[Federal Register Volume 66, Number 167 (Tuesday, August 28, 2001)]
[Rules and Regulations]
[Pages 45173-45177]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-21657]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 414

[CMS-1010-F]
RIN 0938-AK66


Medicare Program; Replacement of Reasonable Charge Methodology by 
Fee Schedules for Parenteral and Enteral Nutrients, Equipment, and 
Supplies

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

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

SUMMARY: This final rule implements fee schedules for payment of 
parenteral and enteral nutrition (PEN) items and services furnished 
under the prosthetic device benefit, defined in section 1861(s)(8) of 
the Social Security Act. The authority for establishing these fee 
schedules is provided by the Balanced Budget Act of 1997, which amended 
the Social Security Act at section 1842(s). Section 1842(s) of the 
Social Security Act specifies that statewide or other areawide fee 
schedules may be implemented for the following items and services still 
subject to the reasonable charge payment methodology: medical supplies; 
home dialysis supplies and equipment; therapeutic shoes; parenteral and 
enteral nutrients, equipment, and supplies; electromyogram devices; 
salivation devices; blood products; and transfusion medicine. This 
final rule describes changes made to the proposed fee schedule payment 
methodology for these items and services and provides that the fee 
schedules for PEN items and services are effective for all covered 
items and services furnished on or after January 1, 2002. Fee schedules 
will not be implemented for electromyogram devices and salivation 
devices at this time since these items are not covered by Medicare. In 
addition, fee schedules will not be implemented for medical supplies, 
home dialysis supplies and equipment, therapeutic shoes, blood 
products, and transfusion medicine at this time since the data required 
to establish these fee schedules are inadequate.

DATES: These final regulations are effective January 1, 2002.

FOR FURTHER INFORMATION CONTACT: Joel Kaiser, (410) 786-4499.

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I. Background

    The provisions of sections 1833 and 1842 of the Social Security Act 
(the Act) set forth the general payment authority for most physician 
and other medical and health services furnished under Part B of the 
Medicare program. Section 1842(s) of the Act, added by section 4315 of 
the Balanced Budget Act of 1997 (BBA), (Pub. L. 105-33) provides 
authority for implementing statewide or other areawide fee schedules to 
be used for payment of the following items and services that are paid 
on a reasonable charge basis when covered:
     Medical supplies.
     Home dialysis supplies and equipment.
     Therapeutic shoes.
     Parenteral and enteral nutrients, equipment, and supplies.
     Electromyogram devices.
     Salivation devices.
     Blood products.
     Transfusion medicine.
    Section 1842(s)(1) of the Act provides that if fee schedules are 
established for any of the covered items and services listed above, the 
fee schedules are to be updated on an annual basis by the percentage 
increase in the consumer price index for all urban consumers (CPI-U) 
for the 12-month period ending

[[Page 45174]]

with June of the preceding year. The fee schedules for PEN items and 
services, however, may not be updated before the year 2003. Finally, 
section 4315(d) of the BBA requires that the first year's fee schedules 
be set so that they are budget-neutral (that is, total payments for the 
initial year of the fee schedules for particular services must be 
approximately equal to the estimated payments that would have been made 
for those services under the reasonable charge payment methodology).
    We published a proposed rule on July 27, 1999 (64 FR 40534) that 
described the methods proposed for computing fee schedules for the 
covered items and services listed above. The proposed rule stated that 
the fee schedules would apply to items and services furnished on or 
after January 1, 1999 and would be calculated using base reasonable 
charges updated by an update factor as mandated by the BBA. The 
proposed rule provided that statewide fee schedule amounts would be 
calculated for all items and services except PEN items and services, 
which would have nationwide fee schedule amounts. In accordance with 
section 4551(b) of the BBA, the nationwide fee schedule amounts for PEN 
items and services would be equal to the lesser of: (1) The 1995 
reasonable charges; or (2) the 1998 reasonable charges, increased by 
the inflation adjustment factor that would have otherwise been used in 
calculating the 1999 inflation-indexed charges (in effect, the 1999 
reasonable charges). The proposed rule also called for national fee 
schedule ceiling and floor limits for medical supplies, electromyogram 
devices, salivation devices, blood products, and transfusion medicine 
furnished within the continental United States.
    Medicare currently does not cover electromyogram devices or 
salivation devices; therefore, we do not plan to establish fee 
schedules for these items at this time. Also, fee schedules will not be 
established at this time for medical supplies, home dialysis supplies 
and equipment, therapeutic shoes, blood products, and transfusion 
medicine. The data needed to establish these fee schedule amounts so 
that they meet the budget-neutrality requirement of section 4315(d) of 
the BBA are currently not available. We are establishing fee schedules 
only for PEN items and services in this final rule. In the event that 
it becomes possible to establish budget-neutral fee schedules in the 
future for the other items and services addressed in the proposed rule, 
we will establish these fee schedules in one or more separate final 
rules.

II. Summary of Public Comments and Responses

    We received comments from five groups representing the industry, 
two individual suppliers, and one member of the Congress who wrote on 
behalf of a constituent hospital. We have summarized the comments 
pertaining to the fee schedules for PEN items and services and present 
them below along with our responses. We have not included the comments 
pertaining to those items and services for which we have decided not to 
implement fee schedules at this time.

Effective Date for Implementation of Fee Schedules

    Comment: Several commenters suggested that the fee schedules should 
not be implemented retroactively based on an effective date of January 
1, 1999. One commenter suggested that the fee schedules be implemented 
no sooner than 60 days after the date of the final rule.
    Response: We did not intend to apply this rule retroactively, and 
are changing the effective date from that proposed in the NPRM to 
January 1, 2002 to take into account the publication date of the final 
rule. The fee schedules for PEN items and services will apply to items 
and services furnished on or after January 1, 2002.

List of Health Care Financing Common Procedure Coding System (HCPCS) 
Codes Subject to the Fee Schedules

    Comment: One commenter asked which HCPCS codes would be subject to 
the fee schedules.
    Response: The list of HCPCS codes subject to the fee schedules 
established by this final rule will change as codes are added to and 
deleted from the HCPCS. The following is the list of HCPCS codes 
currently subject to the fee schedules established by this final rule:

                         Pen Items and Services
------------------------------------------------------------------------
 
------------------------------------------------------------------------
B4034..................................  Enteral Feeding Supply Kit;
                                          Syringe, per day
B4035..................................  Enteral Feeding Supply Kit;
                                          Pump Fed, per day
B4036..................................  Enteral Feeding Supply Kit;
                                          Gravity Fed, per day
B4081..................................  Nasogastric Tubing with Stylet
B4082..................................  Nasogastric Tubing without
                                          Stylet
B4083..................................  Stomach Tube--Levine Type
B4084..................................  Gastrostomy/Jejunostomy Tubing
B4085..................................  Gastrostomy Tube, Silicone with
                                          sliding ring, each
B4150..................................  Enteral Formulae; Category I;
                                          semi-synthetic intact Protein/
                                          Protein Isolates, administered
                                          through an enteral feeding
                                          tube, 100 calories = 1 unit
B4151..................................  Enteral Formulae; category I;
                                          Natural Intact Protein/Protein
                                          Isolates, administered through
                                          an enteral feeding tube, 100
                                          calories = 1 unit
B4152..................................  Enteral Formulae; Category II;
                                          Intact Protein/Protein
                                          Isolates (calorically dense),
                                          administered through an
                                          enteral feeding tube, 100
                                          calories = 1 unit
B4153..................................  Enteral Formulae; Category III;
                                          Hydrolized Protein/Amino
                                          Acids, administered through an
                                          enteral feeding tube, 100
                                          calories = 1 unit
B4154..................................  Enteral Formulae; Category IV;
                                          Definde Formula for Special
                                          Metabolic Need, administered
                                          through an enteral feeding
                                          tube, 100 calories = 1 unit
B4155..................................  Enteral Formulae; Category V;
                                          Modular Components,
                                          administered through an
                                          enteral feeding tube, 100
                                          calories = 1 unit
B4156..................................  Enteral Formulae; Category VI;
                                          Standardized Nutrients,
                                          administered through an
                                          enteral feeding tube, 100
                                          calories = 1 unit
B4164..................................  Parenteral Nutrition Solution:
                                          Carbohydrates (Dextrose), 50%
                                          or less (500 ML = 1 unit)--
                                          Homemix
B4168..................................  Parenteral Nutrition Solution;
                                          Amino Acid, 3.5%, (500 ML = 1
                                          unit)--Homemix
B4176..................................  Parenteral Nutrition Solution;
                                          Amino Acid, 7% through 8.5%,
                                          (500 ML = 1 unit)--Homemix
B4178..................................  Parenteral Nutrition Solution;
                                          Amino Acid, greater than 8.5%
                                          (500 ML = 1 unit)--Homemix
B4180..................................  Parenteral Nutrition Solution;
                                          Carbohydrates (Dextrose),
                                          greater than 50% (500 ML = 1
                                          unit)--Homemix
B4184..................................  Parenteral Nutrition Solution;
                                          Lipids, 10% with
                                          Administration Set (500 ML = 1
                                          unit)
B4186..................................  Parenteral Nutrition Solution,
                                          Lipids, 20% with
                                          Administration Set (500 ML = 1
                                          unit)
B4189..................................  Parenteral Nutrition Solution;
                                          Compounded Amino Acid and
                                          Carbohydrates with
                                          Electrolytes, Trace Elements,
                                          and Vitamins, including
                                          preparation, any strength, 10
                                          to 51 grams of protein--Premix

[[Page 45175]]

 
B4193..................................  Parenteral Nutrition Solution;
                                          Compounded Amino Acid and
                                          Carbohydrates with
                                          Electrolytes, Trace Elements,
                                          and Vitamins, including
                                          preparation, any strength, 52
                                          to 73 grams of protein--Premix
B4197..................................  Parenteral Nutrition Solution;
                                          Compounded Amino Acid and
                                          Carbohydrates with
                                          Electrolytes, Trace Elements
                                          and Vitamins, including
                                          preparation, any strength, 74
                                          to 100 grams of protein--
                                          Premix
B4199..................................  Parenteral Nutrition Solution;
                                          Compounded Amino Acid and
                                          Carbohydrates with
                                          Electrolytes, Trace Elements
                                          and Vitamins, including
                                          preparation, any strength,
                                          over 100 grams of protein--
                                          Premix
B4216..................................  Parenteral Nutrition; Additives
                                          (Vitamins, Trace Elements,
                                          Heparin, Electrolytes) Homemix
                                          per day
B4220..................................  Parenteral Nutrition Supply
                                          Kit; Premix, per day
B4222..................................  Parenteral Nutrition Supply
                                          Kit; Home Mix, per day
B4224..................................  Parenteral Nutrition
                                          Administration Kit, per day
B5000..................................  Parenteral Nutrition Solution:
                                          Compounded Amino Acid and
                                          Carbohydrates with
                                          Electrolytes, Trace Elements,
                                          and Vitamins, including
                                          preparation, any strength,
                                          Renal--Amirosyn RF,
                                          Nephramine, Renamine--Premix
B5100..................................  Parenteral Nutrition Solution:
                                          Compounded Amino Acid and
                                          Carbohydrates with
                                          Electrolytes, Trace Elements,
                                          and Vitamins, including
                                          preparation, any strength,
                                          Hepatic--Freamine HBC,
                                          Hepatamine--Premix
B9000..................................  Enteral Nutrition Infusion
                                          Pump--without alarm
B9002..................................  Enteral Nutrition Infusion
                                          Pump--with alarm
B9004..................................  Parenteral Nutrition Infusion
                                          Pump, portable
B9006..................................  Parenteral Nutrition Infusion
                                          Pump, stationary
E0776XA................................  IV pole
------------------------------------------------------------------------

Calculating Fee Schedule Amounts for Items and Services Where 
Reasonable Charge Data Is Unavailable

    Comment: One commenter questioned how fee schedule amounts were 
going to be established for items and services for which reasonable 
charge data were unavailable during the data base period.
    Response: The compilation of aggregate reasonable charge data for 
PEN items and services is 100 percent complete.

Payment for Professional Services Associated With Furnishing PEN Items 
and Services

    Comment: Several commenters stated that we ignored the 
recommendation of the Congress that appeared in the conference 
agreement on the BBA to ``* * * examine carefully the appropriateness 
of including the costs of professional services * * *'' when 
establishing the fee schedule amounts for PEN items and services.
    Response: The Medicare payment to a supplier who furnishes PEN 
nutrients, equipment, and supplies to a Medicare beneficiary includes 
payment for providing all services that are medically necessary to 
furnish the PEN nutrients, equipment, and supplies. The Medicare 
payment for these services was predicated on the assumption that 
suppliers included in their charges all medically necessary services 
directly related to furnishing PEN nutrients, equipment, and supplies. 
Payment for services of a physician that are related to furnishing PEN, 
such as the initial evaluation of the patient leading to the 
prescription for PEN, are paid for separately under the Medicare fee 
schedule for physicians' services. However, the reasonable charges for 
PEN items and services included payment for services such as the 
supplier's assessment of the patient, patient education, and general 
care provided by registered nurses, and dispensing of nutrition 
supplies by licensed pharmacists that are part of the overall services 
furnished by the supplier. Therefore, payment for all medically 
necessary services directly associated with providing PEN nutrients, 
equipment, and supplies has always been included in the payment amounts 
developed under the reasonable charge payment methodology, a 
methodology that uses suppliers' charges to calculate payment amounts. 
Because the fee schedule amounts for PEN items and services established 
by this final rule are based on the payment amounts that were developed 
under the reasonable charge methodology, payment for any necessary 
professional services provided by a supplier as part of furnishing PEN 
nutrients, equipment, and supplies to Medicare beneficiaries is 
included in the fee schedule amounts.
    Moreover, it is important to note that the statute requires that 
the fee schedule amounts established by this final rule must be budget-
neutral. Additional payment for professional services provided by 
suppliers furnishing PEN nutrients, equipment, and supplies, would 
duplicate payment already included in the fee schedule rate and 
payments for all other PEN items and services would have to be reduced 
to maintain budget-neutrality. The total payment for PEN items and 
services would therefore remain the same.

Lump Sum Payment for PEN Items and Services

    Comment: One commenter requested clarification regarding the 
provision in the proposed rule that payment for PEN items and services 
is to be made on a lump sum basis.
    Response: The term ``lump sum'' generally refers to a one-time 
payment for the purchase of an item. Since payment for certain PEN 
items and services is made on a rental basis rather than a purchase 
basis, the use of the term ``lump sum'' in relation to payment for 
these rental PEN items is erroneous. Therefore, we have revised the 
rule to reflect that the term ``lump sum'' only applies to purchase 
transactions.

III. Provisions of the Final Regulations

    The provisions of this final rule are the same as the provisions of 
the July 27, 1999, proposed rule except as noted below. The following 
changes have been made:
     Fee schedules will only be implemented for PEN items and 
services. Fee schedules will not be implemented at this time for 
electromyogram devices, salivation devices, medical supplies, home 
dialysis supplies and equipment, therapeutic shoes, blood products, and 
transfusion medicine.
     The initial year that the fee schedules will be in effect 
will be calendar year 2002 rather than calendar year 1999.
     For PEN items and services, the fee schedule amounts will 
be based on the reasonable charges that would have been used in 
determining payment for these items and services in 2002.
     The section regarding payment for PEN items and services 
has been revised to reflect that payment for these items and services 
will be on either a rental basis for the equipment or in a lump sum 
amount for the purchase of the nutrient or supply.
    The 2002 fee schedule amounts for all HCPCS codes for PEN items and 
services are listed below. Section 4551(b) of the BBA specifies that 
the reasonable charges for PEN items and services for 2002 may not 
exceed the reasonable charges for these items and services from 1995. 
Therefore, the fee schedule amounts for PEN items and services, other 
than codes B4176 and

[[Page 45176]]

B4222, are based on the reasonable charges for the items or services 
during 1995. We have determined that the reasonable charges for codes 
B4176 and B4222 for 2002 will be less than the reasonable charges from 
1995. Therefore, the fee schedule amounts for codes B4176 and B4222 
will be based on the amounts that would have been used in calculating 
the reasonable charges for 2002. A modifier (MOD), if applicable, 
identifies the service as either: purchase of new equipment (NU); 
purchase of used equipment (UE); or rental of equipment (RR).

                2002 Fee Schedule--Pen Items and Services
------------------------------------------------------------------------
                         HCPCS/MOD                               Fee
------------------------------------------------------------------------
B4034.....................................................         $5.60
B4035.....................................................         10.67
B4036.....................................................          7.31
B4081.....................................................         19.78
B4082.....................................................         14.73
B4083.....................................................          2.25
B4084.....................................................         16.52
B4085.....................................................         37.48
B4150.....................................................          0.61
B4151.....................................................          1.43
B4152.....................................................          0.51
B4153.....................................................          1.74
B4154.....................................................          1.12
B4155.....................................................          0.87
B4156.....................................................          1.24
B4164.....................................................         15.08
B4168.....................................................         21.96
B4176.....................................................         40.99
B4178.....................................................         51.04
B4180.....................................................         21.61
B4184.....................................................         70.86
B4186.....................................................         94.48
B4189.....................................................        157.66
B4193.....................................................        203.73
B4197.....................................................        248.02
B4199.....................................................        283.42
B4216.....................................................          6.85
B4220.....................................................          7.10
B4222.....................................................          8.44
B4224.....................................................         22.19
B5000.....................................................         10.54
B5100.....................................................          4.12
B9000NU...................................................      1,121.97
B9000RR...................................................        103.10
B9000UE...................................................        841.47
B9002NU...................................................      1,121.97
B9002RR...................................................        108.66
B9002UE...................................................        841.47
B9004NU...................................................      2,238.01
B9004RR...................................................        354.30
B9004UE...................................................      1,678.51
B9006NU...................................................      2,238.01
B9006RR...................................................        354.30
B9006UE...................................................      1,678.51
E0776NU...................................................         93.30
E0776RR...................................................         23.62
E0776UE...................................................         29.15
------------------------------------------------------------------------

IV. Collection of Information Requirements

    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. 3501 et. seq.)

V. Regulatory Impact Statement

    We have examined the impact of this final rule as required by 
Executive Order (EO) 12866, the Unfunded Mandates Reform Act (UMRA) 
(Pub. L. 104-4), the Regulatory Flexibility Act (RFA) of 1995 (Pub. L. 
96-354), and the Federalism Executive Order (EO) 13132. 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 must be prepared for 
major rules with economically significant effects ($100 million or more 
annually). This rule will not result in a change in expenditures of 
$100 million or more annually, and is therefore not a major rule as 
defined in Title 5, United States Code, section 804(2) and is not an 
economically significant rule under Executive Order 12866.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, non-profit organizations and government agencies. 
Most hospitals and most other providers and suppliers are small 
entities, either by non-profit status or by having revenues of $5 
million to $25 million annually. Individuals and states are not 
included in the definition of a small entity. Based on data from the 
Small Business Administration (SBA), we estimate that 98 percent of 
suppliers of the items and services affected by this rule would be 
defined as small entities for purposes of the RFA. Due to the fact that 
the statewide fee schedule amounts will be calculated using the average 
of the payment amounts made in each State under the reasonable charge 
payment methodology, we expect that the overall impact of this rule on 
small businesses will be minimal.
    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 604 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.
    In the proposed rule we certified that this rule would not have a 
significant impact on a substantial number of small entities and on 
small rural hospitals. Since we did not receive any comment on our 
initial regulatory impact statements, we are conforming our initial 
determination and certifying that this rule will not have a significant 
impact on a substantial number of small entities including 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 an expenditure in any year by 
State, local, or tribal governments, in the aggregate, or by the 
private sector, of $110 million. This rule would not have an effect on 
the governments mentioned, and private sector costs would be less than 
the $110 million threshold.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.
    We have reviewed this proposed rule under the threshold criteria of 
Executive Order 13132, Federalism. We have determined that it does not 
significantly affect the rights, roles, and responsibilities of State 
or local governments.
    42 CFR part 414 is amended as set forth below:

PART 414--PAYMENT FOR PART B MEDICAL AND OTHER HEALTH SERVICES

    1. The authority citation for part 414 continues to read as 
follows:

    Authority: Secs. 1102, 1871, and 1881(b)(1) of the Social 
Security Act (42 U.S.C. 1302, 1395hh, and 1395rr(b)(1)).

    2. A new subpart is added to read as follows:

Subpart C--Fee Schedules for Parenteral and Enteral Nutrition (PEN) 
Nutrients, Equipment and Supplies


Sec. 414.100  Purpose.

    This subpart implements fee schedules for PEN items and services as 
authorized by section 1842(s) of the Act.


Sec. 414.102  General payment rules.

    (a) General rule. For items and services furnished on or after 
January 1, 2002, Medicare pays for the items and services as described 
in paragraph (b) of this section on the basis of 80 percent of the 
lesser of----
    (1) The actual charge for the item or service; or

[[Page 45177]]

    (2) The fee schedule amount for the item or service, as determined 
in accordance with Secs. 414.104.
    (b) Payment classification. (1) HCFA or the carrier determines fee 
schedules for Parenteral and enteral nutrition (PEN) nutrients, 
equipment, and supplies, as specified in Sec. 414.104.
    (2) HCFA designates the specific items and services in each 
category through program instructions.
    (c) Updating the fee schedule amounts. For each year subsequent to 
2002, the fee schedule amounts of the preceding year are updated by the 
percentage increase in the CPI-U for the 12-month period ending with 
June of the preceding year.


Sec. 414.104  PEN Items and Services.

    (a) Payment Rules. Payment for PEN items and services is made in a 
lump sum for nutrients and supplies that are purchased and on a monthly 
basis for equipment that is rented.
    (b) Fee schedule amount. The fee schedule amount for payment for an 
item or service furnished in 2002 is the lesser of--
    (i) The reasonable charge from 1995; or
    (ii) The reasonable charge that would have been used in determining 
payment for 2002.

(Catalog of Federal Domestic Assistance Programs No. 93.774, 
Medicare-Supplementary Medical Insurance Program)

    Dated: August 1, 2001.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: August 8, 2001.
Tommy G. Thompson,
Secretary.
[FR Doc. 01-21657 Filed 8-27-01; 8:45 am]
BILLING CODE 4120-01-P