[Federal Register Volume 69, Number 219 (Monday, November 15, 2004)]
[Rules and Regulations]
[Pages 66236-66915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-24758]
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Part III
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 403, 405, 410, et al.
Medicare Program; Revisions to Payment Policies Under the Physician Fee
Schedule for Calendar Year 2005; Final Rule
Federal Register / Vol. 69, No. 219 / Monday, November 15, 2004 /
Rules and Regulations
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 403, 405, 410, 411, 414, 418, 424, 484, and 486
[CMS-1429-FC]
RIN 0938-AM90
Medicare Program; Revisions to Payment Policies Under the
Physician Fee Schedule for Calendar Year 2005
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule with comment period.
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SUMMARY: This final rule refines the resource-based practice expense
relative value units (RVUs) and makes other changes to Medicare Part B
payment policy. These policy changes concern: supplemental survey data
for practice expense; updated geographic practice cost indices for
physician work and practice expense; updated malpractice RVUs; revised
requirements for supervision of therapy assistants; revised payment
rules for low osmolar contrast media; changes to payment policies for
physicians and practitioners managing dialysis patients; clarification
of care plan oversight requirements; revised requirements for
supervision of diagnostic psychological testing services;
clarifications to the policies affecting therapy services; revised
requirements for assignment of Medicare claims; addition to the list of
telehealth services; and, several coding issues. We are making these
changes to ensure that our payment systems are updated to reflect
changes in medical practice and the relative value of services.
This final rule also addresses the following provisions of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(Pub. L. 108-17) (MMA): coverage of an initial preventive physical
examination; coverage of cardiovascular (CV) screening blood tests;
coverage of diabetes screening tests; incentive payment improvements
for physicians in shortage areas; payment for covered outpatient drugs
and biologicals; payment for renal dialysis services; coverage of
routine costs associated with certain clinical trials of category A
devices as defined by the Food and Drug Administration; hospice
consultation service; indexing the Part B deductible to inflation;
extension of coverage of intravenous immune globulin (IVIG) for the
treatment in the home of primary immune deficiency diseases; revisions
to reassignment provisions; and, payment for diagnostic mammograms,
physicians' services associated with drug administration services and
coverage of religious nonmedical health care institution items and
services to the beneficiary's home.
In addition, this rule updates the codes subject to the physician
self-referral prohibition, discusses payment for set-up of portable x-
ray equipment, discusses the third five-year refinement of work RVUs,
and solicits comments on potentially misvalued work RVUs.
We are also finalizing the calendar year (CY) 2004 interim RVUs and
are issuing interim RVUs for new and revised procedure codes for CY
2005.
As required by the statute, we are announcing that the physician
fee schedule update for CY 2005 is 1.5 percent, the initial estimate
for the sustainable growth rate for CY 2005 is 4.3, and the conversion
factor for CY 2005 is $37.8975.
DATES: Effective Date: These regulations are effective on January 1,
2005.
Applicability Date: Section 623 of the MMA, that is, the case-mix
portion of the revised composite payment methodology and the budget
neutrality adjustment required by the MMA, is applicable on April 1,
2005.
Comment Date: To be assured consideration, comments must be
received at one of the addresses provided below, no later than 5 p.m.
on January 3, 2005.
ADDRESSES: In commenting, please refer to file code CMS-1429-FC.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of three ways (no duplicates,
please):
1. Electronically. You may submit electronic comments on specific
issues in this regulation to http://www.cms.hhs.gov/regulations/ecomments. (Attachments should be in Microsoft Word, WordPerfect, or
Excel; however, we prefer Microsoft Word.)
2. By mail. You may 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-1429-
FC, P.O. Box 8012, Baltimore, MD 21244-8012.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to one of the following addresses. If you
intend to deliver your comments to the Baltimore address, please call
telephone number 800-743-3951 in advance to schedule your arrival with
one of our staff members. Room 445-G, Hubert H. Humphrey Building, 200
Independence Avenue, SW., Washington, DC 20201; or 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 received after the comment
period.
Submission of comments on paperwork requirements. You may submit
comments on this document's paperwork requirements by mailing your
comments to the addresses provided at the end of the ``Collection of
Information Requirements'' section in this document.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Pam West (410) 786-2302 (for issues related to Practice Expense,
Respiratory Therapy Coding, and Therapy Supervision).
Rick Ensor (410) 786-5617 (for issues related to Geographic
Practice Cost Index (GPCI) and malpractice RVUs).
Craig Dobyski (410) 786-4584 (for issues related to list of
telehealth services or payments for physicians and practitioners
managing dialysis patients).
Bill Larson or Tiffany Sanders (410) 786-7176 (for issues related
to coverage of an initial preventive physical examination).
Cathleen Scally (410) 786-5714 (for issues related to payment of an
initial preventive physical examination).
Joyce Eng (410) 786-7176 (for issues related to coverage of
cardiovascular screening tests).
Betty Shaw (410) 786-7176 (for issues related to coverage of
diabetes screening tests).
Anita Greenberg (410) 786-0548 (for issues related to payment of
cardiovascular and diabetes screening tests).
David Worgo (410) 786-5919, (for issues related to incentive
payment
[[Page 66237]]
improvements for physicians practicing in shortage areas).
Angela Mason or Jennifer Fan (410) 786-0548 (for issues related to
payment for covered outpatient drugs and biologicals).
David Walczak (410) 786-4475 (for issues related to reassignment
provisions).
Henry Richter (410) 786-4562 (for issues related to payments for
ESRD facilities).
Steve Berkowitz (410) 786-7176 (for issues related to coverage of
routine costs associated with certain clinical trials of category A
devices).
Terri Deutsch (410) 786-9462 (for issues related to hospice
consultation services).
Karen Daily (410) 786-7176 (for issues related to clinical
conditions for payment of covered items of durable medical equipment).
Dorothy Shannon (410) 786-3396 (for issues related to outpatient
therapy services performed ``incident to'' physicians' services).
Roberta Epps (410) 786-5919 (for issues related to low osmolar
contrast media or supervision of diagnostic psychological testing
services).
Gail Addis (410) 786-4522 (for issues related to care plan
oversight).
Jean-Marie Moore (410) 786-3508 (for issues related to religious
nonmedical health care institution services).
Diane Milstead (410) 786-3355 or Gaysha Brooks (410) 786-9649 (for
all other issues).
SUPPLEMENTARY INFORMATION:
Submitting Comments: We welcome comments from the public on the
following issues: interim RVUs for selected procedure codes identified
in Addendum C; zip code areas for Health Professional Shortage Areas
(HPSAs); the coverage of religious nonmedical health care institution
items and services to the beneficiary's home; the physician self
referral designated health services listed in tables 20 and 21; the
third five-year refinement of work RVUs for services furnished
beginning January 1, 2007; and, potentially misvalued work RVUs for all
services in the CY 2005 physician fee schedule. You can assist us by
referencing the file code CMS-1429-FC and the specific ``issue
identifier'' that precedes the section on which you choose to comment.
Inspection of Public Comments: Comments received timely will be
available for public inspection as they are processed, 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. To schedule an appointment to view
public comments, call 800-743-3951.
Copies: To order copies of the Federal Register containing this
document, send your request to: New Orders, Superintendent of
Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date
of the issue requested and enclose a check or money order payable to
the Superintendent of Documents, or enclose your Visa or Master Card
number and expiration date. Credit card orders can also be placed by
calling the order desk at (202) 512-1800 (or toll-free at 1-888-293-
6498) or by faxing to (202) 512-2250. The cost for each copy is $10. As
an alternative, you can view and photocopy the Federal Register
document at most libraries designated as Federal Depository Libraries
and at many other public and academic libraries throughout the country
that receive the Federal Register.
This Federal Register document is also available from the Federal
Register online database through GPO Access, a service of the U.S.
Government Printing Office. The web site address is: http://www.access.gpo.gov/nara/index.html.
Information on the physician fee schedule can be found on the CMS
homepage. You can access this data by using the following directions:
1. Go to the CMS homepage (http://www.cms.hhs.gov).
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. Under ``Policies/Regulations'' select ``Physician Fee
Schedule.''
To assist readers in referencing sections contained in this
preamble, we are providing the following table of contents. Some of the
issues discussed in this preamble affect the payment policies but do
not require changes to the regulations in the Code of Federal
Regulations. Information on the regulation's impact appears throughout
the preamble and is not exclusively in section VII.
Table of Contents
I. Background
A. Legislative History
B. Published Changes to the Fee Schedule
C. Components of the Fee Schedule Payment Amounts
D. Development of the Relative Value System
II. Provisions of the Proposed Regulation Related to the Physician
Fee Schedule
A. Resource-Based Practice Expense Relative Value Units
1. Resource-Based Practice Expense Legislation
2. Current Methodology
3. Practice Expense Proposals for Calendar Year 2005
B. Geographic Practice Cost Indices (GPCIs)
C. Malpractice RVUs
D. Coding Issues
III. Provisions Related to the Medicare Modernization Act of 2003
A. Section 611--Preventive Physical Examination
B. Section 613--Diabetes Screening
C. Section 612--Cardiovascular Screening
D. Section 413--Incentive Payment for Physician Scarcity
E. Section 303--Payment for Covered Outpatient Drugs and
Biologicals
F. Section 952--Revision to Reassignment Provisions
G. Section 642--Extension of Coverage of IVIG for the Treatment
in the Home of Primary Immune Deficiency Diseases
H. Section 623--Payment for Renal Dialysis Services
I. Section 731--Coverage of Routine Costs for Category A
Clinical Trials
J. Section 629--Part B Deductible
K. Section 512--Hospice Consultation Service
L. Section 302--Clinical Conditions for Coverage of Durable
Medical Equipment (DME)
M. Section 614--Payment for Certain Mammography Services
N. Section 305--Payment for Inhalation Drugs
O. Section 706 Coverage of Religious Nonmedical Health Care
Institution Services Furnished in the Home
IV. Other Issues
A. Provisions Related to Therapy Services
1. Outpatient Therapy Services Performed ``Incident to''
Physicians' Services
2. Qualification Standards and Supervision Requirements in
Therapy Private Practice Settings
3. Other Technical Revisions
B. Low Osmolar Contrast Media
C. Payments for Physicians and Practitioners Managing Patients
on Dialysis
D. Technical Revision--Sec. 411.404
E. Diagnostic Psychological Tests
F. Care Plan Oversight
G. Assignment of Medicare Claims-Payment to the Supplier
H. Additional Issues Raised by Commenters
V. Refinement of Relative Value Units for Calendar Year 2004 and
Response to Public Comments on Interim Relative Value Units for 2003
VI. Five-Year Refinement of Relative Value Units VII. Update to the
Codes for Physician Self-Referral Prohibition
VIII. Physician Fee Schedule Update for Calendar Year 2005
IX. Allowed Expenditures for Physicians' Services and the
Sustainable Growth Rate
X. Anesthesia and Physician Fee Schedule Conversion Factors for CY
2005
XI. Telehealth Originating Site Facility Fee Payment Amount Update
XII. Provisions of the Final Rule
XIII. Waiver of Proposed Rulemaking
XIV. Collection of Information Requirements
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XV. Response to Comments
XVI. Regulatory Impact Analysis
Addendum A--Explanation and Use of Addendum B.
Addendum B--2005 Relative Value Units and Related Information Used
in Determining Medicare Payments for 2005.
Addendum C--Codes With Interim RVUs
Addendum D--2005 Geographic Practice Cost Indices by Medicare
Carrier and Locality
Addendum E--2006 Geographic Practice Cost Indices by Medicare
Carrier and Locality
Addendum F--Comparison of 2004 GAFs to 2005 GAFs
Addendum G--Comparison of 2004 GAFs to 2006 GAFs
Addendum H--Specialty Care PSA Zip Codes
Addendum I--2005 Primary Care HSPA Zip Codes
Addendum J--Primary Care PSA Zip Codes
Addendum K--Mental Health HPSA Zip Codes
Addendum L--Updated List of CPT/HCPCS Codes Used To Describe Certain
Designated Health Services Under the Physician Self-Referral
Provision
In addition, because of the many organizations and terms to which
we refer by acronym in this final rule, we are listing these acronyms
and their corresponding terms in alphabetical order below:
AAA Abdominal aortic aneurysm
AAFP American Academy of Family Physicians
AAKP American Association of Kidney Patients
AANA American Association of Nurse Anesthetists
ABI Ankle brachial index
ABN Advanced beneficiary notice
ACC American College of Cardiology
ACLA American Clinical Laboratory Association
ACP American College of Physicians
ACPM American College of Preventative Medicine
ACR American College of Radiology
ADLs Activities of daily living
AFROC Association of Freestanding Radiation Oncology Centers
AGS American Geriatric Society
AHA American Heart Association
AMA American Medical Association
AOA American Osteopathic Association
APA Administrative Procedures Act
APTA American Physical Therapy Association
ASA American Society of Anesthesiologists
ASCP American Society for Clinical Pathology
ASN American Society of Nephrology
ASP Average sales price
ASTRO American Society for Therapeutic Radiation Oncology
ATA American Telemedicine Association
AWP Average wholesale price
BBA Balanced Budget Act of 1997
BBRA Balanced Budget Refinement Act of 1999
BIPA Benefits Improvement and Protection Act of 2000
BLS Bureau of Labor Statistics
BMI Body mass index
BSA Body surface area
CAH Critical access hospital
CAP College of American Pathologists
CAPD Continuous ambulatory peritoneal dialysis
CCPD Continuous cycling peritoneal dialysis
CDC Centers for Disease Control and Prevention
CF Conversion factor
CFR Code of Federal Regulations
CLIA Clinical Laboratory Improvement Amendment
CMA California Medical Association
CMS Centers for Medicare & Medicaid Services
CNMs Certified nurse midwives
CNS Clinical nurse specialist
COPD Chronic obstructive pulmonary disease
CORF Comprehensive outpatient rehabilitation facilities
CPEP Clinical Practice Expert Panel
CPI Consumer Price Index
CPO Care Plan Oversight
CPT [Physicians'] Current Procedural Terminology [4th Edition, 2002,
copyrighted by the American Medical Association]
CRNAs Certified Registered Nurse Anesthetists
CT Computed tomography
CV Cardiovascular
CY Calendar year
DEXA Dual energy x-ray absorptiometry
DHS Designated health services
DME Durable medical equipment
DMEPOS Durable medical equipment, prosthetics, orthotics, and
supplies
DMERC Durable medical equipment regional carrier
DOI Departments of Insurance
DRE Digital rectal exam
DRG Diagnosis-related groups
DVT Deep venous thrombosis
EKG Electrocardiogram
E/M Evaluation and management
EPO Erythropoeitin
ESRD End-stage renal disease
FAX Facsimile
FMR Fair market rental
FQHC Federally qualified healthcare center
FR Federal Register
FY Fiscal year
GAF Geographic adjustment factor
GPCI Geographic practice cost index
GTT Glucose tolerance test
HBO Hyperbaric oxygen
HCPAC Health Care Professional Advisory Committee
HCPCS Healthcare Common Procedure Coding System
HHA Home health agency
HHS [Department of] Health and Human Services
HIPAA Health Insurance Portability and Accountability Act of 1996
HOCM High osmolar contrast media
HPSA Health professional shortage area
HRSA Health Resources and Services Administration
HsCRP high sensitivity C-reactive protein
HUD Housing and Urban Development
IDTFs Independent diagnostic testing facilities
IMRT Intensity modulated radiation therapy
IOM Internet Only Manual
IPD Intermittent peritoneal dialysis
IPPE Initial preventive physical examination
IPPS Inpatient prospective payment system
ISO Insurance Services Office
IVIG Intravenous immune globulin
JUAs Joint underwriting associations
KCP Kidney Care Partners
KECC Kidney Epidemiology and Cost Center
LCD Local coverage determination
LMRP Local medical review policies
LOCM Low osmolar contrast media
LUPA Low utilization payment adjustment
MCM Medicare Carrier Manual
MCP Monthly capitation payment
MedPAC Medicare Payment Advisory Commission
MEI Medicare Economic Index
MGMA Medical Group Management Association
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003
MPFS Medicare physician fee schedule
MSA Metropolitan statistical area
NAMCS National Ambulatory Medical Care Survey
NCD National coverage determination
NCIPC National Center for Injury Prevention and Control
NDC National drug code
NIH National Institutes of Health
NP Nurse practitioner
NPP Nonphysician practitioners
OASIS Outcome and Assessment Information Set
OBRA Omnibus Budget Reconciliation Act
OIG Office of Inspector General
OMB Office of Management and Budget
OPPS Outpatient prospective payment system
OT Occupational therapy
OTA Occupational therapist assistant
OTPP Occupational therapists in private practice
PA Physician assistant
PAD Peripheral arterial disease
PC Professional component
PCF Patient compensation fund
PD Peritoneal dialysis
PEAC Practice Expense Advisory Committee
PET Positron emission tomography
PFS Physician Fee Schedule
PHSA Public Health Services Act
PIAA Physician Insurers Association of America
PIN Provider identification number
PLI Professional liability insurance
POS Prosthetics, orthotics and supplies
PPI Producer price index
PPS Prospective payment system
PRA Paperwork Reduction Act
PSA Physician scarcity area
PT Physical therapy
PTA Physical therapist assistant
PTPP Physical therapists in private practice
PVD Peripheral vascular disease
RFA Regulatory Flexibility Act
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RHC Rural health clinic
RHHI Regional home health intermediary
RIA Regulatory impact analysis
RN Registered nurse
RNHCI Religious nonmedical health care institution
RPA Renal Physicians Association
RT Respiratory therapy
RTs Respiratory therapists
RUC [AMA's Specialty Society] Relative [Value] Update Committee
RUCA Rural-Urban commuting area
RVU Relative value unit
SAF Standard analytic file
SCHIP State Child Health Insurance Program
SGR Sustainable growth rate
SHIPs State Health Insurance Assistance Programs
SIR Society for Interventional Radiology
SLP Speech language pathology
SMR Standardized mortality ratio
SMS [AMA's] Socioeconomic Monitoring System
SNF Skilled nursing facility
TC Technical component
UAF Update adjustment factor
URR Urea reduction ratios
USPSTF U.S. Preventive Services Task Force
I. Background
A. Legislative History
Medicare has paid for physicians' services under section 1848 of
the Social Security Act (the Act), ``Payment for Physicians' Services''
since January 1, 1992. The Act requires that payments under the fee
schedule be based on national uniform relative value units (RVUs)
reflecting 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
$20 million, we must make adjustments to ensure that they do not
increase or decrease by more than $20 million.
B. Published Changes to the Fee Schedule
The July 2000 and August 2003 proposed rules ((65 FR 44177) and (68
FR 49030), respectively), include a summary of the final physician fee
schedule rules published through February 2003.
In the November 7, 2003 final rule, we refined the resource-based
practice expense RVUs and made other changes to Medicare Part B payment
policy. The specific policy changes concerned: the 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 updated the codes subject
to the physician self-referral prohibition. We also made revisions to
the sustainable growth rate and the anesthesia conversion factor.
Additionally, we finalized the CY 2003 interim RVUs and issued interim
RVUs for new and revised procedure codes for CY 2004.
As required by the statute, we announced that the physician fee
schedule update for CY 2004 was -4.5 percent; that the initial estimate
of the sustainable growth rate for CY 2004 was 7.4 percent; and that
the conversion factor for CY 2004 was $35.1339.
Subsequent to the November 7, 2003 final rule, the Congress enacted
the Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (Pub. L. 108-17) (MMA). On January 7, 2004, an interim final rule
was published to implement provisions of the MMA applicable in 2004 to
Medicare payment for covered drugs and physician fee schedule services.
These provisions included--
Revising the current payment methodology for Medicare Part
B covered drugs and biologicals that are not paid on a cost or
prospective payment basis;
Making changes to Medicare payment for furnishing or
administering drugs and biologicals;
Revising the geographic practice cost indices;
Changing the physician fee schedule conversion factor.
(Note: The 2004 physician fee schedule conversion factor is $37.3374);
and
Extending the ``opt-out'' provisions of section
1802(b)(5)(3) of the Act to dentists, podiatrists, and optometrists.
The information contained in the January 7, 2004 interim final rule
concerning payment under the physician fee schedule superceded
information contained in the November 7, 2003 final rule to the extent
that the two are inconsistent.
C. Components of the Fee Schedule Payment Amounts
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 unit (RVU) 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:
Payment = [(RVU work x GPCI work) + (RVU practice expense x GPCI
practice expense) + (RVU malpractice x GPCI malpractice)] x CF
The CF for calendar year (CY) 2005 appears in section X. The RVUs
for CY 2005 are in Addendum B. The GPCIs for CY 2005 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.
D. Development of the Relative Value System
1. Work Relative Value Units
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, which we integrated into the
overall physician fee schedule. The RVUs for anesthesia services were
based on RVUs from a uniform relative value guide. We established a
separate CF for anesthesia services, and we continue to recognize
[[Page 66240]]
time as a factor in determining payment for these services. As a
result, there is a separate payment system for anesthesia services.
2. Practice Expense and Malpractice Expense Relative Value Units
Section 1848(c)(2)(C) of the Act requires 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, because 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's service. As amended by the Balanced
Budget Act of 1997 (BBA) (Pub. L. 105-33), enacted on August 5, 1997,
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.
II. Provisions of the Proposed Rule Related to the Physician Fee
Schedule
In response to the publication of the August 5, 2004 proposed rule
(69 FR 47488), we received approximately 9,302 comments. We received
comments from individual physicians, health care workers, professional
associations and societies, and beneficiaries. The majority of the
comments addressed the proposals related to ``incident to'' therapy
services, GPCI, diagnostic psychological testing, and drug issues
including average sales price (ASP).
The proposed rule discussed policies that affected the number of
RVUs on which payment for certain services would be based. The proposed
rule also discussed policies related to implementation of the MMA. RVU
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 discuss in detail the effects of these changes in the Regulatory
Impact Analysis in section XIV.
For the convenience of the reader, the headings for the policy
issues correspond to the headings used in the August 5, 2004 proposed
rule. More detailed background information for each issue can be found
in the August 5, 2004 proposed rule.
A. Resource-Based Practice Expense Relative Value Units
1. Resource-Based Practice Expense Legislation
Section 121 of the Social Security Act Amendments of 1994 (Pub. L.
103-432), enacted on October 31, 1994, amended section
1848(c)(2)(C)(ii) of the Social Security Act (the Act) and required us
to develop a methodology for a resource-based system for determining
practice expense RVUs for each physician's service beginning in 1998.
Until that time, physicians' practice expenses were established based
on historical allowed charges.
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)(C)(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)(C)(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. (The 1999 and 2003 final rules (64 FR 59380 and 68 FR 63196,
respectively, extended the period during which we would accept
supplemental data.)
2. Current Methodology for Computing the Practice Expense Relative
Value Unit System
In the November 2, 1998 final rule (63 FR 58910), effective with
services furnished on or after January 1, 1999, we established at 42
CFR 414.22(b)(5) 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 CPEP data were
collected from panels of physicians, practice administrators, and
nonphysicians (for example registered nurses) nominated by physician
specialty societies and other groups. The CPEP panels identified the
direct inputs required for each physicians service in both the office
setting and out-of-office setting. The AMA's SMS data provided
aggregate specialty-specific information on hours worked and practice
expenses. 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.
Also in the November 2, 1998 final rule, in response to comments,
we discussed the establishment of the Practice Expense Advisory
Committee (PEAC) of the AMA's Specialty Society Relative Value Update
Committee (RUC), which would review code'specific CPEP data during the
refinement period. This committee would include representatives from
all major specialty societies and would make recommendations to us on
suggested changes to the CPEP data.
As directed by the BBRA, we also established a process (see 65 FR
65380) under which we would accept and use, to the maximum extent
practicable and consistent with sound data practices, data collected by
entities and organizations to supplement the data we normally collect
in determining the practice expense component of the physician fee
schedule.
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a. Major Steps
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.)
Step 1--Determine the specialty specific practice expense
per hour of physician direct patient care. We used the AMA's SMS survey
of actual aggregate cost data by specialty to determine the practice
expenses per hour for each specialty. We calculated the practice
expenses per hour for the specialty by dividing the aggregate practice
expenses for the specialty by the total number of hours spent in
patient care activities.
Step 2--Create a specialty-specific practice expense pool
of practice expense costs for treating Medicare patients. To calculate
the total number of hours spent treating Medicare patients for each
specialty, we used the physician time assigned to each procedure code
and the Medicare utilization data. The primary sources for the
physician time data were surveys submitted to the AMA's RUC and surveys
done by Harvard for the establishment of the work RVUs. We then
multiplied the physician time assigned per procedure code by the number
of times that code was billed by each specialty, and summed the
products for each code, by specialty, to get the total physician hours
spent treating Medicare patients for that specialty. We then calculated
the specialty-specific practice expense pools by multiplying the
specialty practice expenses per hour (from step 1) by the total
Medicare physician hours for the specialty.
Step 3--Allocate the specialty-specific practice expense
pool to the specific services (procedure codes) performed by each
specialty. For each specialty, we divided the practice expense pool
into two groups based on whether direct or indirect costs were involved
and used a different allocation basis for each group.
(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. For the separate practice expense pool for services
without physician work RVUs, we have used, on an interim basis, 1998
practice expense RVUs to allocate the direct cost pools.
(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, or the 1998 practice expense
RVUs, in combination 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).
Step 4--The direct and indirect costs are then added
together to attain the practice expense for each procedure, by
specialty. For procedures performed by more than one specialty, the
final practice expense allocation was a weighted average of practice
expense allocations for the specialties that perform the procedure,
based on the frequency with which each specialty performs the procedure
on Medicare patients.
b. Other Methodological Issues
i. Nonphysician Work Pool
As an interim measure, until we could further analyze the effect of
the top-down methodology on the Medicare payment 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. We first used the average clinical
staff time from the CPEP data and the ``all physicians'' practice
expense per hour to create the pool. In the December 2002 final rule,
we changed this policy and now use the total clinical staff time and
the weighted average specialty-specific practice expense per hour for
specialties with services in this pool. In the next step, we used the
adjusted 1998 practice expense RVUs to allocate this pool to each
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.
A specialty society may request that its services be removed from
the nonphysician work pool. We have removed services from the
nonphysician work pool if the requesting specialty predominates
utilization of the service.
ii. Crosswalks for Specialties Without Practice Expense Survey Data
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.
iii. Physical Therapy Services
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.
3. Practice Expense Proposals for Calendar Year 2005
a. Supplemental Practice Expense Surveys
i. Survey Criteria and Submission Dates
As required by the BBRA, we established criteria to evaluate survey
data collected by organizations to supplement the SMS survey data used
in the calculation of the practice expense component of the physician
fee schedule. The deadline for submission of supplemental data to be
considered in CY 2006 is March 1, 2005.
ii. Survey by the College of American Pathologists (CAP)
In the August 5, 2004 rule, we proposed to incorporate the CAP
survey data into the practice expense methodology and to implement a
change to the practice expense methodology to calculate the technical
component RVUs for pathology services as the difference between the
global and professional component RVUs. (This technical change was
proposed in the June 28, 2002 Federal Register (67 FR 43849), but, at
the specialty's request, we delayed implementation of this change for
pathology services to permit evaluation of the combined effects of the
use of the new survey data along with this technical change to the
methodology.) We proposed to use the following practice expense per
hour figures for specialty 69--Independent Laboratory.
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[GRAPHIC] [TIFF OMITTED] TR15NO04.487
Comment: Specialty organizations representing clinical laboratories
and pathologists expressed support for the use of the CAP supplemental
survey data and urged us to finalize this proposal.
Response: We will incorporate the CAP survey data into the practice
expense methodology and implement the proposed change to the practice
expense methodology to calculate the technical component RVUs for
pathology services as the difference between the global and
professional component RVUs.
iii. Submission of Supplemental Surveys
We received surveys from the American College of Cardiology (ACC),
the American College of Radiology (ACR), and the American Society for
Therapeutic Radiation Oncology (ASTRO). Our contractor, The Lewin
Group, evaluated the data and recommended that we accept the data from
the ACC and the ACR, but indicated that the survey from ASTRO did not
meet the precision criteria established for supplemental surveys and,
thus, did not recommend using the ASTRO survey results at this time. We
agreed with these recommendations. However, as explained in the August
5, 2004 proposed rule, the ACR and the ACC requested that we not use
the data until we have a stable and global solution that is workable
for all specialties that are currently paid using the nonphysician work
pool. We agreed with these requests and proposed delaying use of these
supplemental surveys until issues related to the nonphysician work pool
can be addressed.
Comment: The ACR expressed appreciation for our acceptance of the
supplemental data and for our proposal to delay implementation until
next year, as they had requested, to allow further time to examine the
issue of the nonphysician work pool. The Society for Interventional
Radiology (SIR) also expressed support for the use of the ACR data and
the delay in implementation.
Response: We look forward to working with these and other
specialties as we seek a permanent solution to practice expense issues
associated with the nonphysician work pool.
Comment: ASTRO stated that they appreciate the opportunity to
submit data and, that they understand we will not be using the data in
2005. ASTRO further commented that, due to the specific practice
patterns and practice environment of radiation oncology, new data,
regardless of the response rate, may not meet the criteria. ASTRO
further stated that they will continue to work with CMS and with the
Lewin Group as this issue is analyzed. The Association of Freestanding
Radiation Oncology Centers (AFROC) expressed concern that freestanding
centers that have higher costs than hospital-based centers were
underrepresented by the ASTRO survey. They also expressed concern about
the reference in the Lewin Group report to crosswalking radiation
oncology costs from another specialty. In addition, AFROC argued that
we should not average costs associated with freestanding centers with
those that are hospital-based, because the costs would be understated.
They urged us to ensure that any assumption regarding
representativeness of any survey data is justified.
Response: We will take these comments into consideration as we
continue to work with these groups concerning the supplemental survey
data. We currently have no plans to propose a practice expense
crosswalk for radiation oncology.
Comment: The ACC expressed appreciation that we are not eliminating
the nonphysician workpool until methodologic issues are addressed.
While they support the delay in implementing their supplemental survey
data, they believe that the contractor's suggestion that the ACC survey
data could be blended with the existing SMS survey data is invalid for
two reasons: (1) The suggestion that similar changes to physician
practice (for example, increased use of technology) may have occurred
throughout all physician services is an unfounded speculation because
few other specialties are as technologically driven as cardiology; and
(2) other supplemental data has not been blended and all specialties
must be treated consistently.
Response: We will take these comments into consideration as part of
the evaluation and discussion of the cardiology survey data in next
year's proposed rule.
Comment: The American Urological Association requested that, as we
explore alternate sources of data and consider how to incorporate new
practice expense data into the methodology, we find a way to
incorporate recently collected specialty supplemental data into the new
efforts. They also requested that we clarify whether we would apply the
budget neutrality exemption to any increases in drug administration PE
RVUs that result from the use of urology survey data that will be
submitted under the supplemental survey process.
Response: We anticipate that we would incorporate all accepted
supplemental survey data into any comprehensive changes to the
nonphysician work pool.
As we explained in the January 7, 2004 Federal Register (69 FR 1093
through 1094), section 303(a)(1) of the MMA modifies section
1848(c)(2)(B) of the Act to provide an exemption from the budget
neutrality requirements in 2006 for further increases in the practice
expense RVUs for drug administration that may result from using survey
data from specialties meeting certain criteria. The survey must include
expenses for the administration of drugs and biologicals and be
submitted by a specialty that receives more than 40 percent of its 2002
Medicare revenues from drugs. Urology received more than 40 percent of
its 2002 Medicare revenues from drugs. Therefore, if we were to receive
a practice expense survey of urologists by March 1, 2005
[[Page 66243]]
that included expenses for the administration of drugs and biologicals
and the survey met the criteria we have established (and those of
section 1848(c)(2)(I)(ii) of the Act), we would exempt the change in
the practice expense RVUs for drug administration services from the
budget neutrality requirements of section 1848(c)(2)(B) of the Act.
b. Practice Expense Advisory Committee (PEAC)
Recommendations on CPEP Inputs for 2005
CPEP Refinement Process.
In the August 5, 2004 proposed rule, we included the PEAC
recommendations from meetings held in March and August 2003 and January
and March 2004, which accounted for over 2,200 codes from many
specialties. We also stated that future practice expense issues,
including the refinement of the remaining codes not addressed by the
PEAC, would be handled by the RUC.
Comment: We received comments from the AMA that future practice
expense issues, including the refinement of the remaining codes not
addressed by the PEAC, would be handled by the RUC with the help of a
new ad hoc committee, now termed the Practice Expense Review Committee
(PERC), comprised of former PEAC members. The RUC also noted that their
Practice Expense Subcommittee remains committed to reviewing
improvements to the practice expense methodology.
The AMA and the RUC, as well as the specialty society representing
neurological surgeons, noted their appreciation of our continued
efforts to improve the direct practice expense data and to establish a
reasonable methodology for determining practice expense relative
values.
Response: We look forward to our continuing work with the AMA, the
RUC and all the specialty societies on the refinement of the remaining
codes and with ongoing practice expense issues.
Comment: The National Association for the Support of Long Term Care
expressed concern about the dissolution of the PEAC and requested that
we require the RUC to expand its membership to include a broad array of
providers who are reimbursed under the physician fee schedule.
Response: Because the RUC is an independent committee, we are not
in a position to set the requirements for RUC membership. However, we
are confident that the RUC and the Health Care Professional Advisory
Committee, which also sends practice expense recommendations directly
to us, together represent two broad ranges of practitioners, both
physician and nonphysician.
Comment: A specialty society suggested that there should be a
process for fixing minor errors that are identified outside of the
refinement process. The commenter also suggested that there should be a
system to address individual exceptions to PEAC standard packages.
Response: If we have made errors, major or minor, in any part of
our calculation of practice expense RVUs in this final rule, inform us
as soon as possible so that we are able to correct them in the
physician fee schedule correction notice. Any other revisions would
have to be made in the next physician fee schedule rule. If a specialty
society believes that a RUC decision is not appropriate, the society
can always request that the decision be revisited or can discuss the
issue with us at any time. For the concern with the standard packages
adopted by the PEAC, it is our understanding that all presenters at the
RUC have the opportunity to demonstrate that something other than the
standard would be more appropriate.
PEAC Recommendations.
We proposed to adopt nearly all of the PEAC recommendations.
However, we disagreed with the PEAC recommendation for clinical labor
time for CPT code 99183, Physician attendance and supervision of
hyperbaric oxygen therapy, per session, and proposed a total clinical
labor time of 112 minutes for this service.
Comment: Specialty societies representing interventional radiology
and neurological surgeons, as well as the AMA, expressed appreciation
for our acceptance of well over 2,000 PEAC refinements in this rule.
However, the specialty society representing orthopaedic surgeons
commented that some of our proposals appeared to be circumventing the
PEAC process, in that we changed the PEAC recommendation for hyperbaric
oxygen (HBO) therapy and proposed in-office inputs for two services
rather than referring these to the RUC.
Response: We appreciate the hard work and perseverance on the part
of the PEAC and the specialty societies that produced the recommended
refinements for so many services. In addition, we do not believe that
we circumvented the PEAC process in any way. We have the greatest
respect for the PEAC and RUC recommendations that we received. However,
we do have the final responsibility for all payments made under the
physician fee schedule, and this can lead to disagreement with a
specific recommendation. The RUC itself has always demonstrated its
understanding and respect for our responsibility in this regard. With
regard to the two services that we priced in the office, we stated
explicitly in the proposed rule that we were requesting that the RUC
review the practice expense inputs.
Comment: The specialty society representing family physicians
disagreed with our proposed changes to the PEAC recommendations for the
clinical labor time for CPT code 99183, Physician attendance and
supervision of hyperbaric oxygen therapy, per session. The commenter
contended that a physician providing this service would probably have
multiple hyperbaric oxygen chambers; therefore, staff would not be in
constant attendance. However, the specialty society representing
podiatrists supported this change in clinical staff time.
Response: Based on our concern that the PEAC recommendation of 20
minutes of clinical staff time during the intra-service period
undervalued the clinical staff time, we proposed increasing this time
to 90 minutes in the proposed rule. This was, of course, subject to
comment. We believe there is some merit to the claim that the clinical
staff may be monitoring more than one chamber at a time. Therefore, we
are adjusting the time for the intra-service period from the proposed
90 minutes to 60 minutes in recognition of this point. We will continue
our examination of this issue and entertain ongoing dialog with all
interested organizations and individuals familiar with this service to
assure the accuracy of the intra-service time.
Comment: The Cardiac Event Monitoring Provider Group Coalition
expressed concern about the PEAC recommendations that would
substantially reduce the clinical staff time associated with cardiac
monitoring services. Of particular concern to the Coalition was the 70
percent reduction in time for CPT code 93271, the code for cardiac
event monitoring, receipt of transmissions, and analysis. Although all
these services are currently priced in the nonphysician work pool and
this decrease in the staff times has no immediate impact, the commenter
was concerned that, when the nonphysician work pool is eliminated,
these services will be undervalued. The commenter also believed that
the PEAC recommendations may not have reflected all the supplies and
equipment utilized in these services and included a complete list of
necessary supplies
[[Page 66244]]
and equipment. The American College of Cardiology (ACC) presented these
services at the PEAC meeting and commented they had been unable to
collect sufficient data so that the PEAC could make an appropriate
recommendation.
Response: It is clear from the Coalition and ACC comments that more
information is needed in order to ensure that the appropriate practice
expense inputs are assigned to these services in the event that they
are removed from the nonphysician work pool. We would be glad to work
with the Coalition and the specialty society so that they can make a
new presentation to the RUC this coming year.
Adjustments To Conform With PEAC Standards
We also reviewed those codes that are currently unrefined or that
were refined early in the PEAC process to apply some of the major PEAC-
agreed standards. For the unrefined 10-day global services, we proposed
to substitute for the original CPEP times the PEAC-agreed standard
post-service office visit clinical staff times used for all 90-day and
refined 10-day global services. We also proposed to eliminate the
discharge day management clinical staff time from all but the 10 and
90-day global codes, substituting one post-service phone call if not
already in the earlier data. Lastly, we proposed to delete any extra
clinical staff time for post-visit phone calls for 10 and 90-day global
service because that time is already included in the time allotted for
the visits.
Comment: A specialty society representing family physicians
supported the elimination of the discharge day management time assigned
in the facility setting for all 0-day global services, as well as all
the other adjustments we made to apply PEAC standards. However, several
specialty societies representing gastroenterology and orthopaedics, as
well as the American College of Physicians, did not agree with the
deletion of the discharge day management time. These groups requested
restoration of the six minutes allocated to the discharge day
management for 0-day global services and argued that most 0-day
services require as much staff time as do many 10-day global services
performed in the outpatient setting. One of these commenters did not
believe a rationale was provided for this change. Another commenter,
although recommending that any future refinements take into account all
of the PEAC standards, expressed concern regarding all of the above
changes, suggesting that this could lead to additional anomalies and
recommending that the revisions should be reviewed by the RUC.
Response: The PEAC recommended that the discharge day management
time apply only to 10-day and 90-day global services and we were
complying with this recommendation. We also believe that this PEAC
recommendation is reasonable; it is hard to imagine what tasks a
physician's clinical staff back in the office is performing for a
patient during the period that the patient is undergoing a same-day
procedure in the hospital outpatient department. However, the point
made about 10-day global procedures is pertinent. We would suggest that
the RUC reconsider whether the discharge day management clinical staff
time should apply only to services that are typically performed in the
inpatient setting. We also believe that it was appropriate to apply the
PEAC standards to codes that were not refined or that were refined
before the standards were developed. The application of these standards
is not only fair, but can also help to avoid the possible rank order
anomalies cited by the commenter.
Methacholine Chloride
The PEAC recommendations for CPT codes 91011 and 91052 included a
supply input for methacholine chloride as the injected stimulant for
these two services. In discussions with representatives from the
gastroenterology specialty society subsequent to receipt of the PEAC
recommendations, we learned this is incorrect. For the esophageal
motility study, CPT code 91011, we proposed to include edrophonium as
the drug typically used in this procedure. For the gastric analysis
study, CPT code 91052, we were unable to identify the single drug that
is most typically used with this procedure. We requested that
commenters provide us with information on the drug that is most
typically used for CPT code 91052, including drug dosage and price, so
that it could be included in the practice expense database.
Comment: Several specialty societies representing allergists,
pulmonologists and chest physicians, as well as the AMA, requested that
the additional cost of methacholine be reflected in the RVUS for the
bronchial challenge test, CPT code 95070. As an alternative, the
specialty society representing allergists suggested that a HCPCS code
could be created so that methacholine could be billed separately.
In response to our request for information about the supply inputs
for CPT codes 91011 and 91052, the American Gastroenterological
Association (AGA) indicated that edrophonium may be an appropriate
supply proxy for CPT code 91011, but, in practice, other agents are
more commonly used. However, they provided no additional information
regarding these other agents. AGA also stated that the most commonly
used drug for CPT code 91052 is pentagastrin, but betazole or histamine
may also be used. Again, they did not provide further specific
information.
Response: Because CPT code 95070 is valued in the nonphysician work
pool, the PEAC's addition of methacholine to this procedure could not
be captured by the practice expense RVUs. However, a J-code was
established, J7674, Methacholine chloride administered as inhalation
solution through nebulizer, per 1mg, so that this drug can be billed
separately. Accordingly, we have deleted methacholine from the practice
expense database.
For CPT code 91011, we have retained the drug edrophonium, and our
proposed price of $4.67 per ml, as a supply in the practice expense
database. However, we were not able to include a price for pentagastrin
in the supply practice expense database for CPT code 91052. We will be
happy to work with the specialty societies involved with both of these
procedures to obtain accurate drug pricing for the 2006 fee schedule.
Nursing Facility and Home Visits.
We proposed to adopt the direct practice expense input
recommendations from the March 2003 PEAC meeting for CPT codes 99348
and 99350, two E/M codes for home visits, as well as the March 2004
PEAC recommendations for E/M codes for nursing home services (CPT codes
99301 through 99316).
Comment: A specialty group representing family physicians supported
the acceptance of the PEAC recommendations for nursing facility visits,
even though this resulted in a decrease for these services. The
commenter stated that the decrease occurred because the original CPEP
data was flawed and the clinical staff times were too high. The
commenter also stated that the payments in the facility setting will
increase for these services and that setting has the higher volume of
visits. Other commenters representing long term care physicians,
geriatricians and podiatrists expressed disappointment in these PEAC
recommendations and stated that, while the PEAC did consider the views
of long term care physicians, the PEAC failed to accept these views
even though they were supported by data. These commenters believe the
PEAC did not
[[Page 66245]]
recommend an appropriate increase based on a false assumption that the
nursing home provides the staff. Another commenter contended that the
new values do not adequately account for work performed by the
physician's clinical staff. The commenter stated that the pre- and
post-times for these codes are less than for the comparable office
visit codes, even though it is clear that more clinical staff time is
required for the nursing facility resident. One commenter suggested
that these concerns would need to be addressed within the framework of
the 5-year review. The specialty society representing homecare
physicians also commented that, rather than challenging a flawed
system, they will use the 5-year review process to have work and
practice expense re-valuated for the home visit codes.
Response: While sympathetic to the concerns expressed by the long-
term care physicians regarding the overall decrease in clinical staff
time in the nursing facility E/M procedures, we believe the PEAC
recommendations for these services to be reasonable. We also agree with
commenters regarding the upcoming 5-year review process as a means to
address the physician work component of these codes. To the extent that
there is overlap between the physician time and the clinical labor
practice expenses involved in a particular procedure, the 5-year review
process can be utilized to address these issues. We encourage the home
care physicians and the long-term care physicians to consider using the
5-year review process for these codes.
Suggested Corrections to the CPEP Data.
Comment: The RUC and American Podiatric Medical Association
identified a number of PEAC refinements from the August 2003 meeting
that were not reflected in the practice expense database and asked that
these be implemented. The RUC also asked us to correct the equipment
times for all of the 90-day global services to correspond with the
PEAC-refined clinical staff times for these codes.
Response: We have made the recommended corrections to our practice
expense database.
Comment: The specialty society representing hematology noted the
supply items missing from the practice expense database for CPT codes
36514 through 36516 that had been included in the CMS-accepted PEAC
refinements.
Response: We regret the error. These items are incorporated into
the practice expense database.
Comment: The specialty society representing pediatrics as well as
the RUC commented that the PEAC recommendations also included a
recommendation for a change in the global period for CPT code 54150,
Circumcision, using clamp or other device; newborn, from a 10-day
global to an ``xxx'' designation, which would mean the global period
does not apply. This issue was not discussed in the proposed rule and
the commenters requested that this change be reflected in the final
rule.
Response: As stated by the commenters, this request was included in
the PEAC recommendations but was inadvertently omitted from the
proposed rule. We agree that the 10-day global period currently
assigned to this procedure may not be appropriate because the physician
performing the procedure most likely does not see the infant for a
post-procedure visit. However, we believe that a 0-day global period
rather than ``xxx'' should be assigned to this procedure. We generally
use the ``xxx'' designation for diagnostic tests and no surgical
procedure currently is designated as an ``xxx'' global service. We
believe this will accomplish the same end because most any other
service performed at the same time as the circumcision could be billed
with the appropriate modifier. We are adjusting the practice expense
database to delete any staff time, supplies and equipment associated
with the post-procedure office visit.
Comment: Specialty societies representing dermatology stated that
there was an error in the nonfacility practice expense RVUS for the
Mohs micrographic surgery service, CPT code 17307, due to the omission
of clinical staff time from the practice expense database.
Response: We have corrected the practice expense database to
reflect the appropriate clinical staff time.
Comment: We received comments from the American College of
Radiology (ACR) and Society of Nuclear Medicine noting that some of the
codes used by their specialty were omitted from the listing of PEAC-
refined codes that appeared in Addendum C in our proposed rule. They
submitted a complete list of the codes that had gone through PEAC
refinement, beginning at the first PEAC meeting in April 1999, and
asked that we include these codes on the Addendum.
Response: We appreciate the specialty societies bringing to our
attention that some of their codes were omitted from Addendum C and we
have reviewed the codes on their submitted list. Addendum C was meant
to list only those codes that were refined in this year's rule, and
thus, only listed those refined by the PEAC from March and August 2003
and January and March 2004. However, it does appear that there is some
confusion regarding what codes were refined during this period,
particularly from the March 2004 meeting. We will work with all medical
societies and the RUC to clarify the status of all the codes in
question.
Other Issues.
Comment: The RUC requested that we publish practice expense RVUs
for all Medicare noncovered services for which the RUC has recommended
direct inputs. We also received a request from the American Academy of
Pediatrics to publish work and practice expense RVUs for the noncovered
nasal or oral immunization services (CPT codes 90473 and 90474) and the
visual acuity test (CPT code 99173).
Response: In the past, we have published the practice expense RVUs
for only a small number of noncovered codes which are listed in our
national payment files that can be accessed via our physician web page
under ``Medicare Payment Systems'' as part of the public use files at
www.cms.hhs.gov/physicians/. Because we have not yet established a
consistent policy regarding the publication of RVUs for noncovered
services, we will need to examine this issue further to carefully weigh
the pros and cons of publishing these RVUs for noncovered services.
Comment: The American Speech-Language Hearing Association (ASHA)
and the American Academy of Audiology (AAA), expressed concern about
the reduction of practice expense RVUs for CPT code 92547, Use of
vertical electrodes (List separately in addition to code for primary
procedure), which resulted after the PEAC refinement. The commenters
asked for our assistance to clarify a CPT instruction regarding this
procedure because they believe it prevents the multiple billings of CPT
92547 in a given patient encounter.
Response: While we are sympathetic to the concerns expressed by
ASHA and AAA, we also want to note that CPT code descriptors and
accompanying coding instructions are proprietary to CPT. We would
encourage these organizations to discuss this issue directly with the
CPT editorial committee.
Comment: A specialty society representing vascular surgery
expressed concern about the wide variations in practice expense RVUs
that are sometimes derived under the current methodology. The commenter
suggested that some outliers require additional focus to determine
whether these are errors in the direct inputs or if they
[[Page 66246]]
reflect problems inherent in the methodology. According to the
commenter, it would appear that some of the extreme variation is due to
the high costs of certain disposable supplies in the office setting as
well as high scaling factors. A few examples of outlier codes were
provided. The commenter suggested that we consider an alternative
methodology for payment of high-priced single-use items in the
nonfacility setting.
Response: We agree with the commenter that the issue raised is one
worth study and analysis. Unfortunately, this is not a task that can be
accomplished in time for discussion in this final rule. We will be very
willing to work with the specialty society and with the Practice
Expense Subcommittee of the RUC, as well as any other interested
parties, to work further on this issue that will only be magnified as
more complex procedures are moved into the office setting.
Comment: A provider of radiology services questioned the reductions
in practice expense for CPT code 77370, Special medical radiation
physics consultation.
Response: The practice expense RVUs for CPT code 77370 decreased by
0.02 RVUs between last year's final rule and this year's proposed rule.
This small decrease is due to the normal fluctuations resulting from
updating our practice expense data.
c. Repricing of Clinical Practice Expense Inputs--Equipment
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 performed by
each specialty. The costs of the original equipment inputs assigned by
the CPEP panels were determined in 1997 by our contractor, Abt
Associates, based primarily on list prices from equipment suppliers.
Subsequent to the CPEP panels, equipment has also been added to the
CPEP data, with the costs of the inputs provided by the relevant
specialty society. We only include equipment with costs equal to or
exceeding $500 in our practice expense database because the cost per
use for equipment costing less than $500 would be negligible. We also
consider the useful life of the equipment in establishing an equipment
cost per minute of use.
We contracted with a consultant to assist in obtaining the current
price for each equipment item in our CPEP database. The consultant was
able to determine the current prices for most of the equipment inputs
and clarified the specific composition of each of the various packaged
and standardized rooms or ophthalmology ``lanes'' currently identified
in the equipment practice expense database (for example, mammography
room or exam lane). We proposed to delete the current ``room''
designation for the radiopharmaceutical receiving area and, in its
place, list separately the equipment necessary for each procedure as
individual line items.
Also, we proposed to replace all surgical packs and trays in the
practice expense database with the appropriate standardized packs that
were recommended by the PEAC, either the basic instrument pack or the
medium pack.
The useful life for each equipment item was also updated as
necessary, primarily based on the AHA's ``Estimated Useful Lives of
Depreciable Hospital Assets'' (1998 edition). We noted in the August 5,
2004 proposed rule that AHA would be publishing updated guidelines this
summer and that we would reflect any updates in our final rule.
In addition, we proposed the following database revisions:
Assignment of Equipment Categories
We proposed that equipment be assigned to one of the following six
categories: documentation, laboratory, scopes, radiology, furniture,
rooms-lanes, and other equipment. These categories would also be used
to establish a new numbering system for equipment that would more
clearly identify them for practice expense purposes.
Consolidation and Standardization of Item Descriptions
We proposed combining items that appeared to be duplicative. For
example, for two cervical endoscopy procedures, our contractor
identified that the price of the LEEP system includes a smoke
evacuation system but that system is also listed separately. We
proposed to merge these two line items and reflect both prices in the
price of the LEEP system.
These changes were reflected in Addendum D of the proposed rule.
Additionally, there were specific equipment items for which a
source was not identified or for which pricing information was not
found that were included in Table 2 of the August 5 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,
including appropriate documentation. Also, we stated that if we were
not able to obtain any verified pricing information for an item, we
might eliminate it from the database.
Comment: The Society of Nuclear Medicine agreed with the deletion
of the current room designation for radiopharmaceutical area and
designation of categories for equipment. However, the society
recommended that the category designation of ``radiology'' be changed
to ``imaging equipment'' and ``other equipment'' be changed to ``non-
imaging equipment'' to be inclusive of these modalities. The American
College of Radiology also concurred with the elimination of the current
room designation for radiopharmaceutical area.
Response: We agree that the term ``imaging equipment'' rather than
the term ``radiology'' more accurately reflects current practice and
have changed the practice expense database accordingly. However, it
would be inappropriate to change the ``other equipment'' category to
``non-imaging equipment'' because there are items in other categories
that would not be encompassed in the proposed title change.
Comment: The Society of Nuclear Medicine supplied information on
the equipment item E51076 with the requested documentation.
Response: We have revised the practice expense database to reflect
the information provided.
Comment: The American Society for Therapeutic Radiology and
Oncology (ASTRO) submitted information and the requested documentation
for fifteen items, often supplying two or more pricing sources.
Response: We greatly appreciate the information and have revised
the practice expense database to reflect the information provided.
Comment: Commenters representing manufacturers and providers
expressed concern about the reduction in payment (9 percent) for
external counterpulsation (ECP), G0166. The commenters questioned the
proposed change made to the life of the ECP equipment, from seven to
five years, used for this service. Commenters did not believe this was
supported by the AHA information (which indicated that similar
diagnostic cardiovascular equipment has an equipment life of five
years) and requested that this timeframe be applied to the ECP
equipment for this service. The American College of Cardiology also
questioned the change to the ECP equipment life. The commenters also
questioned the allocation for maintenance and indirect costs applied
under the practice expense methodology
[[Page 66247]]
as well as the time allocated for this service. As a final point, some
of the commenters requested that we adjust the work RVUs assigned to
this G-code to that of an echocardiogram (CPT code 93307) and include
it in the nonphysician work pool.
Response: Based upon review of the information provided we have
revised the equipment life to five years. The methodology used for the
allocation for maintenance and indirect costs is consistent with our
methodology. For the request to adjust the work RVUs for this service,
we refer the commenters to section VI of this final rule where we are
soliciting comments on services where the physician work may be
misvalued.
Comment: The College of American Pathologists provided information
on items listed in table 2: the DNA image analyzer (ACIS), and image
analyzer (CAS system) code E13652. They noted that the CAS system is no
longer marketed and that the ACIS system would be used in its place.
Thus, they provided documentation on the price for the ACIS system.
Response: We appreciate the information and have made the necessary
changes to the database.
Comment: The American College of Cardiology (ACC) agreed with the
pricing for the ambulatory blood pressure monitor, provided prices for
the ECG signal averaging system (E55035), but provided no documentation
for these prices. They stated that the echocardiography digital
acquisition ultrasound referenced in table 2 was no longer in the
marketplace and that a digital workstation was now typically used. They
requested that an appropriate equipment code be available for this item
and provided a price range for this item (although without the
supporting documentation). ACC also recommended that the pacemaker
programmer (E55013) be removed from the equipment list because it is
provided at no cost to the physician. Removal of this item from the PE
database was also supported by a manufacturer that commented on the
rule.
Response: We have removed the pacemaker programmer from the
practice expense database. We will temporarily retain other items and
prices for the 2005 physician fee schedule and request that ACC forward
the documentation as soon as possible.
Comment: The American College of Radiology (ACR) provided partial
information for the CAD processor unit and software. ACR also submitted
information regarding the computer workstation for MRA and the
mammography reporting software, but with insufficient documentation.
For the various equipment items ACR listed for the mammography room,
updated information was provided for a few of the items. ACR noted that
they would submit documentation for all outstanding pieces of equipment
when it is available. ACR did not agree with the room price for MRI and
CT that was referenced in Addendum D and requested an extension so that
they can work with us to accurately price these items.
Response: We will maintain current pricing for all equipment items
and the mammography room on an interim basis, until sufficient
documentation is provided.
Comment: The American Ophthalmology Association (AOA) and American
Optometric Association both supplied pricing information along with the
requested documentation for the computer, VDT, and software (E71013)
listed in table 2. AOA also provided pricing information for the
ophthalmology drill listed in this table, indicating a cost of $57.
They expressed their appreciation for the recategorization and
standardization of descriptions for equipment and supplies.
Response: We appreciate the documentation forwarded by these two
organizations and have incorporated into the practice expense database
the pricing information provided for the computer, VDT, and software.
Because the ophthalmology drill is less than $500 (the standard
established for equipment), we are removing it from the equipment list
for the practice expense database.
Comment: The American Gastroenterological Association (AGA)
expressed concern about the reduction in RVUs for CPT code 91065, a
breath hydrogen test. They believe that the newer equipment listed in
the practice expense database does not reflect the analyzer that is
typically used, which is more expensive, and noted that the costs for
the reagents have also increased.
Response: We are sympathetic to the concerns of the AGA regarding
the typical equipment used for CPT code 91065 and would like to work
with them to ascertain updated pricing information about the equipment
most physicians utilize for this service. However, the majority of the
decrease (76 percent) in practice expense RVUs for this procedure is
due to the PEAC refinement for the clinical labor time that was reduced
by nearly 50 percent.
Comment: The American Academy of Sleep Medicine indicated that most
typical CPAP/BiPAP remote unit is a bilevel positive airway pressure
unit and provided documentation for the price of this item.
Response: This price is reflected in the practice expense database.
Comment: The Society for Vascular Surgery (SVS), Society for
Vascular Ultrasound and Society of Diagnostic Medical Sonography all
expressed appreciation for the refinement to the inputs that apply to
vascular ultrasound services. However, the commenters requested that we
incorporate the requested refinements for the other ancillary equipment
present in a vascular ultrasound room into other similar procedures.
SVS specifically listed the following CPT codes: 93875-9 and 93990.
Response: In addition to the three new CPT codes for
cerebrovascular arterial studies CPT 93890, 93892 and 93893, we have
added the vascular ultrasound room to the codes indicated in the SVS
comment noted above.
Comment: The American Psychiatric Association provided
documentation for the cost of the ECT machine and the American
Psychological Association provided information on the neurobehavioral
status exam and testing, as well as the biofeedback equipment listed in
table 2, along with the requested documentation.
Response: We appreciate this information. The practice expense
database was revised to reflect this cost information.
Comment: The American Society of Clinical Oncology requested that
the biohazard hood be substituted for the ventilator and hood blower as
a practice expense input for the chemotherapy codes.
Response: We revised the database to reflect this change.
Comment: American Academy of Neurology supplied information and the
necessary documentation on several equipment items listed in table 2
associated with neurology services.
Response: We have made the revisions to the prices for the
ambulatory EEG recorder (E54008), ambulatory review station (E54009),
and portable digital EEG monitor based on the documentation provided.
Based on the documentation provided, we note that the price for the
ambulatory review station was substantially reduced ($44,950 to
$7,950).
Comment: The American Clinical Neurophysiology Society (ACNS)
stated that the payment for CPT code 95819, an EEG service, was
substantially reduced. The Society believes it is due to a price
reduction for the EEG equipment (E54006) used in this service that was
listed in Addendum D of the
[[Page 66248]]
proposed rule. The commenter indicated that the proposed price does not
include the review station and software which is needed for this
service and provided documentation for appropriately pricing this item.
Response: Based on the documentation provided, we have changed, on
an interim basis for the 2005 fee schedule, the price for this item and
note that this equipment price is associated only with CPT code 95819.
We would be happy to work with ACNS in order to resolve any issues
surrounding the RVUs for CPT code 95819. Reviewing the direct inputs
for this code, we note that the largest contributor to the reduction of
practice expense RVUs is the PEAC's refinement of this code's supply
items.
Comment: The National Association for Medical Direction of
Respiratory Care and the American College of Chest Physicians were in
agreement with the proposed prices for equipment except for the pulse
oximeter (including printer), E55003. The commenters referenced a price
that is $83 more than that listed in the table, but provided no
documentation.
Response: We appreciate the comments from these organizations
regarding the repricing of the equipment items in the practice expense
database. We have retained our price of $1,207 for the pulse oximeter
and note that it is an average from two different available sources.
Comment: We received a comment from a consumer regarding the price
of the electromagnetic therapy machine for HCPCS code G0329 with
concerns about the low payment for this modality. While no
documentation was submitted, the commenter noted that the cost for this
equipment ranged from $25,000 to $35,000.
Response: We appreciate the commenter's remarks about the price of
the electromagnetic therapy equipment, Diapulse. We have retained our
price of $25,000 in the practice expense database because we do not
have documentation that any higher-priced equipment is typically used.
Similar to other modalities used in rehabilitation, including those
used in wound care, we note that this procedure reflects comparable
practice expense values.
Comment: Several specialty organizations questioned our
substitution of the two standardized packs for previously PEAC-approved
packs and trays, as discussed in our proposed rule. One specialty
society suggested we consult with the AMA before proceeding on this
point.
Response: We uniformly applied the PEAC-approved values for the
packs and trays to all packs and trays, regardless of whether the codes
had previously been refined by the PEAC. To the extent that a specialty
society feels that it was disadvantaged by this policy, we would
encourage them to bring the specific codes that should be excluded from
this policy to the newly formed PERC (formerly PEAC) at the next RUC
meeting in February 2005.
Comment: Several specialty organizations indicated that they were
in the process of obtaining pricing information on equipment items and
would provide it as soon as possible. One commenter also asked that we
retain the items proposed for deletion as they are necessary in
providing their services, but provided no documentation.
Response: In the proposed rule, we noted that we might eliminate
those items from the database for which documented pricing information
was not received. Due to the number of outstanding equipment prices,
and the number of societies that are underway in their search for this
data, we have decided to extend the submission deadline. We would
encourage specialty societies to submit price information soon to help
ensure that it can be used to establish practice expense RVUs in next
year's proposed rule.
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d. Miscellaneous Practice Expense Issues
Pricing for Seldinger Needle.
We proposed to average two prices of this supply item to reflect a
cost of $5.175. We requested that, if commenters disagreed with this
change in price, the comment should provide documentation to support
the recommended price, as well as the specific type of needle that is
most commonly used.
Comment: Commenters were in agreement with the proposed pricing of
the seldinger needle.
Response: We will use the proposed price of $5.175 for this supply
item in the practice expense database.
[[Page 66255]]
Hysteroscopic Endometrial Ablation.
We proposed to assign, on an interim basis, the following direct
practice expense inputs in the nonfacility setting for CPT code 58563,
Hysteroscopy, surgical; with endometrial ablation. (Note: In the August
5, 2004 proposed rule this code was erroneously identified as 56853,
which does not exist.) We also stated we would request that the RUC
review these inputs as part of the practice expense refinement process.
+ Clinical Staff: RN/LPN/MTA--72 minutes (18 pre-service and 54
service)
+ Supplies: PEAC multispecialty visit supply package, pelvic exam
package, irrigation tubing, sterile impervious gown, surgical cap, shoe
cover, surgical mask with face shield, 3x3 sterile gauze (20), cotton
tip applicator, cotton balls (4), irrigation 0.9 percent sodium
chloride 500-1000 ml (3), maxi-pad, mini-pad, 3-pack betadine swab (4),
Monsel's solution (10 ml), lidocaine jelly (1000 ml), disposable
speculum, spinal needle, 18-24 g needle, 20 ml syringe, bupivicaine
0.25 percent (10 ml), 1 percent xylocaine (20 ml), cidex (10 ml),
Polaroid film-type 667 (2), endosheath, and hysteroscopic ablation
device kit.
+ Equipment: power table, fiberoptic exam light, endoscopic-rigid
hysteroscope, endoscopy video system, and hysteroscopic ablation
system.
Comment: Commenters, including many individual practitioners, were
supportive of this proposed change. The specialty society also stated
that they plan to present the inputs for this service at the RUC
meeting in February 2005
Response: With the exception of the post incision care kit that we
deleted because this procedure does not require an incision, we will
finalize these inputs as proposed.
Photopheresis.
We proposed to assign, on an interim basis, the following
nonfacility practice expense inputs for the photopheresis service, CPT
code 36522:
+ Clinical Staff: RN--223 minutes (treatment is for approximately 4
hours)
+ Supplies: multispecialty visit supply package, photopheresis
procedural kit, blood filter (filter iv set), IV blood administration
set, 0.9 percent irrigation sodium chloride 500-1000 ml (2), heparin
1,000 units-ml (10), povidone solution-betadine, methoxsalen (UVADEX)
sterile solution-10 ml vial, 1 percent-2 percent lidocaine-xylocaine,
paper surgical tape (12), 2x3 underpad (chux), nonsterile drapesheet 40
inches x 60 inches, nonsterile Kling bandage, bandage strip, 3x3
sterile gauze, 4x4 sterile gauze, alcohol swab pad (3), impervious
staff gown, 19-25 g butterfly needle, 14-24g angiocatheter, 18-27 g
needle, 20 ml syringe, 10-12 ml syringe, 1 ml syringe, 22-26 g syringe
needle-3 ml.
+ Equipment: plasma pheresis machine with ultraviolet light source,
medical recliner.
We also stated we would request that the RUC review these inputs.
Comment: One commenter supplied information on practice expense
inputs for this code and indicated that an oncology nurse should be
used, instead of an RN, to perform the procedure. A specialty society
also stated that they would be providing information on this service at
the September RUC meeting.
Response: We appreciate the information submitted by the
commenters. This code was discussed at the September RUC meeting and
recommended practice expense inputs for this service were provided to
us. We do not agree with the RUC recommended clinical staff procedure
(intra) time of 90 minutes. We believe that this time, which is half of
the proposed intra time, does not accurately reflect the total time
involved in performing this procedure. Our understanding is that the
filtration rate and the procedures performed by the nurse for
photopheresis are similar to those that are reflected in the selective
apheresis services, CPT code 36516, with a PEAC-approved intra time of
240 minutes. Based on this, and the absence of specialty representation
at the RUC familiar with the process, we are assigning 180 minutes for
the intra time, as proposed. We are also assigning the RN/LPN staff
type to this procedure, because we believe it is similar to other
apheresis procedures. We will continue our examination of this issue
and entertain ongoing dialog with all interested organizations and
individuals, including the AMA and the RUC, the industry, and those
physicians and individuals familiar with the photopheresis procedure in
order to assure the accuracy of the intra time.
Pricing of New Supply Items.
As part of last year's rulemaking process, we reviewed and updated
the prices for supply items in our practice expense database. During
subsequent meetings of both the PEAC and the RUC, supply items were
added that were not included in the supply pricing update. The August
5, 2004 proposed rule included Table 3 Proposed Practice Expense Supply
Item Additions for 2005, which listed supply items added as a result of
PEAC or RUC recommendations subsequent to last year's update of the
supply items and the proposed associated prices that we will use in the
practice expense calculation.
We also identified certain supply items for which we were unable to
verify the pricing information (see Table 4, Supply Items Needing
Specialty Input for Pricing, in the August 5, 2004 proposed rule). We
requested that commenters provide pricing information on these items
along with documentation to support the recommended price. In addition,
we also requested information on the specific contents of the listed
kits, so that we do not duplicate any supply items.
Comment: Several commenters representing providers of these
services stated that table 3 incorrectly associated ``gold markers''
with the brachtherapy intracavity codes. They were all in agreement
that these markers are typically used in external beam treatments and
payment is associated with unlisted procedure codes and should be paid
for at cost.
Response: We have deleted the gold markers from CPT codes 77761-
77763 and removed this supply from the practice expense database.
Comment: The American Urology Association noted that we should
exclude the vasotomy kit from CPT codes 55200 and 55250.
Response: We have deleted the vasotomy kit from CPT codes 55200 and
55250.
Comment: The American College of Chest Physicians agreed with
pricing of items used in their practices in table 3 and stated that the
bronchogram tray does not need to be included in the practice expense
database, as the procedure is seldom performed and, when it is, the
procedure is performed in a facility.
Response: We have deleted the bronchogram tray from the practice
expense database and corrected the direct inputs for CPT code 31708
accordingly.
Comment: We received comments from the American College of
Cardiology (ACC) that included price quotes and names of sources for
supply items listed on table 3.
Response: Unfortunately, ACC did not include the requested
sufficient documentation, such as invoices or catalog web page links.
We have asked ACC to forward this pricing documentation to us as soon
as possible because it will be required for supplies to remain valued
in the practice expense database. In the interim, for the 2005 fee
schedule, we will maintain the prices currently in the practice expense
database for the following supplies:
[[Page 66256]]
blood pressure recording form at $0.31, pressure bag (infuser) 500cc or
1000cc at $8.925, sterile, non-vented, tubing at $1.99.
Comment: Noting that a $15 supply item, needle-wire for
localization of lesions in the breast (used preoperatively in CPT codes
19290 and 19291) was no longer used, a manufacturer requested that we
replace this supply with an anchor-guide device valued at $245. The
commenters also stated that this device is used in over 70 offices and
imaging centers.
Response: We appreciate the comments from the manufacturer.
However, during last year's rulemaking process we repriced all of our
supplies, and the needle-wire price of $15 was an average of prices
from two different sources ($17 and $13). This price was proposed and
accepted by the medical specialty societies that we depend on to verify
typical items in our practice expense database. We have retained the
$15 needle-wire for localization because we believe it is typically
used for this procedure.
The following table lists the items on which we requested input,
the comments received, and the action taken.
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Addition of Supply Item to CPT 88365, Tissue In Situ
Hybridization.
We proposed to add, on an interim basis, a DNA probe to the CPEP
database for CPT 88365, tissue in situ hybridization, with the
understanding that the inclusion of the item would be subject to
forthcoming RUC review.
[[Page 66259]]
Comment: Commenters were supportive of this proposal. The College
of American Pathologists also encouraged us to include updated
information on practice expense inputs from the September RUC meeting,
while another commenter suggested that we run the information by the
specialty society.
Response: The direct practice expense inputs for this code and two
other codes in the same family were discussed at the September RUC
after a presentation made by the specialty society. We have reviewed
and accepted the RUC recommendations, and these practice expense inputs
will be included in the practice expense database.
Ophthalmology Equipment.
In cases where both the screening and exam lanes are included in
the equipment list for the same ophthalmology service, we proposed to
include only one lane because the patient could only be in one lane at
a time. We proposed defaulting to the exam lane and, thus, we proposed
deleting the screening lane from the practice expense inputs for these
procedures. For the services where a lane change was made, time values
were assigned to the exam lane in accordance with our established
standard procedure.
Comment: The American Academy of Ophthalmology requested that we
specifically identify the codes for which we deleted the screening
lane, so that they can ensure that the correct lane was deleted.
Response: This information can be obtained by comparing the direct
inputs in the practice expense database files for the 2004 and 2005 fee
schedules that are posted on our Web site (http://www.cms.hhs.gov/physicians/pfs). However, we would be happy to work with the specialty
organization to verify the accuracy of the information.
Parathyroid Imaging, CPT code 78070.
Based on comments received from the RUC and the specialty society
representing nuclear medicine, we proposed to crosswalk the charge-
based RVUs from CPT 78306, Bone and/or joint imaging; whole body, to
CPT 78070, Parathyroid imaging.
Comment: Several specialty societies expressed appreciation for
this proposed change.
Response: We will finalize our proposal and crosswalk the charge-
based RVUs from CPT code 78306 to CPT code 78070.
Additional PE concerns.
Comment: We received information from the American Academy of
Ophthalmology that two biometry devices (a-scan ultrasonic biometry
unit and an optical coherence biometer) were listed as equipment for
the ophthalmic biometry service, CPT code 92136. Only the optical
coherence biometer should be included for this code.
Response: As requested by the specialty society, we have deleted
the a-scan biometry unit from the equipment list for CPT code 92136.
Comment: We received comments from manufacturers, specialty
societies representing renal physicians and vascular surgeons, and
individual providers questioning the decrease in nonfacility practice
expense RVUS for CPT code 36870, Percutaneous thrombectomy,
arteriovenous fistula, autogenous or nonautogenous graft (includes
mechanical thrombus extraction and intra-graft thrombolysis. Some
commenters believe this reduction occurred because the supplies listed
in the database for this service reflect only one method of providing
this service. While commenters acknowledged that the database includes
the supplies used in approximately 50 percent of the instances this
procedure is performed, the commenters claimed that other supplies may
be used in the remaining occasions. Commenters requested that we add
these other specific supplies to the database.
Response: Because there are a variety of supplies and equipment
that can be used in performing a service, under the practice expense
methodology, the supplies and equipment that are used in determining
payment are those that are most typical for the procedure. Although
there may be alternative supplies used, the inputs in the database
reflect what is typically used (which is acknowledged by the
commenters) and thus we are not adding the requested supplies to the
practice expense database. However, we did note that the list of
equipment did not reflect the cost of the angiography room that is used
during the procedure, and this has been added to our database for this
code.
Comment: Societies representing dermatologic specialties expressed
concern about the reduction in practice expense RVUs for a photodynamic
therapy service, CPT code 96567. The commenters believe that this
reduction is due to the application of the dermatology scaling factor
based on updated practice expense utilization and requested that this
be reconsidered. These commenters also expressed appreciation that
there is now a separate HCPCS code to bill for levulan that is needed
for this procedure, but stated that there are two medical supplies that
need to be included in the practice expense database: bacitracin, and a
topical anesthetic cream.
Response: The practice expense RVUs for photodynamic therapy
decreased only slightly in this year's proposed rule due to the
proposed repricing of equipment. The decrease referred to by the
commenter occurred after the first year that the code was established.
At that time we obtained the utilization data that demonstrated that
dermatologists performed the service and we then applied the same
scaling factors to the code that we do for all dermatology services.
Therefore, the scaling factor we now apply is correct. We will add the
requested amount of bacitracin to the supply list for the code.
Unfortunately, the topical anesthetic requested is not in our database
and the commenters did not include pricing information so we are not
able to include the item in our practice expense calculation.
Comment: A society representing interventional pain physicians
expressed concern that the practice expense RVUs for CPT code 95990,
Refilling and maintenance of implantable pump or reservoir for drug
delivery, spinal (intrathecal, epidural) or brain (intraventricular),
are understated when compared to the RVUs for CPT code 95991, the same
service administered by a physician. According to the commenter, CPT
code 95991 includes a total of 47 minutes of nonphysician labor and 37
minutes of physician labor or total professional time of 84 minutes.
This is the total time spent with the patient before, during and after
the refill. The commenter requested that the number of minutes of
direct labor for CPT code 95990 should be a minimum of 84 minutes,
since the nonphysician practitioner would be performing all the
services associated with CPT code 95991 that are performed by both the
physician and clinical staff. In addition, the commenter stated that
CPT code 95990 should also be assigned physician work RVUs because
there is physician oversight of the service even when performed by
clinical staff. Two other commenters stated that both CPT codes 95990
and 95991 should be valued the same as the chemotherapy implanted pump
refill service, CPT code 96530. The commenters state that this was the
code originally used to report the above services, that CPT codes 95990
and 95991 originally were assigned higher RVUs than CPT code 96530 and
that the MMA adjustments that increased the payment for CPT code 96530
should be applied to CPT codes 95990 and 95991.
[[Page 66260]]
Response: The commenter is correct that the clinical staff times
for CPT codes 95990 and 95991 are the same (50 minutes of clinical
staff time), although the clinical staff is performing the procedure in
one case and assisting the physician in the other. However, the
assumption underlying these times is that, in the cases where it is
necessary for the physician to personally perform the procedure, the
nurse is assisting for the entire time. If this assumption is not
correct, then the clinical staff time for CPT code 95991 is overstated.
Because CPT codes 95990 and 95991 are not considered drug
administration codes under section 303 of the MMA, we will not apply
the adjustments made for CPT code 96530 to these services. Therefore,
we will not be revising the staff time for either code at this time,
but would suggest that the RUC look further at this issue. We would
also suggest that the society bring CPT code 95990 to the 5-year
review, if they wish to make the case that work RVUs should be
assigned.
Comment: The society representing interventional pain physicians
questioned the ``professional component only'' designation we assigned
to the codes for the analysis of an implanted intrathecal pump, CPT
codes 62367 and 62368, and the subsequent low RVUs for these services.
The commenter stated that if the payment is left as proposed, more
physicians would stop offering intrathecal pumps to patients.
Response: This was an inadvertent error on our part that we have
corrected for the final rule. These services are physicians' services
that do not have separate professional and technical components. We
thank the commenter for pointing out this error.
Comment: The Joint Council of Allergy, Asthma and Immunology
expressed concern about the reduction in the proposed rule in practice
expense RVUs for a number of allergy codes, in particular the venom
therapy CPT codes, 95145 through 95149. The commenter stated that
Medicare reimbursement for these services does not cover the
physician's supply expense, due to the expensive venom antigens that
are part of the service, and believes this is a result of the scaling
factor being used.
Response: We are sympathetic to the commenter's concern about the
high cost of the venom antigens and the specialty's low scaling factor.
We would be happy to work with JCAAI further to see if a remedy can be
identified regarding this subset of the allergy codes.
Comment: Two commenters stated that the practice expense RVUs for
HCPCS code G0329, Electromagnetic Therapy for ulcers, were too low and
supplied information on the supplies, equipment and clinical staff time
for this service.
Response: Based on the information provided by the commenters, we
added diapulse asetips and chux to the supplies in the practice expense
database for this service. We also increased the equipment time to 30
minutes.
Comment: We received comments from the North American Spine Society
(NASS) stating that the specific needle used for CPT codes 22520 and
22522, which was originally recommended by NASS, is the most expensive
needle and may not be the most typical. The specialty noted that
available needles range from $26 to $1,295, which represent the needle
(termed vertebroplasty kit) in the practice expense database. NASS
indicated that the specialties involved in performing these procedures
are conducting a survey to determine the most commonly used needles and
their costs.
Response: We appreciate the comments from NASS and look forward to
receiving the survey results. In the interim, we have averaged the
needle costs for the range indicated above by the specialty and have
entered this figure, $660.50, as a placeholder for the 2005 fee
schedule. Because of the large disparity between the lowest and highest
needle costs, it is not reasonable to consider $660.50 as a true
average cost for this supply item. We will continue to work with the
specialty organizations in order to ensure that the 2006 fee schedule
practice expense database reflects the value for the most typical
needle used in these procedures.
Comment: We received comments from two medical societies with
concerns about a decrease in practice expense RVUs for CPT code 95819,
which is part of the EEG sleep study series of codes. These two
organizations noted their willingness to bring this code to the
February 2005 RUC meeting in order to rectify the direct practice
expense inputs for this procedure.
Response: We have reviewed the family of EEG sleep-study codes and
believe that a rank order anomaly exists relating primarily to the 2004
PEAC recommendation to delete the 25 reusable electrodes from CPT code
95819. We support and encourage these organizations to bring the entire
EEG family of codes to the February 2005 RUC to ensure that this rank
order anomaly can be resolved and the correct direct inputs can be
identified for these procedures.
Comment: The Coalition for Advancement of Prosthetic Urology
expressed concern about the continuing decline in practice expense RVUs
for prosthetic urology procedures. They believe that this is due in
part to the number of post service visits assigned to these services.
They stated that information from a survey they conducted shows there
are typically four to five post service visits rather than three as
reflected in the database. The commenter also provided a copy of the
survey information.
Response: The number of post service visits for these services was
established based on recommendations from the RUC or by using the
Harvard data. If they believe that the information regarding the number
of post service visits for specific procedures is incorrect, the
Coalition must request that the codes be examined as part of the 5-year
refinement of work RVUs. An explanation of this process and the
information that must be provided is found in section VI. of this rule.
B. Geographic Practice Cost Indices (GPCIs)
We are required by section 1848(e)(1)(A) of the Act to develop
separate GPCIs to measure resource cost differences among localities
compared to the national average for each of the three fee schedule
components. While requiring that the practice expense and malpractice
GPCIs reflect the full relative cost differences, section
1848(e)(1)(A)(iii) of the Act requires that the physician work GPCIs
reflect only one-quarter of the relative cost differences compared to
the national average.
Section 1848(e)(1)(C) of the Act requires us to review and, if
necessary, to adjust the GPCIs at least every 3 years. This section of
the Act also requires us to phase-in the adjustment over 2 years and to
implement only one-half of any adjustment if more than 1 year has
elapsed since the last GPCI revision. The GPCIs were first implemented
in 1992. The first review and revision was implemented in 1995, the
second review was implemented in 1998, and the third review was
implemented in 2001. We reviewed and revised the malpractice GPCIs as
part of the November 7, 2003 (68 FR 63196) physician fee schedule final
rule. We were unable to revise the work and practice expense GPCIs at
the time of the publication of the November 2003 final rule because the
U.S. Census data, upon which the work and practice expense GPCIs are
based, were not yet available.
[[Page 66261]]
In addition, section 412 of the MMA amended section 1848(e)(1) of
the Act and established a floor of 1.0 for the work GPCI for any
locality where the GPCI would otherwise fall below 1.0. This 1.0 work
GPCI floor is used for purposes of payment for services furnished on or
after January 1, 2004 and before January 1, 2007. Section 602 of the
MMA further amended section 1848(e)(1) of the Act for purposes of
payment for services furnished in Alaska under the physician fee
schedule on or after January 1, 2004 and before January 1, 2006, and
sets the work, practice expense, and malpractice expense GPCIs at 1.67
if any GPCI would otherwise be less than 1.67.
In the August 5, 2004 proposed rule, we proposed to revise the work
and practice expense GPCIs for 2005 through 2007 based on updated U.S.
Census data and Department of Housing and Urban Development (HUD) fair
market rental (FMR) data. The same data sources and methodology used
for the development of the 2001 through 2003 GPCIs were used for the
proposed 2005 through 2007 work and practice expense GPCIs.
The relative respective weights for the 2004 work, practice expense
and malpractice GPCIs, as well as the proposed 2005 through 2007 GPCI
revisions, were derived using the same weights that were used in the
Medicare Economic Index (MEI) revision discussed in the November 2003
physician fee schedule final rule (68 FR 63245).
1. Work Geographic Practice Cost Indices
As explained in the August 5, 2004 proposed rule, we used data from
the 2000 decennial U.S. Census, by county, of seven professional
occupations (architecture and engineering; computer, mathematical, and
natural sciences; social scientists, social workers, lawyers;
education, library, training; registered nurses; pharmacists; writers,
artists, editors) in the development of the proposed work GPCIs.
Physicians' wages are not included because Medicare payments are
determinant of the physicians' earnings. Including physician wages in
the physician work GPCI would, in effect, make the index dependent upon
Medicare payments. Based on analysis performed by Health Economics
Research, we believe that, in the majority of instances, the earnings
of physicians will vary among areas to the same degree that the
earnings of other professionals vary.
The U.S. Census Bureau has very specific criteria that tabulations
must meet in order to be released to the public. To maximize the
accuracy and availability of the data collection, the nonphysician
professional wage data were aggregated by county and a median wage by
county was calculated for each occupational category. These median
wages were then weighted by the total RVUs associated with a given
county to ultimately arrive at locality-specific work GPCIs. This
geographic aggregation of Census data is the same methodology that was
used in previous updates to the GPCIs.
The proposed work GPCIs reflected one-fourth of the relative cost
differences, as required by statute, with the exception of those areas
where MMA requires that the GPCI be set at no lower than 1.00 and that
the Alaska GPCIs be set at 1.67.
2. Practice Expense GPCIs
As in the past, we proposed that the practice expense GPCI would be
comprised of several factors that represent the major expenses incurred
in operating a physician practice. The impact of each individual factor
on the calculation of the practice expense GPCI is based on the
relative weight for that factor consistent with the calculation of the
MEI. The specific factors included:
Employee Wage Indices--The employee wage index is based on
special tabulations of 2000 Census data and is designed to capture the
median wage by county of the professional labor force. The employee
wage index uses the median wages of four labor categories that are most
commonly present in a physician's private practice (administrative
support, registered nurses, licensed practical nurses, and health
technicians). Median wages for these occupations were aggregated by
county in the same manner as the data for the work GPCI.
Office Rent Indices--The HUD FMR data for the residential
rents were again used as the proxy for physician office rents as they
are in the current practice expense GPCIs. The proposed 2005 through
2007 practice expense GPCIs reflect the final fiscal year 2004 HUD FMR
data. We believe that the FMR data remain the best available source for
constructing the office rent index. The FMR data are available for all
areas, are updated annually, and retain consistency from area-to-area
and from year-to-year. A reduction in an area's rent index does not
necessarily mean that rents have gone down in that area since the last
GPCI update. Since the GPCIs measure area costs compared to the
national average, a decrease in an area's rent index means that that
area's rental costs are lower relative to the national average rental
costs. Addendum X illustrates the changes in the rental index based
upon the new FMR data.
Medical Equipment, Supplies, and other Miscellaneous
Expenses--The GPCIs assume that items such as medical equipment and
supplies have a national market and that input prices do not vary among
geographic areas. We were again unable to find any data sources that
demonstrated price differences by geographic areas. As mentioned in
previous updates, some price differences may exist, but these
differences are more likely to be based on volume discounts rather than
on geographic areas. The medical equipment, supplies, and miscellaneous
expense portion of the practice expense geographic index will continue
to be 1.000 for all areas in the proposed GPCIs, except for Alaska
which will have an overall practice expense GPCI set at 1.67 for 2005
and 2006.
3. Fee Schedule Payments
All three of the indices for a specific fee schedule locality are
based on the indices for the individual counties within the respective
fee schedule localities. As in the past, fee schedule RVUs are again
used to weight the county indices (to reflect volumes of services
within counties) when mapping to fee schedule areas and in constructing
the national average indices.
Fee schedule payments are the product of the RVUs, the GPCIs, and
the conversion factor. Updating the GPCIs changes the relative position
of fee schedule areas compared to the national average. Because the
changes represented by the GPCIs could result in total payments either
greater than or less than what would have been paid if the GPCIs were
not updated, it is necessary to apply scaling factors to the proposed
GPCIs to ensure budget neutrality (prior to applying the provisions of
MMA that change the work GPCIs to a minimum of 1.0 and increase the
Alaska GPCIs to 1.67 because these provisions are exempted from budget
neutrality). We determined that the proposed work and practice expense
GPCIs would have resulted in slightly higher total national payments.
Because the law requires that each individual component of the fee
schedule--work, practice expense, and malpractice expense--be
separately adjusted by its respective GPCI, we proposed to scale each
of the GPCIs separately. To ensure budget neutrality prior to applying
the MMA provisions, we have made the following adjustments:
Decreased the proposed work GPCI by 0.9965;
[[Page 66262]]
Decreased the proposed practice expense GPCI by 0.9930;
and
Increased the malpractice GPCIs that were published in the
November 7, 2003 final rule by 1.0021.
Because all geographic payment areas will receive the same
percentage adjustments, the adjustments do not change the new relative
positions among areas indicated by the proposed GPCIs. After the
appropriate scaling factors are applied, the MMA provision setting a
1.0 floor has been applied to all work GPCIs falling below 1.0.
Additionally, the GPCIs for Alaska have been set to 1.67 in accordance
with MMA.
Comment: A specialty society representing family physicians
recommended that we work with the Congress to eliminate the GPCIs or
set them all at 1.00. The society stated that they understand the
statutory requirement to apply the GPCIs, but that all geographic
adjustment factors should be eliminated from the physician fee
schedule, except for those designed to achieve a specific policy good,
such as adjustment to encourage physicians to practice in underserved
areas. The commenter contended that elimination of the GPCIs would have
a positive effect on the availability of medical care to rural
beneficiaries. Other commenters suggested that we should no longer
apply the work GPCI to the work RVUs.
We also received numerous comments on the subject of the source of
the data we use in the development of the GPCIs. Commenters suggested
that we find data sources other than Census Bureau data. They believe
the census data become obsolete very quickly and want us to use data
that reflect up-to-date prices for inputs. This would, they argue, make
the GPCI values more realistic.
A medical specialty group commented that the index is flawed
because--
It is based on the tenuous assumption that the relative
differences in the prices of the input proxies accurately reflect
relative changes in prices of corresponding physician practice cost
components; and,
It applies uniform weights to practice cost components,
despite evidence of geographic variation in component shares.
Several commenters had specific concerns about the proxies used for
the work and practice expense GPCIs, for example--
Using data for four employee classes to measure relative
compensation differences for all physicians' office staff which does
not reflect the changes in medical practice that have occurred since
the index was developed;
Using residential real estate prices to reflect relative
differences in physicians' office costs; and
Using nationally uniform prices for supplies, equipment,
and other expenses.
Another particular concern among commenters is the use of HUD
apartment rental data as the source of costs for physicians' rents.
Instead, they argue, we should find, or carry out, a national study of
retail and business rents.
Another commenter asserts that these indices have not been verified
by peer-reviewed published research since they were instituted and that
we should replace the indices with data from nationwide studies that
validate and update actual cost of practice data.
Response: As noted by a commenter, we are required by the Congress
to adjust for geographic differences in the operational cost of
physicians' practices by applying geographic price indices to each
component of the Physician Fee Schedule. However, we also believe it
appropriate in our resource based payment system to account for real
differences in physicians' costs in different geographical areas. We
share the concern about access to care for our rural beneficiaries and,
in this rule, we are finalizing our proposals on payment adjustments to
physicians in underserved areas through the HPSA Incentive Payment
Program. For the commenters who object to the GPCI adjustment to the
work RVUs, we would note that for 2005 and 2006 the floor for the work
GPCI will be 1.00.
With reference to the issue of the GPCI data source, we are always
open to suggestions about possible data sources; however, we believe
the most reliable source of national, comparable data at the county
level is the Census Bureau. Other data sources that we have examined
either fail to produce the data at the county level, cannot be compared
nationally, or offer no means of comparability over time.
We believe that the proxies, while not perfect, are the best tools
available for the development of the GPCIs. For example, if we were to
eliminate all proxies, we would have to collect actual physicians'
office data from a sufficiently large sample in each locality to
calculate the GPCIs. This would place a substantial burden on the
office staff and would be prohibitively expensive. Also, the benefits
from that approach would be uncertain.
The question of applying uniform weights to practice components is
an area where more research could lead to better information about the
variation attributable to case mix and the availability of other health
resources, input prices, and practice styles. However, it is important
to note that much of the variation associated with case and specialty
mix is accounted for by the varying RVUs for different services.
However, we are open to exploring this issue.
On the issue of which employee categories are included in the
employee wage index component of the practice expense GPCI calculation,
we included those that have been determined in the past to be most
commonly present in a physician's private practice. We are considering
the suggestion that we include a broader group of employment categories
in the future.
While we recognize that apartment rents are not a perfect proxy for
physician office rents, there are no existing national studies that
present reliable retail and business rentals data. We would welcome any
nationally consistent data that could be used for this purpose.
We noted in the proposed rule that we were unable to find any data
sources that demonstrate price differences by geographic areas for
medical equipment and supplies. Once again, however, we welcome any
nationally consistent data for this purpose.
We appreciate the concern expressed by the commenter who suggested
our GPCI methodology has not been subjected to peer-review validation
since its inception, but we are not aware of any currently available
data that could replace our methodology. Furthermore, we believe the
process of updating the GPCIs periodically through notice and comment
rulemaking affords an opportunity for a thorough review of the GPCI
calculation methodology.
Comment: A member of a medical society suggested that we make the
floor of 1.00 permanent for the work GPCI and incrementally increase
both the practice expense GPCI and the professional liability insurance
GPCI to 1.00 over the next ten years.
Response: We have no authority to extend the floor of the work
GPCI, or to create a 1.00 floor for the practice expense and
professional liability insurance GPCIs. Section 1848(c)(1)(A) of the
Act requires that the index reflect resource costs relative to the
national average, indicating that, aside from the MMA provision
establishing a floor on the work GPCI through 2006, localities with
costs below the national average have GPCIs below 1.00.
Comment: A specialty organization representing the long term care
industry suggested that we phase in the new
[[Page 66263]]
GPCI values over a three-year period to minimize the impact of the
changes.
Response: We are required by section 1848(e)(1)(C) of the Act to
review and adjust the GPCIs every 3 years. This section of the Act also
requires us to phase in the adjustment over 2 years and implement only
one-half of any adjustment if more than 1 year has elapsed since the
last GPCI revision. We believe this phase-in appropriately balances any
negative impacts of the changes with the positive impacts on those
localities where the GPCIs increase.
4. Payment Localities
As discussed in the August 5, 2004 proposed rule, we have
considered, and are continuing to examine, alternatives to the
composition of the current 89 Medicare physician payment localities to
which the GPCIs are applied.
While we have considered alternatives, we have been unable to
establish a policy and criteria that would satisfactorily apply to all
situations. Any policy that we would propose would have to apply to all
States and payment localities. If, for example, we were to establish a
policy that when adjacent county geographic indices exceeded a
threshold amount the lower county could be moved to the higher county
or that a separate locality could be created, redistributions would be
caused within a State.
Because there will be both winners and losers in any locality
reconfiguration, the State medical associations should be the impetus
behind these changes. The support of State medical associations has
been the basis for previous changes to statewide areas, and continues
to be equally important in our consideration of other future locality
changes.
Comment: We received numerous comments from physicians and
individuals, including members of the Congress, living in and around
Santa Cruz County, California. Their comments uniformly expressed the
opinion that Santa Cruz be taken out of the ``Rest of California''
payment locality and placed in a separate payment locality.
Additionally, the California Medical Association (CMA) submitted a
``placeholder'' proposal to move any county with a county-specific
geographic adjustment factor (GAF) that is 5 percent greater than its
locality GAF to its own individual county payment locality. Under their
proposal, any reductions in payments to maintain budget neutrality in
light of the higher payments to physicians in the counties that are
moved into the new independent county localities would be divided
equally among all payment localities within the State of California.
Additionally, for 2005 and 2006, the GAFs in localities from which the
high-cost counties are removed would not be reduced as a result of
removing the counties.
Response: We greatly appreciate the efforts of the CMA and many
others toward addressing this difficult issue. We also recognize the
concerns expressed by the residents of Santa Cruz County about the
impact of the current payment disparities upon physicians in their
community. Our consistent position has been that we will be responsive
to requests for locality changes when there is a demonstrated consensus
within the State medical association for the change. Due to the re-
distributive impacts of these types of changes, we believe this
approach helps ensure the appropriateness of any such change.
We are required, however, to publish the final 2005 GPCIs and GAFs
in this rule, and we have applied the current definitions for all
California localities.
On October 21, 2004, the CMA Board of Trustees voted without
objection to support the placeholder proposal submitted in the CMA's
comment with the amendment to limit the time period to the years 2005
through 2006. However, we have determined that we do not have the
authority under section 1848(e) of the Act to reduce the GPCIs of some
localities in a State to offset higher payments to other localities.
Nonetheless, we are eager to work with CMA and its Congressional
Representatives to resolve this difficult problem as quickly and fairly
as possible.
Comment: We received comments from physicians, individuals and the
Texas Medical Association regarding locality payments. These commenters
request that we regard all counties in a metropolitan statistical area
(MSA) as being in a single payment locality. This would, they argue,
equalize payments in those areas where growth has expanded city
boundaries across county lines.
Response: As noted above, we will be responsive to requests for
locality changes when there is a demonstrated consensus within the
State medical association for the change.
Result of Evaluation of Comments
We will finalize the GPCIs as proposed.
C. Malpractice Relative Value Units (RVUs)
1. Proposed Methodology for the Revision of Resource-based Malpractice
RVUs
The methodology used in calculating the proposed resource-based
malpractice RVUs is the same methodology that was used in the initial
development of resource-based RVUs, the only difference being the use
of more current data. The proposed resource-based malpractice expense
RVUs are based upon:
Actual 2001 and 2002 malpractice premium data;
Projected 2003 premium data; and
2003 Medicare payment data on allowed services and
charges.
As in the initial development of resource-based malpractice expense
RVUs in the November 2, 1999 final rule, we proposed to revise
resource-based malpractice expense RVUs using specialty-specific
malpractice premium data because they represent the actual malpractice
expense to the physician. In addition, malpractice premium data are
widely available. We proposed using actual 2001 and 2002 malpractice
premium data and projected 2003 malpractice premium data for three
reasons:
These are the most current national claims-made premium
data available.
These data capture the highly publicized and most recent
trends in the specialty-specific costs of professional liability
insurance.
These are the same malpractice premium data that were used
in the development of revised malpractice GPCIs in the November 7, 2003
final rule.
We were unable to obtain a nationally representative sample of 2003
malpractice premium data for the following two reasons:
The premium data that we collected from the private
insurance companies had to ``match'' the market share data that were
provided by the respective State Departments of Insurance (DOI).
Because none of the State DOI had 2003 market share information at the
time of this data collection, 2003 premium data were not usable; and
The majority of private insurers were not amenable to
releasing premium data to us. In the majority of instances, the private
insurance companies would release their premium data only to the State
Department of Insurance.
Discussions with the industry led us to conclude that the primary
determinants of malpractice liability costs remain physician specialty,
level
[[Page 66264]]
of surgical involvement, and the physician's malpractice history.
Malpractice premium data were collected for the top 20 Medicare
physician specialties measured by total payments. Premiums were for a
$1 million/$3 million mature claims-made policy (a policy covering
claims made, rather than services provided during the policy term). We
attempted to collect premium data from all 50 States, Washington, DC,
and Puerto Rico. Data were collected from commercial and physician-
owned insurers and from joint underwriting associations (JUAs). A JUA
is a State government-administered risk pooling insurance arrangement
in areas where commercial insurers have left the market. Adjustments
were made to reflect mandatory patient compensation funds (PCFs) (funds
to pay for any claim beyond the statutory amount, thereby limiting an
individual physician's liability in cases of a large suit) surcharges
in States where PCF participation is mandatory. The premium data
collected represent at least 50 percent of physician malpractice
premiums paid in each State.
For 2001, we collected premium data from 48 States (for purposes of
this discussion, State counts include Washington, DC and Puerto Rico).
We were unable to obtain premium data from Kentucky, New Hampshire, New
Mexico, and Washington, DC. To calculate a proxy for the malpractice
premium data for these four areas in 2001, we began with the most
current malpractice premium data collected for these areas, 1996
through 1998 (the last premium data collection that was undertaken). We
calculated an average premium price (using 1996 through 1998 data) for
all States except Kentucky, New Hampshire, New Mexico, and Washington,
DC. Similarly, we calculated an average premium price for the 1999
through 2001 period for all States except Kentucky, New Hampshire, New
Mexico, and Washington, DC. We calculated the percentage change in
these premium prices as the percent difference between the 1999 to 2001
calculated average premium price and the 1996 to 1998 calculated
average premium price. We then applied this percentage change to the
weighted average 1996 to 1998 malpractice premium price for these four
areas to arrive at a comparable 1999 to 2001 average premium price.
For 2002, we were able to obtain malpractice premium data from 33
States. Many State Departments of Insurance had not yet obtained
premium data from the primary insurers within their States at the time
of this data collection. For those States for which we were unable to
obtain malpractice premium data, we calculated a national average rate
of growth for 2002 and applied this national rate of growth to the
weighted average premium for 2001 to obtain an average premium for 2002
for each county for which we were unable to obtain malpractice premium
data for 2002.
We projected premium values for 2003 based on the average of
historical year-to-year changes for each locality (when locality level
data were available) or by State (when only statewide premium data
projections were available). First, we calculated the percentage
changes in the premiums from the 1999 through 2000, 2000 through 2001,
and 2001 through 2002 periods for each payment locality. Next, we
calculated the geometric mean of these three percentages and applied
the mean to the 2002 premium to obtain the forecasted 2003 malpractice
premium. We used the geometric mean to calculate the forecasted 2003
premium data because the geometric mean is commonly used to derive the
mean of a series of values that represent rates of change. Because the
geometric mean is based on the logarithmic scale, it is less impacted
by outlying data. Alternative methods, such as linear extrapolation
tended to yield more extreme values that were the result of outlying
data.
Malpractice insurers generally use five-digit codes developed by
the Insurance Services Office (ISO), an advisory body serving property
and casualty insurers, to classify physician specialties into different
risk classes for premium rating purposes. ISO codes classify physicians
not only by specialty, but in many cases also by whether or not the
specialty performs surgical procedures. A given specialty could thus
have two ISO codes, one for use in rating a member of that specialty
who performs surgical procedures and another for rating a member who
does not perform surgery. We use our own system of specialty
classification for payment and data purposes. It was therefore
necessary to map Medicare specialties to ISO codes and insurer risk
classes. Different insurers, while using ISO codes, have their own risk
class categories. To ensure consistency, we used the risk classes of
St. Paul Companies, one of the oldest and largest malpractice insurers.
Although St. Paul Companies have recently terminated writing
professional liability insurance policies at the time of this data
collection they were still the largest and most nationally
representative writer of professional liability insurance policies in
the nation. The crosswalks for Medicare specialties to ISO codes and to
the St. Paul risk classes used are reflected in Table 4.
Some physician specialties, nonphysician practitioners, and other
entities (for example, independent diagnostic testing facilities) paid
under the physician fee schedule could not be assigned an ISO code. We
crosswalked these specialties to similar physician specialties and
assigned an ISO code and a risk class. These crosswalks are reflected
in Table 5.
In the development of the proposed resource-based malpractice RVU
methodology, we considered two malpractice premium-based alternatives
for resource-based malpractice RVUs: the dominant specialty approach
and the specialty-weighted approach.
Dominant Specialty Approach
The dominant specialty approach bases the malpractice RVUs upon the
risk factor of only the dominant specialty performing a given service
as long as the dominant specialty accounted for at least 51 percent of
the total utilization for a given service. When 51 percent of the total
utilization does not comprise the dominant specialty, this approach
uses a modified specialty-weighted approach. In this modified
specialty-weighted approach, two or more specialties are collectively
defined as the dominant specialty. Starting with the specialty with the
largest percentage of allowed services, the modified specialty-weighted
approach successively adds the next highest specialty in terms of
percentage of allowed services until a 50 percent threshold is
achieved. The next step is to sum the risk factors of those specialties
(weighted by utilization) in order to achieve at least 50 percent of
the total utilization of a given service and then to use the factors in
the calculation of the final malpractice RVU.
The dominant specialty approach produces modest increases for some
specialties and modest decreases for other specialties. The largest
increase for any given specialty, over the specialty-weighted approach,
is less than 1.5 percent of total RVUs, while the largest decrease for
any given specialty is less than 0.5 percent of total RVUs. The
dominant specialty approach also fails to account for as much as 49
percent of the utilization associated with a given procedure.
Specialty-Weighted Approach
The approach that we adopted in the November 1999 final rule and
proposed
[[Page 66265]]
to use for 2005 bases the final malpractice RVUs upon a weighted
average of the risk factors of all specialties performing a given
service. The specialty-weighted approach ensures that all specialties
performing a given service are accounted for in the calculation of the
final malpractice RVU. Under the proposed methodology, we--
Compute a national average premium for each specialty.
Insurance rating area malpractice premiums for each specialty are
mapped to the county level. The specialty premium for each county is
then multiplied by the total county RVUs (as defined by Medicare claims
data), which were divided by the malpractice GPCI applicable to each
county to standardize the relative values for geographic variations. If
the malpractice RVUs were not normalized for geographic variation, the
locality cost differences (as reflected by the GPCIs) would be counted
twice. The product of the malpractice premiums and standardized RVUs is
then summed across specialties for each county. This calculation is
then divided by the total RVUs for all counties, for each specialty, to
yield a national average premium for each specialty. As stated
previously, we used an average of the 3 most current years, 2001 to
projected 2003 malpractice premiums, in our calculation of the proposed
malpractice RVUs. See Table 6 for a display of the average premiums for
the top 20 Medicare specialties;
Calculate a risk factor for each specialty. Differences
among specialties in malpractice premiums are a direct reflection of
the malpractice risk associated with the services performed by a given
specialty. The relative differences in national average premiums
between various specialties can be expressed as a specialty risk
factor. These risk factors are an index calculated by dividing the
national average premium for each specialty by the national average
premium for the specialty with the lowest average premium, nephrology.
The risk factors used in the development of the resource-based
malpractice RVUs are displayed in Table 7;
Calculate malpractice RVUs for each code. Resource-based
malpractice RVUs were calculated for each procedure. In order to
calculate malpractice RVUs for each code, we identified the percentage
of services performed by each specialty for each respective procedure
code. This percentage was then multiplied by each respective
specialty's risk factor as calculated in Step 2. The products for all
specialties for the procedure were then summed, yielding a specialty-
weighted malpractice RVU reflecting the weighted malpractice costs
across all specialties for that procedure. This number was then
multiplied by the procedure's work RVUs to account for differences in
risk-of-service. Since we were unable to find an acceptable source of
data to be used in determining risk-of-service, work RVUs were used. We
welcome any suggestions at any time for alternative data sources to be
used in determining risk-of-service.
Certain specialties may have more than one ISO rating class and
risk factor. The surgical risk factor for a specialty was used for
surgical services and the nonsurgical risk factor for evaluation and
management services. Also, for obstetrics/gynecology, the lower
gynecology risk factor was used for all codes except those obviously
surgical services, in which case the higher, surgical risk factor was
used.
Certain codes have no physician work RVUs. The overwhelming
majority of these codes are the technical components (TCs) of
diagnostic tests, such as x-rays and cardiac catheterization, which
have a distinctly separate technical component (the taking of an x-ray
by a technician) and professional component (the interpretation of the
x-ray by a physician). Examples of other codes with no work RVUs are
audiology tests and injections. Nonphysicians, in this example,
audiologists and nurses, respectively, usually furnish these services.
In many cases, the nonphysician or entity furnishing the TC is distinct
and separate from the physician ordering and interpreting the test. We
believe it is appropriate for the malpractice RVUs assigned to TCs to
be based on the malpractice costs of the nonphysician or entity, not
the professional liability of the physician.
Our proposed methodology, however, would result in zero malpractice
RVUs for codes with no physician work, since we proposed the use of
physician work RVUs to adjust for risk-of-service. We believe that zero
malpractice RVUs would be inappropriate because nonphysician health
practitioners and entities such as independent diagnostic testing
facilities (IDTFs) also have malpractice liability and carry
malpractice insurance. Therefore, we proposed to retain the current
charge-based malpractice RVUs for all services with zero work RVUs. We
also solicited comments and suggestions for constructing resource-based
malpractice RVUs for codes with no physician work.
Rescale for budget neutrality. The law requires that
changes to fee schedule RVUs be budget neutral. The current resource-
based malpractice RVUs and the proposed resource-based malpractice RVUs
were constructed using entirely different malpractice premium data.
Thus, the last step in this process is to adjust for budget neutrality
by rescaling the proposed malpractice RVUs so that the total proposed
resource-based malpractice RVUs equal the total current resource-based
malpractice RVUs. The proposed resource-based malpractice RVUs for each
procedure were then multiplied by the frequency count for that
procedure to determine the total resource-based malpractice RVUs for
each procedure. The total resource-based malpractice RVUs for each
procedure were summed for all procedures to determine the total fee
schedule proposed resource-based malpractice RVUs. The total fee
schedule proposed resource-based malpractice RVUs were compared to the
total current resource-based malpractice RVUs. The total current and
proposed malpractice RVUs were equal and, therefore, budget neutral.
Thus, no adjustments were needed to ensure that expenditures remained
constant for the malpractice RVU portion of the physician fee schedule
payment.
The proposed resource-based malpractice RVUs were shown in Addendum
B of the August 5, 2004 proposed rule. The values did not reflect any
final budget-neutrality adjustment, which we stated would be made in
the final rule based upon the more current Medicare claims data. The
malpractice RVUs identified in this final rule did not require the
application of a scaling factor to retain budget neutrality.
Because of the differences in the sizes of the three fee schedule
components, the implementation of the updated resource-based
malpractice RVUs has a smaller payment effect than the previous
implementation of resource-based practice expense RVUs. On average,
work represents about 52.5 percent of the total payment for a
procedure, practice expense about 43.6 percent of the total payment,
and malpractice expense about 3.9 percent of the total payment. Thus, a
20 percent change in practice expense or work RVUs would yield a change
in payment of about 8 to 11 percent. In contrast, a corresponding 20
percent change in malpractice values would yield a change in payment of
only about 0.6 percent.
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Comments and Responses
We received public comments on several malpractice issues. The
comments and our responses are stated below.
Comment: Several comments were received that requested revisions to
the data sources utilized in the development of resource-based
malpractice RVUs. Specifically, commenters requested that we remove
utilization for assistant-at-surgery claims from the calculation of
resource-based malpractice RVUs because the utilization of assistant-
at-surgery services artificially lowers the average risk associated
with surgical services. Additionally, we also received comments that
raised questions related to the ISO crosswalks and resulting risk
factors that we used.
Response: We agree that assistants at surgery should not be
reflected in the malpractice RVUs because they are not primarily
responsible for performing the surgical procedures, and we are removing
the assistant-at-surgery utilization, and associated risk factors, from
the data that are used to calculate the resource-based malpractice
RVUs. The inclusion of the lower assistant-at-surgery risk factors into
the overall determination of some complex surgical services
artificially lowers the average risk factor and resulting resource-
based malpractice RVUs of these services.
Regarding the ISO Classifications and resulting risk factors that
were applied to specialties, the majority of comments received did not
offer substantive reasons or alternative methodologies for the proposed
ISO crosswalks. We derived the ISO crosswalks, and resulting risk
factors, based upon the review by both our contractor and CMS medical
officers. Due to the lack of substantive alternatives in the comments
received, we will retain the crosswalks that were proposed in the
August 4, 2004 proposed rule (see Table 7) with the exception of
orthopedic surgery and dermatology.
Comment: Several commenters believed that the August 2004 proposed
rule that established risk factors of 7.46 for orthopedic surgery with
spinal and 8.06 for orthopedic surgery without spinal were
counterintuitive and needed revision.
Response: We agree with these comments and have revised the
orthopedic surgery with spinal risk factor to reflect the risk factor
identified in the rating manuals (8.89). In the proposed rule, the risk
factors for orthopedic surgery with spinal and without spinal were
taken from two separate sources (premium data and rating manuals,
respectively) thus causing the anomalous result. See Table 7 for the
revised orthopedic surgery risk factors.
Comment: Two commenters, including the American College of
Dermatology believe that the use of the higher risk class of major
surgery is inappropriate for dermatological services as the typical
dermatological practice does not encompass major surgery but instead
focuses on minor surgery in the office setting.
Response: We agree with these comments and will use the minor
surgery and no-surgery risk classifications for dermatological
services. See Table 7 for the revised dermatology risk factors. The
impact of removing the assistant at surgery claims and revising the
risk factor associated with orthopedic surgery with spinal is a 0.9
percent increase for neurosurgery and a 0.4 percent increase for
orthopedic surgery over the malpractice RVUs shown in proposed rule.
The effect of replacing the major surgery risk factor with the minor
surgery risk factor for dermatology is a 0.9 percent decrease in total
payments relative to the proposed rule.
Comment: One commenter states that the resource-based malpractice
RVU methodology underestimates the cost of PLI for physicians who
perform obstetric and gynecologic services. According to the commenter,
eighty percent of OB/GYNs perform both obstetric and gynecologic
services yet the risk factor for most services these physicians provide
to Medicare beneficiaries is based on the much lower premiums paid by
physicians who offer only gynecologic services.
Response: Although obstetricians and gynecologists' malpractice
premiums can be appreciably different, most Medicare OB/GYN services
are gynecological. Therefore, all Medicare OB/GYN procedures will be
assigned a gynecology risk factor except in those instances where the
service provided is clearly obstetrical in nature. CPT codes in the
range of 59000-59899 are clearly obstetrical services and use the
obstetrics risk factor (11.30).
Comment: One commenter felt that it was inappropriate to assign
0.00 malpractice RVUs to services that have physician work and have
historically had a small amount of malpractice RVUs associated with
them.
Response: We agree with this comment and will adjust these services
in the final rule. All payable fee schedule services have some amount
of PLI associated with their performance.
Comment: One commenter requested that we consider the
implementation of the resource-based malpractice expense RVUs interim
until the agency has worked with the medical community to ensure that
the data and methodology utilized to calculate the malpractice RVUs are
appropriate.
Response: We are continuing to work with the medical community to
ensure that the methodology and data used to calculate the malpractice
RVUs appropriately reflect the actual resource costs associated with
professional liability insurance for physicians. Section
1848(c)(2)(B)(i) of the Act states that the Secretary is required to
review the relative values not less often than every 5 years. If
substantive information becomes available subsequent to the publication
of the final malpractice RVUs, the statute allows us flexibility to
review that information for possible inclusion in future malpractice
RVU updates.
Comment: Several commenters requested that we use a methodology
that would only account for the dominant specialty in the calculation
of the service-specific resource-based malpractice RVUs. Commenters
stated that a dominant specialty approach would be consistent with the
``typical'' service approach that we use throughout the resource-based
physician payment system. Commenters also feel that a dominant
specialty approach would more appropriately reflect the actual premium
resource costs associated with the performance of individual services.
Response: We continue to believe that accounting for all
specialties that perform a given service is the more appropriate and
equitable methodology in establishing resource-based malpractice RVUs.
Basing payment upon all specialties that perform a given service
ensures that the actual professional liability insurance resource costs
of all specialties are included in the calculation of the final
malpractice RVUs. Using only the dominant specialty does not capture
the true resource costs associated with a given service and under a
relative value based system, results in the redistribution of RVUs
based upon only partial data.
The dominant specialty approach is particularly vulnerable for
calculating resource-based malpractice RVUs in services that are multi-
disciplinary in nature. An example that illustrates the potentially
distorting effect of the dominant specialty approach on multi-
disciplinary services is the specialty utilization associated with a
level III established office visit. Although over 35 different
specialties perform a significant number of these services, a dominant
specialty approach would base the malpractice RVUs on
[[Page 66274]]
approximately 2 specialties. High risk specialties such as
neurosurgery, thoracic surgery, general surgery, and obstetrics and
gynecology, which account for a small percentage of the total
utilization but a large amount of total dollars, would no longer factor
into the calculation of the malpractice RVU for this service. These
four specialties alone account for nearly $300 million of the total
dollars associated with a level III established office visit. The
effect of removing these four high-cost, high-risk specialties from the
calculation of the malpractice RVUs for this service would be an
overall decrease in the malpractice RVUs, because the calculation would
be based upon lower-cost, lower-risk specialties.
We disagree that a dominant specialty approach is consistent with
the typical service approach used in the RUC survey process.
Irrespective of the specialty performing a given service, we require
that the typical service be the measurement tool for the calculation of
final payments. The typical service approach utilized in the RUC survey
process has never referred to the typical specialty performing a
service, but instead to the typical type of service furnished. This
typical service would encompass such things as the condition of the
patient, the extent of the work, the staff needed to accomplish the
service, and the respective resource inputs associated with the typical
service.
We will continue to work with the RUC PLI Workgroup to identify
alternatives to the dominant specialty approach. One alternative that
we are currently exploring with the RUC PLI Workgroup is removing
aberrant data from low utilization services.
Comment: One commenter suggested that we determine the exponential
rate of growth in the PLI premium data from 2001 through 2003 to
predict the 2004 premium data. This commenter believes that we should
use only this predicted 2004 premium data in the calculation of
resource-based malpractice RVUs.
Response: We disagree with the commenter's recommendation that
predicted 2004 professional liability insurance premium data be
utilized in the calculation of resource-based malpractice RVUs. The
data sources that are currently used in the calculation of the 2005
resource-based malpractice RVUs consist of actual 2001 and 2002 premium
data (when available) and projected 2003 premium data. Professional
liability insurance has proven to be the most volatile data source that
is used in the calculation of resource-based physician fee schedule
RVUs. For this reason, we believe that it is inappropriate to use only
one year of projected premium data.
Comment: Various specialty organizations request that we work with
the RUC's Professional Liability Insurance (PLI) Workgroup to ensure
that the medical community has input into the refinement of the
malpractice RVUs.
Response: Over the course of the past year, we have been working
with the RUC PLI Workgroup to solicit input on the methodology and data
sources utilized to calculate resource-based malpractice RVUs. We
continue to actively participate in the PLI Workgroup to keep both the
workgroup and the various specialty organizations aware of our progress
in the development and refinement of resource-based malpractice RVUs.
We have forwarded all requested contractor reports, which outline both
our methodology and data sources, to the RUC for review and comment. We
agree with these comments and plan to continue our cooperative
relationship with the RUC PLI Workgroup and various specialty
organizations to ensure that the necessary specialty organizations are
involved with both the premium collection efforts and the development
and refinement of resource-based malpractice RVUs.
Comment: Tail coverage is designed to cover any claims that may be
made against a new employee for services furnished on behalf of his or
her old employer during the time that he or she is employed by the new
employer. Several commenters suggested that we incorporate the cost of
tail coverage in the determination of PLI annual premium data.
Response: Although we agree with the commenters that it might be
desirable to use tail coverage premium data in addition to the annual
premium data that are currently used in the revisions to resource-based
malpractice RVUs, we have been unable to identify a nationally
representative source of tail coverage premium data. We are continuing
to work with the RUC PLI Workgroup, the AMA, and the various specialty
organizations to identify a nationally representative source of tail
coverage premium data for future rulemaking.
Comment: One commenter recommended that professional liability
insurance data for all specialties should be used rather than the data
from the top 20 Medicare specialties.
Response: Although it might be desirable to obtain premium data
from every conceivable specialty in the practice of medicine, it is not
possible to obtain this scope of data under the time constraints
associated with collecting the most current premium data. In order to
conduct surveys that collect the maximum amount of premium data from
all geographic areas without being too intrusive to the State
Departments of Insurance and private insurance companies, we chose to
limit the scope of the data collection to the top 20 Medicare
specialties. Further, utilizing PLI data from the top 20 Medicare
specialties encompasses 80 percent of fee schedule services.
Comment: Several commenters requested that we use data from the
Physician Insurers Association of America (PIAA) in the development of
resource-based malpractice RVUs. This commenter further requested that
we provide concise requirements for those data collection efforts.
Response: We did explore the use of data from PIAA in the
development of resource-based malpractice RVUs. Unfortunately, the PIAA
does not include actual physician claims-made premium data by insurer
and specialty classification. The information that was available from
PIAA ranged from insured demographics information to medical
malpractice claims trends.
Regarding our criteria for premium data collection efforts, we have
shared the criteria for those premium data collection efforts with the
RUC PLI Workgroup.
Comment: Several commenters recommended that the malpractice RVUs
should remain stable. Commenters suggested that any budget neutrality
adjustments, positive or negative, that might occur due to the 5-year
review of malpractice RVUs should be made to the conversion factor and
not to the malpractice RVUs.
Response: We acknowledge the comments that suggest that any
adjustments for budget neutrality not be performed on the RVUs, but we
note that any budget neutrality adjustments to the RVUs do not change
the relative relationship among the values for the services but instead
uniformly change all relative values. Regarding malpractice RVUs
specifically, malpractice RVUs are by nature not ``stable.'' When the
malpractice RVUs are reviewed and updated, the malpractice RVUs
associated with all services could potentially change. Additionally,
for 2005, we are mandated by statute to apply at least a 1.5 percent
increase to the conversion factor. Thus, if the budget neutrality
associated with updated malpractice RVUs were negative, it would not be
possible to ensure budget neutrality and comply with the statutory 1.5
percent update.
[[Page 66275]]
Comment: One commenter recommended that the exceptions to the
surgical risk factor be modified to include coding changes since the
initiation of the resource-based malpractice RVUs in 2000. The previous
update to the malpractice RVUs made service-specific exceptions,
whereby certain codes were assigned the higher surgical risk factor in
the calculation of their final malpractice RVU. The commenter
specifically requested that due to CPT coding modifications, the
following codes should also receive this same coding modification and
receive the greater of their actual average risk factor or the risk
factor for cardiac catheterization: 92973-92974, 93501-93533, 93580-
93581, 93600-93613, and 93650-93652.
Response: In order to retain the exceptions that were identified in
the previous malpractice RVU update for this new series of services, we
will assign the greater of the actual average risk factors or the risk
factor for cardiac catheterization services.
Comment: Several commenters agreed with our use of the work RVUs as
the best available data source for adjusting the malpractice RVUs for
risk of service. These commenters noted, as we did, that the work RVUs
are not a perfect proxy for risk of service, but are the best available
source at this time. Commenters requested that we continue our use of
work RVUs as the adjuster to malpractice RVUs for risk of service, but
also requested that we be responsive to potential anomalies that may be
identified.
Response: We agree with these comments and look forward to
continuing our work with the various organizations to identify all
potential anomalies in the malpractice RVUs.
Comment: One commenter expressed concern that, although malpractice
premiums have increased for all specialty practices, some specialty
practices will experience a decline in payments as a result of the 5-
Year Review of malpractice RVUs. This commenter suggested that
additional dollars need to be added to the system to account for rising
PLI costs.
Response: The impact of the malpractice RVU revisions on an
individual specialty organization is not a direct reflection of the
increases or decreases in their malpractice premiums but instead
reflects increases or decreases in a specific state's premiums as
compared to the national average. In some instances, specialty
organizations might have experienced slight increases in their
respective malpractice premiums since the last malpractice RVU update,
but these increases have occurred at a slower rate than the national
average increase for all specialty organizations. The result is a
negative impact on these specialties. Specialty organizations that have
increased at a rate higher than the national average will experience
positive impacts.
Comment: One commenter believes that additional dollars should be
added to the Medicare physician fee schedule to account for escalating
professional liability insurance premiums.
Response: The Medicare Economic Index (MEI) is the device by which
additional dollars are added to the physician fee schedule. For 2005,
the cost category associated with professional liability insurance has
increased by 23.9 percent. However, for 2004 and 2005, section 601 of
the MMA established an update of 1.5 percent.
Comment: The American College of Radiology (ACR) commented that
there is an imbalance between the distribution of malpractice RVUs to
the professional component and technical component of a service. The
ACR requested that we work with ACR staff to identify alternative
methodologies for the more appropriate valuation of technical component
services.
Response: Physician work RVUs are used to adjust for risk of
service. Because technical component services do not have physician
work RVUs, they are still valued using charge-based RVUs instead of the
resource-based malpractice RVU methodology. We look forward to working
with the ACR and other interested specialty organizations to examine
alternative methodologies that would allow technical component services
to also reflect resource-based malpractice RVUs.
Final Decision
We are implementing the revised 2005 malpractice RVUs as proposed
with the modifications noted in the discussions above. Additionally, we
are continuing to work with the AMA's RUC to--
Consider the appropriateness of a dominant specialty
approach;
Identify the most current nationally representative
professional liability insurance premium data;
Review the current ISO crosswalks; and
Review aberrant data patterns in low-utilization services
for possible inclusion in a future rulemaking cycle.
D. Coding Issues
1. Change in Global Period for CPT Code 77427, Radiation Treatment
Management, Five Treatments
This code was included in the November 2, 1999 physician fee
schedule final rule (64 FR 59380) and was effective for services
beginning January 1, 2000. In that rule, and subsequent rules, we have
applied a global indicator of ``xxx'' to this code, meaning that the
global concept does not apply. It was brought to our attention that
this global indicator is incorrect and that the code should be assigned
a 90-day global period because the RUC valuation of this service
reflected a global period of 90 days which we had accepted. Therefore,
we proposed to correct the global indicator for this service to reflect
a global period of 90 days (090).
Comment: Specialty organizations representing radiation oncology
and radiology as well as individual physicians and providers, and the
AMA, all expressed concern about this proposal to change the global
period for CPT code 77427. The commenters stated that this code is
universally recognized as a recurring service that can be provided
multiple times during a course of radiation. This code is usually
submitted once for each group of five treatments (or fractions) and
represents substantial services furnished during that group (typically
1 week) of five treatments. Commenters believe this proposed change
would--
Contradict the current CPT definitions;
Not reflect the process of care for radiation;
Countervene the essence of the RUC valuations; and
Negate the guidelines that we previously issued.
Because a change in the global period could have a significant
impact on the process of care for radiation oncology, commenters urged
us to withdraw this proposal or to delay implementation until there is
further discussion with the specialty organizations and the RUC, and
clarification of billing matters related to this proposed change are
provided.
Response: Based on the concerns raised by the commenters, we are
not changing the global period for this service as proposed.
Result of Evaluation of Comments
We are retaining the global period of ``xxx'' for CPT code 77427.
[[Page 66276]]
2. Requests for Adding Services to the List of Medicare Telehealth
Services
As discussed in the proposed rule (69 FR 47510), section 1834(m) of
the Act defines telehealth services as professional consultations,
office and other outpatient visits, and office psychiatry services
defined as of July 1, 2000 by CPT codes 99241 through 99275, 99201
through 99215, 90804 through 90809, and 90862. In addition, the statute
requires us to establish a process for adding services to, or deleting
services from, the list of telehealth services on an annual basis. In
the CY 2003 final rule, we established a process for adding to or
deleting services from the list of Medicare telehealth services (67 FR
79988). This process provides the public an opportunity on an ongoing
basis to submit requests for adding a service. We assign any request to
add a service to the list of Medicare telehealth services to one of the
following categories:
Category 1: Services that are similar to office and other
outpatient visits, consultation, and office psychiatry services. In
reviewing these requests, we look for similarities between the proposed
and existing telehealth services in terms of the roles of, and
interactions among, the beneficiary, the physician (or other
practitioner) at the distant site and, if necessary, the telepresenter.
We also look for similarities in the telecommunications system used to
deliver the proposed service, for example, the use of interactive audio
and video equipment.
Category 2: Services that are not similar to the current
list of telehealth services. Our review of these requests includes an
assessment of whether the use of a telecommunications system to deliver
the service produces similar diagnostic findings or therapeutic
interventions as compared with the face-to-face ``hands on'' delivery
of the same service. Requestors should submit evidence showing that the
use of a telecommunications system does not affect the diagnosis or
treatment plan as compared to a face-to-face delivery of the requested
service.
Requests for adding services to the list of Medicare telehealth
services must be submitted and received no later than December 31st of
each calendar year to be considered for the next proposed rule. For
example, requests submitted in CY 2003 are considered for the CY 2005
proposed rule. For more information on submitting a request for
addition to the list of Medicare telehealth services, visit our Web
site at http://www.cms.hhs.gov/physicians/telehealth.
We received the following public requests for addition in CY 2003:
Inpatient hospital care (as represented by CPT codes 99221
through 99223 and 99231 through 99233).
Emergency department visits (as defined by CPT codes 99281
through 99285).
Hospital observation services (as represented by CPT codes
99217, 99218 through 99220).
Inpatient psychotherapy (as defined by CPT codes 90816
through 90822).
Monthly management of patients with end-stage renal
disease (ESRD), (as represented by HCPCS codes G0308 through G0319).
Speech and audiologist services (as defined by CPT code
range 92541 through 92596).
Case management (as identified by CPT codes 99361 and
99362)
Care plan oversight services (as represented by CPT codes
99374 and 99375).
After reviewing the public requests for addition, we proposed to
add ESRD-related services as described by G0308, G0309, G0311, G0312,
G0314, G0315, G0317, and G0318 to the list of Medicare telehealth
services. However, we specified that the required clinical examination
of the vascular access site must be furnished face-to-face ``hands on''
(without the use of an interactive telecommunications system) by a
physician, certified nurse specialist (CNS), nurse practitioner (NP),
or physician's assistant (PA). An interactive telecommunications system
may be used for providing additional visits required under the 2 to 3
visit Monthly Capitation Payment (MCP) code and the 4 or more visit MCP
code.
Moreover, we proposed to add the term ``ESRD-related visits'' to
the definition of Medicare telehealth services at Sec. 410.78 and
Sec. 414.65 as appropriate.
We did not propose to add any additional services to the list of
Medicare telehealth services for CY 2005.
For further information on the addition to the list of telehealth
services, see the Federal Register dated August 5, 2004 (69 FR 47510).
Inpatient Hospital Care, Hospital Observation Services, Inpatient
Psychotherapy, and Emergency Department Services
Comment: We received conflicting comments on our proposal not to
add inpatient hospital care, hospital observation services, inpatient
psychotherapy, and emergency department services to the list of
approved telehealth services. For example, one professional society
supported our proposal not to add inpatient hospital care, hospital
observation services, inpatient psychotherapy, and emergency department
services to the list. That commenter believes conclusive efficacy data
is necessary before adding the aforementioned services. Likewise, an
association representing emergency department management agreed that
emergency department visits should not be added to the list of Medicare
telehealth services. That commenter believes that hospitals in rural
areas have physicians with sufficient experience to handle the
complexities of emergent care.
An association representing family physicians agreed with our
proposal not to add inpatient hospital care and hospital observation
services. However, they disagreed with our proposal not to add
emergency department visits to the list of Medicare telehealth
services. The commenter stated that emergency department visits should
not be assigned to category 2 based on the acuity of the patient. The
commenter believes that the range of potential acuity is the same in
the emergency room as it is in the office setting and noted that office
and other outpatient visits are currently on the list of Medicare
telehealth services. A professional society encouraged us to reexamine
the request to add inpatient hospital care, observation services, and
inpatient psychotherapy to the list of Medicare telehealth services in
the future.
Response: We agree that the acuity for some patients may be the
same in the emergency department as in a physician's office. However,
we also believe that more acutely ill patients are more likely to be
seen in the emergency department. Although telehealth is an acceptable
alternative to face-to-face ``hands on'' patient care in certain
settings, the potential for misdiagnosis and/or mismanagement, with
more serious consequences, exists in high acuity environments like the
emergency department when telehealth is used as a replacement for an
onsite physician or practitioner. The practice of emergency medicine
often requires frequent patient reassessments, rapid physician
interventions, and sometimes the continuous physician interaction with
ancillary staff and consultants. We do not have evidence suggesting the
use of telehealth could be a reasonable surrogate service for this type
of care. In the absence of sufficient evidence that illustrates that
the use of a telecommunications system produces
[[Page 66277]]
similar diagnoses or therapeutic interventions as would the face-to-
face delivery of inpatient hospital care, emergency department visits,
hospital observation services, and inpatient psychotherapy, we do not
plan to add these services to the list of approved telehealth services.
As discussed in the proposed rule, we believe that the current list of
Medicare telehealth services is appropriate for hospital inpatients,
emergency room cases, and patients designated as observation status. If
guidance or advice is needed in these settings, a consultation may be
requested from an appropriate source.
Comment: A telehealth association and a telehealth network
requested that we clarify what consultation codes could be used for
hospital inpatients, emergency room cases, and patients designated as
observation status.
Response: The appropriate consultation code depends on the
admission status of the beneficiary. When the beneficiary is an
inpatient of a hospital, the physician or practitioner at the distant
site bills an initial or follow-up inpatient consultation as described
by CPT codes 99251 through 99263. For the hospital observation setting
and emergency department, the appropriate office or other outpatient
consultation code is CPT codes 99241 through 99245.
Comment: Some commenters believe that hospital inpatient care,
inpatient psychotherapy, observation services, and emergency department
visits should all be assigned to category 1 because they are clinically
the same as a consultation. Moreover, the commenters expressed their
opinion that a telecommunications system would not substitute for an
in-person practitioner for the requested hospital services.
Response: We agree that the key components of a consultation are
similar to inpatient hospital care, observation services, and emergency
department visits. However, a consultation service is distinguished
from the requested hospital services because it is provided by a
physician or practitioner whose opinion or advice regarding evaluation
and management of a specific problem is requested by another physician
or appropriate source. The ongoing management of the patient's
condition remains the responsibility of the practitioner who requested
the consultation. As discussed in our response to another comment, a
consultation may be provided as a Medicare telehealth service for
hospital inpatients, emergency room cases, and patients designated in
observation status.
In furnishing a consultation as a telehealth service, the physician
at the distant site provides additional expertise, to ensure optimal
patient outcomes. For consultation services, a practitioner is
available to manage the patient at the originating site. However,
adding the requested hospital services would permit a
telecommunications system to be used as a substitute for an onsite
practitioner because the physician or practitioner at the distant site
assumes responsibility for the ongoing management of the patient's
condition.
End Stage Renal Disease--Monthly Management of Patients on Dialysis
Comment: Many commenters, including a telehealth association, a
nephrology nurses association, a renal physicians association, a health
system, a community hospital, a telemedicine law group, and others
applauded our proposal to add the ESRD-related services with 2 or 3
visits per month and ESRD-related services with 4 or more visits per
month to the list of Medicare telehealth services. For example, two
commenters believe that adding these services will help provide
dialysis patients living in rural areas sufficient access to nephrology
specialists and will save both patients and practitioners a significant
amount of travel time. Additionally, many commenters expressed strong
support for not permitting the visit that includes a clinical
examination of the vascular access site to be added to the list of
Medicare telehealth services and agreed that this exam should be
furnished in person.
Response: We agree with the comments.
Comment: With regard to furnishing ESRD-related visits under the
MCP, a nephrology association suggested that we permit the use of e-
mail and telephone conferencing for one year. The commenter believes
this grace period would enable physicians and originating sites to
acquire the necessary technology and execute their implementation
plans. Additionally, an association of kidney patients questioned
whether telehealth services would be available to ESRD patients in non-
rural areas.
Response: Services added to the list of Medicare telehealth
services are subject to the requirements and conditions of payment in
the law and regulations. Under the Medicare telehealth provision, the
use of an interactive audio and video telecommunications system that
permits real-time interaction between the patient, physician or
practitioner at the distant site, and telepresenter (if necessary) is a
substitution for the face-to-face requirements under Medicare.
Electronic mail systems and telephone calls are specifically excluded
from the definition of an interactive telecommunications system.
Moreover, we do not have the legislative authority to expand the
geographic areas where telehealth services may be furnished. Telehealth
services may only be furnished in non-Metropolitan Statistical Area
counties or rural health professional shortage areas.
Comment: An association representing kidney patients questioned
whether we plan to evaluate the provision of telehealth services to
ESRD patients to determine best practices.
Response: We believe that most physicians and practitioners will
use telehealth services for providing additional visits required under
the MCP as appropriate to manage their patients on dialysis. However,
we would welcome specific data on best practice methods for furnishing
ESRD-related services as telehealth services.
Comment: Some commenters indicated a belief that the ESRD-related
services were assigned to category 2 for review. For example, one
telehealth group believed that a discrepancy exists between the
rationale we used to add ESRD-related services to the list of
telehealth services and our decision not to add inpatient hospital
care, observation services, inpatient psychotherapy, and emergency
department visits. The commenter stated that ESRD-related services were
added in the absence of randomized clinical trials or comparison
studies and mentioned that the same level of evidence was submitted for
ESRD-related services as for other requests (for example, inpatient
hospital services). The commenter requested clarification on the method
used to assign services to category 1 or category 2.
Response: As discussed in the proposed rule, the MCP represents a
range of services provided during the month, including various
physician and practitioner services, such as the establishment of a
dialyzing cycle, outpatient evaluation and management of the dialysis
visit(s), telephone calls, and patient management as well as clinically
appropriate physician or practitioner visit(s) during the month. At
least one of the visits must include a clinical examination of the
vascular access site furnished face-to-face, ``hands-on'' by a
physician, CNS, NP, or PA.
We considered the outpatient evaluation and management of the
dialysis visits to be similar to an office
[[Page 66278]]
visit and other outpatient visits currently on the list of Medicare
telehealth services. However, we believe that the clinical examination
of the vascular access site is not similar to the existing telehealth
services, and, therefore, it meets the criteria for a category 2
request. We did not propose to add a comprehensive visit including a
clinical examination of the vascular access site, to the list of
Medicare telehealth services because the requestor did not provide
comparative analyses illustrating that the use of a telecommunications
system is an adequate substitute for a face-to-face clinical
examination of the vascular access site. However, as discussed in the
proposed rule, we do believe that the subsequent visits to monitor the
patient's condition met our criteria for approving a category 1
request. For category 1 services, we look for similarities between the
proposed and existing telehealth services in terms of the roles of, and
interactions among, the beneficiary, the physician or practitioner at
the distant site, and, if necessary, the telepresenter.
Therefore, we proposed that the MCP physician, that is, the
physician or practitioner responsible for the evaluation and management
of the patient's ESRD, and other practitioners within the same group
practice or employed by the same employer or entity, may furnish
additional ESRD-related visits as telehealth services using an
interactive audio and video telecommunications system. However, for
purposes of billing the MCP, at least one visit must include a clinical
examination of the vascular access site, and must be furnished face-to-
face, ``hands on'' by a physician, CNS, NP, or PA each month.
Comment: One commenter requested that we allow a physician or
surgeon located at the originating site (who is not the MCP physician)
to furnish ESRD-related visits involving the clinical examination of
the vascular access site. The commenter stated that having a physician
or surgeon skilled in vascular access management available to work in
coordination with the MCP physician is necessary for geographically
remote areas such as Alaska and in severe weather conditions. The
commenter believes that this type of arrangement is well suited for
telehealth.
Response: The MCP physician may use another physician to provide
some of the visits during the month however, the non-MCP physician must
have a relationship with the billing physician such as a partner,
employees of the same group practice or an employee of the MCP
physician, for example, the physician at the originating site is either
a W-2 employee or 1099 independent contractor.
Case Management and Care Plan Oversight (Team Conferences and Physician
Supervision)
A telehealth association and a network of clinics requested
clarification on--
The scope of authority relating to the addition of
services that do not require a face-to-face encounter with the patient;
and
Whether our policy for care plan oversight is similar to
the interpretation of an x-ray and other services that do not require a
face-to-face encounter.
Additionally, a neurological society urged us to reconsider our
decision not to add medical team conferences to the list of telehealth
services. The commenter argued that adding medical team conferences as
a telehealth service would improve the quality of the care plan and
save time for all physicians involved in the patient's care.
Response: We add services to the list of Medicare telehealth
services that traditionally require a face-to-face physician or
practitioner encounter. The use of an interactive audio and video
telecommunications system, permitting real time interaction between the
beneficiary, physician or practitioner at the distant site, and
telepresenter (if necessary) is a substitute for face-to-face
requirements under Medicare. Services not requiring a face-to-face
encounter with the patient that may be furnished through the use of a
telecommunications system are already covered under Medicare. As
discussed in chapter 15, section 30 of the Medicare Benefit Policy
Manual, payment may be made for physicians' services delivered via a
telecommunications system for services that do not require a face-to-
face patient encounter. The interpretation of an x-ray,
electrocardiogram, electroencephalogram and tissue samples are listed
as examples of these services. The Medicare Benefit Policy Manual may
be found on our Web site at http://www.cms.hhs.gov/manuals/ by
selecting the internet-only manuals link.
Medical team conferences and monthly physician supervision do not
require a face-to-face encounter with the patient, and, thus, a
telecommunications system may be used to accomplish them. However,
Medicare payment for CPT codes 99361, 99362, and 99374 are bundled; no
separate payment is made under the Medicare program for these services,
and CPT code 99375 (physician supervision; 30 minutes or more) is
invalid for Medicare payment purposes. We pay for monthly physician
supervision as described by HCPCS codes G0181 and G0182.
Process for Adding Services to the List of Medicare Telehealth Services
Comment: We received conflicting comments on our process for adding
services to the list of Medicare telehealth services. For example, a
surgeons' association supported the evidence-based approach for adding
category 2 services. However, a school of medicine and a telemedicine
and electronic health group believe that we should consider changing
our categorical system for adding a service to the list of Medicare
telehealth services, specifically, in relation to the requested
hospital services for hospital inpatients, emergency room cases, and
patients designated as observation status.
One of the commenters believes that the decision to use a
telehealth system should be up to the physician or practitioner at the
distant site. The commenter argues that, if the physician or
practitioner at the distant site is not comfortable in making a
clinical judgment, the patient may be asked to travel to the
physician's office for further examination.
Moreover, the commenter contends that the nature of telehealth
services is not well suited for clinical trials and that the evidence
that we require under category 2 may never be obtained because of the
lack of reimbursement. As an alternative, the commenters recommended a
method of review that considers--
Clinical utilization of the requested telehealth service;
The opinions of physicians and practitioners furnishing
the telehealth service; and
The opportunity for the physicians and practitioners to
prove the service is being delivered appropriately via
telecommunications system.
Response: We believe that the current method for reviewing requests
for addition already considers the criteria mentioned by the commenter.
The process for adding services to the list of Medicare telehealth
services provides the public an ongoing opportunity to propose services
that they believe are appropriate for Medicare payment. Requestors may
submit data showing that patients who receive the requested service via
telecommunications system are satisfied with the service delivered and
that the use of a telecommunications system does not change the
diagnosis or therapeutic
[[Page 66279]]
interventions for the requested service. Additionally, we believe that
having different categories of review allows us to add requested
services that are most like the current telehealth services (for
example, office visits, consultation, and office psychiatry) without
subjecting these requests to a comparative analysis.
Since establishing the process to add services to the list of
Medicare telehealth services, we have added the psychiatric diagnostic
interview examination and have proposed specific ESRD-related services
for the CY 2005 rule.
Comment: One commenter recommended that we replace the term face-
to-face with ``in-person''. The commenter believes that the term ``in-
person'' is a better description of an encounter where the practitioner
is in the same physical location as the beneficiary.
Response: The commenter's suggestion to use the term ``in-person''
to describe an encounter where the physician or practitioner and the
beneficiary are physically in the same room has been noted. We will
consider the commenter's suggestion as we discuss Medicare telehealth
payment policy in the future.
Report to Congress
Comment: An audiology society and a language and hearing
association strongly believe that most audiology services and speech
therapy can be furnished remotely as telehealth services. To that end,
many commenting groups and associations requested that we complete the
report to Congress (as required by section 223(d) of the BIPA) and
urged us to recommend adding speech language pathologists and
audiologists as medical professionals that may provide and receive
payment for Medicare telehealth services.
Moreover, in light of the proposed addition of ESRD-related
services to the list of telehealth services, many of these same
commenters along with a nephrology society requested that we recommend
adding dialysis facilities to the list of originating sites. One
commenter requested that we add the patient's home to the definition of
an originating site.
Response: The report to Congress on additional sites and settings,
practitioners, and geographic areas that may be appropriate for
Medicare telehealth payment is under development. We are considering
the suggestions raised by the commenters as we formulate our
recommendations to the Congress.
Result of Evaluation of Comments
We are adding ESRD-related services as described by G0308, G0309,
G0311, G0312, G0314, G0315, G0317, and G0318 to the list of Medicare
telehealth services. However, we will require that the complete
assessment must include a face-to-face clinical examination of the
vascular access site furnished ``hands on'' (without the use of an
interactive telecommunications system) by a physician, clinical nurse
specialist, nurse practitioner, or physician's assistant. An
interactive telecommunications system may be used for providing
additional visits required under the 2 to 3 visit MCP code and the 4 or
more visit MCP code. Additionally, we are adding the term ``ESRD-
related visits'' to the definition of Medicare telehealth services at
Sec. 410.78 and Sec. 414.65, as appropriate.
3. National Pricing of G0238 and G0239 Respiratory Therapy Service
Codes.
In the 2001 final rule, we created the following three G codes for
respiratory therapy services:
G0237 Therapeutic procedures to increase strength or
endurance of respiratory muscles, face-to-face, one-on-one, each 15
minutes (includes monitoring).
G0238 Therapeutic procedures to improve respiratory
function, other than ones described by G0237, one-on-one, face-to-face,
per 15 minutes (includes monitoring).
G0239 Therapeutic procedures to improve respiratory
function or increase strength or endurance of respiratory muscles, two
or more individuals (includes monitoring).
We assigned RVUs to one of the codes (G0237), and indicated that
the other two codes (G0238 and G0239) would be carrier-priced. Since
the services represented by these codes are frequently being performed
in comprehensive outpatient rehabilitation facilities (CORFs), paid
under the physician fee schedule through fiscal intermediaries, there
has been some uncertainty surrounding the payment for the carrier-
priced services. We believe assigning RVUs to G0238 and G0239 will
provide needed clarity. Since these services are typically performed by
respiratory therapists, we did not assign physician work to G0237, and
we did not propose work RVUs for either G0238 or G0239.
Therefore, we proposed to value nationally the practice expense for
these services using the nonphysician work pool. We proposed to
crosswalk practice expense RVUs for G0238 to those for G0237 based on
our belief that the practice expense for the activities involved is
substantially the same for both services.
For G0239, we believe a typical group session to be 30 minutes in
length and to consist of 3 patients. Therefore, for the practice
expense RVUs for G0239, we proposed using the practice expense RVUs of
G0237 reduced by one-third to account for the fact that the service is
being provided to more than one patient simultaneously and each patient
in a group can be billed for the services of G0329.
We also proposed a malpractice RVU of 0.02, the malpractice RVU
assigned to G0237, for these two G-codes.
Comment: Commenters supported the national pricing for these 2 G-
codes, G0238 and G0239. However, these organizations disagree with our
RVU assignment. Specifically, most commenters disagreed with the lack
of physician work RVUs and also believed that the malpractice RVU is
inadequate to reflect the costs associated with the delivery of the
services. These organizations contend that pulmonary rehabilitation
services ``include a physician-directed individualized plan of care
using multidisciplinary qualified health professionals to enhance the
effective management of pulmonary diseases and resultant functional
deficits.'' They believe that beneficiaries may receive pulmonary
rehabilitation services at physician offices, outpatient departments of
acute care hospitals, CORFs and rehabilitation clinics. The commenters
noted that physicians and qualified nurse practitioners (NPs) and PAs
order, supervise, and approve the plans of care for patients receiving
respiratory therapy services, irrespective of the delivery setting.
Because respiratory rehabilitation is often furnished in a
physician office, these organizations believe the malpractice RVU
assigned is inadequate to account for the physician involvement and
requested that a more appropriate risk factor be used.
Response: Because we believe that respiratory therapists (RTs)
typically deliver these services, it would be inappropriate to assign a
physician work RVU to these services. The malpractice RVU of 0.02 is
similar to RVUs of therapeutic procedures delivered by physical and
occupational therapists for similar services, including procedures
performed one-on-one and in groups. We believe that the 0.02
malpractice RVU fairly represents the risk value inherent in the
provision of these procedures. However, because the commenters
expressed concerns about work and malpractice RVUs, we are assigning
these RVUs on an interim
[[Page 66280]]
basis, and we are requesting that the RUC or HCPAC consider this series
of three G-codes at an upcoming meeting.
Because RTs cannot directly bill Medicare for their services, these
G-codes can only be billed as incident to services in physician offices
and outpatient hospital departments or as CORF services. When performed
in the CORF setting, these services must be delivered by qualified
personnel, that is, RTs and respiratory therapy technicians, as defined
at Sec. 485.70. The CORF benefit requires the physician to establish
the respiratory therapy plan of care and mandates a 60-day
recertification for therapy plans of care, including physical therapy
(PT), occupational therapy (OT), speech language pathology (SLP), and
respiratory therapy. As we stated in the December 31, 2002 final rule,
we believe that specially trained professionals (that is, registered
nurses, physical therapists and occupational therapists) can also
provide these services.
These respiratory therapy G-codes were designed to provide more
specific information about the medically necessary services being
provided to improve respiratory function and to substitute for the
physical medicine series of CPT codes 97000 through 97799, except when
services are furnished and meet all the requirements for physical and
occupational therapy services.
Comment: While three commenters voiced concerns about the
significant undervaluing of these codes, one commenter noted that the
practice expense RVUs fail to recognize the intensity of services and
the cost of monitoring and other equipment associated with providing
these services.
Response: We agree that the practice expenses, particularly the
equipment, for G0237 and G0238 are not equivalent and that there are
more resources required to provide the medically necessary services of
G0238. The necessary monitoring equipment referenced by commenters were
considered at the time G0327 was originally valued. The appropriate
direct inputs will be added to the practice expense database. However,
we identified the omission of therapeutic exercise equipment for G0238
and G0239 and we will also add this to the practice expense database.
Result of Evaluation of Comments
We are assigning practice expense and malpractice RVUs to G0238 and
G0239 and will add the additional items to the practice expense
database. These codes are being valued in the nonphysician work pool as
proposed. We will also ask the RUC or HCPAC to consider these codes.
4. Bone Marrow Aspiration and Biopsy through the Same Incision on the
Same Date of Service.
In the August 5, 2004 rule, we proposed a new add-on G-code, G0364
(proposed as G0XX1): Bone marrow aspiration performed with bone marrow
biopsy through same incision on same date of service. The physician
would use the CPT code for bone marrow biopsy (38221) and G0364 for the
second procedure (bone marrow aspiration).
We believe that there is minimal incremental work associated with
performing the second procedure through the same incision during a
single encounter. We estimated that the time associated with this G-
code is approximately 5 minutes based on a comparison to CPT code 38220
bone marrow aspiration which has 34 minutes of intraservice time and a
work RVU of 1.08 work when performed on its own. We proposed 0.16 work
RVUs for this new add-on G-code and malpractice RVUs of 0.04 (current
malpractice RVUs assigned to CPT code 38220). For practice expense, we
proposed the following practice expense inputs:
-- Clinical staff time: Registered nurse--5 minutes Lab technician--2
minutes
-- Equipment: Exam table
We also proposed a ZZZ global period (code related to another
service and is always in the global period of the other service) for
this add-on code since this code is related to another service and is
included in the global period of the other service.
In the August 5, 2004 proposed rule, we also stated that if the two
procedures, aspiration and biopsy, are performed at different sites
(for example, contralateral iliac crests, sternum/iliac crest or two
separate incisions on the same iliac crest), the -59 modifier, which
denotes a distinct procedural service, is appropriate to use and
Medicare's multiple procedure rule will apply. In this instance, the
CPT codes for aspiration and biopsy are each being used.
Comment: Many commenters supported creation of this G-code;
however, all commenters stated that the time for this procedure (5
minutes) was substantially underestimated. Commenters recommended
increasing the added incremental time associated with the aspiration to
15 minutes. One commenter noted that this time is needed for the actual
aspiration procedure, approving the quality of the aspiration,
collecting flow cytometry and chromosome studies, preparing additional
slides, ordering appropriate lab tests on the slides, and performing
the added recordkeeping and documentation. Another commenter provided a
detailed description of the activities involved in this procedure.
Commenters also recommended that the practice expense input for the
nurse assisting with the procedure should be increased to 15 minutes.
Response: We continue to believe that the proposed 5 minutes of
physician time, 5 minutes of registered nurse time, and 2 minutes of
lab technician time reflect the additional effort involved when a bone
marrow aspiration is performed in conjunction with a bone marrow biopsy
through the same incision during a single encounter. It is our
understanding that some of the activities attributed to the additional
15 minutes of physician work generally are performed by ancillary
staff, for example, preparing slides. While we appreciate the
information provided, we believe that the majority of the effort and
specific tasks discussed are accounted for in the CPT code for bone
marrow biopsy (38221) which is the primary code being billed.
Comment: Two physician specialty societies, representing
radiologists and interventional radiologists, questioned the need for
the proposed code, because the multiple surgical discount rule that
reduces payment for a subsequent lower valued service applies, thereby
taking into account any savings in physician work. If we choose to
proceed with the proposal, the commenter recommended the RVUs be
consistent with those determined using the current values for CPT codes
38220 and 38221 and the multiple surgical discount rule.
Response: One of the primary reasons for our proposal for this G-
code was that we believe that, even with the application of the
multiple procedure reduction, we would be overpaying for these services
when they are performed on the same day, at the same encounter and
using the same incision.
Result Of Evaluation of Comments
We are finalizing our proposal and using new G-code G0364, Bone
marrow aspiration performed with bone marrow biopsy through the same
incision on the same date of service. Payment is based on the work and
malpractice RVUs and practice expense inputs proposed and the global
period for this service is ``ZZZ''.
[[Page 66281]]
5. Q-Code for the Set-Up of Portable X-Ray Equipment
The Q-code for the set-up of portable x-ray equipment, Q0092, is
currently paid under the physician fee schedule and is assigned an RVU
of 0.33. In 2004, this produces a national payment of $12.32. This set-
up code encompasses only a portion of the resources required to provide
a portable x-ray service to patients. In 2003, portable x-ray suppliers
received total Medicare payments of approximately $208 million. More
than half of these payments (approximately $116 million) were for
portable x-ray transportation (codes R0070 and R0075). The portable x-
ray set-up code (Q0092) generated approximately $19 million in
payments. The remainder of the Medicare payments for portable x-ray
services (approximately $73 million) were for the actual x-ray services
themselves.
As discussed in the August 5, 2004 proposed rule, the Conference
Report accompanying the Consolidated Appropriations Bill, H.R. 2673,
(Pub. L. 108-199, enacted January 23, 2004) urged the Secretary to
review payment for this code, and the portable x-ray industry has also
requested that we reexamine payments for this code.
Q0092 is currently priced in the nonphysician work pool. At the
time we modeled this change for the proposed rule, removing this code
from the nonphysician work pool had an overall negative impact on
payments to portable x-ray suppliers (as a result of decreases to
radiology codes that remain in the nonphysician work pool) and a
negative impact on many of the codes remaining in the nonphysician work
pool. An alternative to national pricing of portable x-ray set-up would
be to require Medicare carriers to develop local pricing as they do
currently for portable x-ray transportation. We requested comments on
whether we should pursue national pricing for portable x-ray set-up
outside of the nonphysician work pool or local carrier pricing for
2005, or whether we should continue to price the service in the
nonphysician work pool.
Comment: Most commenters recommended removing portable x-ray from
the nonphysician work pool, using the ``existing data'' from the
American College of Radiology (ACR) supplemental practice expense
survey as the practice expense per hour proxy. However, the National
Association of Portable X-Ray Suppliers (NAPXP) requested additional
time to review information they received from us just 3 days before the
close of the comment period. This association requested that they be
allowed to submit supplemental comments.
Response: ACR requested that we delay incorporating their survey
data for 1 year. Using the data for one code, as proposed by
commenters, would be inconsistent with that request. We believe it is
inappropriate to use the new survey data for this code but no other
code. Even if we removed the set-up code from the nonphysician work
pool and calculated its practice expense RVU using the ACR data, the
increase in payment for the portable x-ray set-up code would be largely
offset by lower payment for x-ray services. Payments for other services
in the nonphysician work pool would also decline affecting other
specialties, such as radiology, radiation oncology, cardiology,
allergy, audiology and others. Further, the portable x-ray set-up code
is yet to be refined, and we believe that the 45 minutes of staff time
that is used to determine its value is likely overstated. We believe it
is preferable to address refinement of the code and pricing the service
outside of the nonphysician work pool together. Therefore, in 2005, we
are continuing to price this service within the nonphysician work pool.
The NAPXP requested more time to review the data we supplied them.
NAPXP's comment implying that we withheld ``data'' from them is simply
wrong. In an effort to explain the theoretical reasons for our
statements that removing this service from the nonphysician work pool
could lower overall payments to portable x-ray suppliers, we prepared
an illustration for another association as a follow-up request after a
meeting, where we were asked to explain our proposed rule analysis. The
explanation contained no new data. Moreover, we provided the
explanatory information to NAPXP as soon as they requested it. Since
the information NAPXP complains about was illustrative only, we do not
believe NAPXP has been prejudiced in any way. Moreover, we are willing
to explain the information to NAPXP and to consider any comments they
may have as we consider changes to the practice expense methodology for
2006.
6. Venous Mapping for Hemodialysis
In the August 5, 2004 rule, we proposed a new G-code (G0XX3: Venous
mapping for hemodialysis access placement (Service to be performed by
operating surgeon for preoperative venous mapping prior to creation of
a hemodialysis access conduit using an autogenous graft). Autogenous
grafts have longer patency rates, a lower incidence of infection and
greater durability than prosthetic grafts. Use of autogenous grafts can
also result in a decrease in hospitalizations and morbidity related to
vascular access complications. We stated that creation of this G-code
will enable us to distinguish between CPT code 93971 (Duplex scan of
extremity veins including responses to compression and other maneuvers;
unilateral or limited study) and G0XX3 in order to allow us to track
use of venous mapping for quality improvement purposes.
We also proposed that this G-code be billed only by the operating
surgeon in conjunction with CPT codes 36819, 36821, 36825, and 36832
and that we would not permit payment for CPT code 93971 when this G-
code is billed, unless code CPT 93971 was being performed for a
separately identifiable clinical indication in a different anatomic
region.
We proposed to crosswalk the RVUs for the new G-code from those of
CPT code 93971 and also assigned this new G-code a global period of
``XXX,'' which means that the global concept does not apply.
Comment: Commenters representing specialty societies and individual
providers were generally supportive of the proposal for this new code,
but expressed the following three primary concerns:
Commenters did not agree with restricting this code to the
operating surgeon, stating that such a restriction could limit access
and serve as a barrier in providing this service. They also stated that
this proposed restriction is not reflective of current practice, since
nonsurgeons often perform this procedure.
Commenters did not agree with the proposed descriptor.
They indicated that the proposed descriptor did not reflect the
procedure as it is now performed and suggested (a) alternate wording,
such as ``vascular mapping,'' ``autogenous AV fistula,'' and
``prosthetic graft,'' ``vessel mapping;'' (b) that two G-codes should
be created to distinguish between a complete bilateral and unilateral
or limited studies. Other commenters noted that the proposal did not
distinguish between mapping by venography or ultrasound (duplex), and
some commenters suggested creating an additional G-code to distinguish
between these procedures.
Commenters stated that the comparison to CPT code 93971 in
the proposed rule undervalues the service. While there are differences,
the closer analogue in terms of time and resources required is CPT code
93990, Duplex scans of hemodialysis access.
Response: We proposed the G-code to create the opportunity for us
to analyze
[[Page 66282]]
the relationship between venous mapping utilization and fistula
formation.
Based on the comments we received, we are revising the code
descriptor to enable clinicians, other than the operating surgeon, who
provide care to ESRD patients the opportunity to bill for this service.
We believe that vessel mapping requires the assessment of the
arterial and venous vessels in order to provide the information
necessary for the creation of an autogenous conduit. Therefore, we are
also revising payment for this code and will crosswalk it to CPT code
93990 for work, malpractice, and practice expense RVUs because these
RVUs more appropriately reflect the work and resources of this new G-
code. The G-code and descriptor for this service will be G0365, Vessel
mapping of vessels for hemodialysis access (Services for preoperative
vessel mapping prior to creation of hemodialysis access using an
autogenous hemodialysis conduit, including arterial inflow and venous
outflow). This code can only be used in patients who have not had a
prior hemodialysis access prosthetic graft or autogenous fistula and is
limited to two times per year.
We will not permit separate payment for CPT code 93971 when this G-
code is billed, unless CPT code 93971 is being performed for a
separately identifiable indication in a different anatomic region. We
also note that other imaging studies may not be billed for the same
site on the same date of service unless an appropriate ``KO'' modifier
indicating the reason or need for the second imaging study is provided
on the claim form.
We will follow the utilization closely this year to better
understand whether this code is used as intended.
III. Provisions Related to the Medicare Modernization Act of 2003
A. Section 611--Preventive Physical Examination
Section 611 of the MMA provides for coverage under Part B of an
initial preventive physical examination (IPPE) for new beneficiaries,
effective for services furnished on or after January 1, 2005, subject
to certain eligibility and other limitations.
In the August 5, 2004 proposed rule, we described a new Sec.
410.16 (Initial preventive physical examination: conditions for and
limitations on coverage) that would provide for coverage of the various
IPPE services specified in the statute. As provided in the statute,
this new coverage allows payment for one IPPE within the first 6 months
after the effective date of the beneficiary's first Part B coverage
period, but only if that coverage period begins on or after January 1,
2005. To implement the statutory provisions, we proposed definitions of
the following terms:
Eligible beneficiary;
An initial preventive physical examination;
Medical history;
Physician;
Qualified NPP;
Social History, and
Review of the individual's functional ability and level of
safety.
In keeping with the language of section 611 of the MMA, we defined
the term ``eligible beneficiary'' to mean individuals who receive their
IPPEs within 6 months after the date of their first Medicare Part B
coverage period, but only if their first Part B coverage period begins
on or after January 1, 2005. This section also defines the term
``Initial Preventive Physical Examination'' to mean services provided
by a physician or a qualified NPP consisting of: (1) A physical
examination (including measurement of height, weight, blood pressure,
and an electrocardiogram, but excluding clinical laboratory tests) with
the goal of health promotion and disease detection; and (2) education,
counseling, and referral for screening and other covered preventive
benefits separately authorized under Medicare Part B.
Specifically, section 611(b) of the MMA provides that the
education, counseling, and referral of the individual by the physician
or other qualified NPP are for the following statutory screening and
other preventive services authorized under Medicare Part B:
Pneumococcal, influenza, and hepatitis B vaccine and their
administration;
Screening mammography;
Screening pap smear and screening pelvic exam services;
Prostate cancer screening services;
Colorectal cancer screening tests;
Diabetes outpatient self-management training services;
Bone mass measurements;
Screening for glaucoma;
Medical nutrition therapy services for individuals with
diabetes or renal disease;
Cardiovascular screening blood tests; and
Diabetes screening tests.
Based on the language of the statute, our review of the medical
literature, current clinical practice guidelines, and United States
Preventive Services Task Force (USPSTF) recommendations, we interpreted
the term ``initial preventive physical examination'' for purposes of
this benefit to include all of the following service elements:
1. Review of the individual's comprehensive medical and social
history, as those terms are defined in proposed Sec. 410.16(a);
2. Review of the individual's potential (risk factors) for
depression (including past experiences with depression or other mood
disorders) based on the use of an appropriate screening instrument,
which the physician or other qualified NPP may select from various
available standardized screening tests for this purpose, unless the
appropriate screening instrument is defined through the national
coverage determination (NCD) process;
3. Review of the individual's functional ability and level of
safety, as described in proposed Sec. 410.16(a), (that is, at a
minimum, a review of the following areas: Hearing impairment,
activities of daily living, falls risk, and home safety), based on the
use of an appropriate screening instrument, which the physician or
other qualified NPP may select from various available standardized
screening tests for this purpose, unless the appropriate screening
instrument is further defined through the NCD process;
4. An examination to include measurement of the individual's
height, weight, blood pressure, a visual acuity screen, and other
factors as deemed appropriate by the physician or qualified NPP, based
on the individual's comprehensive medical and social history and
current clinical standards;
5. Performance and interpretation of an electrocardiogram;
6. Education, counseling, and referral, as appropriate, based on
the results of the first five elements of the initial preventive
physical examination; and
7. Education, counseling, and referral, including a written plan
provided to the individual for obtaining the appropriate screening and
other preventive services, which are separately covered under Medicare
Part B benefits; that is, pneumococcal, influenza, and hepatitis B
vaccines and their administration, screening mammography, screening pap
smear and screening pelvic examinations, prostate cancer screening
tests, colorectal cancer screening tests, diabetes outpatient self-
management training services, bone mass measurements, screening for
glaucoma, medical nutrition therapy services, cardiovascular (CV)
screening blood tests, and diabetes screening tests.
[[Page 66283]]
The proposed ``medical history'' definition includes the following
elements:
Past medical history and surgical history, including
experience with illnesses, hospital stays, operations, allergies,
injuries, and treatment.
Current medications and supplements, including calcium and
vitamins.
Family history, including a review of medical events in
the patient's family, including diseases that may be hereditary or
place the individual at risk.
The proposed ``physician'' definition means for purposes of this
provision a doctor of medicine or osteopathy (as defined in section
1861(r)(1) of the Act).
The proposed ``qualified nonphysician practitioner'' for purposes
of this provision means a PA, NP, or clinical nurse specialist (CNS)
(as authorized under sections 1861(s)(2)(K)(i) and 1861(s)(2)(K)(ii) of
the Act and defined in section 1861(aa)(5) of the Act, or in
regulations at Sec. 410.74, Sec. 410.75, and Sec. 410.76).
The proposed ``social history'' definition includes, at a minimum,
the following elements:
History of alcohol, tobacco, and illicit drug use.
Work and travel history.
Diet.
Social activities.
Physical activities.
The proposed definition of ``Review of the individual's functional
ability and level of safety'' includes, at a minimum, a review of the
following areas:
Hearing impairment.
Activities of daily living.
Falls risk.
Home safety.
We also proposed conforming changes to specify an exception to the
list of examples of routine physical examinations excluded from
coverage in Sec. 411.15(a)(1) and Sec. 411.15(k)(11) for IPPEs that
meet the eligibility limitation and the conditions for coverage that we
are specifying under Sec. 410.16, Initial preventive physical
examinations.
With regards to the issue of payment for the IPPE, in the August 5,
2004 proposed rule we stated that there is no current CPT code that
contains the specific elements included in the IPPE and proposed to
establish a new HCPCS code to be used for billing for the initial
preventive examination. As required by the statute, we indicated that
this code includes an electrocardiogram, but does not include the other
previously mentioned preventive services that are currently separately
covered and paid under the Medicare Part B screening benefits. When
these other preventive services are performed, they must be identified
using the existing appropriate codes.
Proposed payment for this code was based on the following:
Work RVUs: We proposed a work value of 1.51 RVUs for G0344
(G0XX2 in proposed rule) based on our determination that this new
service has equivalent resources and work intensity to those contained
in CPT E/M code 99203, new patient, office or other outpatient visit
(1.34 RVUs), and CPT code 93000 electrocardiogram, complete (0.17
RVUs), which is for a routine ECG with the interpretation and report.
Malpractice RVUs: For the malpractice component of G0344,
we proposed malpractice RVUs of 0.13 in the nonfacility setting based
on the malpractice RVUs currently assigned to CPT code 99203 (0.10) and
CPT code 93000 (0.03). In the facility setting, we proposed malpractice
RVUs of 0.11 based on the current malpractice RVUs assigned to CPT code
99203 (0.10) and 93010 (an EKG interpretation with a value of 0.01).
Practice Expense RVUs: For the practice expense component
of G0344, we proposed practice expense RVUs of 1.65 in the nonfacility
setting based on the practice RVUs assigned to CPT code 99203 (1.14)
and CPT code 93000 (0.51). In the facility setting, we proposed
practice expense RVUs of 0.54 based on the practice expense RVUs
assigned to CPT code 99203 (0.48) and 93010 (0.06).
Because some of the components for a medically necessary Evaluation
and Management (E/M) visit are reflected in this new G code, we also
proposed, when it is appropriate, to allow a medically necessary E/M
service no greater than a level 2 to be reported at the same visit as
the IPPE. That portion of the visit must be medically necessary to
treat the patient's illness or injury or to improve the function of a
malformed body member and should be reported with modifier--25. We also
stated the physician or qualified NPP could also bill for the screening
and other preventive services currently covered and paid by Medicare
Part B under separate provisions of section 1861 of the Act, if
provided during this IPPE.
The MMA did not make any provision for the waiver of the Medicare
coinsurance and Part B deductible for the IPPE. Payment for this
service would be applied to the required deductible, which is $110 for
CY 2005, if the deductible is not met, and the usual coinsurance
provisions would apply.
Analysis of and Response to Comments
We specifically solicited public comments on the definition of the
term ``initial preventive physical examination,'' with supporting
documentation. For example, we indicated that we chose not to define
the term, ``appropriate screening instrument,'' for screening
individuals for depression, functional ability, and level of safety, as
specified in the rule, because we anticipated that the examining
physician or qualified NPP may want to use the test of his or her
choice, based on current clinical practice guidelines. We believe that
any standardized screening test for depression, functional ability, and
level of safety recognized by the American Academy of Family
Physicians, the American College of Physicians-American Society of
Internal Medicine, the American College of Preventive Medicine, the
American Geriatrics Society, the American Psychiatric Association, or
the USPSTF, or other recognized medical professional group, would be
acceptable for purposes of meeting the ``appropriate screening
instrument'' provision. We asked that commenters making specific
recommendations on this or any related issue provide documentation from
the medical literature, current clinical practice guidelines, or the
USPSTF recommendations.
We received 71 public comments on the proposed rule regarding IPPE.
Commenters included national and State professional associations,
medical societies and medical advocacy groups, hospital associations,
hospitals, managed care plans, physicians, senior advocacy groups,
health care manufacturers, and others. Although a number of commenters
expressed concern that the proposed rule was too prescriptive and not
sufficiently targeted to prevention, a large majority of the commenters
enthusiastically supported most of the coverage provisions of the
proposed rule. Many of the commenters, however, suggested clarification
and revision of the rule in a number of different areas, including the
proposed definitions of ``initial preventive physical examination,''
``physician,'' and ``qualified nonphysician practitioner.'' Commenters
also raised questions regarding other issues, such as those relating to
the need for us to educate Medicare beneficiaries and providers with
respect to the new benefit, and to monitor the implementation of the
new benefit. Finally, commenters offered suggestions and questions with
regards to payment issues, evaluation and
[[Page 66284]]
management services (E/M) and coinsurance and Part B deductible issues.
A summary of the comments and our responses are presented below.
Comment: A number of commenters expressed concern that in the
proposed rule, we had gone beyond the coverage criteria that were
specified in the statute for the new benefit. They noted that the
additional criteria was too prescriptive and would only add confusion
and an additional burden for physicians in determining what medical
services are necessary for each beneficiary they evaluate. Several
commenters indicated that while the proposed definition for the scope
of the benefit was well-intentioned, the beneficiary's physician or
other provider was the best person to determine what medical services
are necessary in providing a thorough physical and to be responsive to
the individual's age, gender, and particular health risks. In general,
they suggested that we not interfere in a physician's judgment by
attempting to standardize by Federal regulations the specific medical
services to be included under the new benefit.
Response: Section 611 of the MMA defines the scope of the IPPE
benefit as physicians' services consisting of a physical examination
(including measurement of height, weight, and blood pressure and an
electrocardiogram) with the goal of health promotion and disease
detection, as well as certain education, counseling, and referral
services with respect to other statutory screening and preventive
services also covered under the Medicare statute. We believe that the
statutory parenthetical language, (including measurement of height,
weight, and blood pressure and an electrocardiogram) recognizes that
other services could be contained within the IPPE benefit. We are using
the authority under section 1871(a) of the Act through the rulemaking
process to provide clarity as to the specific services that are to be
included under the new benefit.
We believe that adding these additional services will help to
ensure that a full and complete IPPE is provided to each beneficiary
who chooses to take advantage of the service and that all beneficiaries
who decide to do this are treated in a relatively uniform manner
throughout the country. With an estimated 200,000 individuals expected
to enroll in Medicare Part B each month starting in January 2005, who
will be eligible to receive the IPPE benefit, we believe that it is
paramount that we promulgate a minimum list of required services
important to the goals of health promotion and disease detection that
must be included in the new benefit, and we are specifying those
service elements in the final rule.
The ``Initial Preventive Physical Examination'' Definition (IPPE)
(Sec. 410.16(a))
Comment: Three commenters indicated that this new benefit presents
a unique opportunity to offer Medicare beneficiaries with a visit
focused on prevention at the start of their Part B enrollment. They
suggested, that we shift our focus in service element 1 of the
definition of the new IPPE from a comprehensive to a more targeted
priority list of modifiable risk factors, screening tests, and
immunizations that are supported by the strongest evidence of
effectiveness, and have been proven to improve the health of
beneficiaries.
Response: We agree that the intent of the new benefit is to deliver
clinical preventive services that are accepted and effective in helping
to keep people healthy and reduce the burden of disease whenever
possible. Therefore, we agree to revise the language in service element
1 to read as follows: ``Review of the individual's medical and social
history with particular attention to modifiable risk factors for
disease.''
Comment: Three commenters indicated that the collection of
information on a beneficiary's social history such as social
activities, work and travel history, is a distraction and is not needed
by the physician or other qualified NPP who is performing the
preventive physical examination. The commenters suggest that we
eliminate the proposed definition and not require the collection of
this information.
Response: We agree that information on work and travel history, and
social activities may not be necessary for purposes of the new
preventive physical examination and thus we are removing those elements
from the minimum requirements for the ``social history'' definition.
However, we believe it is important to retain three elements of the
Social history definition in the final rule and they will be reflected
in that document as follows:
History of alcohol, tobacco, and illicit drug use.
Diet.
Physical activities.
Comment: Several commenters requested that we add language to
service element 1 to allow practitioners to ascertain information from
individuals about additional disease or other diagnoses such as
including questions regarding past diagnoses or treatment of cancer,
diabetes, elevated blood sugar, height loss, previous fractures, and
medical conditions that may increase a person's risk of coagulopathic
disorders such as deep venous thrombosis (DVT).
Response: In applying our definition of ``past medical history'' we
expect that physicians and qualified NPPs performing the IPPE will be
able to ask about an array of medical illnesses, including prior
diagnoses and treatment of conditions such as cancer, diabetes, risk
factors for osteoporosis such as height loss or previous fractures, and
history of coagulopathic disorders such as DVT. Therefore, we do not
see a need to expand the proposed definition as the commenters have
suggested, and we have decided to leave it unchanged in the final rule.
Comment: Three commenters asked us to add language to either
service element 1 or 3 to allow practitioners to screen individuals for
memory impairment.
Response: Currently, the USPSTF has found insufficient evidence to
recommend for or against routine screening for dementia with
standardized instruments in asymptomatic persons. However, the USPSTF
notes that patients with problems in performing daily activities should
have their mental status evaluated and clinicians should remain alert
for possible signs of declining cognitive function. We included as part
of the definition for service element 3, ``Review of the individual's
functional ability and level of safety,'' a review of the patient's
activities of daily living. While not exhaustive, this review will
primarily aid physicians in identifying a patient's problems with
regard to performing these activities and the role cognitive impairment
may play in these deficits.
Comment: One commenter proposed that we not use the NCD process to
revise the content of the IPPE in the future. The NCD process would be
too slow or cumbersome to allow us to keep the content of the
examination consistent with current clinical practice.
Response: For service elements 2 and 3, which discuss the future
use of the NCD process in determining appropriate screening instruments
we will delete the following: ``unless the appropriate instrument is
defined through the NCD process.'' We will add language that states
available standardized screening tests must be recognized by national
medical professional organizations.
Comment: Several commenters requested that we clarify our intent as
to whether the depression screening assessment in service element 2
will include consideration of the potential for depression as well as
an assessment
[[Page 66285]]
of an individual's current depression status. Another commenter asked
us to clarify our intent with respect to the use of a screening
instrument for persons with a current diagnosis of depression.
Response: We agree with the commenters that the regulation language
on depression screening needs to be clarified. We are revising service
element 2 to read ``review of the individual's potential (risk factors)
for depression, including current or past experience with depression or
other mood disorders, based on the use of an appropriate screening
instrument for persons without a current diagnosis of depression, which
the physician or other qualified NPP may select from various available
standardized screening tests designed for this purpose and recognized
by national medical professional organizations.''
Comment: Three commenters expressed the view that the proposed
screening tests for falls risk and home safety in service element 3
were not supported by direct scientific evidence, and should be dropped
from the IPPE benefit in the final rule.
Response: Falls are among the most common and serious problems
facing elderly persons. They are associated with considerable morbidity
such as hip fractures and overall reduced level of functioning. The
USPSTF also notes that falls are the second leading cause of
unintentional injury deaths in the United States. The death rate due to
falls increases as a person ages. According to the National Center for
Injury Prevention and Control, approximately one-half to two-thirds of
all falls occur in and around a person's home. Therefore, discussing
with patients home safety tips may reduce some home hazards. In
addition, the USPSTF recommends counseling patients on specific
measures to reduce the risk of falling, although direct evidence of
effectiveness has not yet been established. Therefore, we believe that
questioning and counseling patients to determine their risk of falling
and home safety is warranted as part of the IPPE benefit.
Comment: Several commenters from the audiology community have asked
us to clarify the meaning of the proposed requirement in service
element 3, which includes (among other things) a review of any hearing
impairment. In addition, several commenters have requested that we
clarify whether a hearing assessment is required as part of service
element 3, or whether questions (or a questionnaire) advanced to an
individual about any possible hearing problems would suffice for
purposes of this part of the new benefit. The commenters ask for
provider flexibility in meeting this requirement.
Response: The regulatory intent of service element 3 is that we
expect that the physician or qualified NPP will engage in a dialogue
with patients concerning these issues by asking the individual
appropriate questions or using a written questionnaire to address
hearing impairment, activities of daily living, falls risk, and home
safety. We do not intend for actual screening instruments such as
audiometric screening tests to be used. After questioning the
individual, if abnormalities are identified, additional follow-up
services may be warranted and may include education, counseling, and
referral (if appropriate.)
Therefore, we are revising the language of service element 3 to
read ``review of the individual's functional ability and level of
safety, based on the use of appropriate screening questions or a
screening questionnaire which the physician or qualified NPP may select
from various available screening questions or standardized
questionnaires designed for this purpose and recognized by national
medical professional organizations.''
Medically necessary diagnostic hearing tests, including hearing and
balance assessment services, performed by a qualified audiologist are
covered as other diagnostic tests under section 1861(s)(3) of the Act
and would be separate from the new IPPE benefit. These services may be
appropriate when a physician or other qualified NPP orders a diagnostic
hearing test for the purpose of obtaining information necessary for the
physician's diagnostic evaluation or to determine the appropriate
medical or surgical treatment of a hearing deficit or related medical
problem. However, coverage of this testing is excluded by virtue of
section 1862 (a)(7) of the Act when the diagnostic information required
to determine the appropriate medical or surgical arrangement is already
known to the physician, or the diagnostic services are performed only
to determine the need for the appropriate type of hearing aid. For
further information about the application of the hearing test exclusion
to diagnostic hearing tests and payment for these services, we suggest
review of section 80.3 to 80.3.1 of the Medicare Benefit Policy Manual.
Comment: Several commenters suggested that we expand the services
to be included as part of service element 4 that was proposed for
coverage under the IPPE benefit to include: (1) Palpitation/
auscultation of carotid arteries; (2) palpitation/auscultation of
abdominal aorta; and (3) the ankle-brachial index (ABI) test for
peripheral arterial disease (PAD).
Response: Currently, routine screening of asymptomatic persons for
carotid artery stenosis via palpation/auscultation of the carotid
arteries or carotid ultrasound is not recommended by organizations such
as the USPSTF, which provides guidelines on this issue. Therefore, we
are not adding routine screening of asymptomatic individuals for
carotid artery stenosis to service element 4 in the absence of evidence
of the effectiveness of the screening. In addition, the USPSTF has
determined that there is insufficient evidence to recommend for or
against routine screening of asymptomatic adults for abdominal aortic
aneurysm (AAA) by palpation/auscultation or ultrasound of the abdominal
aorta so we are not adding that type of screening to service element 4.
Finally, the USPSTF does not recommend routine screening for PAD in
asymptomatic persons. However, they also state that clinicians, should
be aware of symptoms and risk factors for PAD and evaluate patients
accordingly. Therefore, routine screening for PAD with the use of the
ABI will not be required as part of the initial preventive physical
examination.
Comment: One commenter asked for clarification on whether the
proposed regulatory language ``and other factors deemed appropriate by
the physician or qualified nonphysician practitioner,'' as specified in
service element 4, would permit inclusion of coverage of a screening
for chronic obstructive pulmonary disease (COPD) through spirometric
testing under the IPPE benefit.
Response: The intent of this language for the actual physical
examination portion of the IPPE benefit is to leave to the discretion
of the physician or other qualified NPP whether to perform commonly
utilized physical examination measures such as auscultation of the
heart or lungs on a particular patient, if needed. Spirometry as a
screening test for COPD, however, would not be considered to fall
within the scope of the physical examination element of the IPPE
benefit.
Comment: A number of commenters suggested that we add an assessment
of abdominal obesity or alternatively the calculation of the body mass
index (BMI) to the vital signs part of service element 4 to help in
determining if an individual is at risk for a heart attack, diabetes,
or other medical problems.
Response: By requiring measurement of height and weight as part of
the IPPE in element 4 (an examination to include
[[Page 66286]]
measurement of an individual's height, weight, blood pressure), we
believe that the physician or other qualified NPP performing the IPPE
will use that information to determine an individual's BMI if
necessary.
Comment: Three commenters expressed concern about the wide latitude
given to physicians and other qualified NPPs providing the IPPE benefit
to select whichever screening test they prefer to use in connection
with the assessment of visual acuity. The commenters believe that
setting vague boundaries around what constitutes an appropriate
screening instrument could open the door for inappropriate use of
preventive services. To avoid this, the commenters recommend narrowly
defining the appropriate screening instrument for visual acuity in
service element 4 by specifying the use of the Snellen test for that
purpose.
Response: We agree that the Snellen test is a widely available test
used to assess a person's visual acuity. Other similarly available
tests for visual acuity also exist, however, and may convey similar
results for individual physicians and other clinicians. While we expect
that many physicians will utilize the Snellen test in assessing a
beneficiary's visual acuity for the purpose of this new benefit, we are
not mandating the use of the Snellen test or any other specific visual
acuity test in order to meet the requirements of element 4 in the final
rule.
Comment: One commenter noted that the proposed rule allows for
coverage of the assessment in service element 4 of ``other factors as
deemed appropriate based on the individual's comprehensive medical and
social history.'' The commenter expressed the view that the quoted
language might result in the possibility that virtually any patient's
abnormality identified during the preventive physical examination might
lead to further evaluation of the patient and a cascade of diagnostic
workup of questionable health benefit to the patient and potentially of
great cost to the Medicare program. In view of these concerns, the
commenter recommended using more restrictive language that would allow
for additional assessment of other factors only when they are supported
by evidence-based clinical practice guidelines.
Response: Our purpose in proposing the specific quoted language
referenced in service element 4 was to allow for the physician or other
qualified NPP to perform a limited physical examination of those key
elements such as height, weight, blood pressure, and a visual acuity
screen that may be important in detecting disease. However, we have
specified that additional physical examination measures may be
performed if deemed appropriate based on the issues identified by the
physician or other clinician in the review of service elements 1 to 3.
While we will not specify in the final rule that these additional
measures must be supported by evidence-based practice guidelines, we
will state that the practitioner performing the preventive examination
follow current clinical standards and those guidelines, of course, may
include the evidence-based guidelines referenced by the commenter.
Comment: One commenter recommends that we include in our guidelines
for the IPPE benefit information that informs the physician or other
qualified NPP of: (1) The need to refer patients to occupational
therapists when a more extensive evaluation of activities of daily
living, falls risk, and home safety is warranted; and, (2) when, such
referrals would be medically appropriate.
Response: As part of the final rule, service element 6 of the IPPE
benefit will require, education, counseling, and referral, as
appropriate, based on the individual's results of the previous 5
elements of the IPPE benefit. However, appropriate referral of a
patient to an occupational therapist is left to the discretion of the
physician or other qualified NPP who is treating the patient for the
medical problem that is identified, subject to contractors' medical
necessity review. We do not believe there is a need for us to issue
guidelines to our contractors on this point.
Comment: Several commenters indicated that they were concerned
about use of the term ``counseling'' in service elements 6 and 7 of the
definition of the IPPE because it lacked sufficient clarity. The
commenters indicated that counseling may include varying amounts of
time depending upon the intensity of the type of service provided, the
ability of the individual receiving the counseling to understand the
information that is being communicated, etc. The commenters suggested
that either we not use the term counseling or clarify its meaning in
the final rule.
Response: Use of the term counseling in connection with service
element 7 is mandated by section 611 of the MMA, and thus, it is
appropriate to use the term in the final rule. However, we would like
to clarify this issue in connection with both service elements 6 and 7
of the new benefit. In most cases, we do not expect that the physician
or other qualified NPP performing the service should need to spend more
than a few minutes of brief education and counseling with a new
beneficiary on appropriate topics as required by element 7.
Nonetheless, it is possible that it may be necessary to spend more than
a few minutes on the education and counseling required by element 6. As
the commenters have indicated, the education and counseling required
may involve varying amounts of time depending upon the medical problem
or problems that are being considered, based on the results of elements
1 to 5, and the intensity of the service that is believed to be
medically necessary at that time.
Comment: Three commenters indicated that they support proposed
service element 6 on ``education, referral, and counseling deemed
appropriate based on the results of the review and evaluation of
services,'' in service elements 1 to 5 because it offers an
unprecedented opportunity to counsel beneficiaries about health
behaviors (for example, stopping smoking, losing weight). Nonetheless,
they were concerned about possible over-utilization of services that
might result from that provision, and suggest that we clarify that
these education, counseling and referral efforts be concordant with
evidence-based practice guidelines.
Response: We will not specify in the final rule that education,
counseling, and referral efforts must be consistent with evidence-based
practice guidelines. We expect that physicians and other qualified NPPs
will provide appropriate education, counseling, and referral that
utilizes evidence-based practice guidelines and current clinical
standards. In addition, follow-up care obtained outside of the IPPE
Benefit must be reasonable and necessary based on Section 1862(a)(1)(A)
of the Act.
Comment: A number of commenters requested that we clarify the
written plan provision of service element 7 that was included in the
proposed rule. Several commenters indicated that two problems they see
with this requirement are: (1) It is not clearly defined and thus could
impose a significant burden on physicians and other clinicians, if it
is not more carefully written; and, (2) it does not acknowledge that
alternative mechanisms may already be in place that could better
facilitate coordination of care for these beneficiaries than the
proposed written plan requirement. For example, one commenter suggests
that some physicians and other clinicians may currently be using
electronic technology to track the delivery of preventive services and
should not be
[[Page 66287]]
required to file written plans. Instead, the commenter recommends that
we craft language to require physicians to demonstrate a system for
ensuring that beneficiaries receive recommended screening and
preventive services and allow physicians flexibility to determine the
design and medium that such a system would employ.
Response: We agree that the term written plan may not offer a
sufficiently clear description of our intentions in requiring the
physician or other qualified NPP who also performs the IPPE to carry
out the statutory mandate that eligible beneficiaries be provided with
education, counseling, and referral for screening and other preventive
services described in section 1861(ww)(2) of the Act. Our intent in the
proposed rule was that each physician or other qualified NPP provide
their eligible beneficiaries at the time of the examination with
appropriate education, counseling, and referral(s), including a brief
written plan such as a checklist, which is provided to the beneficiary
for obtaining the appropriate screening and/or other preventive
services that are covered as separate Medicare Part B benefits to which
he or she is entitled. We acknowledge that physicians or qualified NPPs
may have an alternative mechanism in place to ensure that beneficiaries
receive recommended screening and other preventive services that does
not provide for a written plan to be provided to the beneficiary.
However, the intent of the written plan requirement is to promote and
encourage beneficiary participation in the health care process by
making them aware, briefly in writing of the screening and prevention
services for which they are entitled under the Medicare Part B program.
In conclusion, we will revise service element 7 to read
``education, counseling, and referral, including a brief written plan
such as a checklist, be provided to the individual for obtaining
appropriate screening and other preventive services, which are
separately covered under Medicare Part B benefits.''
The ``Physician'' Definition (Sec. 410.16(a))
Comment: One commenter expressed concerns regarding the definition
of a physician. The commenter expressed concern that the proposed rule
limits the type of practitioner who is considered qualified to perform
the new preventive physical examination. The commenter states that this
restriction was not specified by the Congress in section 611 of the MMA
or its accompanying conference committee report, and suggests that it
should be revised to allow all practitioners, including doctors of
podiatric medicine, who are defined as a physician under section
1861(r) of the Act, to be considered qualified to perform the
preventive physical examination.
Response: Section 611 of the MMA amended the statute to provide
that payment for the IPPE must be made under the Medicare physician fee
schedule, as provided in section 1848(j)(3) of the Act, but it did not
specifically define what type of physician is eligible for performing
this examination. In developing the proposed rule on which physicians
are considered qualified to perform the IPPE, we considered the various
types of physicians that are identified in section 1861(r)(2), (r)(3),
(r)(4), and (r)(5) of the Act. These include doctors of dental surgery,
doctors of podiatric medicine, doctors of optometry, and chiropractors,
whose scope of medical practice is generally limited by State law to a
particular part (or parts) of the human anatomy.
These state licensing restrictions would likely make it difficult
for those practitioners to perform all of the services required. Based
on this information, we are leaving the definition of a physician
unchanged in the final rule.
The ``Qualified Nonphysician Practitioner'' Definition (Sec.
410.16(a))
Comment: One commenter indicated concern that in the proposed rule
certified nurse-midwives (CNMs) are not eligible to furnish the new
preventive physical examinations, but physicians and certain other NPPs
are eligible to provide those services to Medicare beneficiaries. The
commenter indicates that CNMs are fully qualified to provide physical
examination and checkups covered by the statute and that they do so on
a daily basis as a basic component of the care they provide their
clients. The commenter states that we may be constrained by the statute
as enacted by Congress on this subject, but suggests that we should
review the issue and if possible revise the proposed rule to include
CNMs among those who are considered to be eligible to provide the new
service in the final rule.
Response: Section 611 of the MMA amended the statute to provide
that in addition to physicians certain NPPs, that is, PAs, NPs, and CNS
(as authorized under section 1861(s)(2)(K)(i) and (ii) of the Act, and
defined in section 1861(aa)(5) of the Act, or in regulations at Sec.
410.74, Sec. 410.75, and Sec. 410.76) will be able to furnish the new
preventive physical examination to eligible beneficiaries effective
January 1, 2005. Thus, Congress did not specifically authorize CNMs to
perform the IPPE. Unless CNMs are able to qualify as one of these other
types of NPPs designated by the statute for purposes of the new IPPE
benefit, they will not be eligible to provide this service to
beneficiaries for Medicare Part B coverage purposes.
Other Issues
Comment: One commenter requested that we clarify application of the
proposed IPPE definition to managed care plans where preventive
physical examinations are available to Medicare enrollees on an annual
basis and they are not limited to a one-time benefit. Generally in the
case of managed care plans, it is indicated that the extent of their
typical annual preventive examination is determined by the enrollee's
physician or other treating physician, depending upon the patient's
history and clinical indications. The commenter asks that we allow
managed care plans greater flexibility in providing their Medicare
enrollees with the various service elements described in the proposed
rule. Alternatively, the commenter requests that we clarify in the
final rule that managed care plans will need to provide their Medicare
enrollees with all elements of the new benefit only if requested to do
so by a particular Medicare enrollee.
Response: Section 611 of the MMA requires that IPPEs be made
available to all Medicare beneficiaries who first enroll in Medicare
Part B on or after January 1, 2005, and who receive that benefit within
6 months of the effective date of their initial Part B coverage period.
The new statute does not allow for any exceptions to be made to the
coverage of IPPEs for beneficiaries who are members of managed care
plans. In fact, section 1852(a) of the Act provides that generally each
managed care plan must, at a minimum, provide to its Medicare members
all of those items and services (other than hospice care) for which
benefits are available under Parts A and B for individuals residing in
the area served by the plan. Nonetheless, if a particular Part B member
of the plan chooses not to take advantage of the IPPE benefit, for
example, because it would duplicate an annual preventive physical exam
that has already been provided to that member, the plan would not be
obligated to provide the IPPE to that member.
Comment: One commenter noted that while the screening benefits
listed in paragraph (A)(1) on Federal Register
[[Page 66288]]
page 47514 (vol. 69, No. 150) includes ``(5) colorectal cancer
screening test,'' the list of screening benefits described in the same
section, paragraph (7) on page 47515 does not include that type of
cancer screening test. The commenter requests that we include
colorectal cancer screening in the list of screening services described
on page 47515 of the Physician Fee Schedule Proposed Rule and any other
sections of any proposed rule in which covered screening benefits are
listed to ensure there is no confusion regarding what services should
discussed with patients during the IPPE.
Response: We agree with the commenter that there was an error of
omission relative to colorectal cancer screening in the language in the
preamble to the proposed rule in the list of screening benefits
described on page 47515 of the Physicians Fee Schedule, and we have
corrected that oversight in this final rule.
Comment: One commenter requests that we clarify the part of the
definition of the IPPE (service element 7) that refers to the provision
of education, counseling, and referral of the individual for coverage
of bone mass measurements by adding the term ``Dual Energy X-Ray
Absorptiometry'' (DEXA) to that provision. The commenter states that
DEXA testing is the most accurate method available for diagnosis of
osteoporosis and that early detection of this condition paramount for
preventing further bone loss and eventual fractures. The commenter is
concerned that unless this is clarified in the final rule, local
Medicare contractors may exclude coverage for the DEXA test as part of
the IPPE benefit.
Response: Our existing regulations governing bone mass measurements
are published in Sec. 410.31. While we agree that the DEXA scan is a
very commonly used method for the initial diagnosis of osteoporosis, we
do not believe that it would be appropriate to add any specific
reference to the DEXA test in the IPPE definition because it may be
perceived as endorsing one test over another. We do not believe this
would be appropriate. Physicians and other qualified NPPs who perform
IPPE services may provide appropriate education, counseling, and
referral of their Medicare patients for the bone density tests. The
counseling and referral may include choosing the appropriateness of the
diagnostic modalities for the particular patient.
Comment: A number of commenters have asked us to provide
information to Medicare physicians and qualified NPPs performing the
IPPE for appropriate referral of their patients when treatment or a
more extensive evaluation of patients is needed as part of service
element 6.
Response: As part of the final rule, under service element 6,
providers are required to furnish their patients with education,
counseling, and referral, as appropriate, based on the individual's
results of service elements 1-5 of the IPPE service. However,
appropriate referral of a patient, of course, is left to the discretion
of the physician or other qualified NPP who is treating the patient for
the medical problem that is identified.
Comment: One commenter asked us how we plan to monitor the
effectiveness of the IPPE benefit over the next several years.
Response: As indicated in the final rule, we have established
unique billing codes for the IPPE service which physicians and other
qualified NPPs must use in billing Medicare Part B for the new service.
Establishing those codes will allow us to monitor over time the extent
to which the eligible Medicare Part B population is utilizing the new
service, which will be of interest to our program administrators,
members of the Congress, and the general public.
Comment: One commenter asked how providers of IPPE services will
know if a particular beneficiary is eligible to receive the new benefit
due to the statutory time and coverage frequency (one-time benefit)
limitations.
Response: The statute provides for coverage of a one-time IPPE
benefit that must be performed for new beneficiaries by qualified
physicians or certain specified NPPs within the first 6 months period
following the effective date of the beneficiary's first Part B
coverage. Since physicians or other qualified NPPs may not have the
complete medical history for a particular new beneficiary, including
information on possible use of the one-time benefit, these clinicians
are largely relying on their own medical records and the information
the beneficiary provides to them in establishing whether or not the
IPPE benefit is still available to a particular individual and was not
performed by another qualified practitioner. Since a second IPPE will
always fall outside the definition of the new Medicare benefit, an
advance beneficiary notice (ABN) need not be issued in those instances
where there is doubt regarding whether the beneficiary has previously
received an IPPE. The beneficiary will always be liable for a second
IPPE no matter when it is conducted. However, for those instances where
there is sufficient doubt as to whether the statutory 6-month period
has lapsed, the physician or other qualified NPP should issue an ABN
indicating that Medicare may not cover and pay for the service. If the
physician or other qualified NPP does not issue an ABN and Medicare
denies payment because the statutory time limitation for conducting the
initial IPPE has expired, then the physician or other qualified NPP may
be held financially liable.
Comment: Several commenters asked that we provide explicit
instructions and guidelines, respectively, to providers and
beneficiaries regarding the details of what will be included in the new
benefit, the eligibility requirements, and how providers must bill
Medicare for the new service.
Response: Medicare will release appropriate manual and transmittal
instructions and information from our educational components for the
medical community, including a MedLearn Matters article and fact sheets
like the ``2005 Payment Changes for Physicians and Other Providers: Key
News From Medicare for 2005''. The medical community can join this
effort in educating physicians, qualified NPPs, and beneficiaries by
distributing their own communications, bulletins or other publications.
In addition, we have specifically included information on the new
IPPE benefit in the 2005 version of the Medicare and You Handbook and
the revised booklet, Medicare's Preventive Services. A new 2-page fact
sheet on all of the new preventive services, including the IPPE
benefit, is currently under development, and a bilingual brochure for
Hispanic beneficiaries will also be available in the new future. This
information will be disseminated by our regional offices, State Health
Insurance Assistance Programs (SHIPs), and various partners at the
national, State, and local levels. Information on the new benefit will
also be made available to the public through medicare.gov, the cms.gov
partner Web site, 1-800-MEDICARE, numerous forums hosted by CMS, and
conference exhibits and presentations.
Comment: Many of the major physician specialty societies believe
the payment, as proposed, is undervalued for what is believed to be a
labor-intensive IPPE. They request that we use the existing CPT
preventive medicine services code series rather than creating a new G-
code. These codes have higher RVUs than the office or other outpatient
visit code 99203. For example, preventive medicine services visit code
99387 has total nonfacility RVUs of 4.00 while the corresponding value
for 99203 is 2.58.
Response: The existing CPT preventive medicine services codes
[[Page 66289]]
(99381-99397) are not covered by Medicare. In accordance with section
1862(a)(1)(A) of the Act that requires us to pay only for services that
are reasonable and necessary for the treatment of an illness or injury
or to improve the function of a malformed body member, we have not
covered E/M visits for screening purposes.
The IPPE is intended to target selected modifiable risk factors and
secondary prevention opportunities shown by evidence to improve the
health and welfare of the beneficiary, and is less focused on a
comprehensive physical examination compared to the typical service
provided in accordance with CPT code 99397. We equated the resources
anticipated with this service to the existing new office or other
outpatient visit. For CPT code 99203 the RUC survey data shows 53
physician minutes (including pre-service time, intra-service time and
post-service time) with 51 minutes of staff time. We believe the IPPE
will reflect these time approximations. We will be looking at the data
and consulting with the medical community after initial experience with
this new benefit to determine if this payment has been valued
appropriately.
Comment: Two commenters suggested that we allow the IPPE either on
a yearly basis or every decade after the initial evaluation.
Response: The IPPE was specifically legislated as a one time only
benefit for the beneficiary newly enrolled in the Medicare program.
This visit familiarizes the beneficiary with a physician or qualified
NPP who will highlight the assessments available to help prevent and
detect disease and also make available the educational, counseling and
referral opportunities to the new Medicare recipient. Our policy
anticipates physicians will make appropriate and individualized
referrals for the beneficiary. Expanding the number of routine
physicals would require additional legislation (See section 1862(a)(7)
of the Act).
Comment: Many commenters asked if the IPPE may be provided without
performing the EKG at the same visit. They asked to have the EKG
component unbundled from the evaluation and management component that
had been specified in the proposed rule for the IPPE service since a
physician may not have the equipment and capability of providing EKG
services to their patients in the office suite or clinic. Additionally,
others asked if a physician would be denied payment for the IPPE if the
screening EKG was not performed because a diagnostic EKG was performed
in a recent visit or if a diagnostic EKG was warranted at the IPPE
visit.
Response: Section 611 of the MMA does require a screening EKG to be
performed as part of the IPPE visit. We recognize that there are a
number of primary care physicians or other clinicians furnishing the
service who may want to refer their beneficiaries to outside
practitioners or entities for performance and interpretation of the EKG
service rather than performing it themselves. Therefore, if an
individual physician or other qualified NPP does not have the capacity
to perform the EKG in the office suite, then alternative arrangements
will need to be made with an outside physician or other entity in order
to make certain that the EKG is performed. In circumstances where the
primary care physician or qualified NPP refers the beneficiary to an
outside physician or entity for the EKG service, we expect that the
primary care physician or qualified NPP will incorporate the results of
the EKG into the beneficiary's medical record to complete the IPPE.
Both components of the IPPE, the examination portion and the EKG, must
be performed for either of the components to be paid. Billing
instructions for physicians, qualified NPPs and providers will be
issued. In order to address these potentially occurring scenarios to
complete the IPPE and EKG we have created the following HCPCS codes:
G0344: Initial preventive physical examination; face-to-
face visit services limited to new beneficiary during the first six
months of Medicare enrollment
G0366: Electrocardiogram, routine ECG with at least 12
leads with interpretation and report, performed as a component of the
initial preventive physical examination
A physician or qualified NPP performing the complete service would
report both G0344 and G0366.
G0367: tracing only, without interpretation and report,
performed as a component of the initial preventive physical examination
G0368: interpretation and report only, performed as a
component of the IPPE
RVUs for payment for these new HCPCS codes will be crosswalked from
the following CPT codes:
G0344 will crosswalk from CPT code 99203 (Office or other
outpatient visit)
G0366 will crosswalk from CPT code 93000
(Electrocardiogram, routine ECG with at least 12 leads; with
interpretation and report)
G0367 will crosswalk from CPT code 93005
(Electrocardiogram, routine ECG with at least 12 leads; tracing only,
without interpretation and report)
G0368 will crosswalk from CPT code 93010
(Electrocardiogram, routine ECG with at least 12 leads; interpretation
and report only)
Note that HCPCS codes G0366 and G0367 are not payable under the
physician fee schedule in the facility setting.
To comply with MMA the IPPE must include the EKG regardless of
whether a diagnostic EKG was recently performed. An EKG performed by
the physician or qualified NPP during the IPPE visit must be reported
with HCPCS code G0366. Medicare does not cover a screening EKG alone.
Comment: One commenter asked if physicians and qualified NPP who
see patients in Federally Qualified Healthcare Centers (FQHCs) will be
able to provide and bill under the FQHC all-inclusive rate.
Response: Physicians and other qualified NPPs in RHCs and FQHCs may
provide this new benefit and follow normal procedures for billing for
RHCs and FQHC services. Payment for the professional services will be
made under the all-inclusive rate.
Comment: Many physician specialty societies did not agree with our
proposal to limit the level of a medically necessary E/M visit when
performed and billed with the IPPE. They contend that most Medicare
patients, even if known to their physician, come to the IPPE visit with
multiple chronic problems often necessitating immediate evaluation and
treatment at a level of care equal to a level 4/5 E/M visit code. They
also state that current Medicare policy does permit a medically
necessary E/M visit at whatever level is appropriate when the
noncovered preventive medicine services (CPT codes 99381-99397) are
performed. They ask that we eliminate the restriction for the level of
service for a medically necessary E/M visit performed at the same visit
as the IPPE visit.
Response: The physician will need to schedule time with the
beneficiary identifying the available preventive and educational
opportunities. A level 2 new or established patient office or other
outpatient visit code was proposed because we believe there is a
substantial overlap of practice expense, malpractice expense and
physician work in both history taking and examination of the patient
with the IPPE and another E/M service. We do not want to prohibit the
use of an appropriate level of service when it is necessary to evaluate
and treat the beneficiary for acute and chronic
[[Page 66290]]
conditions. At the same time, we believe the physician is better able
to discuss health promotion, disease prevention and the educational
opportunities available with the beneficiary when the health status is
stabilized and the beneficiary is physically receptive.
We will remove the restriction limiting the medically necessary E/M
service to a level 2 visit code. CPT codes 99201 through 99215 may be
used depending on the circumstances and appended with CPT modifier ``25
identifying the E/M visit as a separately identifiable service from the
IPPE code G0344 reported.
We do not believe this scenario will be the typical occurrence and,
therefore, we will monitor utilization patterns for the level 4/5 new
or established office or other outpatient visit codes being reported
with the IPPE. If there are consistent data that demonstrate high usage
of level 4/5 E/M codes we may need to revise the policy.
Comment: Two commenters asked if we would permit separate payment
for a digital rectal exam (DRE) when performed on the same day as the
initial preventive physical examination.
Response: Currently Medicare does not make separate payment for DRE
(code G0102) when performed on the same day as an E/M service. We will
maintain the current policy and not pay separately for a DRE performed
during the IPPE visit. A DRE is usually furnished as part of an E/M
service and is bundled into the payment for an E/M service when a
covered E/M service is furnished on the same day as a DRE. It is a
relatively quick and simple procedure and if it is the only service
furnished or is provided as part of an otherwise noncovered service it
would be payable if coverage requirements are met.
Comment: Several commenters requested guidance on documentation.
Response: It is expected that the physician will use the
appropriate screening tools. As for all E/M services, the 1995 and 1997
E/M documentation guidelines must be followed for recording information
in the patient's medical record. The screening tools used, EKG
documentation, referrals and a written plan for the patient also must
be included in the patient's medical record. These forms and methods of
documentation mirror those that would be used in typical physician
practice with patient visits and do not add an additional burden to the
physician.
Comment: Several commenters expressed concern that the non-waived
deductible and coinsurance will be a disincentive to the beneficiary
having the IPPE. They are concerned that some beneficiaries will not
avail themselves of the opportunity of the IPPE visit because of the
beneficiary's cost share.
Response: The MMA did not waive the deductible and coinsurance,
therefore, we must implement the provision as written.
Result of Evaluation of Comments
In view of the comments, we have decided to make several revisions
in Sec. 410.16(a) relative to service elements 1, 2, and 3. We are
revising Sec. 410.16(a)(1)(i) language in service element 1 to read as
follows: ``Review of the individual's medical and social history with
particular attention to modifiable risk factors for disease.''
We are clarifying the regulation language on depression screening
(service element 2) by revising Sec. 410.16(a)(1)(ii) to specify that
review of the individual's potential (risk factors) for depression,
including current or past experience with depression or other mood
disorders, based on the use of an appropriate screening instrument for
persons without a current diagnosis of depression, which the physician
or other qualified NPP may select from various available standardized
screening tests designed for this purpose and recognized by national
medical professional organizations. To allow for a certain amount of
provider flexibility in meeting the requirements of the regulatory
intent of service component 3 we are revising Sec. 410.16(a)(1)(iii)
to specify that review of the individual's functional ability and level
of safety, based on the use of appropriate screening questions or a
screening questionnaire, which the physician or qualified NPP may
select from various available screening questions or standardized
questionnaires designed for this purpose and recognized by national
medical professional organizations.
To clarify the requirements of the regulatory intent of service
component 7 we are revising Sec. 410.16(a)(1)(vii) to specify that
education, counseling, and referral, including a brief written plan
such as a checklist be provided to the individual for obtaining the
screening and other preventive services for the individual that are
covered as separate Medicare Part B benefits.
The ``social history'' definition in the final rule will be revised
to include 3 elements:
History of alcohol, tobacco, and illicit drug use.
Diet.
Physical activities.
With regard to payment of the IPPE, we will use the new HCPCS codes
and payment will be based on the RVUs of the CPT codes crosswalked as
stated above. We will not finalize our proposal to allow a medically
necessary E/M service no greater than a level 2 to be reported at the
same visit as the IPPE.
B. Section 613--Diabetes Screening
Section 613 of the MMA adds section 1861(yy) to the Act and
mandates coverage of diabetes screening tests.
The term ``diabetes screening tests'' is defined in section 613 of
the MMA as testing furnished to an individual at risk for diabetes and
includes a fasting blood glucose test and other tests. The Secretary
may modify these tests, when appropriate, as the result of
consultations with the appropriate organizations. In compliance with
this directive, we consulted with the American Diabetes Association,
the American Association of Clinical Endocrinologists, and the National
Institute for Diabetes and Digestive and Kidney Diseases.
1. Coverage
We proposed in Sec. 410.18 that Medicare cover--
A fasting blood glucose test; and
Post-glucose challenge tests; either an oral glucose
tolerance test with a glucose challenge of 75 grams of glucose for non-
pregnant adults, or a 2-hour post-glucose challenge test alone.
We would not include a random serum or plasma glucose for persons
with symptoms of uncontrolled diabetes such as excessive thirst or
frequent urination in this benefit because it is already covered as a
diagnostic service. This language is not intended to exclude other
post-glucose challenge tests that may be developed in the future,
including panels that may be created to include new diabetes and lipid
screening tests. We also would include language that would allow
Medicare to cover other diabetes screening tests, subject to a NCD
process.
The statutory provision describes an ``individual at risk for
diabetes'' as having any of the following risk factors:
Hypertension.
Dyslipidemia.
Obesity, defined as a body mass index greater than or
equal to 30 kg/m2.
Previous identification of an elevated impaired fasting
glucose.
Previous identification of impaired glucose tolerance.
A risk factor consisting of at least two of the following
characteristics:
+ Overweight, defined as a body mass index greater than 25 kg/m2,
but less than 30.
+ A family history of diabetes.
[[Page 66291]]
+ A history of gestational diabetes mellitus or delivery of a baby
weighing greater than 9 pounds.
+ 65 years of age or older.
For individuals previously diagnosed as diabetic, there is no
coverage under this statute.
The statutory language directs the Secretary to establish standards
regarding the frequency of diabetes screening tests that will be
covered and limits the frequency to no more than twice within the 12-
month period following the date of the most recent diabetes screening
test of that individual.
We proposed that Medicare beneficiaries diagnosed with pre-diabetes
be eligible for the maximum frequency allowed by the statute, that is,
2 screening tests per 12 month period. We defined ``pre-diabetes'' as a
previous fasting glucose level of 100-125 mg/dL, or a 2-hour post-
glucose challenge of 140-199 mg/dL. This definition of pre-diabetes was
developed with the assistance of the American Association of Clinical
Endocrinologists, concurs with the Centers for Disease Control and
Prevention (CDC) definition, and complements the definition of diabetes
that we published November 7, 2003 (68 FR 63195).
2. Payment
We proposed to pay for diabetes screening tests at the same amounts
paid for these tests when performed to diagnose an individual with
signs and symptoms of diabetes. We would pay for these tests under the
clinical laboratory fee schedule. We proposed to pay for these tests
under CPT code 82947 Glucose; quantitative, blood (except reagent
strip), CPT code 82950, post glucose dose (includes glucose), and CPT
code 82951 Glucose; tolerance test (GTT), three specimens (includes
glucose). To indicate that the purpose of the test is for diabetes
screening, we would require that the laboratory include a screening
diagnosis code in the diagnosis section of the claim. We proposed V77.1
special screening for diabetes mellitus as the applicable ICD-9-CM code
for this purpose. Because laboratories are required and accustomed to
submitting diagnosis codes when requesting payment for testing, we
believe including a screening diagnosis code is appropriate for this
benefit.
Comment: One commenter questioned whether there is statutory
authority to expand eligibility for individuals. Adding that, section
613 of the MMA gives authority for additional test and frequency, not
additional individuals.
Response: There is no statutory authority to expand eligibility for
individuals. Section 613 of the MMA establishes coverage for
beneficiaries who are at risk for developing diabetes. Beneficiaries
who are pre-diabetic fall within 1861(yy)(2)(D) or (E) and are at an
increased risk for developing diabetes. This increased risk separates
them from the general at-risk population and requires the course of
their care to be managed closer and more frequently.
For individuals not meeting the ``pre-diabetes'' criteria, we
proposed that one diabetes screening test be covered per individual per
year.
Comment: Several comments were received that recommended we provide
physicians with clear guidance about Medicare's covered services to
help patients control their diabetes. The commenters also asked that we
inform providers about other covered services, such as Hgb1AC tests,
that will help patients avoid painful diabetes-related complications.
Response: We will be releasing two publications. The Dear Doctor
Package publication, which includes the ``2005 FACT SHEET'', will be
sent to the contractors on a CD on or about October 15, 2005 and
distributed to the providers by November 15, 2005. The Medicare
Coverage of Diabetes Services and Supplies publication was originally
written in 2002. It was revised in 2003 to update the Part B premium
amount and is being revised again this year to update the premium
amount and to include any information relevant to the MMA. This
document will be available on the CMS Web site and at 1-800-MEDICARE.
Comment: We received several comments suggesting that screening
should not require a physician's prescription or referral in order to
be covered under Medicare Part B. This approach would follow the
successful precedent established by us with other screening tests such
as mammograms.
Response: The legislative history on mammography did result in us
allowing self-referral for mammograms. However, Medicare rules have
required that laboratory tests for screening or other diagnoses must be
ordered by licensed health care practitioners, specifically physicians,
PAs, NPs, or CNSs.
Comment: Comments were received recommending that the final rule
include coverage of one annual diabetes screening for all Medicare
beneficiaries.
Response: The benefit of screening all Medicare beneficiaries is
not supported by current evidence. We plan risk-based frequency
limitations of coverage for diabetes screening based upon the statute
requirements. Furthermore, we believe beneficiaries with pre-diabetes
may warrant a more frequent follow-up and this is permitted at the
professional judgment of the health care practitioner.
Comment: We received a few comments suggesting the addition of the
C-peptide test, as it is sometimes useful in Type 1 or Type 2 diabetes.
Response: We believe that C-peptide testing is appropriate for
diagnostic evaluation, but not for screening. It is currently covered
under the general lab benefit as a diagnostic test when it is medically
necessary.
Comment: The American Society for Clinical Pathology (ASCP) has
urged us to add CPT 82950 glucose; post glucose dose (includes
glucose). This test is more frequently used to screen for diabetes. GTT
is a more definitive test usually requested when questionable results
from random, fasting or postprandial glucose levels are obtained. As
written, the proposed rule appears to exclude 82950 as a screening
test.
Response: We appreciate attention being drawn to the apparent
exclusion of CPT code 82950, which was not our intention and we have
corrected that omission.
Comment: A commenter suggested that due to increased incidence of
obesity in recent years that family history of diabetes be defined as
persons with Type 2 Diabetes in one or more first or second-degree
relatives.
Response: The comments received did not provide a clear consensus
on the definition of family history of diabetes. Thus the definition of
family history of diabetes will be left to the professional judgment of
the treating physician or qualified non-physician practitioner based on
the beneficiary's medical history and best practice standards.
Comment: The American Clinical Laboratory Association (ACLA)
believes that the other codes on the NCD routine screening list that
currently result in a diabetes denial on the basis of routine screening
should be covered under the new diabetes screening benefit.
Response: We believe the majority of individuals who will seek care
under this benefit will conform to the V77.1 code. We are willing to
review a sample of claims and determine if other specific codes are
appropriate code for this benefit. Codes that need to be considered for
this new benefit can be brought to our attention through the national
coverage determination process for laboratories.
Comment: A comment was received recommending that the proposed rule
be clarified to refer to a ``fasting blood glucose test'' rather than a
``fasting plasma glucose test'' since the CPT code
[[Page 66292]]
does not differentiate between blood and plasma.
Response: We agree with the recommendation to change the term
``fasting plasma glucose test'' to ``fasting blood glucose test''.
Comment: A comment was received recommending additional diabetes
screening tests be added through a less formal process of consultation
with manufacturers, health care providers, patients, and other
stakeholders, as contemplated by Congress. The commenter further stated
that the NCD process is complex and time consuming, delaying the
coverage of new tests.
Response: We believe the evidence-based NCD process is an effective
process to review and analyze items and services as potential benefits
for Medicare beneficiaries. Because the NCD process allows for public
comment before we make any changes, we believe this is the appropriate
process for any future changes. Further, we may not be able to accept
every stakeholder's recommendation because of instructional, coding, or
claims issues which must be resolved before any benefit can be
implemented.
Result of Evaluation of Comments
Our review of the comments has led to the elimination of the word
``plasma'' from the term ``fasting plasma glucose test.'' The word
``plasma'' will be replaced with the term ``blood''. We have corrected
the unintentional omission of CPT code 82950, post glucose dose
(includes glucose) as a diabetes screening test. The providers and
beneficiaries are reassured that there will be clear guidance on
covered services by way of two publications: The Dear Doctor Package,
which includes the ``2005 Fact Sheet'' and Medicare Coverage of
Diabetes Services and Supplies. We continue to promote healthcare
practitioner autonomy with our policy of risk-based frequency
limitations on items and services provided to our beneficiaries. We
recognize the differing opinions with regard to the usage of the NCD
process to review potential new items and services such as new diabetes
screening tests for our beneficiaries. To provide transparency,
timeliness and fairness, a formal process is necessary. Historically,
the NCD process has been open to all interested parties and has proven
to be an effective process.
Based on reasoning from the responses to the comments we received,
at this time we will not be accepting the following suggestions.
Reversing policy requiring a physician's or a qualified
non-physician's prescription or referral for diabetes screening tests.
Providing coverage of one annual diabetes screening test
for all Medicare beneficiaries.
Adding coverage of C-peptide test as a screening test.
Bypassing the current NCD process for a less formal
process to add additional diabetes screening tests.
C. Section 612--Cardiovascular Screening
Section 612 of the MMA adds section 1861(xx) to the Act and
provides for Medicare coverage of cardiovascular (CV) screening blood
tests for the early detection of CV disease or abnormalities associated
with an elevated risk for that disease effective on or after January 1,
2005.
Upon reviewing the USPSTF reports, the scientific literature and
comments of professional societies, trade associations, the industry,
and the public, we proposed in the August 5, 2004 Federal Register,
that the benefit for CV screening would include the use of three
clinical laboratory tests to detect early risk for CV disease. Since
the three tests, a total cholesterol, a HDL-cholesterol, and a
triglycerides test, could be ordered as a lipid panel or individually,
the frequency was limited to one of each individual test or combination
as a panel every 5 years.
When we researched the benefit, some scientific experts proposed
that the use of only the total cholesterol test as a single test every
2 years was adequate. After reviewing the literature and comments, we
concluded that each test in the lipid panel is important since each
test predicts the risk for CV disease independently. It would be
prudent, therefore, to promote the benefit as three separate tests
every 5 years. The decision to limit the frequency to 5 years, rather
than more frequent testing every 2 years was due to information found
in the Clinical Considerations of the USPSTF which indicate that the
cholesterol values of elderly persons, who are the majority of the
Medicare population, change slowly as they age. We also proposed that
any changes to the list of tests could be made after a review of
recommendations by the USPSTF and the use of the NCD process.
We proposed that for the claims processing and payment system, the
coding of the tests would be made using the CPT codes available for the
lipid panel or the three tests individually coded with the use of V
codes to identify the tests were ordered for screening purposes. We
also stated that we would pay for these CV screening tests at the same
amounts paid for these tests to diagnose an individual with signs of CV
disease and that these would be paid under the clinical laboratory fee
schedule. The proposed coverage requirements were set forth in new
Sec. 410.17.
In response to the proposed rule, we received letters and e-mails
from 28 commenters representing professional societies, trade groups,
the industry, and individuals, who wrote on 26 different issues. One
commenter represented 14 medical societies. Each commenter had many
concerns and the comments were grouped into 26 areas of concern.
Comment: Three commenters expressed concern that many laboratories
perform direct measurement LDL reflexively when triglycerides exceed
certain parameters. The commenters are concerned that if screening
direct measurement LDL is statutorily excluded then the Medicare
beneficiaries would be liable for these tests without prior notice.
Response: Section 410.32 requires that tests be ordered by a
treating physician and used in the management of the patient. We have
interpreted this provision to restrict the furnishing of reflex testing
to situations where it is clear that the physician is ordering reflex
testing at specific parameters and where the physician has an option to
order the test without the reflex portion. Thus, laboratories must
offer physicians the ability to order a lipid panel without the option
to perform the direct measurement LDL. We strongly encourage physicians
to order lipid panels without the direct measurement LDL reflex option
to protect Medicare beneficiaries from incurring a charge for this
service without advanced notice.
If the screening lipid panel results indicate a triglyceride level
that indicates the need for a direct measurement LDL, the physician may
order this test once the results of screening lipid panel are reported.
The NCD for lipid testing includes coverage of direct measurement LDL
for patients with hyperglyceridemia. [http://www.cms.hhs.gov/ mcd/
viewncd.asp ?ncd--id=190.23&ncd-- version=1&show=all]
We do not require the patient to physically return to the treating
physician for an office visit and ordering of subsequent testing.
Physicians may order such tests based on the results of the CV
screening. The Medicare law and regulations do not prohibit the use of
the same sample of blood to be used for direct measurement LDL
following a lipid panel with very high triglycerides. Laboratories may
archive the initial specimen and use it
[[Page 66293]]
for subsequently ordered medically necessary direct measurement LDL.
Comment: One commenter suggested that if the direct LDL cholesterol
is included in the CV risk screening benefit, we must provide guidance
to laboratories regarding whether or not the direct LDL must be billed
with the -59 modifier for the charge to be reimbursed.
Response: Since the direct LDL cholesterol is not being added to
the CV screening benefit, there is no change to the billing.
Comment: One commenter requested that the V codes (V81.0, V81.1,
and V81.2) be added to the Lipid NCD and that the NCD Edit Software be
modified to accept these V codes (V81.0, 81.1, and 81.2) on a frequency
basis.
Response: The Laboratory NCD Edit Module will be modified to accept
the V codes for matching the CPT codes with the ICD-9-CM code for those
tests within the lipid NCD that are part of this statutory benefit. The
entire lipid NCD is not open for modification. The frequency is
determined by the NCD process and implemented through changes to the
claims processing system to edit the patient history and coding.
Comment: One commenter asked that Medicare contractors provide
explicit instructions to physicians to provide the necessary V codes
(or their corresponding narratives) since screening is normally non-
covered.
Response: We will release the appropriate manual, transmittal
instructions and information from our educational components for the
medical community including a MedLearn Matters article and fact sheets
such as the ``2005 Payment Changes for Physicians and Other Providers:
Key News From Medicare for 2005.'' Laboratories can join this effort to
educate physicians and beneficiaries by distributing their own
communication, bulletins or other publications. Some of this
information will also be part of the ``Welcome to Medicare Preventive
Services Package.''
Comment: Three commenters recommended that high sensitivity C-
reactive protein (hsCRP) be considered as a test for this benefit since
the AHA and CDC issued a Class IIa recommendation stating that hsCRP
measurements for risk stratification add important information to the
``classic'' cholesterol and HDL measurement. They cited that given
Congressional intent, we should include this measure in its list of
``approved'' screening tests and, if not, that we immediately request
that USPSTF conduct a formal review of hsCRP as a screening test. Four
commenters recommended the addition of the ABI test. Another requested
the inclusion of the 12-lead ECG, the echocardiogram, and tests for
carotid artery disease. Another requested the coverage of blood
pressure screening. Finally, another commenter suggested that we allow
the broadest access and maximize the potential for tests.
Response: We appreciate the commenters' suggestions to include
hsCRP and the other tests. In our efforts to develop the proposed rule,
many tests were considered for inclusion in the list of screening tests
for this benefit. There was insufficient evidence to include any
additional tests beyond the lipid panel tests. The information we
received in the development of the proposed rule did not support the
inclusion of these additional tests but we invite the public to submit
scientific literature for our consideration. Other new types of CV
screening blood tests may be added under this new screening benefit if
we determine them appropriate through a subsequent NCD. 68 FR 55634
(Sept 26, 2003) or http://www.cms.hhs.gov/coverage/8a.asp].
Comment: Two commenters recommended that we add HCPCS codes for the
Lipid Panel and components as waived tests since they are performed in
physician offices and other sites with Clinical Laboratory Improvement
Amendments (CLIA) Certificates of Waiver.
Responses: Under CLIA, a facility with a CLIA certificate of waiver
can only perform those tests that are approved by the FDA as waived
tests. We update the list of waived tests and their appropriate CPT
codes on a quarterly basis through our program transmittal process.
When we program the claims system to look for the AMA CPT codes for
Lipid Panel or any of the three tests which make up the panel, the
system will recognize those waived tests performed using the same code
plus the QW modifier that are medically necessary.
Comment: Two commenters requested clarification of the frequency
limits for the three tests considered for this benefit. They asked if
we would cover: (1) A lipid panel; (2) one or more component tests
making up the lipid panel once every 5 years; or (3) each of the 4
HCPCS codes listed every 5 years.
Response: The intent of the benefit is to screen for CV disease.
Since we believe most physicians would order the Lipid Panel as a
single test, our intention was to cover the panel. We recognize that
physicians may have different approaches to reaching their decision to
treat, and therefore, we have to make available the possibility that
physicians could order the individual tests which make up the panel. No
matter how the physician(s) order the tests, our intention is to cover
each of the 3 component tests (that is, a total cholesterol, a
triglycerides test, and an HDL cholesterol) once every 5 years.
Comment: Two commenters asked that we clarify the reasons for
having V codes for screening tests added from the MMA rather than the
past practice of developing G codes (unique HCPCS codes; temporary
codes). This commenter believed that the change to V codes would cause
confusion to the databases like the Physician/Supplier Procedure
Summary Master File. This confusion would result in improperly filed
provider claims and this would lead to a different and confusing method
of processing claims.
Response: The decision to use ICD-9-CM codes rather than continue
to add G codes was made because we try to utilize existing coding
structures where possible and create G codes if there is a specific
programmatic need. The laboratory community has lobbied against the use
of G codes for a few years. Also the Health Insurance Portability and
Accountability Act of 1996 (HIPAA) Standardization Requirements are
working toward phasing out G codes, which are CMS only codes. The
claims processing and editing systems are expected to be adjusted to
manage this change.
Comment: Five commenters questioned the reasons for establishing
limits on the frequency of this benefit since this places great legal,
administrative, and financial burden for providers to manage this type
of information. One commenter suggested the use of a chit that
beneficiaries would receive and redeem for testing so laboratories
would not need to keep records.
Response: The statute requires a frequency limit. Since
laboratories may not have the complete medical history for individuals,
including their history of CV screening tests, they are largely relying
on the physician's order in establishing whether the test is medically
necessary and covered by Medicare. However, relying on the physician's
order does not provide the laboratory with proof that the CV screening
test is medically necessary since the beneficiary may be treated by
multiple physicians who may have ordered these tests independently
within the 5 year coverage window. If the laboratory has sufficient
doubt, the laboratory may issue an Advanced Beneficiary Notice (ABN) to
the beneficiary indicating that Medicare may not cover the CV screening
test. If the laboratory does not issue an ABN to
[[Page 66294]]
the beneficiary who has received more that one CV screening test during
the previous five years, the laboratory may be financially liable for
the cost of the test. Laboratories are not required to issue an ABN if
the physician has already issued one.
In addition, section 40.3.6.4(C) titled ``Frequency Limited Items
and Services'' of Chapter 30 of Pub 100-4 of the ``Internet Only
Manual'' provides additional guidance for those instances where
Medicare has imposed frequency limitations on items or services. This
section instructs providers that the provider may routinely give ABNs
to beneficiaries and that whenever such a routine ABN is provided to a
beneficiary, the ABN must include the frequency limitation as the
reason for which Medicare will deny coverage.
Comment: Several commenters, including the ACR and the SIR, offered
their assistance to us when we determine whether noninvasive testing
for CV disease is necessary.
Response: Since the organizations that suggested noninvasive tests
for inclusion in this benefit provided the materials for our review, it
is not necessary for us to seek outside assistance. We appreciate the
commenters' offer of assistance.
Comment: Four commenters suggested that the CV screening benefit
stipulate an age for the population to be tested. We reviewed the
USPSTF recommendation that promoted testing for men 35 years and older
and women 45 years and older. The commenters believe this age range
should be lowered to include those aged 20 years and older and asked us
to consider including younger people in this benefit.
Response: The statutory change for this benefit did not include an
age for the person to be tested. While some of the USPSTF
recommendations included an age or an age range, none was selected for
the proposed rule. Since the majority of the individuals in Medicare
are generally 65 and older, the belief was that we are looking at an
older population rather than concentrating our resources on the younger
beneficiaries who may also be disabled and Medicaid eligible or could
be eligible for other services due to other complications of CV
disease. While there may be individuals younger than 65 years of age
that could benefit from this testing, this benefit is intended for
those entitled to Medicare. Therefore, any patient entitled to Medicare
would be covered for this benefit as specified in this rule.
Comment: One commenter noted that if the patient did not fast for
the screening test (fasting may be difficult for some patients), the
calculation of LDL cholesterol may be inaccurate. This commenter
recommended that for screening purposes, an alternative to repeating
the full lipoprotein profile in the fasting state would be a follow-up
direct measurement of LDL cholesterol.
Response: If a patient cannot fast and the physician believes the
patient's medical history and circumstances suggest the beneficiary is
at risk of CV disease, then any additional testing beyond an initial
screening would need to be done under the diagnostic clinical
laboratory benefit. Under the screening benefit, a repeated full
lipoprotein profile (fasting) or a second LDL cholesterol (fasting)
would not be covered for anyone who failed to fast when they had their
first set of tests.
Comment: Several commenters suggested that the tests that the
USPSTF approves for CV screening blood tests be automatically adopted
and covered by Medicare for the purposes of this benefit. We would not
need to use the NCD process to add tests to this benefit. Immediate
adoption of USPSTF recommendations will remove us from our own lengthy
review.
Response: While the USPSTF process is well established, we believe
it is prudent to review any recommendations from the USPSTF before
implementing them. In the proposed rule, we asked the public how we
should make changes for this benefit. Because the national coverage
determination process allows for public comment before we make any
changes, we believe this is the most appropriate basis for any future
changes. Further, we may not be able to accept every USPSTF
recommendation because of instructional, coding or claims issues that
must be resolved before any benefit can be implemented.
Comment: Several commenters questioned whether the screening
benefit for CV disease included noninvasive tests or whether it was
limited only to blood tests. Further, they recommended that the
adoption of noninvasive tests be tied to recommendations of the USPSTF
or to an NCD.
Response: We interpreted this portion of the screening benefit to
permit noninvasive tests for which there was a blood test recommended
by the USPSTF (for example, there is a blood test for cholesterol and
if a noninvasive test was developed that detected characteristics of
cholesterol, could provide a meaningful (comparison) result and
accurate reading) then the noninvasive test could be considered for
inclusion in the screening benefit. Noninvasive tests would not be
immediately included but would be subject to a review before adoption.
When it is time to consider the addition of tests or changes to the
list of tests, we will consider any changes through an NCD. This
benefit is not limited only to blood tests.
Comment: One commenter recommended that we include a fasting blood
glucose test as part of the CV screening blood benefit and that we
cover this test every 2 years for beneficiaries over 45 and for younger
beneficiaries who are obese or have a family history of diabetes.
Fasting blood glucose is inherently a CV screening test because
diabetes carries increased risk of CV disease.
Response: While some people who have diabetes exhibit other factors
associated with CV disease, we do not see the necessity to adjust the
CV screening benefit to include a fasting blood glucose test. The
diabetes screening benefit should be able to identify these
individuals. Medicare does not plan to duplicate tests when they are
available through other screening programs.
Comment: One commenter requested the inclusion of V70.0 for routine
examination to be added as one of the ICD-9-CM codes to be covered for
screening for CV screening blood tests. They asked that the NCD on
lipid panel be reviewed for any codes that were previously denied as
routine screening in the past, and that these codes be considered for
inclusion under this new benefit.
Response: We believe the majority of individuals who will seek care
under this benefit will fit the V81.0, V81.1, or V 81.2 codes. We are
willing to review a sample of claims and determine if V70.0 is an
appropriate code for this benefit. At this time, we are unable to add
V70.0 to the instructions being cleared. Codes that are to be
considered for this new benefit must be brought to our attention
through the national coverage determination process for laboratories.
Comment: One commenter suggested that the proposed Sec. 410.17
include reference to whether beneficiaries will incur out-of-pocket
costs for CV screening blood tests.
Response: Section Sec. 410.17 is specific to coverage instructions
for screening tests for the early detection of CV disease. We do not
believe it is necessary to revise Sec. 410.17 to include payment
instructions. We have indicated that Medicare would pay for the tests
under the clinical laboratory fee schedule. Currently under this
payment system, beneficiaries do not incur copayments and deductibles
in accordance with section 1833(a)(1)(D)(i) of the Act, and is included
in
[[Page 66295]]
instructions at Medicare Claims Processing Manual, Pub. 100-04, chapter
16, Sec. 30.2.
Comment: Two commenters asked us to clarify why we chose 5 years as
the timeframe for the benefit, rather than the 2 years allowed by the
statute.
Response: Our primary goal was to allow testing for the population
that needed to be screened. In the preamble to the proposed rule, we
stipulated that the Clinical Considerations of the USPSTF indicate,
while screening may be appropriate in older people, repeated screening
is less important because lipid levels are less likely to increase
after age 65. Screening individuals more often than necessary might
lead to unnecessary expenses and treatment. The scientific literature
indicates that lipid levels in the elderly are fairly stable.
Therefore, we proposed screening once every 5 years and have not
received sufficient evidence to change this position.
Comment: Two commenters suggested that a two-tiered benefit be
developed that would allow lipid profile screening tests at least every
5 years for beneficiaries when risk factors are not evident and a
second group be screened at least every 2 years. The second group would
include individuals who have modifiable risk factors (for example,
tobacco smoking, high blood pressure, physical inactivity, obesity, and
diabetes mellitus) and non-modifiable risk factors (such as age,
gender, race, and family history).
Response: While the CV screening benefit could be expanded to
include individuals other than those mentioned in the proposed rule,
preventive benefits were added to the Medicare Program on a limited
basis as science and technology permit them. Since some of the
individuals in the second group already would be screened through the
IPPE and the Diabetes Screening Benefit, we are not developing a second
tier at this time. We believe expanding this to a second tier would
waste precious resources of time and money and not contribute to
lowering the risk factors for individuals with CV disease.
Comment: One commenter questioned why we proposed to use the NCD
process as the method of making changes to the list of tests covered by
the CV screening blood test benefit. The commenter wrote that the MMA
does not require that the NCD process be utilized. They indicated that
there is no need for us to conduct our own assessment since a thorough
evaluation of the test was to be done by the USPSTF in determining that
the test is one that it recommends. The commenter objected to the use
of the NCD process for consideration of new tests because of the
significant delays that mark this process. The commenter also stated
that all that would be needed for us to approve the coverage of
additional CV screening tests is the recommendation of the USPSTF.
Response: In establishing the benefit for CV screening blood tests,
the Congress gave the Secretary the authority to determine which tests
would be covered by this benefit. We do not believe it would be proper
to delegate this function to USPSTF or any other entity. In the
proposed rule, we proposed the tests to be covered for the new benefit
when it becomes effective January 1, 2005 and at the same time, we
offered the NCD process for changes to this benefit. We proposed that
future tests would be added after reviewing the recommendations of the
USPSTF and the use of the NCD process. The NCD process actually has
several methods for evaluating which tests we may eventually cover. The
NCD process includes an application for a new coverage issue, a
reconsideration of an existing policy, or a coding change for
laboratory tests. We believe the use of the NCD process is a worthwhile
endeavor since it is a public process and less time consuming than
rulemaking. The use of an NCD is authorized by Section 1871 of the Act.
Comment: One commenter suggested that we include triglycerides as a
test for the CV screening blood test benefit since the 2001 USPSTF
recommendations for screening for lipid disorders associated with CV
disease only includes measurement of total cholesterol and high-density
lipoprotein cholesterol (HDL-C).
Response: We have included the triglycerides test as one of the
tests for screening for CV disease. For some individuals, triglycerides
may detect a risk factor for CV disease. That is why it was more
prudent to select a lipid profile that includes the three tests (total
cholesterol, HDL-C, and the triglycerides) rather than to indicate the
use of individual tests with different test intervals and different
ordering patterns.
Comment: One commenter requested that the frequency limit for lipid
testing of 5 years be waived if the patient develops a risk factor,
such as diabetes, a marked weight gain, etc. in the interval.
Response: A patient screened for lipid testing could also meet the
requirements for screening under the diabetes screening benefit. If a
patient developed further risk factors which negate the need for
continued screening under the CV screening blood test benefit, their
additional signs or symptoms would probably cause the person to need to
seek treatment which would be covered under other benefits including
diagnostic clinical laboratory testing.
Comment: One commenter questioned whether Sec. 410.16 that permits
qualified nurse practitioners and others to order CV screening tests
under the physical examination (section 611 of the MMA) is inconsistent
with Sec. 410.17 that requires that the laboratory tests be ordered by
the treating physician (Sec. 410.32(a)).
Response: Section 410.16 addresses services by NPs because of
conforming changes made in section 611(d) of the MMA. Section
410.32(a)(3) permits certain NPPs to furnish services that would be
physicians' services if furnished by a physician and who are operating
within the scope of their authority under State law and within the
scope of their Medicare statutory benefit. We believe that the statute
permits the use of NPPs to order tests described under Sec. 410.17
without a change in the statute. The general rule for laboratory tests
is that the tests must be ordered by the treating physician and in the
instance of screening tests, the treating NPP may be regarded as a
physician for this purpose.
Comment: One commenter believed that screening every 5 years was
too long a period between tests and that the data we collect be used to
allow more frequent testing.
Response: We have heard from commenters that the frequency
limitation of keeping records for the 5 years is difficult because of
storage, access and retrieval, and orders from multiple physicians.
Change in the frequency (that is, the number of times a patient can be
tested during a given timeframe) will be considered if the scientific
literature supports it. We do not believe we are permitted to change
the frequency based solely upon the logistical difficulties in
collecting, consolidating, and maintaining administrative data.
Modifying the benefit to permit more frequent testing will not resolve
these administrative difficulties. However, we will take this
recommendation under advisement as we continue to consider the
associated clinical data, but will not make any changes for the final
rule.
Comment: One commenter requested that blood be removed from the
title of this benefit for the final rule. The commenter believed the
narrow focus on blood would restrict the types of tests that would be
administered for detecting CV disease.
Response: In developing the proposed rule, we included blood in the
title of this benefit to be consistent with the
[[Page 66296]]
history of this benefit and to distinguish the tests in the benefit. We
believe that noninvasive tests could be covered and this benefit is not
limited only to blood tests.
Comment: One commenter suggested that the CV screening benefit
include an appropriate screening instrument. As with depression, the
examining physician has a test based on clinical practice guidelines to
use as a tool for assessing the patient. Since the American Heart
Association (AHA) and the ACC Guidelines for PAD are expected to be
published in 2005, the commenter is requesting that we adapt the
patient assessment and include these guidelines under the CV screening
benefit.
Response: Since the publication of the AHA and ACC Guidelines has
not taken place, it would be difficult to evaluate this document and
how physicians would use this in the course of examining a patient.
Physicians may use their best judgment for how they assess an
individual patient and whether additional specific tests from the AHA
and ACC guidelines would be more helpful than what is already included
in the screening benefit for CV disease is not something we can
conclude at this time. The NCD process is available when additional
tests should be considered.
Result of Evaluation of Comments
After reviewing all the comments, we have plans to include the V
codes (V81.0, V81.1 and V81.2) in the Laboratory Edit Module, and to
release manual and transmittal instructions and information to smooth
the transition for the new benefit. Providers who routinely give ABNs
to beneficiaries must include in the ABN that the frequency limitation
is the reason for which Medicare will deny coverage. A patient who has
an ABN and exceeds the frequency limitation may incur out-of-pocket
charges. We will finalize the changes to Sec. 410.17 as proposed.
D. Section 413--Physician Scarcity Areas and Health Professional
Shortage Areas Incentive Payments
[If you choose to comment on issues in this section, please include
the caption ``HPSA Zip Code Areas'' at the beginning of your comments.]
Section 413(a) of the MMA provides a new 5 percent incentive
payment to physicians furnishing services in physician scarcity areas
(PSAs). The MMA added a new section 1833(u) of the Act that provides
for paying primary care physicians furnishing services in a primary
care scarcity county and specialty physicians furnishing services in a
specialist care scarcity county an additional amount equal to 5 percent
of the amount paid for these services.
Section 1833(u) of the Act defines the two measures of physician
scarcity as follows:
1. Primary care scarcity areas--determined by the ratio of primary
care physicians to Medicare beneficiaries. A primary care physician is
a general practitioner, family practice practitioner, general
internist, obstetrician, or gynecologist.
2. Specialist care scarcity areas--determined by the ratio of
specialty care physicians to Medicare beneficiaries. The specialist
care PSA ratio includes all physicians other than primary care
physicians as defined in the definition of primary care scarcity areas.
To identify eligible primary care and specialist care scarcity
areas, we ranked each county by its ratio of physicians to Medicare
beneficiaries. In accordance with the statute, in the list of primary
care and specialist care scarcity counties, only those counties with
the lowest ratios that represent 20 percent of the total number of
Medicare beneficiaries residing in the counties were considered
eligible for the 5 percent incentive payment. In accordance with the
section 1833(u) of the Act, we also treated a rural census tract of a
metropolitan statistical area (as determined under the most recent
modification of the Goldsmith Modification) as an equivalent area (that
is, equal to a full county).
Consistent with section 1833(u)(4)(C) of the Act, all PSAs were
assigned their 5-digit zip code area so that we may automatically
provide the 5 percent incentive payment to eligible physicians. For zip
codes that cross county boundaries, we used the dominant county of the
postal zip code (as determined by the U.S. Postal Service) to identify
areas eligible to receive the 5 percent payment. Section 1833(u)(4)(C)
of the Act also requires us to publish a list of eligible areas as part
of the proposed and final physician fee schedule rules for the years
for which PSAs are identified or revised and to post a list of PSAs on
our Web site. See Addenda J and H for the zip codes of primary care and
specialist care PSAs. The PSA lists by zip code and county are also
available on our Web site at http://www.cms.hhs.gov/providers/bonuspayment. Since we are publishing these lists for the first time in
this final rule with comment period, we are accepting comments for 60
days after the date of publication of this regulation on the zip codes
and counties qualifying as physician scarcity areas and will address
the comments in next year's fee schedule.
In addition to creating of the 5 percent PSA incentive payment,
section 413 of the MMA amended section 1833(m) of the Act to mandate
that we pay the 10 percent health professional shortage areas (HPSA)
incentive payment to eligible physicians in full county HPSAs without
any requirement that the physician identify the HPSA area. We can only
achieve this result by assigning zip codes to eligible areas. See
Addenda I and K for the lists of eligible primary care and mental
health HPSAs by zip code. Consistent with the Act, we have also posted
a list of links on our Web site at http://www.cms.hhs.gov/providers/bonuspayment to assist those physicians located in eligible areas where
automation is not feasible, that is, the eligible area could not be
assigned a zip code.
In the August 5, 2004 proposed rule, we proposed conforming changes
to our regulations to add Sec. 414.66 to provide a 5 percent incentive
payment to eligible physicians furnishing covered services in eligible
PSAs. We also proposed conforming changes to our regulations to add
Sec. 414.67 to codify the 10 percent incentive payment to eligible
physicians furnishing covered services in eligible HPSAs, established
under the Omnibus Budget Reconciliation Act of 1987 (OBRA) (Pub. L.
100-203), previously implemented through manual issuance.
We received 23 letter comments on the bonus payment provisions of
section 413 of the MMA. A summary of those comments and our responses
follows:
Comment: One commenter questioned the rationale behind using zip
codes for the purpose of identifying eligible areas for physician
bonuses. The commenter believes that zip codes are less accurate than
political boundaries (counties, census civil divisions, and census
tracts).
Response: The statute requires the identification of PSAs on a
county basis, except for rural areas (using the Goldsmith
Modification). At this time, we can only determine physician scarcity
for Goldsmith areas at the zip code level since the Medicare
beneficiary data is currently unavailable at the census tract level.
Automation of physician bonus payments can only be achieved by
assigning zip codes to eligible areas. That is, the zip code place of
service is the only data element reported on the Medicare claim form
that would allow automation.
Comment: A commenter believes that our proposal to identify
qualified PSAs and HPSAs by zip code for automatic payment purposes is
problematic
[[Page 66297]]
because zip codes cross county lines. The commenter suggested that a
more user-friendly option would be to add a county identifier to the
claim form.
Response: The addition of a county code would not resolve the issue
of identifying the claims that would have a bonus because not all
designated HPSAs and PSAs are full counties. We cannot identify, for an
automated payment, services furnished in counties that are only
partially designated and Goldsmith areas that are not full counties. In
addition, there currently is no place on the standard electronic claims
form to accommodate the entry of a county code.
Comment: A commenter requested clarification regarding
circumstances when automation of bonus payments is not feasible.
Response: When the boundaries of zip code areas precisely overlay
with the boundaries of eligible HPSAs and PSAs, automation of bonus
payments is feasible. In other words, eligible physicians furnishing
services to Medicare patients within these zip code areas will
automatically receive their bonus payments. We can also automate bonus
payments within zip code areas that cross outside of qualified county
boundaries as long as the zip code, as determined by the U.S. Postal
Service, is dominant to the qualified scarcity county. We cannot
automate bonus payments when boundaries of zip code areas only
partially coincide with the boundaries of HPSAs and PSAs.
Comment: One commenter requested clarification regarding the
application of the billing modifier in determining physician
eligibility. The commenter inferred from the proposed rule that, if the
zip code is not posted as a qualified area, an eligible physician could
still receive a bonus payment if a modifier is used.
Response: Eligible physicians furnishing covered services in a
portion of an eligible PSA, which cannot be properly assigned a zip
code to permit automation of the bonus payment, would need to include
the new physician scarcity modifier on the Medicare claim in order to
receive the bonus payment. Lists of the zip codes that are eligible for
the automated payment, as well as a list of the counties that are
eligible to receive the PSA bonus are available on our Web site at
http://www.cms.hhs.gov/providers/bonuspayment. If a service is provided
in a zip code area that is not listed on the automated payment files,
but is within a designated physician scarcity county, the physician
must submit the ``AR'' billing modifier with the service in order to
receive the bonus payment. Separate lists for the primary care PSAs and
the specialty care PSAs are provided on our Web site for both the
automated zip codes and the counties.
Comment: A commenter requested clarification on what ratios would
be used to identify PSAs. The Health Resources and Services
Administration (HRSA) uses a national ratio of 3,500:1, or 3,000:1 if
high needs are shown. The commenter requested information on which
ratios would be used to determine PSAs for specialty providers, and
whether the ratios would be different for different specialty care
providers.
Response: Only those counties with the lowest primary care ratios
that represent 20 percent of the total number of Medicare beneficiaries
residing in the counties will be considered eligible for the 5 percent
incentive payment. In other words, we ranked each county by its ratio
of physicians to beneficiaries and then designated counties as scarcity
areas with the lowest ratios until 20 percent of the Medicare
population was reached. A separate specialist physician ratio was
calculated to identify specialist care PSAs using the same methods
stated. The statutory mandate precludes us from adopting a national
physician-to-patient ratio similar to the HPSA designations. By
statute, the 20 percent population threshold must serve as the
qualifying condition for all counties/rural areas.
For calculating the ratios, section 1833(u)(6) of the Act, as added
by the MMA, defines a primary care physician as a general practitioner,
family practice practitioner, general internist, obstetrician, or
gynecologist. In accordance with the statute, all other physicians were
grouped together as specialists for purposes of determining the
specialist care PSA list.
Comment: A commenter requested clarification regarding the
frequency of updating the eligible zip code list for automatic HPSA
bonus payments and its impact on otherwise eligible physicians.
Response: Determination of zip codes eligible for automatic HPSA
bonus payment will be made on an annual basis, and there will not be
any mid-year updates. We will effectuate revisions made to designations
by HRSA the following year for purposes of automatic bonus payments.
Consequently, if HRSA changes to the HPSA designations remove
physicians in those areas from receiving automatic payment, the zip
code areas will remain eligible until the next year when we remove the
zip code from our approved list.
Eligible physicians furnishing covered services in newly-designated
HPSAs are permitted to add a modifier to their Medicare claims to
collect the HPSA incentive payment until our next annual posting of
eligible zip codes for automation of bonus payments. In cases where a
zip code cannot be properly assigned to the newly-qualified HPSA,
physicians furnishing services in the area must continue to bill for
the incentive payments using the appropriate modifier.
Comment: A commenter requested that we provide FQHCs with the 5
percent PSA incentive payment. Since the statute does not explicitly
exclude other physicians' services (that are billed on an all-inclusive
basis), such as those provided in FQHCs or RHCs, the commenter stated
that we should extend the new 5 percent bonus payment to FQHC
physicians.
Response: As defined in section 1861(aa) of the Act, FQHC and RHC
services are not physicians' services, even though physicians' services
are frequently a component of the services furnished in these
facilities. The services are rather identified as FQHC services.
Therefore, services furnished by these providers are not eligible for
the incentive payment.
Comment: A commenter has questioned our proposal not to apply the
new 5 percent physician incentive payment to the technical component of
physicians' services. The commenter stated that extending the new bonus
payment to both the professional and technical component of the
physicians' services is consistent with Congressional intent and would
simplify claims processing.
Response: Section 1833(u) of the Act provides for incentive
payments for physicians' services furnished in PSAs. We note that the
statute contains two definitions of physicians' services. The first,
which appears at section 1861(q) of the Act, defines physicians'
services as ``professional services performed by physicians including
surgery, consultation, and home, office, and institutional calls.'' The
second, which refers to services paid under the physician fee schedule,
is found at section 1848(j)(3) of the Act and contains a broader
definition of physician services. However, that definition applies only
for purposes of section 1848 of the Act.
Since the incentive payment is not included in section 1848 of the
Act, the definition of physicians' services specified in section
1861(q) of the Act is the definition that applies. Thus, we believe the
best reading of the statute is that only professional services
furnished
[[Page 66298]]
by physicians are eligible for incentive payments.
Comment: A commenter recommended that we extend the HPSA bonus
payment to all physicians, regardless of their specialty, when their
services are furnished within a mental health HPSA. The commenter
believes there is no statutory basis to limit incentive payments just
to psychiatrists within mental health HPSAs.
Response: We provide HPSA bonus payments in primary medical care
HPSAs to all physicians regardless of specialty (including
psychiatrists) in light of the fact that there is significant overlap
between primary medical care HPSAs and mental health HPSAs.
Furthermore, most primary medical HPSAs, especially in rural areas,
also have shortages of specialists. Consequently, there is no apparent
need to distinguish between physician specialties within primary
medical care HPSAs for determining physician eligibility for bonus
payment purposes. However, in the situation where the mental health
HPSA does not overlap with a primary medical care HPSA, we allow only
psychiatrists to collect the incentive payment. Within these stand-
alone mental health HPSAs, there is an adequate supply of physicians
for the provision of medical services and a shortage only of those
providing mental health services. Therefore, it would be inconsistent
with the HPSA incentive payment provisions, as well as an inappropriate
use of the Medicare Trust Fund, to pay bonuses to physicians who
furnish medical services in service areas without shortages of primary
medical services.
Comment: A commenter requested that we count only those practicing
physicians who treat Medicare patients when determining the ratio of
beneficiaries to practicing physicians. To count all practicing
physicians, including those who do not treat Medicare patients would
undermine the intent of the provision.
Response: The statute does not permit us to count only Medicare
participating physicians to determine PSAs. The statute explicitly
requires that we calculate the primary and specialist care ratio by the
number of physicians in the active practice of medicine or osteopathy
within the county or rural area. Therefore, we must include in the
physician tally all actively practicing physicians when determining
PSAs.
Comment: A commenter asked that we clarify our methods for
determining the number of primary care and specialty care physicians to
calculate the physician-to-beneficiary ratio for identifying PSAs. The
commenter suggested that we use only the number of practicing
physicians when determining the beneficiary to physician ratio, that
is, distinguish between licensed physicians and practicing physicians
when determining ratios of primary care and specialty care since some
physicians continue to be licensed after they retire.
Response: As required by section 413 of the MMA, the determination
of eligible PSAs is based on the ratio of ``active practice''
physicians to Medicare beneficiaries within a county or rural area
(using the Goldsmith Modification). The physician data source used in
calculating scarcity areas is contained in the following:
The 2001 Physician Characteristics file; and
The 2001 Physician Address file.
These data are a compilation of:
The December 2001 AMA Master file;
The December 2001 American Osteopathic Association (AOA)
Physician file; and
The National Health Service Corps 2001 participant
listing.
These physician data files allow for the identification of the
physician's active status. Some of the key status indicators to
identify practicing physicians include ``clinically active'' and
``Federal employment'' status. Clinically active status was determined
using the type of practice, professional employment, and major
professional activity fields from AMA and AOA. For example, determining
non-active status is based on physicians who--
(1) Are involved in administration, medical teaching, research, and
other non-patient care activities; or
(2) Have self-identified as fully retired or otherwise inactive.
We believe that the indicator field of ``fully retired or otherwise
inactive'' addresses the specific issue of a physician maintaining his
or her license after he or she retires.
Comment: A commenter expressed concern about our use of the AMA
database to determine the number of licensed physicians engaged in
direct patient care in each State. The commenter claims that the AMA
database overstates the number of practicing physicians in the State of
California by at least 10,000 physicians. In light of this concern, the
commenter stated that we should use State medical board licensing
information rather than the AMA database in determining the physician
counts.
Response: The physician data source used in calculating scarcity
areas is contained in the 2001 Physician Characteristics file and the
2001 Physician Address file. These data are a compilation of the
December 2001 AMA Master file, the December 2001 AOA Physician file,
and the National Health Service Corps 2001 participant listing. We made
the decision to use the AMA Master file as well as the other files as
the sources of physician data in scarcity calculations because there is
no other adequate source of national physician data. It may be possible
to obtain physician data from each individual State agency, but doing
so would entail considerable administrative and technical difficulties.
Furthermore, methods of gathering and compiling data may be
inconsistent in different States. State agencies may vary greatly in
terms of the methods used to update physician databases, the frequency
of updates, how the data are stored, the type of information collected,
and so forth. In addition, States may use their own classification
systems for physician specialties, types of practice, and other key
information, and these systems may change over time.
Comment: A commenter encouraged us to implement similar incentive
payment programs for non-physician practitioners, for example,
Certified Registered Nurse Anesthetists and physician assistants.
Response: We do not have the authority to provide bonus payments to
non-physicians. Sections 1833(m) and 1833(u) of the Act authorize bonus
payments only to physicians.
Comment: A commenter requested that we immediately publish the
already identified PSAs by zip code and specify the specialties in
short demand within each eligible PSA.
Response: Lists of the zip codes that are eligible for the
automated payment, as well as a list of the counties that are eligible
to receive the PSA bonus, are now available on our Web site at http://www.cms.hhs.gov/providers/bonuspayment. See Addenda J and H for the zip
code list of PSAs for primary care and specialist care.
We have forwarded to the Health Resources and Services
Administration the request for identification of specialties in short
supply within PSAs. That Agency has responsibility for physician
manpower issues.
Comment: A commenter requested that the list of scarcity areas
should be made interim in the final fee schedule rule in order to give
physicians sufficient time to review and comment on the proposal.
Response: Although we made these lists public on our Web site on
October 1, 2004, we will accept comments for 60 days after the date of
publication of this regulation on the zip codes and counties
[[Page 66299]]
qualifying as physician scarcity areas and will address the comments in
next year's fee schedule.
Comment: A commenter expressed appreciation for our effort to
fairly implement the incentive payments to physicians in scarcity
areas. As this new incentive payment program is implemented, physicians
must be informed that this bonus is available, and it must be simple
for them to receive the bonus.
Response: We have already made available on our Web site at http://www.cms.hhs.gov/providers/bonuspayment the lists of the zip codes that
are eligible for the automated payment, as well as a list of the
counties that are eligible to receive the PSA bonus. We have also
issued a Medlearn article to educate the physician community regarding
Medicare physician incentive payment programs. For a copy of this
provider education article go to: http://www.cms.hhs.gov/medlearn/matters/mmarticles/2005/SE0449.pd. Lastly, Medicare's contractors have
established their own Web site links for the HPSA incentive payment
program to facilitate the payment of these bonuses to eligible
physicians.
Comment: A commenter expressed support of our proposed changes
relating to incentive payments for services provided in areas
designated as HPSAs and PSAs. The commenter also commended us for our
prompt implementation of section 413 of the MMA. Another commenter
expressed appreciation that the new 5 percent incentive is available to
specialists in counties with short supply of these physicians.
Response: We appreciate this positive feedback from the provider
community.
Comment: A commenter has questioned the rationale for our policy of
imposing, as a condition of eligibility, the requirement that the
specific location at which the service is furnished must be considered
a HPSA or PSA. Since physicians do not always reside in the county
where they provide services, identifying PSAs on one basis and paying
for them on another basis may be problematic.
Response: According to section 1833 of the Act, we make bonus
payments for physicians' services furnished in an eligible HPSA or PSA.
Thus, the place of service controls the availability of the bonus. A
physician providing a service in his or her office, a patient's home,
or in a hospital may receive the incentive payment only if the service
occurs within an eligible shortage or scarcity area.
Comment: One commenter believes that podiatric physicians, who are
considered specialists, should be among those eligible to receive the
additional 5 percent incentive payment.
Response: Section 1833(u) of the Act, as added by the MMA,
specifically defines ``physician'' as one described in section
1861(r)(1) of the Act. Therefore, we do not have authority to make
bonus payments to podiatrists.
Commenter: A commenter expressed concern that our systems had
trouble implementing the HPSA bonuses under Method II for Critical
Access Hospital (CAH) participation, and some providers have waited
more than two years for increased Medicare payments.
Response: Although some fiscal intermediaries may not have been
accustomed to processing physician claims, these systems were updated
and the problems resolved as of July 1, 2004.
Comment: A commenter from California requested that physicians who
provide Medicare services only through managed care not be included in
our calculations. The commenter believes that including physicians who
only treat managed care patients in the count to determine physician
scarcity areas will lead to a gross overstatement of the number of
physicians available to provide care to fee-for-service Medicare
patients.
Response: We do not believe that we have the legal authority to
exclude managed care physicians from the ratio calculations. Moreover,
excluding managed care physicians in the county-wide physician tally
would not change PSAs in California based on our calculations. In fact,
excluding the managed care physicians would make five eligible areas
ineligible.
Result of Evaluation of Comments
We are finalizing Sec. 414.66 and Sec. 414.67 as proposed. We are
accepting public comments on the zip code areas.
E. Section 303--Payment for Covered Outpatient Drugs and Biologicals
1. Average Sales Price (ASP) Payment Methodology
a. Background
Medicare Part B covers a limited number of prescription drugs and
biologicals. For the purposes of this proposed rule, the term ``drugs''
will hereafter refer to both drugs and biologicals. Medicare Part B
covered drugs generally fall into the following three categories:
Drugs furnished incident to a physician's service.
Durable medical equipment (DME) drugs.
Drugs specifically covered by statute (for example,
immunosuppressive drugs).
Section 303(c) of the MMA revises the payment methodology for Part
B covered drugs that are not paid on a cost or prospective payment
basis. In particular, section 303(c) of the MMA amends Title XVIII of
the Act by adding section 1847A, which establishes a new ASP drug
payment system. In 2005, almost all Medicare Part B drugs not paid on a
cost or prospective payment basis will be paid under this system.
The new ASP drug payment system is based on data submitted to us
quarterly by manufacturers. Payment amounts will be updated quarterly
based on the manufacturer's ASP calculated for the most recent calendar
quarter for which data are available. We intend to implement the
quarterly pricing changes through program instructions or otherwise, as
permitted under Section 1847A(c)(5)(C). For calendar quarters beginning
on or after January 1, 2004, the statute requires manufacturers to
report their ASP data to us for almost all Medicare Part B drugs not
paid on a cost or prospective payment basis. Manufacturers' submissions
are due to us not later than 30 days after the last day of each
calendar quarter.
The methodology for developing Medicare drug payment allowances
based on the manufacturer's submitted ASP data is described in this
final rule and reflected in final revisions to the regulations at Sec.
405.517 and new Subpart K in part 414. Several comments discussed
aspects of the manufacturers' calculation of ASP that are beyond the
scope of this final rule. We did not propose any changes to the
regulations concerning the manufacturer's calculation of ASP. We also
received other comments regarding the use of the least costly
alternative (LCA) methodology when pricing drugs, and requests for new
HCPCS codes for drugs and coverage of compounded drugs. These comments
are also outside the scope of this final rule. We did not propose any
changes to the LCA policy, the HCPCS process, or coverage of compounded
drugs.
b. Provisions of the Final Rule
i. The ASP Methodology
Effective 2005, payment for certain drugs and biologicals not paid
on a cost or prospective payment basis furnished on or after January 1,
2005 will be based on an ASP methodology.
As described in section 1847A(b)(3)(A) of the Act for multiple
source drugs and section 1847A(b)(4)(A) for single source drugs, the
ASP for all
[[Page 66300]]
drug products included within the same billing and payment code [or
HCPCS code] is the volume-weighted average of the manufacturers'
average sales prices reported to us across all the NDCs assigned to the
HCPCS code. Specifically, section 1847A(b)(3)(A) of the Act and section
1847A(b)(4)(A) of the Act require that this amount be determined by--
Computing the sum of the products (for each National Drug
Code assigned to those drug products) of the manufacturer's average
sales price and the total number of units sold; and
Dividing that sum by the sum of the total number of units
sold for all NDCs assigned to those drug products.
Section 1847A(b)(1)(A) of the Act requires that the Medicare
payment allowance for a multiple source drug included within the same
HCPCS code be equal to 106 percent of the ASP for the HCPCS code. This
payment allowance is subject to applicable deductible and coinsurance.
The payment limit is also subject to the two limitations described
below in section III.E.1.b.v of this preamble concerning widely
available market prices and average manufacturer prices in the Medicaid
drug rebate program. As described in section 1847A(e) of the Act, the
payment limit may also be adjusted in response to a public health
emergency under section 319 of the Public Health Service Act in which
there is a documented inability to access drugs and a concomitant
increase in the price of the drug which is not reflected in the
manufacturer's average sales price.
Section 1847A(b)(1)(B) of the Act requires that the Medicare
payment allowance for a single source drug HCPCS code be equal to the
lesser of 106 percent of the average sales price for the HCPCS code or
106 percent of the wholesale acquisition cost of the HCPCS code. This
payment allowance is subject to applicable deductible and coinsurance.
The payment limit is also subject to the two limitations described
below in section III.E.1.b.v concerning widely available market prices
and average manufacturer prices in the Medicaid drug rebate program. As
described in section 1847A(e) of the Act, the payment limit may also be
adjusted in response to a public health emergency under section 319 of
the Public Health Service Act.
Comment: One commenter suggested that we implement the ASP
methodology on a pilot basis prior to a national rollout. A physician
interest group recommended that we delay the implementation of the ASP
payment system for at least one year. The interest group stated that we
should inform physicians of the ASP for all covered drugs before the
final rule is issued and allow physicians to comment on the proposed
rates after an informed and complete review process.
Response: The law requires that the new ASP-based drug pricing
system be implemented January 1, 2005. The January 1, 2005 prices will
be based on the data submitted to us no later than 30 days after the
end of the third calendar year quarter of 2004. Given the requirements
surrounding the timing of the promulgation of the physician fee
schedule final rule, we will not have the January 1, 2005 prices
available before the publication of the final rule. However, our goal
is to provide as much information on Medicare Part B drug payment rates
as possible as early as possible prior to the January 1, 2005 effective
date of those rates.
Comment: A provider asked that we earmark funds to enable
physicians to transition from the AWP-15 percent payment system to the
ASP + 6 percent payment system.
Response: We do not have statutory authority to create such a
transition fund.
Comment: One commenter stated that the ASP plan does not account
for price increases in a timely manner. Another commenter expressed
concern that because ASP modifications lag by at least two calendar
quarters, market prices would not be reflected in a drug's payment
limit for at least six months after a pricing adjustment.
Response: The ASP methodology is based on average sales prices
reported by manufacturers quarterly. Manufacturers must report to us no
later than 30 days after the close of the quarter. We implement these
new prices through program instructions or otherwise at the first
opportunity after we receive the data, which is the calendar quarter
after receipt.
Comment: Some commenters expressed concern that the ASP + 6 percent
payment methodology would discourage providers from using generic drugs
and would increase the tendency to use newer or more expensive agents.
Response: It is true that the higher the average sales price of a
drug, the greater amount of money represented by 6 percent of that
price. However, Section 1847A specifies that payment is at 106 percent
of ASP. The law requires the use of the new ASP + 6 percent payment
system except in the limited instances described below in Sections V
and VI.
Comment: Several commenters suggested that we should establish a
mechanism to provide the public with an opportunity to identify errors
in the ASP-based payment rates before the start of the calendar quarter
in which the rates are effective. They believe that this mechanism
would minimize errors by permitting posting of the rates several weeks
prior to the effective date.
Response: Our goal is to provide as much information on Medicare
Part B drug payment rates as possible as early as possible prior to the
effective date of those rates.
Comment: A physician specialty group recommended that we use our
inherent reasonableness authority to increase drug payments up to 15
percent where necessary to make the Medicare payment level sufficient
to cover the price of drugs charged by specialty distributors that
service the physician office market.
Response: We do not have sufficient data to determine whether our
inherent reasonableness authority would apply in this instance. Even if
our inherent reasonableness authority were triggered, our data are
insufficient to determine whether the adjustment the commenters request
would be appropriate.
Comment: Several commenters urged us to weigh the full range of
potential consequences to patient care, especially in the oncology
setting, with the implementation of the ASP payment methodology. They
recommended that we take into consideration concerns such as the
potential inability of providers to purchase drugs below the new
reimbursement rate, the inability of oncologists to provide access to
important under-reimbursed support services, and the disproportionate
impact of these changes on rural providers necessitating a shift in
care of sick cancer patient from community settings to the hospital.
Some commenters suggested that we place a form on its Web site enabling
beneficiaries to identify access problems. One commenter suggested that
we perform a 1-year monitoring study to evaluate the quality of care
issues and delay implementation until the results of the study are
known.
Response: Although we do not expect access problems under the new
ASP + 6 percent payment system, we will be monitoring patient access
through our 1-800-MEDICARE line, regional office staff, claims
analysis, and other environmental scanning activities. We will work
with Congress if access issues arise. The law requires that the new
ASP-based drug pricing system be implemented January 1, 2005.
Comment: Several commenters expressed concern regarding the
statements on joining group purchasing organizations (GPOs) to improve
their purchasing power. They indicate that
[[Page 66301]]
the size of the discount is based on the individual GPO member's
purchases, not the combined purchases of the GPO members. Thus,
membership in a GPO would not necessarily result in a greater discount.
They also point out that retail pharmacies do not have access to GPO
purchasing arrangements. One commenter requested that we offer more
tangible suggestions for obtaining drugs at the ASP +6 percent price
other than encouraging physicians to participate in purchasing groups.
Response: The law requires that the new ASP-based drug pricing
system be implemented January 1, 2006. A recent survey of oncology
practices performed by the American Society of Clinical Oncology
indicated that the purchase price of drugs is not necessarily driven by
practice size. It would appear that smaller purchasers are on average
sometimes able to achieve similar drug pricing to larger purchasers.
The OIG is conducting a study due not later than October 1, 2005, on
the ability of different size physician practices in the specialties of
hematology, hematology/oncology, and medical oncology to obtain drugs
at 106 percent of the average sales price. We are currently conducting
another MMA-mandated study of sales of drugs to large volume purchasers
that is due not later than January 1, 2006. We will seek to work with
physicians, providers, and suppliers on ways to encourage prudent
purchasing, including to the extent practicable the dissemination of
information on lower cost suppliers of Medicare Part B drugs. We would
welcome suggestions on ways to accomplish this goal.
Comment: One commenter suggested that classes of trade should be
taken into account when establishing ASP payment rates.
Response: The law does not permit the exclusion of or
differentiation by classes of trade in the calculation of the ASP
payment rates, except for the specific statutory exceptions described
in the Medicaid best price calculation under sections 1927(c)(1)(C)(i)
and 1927(c)(1)(C)(ii)(III) of the Act. The statute specifies a payment
rate of 106 percent of ASP.
Comment: A drug manufacturer urges us to reject any requests to
publish the NDC-specific ASPs as the publishing of the rates would
facilitate inappropriate conduct.
Response: The law does not permit the disclosure of NDC level ASPs
in a form that discloses the identity of a specific manufacturer or
prices charged by the manufacturer except in accordance with Section
1927(b)(3)(D) of the Act. That provision permits the disclosure of such
data as the Secretary determines to be necessary to effectuate the
provisions of section 1847A of the Act.
v. Limitations on ASP
Section 1847A(d)(1) of the Act states that ``The Inspector General
of the Department of Health and Human Services shall conduct studies,
which may include surveys, to determine the widely available market
prices of drugs and biologicals to which this section applies, as the
Inspector General, in consultation with the Secretary, determines to be
appropriate.'' Section 1847A(d)(2) of the Act states that ``Based upon
such studies and other data for drugs and biologicals, the Inspector
General shall compare the average sales price under this section for
drugs and biologicals with--
The widely available market price for such drugs and
biologicals (if any); and
The average manufacturer price (as determined under
section 1927(k)(1)) for such drugs and biologicals.''
Section 1847A(d)(3) of the Act states that ``The Secretary may
disregard the average sales price for a drug or biological that exceeds
the widely available market price or the average manufacturer price for
such drug or biological by the applicable threshold percentage (as
defined in subparagraph (B)).'' Section 1847A(d)(3)(B) states that
``the term `applicable threshold percentage' means--
In 2005, in the case of an average sales price for a drug
or biological that exceeds widely available market price or the average
manufacturer price, 5 percent; and
In 2006 and subsequent years, the percentage applied under
this subparagraph subject to such adjustment as the Secretary may
specify for the widely available market price or the average
manufacturer price, or both.''
Section 1847A(d)(3)(C) of the Act states that ``If the Inspector
General finds that the average sales price for a drug or biological
exceeds such widely available market price or average manufacturer
price for such drug or biological by the applicable threshold
percentage, the Inspector General shall inform the Secretary (at such
times as the Secretary may specify to carry out this subparagraph) and
the Secretary shall, effective as of the next quarter, substitute for
the amount of payment otherwise determined under this section for such
drug or biological the lesser of--
The widely available market price for the drug or
biological (if any); or
103 percent of the average manufacturer price (as
determined under section 1927(k)(1)) for the drug or biological.''
Comment: One commenter urged us to provide further guidance on the
widely available market price (WAMP) methodology, specifically how the
OIG will compare ASP to WAMP. The commenter also requested guidance on
how WAMP will be determined in the case of multiple drugs represented
by a single J-code. Other commenters stated that we should provide
greater guidance for how it will substitute WAMP for ASP. These
commenters also suggested that we provide guidance on how it will treat
quarterly oscillations between ASP and WAMP.
Response: The OIG is developing its methodology regarding the
widely available market price. Because the determination of WAMP is
within OIG's purview, we believe it is premature to address the
implementation issues prior to the OIG establishing its methodology and
conducting its first review.
Comment: Several commenters recommend that we make adjustments
where there is a disparity between the ASP-based payment limit and the
physician acquisition cost. These commenters recommended that we raise
the payment rate if the WAMP is higher than ASP.
Response: Section 1847A of the Act does not provide authority to
increase the ASP-based payment system based on the review of the OIG.
vi. Payment Methodology in Cases Where the Average Sales Price During
the First Quarter of Sales Is Unavailable
Section 1847A(c)(4) of the Act states that ``In the case of a drug
or biological during an initial period (not to exceed a full calendar
quarter) in which data on the prices for sales for the drug or
biological is not sufficiently available from the manufacturer to
compute an average sales price for the drug or biological, the
Secretary may determine the amount payable under this section for the
drug or biological based on--
The wholesale acquisition cost; or
The methodologies in effect under this part on November 1,
2003, to determine payment amounts for drugs or biologicals.''
Comment: Several commenters requested that we provide guidance on
how the payment rate for a new drug in its second calendar quarter will
be determined. They recommend that we utilize the same methodology for
the 2nd quarter payment as for the 1st quarter; that is, use the WAC or
methodologies in effect on November 1, 2003.
[[Page 66302]]
Response: Pursuant to section 1847A(c)(4) of the Act, during an
initial period (not to exceed a full calendar quarter) where data on
prices for sales for a drug are not sufficiently available from the
manufacturer to compute an ASP, we will pay based on WAC or the
methodologies in effect on November 1, 2003 for a limited period. This
time period will start on the date that sales of the drug begin and end
at the beginning of the quarter after we receive information from the
manufacturer regarding ASP for the first full quarter of sales.
c. Payment for Influenza, Pneumococcal, and Hepatitis B Vaccines
Section 1841(o)(1)(A)(iv) of the Act requires that influenza,
pneumococcal, and hepatitis B vaccines described in subparagraph (A) or
(B) of section 1861(s)(10) of the Act be paid based on 95 percent of
the average wholesale price (AWP) of the drug. The AWP payment rates
for these vaccines will be updated quarterly. No commenters objected.
d. Payment for Drugs Furnished During 2005 in Connection With the
Furnishing of Renal Dialysis Services if Separately Billed by Renal
Dialysis Facilities
Section 1881(b)(13)(A)(ii) of the Act indicates that payment for a
drug furnished during 2005 in connection with the furnishing of renal
dialysis services, if separately billed by renal dialysis facilities,
will be based on the acquisition cost of the drug as determined by the
Inspector General(IG) report to the Secretary required by section
623(c) of the MMA or, insofar as the IG has not determined the
acquisition cost with respect to a drug, the Secretary shall determine
the payment amount for the drug. In the report, ``Medicare
Reimbursement for Existing End-Stage Renal Disease Drugs,'' the IG
found that, on average, in 2003 the four largest chains had drug
acquisition costs that were 6 percent lower than the ASP of 10 of the
top drugs, including erythropoietin. A sample of the remaining
independent facilities had acquisition costs that were 4 percent above
the ASP. Based on this information, the overall weighted average drug
acquisition cost for renal dialysis facilities is 3 percent lower than
the ASP. Therefore, we proposed that payment for a drug or biological
furnished during 2005 in connection with renal dialysis services and
separately billed by renal dialysis facilities will be based on the ASP
of the drug minus 3 percent. We proposed to update this quarterly based
on the ASP reported to us by drug manufacturers.
We received numerous comments regarding our proposed payments rate
of ASP minus 3 percent. Those comments and responses are provided
below.
Comment: Commenters questioned the basis for our decision to pay
for separately reimbursed drugs at a rate of ASP minus three percent.
These commenters stated that ASP minus 3 percent was not acquisition
cost as determined by OIG and did not reflect the acquisition cost
relationship between these drugs. Some commenters questioned the
relationship between the ASP definition used by the OIG and the current
definition. Commenters stated that we should base the payment rates on
the acquisition cost of each drug as reported by the OIG updated to
2005 rather than an ASP-based formula. Some commenters indicated that
the acquisition cost should be updated to 2005 and suggested an update
using the same annual factor used for budget neutrality calculations.
For drugs not included in the OIG report, some commenters suggested
that we use the same methodology for most other Medicare Part B drugs,
namely ASP plus 6 percent. Commenters indicated we should consider two
tiers of payment based on provider size to minimize the discrepancy
between large and small providers or in the absence of two tiers base
the payment on the acquisition cost of the facilities not owned or
managed by the four largest providers. Commenters also asked for
clarification of the payment basis for separately billable ESRD drugs
other than EPO billed by hospital based ESRD facilities since these
drugs historically were not paid based on AWP but rather based on
reasonable cost.
Response: We agree with the commenters who suggested we base the
2005 payment rates for separately billable ESRD drugs on the actual
dollar value of the acquisition costs as determined by the IG rather
than the acquisition costs relative to the ASP. We also agree that we
should update the IG acquisition costs to calculate 2005 rates. After
consideration of the available price data, we have determined that the
Producer Price Index (PPI) for prescription preparations is the most
appropriate price measure for updating EPO and other separately
billable drugs from 2003 to 2005. The PPI for prescription preparations
is released monthly by the Bureau of Labor Statistics, and reflects
price changes at the wholesale or manufacturer stage. By comparison,
the Consumer Price Index (CPI) for prescription drugs reflects price
changes at the retail stage. Because EPO and many of the separately
billable drugs used by dialysis facilities are purchased directly from
the manufacturer, the use of a price index that measures wholesale
rather than retail prices is more appropriate. The PPI for prescription
drugs is the measure used in the various market baskets that update
Medicare payments to hospitals, physicians, skilled nursing facilities,
and home health agencies. In addition, the PPI for prescription drugs
was recommended for use in the proposed composite rate market basket
detailed in the 2003 Report to Congress.
Based on historical data through the second quarter of 2004, we
used the Global Insight Inc. forecast of the PPI for prescription drugs
to determine the update factors for 2004 and 2005. We feel the use of
an independent forecast, in this case from Global Insight Inc., is
superior to using the Naational Health Expenditure projections for drug
prices (which is the CPI for prescription drugs) and is consistent with
the methodology used in projecting market basket increases for Medicare
prospective payment systems.
We also agree with those commenters who suggested that the drugs
not contained in the IG study should be paid at ASP plus 6 percent. We
believe it is appropriate for the payment amount for these drugs when
separately billed by ESRD facilities during 2005 to be the same as the
payment amount for other entities that are paid by Medicare on other
than a cost or prospective payment basis. We do not agree with
commenters that we should establish separate drug payment rates for
large and small providers. For reasons discussed in the section of this
final rule on the ESRD composite rate, we believe it is appropriate to
establish a single add-on payment to the composite rate and therefore
appropriate to establish the same drug payment rates for both large and
small providers. We do not believe it is appropriate to base the
payment amount on only the higher acquisition cost of the facilities
not owned or managed by the four largest providers and not take into
account the acquisition costs of the largest four providers who
represent the majority of the drug expenditures. Section
1881(b)(13)(A)(ii) of the Social Security Act refers to ``the
acquisition cost of the drug or biological'' and not the acquisition
costs of the drug or biological. In accordance with the statute and our
understanding of Congressional intent for 2005, we believe it is more
appropriate to base the 2005 payment amounts on a weighted average of
the acquisition costs of the four largest providers and the other
[[Page 66303]]
facilities rather than base the 2005 payment amounts solely on the
acquisition costs of the other facilities.
In response to the commenters who requested clarification of the
payment basis for separately billable ESRD drugs other than EPO billed
by hospital-based ESRD facilities, we did not propose changes to the
reasonable cost payment basis for these drugs. The OIG did not study
separately billable ESRD drugs other than EPO billed by hospital-based
ESRD facilities and accordingly, we did not propose to change the
payment basis for these drugs.
e. Payment for Infusion Drugs Furnished Through an Item of DME
In 2005, section 1841(o)(1)(D)(i) of the Act requires that an
infusion drug furnished through an item of DME covered under section
1861(n) of the Act be paid 95 percent of the average wholesale price
for that drug in effect on October 1, 2003. No commenters objected.
2. Drug Administration Payment Policy and Coding Effective in 2005
Section 1848(c)(2)(J) of the Act (as added by section 303(a) of the
MMA) requires the Secretary to promptly evaluate existing drug
administration codes for physicians' services to ensure accurate
reporting and billing for those services, taking into account levels of
complexity of the administration and resource consumption. According to
section 1848(c)(2)(B)(iv) of the Act (as amended by section 303(a) of
the MMA), any changes in expenditures in 2005 or 2006 resulting from
this review are exempt from the budget neutrality requirement of
section 1848(c)(2)(B)(ii) of the Act. The statute further indicates
that the Secretary shall use existing processes for the consideration
of coding changes and, to the extent changes are made, shall use those
processes to establish relative values for those services. The
Secretary is also required to consult with physician specialties
affected by the provisions that change Medicare payments for drugs and
drug administration.
The AMA's CPT Editorial Panel established a workgroup, with
representatives from affected specialties that met earlier this year to
develop recommendations to the CPT Editorial Panel in August. Based on
these recommendations, that panel adopted several new drug
administration codes and revised several existing codes. Subsequently,
the AMA's Relative Value Update Committee (RUC) met at the end of
September to make recommendations to us on the practice expense
resource inputs and work relative values for the new and revised drug
administration codes.
We indicated in the proposed rule that we would consider whether it
is necessary for us to make coding changes effective January 1, 2005
through the use of G-codes (because the 2005 CPT book will have already
been published), and we requested public comment. As described in
detail below, we are establishing new G-codes for 2005 that correspond
with the new CPT codes that will become active in 2006. These new G-
codes are interim until 2006.
The new CPT codes can be categorized into the following three
categories of drug administration services: infusion for hydration;
nonchemotherapy therapeutic/diagnostic injections and infusions other
than hydration; and chemotherapy administration (other than hydration)
which includes infusions/injections. There are some important changes
in the new codes relative to current drug administration coding. The
infusion of substances such as monoclonal antibody agents or other
biologic response modifiers is reported under the chemotherapy codes,
instead of the nonchemotherapy infusion codes, as is currently the
case. There are also new codes in both the chemotherapy and
nonchemotherapy sections for reporting the additional sequential
infusion of different substances or drugs.
As we stated in the proposed rule, we plan to analyze any shift or
change in utilization patterns once the payment changes for drugs and
drug administration required by MMA go into effect. While we do not
believe the changes will result in access problems, we plan to continue
studying this issue. We also note that the MMA requires the Medicare
Payment Advisory Commission (MedPAC) to study how the changes in
payments for drugs and drug administration affect other specialties.
We received many comments on various aspects of coding and payment
for drug administration services in response to the proposed rule. We
are also responding below to comments we received on the January 7,
2004 interim final rule with comment period that announced the
provisions of section 303 of the MMA affecting drug administration
services that took effect in 2004 (69 FR 1094). Specifically, section
303 of the MMA required the following changes in 2004: a transitional
adjustment that increases payments for specific drug administration
services by 32 percent in 2004 (and 3 percent in 2005); establishing
work RVUs for certain drug administration services equal to the work
RVUs for a level 1 office medical visit for an established patient; the
incorporation of supplemental survey data in the calculation of the
practice expense RVUs for drug administration codes; and allowing
oncologists to bill for multiple drug administrations by the ``push''
technique on a single day.
Comment: Many commenters supported the efforts to promptly evaluate
existing drug administration codes to ensure accurate reporting and
billing for services. They support our proposal to use G-codes until
the new CPT codes are active. They asked us to adopt the
recommendations of the CPT Editorial Panel for new drug administration
codes.
Response: We appreciate the support of the commenters of all of the
efforts to expeditiously review and update these codes. We also would
like to specifically recognize the efforts of the CPT Editorial Panel's
Drug Administration Workgroup to develop the new CPT codes, the
Editorial Panel for its consideration and approval of the new codes,
and the RUC for its similar efforts to develop recommendations for the
inputs for the new codes.
We have reviewed the recommendations of the CPT Editorial Panel
and, with one exception noted below, agree with their new and revised
codes for drug administration for 2005. Because the new CPT codes will
not be included in the 2005 CPT, we have decided to establish G-codes,
where applicable. At this time, we anticipate these new G-codes will be
temporary until the new CPT codes become active January 1, 2006.
A listing of the old CPT codes and their corresponding G-codes are
in the table below. Some of the old CPT codes will correspond to more
than one G-code, and there are codes that will allow physicians to bill
for services that previously did not have a code or were bundled into
other services.
The drug administration codes are divided into three categories:
infusion codes for hydration; codes for therapeutic/diagnostic
injections; and chemotherapy administration codes. The descriptions of
the codes below are taken primarily from the AMA CPT Editorial Panel.
We are including these specific descriptions here in order to provide
as much information as possible about the new G-codes prior to their
implementation on January 1, 2005. However, we anticipate that we will
issue further instructions regarding the appropriate use of these G-
codes, including clarifications, interpretations, and other
modifications to the following guidance (apart from the G-codes
[[Page 66304]]
themselves) as part of any instructions issued through a subregulatory
process.
The codes for hydration (G0345 and G0346 in the table below) are
for reporting hydration intravenous (IV) infusions consisting of a
prepackaged fluid and electrolytes. These codes are not used to report
infusion of drugs or other substances. The codes for chemotherapy
administration are to be used for reporting the administration of non-
radionuclide anti-neoplastic drugs, and anti-neoplastic agents provided
for treatment of noncancer diagnoses, or substances such as monoclonal
antibody agents and other biologic response modifiers. The remaining
codes are for reporting injections and infusions for all drug
administrations that were previously reported using CPT codes 90780-
90788, 96400, and 96408-96414 (other than those described above as
hydration or chemotherapy).
[[Page 66305]]
[GRAPHIC] [TIFF OMITTED] TR15NO04.503
[[Page 66306]]
[GRAPHIC] [TIFF OMITTED] TR15NO04.504
The following coding guidance is based on the CPT Editorial Panel's
explanatory language for the new CPT codes. As noted above, we plan to
issue further guidance as needed.
Infusions that were previously reported under CPT code 90780 (non-
chemotherapy infusion, 1st hour) will be billed under one of three G-
codes beginning January 1, 2005. The first hour of a hydration infusion
will be billed under G0345. The first hour of infusion of a
nonchemotherapy drug other than hydration will be billed under G0347.
The first hour of infusion of anti-neoplastic agents provided for
treatment of noncancer diagnoses or substances such as monoclonal
antibody agents and other biologic response modifiers is billed under
G0359.
Similarly, services that were previously reported under CPT code
90781 (non-chemotherapy infusion, each additional hour) will be billed
under one of four G-codes beginning January 1, 2005. Each additional
hour of a hydration infusion will be billed under G0346. Each
additional hour of a nonchemotherapy infusion will be billed under
G0348. Currently, if a second (or other subsequent) nonchemotherapy
drug is administered sequentially, the physician would bill code 90781
for the additional hour of infusion. Under the new G-codes, the
physician will bill G0349, the sequential administration of a second or
subsequent nonchemotherapy drug. In addition, each additional hour of
the infusion of anti-neoplastic agents for the treatment of noncancer
diagnoses or substances such as monoclonal antibodies and other
biological modifiers is billed under G0360.
Injections that were previously billed under CPT code 90782 will
now be billed under HCPCS code G0351. Physicians should use HCPCS code
G0352 for injections previously billed under CPT code 90783.
Nonchemotherapy drugs administered by IV push (currently using CPT code
90784) should now be billed under HCPCS code G0353. The CPT book does
not currently contain a code for physicians to bill a second (or other
subsequent) nonchemotherapy drug administered by IV push. The CPT
Editorial Panel created a new code for each additional nonchemotherapy
drug administered by IV push. For 2005, the physician should bill HCPCS
code G0354.
The CPT coding system will be deleting code 90788 (Intramuscular
injection of antibiotic) in 2006. We are maintaining CPT code 90788 as
an active code until it is changed in the CPT coding system and
instructions are provided on the code to bill in its place beginning
January 1, 2006.
Chemotherapy injections, previously billed under the CPT code
96400, will now be billed using one of two new G-codes. For injection
of nonhormonal anti-neoplastic drugs, the physician should bill HCPCS
code G0355. For injection of hormonal anti-neoplastic drugs, the
physician should bill HCPCS code G0356. CPT is not recommending any
changes to CPT codes 96405 (Chemotherapy administration; intralesional,
up to and including 7 lesions) and 96406 (more than 7 lesions), and
these codes will remain active for Medicare in 2005.
Chemotherapy drugs administered by IV push (currently billed under
CPT code 96408, or, if the drug meets the expanded definition of
chemotherapy including monoclonal antibodies or other biologic response
modifiers, currently billed under CPT code 90784) should be billed
using G0357 for the initial drug administered. In 2004, Medicare paid
for the second (or other subsequent) chemotherapy drug administered by
IV push under CPT code 96408. CPT will be establishing a code that
recognizes the resource inputs associated with each additional
chemotherapy drug administered by IV push. For 2005, the analogous code
to bill the second (or other subsequent) chemotherapy drug administered
by IV push is G0358.
The first hour of chemotherapy administration, previously billed
under CPT code 96410, should now be billed under CPT code G0359. Each
additional hour of chemotherapy (previously billed under CPT code
96412) should now be billed under CPT code G0360. CPT is also
recommending a new code for the first hour of a different chemotherapy
drug administered sequentially by infusion. If a second chemotherapy
drug is administered sequentially, the physician should bill for HCPCS
G0362 for the first hour of infusion of the second drug. All additional
hours (up to eight total hours) of chemotherapy infusion should be
billed using HCPCS code G0360. Prolonged chemotherapy infusions (8
hours or more, previously billed under code 96414) should be billed in
2005 using HCPCS code G0361.
For three codes (G0350, G0354, G0363), the table above has an ``N/
A'' listed in the ``Old CPT'' column, meaning there were no CPT codes
that existed explicitly for these services. These services will now be
billable under the new coding system. For instance, CPT will be
establishing a code for a ``concurrent infusion.'' A concurrent
infusion refers to the simultaneous infusion of two nonchemotherapy
drugs. We are using temporary code G0350 for this service. Code G0350
is an add-on code. It must be reported as an ``add-on'' or with another
code and our payment reflects the incremental resources associated with
infusing the second drug. For example, if two nonchemotherapy drugs are
infused concurrently, the physician bills G0347 for the initial drug
infused and G0350 as an add-on.
[[Page 66307]]
As indicated above, HCPCS code G0354 is a new code for each
additional sequentialnonchemotherapy drug administered by IV push.
HCPCS code G0354 is also an add-on code. In general, G0354 will be an
add-on to G0353. However, it is possible that a nonchemotherapy drug
administered by IV push may follow the administration of a chemotherapy
drug administered by IV push, and HCPCS code G0354 would then be an
add-on to HCPCS code G0357.
HCPCS code G0363 is a new code for irrigation of an implanted
venous access device. There is currently no code to describe this
service. Medicare will pay for G0363 if it is the only service provided
that day. If there is a visit or other drug administration service
provided on the same day, payment for this service is bundled into
payment for the other service.
We are creating the following new add-on G-codes: G0346, G0348,
G0349, G0350, G0354, G0358, G0360 and G0362. As indicated above, add-on
codes must be billed with other codes, and our payment reflects the
incremental resources associated with providing the additional service.
The initial codes that these add-on codes could potentially be billed
with include: G0345, G0347, G0353, G0357 and G0359. If a combination of
chemotherapy, nonchemotherapy drugs, and/or hydration is administered
by infusion sequentially, the initial code that best describes the
service should always be billed irrespective of the order in which the
infusions occur.
Comment: In the January 7, 2004 interim final rule with comment, we
revised our payment policy for pushes of chemotherapy drugs to allow
for payment of multiple pushes of different chemotherapy agents in one
day. A commenter asked that we revise our policy for multiple pushes of
nonchemotherapy agents, to allow multiple billings on a single day.
Response: The CPT/RUC recommendations address this comment. New
codes have been created to account for the resources associated with
multiple chemotherapy and nonchemotherapy drugs administered by IV
push. HCPCS code G0353 is used for the initial IV push of a
nonchemotherapy drug, while HCPCS code G0354 is used for each
additional push of a nonchemotherapy drug. For chemotherapy drugs
administered by IV push, HCPCS code G0357 is used for the first drug
administered, while HCPCS code G0358 is used for each additional drug.
We also note that existing CPT codes 90782-90788 (Therapeutic,
prophylactic or diagnostic injections) currently have a status
indicator of ``T'', which means that payment for the service is bundled
unless it is the only service billed by the physician for the patient
that day. However, based on the RUC recommendations and the resulting
values for the injection services, we are making the status indicator
on HCPCS codes G0351--G0354 an ``A'', which will allow them to be
separately paid even if another physician fee schedule service is
billed for the same patient that day.
Comment: A commenter stated that, given the increased work and
practice expense RVUs for drug administration codes, it follows that
both the work and practice expense RVUs for the immunization
administration codes (90471, 90472, 90473, and 90474) should also be
increased. The commenter argued that the service involved in
administering vaccines is more intense/complex than the service
involved in the drug infusion codes.
Response: We agree with the commenter that the physician work and
practice expenses associated with administering injections are similar
to immunizations. In addition, we would point out that we currently pay
for vaccine administrations (G0008-G0010) based on crosswalking the
RVUs to CPT code 90471. Therefore, any changes to the physician work
and practice expense RVUs for code 90471 would also affect payments for
vaccine administrations.
Because we agree these services should be similar in the amount of
physician work involved, we are assigning the physician work value
recommended by the RUC for code 90782 (G-code G0351) to code 90471 and
HCPCS G-codes G0008-G0010. We are combining the utilization data for
all of these codes to determine a single practice expense RVU that will
be applied to each of these codes.
We are also assigning a work RVU of 0.15 to code 90472. Codes 90473
(Immunization administration by intranasal or oral route; one vaccine
(single or combination vaccine/toxoid)) and 90474 (Each additional
vaccine (single or combination vaccine/toxoid)) are currently not
covered. We are changing the status of these codes to ``R'', or
restricted, meaning they are payable under some circumstances after
carrier review. These codes will be carrier priced.
Comment: If a patient receives chemotherapy infusions, CPT code
96410 is used to report the infusion of the first drug up to one hour.
Chemotherapy drugs are usually administered sequentially. Thus, if a
patient receives the administration of a second chemotherapy drug at
the same treatment session, CPT code 96412 is used to report the
infusion of the second drug for each additional hour of infusion. In
2004, the national payment, including the transitional payment
adjustment of 32 percent, for CPT code 96410 is $217. The comparable
payment for CPT code 96412 is $48.
Commenters pointed out that this policy does not take into account
the levels of complexity of administration and resource consumption.
The administration of multiple drugs requires additional preparation
time, supplies, and patient education, not currently accounted for in
CPT code 96412.
Response: The CPT/RUC recommendations addressed this issue. We are
implementing new code G0362, Chemotherapy administration, intravenous
technique; each additional sequential infusion, up to one hour. This
code will allow, effective January 1, 2005, physicians to begin to bill
for the first hour of chemotherapy of the second chemotherapy drug
administered.
Comment: Several commenters requested clarification that the
changes to the drug administration codes resulting from the CPT changes
and our G-codes would be exempted from budget neutrality by the
provision at section 1848(c)(2)(B)(iv)(III), as added by MMA section
303(a)(1). This provision stipulates that the evaluation of the
existing drug administration codes described above as leading to the
interim G-codes and the new CPT codes for 2006, is to be exempt from
budget neutrality.
Response: The commenters are correct that the additional
expenditures that result from the interim G-code changes we are
implementing in this rule are exempt from budget neutrality.
Comment: Several commenters asked that we continue payment for drug
administration codes at the 2004 levels, which included the 32 percent
transitional payment adjustment, instead of paying at the 3 percent
transitional payment adjustment for 2005, or adopt other measures. For
example, commenters suggested temporary codes to offset the large
reductions that would otherwise go into effect in 2005.
Response: Section 303(a)(4) of the MMA is very specific on the
application of the transitional payment adjustments in 2004 and 2005.
We do not have the legal authority to continue payments based on the
2004 payment levels. In 2005, the transitional adjustment percentage
for drug administration
[[Page 66308]]
decreases from 32 percent to 3 percent. No transitional percentage is
applied in 2006 or subsequent years.
Comment: One commenter requested additional temporary G-codes to
offset the payment reductions for oncologists that would otherwise go
into effect in 2005. According to this commenter, the payment amount
associated with each of these codes would be a percentage add-on amount
sufficient to offset the reductions in drug margins and payments for
drug administration services.
Response: We have worked extensively with the major associations
representing oncologists and their patients to ensure that Medicare
continues to pay appropriately for these extremely critical services.
The payment changes we made for 2004, the new G-codes, and allowing
additional payment for injections and additional infusions, either have
already increased, or will increase, payments for drug administration
services. The impacts of these changes are discussed extensively in the
impact analysis section of this final rule.
In addition, as we indicated above, we plan to analyze any shift or
change in utilization patterns once the payment changes for drugs and
drug administration required by MMA go into effect. While we do not
believe the changes will result in access problems, we plan to continue
studying this issue.
Comment: One commenter expressed concern that the reductions in
payments to oncologists described in the proposed rule could make it
difficult, if not impossible, for many patients to continue to access
cancer care in nonhospital community settings.
Response: As noted above, we have taken several steps to increase
payments for drug administration services in this final rule. We
recognize that oncology patients in the Medicare population undergoing
chemotherapy face serious and unique issues and problems related to
quality of care throughout the life cycle of their disease process;
from the time of first diagnosis, through treatment, until the patient
experiences an end to medical (including hospice) care. Patients,
national cancer organizations, and medical providers have identified
certain factors that they believe affect the comfort and ultimately the
care for cancer patients in the physician office setting.
We believe that the goals and objectives of optimal treatment
include reviewing and analyzing pain control management, minimization
of nausea and vomiting, explaining treatment options, outlining
existing chemotherapy regimens, assessing quality of life, assessing
patient symptoms and complaints, supporting and educating caregivers,
and avoidance of unnecessary Emergency Department visits and inpatient
hospitalizations. Further, we believe that clinicians armed with
appropriate assessments can proactively intervene with medical
treatment and nonmedical assistance to help ameliorate some of the
distressing and unpleasant, but frequent and predictable, events that
may accompany certain cancers and chemotherapeutic regimens used to
combat cancer.
The Secretary has been given the authority under sections
402(a)(1)(B) and 402(a)(2) of the Social Security Act Amendments of
1967 (Pub. L. 90-248), as amended, to develop and engage in experiments
and demonstration projects to provide incentives for economy, while
maintaining or improving quality in provision of health services. In
order to identify and assess certain oncology services in an office-
based oncology practice that positively affect outcomes in the Medicare
population, we will initiate a one-year demonstration project for CY
2005. While we encourage optimal care in all facets of treatment, the
focus of the demonstration project will be on three areas of concern
often cited by patients: pain control management, the minimization of
nausea and vomiting, and the reduction of fatigue.
Practitioners participating in the project must provide and
document specified services related to pain control management and
minimization of nausea and vomiting, and the reduction of fatigue. To
facilitate the collection of this information, we have established 12
new G-codes to be reported by program participants.
G-Codes for Assessment of Nausea and/or Vomiting
G9021: Chemotherapy assessment for nausea and/or vomiting, patient
reported, performed at the time of chemotherapy administration;
assessment level one: not at all (for use in a Medicare-approved
demonstration project).
G9022: Chemotherapy assessment for nausea and/or vomiting, patient
reported, performed at the time of chemotherapy administration;
assessment level two: a little (for use in a Medicare-approved
demonstration project).
G9023: Chemotherapy assessment for nausea and/or vomiting, patient
reported, performed at the time of chemotherapy administration;
assessment level three: quite a bit (for use in a Medicare-approved
demonstration project).
G9024: Chemotherapy assessment for nausea and/or vomiting, patient
reported, performed at the time of chemotherapy administration;
assessment level four: very much (for use in a Medicare-approved
demonstration project).
G-Codes for Assessment for Pain
G9025: Chemotherapy assessment for pain, patient reported,
performed at the time of chemotherapy administration, assessment level
one: not at all (for use in a Medicare-approved demonstration project).
G9026: Chemotherapy assessment for pain, patient reported,
performed at the time of chemotherapy administration, assessment level
two: a little (for use in a Medicare-approved demonstration project).
G9027: Chemotherapy assessment for pain, patient reported,
performed at the time of chemotherapy administration assessment level
three: quite a bit (for use in a Medicare-approved demonstration
project).
G9028: Chemotherapy assessment for pain, patient reported,
performed at the time of chemotherapy administration, assessment level
four: very much (for use in a Medicare-approved demonstration project).
G-Codes for Assessment for Lack of Energy (Fatigue)
G9029: Chemotherapy assessment for lack of energy (fatigue),
patient reported, performed at the time of chemotherapy administration,
assessment level one: not at all (for use in a Medicare approved
demonstration project).
G9030: Chemotherapy assessment for lack of energy (fatigue),
patient reported, performed at the time of chemotherapy administration,
assessment level two: a little (for use in a Medicare approved
demonstration project).
G9031: Chemotherapy assessment for lack of energy (fatigue),
patient reported, performed at the time of chemotherapy administration,
assessment level three: quite a bit (for use in a Medicare approved
demonstration project).
G9032: Chemotherapy assessment for lack of energy (fatigue),
patient reported, performed at the time of chemotherapy administration,
assessment level four: very much (for use in a Medicare-approved
demonstration project).
The codes correspond to four patient assessment levels (``not at
all,'' ``a little,'' ``quite a bit,'' or ``very much'') for each of the
following three patient status factors: nausea and/or vomiting;
[[Page 66309]]
pain; and lack of energy (fatigue). These levels, based on the
Rotterdam scale, were chosen since they appear to be less burdensome
for the practitioner and more easily understood by the patient.
Participating practitioners must bill the applicable G-codes for each
patient status factor (that is, one G-code each for patient comfort
assessment factors: nausea and/or vomiting; pain; and fatigue) assessed
during a chemotherapy encounter in order to receive payment under the
demonstration. A G-code for each patient status factor must appear on
the claim for payment to be made under the demonstration project. A
patient chemotherapy encounter is defined as chemotherapy administered
through intravenous infusion or push, limited to once per day. During
the course of the demonstration, an additional payment of $130 per
encounter will be paid to participating practitioners for submitting
the patient assessment data as described above.
Any office-based physician or nonphysician practitioner operating
within the State scope of practice laws who takes care of and
administers chemotherapy to oncology patients in an office setting is
eligible to participate in this demonstration project. By billing the
designated G-codes, the practitioner self-enrolls in the project and
agrees to all of the terms and conditions of the demonstration project.
This information will help us to work with those who care for
cancer patients to determine ways to improve the quality of care and
quality of life for patients as demonstrated by measuring objective
parameters and the medical response to those standardized measurements.
The evaluation of the project will be based on data reported to us by
the practitioners and the use of our administrative claims data to
examine Emergency Department visits and inpatient hospitalizations.
We anticipate that further information regarding this demonstration
project will be forthcoming after publication of this final rule.
Comment: Commenters pointed out that, under the MMA, we added
physician work RVUs to specified drug administration codes equivalent
to a level 1 established office visit. They indicated that we should
also have increased the practice expense inputs for the same drug
administration codes to account for the practice expense inputs
associated with a level 1 established office visit.
Response: Section 1848(c)(2)(H)(iii) of the Act (as added by
303(a)(1)(B) of the MMA) specified that we increase the work RVUs for
drug administration services equal to the work RVUs for a level 1
established patient office visit (CPT code 99211). As indicated in the
January 7, 2004 Federal Register (69 FR 1093), we established work RVUs
of 0.17 for specific CPT codes that met the statutory definition of
``drug administration services.''
However, the legislation did not direct us to also increase the
practice expense RVUs of the drug administration codes to include the
clinical staff time associated with a level 1 office visit. The
practice expense inputs of the existing CPT codes for drug
administration were refined in 2002. We believe the recommendations
from the PEAC included the typical clinical staff time associated with
each drug administration service.
The CPT Editorial Panel approved new and revised codes for drug
administration services for 2005. Depending upon the service, the RUC
is recommending work RVUs for the new drug administration codes that
may equal, exceed or be less than 0.17. Although section
1848(c)(2)(H)(iii) of the Act requires that the work RVUs for drug
administration services shall equal those of a level 1 office medical
visit, new subparagraph (J) requires the Secretary to ``promptly
evaluate existing drug administration codes for physicians' services''.
The statute further indicates that the ``Secretary shall use existing
processes for the consideration of coding changes and * * * in
establishing relative values * * * ''
Because we typically use the CPT and RUC processes to establish
codes and relative values, we believe the statute gives us authority to
establish work RVUs at a level other than those of a level 1
established patient office visit. Therefore, for 2005, we are accepting
the RUC recommendations for the interim G-codes even though they result
in work RVUs that are different than 0.17.
Comment: Several organizations and physicians commented that the
Medicare payments for the chemotherapy codes do not include payment for
many services provided by an oncology practice. These services include
support services such as nutrition counseling, social work services,
case management, psychosocial counseling, and educational services
provided by an oncology nurse to the patient.
Response: Under certain circumstances, Medicare does make explicit
payment for clinical social worker and medical nutrition therapy
services. Medicare can pay separately for the services of clinical
psychologists (CPs), clinical social workers (CSWs), and nurse
practitioners (NPs), clinical nurse specialists (CNS) and physician
assistants (PAs).
CPs can bill directly for services and supplies they are legally
authorized by the State to perform that could also be furnished by a
physician or incident to a physician's service. Payment for CP services
is made at 100 percent of the physician fee schedule for services they
are authorized to provide that are comparable to those of a physician.
CSWs can furnish services for the diagnosis and treatment of mental
illnesses that they are legally authorized by the State to provide.
Payment for CSW services is made at 75 percent of the CP fee schedule,
which is 100 percent of the physician fee schedule.
NPs, CNSs and PAs can bill for mental health services consistent
with their authority under law to furnish physician services. They may
also bill for services furnished incident to their own professional
services that fall under the State scopes of practice. Payment for
these services is made at 85 percent of the physician fee schedule.
Medicare will pay for medical nutrition therapy services provided by a
registered dietitian or nutrition professional for a beneficiary with
diabetes or renal disease. Based on a comment on our August 20, 2003
proposed rule (68 FR 50428), we understand that social worker services
could involve different tasks (``helping patients with their health
insurance, filling and refilling prescriptions'') than those that are
explicitly paid for by Medicare. However, we believe Medicare does pay
for these services indirectly through the practice expense RVUs for
drug administration services. If these services are typically provided
to cancer patients, we believe the RUC could consider whether it is
possible for resource inputs for these types of staff to be
incorporated into the new drug administration codes. We also believe
that the RUC could consider whether these types of staff activities are
unique to physicians who provide drug administration or if they apply
to other physicians' services as well.
Comment: Current CPT code 96412 (infusion techniques, one to 8
hours, each additional hour) is an add-on code, billed in addition to
the primary code, 96410 (the first hour of chemotherapy). There is no
national coding policy that explains how this add-on code is to be
reported if less than a full hour of chemotherapy infusion is provided.
A commenter pointed out that the Medicare carriers have different
policies for reporting this service. Some carriers require the infusion
to extend at least 16 minutes into the subsequent hour before
[[Page 66310]]
an add-on code can be billed, and others impose a 31 minute
requirement. The commenter asked that we establish a uniform policy for
the carriers to follow.
Response: The CPT Editorial Panel addressed this issue as part of
its review of the drug administration codes. Effective in 2006, the
add-on code is to be used for ``infusion intervals of greater than
thirty minutes beyond one hour increments''. We are adopting this
policy for chemotherapy administration codes furnished on or after
January 1, 2005.
Comment: The nonchemotherapy subcutaneous injection is currently
reported and paid under CPT code 90782, while a chemotherapy
subcutaneous injection is currently reported under CPT code 96400. Some
commenters recommended that we permit billing for nonchemotherapy
injections for cancer patients to be made under CPT code 96400. They
believe this code more appropriately reflects the practice expenses
related to supportive care for chemotherapy.
Response: The CPT Editorial Panel explicitly addressed this issue
by creating separate drug administration codes for hydration,
nonchemotherapy infusions and injections, and chemotherapy infusions
and injections. It further expanded the definition of chemotherapy to
include those drugs where the resource costs associated with the drug
administration are similar to those administered as anti-neoplastics.
Other drugs administered in support of chemotherapy, such as anti-
emetics and drugs to prevent anemia, are billed using the injection
code, G0351, which replaces CPT code 90782 (consistent with the CPT
recommendations). We have reviewed the practice expense inputs for this
code from the RUC and accepted their recommendation.
Comment: Some commenters asked that complex non-oncology infusions,
such as Remicade, be paid at the same level as chemotherapy infusions.
They indicate that these nonchemotherapy infusions have similar
complexity and resource use as chemotherapy infusions.
Response: The CPT recommendations address this issue. The codes for
chemotherapy administration are for reporting the administration of
non-radionuclide, anti-neoplastic drugs, anti-neoplastic agents
provided for treatment of noncancer diagnoses or substances such as
monoclonal antibody agents, and other biologic response modifiers.
Comment: Some commenters inquired about the recognition of a severe
drug reaction management code that could be used during the
administration of high complexity biologic medications and less
frequently during other drug administrations or chemotherapy services.
While the CPT Drug Administration Workgroup supported the creation of a
severe drug reaction management code, the CPT Editorial Panel did not
approve this code.
Response: We recognize that considerable physician effort may be
required to monitor and attend to patients who develop significant
adverse reactions to chemotherapy drugs, or otherwise have
complications in the course of chemotherapy treatment. Physicians may
not be aware that these services can be billed using existing CPT
codes. The following scenarios are examples where existing codes may be
used in addition to the routine billing for the physician's care of a
cancer patient:
Bill for the Physician Visit. If a patient has a
significant adverse reaction to drugs during a chemotherapy session and
the physician intervenes, the physician could bill for a visit in
addition to the chemotherapy administration services.
Bill for the Higher-Level Physician Visit. If the patient
had already seen the physician prior to a chemotherapy session for a
problem that is unrelated to the supervision of the administration of
chemotherapy drugs, the physician may bill a visit for a significant
adverse drug reaction. The total time, resources, and complexity of the
physician's interaction with the patient may justify a higher level of
visit service.
Bill for a Prolonged Service. If the patient had a
physician visit prior to the chemotherapy session and experienced a
significant adverse reaction to drugs on the same day, the physician
can bill a prolonged service code in addition to the physician visit.
There are several code combinations to use depending on the number of
minutes involved. The physician must have a face-to-face encounter with
the patient and must spend at least 30 minutes beyond the threshold or
typical time for that level of visit for the physician to bill for the
prolonged service code.
Bill for Critical Care Service. If the patient had a
physician visit prior to the chemotherapy session and experienced a
life-threatening adverse reaction to the drugs, the physician could
bill for a critical care service in addition to the visit if the
physician's work involves at least 30 minutes of direct face-to-face
involvement managing the patient's life-threatening condition. Examples
of life-threatening conditions are: central nervous failure,
circulatory failure, shock, renal, hepatic, metabolic, and/or
respiratory failure.
These instructions are published here for informational purposes,
and we anticipate that we will issue further instructions regarding the
appropriate use of these G-codes including clarifications,
interpretations and other modifications to the following guidance as
part of any instructions issued through a subregulatory process.
Comment: The American Urological Association (AUA) commented in
response to the January 7, 2004 interim final rule to ask us to include
the following codes in the MMA-mandated evaluation of existing drug
administration codes for physicians' services to ensure accurate
reporting and billing for such services: CPT codes 11980, 11981, 11982,
11983, 51700, 51720, 54200, 54231, and 54235. The AUA asked that we
consider applying the transitional adjustment payment to these codes
for 2005.
Response: We presented these codes to the CPT Drug Administration
Workgroup. After subsequent discussion with representatives of the AUA,
the AUA withdrew these codes from consideration by the workgroup.
These codes are not subject to the ``transitional adjustment
payment provision'' because they are not included in the definition of
``drug administration codes.''
Comment: Ophthalmologists frequently perform the procedure
photodynamic therapy (CPT code 67221 and 67225) by infusing the drug
Visudyne. While separate payment is allowed for the drug, the infusion
is considered an integral part of the photodynamic therapy code. Thus,
the physician is not allowed to bill a separate code for the infusion
of the drug.
According to one commenter, Visudyne is also a drug used in cancer
chemotherapy. The commenter pointed out that when Visudyne is provided
for photodynamic therapy, ophthalmologists incur drug administration
costs similar to oncologists who use infused drugs.
The AAO asked why we did not include CPT codes 67221 and 67225
among the drug administration codes that benefited under the MMA.
Response: In this instance, the infusion of the drug is an integral
part of the surgical procedure and it was valued by the RUC and CMS
that way. The code of which it is a part is not considered a drug
administration code under section 303 of the MMA.
3. Blood Clotting Factor
For clotting factors furnished on or after January 1, 2005, we
proposed to establish a separate payment of $0.05
[[Page 66311]]
per unit to hemophilia treatment centers, homecare companies and other
suppliers for the items and services associated with the furnishing of
blood clotting factor. Section 303(e)(1) of the MMA requires the
Secretary, after review of the January 2003 report to the Congress by
the Comptroller General of the United States, to establish a furnishing
fee for the items and services associated with the furnishing of blood
clotting factor.
Based on a review of the Government Accountability Office (GAO)
report and data received from various clotting factor providers, we
proposed a furnishing fee in order to cover the administrative costs
associated with supplying the clotting factor. As outlined in the MMA,
any separate payment amount established may include the mixing and
delivery of factors, including special inventory management and storage
requirements, as well as ancillary supplies and patient training
necessary for the self-administration of these factors. The MMA states
that, in determining the separate payment, the total amount of payments
and these separate payments must not exceed the total amount of
payments that would have been made for the factors if the amendments in
section 303 of the MMA had not been enacted.
As indicated in the GAO report, ``[w]hen Medicare's payment for
clotting factor more closely reflects acquisition costs, we recommend
that the Administrator establish a separate payment for providers based
on the costs of delivering clotting factor to Medicare beneficiaries.''
Effective upon implementation of the ASP-based payment rates, payment
for blood clotting factors will more closely reflect acquisition costs,
since payment will be based on the average sales price as reported by
drug manufacturers plus 6 percent.
Therefore, we stated in the August 5, 2004 proposed rule that in
the absence of additional data we believe that a furnishing fee of
$0.05 per unit for the cost of delivering clotting factor is an
appropriate amount. However, we also sought updated data and comments
on the GAO report, as well as information on the fixed and variable
costs of furnishing clotting factor. We recognized that there may be
alternatives to a fee, which varies entirely based on the number of
units of clotting factor furnished. We indicated we would closely
examine all data and information submitted in order to make a final
determination with respect to the appropriateness of the $0.05 per unit
amount.
We received comments from various sources including, but not
limited to, hemophilia treatment centers, hemophilia coalitions, and
other suppliers of clotting factors regarding our request for
additional data and information on the appropriateness of our proposed
fee. The comments and responses are provided below.
Comment: Many commenters recommended that we incorporate cost
information received from homecare providers and any updated cost data
from hemophilia treatment centers in determining the separate
furnishing fee payment amount for 2005. The commenters cited an
industry-sponsored survey of full-service hemophilia homecare companies
that recommended a furnishing fee of $0.20 per unit. This survey
collected CY 2003 data from three hemophilia homecare suppliers that
the commenter indicated supplied 42 percent of all Medicare hemophilia
patients. Commenters also stated that the GAO report was inadequate to
serve as the basis for determining the separate payment for clinically
appropriate items and services related to furnishing blood clotting
factor. They questioned the accuracy of the recommended payment range
in the GAO report, given what they viewed as an insufficient sample
size; that is, the GAO report received data from only 4 hemophilia
treatment centers and lacked any cost data from national or regional
full-service hemophilia homecare providers. These commenters also
indicated that the GAO survey may have included homecare companies that
purchase clotting factor at a lower price through the Public Health
Service's 340B program. More information on the 340B program is
available on the Health Resources and Services Administration's Web
site at http://bphc.hrsa.gov/opa/howto.htm. The commenters also stated
that the GAO report focused solely on estimating providers' blood
clotting factor delivery costs, which the GAO defined as inventory
management, storage, shipping, and the provision of ancillary supplies.
According to the commenters, the MMA directed us to establish a
separate payment for items and services related to the furnishing of
blood clotting factor that takes into consideration a wider range of
items and services than the delivery costs addressed in the GAO report,
for example patient education.
Response: We agree with the commenters that full-service hemophilia
homecare companies provide services that may be of benefit to Medicare
beneficiaries with hemophilia, such as disease and patient management
activities. However, we do not believe that the scope of the furnishing
fee includes these services. As noted above, Section 303(e) specifies
the items and services that may be taken into consideration in setting
the furnishing fee. Disease and patient management activities are not
included in the items and services specified in Section 303(e).
However, these activities may be more appropriately addressed through a
future phase of the new Medicare Chronic Care Improvement Program.
The new Medicare Chronic Care Improvement Program is an important
component of the MMA and demonstrates a commitment to improving and
strengthening the traditional fee-for-service Medicare program. This
program is the first large-scale chronic care improvement initiative
under the Medicare fee-for-service program. We will select
organizations that will offer self-care guidance and support to
chronically ill beneficiaries. These organizations will help
beneficiaries manage their health and adhere to their physicians' plans
of care, and help ensure that they seek or obtain medical care that
they need to reduce their health risks. More information regarding this
program is available on the CMS Web site at http://www.cms.hhs.gov/medicarereform/ccip/.
With regard to the other costs identified in the comments and in
the industry-sponsored survey, we also do not believe the scope of a
furnishing fee includes costs associated with sales and marketing. We
do not believe it is appropriate to build an explicit profit margin
into the furnishing fee, but rather have the margin associated with the
furnishing fee result from efficient furnishing of clotting factor. We
agree with the commenters that the GAO report did not include amounts
for education and that these are appropriate for the furnishing fee.
Therefore, after removing the costs associated with sales and
marketing, an explicit profit margin, and patient management, the
resulting figure from the homecare survey is $0.14 per unit of clotting
factor. We are establishing the furnishing fee for 2004 at $0.14 per
unit of clotting factor. For years after 2005, the MMA specifies that
the furnishing fee for clotting factor must be updated by the
percentage increase in the consumer price index for medical care for
the 12-month period ending with June of the previous year.
Comment: One commenter recommended that the beneficiary's 20
percent coinsurance not be applicable to this separate payment. The
commenter indicated that the additional financial
[[Page 66312]]
burden would limit many beneficiaries' access to this lifesaving
product.
Response: Under provisions designed to protect the Medicare program
from fraud and abuse, a broad waiver of beneficiary cost sharing of the
type the commenter recommends would not be permitted. However, we make
no statement regarding the applicability of existing statutory and
regulatory provisions that may allow for the waiver of cost sharing in
certain cases.
4. Supplying Fee
Section 1842(o)(6) of the Social Security Act requires the
Secretary to pay a supplying fee (less applicable deductible and
coinsurance) to pharmacies for immunosuppressive drugs described in
section 1861(s)(2)(J) of the Act, oral anticancer chemotherapeutic
drugs described in section 1861(s)(2)(Q) of the Act, and oral anti-
emetic drugs used as part of an anticancer chemotherapeutic regimen
described in section 1861(s)(2)(T) of the Act, as determined
appropriate by the Secretary. In the interim final rule published on
January 7, 2004 (69 FR 1084), we considered this fee to be bundled into
the current payment for these drugs for 2004 and did not establish a
separately billable supplying fee.
Effective January 1, 2005, we proposed to establish a separately
billable supplying fee of $10 per prescription for immunosuppressive
drugs, oral anti-cancer chemotherapeutic drugs and oral anti-emetic
drugs. We based this proposed fee on information provided by retail
chain pharmacies on the costs of supplying these drugs to non-Medicare
patients combined with steps to reduce the administrative burden
associated with billing Medicare.
We also sought data and information on the additional services
pharmacies provide to Medicare beneficiaries, the extent to which oral
drugs can be furnished without these additional services and the extent
to which such services are covered under Medicare. Additionally, we
requested comments concerning whether the supplying fee should be
somewhat higher during the initial month following a Medicare
beneficiary's transplant to the extent that additional resources are
required for example, due to more frequent changes in prescriptions for
immunosuppressive drugs.
Comment: Several commenters stated that they were not in a position
to determine whether the proposed $10.00 supplying fee was adequate
since they did not know the actual 2005 payment rates for Part B drugs.
These commenters indicated that the supplying fee needed to cover
return on investment, the costs of supplying the drugs, and make up for
any differences between the product costs and the ASP based payment for
the drug. Some commenters indicated that aside from the adequacy of the
ASP-based payment for the drug, a $10.00 supplying fee appeared to be
too low. These commenters indicated that the average cost to a retail
pharmacy to dispense a non-Medicaid third party or cash paying
prescription ranges anywhere from $7.50-$8.00. The commenters indicated
that Medicare should pay at least $2.00-$2.50 more per prescription
since costs associated with supplying Medicare prescriptions are
higher.
We received a comment from a large retail pharmacy indicating that
a supplying fee of $25 would be adequate to cover the higher costs of
dispensing Medicare Part B oral drugs.
We received comments from specialty immunosuppressive pharmacies
that included information from a recent survey of their supplying
costs. The survey indicated that the cost for specialty pharmacies to
dispense Medicare Part B immunosuppressants is $35.48 per prescription.
The specialty immunosuppressive pharmacies indicated that they provide
services not typically provided by retail chain drug stores or large
mail-order pharmacy benefit management companies. These services
include direct patient care through pro-active pharmacist contact,
expeditious processing and turnaround of medication orders, direct
billing of Medicare and coordination of benefits on behalf of
transplant patients to reduce the costs to the patients, and
maintaining expensive immunosuppressant in stock to ensure timely
receipt when needed by beneficiaries. These pharmacies also indicated
that the retail chains typically do not supply immunosuppressive drugs
or file Medicare claims.
Several commenters indicated that the lack of on-line adjudication
for Medicare claims was one of the major drivers, among other reasons,
for the additional costs of supplying Medicare prescription.
Response: We agree that the cost of supplying Medicare Part B oral
drugs is higher than many other payers because of the lack of on-line
adjudication for Medicare Part B oral drug claims. Due to operational
issues, we do not anticipate the establishment of an on-line
adjudication system in the near future. Accordingly, we believe it is
appropriate to establish a supplying fee higher than the fees paid by
some other payers with on-line adjudication. We note that many other
payers with on-line adjudication have fees in the range of $5-$10 per
prescription. We note that this is consistent with the approximately $8
cost for non-Medicaid dispensing stated by some commenters and
described earlier. Other than administrative costs associated with
billing Medicare Part B for oral drugs, we do not agree with commenters
that the supplying fee for these drugs should exceed the dispensing
fees of other payers because we do not believe there are other
significant differences between supplying Medicare Part B and other
oral drugs. We also do not agree that the supplying fee should include
product costs. Product costs are paid through the ASP + 6 percent drug
payment system. For the additional burden associated with billing
Medicare Part B for oral drugs, we note the commenters who suggested an
additional fee of approximately $2 for Medicare billing costs. Added to
the $8 non-Medicaid fee described above, this would result in a
supplying fee of approximately $10. We also note the survey of the
specialty immunosuppressive pharmacies that indicated Medicare claims
processing costs of approximately $8. This same survey also indicated
total personnel costs of approximately $9, a portion of which we assume
is attributable to the additional work associated with Medicare
billings because the comments indicated Medicare billing was labor-
intensive. Using the $5 to $10 figures for payers with on-line
adjudication described above, the specialty pharmacy data on Medicare
claims processing costs and personnel costs, we developed a range of
possible supplying fees based on the specialty pharmacy data. Depending
upon the portion of the personnel costs associated with Medicare
billings, this would result in a supplying fee between a minimum of $13
(= $5 + $8) and a maximum of $27 (= $10 + $8 + $9). The comment of the
large chain pharmacy recommending a $25 supplying fee indicated that
this amount would be adequate to cover the costs of supplying Medicare
Part B drugs including the additional costs of processing Medicare
claims; however, this amount included a margin for profit. We do not
believe it is appropriate to build an explicit profit margin into the
supplying fee, but rather have the margin associated with the supplying
fee result from efficient supplying of these drugs. Although the profit
margin included in the $25 was not explicitly stated in the comment, if
we assume a 5 percent margin, then a supplying fee of approximately $24
would cover the large chain pharmacy's
[[Page 66313]]
costs of supplying Medicare Part B drugs. We are not indicating that 5
percent is an appropriate margin.
There was variability in the submitted comments with respect to an
appropriate supplying fee. On the low end, analysis of the submitted
comments would indicate a supplying fee of $10. On the high end, the
analysis would indicate a supplying fee of $27. Given the variability
in the values and assumptions included in various calculations, we do
not think it is appropriate to simply take the rounded midpoint of this
range, $19, as the supplying fee. However, we do not think it
appropriate to take the maximum amount of this range, $27, given that
it is unlikely that all of the personnel costs indicated in the
specialty pharmacy survey are related to the costs of billing for oral
Medicare Part B drugs. The amount in the comment from the large chain
pharmacy, after adjusting for a possible profit margin, or $24, is
consistent with our belief that not all of the additional personnel
costs identified in the specialty pharmacy survey are related to the
costs of billing for oral Medicare Part B drugs. We are therefore
establishing a per prescription supplying fee of $24 as the value
consistent with both the large retail pharmacy comment (after making an
adjustment for built-in profit margins) and the higher end of the broad
range of the specialty pharmacy survey. Although we believe that a $24
supplying fee coupled with the ASP-based drug payment will not result
in any access problems for Medicare beneficiaries, we will monitor
access as we implement the new ASP-based payment system.
Comment: Some commenters recommended that we update the supplying
fee annually. Some commenters indicated this fee should be updated by
the average annual increase in the costs of pharmacies supplying these
drugs to Medicare beneficiaries (costs such as rent, utilities and
salaries), but no less than the increase in the medical care inflation
index for the most recent twelve months for which it can be calculated
before the next calendar year.
Response: We will study the issue of appropriate future increases
for the supplying fee and proceed, as necessary, through notice and
comment rulemaking.
Comment: A specialty organization suggested that we develop a
sliding supplying fee, which would be calculated as a percentage of the
cost that the pharmacy incurred in acquiring a particular drug.
Response: We do not agree that the supplying fee should vary by
product costs. Product costs are paid through the ASP-based drug
payment system.
Comment: Several commenters agreed with our suggestion to increase
the supplying fee in the first month following a transplant, but
recommended that we extend this increase to at least the first 3 months
following the transplant. One commenter suggested that extra resources
are associated with frequent changes in prescriptions during the
initial month following a beneficiary's organ transplant. One commenter
recommended a fee of $50 for an initial prescription fill. However, one
commenter advocated against a supplying fee that distinguished between
new and refill prescriptions stating that it would be impractical, of
questionable benefit and would discourage long-term pharmacy-patient
relationships as pharmacy providers would only have an incentive to
serve patients in the short term.
Response: We agree that additional costs are most likely to occur
nearer the time when the beneficiary has a transplant. In order to
recognize these costs, we are establishing a higher supplying fee of
$50 for the supplying of the initial oral immunosuppressive
prescription in the first month after a beneficiary has a transplant
because the costs of supplying immunosuppressives are likely to be
higher immediately following a transplant, when the practitioner is
adjusting the dose of immunosuppressive drugs. With regard to the
comment opposing higher supplying fees for new patients regardless of
their transplant date, we agree with the commenter that it would result
in inappropriate incentives and are not implementing any such fee.
Comment: Commenters recommended that the supplying fee should
account for the different prices paid by pharmacies and physicians,
recognizing that these are separate classes of trade that may not have
access to comparable pricing. Thus, we should increase the supplying
fee associated with providing and overseeing the use of oral anti-
cancer drugs.
Response: We do not agree that the supplying fee should vary by
product costs. Product costs are paid through the ASP based drug
payment system.
Comment: Commenters recommended that we extend the supplying fee to
physicians that directly supply covered oral anti-cancer,
immunosuppressive and oral anti-emetic drugs to patients, as well as
create a dose management and compliance fee for physicians that
prescribe oral chemotherapy products. These commenters state that we
could use the premise that the MMA does not provide a definition of the
word ``pharmacy'' and we could permit payment of a supplying fee to
include a physician acting in the capacity of a pharmacist.
Alternatively, commenters suggested that we use its inherent
reasonableness authority to extend the supplying fee to physicians.
Response: Given our current understanding of Congressional intent,
we do not believe it would be appropriate to pay a supplying fee to
physicians. Moreover, we do not have sufficient data to determine
whether our inherent reasonableness authority would apply in this
instance. However, we will study these issues further.
5. Billing Requirements
In the proposed rule, we proposed the following changes to certain
billing requirements and clarified policy for other billing
requirements in an effort to reduce a pharmacy's costs of supplying
covered immunosuppressive and oral chemotherapy drugs to Medicare
beneficiaries:
Original signed order. We clarified Medicare's policy
regarding the necessity of an original signed order before the filling
of a prescription. According to the Medicare Program Integrity Manual
(section 5.1 of Chapter 5), which addresses the ordering requirement
for durable medical equipment, prosthetics, orthotics and supplies
(DMEPOS), including drugs, most DMEPOS items can be dispensed based on
a verbal order from a physician. A written order must be obtained
before submitting a claim, but that written order may be faxed,
photocopied, electronic, or pen and ink. The order for the drug must
specify the name of the drug, the concentration (if applicable), the
dosage, and the frequency of administration. The clarification of this
requirement should reduce a pharmacy's costs of supplying covered
immunosuppressive and oral drugs to Medicare beneficiaries to the
extent that pharmacies are currently applying an original signed
prescription requirement.
Comment: Commenters recommended that a prescription be filled and
billed based solely on a verbal order from a physician and an actual
signed written prescription should not be necessary before billing.
Response: The policy that allows dispensing based on a verbal order
but requires a written order for billing applies to all DMEPOS items.
This policy balances fraud and abuse concerns with prompt dispensing of
DMEPOS items to beneficiaries. We
[[Page 66314]]
point out that the written order from the physician can be faxed,
photocopied, electronic, or pen and ink. We currently allow pharmacies
to accept electronic prescriptions from physicians.
Assignment of Benefits Form. We proposed to eliminate use
of the Assignment of Benefits form for Part B items and services,
including drugs, where Medicare payment can only be made on an assigned
basis. For Part B covered oral drugs, this would be a means of reducing
a pharmacy's costs of supplying these drugs to Medicare beneficiaries.
Currently, pharmacies must obtain a completed Assignment of Benefits
form in order to receive payment from Medicare. This requirement
increases a pharmacy's cost of supplying covered drugs to Medicare
beneficiaries, as other payers do not impose this requirement. Thus, we
do not believe that it is necessary for an assignment of benefits form
to be filled out for drugs covered under Part B, since payment for them
can only be made on an assignment-related basis.
Comment: Some commenters suggested that the Assignment of Benefits
form be eliminated for diabetic supplies dispensed by pharmacy
suppliers.
Response: Our proposal to eliminate the Assignment of Benefits form
applied to services where Medicare payment can only be made on an
assigned basis. That is not the case with diabetic supplies. Thus, we
are not eliminating the AOB form for diabetic supplies.
DMERC Information Form (DIF). The DIF is a form created by
the DMERC Medical Directors that contains information regarding the
dates of the beneficiary's transplant and other diagnosis information.
This form is a one-time requirement that pharmacies must complete in
order to receive payment. Since section 1861(s)(2)(J) of the Act no
longer imposes limits on the period of time for coverage of
immunosuppressive drugs, we believe that the information on transplant
diagnosis can be captured through other means (for example, diagnosis
codes on the Part B claim form).
Comment: Several commenters applauded our efforts to eliminate use
of the DIF in an effort to reduce the cost that the billing
requirements imposed. These commenters asked that we ensure that this
requirement is applied uniformly by all the DMERCs.
Response: We appreciate the support regarding the elimination of
the DIF form. Action is being taken to eliminate the DIF form,
including accommodating systems issues and providing for notifications.
We anticipate resolution of issues to occur soon and elimination would
occur next year.
Other Billing Issues. We also received other comments
regarding other billing issues related to the supplying of
immunosuppressive, oral anti-cancer, and oral anti-emetic drugs.
Comment: Commenters suggested that we allow physicians to bill the
carrier when oral drugs are provided directly by the physician in his
office rather than having the physician bill the DMERC for the oral
anti-cancer drug. Others stated that we should allow for billing for
pharmaceutical products to be conducted on current electronic
platforms, because ``batch billing'' creates operational and patient
care problems, and adds significant participation costs. Commenters
also stated that we should eliminate the requirement for a diagnosis
code to be present on the prescription; while, at the same time, adopt
the usage of the physician's DEA number instead of the UPIN number when
submitting claims.
Response: We thank the commenters for identifying these issues. We
plan to examine these aspects of billing.
6. Shipping Time Frame
In the proposed rule, we highlighted the fact that the guidelines
regarding the time frame for subsequent deliveries of refills of DMEPOS
products had been revised. Effective February 2, 2004, the shipping of
refills of DMEPOS products may occur ``approximately'' on the 25th day
of the month in the case of a month's supply. In the proposed rule, we
emphasized the word ``approximately''; while we indicated that normal
ground service shipping would allow delivery in 5 days, if there were
circumstances where ground service could not occur in 5 days, the
guideline would still be met if the shipment occurs in 6 or 7 days.
This change should eliminate the need for suppliers to utilize
overnight shipping methods and would permit the shipping of drugs via
less expensive ground service.
F. Section 952--Revision to Reassignment Provisions
As discussed in the August 5, 2004 proposed rule, section
1842(b)(6)(A)(ii) of the Act, as amended by section 952 of the MMA,
allows, in many circumstances, a physician or NPP to reassign payment
for Medicare-covered services, regardless of the site of service,
providing there is a contractual arrangement between the physician or
NPP and the entity through which the entity submits the bill for those
services. Thus, the services may be provided on or off the premises of
the entity receiving the reassigned payments. The MMA Conference
Agreement states that entities that retain independent contractors may
enroll in the Medicare program. The expanded exception created by
section 952 of the MMA applies to those situations when an entity seeks
to obtain the medical services of a physician or NPP.
Section 952 of the MMA states that reassignment is permissible if
the contractual arrangement between the entity that submits the bill
for the service and the physician or NPP who performs the service meets
the program integrity and other safeguards as the Secretary may
determine to be appropriate. The Conference Agreement supports
appropriate program integrity efforts for entities with independent
contractors that bill the Medicare program, including joint and several
liability (that is, both the entity accepting reassignment and the
physician or NPP providing a service are both liable for any Medicare
overpayments). The Conference Agreement also recommends that physicians
or NPPs have unrestricted access to the billings submitted on their
behalf by entities with which they contract. We incorporated these
recommended safeguards in a change to the Medicare Manual, implementing
section 952 of the MMA that was published on February 27, 2004. In the
August 5, 2004 rule, we proposed to revise Sec. 424.71 and Sec.
424.80 to reflect these safeguards, as well as the expanded exception
established by section 952 of the MMA.
Section 952 of the MMA revises only the statutory reassignment
exceptions relevant to services provided in facilities and clinics
(section 1842(b)(6)(A)(ii) of the Act). Section 952 of the MMA does not
alter an individual or entity's obligations under any other applicable
Medicare statutes or regulations governing billing or claims
submission.
In addition, physician group practices should be mindful that
compliance with the physicians' services exception and the in-office
ancillary services exception to the physician self-referral prohibition
in section 1877 of the Act requires that a physician or NPP who is
engaged by a group practice as an independent contractor may provide
``designated health services'' to the group practice's patients only in
the group's facilities. See the definition of physician in the group at
42 CFR 411.351.
We also cautioned that parties must be mindful that contractual
arrangements involving reassignment may not be used to camouflage
inappropriate fee-splitting arrangements
[[Page 66315]]
or payments for referrals. In the August 5, 2004 proposed rule, we
solicited comments on potential program vulnerabilities and on possible
additional program integrity safeguards to guard against those
vulnerabilities.
Comment: We received positive comments for the proposed changes to
the reassignment rules from two physician associations and one
association representing non-physician practitioners.
Response: We are pleased to receive positive feedback to the
changes to the reassignment rules. We believe these changes balance the
need to respond to the changing business arrangements in the delivery
of health care services with the need to protect the Medicare trust
funds from fraudulent and abusive billing practices.
Comment: An association representing emergency medicine physicians
and numerous members of that association commented that requiring
independent contractor physicians to have unrestricted access to the
billings submitted on their behalf is not sufficient to ensure such
access. The commenters requested that we revise our regulations to
require the entity submitting the bills to provide duplicates of the
Medicare remittance notices (which indicate the services billed and the
amounts paid for those services) to the independent contractor
physicians. Some of the commenters requested that we require
independent contractor physicians to receive itemized monthly reports
of the claims submitted and remittances received on their behalf.
Response: We believe that requiring independent contractors to have
unrestricted access to the billings submitted on their behalf is
sufficient to satisfy the independent contractors' need to review the
claims information.
We recognize that some independent contractors may not wish to
receive copies of all bills submitted on their behalf. It would place
an unnecessary burden on entities if we require them to furnish
duplicate remittance notices to independent contractors on a routine
basis. Similarly, it would place a significant burden on our claims
processing systems if we were obligated to provide duplicate remittance
notices to those who have reassigned their payments. We note that the
method and frequency of obtaining access to billing records is an issue
that the independent contractor and the entity to which the independent
contractor is reassigning payments can resolve in their written
contract.
Comment: A commenter asked whether or not the new reassignment
exception (which essentially expanded or revised the previous
exceptions pertaining to independent contractors), established by
section 952 of the MMA, is available when one entity contracts with a
second entity, which in turn contracts with a physician or non-
physician practitioner to furnish services for the first entity.
Response: We refer to this situation as an indirect contractual
arrangement between the independent contractor furnishing the service
and the entity doing the billing and receiving payment (excluding
billing agents). Thus, the reassignment is between the individual
furnishing the service and the entity receiving the reassigned
benefits. Indirect contractual arrangements were permissible prior to
passage of section 952 of the MMA and remain permissible. The CMS-855-R
enrollment form would need to be completed by the entity receiving the
reassigned benefits and the person furnishing the service. In
accordance with section 952 of the MMA, the contractual arrangement and
any program integrity safeguard requirements deemed appropriate by the
Secretary are between the independent contractor and the entity
receiving the reassigned payments, with the program integrity
safeguards applying to both parties. If the parties involved also wish
to include the intermediary entity in a similar contract, and apply
standards identical or similar to the program integrity safeguards to
their arrangement, they have that option; but, it is not required or
necessary to comply with the exception to the reassignment prohibition
for contractual arrangements.
Comment: Several members of the Congress urged us not to delay the
enrollment process of providers or suppliers while implementing section
952 of the MMA.
Response: We do not expect any delays in provider or supplier
enrollment to result from implementing the reassignment provisions of
this regulation. We are sensitive to the need for an efficient and
timely enrollment process. If the new reassignment exception results in
the submission of a particularly high volume of claims, or if a
Medicare contractor has to process a large number of new enrollment
applications, it is possible that delays may occur in some cases. A
provider or supplier whose enrollment was delayed must contact the
appropriate Medicare contractor's provider or supplier enrollment
office to discuss the reasons for the delay.
Comment: A trade association of physician specialists asked that we
clarify our definitions of onsite and off-site services. This trade
association also requested that we further describe the potential
program vulnerabilities that the revised Medicare reassignment
exception might create.
Response: We consider onsite services to be services of an
independent contractor that are performed in space owned or leased by
the entity billing and receiving the reassigned payments. We consider
offsite services to be services of an independent contractor that are
performed in space that is not owned or leased by the entity billing
and receiving the reassigned payments, that is, services performed off
the premises.
The Congress originally passed the prohibition on reassignment
provision due to experience with fraudulent and abusive billing
practices. As we discussed in the preamble to the August 5, 2004
proposed rule, the new reassignment exception for contractual
arrangements will potentially permit myriad relationships and financial
arrangements. Some of these relationships may have the potential to
increase fraudulent and abusive billing practices that the reassignment
rules were designed to prevent. We also stated in the proposed rule
that the new reassignment exception does not alter an individual's or
entity's obligations under existing Medicare statutes and regulations
(for example, the physician self-referral prohibition, the anti-
kickback statute, purchased diagnostic test rules, incident to rules,
etc.).
Comment: Several commenters expressed concern over the recent
growth of so-called pod, salon, turnkey, mini-mall, or condo labs,
especially since section 952 of the MMA appears to liberalize the
Medicare reassignment rules.
As we understand the situation, some entities have created a
building or a floor of a building that contains a number of cubicles,
each of which is equipped with a microscope and other supplies that
enable a pathologist to go to a particular cubicle or pod to analyze
any tissue sample that is submitted by the group practice that rents
pod space on a full-time basis. Apparently, some of the owners of these
anatomical laboratories assert that each pod is a centralized location
for a laboratory that is owned by a group practice. Other owners assert
that each pod serves as an offsite office of a pathologist who works
for a group practice as an independent contractor.
These entities market their services to specialists in certain
disciplines, such as gastroenterology, urology, and dermatology, which
rely on a high
[[Page 66316]]
volume of anatomic pathology services. The commenters stated that these
lab arrangements are subject to excess, waste, and abuse, including,
but not limited to: (a) Generation of medically unnecessary biopsies;
(b) kickbacks; (c) fee-splitting; and, (d) referrals that would
otherwise be prohibited under the physician self-referral statute.
The commenters agree with us that safeguards are necessary to
prevent the increased incidence of fraudulent and abusive billing
practices resulting from the new reassignment exception for contractual
arrangements. To reach the goal of closing any loophole for excess,
waste, and abuse opened by the new independent contractor reassignment
exception, the commenters provided several suggestions. One commenter
recommends that we add language to proposed Sec. 424.80(d) that would
prohibit a physician from making a reassignment to another physician,
under the independent contractor exception, if the physicians do not
practice in substantially the same medical specialty. This limitation
would not apply if the entity accepting the assignment is a bona fide
multi-specialty physician practice, meaning that it employs (on a W-2
basis) physicians who regularly practice in two or more specialties of
medicine.
The commenters believe that the regulations need to state more
clearly that all requirements of the purchased diagnostic test rules
and purchased test interpretation rules need to be met. In other words,
the commenters want to prevent the new reassignment exception from
applying to services furnished by independent contractor pathologists.
These commenters are urging us to review these practices to see if
they fail to meet existing obligations under the physician self-
referral prohibition or anti-kickback statute. The commenters believe
that these business arrangements are exploiting the in-office ancillary
services exception and other exceptions to the physician self-referral
prohibition.
Response: We appreciate comments that specify situations where
fraud and abuse may occur and propose solutions to prevent such
occurrences. While we decline to incorporate the commenters' suggested
regulatory revisions at this time, we share the commenters' concerns.
We will be paying close attention to this issue, and may initiate
future rulemaking to address arrangements that are fraudulent or
abusive.
To respond to commenters' concerns, we are amending the regulations
governing reassignment at Sec. 424.80(a) to clarify that nothing in
Sec. 424.80 alters an individual or entity's obligations under other
Medicare statutes or rules, including, but not limited to, the
physician self-referral prohibition (section 1877 of the Act), the
anti-kickback statute (section 1128(B)(b)(1) of the Act), the
regulations regarding purchased diagnostic tests, and regulations
regarding services and supplies provided incident to a physician's
services.
In response to the concerns expressed by the commenters, we wish to
further expand on the fact that section 952 of the MMA did not affect
the obligation of an individual or entity to comply with the physician
self-referral prohibition (section 1877 of the Act and the
corresponding regulations). As stated in the proposed rule, ``physician
group practices should be mindful that compliance with the in-office
ancillary services exception to the physician self-referral prohibition
requires that a physician who is engaged by a group practice on an
independent contractor basis must provide services to the group
practice's patients in the group's facilities. As noted in the Phase I
physician self-referral final rule (66 FR 887), ``we consider an
independent contractor physician to be `in the group practice' if: (1)
He or she has a contractual arrangement to provide services to the
group's patients in the group practice's facilities; (2) the contract
contains compensation terms that are the same as those that apply to
group members under section 1877(h)(4)(iv) of the Act or the contract
fits in the personal services exception; and, (3) the contract complies
with the reassignment rules * * * '' See also 66 FR 886.'' This test is
specified at Sec. 411.351 in the definition of physician in the group
practice, which contains a premises requirement independent of the
reassignment rules.
In addition, the use of independent contractors at off-premises
locations may impact the ability of a group practice to meet the
definition of a group practice at Sec. 411.352 for purposes of
complying with section 1877 of the Act. Accordingly, some group
practices may need to be careful about the number of physician-patient
encounters that independent contractors perform off-premises to ensure
that they meet the 75 percent patient-physician encounters test as set
forth in Sec. 411.352(h).
We will continue to monitor compliance with the reassignment rules
and we will analyze the impact of the physician self-referral
prohibition on ``pod'' labs. If we determine that changes to the
physician self-referral prohibition are necessary, these changes will
be made in a separate rulemaking document.
Comment: We received a number of comments and recommendations from
three organizations that utilize the services of independent contractor
emergency department physicians. One of the three organizations
represents management companies that employ independent contractor
emergency department physicians. The commenters believe that the
changes to the reassignment rules necessitated by section 952 of the
MMA should be implemented in a manner that does not impose additional
burdens on the Medicare enrollment process. They believe that
implementation of the proposed regulations could impede the enrollment
process. They expressed concern that amendments to current contracts
might be necessary to incorporate the program integrity safeguards
included in the proposed regulations. Since they believe requiring
contract amendments would be burdensome and costly to hospitals, they
are urging us not to require parties to amend their contracts to
reflect the program integrity safeguards that we proposed.
Response: We do not believe that implementation of the proposed
regulations will impede the enrollment process. Our proposed
regulations would not require parties to amend their contracts to
reflect the program integrity safeguards. We plan to include the
program integrity safeguard requirements on the CMS-855-R enrollment
form. The program integrity safeguards will apply to arrangements
entered into pursuant to the new reassignment exception for contractual
arrangements, regardless of whether the parties reference the
safeguards in their contracts.
Comment: Three commenters representing groups that utilize
independent contractor emergency physicians strongly oppose our
implementation of the two proposed program integrity safeguard
requirements: (1) Joint and several liability/responsibility for
Medicare overpayments; and (2) unrestricted access to the billings for
services provided by independent contractors. The commenters believe
that establishing program integrity safeguards is premature and that we
should first formally assess the need for such safeguards. These
commenters also ask us to clearly define joint and several liability/
responsibility. They express concern over our attempt to impose joint
and several liability/responsibility on both the contracting entity and
practitioner furnishing the services and
[[Page 66317]]
note that the CMS-855-R enrollment form certification holds the
enrolling provider or supplier responsible for any Medicare
overpayments. The commenters argue that we should impose these program
integrity safeguards on employer/employee relationships if we are going
to impose them on contractual arrangements. The commenters ask how we
would monitor compliance with joint and several liability/
responsibility. The commenters also have concerns about regulating
access to claims submitted by an entity for services furnished by an
independent contractor. In their view, this type of requirement should
be part of the compliance programs of entities and employers rather
than mandated as part of the reassignment rules.
Response: We disagree with the commenters' assertion that it is
premature to implement the proposed program integrity safeguards.
Section 952 of the MMA specifically authorizes the Secretary to
implement program integrity safeguards. Further, in the Conference
Report to the MMA, the Congress specifically highlighted the two
program integrity safeguards that we have proposed.
Our assessment of the need for program integrity safeguards is
based upon prior experience with certain types of entities and their
subsidiary billing companies. For example, on April 6, 2000, Lewis
Morris, Assistant Inspector General for Legal Affairs, Office of
Inspector General (OIG), U.S. Department of Health and Human Services,
testified before the House Committee on Commerce, Subcommittee on
Oversight and Investigations regarding Medicare and third-party billing
companies. Mr. Morris of the OIG detailed the upcoding activities of
two firms that provided billing services for entities contracting with
emergency department physicians. One firm paid $15 million and the
other paid $15.5 million to settle their respective liabilities.
Moreover, as we have noted, we have received numerous comments from
physicians stating that they have been prevented from seeing the
Medicare remittance notices for services they furnished, on penalty of
termination.
In addition, we understand the commenters' concerns that if the
Agency plans to implement the two proposed program integrity
safeguards, we should apply these same program integrity safeguards to
employees, as well as to independent contractors. Joint and several
responsibility/liability and unrestricted access to billings may or may
not be appropriate for employees and employers as it is for the parties
involved in contractual arrangements. CMS will study this issue
further, and if necessary will address it in a separate rulemaking
document.
We use the words responsibility and liability interchangeably, and
in the context of claims filing and payment, they both have the same
meaning. We define joint and several liability/responsibility to mean
that both the person furnishing a service and the entity billing for
that service (and to which payments have been reassigned) can be held
liable or responsible for any errors in billing that result in a
Medicare overpayment, including, but not limited to, upcoding and
billing for services never rendered.
We will monitor the program integrity safeguards as we monitor all
other program integrity requirements. We also believe that entities and
independent contractors will report violations to us, since both may be
held responsible for any Medicare overpayments. If an independent
contractor is refused access to the billings submitted on his or her
behalf, the independent contractor may report this to the appropriate
Medicare contractor.
Comment: An organization representing entities that use independent
contactor emergency department physicians believes if we retain the
proposed program integrity requirements, then these requirements should
be clarified and included in other reassignment exceptions and in other
Medicare conditions of participation.
Response: It is our goal to have the program integrity requirements
identified and included on the appropriate CMS-855-R enrollment form.
As we have discussed above, while we will study whether it is
appropriate to extend the program integrity safeguards to employer/
employee relationships, we do not believe it is necessary to include
the program integrity requirements in other reassignment exceptions (or
in other Medicare conditions of participation) at this time.
Comment: Three commenters representing organizations that use
independent contractor emergency physicians recommend that we revise
our definition of entity to specifically identify the types of entities
that are listed in the Conference Report to section 952 of the MMA.
They believe that our existing definition which defines entity as a
person, group or facility enrolled in the Medicare program is ambiguous
and inconsistent with Congressional intent. Therefore, they are
recommending that we add the language to the definition that specifies
that an entity includes but is not limited to, a hospital, clinic,
medical group, a physician practice management organization, or a
staffing company. One of the commenters opposes stating that entities
need to be enrolled in Medicare in the definition of entity because the
commenter believes it is not necessary to include such information in
the regulations on reassignment. This commenter believes that
instructions on enrollment should be addressed in an enrollment
regulation. The commenter also states that our current reassignment
regulation does not define facility as a hospital or other institution
enrolled in the Medicare program. These groups believe that their
proposed definition of entity more accurately reflects the language
from the Statement of the Managers filed by the MMA Conference
Committee and is included in the Conference Report (Conference
Agreement). Finally, these groups do not believe that a definition of
entity is necessary, since we do not define employer in the
reassignment regulations definition section.
Response: We continue to believe that our definition of entity in
the proposed rule is appropriate. We believe that defining entity as a
person, group, or facility that is enrolled in Medicare encompasses all
entities that are allowed to bill and receive payment from Medicare,
and does not prevent those entities that were specifically identified
in the Conference Report from benefiting from the new contractual
arrangement reassignment exception. We will not specifically include a
staffing company in the definition of entity because a staffing company
cannot enroll in Medicare as a staffing company. Staffing companies can
enroll as either a group practice or clinic, depending on how they are
licensed or allowed to do business in the state where they are located.
We further believe that a definition of entity is necessary to
distinguish between entities that are allowed to reassign their right
to payment and to receive reassigned payments from entities that are
not allowed to reassign their right to payment or to receive reassigned
payments (for example, billing agents, entities that provide services
under arrangements, and substitute physicians, (for example, locum
tenens physicians or physicians working on a reciprocal basis) all of
which are not required to enroll in Medicare).
Comment: Three commenters representing organizations that use
independent contractor emergency physicians found our use of the term
supplier confusing when denoting the physician or non-physician
practitioner
[[Page 66318]]
that contracts with an entity and reassigns his or her right to bill
and receive payment. Specifically, the commenters found the proposed
revision to Sec. 424.80(c) (Prohibition on reassignment of claims by
suppliers) confusing because it refers to a hospital or facility as the
supplier of services for purposes of the reassignment revision when
Medicare already has regulations that separately define provider and
supplier. The commenters recommend that we clarify our intent regarding
the use of the term supplier.
Response: In instances of reassignment, the supplier is the person
furnishing the service and reassigning his or her right to bill and
receive payment to another entity. This is consistent with our
definition of supplier in Sec. 400.202. In our proposed revision to
Sec. 424.80(c), we state that the employer or entity is considered to
be the supplier of the services for subparts C, D, and E of this part,
subject to the provisions of paragraph (d) of the section. Once a
supplier reassigns his or her right to receive Medicare payments, the
entity receiving the reassigned payments essentially takes the place of
the supplier. We have revised Sec. 424.80(c) to reflect the new
contractual arrangement reassignment exception. The existing Sec.
424.80(c) includes the same formulation and we have simply proposed to
replace the words ``facility'' and ``system'' with ``entity,'' because
the new exception for payment to an entity under a contractual
arrangement now replaces the previous exceptions for payment to a
facility or health care delivery system.
Comment: Three commenters that use independent contractor emergency
physicians expressed concern about our statement in the preamble to the
proposed rule that the new reassignment exception may create fraud and
abuse vulnerabilities, which may not become apparent until the program
has experience with the range of contractual arrangements permitted by
the new reassignment exception. These groups do not believe that the
new reassignment exception will result in an increase in violations of
the types addressed in the preamble to the proposed rule. The groups
also disagree with our statement in the preamble to the proposed rule
that contractual arrangements with independent contractor physicians
may be used to camouflage inappropriate fee-splitting arrangements or
payment for referrals. These groups state that Medicare does not govern
fee-splitting arrangements, that policing such arrangements is a matter
of State law, and that Medicare reassignment policy has no direct
effect on this issue. They question why we have expressed concern over
potential violations of the physician self-referral prohibition,
because section 952 of the MMA does not affect or otherwise change the
obligation of providers and suppliers to comply with the physician
self-referral prohibition and its accompanying regulations.
Response: The Congress originally passed the prohibition on
reassignment provision because of increasing fraud and abuse in billing
practices. Since the new reassignment exception has expanded the
circumstances under which suppliers can reassign their right to receive
Medicare payments, we are concerned that the potential exists for an
increased incidence of fraud and abuse, which may not become apparent
until the program has experience with the range of contractual
arrangements permitted by the new reassignment exception. Fee-splitting
arrangements may violate the physician self-referral prohibition and
the anti-kickback statute. Preventing fraudulent and abusive billing
practices continues to be the primary purpose of the reassignment
rules, even as they are amended to reflect changing practices in the
delivery of health care.
We agree that section 952 of the MMA does not change the
obligations of providers and suppliers under the physician self-
referral prohibition, and all other Medicare statutes and regulations.
We are incorporating this clarification in Sec. 424.80(a).
Comment: Three organizations that use independent contractor
emergency physicians raised procedural concerns regarding the timing of
the final rule, which is effective January 1, 2005. The commenters
claim that providers and suppliers do not have time to comply with the
new program integrity safeguards. They are asking us to provide
providers and suppliers with an additional time frame of at least six
months for compliance with the program integrity safeguards, if they
are finalized. They recommend that we make the new safeguards
applicable to enrollment applications submitted on or after the
effective date of the final rule.
Response: We do not believe additional time is necessary for
compliance with the program integrity safeguards. Providers and
suppliers will not have to amend contracts to include the proposed
program integrity requirements. Thus, enrollment applications are not
affected by this regulation. The program integrity safeguards will be
effective on the effective date of this final rule and these
requirements will be applicable to all Medicare providers and suppliers
affected by the section 952 change to the reassignment rules.
Comment: One commenter believes that the public comment period for
this rule was shortened to 50 days instead of the 60-day comment period
required by statute. The proposed rule was published in the Federal
Register on August 5, 2004 and the public comment period ended at 5
p.m. on September 24, 2004.
Response: While the law requires that we provide a 60-day public
comment period and that the notice of proposed rulemaking be published
in the Federal Register, it does not require that the date of Federal
Register publication be the first day of the comment period. The two
requirements are independent. We post the proposed rule on our Web site
on the date of display of the proposed rule at the Office of the
Federal Register, satisfying the requirement for a 60-day comment
period. By making the proposed rule available on the CMS Web site (as
well as at the Office of the Federal Register), we provided the public
with access to not only the proposed rule, but also to all of the
supporting files and documents cited in the proposed rule in a manner
that can be used for analysis. We note that the computer files posted
on the Web site can be used for independent analysis. Therefore, we
believe that beginning the comment period for the proposed rule with
the display date at the Office of the Federal Register, and posting the
proposed rule and data files on the CMS Web site on the display date,
fully complies with the statute and provides a far better opportunity
for the public to have meaningful input than the past practice under
which the comment period began with the publication date in the Federal
Register, a week or longer after the display date and no other data in
any other form was furnished.
G. Section 642--Extension of Coverage of IVIG for the Treatment of
Primary Immune Deficiency Diseases in the Home
In the August 5, 2004 proposed rule, we stated that for dates of
service beginning on or after January 1, 2004, Medicare would pay for
IVIG administered in the home. The benefit is for the drug and not for
the items or services related to the administration of the drug when
administered in the home, if deemed medically appropriate. The
implementing instructions for this benefit were provided in a
transmittal released on January 23, 2004. We received several comments
regarding this new benefit. The comments and our responses are provided
below.
[[Page 66319]]
Comment: Several commenters expressed concern regarding the lack of
coverage for the items and services needed to administer IVIG. These
commenters urged us to use our authority to pay for the items that are
necessary for the effective use of IVIG.
Response: The MMA provided coverage for the approved pool plasma
derivative for treatment in the home; however, new section 1861(zz) of
the Act specifically precludes coverage for the items and services
related to the administration of the derivative.
Comment: The commenter stated that on January 23, 2004, we released
a transmittal implementing the new IVIG coverage. The transmittal
contained the following language: ``for coverage of IVIG under this
benefit, it is not necessary for the derivative (IVIG) to be
administered through a piece of durable medical equipment.'' Commenters
stated that this language has resulted in the denial of coverage of
IVIG for patients because providers are using the rationale that it is
medically unnecessary to infuse IVIG through an infusion pump and
therefore IVIG is medically unnecessary. The commenters recommended
that we issue a new transmittal stating that IVIG is to be covered even
when administered through durable medical equipment (DME), as
determined necessary by a physician.
Response: It was not our intention to deny any beneficiary the
coverage of IVIG in the home. It appears that the sentence that
references the use of DME for the administration of IVIG is both
confusing and misleading. Therefore, we will issue a new transmittal
removing the apparent DME restriction.
Result of Evaluation of Comments
We are finalizing the proposed revisions to Sec. 410.10 without
alteration.
H. Section 623--Payment for Renal Dialysis Services
Section 623 of the MMA amended section 1881(b) of the Act and
directed the Secretary to revise the current renal dialysis composite
rate payment system. The MMA included several major provisions that
require the development of revised composite payment rates for ESRD
facilities.
The following is a summary of the proposed revisions to the
composite payments rate methodology implementing provisions in section
623 of the MMA that are required to be effective January 1, 2005.
The proposed rule provides for a 1.6 percent increase to
the current composite payment rates effective January 1, 2005.
The proposed rule included an add-on to the composite rate
for the difference between current payments for separately billable
drugs and payments based on a revised drug pricing methodology using
acquisition costs. For purposes of this adjustment, in the proposed
rule, we defined acquisition costs as the ASP minus 3 percent. We
proposed a single adjustment to the composite payment rates for both
hospital-based and independent facilities, equal to 11.3 percent.
In the proposed rule, we discussed the reinstatement of
the ESRD exceptions process for pediatric facilities as provided in
section 623(b) of MMA. The statute defines pediatric ESRD facilities as
renal facilities at least 50 percent of whose patients are under age
18. Since April 1, 2004, we have accepted ESRD composite rate exception
requests from ESRD facilities that believe they qualify for exceptions
as pediatric ESRD facilities.
Section 1881(b)(12)(D) of the Act, added by section
623(d)(1) of the MMA gives the Secretary discretionary authority to
revise the current wage indexes and the urban and rural definitions
used to develop them. In the proposed rule, we proposed to take no
action at this time to revise the current composite rate wage indexes.
Because of the potential payment implications of recently revised
definitions of urban areas, we believe further study is required.
The proposed rule described the proposed methodology for a
case-mix adjustment to a facility's composite payment rate based on the
statutorily required limited number of patient characteristics. We used
co-morbidity data for all Medicare ESRD patients obtained from the Form
CMS-2728, supplemented with co-morbidity information obtained from
Medicare claims. We measured the degree of the relationship between
specified co-morbidities and ESRD facility per treatment costs,
controlling for the effects of other variables, using standard least
square regression. The source of the per treatment costs was the
Medicare cost report. The result, after all necessary statistical
adjustments, was a set of eight case-mix adjustment factors based on
age, gender, AIDS, and peripheral vascular disease (PVD). Section
623(d)(1) of the MMA requires that aggregate payments under the case-
mix adjusted composite payment system be budget neutral. Therefore, the
proposed rule provided an adjustment 0.8390 to be applied to a
facility's composite payment rate to account for the effects of the
case-mix adjustments.
A. Composite Rate Increase
The current composite payment rates applicable to urban and rural
hospital-based and independent ESRD facilities were effective January
1, 2002. Section 623(a)(3) of the MMA requires that the composite rates
in effect on December 31, 2004 be increased by 1.6 percent. The updated
wage adjusted rates were published in Tables 18 and 19 of the proposed
notice.
The tables reflected the updated hospital-based and independent
facility composite rate of $132.41 and $128.35, respectively, adjusted
by the current wage index. The rates shown in the tables do not include
any of the basic case-mix adjustments required under section 623 of the
MMA.
Comment: Although there were no specific comments on the 1.6
percent adjustment, several commenters wanted to emphasize the
importance of providing an annual adjustment to the composite rate in
order to recognize the increased costs that face renal dialysis
facilities. They stated that failure to increase the composite rate on
a regular basis has caused dialysis providers to suffer a significant
loss of income from their Medicare reimbursement and that dialysis
facilities are the only Medicare entities that do not receive a
statutorily mandated annual increase in their reimbursement rates.
Response: We do not have the authority to establish an annual
update to the composite payment rates. Section 4201(a)(2) of Pub. L.
101-508 effectively froze the methodology for calculation of the rates,
including the data and definitions used as of January 1, 1991. Since
that time, the Congress has set the composite payment rate for ESRD
services furnished to Medicare beneficiaries. As a result, we do not
have the authority to update the composite payment rate.
B. Composite Rate Adjustments To Account for Changes in Pricing of
Separately Billable Drugs and Biologicals
Section 623(d) of MMA provides for an add-on to the composite rate
for thedifference between current payments for separately billable
drugs and payments based on a revised drug pricing methodology using
acquisition costs.
In the proposed notice we proposed to pay for separately billable
ESRD drugs using ASP minus 3 percent based on the average relationship
of acquisition costs to average sales prices from the drug
manufacturers as outlined in the OIG report. We developed the proposed
drug add-on adjustment using the ASP minus
[[Page 66320]]
3 percent drug prices. As discussed below, the drug add-on adjustment
for this final rule is based on average acquisition costs for the top
ten ESRD drugs updated to 2005 and ASP plus 6 percent for the remaining
separately billable ESRD drugs. See section III.E, Payment for Covered
Outpatient Drugs and Biologicals, for a discussion of the final payment
methodology for ESRD separately billable drugs.
In the proposed notice, we outlined the methodology and data used
to develop the proposed drug add-on adjustment to the composite rate of
11.3 percent for both hospital-based and independent ESRD facilities.
Since the composite rate payment for hospital-based facilities is
higher than the composite rate for independent facilities, the proposed
adjustment results in a higher payment rate for hospital-based
facilities. The 2005 composite rates (including the 1.6 percent
increase) would be $132.41 for hospital-based facilities and $128.35
for independent facilities with the hospital-based facilities' rate
higher by $4.06. We found this result consistent with section
1881(b)(7) of the Act, which requires that our payment methods
differentiate between hospital-based facilities and others. We also
indicated that the proposed methodology for making this drug add-on
adjustment to the composite rate is designed to ensure that the
aggregate payments to ESRD facilities for separately billable drugs
would be budget neutral with what would have been paid absent the MMA
provisions.
The proposed rule also discussed an alternative approach that
produced separate adjustments to the composite rate of 2.7 percent for
hospital-based and 12.8 percent for independent facilities. In contrast
to a single add-on, separate add-on adjustments would result in a
significantly higher composite payment rate for independent facilities
than hospital-based facilities, of $8.79 more per treatment.
Comment: We received many comments from independent facilities,
chain organizations and groups objecting to our proposal to establish a
single add-on adjustment to the composite payment rate. Several
commenters expressed concern that since hospital-based facilities are
paid reasonable cost for their separately billed drugs other than EPO,
those facilities should receive an adjustment based only on the spread
related to EPO payments. They stated that our proposal to spread the
drug savings to all facilities does not comply with the provision in
the statute that they believe is intended to hold facilities harmless
with respect to their drug payment profit margins. The commenters also
contend that since hospital-based facilities already receive about
$4.00 per treatment more than independent facilities, they should not
share in the drug add-on adjustment for other than their specific EPO
usage.
Response: As we indicated in the proposed rule, we believe that the
statutory language supports one uniform drug add-on adjustment to
composite payment rates set forth in section 1881(b)(7) of the Act
after updating by 1.6 percent. The provision speaks of one ``difference
between payment amounts'' and ``acquisition costs * * * as determined
by the Inspector General.'' It is reasonable to infer that the Congress
intended us to compute one ``difference'' based only on the payment
amounts under sections 1842(o) and 1881(b)(11) of the Act.
Although the language of section 1881(b)(7) contemplates
differential composite rates for hospital-based facilities and 623(d)
contemplates existing composite rates as the starting point for
application of the new rate adjustments prescribed under section
1881(b)(12)(A) of the Act, the MMA language does not suggest that these
adjustments would be applied differentially across facilities.
Otherwise, all of the adjustments, including case-mix and budget
neutrality would have to be developed separately based on facility
type.
We note that the amount of the drug add-on has decreased
significantly from the proposed rule as a result of our revised policy
of paying for ESRD drugs for 2005. Since the drug payment amounts
increased, the amount of the drug add-on to the composite rate
decreased. The resulting drug add-on amount is now 8.7 percent.
We also note that there is not a significant difference in
composite rates for independent facilities under single and separate
add-ons. With a single add-on of 8.7 percent, the 2005 composite rate
for independent facilities would be $139.52. Under a separate add-on
approach, the 2005 composite rate for independent facilities would be
$140.93, a difference of $1.41 or about 1 percent before taking other
considerations into account. This difference is about 27 percent less
than the difference based on the approach and figures in the proposed
rule.
While a composite rate difference of $1.41 is important, such
difference does not take into account two other factors: (1) Since
Medicare's 2005 payments for ESRD drugs will be a weighted average of
the acquisition costs determined by the Inspector General, the payment
amounts for the most utilized ESRD drugs (such as EPO) will be
significantly higher than payment based on ASP-3 percent; and (2)
Beginning with 2005, Medicare will pay separately for syringes that are
currently included in the EPO payments.
With separate add-ons, the composite rate for the independent
facilities would be $7.33 higher than the composite rate for hospital-
based facilities. However, the composite rate for hospital-based
facilities would be $10.33 lower under separate add-ons than under a
single add-on approach. We believe the current difference in composite
rates where the hospital-based rate is about $4.00 higher than the
independent facility rate would effectively be preserved with a single
add-on and significantly reversed with separate add-ons.
Finally, we note that a key purpose of the MMA legislation was to
eliminate the cross-subsidization of composite rate payments by drug
payments. If the composite rate was inadequate before the MMA
provision, it was inadequate for both hospital-based and independent
facilities. As such, increasing the composite rate by relatively
greater amounts for independent facilities than hospital-based
facilities would place the latter facilities at a competitive
disadvantage relative to the former facilities.
Comment: One comment from a drug manufacturer suggested that in
order to preserve high quality care to ESRD patients and prevent cost
shifting behavior, we should require a facility to provide the full
range of separately reimbursable drugs and biologicals in order to
receive the drug add-on adjustment.
Response: We do not believe the statute permits imposing such a
requirement as a condition for receiving the add-on adjustment to the
composite rate. However, other regulations require that ESRD facilities
provide appropriate care to each patient based on a plan of care that
would include the administration of medically necessary drugs as
prescribed by the patient's dialysis physician.
1. Growth Factors Used To Update Drug Expenditures and Prices
Comment: One commenter noted that, in the proposed rule, we updated
the 2004 ASP drug prices to 2005 prices by using the projected annual
growth factor for National Health Expenditures prescription drugs of
3.39 percent. This commenter wanted to know why we did not use the
actual growth factors for separately billable drugs that are furnished
by ESRD facilities to ESRD
[[Page 66321]]
patients. The commenter states that this factor is currently running
about 39 percent.
Response: After consideration of the available price data, as
discussed in the section on payment for ESRD separately billable drugs,
we have determined that the Producer Price Index (PPI) for prescription
preparations is the most appropriate price measure for updating EPO and
other separately billable drugs from 2003 to 2005. The PPI for
prescription preparations is released monthly by the Bureau of Labor
Statistics, and reflects price changes at the wholesale or manufacturer
stage. By comparison, the Consumer Price Index (CPI) for prescription
drugs reflects price changes at the retail stage. Because EPO and many
of the separately billable drugs used by dialysis facilities are
purchased directly from the manufacturer, the use of a price index that
measures wholesale rather than retail prices is more appropriate. The
PPI for prescription drugs is the measure used in the various market
baskets that update Medicare payments to hospitals, physicians, and
skilled nursing facilities, and home health agencies. In addition, the
PPI for prescription drugs was recommended for use in the proposed
composite rate market basket detailed in the 2003 Report to the
Congress.
Based on historical data through the second quarter of 2004, we
used the Global Insight Inc. forecast of the PPI for prescription drugs
to determine the update factors for 2004 and 2005. We feel the use of
an independent forecast, in this case from Global Insight Inc., is
superior to using the NHE projections for drug prices (which is the CPI
for prescription drugs) and is consistent with the methodology used in
projecting market basket increases for Medicare prospective payment
systems.
Comment: One comment questioned the 3 percent growth rate that we
used in the proposed rule to estimate 2005 Medicare AWP payment amounts
for purposes of calculating the drug add-on amount. Specifically, the
commenter asked whether the 3 percent figure represented the AWP growth
trends for all drugs as opposed to the AWP growth trends for only ESRD
separately billable drugs and biologicals. The commenter also asked for
clarification of the timeframe used to establish the historical trend.
Several comments also expressed concern that we used a 10-quarter
average as an approximation for 2002 expenditures, and as a result, the
projected 2005 drug expenditures were understated. These comments
strongly recommended that we establish an accurate baseline using
actual 2002 expenditures. A study performed for commenters by an
industry consultant was cited as confirming that our base year estimate
is materially below actual drug spending computed using CMS's 2002
Outpatient Five Percent Standard Analytic File (SAF). Commenters were
also concerned that the drug add-on does not reflect the true
difference between payments under the current system and acquisition
costs described by the OIG.
Response: We have taken all these comments into consideration and
have re-evaluated our 2005 projection of aggregate ESRD facility drug
expenditures. We did not use an average over 10 quarters to determine
aggregate drug payments. The 10 quarters of data were used only to
establish historical growth trends. However, we determined that our
estimates of aggregate drug payment amounts were in fact understated
because they did not include deductibles and coinsurance. Since drug
payment rates are set at 100 percent of the allowable payment, we
incorrectly calculated the aggregate drug payment for 2005. We revised
our calculation to ensure that we capture the allowable payment before
deductible and coinsurance are removed. In addition, we updated our
estimates to incorporate the June 2004 update to the 2003 standard
analytical file. The 3 percent growth represents our best estimate of
the expected growth rate in AWP prices. In addition, due to numerous
coding changes for the various ESRD drugs, we were unable to do direct
comparisons for each of the AWP prices from year-to-year. Therefore, we
believe the 3 percent inflation factor we used to update the AWP prices
is appropriate.
Comment: One comment expressed concern that the projected number of
dialysis treatments in 2005 would be overstated if home peritoneal
dialysis (PD) treatments for home patients are included because
facilities do not bill for non-EPO drugs in that setting.
Response: Since ESRD facilities also receive composite rate
payments for their Method I home patients, the drug add-on would also
apply to composite rate payments for those patients. Therefore, it is
appropriate for us to count those treatments in projecting the number
of dialysis treatments for computation of the drug add-on amount. We
did not, however, count treatments attributable to Method II home
patients since payment for these patients is made based on reasonable
charges as opposed to the composite rate.
Comment: One comment from a patient organization raised concern
that the add-on provision would remove any incentives the current
payment policy creates for facilities to provide separately billable
drugs and biologicals to dialysis patients. This comment suggested that
we establish new clinical guidelines or indicators to ensure that
dialysis patients receive necessary drugs and biologicals. This
commenter also asked whether we have longer term plans to revise
payment for dialysis treatment and ancillary services.
Response: We share this commenters concern that changes in payments
to dialysis facilities could produce perverse incentives for dialysis
facilities to skimp on care to ESRD patients. In order to ensure that
patients continue to receive quality care, we are revising the ESRD
facility conditions for coverage so that they are more patient-centered
and outcome-oriented. We will publish proposed ESRD conditions by the
end of 2004. We note that section 623 of MMA also requires us to
develop a bundled, case-mix adjusted payment system and report to the
Congress by October 1, 2005. This section also requires the
establishment of a demonstration to test the revised payment system
over a 3-year period beginning January 1, 2006.
2. Update Methodology for Drug Add-on Adjustment in 2006
Comment: Several commenters recommended that we publish the
methodology that we intend to use to update the drug add-on component
of the basic case-mix adjusted payment amounts, beginning in 2006, and
that we provide the opportunity for public comment.
Response: We did not propose a mechanism for updating the 2006
payments in this document since this rule addresses payment for 2005.
It is our intent to publish a proposed rule in mid-2005 to address
payment changes for 2006. The public will be given an opportunity to
comment on those proposals at that time.
3. Computation of Final Drug Add-On Adjustment to the Composite Payment
Rate
To develop the final drug add-on adjustment we used historical
total aggregate payments for separately billed ESRD drugs for half of
2000 and all of 2001, 2002 and 2003. For EPO, these payments were
broken down according to type of ESRD facility (hospital-based versus
independent). We also used the 2003 data on dialysis treatments
performed by these two types of facilities over the same period.
[[Page 66322]]
I. 2005 Average Acquisition Payment (AAP) Amounts
The OIG report contained 2003 average acquisition costs for the top
ten drugs supplied by the four largest dialysis chain organizations and
by a sample of those facilities not managed by the four largest chain
organizations. According to the OIG report, these ten drugs accounted
for about 98 percent of total expenditures for separately billed drugs
furnished by ESRD facilities. The report also indicated that payment to
the four largest dialysis chains accounted for 73 percent of Medicare
drug reimbursement in 2002. Therefore, we weighted the average
acquisition costs using a 73-27 split. As discussed earlier, we then
updated the 2003 weighted average acquisition costs to arrive at the
2005 AAP amounts by using the PPI for prescription drugs. These factors
were 4.81 percent and 3.72 percent for 2004 and 2005, respectively.
[GRAPHIC] [TIFF OMITTED] TR15NO04.505
II. Estimated 2005 Medicare Payment Amounts Based on 95 Percent of AWP
We estimated what Medicare would pay for ESRD drugs in 2005 if the
MMA had not been enacted. We adjusted the first quarter 2004 Medicare
payment amounts (95 percent of AWP), based on the prices from the
January 2004 Single Drug Pricer, for drugs other than EPO, to estimate
2005 prices by using an estimated AWP growth of 3 percent. As discussed
earlier, these growth factors are based on historical trends of AWP
pricing over years. We did not increase the price for Epogen since
payment was maintained at $10.00 per thousand units prior to MMA.
[GRAPHIC] [TIFF OMITTED] TR15NO04.506
[[Page 66323]]
III. Dialysis Treatments
We updated the number of dialysis treatments based on 2003 data by
actuarial projected growth in the number of ESRD beneficiaries. Since
Medicare covers a maximum of three treatments per week, utilization
growth is limited, and therefore any increase in the number of
treatments will be due to enrollment. In 2005, we project there will be
a total of 34.8 million treatments performed.
IV. Estimated Drug Spending
We updated the total aggregate 2003 Epogen drug spending for
hospital-based and independent facilities using historical trend
factors. For 2004 and 2005, we increased the 2003 spending levels by
trend factors of 1.0 percent for hospital-based facilities and by 10.0
percent for independent facilities based on historical growth from 2000
to 2003.
We also updated the aggregate AWP based spending for separately
billed drugs, other than EPO, for independent facilities by using the
10 percent growth factor for Epogen. Since aggregate spending in this
category show extremely varied growth in recent history, we could not
establish a clear growth trend. For this reason we decided to apply the
Epogen growth rate to the other separately billed drugs. Given the
problems establishing growth trends for the other drugs, plus the fact
the expenditures for Epogen account for about 70 percent of the total
spending for the top ten ESRD drugs, we believe this approach to
updating all of the separately billed drugs is appropriate.
Additionally, we deducted 50 cents for each administration of
Epogen from the total Epogen spending for both hospital based and
independent facilities, to account for payment for syringes that is
currently included in the EPO payments. Payment for syringes used in
administering EPO will be made separately beginning January 1, 2005. In
2005, we estimate that the total spending for syringes associated with
the administration of Epogen will amount to $1.6 million for hospital-
based facilities and $27 million for independent facilities. For 2005,
we estimate that the total spending for Epogen provided in hospital-
based facilities will be $210 million, and $2.913 billion for drugs
provided in independent facilities ($2.003 billion for Epogen and $910
million for other drugs).
V. Add-On Calculation and Budget Neutrality
For each of the ten drugs in the previous tables, we calculated the
percent by which 2005 AAP amounts are projected to be different from
the payment amounts under the pre-MMA system. For Epogen, this amount
is 2 percent. We applied this 2 percent figure to the total aggregate
drug payments for Epogen in hospital-based facilities, resulting in a
difference of $5 million.
Since the top 10 ESRD drugs will be paid at 2005 AAP amounts and
the remainder will be paid at ASP plus six percent, we then calculated
a weighted average of the percentages by which AAP amounts would be
below current Medicare prices, for the top 10 drugs, and the percentage
by which ASP plus 6 percent would be below current Medicare payment
amounts. For other than the top ten drugs, we do not have detailed data
on expenditures for drugs billed by ESRD facilities. Therefore, we
computed the percentage by which ASP plus 6 percent is below the
estimated 2005 pre-MMA payment amounts for those drugs, using the
average of the comparable ASP prices for the top 10 ESRD drugs. This
procedure resulted in a weighted average of 13 percent by which the
overall revised 2005 drug payment amounts applicable to independent
facilities is projected to be less than the 2005 estimated pre-MMA
system (that is, 95 percent of AWP). We then applied the 13 percent
weighted average to total aggregate drug spending projections for
independent facilities, producing a projected difference of $385
million.
Combining the 2005 estimates of $5 million and $385 million, for a
total of $390 million and then distributing this over a total projected
34.8 million treatments would result in an add-on to the per treatment
composite rate of 8.7 percent. We estimate that an 8.7 percent
adjustment to the ESRD composite payment rate would be needed to
achieve budget neutrality with respect to drug expenditures for ESRD
facilities.
A. Patient Characteristic Adjustments
As explained in the proposed rule, the current ESRD composite
payment rates are not adjusted for variation in patient characteristics
or case-mix. Section 623(d)(1) of the MMA added section 1881(b)(12)(A)
of the Act to require that the outpatient dialysis services included in
the composite rate be case-mix adjusted. Specifically, the statute
requires us to establish a basic case-mix adjusted prospective payment
system for dialysis services. Also, the statute requires adjustments
under this system for a limited number of patient characteristics. In
the proposed notice, we described the development of the methodology
for the proposed patient characteristic case-mix adjusters required
under the MMA.
In summary, we proposed to use a limited number of patient
characteristics that explain variation in reported costs for composite
rate services, consistent with the legislative requirement. The
proposed adjustment factors are as follows:
[[Page 66324]]
[GRAPHIC] [TIFF OMITTED] TR15NO04.507
Although the magnitude of some of the patient-specific case-mix
adjustments appears to be significant, facility level variation in
case-mix is limited because of the overall similarity of the
distribution of patients among the eight case-mix classification
categories across facility classification groups.
We received a significant number of comments regarding the case-mix
adjustment factors, which are summarized in this section with our
corresponding responses.
1. Sample Data Used To Develop the Basic Case-Mix System
Comment: Comments regarding the sample or universe used to derive
the proposed basic case-mix adjustments in the proposed rule expressed
concerns about the size of the sample, the number of hospitals and
freestanding facilities included, as well as the number of facilities
excluded from the data.
Response: We used the database established by our contractor to
develop the basic case-mix system in the proposed rule. Facility cost
report data were matched to the corresponding facility billing data to
insure that the sample reflected the most valid and reliable data
available. The specific methodology used to develop the database is
discussed in Kidney Epidemiology and Cost Center's (KECC's) Phase I
report. The Phase I report entitled: ``An Expanded Medicare Outpatient
End Stage Renal Disease PPS--Phase I'' is available on the University
of Michigan Web site: http://www.sph.umich.edu/kecc. The contractor has
been updating the data files for subsequent phases of their research
and is beginning to analyze these data for the bundled prospective
payment system. The data used for the basic case-mix proposed system
were also assessed in terms of consistency. Data from 2000, 2001, and
2002 were examined separately as well as combined to determine if there
were consistent trends over the 3-year period. The data were updated to
include the latest 2002 data that was available as of September 2004.
The updated data reflect an increase of approximately 10 percent in the
number of facilities represented in the database.
Comment: Several comments expressed concerns regarding the
timeliness of the data used to develop the proposed case-mix measures.
These concerns focused on the availability of cost reports for 2002. In
the proposed notice we acknowledged we were delayed in obtaining cost
reports for 2002 and that the final rule would reflect the most recent
data on the number of cost reports available.
Response: Table 12 indicates the number of dialysis facilities with
at least one cost report for 2000 to 2002. This table also reflects the
availability of the most recent cost reports data for 2002 and reflects
an increase from the proposed rule of an additional 564 cost reports
for the independent facilities in 2002.
[GRAPHIC] [TIFF OMITTED] TR15NO04.508
The availability of cost reporting data may be delayed because of a
number of factors including late submissions by facilities and
necessary reconciliation and verification of data by fiscal
intermediaries prior to submission to our data systems. The comment on
delays and availability of data is also related to concerns expressed
by other comments regarding the reporting of co-morbid conditions.
Several comments addressed potential inconsistencies in
[[Page 66325]]
facility reporting of co-morbid conditions, specifically with the
impact of the variation of the reporting of AIDs noted in the 2000 data
compared to other years. This variation, coupled with the potential
incompleteness of the 2002 data, led us to examine options for
selecting the time period to be used for determining the case-mix
adjustments.
In this final rule, we have decided to use combined data for the 3-
year period 2000-2002, to determine the case-mix adjustment factors.
The use of combined data enables us to eliminate any impact caused by
annual variation in reporting, delays in the availability of
administrative files, and overemphasizing the predictive significance
of selected variables, because case-mix variables are combined and
averaged over a 3-year period, thus representing a more stable
database.
Comment: Several comments focused on the number of facilities that
were excluded from the study sample in the development of the proposed
case-mix adjustments. For the proposed regulation, we excluded from our
sample facilities where cost report data could not be matched to claims
data and vice versa, or where key data elements were missing. In
addition we excluded outlier facilities (those with high or low average
costs, or high or low proportions of co-morbid conditions.) Data from
small facilities (fewer than 20 patients) and those with existing
composite rate exceptions were also excluded.
Response: We concurred with the recommendation to reassess the
sample. For the final rule, we are including, within the sample, data
for facilities with existing exceptions. However, we have continued to
exclude data for small facilities, outliers, and facilities with
missing or unusable data. Missing data excluded approximately 11
percent of the sample, and not including small facilities or outlier
facilities eliminated approximately 9 percent of the study sample.
We did not accept the suggestion that smaller sized facilities were
proxies for rural facilities, however, and we will continue to study
the rural and urban issue in future research and in updates to the wage
index.
Overall, including those facilities with exceptions provides a more
robust study sample. In this way any effects on the case-mix values due
to fluctuations in the data from year to year are greatly diminished.
Comment: Several commenters objected that the database used to
develop the basic case mix was not available. One commenter indicated
that not having the data made it difficult to evaluate the impact of
the proposed case-mix variables on specific facilities.
Response: The database developed for the basic case-mix system is
the same database that was developed by the University of Michigan for
the ongoing research project to develop a bundled payment system. This
database was compiled using our administrative data. We make available
for purchase data available in the form of public use files or standard
analytic files. Commenters can use the same data files that were used
by the University of Michigan to develop the database used. The
proposed rule provides the factors necessary to determine impact on
individual facilities based on the case-mix within that facility. In
addition, we have expanded our discussion of the impact of the case-mix
adjustments and have provided a more detailed example to assist
facilities in evaluating the impact of the case mix on their specific
facilities.
2. Including Co-Morbid Conditions in the Case-Mix Adjustment
Comment: A number of comments expressed concerns regarding the
coding of co-morbid conditions. Some comments acknowledged that limited
time has been spent by ESRD facilities in coding multiple conditions.
Some stressed that training should be provided to ensure that
facilities understand this reporting requirement. One commenter
attributed the proposed delay in implementation of the case-mix
adjustments to potential difficulties in coding co-morbid conditions
and in integrating these coded conditions into the payment.
Response: We considered the commenters concerns regarding
incorporating co-morbid conditions and the findings from analyzing more
recent data. Although our regression modeling suggests that the
inclusion of co-morbidities in the case-mix system would be
appropriate, we are concerned that the data available to determine
patient level co-morbidities may not accurately reflect diagnoses
relevant to the dialysis patient population. Therefore, in this final
rule we are not including co-morbidities as case-mix adjustments. As
discussed later in this section, we are establishing the case-mix
adjustments based on the following variables: age, body mass index
(BMI) and body surface area (BSA). More recent analysis of the data and
clinical concerns expressed regarding the inclusion of AIDs and
selected PVD diagnoses support this decision. However, while co-morbid
conditions are not currently part of the basic case-mix system, we
encourage all facilities to more thoroughly report and code co-morbid
conditions on their claims. This will enable appropriate refinements to
the basic case-mix adjustments and also provide a better database from
which we can develop case-mix measures for a bundled payment system.
Comment: One commenter representing a chain of ESRD facilities
stated that we overstated the prevalence of patients with peripheral
vascular disease (PVD). The commenter maintained that overstating the
incidence of PVD in the ESRD outpatient population results in an
overstatement of the offset for budget neutrality because of the
proposed 1.07 case-mix adjuster for PVD patients, thereby decreasing
the otherwise applicable composite payment rate prior to case-mix
adjustments. The commenter identified 51 diagnoses from the list of PVD
diagnosis codes included in the proposed rule that he believed were
either not reflective of PVD in ESRD patients, were not usually
considered as a cause of PVD in ESRD patients, or were poorly
differentiated clinically and could occur even in the absence of PVD.
The commenter believed that these 51 diagnoses should be excluded from
our list of PVD diagnoses for purposes of determining the case-mix and
budget neutrality adjustments to the composite payment rates. Another
commenter pointed out that there is substantial clinical disagreement
about the definition of PVD and that the ESRD claims data presently do
not contain sufficient information to implement the proposed PVD
adjustor.
Response: The selection of specific co-morbid conditions for
purposes of adjusting the composite payment rates to reflect the
patient characteristics associated with cost differences across
facilities is an important issue, and we appreciate the commenter's
suggestions. However, we disagree with the recommendation that we
exclude certain diagnoses because they are not usually considered a
cause of ESRD in patients. We believe that whether a particular co-
morbid condition caused the onset of ESRD is irrelevant. The important
factor is whether a particular co-morbid condition is associated with
facility differences in composite rate costs, regardless of their role
in the etiology of ESRD.
We agree with the commenter's suggestion that diagnoses which can
occur in the absence of PVD will be excluded for purposes of applying a
case mix adjustment based on PVD. In addition, there is apparent
disagreement among clinicians as to whether certain
[[Page 66326]]
diagnoses are reflective of PVD in ESRD patients, and we will try to
achieve as much consensus as possible before proceeding to implement a
case mix adjuster which purports to reflect PVD. Accordingly, we are
eliminating the case mix adjustment for PVD as set forth in the
proposed rule. We point out that further analyses with more restricted
sets of diagnostic codes revealed that the omitted codes were still
strong predictors of costs. We intend to revisit the issue of
appropriate co-morbidity adjustments as we continue our research to
develop the bundled ESRD payment system.
We point out that our case mix model that included PVD explained
about 35.7 percent of the variation in facility composite rate costs.
By comparison, our model using five age groups without co-morbidities
explains about 35.6 percent of the cost variations. Although PVD was a
statistically significant case mix variable, its contribution to the
model's performance overall in explaining facility differences in costs
was minimal. While co-morbidity adjustments will be excluded under the
basic case mix adjusted composite payment system, accuracy in the
reporting of co-morbid conditions on the bills will become increasingly
important because of the likelihood that a bundled ESRD payment system
will include co-morbidities associated with differences in patient
resource consumption.
Comment: Two commenters recommended that we exclude AIDS as a co-
morbidity warranting case-mix adjustment. These commenters stated that
because of State laws requiring that a patient's AIDS status be kept
confidential, most facilities do not know whether their patients have
AIDS. This does not pose a risk to other patients or caregivers because
of the universal precautions which dialysis facilities are required to
use in order to prevent exposure and infection.
Response: Because the claims data contain primarily the patient's
primary diagnosis, AIDS is not likely to be recorded as a claims
diagnosis for outpatient dialysis patients. Requiring the recording of
the AIDS diagnosis on the bills would create powerful incentives for
ESRD facilities to circumvent confidentiality restrictions. In those
States with AIDS confidentiality requirements, the diagnosis is not
likely to be recorded at all. Given the relatively low incidence of
AIDS patients in the outpatient dialysis population, the fact that
facilities in States with AIDS confidentiality requirements would be
potentially disadvantaged if AIDS were included as a payment adjuster,
and the fact that the relationship between AIDS and dialysis costs was
not stable from year to year, we have decided to eliminate AIDS as a
basis for case-mix adjustment to the composite payment rates at the
present time.
3. Case-Mix Adjustment for Gender
Comment: One commenter suggested that we eliminate gender as one of
the patient characteristic variables used to case-mix adjust the
composite payment rates. The commenter stated that gender was
essentially a surrogate for differences in height and weight measures
that would yield a superior case-mix adjustment.
Response: Although height and weight are much better predictors of
facility variation in composite rate costs, these data were only
available on the Form CMS 2728, not on the bills submitted for payment.
Accordingly, we used gender as a surrogate measure in proposing
adjustments, because gender is reported on the outpatient bill (for
example, UB92 or the equivalent electronic form). However, the National
Uniform Billing Committee has approved the use of two new value codes
for reporting weight and height (A8--weight in kilograms, A9--height in
centimeters) on the billing forms effective January 1, 2005.
The mandatory reporting of height and weight permits the
development of case mix measures that reflect both variables, such as
BMI and BSA, each of which are superior to weight alone as predictors
of resource use. Given the impending availability of height and weight
data on the outpatient dialysis bill, we examined the predictive power
of weight, BMI, and BSA in lieu of gender based on data reported on the
Form 2728 from 2000 through 2002. We found that both BMI and BSA are
superior predictors to weight alone and that BSA, coupled with a
variable for low BMI, is the best predictor of facility differences in
composite rate costs. Accordingly, we have eliminated gender in this
final rule as a patient classification variable for purposes of case
mix adjustment. Instead we are substituting BSA, and a variable for low
BMI, each of which are explained in another section of this final rule.
4. Age Groupings Used in Proposed Case-Mix Adjustment
Comment: Several comments indicated that the proposed age groups
were too broad. Some of the comments recommended that we create more
age categories for purposes of the case-mix adjustments.
Response: In the proposed rule we established three age categories
for example: less than 65, 65-79, and greater than 79. In reassessing
the study sample and the proposed case mix adjusters, we also explored
the age categories. We concur with the comments to expand the number of
age categories. For the final rule, there will be five age groupings.
These are: 18-44, 45-59, 60-69, 70-79, and 80+. Patients under 18 are
discussed in the following section on pediatrics. We believe that the
revisions to the age groupings more accurately describe the
distribution of the patient population and reflect more refined
predictors of age for payment purposes.
Comment: One commenter asked what would happens under our proposed
adjustment if during the course of a month, an ESRD patient's age
changed and they cross the line into another case-mix adjustment
factor. For example, on August 15 a 64-year-old ESRD patient turns 65.
They questioned how is this situation is handled and is the age used as
of the last day of the month.
Response: We believe it is appropriate to handle this situation as
it is handled for enrollment. Thus, for a month when the patient has a
birthday that puts him or her into another age category, the first of
the month would be the effective date of the patient's new age
category.
5. Case-Mix Adjustment for Pediatric Patients
Comment: Several commenters expressed concern over the lack of a
case-mix adjustment for pediatric ESRD patients. The commenters stated
that although section 623(b) of the MMA provided for an exception
process for pediatric ESRD facilities, qualification for a pediatric
exception is limited to those facilities where pediatric patients
(those under age 18), comprise at least 50 percent of the caseload. The
commenters pointed out that ESRD pediatric patients are unusually
resource intensive and costly and are widely scattered among
facilities, most of which would not qualify as pediatric facilities
under the definition set forth in the statute. The commenters
recommended that we develop a case-mix adjuster for pediatric ESRD
patients using other data sources.
Response: Using the same regression methodology described in the
proposed rule, we attempted to develop a case-mix adjuster for
outpatient ESRD patients under age 18. However, based on the
approximately 600 Medicare patients for whom bills were available each
year from 2000 through 2002, the results were highly variable,
statistically
[[Page 66327]]
unstable, and therefore inappropriate for development of a case-mix
adjuster in accordance with the proposed rule's methodology. However,
because of the costliness of pediatric ESRD patients, we believe that
an alternative case-mix adjustment is warranted, particularly for those
facilities, which do not meet the definition of a pediatric facility
under section 623(b) of the MMA.
As the commenter correctly pointed out, some facilities would not
qualify for consideration for the pediatric exception provided in the
law because their pediatric caseload does not constitute 50 percent of
their patients. These facilities may still incur substantial costs for
the treatment of pediatric ESRD patients. Pending the development of
more refined case-mix adjustments that are more sensitive to individual
variation in treatment costs under a fully bundled ESRD PPS, we are
providing for a single adjustment to a facility's otherwise applicable
composite payment rate, developed based on the methodology described
below, for outpatient ESRD pediatric treatments. We want to emphasize
that the pediatric adjustment factor resulting from this methodology is
intended to be a temporary measure. It will only apply until we can
develop an adjustor under the bundled ESRD PPS that is more similar
with the case-mix adjustments that would apply to non-pediatric ESRD
patients.
During the period from November 1, 1993 to the present time, we
identified 19 hospital-based and one freestanding ESRD facility, each
of which sought and received an atypical services exception based on
the higher costs incurred for the treatment of outpatient pediatric
patients. For each of these facilities we obtained the number of
treatments at the time the exception was submitted and determined the
unadjusted composite payment rate that would have applied beginning
January 1, 2005 without regard to any exception amount, that is, each
facility's unadjusted composite payment rate was inflated to January 1,
2005 to reflect the statutory increases of 1.2 percent effective
January 1, 2000, 2.4 percent effective January 1, 2001, and 1.6 percent
effective January 1, 2005.
We then subtracted the inflated January 1, 2005 unadjusted
composite rate from each facility's composite payment rate, including
the exception amount granted, to obtain the estimated amount of the
exception projected to 2005. This amount was multiplied by the number
of treatments previously provided, summed for all 20 facilities, and
then divided by the number of treatments for all 20 providers to yield
an average atypical services exception amount per treatment. The
average exception amount for ESRD facilities that received exceptions
due to their pediatric caseload, adjusted to 2005, was $86.79 per
treatment. The average unadjusted composite payment rate for these same
20 facilities projected to 2005, similarly weighted by the number of
treatments, was $139.32. Thus, the average composite payment rate
adjusted to January 1, 2005, including the average exception amount of
$86.79, was $139.32 + $86.79 or $226.11. Because the average exception
amount was calculated from facilities located in areas with differing
wage levels, we converted the average pediatric exception amount to a
ratio, $226.11/$139.32 or 1.62.
This is the case-mix adjustment factor that will be applied to each
facility's composite payment rate per treatment for outpatient
maintenance dialysis services furnished to pediatric patients. This
includes both in-facility and home dialysis. Applying the adjuster
multiplicatively in this manner recognizes the wage index variation in
labor costs among urban and rural areas built into the composite rates.
Notwithstanding this case-mix adjustment per treatment for ESRD
pediatric patients, facilities who otherwise qualify as a pediatric
facility under section 623(b) of the MMA will be permitted to seek an
exception to this rate if they believe their circumstances warrant a
higher payment rate under the atypical services exception provisions
set forth in the regulations. We intend the pediatric adjustment factor
of 1.62 to be a temporary measure. We anticipate its elimination once
the case-mix methodology that will apply in the context of the bundled
ESRD PPS is developed. We want the same methodology to apply to both
pediatric and non-pediatric ESRD patients.
6. Facility Level Control Variables Used in the Proposed Regression
Model
In developing the regression model used to derive the case-mix
adjustments, we included variables reflective of facility
characteristics. Because facility characteristics do account for
differences in facility composite rate costs, we included them in the
regression model through the use of facility control variables, so that
the patient characteristic case-mix adjusters are not distorted. The
facility control variables included the wage index, facility size
(based on the annual number of treatments), facility status as
hospital-based or freestanding, percent of patients with urea reduction
ratios greater than or equal to 65 percent, chain ownership, year of
cost report, and percent of pediatric patients treatments. These
variables were not used to calculate the basic case-mix adjustment
factors.
Comment: One comment questioned the inclusion of the proportion of
patients with urea reduction ratios (URRs) greater than 65 as a
facility control variable in the least squares regression model used to
develop the case-mix adjustment factors. The comment maintained that
because a patient's URR may be correlated with other co-morbid
conditions, the coefficients for the variables tested in the model
might be distorted. The comment recommended an evaluation of the degree
of association between URR and the main co-morbid conditions to
determine the extent of any multicolinearity. The comment further
stated that if URR is appropriate as a facility control variable, then
other surrogates of dialysis efficiency, such as standardized mortality
ratio and proportion of patients with hemoglobin readings above
specified target levels, should also be considered as control
variables.
Response: We believe that case-mix adjustments to the composite
payment rate must be determined by patient and not by facility
characteristics. To the extent that facility differences in costs are
statistically explained by facility and not patient characteristics, we
account for them in the regression model through the use of control
variables, so that the potential case-mix adjusters are not distorted.
Facility control variables were not used to develop the adjustment
factors to the composite payment rates.
For example, chain affiliation, facility size, and status as a
hospital-based or freestanding facility were associated with
statistically significant differences in facility costs. However, it
would be inappropriate to object to the payment rates based on a
facility belonging to a particular chain, or based on the number of
annual treatments.
To test for multicolinearity, that is, to ensure that each co-
morbidity tested for inclusion in the regression model was not
correlated with other variables, we ran a correlation matrix. The
correlation matrix included URR. URR was found not to correlate with
any of the co-morbidities tested; in statistical parlance, it was
orthogonal. Accordingly, low URR was not a surrogate of co-morbidity.
Therefore, we believe it was appropriate to treat URR as a quality of
care outcome measure at each facility. The effect of using URR as a
facility control variable was to ensure that the case-mix adjustment
factors were not distorted for facilities with similar URR outcomes.
For example, if
[[Page 66328]]
larger patients receive lower doses of dialysis, not controlling for
URR could impart a downward bias on the coefficient for patient size.
The comment also suggested the use of other variables as facility
control variables such as standardized mortality ratio (SMR) and
hemoglobin count. Because SMR standardizes or controls for the effect
of case mix on the ratio, we would have to ensure consistency in the
reporting of specified co-morbidities on the bills in order to ensure
the validity of each facility's SMR. That consistency currently does
not exist. Facilities are only required to report hematocrit/hemoglobin
on the claims available for those patients receiving erythropoeitin
(EPO). However, because the proportion of patients receiving EPO is
high, the use of hematocrit/hemoglobin as another outcome facility
control variable is feasible, but mainly in the context of the bundled
payment system. Since the drugs and lab tests associated with anemia
management are paid outside the composite payment rate, hematocrit/
hemoglobin level would not be appropriate as a control variable
applicable to composite rate costs.
7. Propriety of Case-Mix Adjustment
Comment: Several commenters expressed reservations about our
proceeding with the implementation of a case-mix adjustment to the
composite payment rates using the methodology set forth in the proposed
rule. One commenter cited the May 19, 2004 report prepared by the KECC
of the University of Michigan, which pointed out that the proposed
case-mix variables collectively explained less than 1 percent of the
facility variation in composite rate costs, although the addition of
facility control variables increased this proportion to about 33
percent. One commenter stated that the low explanatory power of the
proposed case-mix variables indicated that they do not accurately
predict cost variation and are flawed. The commenter suggested that we
defer applying a case-mix model until the results of the demonstration
project mandated under section 623(e) of the MMA are available.
Response: We would have preferred to develop a case-mix adjustment
in the context of a bundled outpatient ESRD PPS. In a fully bundled
PPS, which section 623(f) of the MMA anticipates, routine and
separately billable dialysis related services, drugs, and clinical
laboratory tests would be included in the payment bundle. KECC's
previous research revealed that, for separately billable services,
case-mix explained about 23 percent of the variation in cost across
dialysis facilities. (See Hirth, et al., Is Case-Mix Adjustment
Necessary for an Expanded Dialysis Bundle?, Health Care Financing
Review, 2003, 24, pages 77-88).
However, the enactment of Pub. L. No. 108-173 foreclosed the option
of deferring implementation of a casemix adjusted composite rate based
on a limited number of patient characteristics effective January 1,
2005. We do not believe that the statutory directive set forth in
section 623(d) of the MMA permits us to defer the development of a
basic case-mix measure, one based on a ``limited number of patient
characteristics.''
We do not agree with the statement that, because the proposed case-
mix adjusters collectively account for about 1 percent of the facility
variation in composite rate costs, the variables used are fundamentally
flawed. In fact, when data is combined over three years, each of the
proposed case-mix variables is highly significant statistically,
despite the low proportion of facility variation in costs explained. A
more important indicator of the importance of the case mix factors
identified is the size of the adjustments. If the identified case mix
variables did not have a meaningful relationship with costs, the
magnitude of the adjustment factors would be insignificant or trivial.
They are not. As explained in this final rule, based on our analysis of
the comments we received, we have revised the case-mix variables used
to adjust the composite payment rates. Our research to develop a
statistically robust clinically coherent case-mix measure in the
context of the fully bundled ESRD PPS will continue.
8. Alternative Case-Mix Variables
Comment: Several commenters suggested alternative case-mix
variables which they believe account for patient differences in
resource consumption and would better distinguish facility differences
in composite rate costs. The patient characteristics proposed by
commenters included quarterly serum albumin values, cancer, limb
amputation, gastrointestinal disorders, body mass index, weight,
revised age groupings, hypertension, duration of dialysis treatment,
and others. The commenters indicated that, based on their clinical
judgment, the suggested factors were more likely to be predictors of
variability in the cost of care than the proposed AIDS and PVD co-
morbidities. A few commenters recommended a delay in the implementation
of the case-mix adjusted composite payment rates pending evaluation of
the suggested variables. A number of comments indicated that BMI was a
significant predictor of cost and recommended that BMI be included in
the case-mix adjustment. Another commenter recommended BSA be examined
as a potential case-mix predictor.
Response: We appreciate all of the comments we received proposing
alternative case-mix variables. We welcome suggestions for case-mix
refinement based on sound clinical judgment, especially when analyses
including separately billable ESRD services are performed as our
research for development of the bundled ESRD payment system progresses.
However, we point out, that unless the existence of a suggested co-
morbidity or patient characteristic could be determined from either the
Form CMS 2728 or claims data which could be linked to a specific ESRD
dialysis patient, we were unable to evaluate its potential to predict
facility differences in composite rate costs. Furthermore, unless a
patient characteristic can be reported on the UB 92 claim form (or the
equivalent electronic version), it cannot be used to adjust a
facility's composite payment rate. These limitations eliminate for
consideration many of the commenters' suggested alternative patient
characteristic variables.
Nonetheless, our regression model evaluated 35 patient
characteristics including weight, BMI, BSA, seven types of cancer,
diabetes, chronic obstructive pulmonary disease, four types of heart
disease, and race. Co-morbidities selected for inclusion in the model
with significant negative coefficients were removed from subsequent
iterations of the stepwise regression model. The inclusion of such co-
morbidities would have resulted in reductions in the otherwise
applicable composite rate payments. Because we can now require the
reporting of height and weight on the claim form beginning January 1,
2005, we have adopted the commenters' suggestions to use either BMI or
BSA as a predictor variable. We selected BSA and low BMI because they
improve the model's ability to predict the costs of composite rate
service compared to using BMI or weight alone. In addition, we have
increased the number of age groups from three to five and eliminated
gender as a payment variable entirely.
As explained later in the ``Implementation Date'' section, we do
not believe it would be appropriate to further delay the implementation
of the basic case-mix adjustment. We proposed delaying implementation
of the case-mix payments until April 1, 2005 in order to ensure all
systems, programming, and other operational requirements are in place.
Between publication of this final rule and the
[[Page 66329]]
implementation date, we will conduct training programs to ensure that
facilities understand both the payment methodology and reporting
requirements necessary to ensure appropriate payment to ESRD
facilities.
9. Continuing Research To Develop a More Fully Bundled Case-Mix System
Comment: Several comments requested additional detail regarding the
continuing research for the development of a more fully bundled system.
Response: The research activities for the fully bundled system have
focused on updating the database. Research efforts since the passage of
MMA have focused on supporting the Congressional mandate for the
development of a limited number of case-mix variables. Following the
publication of this rule, we anticipate that the emphasis will return
to the development of a bundled prospective payment system that
includes bundling of drugs, clinical laboratory tests, and other items
that are separately billed by such facilities. This research will be
reflected in an October 1, 2005 Report to the Congress.
In addition, the MMA requires us to establish the fully case-mix
adjusted demonstration which will bundle into the payments both
separately billable drugs and biologicals and clinical labs. Both the
Report to the Congress and the demonstration will be supported by
continuing research.
10. Body Measurements as Case-Mix Adjusters
In the proposed rule, we had discussed the importance of the BMI as
a measure of resource consumption related to the composite payment
rate. At that time, our analysis indicated that patients with very low
or high BMI were more costly to treat. At the time of the publication
of the proposed rule, we had no mechanism to obtain indicators for
height and weight on the claims form. We had indicated that we would be
exploring adding height and weight to the bills.
Comment: A number of commenters endorsed the use of low BMI as an
appropriate surrogate for the severity of morbid conditions associated
with malnourishment in the dialysis population, and some suggested that
a BMI below 20.0 kg/m\2\ is generally considered in the underweight
range. In addition, we also received comments regarding the inclusion
of a measure of BSA.
Response: We concur with the comments to include BMI and BSA as
case-mix adjusters reflecting patient characteristics that explain
variation in the reported costs for composite rate services. We have
obtained approval to collect both height and weight on the bill through
the use of two new value codes. ESRD facilities will be required to
report height and weight using these value codes, so that payment can
be based on the case-mix adjusted composite rate payment system on
April 1, 2005.
For the implementation of the basic case-mix payments, we are
providing an adjustment for low BMI, that is, any patient with a BMI
less than 18.5 kg/m\2\. We included this variable because our
regression analysis indicated that those patients who are underweight
and malnourished consume more resources than other patients. Although
we received one comment suggesting defining low BMI as 20 kg/m\2\, we
chose the measure of low BMI that is consistent with the CDC and NIH
definition for malnourishment. Furthermore, our exploration of
alternative BMI thresholds did not improve the model's ability to
predict the costs of composite rate services.
In addition, we are providing case-mix adjustments based on BSA.
Our research into this body measurement indicated that BSA (meters\2\)
is a good predictor of composite rate resource consumption. We examined
all of the formulas for BSA. While we found very little differences
between the formulas in predictive power, we are adopting the Dubois
and Dubois formula for BSA since our literature search revealed that
this particular formula was the most widely known and accepted. This
formula is: BSA=W\0.425\ * H\0.725\ * 0.007184 (DuBois D. and DuBois,
EF. ``A Formula to Estimate the Approximate Surface Area if Height and
Weight be Known'': Arch. Int. Med. 1916 17:863-71.), where w and h
represent weight in kilograms and height in centimeters, respectively.
In addition, we explored a number of options for setting the
reference values for the BSA. We examined the distributions for both
the midpoint of the BSA and the count of dialysis patients by age, body
surface and low BMI. Based on this analysis, we are setting the
reference point at a BSA of 1.84 (the average BSA among dialysis
patients in 2002). By setting the reference point at the average BSA,
the adjusters will reflect the relationship of a specific patient's BSA
to the average BSA of all patients. Therefore, some adjusters will be
greater than 1.0 and some will be less than 1.0. In this way, we are
able to minimize the magnitude of the budget neutrality offset to the
composite payment rate.
The following presents an example of the method for calculating
patient level multipliers that were derived from the coefficients
resulting from the regression model that includes control variables,
expanded age groups, BSA, and an indicator for low BMI (<18.5 kg/m\2\).
The model excluded small facilities, and outliers.
Case-mix adjuster = Age factor * low BMI factor * BSA factor
Although we could have selected any increment, we believed an
increment of 0,1 provided and appropriate degree of precision of the
calculation of the exponent used to compute the BSA case-mix
adjustment. The BSA factor is defined as an exponent equal to the value
of the patient's BSA minus the reference BSA of 1.84 divided by 0.1.
The BSA adjustment factor of 1.037 is then exponentiated based on the
calculated BSA factor as 1.037 ((BSA - 1.84)/0.1)
For Example: The case-mix adjuster for a 47-year old person who is
underweight (BMI<18.5 kg/m\2\) and has a body surface area of 2.0 m\2\
is calculated by using the 1.84 BSA reference point:
Age Factor = 1.055
Low BMI Factor = 1.112
BSA Factor = 1.037 ((2.0-1.84)/0.1) = 1.037 \(1.6)\ = 1.060
Case-Mix Adjuster = 1.055 * 1.112 * 1.06 = 1.244
The resulting case-mix adjustment factor of 1.244 for this patient
would be applied to the facility's composite payment rate that is
adjusted for area wage index, drug add-on, and budget neutrality.
11. Budget Neutrality for Case-Mix Adjustment
Section 1881(b)(12)(E)(i) of the Act, as added by section 623(d)(1)
of the MMA, requires that the basic case-mix adjusted composite rate
system be designed to result in the same aggregate amount of
expenditure for such services, as estimated by the Secretary, as would
have been make for 2005 if that paragraph did not apply. Therefore, the
patient characteristics case-mix adjustment required by section
623(d)(1) of the MMA must result in the same aggregate expenditures for
2005 as if these adjustments were not made.
In order to account for the payment effect related to the case-mix
adjustment, we proposed to standardize the composite rate by dividing
by the average case-mix modifier of 1.1919. The proposed budget
neutrality adjustment to the composite rate was 0.8390. However, we
were not able to simulate case-mix effects at the bill level
[[Page 66330]]
because co-morbidities are generally not reported on the ESRD bill. We
still intend to refine our case-mix adjustments once we have more
complete patient data on the ESRD bill. In this final rule, we have
refined our adjustment for budget neutrality related to the case-mix
factor. We simulated payment for each ESRD provider by applying a
facility-specific case-mix multiplier to the composite rate applicable
for that facility. Since the pediatric case-mix adjustment was
developed outside the regression model, we simulated payments
separately for those treatments. The results of these tow computations
were then combined to arrive at the total case-mix adjusted payments.
We also simulated payment for each provider as if they did not receive
any case-mix adjustments. We then compared the total simulated payments
with case-mix adjustment to total simulated payments without case-mix
adjustment. The resulting budget neutrality adjustment to the composite
rate is 0.9116.
B. Revised Patient Characteristic Adjustments
The following section discusses in detail the final case-mix
adjustments to the ESRD composite rate payment.
In summary, based on the comments that we received on the proposed
case-mix and additional analyses prepared by our contractor, KECC, in
this final rule, we are modifying the proposed case-mix adjustments. We
have broadened the number of age groups to include five age categories
and added low BMI and BSA as measures. We have also included a specific
case-mix adjustment for pediatric patients under age 18. We excluded
the proposed categories gender and co-morbid conditions. We will be
using a limited number of patient characteristics for the basic case
mix system; however, we believe that these adjustments adequately
explain variation in the reported costs per treatment for the composite
rate services consistent with the legislative requirement. The
adjustment factors for the basic case mix are listed in Table 13 below.
[GRAPHIC] [TIFF OMITTED] TR15NO04.509
The following table illustrates the average case-mix adjustment by
type of provider based on the 2002 data that was used to develop the
adjustment factors.
[[Page 66331]]
[GRAPHIC] [TIFF OMITTED] TR15NO04.510
As illustrated in table 14, regardless of the type of provider, the
projected average case-mix adjustments for patient characteristics do
not vary significantly.
C. Rural Facilities
Comments: Some commenters focused on the potential impact the
revised composite rate payment system could have on rural facilities.
They were initially concerned that excluding small facilities from the
overall sample actually reflected the elimination of rural facilities
from the sample. As a means of resolving this issue, they suggested
that a rural facility exception be restored.
Response: The MMA provision for composite rate exceptions limited
the availability of exceptions only to pediatric facilities. To the
extent that a qualifying pediatric facility is located in a rural area,
it would be able to apply for an exception to its composite payment
rate.
D. Dual Eligible Dialysis Population
Comment: One commenter expressed concerns regarding potential
impact on the dual eligible population, specifically with respect to
coverage of deductibles and coinsurance amounts. Concern was expressed
regarding the impact of this proposal on the Medicaid population on a
state-by-state basis.
Response: We recognize that this is an important issue for ESRD
facilities and can be particularly problematic for chain organizations
that own facilities in multiple States. While we cannot direct States
for payment for dual eligible beneficiaries, we will take appropriate
action to ensure that States are aware of the changes we are
implementing so they can take steps to adjust their payments for dual
eligible dialysis patients.
E. Budget Neutrality
Section 623(d)(1) of the MMA added section 1881(b)(12)(E)(i) of the
Act, which requires that the basic case-mix adjusted composite rate
system be designed to result in the same aggregate amount of
expenditure for services, as estimated by the Secretary, as would have
been made for 2005 if that paragraph did not apply. Therefore, the drug
add-on adjustment and the patient characteristics case-mix adjustment
required by section 623(d)(1) of the MMA must result in the same
aggregate expenditures for 2005 as if these adjustments were not made.
For the proposed drug payment add-on adjustment, we indicated in
the proposed rule that the methodology we used to estimate the
difference between the current and proposed drug payments was designed
so that aggregate payments would be budget neutral.
In addition, the proposed rule provided for a budget neutrality
adjustment to the composite payment rate of 0.8390 to account for the
effects of the proposed case-mix adjustments on aggregate expenditures.
Comment: We received a number of comments concerning our
application of the budget neutrality provision of section 623 of MMA.
Specifically, many comments suggested that we did not comply with
Congressional intent that facilities would be held harmless by this
provision, that is, that facilities would not receive lower payments
then they otherwise would have.
Response: Section 623 of MMA requires that aggregate payments in
2005 not exceed payments that would otherwise be paid. The budget
neutrality provision is to ensure that total aggregate payments from
the Medicare trust fund will not increase or decrease as a result of
changes in the payment methodology. As with other Medicare payment
systems, changes in the payment mechanism will result in the
redistribution of Medicare dollars across facilities. There is no
provision (nor any implication) in section 623 of the MMA that
guarantees that individual facilities would receive the same amount of
payment under a case-mix adjusted system as they did previously.
The final budget neutrality adjustment to the ESRD composite
payment rate applicable to the case mix adjustments (including the
pediatric adjustment) is 0.9116. Also in the proposed rule, the
calculation of the drug add-on adjustment was designed to ensure budget
neutrality with respect to aggregate drug payments.
F. Geographic Index
Comment: Several comments expressed disappointment that we did not
propose revisions to the current outdated wage indexes reflected in the
composite payment rates, despite the discretionary authority set forth
in section 623(d)(1) of the MMA to replace them. These comments stated
that this decision likely would have the greatest impact on facilities
located in high cost and high wage areas, where competitive labor
market pressures are more
[[Page 66332]]
pronounced. Comments generally were in favor of using the most up-to-
date information available for developing a revised composite rate wage
index.
Response: The wage index currently used in the composite rates is a
blend of two wage index values, one based on hospital wage data from
fiscal year 1986 and the other developed from 1980 data from the Bureau
of Labor Statistics. The wage index is calculated for each urban and
rural area based on 1980 U.S. Census definitions of metropolitan
statistical areas (MSAs) and areas outside of MSAs. Restrictions apply
to the wage index values used to develop the composite payment rates.
Payments to facilities in areas where labor costs fall below 90 percent
of the national average, or exceed 130 percent of that average, are not
adjusted below the 90 percent or above the 130 percent level. This
effectively means that facilities located in areas with wage index
values less than 0.90 are paid more than they would receive if we fully
adjusted for area wage differences. Conversely, facilities in locales
with wage index values greater than 1.30 are paid less than they would
receive if we fully adjusted payment for these higher wage levels.
We agree that the current ESRD composite rate wage indexes, and the
definitions of the geographic areas on which they are based, need to be
updated. On June 6, 2003, OMB issued Bulletin 03-04, which announced
new geographic areas based on the 2000 Census. The extent to which we
use the new OMB geographic definitions, incorporate them into the
various prospective payment systems (PPSs) we administer, and whether
we rely on hospital wage and employment data to develop new composite
rate wage index values will have the potential to significantly
redistribute payments among ESRD facilities.
In the August 11, 2004 Federal Register (69 FR 48916), we announced
how we were revising the hospital wage index used in connection with
inpatient PPS. Although one comment stated that we should adopt the
same wage index used in connection with the inpatient PPS, several of
the hospital wage index revisions stem from specific provisions of law
(for example, geographic reclassification of hospitals) and would not
necessarily be appropriate to apply to a revised ESRD wage index for
the composite payment rates. Because of the discretion afforded the
Secretary in developing a new wage index for ESRD payment purposes, we
are carefully assessing the propriety and payment implications of
policy options before recommending revisions to the current measure. We
will not take action to replace the current composite rate wage index
at this time. We point out that, in accordance with section 623(d)(1)
of the MMA, any revisions to the wage index ultimately adopted must be
phased in over a multiyear period.
G. Payment Exceptions and the Revised Composite Payment Rate
1. Application of Statutory Increases to Exception Amounts
Comment: Several comments were critical of our policy of not
applying increases to composite rates, mandated by the Congress, to
amounts paid under exceptions. The comments maintained that this policy
is inequitable, precludes the proper application of inflation updates
to costs that we had recognized as appropriate in granting the
exception, and over time erodes the value of the exception because of
the cumulative impact of an effective ``historical freeze.''
Response: The commenters are correct that we have only applied the
Congressionally mandated statutory increases to the basic wage index
adjusted composite payment rates, not to exception payments. For
example, a provider which was authorized a $12.00 atypical services
exception amount per treatment in addition to its otherwise applicable
composite payment rate of $125.00 effective August 12, 2000 would not
be entitled to the 2.4 percent increase applicable to composite rate
payments on January 1, 2001, because its exception rate of $137.00
exceeded its basic rate of $125.00 increased by 2.4 percent or $128.00.
While the commenter believes that our policy of not applying the
Congressional mandated increases to exception amounts is unfair, we
believe that the policy is consistent with the law. Section
422(a)(2)(C) of SCHIP, enacted December 21, 2000, states as follows in
pertinent part:
Any exception rate under such section in effect on December 31,
2000 * * * shall continue in effect so long as such rate is greater
than the composite rate as updated * * *.
Thus, the statute seems to distinguish between an exception rate
and the composite rate, as ``updated'' by the Congress. The clear
implication of the text is that the exception rate is not so updated.
Accordingly, we believe that our policy of not applying mandated
composite rate increases to exception amounts is consistent with the
statute. Moreover, we point out that section 422(a)(2) of SCHIP
prohibited the granting of new exceptions and that we are providing
facilities the option of either retaining their exception rates, or at
any time, electing payment under the case-mix adjusted composite
payment rates. We do not believe providers, given this option, will be
disadvantaged.
2. Home Dialysis Training Exceptions
Comment: We received comments asking for clarification concerning
home dialysis training exceptions since the proposed rule only
addressed exceptions in a very general way. They stated that the rule
proposes that each facility with an exception rate would compare their
exception rate to the new basic case-mix adjusted prospective payment
and then decide if it wishes to withdraw the exception rate and be
subject to the basic case-mix adjusted composite rate. The commenters
stated that this language does not consider a facility that would
choose to accept the basic case-mix adjusted prospective payment for
its chronic treatments, but continue its exception rates for the
training of home patients. The home training exception is the most
widely used exception and provides a higher rate for the higher cost of
training a patient in fewer than the maximum number of allowed
treatments.
Response: We agree and are providing that a home training exception
rate may be continued. Facilities with home training exceptions will be
able to retain their current exception training rates as well as take
advantage of the case-mix adjusted rate for non-training dialysis.
3. New Exception Window
Comment: One commenter requests that a new ``exceptions window''
for pediatric facilities be opened in early 2005. It will not be until
after this rule is final that its members will be able to determine the
exact impact of this new methodology on their operations.
Response: Section 623(b) of MMA reinstated exceptions for
qualifying pediatric facilities defined as facilities with at least 50
percent of their patients under 18 years of age. The current exception
window for pediatric facilities closed on September 27, 2004. At this
time, future exception windows will be open only for pediatric
facilities. The exceptions process is opened each time there is a
legislative change in the composite payment rate or when we open the
exception window. The fiscal intermediary will notify the ESRD
pediatric facilities when a new exception window opens. However, it is
our intent to open pediatric exception windows on an annual basis.
[[Page 66333]]
4. Home Dialysis Training Rates
Comment: One commenter asked if the training rate add-on to the
composite rate would still be applied.
Response: Yes, the following rates will apply for self-dialysis or
home dialysis training sessions:
For intermittent peritoneal dialysis (IPD), continuous
cycling peritoneal dialysis (CCPD) and hemodialysis training, the
facility's case-mix adjusted payment excluding any approved exception
rates will be increased by $20 per training session, furnished up to
three times per week.
For continuous ambulatory peritoneal dialysis (CAPD), the
facility's case-mix adjusted payment excluding any approved exception
rates will be increased by $12 per training session, furnished up to
three times per week.
Based on the example for John Smith in section L (Example of
Payment Calculation Under the Case-Mix Adjusted Composite Rate System),
the hemodialysis (IPD & CCPD) training rate would be his case-mix
adjusted rate of $170.80, increased by the training add-on of $20 for a
total training rate of $190.80. For CAPD training, the training rate
would be $182.80 ($170.80+$12)
H. Implementation Date
Comment: We received a number of comments supporting our proposed
delay in implementing the case-mix portion of the revised composite
payment methodology. Many comments maintained that the proposed April
1, 2005 effective date was overly ambitious, and some suggested that a
July 1, 2005 implementation date would be more realistic given the need
for facility and fiscal intermediary training and education.
Response: The MMA requires that the basic case-mix adjusted
composite payment rates be effective for services beginning January 1,
2005. Despite the statute's specificity, we pointed out in the proposed
rule that all of the numerous systems, programming, and operational
changes necessary to implement the case-mix adjusted payments cannot be
completed in time for a January 1, 2005 implementation date.
As presented in the proposed rule, we considered two options that
we believed effectively complied with the statute's January 1, 2005
implementation date. While we stated in the proposed rule that either
of these options substantively complies with the January 1, 2005
implementation date requirement of the statute, we rejected both
alternatives.
The likelihood of payment error, potential disruption of facility
payments, and the cost of reprocessing bills militated against either
option. We proposed instead an April 1, 2005 implementation date for
the basic case-mix adjustments to the composite payment rates,
including the budget neutrality reduction. This option avoids the need
for reprocessing of bills and applies the budget neutrality adjustment
applicable to the case-mix adjustments effective April 1, 2005.
Although we agree with the comment that a July 1, 2005 effective date
would be ideal in light of the systems and operational changes required
to implement the case-mix provisions, we believe that an April 1, 2005
effective date for the case-mix adjustments is feasible, and have
decided not to revise that date. We have concluded based on our
evaluation of ESRD claims processing systems that the April 1, 2005
implementation date is achievable. As we stated in the proposed rule,
the 1.6 percent increase to the composite payment rates and drug add-on
will be effective January 1, 2005.
I. Summary of Final Rule Implementing Changes to the ESRD Composite
Payment Rate (Section 623 of MMA)
As set forth in this final rule, we will increase the ESRD
composite payment rates by 1.6 percent effective January 1, 2005 in
accordance with section 623(a) of the MMA. Also, the composite payment
rates will be increased January 1, 2005 by 8.7 percent to reflect
revisions to the drug pricing methodology for separately billable
drugs, as discussed previously in this rule (Composite Rate Adjustments
to Account for Changes in Pricing of Separately Billable Drugs and
Biologicals). This section explains the development and computation of
the revised drug add-on, which differs from the 11.3 percent amount
described in the proposed rule, and our response to comments which
advocated separate add-on amounts for hospital-based and independent
facilities.
Despite the discretionary authority set forth in section 623(d)(1)
of the MMA to replace the current outdated wage index used in the
composite payment rates, we are taking no action to revise the wage
index at the present time. A revised wage index will potentially
significantly redistribute ESRD payments. We believe that further study
is warranted before we revised the current index. Those assessments are
presently underway.
We have also adopted a revised basic case-mix methodology for
adjusting the composite payment rates based on a limited number of
patient characteristics, as prescribed in section 623(d) of the MMA.
The development and application of the revised case-mix adjusters were
previously explained in the ``Revised Patient Characteristic
Adjustments'' section of this final rule. The variables for which
adjustments will be applied to each facility's composite payment rate
include age, BSA, and low BMI. In response to comments, we eliminated
gender in this final rule as a patient classification variable for
purposes of case-mix adjustment, substituting BSA and a low BMI
variable instead. We have also increased the number of age categories
from three to five, and eliminated co-morbidities pending further
study. Because height and weight are necessary to compute each
patient's BSA and BMI, those measurements, in centimeters and
kilograms, respectively, will be required on the UB 92 for outpatient
ESRD services furnished on and after January 1, 2005. This final rule
also provides for a case-mix adjustment of 1.62 to a facility's
composite payment rate for pediatric ESRD patients (that is, under age
18). The methodology used to develop the pediatric case-mix adjustment
factor of 1.62 is described in the ``Case-Mix Adjustment for Pediatrics
Patients'' section of this rule. Although the MMA requires that the
basic case-mix adjusted composite payment rates be effective for
services beginning January 1, 2005, the systems and operational changes
necessary to implement them cannot be completed in time for a
prospective January 1, 2005 effective date. The case-mix adjustments
and the applicable budget neutrality adjustment of 0.9116 will be
effective April 1, 2005.
Example of Payment Calculation Under the Case-Mix
Example 1
Adjusted Composite Rate System
The following example presents 2 patients dialyzing at Neighbor
Dialysis, an independent ESRD facility located in Baltimore, MD.
Calculation of Basic Composite Rate for Neighbor Dialysis
Wage adjusted composite rate for independent facilities in Baltimore,
MD: $134.93
Wage adjusted composite rate increased by drug add-on adjustment
$134.93 x 1.087: $146.67
Adjusted Facility Composite Rate after budget neutrality adjustment
($146.67 x 0.9116): $133.70
Patient 1
John Smith attains age 18 on April 10, 2005 and undergoes
hemodialysis. John
[[Page 66334]]
weighs 75.5 kg. and is 181.5 cm. in height. Because John Smith attains
age 18 April 10, he is considered age 18 for the entire month of April,
and would not be classified as a pediatric patient.
Calculation of Case Mix Adjusted Payment
The BSA and BMI for John Smith will be calculated by the PRICER
program used to compute the composite payment for each patient based on
the height and weight reported on the UB 92. However, the computations
of the BSA and BMI for John Smith are shown below:
BSA = 0.007184 x (height) \0.725\ x (weight) \0.425\
BSA = 0.007184 x 181.5 \0.725\ x 75.5\0.425\
BSA = 0.007184 x 43.4196 x 6.2824 = 1.960
BMI = weight/height(m) \2\
John Smith is 181.5 cm. in height, which converts to 1.815 meters.
BMI = 75.5/1.815 \2\ = 22.919
The case mix adjustment factor for John Smith, an 18 year old whose
BMI exceeds 18.5 kg/m\2\ and has a BSA of 1.960 is calculated as
follows:
Age adjustment factor (age 18-44) 1.223
BMI adjustment factor (BMI >= 18.5 kg/m\2\) 1.000
BSA adjustment factor (1.0371.960-1.84/0.1) 1.0446
Case mix adjustment factor (1.223 x 1.000 x 1.0446) 1.2775
Basic case mix adjusted composite payment ($133.70 x 1.2775) $170.80
Patient 2
Jane Doe is a 82 year old malnourished patient who undergoes
hemodialysis. Jane is 158.0 cm. in height.
Calculation of Case Mix Adjusted Payment
The BSA and BMI for Jane Doe, which will be automatically computed
by the PRICER program, are calculated as follows:
BSA = 0.007184 x (height) \0.725\ x (weight) \0.425\
BSA = 0.007184 x 158.0 \0.725\ x 31.25 \0.425\
BSA = 0.007184 x 39.2669 x 4.3183 = 1.2182
BMI = weight/height(m) \2\
Jane Doe is 158 cm. in height, which converts to 1.580 meters.
BMI = 31.25/1.580 \2\ = 12.5180
The case mix adjustment factor for Jane Doe, an 82 year old whose
BMI is less than 18.5 kg/m\2\ and has a BSA of 1.2182, is calculated as
follows:
Age adjustment factor (age 80+) 1.174
BMI adjustment factor (BMI <= 18.5 kg./m\2\) 1.112
BSA adjustment factor (1.037 1.2182-1.84/0.1) 0.7978
Case-mix adjustment factor (1.174 x 1.112 x 0.7978) 1.0415
Basic case mix adjusted composite payment ($133.70 x 1.0415) $139.24
Example 2
Linda Jones is age 16 and undergoes peritoneal dialysis at
Community Hospital, a hospital-based facility in New York City. Linda
weighs 35 kg and is 160.0 cm in height. The basic composite rate for
Linda Jones is calculated as follows:
Wage adjusted composite rate for hospital-based facilities in New York,
New York: $146.35
Wage adjusted composite rate increased by drug adjustment factor
($146.35 x 1.087): $159.08
Adjusted Facility Composite Rate after budget neutrality adjustment
($159.08 x 0.9116) $145.02
Because Linda is a pediatric ESRD patient, the automatic pediatric
adjustment factor of 1.62 applies. Neither the age, BMI, nor BSA
adjustments are applicable because Linda is less than age 18.
Pediatric adjusted composite rate ($145.02 x 1.62) $234.93
If Community Hospital were entitled to a composite rate exception,
then the provider could elect to retain its exception rate in lieu of
receiving the otherwise applicable pediatric payment rate of $234.93.
Impact Analysis
Comment: One commenter observed that the budgetary impact on the
Medicare program of proposed section 623 changes (impact table)
generally indicates an ``overall'' neutral or modest reimbursement
increase for all types of dialysis facilities (independent and rural,
for profit and non-profit, urban and rural). This commenter requested
data that indicate the number of dialysis facilities that are operating
at a loss in the U.S., by corresponding facility characteristics shown
in the impact table.
Response: The purpose of the impact table is to simulate what ESRD
facilities will receive in payments under the MMA section 623 changes
compared to what ESRD facilities would receive without any changes to
the current composite payment rates. We do not have data to determine
whether or not a facility may operate at a loss under MMA section 623.
J. Section 731--Coverage of Routine Costs for Category A Clinical
Trials
Before the enactment of the MMA, Medicare did not cover services
related to a noncovered Category A device. The MMA authorizes Medicare
to cover the routine costs associated with certain Category A clinical
trials for services furnished on or after January 1, 2005. For a trial
to qualify for payment, it must meet certain criteria to ensure that
the trial conforms to appropriate scientific and ethical standards. In
addition, the MMA established additional criteria for trials initiated
before January 1, 2010 to ensure that the devices involved in these
trials are intended for use in the diagnosis, monitoring, or treatment
of an immediately life-threatening disease or condition. Seven
commenters were in favor of this provision. Of them, four had
additional comments. One commenter was against the provision.
Comment: One commenter stated that this provision would result in
money being taken away from the pool of money for physician payments of
non-experimental procedures.
Response: We considered this issue in determining the SGR for 2005.
Since we have made a regulatory change to allow for coverage of routine
costs associated with Category A clinical trials, we are required by
statute to reflect any increased costs of this policy in the 2005 SGR.
At this time, we are estimating that the costs associated with coverage
of routine costs of Category A clinical trials will increase Medicare
spending for physicians' services by less than 0.1 percent. However, we
are reviewing this issue and we will adjust our estimates once we have
actual spending data for 2005.
Comment: One commenter specifically requested that we define
routine costs.
Response: We discuss and define routine costs in section 310.1 of
the Medicare National Coverage Determination Manual (pub 100.3). We
will take this comment into consideration if we decide to revise
section 310.1 in the future.
Comment: Two commenters recommended that we adopt a definition of
``immediately life-threatening'' that would allow contractors some
level of flexibility when they apply this criteria to evaluate trials.
Response: We will consider the importance of some level of
flexibility in defining ``immediately life-threatening.'' Although we
are not defining this term in our regulation, we intend to provide
guidance through implementing instructions.
Comment: Another commenter suggested that contractors determine in
advance if trials satisfy the immediately life threatening requirement.
[[Page 66335]]
Response: We are considering implementation requirements and will
take this suggestion under advisement.
Result of Evaluation of Comments
We are finalizing the changes to Sec. 405.207 as proposed.
K. Section 629--Part B Deductible
Section 629 of the MMA provides for regular updates to the Medicare
Part B deductible in consideration of inflationary changes in the
nation's economy. Since 1991, the Medicare Part B deductible has been
$100 per year. The MMA stipulates that the Medicare Part B deductible
will be $110 for calendar year 2005, and, for a subsequent year, the
deductible will be the previous year's deductible increased by the
annual percentage increase in the monthly actuarial rate under section
1839(a)(1) of the Act, ending with that subsequent year (rounded to the
nearest dollar). Section 1839(a)(1) of the Act requires the Secretary
of Health and Human Services to calculate the monthly actuarial rate
for Medicare enrollees age 65 and over.
We proposed to update Sec. 410.160(f), ``Amount of the Part B
annual deductible,'' to conform to the MMA and to reflect that the
Medicare Part B deductible is $100 for calendar years 1991 through
2004.
Comment: Commenters stated that they understand that we are
following the statute in implementing this provision, but encouraged us
to educate Medicare beneficiaries regarding this change.
Response: We agree that it is important to educate beneficiaries
about the deductible, as well as the other provisions of the MMA, such
as the new screening benefits, and we will be using publications such
as the ``Medicare and You Handbook'' for this purpose.
Result of Evaluation of Comments
We are finalizing the proposed changes to Sec. 410.160(f).
L. Section 512--Hospice Consultation
1. Coverage of Hospice Consultation Services
As discussed in the proposed rule published August 5, 2004,
effective January 1, 2005, section 512 of the MMA provides for payment
to a hospice for specified services furnished by a physician who is
either the medical director of, or an employee of, a hospice agency.
Payment would be made on behalf of a beneficiary who is terminally ill
(which is defined as having a prognosis of 6 months or less if the
disease or illness runs its normal course), has not made a hospice
election, and has not previously received the pre-election hospice
services specified in section 1812(a)(1)(5) of the Act as added by
section 512 of the MMA. These services comprise an evaluation of an
individual's need for pain and symptom management, counseling the
individual regarding hospice and other care options, and may include
advising the individual regarding advanced care planning.
We believe that most individuals will seek this type of service
from their own physicians. Thus, we do not expect that the services of
a hospice physician would be necessary for all individuals who elect
hospice. However, a beneficiary, or his or her physician, may seek the
expertise of a hospice medical director or physician employee of a
hospice to assure that a beneficiary's end-of-life options for care and
pain management are discussed and evaluated.
Currently, beneficiaries are able to receive this evaluation, pain
management, counseling, and advice through other Medicare benefits. For
example, physicians who determine the beneficiary's terminal diagnoses
can provide for these E/M services as well as for pain and symptom
management under the physician fee schedule. Beneficiaries may also
obtain assistance with decisions pertaining to end-of-life issues
through discharge planning by social workers, case managers, and other
health care professionals. To the extent that beneficiaries have
already received Medicare-covered evaluation and counseling for end-of-
life care, the hospice evaluation and counseling would seem
duplicative. We plan to monitor data regarding these services to assess
whether Medicare is paying for duplicative services.
In the proposed rule, we proposed to cover the services described
above for a terminally ill beneficiary when the services are requested
by a beneficiary or the beneficiary's physician. The service would, in
accordance with the statute, be available on a one-time basis to a
beneficiary who has not elected or previously used the hospice benefit,
but who might benefit from evaluation and counseling with a hospice
physician regarding the beneficiary's decision-making process or to
provide recommendations for pain and symptom management. The
beneficiary or his or her physician decides to obtain this service from
the hospice medical director or physician employee. Thus, the
evaluation and counseling service may not be initiated by the hospice,
that is, the entity receiving payment for the service.
The statute specifies that payment be made to the hospice when the
physician providing the service is an employee physician or medical
director of a hospice. Therefore, other hospice personnel, such as
nurse practitioners, nurses, or social workers, cannot furnish the
service. The statute requires that the physician be employed by a
hospice; therefore, the service cannot be furnished by a physician
under contractual arrangements with the hospice or by the beneficiary's
physician, if that physician is not an employee of the hospice.
Moreover, if the beneficiary's physician is also the medical director
or physician employee of a hospice, that physician already possesses
the expertise necessary to furnish end-of-life evaluation, management,
and counseling services and is providing these services to the
beneficiary and receiving payment for these services under the
physician fee schedule through the use of E/M codes.
In the event that the individual's physician initiates the request
for services of the hospice medical director or physician, we indicated
in the proposed rule that we would expect that appropriate
documentation guidelines would be followed. The request or referral
would be in writing, and the hospice medical director or employee
physician would be expected to provide a written note on the patient's
medical chart. The hospice employee physician providing these services
would be required to maintain a written record of this service. If the
beneficiary initiates the services, we would expect that the hospice
agency would maintain a written record of the service and that
communication between the hospice medical director or physician and the
beneficiary's physician would occur, with the beneficiary's permission,
to the extent necessary to ensure continuity of care.
We proposed to add new Sec. 418.205 and Sec. 418.304(d) to
implement section 512 of the MMA.
Comment: Several commenters requested that this provision be
extended to contracted physicians and nurse practitioners.
Response: Section 1812(a)(5) of the Act explicitly indicates that a
physician employed by a hospice agency must provide the services under
this provision. We recognize that contractual relationships are
permitted by hospice agencies for medical director and physicians'
services under the hospice benefit as described in section 1861(dd) of
the Act. However, the plain language of section 1812(a)(5) provides
only for employees of the hospice to furnish the service.
[[Page 66336]]
Section 1812(a)(5) of the Act also requires that this service be
provided by a physician as defined in section 1861(r)(1) of the Act.
While nurse practitioners may serve as attending physicians for
beneficiaries who have elected the hospice benefit, this provision does
not permit non-physicians to provide this pre-hospice service.
Comment: We received several comments that supported this provision
as beneficial for end-of-life care.
Response: We believe that this provision supports and supplements
options available to beneficiaries as they make end-of-life decisions
when the individual's health care provider and community resources are
not able to provide the expertise and information.
Comment: We received a comment suggesting that the certification of
a terminal illness, with a 6-month prognosis if the disease runs its
normal course, be eliminated and that this service should be available
to any individual deemed to be terminal.
Response: Section 1812(a)(5) of the Act explicitly indicates that
this one-time service is available to Medicare beneficiaries who are
terminally ill and have not previously elected the hospice benefit.
Section 1861(dd)(3)(A) of the Act defines the phrase ``terminally ill''
as denoting a medical prognosis that the individual's life expectancy
is 6 months or less. Since section 1812(a)(5) of the Act specifies that
the beneficiary must have a terminal illness, which includes the 6-
month prognosis, we have no authority to eliminate this definition.
Since the benefit is a pre-hospice one, we have not required that a
certification be completed before this service is provided.
Nonetheless, in the judgment of the individual's physician, the
individual must be terminally ill, that is, having a 6-month or less
life expectancy if the disease or illness runs its normal course.
2. Payment for Hospice Consultation Services
Section 512(b) of the MMA amends section 1814(i) of the Act and
establishes payment for this service at an amount equal to an amount
established for an office or other outpatient visit for E/M associated
with presenting problems of moderate severity and requiring medical
decision-making of low complexity under the physician fee schedule,
other than the portion of such amount attributable to the practice
expense component. No existing CPT or HCPCS code specifically
represents these services. We proposed establishing a new HCPCS code,
G0337 (proposed as G0xx4) Hospice--evaluation and counseling services,
pre-election. The hospice would use this new HCPCS code to submit
claims to the Regional Home Health Intermediary (RHHI) for payment for
this service. Utilization of the code would allow us to provide payment
for the service, as well as enable us to monitor the frequency with
which the code is used and assess its appropriate use. Payments by
hospices to physicians or others in a position to refer patients for
services furnished under this provision may implicate the Federal anti-
kickback statute.
In accordance with the statute, we proposed that the payment amount
for this service would be based on the work and malpractice expense
RVUs for CPT code 99203 multiplied by the CF (1.34 Work RVU + 0.10
Malpractice RVU) * (CF). The CPT code for an office or outpatient visit
for the E/M of a new patient represents a detailed history, detailed
examination and medical decision making of low complexity. We believe
that this E/M service is quite similar to the components of the new
service provided by a medical director or physician employed by the
hospice agency. Assuming that there are no changes in RVUs for CPT code
99203, and that the CY 2005 update to the physician fee schedule is the
1.5 percent specified in the MMA, the national payment amount for this
service would be $54.57 for this service (1.44 * $37.8975).
Comment: We received several comments indicating that CPT Code
99203, a mid-level office visit with a new patient, does not accurately
reflect the complexity associated with the hospice consultation. One
commenter suggested using CPT code 99205. In addition, commenters
stated that payment for this benefit should reflect the length and
intensity of each consultation.
Response: Section 1814(i)(4) of the Act explicitly states that the
payment for this service be equal to an amount established for an
office or outpatient visit with presenting problems of moderate
severity and requiring low complexity medical decision-making. We
believe that CPT code 99203, rather than CPT code 99205, most closely
conforms to the statutory language. However, in order to establish a
payment rate that excludes the practice expense component and to ensure
that we pay for the service only once, we established a G code.
Comment: We received one comment that indicated that existing
consultation codes coupled with a place of service should be used.
Response: We appreciate the concern about introducing another code
into a complex system of codes. While the title of the provision
indicates that this is a consultative service, we believe that, unlike
other consultations, beneficiaries are able to seek this service
without a referral. Moreover, we need to be able to distinguish this
service so that we can ensure that it is furnished only once to an
individual. In addition, existing E&M codes are billed by physicians.
This provision is billed by the hospice agency and is not a result of
reassignment of payment by a physician to a hospice agency. Finally,
the G code will allow us to track utilization of this new benefit.
Result of Evaluation of Comments
We are adopting our proposed policy and revising the regulations at
Sec. 418.205 and Sec. 418.304(d). We are also finalizing our proposal
to pay for this service using a G code (G0337) Hospice--evaluation and
counseling services, pre-election, with the payment based on the work
and malpractice expense RVUs for CPT code 99203.
M. Section 302--Clinical Conditions for Coverage of Durable Medical
Equipment (DME)
Section 1832(a)(1)(E) of the Act, as added by section 302(a)(2) of
the MMA, requires the Secretary to establish clinical conditions of
coverage standards for items of DME. The statute requires the Secretary
to establish types or classes of covered items that require a face-to-
face examination of the individual by a physician or specified
practitioner. Due to the timeframe and the extensive number of public
comments received, we will implement this provision at a later date. We
will address all public comments in a future Federal Register document.
N. Section 614--Payment for Certain Mammography Services
Medicare covers an annual screening mammogram for all beneficiaries
who are women age 40 and older and one baseline mammogram for
beneficiaries who are women age 35 through 39. Medicare also covers
medically necessary diagnostic mammograms. Payment for screening
mammography, regardless of setting, is paid under the physician fee
schedule, but diagnostic mammography performed in the hospital
outpatient department is currently paid under the hospital outpatient
prospective payment system (OPPS).
As stated in the August 5, 2004 proposed rule, section 614 of the
MMA amended section 1833(t)(1)(B)(iv) of the
[[Page 66337]]
Act to exclude payment for screening and diagnostic mammograms from the
OPPS. Beginning January 1, 2005, we will pay for diagnostic mammograms
under the OPPS based on the payments established under the physician
fee schedule. Thus, both diagnostic and screening mammography services
provided in the OPPS setting will now be paid based on the physician
fee schedule.
Comment: Commenters expressed support for this proposed change in
payment and believe it will assist in ensuring that these services are
available to women at risk for breast cancer.
Response: We agree that it is important to ensure access to these
services. Additional discussion of the MMA provision can also be found
in the OPPS final rule, ``Medicare Program; Changes to the Hospital
Outpatient Prospective Payment System and CY 2005 Payment Rates''
currently under development.
O. Section 305--Payment for Inhalation Drugs
The August 5, 2004 proposed rule contained the ASP plus 6 percent
payment amounts based on data received from manufacturers' ASP for the
first quarter of 2004 for albuterol sulphate and ipratropium bromide.
We indicated that such payment amounts were not the payment rates for
2005 and specified that Medicare payment rates for the first quarter of
2005 would be based on data submitted by manufacturers from the third
quarter of 2004.
We proposed to establish a separate dispensing fee for inhalation
drugs. We noted that Medicare currently pays a monthly dispensing fee
of $5 for each inhalation drug used in a nebulizer. We requested
information about an appropriate dispensing fee amount.
We also proposed to make several changes related to billing for
inhalation drugs. We proposed to allow a prescription for inhalation
drugs written by a physician and filled by a pharmacy to be increased
from 30-day to a 90-day period. We indicated that we had recently
revised the guidelines regarding the time frame for delivery of refills
of DMEPOS products to occur no sooner than ``approximately five days''
prior to the end of usage for the current product. We emphasized the
word ``approximately'' in this time frame. The change allows shipping
of inhalation drug refills on ``approximately'' the 25th day of the
month in the case of a 30-day supply and on ``approximately'' the 85th
day in the case of a 90-day supply. We indicated our belief that such
revision eliminates the need for suppliers to use overnight shipping of
inhalation drugs and allows shipping of inhalation drugs by less
expensive ground service.
We also clarified the ordering requirements for DMEPOS items,
including drugs. Drugs, including, inhalation drugs, can be dispensed
with a verbal physician order and without a written prescription.
Although a written prescription must be obtained before submitting a
claim, we reiterated that we allowed photocopied, electronic, or pen
and ink prescriptions. We pointed out the recent revision to the
Program Integrity Manual of acceptable proof of delivery requirements
for DMEPOS items. Finally, we proposed to eliminate the requirement
that pharmacies have a signed Assignment of Benefits (AOB) form from a
beneficiary in order for Medicare to make a payment. Our proposal would
eliminate a billing requirement for all drugs, including inhalation
drugs and other items where Medicare payment is only made on an
assigned basis.
Comment: A number of commenters, particularly retail pharmacies,
indicated that they are not able to obtain albuterol sulfate at the
$0.04 per milligram and ipratropium bromide at the $0.30 per milligram
rates specified in the proposed rule based on manufacturer submissions
of data for the first quarter of 2004. A large company indicated that
the ASPs stated in the proposed rule for albuterol sulfate and
ipratropium bromide were extremely close to its own acquisition costs
and inferred that the payment amount would be below smaller providers'
purchase prices. A commenter questioned the suggestion in the proposed
rule that because albuterol sulfate and ipratropium bromide are generic
drugs with multiple manufacturers a pharmacy might be able to obtain
them at a price below the average. The commenter suggested that this is
highly speculative because we have not yet received the information
from manufacturers to set the ASP for the first quarter of 2005.
Response: The ASP plus 6 percent prices for drugs in the proposed
rule were calculated based on manufacturer submissions of data covering
the first quarter of 2004. We indicated that such ASP plus 6 percent
figures were not actual payment rates for the first quarter of 2005.
ASP data submitted by manufacturers for the second quarter of 2004 show
some significant changes for inhalation drugs. The data show that the
ASP plus 6 percent would be $0.05 per milligram for albuterol sulfate,
a 25 percent increase, and $0.45 per milligram for ipratropium bromide,
a 50 percent increase. We also note that in its recent study,
``Medicare: Appropriate Dispensing Fee Needed for Suppliers of
Inhalation Therapy Drugs'' (GAO-05-72), the GAO found that acquisition
costs of inhalation drugs varied widely. The GAO found that acquisition
costs of albuterol sulfate ranged from $0.04 to $0.08 and ipratropium
bromide ranged from $0.23 to $0.64. Based on the submission of
manufacturer's average sales price data for the second quarter of 2004,
Medicare's payment rates for ipratropium bromide and albuterol sulfate
are within the acquisition cost range found by the GAO. The GAO also
found that acquisition cost was not necessarily related to the size of
the supplier.
Comment: One commenter suggested that we should consider delaying
the implementation of cuts in Medicare reimbursement for inhalation
drugs until 2006. The commenter suggested that a delay would ensure
that physicians and beneficiaries have a range of options available for
managing respiratory diseases.
Response: We do not believe that we can delay the implementation of
the ASP payment system until 2006 because the MMA provides for the
implementation of the ASP payment system in 2005.
Comment: Commenters strongly supported our proposal to pay a
separate dispensing fee for inhalation drugs, but we received varied
comments on the scope of services appropriately included in a
dispensing fee. Commenters indicated that an appropriate dispensing fee
is necessary because the costs associated with dispensing these drugs
typically exceed ASP plus six percent. Without adequate compensation,
commenters argued that Medicare beneficiary access to inhalation drugs
would be harmed. Commenters referenced an August 2004 report prepared
for the American Association of Homecare (AAH) by a consultant that
surveyed 109 homecare pharmacies between the end of May and the middle
of July 2004. Commenters cited survey results from the report
suggesting that 89 percent of suppliers would discontinue providing
inhalation drugs to Medicare beneficiaries in the absence of adequate
compensation. One commenter believes it is reasonable to expect that
reducing Medicare payment for inhalation drugs will trigger an increase
in emergency room visits, doctor visits, and hospital admissions. Other
commenters suggested a dispensing fee that is too low would result in a
concentrated market, thereby adversely affecting beneficiary choice and
access.
[[Page 66338]]
The AAH study indicated that in order to maintain 2004 levels of
service to Medicare beneficiaries and provide an operating margin of 7
percent, Medicare would have to pay an additional payment of $68.10 per
service encounter. This figure includes an average of the costs
reported as being incurred during the first quarter of 2004 for the
pharmacies that responded to the AAH survey. The study defined a
service encounter as each instance one or more billing codes were
submitted to Medicare for payment. The study reported that the typical
Medicare beneficiary has 8.8 service encounters each year, or one
service encounter every 42 days. Most commenters who cited the AAH
study supported a fee of $68.10 per service encounter.
Commenters also cited another AAH report, dated September 2001 (and
updated to 2003) from a different consultant, who surveyed a sample of
19 homecare pharmacies and found that drug acquisition costs accounted
for 26 percent of costs incurred by homecare pharmacies. Facility,
labor, delivery, patient care and education, billing and collection
costs and other direct costs were found to account for 46 percent;
indirect costs such as management information systems, regulatory
compliance programs, professional liability insurance and field and
corporate administration was 25 percent; and bad debt was 3 percent.
The study concluded that homecare pharmacies generated after-tax
returns of 9.2 percent.
A retail pharmacy commented that a dispensing fee five to six times
the current dispensing fee of $5 is necessary to cover its costs.
Another retail pharmacy indicated that a dispensing fee of $25 would be
an adequate dispensing fee, including the additional costs of
processing Medicare claims and instructing the patient on using the
drugs, and would be profitable for it.
A manufacturer urged CMS to conduct a study of the appropriate
pharmacy activities and their costs in calculating a dispensing fee.
The commenter believes such a study would yield a more accurate amount
than data and information provided as part of comments to proposed
rules does. One inhalation company indicated that the costs of rent,
delivery and salary had recently increased by specific percentages.
Several commenters opposed the inclusion in the dispensing fee of a
transitional payment. Another commenter strongly urged establishing a
dispensing fee that include an appropriate transitional payment, given
the significant payment reductions scheduled to begin in 2005.
On the scope of services, commenters indicated that various
services involved with dispensing inhalation drugs to Medicare
beneficiaries such as: (i) Training beneficiaries and caregivers on
proper use of drugs with nebulizers; (ii) establishing and revising a
plan of care and coordinating care; (iii) providing in-home visits;
(iv) providing 24-hours/7-days a week on-call personnel; (v) contacting
physicians and beneficiaries regarding dispensing of inhalation drugs;
(vi) providing follow-up contact with beneficiaries, including
compliance monitoring and refill calls. Commenters indicated that they
felt CMS has the authority to pay for costs associated with delivering
inhalation drugs under the durable medical equipment (DME) benefit.
An association representing pharmacists recommended an expansion of
Part B to include compensation for therapy management services
furnished by pharmacists. An association representing respiratory
therapists recommended a separate payment for beneficiary training by
practitioners with documented evidence of education, clinical training
and competency testing, such as respiratory therapists. A company
suggested that we establish a basic dispensing fee and separately
reimbursable codes for those who provide additional services,
reflecting the range of management services involved with inhalation
drugs. Another association acknowledged that although limited peer
reviewed studies exist on the role of homecare providers and the
respiratory practitioners in furnishing care to COPD patients,
significant anecdotal data and a consensus within the pulmonary
medicine and respiratory therapy professional communities support the
role and contribution of home respiratory care providers. Several
commenters indicated that training a beneficiary on using a nebulizer
should also be reimbursed. However, they pointed out that training
cannot be done by the physician or physician's staff because many
physicians do not have a nebulizer on which to train the beneficiary
and the Medicare payment is not sufficient to cover the physician's
staff time.
Response: We appreciate the support for our proposal to establish a
dispensing fee as well as the information about the levels and
components of such a fee.
The October 12, 2004 GAO report is based on a survey of 12
companies representing 42 percent of the inhalation therapy market. The
GAO found wide variation in suppliers' monthly costs associated with
dispensing inhalation drugs. In addition, the GAO found that large
suppliers do not necessarily have lower costs and do not necessarily
realize economies in costs associated with dispensing inhalation
therapy drugs. The GAO indicated that the wide range is due in part to
the range of services offered by suppliers and that some costs incurred
by suppliers may not be necessary to dispense inhalation drugs, for
example marketing, overnight shipping, and 24-hour hotlines for
beneficiary questions. The GAO report indicates that the range of costs
suppliers are incurring is a good starting point for a dispensing fee
amount, but that the appropriate dispensing fee Medicare pays must take
into account how excess payments affect the costs.
We note the extreme variation that the GAO found in the costs of
dispensing nebulized drugs to Medicare beneficiaries: GAO found that
per patient monthly costs of dispensing these medications ranged from a
low of $7 to a high of $204 in 2003. Because it appears that the GAO
survey and the 2004 AAH survey may have included different costs and
services, further research is needed to understand these differences.
In addition to the GAO and AAH studies, we note the wide range of
comments indicating what services a dispensing fee should cover. We
believe that before a determination can be made as to an appropriate
dispensing fee for inhalation drugs after 2005, we need to more fully
understand the components of and the reasons behind the current
variability in the costs of furnishing of these drugs and the services
being provided. We intend to work with the AAH, others concerned with
inhalation therapy and our partners in the Department of Health and
Human Services to explore these issues more fully.
In the interim, for 2005, we are establishing a $57 monthly fee and
an $80 90-day fee for furnishing inhalation drugs using data in the AAH
study and the GAO report. We established the monthly fee based on the
weighted average of the costs for new and established patients from the
2004 AAH study after excluding sales and marketing, bad debt, and an
explicit profit margin. Because the AAH study did not establish a fee
for the 90-day period, we applied the methodology used in the GAO
report to the data in the AAH study to calculate the 2005 90-day fee.
Accordingly, we assumed that direct costs associated with a monthly fee
are similar to the direct costs associated with the 90-day fee and then
we tripled the indirect costs. We intend to further examine the
conversion of per
[[Page 66339]]
encounter costs as reported in the AAH study to comparable monthly and
90-day cost figures.
We note that although the AAH study contained costs related to
services that may be of potential benefit to our beneficiaries, and
many commenters indicated that we should provide payment for these and
the other services described above, we are concerned that these
services may be outside the scope of a dispensing fee. We are
continuing to study these services and associated cost categories as
the new payment systems are implemented and we gain experience with
them. We intend to revisit this issue and proceed through notice and
comment rulemaking in order to establish an appropriate dispensing fee
for 2006.
Comment: A commenter suggested that the dispensing fee be
established on a per dose basis. It was argued that this would provide
Medicare with protection against pharmacies dispensing partial
shipments or shipments more frequently than 30 or 90 days in order to
increase the number of dispensing fees. We received comments in support
of a need-based dispensing fee to accommodate additional drugs when
beneficiaries suffer from disease flare-ups. We also received comments
indicating that beneficiary's prescriptions change, often during the
first month. Other commenters cited the AAH study, which calculated
different costs associated with dispensing inhalation drugs for new
patients and established patient.
Response: The dispensing fee we are establishing covers all drugs
shipped to a beneficiary during a month (or 90-day period) regardless
of the number of times a supplier ships inhalation drugs to a
beneficiary. If a supplier does not supply the prescription in full, it
is the supplier's responsibility to fill and deliver the remainder of
the prescription, but Medicare will not pay additional monthly
dispensing fees. We will monitor the issue about partial shipments and
potentially erroneous billing for multiple monthly dispensing fees. We
also are concerned that a per-dose dispensing fee could provide an
incentive to supply more drugs.
The 2005 fee is an average across all beneficiaries, new and
established, and covers additional drugs shipped during a month if a
beneficiary's prescription changes. We will study the issue further of
different dispensing fees for new and established beneficiaries and the
frequency that additional drugs are shipped for prescription changes.
Comment: A manufacturer recognized that compounded products can be
covered under certain circumstances and that compounding could be
included appropriately in a dispensing fee. Another manufacturer
expressed concern about including compounding in the activities that a
dispensing fee covers. A suggestion was made that a HCPCS modifier be
used for inhalation drugs that are compounded.
Response: The costs of compounding are included in the AAH study
but are not separately identified in the direct cost line items.
Because the 2005 fee is based on the AAH study, we need to avoid
duplicate payment. With compounding bundled into the fee for 2005, we
have concerns about paying separately for compounding in 2005.
Comment: A commenter recommended that we address compounding
circumstances that might be inconsistent with FDA's policy prohibiting
pharmacy compounding of two or more separate FDA-approved products when
a combination product approved by the FDA is commercially available and
compounding that might be done without the necessary controls to ensure
drug product sterility and potency.
Response: The fact that we consider compounding to be included in
the 2005 fee to furnish inhalation drugs does not in any way support
practices that are inconsistent with FDA guidelines.
Comment: The commenter also suggested that we consider creating a
HCPCS modifier for drugs that a prescribing physician intends to be
compounded but which a pharmacy dispenses separately in non-compounded
form. The commenter believes that such a modifier would help discourage
pharmacies from leaving the responsibility for compounding to the
beneficiary who would be combining the drugs in non-sterile,
uncontrolled conditions.
Response: We understand the commenter's concerns and will study
this issue.
Comment: We received comments suggesting that the actual savings
attributable to MMA section 305 may be both higher and lower than the
November 20, 2003 Congressional Budget Office (CBO) estimate for MMA
section 305. One company suggested that the actual savings could be
less than estimated by CBO because the ASP model potentially motivates
drug manufacturers to increase drug costs, which will be directly
passed on to the government. Other commenters cited two different
estimates from the AAH report. Using one calculation, the commenters
argued that a dispensing fee of $68.10 per encounter would still enable
Medicare to achieve savings of $350 million per year or more than $4
billion over 10 years. Using another calculation, the commenters argued
that the savings would be $7 billion over the 10-year budget-scoring
window. The commenters indicated that the $4 billion savings figure was
comparable to the initial projections made by the Congressional Budget
Office (CBO) in 2003 and the $7 billion figure was in excess of the CBO
estimated savings. Commenters cited these figures to argue that
establishment of a per service encounter fee of $68.10 would set the
payment at the level originally envisioned by Congress. Another
commenter suggested that a dispensing fee of $0.85 per 2.5 mg dose for
albuterol sulfate and $0.97 per dose for a blended mix of other
inhalation drugs including ipratropium bromide would be consistent with
what they believe are the 17.7 percent savings assumed by CBO. One
commenter indicated that CBO underestimated the savings from section
305.
Response: MMA specifically requires the use of the ASP methodology
to establish more appropriate payment rates for drugs. MMA explicitly
requires the establishment of a supplying fee for Part B covered oral
drugs as determined to be appropriate by the Secretary. MMA also
explicitly requires establishment of a furnishing fee for blood
clotting factors. However, MMA does not specify a particular dispensing
fee amount for inhalation drugs, nor does MMA specify a method to
determine a dispensing fee for inhalation drugs. Accordingly, CMS used
existing authority to propose in the NPRM that an appropriate
dispensing fee be established. Because MMA did not require a specific
method or amount for a dispensing fee for inhalation drugs, we find the
arguments unpersuasive that a dispensing fee of a particular amount was
envisioned by Congress or consistent with Congressional intent as
reflected in a CBO estimate.
Comment: We received comments that supported and opposed the use of
90-day prescriptions. One commenter supporting the proposed change
indicated that most beneficiaries who receive nebulized medications
suffer from chronic lung diseases and will require medication to manage
their disease for prolonged periods. The commenter indicated that
allowing a prescription for 90-days would reduce paperwork and
redundant effort for beneficiaries, physicians and DME suppliers. A
commenter indicated that there would be modest savings in dispensing,
billing and shipping costs with allowance of a 90-day supply of
[[Page 66340]]
refills. One company suggested savings of 12.5 percent, most notably in
shipping. Commenters opposing 90-day prescriptions gave various
reasons, including that beneficiaries may experience side effects and
change prescriptions within the first month and a certain percent of
beneficiaries die each month resulting in non-returnable product. In
addition, some argued that pharmacy savings for a 90-day shipment would
not be significant because shipping costs account for only an estimated
16 percent of supplier's non-acquisition costs associated with
providing inhalation drugs. Another company argued that a 90-day
shipment would substantially increase provider's expenses for boxes and
shipping. Some commenters agreed that certain chronic use medications
should be provided in larger quantities, but urged caution due to the
practices of some suppliers who automatically ship additional product
without knowing whether the patient's current supply is exhausted. Some
comments suggested that a 60-day supply might be more cost-effective in
the long-term because there would be a reduced risk that large
quantities of medications might be wasted. Another commenter suggested
that the policy be defined to cover only drugs that are proven to be
stable for at least 90 days following dispensing.
Response: As we indicated in the proposed rule, we believe that
reasonableness should govern filling a monthly vs. 90-day prescription
depending on the circumstances of the beneficiary. We agree with the
commenter that the initial prescription for a new patient should be
written for a 30-day period because of the potential for adverse
reactions or changes in the treatment regimen. We would expect
prescriptions for new patients to be for 30-day periods. In addition,
we believe that it is reasonable for physicians to write a 30-day
prescription for those beneficiaries who they believe are less stable.
Similarly, we believe that refill prescriptions for 90-day periods are
reasonable, particularly for stable beneficiaries. Although the
Medicare program would achieve savings from the appropriate use of 30-
day and 90-day prescriptions, we believe that given the comments it
would be prudent for us to monitor the 90-day supply issue. Section
4.26.1, the Proof of Delivery Methods section of the Program Integrity
Manual, instructs that suppliers of DMEPOS product refills contact the
beneficiary prior to dispensing the refill to ensure that the refilled
item is necessary and confirm any changes or modifications to the
order. Suppliers who ship either a 30-day or 90-day supply of
inhalation drugs without knowing the beneficiary's current supply is
exhausted would be in violation of this policy. The 90-day period
should not be of concern for inhalation drugs because most of these
drugs are stable for at least 90-days and thus can be dispensed for
such period. We would revisit this issue if additional inhalation drugs
that are unstable after 90-days become available.
Because we received limited data on costs of furnishing a 90-day
supply, it is more difficult to determine a 2005 fee for furnishing a
90-day supply of inhalation drugs. However, given that this is an
optional payment arrangement for beneficiaries whose course of
treatment has stabilized to the point that the required dosage can be
predicted with a reasonable degree of certainty over a 90-day period,
we believe that it is important to establish a 90-day fee. As described
earlier, we are establishing a 90-day fee for furnishing inhalation
drugs by applying the methodology from the GAO report to the data in
the AAH study. We assumed all of the direct costs associated with a
monthly fee are similar to the direct costs associated with a 90-day
fee and we tripled the indirect costs. We plan to study this issue
further.
Comment: Many commenters acknowledged that most DMEPOS items,
including drugs, can be dispensed based on verbal orders. Several
commenters objected to the requirement that a written order from the
physician still must be obtained before billing. They suggested that we
revise policy so that a prescription could be both filled and billed
based solely on a verbal order from a physician. They pointed out that
the requirement that a pharmacy still obtain a written order for a
prescription in order to be able to bill Medicare creates a significant
administrative burden for a pharmacy because it often requires
persistent follow-up with a physician. Another commenter suggested that
we consider accepting electronic transmissions of prescriptions, for
example, e-scripts. Another commenter requested clarification of the
rule for dispensing based on a verbal order for inhalation drugs and
the proposed requirement that an order for an item of DMEPOS be signed
and dated within 30 days of a face-to-face examination of a
beneficiary.
Response: The policy that allows dispensing based on a verbal order
but requires a written order for billing applies to all DMEPOS items.
This policy balances fraud and abuse concerns with prompt dispensing of
DMEPOS items to beneficiaries. Written orders from the physician can be
faxed, photocopied, or provided via electronic or pen and ink forms. In
accordance with current policy, pharmacies may accept electronic
prescriptions from physicians.
Beneficiaries receiving inhalation drugs are having face-to-face
exams routinely and generally do not need additional visits to re-order
their drugs. A single face-to-face exam is generally sufficient for
items ordered, that is, we would not require a separate face-to-face
exam for the nebulizer and for the inhalation drugs. We assume that
physicians would order them at the same time because they are used
together.
Comment: One commenter supported the revision made earlier this
year that provides flexibility regarding the timeframe for refilling
Medicare prescriptions. The commenter noted that most third party plans
allow pharmacies to refill prescriptions within five days of the end of
usage for the previous prescription quantity dispensed. Another
commenter recommended that the time frame for subsequent deliveries be
expanded beyond five days. The commenter indicated that they believe a
five-day time frame is too short a period for ground service and would
not eliminate the need for overnight shipping. This is based on the
commenter's experience that beneficiaries do not respond to calls to
confirm that they need additional supply until the beneficiary has only
a few days' supply left.
Response: As we indicated in the proposed rule, the revised time
frame for delivery of refills of DMEPOS products provides for refills
to occur no sooner than ``approximately five days prior to the end of
the usage for the current product.'' In the proposed rule we emphasized
the word ``approximately.'' While we believe that normal ground service
would allow delivery in five days, if there were circumstances where
ground service could not occur in five days, the guideline would still
be met if the shipment occurs in six or seven days. As another
commenter noted, the five-day standard is consistent with the time
frame for shipping used by most third party plans. Given the
consistency with private sector plans, because the requirement applies
to all DMEPOS product refills, and because the standard is not a firm
five-day limit, we do not believe that it is necessary to lengthen the
standard. We will study further the ability of a supplier to contact
beneficiaries for refills compared with its ability to provide
[[Page 66341]]
beneficiary and caregiver training on a monthly basis.
Comment: One commenter indicated that the DMERCs have not
consistently implemented the revised proof of delivery provisions but
that they are engaged in dialogue with CMS and the DMERCs to clarify
the requirements and standardize their interpretation across the four
DMERCs. Other commenters suggested that the proof of delivery
requirement be eliminated.
Response: We encourage dialogue to ensure consistent understanding
and application of the proof of delivery requirements. The proof of
delivery requirements have recently undergone an extensive review and
revision and, based on the need to prevent fraud and abuse, we see a
need to continue them.
Comment: Those commenters who addressed our proposed elimination of
the Assignment of Benefits (AOB) form for items and services, including
drugs, where assignment is required by statute, supported our proposed
change. Commenters agreed that obtaining an AOB in each instance is
redundant because the supplier is required by statute to accept the
assignment. Some commenters suggested that a onetime AOB be obtained
from the beneficiary that will be valid for every DMEPOS item he or she
receives during the period of his or her medical necessity.
Response: We appreciate the support for our proposal. As discussed
in section IV of this final rule, we are adopting our proposal to
eliminate the requirement for AOB form for items and services,
including drugs, where assignment is required by statute. We do not
agree with the suggestion to allow for a one-time AOB form to cover
items and services provided in the future because there could be fraud
and abuse issues.
Comment: We received conflicting comments about the impact of the
changes and clarifications relating to billing requirements on the
costs of dispensing inhalation drugs.
Commenters differed on the impact of the revisions to the proof of
delivery requirements that we pointed out in the proposed rule that
went into effect in early 2004. One company that currently uses
automated systems indicated that the revision to the proof of delivery
requirements would not generate savings for them. Commenters indicated
that the DMERCs have not consistently implemented the changes, and that
consequently there has not been significant administrative relief and
subsequent savings.
We received conflicting comments about the impact of the revised
time frame for shipping guidelines. While one commenter indicated that
savings had already been achieved because the provision had already
been implemented, another commenter indicated that the revision would
have negligible effect because the commenter would not change its
existing business practice of using overnight shipping.
One commenter said it had already adopted the provision of
prescriptions being filled by verbal order, followed up by a written
order for the claim submission and that these changes did not generate
any additional savings for the commenter. Some suggested that the
elimination of the AOB form for drugs would have limited savings
because some suppliers currently obtain the AOB form at the same time
that they obtain other forms that would be continued. Retail pharmacies
agreed that elimination of the AOB form and verbal prescription order
would reduce their paperwork. However, inhalation companies did not
agree.
Response: We understand the commenters concerns and will study the
impact of these billing changes on the different suppliers' costs as
the new payment system is implemented.
Comment: Several commenters suggested that we review and consider
changing several aspects of billing that might have cost-savings
potential for suppliers of drugs. Several commenters indicated that
Medicare's lack of on-line adjudication represented a significant cost
and burden to them. One retail pharmacy commented that pharmacies face
higher than normal rejection rate on claims because Medicare claims are
not processed on-line, resulting in higher administrative costs. Others
commented that pharmacies that dispense Medicare prescriptions must
obtain documentation that is typically provided by the physician. For
example, one company indicated that suppliers are held responsible for
the appropriate medical necessity documentation in the patient's
medical record but that the supplier has no control over physician
records. Some suggested that we consider eliminating the requirement
that a diagnosis code be required on the prescription. One pharmacy
commented that pharmacies should not be expected to verify that the
physician has in fact performed a face-to-face exam for the purpose of
treating and evaluating the patient's medical condition or whether the
physician has created appropriate documents in his records. Rather, the
pharmacy believes that this responsibility should be left to the
physician, and the creation of a prescription should be all that is
needed to verify that the physician has complied with all Medicare
requirements. A commenter noted that Medicare requires that suppliers
submit claims with the physician's Unique Physician Identification
Number (UPIN) while most third party plans require the physician's DEA
number and suggested that we consider adopting usage of the physician's
DEA number instead of UPIN. A pharmacy commented that dispensing units
are different than current National Council for Prescription Drug
Programs (NCPDP) standards; Medicare reimburses products based on a per
mg price while the NCPDP standard suggests reimbursement on a per ml
price. The pharmacy indicated that this makes it more difficult for the
pharmacy to calculate proper reimbursement for these Medicare claims.
Other commenters suggested that the Medicare enrollment and
reenrollment process for suppliers be significantly streamlined. A
retail pharmacy indicated that Medicare requires pharmacy suppliers to
submit extensive and often duplicative pharmacy-specific paperwork that
is more voluminous than any other third party plan in which retail
pharmacies participate. One inhalation company suggested certain
aspects of billing such as the requirement that the supplier query the
physician and beneficiary to find out if the beneficiary had already
received a same or similar item from another supplier. The company also
identified what it claimed are several other labor-intensive, costly
aspects of Medicare billing including electronic claims filing
requirements; information system programming and testing; paperwork and
new business procedures required to be compliant with HIPAA; Medicare
and secondary insurance benefits verification and qualification;
responding to significantly increased pre-payment audit activities;
administering the Patient Financial Hardship Waiver prior to billing
deductible and coinsurance amounts; billing and writing off beneficiary
cost-sharing as bad debts; and differing DMERC policies concerning
documentation needed to support home inhalation therapies.
Response: We thank the commenters for identifying these items. We
plan to examine these aspects of billing. To the extent that there are
different interpretations or applications of national policy by DMERCs,
our goal is increased standardization.
Comment: A comment from a group focused on respiratory care
indicated that there may be over utilization of albuterol sulfate. The
comment indicated that a large amount of scientific evidence concludes
that high albuterol sulfate use is indicative of
[[Page 66342]]
poor overall disease management. The commenter further indicated that
Medicare's costs related to the use of albuterol sulfate may result
from the fact that alternative drug treatment regimes are not
adequately considered in the management of the patient's disease. The
commenter urged us to examine the underlying causes of high utilization
rates of albuterol sulfate.
Response: Our goal is to ensure that Medicare beneficiaries have
access to the appropriate drugs to treat their diseases. We believe
that the availability of discounts through the Medicare drug card and
the implementation of the Part D drug benefit beginning in 2006 promote
treatment decisions being made based on the best clinical evidence,
rather than being influenced by differential coverage.
Comment: We received many comments addressing the issue of
nebulizers versus metered dose inhalers (MDIs). Most commenters
questioned whether a significant shift of Medicare beneficiaries to
MDIs would occur when MDIs are covered in the Part D drug benefit
beginning in 2006. We received many comments, studies and literature
reviews on nebulizers and MDIs. Some commenters identified the specific
disadvantages of MDIs and holding chambers or spacers. Some commenters
questioned the conclusion of the literature review mentioned in the
proposed rule that nebulizers are not clinically superior in delivering
inhalation drugs than MDIs and the commenters asserted that the two are
not fully substitutes. Some commenters quantified the costs to
beneficiaries of nebulizers and MDIs. One commenter pointed out that
MDIs would increase in 2006 based on the ban of the propellent
chlorofluorocarbon. Another commenter questioned the point in the
proposed rule that MDIs are more portable than nebulizers since
advances in nebulizer technology have included additional portability.
The commenter noted that since Medicare covers only one standard
nebulizer, many of their patients have purchased portable nebulizers on
an out-of-pocket basis to use as a second device while outside of their
home.
Response: A number of drugs are available to treat the persons with
asthma or who develop COPD. These include drugs, often inhaled, that
expand the bronchial tubes and allow the patient to breathe more
freely. Depending on the needs of the individual patient, these
medications can be delivered using nebulizers or MDIs. Although
nebulizers have long been covered under Medicare Part B, the MMA
expanded access to MDIs beginning in 2006 through the new Medicare Part
D drug benefit. While two meta-analyses cited by one commenter are
consistent with the literature review mentioned in the proposed rule
that found a lack of overall clinical superiority of MDIs over
nebulizers, we recognize that even after coverage of MDIs begins in the
Part D drug benefit in 2006, due to their particular circumstances,
many beneficiaries will require the use of nebulizers and that
nebulizers will continue to play an important role in inhalation
therapy. Part B does not currently cover MDIs and we will gain
experience with the costs of MDIs as the Part D drug benefit is
implemented.
Comment: Comments were received from respiratory drug distributors
and homecare providers addressing drugs that are supplied from the
manufacturer in more than one form. One company suggested that since
inhalation drugs are provided by the manufacturer in two forms, a
premixed solution or as a powder (or other concentrate) that is diluted
by the pharmacist, the ASP should be calculated separately for each of
these two forms in order to reflect the different acquisition costs to
the pharmacy for the different forms. The company suggested use of a
modifier for the J-code to distinguish between these two forms for
reimbursement purposes.
Response: We disagree. Consistent with the statute, the ASP is
calculated by the HCPCS codes rather than the NDC code. This allows
flexibility in appropriate drug delivery.
Comment: We received letters from individual beneficiaries and
their family members indicating that the beneficiary has tried MDIs
unsuccessfully and that inhalation drugs administered through a
nebulizer were a successful treatment. They asked us not to assume that
everyone on a nebulizer could be switched to inhalers and asked that we
allow inhalation medications administered through nebulizers to remain
funded by Medicare.
Response: We recognize that nebulizers are required by many
beneficiaries due to their particular health circumstances. We did not
propose to eliminate Medicare funding for inhalation medications
administered through nebulizers.
Comment: Several commenters questioned why there should be public
funding for COPD treatments for persons who chose to smoke cigarettes.
The commenters indicate that it may be too harsh a policy to cease all
reimbursement for COPD treatments, but they suggested two alternatives:
(1) No individual who currently smokes should receive any Medicare
benefit for the treatment of any respiratory condition, and (2) Any
individual who historically smoked heavily and receives treatment for
respiratory disorders should face an annual deductible equal to the
cost of smoking a pack of cigarettes a day.
Response: As we indicated in the proposed rule, smoking has been
linked to a large number of health problems and is the leading cause of
cancer and pulmonary disease. The Department of Health and Human
Services (HHS) has been actively encouraging Americans to quit smoking
through its smoking cessation initiatives. Americans who quit smoking
will enjoy longer, healthier lives and avoid diseases such as COPD.
However, the Medicare law does not limit benefits to persons who do not
currently smoke, nor does the Medicare law impose a deductible that is
different for smokers and non-smokers. This regulation implements the
law as it is currently written.
Result of Evaluation of Comments
In the proposed rule, we requested comments on the appropriate
separate dispensing fee for inhalation drugs used in a nebulizer. In
this final rule we are establishing 2005 fees of $57.00 for furnishing
a 30-day prescription and $80.00 for furnishing a 90-day prescription
for inhalation drugs. This fee would be paid in addition to the
Medicare payment amount for the drug.
As discussed in section IV, we are finalizing our proposal to
eliminate the Assignment of Benefits (AOB) form for items and services,
including drugs, where assignment is required by statute. We reiterate
language in the recently updated guidelines for DMEPOS refills,
emphasizing the word ``approximately''. This allows for refill
prescriptions to be shipped by ground service on ``approximately'' the
25th or 85th day of the respective prescription period. In addition, we
clarified the ordering requirements for DMEPOS items, including drugs,
which can be dispensed with just a verbal physician order.
P. Section 706--Coverage of Religious Nonmedical Health Care
Institution Services Furnished in the Home
1. Background
Section 706(a) of the MMA amended section 1821(a) of the Act by
adding home health services to the list of services furnished to an
individual by a religious nonmedical health care institution (RNHCI).
Section 706(b) added section 1861(aaa) to the Act to expand the term
``home health agency'' (HHA) to include a RNHCI. However,
[[Page 66343]]
this expansion is limited to RNHCI items (specified durable medical
equipment) and services furnished in the beneficiary's home when the
items and services are comparable to those provided by a HHA that is
not a RNHCI. Moreover, payment may not be in excess of $700,000 per
calendar year, and may not be made after December 31, 2006.
Accordingly, we are implementing changes to the RNHCI regulation to
include services furnished in the home that result from the enactment
of the MMA and that are becoming effective January 1, 2005.
The new time-limited home health services benefit will be referred
to as ``home benefit'' or ``home services'' throughout this rule. The
RNHCI home benefit may only be provided to an eligible beneficiary who
is confined to the home for health reasons and who has a condition that
makes the beneficiary eligible to receive services under Medicare home
health. Additionally, the beneficiary must have an effective RNHCI
election and receive his or her home services from the RNHCI. The home
benefit is not a substitute for hospice care. As in the original RNHCI
benefit, Medicare will pay only for nonmedical services in the home,
but not for those religious items or services provided by the RNHCI.
Additionally, RNHCI home service patients who have a documented need
for a specified DME item can obtain that item with the applicable
deductible and coinsurance.
2. Legislative History
In 1965, payments to Christian Science sanatoria (inpatient
nonmedical care facilities for bedfast patients) were included in the
initial provisions of Medicare under title XVIII of the Act. In 1996,
in Children's Healthcare Is a Legal Duty, Inc. v. Vladeck, 938 F. Supp.
1466 (D. Minn. 1996) (``CHILD I''), a Federal district court held that
some of the provisions pertaining to Christian Science sanatoria were
unconstitutional on the grounds that they were sect specific, in
violation of the Establishment Clause of the U.S. Constitution.
Section 4454 of the BBA amended section 1861(a)(1) of the Act,
deleting Christian Science sanatoria from the Act and creating instead
the RNHCI benefit to provide Medicare Part A and Medicaid access for
all religious groups whose belief structure does not include medical
intervention. We note that, in the Conference Report to the BBA (H.R.
Conference Report, No. 105-217, at 768 (1997)), the Congress specified
that the RNHCI provisions were a sect-neutral accommodation available
to any person who is relying on a religious method of healing and for
whom the acceptance of medical health services would be inconsistent
with his or her religious beliefs. Further, the Congressional conferees
were convinced that the RNHCI provisions fully responded to and
satisfied the constitutional concerns that had been addressed by the
district court in CHILD I.
Besides adding the new RNHCI benefit, section 4454 of the BBA also
added sections 1861(ss) and 1821 to the Act. Section 1861(ss) sets
forth:
The ten requirements that a provider must meet in order to
be considered a RNHCI;
Parameters for oversight and monitoring;
Authority for Federal review of items and services
provided for excessive or fraudulent claims; and
Parameters for ownership/affiliations.
As in the past, the new provisions do not mention the use of a
religious counselor or practitioner; we consider that to be the
responsibility of the patient.
Section 1821 of the Act provides for conditions for coverage of
RNHCI services including:
The election, revocation, and limitations of the RNHCI
benefit (section 1821(b));
The monitoring and safeguarding against expenditures
(section 1821(c)); and
The sunset provisions for the RHNCI benefit (section
1821(d)).
Section 1821(a) of the Act, as amended by the MMA, provides for
Part A payment for inpatient hospital services, post-hospital extended
care services, or home health services furnished to a beneficiary in,
or by, a RNHCI only when the beneficiary has:
A valid election for the RNHCI benefit in effect; and
A condition that would qualify for inpatient hospital,
extended care services, or home health if the beneficiary were an
inpatient or resident in a hospital or skilled nursing facility, or was
a patient residing at home under the care of a HHA that was not a
RNHCI.
The election of the RNHCI benefit becomes effective immediately
after execution and remains in effect for a lifetime or until revoked.
As described in section 1821(b) of the Act, the election is a written
statement signed by the beneficiary or the beneficiary's legal
representative which states that:
The individual is conscientiously opposed to the
acceptance of nonexcepted medical treatment;
The individual's acceptance of that nonexcepted treatment
would be inconsistent with the individual's sincere religious beliefs;
and
The individual's receipt of nonexcepted medical care
constitutes a revocation of the election.
The RNHCI election may be revoked by voluntarily notifying the
Secretary in writing of the revocation or the election may be revoked
by simply receiving nonexcepted medical care for which payment is
sought under Medicare. Once a RNHCI election is revoked twice, the next
election may not take place until a date that is at least one year from
the date of the most recent revocation. Any election thereafter does
not become effective before a date that is at least five years after
the date of the previous revocation. The receipt of excepted medical
care does not result in a revocation of the election. As stated in
Sec. 403.702 of the regulations, the following definitions apply--
Excepted medical care or treatment for purposes of the
RNHCI benefit is defined as medical care or treatment (including
medical or other health care services) received involuntarily (for
example, following an accident), or required by any level of government
(for example, immunizations).
Nonexcepted medical care or treatment refers to all
medical care or treatment that is not defined as excepted medical care
or treatment. The beneficiary always retains the right to receive
medical care under Medicare based on his or her level of coverage (for
example, Part A, Parts A and B). However, using nonexcepted care will
result in the revocation of the RNHCI election.
On November 30, 1999, we published the RNHCI interim final rule
with comment period in the Federal Register (64 FR 67028), effective on
January 31, 2000. The final RNHCI regulations were published on
November 28, 2003 (68 FR 66710). There are currently 16 RNHCIs in the
United States: Three in California; two each in Florida and Ohio; and
one each in: Colorado, Illinois, Indiana, Massachusetts, New York,
Texas, Virginia, Washington, and Wisconsin.
3. Summary of Section 706 of the MMA
Section 706 of the MMA amended the Act to extend Medicare coverage
of RNHCI items and services to the RNHCI beneficiary's home when the
items and services are comparable to those provided by a HHA that is
not a RNHCI.
Specifically, section 706(a) of the MMA amended section 1821(a) of
the Act by adding home health services to the list of services
furnished to an individual by a RNHCI. Section 706(b) of the MMA added
section 1861(aaa) to the Act to expand the term ``home
[[Page 66344]]
health agency'' to include a RNHCI as defined in section 1861(ss)(1) of
the Act, but only for items and services that are ordinarily furnished
by a RNHCI to individuals in their homes, and that are comparable to
items and services furnished to individuals by a HHA that is not a
RNHCI. Section 1861(aaa)(2)(A) of the Act states that, subject to
section 1861(aaa)(2)(B), payment may be made for services provided by a
RNHCI only to the extent and under the conditions, limitations, and
requirements that are in regulations consistent with section 1821 of
the Act. Section 1861(aaa)(2)(B) states that payment may not be made
for RNHCI home services under section 1861(aaa)(2)(A) of the Act in
excess of $700,000 per calendar year, or after December 31, 2006.
This interim final rule amends the existing RNHCI regulations in
Subpart G to implement section 706 of the MMA.
4. Discussion
a. Implementation of Section 706 of the MMA
As stated above, section 706 of the MMA added section 1861(aaa)(1)
to the Act to expand the term ``home health agency'' to include a
RNHCI, as defined in section 1861(ss)(1) of the Act, but only for items
and services that are ordinarily furnished by that institution to
individuals in their homes, and that are comparable to items and
services furnished by a HHA that is not a RNHCI. This posed a number of
implementation challenges as a RNHCI does not conform to the statutory
definition or requirements of a HHA in section 1861(m) of the Act,
which is based on a medical model. Some of these challenges result from
the fact that--
RNHCIs were established to accommodate those religious
groups that do not believe in the use of physicians to direct or
supervise health care; and
RNHCI nursing does not correspond to the statutory or
regulatory parameters established by Medicare for ``skilled care'' in
the home setting.
In addition, the RNHCI payment methodology does not readily lend
itself to payment to the RNHCI for items and services under the RNHCI
home benefit. Therefore, in an effort to implement the intent of the
amendment, we will generally use the definition and requirements for a
RNHCI, rather than a HHA (with some exceptions), in order to extend
RNHCI services into the home environment. However, in order to aid in
determining comparability, we are also utilizing, when appropriate,
some of the home health requirements set forth in section 1861(m) of
the Act.
The presence of physician orders and oversight is a keystone in the
operational viability of a HHA and nonexistent in the RNHCI, where the
religious practitioner (noncovered by Medicare) is the primary focal
person in establishing the course for the religious method of healing.
In addition, the RNHCI nurse further assists the patient in navigating
the course established for the religious method of healing. To address
the need for oversight for the RNHCI home benefit as with the current
inpatient RNHCI benefit, we are implementing section 706 of the MMA by
continuing to require that the RNHCI utilization review committee
review the need for care (expanded now to include both admission to the
home benefit and continued care in the home setting), and to oversee
the utilization of items and services in the time-limited home benefit.
The utilization review committee, however, cannot act in place of a
physician in ordering items and services other than those designated
specifically for the purpose of this time-limited RNHCI home benefit. A
claim from any other individual or provider attempting to seek Medicare
payment for non-designated RHNCI home benefit items and services
without a physician order will be disallowed.
We also recognize that implementing section 706 is particularly
challenging in light of the fact that no sophisticated physical
treatments or procedures are provided in RNHCIs, while conventional
medical care becomes more technical every year, making the care
delivered by HHA personnel increasingly complex. The major challenge
was determining comparability between home health services for HHAs
defined in part 409 subpart E, and RNHCI services which are nonmedical
in nature.
Medicare pays for supportive care or dependent services under the
home health benefit only when under the orders and direction of a
licensed physician if there is a medical need for skilled health care
by a registered nurse, physical therapist, speech-language therapist,
occupational therapist, or medical social worker. Under the Medicare
home health benefit, when there is no longer a need for the ``skilled''
health care services, the supportive dependent services no longer
qualify for payment. Based on section 1861(m) of the Act, we believe
that Medicare home health care benefits are skilled-care oriented.
These benefits were not designed to provide coverage for care related
to help with activities of daily living unless the patient requires
skilled nursing care or physical or speech therapy. The RNHCI nurse may
be skilled in ministering to a beneficiary's religious needs (not
covered by Medicare), but does not have the training or nursing skill
sets required of credentialed/licensed health care professionals (for
example, a registered nurse). While the RNHCI nurse may provide
supportive care, that care is focused primarily on religious healing
and meeting basic beneficiary needs for assistance with activities of
daily living (for example, bathing, toileting, dressing, ambulation),
as part of creating an environment for religious healing. The care
provided by a RNHCI nurse is not at the level of either a registered
nurse or a licensed practical nurse. The physical care provided by a
RNHCI nurse is at a level that could be considered as supportive, but
is decidedly not skilled nursing care as that term is understood under
the Medicare home health program.
In the search for comparability of services, we considered the
requirements and functions of the home health aide contained in
sections 1861(m) and 1891(a)(3)(A) of the Act and in the regulations at
42 CFR 484.36. We performed a parallel review of the activities and
skills utilized by home health aides and RNHCI nurses to determine
comparability at an operational level. We determined that both the
RNHCI nurse and the home health aide perform the following basic
tasks--
Assisting with activities of daily living (ADLs) that
include: ambulation, bed-to-chair transfer, and assisting with range of
motion exercises; bathing, shampoo, nail care, and dressing; feeding
and nutrition; and toileting;
Performing light housekeeping, incident to visit; and
Documenting the visit.
However, the home health aide is also responsible for--
Care of catheters and drainage equipment;
Checking oxygen and other respiratory equipment;
Communicating with nurse or other skilled team members;*
Assisting with exercises as ordered by PT, OT or speech
language therapist;
Observation and reporting of existing medical conditions;*
Recognizing and responding to emergency situations
(including CPR);
Routine care of prosthetics and orthotics;
Taking and reporting vital signs;*
Using basic infection control procedures;* and
Care of wound/stoma dressings.
The home health aide during a home visit will usually perform at
least three of the four skills marked with an
[[Page 66345]]
asterisk (*) from the ten skills listed. The remaining areas of
responsibility are carried out as indicated by the patient's needs and
the patient's care plan.
In analyzing the outcomes of the home health aide/RNHCI nurse
review, we found that both groups engaged in the comparable tasks of
assisting with activities of daily living, performing light
housekeeping (incident to visit), and documenting the visit. Therefore,
we will pay for the performance of these tasks by a RNHCI nurse in the
home under the home benefit established by section 706 of the MMA.
However, in reviewing for comparability of these services, we also
found that the Medicare requirements for a home health aide exceed the
preparation and skills of the RNHCI nurse for furnishing physical care.
The home health aide performs activities that support the patient's
prescribed medical therapeutic regimen and contribute to the Outcome
and Assessment Information Set (OASIS) data collection effort.
Moreover, we assumed that a significant portion of each RNHCI nurse
visit is focused on religious activity (noncovered by Medicare).
However, in spite of the difference in skill levels and the
incorporation of non-covered religious activity into a visit, Medicare
payment for the RNHCI home benefit is based on a fixed payment per
visit, rather than on a total number of hours or number of caregivers
involved. Unlike the home health benefit, the RNHCI benefit does not
involve multiple levels of covered caregivers. Under the home health
PPS only the low utilization payment adjustment (LUPA) rate provides
for payment for individual home health visits. Due to the uniqueness of
the RNHCI and RNHCI nurses in the Medicare program, we have developed a
payment rate that is a percentage of the PPS LUPA rate for home health
aide visits provided under the home health PPS, which we believe
adequately represents the percentage of comparable tasks performed by
the RNHCI nurse. Only a visit by a RNHCI nurse to a home is payable by
Medicare. The cost for the religious portion of the visit continues to
be the responsibility of the individual patient or the specific RNHCI.
Another challenge was posed by the provision of DME items for RNHCI
patients in the home, since all DME is covered for Medicare payment
only when ordered by a physician. That physician order may provide the
RNHCI patient with the desired DME item, but will also revoke the
patient's election for RNHCI care. We addressed the issue of DME by
reviewing those items that are routinely found in a RNHCI that are
comparable to those used by a HHA that is not a RNHCI. This resulted in
a list of DME items that one could normally buy or rent off the shelf
from a community pharmacy or health care supply store. For purposes of
this time-limited benefit, we are permitting the RNHCI nurse to order
from this list of designated items under the oversight of the RNHCI
utilization review committee. A listing of these items is provided in
Table 15 below.
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We will provide the specifics for implementing the DME items and
payment under this time-limited benefit in later Medicare program
instructions.
Under section 1861(aaa)(2)(B) of the Act, payments for the RNHCI
home benefit may not be made that exceed $700,000 per calendar year,
and not after December 31, 2006. Under the RNHCI home benefit, Medicare
will pay only for nonmedical health services in the home, as well as
for those DME items included in Table 15 of this preamble. Medicare
will not pay for religious items or services provided by the RNHCI. We
have developed a special billing system for those RNHCI providers
offering the home benefit to monitor expenditures on home services and
items for purposes of staying within the statutory calendar year
expenditure limit.
5. RNHCI Regulatory Provisions--RNHCI Medicare Benefits, Conditions of
Participation, and Payment
As noted previously, to implement section 706 of the MMA, we
reviewed the requirements for both HHAs and RNHCIs to identify the most
feasible approach. Accordingly, we have made the following changes to
the RNHCI regulations:
a. Basis and Purpose of Religious Non-Medical Health Care Institutions
Providing Home Services--Sec. 403.764
We added Sec. 403.764 to set forth the basis and purpose of the
RNHCI home benefit. Specifically, we added subsection (a) to include a
reference to section 1861(aaa) of the Act to the general RNHCI
authority noted in Sec. 403.700 and a description of the provisions of
section 1861(aaa). We also added subsection (b) to describe the home
benefit, the statutory annual fiscal limitation, and the sunset
provision.
b. Definitions and Terms--Sec. 403.702
We made no changes to the regulation.
c. Conditions for Coverage--Sec. 403.720
We made no changes to the regulation.
We wish to emphasize that the RNHCI home benefit is an option
available to each RNHCI, and the facility is not required to offer this
service to either gain or maintain RNHCI status.
The RNHCI home benefit is not to be confused with hospice care that
may involve more frequent visits and can involve institutional
services. If, for some reason, the RNHCI home-serviced patient requires
more than what is provided under the RNHCI home benefit, RNHCI or other
institutional services may be required.
d. Valid Election Requirements--Sec. 403.724
We made no changes to the regulation because no modification or
clarification to this requirement is needed to implement the RNHCI home
benefit. Section 1821(b) of the Act addresses the issues involved in
beneficiary election of RNHCI services.
e. Conditions of Participation--Sec. 403.730 through Sec. 403.746
We have not changed the following conditions of participation, as
they do not require any modification or clarification for implementing
the RNHCI home benefit:
Patient Rights (Sec. 403.730)
Quality Assessment and Performance Improvement (Sec.
403.732)
Administration (Sec. 403.738)
Staffing (Sec. 403.740)
We have not changed the following conditions of participation, as
they are specific to institutions and are not applicable to the
implementation of the RNHCI home benefit:
Food Services (Sec. 403.734)
Discharge Planning (Sec. 403.736)
Physical Environment (Sec. 403.742)
Life Safety From Fire (Sec. 403.744)
The following condition of participation requires the addition of a
new standard to reflect the additional responsibility necessary for
implementing the RNHCI home benefit:
Utilization Review (Sec. 403.746)
As explained previously, the utilization review committee will
review the need for care and oversee the utilization of items and
services for the RNHCI home benefit. Accordingly, Sec. 403.746 will be
revised to reflect the additional responsibility necessary for
implementing the RNHCI home benefit. Specifically, Sec. 403.746 will
be modified to add a new subsection (c) to read as follows:
(c) Standard: Utilization review committee role in RNHCI home
services. In addition to the requirements in (b), the utilization
review committee is responsible for the admission and continued care
review (at least every 30 days) of each patient in the RNHCI home
services program. The utilization review committee is responsible for
oversight and monitoring of the home services program, including the
purchase and utilization of designated durable medical equipment (DME)
items for beneficiaries in the program.
We again note that under the RNHCI home benefit, one of the tasks
of the RNHCI nurse is to order from a selected group of DME items that
meet the documented needs presented by a patient, if that need is
presented by the patient. The utilization review committee will provide
oversight for the DME orders and utilization of the items. The
utilization review committee cannot act as a physician in ordering DME
items other than those items designated specifically for the purpose of
this time limited RNHCI benefit. A claim from any other individual or
provider attempting to seek Medicare payment for non-designated RNHCI
home benefit DME items without a physician order will be disallowed.
In implementing section 706 of the MMA, we have also revised the
regulations to add the following provisions:
a. Requirements for Coverage and Payment of RNHCI Home Services (Sec.
403.766)
The RNHCI home benefit is an option available to each RNHCI, but it
is not a service that the facility must offer to gain or maintain RNHCI
status. With the exception of limited DME items, we have determined
that services that RNHCI nurses provide are generally covered for
Medicare payment under the time limited RNHCI home benefit as these
services (for example, assistance with ADLs, light housekeeping
incident to the visit, and documentation of the visit), are comparable
to the services of home health aides in HHAs that are not RNHCIs.
[[Page 66348]]
To reflect the requirements of this limited benefit, we are adding
a new section 403.766. Specifically, in Sec. 403.766(a), we are
requiring the RNHCI provider to submit a notice of intent if it is
interested in providing RNHCI home services. This will help us
facilitate the implementation of the RNHCI home benefit by letting us
focus our efforts on those providers interested in providing this new
benefit. The RNHCI provider is also responsible for providing RNHCI
home services to eligible beneficiaries. We are imposing this
requirement because we believe the RNHCI provider itself is responsible
for providing the RNHCI home services, directly or under arrangement,
to the eligible beneficiary. This means that the beneficiary cannot
contract directly with a supplier or RNHCI nurse, but that the RNHCI
provider itself is responsible for provision of the RNHCI home benefit
services. This requirement conforms to the ``under arrangement''
requirement that home health agencies generally have to comply with to
receive payment under the home health prospective payment system (see
Sec. 409.100(a)(2)). Furthermore, because the RNHCI is not a supplier,
we are explicitly requiring the RNHCI provider to make arrangements for
suppliers to furnish the designated RNHCI home benefit DME items.
Likewise, the RNHCI provider will have to arrange for the RNHCI nursing
services. While the RNHCI regulations currently require the RNHCI
provider to have a utilization review plan and committee in place, we
believe it would be prudent in the RNHCI home benefit regulation to
explicitly require the RNHCI home benefit provider to have a
utilization review committee that assumes the additional responsibility
for the oversight and monitoring of the items and RNHCI nursing
services provided under the home benefit. Lastly, because the RNHCI
home benefit does not supersede or otherwise replace the existing RNHCI
benefit, the provider will continue to have to meet all the existing
applicable RNHCI regulatory requirements in subpart G of part 403.
We will also define an ``eligible beneficiary'' for the RNHCI home
benefit in Sec. 403.766(b). First, the beneficiary must elect to
receive RNHCI services. Clearly, the RNHCI home benefit can only be
provided to a beneficiary who has elected RNHCI services. Second, we
believe that the purpose of providing a home benefit by a RNHCI
provider was not to expand the basic eligibility criteria for receiving
home health services. In fact, section 1821(a) of the Act, as amended
by the MMA, now states that payment for RNHCI home services be made
only if the individual has an election in effect and has a condition
such that the individual would otherwise qualify for Medicare home
health services. Specifically, this means that the individual must be
confined to the home, as defined in section 1814(a) of the Aft and have
a condition that would make him or her eligible to receive Medicare
home health services. Third, much like the requirement that the RNHCI
provider is responsible for providing RNHCI home services directly or
under arrangement to the beneficiary, the beneficiary can only receive
RNHCI home services through the RNHCI. The purpose of this requirement
is to provide Medicare payment for the RNHCI home benefit only to
beneficiaries who receive these services through the RNHCI. This
requirement is consistent with section 1821(a) of the Act, as amended,
which provides Medicare payment for home services furnished an
individual by a RNHCI. We note that under the home health benefit
beneficiaries are responsible for the deductible and coinsurance for
DME furnished as a home health services. We see no reason to modify
that requirement for beneficiaries receiving RNHCI home services. As
this is a new benefit for RNHCI beneficiaries, we wish to make it clear
that they are responsible for deductible and coinsurance for the
designated RNHCI home benefit DME items in the same manner as Medicare
beneficiaries receiving DME under the home health benefit.
b. Excluded Services (Sec. 403.768)
Under the home health benefit, certain items and services are
excluded under the benefit. The RNHCI home benefit will exclude the
same items and services, which are:
Drugs and biologicals;
Transportation;
Services that would not be covered as inpatient services;
Housekeeping services;
Services covered under the ESRD program;
Prosthetic devices; and
Medical social services provided to family members.
Accordingly, we are adding a new Sec. 403.768 to reflect the
services excluded under the RNHCI home benefit.
In addition, we note that the statute does not provide for the
provision of the RNHCI home benefit in a home health agency that is not
a RNHCI, and we will provide for this exclusion in the regulation. We
wish to reiterate that items and services not provided by a RNHCI but
instead provided by a supplier or RNHCI nurse not under arrangement
with the RNHCI are not included under the RNHCI home benefit. The
regulation will also note this exclusion.
c. Payment for RNHCI Home Services (Sec. 403.770)
As discussed above, providing home services in the RNHCI
environment incorporates many of the same components of the provision
of home health aide services under the Medicare home health benefit.
Because this is a new benefit not contemplated under the original RNHCI
legislation, an appropriate payment methodology needed to be developed.
As explained previously, we believe that an appropriate proxy for the
cost of providing RNHCI home services can be found in the low
utilization payment amount for home health aide visits under the
Medicare home health PPS. Generally, Medicare home health services are
reimbursed a prospectively set payment amount for a 60-day episode of
care, adjusted for case mix. This 60-day episode payment includes costs
for non-routine medical supplies, as well as costs for the six major
home health disciplines, including home health aide services. The home
health episode payment rate does not include reimbursement for durable
medical equipment, which is paid through a separate DME fee schedule.
The home health PPS rates were required to be budget neutral to what
would have been expended under the reasonable cost system. The 60-day
episode rate is updated annually by some percentage of the home health
market basket, as dictated by law, and is adjusted by the hospital wage
index to account for geographic variations in labor costs.
Medicare home health services may also be paid on a visit basis if
the home health episode has four or fewer visits. Medicare pays on the
basis of a national per-visit amount by discipline, referred to as low
utilization payment adjustment (LUPA), adjusted for case mix. As
mentioned previously, the LUPA rate for home health aide services is a
very close approximation of the cost of providing home services in the
RNHCI environment. However, due to the difference in skill levels and
the incorporation of RNHCI religious activities that are not covered by
Medicare, payment for the RNHCI home benefit is set at 80 percent of
the per visit rate for a home health aide visit under the Medicare home
health benefit.
[[Page 66349]]
The policies and rationale governing LUPA payments under the
Medicare home health benefit are described in the July 3, 2000 HH PPS
final rule (65 FR 41127). Generally, low utilization episodes are paid
at a standardized average per visit amount, adjusted for geographic
differences in wages, which will be the basis of calculating payment
under the RNHCI home benefit program. These amounts are updated
annually by the home health market basket percentage as dictated by
statute and are being used for the RNHCI home benefit. For CY 2005, the
Medicare HHA PPS rates were updated by the home health market basket
minus 0.8 percent. The HHA PPS LUPA amount for CY 2005 is $44.76 for a
home health aide visit, as published in the Federal Register October
23, 2004 (69 FR 62124). Because we believe the intent is to provide
comparable home health services to a beneficiary at home provided by a
RNHCI, we believe it is similarly necessary to develop a payment
methodology to reflect the provision of these comparable services. As
previously mentioned, we have determined that the LUPA payment, as
calculated under the home health PPS and adjusted for geographic
differences in wages is an appropriate payment methodology for the
RNHCI home benefit. We further note that as the LUPA will be updated by
the applicable market basket percentage under the home health PPS, we
will also adopt the updated LUPA payment for CY 2006 as the basis of
payment for the RNHCI home benefit in CY 2006. An update of the HHA
payment rates is published annually in the Federal Register, with CY
2006 updated figures available in Fall 2005. As mentioned above, the
beneficiary receiving the RNHCI home benefit will be responsible for
deductible and coinsurance for the designated RNHCI home benefit DME
items. The regulation will indicate that payment for DME as a RNHCI
home item is made less the deductible and coinsurance amount.
In view of the small size and low volume of most RNHCIs, we will
use a 30-day cycle for the submission of RNHCI home benefit claims.
Unlike standard HHAs that use a 60-day cycle, the RNHCI will use a 30-
day cycle for both payment request and as a minimum for continued care
home benefit review by the utilization review committee. Specific
instructions on the processing of RNHCI home benefit payments will be
issued in separate Medicare instructions.
Example of LUPA Payment Adapted for RNHCI Home Benefit Payment:
A RNHCI in Baltimore, Maryland is providing the RNHCI home benefit
to a patient with a RNHCI election. The RNHCI has provided 12 visits
within a 30-day cycle. The RNHCI would determine the payment for the
home benefit visits as follows:
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IV. Other Issues
A. Provisions Related to Therapy Services
1. Outpatient Therapy Services Performed ``Incident To'' Physicians'
Services
Section 1862(a)(20) of the Act permits payment for therapy services
furnished incident to a physician's professional services only if the
practitioner meets the standards and conditions that would apply to the
therapy services if they were furnished by a therapist, with the
exception of any licensing requirement. We proposed to amend the
regulations at Sec. 410.26, Sec. 410.59, Sec. 410.60, and Sec.
410.62 to reflect the statutory prohibition on payment for ``therapy''
services of individuals who do not meet the existing qualification and
training standards for therapists (with the exception of licensure) as
these standards are set out in Sec. 484.4.
As discussed in the August 5, 2004 proposed rule, section
1862(a)(20) of the Act refers only to PT, OT, and SLP services and not
to any other type of therapy or service. This section applies to
covered services of the type described in sections 1861(p), 1861(g) and
1861(ll) of the Act; it does not, for example, apply to therapy
provided by qualified clinical psychologists. This section also does
not apply to services that are not covered either as therapy or as E/M
services provided incident to a physician or NPP, such as recreational
therapy, relaxation therapy, athletic training, exercise physiology,
kinesiology, or massage therapy services.
In the following discussion, the phrase ``therapy services'' means
only PT, OT, and SLP. Also, ``therapist'' means only a physical
therapist, occupational therapist, and speech-language pathologist.
Section 1861(s)(2)(K) of the Act permits certain NPPs, specifically
PAs, NPs, and CNSs, to function as physicians for the purposes of
furnishing therapy services which they are legally authorized to
perform by the State in which the services are performed. Therefore, in
our responses to comments in the following discussion, the statements
concerning therapy services that apply to physicians also apply to PAs,
NPs, and CNSs.
We received many comments on this proposal from professionals and
associations for audiologists, speech-language pathologists, physical
therapists, occupational therapists, long term care facilities,
kinesiotherapists, massage therapists, athletic trainers, nurses, and
physicians such as physiatrists, neurologists, podiatrists,
chiropractors, osteopaths, medical groups, and family practitioners.
The proposal describes covered Medicare services and is not
intended to affect the policies of other insurers who may cover
services that Medicare does not, for example, therapy services
performed by massage therapists or athletic trainers.
Comment: Several associations believe that this proposal is based
on an incorrect interpretation of the intent of section 1862(a)(20) of
the Act. Some claim that the proposed clarification is prohibited by
the statute. They note the lack of any elaboration upon the Congress'
intent in the Conference Report accompanying section 4541(b) of the
BBA, but suggest the provision was based on a 1994 OIG report,
``Physical Therapy in Physicians' Offices'' (OEI-02-90-00590, March
1994). In the view of some commenters, the intended effect of section
1862(a)(20) of the Act was to apply to incident to therapy services the
standards and conditions related to treatment plans, the need for
goals, and the requirement that therapy is to be restorative. This
position is based on the fact that these standards were the focus of
the 1994 OIG report. The commenters point out that the report did not
compare therapist services to services furnished by nontherapists in a
physician's office, but it only compared the services billed by
therapists to those billed by physicians.
Commenters argued that the plain meaning of section 1862(a)(20) of
the Act indicates that incident to services are not necessarily
furnished by therapists. They point to the parenthetical exclusion of
licensure requirements in the statutory language as evidence that the
Congress did not intend to apply the personnel requirements applicable
to therapists in private practice to incident to therapy services. Some
commenters believe this exclusion was intended to preserve the right of
physicians to supervise auxiliary personnel that were not licensed as
therapists. They suggest that we are creating a de facto licensure
requirement.
Comments from the two members of the Congress who introduced the
act that resulted in section 1862(a)(20) of the Act support the
proposed rule, stating that the proposed clarification meets the intent
of the law when it was passed by the Congress in 1997. These commenters
confirm that the legislation was based in part on the 1994 OIG report
and the intent was to establish ``a consistent standard for the
delivery for PT services to ensure quality patient care.'' Two
additional comments were received from the Congress in support of the
proposal.
[[Page 66352]]
Response: Our interpretation is based on the plain language of the
law: no payment may be made for incident to therapy services ``that do
not meet the standards and conditions (other than any licensing
requirement specified by the Secretary) under the second sentence of
section 1861(p) * * * ''
The second sentence of section 1861(p) of the Act reads as follows:
``The term `outpatient physical therapy services' also includes
PT services furnished an individual by a physical therapist (in his
office or in such individual's home) who meets licensing and other
standards prescribed by the Secretary in regulations, otherwise than
under an arrangement with and under the supervision of a provider of
services, clinic, rehabilitation agency, or public health agency, if
the furnishing of such services meets such conditions relating to
health and safety as the Secretary may find necessary.''
It is evident then, that the standards and conditions referenced in
section 1862(a)(20) of the Act encompass qualifications of the
individual providing the therapy. Consequently, we disagree with those
commenters who suggest that it was not the intent of section
1862(a)(20) of the Act to apply the personnel qualifications of the
second sentence of section 1861(p) of the Act to therapy provided
incident to a physician's service. We believe our interpretation of the
law is further supported by the comment received from the Congress
members who sponsored the original bill that became section 1862(a)(20)
of the Act.
According to the proposed requirements, a person who is trained in
therapy, but has not completed the further requirements of therapy
licensure, may provide services incident to a physician's services.
These individuals are not therapists, since they are not licensed, but
they are qualified personnel who may, under direct supervision, provide
therapy services incident to a physician.
A physician may utilize supervised unlicensed staff and may bill
for a covered therapy service incident to the physician's service if it
is provided according to Medicare policies, including coverage and
incident to policies.
Comment: Commenters also note that qualifications at Sec. 484.4
are in the home health agency section of the regulations, while the
second sentence of section 1861(p) of the Act (referenced by section
1862(a)(20) of the Act) does not apply to therapy provided in home
health agencies.
Response: The statute specifies therapy services provided incident
to a physician must meet the standards and conditions that would apply
to a therapist, except licensure. For the history of the qualifications
for the private practice setting, please see the discussion in this
rule as described below in section IV.A.2, ``Qualification Standards
and Supervision Requirements in Therapy Private Practice Settings.'' We
proposed to apply to all settings the qualifications in Sec. 484.4
because they are standards that currently apply to therapists in
provider settings. It is our intent to make therapist qualifications
consistent in all settings (unless otherwise required by statute).
Therefore, unless a person meets the standards in Sec. 484.4, except
licensure, their services may not be billed as therapy services
incident to a physician's service, regardless of any other training,
other licensure or certification or other experience they may have. For
example, the services of chiropractors or athletic trainers who do not
meet the requirements in Sec. 484.4 except licensure, cannot be billed
as therapy services incident to a physician's service.
Comment: Several associations indicated that we are changing our
interpretation of the statute. They assumed any instruction relevant to
the law was made in 1998 through Transmittal 1606. That transmittal
provided guidance for therapy services, but did not address the
qualification of the people who furnish therapy incident to physician
services. It was also suggested that we delay implementation to allow
further study and comment from interested parties. The AMA urged us to
withdraw proposed changes and reissue a later proposal after consulting
with all affected physician and other health professional
organizations.
Also, the commenters note that the Administrative Procedure Act
(APA) requires that we characterize this as a change rather than a
clarification.
Response: In the past, we did not discuss the plain language of the
law ecause we did not believe it needed extensive clarification.
However, it has become clear to us that contractors have varied in
their policies.
Some contractors created local policies that paid only for services
provided by licensed therapists in all settings including incident to a
physician's service. Others had no policies that assured the
qualifications of personnel furnishing services billed as therapy
services incident to a physician.
Study of the utilization of therapy services, internal discussions
with contractors and medical review of claims for the purpose of error
rate analysis all suggested that the services being performed in the
offices of physicians did not consistently meet the standards and
conditions we applied to therapy services in private practice or in
provider settings. Problems associated with an imprecise definition of
therapy services were discussed at length in Section 4.1 of the ``Study
and Report on Outpatient Therapy Utilization'' (the DynCorp utilization
study) found at http://www.cms.hhs.gov/medlearn/therapy. Review of
medical records following this report reinforced the personnel
qualification problem.
In Pub. 100-04, the Medicare Claims Processing Manual at chapter 5,
section 20, there is a list of codes that represent services that are
always therapy services (available online at http://www.cms.hhs.gov/manuals/104_claims/clm104c05.pdf). Whenever these codes are billed,
they must have a modifier that identifies the type of therapy (PT, OT,
or SLP) and the services provided must meet the standards and
conditions that apply to outpatient therapy services. In the medical
review of therapy claims, there were frequent observations of ``always
therapy'' services performed by persons other than therapists, which
were billed inappropriately as therapy.
Since the qualifications of therapists and therapy services
continued to be problematic, we chose to raise the subject of therapist
qualifications last year. Last year's comments made it clear that there
is widespread use of nontherapists, particularly athletic trainers, in
the offices of physicians and those services are being billed as
therapy services. The volume of similar comments this year made it
evident to us that the clarification was needed.
We characterize this statement as a clarification because it merely
restates the law. Moreover, we announced our clarification in the
proposed rule, and it has been subject to comment in last year's
proposed rule and again this year. So, assuming that it did change
policy, its promulgation meets the requirements of the APA.
In addition, we note that we continue to pay only for covered
services whether they are therapy or other services. Coverage rules in
the Program Integrity Manual, chapter 13.5.1, require, for example,
that the service be safe, effective, in accordance with accepted
standards of medical practice, and furnished by qualified personnel.
We recognize there has been inconsistent application of this
statutory requirement. Therefore, in order to allow sufficient time for
physicians to adjust their practices, and to avoid disrupting ongoing
therapy in affected practices, we will delay implementation
[[Page 66353]]
until manual instructions are published. We anticipate publication of
manual instructions on or after March 1, 2005.
Comment: Many commenters offered the opinion that restricting
payment for therapy services to those performed by therapists would
reduce access and quality of care and increase costs. They noted that
it is more convenient for therapy to be available in a physician's
office than at another site. Also, there was concern that therapists
may not work in rural areas, especially because there is a shortage of
qualified therapists.
Response: The statute requires that those who provide therapy
services meet therapy standards. It provides an exception for licensure
in an incident to setting, but it does not provide an exception for
rural areas. Since recent changes allow physical and occupational
therapists that are enrolled in Medicare to work for physicians, there
is no legal impediment to physicians being able to provide therapy
services in their offices without the use of nontherapists. The
Department of Labor Bulletin 2572, titled ``Occupational Projections
and Training Data 2004-05 Edition'', suggests no shortage of
therapists.
Nor do we find evidence to suggest the quality of care will be
decreased by the use of personnel trained in therapy services as
opposed to those trained in other disciplines. The cost of therapy
services to Medicare will not be changed by the use of appropriately
trained personnel.
Comment: Many comments from physical therapists and PT associations
agreed in principle with consistently defining the qualifications for
therapists in all settings. They point out that, although the statute
allows unlicensed people to provide therapy services incident to the
services of a physician, the purpose of licensure is to assure that
services are safely and effectively furnished by professionals who have
demonstrated the necessary knowledge and skills. The statute permits
the use of therapists who have not met licensing requirements and those
whose licenses were revoked due to malpractice or fraud. The
supervision requirement that the physician be present somewhere in the
suite, but not in line of sight, is insufficient to assure the safety
and quality of service provided by unlicensed staff.
Response: Although the law permits unlicensed individuals to
provide services incident to the services of a physician, we believe
physicians will be motivated to screen employees to weed out sanctioned
or incompetent people who have training in therapy since physicians
would be liable for the actions of an incompetent employee. We require
direct supervision of the employee by the physician as a minimum
standard, but a physician will provide whatever guidance and
supervision is required to assure the safety, effectiveness and quality
of the service.
Comment: Many comments were received from individuals such as
athletic trainers, kinesiotherapists, massage therapists and
chiropractors describing their training as equal or superior to
therapists' and suggesting that they provide care similar to
therapists.
Response: The statute allows Medicare to pay only for PT, OT and
SLP services. Comments from therapists and nontherapists agreed that
their training and licensure is unique to their professions, and they
are separately trained and licensed for those unique professions. It is
clear that many nontherapist health care practitioners are well-trained
professionals dedicated to the provision of quality treatment for their
patients. However, their training is not in PT, OT, or SLP, but in the
other disciplines for which they are licensed or accredited.
Comment: A number of physicians and associations for physicians
wrote to tell us that they believe it is their right and within their
authority to decide who can provide effective therapy services in their
offices.
Response: The statute requires Medicare to pay only for services
that meet the standards and conditions, except licensure, that apply to
therapists. It is the right and responsibility of a physician to
recommend services for patients that in the physician's judgment are
needed and effective. Medicare, however, need not pay for all services
that a physician recommends. We are required to pay for services that
are covered in the statute and to deny payment for services that are
not covered, even if the physician considers those services necessary
and effective.
Comment: Some physicians wrote to tell us they are currently
billing Medicare for therapy services when athletic trainers perform
services in their offices. Several commenters asked what services may
be billed to Medicare when provided by auxiliary staff who are
qualified as athletic trainers, or who have certification in fields
other than therapy.
Response: While some carriers may have paid claims for incident to
therapy services furnished by individuals without therapy training, we
have never had a policy that permits athletic trainers or any other
staff who do not have training in PT to provide services that are
billed as PT services. Carrier payment for a service is not conclusive
evidence that the service was appropriately rendered. Billing with a
code that does not accurately represent the service provided is
inappropriate. If identified by carrier medical review, these claims
must be denied, and further development of the claim may be indicated
to determine if there was intent to bill improperly.
Medicare defines PT, OT and SLP as services that require the skills
of a physical therapist, occupational therapist or speech-language
pathologist. Therapy codes are priced based on the salaries and
expenses of therapists and we expect that therapy claims are made for
services of therapists (or, for incident to services by someone with
their training, except for licensure).
When a service is not a covered service, it is inappropriate to
bill Medicare for that service as a service incident to a physician, or
as an E/M service. For example, if a service is appropriately described
as acupuncture or athletic training or massage therapy, Medicare will
not pay for that service because it is not covered.
A physician may not bill Medicare for a service that is on the list
of ``always therapy'' services (see Pub. 100-04, the Medicare Benefit
Policy Manual, chapter 5, section 20) if the service was done by staff
that is not qualified to provide a skilled therapy service, because
that is not a covered therapy service. The ``always therapy'' codes
always require a modifier to describe whether the service was PT, OT or
SLP.
There are covered services that other staff, such as athletic
trainers, may perform with other training, however, these are not
therapy services. Other codes on the therapy list are ``sometimes
therapy'' services and require modifiers only when they are therapy
services rather than physician services. For example, a physician may
apply a surface neurostimulator (CPT 64550) as an isolated service,
outside of a therapy plan of care and appropriately bill the code
without a therapy modifier. That service is not a therapy service. If
that physician supervises auxiliary personnel in the provision of that
same nontherapy service, the auxiliary personnel does not have to be
qualified as a therapist because the service rendered is not therapy.
In any case, when Medicare is billed for a service, the person
providing the service must be qualified to provide the service, as
determined by the contractor in accordance with coverage requirements
[[Page 66354]]
in Pub. 100-08, the Medicare Program Integrity Manual, chapter 13.5.1.
However, if a therapist provides the service under any circumstance, or
if either the physician or qualified personnel provides the service as
part of a therapy plan of care, it is a therapy service and it requires
a modifier. In cases where there is doubt, the contractor will
determine whether the service is therapy or is not therapy.
Further information about services that may be completed by non-
therapists will be available in implementing instructions.
Comment: The American Chiropractic Association commented that
doctors of chiropractory are authorized to perform PT services in all
but two States, Michigan and Washington. They request that we note that
fact in our commentary and in the regulation. They note that Doctors of
Chiropractic are included in the definition of ``physician'' and they
propose language in addition to that in Sec. 484.4 to define the
qualifications of chiropractors, in order to recognize the State-
authorized practice privileges of Doctors of Chiropractic.
Response: Chiropractors may bill services to Medicare as
physicians, but only for the purposes of providing manipulation of the
spine for the correction of a subluxation, which is a chiropractor
service, and not a therapy service. For these manipulation services,
chiropractors may directly supervise employees who provide incident to
services. However, as Medicare physicians, chiropractors are not
authorized to order therapy services or to perform any other services.
To qualify to provide therapy services incident to a physician,
chiropractors must meet all of the criteria set forth at Sec. 484.4
except licensure.
Comment: Several associations and some individuals commented that
we are creating a monopoly for therapists to provide therapy services
and unnecessarily restricting other professions from providing therapy
services.
Response: We are bound by the statutory authority given to us in
section 1832 of the Act to pay only for services for which there are
benefits enumerated in the statute. PT, OT and SLP have benefits in
section 1861 of the Act. Therefore, Medicare pays only for those
services.
Comment: Several commenters noted that some NPPs, specifically PAs,
NPs, and CNSs, may perform therapy services billable under Medicare as
therapy services if their State scope of practice allows. The
commenters question whether those NPPs may also perform therapy
services incident to a physician or NPP.
Response: Medicare does not impose therapy training requirements on
physicians whose State scope of practice allows them to perform therapy
services. Section 1861(s)(2)(K) of the Act permits PAs, NPs, and CNSs,
to furnish services which would be physicians' services, that is, to
function as physicians for purposes of furnishing services, including
therapy services, which they are legally authorized to perform by the
State in which the services are performed. Therefore, this final rule
has been modified to reflect that in States that authorize physicians,
PAs, NPs, and CNSs to provide one or more of the therapy services (PT,
OT, or SLP services), those NPPs may provide the services incident to
the services of a physician or NPP under the same conditions as
physicians, that is, without meeting the training requirements
applicable to therapists.
Results of Evaluation of Comments
To the extent that this policy is different from current manual
text, we proposed this rule and received comments. We are finalizing
the proposal in this final rule with the changes noted above in
accordance with the APA. We will implement this regulation through
manual guidance on or after March 1, 2005.
2. Qualification Standards and Supervision Requirements in Therapy
Private Practice Settings
Sections 1861(g) and (p) of the Act include services furnished to
individuals by physical and occupational therapists meeting licensing
and other standards prescribed by the Secretary if the services meet
the necessary conditions for health and safety. These services include
those furnished in the therapist's office or the individual's home. By
regulation, we have defined therapists under this provision as physical
or occupational therapists in private practice (PTPPs and OTPPs).
Under Medicare Part B, outpatient therapy services, including
physical and occupational therapy services, are generally covered when
reasonable and necessary and when provided by physical and occupational
therapists meeting the qualifications set forth at Sec. 484.4.
Services provided by qualified therapy assistants, including physical
therapist assistants (PTAs) and occupational therapy assistants (OTAs),
may also be covered by Medicare when furnished under the level of
supervision by the therapist that is required for the setting in which
the services are provided (institutions and private practice therapist
offices). For PTPPs and OTPPs, the regulations now specify only that
the PT or OT meet State licensure or certification standards; the
regulations and do not currently refer to the professional
qualification requirements at Sec. 484.4.
Since 1999, when therapy services are provided by PTAs and OTAs in
the private practice of a PT or OT, the services must be personally
supervised by the PTPP or OTPP. In response to a requirement to report
to the Congress on State standards for supervision of PTAs, we
contracted with the Urban Institute. The Urban Institute found that no
State has the strict, full-time personal supervision requirement, for
any setting, that Medicare places on PTAs in PTPPs. (The report
examined only PTAs, who are more heavily regulated by the States than
OTAs).
To provide a consistent therapy assistant supervision policy, we
proposed to revise the regulations at Sec. 410.59 and Sec. 410.60 to
require direct supervision of PTAs and OTAs when PTs or OTs provide
therapy services in private practice. We also specifically solicited
comments regarding the proposed PTA supervision policy, and whether or
not it would have implications for the quality of services provided, or
for Medicare spending, either through increased capacity to provide
these services, or, in the event that the Congress again extends the
moratorium on the implementation of the limits on Medicare
reimbursement for therapy services imposed by the BBA of 1997.
In addition, as discussed in the August 5, 2004 proposed rule, the
current OTPP or PTPP regulations at Sec. 410.59(c) and Sec. 410.60(c)
do not reference qualification requirements for therapy assistants or
other staff working for PTs and OTs in private practices. In order to
create consistent requirements for therapists and for therapy
assistants, we proposed to restore the qualifications by adding the
cross-reference to the qualifications at Sec. 484.4 for privately
practicing therapists and their therapy assistants at Sec. 410.59 and
Sec. 410.60.
Comment: Commenters representing therapy organizations, as well as
individual providers, were supportive of our proposal to revise the
regulations at Sec. 410.59 and Sec. 410.60 to require direct, rather
than personal, supervision of PTAs and OTAs when therapy services are
provided by PTs or OTs in private practice.
(We use the 3 supervision levels defined at Sec. 410.32, personal,
direct, and
[[Page 66355]]
general, to describe the supervision requirements for various Medicare
services and settings.)
Many commenters also stated that this is consistent with the
Medicare requirements in other provider settings, such as hospitals,
HHAs and rehabilitation agencies and is also consistent with the
Medicare requirements for therapists in private practice that were in
place prior to 1999. Commenters also believe that this will assist in
ensuring access to therapy services and in protecting patient privacy.
Response: Requiring direct supervision of therapy assistants in PT
and OT private practice settings is consistent with the supervision
requirements that PTs and OTs in independent practice were required to
meet, prior to 1999, at Sec. 410.59(c) and Sec. 410.60(c). This
direct supervision requirement in PT and OT private practices requiring
the therapist to be on site or ``in the office suite'' differs from our
therapy assistant supervision requirements in institutional settings
(for example, outpatient hospital departments, HHAs, and rehabilitation
agencies). In those settings, PTs and OTs may provide general
supervision of therapy assistants without being on-site.
We agree that changing the level of supervision of therapy
assistants from personal to direct will help to improve access to
medically necessary services.
Comment: A few commenters stated they believe permitting general
supervision, rather than direct, is more consistent with State therapy
supervision requirements. While State requirements vary, this variation
may be due to the fact that PTAs are not licensed in some States. Other
commenters stated that therapy assistants are qualified to provide
services without having therapists in-the-room to provide personal
supervision.
Response: A review of State practice acts revealed that Medicare's
personal in-the-room supervision requirement for therapy assistants in
PT and OT private practices was more stringent than any State
supervision requirement for any setting. The Urban Institute report
also found that most States permit a supervision level similar to our
general supervision requirement for institutional settings. However, we
believe that services delivered by therapy assistants in private
practices require a higher level of therapist supervision than those
provided in institutional settings where stringent standards for
Medicare participation are enforced through State survey and
certification programs, rather than the simplified carrier enrollment
process for the PT or OT private practice offices.
Comment: One commenter stated that only licensed therapists should
be allowed to provide and bill for therapy and another commenter
demanded that therapy services only be reimbursed when provided by a
therapist, not any other professional, including nurses, PAs, or
chiropractors, and not by therapy assistants. They suggested that
without this requirement there would be program abuses.
Response: We concur with the therapy associations and the
overwhelming majority of commenters that therapy assistants are
qualified by their training and education to provide services without
the personal in-the-room supervision in the private practice setting.
This does not mean, however, that therapy assistants may bill for the
services they provide. Under the law, only PTs and OTs in private
practice may bill Medicare for the therapy services provided by PTAs
and OTAs. These therapists enroll in the Medicare program and receive a
provider identification number (PIN) in order to file claims for the
therapy services provided as a PTPP or OTPP. Institutional therapy
providers bill Medicare on behalf of the PTs, OTs, and speech language
pathologists who provide therapy services in these settings.
Other professionals, including nurses, athletic trainers, and
chiropractors do not meet the statutory requirements for therapists in
section 1861(p) of the Act and as implemented at Sec. 484.4. We
proposed to amend the regulations at Sec. 410.59 and Sec. 410.60 to
specify that only individuals meeting the qualification standards and
training consistent with Sec. 484.4 may bill and receive Medicare
payment for therapy services. In addition, a State license or
certification in PT or OT will continue to be required for therapist
providing services as PTPPs or OTPPs.
When PAs, NPs, or CNSs are authorized by their State practice acts
to provide physical or occupational therapy services, and these NPPs
are acting within their capacity to provide physician services under
section 1861(s)(2)(K) of the Act, their services are considered therapy
services.
Comment: One commenter stated that allowing lesser trained
individuals such as therapist assistants to provide services if a
therapist supervises, but prohibiting physicians from delegating
performance of these services to doctors of chiropractic
inappropriately gives therapists more authority than physicians.
Response: Medicare law recognizes chiropractors as physicians, but
only for the limited purpose of providing manipulation of the spine for
the correction of a subluxation. In order to qualify as a PT or OT for
Medicare purposes, chiropractors would need to meet all of the criteria
set forth at Sec. 484.4.
Comment: In response to our request for information on the impact
of this proposed change on the quality of services and Medicare
spending, several individuals stated that the proposed change would not
affect the way therapists practice, since they are fully accountable
for services provided under their direction and, therefore, the change
would not diminish the quality of services. Furthermore, commenters
believe the change would also allow the appropriate and efficient
utilization of therapist assistants because the in-the-room supervision
unnecessarily drives up the cost of health care without providing
additional consumer protection.
The American Physical Therapy Association (APTA) anticipates there
will be little, if any, increase in spending as a result of this policy
and believes that any increases would be due to improving access to
medically necessary outpatient therapy services provided by qualified
practitioners. For spending implications, the APTA believes it is
highly unlikely that physical therapists would significantly alter
their staffing patterns and thereby increase spending as a result of
this change in policy. The majority of States have laws that establish
limits on the number of PTAs that a PT can supervise (referred to as
``supervision ratios''). For example, a large number of States have a
supervision ratio of one PT to two PTAs. There are also a limited
number of PTAs whom PTs could supervise, and APTA does not anticipate
substantial growth in the number of PTAs in the foreseeable future. To
the contrary, the number of PTA education programs is declining.
Furthermore, services of PTs in private practice comprise a
relatively small percentage of services billed under the Medicare
program. Therefore, the overall financial impact of any change in the
supervision requirement in this setting would be minimal.
Response: We appreciate the information provided by the commenters.
Other opportunities already exist for therapists to provide services
under Medicare in rehabilitation agencies and CORFs where the therapy
assistant supervision level is general. Therapists opting to utilize
therapy assistants might be more
[[Page 66356]]
likely to own a rehabilitation facility where the physical or
occupational therapy assistant supervision level is general, rather
than a private practice office where the therapist is required to be
on-site to supervise services of the therapy assistant. The Urban
Institute Report confirmed the limited number of therapy assistants
available to be hired and found that workforce and distribution
percentages of PTs and PTAs parallel each other, with nearly 25 percent
of PTAs employed by PTPPs. We believe that the State supervision
requirements and the limited number of PTAs are likely to limit the
financial implications of this change. We plan to monitor this area to
determine whether volume changes occur and, if so, in what settings
they occur.
Comment: Commenters supported our proposal to revise Sec. 410.59
and Sec. 410.60 to cross-reference the qualifications at Sec. 484.4
for privately practicing therapists and their therapy assistants.
Response: We appreciate the numerous letters of support for this
proposal, including the national and State-level therapy organizations,
other professional organizations, and many therapists and therapy
assistants.
Result of Evaluation of Comments
We will finalize the proposed revisions to Sec. 410.59 and Sec.
410.60 to require direct supervision of PTAs and OTAs when therapy
services are provided by PTs or OTs in private practice and also to
cross-reference the qualifications at Sec. 484.4 for privately
practicing therapists and their therapy assistants.
3. Other Technical Revisions
We proposed technical corrections to Sec. 410.62 to refer
consistently to SLP (currently the terms ``speech pathology'' and
``speech-language pathology'' are used interchangeably) and proposed
revisions to Sec. 410.62(a)(2)(iii) to appropriately reference Sec.
410.61 (the current reference is to Sec. 410.63).
We also proposed removing subpart D, Conditions for Coverage:
Outpatient Physical Therapy Services Furnished by Physical Therapists,
from part 486. Our November 1998 rule (63 FR 58868) discussed replacing
this subpart with a simplified carrier enrollment process for physical
or occupational therapists in private practice; however, the conforming
regulatory change to remove subpart D was never made.
In addition, we proposed a technical change at Sec. 484.4 to
correct the title ``physical therapy assistant'' to ``physical
therapist assistant'' and proposed amending Sec. 410.59(e) and Sec.
410.60(e) to include a reference to the 2-year moratorium on the
therapy caps established by section 624 of the MMA.
Comment: Commenters representing therapy specialty organizations
supported these changes.
Response: We will finalize these changes as proposed.
Result of Evaluation of Comments
We are finalizing the changes as proposed.
B. Low Osmolar Contrast Media
High osmolar and low osmolar contrast media (LOCM) are used to
enhance the images produced by various types of diagnostic radiological
procedures. When the Medicare physician fee schedule was established,
findings of studies of patients receiving both types of contrast media
had been published, and the ACR had adopted criteria for the use of
LOCM. At that time, we determined that the older, less expensive high
osmolar contrast media (HOCM) could be used safely in a large
percentage of the Medicare population. However, we also decided that
separate payment for LOCM may be made for patients with certain medical
characteristics. We adopted the ACR criteria, with some modification,
as the basis for a policy that separate payments are made for the use
of LOCM in radiological procedures for patients meeting certain
criteria. These criteria were established at Sec. 414.38. Under these
conditions, we pay for LOCM, utilizing HCPCS codes A4644 through A4646.
In the August 5, 2004 rule, we proposed to revise the regulations
at Sec. 414.38 to eliminate the restrictive criteria for the payment
of LOCM. This proposal would make Medicare payment for LOCM consistent
across settings since, under the OPPS, there is no longer a payment
difference between LOCM and other contrast materials.
We also proposed that, effective January 1, 2005, payment for LOCM
would be made on the basis of the ASP plus six percent in accordance
with the standard methodology for drug pricing established by the MMA.
However, because the technical portions of radiology services are
currently valued in the nonphysician work pool and the CPEP inputs for
these services are not used in calculating payment, we also indicated
we would continue to reduce payment for LOCM by eight percent to avoid
any duplicate payment for contrast media.
Comment: Commenters representing radiology, interventional
radiology, and imaging contrast manufacturers were supportive of this
proposed change; however, our payment methodology of ASP plus six
percent minus eight percent was questioned. Two commenters also believe
that the implementation date for the application of ASP methodology
should be changed from January 1, 2005. One requested an effective date
of April 1, 2005 and the other requested an effective date of January
1, 2006.
Response: We appreciate the commenters' support for this change. We
stated in the proposed rule that effective January 1, 2005, payment for
LOCM would be made on the basis of the ASP plus six percent. However,
there is an October 30, 2004 deadline for submission of the ASP data
used for the January 1, 2005 payment, and this date occurred prior to
our finalizing the proposed payment methodology for LOCM. Therefore,
the ASP payment methodology for LOCM will be made effective April 1,
2005. Manufacturers of LOCM will be required to submit their fourth
quarter 2004 (4Q04) ASP information to us on or before January 30,
2005. Subsequent data must be submitted within 30 days after the end of
each calendar quarter. The 4Q04 data will be used to determine the
April 1, 2005 ASP plus six percent payment limits. Further information
on the specific format of the data submission and the address to which
the information can be sent is found on the CMS ASP Web site,
specifically at http://www.cms.hhs.gov/providers/drugs/asp.asp.
Our policy to reduce payment for LOCM by 8 percent stems from the
fact that the technical component RVUs for these procedures took into
account the use of (and expenses for) HOCM in the (see the November 25,
1991 final rule (56 FR 59502)). However, since that time, the price
differential between HOCM and LOCM has declined. In addition, upon
further review, we are not able to determine accurately the degree of
duplicate payment that might occur when both the imaging procedure and
LOCM are billed. Therefore, we are not applying the eight percent
reduction to the LOCM payment as proposed. The payment for LOCM will be
consistent with the payment rate for the majority of drugs administered
by physicians.
Comment: One contrast agent industry association suggested that we
issue additional codes for the reporting of contrast media.
Response: For 2005, we are continuing to use the current three
HCPCS codes in the reporting of low osmolar contrast agents. However,
we are exploring the possibility of additional codes to accurately
capture the cost differences among all contrast agents as well as the
differing clinical
[[Page 66357]]
uses, concentration, and dose administrations. We welcome input from
the medical community and the manufacturers of contrast media on this
issue.
Comment: A commenter suggested that we use a model to capture
volume and concentration variances of LOCM. In this model, ASP would be
calculated as ASP = Total Sales/Total Volume.
Response: This suggested methodology does not take into account the
weighted average for each national drug code (NDC) within a HCPCS code
that must be used to derive an appropriate ASP code price.
Result of Evaluation of Comments
We are revising the regulations at Sec. 414.38 to eliminate the
criteria for the payment of LOCM. In addition, effective April 1, 2005,
payment for LOCM will be made on the basis of the ASP plus six percent.
C. Payments for Physicians and Practitioners Managing Patients on
Dialysis
1. ESRD-Related Services Provided to Patients in Observation Settings
In response to comments received on billing procedures for
physicians and practitioners managing patients on dialysis when the
dialysis patient is hospitalized during the month, we stated in the
November 7, 2003 Federal Register (68 FR 63220) that ESRD-related
visits furnished to patients in observation status would not be counted
as visits under the MCP but would be paid separately. Prior to this,
long-standing Medicare policy had included ESRD-related visits
furnished in the observation setting within the MCP. However, upon
further review of this issue, in the proposed rule published August 5,
2004, we proposed a revision to this policy and stated that ESRD-
related visits provided to patients by the MCP physician in an
observation setting would be counted as visits for purposes of billing
the MCP codes.
Comment: Several commenters expressed support for allowing ESRD-
related visits provided to patients by the MCP physician in the
observation setting to be counted for purposes of billing the MCP
codes. However, Kidney Care Partners (KCP) and the Renal Physicians
Association (RPA) requested clarification as to how a physician or
practitioner who is not part of the MCP practice team should bill for
visits furnished in the hospital observation setting. The RPA suggested
that a hemodialysis procedure with single physician evaluation as
described by CPT code 90935 be used.
Response: Physicians or practitioners who are not part of the MCP
practice team but who furnish a visit to an ESRD beneficiary in the
observation setting can bill the appropriate observation codes that
accurately describe the service (CPT codes 99217 through 99220). A
hemodialysis procedure with single physician visit as described by CPT
code 90935 will only be used when the beneficiary is an inpatient or
for outpatient dialysis services for a non-ESRD patient.
2. Payment for Outpatient ESRD-Related Services for Partial Month
Scenarios
Since changing our payments for physicians and practitioners
managing patients on dialysis, we have received a number of comments
from the nephrology community requesting guidance on billing for
outpatient ESRD-related services provided to transient patients and in
partial month scenarios (for example, when the patient is hospitalized
during the month or receives a kidney transplant). To address this
issue, we proposed to change the description of the G codes for ESRD-
related home dialysis services, less than full month, as identified by
G0324 through G0327. The new descriptor would include other partial
month scenarios, in addition to patients dialyzing at home. The
proposed descriptors for G0324 through G0327 are as follows:
G0324, End stage renal disease (ESRD) related services for
dialysis less than a full month of service, per day; for patients under
two years of age;
G0325, End stage renal disease (ESRD) related services for
dialysis less than a full month of service, per day; for patients
between two and eleven years of age;
G0326, End stage renal disease (ESRD) related services for
dialysis less than a full month of service, per day, for patients
between twelve and nineteen years of age.
G0327, End stage renal disease (ESRD) related services for
dialysis less than a full month of service, per day, for patients
twenty years of age and over.
In the August 5, 2004 proposed rule, we stated that these G codes
would provide a consistent way to bill for outpatient ESRD-related
services provided under the following circumstances:
Transient patients--Patients traveling away from home
(less than full month);
Home Dialysis Patients (less than full month);
Partial month where there were one or more face-to-face
visits without the comprehensive visit and either the patient was
hospitalized before a complete assessment was furnished, dialysis
stopped due to death, or the patient had received a kidney transplant.
However, we noted that this proposed change to the descriptions of
G0324 through G0327 was intended to accommodate unusual circumstances
when the outpatient ESRD-related services would not be paid for under
the MCP and that use of the codes would be limited to the circumstances
listed above. Physicians who have an on-going formal agreement with the
MCP physician to provide cursory visits during the month (for example
``rounding physicians'') could not use the per diem codes.
Clarification on Billing for Transient Patients
In the August 5, 2004 proposed rule, we stated that, for transient
patients who are away from their home dialysis site and at another site
for fewer than 30 consecutive days, the revised per diem G codes (G0324
through G0327) would be billed by the physician or practitioner
responsible for the transient patient's ESRD-related care. Only the
physician or practitioner responsible for the traveling ESRD patient's
care would be permitted to bill for ESRD-related services using the per
diem G codes (G0324 through G0327).
If the transient patient is under the care of a physician or
practitioner other than his or her regular MCP physician for a complete
month, the physician or practitioner responsible for the transient
patient's ESRD-related care would not be able to bill using the per
diem codes. We also solicited comments on when a patient will be
considered transient.
Comment: Several commenters, including the ASN, KCP, and the RPA,
supported our proposed change to the description of HCPCS codes G0324-
G0327 (per diem codes). The KCP believed that this change would provide
a consistent billing method when the patient is transient, furnished
home dialysis (less than full month), and for other partial month
scenarios when the patient is hospitalized, has a transplant or when
the patient expires. Additionally, several commenters praised us for
our willingness to work with the renal community to address the
multitude of issues surrounding the way physicians and practitioners
are paid for managing patients on dialysis.
However, the RPA and KCP suggested that, in addition to the
situations described in the proposed rule, the per diem codes as
described by G0324 through G0327 should be used to bill whenever one or
more visits occurred
[[Page 66358]]
during the month regardless of whether the complete monthly assessment
was furnished.
Response: As explained in the proposed rule, we believe the per
diem codes will only be used for unusual circumstances where the
ongoing management of an ESRD patient would not be paid through the
MCP. As discussed earlier, we proposed to allow the per diem codes only
in specific circumstances. However, after further review of this issue,
we believe that it would also be appropriate to use the per diem codes
when the beneficiary's MCP practitioner changes permanently during the
month. For example, the ESRD beneficiary moves from one State to
another and a new MCP physician or practitioner has the ongoing
responsibility for the E/M of the patient's ESRD-related care who is
not part of the same group practice as an employee of the previous MCP
physician. We addressed this issue in a recent instruction published on
September 17, 2004 (CR 3414 ``Payment for Outpatient ESRD-Related
Services'', Transmittal 300). For more information on this instruction
please visit our Web site at http://www.cms.hhs.gov/manuals/ and select
2004 transmittals under the program transmittals link.
However, we will not permit the use of per diem codes (HCPCS codes
G0324 through G0327) for all instances when the MCP physician or
practitioner furnishes at least one visit during the month without
regard to the status of a complete monthly assessment of the patient.
We are concerned that permitting the per diem codes to be used in this
manner may undermine the MCP. For example, the ESRD MCP includes
various physician and practitioner services such as the establishment
of a dialyzing cycle, outpatient E/M of the dialysis visit(s),
telephone calls, patient management as well as clinically appropriate
physician or practitioner visit(s) during the month. At least one of
the visits must include a clinical examination of the vascular access
site furnished face-to-face by a physician, CNS, NP or PA. When a
practitioner bills for the MCP, the medical record must document that
all of these services are furnished. By using the per diem codes in the
manner suggested by the commenter, it would not be necessary for the
practitioner to provide a complete monthly assessment of the ESRD
beneficiary to receive payment for the ongoing management of patients
on dialysis.
Comment: With regard to the ESRD-related services for home dialysis
patients, less than full month, one healthcare corporation believes
that the proposed coding changes continue to penalize nephrologists for
prescribing home therapy because a per diem (pro-rated) payment is made
when a hospitalization occurs. The commenter believes that this policy
results in an inequity as compared to a physician providing 2-3 visits
per month for center-based dialysis patients. Additionally, the
commenter argues that the pro-rated methodology used for home dialysis
patients (partial month) is inconsistent with how we pay the MCP
physician for patients undergoing dialysis treatments in a dialysis
facility.
The commenter believes that we should increase the payment for
ESRD-related services for home dialysis patients to a level that is at
least as high as the ESRD-related services (for full month) with 4 or
more visits per month. The commenter contends that raising the payment
amount for home-based dialysis patients would result in revenue
opportunities similar to those available in the center-based scenario
and would provide a greater incentive for home dialysis treatment.
Response: We do not agree with the commenter's statement that an
inconsistency exists in the way we pay the MCP physician for managing a
home dialysis patient (less than full month) and center dialysis
patient (less than full month).
Our proposed change to the description of HCPCS codes G0324 through
G0327 would apply to dialysis patients who receive dialysis in a
dialysis center or other facility during the month as well as to home
dialysis patients. For example, if a center dialysis patient is
hospitalized during the month, has a transplant, or expires before a
complete assessment is furnished (including a face-to-face examination
of the vascular access site), the MCP physician would use the per diem
rate to bill for ESRD-related care. When either a home dialysis patient
or a patient who receives dialysis in a dialysis facility is
hospitalized, the MCP physician or practitioner may bill for inpatient
hemodialysis visits as appropriate (for example CPT codes 90935 and
90937).
Additionally, we believe the current payment level for physicians
managing patients on home dialysis for a full month already provides an
incentive for an increased use of home dialysis. For instance, payment
for the monthly management of home dialysis patients is made at the
same rate as the MCP with 2 to 3 visits. However, a monthly visit is
not required as a condition of payment for physicians and practitioners
managing home dialysis patients. Essentially, a physician or
practitioner managing ESRD patients who receive dialysis in a dialysis
facility would be required to furnish 2 to 3 face-to-face visits in
order to receive the same level of payment as he or she would have
received for managing a home dialysis patient. We do not believe it
would be appropriate to pay physicians managing home dialysis patients
at the highest MCP amount when no visits are required as a condition of
payment.
Definition of a ``Transient Patient''
Comment: The RPA and KCP believe that it would be more appropriate
to refer to these patients as ``visiting patients''. The RPA suggested
that a ``visiting patient'' be defined as a ``patient receiving
dialysis or renal-related care whose care is temporarily supervised
(for less than one month's time) by a physician who is not a member of
the practice that usually charges under the MCP or G codes''.
Response: We believe the term ``transient patients'' better
describes a beneficiary who is away from his or her home dialysis site
for less than a full month.
General Comments on Our Changes in Payments for Physicians and
Practitioners Managing Patients on Dialysis
Comment: One commenter requested clarification as to how ESRD-
related visits furnished to beneficiaries residing in a skilled nursing
facility (SNF) adjacent to a hospital should be handled. The commenter
explained that his SNF patients with ESRD usually receive dialysis
treatments in an independent dialysis facility connected to a
hospital's SNF. However, in cases when the patient is ``too ill'' to be
transported to the independent dialysis facility, the dialysis
treatment occurs in the inpatient dialysis treatment area (but the
patient is not admitted to the hospital as an inpatient). The commenter
noted that ESRD-related visits may be furnished while the patient is
dialyzing or at the SNF when the patient is not dialyzing.
Response: Although we have not issued specific instructions on this
issue, we believe that ESRD-related visits furnished to SNF residents
are similar to other ongoing management services under the MCP. As
such, ESRD-related visits furnished to patients residing in a SNF will
be counted for purposes of billing the MCP codes. However, if the
beneficiary is admitted to the hospital as an inpatient, the
appropriate inpatient visit code will be used, for example, CPT code
90935.
[[Page 66359]]
Comment: With regard to our revisions to the MCP (as published in
the CY 2004 final rule), the American Association of Kidney Patients
(AAKP) questioned if we have any current data on or future plans to
study whether access to nephrologists or the quality of medical care
for ESRD patients has been improved or impaired. Additionally, AAKP
questioned whether we have any plans to develop additional proposals
(beyond the telehealth proposal) to address access needs in rural and
other underserved areas.
Response: In evaluating the MCP, we will be looking for trends in
hospitalization rates and resource utilization for ESRD patients.
Moreover, we understand the challenges nephrologists face in visiting
all patients on dialysis. To that end, we believe that our policy to
allow clinical nurse specialists, nurse practitioners and physician
assistants to furnish visits under the MCP, along with our addition of
specific ESRD-related services to the list of Medicare telehealth
services, will help ameliorate access issues.
Comment: The RPA and the ASN continued to express concerns with the
changes made in the CY 2004 final rule to the way physicians are paid
for managing patients on dialysis. The RPA strongly believes that many
of the underlying principles of the new HCPCS codes for managing ESRD
patients need to be changed. The RPA cited the impact on rural
providers, the lack of gradation in payment amounts between furnishing
2 and furnishing 3 visits per month, and the premise that more visits
will equate to better quality of care as major shortcomings of the new
ESRD MCP.
The RPA and ASN emphasized their belief that more physician and
practitioner visits per month does not correlate to efforts to improve
the quality of care for ESRD patients. RPA contends that a stratified
MCP system based on the number of monthly physician and practitioner
visits is unnecessarily complicated and believes that the vast majority
of nephrologists provided appropriate ESRD-related care under the
previous MCP. To that end, the RPA urged us to implement a simpler
system based on a minimum number of patient visits and a new
documentation requirement for the services provided under the MCP.
Response: We appreciate the commenters' suggestions and will
consider these comments as we continue to refine how we pay for
physicians and practitioners managing patients on dialysis.
Results of Evaluation of Comments
ESRD-related visits provided to patients by the MCP physician or
practitioner in an observation setting will be counted as visits for
purposes of billing the MCP codes.
Moreover, we will change the description of the G codes for ESRD-
related home dialysis services, less than full month, as identified by
G0324 through G0327. The new descriptor will include other partial
month scenarios, in addition to patients dialyzing at home. The
descriptors for G0324 through G0327 will be as follows:
G0324: End stage renal disease (ESRD) related services for
dialysis less than a full month of service, per day; for patients under
two years of age.
G0325: End stage renal disease (ESRD) related services for
dialysis less than a full month of service, per day; for patients
between two and eleven years of age.
G0326: End stage renal disease (ESRD) related services for
dialysis less than a full month of service, per day; for patients
between twelve and nineteen years of age.
G0327: End stage renal disease (ESRD) related services for
dialysis less than a full month of service, per day; for patients
twenty years of age and over.
The revised per diem ESRD-related services G codes will be used for
outpatient ESRD-related services provided in the following scenarios:
Transient patients--Patients traveling away from home
(less than full month);
Home dialysis patients (less than full month);
Partial month where one or more face-to-face visits
without the comprehensive visit and either the patient was hospitalized
before a complete assessment was furnished, dialysis stopped due to
death, or the patient had a transplant.
Patients who have a permanent change in their MCP
physician during the month.
D. Technical Revision--Sec. 411.404
In Sec. 411.404, Medicare noncoverage of all obesity-related
services is used as an example. Since we are currently revising this
coverage policy, we proposed to omit this example.
Commenters were supportive of this proposed change and we are
finalizing it as proposed.
E. Diagnostic Psychological Tests
All diagnostic tests covered under section 1861(s)(3) of the Act
and payable under the physician fee schedule must be furnished under
the appropriate level of supervision by a physician as defined in
section 1861(r) of the Act. Section 410.32(b)(2)(iii) states an
exception to these physician supervision requirements for clinical
psychologists and independently practicing psychologists (who are not
clinical psychologists) which allows them to personally perform
diagnostic psychological testing services without physician
supervision. However, diagnostic psychological tests performed by
anyone other than a clinical psychologist or an independently
practicing psychologist must be provided under the general supervision
of a physician as defined in section 1861(r) of the Act. Accordingly,
clinical psychologists and independently practicing psychologists have
not been permitted to supervise others in the administration of
diagnostic psychological tests.
As discussed in the August 5, 2004 proposed rule, we were asked to
re-evaluate our regulations regarding clinical psychologists'
supervision of diagnostic psychological tests, and additional
information concerning provision of these services was also supplied.
Based upon our review of this issue, we determined that clinical
psychologists possess knowledge sufficient to direct test selection and
interpret test data. Therefore, we proposed to change the requirements
at Sec. 410.32(b)(2)(iii) to permit clinical psychologists to
supervise the performance of diagnostic psychological and
neuropsychological testing services.
Comment: Two specialty societies representing psychologists and
many individual commenters were in support of the change. One major
association representing psychiatrists and a few individual commenters
opposed the proposal. According to the association, expanding the
supervision requirements will not lessen the burden on physicians and
healthcare facilities within rural areas. In addition, this association
asked that we provide data showing that the change to the supervision
requirements will reduce the burden on physicians and health care
facilities, and that access will be improved in rural areas.
Response: We appreciate the positive comments in support of this
proposal.
In response to the request for evidence that this change will
reduce burden and improve access, we would first note that our primary
reason for proposing this change was that we believe clinical
psychologists possess the core knowledge to sufficiently supervise the
administration of these tests. By enabling them to do so, this change
will allow greater flexibility in their practices.
[[Page 66360]]
With regard to improved access in rural areas, we noted previously
in this rule that we recognize mental health HPSAs for incentive
payments for psychiatrists. Accordingly, we believe that the expansion
of the supervision requirements will help improve access in these
areas.
Result of Evaluation of Comments
As proposed, we are revising Sec. 410.32(b)(2)(iii) to permit
clinical psychologists to supervise the performance of diagnostic
psychological and neuropsychological testing services.
F. Care Plan Oversight
Care Plan Oversight (CPO) refers to the supervision of patients
receiving Medicare-covered home health or hospice services requiring
complex multidisciplinary care modalities, including regular
development and review of plans of care. In the August 5, 2004 rule, we
proposed to revise Sec. 414.39 to clarify that NPPs can perform home
health CPO; however, they cannot certify a patient for home health
services and sign the plan of care. We also proposed the conditions
under which NPP services may be billed for CPO and explained that the
proposed conditions are meant to ensure that the NPP has seen and
examined the patient and that the appropriate and established
relationship exists between the physician who certifies the patient for
home health services and the NPP who will provide the home health CPO.
Comment: Several commenters support the proposed revision and
conditions of coverage. They support the integrated practice
arrangements required by proposed Sec. 414.39(c)(2)(iii). They believe
the proposed conditions ensure appropriate, ongoing supervision of both
the patient's condition and the NPP.
Response: We appreciate the commenters' support for this proposal.
Comment: We received a comment from an association representing
home care physicians requesting that we include PAs in the
clarification because PAs increasingly play the same role as NPs in
home health care and bill under the same house call codes.
Response: We agree with the commenter that we include PAs in the
clarification. The definition of NPPs in proposed Sec. 414.39(a)
includes NPs, CNSs, and PAs. However, we also note that PAs cannot bill
directly for their own services.
Comment: We received a comment requesting that we clearly state the
definition of the appropriate relationship between the physician and
the NPP. The commenter requested that we cross-reference applicable
State standards because the meaning of collaboration varies across
States and some States require employment relationships. Also, the
commenter recommended that we require a written agreement regarding the
responsibilities for managing care when the NP or PA is not from the
same organization as the physician who has certified the skilled home
care services.
Response: We agree that State laws or regulations governing
collaborative relationships, where applicable, would be useful in this
regard. In the absence of State laws or regulations, NPs and CNSs will
be required to document their scope of practice and indicate the
relationships they have with physicians to handle issues outside their
scope of practice. If the NPP is a PA, the physician signing the plan
of care also must be the physician who provides general supervision of
PA services for the practice.
Comment: We received a comment requesting that this clarification
be made retroactive to at least FY 2000 to allow denied claims to be
resubmitted. The commenter stated that many claims for CPO services by
NPs were denied over the past several years, despite CMS and
legislative intent to have these claims reimbursed.
Response: We clarified in the November 1, 2000 final rule (65 FR
65407) that CPO services of NPPs, practicing within the scope of State
law applicable to their services, could be paid under Medicare.
However, our policy has also been that the physician who bills for CPO
must be the same physician who signs the plan of care.
Appeal rights are available for these claims for CPO services
provided by NPPs in HHAs if the appeal is requested within 120 days of
the date of the claim denial. If appeal rights have expired, the
physician or supplier may request a reopening for any reason within 12
months of the date of the notice of initial determination. After the
12-month period, but within 4 years from the date of the initial
determination, a reopening may be requested for good cause. The
decision on whether to reopen a claim at the request of the physician
or supplier is at the discretion of the Medicare contractor.
Comment: We received comments noting that this clarification does
not allow NPs, CNSs, or PAs to certify a patient for home health care
services or to sign the plan of care. The commenters noted that
certification by NPPs is not currently permitted under the statute. One
of the commenters recommended that we revise the rules on certification
and recertification to allow NPs, CNSs, or PAs to perform them.
Response: The commenters are correct that the statute (sections
1814(a)(2)(C) and 1835(a)(2)(A) of the Act) requires a physician to
certify a patient for home health care services or to sign the plan of
care. Therefore, the issue of whether to allow NPs, CNSs, or PAs to
certify a patient for home health care services or to sign the plan of
care is not within the purview of this rule.
Result of Evaluations of Comments
We are adopting the proposed changes to Sec. 414.39 that clarify
that NPPs can provide care plan oversight for beneficiaries who receive
home health services.
G. Assignment of Medicare Claims--Payment to the Supplier
The current regulation requires the beneficiary (or the person
authorized to request payment on the beneficiary's behalf) to assign a
claim to the supplier for an assignment to be effective. However, over
time, the Act was amended in various sections to require that Medicare
payment for certain services would only be made on an assigned basis
regardless of whether or not the beneficiary actually assigns the claim
to the supplier. In these instances, the current requirement in Sec.
424.55(a), which specifies that the beneficiary assign the claim to the
supplier, is now unnecessary. Therefore, we proposed to create an
exception to the general rule in Sec. 424.55(a). New Sec. 424.55(c)
would eliminate the requirement that beneficiaries assign claims to
suppliers in situations when payment under the Act can only be made on
an assignment-related basis or when payment is for services furnished
by a participating physician or supplier.
Comment: The ACLA supports the proposal and agrees that this new
exception to the requirement for beneficiaries to assign benefits in
situations where benefits can, by statute, only be paid on an assigned
basis will reduce the paperwork burden on beneficiaries and suppliers.
Response: We agree that the proposed regulation will reduce the
paperwork burden on beneficiaries and suppliers and we are finalizing
the revisions as proposed.
Result of Evaluation of Comments
We are finalizing Sec. 424.55(c) as proposed.
H. Additional Issues Raised by Commenters
Comment: Two specialty societies representing plastic surgeons and
[[Page 66361]]
podiatrists, as well as the RUC, recommended that the global period for
CPT 15342, Application of bilaminate skin substitute/neodermis; 25 sq
cm, be changed from a 10-day global period to a 0-day global period.
The commenters stated that the plastic surgeons generally perform this
procedure on more severely injured patients, such as burn patients, who
are often seen in the inpatient setting. The podiatrists, on the other
hand, typically treat patients with diabetic foot ulcers in the
outpatient setting. Therefore, the commenters contend that though the
work required to perform the procedure is the same for both
specialties, the post-surgical work and time are not and the change in
the global period would allow both scenarios to be paid appropriately.
Response: We understand that this code can represent differing
scenarios. However, while podiatrists perform approximately 45 percent
of the procedures and general surgeons 17 percent, plastic surgeons
perform only 7 percent. In addition, only 9 percent are performed in
the inpatient hospital setting. Our general approach and the one
adopted by the RUC for valuing all services is to base our review on
the typical patient. In this case, the podiatric scenario would clearly
dominate and applying a 10-day global period to capture the post-
procedure office visit appears appropriate. However, we would be
willing to discuss this issue further with the specialties involved and
with the RUC.
Comment: The American Society of Anesthesiologists (ASA) provided
comments asking that we consider revising the current teaching
regulations to place teaching anesthesiologists' reimbursements on par
with the teaching of resident physicians in surgery and other high-risk
specialties. Also, that we redefine the HCPCS claims service modifier
``AA'' to include both the personal administration of the anesthesia by
the physician and teaching up to two resident physicians concurrently.
In its comments, the ASA stated that it believes we possess the
authority under the terms of section 1871 of the Medicare statute to
make the requested change in its teaching reimbursement rules,
effective January 1, 2005, as follows: the agency can treat the rule as
a logical outgrowth of a prior proposal; it can issue a final rule with
comment period as part of the 2005 physician payment final rule; or, it
can promptly issue a free-standing rule proposing the change and allow
for public comment and subsequent effectiveness along with the 2005
physician payment rule. The American Association of Nurse Anesthetists
(AANA) asked that, if we review proposed revisions to the teaching
anesthesiologist rules, that we carefully consider how these revisions
might impact teaching Certified Registered Nurse Anesthetists (CRNAs).
The AANA commented that our rules should not favor one type of provider
over another.
Response: Surgical services are paid differently than anesthesia
services. For example, surgical codes usually have global periods and
payment includes the payment for the surgical procedure and
postoperative visits during the global period. Anesthesia services
include the preanesthesia examination and evaluation, the anesthesia
service associated with the surgical service, and immediate
postanesthesia care. Currently, the teaching physician's presence
during the key or critical period criteria applies to both the services
of the teaching surgeon and the teaching anesthesiologist. The key or
critical services are different for the service of each specialty.
We plan to explore these issues further prior to deciding whether
to include this change in the proposed rule for 2006.
Comment: We received comments from a manufacturer, many providers
and individuals requesting that new HCPCS codes be created for a
specific laser surgery treatment for benign prostatic hyperplasia.
Commenters stated that current CPT codes used for billing this service
under the physician fee schedule are not specific to the unique
technology involved with this laser surgery treatment and result in
underpayment when this technology is used. They noted that under the
hospital OPPS, this treatment was assigned to a new technology code.
We also received requests from other individuals for new G codes
and payment for other specific services, and for certain HCPCS codes
that currently are paid only under OPPS.
Response: We do not believe that it is necessary to create new
HCPCS codes for these services. Commenters that believe the existing
CPT codes do not reflect their technology or services, may contact the
AMA's CPT Editorial Panel to review these matters, particularly since
the CPT Editorial Panel has a new coding classification specifically
for new and emerging technologies.
There will be situations where codes are used under OPPS but not
recognized under the physician fee schedule (PFS) because of the
different payment methodologies.
Comment: A specialty society urged us to discontinue use of the
HCPCS codes for positron emission tomography (PET) procedures and to
instruct physicians to use the available CPT codes. They also urged us
to adopt RUC recommendations for new PET codes rather than carrier
price these services. The commenter stated they would like to meet to
discuss these new codes and PET/computed tomography (CT) technology.
Response: We will continue to use HCPCS codes and carrier price
these services at this time. We will be examining the overall issue of
Medicare coding, payment, and coverage of PET services and would be
happy to meet with the specialty society to discuss this issue.
General Issues
We also received comments on issues and concerns that were beyond
the scope of the proposed rule. These include: The need for quality
standards for diagnostic imaging; concerns about outreach and access;
requests for revisions to current policy; and, concerns about the
accuracy of code descriptors. While we will try to ensure these
comments are provided to appropriate CMS components, commenters should
also feel free to contact the appropriate CMS components about their
concerns. To the extent that these comments involved valuation of
services under the physician fee schedule, we are also soliciting
comments on services for which the physician work may be misvalued. See
section VI for additional information on this process.
V. Refinement of Relative Value Units for Calendar Year 2005 and
Response to Public Comments on Interim Relative Value Units for 2004
[If you choose to comment on issues in this section, please include the
caption ``Interim Work Relative Value Units'' at the beginning of your
comments.]
A. Summary of Issues Discussed Related to the Adjustment of Relative
Value Units
Section V.B. and V.C. 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, 2005.
B. Process for Establishing Work Relative Value Units for the 2004
Physician Fee Schedule
Our November 7, 2003 final rule (69 FR 1084) contained the work
RVUs for Medicare payment for existing
[[Page 66362]]
procedure codes under the physician fee schedule and interim RVUs for
new and revised codes beginning January 1, 2004. We considered the RVUs
for the interim codes to be subject to public comment under the annual
refinement process. (Note that the November rule was subsequently
revised on January 7, 2004 to reflect revisions to procedure codes
required by the MMA.) In this section, we summarize the refinements to
the interim work RVUs published in the November 7, 2003 rule and our
establishment of the work RVUs for new and revised codes for the 2005
physician fee schedule.
C. Work Relative Value Unit Refinements of Interim Relative Value Units
1. Methodology (Includes Table Titled ``Work Relative Value Unit
Refinements of the 2003 Interim and Related Relative Value Units'')
Although the RVUs in the January 2004 final rule were used to
calculate 2004 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 on approximately 12 CPT codes
with interim work RVUs.
To evaluate these comments we used a process similar to the process
used since 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
organizations 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 and 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 or
more of the reference services. In compiling the set, we attempted to
include: (1) Services that are commonly performed whose work RVUs are
not controversial; (2) services that span the entire spectrum from the
easiest to the most difficult; and (3) at least three services
performed by each of the major specialties so that each specialty would
be represented. The intent of the panel process was to capture each
participant's independent judgment based on the discussion and his or
her clinical experience. Following the discussion, each participant
rated the work for the procedure. Ratings were individual and
confidential, and there was no attempt to achieve consensus among the
panel members.
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 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 2004, 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.
Table 17 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.
2004 Work RVU. The work RVUs that appeared in the January
2004 rule are shown for each reviewed code.
Requested Work RVU. This column identifies the work RVUs
requested by commenters.
2005 Work RVU. This column contains the final RVUs for
physician work.
[[Page 66363]]
[GRAPHIC] [TIFF OMITTED] TR15NO04.515
2. Interim 2004 Codes
CPT code 43752 Naso- or oro-gastric tube placement, requiring
physician's skill and fluoroscopic guidance (includes fluoroscopy,
image documentation and report).
The RUC recommended a work RVU of 0.82 for this service based on a
comparison of this procedure to CPT code 44500, Introduction of long
gastrointestinal tube. While we agreed that CPT code 43752 is similar
in work intensity to CPT code 44500, we believed 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 reduced
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 and
assigned 0.68 interim work RVUs for CPT code 43752.
Comment: Commenters disagreed with our decision not to accept the
RUC recommended WRVU of 0.82 and with our rejection of the survey time,
particularly since this service involves both tube placement and
imaging. Based on these comments, we referred this code to the
multispecialty validation panel for review.
Response: As a result of the statistical analysis of the 2004
multispecialty validation panel ratings, we have assigned 0.81 work
RVUs to CPT code 43752.
CPT code 63103 Vertebral corpectomy (vertebral body resection),
partial or complete, lateral extracavitary approach with decompression
of spinal cord and/or nerve root(s) (for example, for tumor or
retropulsed bone fragments); thoracic or lumbar, each additional
segment (List separately in addition to code for primary procedure).
The RUC recommended a work RVU of 5.00 for this service based on a
comparison of this procedure to CPT code 63088, the add-on code for the
vertebral corpectomy, thoracic lumbar approach. We stated that 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.
Comment: Commenters requested that we withdraw the arbitrary
reduction of the work RVU for CPT code 63103 stating that the unique
aspects of the lateral extracavitary approach make the location in the
lumbar and thoracic spine less relevant than the actual exposure of an
additional level itself. The commenters stated that in contrast to
anterior thoracic or lumbar approaches for vertebral corpectomy, the
lateral extracavitary approach requires an unrelated and significantly
greater muscle dissection of spinal/paraspinal tissues, as well as an
additional rib, transverse process, and pedicle removal with isolation
and division of another pair of segmental vessels. Based on these
comments, we referred this code to the multispecialty validation panel
for review.
Response: As a result of the statistical analysis of the 2004
multispecialty validation panel ratings, we have assigned 4.82 work
RVUs to CPT code 63103.
CPT codes 38207 Transplant preparation of hematopoietic progenitor
cells; cryopreservation and storage, 38208 Transplant preparation of
hematopoietic progenitor cells; thawing of previously frozen harvest,
without washing, 38209 Transplant preparation of hematopoietic
progenitor cells; thawing of previously frozen harvest, with washing
38210 Transplant preparation of hematopoietic progenitor cells;
specific cell depletion within harvest, T-cell depletion, 38211
Transplant preparation of hematopoietic progenitor cells; tumor cell
depletion, 38212 Transplant preparation of hematopoietic progenitor
cells; red blood cell removal, 38213 Transplant preparation of
hematopoietic progenitor cells; platelet depletion, 38214 Transplant
preparation of hematopoietic progenitor cells; plasma (volume)
depletion, 38215 Transplant preparation of hematopoietic progenitor
cells; cell concentration in plasma, mononuclear, or buffy coat
layer.--These codes were new for CY 2003 but we did not receive the
final RUC recommendations in time for inclusion in the final rule. In
the December 31, 2002 rule we discussed the interim RUC recommendations
and our concerns for removing these codes from the laboratory fee
schedule, and paying them instead on the physician fee schedule (67 FR
80007). We received the final RUC recommendations in May 2003 and in
the November 7, 2003 final rule we stated we were maintaining a status
indicator ``I'' for these services making them not valid for payment
under the physician fee schedule. (Note: In the December 31, 2002 rule,
as part of the discussion about these CPT codes, we discussed the
creation of HCPCS codes G0265, Cryopreservation, freezing and storage
of cells for therapeutic use, each cell line; G0266 Thawing and
expansion of frozen cells for therapeutic use, each aliquot; and G0267,
Bone marrow or peripheral stem cell harvest,
[[Page 66364]]
modification or treatment to eliminate cell type(s) (for example, T-
cells, metastic carcinoma). We stated that these HCPCS codes are paid
under the laboratory fee schedule.)
Comment: We received comments regarding these codes in response to
the 2002 and 2003 final rules. Commenters expressed concern, which was
shared by the RUC about the CMS decision pertaining to these CPT codes.
They stated that CMS was invited to conduct site visits to observe and
have a better understanding of these services. They believe such visits
would provide additional information on these services and allow for a
more informed decision about their placement on the physician fee
schedule.
Response: CPT codes 38207, 38208, 38209, 38210, 38211, 38212,
38213, 38214 and 38215 reflect services that are typically provided by
laboratory personnel who require general oversight and supervision by a
laboratory physician, analogous to a physician providing oversight in a
blood banking facility. Based on site visits, we continue to believe
that these services are not typically provided by a physician. We
recognize that variability pertaining to the clinical and laboratory
management of patients does exist and that in some bone marrow
transplant centers these laboratory services are closely supervised and
managed by physicians. These centers, however, do not reflect the
typical practice pattern for the majority of bone marrow transplant
centers. Therefore, we will continue to allow use of HCPCS codes G0265
Cryopreservation, freezing and storage of cells for therapeutic use,
each cell line and G0266 Thawing and expansion of frozen cells for
therapeutic use, each aliquot to report these services, and G0267 Bone
marrow or peripheral stem cell harvest, modification or treatment to
eliminate cell type(s) (for example, T-cells, metastatic carcinoma).
These services are currently on the laboratory fee schedule. We welcome
additional comments to help us better determine whether to place CPT
codes 38207 through 38215 on either the physician or laboratory fee
schedule.
Note: We identified the services provided within transplant centers
as clinical services typically provided by a physician in conjunction
with the following codes: CPT codes 38205--Blood-derived hematopoietic
progenitor cell harvesting for transplantation, per collection;
allogenic, CPT 38206--Blood-derived hematopoietic progenitor cell
harvesting for transplantation, per collection; autologous, CPT codes
38240--Bone Marrow or bone derived peripheral stem cell
transplantation; allogenic, CPT code 38241--Bone Marrow or bone derived
peripheral stem cell transplantation; autologous, and CPT code 38242--
Bone Marrow or bone derived peripheral stem cell transplantation;
allogeneic lymphocyte donor infusions. We believe the physician work
RVUs assigned by the RUC to these codes (CPT code 38205-1.50, CPT code
38206-1.50, CPT code 38240-2.24 RVUs, CPT code 38241-2.24 RVUs, and CPT
code 38242-1.71 RVUs) appropriately reflect the physician work
intensity for each of these services and reaffirm our prior decision
announced in 2002. CPT code 38204--Management of recipient
hematopoietic progenitor cell donor search and cell acquisition was
valued at 2.00 RVUs by the RUC in 2002. We believe there may be
physician work when providing this service. However, information
obtained during our site visits revealed that the bulk of the service
was provided by the transplant coordinator, who worked closely with the
physician. It is unclear at this point what the appropriate value will
be for the physician who provides this service. We welcome comments on
this issue.
CPT code 76514 Ophthalmic ultrasound, echography, diagnostic;
corneal pachymetry, unilateral or bilateral (determination of corneal
thickness).--We accepted the RUC recommendation of 0.17 work RVUs.
Comments: The American Academy of Ophthalmology commented that the
assigned work RVU does not accurately reflect the value intended by the
RUC or CPT; the value should be doubled. The Academy stated that the
problem arose when the RUC recommended to CPT that the descriptor
should be changed from unilateral to unilateral or bilateral. The
commenter suggested that either the descriptor be changed to reflect
only the unilateral, which will take a while to accomplish, or that we
increase valuation to correctly reflect valuation by RUC.
Response: Because we have no data that indicates whether the
unilateral or bilateral procedure is more typical, we are not changing
the RVUs at this time. We would suggest that the Academy contact the
CPT Editorial Panel if a change to the descriptor would be helpful to
the specialty.
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 2005
(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 2005
CPT Codes'')
One aspect of establishing RVUs for 2005 was to assign 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 149 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. We also considered the relationships among the new and
revised codes for which we received RUC recommendations and agreed with
the majority of the relative relationships reflected in the RUC values.
In some instances, although 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) for the
family of codes. We reviewed all the RUC recommendations and accepted
approximately 99 percent of the RUC recommended values. For
approximately 1 percent of the recommendations, we agreed with the
relativity established by the RUC, but needed to adjust work RVUs to
retain budget neutrality.
We received four recommendations from the HCPAC. We agreed with two
of these recommendations and disagreed with two of them.
Table 18, titled ``AMA RUC and HCPAC Recommendations and CMS
Decisions for New and Revised 2005 CPT Codes,'' lists the new or
revised CPT codes, and their associated work RVUs, that will be interim
in 2005. This
[[Page 66365]]
table includes the following information:
A ``'' identifies a new code for 2005.
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 or
we disagreed with the RUC recommendation. 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.
2005 Work RVUs. This column establishes the interim 2005
work RVUs for physician work.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR15NO04.516
[[Page 66366]]
[GRAPHIC] [TIFF OMITTED] TR15NO04.517
[[Page 66367]]
[GRAPHIC] [TIFF OMITTED] TR15NO04.518
[[Page 66368]]
[GRAPHIC] [TIFF OMITTED] TR15NO04.519
BILLING CODE 4120-01-C
Table 19, which is titled ``AMA RUC ANESTHESIA RECOMMENDATIONS AND
CMS DECISIONS FOR NEW AND REVISED 2005 CPT CODES'', lists the new or
revised CPT codes for anesthesia and their base units that will be
interim in 2005. 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 or
we disagreed with the RUC recommendation. Codes for which we did not
accept the RUC recommendation are discussed in grreater detail
following this table.
2005 Base Units. This column establishes the 2005 base
units for these services.
[GRAPHIC] [TIFF OMITTED] TR15NO04.520
[[Page 66369]]
Discussion of Codes for Which There Were No RUC Recommendations or for
Which the RUC Recommendations Were Not Accepted
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 discuss those CRP codes
for which we received no RUC recommendations for physician work RVUs.
This summary refers only to work RVUs or base units.
New and Revised Codes for 2005
CPT mode 97605 Negative pressure wound therapy (for example, vacuum
assisted drainage collection), including topical application(s), wound
assessment, and instruction(s) for ongoing care, per session; total
wound(s) surface area less than or equal to 50 square centimeters and
CPT code 97606 Negative pressure wound therapy (for example, vacuum
assisted drainage collection), including topical application(s), wound
assessment, and instruction(s) for ongoing care, per session; total
wound(s) surface area greater than 50 square centimeters.--The RUC
HCPAC review board recommended 0.55 work RVUs for CPT code 97605 and
0.60 work RVUs for CPT code 97606, which we did not accept. We disagree
with their recommendation that these services contain physician work
and will not assign work RVUs. Further, when the negative pressure
wound therapy service does not encompass selective debridement, we
consider this service to represent a dressing change and will not make
separate payment. When the negative pressure wound therapy service
includes the need for selective debridement, we consider the services
represented by CPT codes 97605 and 97606 to be bundled into CPT codes
97597 or 97598, the new debridement codes, which will be appropriately
billed. We are assigning a status indicator of ``B'' to these two new
CPT codes (97605 and 97606), meaning that we will not make separate
payment for these services.
CPT code 57282, Colpopexy, vaginal; extra-peritoneal approach
(sacrospinous, iliococcygeus) and CPT code 57283 Colpopexy, vaginal;
intra-peritoneal approach (uterosacral, levator myorrhaphy).--The CPT
Editorial Panel revised an existing code (57282) and created a new code
(57283) to describe vaginal extra and intraperitoneal colpopexies. The
RUC recommended maintaining the current work PVUs of 8.85 for 57282 and
recommended 14.00 work PVUs for 57283. Previously, both the extra-
peritoneal approach and intra-peritoneal approach were billed under CPT
code 57282. Effective January 1, 2005, CPT code 57282 will be used to
report colpopexy, vaginal; extra-peritoneal approach, while CPT code
57283 will be used to report colpopexy vaginal; intraperitoneal
approach. Although we agree with the relativity established by the RUC,
we believe that the work RVUs for CPT code 57282 should have been
adjusted to reflect that the intra-peritoneal approach is now being
reported using CPT code 57283. In order to retain work neutrality
between these two services, we adjusted the work RVUs using the
utilization crosswalks provided by the specialty survey to account for
the work that was previously associated with performing these
procedures when only one code existed. This results in work RVUs of
6.86 for CPT code 57282 and 10.84 work RVUs for CPT code 57283.
We have not received the final recommendations from the RUC on
these services and carriers will price these services in 2005.
CPT Code 32855 Backbench standard preparation of cadaver donor lung
allograft prior to transplantation, including dissection of allograft
from surrounding soft tissues to prepare pulmonary venous/atrial cuff,
pulmonary artery, and bronchus; unilateral; CPT Code 32856 Backbench
standard preparation of cadaver donor lung allograft prior to
transplantation, including dissection of allograft from surrounding
soft tissues to prepare pulmonary venous/atrial cuff, pulmonary artery,
and bronchus; bilateral; CPT Code 33933 Backbench standard preparation
of cadaver donor heart/lung allograft prior to transplantation,
including dissection of allograft from surrounding soft tissues to
prepare aorta, superior vena cava, inferior vena cava, and trachea for
implantation; CPT Code 33944 Backbench standard preparation of cadaver
donor heart allograft prior to transplantation, including dissection of
allograft from surrounding soft tissues to prepare aorta, superior vena
cava, inferior vena cava, pulmonary artery, and left atrium for
implantation; CPT Code 44715 Backbench standard preparation of cadaver
or living donor intestine allograft prior to transplantation, including
mobilization and fashioning of the superior mesenteric artery and vein;
CPT Code 47143 Backbench standard preparation of cadaver donor whole
liver graft prior to allotransplantation, including cholecystectomy, if
necessary, and dissection and removal of surrounding soft tissues to
prepare the vena cava, portal vein, hepatic artery, and common bile
duct for implantation; without trisegment or lobe spilt; CPT Code 47144
Backbench standard preparation of cadaver donor whole liver graft prior
to allotransplantation, including cholecystectomy, if necessary, and
dissection and removal of surrounding soft tissues to prepare the vena
cava, portal vein, hepatic artery, and common bile duct for
implantation; with trisegment split of whole liver graft into two
partial liver grafts (that is, left lateral segment (segments II and
III) and right trisegment (segments I and IV through VIII)); CPT Code
47145 Backbench standard preparation of cadaver donor whole liver graft
prior to allotransplantation, including cholecystectomy, if necessary,
and dissection and removal of surrounding soft tissues to prepare the
vena cava, portal vein, hepatic artery, and common bile duct for
implantation; with lobe split of whole liver graft into two partial
liver grafts (that is, left lobe (segments II, III, and IV) and right
lobe (segments I and V through VIII)); CPT Code 48551 Backbench
standard preparation of cadaver donor pancreas allograft prior to
transplantation, including dissection of allograft from surrounding
soft tissues, splenectomy, duodenotomy, ligation of bile duct, ligation
of mesenteric vessels, and Y-graft arterial anastomoses from iliac
artery to superior mesenteric artery and to splenic artery, CPT Code
50323 Backbench standard preparation of cadaver donor renal allograft
prior to transplantation, including dissection and removal of
perinephric fat, diaphragmatic and retroperitoneal attachments,
excision of adrenal gland, and preparation of ureter(s), renal vein(s),
and renal artery(s), ligating branches, as necessary; CPT Code 50325
Backbench standard preparation of living donor renal allograft (open or
laparoscopic) prior to transplantation, including dissection and
removal of perinephric fat and preparation of ureter(s), renal vein(s),
and renal artery(s), ligating branches, as necessary; and CPT Code
93745 Initial set-up and programming by a physician of wearable
cardioverter-defibrillator includes initial programming of system,
establishing baseline electronic ECG, transmission of data to data
repository, patient instruction in wearing system and patient reporting
of problem or events.
[[Page 66370]]
Establishment of Interim Practice Expense RVUs for New and Revised
Physician's Current Procedural Terminology (CPT) Codes and New
Healthcare Common Procedure Coding System (HCPCS) Codes for 2005
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 (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 2005 codes were submitted to us as interim recommendations.
We have accepted, in the interim, the practice expense
recommendations submitted by the RUC for the codes listed in the table
titled ``AMA RUC and HCPAC RVU Recommendations and CMS Decisions for
New and Revised 2005 CPT Codes.'' However, we will be reviewing the
supplies, including the DNA probes, for the new and revised in situ
hybridization codes (CPT 88365, 88367 and 88368) to ensure that the
practice expense database accurately reflects the supplies associated
with these services.
Other Issues
Comment: The RUC requested that we modify the definition of the
``preservice'' portion for the 0-, 10- and 90-day global periods to
state, ``The preservice period includes the physicians' services
following the visit at which the decision for surgery is finalized
until the time of the operative procedure.'' The current definition of
the preservice time for the 0 and 10-day global periods includes the
preservice work occurring on the day of surgery, while the 90-day
global period includes the preservice work occurring the day before
surgery.
Response: We are reluctant to revise the definition of preservice
until there is further review of the issue. Though the suggested change
in preservice definition for physician work would correspond to the
change made in the definition for practice expense purposes, that
revision was made at the beginning of the practice expense refinement.
It is not clear to us how the relativity would be maintained between
existing codes valued under the current definition and new codes valued
using an expanded definition of preservice work. In addition, among
different procedures, there is most likely much variation in the time
period between the decision to perform surgery and the time of the
operative procedure. The absence of a specific timeframe could result
in an inconsistent application of the definition. However, we would
look forward to further discussion with the RUC concerning this issue.
Comment: Solid compensator-based intensity modulated radiation
therapy (IMRT) is one of the IMRT technologies currently paid using the
radiation therapy CPT code 77418, Intensity modulated treatment
delivery. For 2005, CPT created a Category III tracking code 0073T,
Compensator-based beam modulation treatment delivery of inverse planned
treatment using three or more high resolution (milled or cast)
compensatory convergent beam modulated fields, per treatment session.
CPT instructions for CPT code 77418 now specifically exclude this
technology.
Physicians performing compensator-based IMRT expressed concern that
we generally carrier price tracking codes and that carriers often will
not pay for them, considering services reported with a tracking code to
be experimental. One commenter requested that, in order to allow
payment for solid compensator-based IMRT under the physician fee
schedule, we assign RVUs to the new CPT tracking code 0073T.
Response: As noted by the commenters, we generally do not
nationally price tracking codes, which are most often used to report
new or experimental services. Rather, we designate them as carrier
priced until there is sufficient volume and information to develop
appropriate RVUs. However, solid compensator based IMRT is an
established technology that is currently paid both under the physician
fee schedule and in the hospital outpatient department. We are
concerned that having this service be reported using a carrier-priced
tracking code could have an adverse effect on access to this
technology. Therefore, we are assigning interim RVUs to this tracking
code. For payment under the physician fee schedule, we will crosswalk
the practice expense and malpractice RVUs assigned to CPT code 77418 to
the Category III tracking code 0073T. (Note that this is a technical
component only service and there are no associated physician work
RVUs.)
Comment: For 2005, CPT has eliminated CPT code 79900, Provision of
Therapeutic Radiopharmaceuticals. We received comments from several
organizations and individuals concerning elimination of this CPT code.
Commenters requested we either grant a grace period for the CPT code or
reinstate the HCPCS code Q3001, Radioelements for brachytherapy, any
type, each, so that payment can be made under the physician fee
schedule.
Response: We are reinstating HCPCS code Q3001 under the physician
fee schedule. This service will be carrier priced.
Note that there have been new HCPCS drug administration codes for
physicians' services established for CY 2005. Please see section
III.E.2 for specific information related to these new HCPCS codes.
VI. Five-Year Refinement of Relative Value Units
[If you choose to comment on issues in this section, please include the
caption ``Five Year Refinement of Work Relative Value Units for
Calendar Year 2004'' at the beginning of your comments.]
A. Background
The work RVUs were originally developed by a research team at the
Harvard School of Public Health in a cooperative agreement with us.
Harvard established the work RVUs for almost all fee schedule codes.
The RVUs for anesthesia services were based on relative values from the
American Society of Anesthesiology. The original RVUs for radiology
codes were based on the American College of Radiology relative value
scale. The work RVUs reflect the physician's effort in providing a
service by accounting for: the physician's time; the technical
difficulty of the procedure; the average severity of illness among
patients receiving the procedure; and the degree of physical and mental
effort required of the physician to perform the procedure.
Section 1848(c)(2)(B)(i) of the Act requires that we review all
RVUs no less than every 5 years. We initiated the first 5-year review
in 1994 and refinements went into effect beginning in 1997. The second
5-year review began in 1999 and refinements went into effect beginning
in 2002. It is now time to begin the third 5-year review of the
physician work RVUs with the resulting changes being effective
beginning in 2007.
As part of the final rule published December 8, 1994 (59 FR 63453),
we solicited public comment on all work RVUs for approximately 7,000
CPT and HCPCS codes. The scope of the 5-year review was limited to work
values, since at that time, the statute required practice expense and
malpractice RVUs be calculated based on 1991 allowed charges and
practice expense and malpractice expense shares for the specialties
performing the services. Also, the December 8, 1994 final rule
[[Page 66371]]
outlined the proposed process for refinement of the work RVUs and
provided a suggested format for submission of comments.
We indicated that we were particularly interested in receiving
comments on physicians' services for which medical practice had changed
since the Harvard surveys were performed, but for which there were no
code changes and, therefore, no reconsideration of whether the work
RVUs were still accurate. As a result of the December 8, 1994 final
rule, we received more than 500 comments on approximately 1,100 codes.
Subsequent to review of the comments by our medical staff, comments on
approximately 700 codes were forwarded to the AMA's Specialty Society
RUC for review. An additional 300 codes identified by our staff as
potentially misvalued were also forwarded to the RUC. A process similar
to that used for the annual physician fee schedule update was used for
evaluating the proposed changes to the work RVUs and a notice
discussing these proposed changes was published in the May 3, 1996
Federal Register (61 FR 19992). As outlined in this notice, we proposed
to increase the work RVUs for 28 percent of the codes; we proposed to
maintain the work RVUs for 61 percent of the codes and we proposed to
decrease the work RVUs for 11 percent of the codes. (Our proposed work
RVUs agreed with the RUC recommendations for 93 percent of the codes.)
In response to the May 3, 1996 proposed notice, we received more than
2,900 comments on approximately 133 codes plus all anesthesia services.
In order to address these comments, we convened multi-specialty panels
of physicians. A detailed discussion of this process, as well as the
results of the 5-year review were included in the final rule with
comment period published November 22, 1996 (61 FR 59490).
We initiated the second 5-year review by soliciting comments on
potentially misvalued work RVUs for all services in the CY 2000
physician fee schedule in the November 2, 1999, final rule (64 FR
59427). We indicated that the scope of the second 5-year review would
be restricted to work RVUs, since resource-based malpractice RVUs had
only just been implemented in CY 2000, and we were in the middle of
transitioning to a fully resource-based system for practice expense
RVUs.
In our July 17, 2000 proposed rule (66 FR 31028), we explained the
process used to conduct the second 5-year review of work, beginning
with the solicitation of comments on services that were potentially
misvalued, in our November 2, 1999 final rule with comment period.
We received comments from approximately 30 specialty groups,
organizations, and individuals involving over 900 procedure codes.
After review by our medical staff, we shared all of the comments we
received concerning potentially misvalued services with the RUC.
The RUC submitted work RVU recommendations for all of the codes we
forwarded with the exception of the anesthesia codes and conscious
sedation codes. We analyzed all of the RUC recommendations and
evaluated both the recommended work RVUs and the rationale for the
recommendations. If we had concerns about the application of a
particular methodology, but thought the recommended work RVUs were
reasonable, we verified that the recommended work RVUs were appropriate
by using alternative methodologies. We announced our proposed decisions
on the revised work RVUs in the proposed notice published June 8, 2001
(66 FR 31028).
Overall, we proposed to accept 92 percent of RUC recommended work
RVUs (RVUs or 792 services). Of the RUC recommendations we disagreed
with, we proposed to increase the work RVUs for 37 services and
decrease the work RVUs for 22 services. We did not accept the RUC
recommendations of an increase for 6 services that were previously
reviewed by a multi-specialty physician panel in 2000. The Health Care
Professional Advisory Committee (HCPAC), an advisory committee to the
RUC representing non-physician health professionals, also reviewed a
total of 12 services as part of the 5-year review. For 5 of the
services reviewed, the HCPAC did not offer a recommendation. Of the
remaining 7 services, we proposed to accept the HCPAC recommendations.
Comments received on the June 8, 2001 proposed notice generally
supported our proposed changes. In addition, we received more than 125
comments on approximately 39 specific codes plus all the anesthesia
services. The majority of these comments addressed the gastrointestinal
endoscopy codes and anesthesia services. As with the first 5-year
review, we convened a multi-specialty panel of physicians to assist us
in the review of the comments. For additional information about this
process, the comments received, and the results of the second 5-year
review, see the final rule with comment period published November 2,
2001 (66 FR 55285).
B. Scope of the 5-Year Refinement
As with the second 5-year review, we are soliciting comments only
on the work RVUs that may be inappropriately valued. The malpractice
RVUs were implemented in CY 2000 and revisions to these RVUs are
addressed as part of this final rule.
We are not including the practice expense RVUs as part of this
refinement. The PEAC, an advisory committee of the RUC, has been
providing us with recommendations for refining the direct practice
expense inputs (clinical staff, supplies, and equipment) used in
calculating the practice expense RVUs for established codes. As
discussed in the August 5, 2004 proposed rule, the PEAC held its last
meeting March 2004 and future practice expense issues, including the
refinement of the remaining codes not addressed by the PEAC, would be
handled by the RUC. As we determine the process that will be used to
refine the remaining codes, we will also be considering how to address
future review of practice expense RVUs. We would also welcome comments
on how this might be addressed. However, to the extent that there are
changes in physician time or in the number or level of post procedure
visits as a result of the 5-year review of work, there would be a
potential impact on the practice expense inputs, and we would revise
the inputs accordingly.
C. Refinement of Work Relative Value Units
During the first and second 5-year reviews, we relied on public
commenters to identify services that were potentially misvalued.
For the third 5-year review, we are again requesting comments on
potentially misvalued work RVUs for all services in the CY 2005
physician fee schedule. However, we recognize that this process
generally elicits comments focusing on undervalued codes. Therefore, in
addition to the codes submitted by commenters, we will also identify
codes (especially high-volume codes across specialties) that:
Are valued as being performed in the inpatient setting,
but that are now predominantly performed on an outpatient basis; and