
(d)
A contractor may retire or revise an LCD during the Board's review of an ALJ's decision using the same process described in § 426.420. If an LCD is retired or revised to remove completely the challenged provision(s), the aggrieved party who sought the review is entitled to individual claim review provided at § 426.488(b).
(a)
(b)
(c)
(2)
The Board must issue a written decision, including a description of appeal rights, to all parties to the review of the ALJ decision.
(a)
(1) A statement upholding the part(s) of the ALJ decision named in the appeal.
(2) A statement reversing the part(s) of the ALJ decision named in the appeal.
(3) A statement modifying the part(s) of the ALJ decision named in the appeal.
(4) A statement dismissing the appeal of an ALJ decision and a rationale for the dismissal.
(b)
(1) The date of issuance.
(2) The docket number of the review of the ALJ decision.
(3) A summary of the ALJ's decision.
(4) A rationale for the basis of the Board's decision.
A Board decision must not do any of the following:
(a) Order CMS or its contractors to add any language to a provision or provisions of an LCD.
(b) Order CMS or its contractors to pay a specific claim.
(c) Set a time limit to establish a new or revised LCD.
(d) Review or evaluate an LCD other than the LCD named in the ALJ's decision.
(e) Include a requirement for CMS or its contractors that specifies payment, coding, or system changes for an LCD or deadlines for implementing these changes.
(f) Order CMS or its contractors to implement an LCD in a particular manner.
(a)
(1) The LCD complaint.
(2) The LCD and LCD record.
(3) The supplemental LCD record, if applicable.
(4) Transcripts of record.
(5) Any other relevant evidence gathered under § 426.440.
(6) The ALJ's decision.
(7) The Board's decision.
(b)
(c)
(a)
(b)
(c)
(a)
(1) Notifies each aggrieved party who sought the LCD review, through his or her representative or at his or her last known address, the contractor, and CMS of the Board's remand decision; and
(2) Explains why the case is being remanded and the specific actions ordered by the Board.
(b)
A decision by the Board (other than a remand) constitutes a final agency action and is subject to judicial review. Neither the contractor nor CMS may appeal a Board decision.
(a)
(b)
(1) 6 months of the written statement from each aggrieved party's treating physician, in the case of aggrieved parties who choose to file an NCD challenge before receiving the service; or
(2) 120 days of the initial denial notice, in the case of aggrieved parties who choose to file an NCD challenge after receiving the service.
(c)
(1)
(i) Name.
(ii) Mailing address.
(iii) State of residence, if different from mailing address.
(iv) Telephone number, if any.
(v) Health Insurance Claim number, if applicable.
(vi) Email address, if applicable.
(2)
(i) Name.
(ii) Address.
(iii) Telephone number.
(iv) E-mail address (if any)
(v) Copy of the written authorization to represent the beneficiary.
(3)
(4)
(i) Title of NCD being challenged.
(ii) The specific provision or provisions of the NCD adversely affecting the aggrieved party.
(5)
(6)
(ii) Any documents or portions of documents that include proprietary data must be marked “proprietary data,” and include a legal basis for that assertion.
(iii) Proprietary data submitted by a manufacturer concerning a drug or device for which the manufacturer has submitted information to the Food and Drug Administration, must be considered and given substantive weight only when supported by an affidavit certifying that the submission contains true and correct copies of all data submitted by the manufacturer to the Food and Drug Administration in relation to that drug or device.
(d)
(i) Each aggrieved party named in the joint complaint has a similar medical condition or there are other bases for combining the complaints.
(ii) Each aggrieved party named in the joint complaint is filing the complaint in regard to the same provision(s) of the same NCD.
(2)
(i) The beneficiary-identifying information described in paragraph (c)(1) of this section for each aggrieved party named in the joint complaint.
(ii) The NCD-identifying information described in paragraph (c)(2) of this section.
(iii) The documentation described in paragraphs (c)(3) and (c)(4) of this section.
(3)
(i) Before receiving the service, must file with the Board a joint complaint within 6 months of the written statement from each aggrieved party's treating physician; or
(ii) After receiving the service, must file with the Board a complaint within 120 days of each aggrieved party's initial denial notice.
Once an acceptable complaint has been filed, the aggrieved party may submit additional new evidence without withdrawing the complaint until the Board closes the record.
(a) The Board conducts a fair and impartial hearing, avoids unnecessary delay, maintains order, and ensures that all proceedings are recorded.
(b) The Board defers only to reasonable findings of fact, reasonable interpretations of law, and reasonable applications of fact to law by the Secretary.
(c) The Board has the authority to do any of the following:
(1) Review complaints by an aggrieved party (or aggrieved parties).
(2) Dismiss complaints that fail to comply with § 426.500.
(3) Set and change the date, time, and place of a hearing upon reasonable notice to the parties.
(4) Continue or recess a hearing for a reasonable period of time.
(5) Hold conferences to identify or simplify the issues, or to consider other matters that may aid in the expeditious disposition of the proceeding.
(6) Consult with scientific and clinical experts on its own motion, concerning clinical or scientific evidence.
(7) Set schedules for submission of exhibits and written reports of experts.
(8) Administer oaths and affirmations.
(9) Examine witnesses.
(10) Issue subpoenas requiring the attendance of witnesses at hearings as permitted by this part.
(11) Issue subpoenas requiring the production of existing documents before, and relating to, the hearing as permitted by this part.
(12) Rule on motions and other procedural matters.
(13) Stay the proceeding in accordance with § 426.340.
(14) Regulate the scope and timing of documentary discovery as permitted by this part.
(15) Regulate the course of a hearing and the conduct of representatives, parties, and witnesses.
(16) Receive, rule on, exclude, or limit evidence, as provided in this regulation.
(17) Take official notice of facts, upon motion of a party.
(18) Decide cases, upon the motion of a party, by summary judgment when there is no disputed issue of material fact.
(19) Conduct any conference, argument, or hearing in person or, upon agreement of the parties, by telephone, picture-tel, or any other means.
(20) Issue decisions.
(21) Exclude a party from an NCD review for failure to comply with a Board order or procedural request without good cause.
(22) Stay the proceedings for a reasonable time when all parties voluntarily agree to mediation or negotiation, and provide mediation services upon request.
(d) The Board does not have authority to do any of the following under this part:
(1) Conduct an LCD review or conduct LCD hearings, except as provided by § 426.465.
(2) Conduct an NCD review or conduct NCD hearings on its own motion or on the motion of a nonaggrieved party.
(3) Issue a decision based on any new evidence without following § 426.340, regarding procedures for review of new evidence.
(4) Review any decisions by CMS to develop a new or revised NCD.
(5) Conduct a review of any draft NCDs, coverage decision memoranda, or withdrawn NCDs.
(6) Conduct a review of the merits of an unacceptable NCD complaint as discussed in § 426.510.
(7) Conduct an NCD review of any policy that is not an NCD, as defined in § 400.202 of this chapter.
(8) Allow participation by individuals or entities other than—
(i) The aggrieved party and/or his or her representative;
(ii) CMS and/or the contractor;
(iii) Experts called by the parties or Board; or
(iv) Third parties with a clearly identifiable and substantial interest in the outcome of the dispute who have petitioned for and been granted permission by the Board to participate in the proceedings as
(9) Compel the parties to participate in a mediation process or to engage in settlement negotiations.
(10) Deny a request for withdrawal of a complaint by an aggrieved party.
(11) Compel CMS to conduct studies, surveys, or develop new information to support an NCD record.
(12) Deny CMS the right to reconsider, revise, or withdraw an NCD.
(13) Subject to the timely filing requirements, deny an aggrieved party, CMS, or its contractor the right to appeal an ALJ decision.
(14) Find invalid applicable Federal statutes, regulations, or rulings.
(15) Enter a decision specifying terms to be included in an NCD.
No party or person (except Board staff) communicates in any way with the Board on any substantive matter at issue in a case, unless on notice and opportunity for all parties to participate. This provision does not prohibit a person or party from inquiring about the status of a case or asking routine questions concerning administrative functions or procedures.
(a)
(1) Dockets the complaint.
(2) Determines whether the complaint is—
(i) The first challenge to a particular NCD; or
(ii) Related to a pending NCD review.
(3) Forwards the complaint to the Board member who conducts the review.
(b)
(1) The complaint is being submitted by an aggrieved party or, in the case of a joint complaint, that each individual named in the joint complaint is an aggrieved party. (In determining if a complaint is acceptable, the Board assumes that the facts alleged by the treating physician's documentation regarding the aggrieved party's (or parties') clinical condition are true.)
(2) The complaint meets the requirements for a valid complaint in § 426.500 and is not one of the documents in § 426.325(b).
(c)
(2) If the aggrieved party (or parties) fail(s) to submit an acceptable amended complaint within a reasonable timeframe as determined by the Board, the Board must issue a decision dismissing the unacceptable complaint.
(3) If a complaint is determined to be unacceptable after one amendment, the beneficiary is precluded from filing again for 6 months after being informed that it is unacceptable.
(d)
(1) Sends a letter to the aggrieved party (or parties) acknowledging the complaint and informing the aggrieved party (or parties) of the docket number and the deadline for CMS to produce the NCD record.
(2) Forwards a copy of the complaint, any evidence submitted in the complaint, and the letter described in paragraph (d)(1) of this section to CMS.
(3) Requires CMS to send a copy of the NCD record to the Board and all parties to the NCD review within 30 days of receiving the Board's letter, a copy of the complaint, and any associated evidence, subject to extension for good cause shown.
(e)
(i) The complaints are in regard to the same provision(s) of the same NCD, or there are other bases for consolidating the complaints.
(ii) The complaints contain common questions of law, common questions of fact, or both.
(iii) Consolidating the complaints does not unduly delay the Board's decision.
(2)
(i) Provides notification that the NCD review is consolidated and informs all parties of the docket number of the consolidated review.
(ii) Makes a single record of the proceeding.
(iii) Considers the relevant evidence introduced in each NCD complaint as introduced in the consolidated review.
(3)
(f)
(2) If an acceptable complaint challenges an NCD provision when review is pending and no decision has been issued ending the review, the Board may supplement the public notice on its Web site and extend the time for participation requests if indicated.
(3) The Board may allow participation, in the manner and by the deadlines established by the Board, when an NCD is being challenged and the Board decides that—
(i) The
(ii) Participation would clarify the issues or otherwise be helpful in resolution of the dispute;
(iii) Participation does not result in substantial delay; and
(iv) The petition for participation meets the criteria in § 426.513.
(a)
(1) The petitioner's interest in the hearing;
(2) Who will represent the petitioner; and
(3) The issues on which the petitioner intends to present argument.
(b)
(1) Submitting a written statement of position to the Board before the beginning of the hearing;
(2) Presenting a brief oral statement or other evidence at the hearing, at the point in the proceedings specified by the Board; and
(3) Submitting a brief or a written statement when the parties submit briefs.
(c)
CMS will provide a copy of the NCD record (as described in § 426.518) to the Board and all parties to the NCD review within 30 days of the receipt of the Board's order.
Medicare MCOs and Medicaid State agencies may participate in the NCD review process only if they meet the
(a) CMS may review any new evidence that is submitted, regardless of whether the Board has stayed the proceedings, including but not limited to new evidence:
(1) Submitted with the initial complaint;
(2) Submitted with an amended complaint;
(3) Produced during discovery;
(4) Produced when the Board consults with scientific and clinical experts; and
(5) Presented during any hearing.
(b) CMS may submit a statement regarding whether the new evidence is significant under § 426.340, by a deadline set by the Board.
(a)
(1) The NCD being challenged.
(2) Any medical evidence considered on or before the date the NCD was issued, including, but not limited to, the following:
(i) Scientific articles.
(ii) Technology assessments.
(iii) Clinical guidelines.
(iv) Statements from clinical experts, medical textbooks, claims data, or other indication of medical standard of practice.
(v) MCAC transcripts.
(3) Public comments received during the notice and comment period.
(4) Coverage decision memoranda.
(5) An index of documents considered that are excluded under paragraph (b) of this section.
(b)
(1) Proprietary data or privileged information.
(2) Any new evidence.
The NCD record furnished to the Board includes—
(a) Documents included in § 426.518(a); and
(b) Privileged information and proprietary data considered that must be filed with the Board under seal.
(a) CMS may withdraw an NCD or NCD provision under review before the date the Board issues a decision regarding that NCD. Withdrawing an NCD or NCD provision under review has the same effect as a decision under § 426.560(b).
(b) CMS may revise an NCD under review to remove or amend the NCD provision listed in the complaint through the reconsideration process before the date the Board issues a decision regarding that NCD. Revising an NCD under review to remove the NCD provision in question has the same effect as a decision under § 426.560(b).
(c) CMS must notify the Board within 48 hours of—
(1) Withdrawing an NCD or NCD provision that is under review; or
(2) Issuing a revised or reconsidered version of the NCD that is under review.
(d) If CMS issues a revised or reconsidered NCD, CMS forwards a copy of the revised/reconsidered NCD to the Board.
(e) The Board must take the following actions upon receiving a notice that CMS has withdrawn or revised/reconsidered an NCD under review:
(1) If, before the Board issues a decision, the Board receives notice that CMS has withdrawn the NCD or revised the NCD to completely remove the provision in question, the Board must dismiss the complaint and inform the aggrieved party (ies) who sought the review that he or she or they will receive individual claim review without the retired/withdrawn provisions.
(2) If, before the Board issues a decision, the Board receives notice that CMS has revised the NCD provision in question but has not removed it altogether, the Board must continue the review based on the revised NCD. In this case, CMS must send a copy of the supplemental record to the Board and all parties. In that circumstance, the Board permits the aggrieved party to respond to the revised NCD and the supplemental record.
(a)
(b)
(c)
(2)
(3)
(a)
(b)
(c)
(2) Issuance of a decision finding the record complete and adequate to support the validity of the NCD ends the review process.
(3) If the Board determines that the NCD record is not complete and adequate to support the validity of the NCD, the Board permits discovery and the taking of evidence in accordance with § 426.532 and § 426.540, and evaluate the NCD in accordance with § 426.531.
(d) The process described in paragraphs (a), (b), and (c) of this section applies when an NCD record has been supplemented, except that discovery and the taking of evidence is not repeated. The period for the aggrieved party to file a statement begins when the aggrieved party receives the supplement.
(a)
(1) Confine the NCD review to the provision(s) of the NCD raised in the aggrieved party's complaint.
(2) Conduct a hearing unless the matter can be decided on the written record.
(3) Close the NCD review record to the taking of evidence.
(4) Treat as precedential any previous Board decision made under § 426.547 that involves the same NCD provision(s), same specific issue and facts in question, and the same clinical conditions.
(5) Issue a decision as described in § 426.547.
(b)
(c)
(a)
(b)
(2)
(i) Is irrelevant or unduly repetitive;
(ii) Is unduly costly or burdensome; or
(iii) Will unduly delay the proceeding.
(c)
(d)
(e)
(f)
(g)
(a)
(b)
(1) Designate the witnesses.
(2) Specify any evidence to be produced.
(3) Describe the address and location with sufficient particularity to permit the witnesses to be found.
(4) State the pertinent facts that the party expects to establish by witnesses or documents and state whether those facts could be established by evidence other than by the use of a subpoena.
(c)
(d)
(e)
(1) Be issued in the name of the presiding Board member.
(2) Include the docket number and title of the NCD under review.
(3) Provide notice that the subpoena is issued according to sections 1872 and 205(d) and (e) of the Act.
(4) Specify the time and place at which the witness is to appear and any evidence the witness is to produce.
(f)
(g)
(h)
(a) Except as provided in this part, the Board is not bound by the Federal Rules of Evidence. However, the Board may apply the Federal Rules of Evidence when appropriate, for example, to exclude unreliable evidence.
(b) The Board must exclude evidence that it determines is clearly irrelevant or immaterial, or unduly repetitive.
(c) The Board may accept privileged information or proprietary data, but must maintain it under seal.
(d) The Board may permit the parties to introduce the testimony of expert witnesses on scientific and clinical issues, rebuttal witnesses, and other relevant evidence. The Board may require that the testimony of expert witnesses be submitted in the form of a
(e) Experts submitting reports must be available for cross-examination at an evidentiary hearing upon request of the Board or a party to the proceeding, or the report will be excluded from the record.
(f) Except as set forth in paragraph (c) of this section or unless otherwise ordered by the Board for good cause shown, all documents and other evidence offered or taken for the record is open to examination by all parties.
(a) The Board may, at the request of any party, or on its own motion, dismiss a complaint if the aggrieved party fails to do either of the following:
(1) Attend or participate in a prehearing conference (the prehearing may be conducted by telephone) or hearing without good cause shown.
(2) Comply with a lawful order of the Board without cause shown.
(b) The Board must dismiss any complaint concerning NCD provision(s) if the following conditions exist:
(1) The Board does not have the authority to rule on that provision under § 426.505(d).
(2) The complaint is not timely. (
(3) The complaint is not filed by an aggrieved party.
(4) The complaint is filed by an individual who fails to provide an adequate statement of need for the service from the treating physician.
(5) The complaint challenges a provision or provisions of an LCD except as provided in § 426.476, regarding the Board's review of an ALJ decision. (
(6) CMS notifies the Board that the NCD provision(s) is (are) no longer in effect.
(7) The aggrieved party withdraws the complaint. (
(a) A witness testifying at a hearing before the Board receives the same fees and mileage as witnesses in Federal district courts of the United States. If the witness qualifies as an expert, he or she is entitled to an expert witness fee. Witness fees are paid by the party seeking to present the witness.
(b) If the Board requests expert testimony, the Board is responsible for paying all applicable fees and mileage, unless the expert waives payment.
The Board must ensure that all hearings are open to the public and are electronically, mechanically, or stenographically reported. Except for privileged information and proprietary data that are filed under seal, all evidence upon which the Board relies for decision must be admitted into the public record. All medical reports, exhibits, and any other pertinent document, either in whole or in material part, must be offered, marked for identification, and retained in the case record.
The Board must do the following:
(a) Issue to all parties to the NCD review, within 90 days of closing the NCD review record to the taking of evidence, one of the following:
(1) A written decision, including a description of appeal rights.
(2) A written notification stating that a decision is pending, and an approximate date of issuance for the decision.
(b) Make the decision available at the HHS Medicare Internet site. The posted decision does not include any information that identifies any individual, provider of service, or supplier.
(a)
(1) A determination that the provision of the NCD is valid under the reasonableness standard.
(2) A determination that the provision of the NCD is not valid under the reasonableness standard.
(3) A statement dismissing the complaint regarding the NCD, and a rationale for the dismissal.
(4) A determination that the LCD or NCD record is complete and adequate to support the validity of the LCD or NCD provisions under the reasonableness standard.
(b)
(1) The date of issuance.
(2) The docket number of the NCD review.
(3) A statement as to whether the aggrieved party has filed a claim for the service(s) named in the complaint, the date(s)-of-service, and the disposition, if known.
(4) A basis for concluding that the NCD was or was not valid based on the application of the reasonableness standard to the record before the Board, including CMS':
(i) Findings of fact.
(ii) Interpretations of law.
(iii) Applications of fact to law.
(5) A summary of the evidence reviewed. Where proprietary or privileged data were submitted under seal, the decision must state whether the data were material and what role they played in the determination, but without disclosing the substance or contents of the evidence under seal. A separate statement of the rationale for the Board's treatment of the sealed evidence must be prepared and kept under seal itself. If the Board decision is appealed to the court, this statement must be provided to the court, under seal.
(6) A statement regarding the right to judicial review.
The Board's decision may not do any of the following:
(a) Order CMS to add any language to a provision or provisions of an NCD.
(b) Order CMS or its contractors to pay a specific claim.
(c) Set a time limit for CMS to establish a new or revised NCD.
(d) Review or evaluate an NCD other than the NCD under review.
(e) Include a requirement for CMS or its contractors that specifies payment, coding, or systems changes for an NCD, or deadlines for implementing these types of changes.
(f) Order or address how CMS implements an NCD.
When appropriate, the Board may limit a decision holding invalid a specific provision(s) of an NCD to specific clinical indications and for similar conditions.
(a)
(b)
(ii) If a revised NCD is issued, contractors, M+C organizations, and other Medicare managed care organizations must use the revised NCD in reviewing claim/appeal submissions or request for services delivered or services performed on or after the effective date of the revised NCD.
(iii) If the aggrieved party who sought review has not yet submitted a claim, the contractor must adjudicate the claim without using the provision(s) of the NCD that the Board found invalid.
(iv) In either case, the claim and any subsequent claims for the service provided under the same circumstances, must be adjudicated without using the NCD provision(s) found invalid.
(2)
After the Board has made a decision regarding an NCD complaint, the Board sends a written notice of the decision to each party. The notice must—
(a) State the outcome of the review; and
(b) Inform each party to the determination of his or her rights to seek further review if he or she is dissatisfied with the determination, and the time limit under which an appeal must be requested.
CMS may not reinstate an NCD provision(s) found to be unreasonable unless CMS has a different basis (such as additional evidence) than what the Board evaluated.
Upon a request from a Federal Court, the Board must provide to the Federal Court a copy of the Board's LCD or NCD review record (as described in § 426.587).
A decision by the Board constitutes a final agency action and is subject to judicial review. CMS may not appeal a Board decision.
(a)
(1) The NCD complaint.
(2) The NCD and NCD record.
(3) The supplemental NCD record, if applicable.
(4) Transcripts of record.
(5) Any other evidence relevant gathered under § 426.540.
(6) The Board's decision.
(b)