[Federal Register Volume 65, Number 213 (Thursday, November 2, 2000)]
[Rules and Regulations]
[Pages 65906-65910]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-27721]



[[Page 65905]]

-----------------------------------------------------------------------

Part II





Department of Veterans Affairs





-----------------------------------------------------------------------



38 CFR Part 17



Reasonable Charges for Medical Care or Services; Interim Final Rule and 
Notice

  Federal Register / Vol. 65, No. 213 / Thursday, November 2, 2000 / 
Rules and Regulations  

[[Page 65906]]


-----------------------------------------------------------------------

DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AK39


Reasonable Charges for Medical Care or Services

AGENCY: Department of Veterans Affairs.

ACTION: Interim final rule.

-----------------------------------------------------------------------

SUMMARY: This document amends the Department of Veterans Affairs (VA) 
medical regulations concerning ``reasonable charges'' for medical care 
or services provided or furnished by VA to a veteran:
     For a nonservice-connected disability for which the 
veteran is entitled to care (or the payment of expenses of care) under 
a health plan contract;
     For a nonservice-connected disability incurred incident to 
the veteran's employment and covered under a worker's compensation law 
or plan that provides reimbursement or indemnification for such care 
and services; or
     For a nonservice-connected disability incurred as a result 
of a motor vehicle accident in a State that requires automobile 
accident reparations insurance.
    This document amends the regulations to update databases and other 
provisions for the purpose of providing more precise charges.

DATES: Effective Date: These amendments are effective November 2, 2000. 
Comments must be submitted by January 2, 2001.

ADDRESSES: Mail or hand-deliver written comments to: Director, Office 
of Regulations Management (02D), Department of Veterans Affairs, 810 
Vermont Ave., NW, Room 1154, Washington, DC 20420; or fax comments to 
(202) 273-9289; or e-mail comments to [email protected]. 
Comments should indicate that they are submitted in response to ``RIN 
2900-AK39.'' All comments received will be available for public 
inspection in the Office of Regulations Management, Room 1158, between 
the hours of 8 a.m. and 4:30 p.m., Monday through Friday (except 
holidays).

FOR FURTHER INFORMATION CONTACT: David Cleaver, VHA Revenue Office 
(174), Veterans Health Administration, Department of Veterans Affairs, 
810 Vermont Avenue, NW., Washington, DC 20420, (202) 273-8210. (This is 
not a toll free number.)

SUPPLEMENTARY INFORMATION: This document amends VA's medical 
regulations that are set forth at 38 CFR part 17. More specifically, we 
are amending the regulations concerning ``reasonable charges'' for 
medical care or services provided or furnished by VA to a veteran:
    (i) For a nonservice-connected disability for which the veteran is 
entitled to care (or the payment of expenses of care) under a health 
plan contract;
    (ii) For a nonservice-connected disability incurred incident to the 
veteran's employment and covered under a worker's compensation law or 
plan that provides reimbursement or indemnification for such care and 
services; or
    (iii) For a nonservice-connected disability incurred as a result of 
a motor vehicle accident in a State that requires automobile accident 
reparations insurance.
    The regulations establish a methodology for ``reasonable charges'' 
for such medical care and services. The amount billed using this 
methodology consists of inpatient facility charges, skilled nursing 
facility/sub-acute inpatient facility charges, outpatient facility 
charges, physician charges, and other provider charges.
    Under the provisions of 38 U.S.C. 1729, VA has the right to recover 
or collect its reasonable charges from a third party to the extent that 
the veteran or a provider of the care or services would be eligible to 
receive payment therefor from that third party if the care or services 
had not been furnished by a department or agency of the United States. 
With respect to a third-party payer liable under a health plan 
contract, consistent with the statutory authority, the third-party 
payer would have the option of paying, to the extent of its coverage, 
either the billed charges or the amount the third-party payer 
demonstrates it would pay for care or services furnished by providers 
other than entities of the United States for the same care or services 
in the same geographic area.
    This document modifies the existing regulations in three primary 
ways, and also makes various other less significant improvements. 
First, the original formula used a number of databases for 1995 through 
1998 which are now being updated to use the 1997 through 2000 versions 
of these files (e.g., MedStat and MediCode databases). Second, a number 
of previously used data files are being replaced with more current and 
easier-to-use databases (e.g., use the 1998 Medicare MedPAR database in 
lieu of the 1995 Medicare Standard Analytical File 5% Sample). Lastly, 
the term ``geographic area'', which was defined as the ``Metropolitan 
Statistical Area (MSA) or the local market, if the VA facility is not 
located in a MSA'', retains that definition for inpatient facility 
charges and skilled nursing facility/sub-acute inpatient facility 
charges, but is now defined as ``a three-digit ZIP Code locality'' for 
outpatient facility charges and physician charges. These changes and 
the various other improvements to the methodology are described in 
greater detail in the following paragraphs. These changes and 
improvements should not have a significant impact on any affected 
party, but will make this process more current, accurate, and logical.
    The formulas for inpatient facility charges, skilled nursing 
facility/sub-acute inpatient facility charges, outpatient facility 
charges, and physician charges were designed to replicate, insofar as 
possible, the 80th percentile charge for a particular service in a 
specific location. We have made changes to ensure that the information 
used in the methodology is as current and precise as possible. As an 
example, the formula for outpatient facility charges included factors 
based on the 1995 MedStat claims database. We now are able to use the 
1997 MedStat claims database. Therefore, we are changing the formula to 
use the updated database. We have made a number of other changes to 
obtain more precise information as explained below.
    The formulas for inpatient facility charges, skilled nursing 
facility/sub-acute inpatient facility charges, outpatient facility 
charges, and physician charges include geographic area adjustment 
factors. The term ``geographic area'' was defined as the ``Metropolitan 
Statistical Area (MSA) or the local market, if the VA facility is not 
located in a MSA.'' This document retains this definition for inpatient 
facility charges and skilled nursing facility/sub-acute inpatient 
facility charges. However, for outpatient facility charges and 
physician charges this document changes the definition of geographic 
area to mean a three-digit ZIP Code locality. The three-digit ZIP Code 
methodology is more precise than the MSA and has been developed for 
outpatient facility charges and physician charges.
    The formula for calculating inpatient facility charges includes per 
diem charges that are based in part on two nationwide databases. 
Previously, the formula used the 1995 Medicare Standard Analytical File 
5% Sample and the 1995 MedStat claim database. We are amending the 
formula to use the 1998 Medicare MedPAR database in lieu of the 1995 
Medicare Standard

[[Page 65907]]

Analytical 5% Sample. The 1998 Medicare MedPAR database is not only 
more current but also provides information in an easier-to-use format. 
We are also amending the formula to use the 1997 MedStat database in 
lieu of the 1995 MedStat database. This is a more current database of 
the same information. With these changes the formula will utilize the 
latest available data for calculating per diem charges.
    The formula for inpatient facility charges includes charge 
component percentages. Previously, the formula used the 1995 Medicare 
Standard Analytical File 5% Sample. We are amending the formula to use 
the 1998 Medicare MedPAR database in lieu of the Medicare Standard 
Analytical 5% Sample. As noted above, the 1998 Medicare MedPAR database 
is not only more current but also provides information in an easier-to-
use format.
    The formula for skilled nursing facility/sub-acute inpatient 
facility charges includes per diem charges that are based on nationwide 
data concerning skilled nursing facility charges contained in the 1998 
Milliman & Robertson, Inc. Health Cost Guidelines. We are amending the 
formula to use the data, which has been updated by Milliman & Robertson 
through July 1, 2000. With this change, the formula will use the latest 
available data for calculating per diem charges.
    The formula for outpatient facility charges includes charge factors 
that are based on the 1995 MedStat claims database of nationwide 
commercial insurance. We are amending the formula to use the 1997 
MedStat claims database of nationwide commercial insurance. With this 
change, the formula will use the latest available data for calculating 
the charge factors.
    The formula for outpatient facility charges included 37 Current 
Procedural Terminology (CPT) procedure code groups from which the 
median charge was used for calculating the charge factors. We are 
amending the formula to use 45 CPT procedure code groups instead of the 
previous 37 to better group together those CPT procedure codes with 
similar characteristics. This will help ensure more accurate results 
for the charge factors.
    Previously, the formula for outpatient facility charges established 
80th percentile charge levels using two databases, MediCode and 
MedStat. The formula is changed to use the MedStat database for all CPT 
code groups since it contains all of the information needed for this 
purpose.
    For physician charges other than anesthesia charges, in general, we 
have established several methods for determining charges depending on 
the availability of information. Under the regulations, we employ 
methodology to provide the most precise charges. If work expense and 
practice expense Relative Value Units (RVUs) are established under 
Medicare, we employ methodology utilizing these factors. This enables 
us to use three geographic area adjustment factors (GAAFs) in 
calculating charges for each of these CPT procedure codes: one for the 
work expense RVUs, one for the practice expense RVUs, and one for the 
conversion factor. When work expense and practice expense RVUs are not 
available from Medicare, we use methodology based on total RVUs derived 
from Medicare's Clinical Diagnostic Laboratory Fee Schedule. For each 
of these CPT procedure codes, we are able to use two GAAFs in 
calculating the charges: one for the total RVUs and one for the 
conversion factor. If neither of these methods is available, we use 
methodology based directly on billed charges. For each of these CPT 
procedure codes, we develop total RVUs and a conversion factor, using 
one GAAF for RVUs and one GAAF for the conversion factor. As a last 
resort, if none of the above are available, we use methodology based on 
work expense and practice expense RVUs obtained from St. Anthony's 
RBRVS (Resource Based Relative Value Scale). For each of these CPT 
procedure codes, we develop total RVUs and a conversion factor, using 
one GAAF for RVUs and one GAAF for the conversion factor. Consistent 
with these principles, we are making changes based on new information 
to establish more precise charges for CPT procedure codes. The largest 
group of CPT procedure codes to be changed involves laboratory and 
pathology. Previously, we developed nationwide charges for these CPT 
procedure codes, to which we applied a single GAAF. We are now changing 
the methodology to develop total RVUs for these CPT procedure codes, 
enabling us to use two GAAFs, one for the total RVUs and one for the 
conversion factor.
    With respect to the formula for physician charges, to make charges 
for laboratory and pathology CPT procedure codes more accurately 
reflect 80th percentile charges, we adjusted the relativities for 
laboratory and pathology charges by including the 2000 RBRVS work and 
practice expense RVUs, representing the professional component of these 
procedures, when applicable.
    We have deleted provisions in the physician charges formula 
providing for the Medicare work adjuster. This was used as a budget 
constraint factor designed for use in past years for Medicare 
calculations. This is no longer being used for Medicare calculations 
and, therefore, we are also deleting it from our formula.
    The formula for physician charges included facility-adjusted work 
expense and practice expense RVUs for most CPT procedure codes and base 
unit values for anesthesia CPT procedure codes. Previously, the formula 
used information from the 1998 Medicare Geographic Practice Cost Index, 
1998 Medicare RBRVS Unit Values, and 1998 St. Anthony's Complete RBRVS. 
We are amending the formula to use the 2000 Medicare Geographic 
Practice Cost Index, 2000 Medicare RBRVS Unit Values, and the 2000 St. 
Anthony's RBRVS. With these changes the formula will use the latest 
available data for calculating physician charges.
    The formula for physician charges also included the Health 
Insurance Association of America nationwide commercial insurance 
database for obtaining the 80th percentile charge for facility-adjusted 
80th percentile conversion factors. We have instead used the charge 
data compiled by MediCode since it is easier to use for this purpose.
    The methodology for inpatient facility charges, skilled nursing 
facility/sub-acute inpatient facility charges, outpatient facility 
charges, and physician charges includes trending to update charges 
based on changes to the consumer price index. This methodology is 
updated to reflect changes described above regarding updated databases. 
This methodology is also amended to reflect that charges are trended to 
the midpoint of the calendar year in which the charges will be 
effective.
    All of the above changes made by this document are for the purpose 
of adding precision to charges.
    Also, changes are made to the regulations for purposes of 
clarification.

Administrative Procedure Act

    This document amends the regulations to update databases and other 
provisions for the purpose of providing more precise charges. Although 
some charges might be slightly different, overall these changes would 
not affect total VA charges. Under these circumstances, we have 
concluded under 5 U.S.C. 553 that there is good cause for dispensing 
with prior notice and comment and a delayed effective date based on the 
conclusion that such procedure is impracticable, unnecessary, and 
contrary to the public interest.

[[Page 65908]]

Unfunded Mandates

    The Unfunded Mandates Reform Act requires (in section 202) that 
agencies prepare an assessment of anticipated costs and benefits before 
developing any rule that may result in an expenditure by State, local, 
or tribal governments, in the aggregate, or by the private sector of 
$100 million or more in any given year. This rule would have no 
consequential effect on State, local, or tribal governments.

Executive Order 12866

    The Office of Management and Budget has reviewed this proposed rule 
under Executive Order 12866.

Regulatory Flexibility Act

    The Secretary hereby certifies that this rule will not have a 
significant economic impact on a substantial number of small entities 
as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-
612. This rule would affect mainly large insurance companies and where 
small entities are involved they would not be impacted significantly 
since most of their business is not with VA. Accordingly, pursuant to 5 
U.S.C. 605(b), this rule is exempt from the initial and final 
regulatory flexibility analysis requirements of sections 603 and 604.

    The Catalog of Federal domestic assistance numbers for the 
programs affected by this rule are 64.005, 64.007.64.008, 64,009, 
64.010, 64.011, 64.012, 64.013, 64.014, 64.015, 64.016, 64.018, 
64.019, 64.022, and 64.025.

List of Subjects in 38 CFR Part 17

    Administrative practice and procedure, Alcohol abuse, Alcoholism, 
Claims, Day care, Dental health, Drug abuse, Foreign relations, 
Government contracts, Grant programs-health, Grant programs-veterans, 
Health care, Health facilities, Health professions, Health records, 
Homeless, Medical and dental schools, Medical devices, Medical 
research, Mental health programs, Nursing homes, Philippines, Reporting 
and recordkeeping requirements, Scholarships and fellowships, Travel 
and transportation expenses, Veterans.

    Approved: August 30, 2000.
Hershel W. Gober,
Acting Secretary of Veterans Affairs.
    For the reasons set out in the preamble, 38 CFR part 17 is amended 
as set forth below:

PART 17--MEDICAL

    1. The authority citation for part 17 continues to read as follows:

    Authority: 38 U.S.C. 501, 1721, unless otherwise noted.

    2. Section 17.101 is amended by:
    A. In paragraph (a)(4), revising the definition of Geographic area.
    B. In paragraph (b)(2) introductory text, revising the first 
sentence; and by removing ``their 1995 base'' from the fifth sentence 
and adding, in its place ``1998''.
    C. In paragraph (b)(2)(i), removing ``Medicare Standard Analytical 
File 5% Sample'' and adding, in its place, ``MedPAR file''.
    D. In paragraph (b)(2)(ii), removing ``Medicare'' and adding, in 
its place, ``1995 Medicare''.
    E. Revising paragraph (b)(2)(iii).
    F. In paragraph (c)(2) introductory text, removing ``1998'' each 
time it appears and adding, in its place, ``2000''.
    G. Revising paragraph (c)(2)(ii).
    H. Revising paragraph (d)(3).
    I. In paragraph (e)(1), removing ``and pathology'' each time it 
appears.
    J. In the paragraph (e)(2)(i) heading and in the remaining text of 
the paragraph, removing '', pathology,''.
    K. In paragraph (e)(2)(i), introductory text, removing ``(e)(2)(ii) 
and (e)((2)((iii)'' and adding, in its place, ``(e)(2)(ii) through 
(e)(2)(iv).
    L. Revising paragraph (e)(2)(i)(A).
    M. In paragraph (e)(2)(i)(B), removing ``1998'' each time it 
appears and adding, in its place, ``2000''.
    N. Revising paragraphs (e)(2)(ii) through (e)(2)(iv); and adding 
new (e)(2)(v).
    O. In paragraph (e)(3), introductory text, removing ``1998'' and 
adding, ``2000''.
    P. In paragraph (e)(3); removing ``insurance data base compiled by 
the Health Insurance Association of America, 555 13th Street NW, Suite 
600E, Washington, D.C. 20004 (medical data for 5/1/96-4/30/97, 
including radiology and pathology; surgical data for 3/1/96-2/28/97; 
anesthesia data for 3/1/96-2/28/97)).'' and adding, in its place, 
``charge database compiled by MediCode, Inc., 5225 Wiley Post Way, 
Suite 500, Salt Lake City, Utah 84116).''
    Q. In paragraph (e)(3)(ii), removing ``representing charges for 
time periods detailed'' and adding, in its place, ``representing charge 
levels described''.
    R. In paragraph (e)(3)(ii), removing ``for the period August 1998 
through September 1999, and for each 12-month calendar year period 
thereafter, beginning January 1, 2000'';
    S. In paragraph (e)(3)(ii), removing ``effective charge period'' 
and adding, in its place, ``calendar year in which charges will be 
effective''.
    T. Revising paragraph (e)(4) introductory text.
    U. In paragraph (e)(4)(i), removing ``1998'' each time it appears 
and adding, in its place, ``2000''; and by removing ``anesthesia time 
unit'' and adding, in its place, ``anesthesia average time unit''.
    The additions and revisions read as follows:


Sec. 17.101  Collection or recovery by VA for medical care or services 
provided or furnished to a veteran for a non-service connected 
disability.

    (a) * * *
    (4) * * *
    Geographic area, for purposes of inpatient facility and skilled 
nursing facility/sub-acute inpatient facility charges, means 
Metropolitan Statistical Area (MSA) or the local market, if the VA 
facility is not located in an MSA; and for outpatient facility charges 
and physician charges, means a three-digit ZIP Code locality.
* * * * *
    (b) * * *
    (2) * * * To establish a baseline, two nationwide average per diem 
charges for each DRG are calculated for fiscal year 1998, one from the 
1998 Medicare MedPAR file and one from the MedStat claim database, a 
database of nationwide commercial insurance claims. Because the MedStat 
data is based on calendar year 1997, the MedStat charges were trended 
forward at an annual trend rate of 2.7%, based on the Inpatient 
Hospital component of the CPI-U. * * *
* * * * *
    (iii) Trending forward. 80th percentile charges for each DRG, 
representing charge levels described in (b)(2) of this section, are 
trended forward based on changes to the hospital inpatient component of 
the CPI-U. Actual CPI-U changes are used through the latest available 
month for room/board and ancillary charges. Trends from the latest 
available month to the midpoint of the calendar year in which charges 
become effective are based on the latest three-month average annual 
trend rate from the Inpatient Hospital component of the CPI-U. The 
projected total CPI trend is then applied to the 1998 80th percentile 
charges.
* * * * *
    (c) * * *
    (2) * * *
    (ii) Trending forward. The 80th percentile charge is trended 
forward to the midpoint of the calendar year in which the charges will 
be effective, based on the projected change in Medicare reimbursement 
from the Annual Report of the Board of Trustees of the Federal Hospital 
Insurance Trust Fund (this report can be found on the

[[Page 65909]]

Health Care Financing Administration Internet site at http://www.hcfa.gov/ under the headings ``Publications and Forms'' and 
``Professional/Technical Publications'').
* * * * *
    (d) * * *
    (3) Charge factors. Using the 1997 MedStat claims database of 
nationwide commercial insurance, the median billed facility charge is 
calculated for each applicable CPT procedure code. All outpatient 
facility CPT procedure codes are then separated into one of the 45 
outpatient facility CPT procedure code groups as set forth in paragraph 
(d)(3)(i) of this section. Then, for each CPT procedure code in each 
such group, the median charge is adjusted to the 80th percentile as set 
forth in paragraph (d)(3)(ii) of this section. The resulting 80th 
percentile charge for each CPT procedure code is trended forward to the 
effective time period for the charges as set forth in paragraph 
d)(3)(iii) of this section. Using the resulting charges and the RVUs, 
mathematical approximation methodology based on least squares 
techniques is applied to the data for each CPT procedure code group to 
derive outpatient facility charges. For each CPT procedure code, the 
charge amount is calculated as an amount per incremental RVU and a 
fixed charge amount adjustment.
    (i) Outpatient facility CPT procedure code groups.
    (A) Surgery--Integumentary System--Skin, Subcutaneous & Accessory 
Structures/Nails;
    (B) Surgery--Integumentary System--Repair--Simple, Intermediate, 
Complex, Adjacent Tissue Transfer or Rearrangement;
    (C) Surgery--Integumentary System--Not Otherwise Classified;
    (D) Surgery--Musculoskeletal System--Not Otherwise Classified;
    (E) Surgery--Musculoskeletal System--Incision/Excision/
Introduction/Removal;
    (F) Surgery--Musculoskeletal System--Repair/Revison/Reconstruction/
Arthrodesis/Manipulation/Amputation;
    (G) Surgery--Musculoskeletal System--Fracture/Dislocation-Closed 
Treatment;
    (H) Surgery--Musculoskeletal System--Fracture/Dislocation-Open 
Treatment;
    (I) Surgery--Musculoskeletal System--Application of Casts and 
Strapping;
    (J) Surgery--Musculoskeletal System--Endoscopy/Arthroscopy;
    (K) Surgery--Respiratory System;
    (L) Surgery--Cardiovascular System;
    (M) Surgery--Digestive System--Not Otherwise Classified;
    (N) Surgery--Digestive System--Endoscopy;
    (O) Surgery--Urinary System;
    (P) Surgery--Male Genital System;
    (Q) Surgery--Female Genital System;
    (R) Surgery--Maternity Care and Delivery;
    (S) Surgery--Endocrine System/Nervous System;
    (T) Surgery--Eye/Ocular Adnexa;
    (U) Surgery--Auditory System;
    (V) Radiology--Diagnostic--Head & Neck/Chest/Spine & Pelvis;
    (W) Radiology--Diagnostic--Extremities/Abdomen/Gastrointestinal 
Tract/Urinary Tract/Gynecological & Obstetrical/Heart;
    (X) Radiology--Diagnostic--Aorta & Arteries/Veins & Lymphatics;
    (Y) Radiology--Diagnostic Ultrasound;
    (Z) Radiology--Radiation Oncology/Nuclear Medicine/Therapeutic;
    (AA) Radiology--Diagnostic--CAT Scans;
    (BB) Radiology--Diagnostic--Magnetic Resonance Imaging (MRI);
    (CC) Medicine--Vaccines/Toxoids;
    (DD) Medicine--Therapeutic or Diagnostic Infusions (Excludes
    Chemotherapy)/Therapeutic, Prophylactic, or Diagnostic Injections;
    (EE) Medicine--Psychiatry/Biofeedback;
    (FF) Medicine--Dialysis;
    (GG) Medicine--Gastroenterology;
    (HH) Medicine--Ophthalmology/Special Otorhinolaryngologic Services;
    (II) Medicine--Cardiovascular/Non-Invasive Vascular Diagnostic 
Studies;
    (JJ) Medicine--Pulmonary;
    (KK) Medicine--Neurology & Neuromuscular Procedures/Central Nervous 
System Assessments & Tests;
    (LL) Medicine--Chemotherapy Administration;
    (MM) Medicine--Special Dermatological Procedures;
    (NN) Medicine--Physical Medicine and Rehabilitation--Evaluation/
Modalities; Photodynamic Therapy;
    (OO) Medicine--Physical Medicine and Rehabilitation--Therapeutic 
Procedures/Tests and Measurements/Other Procedures; Osteopathic 
Manipulative Treatment/Chiropractic Manipulative Treatment/Special 
Services, Procedures, & Reports/Other Services and Procedures;
    (PP) Medicine--Evaluation & Management--Consultations;
    (QQ) Medicine--Evaluation & Management--Hospital Observation 
Services;
    (RR) Medicine--Evaluation & Management--Emergency Department 
Services/Critical Care Services; and
    (SS) Medicine--Evaluation & Management--General Ophthalmological 
Services/Office or Other Outpatient Services/Prolonged Services.
    (ii) 80th percentile. For each of the 45 outpatient facility CPT 
procedure code groups set forth in paragraph (d)(3)((i) of this 
section, the median charge is increased by the ratio of the 80th 
percentile charge to median charge obtained from the MedStat database 
of nationwide charges. To mitigate the impact of the variation in the 
intensity of services by CPT procedure code, the percent increase from 
the median to the 80th percentile in outpatient charges is compared to 
the percent increase from the median to the 80th percentile in 
inpatient semi-private room and board charges. Any percent increase in 
outpatient charges in excess of the inpatient semi-private room and 
board percent increase is multiplied by a factor of 0.50. The 80th 
percentile outpatient facility charge is reduced accordingly.
    (iii) Trending forward. The charges for each CPT procedure code, 
representing charge levels described in paragraph (d)(3) of this 
section, are trended forward to the midpoint of the calendar year in 
which the charges will be effective. The trend factors are based on 
changes to the Outpatient Hospital component of the CPI-U. Actual CPI-U 
changes are used through the latest available month. The three-month 
average annual trend rate as of the latest available month is held 
constant to the midpoint of the effective charge period. The projected 
total CPI-U change from the source data period to the effective period 
is then applied to the 80th percentile charges, as described in 
paragraph (d)(3) of this section.
* * * * *
    (e) * * *
    (2) * * *
    (i) * * *
    (A) Facility-adjusted work expense RVUs. For each CPT procedure 
code for each geographic area, the 2000 work expense RVU is multiplied 
by the work expense 2000 Medicare Geographic Practice Cost Index. The 
result constitutes the facility-adjusted work expense RVU.
* * * * *
    (ii) RVUs based on laboratory and pathology CPT codes based on 
Medicare's Clinical Diagnostic Laboratory Fee Schedule. For CPT 
procedure codes without modifiers that are not assigned separately 
identified work and practice units (in (e)(2)(i) of this section), 
total RVUs are developed based on the 2000 edition of Medicare's

[[Page 65910]]

Clinical Diagnostic Laboratory Fee Schedule (found on the Health Care 
Financing Administration public use files Internet site at http://www.hcfa.gov/stats/pufiles.htm under the heading ``Payment Rates/ Non-
Institutional Providers'' and the title ``Clinical Diagnostic 
Laboratory Fee Schedule''). Such Medicare payment amounts are upwardly 
adjusted such that the payment level is, on average, equivalent to 
standard RBRVS payment levels, using statistical comparisons to the 
80th percentile derived from the MediCode charge database. These 
adjusted payment amounts are then divided by the 2000 Medicare 
conversion factor to derive RVUs corresponding to each CPT code. The 
total RVUs are added to the 2000 RBRVS work and practice expense RVUs 
for the corresponding professional component (if any) of a given CPT 
procedure code to derive nationwide total RVUs. The resulting 
nationwide total RVUs are multiplied by the geographic adjustment 
factors as set forth in paragraph (e)(2)(v) of this section to obtain 
the facility-specific total RVUs.
    (iii) RVUs for specified CPT procedure codes. For CPT procedure 
codes without modifiers that are not assigned RVUs in (e)(2)(i) or 
(e)((2)(ii) of this section, total RVUs are developed based on various 
charge databases. For the following CPT procedure codes, the nationwide 
80th percentile billed charges are obtained from the nationwide 
commercial insurance data base compiled by the Health Insurance 
Association of America (Health Insurance Association of America, 555 
13th Street, NW, suite 600E, Washington, DC 20004): 15876, 15877, 
15878, 15879, 21088, 21089, 26587, 32850, 33940, 36468, 36469, 47133, 
48550, 69710, 76140, 78990, 79900, 92390, 92391, 99024, 99071, 99075, 
99078, 99080, 99082, 99090, 99100, 99116, 99135, 99140, 99288, 99420, 
99450, 99455, 99456. For the following CPT procedure codes, the 
nationwide 80th percentile billed charges are obtained from the 
Medicare Standard Analytical File 5% Sample: 23929, 26989, 29909, 
86849, 90749, 96549, 99070, 99429. For the following CPT procedure 
codes, the nationwide 80th percentile billed charges are obtained from 
the MediCode data: 15824, 15825, 15826, 15828, 15829, 17380, 20930, 
20936, 22841, 24940, 36415, 38792, 41820, 41821, 41850, 41870, 48160, 
50300, 54440, 58974, 65760, 65765, 65767, 65771, 69090, 80050, 80055, 
80103, 82251, 86485, 86586, 86850, 86860, 86870, 86890, 86891, 86901, 
86910, 86911, 86915, 86920, 86921, 86922, 86927, 86930, 86931, 86932, 
86945, 86950, 86965, 86970, 86971, 86972, 86975, 86976, 86977, 86978, 
86985, 88000, 88005, 88007, 88012, 88014, 88016, 88020, 88025, 88027, 
88028, 88029, 88036, 88037, 88040, 88045, 88142, 88143, 88144, 88145, 
88147, 88148, 89250, 90371, 90375, 90376, 90389, 90471, 90472, 90585, 
90586, 90632, 90633, 90634, 90645, 90646, 90647, 90648, 90657, 90658, 
90659, 90665, 90675, 90680, 90690, 90691, 90882, 90889, 90989, 90993, 
92531, 92532, 92533, 92534, 92590, 92591, 92592, 92593, 92594, 92595, 
92992, 92993, 93786, 93788, 93790, 94642, 95120, 95125, 95130, 95131, 
95132, 95133, 95134, 96110, 99000, 99001, 99002, 99025, 99050, 99052, 
99054, 99056, 99058, 99190, 99191, 99192, 99358, 99359, 99360, 99361, 
99362, 99371, 99372, and 99373. The nationwide 80th percentile billed 
charges so obtained are divided by the untrended nationwide conversion 
factor for the corresponding physician CPT procedure code group as set 
forth in paragraphs (e)(3) and (e)(3)(i) of this section. The resulting 
nationwide total RVUs are multiplied by the geographic adjustment 
factors as set forth in paragraph (e)(2)(v) of this section to obtain 
the facility-specific total RVUs.
    (iv) RVUs for specified CPT procedure codes. For CPT procedure 
codes without modifiers that are not assigned RVUs in paragraphs 
(e)(2)(i), (e)(2)(ii), or (e)(2)(iii) of this section, the nationwide 
total RVU is calculated by summing the work expense and practice 
expense RVUs found in the 2000 St. Anthony's Complete RBRVS (available 
from Relative Value Studies, Inc., St. Anthony Publishing, 11410 Isaac 
Newton Square, Reston, VA 20190): 38120, 44201, 60650, 76092, 76350, 
78351, 93000, 93040, 93224, 93230, 93235, 93268, 93720, 93760, 93762, 
93784, 99185, 99186. The resulting nationwide total RVUs are multiplied 
by the geographic adjustment factors as set forth in paragraph 
(e)(2)(v) of this section to obtain the facility-specific total RVUs.
    (v) RVU geographic area adjustment factors for specified CPT 
procedure codes. The geographic area adjustment factor for each 
facility location consists of the weighted average of the 2000 work 
expense and practice expense Medicare Geographic Practice Cost Indices 
for each facility location using charge data for representative CPT 
procedure codes statistically selected and weighted for work expense 
and practice expense.
* * * * *
    (4) Nationwide 80th percentile charges for anesthesia CPT procedure 
codes. The nationwide charges are calculated by multiplying the RVUs as 
set forth in paragraph (e)(4)(i) of this section by the appropriate 
nationwide trended 80th percentile conversion factors as set forth in 
paragraph (e)(3) of this section.
[FR Doc. 00-27721 Filed 11-1-00; 8:45 am]
BILLING CODE 8320-01-P