[Federal Register Volume 67, Number 125 (Friday, June 28, 2002)]
[Rules and Regulations]
[Pages 43555-43558]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-16332]



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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 414

[CMS-1223-IFC]
RIN 0938-AL99


Medicare Program; Criteria for Submitting Supplemental Practice 
Expense Survey Data Under the Physician Fee Schedule

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

ACTION: Interim final rule with comment period.

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SUMMARY: This interim final rule revises criteria that we apply to 
supplemental survey information supplied by physician, non-physician, 
and supplier groups for use in determining practice expense relative 
value units under the physician fee schedule. This interim final rule 
solicits public comments on the revised criteria for supplemental 
surveys.

DATES: Effective date: This regulation is effective upon publication.
    Comment date: We will consider comments concerning criteria for 
supplemental surveys if we receive them at the appropriate address, as 
provided below, no later than 5 p.m. on August 27, 2002.

ADDRESSES: In commenting, please refer to file code CMS-1223-IFC. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    Mail written comments (one original and three copies) to the 
following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1223-IFC, P.O. 
Box 8013, Baltimore, MD 21244-8013.
    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 three 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 commenters 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 Supplementary Information section.

FOR FURTHER INFORMATION CONTACT: Stephanie Monroe, (410) 786-6864.

SUPPLEMENTARY INFORMATION:
    Inspection of Public Comments: Comments received timely will be 
available for public inspection as they are received, generally 
beginning approximately 3 weeks after publication of a document, at the 
headquarters of the Centers for Medicare & Medicaid Services, 7500 
Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of 
each week from 8:30 a.m. to 4 p.m. Please call (410) 786-7197 to 
schedule an appointment to view the public comments.
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I. Background

A. Legislative History

    Section 212 of the Balanced Budget Refinement Act of 1999 (BBRA) 
requires us to establish a process under which we will accept and use, 
to the maximum extent practicable and consistent with sound data 
practices, data collected or developed by entities and organizations to 
supplement the data we normally collect in determining the practice 
expense component of the physician fee schedule. Section 212(b) states 
that the process must be available for payments for the 2001 and 2002 
physician fee schedules. In the May 3, 2000 interim final rule with 
comment period (65 FR 25664), we established the criteria under which 
we would accept supplemental data in calendar year (CY) 2000 for use in 
computing practice expense relative value units (RVUs) for CY 2001. 
Among other criteria, we indicated a precision level that the 
supplemental data would have to meet to be accepted. We revised the 
precision criteria in the November 1, 2000 final rule (65 FR 65383) for 
data received in 2001. In the November 1, 2001 final rule (66 FR 
55254), we extended the deadline for receipt of supplemental data for 
an additional 2 years.

B. Current Criteria for Acceptance of Supplemental Data

    We established criteria that apply to supplemental surveys in the 
May 3, 2000 interim final rule with comment period (65 FR 26664). Any 
CMS-designated specialty group may submit supplemental survey data. 
(Please see the May 3, 2000 interim final rule (65 FR 25665) for the 
list of designated specialties). In addition, the following are the 
specific criteria we will use:
     Physician groups must draw their sample from the American 
Medical Association (AMA) Physician Masterfile to ensure a nationally 
representative sample that includes both members and non-members of a 
physician specialty group. Physician groups must arrange for the AMA to 
send the sample directly to their survey contractor to ensure 
confidentiality of the sample; that is, to ensure comparability in the 
methods and data collected, specialties must not know the names of the 
specific individuals in the sample.
     Non-physician specialties not included in the AMA's 
Socioeconomic Monitoring System (SMS) must develop a method to draw a 
nationally representative sample of members and non-members. At a 
minimum, these groups must include former members in their survey 
sample. The sample must be drawn by the non-physician group's survey 
contractor, or another independent party, in a way that ensures the 
confidentiality of the sample; that is, to ensure comparability in the 
methods and data collected, specialties must not know the names of the 
specific individuals in the sample.
     A group (or its contractors) must conduct the survey based 
on the SMS survey instruments and protocols,

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including administration and follow-up efforts and definitions of 
practice expense and hours in patient care. In addition, any cover 
letters or other information furnished to survey sample participants 
must be comparable to the information previously supplied by the SMS 
contractor to its sample participants.
     Physician groups must use a contractor that has experience 
with the SMS or a survey firm with experience successfully conducting 
national multi-specialty surveys of physicians using nationally 
representative random samples.
     Physician groups or their contractors must submit raw 
survey data to us, including all complete and incomplete survey 
responses as well as any cover letters and instructions that 
accompanied the survey, by August 1, 2002 for data analysis and editing 
to ensure consistency. All personal identifiers in the raw data must be 
eliminated.
     The physician practice expense data from surveys that we 
use in our code-level practice expense calculations are the practice 
expenses per physician hour in the six practice expense categories--
clinical labor, medical supplies, medical equipment, administrative 
labor, office overhead, and other. Supplemental survey data must 
include data for these categories.
    In addition to the above survey criteria, we indicated that we 
would review the precision of the survey. Based on our review of 
existing physician practice expense surveys, we indicated that the 
ratio of the standard error of the mean to the mean expressed as a 
percent, should not be greater than 10 percent for overall practice 
expenses or practice expenses per hour. We modified this criterion in 
the physician fee schedule final rule published on November 1, 2000 to 
require a 90-percent confidence interval with a range of plus or minus 
10 percent of the mean (that is, 1.645 times the standard error of the 
mean, divided by the mean, should be equal to or less than 10 percent 
of the mean.)
    Since the physician fee schedule is a national fee schedule, the 
survey must be representative of the target population nationwide. We 
can presume national representativeness if a random sample is drawn 
from a complete nationwide listing of the physician specialty, 
subspecialty, or supplier category and the response rate, that this, 
the percent of usable responses received from the sample, is high. If 
any of these conditions (random sample, complete nationwide listing, 
and high response rate) are not achieved, then the potential impacts of 
the deviations upon national representativeness must be explored and 
documented. For example, if the response rate is low, then 
justification must be furnished to demonstrate that the responders are 
not significantly different from non-responders with regard to factors 
affecting practice expense. Differential weighting of subsamples may 
improve the representativeness. Minor deviations from national 
representativeness may be acceptable.
    We believe that it is impossible and impractical to set rigid 
cutoffs for most of these criteria, especially for national 
representativeness. We are attempting to be as flexible as possible 
consistent with our goal of obtaining new surveys of practice expense 
data that are scientifically sound and methodologically consistent with 
our existing estimates. For instance, a specialty may include different 
types of physician practices (for example, urban versus rural, academic 
versus non-academic, interventional versus non-interventional) that 
exhibit different patterns of practice expense. Similarly, a stratified 
sampling of these different types of practices may be a more efficient 
sampling strategy than a simple random sample of the entire specialty. 
We welcome surveys with more sophisticated designs and these types of 
survey variations if relevance to our criteria is documented.
    We would need to make the supplemental survey data that we 
determine complies with the above criteria consistent with the SMS data 
we are using. Specifically, we are currently using 1994 through 1996 
specialty practice expense per-hour data from the SMS. Thus, we would 
deflate supplemental survey data to be consistent with the timeframe of 
the data from other specialties from the SMS. For example, since the 
midpoint of the SMS data we currently use is 1995, we would deflate 
supplemental survey data to 1995 using the Medicare Economic Index. 
Therefore, any comparison between supplemental survey information and 
the SMS practice expense per-hour data we are currently using should 
take into account that the data should be deflated to 1995 costs. We 
will make comparable adjustments to bring future supplemental surveys 
into the same timeframe as SMS data used in the future.
    In addition, if a specialty is represented in the SMS data, we will 
weight-average (based on the number of survey responses) the 
supplemental data with the existing SMS data already being used. If the 
specialty is not represented in the SMS data, we will substitute the 
new data for the crosswalked SMS data currently being used for the 
specialty. Specialties may also wish to consider that, under our 
methodology for determining practice expenses, we calculate specialty-
specific practice expense RVUs based on estimates of practice expenses 
for specific procedures in combination with the SMS data. The 
specialty-specific practice expense RVUs are weight-averaged based on 
the frequency of allowed services performed by a given specialty. Thus, 
supplemental data from a specialty that represents a small proportion 
of the allowed services for a given procedure code will have little 
influence on the procedure's final value in the weighted averaging.

II. Provisions of the Interim Final Rule

    In this interim final rule with comment, we are revising the 
precision criteria that a survey must meet to be accepted. Further, we 
are amending Sec. 414.22(b)(6) to reflect the 2-year extension in the 
deadline for submitting supplemental data. We will accept supplemental 
data that meet the established criteria that we receive by August 1, 
2002 to determine CY 2003 practice expense RVUs and by August 1, 2003 
to determine CY 2004 practice expense RVUs.
    We have reviewed the criteria set forth in the November 1, 2000 
final rule for the acceptance of supplemental practice expense survey 
data. We will continue the requirements that supplemental survey 
samples be drawn from the AMA Physician Masterfile whenever possible, 
be nationally representative, be conducted in a way that ensures 
confidentiality, and be based on the SMS survey instrument and 
protocols. We will also consider, however, non-probability sample 
designs that follow accepted statistical guidelines for non-probability 
sampling. We will allow specialties not represented in the AMA 
Physician Masterfile to draw samples from other nationally 
representative listings.
    Our criteria for acceptable response rates will continue to be as 
flexible as possible. Our goal is to accept survey data that are 
representative of the practice expenses of the specialty. 
Representativeness can be demonstrated either by a high rate of 
response or evidence that shows the respondents are not significantly 
or systematically different from non-respondents.
    In the November 1, 2000 final rule (65 FR 65383), we established a 
criterion that requires * * * a 90-percent confidence interval with a 
range of plus or minus 10 percent of the mean (that

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is, 1.645 times the standard error of the mean, divided by the mean 
should be equal to or less than 10 percent of the mean).'' It has been 
brought to our attention that this language could cause confusion. 
Instead, in this rule, we are indicating that we will accept surveys 
that achieve a sampling error of 0.15 or less at a confidence level of 
90 percent. This change refines both the measurement of precision and 
the level of precision we will accept and could result in our 
acceptance of more surveys than the past criteria. In addition, we will 
allow specialties that have submitted surveys previously rejected under 
the present criteria to resubmit these survey to be evaluated under the 
revised criterion.

III. Response to Comments

    Because of the large number of items of correspondence we normally 
receive on Federal Register documents published for comment, we are not 
able to acknowledge or respond to them individually. We will consider 
all comments we receive by the date and time specified in the ``DATES'' 
section of this preamble, and, when we proceed with a subsequent 
document, we will respond to the comments in the preamble to that 
document.

IV. Waiver of Proposed Rulemaking and 30-Day Delay in Effective 
Date

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register and invite public comment on a proposed rule. The 
notice of proposed rulemaking includes a reference to the legal 
authority under which the rule is proposed and the terms and substance 
of the proposed rule or a description of the subjects and issues 
involved. This procedure can be waived, however, if an agency finds 
good cause that notice-and-comment procedure is impracticable, 
unnecessary, or contrary to the public interest and incorporates a 
statement of the finding and its reasons in the rule issued. We 
believe, in this instance, that engaging in proposed rulemaking would 
be contrary to the public interest. We anticipate that our revised 
criteria will be more effective in evaluating survey data than current 
criteria and will permit us to use more of the practice expense data 
submitted. Currently, we are aware of physician specialty groups that 
will be conducting a survey in 2002. If we do not publish the improved 
criteria contained in this interim final rule, we will continue to use 
the current criteria to evaluate survey data to determine physician fee 
schedule payments because there is insufficient time to publish 
proposed criteria, allow a 60-day comment period, and publish a final 
rule in the Federal Register before the deadline for submitting 
supplemental survey information. There would be a delay of at least 1 
year until we could apply the revised criteria to survey data to 
calculate practice expense RVUs. Because we believe that application of 
the revised criteria will produce better practice expense data for use 
in determining practice expense RVUs, we believe that it is in the 
public interest for us to apply these criteria to evaluate surveys this 
year. To permit surveys to be evaluated using the most appropriate 
criteria, we find that it is in the public interest for us to waive 
notice-and-comment procedure.
    For this reason, we find good cause to waive the notice of proposed 
rulemaking and to issue this final rule on an interim basis. We are 
providing a 60-day public comment period.
    Section 553(d) of the Administrative Procedure Act (5 U.S.C. 
Section 553(d)) ordinarily requires a 30-day delay in the effective 
date of final rules after the date of their publication in the Federal 
Register. This 30-day delay in effective date can be waived, however, 
if an agency finds for good cause that the delay is impracticable, 
unnecessary, or contrary to the public interest, and the agency 
incorporates a statement of the finding and its reasons in the rule 
issued.
    We anticipate that our revised criteria will be more effective in 
evaluating survey data than current criteria and will permit us to use 
more of the practice expense data submitted. Currently, we are aware 
that physician specialty groups that will be conducting a survey in 
2002. The survey data must be submitted to us by August 1, 2002. Thus, 
if we do not waive the proposed rule and the delay in effective date, 
we believe that there would be a delay of at least 1 year until we 
could apply the revised criteria to survey data to calculate practice 
expense RVUs. Because we believe that application of the revised 
criteria will produce better practice expense data for use in 
determining practice expense RVUs, we believe that it is in the public 
interest for us to apply these criteria to evaluate our surveys this 
year. To permit surveys to be evaluated using the most appropriate 
criteria, we find that it is in the public interest for us to waive the 
30-day delay in effective date.

V. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement, which is 
subject to the PRA, is submitted to the Office of Management and Budget 
(OMB) for review and approval.
    Although this rule contains an information collection requirement, 
associated with the submission of a supplemental survey by any CMS-
designated specialty group, we have determined that this requirement is 
not subject to the PRA. In particular, to date, CMS has not received 
any more than three surveys in a given year. Therefore, this collection 
requirement is not subject to the PRA as defined under 5 CFR 1320.3(3).

VI. Regulatory Impact

    We have examined the impact of this interim final rule as required 
by Executive Order 12866 (September 1993, Regulatory Planning and 
Review), the regulatory Flexibility Act (RFA) (September 16, 1980 
Pub.L. 996-354), section 1102(b) of the Social Security Act, the 
Unfunded Mandates Reform Act (URMA) 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). 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 $8.5 million or less annually (except 
mental health specialties). (For details, see the Small Business 
Administration's web site at http://www.sba.gov/size/naicstb2-ser.pdf). 
For purposes of the RFA, all physicians and non-physician providers are 
considered to be small entities. Individuals and States are not 
included in the definition of a small entity.
    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.
    Since this interim final rule with comment period only modifies 
criteria

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for physicians, non-physicians and suppliers who wish to provide data 
to us in computing RVUs under the physician fee schedule, there are no 
budgetary implications arising from this rule. The UMRA also 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 $110 million or more in any year. This 
interim final rule with comment period will have no consequential 
effect on State, local, or tribal governments. We believe the private 
sector cost of this rule falls below these thresholds as well.
    For these reasons, we are not preparing analyses for either the RFA 
or section 1102(b) of the Act because we have determined, and we 
certify, that this rule will 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.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 414

    Administrative practice and procedure, Health facilities, Health 
professions, Kidney diseases, Medicare, Reporting and recordkeeping 
requirements, Rural areas, X-rays.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services amends 42 CFR chapter IV as follows:

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, 1395(hh), and 1395rr(b)(1)).


    2. In Sec. 414.22, the introductory text is republished and 
paragraph (b)(6) is revised to read as follows:


Sec. 414.22  Relative value units (RVUs).

    CMS establishes RVUs for physicians' work, practice expense, and 
malpractice insurance.
* * * * *
    (b) Practice expense RVUs. * * *
* * * * *
    (6)(i) CMS establishes criteria for supplemental surveys regarding 
specialty practice expenses submitted to CMS that may be used in 
determining practice expense RVUs.
    (ii) Any CMS-designated specialty group may submit a supplemental 
survey.
    (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 August 1, 2002 to determine CY 2003 practice 
expense RVUs and by August 1, 2003 to determine CY 2004 practice 
expense RVUs.

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

    Dated: May 21, 2002.
Thomas A Scully,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: June 5, 2002.
Tommy G. Thompson,
Secretary.
[FR Doc. 02-16332 Filed 6-27-02; 8:45 am]
BILLING CODE 4120-01-P