[Federal Register Volume 71, Number 231 (Friday, December 1, 2006)]
[Rules and Regulations]
[Pages 69624-70251]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-9086]
[[Page 69623]]
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Part II
Book 2 of 2 Books
Pages 69623-70274
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 405, 410, et al.
Medicare Program; Revisions to Payment Policies, etc.; Final Rule
Federal Register / Vol. 71, No. 231 / Friday, December 1, 2006 /
Rules and Regulations
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 405, 410, 411, 414, 415, and 424
[CMS-1321-FC and CMS-1317-F]
RINs 0938-AO24 and 0938-AO11
Medicare Program; Revisions to Payment Policies, Five-Year Review
of Work Relative Value Units, Changes to the Practice Expense
Methodology Under the Physician Fee Schedule, and Other Changes to
Payment Under Part B; Revisions to the Payment Policies of Ambulance
Services Under the Fee Schedule for Ambulance Services; and Ambulance
Inflation Factor Update for CY 2007
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule with comment period.
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SUMMARY: This final rule with comment period addresses certain
provisions of the Deficit Reduction Act of 2005, as well as making
other changes to Medicare Part B payment policy. These changes are
intended to ensure that our payment systems are updated to reflect
changes in medical practice and the relative value of services. This
final rule with comment period also discusses geographic practice cost
indices (GPCI) changes; requests for additions to the list of
telehealth services; payment for covered outpatient drugs and
biologicals; payment for renal dialysis services; policies related to
private contracts and opt-out; policies related to bone mass
measurement (BMM) services, independent diagnostic testing facilities
(IDTFs), the physician self-referral prohibition; laboratory billing
for the technical component (TC) of physician pathology services; the
clinical laboratory fee schedule; certification of advanced practice
nurses; health information technology, the health care information
transparency initiative; updates the list of certain services subject
to the physician self-referral prohibitions, finalizes ASP reporting
requirements, and codifies Medicare's longstanding policy that payment
of bad debts associated with services paid under a fee schedule/charge-
based system are not allowable.
We are also finalizing the calendar year (CY) 2006 interim RVUs and
are issuing interim RVUs for new and revised procedure codes for CY
2007.
In addition, this rule includes revisions to payment policies under
the fee schedule for ambulance services and the ambulance inflation
factor update for CY 2007.
As required by the statute, we are announcing that the physician
fee schedule update for CY 2007 is -5.0 percent, the initial estimate
for the sustainable growth rate for CY 2007 is 2.0 percent and the CF
for CY 2007 is $35.9848.
DATES: Effective Date: These regulations are effective on January 1,
2007.
Comment Date: Comments will be considered if we receive them at one
of the addresses provided below, no later than 5 p.m. on January 2,
2007.
ADDRESSES: In commenting, please refer to file code CMS-1321-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/eRulemaking. Click
on the link ``Submit electronic comments on CMS regulations with an
open comment period.'' (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-1321-
FC, P.O. Box 8014, Baltimore, MD 21244-8014.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send 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-1321-FC, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
4. 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 (410) 786-7197 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).
Stephanie Monroe, (410) 786-6864 (for issues related to the
geographic practice cost index).
Craig Dobyski, (410) 786-4584 (for issues related to list of
telehealth services).
Roberta Epps, (410) 786-4503 (for issues related to diagnostic
imaging services).
Bill Larson, (410) 786-4639 (for issues related to coverage of bone
mass measurement and addition of ultrasound screening for abdominal
aortic aneurysm to the ``Welcome to Medicare'' benefit).
Dorothy Shannon, (410) 786-3396 (for issues related to the
outpatient therapy cap).
Catherine Jansto, (410) 786-7762 (for issues related to payment for
covered outpatient drugs and biologicals).
Henry Richter, (410) 786-4562 (for issues related to payments for
end-stage renal disease facilities).
Fred Grabau, (410) 786-0206 (for issues related to private
contracts and opt-out provision).
David Walczak, (410) 786-4475 (for issues related to reassignment
provisions).
August Nemec, (410) 786-0612 (for issues related to independent
diagnostic testing facilities).
Anita Greenberg, (410) 786-4601 (for issues related to the clinical
laboratory fee schedule).
James Menas, (410) 786-4507 (for issues related to payment for
physician pathology services).
Anne Tayloe, (410) 786-4546; or
[[Page 69625]]
Glenn McGuirk, (410) 786-5723 (for issues related to the ambulance
fee schedule.
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 Relative Value Units
(RVUs) for selected procedure codes identified in Addendum C and the
physician self-referral designated health services (DHS) listed in
Tables 18 and 19. You can assist us by referencing the file code CMS-
1321-FC and the specific ``issue identifier'' that precedes the section
on which you choose to comment.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://www.cms.hhs.gov/eRulemaking. Click on the link ``Electronic Comments on
CMS Regulations'' on that Web site to view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
This Federal Register document is also available from the Federal
Register online database through Government Printing Office 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 also be found on the
CMS homepage. You can access this data by using the following
directions:
1. Go to the following Web site: http://www.cms.hhs.gov/PhysicianFeeSched/.
2. Select ``PFS Federal Regulation Notices.''
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 VI.
Table of Contents
I. Background
A. Development of the Relative Value System
B. Components of the Fee Schedule Payment Amounts
C. Most Recent Changes to the Fee Schedule
II. Provisions of the Final Rule
A. Resource-Based Practice Expense Relative Value Units
1. Current Methodology
2. Proposals for Revising the PE Methodology
3. Specific Changes to the Indirect PE Methodology for Calendar
Year 2007
4. Additional PE Issues for CY 2007
a. RUC Recommendations for Direct PE Inputs and Other PE Input
Issues
b. Payment for Splint and Cast Supplies
c. Medical Nutrition Therapy Services
d. Surgical Pathology Codes
e. PE Issues from Rulemaking for CY 2006
f. Other PE Issues for CY 2007
g. Specific PE Concerns Raised by Commenters
h. Concerns About Decreases in PE RVUs
i. Equipment Utilization and Interest Rate Assumptions
j. Further Review of PE Direct Inputs
k. Supply and Equipment Items Needing Specialty Input
B. Geographic Practice Cost Indices (GPCIs)
C. Medicare Telehealth Services
D. Miscellaneous Coding Issues
1. Global Period for Remote Afterloading High Intensity
Brachytherapy Procedures
2. Assignment of RVUS for Proton Beam Treatment Delivery
Services
E. Deficit Reduction Act (DRA)
1. Section 5102--Adjustments for Payments to Imaging Services
a. Payment for Multiple Imaging Procedures for 2007
b. Reduction in TC for Imaging Services Under the PFS to OPD
Payment Amount
c. Interaction of the Multiple Imaging Payment Reduction and the
OPPS Cap
2. Section 5107--Revisions to Payments for Therapy Services
3. Section 5112--Addition of Ultrasound Screening for Abdominal
Aortic Aneurysm (AAA)
a. Coverage
b. Payment
4. Section 5113--Non-Application of the Part B Deductible for
Colorectal Cancer Screening Tests
5. Section 5114--Addition of Diabetes Outpatient Self-Management
Training Services (DSMT) and Medical Nutrition Therapy (MNT) for the
FQHC Program
F. Payment for Covered Outpatient Drugs and Biologicals (ASP
Issues)
1. ASP Issues
2. Intravenous Immune Globulin (IVIG)
3. Clotting Factor Furnishing Fee
4. Widely Available Market Prices (WAMP) and Average
Manufacturer Price (AMP) Threshold
5. Payment for Drugs Furnished During CY 2006 and Subsequent
Years in Connection With the Furnishing of Renal Dialysis Services
if Separately Billed by Renal Dialysis Facilities
6. Other Issues
G. Revisions Related to Payment for Renal Dialysis Services
Furnished by End Stage Renal Disease (ESRD) Facilities
1. Growth Update to the Drug Add-on Adjustment to the Composite
Rate
2. Update to the Geographic Adjustments to the Composite Rates
H. Private Contracts and Opt-Out Provision--Practitioner
Definition
I. Changes to Reassignment and Physician Self-Referral Rules
Relating to Diagnostic Tests
J. Supplier Access to Claims Billed on Reassignment
K. Coverage of Bone Mass Measurement
1. Provisions of the June 24, 1998 IFC
2. Additional Scientific Evidence
3. Changes to the June 24, 1998 IFC
4. Analysis of and Response to Comments on the June 24, 1998 IFC
and the CY 2007 PFS Proposed Rule
L. Independent Diagnostic Testing Facility (IDTF) Issues
1. IDTF Changes
2. Performance Standards for IDTFs
3. Supervision
4. Place of Service
5. Analysis of and Response to Public Comments
6. Provisions of the Final Rule
M. Independent Laboratory Billing for the TC of Physician
Pathology Services to Hospital Patients
N. Public Consultation for Medicare Payment for New Outpatient
Clinical Diagnostic Laboratory Tests
1. Medicare, Medicaid, and SCHIP Benefits Improvement Protection
Act of 2000 (BIPA)
2. Medicare Prescription Drug, Improvement, and Modernization
Act of 2003 (MMA)
3. Other Laboratory Issues
a. Quality
b. Blood Glucose Monitoring in SNFs
c. Other Lab Issues--Clinical Diagnostic Laboratory Date of
Service (DOS) for Stored Specimens
O. Criteria for National Certifying Bodies that Certify Advanced
Practice Nurses
P. Chiropractic Services Demonstration
Q. Promoting Effective Use of Health Information Technology
(HIT)
R. Health Care Information Transparency Initiative
S. Bad Debt Payment for Services Associated with Reasonable
Charge/Fee Schedules
III. Revisions to the Payment Policies of Ambulance Services Under
the Fee Schedule for Ambulance Services and the Ambulance Inflation
Factor Update for CY 2007
A. History of Medicare Ambulance Services
B. Provisions of the Final Regulation
C. Analysis of and Responses to Public Comments
D. Ambulance Inflation Factor (AIF) for 2007
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IV. Five-Year Refinement of Relative Value Units Under the Physician
Fee Schedule: Responses to Public Comments on the Five-Year Review
of Work Relative Value Units
A. Scope of Five-Year Review
B. Review of Comments (Includes Table entitled ``Work RVU
Revisions in Response to the June 29, 2006 proposed notice'')
C. Discussion of Comments by Clinical Area
1. Dermatology and Plastic Surgery
2. Orthopedic Surgery
3. Gynecology, Urology, Pain Medicine, and Neurosurgery
4. Radiology, Pathology, and Other Miscellaneous Services
5. Evaluation and Management Services
6. Cardiothoracic Surgery
7. General, Colorectal and Vascular Surgery
8. Otolaryngology and Ophthalmology
9. HCPAC codes
D. Other Issues Under the 5-Year Review
1. Anesthesia Services
2. Discussion of Post-Operative Visits included in the Global
Surgical Packages
3. Budget Neutrality
4. Review Process
V. Refinement of Relative Value Units for Calendar Year 2007 and
Response to Public Comments on Interim Relative Value Units for 2006
A. Summary of Issues Discussed Related to the Adjustment of
Relative Value Units
B. Process for Establishing Work Relative Value Units for the
2006 Physician Fee Schedule
C. Work Relative Value Unit Refinements of Interim Relative
Value Units
1. Methodology (Includes table entitled ``2006 Interim Work
Relative Value Units for Codes Reviewed Under the Refinement Panel
Process'')
2. Interim 2006 Codes
D. 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
2007 (Includes Table titled ``American Medical Association Specialty
Relative Value Update Committee and Health Care Professionals
Advisory Committee Recommendations and CMS' Decisions for New and
Revised 2007 CPT Codes'')
E. Discussion of Codes for Which There Were No RUC
Recommendations or for Which the RUC Recommendations Were Not
Accepted
F. Additional Pricing Issue
G. Establishment of Interim PE RVUs for New and Revised
Physician's Current Procedural Terminology (CPT) Codes and New
Healthcare Common Procedure Coding System (HCPCS) Codes for 2007
VI. Physician Self-Referral Prohibition: Annual Update to the List
of CPT/HCPCS Codes
A. General
B. Nuclear Medicine
C. Annual Update to the Code List
VII. Physician Fee Schedule Update for CY 2007
A. Physician Fee Schedule Update
B. The Percentage Change in the Medicare Economic Index (MEI)
C. The Update Adjustment Factor (UAF)
VIII. Allowed Expenditures for Physicians' Services and the
Sustainable Growth Rate
A. Medicare Sustainable Growth Rate
B. Physicians' Services
C. Preliminary Estimate of the SGR for 2007
D. Revised Sustainable Growth Rate for 2006
E. Final Sustainable Growth Rate for 2005
F. Calculation of 2007, 2006, and 2005 Sustainable Growth Rates
IX. Anesthesia and Physician Fee Schedule Conversion Factors for CY
2007
A. Physician Fee Schedule Conversion Factor
B. Anesthesia Fee Schedule Conversion Factor
X. Telehealth Originating Site Facility Fee Payment Amount Update
XI. Provisions of the Final Rule
XII. Waiver of Proposed Rulemaking and Delay in Effective Date
XIII. Collection of Information Requirements
XIV. Response to Comments
XV. Regulatory Impact Analysis
A. RVU Impacts
1. Resource-Based Work and PE RVUs
2. Section 5102 of the DRA Adjustments for Payments for Imaging
Services
3. Combined Impacts
B. Geographic Practice Cost Indices (GPCI) Payment Localities
C. Global Period for Remote Afterloading High Intensity
Brachytherapy Procedures
D. DRA 5112: Addition of Ultrasound Screening for Abdominal
Aortic Aneurysm to ``Welcome to Medicare'' Benefit
E. DRA 5113: Colorectal Screening Exemption from Part B
Deductible
F. Section 5114: Addition of Diabetes Outpatient Self-management
Training Services (DSMT) and Medical Nutrition Therapy (MNT) for the
FQHC Program
G. Payment for Covered Outpatient Drugs and Biologicals (ASP
Issues)
H. Provisions Related to Payment for Renal Dialysis Services
Furnished by End State Renal Disease (ESRD) Facilities
I. Private Contracts and Opt-out Provision
J. Supplier Access to Claims Billed on Reassignment
K. Coverage of Bone Mass Measurement
L. IDTF Changes
M. Independent Lab Billing for TC Component of Physician
Pathology Services for Hospital Patients
N. Public Consultation for Medicare Payment for New Outpatient
Clinical Diagnostic Laboratory Tests
O. Bad Debt Payment for Services Associated with Reasonable
Charge/Fee Schedules
P. Revisions to Payment Policies under the Ambulance Fee
Schedule and the Ambulance Inflation Factor Update for CY 2007
Q. Alternatives Considered
R. Impact on Beneficiaries
S. Accounting Statement
Addendum A--Explanation and Use of Addendum B.
Addendum B--2007 Relative Value Units and Related Information Used
in Determining Medicare Payments for 2006.
Addendum C--Codes with Interim RVUs
Addendum D--2007 Geographic Practice Cost Indices by Medicare
Carrier and Locality
Addendum E--GAF Addenda
Addendum F--Addendum F: CPT/HCPCS Imaging Codes Defined by DRA
5102(b)
Addendum G--CY 2007 Wage Index For Urban Areas Based On CBSA Labor
Market Areas
Addendum H--CY 2007 ESRD Wage Index for Rural Areas Based on CBSA
Labor Market Areas
Addendum I--RUCA Rurality Level by State and Zip Code
Addendum J--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 with comment period, we
are listing these acronyms and their corresponding terms in
alphabetical order below:
AAA Abdominal aortic aneurysm
AAD American Academy of Dermatology
AAFP American Academy of Family Physicians
AANS American Association of Neurological Surgeons
AAO American Academy of Ophthalmology
AAOS American Academy of Orthopaedic Surgeons
AATS American Association for Thoracic Surgery
ACC American College of Cardiology
ACG American College of Gastroenterology
ACHPN Advanced Certified Hospice and Palliative Nurse
ACOG American College of Obstetrics and Gynecology
ACR American College of Radiology
ACS American College of Surgeons
ADA American Dietetic Association
AFROC Association of Freestanding Radiation Oncology Centers
AGA American Gastroenterological Association
AMA American Medical Association
AMP Average manufacturer price
APC Ambulatory payment classification
ASA American Society of Anesthesiologists
ASC Ambulatory surgical center
ASCRS American Society of Colon and Rectal Surgeons
ASGE American Society of Gastrointestinal Endoscopy
ASP Average sales price
ASSH American Society for Surgery of the Hand
ASTRO American Society for Therapeutic Radiology and Oncology
AUA American Urological Association
BBA Balanced Budget Act of 1997 (Pub. L. 105-33)
BBRA [Medicare, Medicaid and State Child Health Insurance Program]
Balanced Budget Refinement Act of 1999 (Pub. L. 106-113)
[[Page 69627]]
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement Protection
Act of 2000
BLS Bureau of Labor Statistics
BMD Bone mineral density
BMM Bone mass measurement
BN Budget neutrality
BNF Budget neutrality factor
BP Best price
CAD Computer-aided detection
CAH Critical access hospital
CAP Competitive acquisition program
CBSA Core-Based Statistical Area
CCI Correct Coding Initiative
CEO Chief executive officer
CF Conversion factor
CFO Chief financial officer
CFR Code of Federal Regulations
CMP Competitive medical plan
CMS Centers for Medicare & Medicaid Services
CNS Clinical nurse specialist
CPI Consumer Price Index
CPT (Physicians') Current Procedural Terminology (4th Edition, 2002,
copyrighted by the American Medical Association)
CT Computed tomography
CTA Computed tomographic angiography
CY Calendar year
DHS Designated health services
DME Durable medical equipment
DMEPOS Durable medical equipment, prosthetics, orthotics, and
supplies
DRA Deficit Reduction Act
DSMT Diabetes outpatient self-management training services
DXA Dual energy x-ray absorptiometry
E/M Evaluation and management
EPO Erythopoeitin
ESRD End stage renal disease
FAX Facsimile
FDA Food and Drug Administration (HHS)
FQHC Federally qualified health center
FR Federal Register
GAF Geographic adjustment factor
GAO Government Accountability Office
GDP Gross domestic product
GPO Group purchasing organization
GPCI Geographic practice cost index
HCPAC Health Care Professional Advisory Committee
HCPCS Healthcare Common Procedure Coding System
HCRIS Healthcare Cost Report Information System
HSA Health Savings Account
HHA Home health agency
HHS [Department of] Health and Human Services
HIT Health information technology
HMO Health maintenance organization
HOCM High osmolar contrast media
HPSA Health Professional Shortage Area
HRSA Health Resources Services Administration (HHS)
HUD [Department of] Housing and Urban Development
ICF Intermediate care facilities
IDTF Independent diagnostic testing facility
IFC Interim final rule with comment period
IPPE Initial preventive physical examination
IPPS Inpatient prospective payment system
IVIG Intravenous immune globulin
IWPUT Intra-service work per unit of time
JCAAI Joint Council of Allergy, Asthma, and Immunology
LCD Local coverage determination
LOCM Low osmolar contrast media
LOINC Logical Observation Identifiers Names and Codes
MA Medicare Advantage
MCP Monthly capitation payment
MedPAC Medicare Payment Advisory Commission
MEI Medicare Economic Index
MLN Medicare Learning Network
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (Pub. L. 108-173)
MNT Medical nutrition therapy
MRA Magnetic resonance angiography
MRI Magnetic resonance imaging
MSA Metropolitan statistical area
MSVP Multi-specialty visit package
NCD National coverage determination
NCQDIS National Coalition of Quality Diagnostic Imaging Services
NDC National drug code
NEMA National Electrical Manufacturers Association
NHE National health expenditures
NOP National Osteoporosis Foundation
NP Nurse practitioner
NPP Nonphysician practitioners
NPWP Nonphysician Work Pool
NSQIP National Surgical Quality Improvement Program
OBRA Omnibus Budget Reconciliation Act
OIG Office of Inspector General
OMB Office of Management and Budget
OPD Outpatient Department
OPPS Outpatient prospective payment system
OSCAR Online Survey and Certification and Reporting
PA Physician assistant
PBM Pharmacy benefit managers
PC Professional component
PE Practice Expense
PE/HR Practice expense per hour
PEAC Practice Expense Advisory Committee
PERC Practice Expense Review Committee
PET Positron emission tomography
PFS Physician Fee Schedule
PLI Professional liability insurance
PPI Producer price index
PPO Preferred provider organization
PPS Prospective payment system
PRA Paperwork Reduction Act
PRM Provider Reimbursement Manual
PT Physical therapy
QCT Quantitative computerized tomography
RFA Regulatory Flexibility Act
RHC Rural health clinic
RIA Regulatory impact analysis
RN Registered nurse
RUC [AMA's Specialty Society] Relative (Value) Update Committee
RVU Relative value unit
SGR Sustainable growth rate
SMS [AMA's] Socioeconomic Monitoring System
SNF Skilled nursing facility
SNM Society for Nuclear Medicine
SPA Single photon absorptiometry
STS Society of Thoracic Surgeons
SVS Society for Vascular Surgery
SXA Single energy x-ray absorptiometry
TA Technology Assessment
TC Technical Component
UAF Update adjustment factor
UPIN Unique Physician Identification Number
USPSTF United States Preventive Services Task Force
VA [Department of] Veteran Affairs
WAC Wholesale acquisition cost
WAMP Widely available market price
WHO World Health Organization
I. Background
Since January 1, 1992, Medicare has paid for physicians' services
under section 1848 of the Social Security Act (the Act), ``Payment for
Physicians' Services.'' The Act requires that payments under the
physician fee schedule (PFS) be based on national uniform relative
value units (RVUs) based on the resources used in furnishing a service.
Section 1848(c) of the Act requires that national RVUs be established
for physician work, practice expense (PE), and malpractice expense.
Before the establishment of the resource-based relative value system,
Medicare payment for physicians' services was based on reasonable
charges.
A. Development of the Relative Value System
1. Work RVUs
The concepts and methodology underlying the PFS were enacted as
part of the Omnibus Budget Reconciliation Act (OBRA) of 1989 (Pub. L.
101-239), and OBRA 1990 (Pub. L. 101-508). The final rule, published
November 25, 1991 (56 FR 59502), set forth the fee schedule for payment
for physicians' services beginning January 1, 1992. Initially, only the
physician work RVUs were resource-based, and the PE and malpractice
RVUs were based on average allowable charges.
The physician 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 physician work RVUs for most codes
in a cooperative agreement with the Department of Health and Human
Services (HHS). In constructing the code-specific vignettes for the
original physician work RVUs, Harvard worked with panels of experts,
both inside and outside the Federal government, and obtained input from
numerous physician specialty groups.
Section 1848(b)(2)(A) of the Act specifies that the RVUs for
radiology services are based on relative value scale we adopted under
section
[[Page 69628]]
1834(b)(1)(A) of the Act, (the American College of Radiology (ACR)
relative value scale), which we integrated into the overall PFS.
Section 1848(b)(2)(B) of the Act specifies that the RVUs for anesthesia
services are based on RVUs from a uniform relative value guide. We
established a separate conversion factor (CF) for anesthesia services,
and we continue to utilize time units as a factor in determining
payment for these services. As a result, there is a separate payment
methodology for anesthesia services.
We establish physician work RVUs for new and revised codes based on
recommendations received from the American Medical Association's (AMA)
Specialty Society Relative Value Update Committee (RUC).
2. Practice Expense Relative Value Units (PE RVUs)
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 Act and required us to develop resource-based
PE RVUs for each physician's service beginning in 1998. We were to
consider general categories of expenses (such as office rent and wages
of personnel, but excluding malpractice expenses) comprising PEs.
Section 4505(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L.
105-33), amended section 1848(c)(2)(C)(ii) of the Act to delay
implementation of the resource-based PE RVU system until January 1,
1999. In addition, section 4505(b) of the BBA provided for a 4-year
transition period from charge-based PE RVUs to resource-based RVUs.
We established the resource-based PE RVUs for each physician's
service in a final rule, published November 2, 1998 (63 FR 58814),
effective for services furnished in 1999. Based on the requirement to
transition to a resource-based system for PE over a 4-year period,
resource-based PE RVUs did not become fully effective until 2002.
This resource-based system was based on two significant sources of
actual PE data: The Clinical Practice Expert Panel (CPEP) data and the
AMA's 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 physician's 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 PEs.
Separate PE RVUs are established for procedures that can be
performed in both a nonfacility setting, such as a physician's office,
and a facility setting, such as a hospital outpatient department (OPD).
The difference between the facility and nonfacility RVUs reflects the
fact that a facility receives separate payment from Medicare for its
costs of providing the service, apart from payment under the PFS. The
nonfacility RVUs reflect all of the direct and indirect PEs of
providing a particular service.
Section 212 of the Balanced Budget Refinement Act of 1999 (BBRA)
(Pub. L. 106-113) directed the Secretary of Health and Human Services
(the Secretary) 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 to
supplement the data we normally collect in determining the PE
component. On May 3, 2000, we published the interim final rule (65 FR
25664) that set forth the criteria for the submission of these
supplemental PE survey data. The criteria were modified in response to
comments received, and published in the Federal Register (65 FR 65376)
as part of a November 1, 2000 final rule. The PFS final rules published
in 2001 and 2003, respectively, (66 FR 55246 and 68 FR 63196) extended
the period during which we would accept these supplemental data.
3. Resource-Based Malpractice RVUs
Section 4505(f) of the BBA amended section 1848(c) of the Act to
require us to implement resource-based malpractice RVUs for services
furnished on or after 2000. The resource-based malpractice RVUs were
implemented in the PFS final rule published November 2, 1999 (64 FR
59380) (hereinafter referred to as the CY 2000 PFS final rule). The
malpractice RVUs were based on malpractice insurance premium data
collected from commercial and physician-owned insurers from all the
States, the District of Columbia, and Puerto Rico.
4. Refinements to the RVUs
Section 1848(c)(2)(B)(i) of the Act requires that we review all
RVUs no less often than every 5 years. The first 5-year review of the
physician work RVUs went into effect in 1997, published on November 22,
1996 (61 FR 59489). The second 5-year review of work RVUs went into
effect in 2002, published on November 1, 2001 (66 FR 55246). The third
5-year review is being finalized in this rule for CY 2007.
In 1999, the AMA's RUC established the Practice Expense Advisory
Committee (PEAC) for the purpose of refining the direct PE inputs.
Through March 2004, the PEAC provided recommendations to CMS for over
7,600 codes (all but a few hundred of the codes currently listed in the
AMA's Current Procedural Terminology (CPT) codes).
In the November 15, 2004, PFS final rule (69 FR 66236) (hereinafter
referred to as the CY 2005 PFS final rule), we implemented the first 5-
year review of the malpractice RVUs (69 FR 66263).
5. Adjustments to RVUS Are Budget Neutral
Section 1848(c)(2)(B)(ii)(II) of the Act provides that adjustments
in RVUs for a year may not cause total PFS payments to differ by more
than $20 million from what they would have been if the adjustments were
not made. In accordance with section 1848(c)(2)(B)(ii)(II) of the Act,
if adjustments to RVUs cause expenditures to change by more than $20
million, we make adjustments to ensure that expenditures do not
increase or decrease by more than $20 million.
B. Components of the Fee Schedule Payment Amounts
To calculate the payment for every physician service, the
components of the fee schedule (physician work, PE, and malpractice
RVUs) are adjusted by a geographic practice cost index (GPCI). The
GPCIs reflect the relative costs of physician work, PEs, and
malpractice insurance in an area compared to the national average costs
for each component.
Payments are converted to dollar amounts through the application of
a CF, which is calculated by the Office of the Actuary and is updated
annually for inflation.
The general formula for calculating the Medicare fee schedule
amount for a given service and fee schedule area can be expressed as:
Payment = [(RVU work x GPCI work) + (RVU PE x GPCI PE) + (RVU
malpractice x GPCI malpractice)] x CF.
However, as discussed in section IV.D of this final rule with
comment period, due to the need to meet the budget neutrality (BN)
provisions of 1848(c)(2)(B)(ii), we are applying a BN adjustor to the
work RVUs in order to calculate payment for a service. Therefore,
payment for services will now be calculated as follows:
[[Page 69629]]
Payment = [(RVU work x BN adjustor x GPCI work) + (RVU PE x GPCI PE) +
(RVU malpractice x GPCI malpractice)] x CF.)
C. Most Recent Changes to the Fee Schedule
The final rule with comment period that appeared in the Federal
Register on November 21, 2005 (70 FR 70116) (hereinafter referred to as
the CY 2006 PFS final rule with comment period) addressed Medicare Part
B payment policy including the PFS that is applicable for CY 2006; and
finalized certain provisions of the interim final rule to implement the
Competitive Acquisition Program (CAP) for Part B Drugs.
It also revised Medicare Part B payment and related policies
regarding: physician work, PE and malpractice RVUs; Medicare telehealth
services; multiple diagnostic imaging procedures; covered outpatient
drugs and biologicals; supplemental payments to Federally Qualified
Health Centers (FQHCs); renal dialysis services; coverage for glaucoma
screening services; National Coverage Determination (NCD) timeframes;
and physician referrals for nuclear medicine services and supplies to
health care entities with which physicians have financial
relationships.
In addition, the rule finalized the interim RVUs for CY 2005 and
issued interim RVUs for new and revised procedure codes for CY 2006.
The rule also updated the codes subject to the physician self-referral
prohibition and discussed payment policies relating to teaching
anesthesia services, therapy caps, private contracts and opt-out, and
chiropractic and oncology demonstrations.
In accordance with section 1848(d)(1)(E)(i) of the Act, we also
announced that the PFS update for CY 2006 would be -4.4 percent; the
initial estimate for the sustainable growth rate for CY 2006 would be
1.7 percent; and the CF for CY 2006 would be $36.1770. However,
subsequent to publication of the CY 2006 PFS final rule with comment
period, section 5104 of the Deficit Reduction Act (DRA) of 2005 (Pub.
L. 109-171, February 8, 2006), was enacted which amended section
1848(d) of the statute. As a result of this statutory change we
maintained the CY 2005 CF of $37.8975 for CY 2006.
We also note that the Five-Year Review of Work Relative Value Units
Under the Physician Fee Schedule and Proposed Changes to the Practice
Expense Methodology proposed notice appeared in the Federal Register on
June 29, 2006 (71 FR 37170). In that notice, we proposed revisions to
work RVUs affecting payment for physicians' services. The revisions
reflect changes in medical practice, coding changes, and new data on
relative value components that affect the relative amount of physician
work required to perform each service, as required by the statute. We
also proposed revisions to our methodology for calculating PE RVUs,
including changes based on supplemental survey data for PE. This
revised methodology would be used to establish payment for services
beginning January 1, 2007.
In this final rule with comment period, we are responding to the
comments received on that notice. To the extent that comments received
were outside the scope of the proposed notice, they are not addressed
in this rule.
Work RVU revisions will be fully implemented for services furnished
to Medicare beneficiaries on or after January 1, 2007. The changes in
PE methodology will be phased-in over a 4-year period; although, as we
gain experience with the new methodology, we will reexamine this policy
beginning next year and propose necessary revisions through future
rulemaking.
II. Provisions of the Proposed Rule
A. Resource-Based Practice Expense (PE) Relative Value Units (RVUs)
Practice expense (PE) is the portion of the resources used in
furnishing the service that reflects the general categories of
physician and practitioner expenses, such as office rent and personnel
wages but excluding malpractice expenses, as specified in section
1848(c)(1)(B) of the Act.
Section 121 of the Social Security Amendments of 1994 (Pub. L. 103-
432), enacted on October 31, 1994, required CMS to develop a
methodology for a resource-based system for determining PE RVUs for
each physician's service. Until that time, PEs were based on historical
allowed charges. This legislation stated that the revised PE
methodology must consider the staff, equipment, and supplies used in
the provision of various medical and surgical services in various
settings beginning in 1998. The Secretary has interpreted this to mean
that Medicare payments for each service would be based on the relative
PE resources typically involved with furnishing the service.
The initial implementation of resource-based PE RVUs was delayed
from January 1, 1998, until January 1, 1999, by section 4505(a) of the
BBA. In addition, section 4505(b) of the BBA required that the new
payment methodology be phased-in over 4 years, effective for services
furnished in CY 1999, and fully effective in CY 2002. The first step
toward implementation of the statute was to adjust the PE values for
certain services for CY 1998. Section 4505(d) of the BBA required that,
in developing the resource-based PE RVUs, the Secretary must:
Use, to the maximum extent possible, generally accepted
cost accounting principles that recognize all staff, equipment,
supplies, and expenses, not solely those that can be linked to specific
procedures.
Develop a refinement method to be used during the
transition.
Consider, in the course of notice and comment rulemaking,
impact projections that compare new proposed payment amounts to data on
actual physician PE.
Beginning in CY 1999, we began the 4-year transition to resource-
based PE RVUs. In CY 2002, the resource-based PE RVUs were fully
transitioned.
1. Current Methodology
The following sections discuss the current PE methodology.
a. Data Sources
There are two primary data sources used to calculate PE. The AMA's
Socioeconomic Monitoring System (SMS) survey data are used to develop
the PE per hour (PE/HR) for each specialty. The second source of data
used to calculate PE was originally developed by the Clinical Practice
Expert Panels (CPEP). The CPEP data include the supplies, equipment and
staff times specific to each procedure.
The AMA developed the SMS survey in 1981 and discontinued it in
1999. Beginning in 2002, we incorporated the 1999 SMS survey data into
our calculation of the PE RVUs, using a 5-year average of SMS survey
data. (See Revisions to Payment Policies and Five-Year Review of and
Adjustments to the Relative Value Units Under the Physician Fee
Schedule for CY 2002 final rule, published November 1, 2001 (66 FR
55246) (hereinafter referred to as CY 2002 PFS final rule).) The SMS PE
survey data are adjusted to a common year, 1995. The SMS data provide
the following six categories of PE costs:
Clinical payroll expenses, which are payroll expenses
(including fringe benefits) for nonphysician personnel.
Administrative payroll expenses, which are payroll
expenses (including fringe benefits) for nonphysician personnel
involved in administrative, secretarial or clerical activities.
[[Page 69630]]
Office expenses, which include expenses for rent, mortgage
interest, depreciation on medical buildings, utilities and telephones.
Medical material and supply expenses, which include
expenses for drugs, x-ray films, and disposable medical products.
Medical equipment expenses, which include expenses
depreciation, leases, and rent of medical equipment used in the
diagnosis or treatment of patients.
All other expenses, which include expenses for legal
services, accounting, office management, professional association
memberships, and any professional expenses not previously mentioned in
this section.
In accordance with section 212 of the BBRA, we established a
process to supplement the SMS data for a specialty with data collected
by entities and organizations other than the AMA (that is, the
specialty itself). (See the Criteria for Submitting Supplemental
Practice Expense Survey Data interim final rule with comment period,
(May 3, 2000, 65 FR 25664).) Originally, the deadline to submit
supplementary survey data was through August 1, 2001. In the CY 2002
PFS final rule (66 FR 55246), the deadline was extended through August
1, 2003. To ensure maximum opportunity for specialties to submit
supplementary survey data, we extended the deadline to submit surveys
until March 1, 2005 in the Revisions to Payment Policies Under the
Physician Fee Schedule for CY 2004 final rule, (November 7, 2003; 68 FR
63196) (hereinafter referred to as CY 2004 PFS final rule).
The CPEPs consisted of panels of physicians, practice
administrators, and nonphysicians (registered nurses (RNs), for
example) who were nominated by physician specialty societies and other
groups. There were 15 CPEPs consisting of 180 members from more than 61
specialties and subspecialties. Approximately 50 percent of the
panelists were physicians.
The CPEPs identified specific inputs involved in each physician's
service provided in an office or facility setting. The inputs
identified were the quantity and type of nonphysician labor, medical
supplies, and medical equipment.
In 1999, the AMA's RUC established the Practice Expense Advisory
Committee (PEAC). From 1999 to March 2004, the PEAC, a multi-specialty
committee, reviewed the original CPEP inputs and provided us with
recommendations for refining these direct PE inputs for existing CPT
codes. Through its last meeting in March 2004, the PEAC provided
recommendations for over 7,600 codes which we have reviewed and
accepted. As a result, the current PE inputs differ markedly from those
originally recommended by the CPEPs. The PEAC has now been replaced by
the Practice Expense Review Committee (PERC), which acts to assist the
RUC in recommending PE inputs.
b. Allocation of PE to Services
To establish PE RVUs for specific services, it is necessary to
establish the direct and indirect PE associated with each service. Our
current approach allocates aggregate specialty practice costs to
specific procedures and, thus, is often referred to as a ``top-down''
approach. The specialty PEs are derived from the AMA's SMS survey and
supplementary survey data. The PEs for a given specialty are allocated
to the services furnished by that specialty on the basis of the direct
input data and work RVUs assigned to each CPT code. The specific
process is outlined in the June 29, 2006 proposed notice (71 FR 37242).
c. Other Methodological Issues: Nonphysician Work Pool (NPWP)
As an interim measure, until we could further analyze the effect of
the top-down methodology on the Medicare payment for services with no
physician work (including the technical components (TCs) of radiation
oncology, radiology and other diagnostic tests), we created a separate
PE pool for these services. However, any specialty society could
request that its services be removed from the nonphysician work pool
(NPWP). The specific steps for the NPWP calculation are detailed in the
June 29, 2006 proposed notice (71 FR 37243).
d. Facility/Non-facility Costs
Procedures that can be furnished in a physician's office, as well
as in a hospital, have two PE RVUs: facility and non-facility. The non-
facility setting includes physicians' offices, patients' homes,
freestanding imaging centers, and independent pathology labs. Facility
settings include hospitals, ambulatory surgical centers (ASCs), and
skilled nursing facilities (SNFs). The methodology for calculating the
PE RVU is the same for both facility and non-facility RVUs, but is
applied independently to yield two separate PE RVUs. Because the PEs
for services provided in a facility setting are generally included in
the payment to the facility (rather than the payment to the physician
under the fee schedule), the PE RVUs are generally lower for services
provided in the facility setting.
2. Proposals for Revising the PE Methodology
We have three major goals for our resource-based PE methodology:
To ensure that the PE portion of PFS payments reflect, to
the greatest extent possible, the relative resources required for each
of the services on the PFS. This could only be accomplished by using
the best available data to calculate the PE RVUs.
To develop a payment system for PE that is understandable
and at least somewhat intuitive, so that specialties could better
predict the impacts of changes in the PE data.
To stabilize the PE portion of PFS payments so that
changes in PE RVUs do not produce large fluctuations in the payment for
given procedures from year-to-year.
In the CY 2006 PFS proposed rule (70 FR 45764), we proposed the
following changes to the PE methodology that we believed would help in
achieving these three major goals:
Using the PE/HR data from seven specialty-specific
supplementary surveys.
Calculating the direct PE using a bottom-up methodology.
Eliminating the NPWP.
We also proposed an indirect PE methodology that was to assign to
each service the higher of the current indirect PE RVUs or the indirect
PE RVUs calculated using the supplementary survey data.
In the CY 2006 PFS final rule with comment period (70 FR 70116), we
withdrew these proposals primarily because a programming error for the
indirect PE RVU calculation had led to the publication of inaccurate
proposed PE RVUs. On February 15, 2006, we sponsored a PE Town Hall
Meeting and invited the public, including all specialty representatives
to attend. At this meeting, we supplied a detailed description of the
bottom-up approach to the calculation of resource-based PE RVUs. Three
examples were examined in detail that illustrated the impact of the
various assumptions that could be used under a bottom-up approach. We
specifically requested input from all interested parties on possible
changes to our PE methodology, including the move to a bottom-up
approach and the various methods of calculating indirect PE.
We reviewed the approximately 35 comments that we received in
response to our solicitation. Many of the comments were combined
efforts from related specialty organizations. Additionally, the AMA RUC
also supplied a letter that captured the
[[Page 69631]]
comments of nearly 30 specialty organizations. The following is a
summary of the comments received as a result of the February 15, 2006
PE Town Hall meeting.
Delaying Implementation of Changes to the Current PE
Methodology: There were mixed opinions from commenters on whether we
should proceed with a proposal to use a bottom-up approach. Some
commenters emphasized that the CPEP data has been refined and is now
the best available source of data, and asserted that it should be used
for the calculation of resource-based PE RVUs. Other comments suggested
a delay in changing to a bottom-up approach because of the other issues
that are affecting PFS payments this year (such as, the effect of
imaging payment provisions in the DRA, the impact of the negative
update, and the uncertainty regarding the impact of the 5-Year Review
of work RVUs).
Transition to a Bottom-Up Approach: The majority of
commenters requested a minimum 1-year transition to a maximum 3-year
transition period to fully implement any change to a bottom-up
approach. All of the commenters supported a transition period whether
or not they supported the implementation of a bottom-up approach.
Use of Supplemental Survey Data: Many commenters stated
that, irrespective of what we proposed for CY 2007, the supplemental
survey data that has already been accepted should be used. Other
commenters believed that the supplemental survey data grossly
overstated PEs and should not be utilized in the development of
resource-based PE RVUs.
Multi-Specialty PE Survey: The majority of commenters
supported the construction and use of a multi-specialty survey to
collect PE data. Commenters believed that the supplemental survey data
is inflated and that the SMS survey data are outdated.
Review Equipment Utilization Assumptions and Interest
Rates: Many commenters supported the review and revision of both the
current utilization assumptions and the interest rates associated with
high cost equipment. Commenters had mixed reactions as to whether the
utilization rates should be higher or lower, and some suggested that we
review the possibility of equipment-specific utilization assumptions
for the future. Most commenters believed that the current 11 percent
interest rate is significantly higher then the actual interest rates
and many commenters suggested a rate of approximately prime plus 2
percent.
Proxy Work RVUs for No Physician Work Services: Commenters
were divided on the assignment of a proxy work RVU to services that
contain no physician work. Some commenters believed that no physician
work services are unfairly penalized under any bottom-up approach,
while other comments stated that the inclusion of a proxy work RVU
would double count the clinical labor associated with the no physician
work services.
After considering these comments, we made the following proposals
for direct PEs in the June 29, 2006 proposed notice (71 FR 37245).
a. Use a Bottom-up Method to Calculate the Direct PEs
We believe that we have consistently made a good faith effort to
ensure fairness in our PE RVU-setting system by using the best data
available at any one time. The reason we did not adopt the bottom-up
methodology originally proposed in 1997 and instead adopted the top-
down methodology finalized in 1998 was because we recognized the
concerns among the physician community that the resource input data
developed in 1995 by the CPEP were less reliable than the aggregate
specialty cost data derived from the SMS process.
However, the situation has now changed. The PEAC/PERC/RUC has
completed the refinement of the original CPEP data and we believe that
the refined PE inputs now, in general, accurately capture the relative
direct costs of PFS services. Conversely, although we have now accepted
supplementary survey data from 13 specialties, we have not received
updated aggregate cost data from most specialties. Thus, we believe
that, in the aggregate, the refined direct input data represent more
reliably the relative direct cost PE inputs for physicians' services.
Therefore, instead of using the top-down approach to calculate the
direct PE RVUs, where the aggregate CPEP/RUC costs for each specialty
are scaled to match the aggregate SMS costs, we proposed to adopt a
bottom-up method of determining the relative direct costs for each
service. Under this method, the direct costs would be determined by
adding the costs of the resources (that is, the clinical staff,
equipment and supplies) typically required to provide the service. The
costs of the resources, in turn, would be calculated from the refined
direct PE inputs in our PE database.
We believe that this proposed change, which was welcomed by most
commenters in the CY 2006 PFS proposed rule, will lead to greater
stability and accuracy in the PE portion of our payment system.
Currently, under the top-down methodology, the need to scale the CPEP
costs to equal the SMS costs has meant that any changes in the direct
PE inputs for one service often leads to unexpected results for other
services where the inputs have not been altered. In addition, the
current PE RVUs for a procedure do not necessarily change
proportionately with changes in the direct inputs, creating possible
anomalous values. We believe that our proposed bottom-up methodology
would resolve these issues, so that changes in the PE RVUs would be
more intuitive and would result in fewer surprises.
b. Use the PE/HR Data from the 7 Surveys We Have Previously Accepted
and, in addition, Use the PE/HR Data from the Survey Submitted by the
National Coalition of Quality Diagnostic Imaging Services (NCQDIS)
As explained in the CY 2005 PFS final rule with comment period (69
FR 66242), we received surveys from the American College of Cardiology
(ACC), the American College of Radiology (ACR), and the American
Society for Therapeutic Radiology and Oncology (ASTRO) by March 1,
2004. The data submitted by the ACC and the ACR met our criteria.
However, as requested by the ACC and the ACR, we deferred using their
data until issues related to the NPWP could be addressed. (The survey
data from ASTRO did not meet the precision criteria established for
supplemental surveys; therefore, we did not accept or use it in the
calculation of PE RVUs for 2005.)
In March 2005, we also received surveys from the Association of
Freestanding Radiation Oncology Centers (AFROC), the American
Urological Association (AUA), the American Academy of Dermatology
(AAD), the Joint Council of Allergy, Asthma, and Immunology (JCAAI),
the NCQDIS, and a joint survey from the American Gastroenterological
Association (AGA), the American Society of Gastrointestinal Endoscopy
(ASGE) and the American College of Gastroenterology (ACG).
All the surveys, with the exception of the survey from NCQDIS, met
our criteria. Therefore, we proposed in the CY 2006 PFS proposed rule
(70 FR 45775) to use the survey data from all the surveys meeting our
criteria in the calculation of PE RVUs for 2006; but, as discussed in
the CY 2006 PFS final rule with comment period (70 FR 70116) and
[[Page 69632]]
above in this section, this proposal was not finalized.
We contracted with the Lewin Group (Lewin) to evaluate whether the
supplemental survey data that were submitted met our criteria and to
make recommendations to us regarding their suitability for use in
calculating PE RVUs. As described in the CY 2006 PFS proposed rule (70
FR 45775), Lewin recommended blending the radiation oncology data from
the AFROC survey data with the ASTRO survey data submitted in 2004 to
calculate the PE/HR. According to Lewin, the goal of the AFROC survey
was to represent the population of freestanding radiation oncology
centers only. To develop an overall average for the radiation oncology
PE pool, Lewin recommended we use the AFROC survey for freestanding
radiation oncology centers, and the hospital-based subset of last
year's ASTRO survey. We agreed that this blending of the AFROC and
ASTRO data was a reasonable way to calculate an average PE/HR that
fully reflects the practice of radiation oncology in all settings.
Blending the survey data overcame the initial problem that the ASTRO
data do not meet the precision criteria as discussed in the CY 2005 PFS
final rule (69 FR 66242). In addition, as discussed in the CY 2006 PFS
proposed rule (70 FR 45776), blending of the data allowed for a broader
base of radiation oncology providers to be represented.
Also, as discussed in the CY 2006 PFS proposed rule (70 FR 45764),
Lewin indicated that the survey data submitted by the NCQDIS on
independent diagnostic testing facilities (IDTFs) did not meet our
precision criterion. However, upon further analysis, Lewin agreed with
NCQDIS' determination that the inclusion of one inaccurate record
skewed the findings outside the acceptable precision range. Lewin
recalculated the precision level at 8.1 percent of the mean PE/HR
(weighted by the number of physicians in the practice). Lewin indicated
that the level of precision for the total PE/HR satisfies the level of
precision requirement, and recommended acceptance of the survey.
We proposed to use the PE/HR data from all of these surveys,
including the NCQDIS survey, in the calculation of the PE RVUs for
2007. For radiation oncology, we proposed to use the new PE/HR derived
from combining the AFROC and ASTRO survey data, as recommended by
Lewin. The proposed figures for PE per physician hour were listed in
Table 52 in the June 29, 2006 proposed notice (71 FR 37246).
Section 303(a)(1)(B) of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173)
added section 1848(c)(2)(I) of the Act to require CMS to use survey
data submitted by a specialty group where at least 40 percent of the
specialty's payments for Part B services are attributable to the
administration of drugs in 2002 to adjust PE RVUs for drug
administration services. The statute applies to surveys that include
expenses for the administration of drugs and biologicals, and were
received by March 1, 2005 for determining the CY 2006 PE RVUs. Section
303(a)(1)(A)(ii) of the MMA also added section 1848(c)(2)(B)(iv)(II) of
the Act to provide an exemption from budget neutrality (BN) in 2005 and
2006 for any additional expenditures resulting from the use of these
surveys. In the Changes to Medicare Payment for Drugs and Physician Fee
Schedule Payments for CY 2004 interim final rule published January 7,
2004 (69 FR 1084), we stated that the specialties of urology,
gynecology, and rheumatology meet this criteria. As described in the CY
2006 PFS final rule with comment period (70 FR 70116), we accepted for
the purposes of calculating the 2006 PE RVUs for drug administration
services the new survey data from the AUA and exempted from the BN
adjustment any impacts of accepting these data for purposes of
calculating PE RVUs for drug administration services.
(Note: Rheumatology and gynecology did not submit supplemental
survey data.)
c. Eliminate the NPWP and Calculate the PE RVUs for all Services Using
the Same Methodology
Primarily because of the lack of representative SMS data or
accurate direct cost inputs for specialties such as radiology and
radiation oncology, the adoption of the top-down approach necessitated
the creation of the NPWP. This separate work pool was created to
allocate PE RVUs for TC codes and codes that are not furnished by
physicians and, thus, have no work RVUs. In the CY 2000 Physician Fee
Schedule; Payment Policies and Relative Value Unit Adjustment final
rule, we indicated that ``the purpose of this pool was only to protect
the (TC) services from the substantial decreases'' caused by inaccurate
CPEP data and the lack of physician work RVU in the allocation of the
indirect costs (64 FR 59406). Unfortunately, the services priced by the
NPWP methodology have proven to be especially vulnerable to any change
in the work pool's composition. This has led to significant
fluctuations from year-to-year in the PE RVUs calculated for these
services.
The major specialties comprising the NPWP (radiology, radiation
oncology and cardiology) have now submitted supplemental survey data
that we have accepted and proposed to use in their PE calculations.
(See the discussion on supplementary surveys above in this section.)
Now that we have representative aggregate PE data for these
specialties, and with the completion of the refinement of the direct
cost inputs, the continued necessity and equity of treating these
technical services outside the PE methodology applied to other services
is questionable.
Therefore, we proposed to eliminate the NPWP and to calculate the
PE RVUs for the services currently in the work pool by the same
methodology used for all other services. This would also allow the use
of the refined CPEP/RUC data to price the direct costs of individual
services, rather than utilizing the pre-1998 charge-based PE RVUs. In
addition, the revised methodology would lead to greater stability for
the PE RVUs for these services and would lead to more intuitive results
than have occurred with the NPWP methodology.
d. Modify the Current Indirect PE RVUs Methodology
As described previously, the SMS and supplementary survey data are
the source for the specialty-specific aggregate indirect costs used in
our PE calculations. We then allocate the indirect costs to particular
codes on the basis of the direct costs allocated to a code and the work
RVUs. In the CY 2006 PFS proposed rule (70 FR 45764), we stated that we
had no information that would indicate that the current indirect PE
methodology is inaccurate. At that time, we also were not aware of any
alternative approaches or data sources that we could use to calculate
more appropriately the indirect PE, other than the new supplementary
survey data, which we proposed to incorporate into our PE calculations.
Therefore, in the CY 2006 PFS proposed rule, we proposed to use the
current indirect PEs in our calculation, incorporating the new survey
data into the codes furnished by the specialties submitting the surveys
(71 FR 45764). We also indicated in that same proposed rule that we
would welcome any suggestions that would assist us in further
refinement of this indirect PE methodology. For example, we were
considering whether we should continue to accept supplementary survey
data or whether it would be preferable and feasible to have an SMS-type
survey of only indirect costs for all specialties, or whether a more
formula-
[[Page 69633]]
based methodology independent of the SMS should be adopted, perhaps
using the specialty-specific indirect-to-total cost percentage as a
basis of the calculation. For a prior discussion of many of the issues
associated with allocating indirect costs, please refer to the CY 2000
Physician Fee Schedule; Payment Policies and Relative Value Unit
Adjustment proposed rule (63 FR 30823).
3. Specific Changes to the Indirect PE Methodology for CY 2007
a. Summary of the PE Proposals From the June 29, 2006 Proposed Notice
As a result of collaboration with the PFS community and public
comments on this issue, in the June 29, 2006 proposed notice, we
proposed the following modifications to the indirect PE methodology.
(1) Indirect Percentage Factor: Use of the Specialty-Specific
Percentage that Indirect PEs Represent of Total PEs Based on the Survey
Data
We currently allocate indirect expenses on the sum of the direct
expenses and the work RVUs (converted to dollars by multiplying by the
CF). We proposed to allocate indirect expenses by applying a specialty-
specific indirect percentage factor to the direct expenses to recognize
the varying proportion that indirect costs represent of total costs by
specialty. This will have the effect of relatively increasing the
indirect expense allocation for services that are on average furnished
by specialties with higher indirect PE percentages, and relatively
decreasing the indirect expense allocation for services that are
furnished by specialties with lower indirect PE percentages. For a
given service, the specific indirect percentage factor to apply to the
direct costs for the purpose of the indirect allocation will be
calculated as the weighted average of the ratio of the indirect to
direct costs (based on the survey data) for the specialties that
furnish the service. For example, if a service is furnished by a single
specialty with indirect PEs that were 75 percent of total PEs, the
indirect percentage factor to apply to the direct costs for the
purposes of the indirect allocation would be (0.75/0.25) = 3.0.
(2) Continued Use of the Specialty-Specific Indirect Scaling Factors
As described earlier in this section, we incorporate the indirect
PE/HR surveys into the methodology through the use of specialty-
specific indirect scaling factors. We would continue to use the
specialty-specific indirect scaling factors; however, to apply them in
a simpler manner we proposed to create an index. This index would
reflect the relationship between each specialty's indirect scaling
factor and the overall indirect scaling factor for the entire PFS. For
example, if a specialty had an indirect practice cost index of 2.00,
this specialty would have an indirect scaling factor that was twice the
overall average indirect scaling factor. If a specialty had an indirect
practice cost index of 0.50, this specialty would have an indirect
scaling factor that was half the overall average indirect scaling
factor. The calculation and application of the indirect practice cost
index is described in more detail below in this section.
(3) Use of the Clinical Labor Costs in the Indirect Allocation for a
Service When the Clinical Labor Costs are Greater than the Physician
Work RVU
We have received numerous comments that services with little or no
physician work RVUs are disadvantaged under our current indirect
allocation methodology based on the direct costs and the work RVUs. In
response to these comments, when the clinical labor portion of the
direct PE RVU is greater than the physician work RVU for a particular
service, we proposed to allocate on the direct costs and the clinical
labor costs. For example, if a service has no physician work, if the
direct PE RVU is 1.10 and if the clinical labor portion of the direct
PE RVU is 0.65 RVUs, we would use the 1.10 direct PE RVUs and the 0.65
clinical labor portion of the direct PE RVUs for the indirect PE
allocation for that service. As another example, if the physician work
RVUs for a service are 0.25, if the direct PE RVU is 1.10 and if the
clinical labor portion of the direct PE RVU is 0.65 RVUs, we would use
the 1.10 direct PE RVUs and the 0.65 clinical labor RVUs for the
indirect allocation for that service. We would not use the 0.25
physician work RVUs for the indirect PE allocation since the 0.65
clinical labor RVUs are greater than the 0.25 physician work RVUs.
(4) Use of 2005 Utilization Data in the Indirect PE RVU Calculation
Under the current PE methodology, we predominately use the 1997-
2000 utilization data in the calculation of the indirect PE RVUs when
the service existed during 1997-2000 or the first year of utilization
data if the service did not exist during that time period. We used
those years of utilization data primarily to increase the year-to-year
stability of the PE RVUs. With the changes we proposed to PE RVUs, in
particular the elimination of the NPWP, we will increase the year-to-
year stability of the PE RVUs. We believe it is now appropriate to use
updated utilization data in the calculation of the indirect PEs. We
believe the other proposed changes in the PE methodology would help
obtain the year-to-year stability we were attempting to achieve by
continuing to use the older utilization data. Additionally, the use of
more current utilization data would reflect the more current practice
patterns. We proposed to use the 2005 utilization data in the
calculation of the 2007 indirect PE RVUs. We also sought comments on
whether the utilization data should be updated yearly, which would
increase the accuracy of the PE calculations, or less often, which
would increase the stability of the PE RVUs.
(5) Elimination of the Special Methodologies for Services with
Technical Components (TCs) and Professional Components (PCs)
Under the PFS, when services have TC, PC, and global components
that can be billed separately, the payment for the global component
equals the sum of the payment for the TC and PCs. Under the current PE
methodology, the different mix of specialties that furnish the global,
TC and PCs can cause the PE RVUs, otherwise created by the methodology,
to fail to add together properly; that is, the global component does
not equal the sum of the PC and TCs. The global component might exceed
the sum of the TC and PCs or it might be less than the sum of the TC
and PCs. We ensure that the TC and PCs add to the global component in
one of two ways. For services in the NPWP, we set the PE RVUs for the
global component equal to the sum of the PC PE RVU and the TC PE RVU.
For services outside the NPWP, we set the PE RVUs for the TC equal to
the difference between the global PE RVUs and the PC RVUs.
With our proposed change to a bottom-up methodology for the direct
PEs, there will be no weighted averaging of the direct cost inputs
necessary to create the direct PE RVUs and, therefore, the direct PE
RVUs for the PC and TCs would sum to the global component. Under the
current methodology, as a result of the process used to ensure the PC
and TCs sum to the global, RVUs for a service with a global component
can be either more or less than the RVUs that would have been
calculated for the service if the PC and TCs did not have to sum to the
global.
Given the proposed change to bottom-up methodology and the
elimination of the NPWP, we believe it is
[[Page 69634]]
inappropriate to have codes for which the global, and the TC and PCs
are assigned RVUs that are either less than or greater than the
methodology would otherwise produce, and thus, are paid at a rate that
is either less than or greater than the methodology would otherwise
specify. (See section II.A.1. of this final rule with comment period
for the discussion of the current methodology.) Therefore, we proposed
that in the calculation of the indirect percentage factor described
earlier in section II.A.3.a.(1), we would use a weighted average of the
ratio of indirect to direct costs across all the specialties that
furnish the global components, TCs, and PCs; that is, we would apply
the same weighted average indirect percentage factor to allocate
indirect expenses to the global components, PC, and TCs for a service.
We also proposed to utilize a similar weighted averaging approach
across all the specialties that furnish the components when calculating
the indirect PE scaling factor. Because the direct PE RVUs for the TC
and PCs sum to the global under the bottom-up methodology, and we
proposed to calculate the indirect percentage factor and the indirect
scaling factor so that they do not vary between the TCs, PCs, and
global components, our proposed methodology would create TCs and PCs
that sum to the global, and no other special methodology would need to
be employed.
(a) PE RVU Methodology
The following is a description of the proposed PE RVU methodology.
(i) Setup File
First, we create a setup file for the PE methodology. The setup
file contains the direct cost inputs, the utilization for each
procedure code at the specialty and facility/nonfacility place of
service level, and the specialty-specific survey PE per physician hour
data.
(ii) Calculate the Direct Cost PE RVUs
Sum the costs of each direct input.
Step 1: Sum the direct costs of the inputs for each service. The
direct costs consist of the costs of the direct inputs for clinical
labor, medical supplies, and medical equipment. The clinical labor cost
is the sum of the cost of all the staff types associated with the
service; it is the product of the time for each staff type and the wage
rate for that staff type. The medical supplies cost is the sum of the
supplies associated with the service; it is the product of the quantity
of each supply and the cost of the supply. The medical equipment cost
is the sum of the cost of the equipment associated with the service; it
is the product of the number of minutes each piece of equipment is used
in the service and the equipment cost per minute. The equipment cost
per minute is calculated as described at the end of this section.
Apply a BN adjustment to the direct inputs.
Step 2: Calculate the current aggregate pool of direct PE costs. To
do this, multiply the current aggregate pool of total direct and
indirect PE costs (that is, the current aggregate PE RVUs multiplied by
the CF) by the average direct PE percentage from the SMS and
supplementary specialty survey data.
Step 3: Calculate the aggregate pool of direct costs. To do this,
for all PFS services, sum the product of the direct costs for each
service from Step 1 and the utilization data for that service.
Step 4: Using the results of Step 2 and Step 3 calculate a direct
PE BN adjustment so that the proposed aggregate direct cost pool does
not exceed the current aggregate direct cost pool and apply it to the
direct costs from Step 1 for each service.
Step 5: Convert the results of Step 4 to an RVU scale for each
service. To do this, divide the results of Step 4 by the Medicare PFS
CF.
(iii) Create the Indirect PE RVUs
Create indirect allocators.
Step 6: Based on the SMS and supplementary specialty survey data,
calculate direct and indirect PE percentages for each physician
specialty.
Step 7: Calculate direct and indirect PE percentages at the service
level by taking a weighted average of the results of Step 6 for the
specialties that furnish the service. Note that for services with TC
and PCs we are calculating the direct and indirect percentages across
the global components, PCs and TCs. That is, the direct and indirect
percentages for a given service (for example, echocardiogram) do not
vary by the PC, TC and global components.
Step 8: Calculate the service level allocators for the indirect PEs
based on the percentages calculated in Step 7. The indirect PEs are
allocated based on the three components: The direct PE RVU, the
clinical PE RVU and the work RVU. (Note that the work RVU used in the
calculation included the separate work BN adjustment from the 5-Year
Review of the work RVUs discussed in the June 29, 2006 proposed notice.
In this final rule, unadjusted work RVUs are used.)
For most services the indirect allocator is:
indirect percentage * (direct PE RVU/direct percentage) + work RVU.
There are two situations where this formula is modified:
If the service is a global service (that is, a service
with global, professional and technical components), then the indirect
allocator is:
indirect percentage * (direct PERVU/direct percentage) + clinical PE
RVU + work RVU.
If the clinical labor PE RVU exceeds the work RVU (and the
service is not a global service), then the indirect allocator is:
indirect percentage * (direct PERVU/direct percentage) + clinical PE
RVU.
(Note that for global services the indirect allocator is based
on both the work RVU and the clinical labor PE RVU. We do this to
recognize that, for the professional service, indirect PEs will be
allocated using the work RVUs, and for the TC service, indirect PEs
will be allocated using the direct PE RVU and the clinical labor PE
RVU. This also allows the global component RVUs to equal the sum of
the PC and TC RVUs.)
For presentation purposes in the examples in the Table 1, the
formulas were divided into two parts for each service. The first part
does not vary by service and is
the indirect percentage * (direct PE RVU/direct percentage).
The second part is either the work RVU, clinical PE RVU, or both
depending on whether the service is a global service and whether the
clinical PE RVU exceeds the work RVU (as described earlier in this
step.)
Apply a BN adjustment to the indirect allocators.
Step 9: Calculate the current aggregate pool of indirect PE RVUs by
multiplying the current aggregate pool of PE RVUs by the average
indirect PE percentage from the physician specialty survey data. This
is similar to the Step 2 calculation for the direct PE RVUs.
Step 10: Calculate an aggregate pool of proposed indirect PE RVUs
for all PFS services by adding the product of the indirect PE
allocators for a service from Step 8 and the utilization data for that
service. This is similar to the Step 3 calculation for the direct PE
RVUs.
Step 11: Using the results of Step 9 and Step 10, calculate an
indirect PE adjustment so that the aggregate indirect allocation does
not exceed the available aggregate indirect PE RVUs and apply it to
indirect allocators calculated in Step 8. This is similar to the Step 4
calculation for the direct PE RVUs.
Calculate the Indirect Practice Cost Index.
Step 12: Using the results of Step 11, calculate aggregate pools of
specialty-specific adjusted indirect PE allocators
[[Page 69635]]
for all PFS services for a specialty by adding the product of the
adjusted indirect PE allocator for each service and the utilization
data for that service.
Step 13: Using the specialty-specific indirect PE/HR data,
calculate specialty-specific aggregate pools of indirect PE for all PFS
services for that specialty by adding the product of the indirect PE/HR
for the specialty, the physician time for the service, and the
specialty's utilization for the service.
Step 14: Using the results of Step 12 and Step 13, calculate the
specialty-specific indirect PE scaling factors as under the current
methodology.
Step 15: Using the results of Step 14, calculate an indirect
practice cost index at the specialty level by dividing each specialty-
specific indirect scaling factor by the average indirect scaling factor
for the entire PFS.
Step 16: Calculate the indirect practice cost index at the service
level to ensure the capture of all indirect costs. Calculate a weighted
average of the practice cost index values for the specialties that
furnish the service. Note that for services with TC and PCs, we
calculate the indirect practice cost index across the global
components, PCs and TCs. Under this method, the indirect practice cost
index for a given service (for example, echocardiogram) does not vary
by the PC, TC and global components.
Step 17: Apply the service level indirect practice cost index
calculated in Step 16 to the service level adjusted indirect allocators
calculated in Step 11 to get the indirect PE RVU.
(iv) Calculate the Final PE RVUs.
Step 18: Add the direct PE RVUs from Step 6 to the indirect PE RVUs
from Step 17.
Step 19: Calculate and apply the final PE BN adjustment by
comparing the results of Step 18 to the current pool of PE RVUs. This
final BN adjustment is primarily required because certain specialties
are excluded from the PE RVU calculation for rate-setting purposes, but
all specialties are included for purposes of calculating the final BN
adjustment. (See ``Specialties excluded from rate-setting calculation''
below in this section.)
(v) Setup File Information
Specialties excluded from rate-setting calculation: For
the purposes of calculating the PE RVUs, we exclude certain specialties
such as midlevel practitioners paid at a percentage of the PFS,
audiology, and low volume specialties from the calculation. This is the
same approach used under the current methodology. These specialties are
included for the purposes of calculating the BN adjustment.
Crosswalk certain low volume physician specialties:
Crosswalk the utilization of certain specialties with relatively low
PFS utilization to the associated specialties. This is the same
approach used under the current methodology.
Physical therapy utilization: Crosswalk physical therapy
utilization to the specialty of physical therapy. This is the same
approach used under the current methodology.
Identify professional and technical services not
identified under the usual TC and 26 modifier: Flag the services that
are PC and TC services, but do not use TC and 26 modifiers (for
example, electrocardiograms). This flag associates the PC and TC with
the associated global code for use in creating the indirect PE RVU. For
example, the professional service code 93010 is associated with the
global code 93000.
Payment modifiers: Payment modifiers are accounted for in
the creation of the file. For example, services billed with the
assistant at surgery modifier are paid 16 percent of the PFS amount for
that service; therefore, the utilization file is modified to only
account for 16 percent of any service that contains the assistant at
surgery modifier.
Work RVUs from the 5-Year Review: The setup file contains
the proposed work RVUs from the 5-Year Review published in the June 29,
2006 proposed notice (71 FR 37174).
(vi) Equipment Cost Per Minute =
The equipment cost per minute is calculated as:
(1/(minutes per year * usage)) * price * ((interest rate/(1-(1/((1 +
interest rate) * life of equipment)))) + maintenance)
Where:
minutes per year = maximum minutes per year if usage were continuous
(that is, usage = 1); 150,000 minutes.
usage = equipment utilization assumption; 0.5.
price = price of the particular piece of equipment.
interest rate = 0.11.
life of equipment = useful life of the particular piece of
equipment.
maintenance = factor for maintenance; 0.05.
BILLING CODE 4120-01-P
[[Page 69636]]
[GRAPHIC] [TIFF OMITTED] TR01DE06.002
[[Page 69637]]
[GRAPHIC] [TIFF OMITTED] TR01DE06.003
BILLING CODE 4120-01-C
[[Page 69638]]
(b) Transition the Resulting Revised PE RVUs Over a 4-Year Period
As explained in the June 29, 2006 proposed notice, we had concerns
that, when combined with a negative update factor for CY 2007 and the
changes to the work RVUs under the 5-Year Review, the shifts in some of
the PE RVUs resulting from the immediate implementation of our
proposals could potentially cause some disruption for medical practices
(71 FR 37252). Therefore, we proposed to transition the PE changes over
a 4-year period. This would also give ample opportunity for us, as well
as the medical specialties and the RUC, to identify any anomalies in
the PE data, to make any further appropriate revisions, and to collect
additional data as needed prior to the full implementation of the PE
changes.
During the transition period, the PE RVUs would be calculated on
the basis of a blend of RVUs calculated using our methodology described
above in this section (weighted by 25 percent during CY 2007, 50
percent during CY 2008, 75 percent during CY 2009, and 100 percent
thereinafter), and the current CY 2006 PE RVUs for each existing code.
PE RVUs for codes that are new during this period would be calculated
using only the methodology, and paid at the fully transitioned rate.
We also believe the methodology is less confusing and more
intuitive than the current approach. First, the NPWP would be
eliminated and all services would be priced using one methodology,
eliminating the complicated calculations needed to price NPWP services.
Second, any revisions made to the direct inputs for one or more
services would now have predictable results. Changes in the direct
practice inputs for a service would proportionately change the PE RVUs
for that service without significantly affecting the PE RVUs for
unrelated services (except, of course, to the extent that a BN
adjustment is required to be applied by the statute).
The methodology will also create a system that would be
significantly more stable from year-to-year than the current approach.
Specialties should no longer experience the wide fluctuations in
payment for a given service due to an aberrant direct cost scaling
factor. Direct PEs should only change for a service if the service is
further refined or when prices are updated, while indirect PEs should
change only when there are changes in the mix of specialties furnishing
the service or if any future new survey data for indirect costs are
utilized.
b. Comments and Responses From the June 29, 2006 Proposed Notice
The following is a summary of the comments we received on the June
29, 2006 proposed notice (71 FR 37170).
(1) Bottom-Up Methodology
Comment: The majority of commenters expressed support for the
proposed bottom-up approach to calculating resource-based PE RVUs. Many
of these commenters stated that the bottom-up approach, which bases the
direct portion of the PE RVUs on the actual direct cost inputs,
produces more accurate, intuitive, and stable PE RVUs.
A few commenters expressed concern about the proposed bottom-up
approach. These commenters were not critical of the merits of the
proposed bottom-up methodology itself, but were instead critical of the
data sources used in the calculation of resource-based PE RVUs. The
commenters suggested that the proposal should be delayed until the
direct cost data, aggregate specialty cost data, and indirect specialty
cost data derived from the aggregate specialty cost data could be
verified.
Response: We are appreciative of the support for the proposed
bottom-up approach to calculating resource-based PE. We also appreciate
the comments that expressed concern about our data sources, since we
also believe that it is important that we use the best available data
to develop the PE RVUs. As discussed in greater detail in subsequent
responses, we do believe that the data sources used to calculate the
proposed PE RVUs are the best available at this time. This is
particularly true of the direct cost input data that forms the basis of
the bottom-up methodology, and that has been thoroughly analyzed and
discussed by the RUC, PEAC, HCPAC and the PERC and then has been
reviewed by us. Therefore, we will implement the bottom-up methodology
as proposed.
(2) Supplemental Survey Data
Comment: Several commenters expressed concern about the significant
increase in PE values for specialty groups that submitted supplemental
survey data. They stated their belief that the data has created serious
inequities in the relativity of PE RVUs across the PFS. The commenters
recommended that the supplemental survey data not be used; but, rather,
that we wait until a new multi-specialty survey can be completed before
using this revised data. One commenter questioned the validity of
supplemental survey data, noting that the response rates were fairly
low. The commenter also indicated that it was inequitable to accept
more recent data from only a few specialties. Another commenter did not
agree that individual specialty groups should be allowed to provide
survey data. Conversely, several commenters strongly supported our
acceptance and use of the supplementary survey data.
Response: The BBRA requires us to establish a process for specialty
groups to submit supplemental survey data. The statute mandated that we
establish criteria for surveys, but required that we accept such data
for only two years. However, to give all specialty groups an
opportunity to submit data, we twice extended the period for submitting
data. Therefore, we accepted data over a 6-year period, instead of the
2-year period mandated by the Congress. In addition, our contractor,
Lewin, was available to provide assistance to any group interested in
submitting a survey by helping to ensure that the proper protocols were
met in order to maximize the survey's chance of meeting our survey
criteria.
We recognize the limitations of the supplemental survey process.
However, we were obligated by statute to establish and use such a
process, all specialty groups had an equal opportunity to submit data,
and groups that conducted surveys did so at great expense. If the
submitted survey data met the criteria we established by notice and
comment rulemaking, we were obligated to accept and use the
supplemental survey data to the maximum extent practicable and
consistent with sound data practices. Additionally, we previously
accepted most of the surveys we proposed to use in the CY 2007 PFS
proposed rule in either the CY 2005 or the CY 2006 PFS final rules with
comment. Although we delayed the use of these surveys for various
reasons, as explained fully in the CY 2005 and CY 2006 rules, there is
no reason to continue to delay implementation of these surveys.
We note that we support the AMA's efforts to field a multi-
specialty survey. However, the earliest this data would be available to
incorporate into the PFS would be for CY 2009. We will consider any
such data as soon as it becomes available.
Comment: The majority of commenters expressed support for the
design and use of a multi-specialty practice cost survey. Several
commenters further recommended that any multi-specialty practice cost
survey adhere to the same standards as the supplemental surveys
accepted by CMS. Two commenters were concerned that a multi-specialty
practice costs survey would not capture the practice costs
[[Page 69639]]
associated with specialties whose practices focus on technical
services.
Response: We support the design of an AMA-sponsored multi-specialty
survey and we understand that over 40 physician and nonphysician
specialties have agreed to participate. The AMA has designed this
survey tool and the process has been open for comment to all interested
parties. We have also offered comments on the survey design to ensure
that both the appropriate practice cost data is collected and the
highest standards are met in the collection of this data.
Comment: A few commenters recommended that we commit to including
the costs associated with uncompensated care in the PE RVUs. One
commenter suggested that the costs of uncompensated care should be
included in the AMA-sponsored multi-specialty practice cost survey.
Response: Many specialties must deal with the issue of
uncompensated care, though we believe that the number of patient care
hours spent on uncompensated care is significantly higher for emergency
medicine. We currently make an adjustment to the patient care hours for
emergency medicine to account for the hours of uncompensated care
included in the SMS survey because the calculated PE/hour should only
reflect reimbursable hours. We agree that it would be beneficial if the
AMA-sponsored multi-specialty survey includes a question on this issue.
Comment: ACR expressed concern that we did not fully utilize its
supplementary survey data by excluding data on part-time physicians.
Response: The precedent for applying average full-time practice
hours to all doctors in the practice when analyzing practice hours was
set by the AMA's Socioeconomic Monitoring System (SMS) and was also
discussed in the September 23, 2003 Lewin report, ``Recommendations
Regarding Supplemental Practice Expense Data Submitted for 2004.'' As
described in this report, independent laboratory organizations were
surveyed at the practice level because most independent labs are owned
by an organization, not physicians; this is also the case with many
free-standing radiology practices.
Lewin applied a comparable methodology to the radiology practice
level supplemental survey data for its May 26, 2004 recommendation to
CMS. The radiology supplemental survey reported that less than 10
percent of radiologists in the practice were part-time doctors. The
average of the practice hours for the 2,250 full-time doctors was 38.9
hours and for the 237 part-time doctors 22.2 hours. Using the
supplemental survey data results in less than a 5 percent increase in
the total practice hours over the number of hours derived from using
the SMS methodology.
We have determined that the original Lewin calculation is
consistent with historical practice hour calculations used in the SMS,
and with subsequent recommendations submitted by Lewin to CMS.
Comment: Lewin recommended accepting supplemental survey data from
ASTRO and AFROC by blending the data in the proportion of 75 percent
hospital-based radiation oncology and 25 percent freestanding radiation
oncology, resulting in a PE/HR of $161.08. AFROC engaged the services
of an independent claims analyst who found that a 62/38 proportion is
more appropriate, resulting in a PE/HR of $213. AFROC supplied this
information as part of its comments on the proposed notice.
Response: Lewin calculated a PE/HR for radiation oncology of
$161.08, which is the weighted average based on the percentage of
Medicare claims for hospital-based (75 percent) versus freestanding (25
percent) radiation oncologists. In our standard outpatient claims data
file for 2003, a radiation oncologist was deemed to be hospital-based
if 50 percent or more of his claims, based on the Unique Physician
Identification Number (UPIN), were for services furnished at a
hospital-based radiation oncology center. The rationale for weighting
the PE/HR by Medicare claims was discussed by Lewin in its ``2005
Recommendations to CMS'' regarding the American Society for Therapeutic
Radiation and Oncology (ASTRO) supplemental survey data.
In its comments, AFROC offered two alternative calculations. The
first proposed to recount the Medicare claims after removing TC only
claims. This method results in a reweighting of hospital-based versus
freestanding radiation oncologists of 64 percent hospital based and 36
percent freestanding. The second method used time-weighting to
determine the mix of hospital based versus freestanding practitioners.
AFROC used physician time data for FY 2004 by radiation oncology CPT
code and removed the TCs, resulting in a reweighting of hospital-based
versus freestanding proportion of physician time of 62 percent to 38
percent, yielding a combined average PE/HR of $213.07.
Lewin reviewed AFROC's analysis and believes that AFROC presented
two reasonable alternatives to weighting hospital-based and
freestanding radiation oncologists, with both methods resulting in
essentially the same answer. However, Lewin has determined that the
time-weighting method is more consistent with the SMS and Lewin
analysis of practice hours per physician. Lewin conducted the physician
time-weighting analysis using our time and utilization data for FY
2005, resulting in a hospital-based to freestanding weight of 63
percent to 37 percent, respectively. The combined average using this
weighting results in a PE/HR for radiation oncologist of $209.19, as
shown in Table 2.
Table 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
ASTRO survey AFROC survey Combined average
--------------------------------------------------------------------------------------------------
ASTRO's ASTRO's
hospital-based hospital-based
and AFROC's and AFROC's
Hospital-based Freestanding Weighted average Freestanding freestanding freestanding
physicians practices practices (by share of (by share of
Medicare physician
claims) time)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number in Sample 67 23 ................. .............. .............. ..............
Percent of Medicare Claims........................... 75.2% 24.8% ................. 24.8% .............. ..............
Percent of Physician Time (Facility vs. Non-Facility) 63.0% 37.0% ................. 37.0% .............. ..............
[[Page 69640]]
Direct PE per hour:
Clinical Payroll................................. $9.93 $104.80 $33.46 $153.24 $45.47 $62.98
Medical Equipment................................ 3.64 80.92 22.81 91.04 25.32 35.99
Medical Supplies................................. 1.56 31.56 9.00 13.11 4.42 5.84
Indirect PE per hour:
Office Expense................................... 19.31 69.40 31.73 87.88 36.32 44.69
Clerical Payroll................................. 12.04 39.42 18.83 59.56 23.82 29.63
Other Expense.................................... 16.92 20.17 17.73 52.43 25.73 30.06
--------------------------------------------------------------------------------------------------
Total PE per hour............................ 63.40 346.27 133.55 457.26 161.08 209.19
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lewin agrees with AFROC that weighting by hours of patient care is
most consistent with our underlying methodology for calculating
physician practice hours. Lewin has recommended that the time-weighting
methodology for determining the percentage of hospital-based to
freestanding radiation oncologist PE be adopted, which would result in
a PE/HR of $213/HR based on 2004 data or $209/HR based on 2005 data. We
accept Lewin's recommendation and will implement a PE/HR of $209 for
radiation oncology.
(3) Nonphysician Workpool
Comment: With the exception of those comments that requested that
we delay the entire revision to the PE methodology, the majority of
commenters expressed support for the elimination of the NPWP.
Response: The development of the NPWP was necessitated by our lack
of accurate aggregate cost data for specialties such as radiology and
radiation oncology necessitated the development of the NPWP. The major
specialties comprising the NPWP have now submitted supplemental survey
data that we have accepted. Now that we have reliable aggregate PE data
for these specialties, as well as and refined direct input data at the
code level, we will finalize our proposal to eliminate the NPWP.
(4) Indirect PE RVUs Methodology
Comment: Many commenters recommended that we not use the budget-
neutralized work RVUs in the indirect PE allocation, but rather use the
unadjusted work RVUs.
Response: As discussed in section III.D.3. of this final rule with
comment period , the BN adjustment necessitated by the 5-Year Review of
work RVUs will be accomplished through the use of a separate, BN
adjustor applied to the work RVUs. However, as recommended by the
commenters, we will not use the budget-neutralized work RVUs to
calculate indirect PE.
Comment: Many commenters disagreed with the use of the physician
work RVUs in allocating indirect PE. Some commenters further contended
that the intensity portion of physician work has no correlation to
indirect PEs. A few commenters contended that physician time would be a
more appropriate allocation tool than physician work RVUs.
Response: There is no perfect method of allocating indirect
expenses down to individual services. We believe the work RVUs are the
most constant of the available allocation tools, and this
characteristic coincides best with our goal of stability for the PE
RVUs. In this final rule with comment, we will continue to use the work
RVUs as one of the indirect PE allocators.
Comment: Many commenters supported the proposal to use clinical
labor costs as an indirect allocator when either the clinical labor RVU
exceeds the work RVU or when the service does not contain physician
work. Two commenters disagreed with the use of clinical labor costs in
allocating indirect PE and stated that this is a ``fudge factor'' that
inappropriately allocates costs to services with very low or no
physician work.
Response: Because work RVUs reflect the time required to perform
the service in addition to the intensity of the physician work
involved, services with low or no work RVUs could be valued
inappropriately unless we use a proxy for the work RVUs in allocating
indirect PE to them. To bring these services onto the same scale as
services that do contain physician work, we believe it is appropriate
to utilize clinical labor costs as a proxy for physician work in the
indirect allocation. We agree with the majority of commenters and will
finalize our proposal to use clinical labor costs in allocating
indirect PE where the physician work RVU is zero or less than the
clinical labor RVU.
Comment: Several commenters recommended that the methodology be
modified to include clinical labor time in the calculation of
specialty-specific aggregate indirect PE pools.
Response: We do not agree with the commenters because the PE/HR for
each specialty is calculated using physician time as the denominator;
clinical staff time is not included in that calculation. It would be
inconsistent to then use clinical labor time in the creation of the
specialty-specific indirect PE pools.
Comment: Many commenters recommend the use of unscaled direct
inputs in the allocation of the indirect PE.
Response: It would be inconsistent to base the direct PE RVUs on
budget neutral scaled direct inputs, and then use unscaled direct
inputs that are not budget neutral in creation of the indirect PE RVUs.
We also disagree with the commenters' suggestion that we should use
unscaled inputs for the direct PE RVUs. Direct costs represent, on
average, approximately one-third of PEs based on the SMS survey data.
[[Page 69641]]
Therefore, we believe it is appropriate to scale the direct inputs so
that approximately one-third of the aggregate PE RVUs are for direct
PEs.
Comment: Several commenters contended that the approach of basing
PE calculations on the weighted average of all specialties performing a
service is flawed and should be replaced with an approach that bases
the specialty-weighted factors upon specialties that represent 95
percent of the utilization for a CPT code and modifier. A commenter
stated that utilizing the service counts associated with lower cost
specialties, such as optometry, that would perform only the
postoperative portion of a service, as opposed to the full service,
inappropriately deflates the total PEs of a service when the practice
costs of these specialties are weight averaged.
Response: With regards to the general question of including all
specialties performing a service in the weight-averaging of the
practice costs of the service, this is an issue that has been raised
since we first proposed a resource-based PE methodology. We still
believe, as we have previously stated, that the inclusion of
specialties that perform a very small proportion of a service has no
discernible impact on the PE calculation.
We agree that it would be inappropriate to assign full service
counts to a specialty that only performs the postoperative work of a
given surgical procedure. For this reason, we have always adjusted the
per specialty utilization for a service using the appropriate payment
modifier (modifier -55) before the service is used to weight the
practice costs of the various specialties performing a given service.
For example, if a specialty performs 100,000 postoperative-only
services for a specific procedure (that is, uses modifier -55), those
services would be counted based upon the code-specific postoperative
percentage multiplied by the 100,000 services. If the postoperative
percentage was 10 percent, the specialty performing 100,000
postoperative-only services will be weighted with only 10,000 services.
Therefore, we do not believe that any further adjustments are needed.
Comment: One commenter recommended that the indirect PE allocation
be distributed from the global services to the professional and
technical services based upon the share of billings for each service.
Response: Although we are unsure of what, exactly, the commenter is
suggesting, it is not clear to us how this recommendation could result
in an appropriate resource-based PE RVU (for example, if the majority
of services furnished were for the PC of a procedure, we believe the
commenter is suggesting that it would then be necessary for the PC to
have a higher PE RVU then the TC). Therefore, we will retain our
current methodology for the allocation of indirect PE for services with
TC and PCs, but we welcome further clarification regarding this
suggestion.
(5) Transition Period
Comment: The majority of commenters expressed support for the
proposal to transition the PE methodology changes over a 4-year period.
One commenter recommended that if the work RVU changes associated with
the 5-Year Review are not transitioned, then the PE RVUs should also
not be transitioned.
Response: We are concerned that, when combined with the negative
update adjustment factor (UAF) for CY 2007 and the impact of changes to
the work RVUs under the 5-Year Review, the shifts associated with the
PE methodology changes could potentially cause some disruption for
medical practices. For this reason, we will finalize the proposed 4-
year transition to the PE methodology.
Comment: One comment supported the use of supplemental survey data,
but requested that this supplemental survey data be implemented with no
transition, since this data was originally accepted 1-2 years ago.
Response: The supplemental survey data is not independently
transitioned in the proposed PE methodology. Rather, the RVUs resulting
from all the changes to the methodology, which are to some degree
interdependent, would be transitioned over 4 years. It would be very
difficult to isolate one aspect of our proposed methodology and exempt
it from the transition. In addition, we are concerned that such an
approach could lead to inequities whereby, for a given specialty, a PE
methodology change that has a positive impact would be transitioned
over 4 years, while a change with a negative impact would not. For
these reasons, we will finalize the 4-year transition as proposed.
(6) Other Comments on the PE Methodology
Comment: Several commenters requested that one budget neutrality
factor (BNF) be applied for PE as opposed to applying a direct
adjuster, an indirect adjuster, and a final BN adjustment.
Response: The separate adjusters for the direct and indirect pools
of RVUs are not pure BN adjustments but are more appropriately viewed
as scaling factors. The purpose of the separate direct and indirect
adjustments is to scale the pool of direct input RVUs and the pool of
indirect RVUs to the direct and indirect RVUs that are available, as
determined by the total direct and indirect dollars from the SMS and
supplemental surveys. For this reason, the adjustments should be viewed
as direct and indirect scaling factors, as opposed to BN adjustments.
If we only applied one BN/scaling factor to the final PE RVUs, there
would not be the appropriate balance between the direct and indirect PE
RVUs and services with more direct RVUs would be paying for those
services with less direct RVUs, since the indirect scaler is greater
then the direct scaler.
Since the direct and indirect RVU pools are scaled and made
``budget neutral'' in these initial steps, the final BN adjustment is
very small. The only reason the final adjustment is needed is because
the RVUs associated with specialties that are not used in the rate
setting process need to be incorporated back into the system. This
introduction of additional RVUs causes a very small adjustment in the
final step. For these reasons, we will finalize the proposal to utilize
three separate adjustments in the calculation of resource-based PE
RVUs.
Comment: Several commenters applauded our proposals relating to the
PE methodology for being more intuitive and transparent, but requested
that we go one step further toward pure transparency by publishing the
PE/HR figures and the specialty indirect practice cost indices.
Response: We appreciate the support for the intuitive and
transparent nature of the revised methodology. Following our original
intention of making this methodology resource-based, intuitive, and
transparent, we will publish both the PE/HR figures and the indirect
practice cost indices on the homepage of the CMS Web site.
Comment: A few commenters requested that either their services be
``frozen'' at the current 2006 PE RVUs or that a floor be placed on the
percent reduction associated with any given service due to the revised
methodology.
Response: We do not believe it would be equitable to maintain
current values for certain codes or to place a floor on the percentage
reduction associated with a given service in a resource-based system.
However, in order to minimize any potential disruptive effects that
could be caused by sudden shifts in RVUs, we will be finalizing our
proposal to transition to the bottom-up methodology over a 4-year
period. This transition period will allow interested
[[Page 69642]]
parties an opportunity to review the data elements associated with
their services. For these reasons, we will not institute a floor on the
reduction in PE RVUs for a service, nor will we freeze any services at
their CY 2006 PE RVUs.
Comment: Several commenters have requested that, for purposes of
calculating resource-based PE RVUs, certain services should be assigned
to specialties with higher PEs then those that are reported in the
Medicare claims data.
Response: Unless there is evidence that the Medicare claims data is
incorrect, or that there is something unique about the services in
question, we do not believe it would be appropriate to override our
existing utilization data. The Medicare claims data identifies what
specialties are furnishing what services and this is an essential
component in the development of our resource-based system. If
interested specialties contend that persons within their specialty are
reporting their specialty designation incorrectly, we urge those
specialties to work with their respective organizations to educate
their membership about the importance of correct reporting of their
specialty designation when billing Medicare.
Comment: Several commenters contended that the independent
diagnostic testing facility (IDTF) survey data does not reflect the
costs of cardiac event monitoring services, because issues such as
hours of operation, intense staffing needs and equipment usage are not
taken into account.
Response: We agree with the commenters that cardiac event
monitoring services are unique and are not appropriately represented by
the IDTF survey data. For this reason, we will use the PE data
associated with cardiology to value these services. Additionally, as
discussed in more detail in the section on direct cost inputs (section
II.A.4.f. of this final rule with comment period), we are revising the
direct inputs for these services to reflect that the PEs are not
limited to direct patient encounters.
Comment: Some commenters recommended that we review the crosswalk
used for both interventional pain management and pain medicine in the
CY 2007 PFS proposed rule. The commenters suggested that the
appropriate crosswalk for these specialties is the ``all physician''
PE/HR.
Response: We agree with this comment and will crosswalk both
interventional pain management and pain medicine to the ``all
physician'' PE/HR.
Comment: Several commenters supported the use of revised 2005
utilization data. A few commenters expressed concerns that the use of
this revised single year data might cause problems with the stability
of the PE RVUs and requested that we delay using this data until the
impact on the stability of PE RVUs can be determined.
Response: We will finalize our proposal to incorporate the most
current Medicare utilization data into the calculation of resource-
based PE RVUs. We have always attempted to use the most current data
available in rate-setting. Although we understand the concerns conveyed
by the few comments that requested a delay in the use of the 2005
utilization data, we do not believe that the use of this data will
destabilize the PE RVUs to the extent that a delay would be warranted.
Comment: Some commenters contended that we are in violation of the
MMA when reducing the PE RVUs of drug administration services by
adopting a new methodology. The commenters stated that, because the
oncology supplemental survey is not being used for the same purpose as
it was when MMA directed us to use the survey, all drug administration
services must be exempt from any impact associated with the revised PE
methodology.
Response: We disagree with this comment. Although the MMA was
enacted prior to these changes in our PE methodology, the MMA did not
prescribe the use of any particular resource-based PE RVU methodology
or constrain our rulemaking authority. The MMA directed us to use the
oncology survey data in determining PE RVUs. We have, in fact, used the
survey data (in exactly the way the Congress envisioned when it passed
MMA) to establish PE RVUs for services furnished during CYs 2004, 2005
and 2006. In addition, under the revised PE methodology, we are
utilizing the survey data in the calculation of the indirect PE RVUs.
Thus, we do not believe that the use of the survey data within our
revised methodology violates the provisions of MMA.
Comment: Several commenters contended that the proposed indirect
practice costs may not be appropriate for cardiology practices that
operate free-standing cardiac catheterization labs. The commenters
further stated that the nonfacility technical billings for cardiac
catheterization are dominated by IDTFs, but the IDTF supplemental
survey data was primarily based on imaging centers. The commenters
recommended that the cardiac catheterization services be based solely
upon the PE data for cardiology.
Response: We agree with these comments. We currently do not have
direct cost input data for the nonfacility setting for these services.
Until we are able to obtain such data, we will carrier-price the
cardiac catheterization codes. We urge interested parties to continue
to work with the RUC to develop direct cost inputs for these services
in the future.
Comment: One commenter recommended that we reinstate the clinical
labor costs associated with physicians bringing their own staff to the
hospital and contended that not counting these costs is in violation of
the statute.
Response: We have indicated that we will not pay for clinical staff
brought by physicians to the hospital for the following reasons: (1)
These costs are already paid to the hospital and would thus be a double
payment; (2) we already pay for physician extender staff through the
physician work RVUs; and (3) we pay physician assistants (PAs) directly
when they serve as assistants at surgery. In response to this decision,
the thoracic surgeons contended that hospitals are no longer providing
the staff to furnish adequate care. We asked the Office of Inspector
General (OIG) to conduct an independent assessment of the staffing
arrangements between hospitals and thoracic surgeons. In response to
our request, in an April 2002 report, the OIG clearly supported our
position to exclude the costs of clinical staff brought to the hospital
from the PE calculations. For these reasons we will continue to exclude
the clinical labor costs associated with physicians bringing their own
staff to the hospital from the calculation of resource-based PE RVUs.
Comment: One commenter recommended that the practice costs
associated with the handling of pharmaceuticals should be incorporated
into the cost categories associated with the calculation of resource-
based PE RVUs.
Response: The commenter did not offer any recommended inputs or
strategies on how to incorporate these costs into the methodology. For
this reason we will not incorporate any additional costs related to the
handling of pharmaceuticals into the methodology at this time.
Comment: One commenter recommended that administrative staff time
should be counted as a direct cost.
Response: Administrative staff time was included in the original
CPEP data as direct PE. However, because of the difficulty in
accurately assigning the
[[Page 69643]]
administrative time to individual procedures, we then converted this
expense to an indirect cost. We agree that, in principle, it could be
helpful to treat as many of the practice costs as possible as direct,
rather than indirect PE, and we would be willing to consider such
recommendations if the PERC or RUC would agree to undertake the task of
assigning administrative staff times to each code.
Comment: One commenter recommended that special resource
considerations for screening services should be factored into the
calculation of the PE RVUs.
Response: We have attempted to account for all resource cost in the
calculation of the PE RVUS for all services. Unfortunately, the
commenter did not supply any documentation regarding additional
resources that the commenter believes should be included for screening
services. Therefore, we will not add additional resources as requested
at this time.
Comment: Many specialty societies expressed concern that the
Medicare database currently does not permit the collection of nurse
practitioner (NP) specialty-specific data. The commenters contended
that this limitation unfairly excludes NPs from participating in
certain demonstration projects and other programs. The commenters also
state that they are ready to work with us on this and any related
issues.
Response: It is not clear from the comment exactly what specialty-
specific data is at issue. However, we would certainly be willing to
work with the commenters to address their concerns.
4. Additional PE Issues for CY 2007
a. RUC Recommendations for Direct PE Inputs and Other PE Input Issues
In the CY 2007 PFS proposed rule (71 FR 48982), we proposed the
following concerning direct PE inputs.
(i) RUC PE Recommendations
The AMA's Relative Value Update Committee (RUC) established a new
subcommittee, the Practice Expense Review Committee (PERC), to assist
the RUC in recommending direct PE inputs (clinical staff, supplies, and
equipment) for new and existing CPT codes. The RUC reviews and gives
final approval for all PERC recommendations.
The PERC reviewed the PE inputs for over 2000 existing codes, some
of which were unresolved PE issues from the CY 2006 PFS final rule with
comment period, at their meetings held in September 2005, February 2006
and April 2006.
We reviewed the PERC recommendations that were forwarded by the RUC
and proposed to adopt all of them. We have worked with the AMA staff to
correct any typographical errors and to ensure that previously PEAC-
accepted standards are incorporated in the recommendations.
The complete PERC recommendations and the revised PE database can
be found on our Web site. (See the SUPPLEMENTARY INFORMATION section of
this final rule with comment period for directions on accessing our Web
site.)
Comment: We received comments from many of the specialty societies
thanking us for our acceptance of the PERC recommendations.
Response: We thank the specialty societies for their positive
remarks and we look forward to our continuing relationship with the
PERC and the societies.
(ii) Standard Supplies and Equipment for 90-Day Global Codes
In our proposed rule of August 22, 2006, we proposed to revise the
CPEP supply and equipment inputs for those 90-day global procedures for
which the RUC had only refined the clinical labor direct PE inputs. We
proposed to apply the standard supply and equipment inputs for the
facility setting for 90-day global services to these remaining
unrefined 90-day global procedure codes. As recommended by the PERC at
its April 2006 meeting, for supplies, we proposed to include one
minimum supply visit package for each postoperative visit assigned to
each code and a postsurgical incision care kit (suture, staple, or
both) where appropriate, along with additional items reviewed and
recommended by the PERC for certain procedures. For equipment, we
proposed to include an exam table and light as the standard equipment,
as well as other equipment items recommended by the PERC that were
identified by the specialty societies as necessary during the
postoperative visit period. However, there are several issues on which
we requested input from the PERC or the specialty before we finalized
the recommended standards. For example, for many of the 90-day codes in
question, the current supply input data contain supplies in far larger
quantities than are contained in either the visit package or incision
care kit. For other codes, the current data include items that are not
contained in the package or kit. In other cases, the PERC
recommendations contain additional items in quantities that appear
excessive. We plan to work with all the concerned specialties to ensure
that the finalized inputs do represent the typical supplies needed to
perform each procedure.
Because the application of the 90-day global standard supplies and
equipment would result in the deletion of some original CPEP inputs, we
requested that all the medical specialties examine the direct PE inputs
on our Web site and inform us if there are additional items from the
original CPEP data that are a necessary part of the postoperative care
and if the PERC-recommended PE inputs were listed correctly.
Comment: Several commenters expressed concern regarding the
accuracy of our PE database for the specialty-specific PERC
recommendations and the application of the standard supplies and
equipment that we proposed to include in the 90-day global codes. One
commenter representing urologists noted that several supply items
approved by the PERC were missing in the PE database and provided us
with specific supply inputs for CPT codes 57310, 57311, 57320, and
57330. Another commenter representing prosthetic urologists recommended
that the standard supplies used for infection control or patient
comfort be included for each postoperative visit, such as gloves for
the physician and clinical staff, table paper, patient drapes and
gowns, and also questioned the accuracy of the number of ``multi-
specialty visit package'' (MSVP) associated with their services. They
believe that their services entail more postoperative visits than the
current number of MSVPs reflected in the PE database. A society
representing gynecologic oncologists also recommended that the standard
supplies for their procedures should be modified to include additional
supplies that are associated with their procedures, such as a pelvic
exam kit and a patient drape. Lastly, a medical society representing
ophthalmologists urged us to incorporate the PERC-recommended supply
and equipment direct inputs for the 90-day global ophthalmologic codes.
Response: We thank the urology specialty for reviewing the PE
database and providing us with the specific supply items missing from
their four CPT codes. These PERC-approved supplies have been added as
requested. We have addressed the prosthetic urologists' concerns
regarding the inclusion of supplies for infection control and patient
comfort by ensuring that one MSVP was included in the PE database for
each postoperative visit for these services. The MSVP contains, among
other things, 2 pairs of gloves, table paper, and a patient gown. We
also note that the inclusion of a patient
[[Page 69644]]
drape is a standard for the codes identified by the specialty for
gynecology and obstetrics. To the extent that prosthetic urologists
believe a patient drape is needed in their 90-day global codes, we
encourage them to work through the RUC process to correct possible
discrepancies. In regard to the request for additional MSVPs for each
procedure performed by the urologic prosthetists, we believe the
commenter is mistaken, as there is one MSVP for each of the RUC-
recommended postoperative visits entered in the PE database. With
respect to the comments about the absence of specific supplies in
gynecologic oncology procedures, we would note that the 90-day CPT
codes identified by the specialty for gynecology and obstetrics all
contain these specific items as part of the standard packages, as
approved by the RUC and accepted by CMS. We would again suggest that
the commenter work through the RUC process to assure that the necessary
inputs are included in these services. In response to the request from
the society representing ophthalmologists to implement the PERC-
recommended supply and equipment changes for ophthalmology services, we
have already incorporated these changes into the PE database and they
are reflected in the PE RVUs. However, we would note that further
equipment adjustments were not made for the ophthalmology CPT codes, as
the PERC recommendations did not include any changes to the current
equipment or ophthalmology lane assignments.
b. Payment for Splint and Cast Supplies
In the CY 2000 and CY 2001 PFS final rules (64 FR 59380 and 65 FR
65376, respectively), we removed splint and cast supplies from the PE
database for the CPT codes for fracture management and cast/strapping
application procedures. Because splint and cast supplies could be
separately billed using Healthcare Common Procedure Coding System
(HCPCS) codes (Q4001 through Q4051) that were established for payment
of these supplies under section 1861(s)(5) of the Act, we did not want
to make duplicate payment under the PFS for these items.
In the CY 2006 PFS proposed rule (70 FR 45764), we proposed to
reinstate payment for all splints and cast supplies through the PE
component of the PFS because we believed we may have unintentionally
prohibited remuneration for these supplies when they are not used for
reduction of a fracture or dislocation (covered under section
1861(s)(5) of the Act), but rather are provided (and covered) as
``incident to'' a physician's service under section 1861(s)(2)(A) of
the Act. This proposal was not finalized; however, in our CY 2006 final
rule with comment period (70 FR 70116) we asked the medical specialties
and the PERC to determine the typical supplies for splints and casts
necessary for each of the fracture management codes and the cast/
strapping application codes because we wanted to make certain that the
supply inputs were correct before we proceeded with rulemaking for the
CY 2007 PFS. At its February 2006 meeting, the PERC reviewed and
approved the supply inputs submitted by the American Academy of
Orthopaedic Surgeons (AAOS) for each CPT code for fracture management
and cast/strapping application and these were forwarded to us as PERC
recommendations. During this interim period we also reassessed the
options for payment of materials for splints and casts.
We believe that the majority of the splint and cast supplies that
are currently paid through the Q-codes are furnished in relationship to
cast/strapping procedures for the management of fractures and
dislocations. However, we did not intend for the medically necessary
splint and cast supplies used for other reasons (for example, serial
casting, wound care, or protection) not to be paid. Because it may be
difficult for the contractors to identify the purpose for the cast/
strapping application procedure on a claim form, we believe that
contractors may have been paying for the splint and cast supply Q-codes
when the service is performed for other purposes than treatment of
fractures and dislocations.
Since these splint and cast supplies can be covered under both
sections 1861(s)(5) and 1861(s)(2)(A) of the Act, we proposed to
include payment for both statutory benefits using the separate HCPCS Q-
codes. This would allow for payment for these medically necessary
supplies whether based on sections 1861(s)(5) or 1861(s)(2)(A) of the
Act, while ensuring that no duplicate payments are made. Physicians
will continue to bill the HCPCS Q-codes, in addition to the cast/
strapping application procedure codes, to be paid for these materials.
The following supplies will continue to be paid separately using
the HCPCS Q-codes and would not be included in the PE database:
Fiberglass roll.
Cast padding.
Cast shoe.
Stockingnet/stockinette.
Plaster bandage.
Denver splint.
Dome paste bandage.
Cast sole.
Elastoplast roll.
Fiberglass splint.
Ace wrap.
Kerlix.
Webril.
Malleable arch bars and elastics.
The splint and cast supplies will not be included in the PEs for
the following CPT codes:
24500 through 24685.
25500 through 25695.
26600 through 26785.
27500 through 27566.
27750 through 27848.
28400 through 28675.
29000 through 29750.
We specifically requested input, from medical specialties and
contractors on our proposal.
Comment: Commenters offered their appreciation and support of our
proposal to pay for medically necessary splint and cast supplies using
HCPCS Q-codes for both statutory benefits, that is, sections 1861(s)(5)
and 1861(s)(2)(A) of the Act. However, one commenter requested that we
clarify ``whether this separation applied to the rehabilitation non-
physician service codes.'' In addition, a few commenters noted that the
supplies for the Unna-boot have been excluded from payment under the Q-
codes, because they are assigned HCPCS A-codes, and asked that we
clarify if the Unna-boot supplies will now be included in the Q-codes.
One commenter suggested that we omit the cast shoe from the list of
supplies that are covered under either benefit. Another commenter asked
us to temporarily include the A-HCPCS codes, A-6441 though A-6457, as
billable HCPCS codes in conjunction with the strapping and casting CPT
procedures codes.
Response: We will proceed with our proposal to pay for the splint
and cast supplies using the existing HCPCS Q-codes for all medically
necessary splints and casts, as appropriate. While we appreciate the
comments received, we have questions about and do not understand the
request concerning whether this applied to the ``rehabilitation
nonphysician service codes.'' We apologize that our listing of the
applicable CPT code ranges in the proposal caused confusion about
whether the Unna-boot supplies that currently are identified with HCPCS
A-codes would change and be paid using the Q-codes. For clarification
purposes, we would like to note that our proposal does not change the
existing Q-code descriptors or their pairing with certain CPT codes for
payment purposes. For CPT code 29580, (Strapping; Unna boot) physicians
and other qualified providers
[[Page 69645]]
will continue to use the A-codes designed for the Unna-boot supplies.
We appreciate the comments from the commenter asking us to remove the
cast shoe from the PE database since shoes are statutorily noncovered
items, except for certain diabetic shoes and those that are attached to
braces. The cast shoe was erroneously identified as a supply item
separately paid using the Q-codes in the listing in our proposed rule.
We now realize that the listing in the proposed rule, in reality,
merely identifies the supply inputs to be removed from the PE database
rather than those that are separately billable. We agree with the
commenter, and will remove the cast shoe item from our PE database (27
codes). While we appreciate a commenter's request to include certain A-
codes as separately billable under our proposal, these items were never
included in the PE database and it would not be appropriate to include
them in the existing Q-codes.
c. Medical Nutrition Therapy Services
In 2000, the Health Care Professional Advisory Committee (HCPAC)
recommended that we assign work RVUs to three new medical nutrition
therapy (MNT) CPT codes: 97802, Medical nutrition therapy; initial
assessment and intervention, individual, face-to-face with the patient,
each 15 minutes at 0.45 RVUs; 97803, Medical nutrition therapy; re-
assessment and intervention, individual, face-to-face with the patient,
each 15 minutes at 0.37 RVUs; and 97804, Medical nutrition therapy;
group (two or more individuals), each 30 minutes at 0.25 RVUs. However,
during rulemaking for the CY 2001 PFS final rule, we indicated that MNT
was not covered because there was no statutory benefit category that
would allow medical nutritionists to bill these services. We also did
not accept the HCPAC recommendations for work RVUs for these MNT
services because the codes were designed for use only by nonphysicians.
The following year, section 105(c) of the Medicare, Medicaid, and State
Child Health Insurance Program Benefits Improvement Protection Act of
2000 (BIPA) (Pub. L. 106-554) provided for the coverage of MNT services
when furnished by registered dietitians or nutritional professionals at
85 percent of the amount that a physician would be paid for the same
services. As a result, we established values for these MNT services for
the CY 2002 PFS. In keeping with our earlier decision, we did not
assign the HCPAC-recommended work values. However, the associated work
value for each code was utilized in the conversion of work to clinical
labor time for MNTs as part of the PE component. At that time we
received several comments, including one from the American Dietetic
Association (ADA), urging us to adopt the work values recommended by
the HCPAC.
More recently, the ADA has requested us to reconsider our decision
not to accept the HCPAC recommended work RVUs. The ADA contends that
the payment rate established by section 105(c) of BIPA, 85 percent of
the PFS amount that would be paid for the same service if furnished by
a physician, is based on the premise that work values are inherent to
these MNT services. The ADA believes that without work RVUs, the
payment for these services does not reflect 85 percent of what a
physician would be paid for performing the same service. Because these
MNT codes were created specifically for MNT professionals, the ADA
compared the work associated with their services to physician E/M
services of CPT codes 99203 and 99213, which have respective work RVUs
of 1.34 and 0.67.
After reviewing the issues and relevant arguments raised by the
ADA, we are persuaded that it would be appropriate to include work RVUs
for the MNT services. Consequently, we proposed to establish work RVUs
for each code at the level previously recommended by the HCPAC, as
follows:
CPT code 97802 = 0.45 RVUs.
CPT code 97803 = 0.37 RVUs.
CPT code 97804 = 0.25 RVUs.
Because we proposed to add the work RVUs to these services, the MNT
clinical labor time in the direct input database will be removed.
Additionally, two HCPCS codes, G0270, MNT subs tx for change dx and
G0271, Group MNT 2 or more 30 mins were created to track MNT services
following the second referral in the same year and these HCPCS codes
correspond to CPT codes 97803 and 97804, respectively. Therefore, we
also proposed to add the same work RVUs to these HCPCS codes and to
delete the MNT clinical labor inputs from the PE database upon adoption
of this policy. We encouraged specialty societies and other
professional groups to comment on this proposal.
Comment: We received comments from the ADA, several MNT providers,
one drug company, the National Kidney Foundation and one Congressional
member all supporting our decision to establish work RVUs for the MNT
services. Further, several commenters joined the ADA in requesting an
increase in the proposed work RVUs. In justification of their request,
the ADA and other commenters compared these services to CPT codes 99213
(mid-level E/M service) and 90804 (individual psychotherapy service).
These commenters also requested that the total work RVUs for 97802,
97803, and G0270 be equal and the total work RVUs for CPT code 97804
and HCPCS code G0271 also be equal. In addition, the ADA provided
specific supplies and equipment to be added to the PE database in order
to facilitate correct PE calculations for these codes.
Response: We appreciate that the commenters acknowledge and support
our decision to establish work RVUs for the 5 MNT services. However, we
do not believe it would be appropriate to accommodate the request to
increase these work RVUs. We believe that the HCPAC work
recommendations best represent the MNT services and encourage the ADA
to utilize the established RUC or HCPAC processes to further assess
valuation of their services. For this reason, we will maintain the
proposed work values for all MNT CPT/HCPCS codes. However, we have
added the supplies and equipment to the PE database as requested.
d. Surgical Pathology Codes
The College of American Pathologists commented on the equipment
times assigned to CPT codes 88304 and 88305 in the basic surgical
pathology family of codes. While all six codes in this family have been
refined by the PEAC, this refinement occurred at four separate PEAC
meetings. CPT codes 88304 and 88305 were refined at the first PEAC
meeting in April 1999 before time standards were established for the
equipment at subsequent PEAC meetings when the other four CPT codes
88300, 88302, 88307, and 88309 were reviewed. Using our proposed
bottom-up PE methodology to value these codes, the lack of the
equipment time standards for CPT codes 88304 and 88305 create a rank-
order anomaly in this family. Consequently, the College of American
Pathologists, after reviewing and applying current standards for the
equipment times, submitted suggested revised equipment times to us. We
proposed to accept these times and the times will be reflected in the
PE database on our Web site (See the SUPPLEMENTARY INFORMATION section
of this final rule with comment period for directions on accessing our
Web site.)
Comment: The College of American Pathologists expressed
appreciation for these revisions to the equipment time to the surgical
pathology CPT codes.
Response: We appreciate the College of American Pathologists's
review of the PE direct inputs, which led to our
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proposal. We are finalizing our proposal for these changes in the
equipment times in the PE database.
e. PE Issues from Rulemaking for CY 2006
In the CY 2006 PFS final rule with comment period (70 FR 70116), we
explained that we were not implementing the PERC or other proposed PE
changes for CY 2006 due to issues with the PE methodology. In the CY
2007 PFS proposed rule, we proposed that the PERC and other PE changes
originally proposed for CY 2006 would be implemented and effective with
the CY 2007 PFS (71 FR 48987). The following subsections, (i) through
(x), summarize the PE proposals from the CY 2006 PFS final rule with
comment period.
(i) PE Recommendations on CPEP Inputs for CY 2006
We proposed to use a clinical labor time of 167 minutes for the
service period for CPT code 36522, Extracorporeal Photopheresis;
maintain the nonfacility setting PE RVUs for CPT code 78350, single
photon bone densitometry; and remove the PE inputs for the nonfacility
setting for CPT codes 76975, GI endoscopic ultrasound, and 15852,
Dressing change not for burn. (70 FR 70136 through 70137)
(ii) Supply Items for CPT Code 95015 (Which is Used for Intradermal
Allergy Tests with Drugs, Biologicals, or Venoms)
We proposed to implement the allergy and immunology specialty's
recommendation to change the test substance in CPT code 95015 to venom,
at $10.70 (from single antigen, at $5.18) and the quantity to 0.3 ml
(from 0.1 ml) (70 FR 70138).
(iii) Flow Cytometry Services
Based on information from the society representing independent
laboratories, we proposed to implement the following direct PE inputs:
Clinical Labor: We proposed to change the staff type in
the service (intra) period in both CPT codes 88184 and 88185 to
cytotechnologist, at $0.45 per minute (currently lab technician, at
$0.33 per minute).
Supplies: We proposed to change the antibody cost for both
CPT codes 88184 and 88185 to $8.50 (from $3.544).
Equipment: We proposed to add the following equipment to
CPT code 88184:
Computer.
Printer.
Slide strainer.
Biohazard hood.
Wash assistant.
FAC loader.
We proposed to add a computer and printer to the equipment for CPT
code 88185 (70 FR 70138).
(iv) Low Osmolar Contrast Media (LOCM) and High Osmolar Contrast Media
(HOCM)
Because separate payment is available for both types of contrast
media, we proposed to delete LOCM and HOCM from the PE database in this
final rule with comment period (70 FR 70138).
Comment: Several specialty organizations expressed their
appreciation for implementing the recommendations for the PE changes in
section (i) of this section to CPT codes 36522, 78350, 76975 and 15852;
in section (ii) of this section for changing the amount and test
substance inputs in CPT 95015; in section (iii) of this section for
implementing the PE changes to the flow cytometry CPT codes 88184 and
88185; and in section (iv) of this section for removing the LOCM and
HOCM from the PE database because they are separately reimbursed.
Response: We will implement these changes for CY 2007.
(v) Imaging Rooms
We proposed to implement the updates for the contents and prices of
5 ``rooms'' used in imaging procedures including--
Basic radiology room;
Radiographic-fluoroscopic room;
Mammography room;
Computed tomography (CT) room; and
Magnetic resonance imaging (MRI) room (70 FR 70139).
Comment: Two commenters questioned why the contents and prices for
ultrasound ``rooms'' were not being updated in CY 2007 proposed rule.
Response: The imaging rooms proposals that appeared in this year's
proposed rule were deferred from the previous year. These imaging rooms
all contained equipment without updated pricing information. The two
ultrasound rooms, general and vascular, were valued during the
repricing of the equipment for the PE database that occurred during
rulemaking for CY 2005.
(vi) Equipment Pricing for Select Services and Procedures
We proposed to accept the following equipment pricing information
provided by various specialty societies for select services and
procedures as discussed in the CY 2006 PFS final rule with comment
period (70 FR 70139).
Equipment pricing for certain radiology services received
from the ACR as presented in Table 15 of the CY 2006 PFS proposed rule.
Equipment pricing on the ultrasound color doppler
transducers and vaginal probe received from the American College of
Obstetrics and Gynecology (ACOG).
Equipment pricing for CPT code 36522, extracorporeal
photopheresis.
Pricing of the EMG botox machine used in CPT code 92265 as
presented by the American Academy of Ophthalmology (AAO).
(vii) Supply Item for In Situ Hybridization Codes (CPT Codes 88365,
88367, and 88368)
We proposed to implement the Society for Clinical Pathologists'
request to change the probe quantity to 1.5 for CPT code 88367, In situ
hybridization, auto, which is equal to the quantity in the other two
codes in the family.
(viii) Supply Item for Percutaneous Vertebroplasty Procedures (CPT
codes 22520 and 22525)
Based on documentation provided by the Society for Interventional
Radiology, we proposed to implement a new price of $696.00 for the
vertebroplasty kit, to replace a temporary price of $660.50 that was a
placeholder price from the CY 2006 PFS final rule with comment period
(70 FR 70139).
(ix) Clinical Labor for G-Codes Related to Home Health and Hospice
Physician Supervision, Certification and Recertification
We proposed to apply the refinements made to the PE inputs to CPT
codes 99375 and 99378 for home health and hospice supervision to four
G-codes that are related to home health and hospice physician
supervision, certification and recertification, G0179, GO180, GO181,
and GO182. These G-codes are incorrectly valued for clinical labor.
These G-codes are crosswalked from CPT codes 99375 and 99378, which
underwent PEAC refinement in January 2003 for the CY 2004 PFS. However,
at that time we inadvertently did not apply the new refinements to
these specific G-codes (70 FR 70139 through 70140).
(x) Programmers for Implantable Neurostimulators and Intrathecal Drug
Infusion Pumps
Although we had initially proposed in the CY 2006 PFS proposed rule
to remove two programmers from the PE database (EQ208 for medication
pump from two codes (CPT codes 62367 and 62368) and EQ209 for the
neurostimulator from 8 codes (CPT codes 95970 through 97979)), based on
comments received as discussed in the
[[Page 69647]]
CY 2006 PFS final rule with comment period (70 FR 70140), we determined
that we will retain these programmers in the database. In addition, we
added ``with printer'' to the description of EQ208, based on comments
received. We proposed to implement these decisions for CY 2007.
Comment: Commenters expressed appreciation for the implementation
of these changes that had been deferred from the previous year.
Response: We will implement the PE changes noted in sections (vi)
through (x) of this section for CY 2007.
f. Other PE Issues for CY 2007
(i) Clarification With Respect to Non-Facility PE RVUs
In the CY 2006 PFS final rule with comment period (70 FR 70335), we
provided a clarification in Addendum A concerning use of ``NA'' in the
PE RVU columns for Addendum B. Commenters requested that further
clarification be made concerning the payment amount for procedures
performed in the non-facility setting if there is an ``NA'' in the non-
facility PE RVU column. In the CY 2007 PFS proposed rule, we clarified
that our policy is that the service will be paid at the facility PE RVU
rate if the Medicare carrier pays for the service in the non-facility
setting. In the CY 2007 PFS proposed rule (71 FR 48982), we proposed
revisions to Addendum A to include this clarification.
Comment: Commenters expressed appreciation for this clarification.
Response: We have modified Addendum A to include this
clarification.
(ii) Supply for CPT Code 50384, Removal (Via Snare/Capture) of
Internally Dwelling Ureteral Stent Via Percutaneous Approach, Including
Radiological Supervision and Interpretation
Upon review of the RUC-recommended direct PE inputs for CPT code
50384, a new procedure for the 2006 CPT codes, we identified the
inappropriate inclusion of a ureteral stent that we proposed to delete
for CY 2007. We believe that the addition of the ureteral stent, valued
by the specialty at $162, to CPT code 50384, which is the procedure for
the removal of a stent, was an inadvertent error by the specialty
during the April 2005 RUC meeting.
Comment: The commenters agreed with the deletion of the ureteral
stent from this service.
Response: This stent will be removed from CPT code 50384 in the PE
database.
(iii) Cardiac Monitoring Services
We requested more specific PE information on remote cardiac event
monitoring services in the CY 2007 PFS proposed rule as a result of a
comment and response discussion in last year's final rule related to
these services and an inappropriate fit with the direct PE model used
for typical physicians' services. These services are overwhelmingly
performed by specialized IDTFs that are paid under the PFS, but
frequently maintain more extensive operating hours than the typical
physician office due to the characteristics of cardiac monitoring
services. Specifically, we requested data to indicate the typical
number and type of transmissions or other encounters per day between
the beneficiary and the IDTF for each of the remote monitoring
services. We also requested the number and type of clinical staff, as
well as the corresponding times, that are necessary to ensure that
appropriate services are available for each patient. Additionally, we
requested assistance in identifying any other direct PE inputs for
typical supplies and equipment relating to these services, and any data
that would reflect indirect PE, such as overhead and non-clinical
payroll expenses. Because we believe that the following codes,
predominately performed by specialized IDTFs, represent atypical PE
scenarios, we requested PE information for these services:
Cardiac event monitoring (CPT codes 93271, 93012 and
93270).
Pacemaker monitoring (CPT codes 93733 and 93736).
Holter monitoring (CPT codes 93232, 93226, 93231 and
93225).
INR monitoring (HCPCS codes G0248 and G0249).
Comment: Several commenters voiced concern about the dramatic
decrease in the PE RVUs for these services and most agreed that the
remote cardiac monitoring services do not fit the PE model for
physicians' services and believed that the information that we
requested could be useful to value these technical services. One
commenter submitted the requested information after conducting a survey
of 7 large IDTFs specializing in these remote cardiac monitoring
services. For each of the 11 CPT/HCPCS codes referenced above in this
section, the commenter provided recommendations for the direct PE
inputs, including the type of clinical labor and the related minutes
for their service, the needed disposable supplies and the equipment
costs, the number of minutes in use, and the respective life of each
piece of equipment. In addition, two commenters suggested that CPT code
92326 (remote, real-time, wireless cardiac monitoring) be added to the
above list of services:
Response: We appreciate that the provider group conducted such a
detailed survey to capture the costs of these services. We have
reviewed the direct inputs that were forwarded by the commenter and
have accepted many of their recommendations, some with modifications,
for all these codes. For example, we used the ``discounted'' purchase
prices for the equipment which is our standard policy rather than the
additional list prices that were also included. The specific direct
inputs for the following CPT/HCPCS codes: 93012, 93271, 93270, 93733,
93736, 93232, 93226, 93231, 93225, G0248 and G0249 are included in the
PE database that is posted with this rule on the CMS Web site. We will
consider these inputs interim, for CY 2007, and will continue to work
with the provider group to appropriately value these services. For the
request to include CPT code 93236 in this list of codes, we would note
that this procedure is not valued in the nonfacility setting and has no
direct inputs. CPT code 93236 is discussed in the following comment and
response.
g. Specific PE Concerns Raised by Commenters
(i) Wireless Cardiac Monitoring
Comment: One commenter expressed concern about the impact of the PE
methodology proposal and stated that there is not a CPT code that
accurately represents ``remote, real-time cardiac monitoring through
wireless communications and computerized arrhythmia detection
technology'' service. The commenter requested that a HCPCS code be
created specifically for this service and provided direct input
recommendations that could be used to price this new code. In the event
that we could not create a HCPCS code, the commenter requested that the
direct inputs be applied to the CPT code 93236 which is currently being
used to bill for this service.
Response: We are reluctant to create a HCPCS code at this time
because the commenter has not demonstrated a compelling need for a
distinct code for this service. Because this code is currently not
valued in the nonfacility setting, we proposed to carrier price this
service for CY 2007. We suggest that if the commenter believes a
distinct code is necessary to describe this service, the provider
should work with the specialty and contact the CPT Editorial Panel to
pursue this matter. We will maintain
[[Page 69648]]
our proposal to carrier price this service for CY 2007.
(ii) Endovenous Ablation Services, CPT Codes 36475, 36476, 36478, and
36479
Comment: We received numerous comments with concerns about the
decrease in PE RVUs proposed for CY 2007. In addition, a few commenters
noted a disparity between the cost of supplies for the RF and the laser
ablation procedures, CPT codes 36475 and 36478, respectively. One
commenter supplied documentation to support that the price of the
endovascular laser kit, at $677, in the PE database is not typical.
This commenter presented a range of prices from $275 to $315 as
typical. The commenter also demonstrated that 3 other supplies listed
for CPT code 36478 were duplicated as they are part of the kit. Another
commenter noted a price of $360 for the laser kit.
Response: We reviewed the supplies in the laser kit and the other
supplies for this endovenous service and believe that the hydrophilic
guide wire, the vascular sheath and the vessel dilator are duplicated.
These items were removed from the database for CPT code 36478. In
addition, based on the information and documentation supplied, we used
the $360 laser kit to average with the existing price of $677 to obtain
the new price of $519. We have also made this change to the PE
database. While we realize that the PE RVUs were negatively impacted by
the change in the PE methodology, it is also important to ensure that
the direct inputs accurately reflect the typical resources used to
provide each service.
(iii) Development of Nonfacility PE for Arthroscopic Procedures
Comment: We received comments requesting that we establish direct
PE inputs for five arthroscopy codes for the nonfacility setting,
including CPT codes 29870, 29805, 29830, 29840 and 29900.
Response: The RUC discussed this request at its October 2006
meeting and determined that the procedures are not safe to perform in
the physician's office. We support the RUC's decision not to value
these arthroscopy procedures in the nonfacility setting and will
continue to use the ``NA'' indicator in the PE RVU column for the
nonfacility setting in Addendum B.
(iv) Audiologist Wage Rate
Comment: One commenter requested that we add 25 percent to the
professional audiologists wage rate per minute which is now $0.52. The
commenter contended that the fringe benefits factor was not applied at
the time we established the clinical labor rates for CY 2002.
Response: We used data from the Bureau of Labor Statistics (BLS) to
establish the base wage rate for audiologists when we repriced the
clinical staff wage rates for CY 2002. We also applied a 33.6 percent
fringe benefit factor to all wage rates, including the wage rate for
audiology. Therefore, we will maintain the wage rate for audiologists
until the time that all clinical labor wages are updated in future
rulemaking.
(v) Medical Physicists Wage Rate
Comment: Several commenters recommended that we accept the 2005
survey data on hourly wages, inflated to 2006, that was presented by
the association representing medical physicists. They contend that we
inappropriately used the wage rate for health physicists, instead of
medical physicists, when we updated the clinical labor wage rates for
CY 2002.
Response: In the PFS final rule for CY 2002, we finalized our
proposal to price the physicist staff type on the average salary data
for all certified health physicists from the 1999 survey conducted by
the American Academy of Health Physics and the American Board of Health
Physics. At the time we were revising the wage rates, this was the best
information available. Further, the source of the majority of wage
rates in the CY 2002 PFS final rule was the BLS. In the case of medical
physicists, we were unable to obtain salary data from BLS. We agree
with the commenters that this revised 2005 salary data is more
appropriate than our current salary data. We will utilize this revised
data, deflated to 2002, to keep all salary data on the same scale. As a
result of this information, we will change the wage rate per minute for
the two following clinical staff types: (a) Medical physicists from
$1.21 to $1.523; and (b) medical dosimetrists/medical physicists from
$0.92 to $1.075.
(vi) Home Visit E/M Services
Comment: We received a comment that stated that the home care
clinical labor times are incorrectly reported in our PE database with
each lacking 6 minutes in the pre-service period. In addition, the
commenter stated that a supply item, specula tips, is missing in one
service. Another commenter voiced support for the efforts of the home
care physician group.
Response: We have verified that our PE database is correct. For the
CPT codes 99341, 99342, and 99343, there is a total 12 minutes labor
for each code, with 6 minutes assigned to the pre-service period and 6
minutes assigned to the postservice period. Also, the supply item the
commenters reported as missing is included in the PE database.
(vii) Supply Inputs for CPT 31730
Comment: Prior to the publication of the CY 2007 PFS proposed rule,
we received documentation from the association representing pulmonary
physicians that specified the contents of the fast track supply tray
for CPT code 31730. The specialty was complying with our request for
information on supply items needing specialty input in last year's
final rule.
Response: We thank the specialty group for its submission of the
fast track supply tray contents and note that we accepted this
documentation and the $750 price in our proposed rule. However, we
regret that we did not remove the duplicated supply items from the PE
database at that time. The following supplies will be removed from the
inputs for CPT 31730 because they are already contained in the fast
track tray: alcohol pads, 6 cc syringe with needle, 27G needle and 4x4
gauze pads. The PE RVUs that appear in this rule reflect the removal of
these supply items.
(viii) Supply Costs for CPT Code 58565
Comment: One commenter noted that the cost of the kit used for
hysteroscopic tubal implant for sterilization (supply code SA076) has
increased in price from $980 to $1245. The specialty society
representing gynecology and obstetrics services did not supply
supporting documentation.
Response: We appreciate that this commenter has reviewed the direct
inputs for accuracy. However, lacking any documentation to substantiate
this request for a higher price, we will maintain the $980 price for
the kit in the PE database for CY 2007. We will add this supply to the
table requiring specialty input and will review any documentation
provided by the specialty as part of a future rulemaking.
(ix) Bone Density Testing Services
Comment: Many commenters requested that we review the costs related
to bone density testing (DXA) services, particularly related to CPT
codes 76075 and 76076 used for detection and quantification of
osteoporosis. These commenters state that the current direct inputs in
the PE database identify the low cost pencil beam technology ($41,000)
as the equipment utilized in performing these DXA services in place of
the higher cost fan beam technology ($85,000). Commenters contended
that the
[[Page 69649]]
majority of densitometers sold are of the higher cost fan beam variety.
Another commenter noted that the DXA services using the fan beam
technology should also contain ``phantom'' equipment to be used to
perform the daily quality check on this equipment.
Response: We have changed the PE database to reflect the fan beam
DXA technology for CPT codes 76075 and 76076. In addition, we have
added, on an interim basis, the ``solid water calibration check
phantom'' to the equipment file in the PE database for the family of
codes using the fan beam technology for 15 minutes each, based on the
survey information presented by one commenter noting that these DXA
services are performed, on average, twice daily. We ask the medical
specialty to provide us with the correct information on the specific
``phantom'' used for the fan beam DXA technology, including pricing
verification. While reviewing the PE database for these services, we
discovered a rank order anomaly between CPT code 76075 and 76076 that
apparently is due to a change in the clinical labor from the April 2006
PERC meeting where CPT code 76075 was used as a reference code. We have
added back the 5 minutes of labor time in the PE database to CPT code
76075 to correct this rank order anomaly.
(x) PE Missing for CPT Code 28890
Comment: One commenter stated that the non-facility inputs for CPT
code 28890, Extracorporeal shock wave, high energy, performed by a
physician, requiring anesthesia other than local, including ultrasound
guidance, involving the plantar fascia, lacked enough clinical staff to
assist the physician with applying the regional (anesthetic) block and
that the ultrasound equipment was not included in the PE database for
this ``shock-wave'' service.
Response: In the CY 2006 PFS final rule with comment, we assigned
nonfacility PE inputs for CPT code 28890, because we believed these
services were being performed in the office. (This assignment of PE for
CPT 28890 is discussed in a subsequent section of this rule.) Since the
``shock-wave'' machine was the only equipment listed in the PE
database, we added the ultrasound equipment for 36 minutes, to the PE
database, but we question whether additional staff is needed to assist
the physician during the procedure since one nurse ``blend'' (RN/LPN/
MTA) staff type is currently assigned for this procedure. We would
entertain future discussions on this issue with interested parties,
including the specialty organization involved in performing this
procedure in the office. For CY 2007, we have maintained the current
clinical labor assignment in the PE database.
h. Concerns About Decreases in PE RVUs for Women's Health and Other
Services
Many commenters raised concerns regarding payment for services that
affect women's health:
Comment: We received many comments regarding the proposed decrease
in PE RVUs for either specific services or for given specialties. Many
commenters raised concerns regarding payment for services that affect
women's health.
Commenters opposed the proposed decrease in payment for the axial
bone density testing (DXA) service, CPT code 76075, which is used for
detection and quantification of osteoporosis, and CPT code 76077, which
is used for vertebral fracture assessment. The commenters raised the
concern that the proposed decrease in payment for these services would
severely restrict patient access to bone density testing, thereby
undermining our effort to effectively screen Medicare beneficiaries for
osteoporosis and vertebral fractures. These commenters identified what
they believed to be flaws in the direct input data and with the
utilization rate applied to the DXA machine. The commenters also
requested that we keep the payment for these services at the current
level.
We received several comments that expressed concern about the
decrease in payment for computer-aided detection (CAD) services, CPT
codes 76082 and 76083, both add-on procedures that are billed in
combination with an appropriate mammography service. The commenters
stressed that CAD systems for mammography are diagnostic tools that can
increase breast cancer detection rates, especially in the early stages.
One commenter contended that the decrease in payment for this service
could cripple the ability of physicians to offer this highest quality
screening service to the broadest patient population.
Several commenters expressed concern about the proposed RVUs for
the various radiation therapy codes involved in breast brachytherapy,
as well as brachytherapy for ovarian and cervical cancer. A society
representing brachytherapy stated that the proposed reductions may
force providers to resort to other less beneficial cancer treatments.
One commenter contended that the proposals could deny a greater number
of African American women access to an important, patient friendly and
proven breast cancer treatment. The above concerns were echoed in
comments from a society representing NPs and a society concerned with
research on women's health.
We also received several comments regarding a related service, CPT
code 19296, Placement of a radiotherapy afterloading balloon catheter
into the breast for interstitial radioelement application. Commenters
expressed concern regarding the proposed decrease in payment for this
service and predicted that this decrease from 129.74 RVUs in 2006 to
89.31 RVUs in 2010 would cause the service not to be offered in a
physician's office to Medicare patients.
We received comments that expressed concern regarding the proposed
decrease in payments for a number of other services. These include: The
surgical hysteroscopy service, CPT code 58565; the chemodenervation
procedures, CPT codes 64612, 64613 and 64614; the EMG-guided Botox
therapy, CPT 92265; and endovenous ablation procedures, CPT codes
36475, 36476, 36478 and 36479.
We also received comments regarding the effect on certain
specialties of our proposed payments. One commenter stated that the
proposed cuts could diminish Medicare patients' access to cardiac care.
Many commenters requested that we reconsider the cuts for
interventional radiology, and others requested that we reverse any
decrease for anesthesiology. Another commenter expressed concern
regarding the decreases for this specialty. Commenters opposed the
changes to the RVUs that would cause a total 14 percent decrease in
payment for clinical social workers. In addition, other commenters
expressed concern regarding our proposed payments for gastroenterology,
neonatology, pain management, radiosurgery and phlebology.
Response: We understand the concern expressed by all of these
commenters. However, payments made for services on the PFS can only
reflect, in a budget neutral manner, the relative resources required to
perform each service. With the exception of the requested changes to
the equipment direct inputs for the DXA service, the commenters have
not provided specific information regarding the relative resources
required for the services in question that would support the requested
changes in payment. We also do not believe it would be equitable to
keep the payment for any specific service at the current rate when
there are many other services that will see decreases in payment. We
would note that one of the main reasons for the proposed 4-year
transition of our new PE methodology was to give specialties
[[Page 69650]]
and practitioners the opportunity to work with us to determine whether
any changes in our payment calculation for such services is warranted
and we are open to further discussion on this issue.
We also applaud the commenters who have stressed the importance of
women's health issues. We certainly share their commitment to ensuring
that those services that meet the health care needs of women remain
accessible to our beneficiaries. In addition, we appreciate the
important role that all of the preventive screening services play in
helping to maintain the health of these beneficiaries. In response to
comments, we have revised our equipment database to reflect the correct
DXA equipment. It should also be noted that, although payment for the
CAD service itself is decreasing, payment for most mammography services
is increasing, which could potentially offset any reductions to the
providers of CAD. However, we will request that the RUC review again
the PE inputs for the DXA and CAD services to ensure that the direct
inputs associated with these services are accurately reflected in our
PE database.
i. Equipment Utilization and Interest Rate Assumptions
Comment: Many specialty societies, MedPAC, and the RUC all offered
comments about the 11 percent interest rate and the 50 percent
utilization rate used to calculate the price per minute for each piece
of equipment. MedPAC stressed the importance of obtaining a reliable
source for updating the yearly interest rate that physicians would pay
when borrowing money to buy equipment. They believe that we should
select the Federal Reserve Board because of the frequent updating,
issued quarterly. MedPAC notes that interest rates, of more than one
year, ranged from 5.3 percent to 6.0 percent over the past 5 years.
Other commenters suggested that we adopt the prime interest rate plus 2
percent, while the RUC and several specialty societies noted that we
should select a competitive market rate. One commenter suggested using
caution in our selection process and requested that the interest rate
be examined before future changes are made.
For updating the current 50 percent utilization rate, many
commenters, including the MedPAC and the RUC, suggested that this rate
should be higher. These comments stressed that by using the assumption
that equipment is in use 50 percent of the time when the utilization is
actually higher, our price per minute would be too high. The RUC
recommended we use a rate higher than 50 percent and permit individual
specialty societies to present support for lower rates for specific
equipment items. While the overall comments contained a broad array of
suggested revisions to the utilization rate, a few specialty
organizations believed that the utilization rate should be lower than
50 percent. Several comments, specific to equipment for bone density
testing (DXA), believe the utilization rate to be closer to 20 percent
for these services performed in primary care physicians' offices and
requested that we review this utilization to more appropriately measure
the actual utilization of this equipment. MedPAC suggested that we
begin our updating process by looking at the higher-priced equipment,
and noted a study it conducted of imaging providers in six markets that
indicated 70 percent and 90 percent utilization rates for CT and MRI,
respectively. A few commenters noted that they would like for us to
assign code-specific equipment utilization rates, although they did not
forward possible avenues for us to follow in making the determinations
of these assignments.
Response: We agree with commenters that the proposed interest rate
of 11 percent and the proposed 50 percent utilization rate should be
examined for accuracy. We are committed to working with all interested
parties to define the most accurate utilization and interest rate
information for equipment used in the performance of physicians'
services. We do not believe that we have sufficient empirical evidence
to justify a change in this final rule, but we will continue to work
with the physician community to examine, and potentially revise, these
estimates in future rulemaking. We have used the 11 percent interest
rate and the 50 percent utilization rate to determine the valuation for
equipment reflected in the PE RVUs in Addendum B.
j. Further Review of PE Direct Inputs
Comment: Several commenters, including the RUC and MedPAC,
recommended that we establish an update process to ensure that the
direct PE inputs--wage rates of clinical staff, purchase price of
supplies, and purchase price of equipment--are updated for completeness
and accuracy. MedPAC requested that we establish a timeline, recurring
at least every 5 years, for the comprehensive review of the PE database
direct inputs. Both MedPAC and the RUC made suggestions that the new,
higher-priced supplies and equipment may need to be updated more
frequently because their prices may decrease over time as other
companies manufacture them.
Response: We appreciate the commenters' remarks regarding the
establishment of a regular update process for the direct inputs
utilized in the calculation of resource-based PE RVUs. We plan to
examine this issue with both the RUC and interested specialty
organizations, as well as with the medical community to determine the
most useful approach to updating our direct PE inputs. Additionally, we
encourage interested parties to continue working with the RUC to
develop direct inputs for those services absent inputs and to correct
any errors contained in our direct input database.
k. Supply and Equipment Items Needing Specialty Input
We have identified certain supply and equipment items for which we
were unable to verify the pricing information in Table 3: Supply Items
Needing Specialty Input for Pricing and Table 4: Equipment Items
Needing Specialty Input for Pricing. In our CY 2007 PFS proposed rule,
we listed both supply and equipment items for which pricing
documentation was needed from the medical specialty societies and, for
many of these items, we received sufficient documentation in the form
of catalog listings, vendor Web sites, invoices, and manufacturer
quotes. We have accepted the documented prices for many of these items
and these prices are reflected in the PE RVUs in Addendum B of this
final rule with comment period. For the items listed in Tables 3 and 4,
we are requesting that commenters provide pricing information on items
in these tables along with acceptable documentation, as noted in the
footnote to each table, to support recommended prices.
In Tables 5 and 6, we have listed new supplies and equipment from
the new CPT codes for CY 2007 that are discussed elsewhere in this
final rule with comment period. These items have been added to the PE
database and, where priced, are reflected in the PE RVUs in Addendum B.
BILLING CODE 4120-01-P
[[Page 69651]]
[GRAPHIC] [TIFF OMITTED] TR01DE06.004
[[Page 69652]]
[GRAPHIC] [TIFF OMITTED] TR01DE06.005
[[Page 69653]]
[GRAPHIC] [TIFF OMITTED] TR01DE06.006
BILLING CODE 4120-01-C
[[Page 69654]]
Table 5.--Practice Expense Supply Item Additions for CY 2007
----------------------------------------------------------------------------------------------------------------
*CPT
code(s)
Equip code Supply description Unit Unit price associated Supply category
with item
----------------------------------------------------------------------------------------------------------------
NA............... Agent, embolic \1\....... Vial............. ............ 37210 Accessory,
Procedure.
NA............... Bolster covers, Item............. 0.06 96904 Gown, drape.
disposable.
NA............... Filter, mouthpiece...... Unit............. 4.6 95012 Infection control.
NA............... Gas, argon.............. Cu ft............ 0.25 19105 Accessory,
Procedure.
NA............... Kit, capsule, ESO, Kit.............. 450 91111 Kit, Pack, Tray.
endoscopy w-application.
NA............... Kit, gold markers, Kit.............. 119 55876 Kit, Pack, Tray.
fiducial, 3 per kit.
NA............... Probe, cryoablation, Item............. 1589 19105 Accessory,
(Viscia ICE 30 or 40). Procedure.
----------------------------------------------------------------------------------------------------------------
*CPT codes and descriptions only are copyright 2007 American Medical Association. All Rights Reserved.
Applicable FARS/DFARS77373y.
1. Price verification needed. Item(s) added to table of equipment requiring specialty input.
Table 6.--Practice Expense Equipment Item Additions for CY 2007
----------------------------------------------------------------------------------------------------------------
*CPT
code(s)
Equip code Equipment description Life Unit price associated Equipment category
with item
----------------------------------------------------------------------------------------------------------------
NA.................. AV projection system 5 3800 70554 IMAGING EQUIP.
(integrated headphone,
video goggles, transducer,
control unit w-remote-
Cinema Vision).
NA.................. camera mount-floor \2\..... 15 \1\ 2300 96904 OTHER EQUIPMENT.
NA.................. cross slide attachment \2\. 10 \1\ 500 96904 OTHER EQUIPMENT .
NA.................. cryoablation system, 3 24950 19105 OTHER EQUIPMENT.
fibroadenoma.
NA.................. dermal imaging software \2\ 5 \1\ 4500 96904 OTHER EQUIPMENT.
NA.................. dermoscopy attachments \2\. 5 \1\ 650 96904 OTHER EQUIPMENT.
NA.................. Gammaknife................. 7 3870000 77371 IMAGING EQUIP.
NA.................. generator, spine, IDET, w- 5 28299 22526 OTHER EQUIPMENT.
extension. 22527
NA.................. genetic counseling, 5 ........... 96040 DOCUMENTATION.
pedigree, software \2\.
NA.................. image-acquisition software 3 108807 70554 IMAGING EQUIP.
and hardware (Brainwave
RealTime, PA, Hardware).
NA.................. lens, macro, 35-70 mm \2\.. 5 ........... 96904 OTHER EQUIPMENT.
NA.................. monitoring system, nitric 5 39200 95012 OTHER EQUIPMENT.
oxide w-computer (Acerine,
NIOX).
NA.................. radioactive source \3\..... ........... ........... 77371 IMAGING EQUIP.
NA.................. speakers, sound field 5 1775 92640 OTHER EQUIPMENT.
(brainstem implant).
NA.................. SRS system, Lincac......... 7 4350000 77372 IMAGING EQUIP.
NA.................. SRS system, SBRT, six- 7 4000000 77373 IMAGING EQUIP.
systems, average.
NA.................. strobe, 400 watts 10 \1\ 1500 96904 OTHER EQUIPMENT.
(Studio)(2) \2\.
----------------------------------------------------------------------------------------------------------------
*CPT codes and descriptions only are copyright 2007 American Medical Association. All Rights Reserved.
Applicable FARS/DFARS77373y.
1. Prices interim for CY 2007--Acceptable documentation required for price verification.
2. Price verification needed. Item(s) added to table of equipment requiring specialty input.
3. Discussion with CMS necessary to establish appropriate value.
B. Geographic Practice Cost Indices (GPCIs)
Section 1848(e)(1)(A) of the Act requires us 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 PE 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, in consultation with
appropriate physician representatives, to review the GPCIs at least
every 3 years and allows us to make adjustments based on our review.
This section of the Act also requires us to phase-in the adjustment
over 2 years, implementing only one-half of any adjustment in the first
year if more than 1 year has elapsed since the last GPCI revision. CMS
is currently working with Acumen, LLC to review and revise the GPCIs in
accordance with the requirement that GPCIs be revised at least every 3
years. We expect to implement any revisions based on our review in
January 2008.
In addition, section 412 of the MMA amended section 1848(e)(1) of
the Act to establish a floor of 1.0 for the work GPCI for any locality
where the GPCI would otherwise fall below 1.0 for purposes of payment
for services furnished on or after January 1, 2004 and before January
1, 2007. Beginning on January 1, 2007, the 1.00 floor will be removed
and the work GPCI will revert to the fully implemented value. The
values for the work GPCI and subsequent changes to the geographic
adjustment factor (GAF) published in the CY 2007 PFS proposed rule
reflect the removal of the 1.0 floor. For many payment localities, this
change had no impact on the GAF; however, the GAFs for a number of
payment localities were reduced due to this change. The impact of this
change on the GAFs for those payment localities was shown in Table 3 of
the CY 2007 PFS proposed rule (71 FR 48993).
In the CY 2007 PFS proposed rule, we also published the proposed
GPCIs for
[[Page 69655]]
2007 in Addendum D and the proposed GAFs for 2007 in Addendum E (71 FR
49246 through 49249). The GPCIs shown in Addendum D represent the fully
implemented value and reflect 2007 BN scaling coefficients provided by
our Office of the Actuary.
In the CY 2005 PFS proposed rule, we discussed issues relating to
changes to the GPCI payment localities (69 FR 47504). In that proposed
rule, we noted that we look for the support of a State medical society
as the impetus for changes to existing payment localities. Because the
GPCIs for each locality are calculated using the average of the county-
specific data from all of the counties in the locality, removing high
cost counties from a locality will result in lower GPCIs for the
remaining counties. Therefore, because of this redistributive impact,
we have refrained, in the past, from making changes to payment
localities unless the State medical association provides evidence that
any proposed change has statewide support.
We requested suggestions on alternative ways that we could
administratively reconfigure payment localities that could be developed
and proposed in future rulemaking. In addition, MEDPAC and the General
Accounting Office (GAO) have both expressed interest in studying the
physician payment localities. We intend to work with both groups to
study our current methodology and develop alternative options.
We received the following comments in response to our GPCI
proposals.
Comment: During the comment period, commenters advised us of two
errors in Table 3 (there were two entries for Kansas and there was a
mistake in the equation for calculating the GAF). We were also advised
of typographical errors in Addendum D.
Response: We appreciate that these were brought to our attention.
Table 7 contains the corrected information and we have corrected
Addendum D in this final rule.
TABLE 7.--Payment Localities With Negative Percent Change in GAF \1\
Between 2006 and 2007 Due to Removal of the 1.000 Work Floor
------------------------------------------------------------------------
Percent
Locality name 2006 GAF 2007 GAF change
------------------------------------------------------------------------
Fort Worth, TX................... 0.998 0.996 -0.17
Rest of Michigan................. 0.986 0.984 -0.20
Rest of New York................. 0.952 0.950 -0.21
Rest of Maryland................. 0.982 0.978 -0.36
Metropolitan St. Louis, MO....... 0.978 0.974 -0.41
Rest of Pennsylvania............. 0.950 0.946 -0.44
Ohio............................. 0.970 0.966 -0.44
Austin, TX....................... 1.020 1.015 -0.47
New Hampshire.................... 1.010 1.005 -0.50
Minnesota........................ 0.980 0.975 -0.53
Galveston, TX.................... 0.991 0.986 -0.54
Metropolitan Kansas City, MO..... 0.987 0.981 -0.56
Fort Lauderdale, FL.............. 1.022 1.016 -0.59
Arizona.......................... 0.999 0.993 -0.65
Wisconsin........................ 0.956 0.950 -0.65
Colorado......................... 0.998 0.991 -0.67
East St. Louis, IL............... 1.003 0.996 -0.68
New Orleans, LA.................. 0.984 0.977 -0.73
Rest of Washington............... 0.984 0.976 -0.77
Indiana.......................... 0.937 0.930 -0.79
Beaumont, TX..................... 0.951 0.942 -0.96
Alabama.......................... 0.923 0.914 -0.99
Virginia......................... 0.958 0.948 -1.06
Southern Maine................... 0.992 0.981 -1.09
Rest of Georgia.................. 0.943 0.932 -1.14
Tennessee........................ 0.933 0.921 -1.27
Utah............................. 0.960 0.948 -1.30
South Carolina................... 0.930 0.917 -1.41
Rest of Illinois................. 0.952 0.938 -1.43
Rest of Florida.................. 0.982 0.968 -1.45
West Virginia.................... 0.942 0.928 -1.47
North Carolina................... 0.951 0.936 -1.55
New Mexico....................... 0.947 0.932 -1.57
Rest of Louisiana................ 0.936 0.919 -1.78
Kentucky......................... 0.932 0.915 -1.80
Kansas*.......................... 0.936 0.919 -1.81
Rest of Oregon................... 0.946 0.929 -1.81
Vermont.......................... 0.968 0.950 -1.82
Virgin Islands................... 1.007 0.989 -1.83
Rest of Texas.................... 0.947 0.929 -1.87
Idaho............................ 0.922 0.904 -1.91
Iowa............................. 0.927 0.909 -1.97
Rest of Maine.................... 0.936 0.916 -2.14
Oklahoma......................... 0.913 0.893 -2.14
Mississippi...................... 0.919 0.898 -2.31
Arkansas......................... 0.905 0.884 -2.34
Puerto Rico...................... 0.905 0.883 -2.44
Nebraska......................... 0.925 0.902 -2.44
Wyoming.......................... 0.934 0.910 -2.55
[[Page 69656]]
Montana.......................... 0.928 0.902 -2.83
Rest of Missouri*................ 0.910 0.883 -2.97
North Dakota..................... 0.924 0.895 -3.16
South Dakota..................... 0.922 0.891 -3.35
------------------------------------------------------------------------
\1\ Calculation for the GAF: (0.52466*work gpci) + (0.03865*mp gpci) +
(0.43669*pe gpci)
Comment: We received several comments indicating that the GPCIs for
Puerto Rico are inadequate because they do not take into consideration
the higher costs of living in Puerto Rico. Commenters are concerned
that physicians in Puerto Rico will relocate to areas with higher
GPCIs. Their comments focused on suggested revisions to the data used
in calculating the GPCIs for Puerto Rico with the intent of raising the
GPCI for Puerto Rico.
Response: We want to ensure that beneficiaries have access to high
quality care in all parts of the United States; however, we do not use
relative costs of living in the calculation of the GPCIs as the
commenters are requesting. Relative costs of living among payment
localities are already accounted for within other measures of relative
resource cost that we use in calculating GPCIs, and we do not believe
it would be appropriate to use different measures of resource cost for
some localities than are used for others.
Comment: We received numerous comments reflecting concerns about
the negative impact on physician payments resulting from removal of the
MMA-mandated floor of 1.0 on the physician work GPCI. Comments also
stated that GPCIs should not be applied to physician work as a general
policy.
Response: The 1.000 floor is being removed for services furnished
after December 31, 2006, because the MMA provision established the
floor only for services furnished on or after January 1, 2004, and
before January 1, 2007. We do not have the legal authority to extend
application of the floor beyond the statutory timeframe. In addition,
application of GPCIs to the work RVUs is required by the statute.
Comment: We received numerous comments requesting that we
administratively change the relative values for codes that have a TC
and a PC. The focus of the comments was that for many codes the TC has
a higher malpractice relative value than the PC. A suggestion was made
that we administratively change the TC RVU to equal the PC RVU.
Response: The commenters are suggesting a change in methodology for
calculating the malpractice RVUs. We did not make any proposals
relating to this methodology; therefore, comments relating to
malpractice RVU policy are outside the scope of this rule. We
appreciate the commenters' suggestions, and if we were to propose
changes to malpractice RVU policy, we would consider the commenters'
suggestions in future rulemaking.
Comment: Commenters indicated that they were troubled about the
data used in developing the GPCIs. Specifically, the proxy categories
used in the wage determination and the real estate data used in the
rent portion of the PE GPCI are of the greatest concern. They stated
that our data do not reflect true costs and, therefore, put many
practitioners in rural areas at a disadvantage and create inequities
between payment localities.
Response: We have previously addressed the issue of rental data in
the CY 2005 PFS final rule (69 FR 66261). We stated that the Department
of Housing and Urban Development (HUD) rental data may be the subject
of concern, but we believe it remains the best data source to fulfill
our requirements that the data be available for all areas, be updated
annually, and retain consistency area-to-area and year-to-year. In that
same rule, we discussed our belief that the wage proxies we use are the
best tools available for the development of the GPCIs. However, we will
consider the possibility of using different wage proxies or wage data
sources for some future update of the GPCIs.
C. Medicare Telehealth Services
As discussed in the CY 2007 PFS proposed rule (71 FR 48994),
section 1834(m)(4)(F) of the Act defines telehealth services as
professional consultations, office visits, and office psychiatry
services (identified as of July 1, 2000 by CPT codes 99241 through
99275, 99201 through 99215, 90804 through 90809, and 90862) and any
additional service specified by the Secretary. 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 December 31, 2002 Federal Register (67 FR 79988), we
established a process for adding services to or deleting services from
the list of Medicare telehealth services. This process provides the
public an ongoing opportunity to submit requests for adding services.
We assign any request to make additions 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 for 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.
Since establishing the process, we have added the following to the
list of Medicare telehealth services: Psychiatric diagnostic interview
examination; ESRD services with two to three visits per month and four
or more visits per month (although we require at least one visit a
month by a physician, CNS, NP, or PA to examine the vascular access
site); and individual medical nutritional therapy.
[[Page 69657]]
Requests to add services to the list of Medicare telehealth
services must be submitted and received no later than December 31 of
each CY to be considered for the next proposed rule. For example,
requests submitted before the end of CY 2005 are considered for the CY
2007 proposed rule. For more information on submitting a request for an
addition to the list of Medicare telehealth services, visit our Web
site at http://www.cms.hhs.gov/telehealth.
We received the following requests for additional approved services
in CY 2005: Nursing facility care; speech language pathology;
audiology; and physical therapy services.
After reviewing the public requests, we explained that section
1834(m)(4)(C)(ii) of the Act defines a telehealth originating site as a
physician's or practitioner's office; or a hospital, critical access
hospital (CAH), rural health clinic, or Federally qualified health
center (FQHC). SNFs are not defined in the statute as originating
sites. The authority to allow SNFs to serve as telehealth originating
sites is dependent upon HHS submitting the Report to Congress on
permitting a SNF to be an originating site (as required by the section
418 of the MMA) and the Secretary concluding in the Report that it is
advisable to include a SNF as a Medicare telehealth originating site
and that mechanisms could be established to ensure that use of a
telecommunications system does not serve as a substitute for the
required in-person physician or practitioner visits to SNF residents.
As discussed in the CY 2007 PFS proposed rule, given that SNFs are
not defined in the statute as a telehealth originating site and HHS is
currently reviewing the Report to Congress, it would not be appropriate
to approve nursing facility care for telehealth at this time.
In addition, we explained that the statute permits only a
physician, as defined by section 1861(r) of the Act or a practitioner
as described in section 1842(b)(18)(C) of the Act (CNS, NP, PA, nurse
midwife, clinical psychologist, clinical social worker, registered
dietitian or other nutrition professional), to furnish Medicare
telehealth services. Since speech language pathologists, audiologists
and physical therapists are not permitted under the statute to provide
and receive payment for Medicare telehealth services at the distant
site, we could not fully consider the request to add speech therapy,
audiology services and physical therapy to the list of Medicare
telehealth services (71 FR 48994).
We received the following comments on the Medicare telehealth
services.
Comment: Some commenters stated that the process for adding
services to the list of Medicare telehealth services does not require
an originating site to be approved prior to the approval of a service
for telehealth (and mentioned that we previously approved ESRD-related
visits furnished under the monthly capitation payment (MCP) for
telehealth without the approval of a dialysis center as an originating
site). The commenters believe that approving nursing facility services
for telehealth is mutually exclusive from the Report to Congress on
permitting a SNF to be a Medicare telehealth originating site and that
the findings of the report are not necessary to approve services for
telehealth. Moreover, the commenters requested that we approve nursing
facility care for telehealth (initial nursing facility care, subsequent
nursing facility care, nursing facility discharge services and other
nursing facility services) prior to the completion of the Report to
Congress on permitting a SNF to be an originating site.
Response: As previously discussed in this section, the MMA
specifically requires an evaluation of SNFs as potential originating
sites for the furnishing of telehealth services, and a Report to
Congress on such evaluation. The law provides the authority to add SNFs
as an originating site if the Secretary concludes in the report that it
is advisable to do so, and that mechanisms could be established to
ensure that the use of telehealth does not substitute for the required
in-person physician or practitioner visits to SNF residents (which
could have significant implications for the type of services we would
approve for telehealth). As such, we believe that a decision to add (or
not add) nursing facility care to the list of Medicare telehealth
services is related to the conclusions reached in the Report to
Congress on permitting a SNF to serve as an originating site. Given
that the conclusions of the Report to Congress are not final, we do not
believe that it would be appropriate to consider the request to add
nursing facility care to the list of Medicare telehealth services at
this time. We intend to review and consider the recommendations of the
Report to Congress once it is issued and would address the request to
approve nursing facility care for telehealth in future rulemaking.
Comment: One commenter expressed support for expanding telehealth
services and for allowing SNFs to serve as a telehealth originating
site.
Response: We appreciate the comment on the use of SNFs as
telehealth originating sites. As discussed earlier in this section, the
Report to Congress that could permit an SNF to serve as an originating
site is currently under review within HHS. We expect to address this
issue in future rulemaking after the Report to Congress is issued.
Comment: Two commenters requested clarification on whether the
public would need to resubmit a request to approve nursing facility
care for telehealth if it is determined that SNFs could be added as an
originating site.
Response: After the Report to Congress is issued regarding SNFs as
a telehealth originating site, we will address the requests to approve
nursing facility care for telehealth and discuss our review through
future rulemaking. It would not be necessary to resubmit a request to
approve nursing facility care for telehealth.
Comment: Commenters stated that we added medical nutritional
therapy (MNT) to the list of telehealth services in the CY 2006 PFS
rule without nutrition professionals being authorized to furnish
telehealth services. The commenters note that physical therapists,
audiologists, and speech language pathologists currently cannot furnish
Medicare telehealth services and requested an explanation as to why we
cannot also consider approving audiology, speech language pathology,
and physical therapy services for telehealth.
Response: The statute permits a physician, as defined by section
1861(r) of the Act or a practitioner as described in section
1842(b)(18)(C) of the Act (that is, CNS, NP, PA, nurse midwife,
clinical psychologist, clinical social worker, registered dietitian or
other nutrition professional), to furnish Medicare telehealth services.
Registered dietitians or nutrition professionals are included in the
statutory definition of practitioner under section 1842(c)(18)(C)(vi),
and thus, are permitted under the statute to furnish telehealth
services (and are the only practitioners permitted by the statute to
furnish MNT). As such, when approving individual MNT for telehealth,
registered dietitians and nutrition professionals as defined in Sec.
410.134 were added to the list of practitioners that may furnish and
receive payment for a telehealth service in the CY 2006 PFS final rule
with comment period (70 FR 70160).
In contrast, speech language pathologists, audiologists and
physical therapists are not permitted under the statute to provide and
receive payment for Medicare telehealth services at the
[[Page 69658]]
distant site. Therefore, we do not believe it would be appropriate to
consider adding audiology, speech language pathology, and physical
therapy services for telehealth.
Comment: Two commenters requested that we provide clarification on
when the telehealth Report to Congress, as required by section 223(d)
of the BIPA, would be completed and submitted to Congress. Another
commenter urged us to expedite the completion of the telehealth report
(as required by the BIPA).
Response: The Report to Congress on additional sites and settings,
practitioners, and geographic areas that may be appropriate for
Medicare telehealth payment, as required by section 223(d) of the BIPA,
is under development. We will work to expedite the completion of this
report.
D. Miscellaneous Coding Issues
The following sections address specific coding issues related to
payment for services under the PFS.
1. Global Period for Remote Afterloading High Intensity Brachytherapy
Procedures
CPT code 77783, Remote afterloading high intensity brachytherapy;
9-12 source positions or catheters, resides in a family of codes with
varying numbers of source positions. All of the codes in the family,
CPT codes 77781 through 77784, are currently designated as 90-day
global services. CPT codes 77781 through 77784 are used to treat many
clinical conditions, but primarily patients with prostate cancer,
breast cancer and sarcoma. Patients with any of these conditions
usually receive several treatments (2 through 10) over a 2 to 10-day
period of time. Due to the increasing variability in treatment
regimens, it is difficult to assign RVUs for a ``typical'' patient
based on a global period of 90 days.
Therefore, we proposed that this family of codes (CPT codes 77781,
77782, 77783 and 77784) be assigned a global period of ``XXX'', which
will permit separate payment each time the services are provided and
allow payment to be based on the actual service(s) provided. We will
request that the RUC revalue the work RVUs and the PE inputs for these
services if a change in the global period is finalized. However we
proposed, on an interim basis, to revise the work RVUs and PE inputs to
reflect the removal of the postoperative visit, CPT code 99212 that is
currently assigned to these services. The interim work RVUs for these
services are as follows:
CPT code 77781 = 1.21
CPT code 77782 = 2.04
CPT code 77783 = 3.27
CPT code 77784 = 5.15
We proposed to delete the registered nurse (RN) time in the
postservice period, as well as the patient gowns for the postservice
visit. We also noted that, to the extent that these services are
performed as staged procedures, providers may make use of applicable
modifiers.
We received the following comments on these coding issues.
Comment: Many commenters concurred with our proposal. However, some
commenters wanted either a reconsideration of the proposed work RVU
reduction, or if needed, a reduction in the CF. One commenter agreed
with the global period revision but recommended establishment of a
threshold for brachytherapy codes at a maximum of 10 percent per year.
Another commenter concurred with the change in the global period;
however, the commenter recommended no change in the work RVUs or a
reduction to the 1992 levels, and prior to any work RVU changes it was
recommended that such changes be reviewed by the RUC. In addition, the
RUC, in its comments, agreed to include a review of the brachytherapy
codes on its April 2007 meeting agenda and several commenters expressed
an interest in working with the RUC on the work RVUs and PE inputs.
Response: We believe that the commenters misunderstood the intent
of the proposed work RVU reductions. They are designed to allow the
billing of the brachytherapy physician service codes on a more frequent
basis than is currently permitted, and are reflective of the present
course of treatment regimens. The current codes have a 90-day global
period and are to be billed only once for the entirety of physician
services provided during the specified time period.
Comment: Some commenters expressed concern that the PE inputs for
the brachytherapy codes should not be reduced to reflect the removal of
a post-operative visit because there is no visit.
Response: A post-operative visit is included within the current PE
inputs for the current 90-day global period brachytherapy codes. The
change to a global period of ``XXX'' necessitates the removal of this
visit from the PE inputs because the codes could be billed several
times during a course of treatment, and each occurrence would not
include a post-operative visit.
The brachytherapy family of codes (CPT codes 77781, 77782, 77783
and 77784) will be assigned a global period of ``XXX'', which will
permit separate payment each time the services are provided and allow
payment to be based on the actual service(s) provided. Because of the
change in the global period a request will be made to the RUC for a
revaluation of the work RVUs and the PE inputs for these services. On
an interim basis the work RVUs and the PE inputs will be revised as
delineated in the proposed rule. In addition, the RN time in the
postservice period, as well as the patient gowns for the postservice
visit will be deleted from the PE database as proposed.
Separate payment will be made for medically necessary post-therapy
visits based on the documented level of E/M service for the post
procedure encounter(s).
We also note that appropriate modifiers are to be used when these
services are performed as staged procedures.
2. Assignment of RVUs for Proton Beam Treatment Delivery Services
As discussed in the CY 2006 PFS proposed rule, we have received a
request to assign PE inputs for the non-facility setting to Proton Beam
treatment delivery services represented by CPT codes 77520 through
77525. These services are currently carrier-priced; therefore, payment
in the facility or non-facility setting is established by each carrier.
To the extent that physicians and suppliers wish to have national RVUs
assigned for these services, we encourage them to use the established
process at the AMA-RUC.
Comment: We received several comments in response to this
discussion. Two commenters stated that due to the relatively limited
availability of these services in freestanding environments given the
small number of proton therapy centers at this point in time, these
services should remain carrier priced. However, one commenter indicated
that allowances established by carriers do not appear to account for
capital and operating costs. This commenter referenced payment amounts
proposed for hospital OPDs under the Outpatient Prospective Payment
System (OPPS), and urged us to provide guidance to carriers in
establishing appropriate payment for these services under the PFS.
Other commenters suggested that RVUs should be established for
these services. Many of these commenters expressed agreement with the
payment rate for these services under OPPS. These commenters were
concerned that since each State has its own CMS-contracted carrier,
variations exist in proton therapy coverage and reimbursement under the
PFS. These
[[Page 69659]]
commenters requested that we provide payment rates for carriers to use
when these services are furnished in freestanding centers so that
payments are consistent with payment rates under OPPS.
We also received comments from the AMA-RUC and ASTRO regarding this
discussion. The RUC reiterated the process that is used to develop RVUs
and ASTRO indicated it would be willing to participate in the
development of RVUs for these services.
Response: As discussed in the CY 2006 PFS proposed rule, at the
present time payment for these services is established at the carrier
level. The carriers have discretion to establish payment using
available information about these services. Should providers wish to
have RVUs established for these services, we would request that they
use the AMA-RUC process that has been established for recommending RVUs
and direct PE inputs used to compute national RVUs for PFS services to
CMS.
E. Deficit Reduction Act (DRA)
The Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171), was
enacted February 8, 2006 and included provisions that affect the
Medicare program. The following section addresses the specific DRA
provisions that were addressed in the CY 2007 PFS proposed rule (71 FR
48996).
1. Section 5102--Adjustments for Payments to Imaging Services
Section 5102 of the DRA includes two provisions that affect
payments of imaging services under the Medicare PFS. The first
provision addresses payment for certain multiple imaging procedures for
CY 2007 and application of BN while the second provision addresses
limiting the payment amount under PFS to the OPD payment amount for the
TC of certain imaging services.
a. Payment for Multiple Imaging Procedures for 2007
In general, Medicare prices diagnostic imaging procedures in the
following three ways:
The PC represents the physician's interpretation (PC-only
services are billed with the 26 modifier).
The TC represents PE and includes clinical staff,
supplies, and equipment (TC-only services are billed with the TC
modifier).
The global service represents both PC and TC.
As discussed in the CY 2006 PFS final rule with comment period (70
FR 70261), in the CY 2006 PFS proposed rule (70 FR 45764 through
46064), we had proposed to reduce payment for the TC of selected
diagnostic imaging procedures belonging to one of eleven imaging
families when the procedures are performed on contiguous body areas by
50 percent for CY 2006. However, in the final rule with comment period,
we stated that we would phase-in the 50 percent reduction over 2 years
beginning with a 25 percent reduction in 2006. We also sought
additional data and comments on the appropriateness of 50 percent as
the final level of reduction. The reduction applies to the TC and the
technical portion of the global service, but does not apply to the PC
of the service. Currently, we make full payment for the highest priced
procedure and reduce payment for each additional procedure by 25
percent, when more than one procedure from the same imaging family is
performed during the same session on the same day.
As described in the CY 2006 PFS final rule with comment period, at
the time, the statute required us to make changes such as this in a
budget neutral manner, meaning that the estimated savings generated by
the application of the multiple imaging procedure payment reduction
were used to increase payment for other physician fee schedule
services. We increased the CY 2006 PE RVUs by 0.3 percent to offset the
estimated savings generated by the multiple imaging payment reduction
policy.
Subsequent to the publication of the CY 2006 PFS final rule with
comment period, section 5102(a) of the DRA (Multiple Procedure Payment
Reduction for Imaging Exempted From Budget Neutrality), required that
``effective for fee schedules established beginning with 2007, reduced
expenditures attributable to the multiple procedure payment reduction
for imaging under the CY 2006 PFS final rule with comment period (42
CFR 405, et al.) insofar as it relates to the PFSs for 2006 and 2007''
are exempted from the BN provision. As a result, we proposed to remove
the 0.3 percent increase to the CY 2006 PE RVUs from the CY 2007 PE
RVUs in accordance with the statute.
In addition, in response to our request for data on the
appropriateness of the 50 percent reduction in the CY 2006 PFS final
rule with comment period (70 FR 70261), the ACR provided information
for 25 code combinations supporting a reduction of between 21 and 44
percent. Given the expected interaction between the multiple procedure
imaging policy and the further imaging payment reductions mandated by
section 5102(b) of the DRA, along with the new information we have
received from the ACR on the multiple imaging procedure policy as it
applies to common combinations of imaging services, we believe it would
be prudent to maintain the multiple imaging payment reduction at its
current 25 percent level while we continue to examine the appropriate
payment levels. Therefore, we proposed to continue the multiple imaging
payment reduction for CY 2007 at the 25 percent level. We would proceed
through future rulemaking in the event we determine that revisions to
the policy are warranted.
b. Reduction in TC for Imaging Services Under the PFS to OPD Payment
Amount
Section 5102(b)(1) of the DRA amended section 1848 of the Act and
requires that, for imaging services, if--
``(i) The technical component (including the technical component
portion of a global fee) of the service established for a year under
the fee schedule * * * without application of the geographic adjustment
factor * * *, exceeds
(ii) The Medicare OPD fee schedule amount established under the
prospective payment system for hospital outpatient department services
* * * for such service for such year, determined without regard to
geographic adjustment * * *, the Secretary shall substitute the amount
described in clause (ii), adjusted by the geographic adjustment factor
[under the PFS] * * *, for the fee schedule amount for such technical
component for such year.''
As required by the statute, for imaging services (described below
in this section) furnished on or after January 1, 2007, we will cap the
TC of the PFS payment amount for the year (prior to geographic
adjustment) by the CY 2007 OPPS payment amount (prior to geographic
adjustment). We will then apply the PFS geographic adjustment to the
capped payment amount.
Section 5102(b)(2) of the DRA exempts the estimated savings from
this provision from the PFS BN requirement. Section 5102(b)(1) of the
DRA defines imaging services as ``* * * imaging and computer-assisted
imaging services, including X-ray, ultrasound (including
echocardiography), nuclear medicine (including positron emission
tomography), MRI, CT, and fluoroscopy, but excluding diagnostic and
screening mammography.''
To apply section 5102(b) of the DRA, we needed to determine the CPT
and alpha-numeric HCPCS codes that fall within the scope of ``imaging
services'' defined by the DRA provision. In general, we believe that
imaging services provide visual information regarding areas of the body
that are not
[[Page 69660]]
normally visible, thereby assisting in the diagnosis or treatment of
illness or injury. We began by considering the CPT 7XXXX series codes
for radiology services and then adding in other CPT codes and alpha-
numeric HCPCS codes that describe imaging services. We then excluded
nuclear medicine services that were either non-imaging diagnostic or
treatment services. We also excluded all codes for unlisted procedures,
since we would not know in advance of any specific clinical scenario
whether or not the unlisted procedure was an imaging service. We
excluded all mammography services, consistent with the statute. We
excluded radiation oncology services that were not imaging or computer-
assisted imaging services. We also excluded all HCPCS codes for imaging
services that are not separately paid under the OPPS since there would
be no corresponding OPPS payment to serve as a TC cap. We excluded any
service where the CPT code describes a procedure for which fluoroscopy,
ultrasound, or another imaging modality is either included in the code
whether or not it is used or is employed peripherally in the
performance of the main procedure, for example, CPT code 31622 for
bronchoscopy with or without fluoroscopic guidance and CPT code 43242
for upper gastrointestinal endoscopy with transendoscopic ultrasound-
guided intramural or transmural fine needle aspiration/biopsy(s). In
these cases, we are unable to clearly distinguish imaging from non-
imaging services because, for example, a specific procedure may or may
not utilize an imaging modality, or the use of an imaging technology
cannot be segregated from the performance of the main procedure. Note
that we included carrier priced services since these services are
within the statutory definition of imaging services and are also within
the statutory definition of PFS services (that is, carrier-priced TCs
of PET scans).
A list of proposed codes that identify imaging services defined by
the DRA OPPS cap provision was found in Addendum F of the proposed
rule.
To the extent changes are made to codes for services already on the
list, we proposed to update the list through program instructions to
our contractors. To the extent that the same imaging service is coded
differently under the PFS and the OPPS, we proposed to crosswalk the
code under the PFS to the appropriate code under the OPPS that could be
reported for the same service provided in the hospital outpatient
setting. These crosswalks are listed in Table 8.
Table 8.--Crosswalks
------------------------------------------------------------------------
MFS Code Descriptor OPPS Code Desc
------------------------------------------------------------------------
74185............ Mri angio, abdom C8900............ MRA w/cont, abd.
w or w/o dye.
76093 *.......... Magnetic image, C8905............ MRI w/o fol w/
breast. cont, brst, un.
76094 *.......... Magnetic image, C8908............ MRI w/o fol w/
both breasts. cont, breast.
71555............ Mri angio chest C8909............ MRA w/cont,
w or w/o dye. chest.
73725............ Mr ang lwr ext w C8912............ MRA w/cont, lwr
or w/o dye. ext.
72198............ Mr angio pelvis C8918............ MRA w/cont,
w/o & w/dye. pelvis.
------------------------------------------------------------------------
* Note: These codes have been renumbered for CY 2007. New code number is
reflected in Addendum F.
c. Interaction of the Multiple Imaging Payment Reduction and the OPPS
Cap
For CY 2007 imaging services potentially subject to both the
multiple imaging reduction and the OPPS cap, we proposed to first apply
the multiple imaging payment reduction and then apply the OPPS cap to
the reduced amount as illustrated in Table 9.
Table 9
----------------------------------------------------------------------------------------------------------------
25% Multiple
HCPCS Pre-OPPS cap imaging OPPS cap rate Final MPFS
MPFS rate reduction payment
----------------------------------------------------------------------------------------------------------------
7XXX1........................................... $341.89 $256.42 $316.55 $256.42
7XXX2........................................... 552.86 414.65 391.83 391.83
----------------------------------------------------------------------------------------------------------------
We considered first applying the OPPS cap and then applying the
multiple procedure reduction. However, as indicated in the CY 2006 OPPS
final rule, we received public comments suggesting that the OPPS
payment rates may implicitly include at least some multiple imaging
discount. While we continue to examine this issue, we believe the most
appropriate policy is to apply the multiple imaging payment reduction
prior to the application of the OPPS cap.
i. OPPS Cap
Comment: Many commenters criticized the OPPS cap, maintaining that
OPPS rate was never intended to reflect the cost of providing
individual physicians' services. They indicated that it is
methodologically unjustifiable, and that it undermines the resource-
based system.
One commenter noted that physician costs are determined on a per
procedure basis, whereas hospital costs are not determined on a per
procedure basis because expensive capital equipment is allocated over
other procedures within a revenue center. Given this methodological
difference, the commenter indicated that it is not surprising that the
cost of a procedure under the PFS is greater than under OPPS. Another
commenter noted that we need to recognize that the delivery of care has
shifted from the hospital to physicians' offices; that there is an
increased complexity of care; and the need to practice defensive
medicine due to the threat of malpractice lawsuits. One commenter noted
that hospital and IDTF payments should not be the same.
Various commenters indicated that the cap will have a devastating
impact and threatens the future viability of outpatient imaging.
Commenters predicted that the consequences will include:
Reduced patient access to diagnostic technologies capable
of
[[Page 69661]]
preventing the onset of more serious conditions, requiring more complex
and expensive treatment later.
Shifting of procedures back to hospitals.
Increased volume to offset the affects of the payment
cuts.
Conversion of IDTFs ownership and legal structure to allow
billing under OPPS, negating any savings from the cap.
A few commenters requested a delay in implementing the cap and
requested that we consider co-sponsoring H.R.5704 that calls for a 2-
year moratorium on imaging cuts.
Response: We acknowledge the commenters concerns and appreciate
their comments. However, we are obligated to implement the statutory
provision. We will continue to work with the Congress and specialty
societies to ensure equitable payments and proper access to care.
Comment: Several commenters requested that the following procedure
codes be excluded from the OPPS cap:
Non-invasive vascular diagnostic study codes (CPT codes
93875-93990 and G0365) because they either contain no imaging or are
predominately non-imaging in nature. Particularly noted were
transcranial Doppler procedures and duplex scans.
Imaging guidance procedures that are integral to the
performance of interventional treatment or diagnostic procedures. CPT
codes cited were: 75894, 75896, 75901-75945, 75952, 75954, 75962,
75966, 75970, 75989-75996, 76940-76948 and 76965.
Nuclear medicine codes 78020, 78135, 78140, 78190, and
78282, based on the fact that other nuclear medicine codes, such as
radioisotope lab codes were excluded.
Codes performed in conjunction with radiation therapy (CPT
codes 76370, 76950, 76965, 77417, and 77421) because they are never
performed for diagnostic purposes. The commenters were pleased that we
excluded radiation oncology codes.
Positron Emission Tomography (PET), PET/ CT, and CT/
Computed Tomographic Angiography (CTA) and Category III codes used to
report emerging technologies because they are carrier-priced codes and,
therefore, not paid under the PFS.
Codes for imaging service that are not separately paid
under OPPS since there is no corresponding OPPS payment to serve as a
TC cap. Codes cited were cardiac catheterization codes 93555 and 93556
and code 0152T.
Additionally, several commenters proposed the following definition
of medical imaging procedures for the purpose of the DRA provision:
``Medical imaging uses noninvasive techniques to view all parts of the
body and thereby diagnose an array of medical conditions. These
techniques include the use of ionizing radiation (X-rays and CT scans),
MRI, ultrasound and scans obtained after the injection of radio
nucleotides (such as bone scans and PET).''
Response: The DRA defines imaging service subject to the OPPS cap
as ``imaging and computer-assisted imaging services, including x-ray,
ultrasound (including echocardiography), nuclear medicine, (including
positron emission tomography [PET], magnetic resonance imaging [MRI],
computed tomography [CT], and fluoroscopy, but excluding diagnostic and
screening mammography.'' The DRA does not distinguish between
diagnostic and therapeutic imaging. We have no authority to modify the
statutory definition of imaging services. Therefore, we cannot exclude
certain non-invasive diagnostic study procedures, imaging guidance
procedures, nuclear medicine procedures, and radiation oncology imaging
procedures. However, in our review of the codes in response to
comments, we determined that there are certain non-invasive vascular
diagnostic study codes that do not involve the generation of an image,
(that is, codes 93875, 93922, 93923, 93924 and 93965.) Therefore, we
are removing these codes from the list of codes subject to the OPPS
cap.
Additionally, we note that imaging guidance procedures that are
separately billed, are appropriately included on the list of codes
subject to the cap. However, codes 75952, 75954, and 75993-75996 were
inadvertently included on the list. These codes do not have a TC and we
are removing them from the list.
Regarding carrier-priced services, all physicians' services (as
defined by the statute under section 1848(j)(3) of the Act) are paid
under the PFS, regardless of how they are priced. Carrier-priced
services are services for which an alternative methodology is used to
arrive at TC payment under the PFS, and, therefore, they are subject to
the DRA provision. The same is true of Category III codes to the extent
that they are carrier-priced (and to the extent they are not carrier-
priced, there is no basis to exempt these codes from application of the
cap).
Regarding codes that are not separately paid under the OPPS, we
agree that there is no corresponding OPPS payment to serve as a TC cap.
Because these codes meet the statutory definition of procedures subject
to the OPPS cap, we will retain these codes on the list of procedures
subject to the cap, but payments for the procedures will not be
affected by the cap.
Comment: One commenter noted that the Ambulatory Payment
Classification (APC) groups are intended to set an average payment,
where some lower cost procedures are paid at a higher average rate, and
some higher cost procedures are paid at a lower average rate. In
crosswalking from the PFS to the OPPS payment, the commenter noted that
it would be more equitable to crosswalk to the median cost by CPT code,
rather than using the median cost per the APC grouping payment.
One commenter requested exclusion of codes bundled under OPPS
having no additional APC payment, but having a TC amount under PFS. The
commenter noted that the list of bundled services under the APC
payments will vary from year-to-year and it is inappropriate to not
make a payment under PFS as there is no packaging of the service into
another procedure. Another commenter noted that drugs and
radiopharmaceuticals are bundled into some OPPS procedures. They
indicated that these should be unbundled to achieve more parity in the
payment systems.
Response: The DRA is specific in its requirements to compare the TC
of a service for a year to the Medicare OPD fee schedule amount.
Therefore, we will crosswalk the TC to the corresponding OPD fee
schedule service and use that rate as a cap. For the same reason, we
must use the OPD payment amount even if there are drugs or
radiopharmaceuticals bundled into a particular OPD payment amount.
In regard to the concern that bundled services vary year to year,
we intend to review the relevant OPD and PFS codes to determine the
appropriate crosswalk for a given year. We recognize that there will be
changes and we believe our process will help to ensure that TC codes
are being crosswalked to the most appropriate OPD codes.
ii. Multiple Procedure Payment Reduction
Comment: Many commenters expressed appreciation for our decision to
apply the multiple procedure payment reduction prior to application of
the OPPS cap, and for maintaining the reduction at 25 percent. However,
the commenters also indicated that the multiple procedure payment
reduction is duplicative, inappropriate and excessive in light of the
OPPS cap, and requested its elimination. Other
[[Page 69662]]
commenters requested continued evaluation, indicating a 25 percent
reduction is greater than what is justified by any efficiencies
achieved in, performing multiple procedures. One commenter noted we had
previously stated that our multiple procedure analysis does not
disprove earlier assertions by physician and industry representatives
that some portion of multiple procedure efficiencies may be already
reflected in OPPS payment rates. Conversely, MedPAC indicated that it
is unclear why the DRA OPPS cap justifies maintaining the 25 percent
reduction since the DRA policy applies only to those services where the
TC exceeds the OPPS rate. In addition, MedPAC requested more
information on the ACR data cited in the CY 2007 PFS proposed rule (71
FR 48996).
Response: When we proposed the multiple procedure payment reduction
last year, as recommended by MedPAC, our data supported a 50 percent
payment reduction. However, we agreed to phase-in the reduction over
two years to allow for a transition of the changes in payment for these
services attributable to the reduction policy and to provide further
opportunity for public comment. Subsequently, the Congress passed the
DRA provision capping imaging procedures at the OPPS payment rate. In
view of the DRA provision, and additional data received from ACR, we
determined that it is more appropriate to retain the multiple procedure
payment reduction at 25 percent, rather than to increase it to 50
percent as previously proposed. We share the concerns of the providers
of imaging services that excessive reductions could be harmful to both
physicians and patients. Therefore, we believe it is more appropriate
to maintain the 25 percent reduction level while we continue to examine
this issue.
The list of codes that identify imaging services defined by the DRA
OPPS cap provision can be found in Addendum F to this final rule with
comment period. Note that the list in the proposed rule was affected by
the renumbering of CPT codes that is effective January 1, 2007.
Addendum F in this final rule with comment period reflects the
renumbering of CPT codes that is effective January 1, 2007, and also
reflects the removal of certain codes in response to comments, as
discussed previously in this section. Payment for an individual service
on this list will only be capped if the PFS TC payment amount exceeds
the OPPS payment amount.
2. Section 5107--Revisions to Payments for Therapy Services
Section 1833(g) of the Act applies an annual per beneficiary
combined cap beginning January 1, 1999 on outpatient physical therapy
and speech-language pathology services and a similar separate cap on
outpatient occupational therapy services. These caps apply to expenses
incurred for the respective therapy services under Medicare Part B,
with the exception of outpatient hospital services. The caps were in
effect from January 1, 1999 through December 31, 1999, from September
1, 2003 through December 7, 2003, and beginning January 1, 2006. In
2000 through 2002, and from December 8, 2003 through December 31, 2005,
the Congress placed moratoria on implementation of the caps. Section
1833(g)(2) of the Act provides that, for 1999 through 2001, the caps
were $1500, and for years after 2001, the caps are equal to the
preceding year's cap increased by the percentage increase in the
Medicare Economic Index (MEI) (except that if an increase for a year is
not a multiple of $10, it is rounded to the nearest multiple of $10).
As discussed in the CY 2006 PFS proposed rule, we implemented the
separate statutory limits of $1740 for outpatient physical therapy and
speech-language pathology services and $1740 for occupational therapy
on January 1, 2006. The DRA was enacted on February 8, 2006. Section
5107(a) of the DRA required the Secretary to develop an exceptions
process for the therapy caps effective January 1, 2006. The exceptions
process applies only to expenses incurred in 2006. Details of the
exceptions process were published in a manual change on February 13,
2006 (CR 4364). The change request consists of three transmittals with
current numbers of--
Transmittal 855, CR 4364, Pub. L. 100-04;
Transmittal 47, CR 4365, Pub. L. 100-02; and
Transmittal 140, CR 4364, Pub. L. 100-08.
The transmittals are available on the CMS Web site at http://www.cms.hhs.gov/Transmittals/.
In accordance with the statute, the therapy caps will remain in
effect, but without the exceptions process, for expenses incurred
beginning on January 1, 2007. The dollar amount of each therapy cap in
CY 2007 will be $1780 (which is the CY 2006 rate ($1740) increased by
the percentage increase in the MEI), rounded to the nearest multiple of
$10. As noted previously in this section, under the statute, the
exceptions process will not apply to therapy services after December
31, 2006, but the therapy caps will remain inapplicable to therapy
services provided in the outpatient hospital setting as provided under
section 1833(g) of the Act.
Comment: We received six comments about therapy caps. All indicated
that the cap exception process was working well to assure provision of
needed therapy services. Some commenters acknowledged that we do not
have the authority to extend therapy cap exceptions, but they requested
that we be aggressive in urging the Congress to intervene to extend the
exceptions or remove the caps.
Several commenters urged us to place a high priority in resources
and funding on continuing to conduct research that could be used to
identify alternatives to the cap that would ensure that patients
receive medically necessary therapy services. Some commenters cited the
Medicare Payment Advisory Commission (MedPAC) recommendations of June
2006 regarding continued research into measuring patient condition and
treatment outcomes as a basis for reforming the payment system.
Commenters also mentioned the Government Accountability Office
publication issued in November 2005 (GAO-06-59) recommending that DHHS
``expedite development of a process for ensuring that these services
were considered in its efforts to standardize existing patient
assessment instruments.'' Specifically, the one commenter, while
recognizing important priorities in allocating limited funds, strongly
urged us to conduct research and pilot studies leading to alternatives
to therapy caps that ensure the needs of patients are met through high
quality care. Another commenter agreed and also noted strong support
for development of a condition-based payment as a viable alternative to
caps. We received no negative comments concerning the exception process
or our efforts to develop alternative payment systems based on the
patient's need for services.
Response: As commenters noted, we do not have the authority to
extend the exceptions process beyond the December 31, 2006, statutory
expiration date. We will continue, to the extent that resources allow,
pursuing a payment policy that encourages provision of high quality,
covered services to all beneficiaries who need them.
Section 5107(b) of the DRA requires the Secretary to implement
edits for clinically illogical combinations of
[[Page 69663]]
procedure codes and other edits to limit inappropriate payment for
therapy services by July 1, 2006. As explained in the CY 2006 PFS
proposed rule, in January 2006, we implemented Correct Coding
Initiative (CCI) edits for the therapy providers that bill the fiscal
intermediaries, thus, addressing the section 5107 of the DRA
requirement for edits for clinically illogical combinations of
procedure codes. Adoption of these code edits ensures that these
providers of outpatient Part B therapy services, including SNFs,
comprehensive outpatient rehabilitation facilities, certain outpatient
physical therapy and speech-language therapy providers (rehabilitation
agencies) and home health agencies (HHAs) (where beneficiary is not
under a Part A plan of care) meet the same CCI edit requirements as
those that have been in place for physicians, private practice
therapists, and OPPS hospitals. We also noted that we are considering
the implementation of other edits in the future to further address
concerns about inappropriate payment for therapy services.
Comment: MedPAC indicated that the CCI code-pair edits we have
implemented are a good start in controlling inappropriate billing, but
encouraged further work and consultation with experts to develop other
clinically appropriate edits for therapy services.
Response: We appreciate the MedPAC's remarks and will consider its
suggestions in the implementation of future edits.
3. Section 5112--Addition of Ultrasound Screening for Abdominal Aortic
Aneurysm (AAA)
a. Coverage
Section 5112 of the DRA amended section 1861 of the Act to provide
for coverage under Part B of ultrasound screening for AAAs, effective
for services furnished on or after January 1, 2007, subject to certain
eligibility and other limitations. This screening test will be
available even if the qualifying patient does not present signs or
symptoms of disease or illness.
To conform the regulations to the statutory requirements of section
5112 of the DRA, we proposed to include an exception in Sec.
411.15(a)(1) to permit coverage for ultrasound screening for AAAs that
meet the conditions for coverage that we proposed to specify under new
Sec. 410.19(b) (Conditions for coverage of an ultrasound screening for
abdominal aortic aneurysms). We also proposed to add a new Sec.
411.15(k)(12).
As provided in the DRA, this new coverage allows payment for a one-
time only screening examination. We proposed new Sec. 410.19(b) to
provide for the coverage of the screening examinations for AAAs as
specified in section 5112 of the DRA. We also proposed to add new Sec.
410.19(c) (Limitation on coverage of ultrasound screening for abdominal
aortic aneurysms.) to provide the limitation on coverage for an
individual who is not an eligible beneficiary as defined in new Sec.
410.19(a).
We proposed the definitions set forth in new Sec. 410.19(a) to
implement the statutory provisions and to help the reader in
understanding the provisions of this regulation. The definitions
include the following terms:
Eligible beneficiary.
Ultrasound screening for abdominal aortic aneurysms.
Specifically, section 5112(a)(1) of the DRA amended section 1861 of
the Act to provide that coverage of ultrasound screening for AAAs will
be available for an individual: (1) Who receives a referral for such as
ultrasound screening as a result of an initial preventive physical
examination (IPPE) (as defined in section 1861(ww)(1) of the Act); (2)
who has not been previously furnished such as ultrasound screening
under this title; and (3) who has a family history of AAA or manifests
risk factors included in a beneficiary category recommended for
screening by the United States Preventive Services Task Force (USPSTF)
regarding AAAs.
Section 5112(a)(2) of the DRA also adds a definition of the term
``ultrasound screening for an Abdominal Aortic Aneurysm'' to mean,
``(1) a procedure using sound waves (or other procedures using
alternative technologies, of commensurate accuracy and cost, that the
Secretary may specify) provided for the early detection of abdominal
aortic aneurysm; and (2) includes a physician's interpretation of the
results of the procedure.''
Based on this provision, we reviewed the 2005 USPSTF
recommendations and related material on ultrasound screening for AAAs
which includes--
A recommendation for a one-time ultrasound screening for
men aged 65 to 75 who have smoked at least 100 cigarettes in their
lifetime;
No recommendation for, or against, ultrasound screening
for AAAs for men who have not smoked at least 100 cigarettes in their
lifetime; and
A recommendation against routine screening for AAAs in
women.
Based on the statutory language and the USPSTF recommendations
outlined in this section, we proposed to define the term ``eligible
beneficiary'' for coverage of ultrasound screening examinations for AAA
to mean an individual who--
Has received a referral for an ultrasound screening as a
result of an IPPE (as defined in section 1861(ww)(1) of the Act);
Has not been previously furnished such a covered
ultrasound screening examination under the Medicare program; and
Is included in at least one of the following risk
categories:
+ Has a family history of an AAA.
+ Is a man age 65 to 75 years who smoked at least 100 cigarettes in
his lifetime.
+ Is an individual who manifests other risk factors that are
described in a benefit category recommended by the USPSTF regarding an
AAA that has been determined by the Secretary through the NCD process.
To facilitate our consideration of possible expansions of coverage
in the future for identifying other risk factors in a benefit category
recommended for screening for the early detection of AAAs by the
USPSTF, and alternative screening technologies to ultrasound screening
for AAAs of commensurate accuracy and cost, we proposed to add language
to our regulations that would allow us to make determinations through
the NCD process. The NCD process would allow the Secretary to expand
coverage more quickly following an assessment of those subjects than is
possible under the standard rulemaking process. We intend to use the
NCD process, which includes an opportunity for public comments, for
evaluating the medical and scientific issues relating to the coverage
of alternative screening technologies and the identification of other
risk factors for AAAs recommended by the USPSTF that may be brought to
our attention in the future. Use of an NCD to establish a change in the
scope of benefits is authorized by section 1871(a)(2) of the Act. An
aggrieved party can challenge an NCD under the procedures established
by section 1869(f) of the Act. We proposed to add these coverage
provisions in new Sec. 410.19 (a)(1)(i) and Sec.
410.19(a)(2)(iii)(C).
Section 5112(b) of DRA also amended section 1861(ww)(2) of the Act
(the IPPE benefit) by adding the new ultrasound screening benefit to
the list of preventive services for which physicians and other
qualified nonphysician practitioners (NPPs) must provide ``education,
counseling and referral'' to new beneficiaries who take advantage of
the IPPE benefit within the first 6 months after the effective date of
[[Page 69664]]
their first Part B coverage period. Therefore, we also proposed to
amend Sec. 410.16(a)(7) of the regulations so that it reflects the
additional responsibilities that physicians and qualified NPPs will
have under the IPPE benefit for the new ultrasound screening benefit.
We received 14 comments that generally supported the proposal to
implement section 5112 of the DRA that provides for Medicare coverage
of ultrasound screening for AAAs. Several commenters had suggestions
for revising certain specific coverage provisions of the proposal.
Comment: Several commenters addressed the issue of the need for
certification of qualification requirements for the Medicare providers
or suppliers who furnish beneficiaries with the new ultrasound
screening for AAAs. A commenter referenced the USPSTF recommendations
that state, ``There is good evidence that abdominal ultrasonography,
performed in a setting with adequate quality assurance (that is, in an
accredited facility with credentialed technologists), is an accurate
screening test for AAA.'' The commenter noted that the proposed rule
did not mention the qualifications of the people performing the
screening and strongly recommended that quality standards be applied to
any laboratories performing this testing.
Response: Section 5112 of the DRA provides for coverage of a one-
time ultrasound screening for AAAs for beneficiaries, subject to
certain eligibility and other limitations. However, section 5112 does
not expressly address the subject of quality standards for the
providers or suppliers of these services and, therefore, in the absence
of a clearly demonstrated need for quality or qualification standards
that are specifically targeted to ultrasound screenings for AAAs, we do
not believe it is appropriate to establish at this time such detailed
standards for these services. We believe that any Medicare provider or
supplier that is authorized to provide covered diagnostic ultrasound
services is qualified to provide covered ultrasound screening services
for AAAs. The ultrasound test is conducted in a similar manner whether
the test is for a screening or diagnostic purpose. We are adding
language at Sec. 410.19(b) to reflect this condition.
Comment: Two commenters expressed concern that many beneficiaries
who became entitled to Medicare Part B coverage for the first time
before the IPPE benefit became effective (January 2005) will not be
able to qualify for coverage of the ultrasound screenings for AAAs
because of the IPPE referral requirement for the exam.
Response: The commenters are correct that the IPPE referral
requirement for coverage of the ultrasound screening for AAAs will
preclude many older beneficiaries from qualifying for coverage of the
exam, but that requirement is specified in section 5112 of the DRA. It
would require a change in the statute to permit us to expand the scope
of the benefit to older beneficiaries who do not satisfy this
requirement.
Comment: Several commenters suggested that we should implement
safeguards against providers billing for duplicative testing for the
AAA screening and an abdominal or retroperitoneal ultrasound exam (with
a diagnosis such as abdominal pain) later the same or the next day.
Response: We agree that the potential for duplicative billing for
the screening and the diagnostic ultrasound test of the same type does
exist. Therefore, we will work with our contractors to implement the
necessary safeguards to insure that this type of billing does not
occur.
Comment: Several commenters are concerned that the proposed rule
does not provide any guidance on the meaning of the statutory IPPE
referral requirement for coverage of the AAA screening service. The
commenter suggests that the term ``referral'' should be interpreted to
include a practitioner's ``direction to receive care from a qualified
provider'' that may be provided orally or in written form during or
after the eligible beneficiary receives his or her IPPE service.
Response: Section 410.16(a)(7) (as modified in this final rule)
provides that each eligible beneficiary who takes advantage of that
benefit is entitled (among other things) to education, counseling, and
referral, including a brief written plan such as a checklist provided
to the beneficiary for obtaining appropriate screening and other
preventive services that are covered as separate Medicare benefits,
such as the ultrasound screening for AAAs. Based on this referral
provision for the IPPE benefit, we believe there is considerable
flexibility that is allowed the IPPE provider in making referrals to
qualified Medicare providers of screening and other preventive
services, such as the AAA screening service. However, at a minimum, we
believe Sec. 410.16(a)(7)of the IPPE regulation requires that the
referral include a brief written plan provided the beneficiary for
obtaining, if appropriate, the AAA screening service from a qualified
Medicare provider.
Comment: Several commenters recommended that we monitor the
utilization of the new AAA screening benefit over the next couple of
years to determine if beneficiary access to this service is a concern
that requires our efforts to ensure appropriate beneficiary awareness
and utilization of the benefit.
Response: We agree that we should monitor use of this benefit to
ensure that there is appropriate beneficiary awareness and use of the
service.
Comment: A commenter urged us to implement a targeted campaign to
educate beneficiaries and physicians about the new screening benefit
and to encourage their use of it.
Response: We will release the appropriate manual and transmittal
instructions and other information, including a ``Medicare Learning
Network (MLN) Matters'' provider education article, an updated new
``Medicare Preventive Services Guide,'' and other information. We would
encourage the medical community to contribute to this effort by
distributing their own communications, bulletins, or other publications
to physicians, qualified NPPs, and beneficiaries.
Except for the additional language added at Sec. 410.19(b)
relating to the ability of a provider or supplier to furnish ultrasound
diagnostic services, we are finalizing this section as proposed to
provide for coverage of the AAA screening service for beneficiaries
under the statute, subject to the statutory eligibility and other
limitations.
b. Payment
Beginning January 1, 2007, we proposed to pay for ultrasound
screening for AAAs through the use of a new HCPCS code G0389,
Ultrasound, B-scan and/or real time with image documentation; for
abdominal aortic aneurysm (AAA) screening. We proposed that payment for
this service be made at the same level as CPT code 76775, Ultrasound,
retroperitoneal (eg, renal, aorta, nodes), B-scan and/or real time with
image documentation; limited. CPT code 76775 is used to bill for the
service when it is provided as a diagnostic test, and we believe the
service associated with the HCPCS codereflects equivalent resources and
work intensity to those contained in CPT code 76775.
In addition, since the DRA provides that the Medicare Part B
deductible will not apply for ultrasound screening for AAA (as defined
in section 1861(bbb) of the Act), we proposed to revise Sec. 410.160
to include an exception from the Medicare Part B deductible for the
ultrasound screening for AAA as described in Sec. 410.19 (Conditions
for
[[Page 69665]]
coverage of an ultrasound screening for abdominal aortic aneurysms).
Comment: Commenters were in agreement with the proposed payment
amount for this service.
Response: We will adopt the proposed values for this new HCPCS code
(that is, make it equivalent to CPT code 76775). This service will be
identified by the following code number and descriptor G0389,
Ultrasound, B-scan and/or real time with image documentation; for
abdominal aortic aneurysm (AAA) screening.
We will also finalize the proposed revisions to Sec. 410.160 to
include an exception from the Medicare Part B deductible for the
ultrasound screening for AAA as described in Sec. 410.19.
4. Section 5113--Non-Application of the Part B Deductible for
Colorectal Cancer Screening Tests
Current Medicare policy requires that, with limited exceptions,
incurred expenses for covered part B services are subject to, and count
toward meeting the Part B annual deductible. Section 5113 of the DRA
amended section 1833(b) of the Act to provide for an exception to the
application of the Part B deductible for colorectal cancer screening
tests. Beginning January 1, 2007, colorectal cancer screening services,
as described in section 1861(pp)(1) of the Act, are no longer subject
to the Part B deductible. The conditions for and limitations on
coverage for colorectal cancer screening tests under Medicare Part B
are described in Sec. 410.37.
To conform our regulations to this statutory change, we proposed to
revise Sec. 410.160 to include an exception from the Part B annual
deductible for the colorectal cancer screening services described in
Sec. 410.37.
Comment: Commenters were supportive of this conforming change.
However, it was pointed out that we had failed to address the situation
where a colorectal cancer screening service actually results in a
beneficiary having a biopsy or a growth removed, requiring the service
to be coded as a diagnostic procedure. Clarification was requested as
to whether in such situations, the deductible would still be waived.
Response: Section 1834(d)(3)(D) of the Act states ``if during the
course of such screening colonoscopy, a lesion or growth is detected
which results in a biopsy or removal of the lesion or growth, payment
under this part shall not be made for the screening colonoscopy but
shall be made for the procedure classified as a colonoscopy with such
biopsy or removal.'' Based on this statutory language, in such
instances the test or procedure is no longer classified as a
``screening test.'' Thus, the deductible would not be waived in such
situations.
After reviewing the public comments, we are finalizing Sec.
410.160 as proposed.
5. Section 5114--Addition of Diabetes Outpatient Self-Management
Training Services (DSMT) and Medical Nutrition Therapy (MNT) for the
FQHC Program
Section 5114 of the DRA amended section 1861(aa)(3) the Act to add
DSMT and MNT services to the list of Medicare covered and reimbursed
services under the Medicare FQHC benefit, effective for services
provided on or after January 1, 2006. Although this statutory change
has already been implemented in administrative instructions, we
proposed to conform the regulations to the new statutory requirement.
FQHCs certified as DSMT and MNT providers have been allowed to
bundle the cost of those services into their FQHC payment rates. But
before the enactment of the DRA, the provision of these services would
not generate a separate FQHC visit payment. Effective for services
furnished on or after January 1, 2006, FQHCs that are certified
providers of DSMT and MNT services can receive per visit payments for
covered services furnished by registered dietitians or nutrition
professionals. That is, if all relevant program requirements are met,
these services are included under the Medicare FQHC benefit as billable
visits.
In public response to the proposed rule, we received a small number
of comments expressing support for our proposal. Therefore, we will
finalize the changes as proposed.
To conform the regulations, we are amending Sec. 405.2446(b) to
expand the scope of FQHC services to include certified providers of
DSMT and MNT services by adding a new paragraph (b)(10). We are also
revising Sec. 405.2463 by--
Revising paragraph (a) to expand the definition of an FQHC
visit to include certified providers of DSMT and MNT services under new
paragraph (a)(1)(ii)(B). We are also revising the definition of an
rural health clinic (RHC) visit in new paragraph (a)(1)(i) to include a
face-to-face encounter between a patient and a clinical psychologist or
clinical social worker to conform to statutory language at section
1861(aa)(1)(B) of the Act. We also proposed to redesignate and revise
paragraphs (b) and (c) as new paragraphs (a)(2) and (a)(3),
respectively.
We are incorporating paragraph (a)(2) into (a)(1), and
redesignating and revising current paragraph (a)(3) as new paragraph
(b). We also clarify that it is generally permissible for both FQHCs
and RHCs to furnish, when necessary, most types of medical and other
health visits on the same day to the same patient. We also amend this
paragraph to permit a separate additional FQHC visit for DSMT and MNT
services (which may occur on the same date of service when the
beneficiary receives care from their FQHC physician or NPP) when
reasonable and necessary, consistent with the Congressional mandate
under section 5114 of the DRA to provide coverage and adequate access
to these services in the FQHC setting.
Finally, we are redesignating and revising current
paragraph (a)(4) as new paragraph (c).
F. Payment for Covered Outpatient Drugs and Biologicals (ASP Issues)
Medicare Part B covers a limited number of prescription drugs and
biologicals. For the purposes of this final rule with comment period,
the term ``drugs'' will hereinafter refer to both drugs and
biologicals. Medicare Part B covered drugs not paid on a cost or
prospective payment basis 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,
certain immunosuppressive drugs).
Beginning in CY 2005, the vast majority of Medicare Part B drugs
not paid on a cost or prospective payment basis are paid under the
average sales price (ASP) methodology. The ASP methodology is based on
data submitted to us quarterly by manufacturers. In addition to the
payment for the drug, Medicare currently pays a furnishing fee for
blood clotting factors, a dispensing fee for inhalation drugs, and a
supplying fee to pharmacies for certain Part B drugs.
In January 2006, the drug coverage available to Medicare
beneficiaries expanded with the implementation of the Medicare Part D
benefit. The Medicare Part D benefit does not change Medicare Part B
drug coverage.
This section of the preamble discusses changes and issues related
to the determination of the payment amounts for covered Part B drugs
and furnishing blood clotting factor. This section also discusses
changes to how manufacturers calculate and report ASP data to us.
[[Page 69666]]
1. ASP Issues
Section 303(c) of the MMA amended title XVIII of the Act by adding
new section 1847A. This new section revised the payment methodology for
the vast majority of drugs and biologicals not paid on a cost or
prospective payment basis furnished on or after January 1, 2005. The
ASP reporting requirements are set forth in section 1927(b) of the Act.
Manufacturers must submit ASP data for each 11-digit NDC to us
quarterly. The manufacturers' submissions are due to CMS no later than
30 days after the last day of each calendar quarter. The methodology
for developing Medicare drug payment allowances based on the
manufacturers' submitted ASP data is described in the regulations in
part 414, subpart K. We update the Part B drug payment amounts
quarterly based on the data we receive.
On April 6, 2004, we published the Manufacturer's Submission of
Average Sales Price Data for Medicare Part B Drugs and Biologicals
(ASP) interim final rule with comment period (IFC) (69 FR 17935) to
implement the ASP calculation and reporting requirements. Manufacturers
were required to submit their initial quarterly ASP data to us shortly
thereafter, by April 30, 2004. We received comments on the April 6,
2004 IFC from drug manufacturers, pharmacies, physicians, national
associations of the pharmaceutical industry, national associations of
physicians, and consultants. These comments addressed a variety of
aspects of calculating and reporting ASPs. On September 16, 2004, we
published the Manufacturer's Submission of Average Sales Price Data for
Medicare Part B Drugs and Biologicals (ASP) final rule (69 FR 55763)
addressing only the comments pertaining to the methodology for
estimating lagged price concessions. We have also addressed ASP
calculation and reporting requirements in other proposed and final
rules and information collection notices, including rulemaking to
implement the Competitive Acquisition Program for Part B Drugs and
Biologicals (CAP) (70 FR 39069, 70 FR 45842, 70 FR 70215, 70 FR 70477,
and 71 FR 48130). In addition, we have posted official agency guidance,
including responses to frequently asked questions, on our Web site to
implement the ASP provisions in accordance with section 1847A(c)(5)(C)
of the Act.
In the CY 2007 PFS proposed rule, we stated that we intended to
finalize the April 6, 2004 IFC in the near future and that we may
publish the final rule as part of this rulemaking, or as a separate
final rule. We also stated that because the comments received during
the comment period in response to the April 6, 2004 IFC were made
during the initial months of manufacturers' experience with calculating
and reporting ASPs and prior to publication of payment amounts based on
the ASP methodology, we believed there was good reason to give the
public an opportunity to provide additional comments. Therefore, we
sought comments on the ASP reporting provisions in the April 6, 2004
IFC, as well as several topics specifically discussed in the CY 2007
PFS proposed rule. These topics included: Fees not considered price
concessions, excluded sales known on a lagged basis, nominal sales, and
other price concession issues. In this final rule with comment period,
we are responding to comments received on the April 6, 2004 IFC and the
CY 2007 PFS proposed rule and revising provisions related to the
estimation methodology for price concessions known on a lagged basis,
which were finalized in the September 16, 2004 final rule. Except as
otherwise specified in this final rule with comment, we are finalizing
the provisions of part 414, subpart J as presented in the April 6, 2004
IFC.
a. Comments Not Related to ASP Reporting
As stated in the CY 2007 PFS proposed rule, we received numerous
comments on the use and potential impacts of the ASP payment
methodology. The April 6, 2004 IFC implemented provisions of the MMA
related to how manufacturers calculate ASP and report their ASP data.
Thus, comments about the appropriateness and use of 106 percent of the
ASP as a basis for Medicare Part B drug payment rates are outside the
scope of the final ASP reporting rule. Implementation of the ASP
payment methodology as the basis for establishing payment amounts for
the vast majority of Part B drugs was discussed in notice and comment
rulemaking in the CY 2005 PFS proposed and final rules (69 FR 47520 and
69 FR 66299). Comments about the ASP payment methodology that address
issues other than how manufacturers calculate and report their ASPs are
outside the scope of this rulemaking. Other topics for which we
received comments that are not within the scope of this rulemaking and
are not otherwise addressed are as follows:
How the ASP-based payment rates are calculated;
How NDCs are assigned to billing codes;
Requests for billing codes for specific products;
Whether alternative payment methodologies or exceptions to
the ASP-based payment should be considered;
Billing and claims processing and adjudication issues;
Variation in local coverage policies:
Whether Part B policies apply to Medicaid and/or Part D;
Issues related to Competitive Acquisition of Outpatient
Drugs and Biologicals Under Part B (CAP); and
Issues pertaining to the content and format of the
quarterly Part B drug pricing files.
b. Fees Not Considered Price Concessions
Section 1847A(c)(5)(A) of the Act states that the ASP is to be
calculated by the manufacturer on a quarterly basis. As a part of that
calculation, manufacturers must take into account price concessions
such as--
Volume discounts;
Prompt pay discounts;
Cash discounts;
Free goods that are contingent on any purchase
requirement;
Chargebacks; and
Rebates (other than rebates under the Medicaid drug rebate
programs).
If the data on these price concessions are lagged, then the
manufacturer is required to estimate costs attributable to these price
concessions using the required ratio methodology as specified in Sec.
414.804(a)(3). This methodology was finalized in the September 16, 2004
final rule based on comments submitted in response to the April 6, 2004
IFC. In the CY 2007 PFS proposed rule, we proposed modifications to the
requirements for estimating lagged price concessions specified Sec.
414.804(a)(3) to conform with other proposals put forth in the proposed
rule. Comments received in response to the proposed rule related to
potential impacts on the estimation of lagged price concessions are
discussed in the appropriate subsections in this section.
In response to the April 6, 2004 IFC, commenters representing drug
manufacturers, national associations of wholesalers and distributors,
and physicians and other health care providers requested clarification
and detailed guidance on the treatment of administrative fees, service
fees and fees paid to pharmacy benefit managers (PBMs) in the ASP
calculation. We posted guidance on our Web site (http://questions.cms.hhs.gov/cgi-bin/cmshhs.cfg) to clarify that in the
absence of specific guidance in the Act or Federal regulations, the
manufacturer may make reasonable assumptions in its
[[Page 69667]]
calculations of ASP, consistent with the general requirements and
intent of the Act, Federal regulations, and its customary business
practices. These assumptions should be submitted along with the ASP
data. In December 2004, we posted further guidance on our Web site
addressing service fees and administrative fees paid to buyers (http://questions.cms.hhs.gov/cgi-bin/cmshhs.cfg).
On July 6, 2005, we restated our guidance on service fees in the
preamble of the Competitive Acquisition of Outpatient Drugs and
Biologicals Under Part B (CAP) interim final rule with comment (70 FR
39069). Subsequently, we received requests for clarification on how
fees paid to entities such as group purchasing organizations (GPOs) or
PBMs must be treated for purposes of the ASP calculation.
Therefore, we proposed to further clarify in the final ASP
reporting rule that, beginning with the ASP reporting for sales during
the first quarter of CY 2007, bona fide service fees that are paid by a
manufacturer to an entity, whether or not the entity takes title to the
drug, are not considered price concessions under Sec. 414.804(a)(2)
insofar as, and to the extent that, they satisfy the definition of a
bona fide service fee that we proposed at Sec. 414.802. In Sec.
414.802, we proposed to define bona fide service fees as fees paid by a
manufacturer to an entity that represent fair market value for a bona
fide, itemized service actually performed on behalf of the manufacturer
that the manufacturer would otherwise perform (or contract for) in the
absence of the service arrangement, and that are not passed on, in
whole or in part, to a client or customer of an entity, whether or not
the entity takes title to the drug. We further proposed that our
current guidance, which provides that bona fide service fees means
expenses that would have generally been paid for by the manufacturer at
the same rate had these services been performed by other entities,
would remain in effect unless we adopted an alternative approach.
Further, we proposed to clarify in the final ASP reporting rule that
fees, including service fees, administrative fees and other fees, paid
to GPOs or PBMs are not considered price concessions under Sec.
414.804(a)(2) insofar as, and to the extent that, they satisfy the
definition of a bona fide service fee that we proposed at Sec.
414.802.
In the CY 2007 PFS proposed rule, we discussed comments to the
April 6, 2004 IFC that provided some insight into the types of
activities that are performed in the distribution of drugs. We noted
that these comments did not provide detailed information about whether
and how one would determine the extent to which these activities are
bona fide services actually performed on behalf of the manufacturer. To
better understand the scope of appropriate bona fide services and how
they may vary across categories of drugs, we sought comment on the
specific types of services entities performed on behalf of the
manufacturer and the necessity of those services in the efficient
distribution of drugs. We also stated that we were considering
providing further guidance on the types of services that may qualify as
bona fide services for purposes of the ASP calculation. We also
indicated that we were considering providing further guidance on or
revising the approach or methodology manufacturers must use to
determine the fair market value of bona fide services performed on
their behalf and whether the service fee paid was passed on in whole or
in part, as well as activities that should not be considered bona fide
services performed on behalf of manufacturers, and bona fide services
that may be appropriate for all or specific types of products or
circumstances. We also sought comments on the costs and relative costs
of services performed on behalf of manufacturers. Specifically related
to the determination of whether or not a fee represents fair market
value for ASP purposes, we solicited comments on the potential
appropriateness of fees tied to performance of a service, fixed fee,
revenue generated by product sales, or other basis. In addition, we
requested comments on the appropriate methods for determining whether a
fee is passed on in whole or in part and on how Medicare's guidance on
the treatment of service fees for ASP calculation purposes may differ
with the treatment of service fees for financial accounting or other
purposes, and any implications that this may have for manufacturers.
Comment: We received numerous comments on the topic of service
fees. Among the commenters there was general agreement with our
clarification that the treatment of bona fide service fees in the ASP
calculation should not be conditioned on whether or not the entity
takes title to the drug. However, many commenters objected to a
definition of bona fide service fee that would limit in any way the
services or amount of fee that a manufacturer would establish in a
contract with any partner in the distribution of drugs or that
otherwise would limit flexibility and evolution in the industry. Many
of the commenters on this issue were opposed to establishing a list of
bona fide services; while a few commenters requested that certain
services such as ``pick, pack and ship,'' chargeback administration,
data services, and patient care programs be specifically included in a
list of bona fide services. A few commenters stated that such a list,
even if the list were illustrative, would be helpful in standardizing
the treatment of service fees across manufacturers' ASP calculations.
Other commenters cautioned that establishing a list of bona fide
services would require ongoing refinement in order for manufacturers to
accurately calculate ASPs as service fee arrangements evolved.
Several commenters recommended that we adopt a more general
standard for evaluating whether an arrangement represents a bona fide
service fee arrangement. However, very few suggestions for modifying
the wording of the proposed definition of bona fide service fee were
offered. One commenter recommended changing ``itemized'' to ``supply
chain'' to address concerns regarding how fair market value may be
determined, and several commenters recommended that we delete the
requirement that the fees not be passed on; these comments are
discussed in more detail below in this section.
In discussing how a more general standard might be applied, several
commenters suggested allowing the marketplace to decide the appropriate
scope of services and fair market value. These commenters stated that
this approach would result in a satisfactory means of determining fees
that are not price concessions (that is, are bona fide and not passed
on) by virtue of the competitiveness of the market for drug
distribution service. Under this approach, any service and price agreed
to in an arm's-length contract with the manufacturer would be
sufficient for determining that the services were bona fide and at fair
market value for ASP purposes.
Other commenters, who support a general standard, suggest that so
long as a service is ``reasonably necessary'' or ``necessary and
useful'' in meeting a manufacturer's business needs, it should be
considered to be both bona fide and a service performed on behalf of
the manufacturer. These commenters emphasize that the purpose of the
service should determine whether it was performed on behalf of the
manufacturer. As a result, in the opinion of these commenters, all
activities related to distributing drugs are services a manufacturer
would either have to perform or contract for if it did not have the
capacity to perform
[[Page 69668]]
the activity or chose not to perform the activity.
Some of the comments in support of a general standard pointed to
the personal services safe harbor from anti-kickback penalties as
specified in 42 CFR 1001.952(d)(7) as a potential benchmark for
purposes of identifying services and fees that would be excluded from
the ASP calculation. Other commenters recommended that any reasonable
method of determining fair market value should be acceptable. However,
several commenters requested that we specify the acceptable methods for
determining fair market value. A small number of commenters requested
that we specifically address whether the income method, market method
or cost method could be used to estimate the range for fair market
value of the bona fide service fee arrangement for ASP purposes. These
commenters did not provide details on the applicability of these three
methods for estimating fair market value for commonly performed drug
distribution services. Many commenters stated that, regardless of the
method used to determine fair market value, manufacturers should be
permitted to calculate fair market value across a set of services (in
lieu of determining fair market value for each itemized service
specified in an arrangement), and that it would be impossible to
calculate fair market value adequately for certain low-volume or value-
added services or certain services that can only be performed by the
purchaser (for example, in the case of wholesalers, compiling, and
sharing retail customer data). Some commenters noted that service fee
contracts may be broadly constructed for a set of services across a
number of drugs without itemizing each service or activity. To reflect
market practices and trends, as noted above in this section, one
commenter recommended that we revise the proposed definition of bona
fide service fees to remove the word ``itemized'' and, in its place,
insert ``supply chain.''
Several commenters supported our proposed definition of bona fide
service fees in general, while also suggesting that we refine or
eliminate the ``not passed on'' requirement because it is not needed if
the services included in an arrangement are bona fide and the fee
represents fair market value. A number of commenters offered that
including ``itemized'' in the definition was unnecessary for the same
reason. While a few commenters stated that specific requirements not to
pass on fees and terms requiring disclosure of any fees passed on could
be written in the bona fide service fee contracts. In contrast, several
commenters stated that for a variety of reasons, manufacturers may not
know or be able to accurately certify that a fee is not passed on in
whole or in part. These commenters identified anti-trust constraints as
one such reason.
Commenters asked that: (1) We clarify that services that can only
be performed by the party that takes possession of the drug from the
manufacturer may be considered to be bona fide services; and (2) we
remove the limitation in our current guidance that bona fide service
fees must be at the same rate had these services been performed by
other entities.
We did not receive comments on services that should not be
considered bona fide services, or on the costs or relative costs of
services performed on behalf of manufacturers.
Response: After consideration of the comments received, we are
finalizing our proposed definition of bona fide service fees at Sec.
414.802 which specifies that in order for a fee to be determined not to
be a price concession, and thus to be excluded from the calculation of
the ASP, the following conditions must be met:
The fee paid must be for a bona fide, itemized service
that is actually performed on behalf of the manufacturer;
The manufacturer would otherwise perform or contract for
the service in the absence of the service arrangement;
The fee represents fair market value; and
The fee is not passed on in whole or in part to a client
or customer of any entity.
We believe that if a fee satisfies the definition of bona fide
services fees it can be excluded from the calculation of the ASP. We
believe the specificity and scope of this definition provides an
appropriate safeguard against the potential risk for inappropriately
higher ASPs, while adopting a more general standard, a more limited
definition or relying solely on market forces, as some commenters
suggested, would not. This is because, taken together, this four
elements describe those situations in which we believe a fee paid is
compensation for services rather than a price concession for drugs. We
disagree with the comments that recommended alternative standards
because a definition with greater breadth or less specificity or both
would not as clearly distinguish bona fide services fees from price
concessions and could result in inappropriately high ASPs and
insconsistent treatment of services fees (for example, if we were to
permit a fee for any services at any price to be excluded from the
calculation of ASP or to eliminate the ``not passed on'' or
``itemized'' requirements.) However, we found many of the comments
informative with respect to how our definition of a bona fide service
fee is met and we discuss below in this section how these comments have
been incorporated into our guidance. In codifying the definition of
bona fide service fees, we seek to clarify a framework for
differentiating between those price concessions that must be included
in the calculation of ASP and bona fide service fees,which are not
included in the calculation of ASP. Beginning with the effective date
of this final rule with comment, the definition of bona fide service
fees will apply to the ASP reporting for sales during the first
calendar quarter of 2007. Additional guidance is discussed below.
(1) Bona fide, Itemized, Actually Performed on Behalf of the
Manufacturer and ``Otherwise Performed''
The first and second elements of the definition of bona fide
service fees relate to the scope of bona fide services for which a fee
paid does not represent a price concession for ASP purposes. To be
considered a bona fide service fee, the fee must be for services that
are: Bona fide, itemized, actually performed on behalf of the
manufacturer, and those the manufacturer would otherwise perform or
contract for in the absence of the service arrangement. Some commenters
requested further guidance on these elements. We were persuaded by
comments that referenced the necessity or usefulness of services.
Therefore, we interpret these elements of the definition to encompass
any reasonably necessary or useful services of value to the
manufacturer that are associated with the efficient distribution of
drugs. In response to commenters' concerns, we are clarifying that
services ``on behalf of'' the manufacturer include both those the
manufacturer has the capacity to perform, and those that can only be
performed by another entity.
Although some commenters provided us with general information on
what they would view to be bona fide services, to avoid inadverently
limiting the scope of what could constitute a bona fide service, we
will not establish a list of ``bona fide services'' at this time.
(2) Fair Market Value
The third element of the definition of bona fide service fees
specifies that the fees must represent fair market value. In response
to comments, we are refining our current guidance to address
[[Page 69669]]
concerns that it may not permit exclusion from ASP of fees for services
that can only be performed by the entity to which the fee is paid.
Therefore, our guidance is that bona fide service fees means expenses
that generally would have been paid for by the manufacturer at the same
rate had these services been performed by other or similarly situated
entities.
In addition, we tend to agree with the commenters that, in certain
circumstances, it may be appropriate to calculate fair market value for
a set of itemized bona fide services, rather than fair market value for
each individual itemized service, when the nature of the itemized
services warrants such treatment. We also tend to agree that the
appropriate method or methods for determining whether a fee represents
fair market value may depend upon the specifics of the contracting
terms, such as the activities the entity will perform and the agreed-
upon mechanism for establishing the payment (for example, percentage of
goods purchased). We believe manufacturers are well-equipped to
determine the most appropriate, industry-accepted method for
determining fair market value of drug distribution services for which
they contract. Therefore, we are not mandating the specific method
manufacturers must use to determine whether a fee represents fair
market value for purposes of excluding bona fide service fees from the
calculation of ASP.
(3) ``Not Passed On''
We appreciate the commenter views on the fourth element of the
definition of bona fide service fees, which specifies that the bona
fide service fee must not be passed on, in whole or in part, to a
client or customer of an entity. At this time, we understand that there
may be significant barriers that limit a manufacturer's ability to
determine whether a fee that otherwise meets the definition of ``bona
fide service fee'' described in this rule is passed on, in whole or in
part, to a client or customer of any entity. Nevertheless, we believe
that it is essential to retain the ``not passed on'' element in the
definition of bona fide service fees. The ``not passed on'' element is,
in our view, a key factor in distinguishing a price concession from a
bona fide service fee because, if a fee that is passed on is excluded
from the ASP calculation, then there is a greater risk of the ASP being
inappropriately higher.
However, we recognize that, in some instances, manufacturers may
have no effective way of knowing whether a fee paid that meets the
other elements of the definition of ``bona fide service fee'' is passed
on. Although we decided to retain the ``not passed on'' requirement in
the definition of bona fide service fees because of its importance in
distinguishing bona fide service fees from price concessions, we
believe it is appropriate to seek to balance our goal of ensuring
appropriate Medicare payments are made with the level of burden a
manufacturer would have to undertake to validate that a fee was not
passed on. Therefore, with respect to certifying to the accuracy of
their ASP calculations when it is unknown to the manufacturer whether
the fee paid was passed on in whole or in part to a client or customer
of any entity, we are clarifying, in this preamble, how manufacturers
may address this concern. If a manufacturer has determined that a fee
paid meets the other elements of the definition of ``bona fide service
fee,'' then the manufacturer may presume, in the absence of any
evidence or notice to the contrary, that the fee paid is not passed on
to a client or customer of any entity.
Comment: Several commenters indicated that some of the fees that
they believe would meet our definition of bona fide services fees for
ASP purposes would be treated as a reduction to revenues for financial
accounting purposes. Commenters asked us to clarify that the treatment
of service fees for ASP purposes and financial accounting purposes may
be different, and that if a fee meets our definition of a bona fide
service fee it can be excluded from the ASP regardless of its treatment
for financial accounting purposes.
Response: Fees that meet our definition of bona fide service fees
are not considered price concessions for purposes of the ASP
calculation, regardless of how they are treated for financial
accounting purposes.
Comment: Many commenters asserted that all fees and other payments
to GPOs and PBMs should be excluded from ASP because the statute
requires only that sales to purchasers be included in ASP, and, they
argue, GPOs and PBMs are not purchasers, do not take title to and
possession of products, and the fees paid to GPOs and PBMs are not
passed on to physicians (or other providers) in a manner that can be
attributable to a particular purchase or drug. Commenters asked that,
if we consider fees paid to GPOs and PBMs to be price concessions
(except to the extent that the fees are bona fide service fees for
purposes of the ASP calculation), we allow fees paid to the GPOs and
PBMs under arrangements that meet the anti-kickback safe harbor for
purchasing arrangements to be excluded from the ASP calculation without
having to meet our definition of bona fide service fees. Other
commenters expressed concern that considering GPO and PBM fees to be
price concessions could artificially deflate ASP such that it would not
accurately reflect the costs incurred by physicians and other
providers. Another commenter suggested that we provide additional
guidance on payments to managed care organizations.
Response: We note that we did not make a specific proposal with
respect to how PBM and GPO fees must be treated for ASP purposes other
than to say that to the extent that such fees meet the definition of
``bona fide service fee,'' they are excluded from the calculation of
ASP. We are continuing to develop our understanding of the variety of
agreements made with entities such as PBMs and GPOs and the possible
effects of these arrangements on the calculation of ASP and provider
acquisition costs. For this reason, at this time we believe it is
premature for us to provide specific guidance with respect to treatment
of fees paid by manufacturers to PBMs and GPOs in the ASP calculation
(other than to specify, as we proposed, that PBM and GPO fees that meet
the definition of ``bona fide service fees'' are excluded from the
calculation of ASP). Instead, we will continue to consider the comments
received and to study the matter further. In addition, we may take into
consideration how fees paid to these entities are addressed in the
context of the Medicaid drug rebate program. We also note that the
MedPAC commented that in the upcoming year it would be continuing to
examine the issue of the average prices physicians pay and the effect
of price concessions that might not be passed on to physicians.
In the absence of specific guidance, the manufacturer may make
reasonable assumptions in its calculations of ASP, consistent with the
general requirements and the intent of the Act, Federal regulations,
and its customary business practices. These assumptions should be
submitted along with the ASP data.
Recognizing that the treatment of fees to PBMs and GPOs in the ASP
calculation may have implications for the integrity of the ASP payment
methodology, we will be paying close attention to this issue and may
provide more specific guidance in the future through rulemaking or
through program instruction or other guidance (consistent with our
authority under section 1847A(c)(5)(C) of the Act).
Comment: Many commenters noted that the Congress excluded
wholesaler
[[Page 69670]]
prompt pay discounts from the calculation of average manufacturer price
(AMP) under the DRA. Commenters asserted that we have the authority to
extend this provision to ASP reporting and thus could exclude
wholesaler prompt pay discounts from ASP reporting.
Response: We do not agree that extending the DRA provision to ASP
reporting would be consistent with Congressional intent. Section
1847A(c)(3) does not specify a carve-out for prompt pay discounts
extended to wholesalers. Therefore, along with all other prompt pay
discounts, prompt payment discounts extended to wholesalers must be
included in the calculation of ASP.
c. Estimation Methodology for Lagged Exempted Sales
Section 1847A(c)(2) of the Act requires manufacturers to exclude
from the calculation of ASP those sales that are exempt from inclusion
in the determination of Medicaid best price (BP). In the comments on
the April 6, 2004 IFC, commenters requested more guidance on the method
manufacturers should use to exclude exempted sales that are known on a
lagged basis. Manufacturers identify exempted sales based on direct
sales and through chargeback and rebate data that may not be
sufficiently available at the time the ASP is calculated. In the
absence of specific guidance on how to account for lagged exempted
sales (that is, exempted sales identified through chargeback or rebate
processes), manufacturers have relied upon assumptions in accordance
with their customary business practices to develop their approach for
excluding these sales from the ASP calculation. In our work with
manufacturers that submit ASP data, we understand that some
manufacturers have used a ratio methodology for estimating exempted
sales known on a lagged basis that is similar to the ratio methodology
manufacturers must use to estimate price concessions known on a lagged
basis.
To establish a uniform approach, we proposed to require, in the
final ASP reporting rule, that all manufacturers use a 12-month (or
less, if applicable) rolling average ratio methodology to estimate
exempted sales known on a lagged basis (through chargebacks or rebates)
to more accurately exclude these sales from the ASP calculation.
Specifically, for exempted sales known on a lagged basis, the
manufacturer would sum the lagged exempted sales for the most recent
12-month period available (or the number of months the NDC has been
sold for NDCs with less than 12 months of sales, except for
redesignated NDCs as described in section II.F.1.e.). The manufacturer
then calculates a percentage using this summed amount as the numerator
and the sales (the number of units after non-lagged exempted sales have
been subtracted from total sales) for the same period (12 months or
less, if applicable) as the denominator. The result would be a rolling
average percentage estimate for lagged exempted sales that is applied
to the sales (the number of units after non-lagged exempted sales have
been subtracted from total sales) for the quarter being reported. The
product that results from multiplying the rolling average percentage
estimate of lagged exempted sales and sales (the number of units after
non-lagged exempted sales have been subtracted from total sales) would
determine the number of lagged exempted sales (in units) to be excluded
from the denominator of the ASP calculation. Manufacturers would be
required to make a corresponding adjustment to the numerator of the ASP
calculation to ensure that the total in dollars for the reporting
quarter does not include revenue related to lagged, exempted sales
excluded from the denominator using the proposed estimation
methodology. Further, manufacturers would be required to remove the
dollar value of lagged exempted sales from their estimates of lagged
price concessions by subtracting the dollar value of estimated lagged
exempted sales from the denominator as specified in Sec.
414.804(a)(3)(i).
Our proposed methodology for excluding lagged, exempted sales is
similar to the methodology manufacturers are required to use to
estimate price concessions known on a lagged basis, and was recommended
by manufacturers. We believe requiring similar methods to estimate both
lagged exempted sales and lagged price concessions would be reasonable
and reduces potential errors in the manufacturers' ASP calculations,
while ensuring that exempted sales are appropriately removed from the
ASP calculation. In addition, using an estimation methodology to remove
lagged exempted sales would reduce the likelihood of quarter-to-quarter
variations in the ASP.
We sought comments on the proposed methodology for excluding
exempted sales known on a lagged basis from the ASP calculation and
estimate of lagged price concessions. We also solicited suggestions on
appropriate alternative methodologies that may be less complex.
Comment: We received comments that were supportive of our approach.
However, some commenters stated that the proposed methodology would be
overly complex and inappropriate for certain types of exempted sales
known on a lagged basis. Several commenters stated that the proposed
methodology would be helpful and useful for accurately excluding from
the ASP calculation sales excluded based on the type of entity to which
the sale is made and known on a lagged basis (for example, sales
relating to subclauses (I), (II), and (IV) of section 1927(c)(1)(C)(i)
of the Act). However, most of these commenters cautioned that use of
the proposed methodology to estimate and exclude from the ASP
calculation sales which are excluded on the basis of rebates paid to
State pharmacy assistance programs and Part D plans or qualified
retiree prescription drug plans (for example, prices under clauses
(III) and (VI) of section 1927(c)(1)(C)(i) of the Act) and known on a
lagged basis would be: (1) Inadequate to fully and accurately account
and adjust for other price concessions applicable to these sales; and
(2) may lead to an inappropriately low ASP if a manufacturer is unable
to identify and remove all price concessions associated with an
exempted sale. Some commenters supported an alternative, two-pronged
approach. Lagged sales excluded based on the type of entity to which
the sale is made would be removed from the ASP using the proposed
methodology if the manufacturer determined that a 12-month rolling
average estimation methodology was necessary to accurately exclude
these lagged exempted sales from the ASP calculation. On the other
hand, the manufacturer would either not make any adjustment for or use
reasonable assumptions to determine the best method for excluding any
prices under a State pharmaceutical assistance program, and any prices
charged which are negotiated by a prescription drug plan under Part D
of title XVIII, by an MA-PD plan under Part C of title XVIII or by a
qualified retiree prescription drug plan as defined in section 1860D-
22(a)(2) of the Act. Several commenters suggested we adopt an approach
that would permit manufacturers not to exclude certain exempted sales
because: (1) Current information sources may not distinguish all
exempted sales; (2) certain sales may satisfy more than one of the
exemptions from the determination of BP so there would be a potential
for over counting excluded sales (for example, a sale to a 340B
[[Page 69671]]
hospital that is also reimbursed by Medicare Part D); and (3) in some
instances the manufacturer may be unable to fully identify and adjust
for the price concessions granted along the distribution chain
associated with certain exempted sales (for example, the portion of
volume discounts granted to distributors and pharmacies that were based
on excluded sales). In addition, a few commenters noted that we did not
specify a standard method for making the necessary corresponding
adjustment to the numerator of the ASP calculation to ensure that the
total in dollars for the reporting quarter does not include revenue
related to lagged, exempted sales excluded from the denominator using
the proposed estimation methodology. These commenters suggested that
the excluded sales be valued at the manufacturer's wholesale
acquisition cost (less customary prompt pay discounts) for purposes of
making the necessary adjustment.
A few manufacturers supported our proposal for calculating excluded
sales known on a lagged basis; however, one manufacturer requested that
we consider requiring use of a revenue-based ratio instead of or as an
alternative to the proposed units-based ratio. This commenter
recommended that manufacturers be given a choice between a revenue-
based or a units-based method to fit their data systems. Another
manufacturer noted that a revenue-based ratio would result in
unintended results if the price of the drug changed during the 12-month
period used to establish the estimation ratio; therefore, a ratio
methodology based on units such as the one we proposed should be
required.
Response: Section 1847A(c)(2) of the Act requires that
manufacturers exclude certain sales from their ASP calculations. The
statute does not make the exclusion of these sales from the ASP
calculation optional. Therefore, we do not have the discretion to
permit manufacturers not to exclude sales from ASP that are exempt from
the determination of BP. Manufacturers must comply with the
requirements in Sec. 414.804(a)(4)(i). In this final rule with comment
period we are revising Sec. 414.804(a)(4)(i) by adding a reference to
nominal prices, as well as sales exempt from inclusion in the
determination of BP. We believe that this revision conforms the
regulatory text to the language of the statute.
To establish a uniform approach for excluding exempted sales known
on a lagged basis, we proposed to amend Sec. 414.804(a)(4) to require
that all manufacturers use a 12-month (or less, if applicable) rolling
average ratio methodology to more accurately estimate and exclude these
sales from the ASP calculation. Our proposal was based on comments we
received in response to the April 6, 2004 IFC and subsequent feedback
from a few manufacturers. The comments received in response to the
proposed rule reflect a broader set of manufacturers' perspectives.
Some commenters indicated that for certain types of exempted sales the
proposed methodology for excluding lagged exempted sales from the ASP
calculation might lead to inaccuracies in the ASP calculation in their
particular circumstances. At the same time, a number of commenters
supported the proposed methodology. We recognize these commenters'
concerns regarding the difficulties in tracking both the exempted sale
and its associated price concessions. Given the range of comments, we
do not believe it is not advisable to mandate the use of the
methodology, which we proposed at Sec. 414.804(a)(4)(iii), for
excluding lagged exempted sales. We recognize the proposed ratio
methodology may not be the most accurate method for identifying and
excluding certain types of exempted sales known on a lagged basis.
However we also believe that our proposed ratio methodology may be
appropriate for identifying and excluding lagged exempted sales in some
instances. For this reason, we are not including the methodology in our
regulations, but are allowing the manufacturers to use the methodology
where applicable. We did not receive specific comments on our proposed
modifications to Sec. 414.804(a)(1) and (3) clarifying further that
exempted sales are excluded from the ASP calculation. We are finalizing
those clarifications as proposed.
d. Nominal Sales
Section 1847A(c)(2)(B) of the Act requires manufacturers to exclude
from the ASP calculation sales that are merely nominal in amount, as
applied for purposes of section 1927(c)(1)(C)(ii)(III) of the Act,
except as the Secretary may otherwise provide. In the preamble to the
April 6, 2004 IFC, we stated that, for ASP purposes, sales to an entity
that are nominal in amount are defined in the Medicaid drug rebate
agreement (see sample agreement at http://www.cms.hhs.gov/MedicaidDrugRebateProgram/downloads/rebateagreement.pdf). That is, for
ASP purposes, a sale at a nominal price is a sale at a price less than
10 percent of the AMP in the same quarter for which the AMP is
computed.
Effective January 1, 2007, the DRA revises the AMP calculation (to
omit customary prompt pay discounts extended to wholesalers), adds a
monthly AMP reporting requirement, and establishes limitations on
nominal sales (only sales to certain entities may qualify as nominal
sales). Section 1927(c)(1)(D) of the Act limits the nominal sales
exclusion to sales at a nominal price made to the following entities:
Covered entities as described in section 340B(a)(4) of the
Public Health Services Act.
Intermediate care facilities for the mentally retarded
(ICFs/MR).
State-owned or operated nursing facilities.
Any other facility or entity that the Secretary determines
is a safety net provider to which sales of such drugs at a nominal
price would be appropriate based on the factors described in section
1927(c)(1)(D)(ii) of the Act.
In light of the DRA changes affecting which sales may be considered
sales at a nominal price or merely nominal in amount, for purposes of
section 1927(c)(1)(C)(ii)(III), the CY 2007 PFS proposed rule sought to
clarify the method manufacturers must follow in 2007 to identify such
sales for ASP reporting purposes and to exclude sales at a nominal
price from the calculation of ASP. For 2007 and beyond, we proposed to
continue to rely on the Medicaid threshold (less than 10 percent of
AMP) to determine whether a sale is at a nominal price and to apply the
limitations in section 1927(c)(1)(D) of the Act for determining the
types of sales that can be considered to be sales at a nominal price
for purposes of the ASP calculation. We made this proposal for several
reasons.
As we indicated in the CY 2007 PFS proposed rule, we believe this
approach helps maintain continuity in the ASP calculation and minimizes
manufacturers' reporting burden, as Medicare continues to follow the
Medicaid approach for identifying sales at a nominal price and
manufacturers can use a single method for identifying nominal sales for
both ASP and AMP purposes.
In addition, we believe the DRA modifications to section 1927 of
the Act will have minimal effect on reported ASPs. We expect that the
exclusion of customary prompt pay discounts extended to wholesalers
from AMP would lead to a modest increase in AMP, and as a result a
modest increase in the nominal price threshold for purposes of ASP
reporting. At the same time, we anticipate that the limitation on the
types of entities to which the
[[Page 69672]]
nominal sales exclusion may apply, as specified in section
1927(c)(1)(D) of the Act, will result in a modest reduction in the
number of sales that qualify for the nominal sales exclusion for
purposes of ASP reporting because we believe that the entities outlined
in section 1927(c)(1)(D) of the Act generally represent the types of
entities to which manufacturers sell at a nominal price. Consequently,
we expect these two countervailing changes would have a minimal overall
impact on nominal sales that would be excluded from the ASP
calculation. For these reasons, we proposed to continue to rely on the
application of section 1927(c)(1)(C)(ii)(III) of the Act (as limited by
section 1927(c)(1)(D) of the Act) for identifying sales to an entity at
a nominal price for purposes of excluding such sales from the
manufacturer's calculation of the ASP.
We solicited comments on our proposal to continue use of the AMP as
the basis for identifying the threshold for sales at a nominal price
for purposes of the exclusion from the ASP calculation and on whether
an alternative threshold is necessary or desirable to ensure the
accuracy of the ASP payment methodology. Specifically, we sought
comments on whether sales at less than 10 percent of the ASP (instead
of the AMP) should be used as the threshold for determining whether a
sale to an entity identified in section 1927(c)(1)(D) of the Act is at
a nominal price. We also sought comments on our belief that the new
limitations in section 1927(c)(1)(D) of the Act, if applied for ASP
purposes, will have minimal impact on reported ASPs.
Comment: We received comments supporting our proposals to continue
to rely on the application of section 1927(c)(1)(C)(ii)(III) of the
Act, as modified by section 1927(c)(1)(D) of the Act, to identify and
exclude sales at a nominal price from the ASP calculation. These
commenters agreed that using the same standard for Medicare and
Medicaid purposes would reduce reporting burden.
Response: We appreciate the comments in support of our proposal. We
are adopting our proposal to continue to rely on the Medicaid threshold
(less than 10 percent of AMP) to determine whether a sale is at a
nominal price, and to apply the limitations in section 1927(c)(1)(D) of
the Act for purposes of identifying sales at a nominal price in
determining the ASP.
Comment: We received a few comments suggesting that the Secretary
provide a list of additional types of safety net providers that would
qualify for the nominal sales exclusion.
Response: The issue of whether the Secretary should designate
additional types of entities that would qualify as safety net providers
for purposes of section 1927(c)(1)(D) of the Act is outside of the
scope of this rulemaking.
Comment: We received a comment suggesting that because of the short
timeframe for performing the ASP calculation, manufacturers should be
allowed to identify sales at a nominal price for ASP purposes using the
AMP for the previous quarter provided that the manufacturer does this
consistently across all of its products.
Response: We are concerned that the commenter's suggestion that we
allow use of last quarter's AMP to identify sales at a nominal price in
the current quarter could have an adverse impact on the accuracy of the
ASP calculation. It is possible for the AMP to change substantially
from one quarter to the next (for example, when generic products first
become available). In such situations, using the current quarter's AMP,
as opposed to last quarter's AMP, would generally result in a more
accurate identification of sales at a nominal price. Consequently, we
are continuing to require that for ASP calculation purposes nominal
sales in a reporting quarter be identified based on the AMP for the
same quarter.
In the CY 2007 PFS proposed rule, we also responded to requests for
clarification on a technical aspect related to the identification of
nominal sales. Specifically, some manufacturers have asked whether
sales at a nominal price are identified by performing a series of
calculations once or whether the manufacturer repeats the series of
calculations until no remaining ASP eligible sales are below the
nominal threshold. Manufacturers must identify sales at a nominal price
by performing the following steps once--
The manufacturer calculates the AMP for the reporting
quarter to identify the dollar amount that represents 10 percent of the
AMP for that reporting period.
The manufacturer then identifies sales at prices below
this amount and excludes these sales from the ASP calculation.
Beginning in 2007, only those sales that meet the criteria
discussed previously and are to an entity identified in section
1927(c)(1)(D) of the Act shall be excluded from the calculation of ASP.
We received no comments concerning this clarification; therefore we
are finalizing the clarification as proposed.
e. Other Price Concession Issues
In our ongoing work with manufacturers that submit ASP data, some
manufacturers have posed questions or raised concerns about how the
estimate of lagged price concessions is done prior to having 12 months
of data for a NDC and, when a product is redesignated with a new NDC,
whether price concessions from the prior NDC must be included in
calculating the ASP for the new NDC. Manufacturers and other
stakeholders have also asked us about how Medicare's ASP guidance
concerning price concessions is to be applied when drugs are sold under
bundling arrangements.
In response, we proposed clarifications and solicited comment on
these issues.
(1) Price Concessions for NDCs With Less Than 12 Months of Sales
To address situations when a NDC with price concessions known on a
lagged basis has not been sold for a full 12 months, we proposed to
revise Sec. 414.804(a)(3) to specify that the period used to estimate
lagged price concessions is the total number of months the NDC has been
sold. We proposed to require that manufacturers use less than 12 months
of data in the estimation methodology for lagged price concessions for
NDCs with less than 12 months of sales (except when the manufacturer
has redesignated the product's NDC, as discussed in this section). We
also clarified in the preamble of the proposed rule that manufacturers
may include the current ASP reporting quarter in the most recent 12-
month period (or less for NDCs with less than 12 months of sales) so
long as the manufacturer follows this approach in calculating the ASP
for all of its reported NDCs.
Comment: We received a number of comments supporting our proposal.
Response: We are finalizing our proposal. We will require that
manufacturers use less than 12 months of data in the estimation
methodology for lagged price concessions for NDCs with less than 12
months of sales (except when the manufacturer has redesignated the
product's NDC, as discussed in this section).
(2) Redesignated NDCs
From time to time, a manufacturer may change the NDC assigned to a
specific product and package size while continuing or offering price
concessions that span across sales of the product under its prior and
redesignated NDCs. For example, an NDC may be changed to reflect a
change in the labeler code
[[Page 69673]]
while lagged price concessions in place under the prior NDC remain in
effect and carry over to the redesignated NDC. Another example would be
a manufacturer that modifies its package design or other non-drug
feature of the NDC and assigns a new NDC to reflect the revised
packaging.
We proposed to clarify in the final ASP reporting rule that, when
an NDC is changed (except when a product is repackaged or relabeled by
a different manufacturer or relabeler or is privately labeled) and
lagged price concessions offered for the prior NDC remain in effect,
the manufacturer must use 12 months (or the total number of months of
sales of the prior and redesignated NDCs if the total number of months
of sales is less than 12 months) of sales and price concession data
from the prior and redesignated NDCs to estimate lagged price
concessions applicable to the redesignated NDC. In establishing this
methodology, we are relying on our authority under section
1847A(c)(5)(A) of the Act.
We sought comments on our proposed refinements to the estimation of
lagged price concessions for NDCs with less than 12 months of sales and
when a manufacturer redesignates the NDC assigned to a product. We also
solicited suggestions for potentially clarifying these policies
further.
Comment: We received a number of comments supporting our proposal.
In addition, some commenters asked for more guidance concerning what
circumstances the policy regarding redesignated NDCs would or would not
apply to. In particular, some commenters suggested the policy should
not apply when there is a change in the 9-digit NDC (that is, a change
in the product code). We also received comments asking for
clarification on how manufacturers should combine price concessions in
situations where the NDC is redesignated and both products are sold for
a time concurrently. Some commenters asked whether the lagged price
concessions for the prior and redesignated NDCs should be combined to
create a single lagged price concession ratio to be used to estimate
lagged price concessions for the prior and redesignated NDC, and if so,
how long this practice should occur. In addition, some commenters noted
that the Food and Drug Administration (FDA) has issued a proposed rule
concerning the assignment of NDC codes, and that the issue of
redesignated NDCs and the ASP calculation may need to be revisited when
the FDA finalizes its regulation.
Response: In making our proposal, we intended our proposal to apply
in instances when a manufacturer redesignates an NDC meaning the
manufacturer establishes a new NDC as a replacement for a prior NDC for
the same product and package size. After reviewing the comments, we are
finalizing our proposal. When a manufacturer redesignates an NDC
(except when a product is repackaged or relabeled by a different
manufacturer or relabeler or is privately labeled) for a specific drug
product and package size and lagged price concessions offered for the
prior NDC remain in effect, the manufacturer must use 12 months (or the
total number of months of sales of the prior and redesignated NDCs if
the total number of months of sales is less than 12 months) of sales
and price concession data from the prior and redesignated NDCs to
estimate lagged price concessions applicable to the redesignated NDC.
Several commenters recommended that we clarify that this policy would
never apply to a change in the product code for an NDC. We disagree and
believe the policy could apply to a change in the product code
depending on the circumstances. When an NDC is redesignated as a
replacement for a prior NDC for a specific drug product and package
size and lagged price concessions for the prior NDC remain in effect,
we believe the policy described previously should apply regardless of
which segment of the NDC code is changed.
Several commenters asked for guidance concerning how to handle
situations where the redesignated NDC and prior NDC are for a time sold
concurrently. If the redesignated NDC is a replacement for the prior
NDC and if the two NDCs are sold for only a limited time concurrently,
then we agree with commenters' suggestion that lagged price concessions
that are based on sales of the prior NDC and redesignated NDC should be
combined to calculate a single lagged price concessions ratio (for the
applicable price concessions) that would be applied to the ASP
calculation for the prior NDC and for the redesignated NDC. In this
situation, the manufacturer should combine the lagged price concession
data that are based on sales of the prior NDC and redesignated NDC as
described previously until the last lot sold of the prior NDC expires.
Finally, we agree that the FDA's proposed regulations concerning the
assignment of NDC codes, once they are finalized, may have implications
for our policy concerning redesignated NDCs, and we may revisit this
issue in the future, if we believe it is warranted.
(3) Bundled Price Concessions
The statute requires that the ASP include volume discounts, prompt
pay discounts, cash discounts, free goods that are contingent on any
purchase requirement, chargebacks, and rebates (other than rebates
under section 1927 of the Act). Thus far, we have not provided specific
guidance in the ASP context on the issue of how to allocate price
concessions across drugs that are sold under bundling arrangements. In
the absence of specific guidance, the manufacturer may make reasonable
assumptions in its calculations of ASP, consistent with the general
requirements and the intent of the Act, Federal regulations, and its
customary business practices. Manufacturers should include these
assumptions in their ASP submissions.
As we indicated in the CY 2007 PFS proposed rule, we expect
manufacturers of drugs reimbursed by Medicare Part B to comply with all
applicable laws, regulations, and legal decisions including, but not
limited to the Stark law, other relevant anti-kickback laws, antitrust
laws, and laws governing fair trade practices (71 FR 49003). Our
discussion of this issue in the proposed rule or in this final rule
with comment period should not be construed as an endorsement or
authorization of any pricing practices that contravene any laws, legal
decisions, or regulations.
In the CY 2007 PFS proposed rule, we indicated that we would like
to better understand how bundling affects sales of Part B drugs and the
ASP calculation, and any concerns stakeholders may have on this issue
(71 FR 49003). Furthermore, we indicated that we are considering
providing guidance, through rulemaking or through program instruction
or other guidance (consistent with our authority under section
1847A(c)(5)(C) of the Act) on the methodology manufacturers must use
for apportioning price concessions across Part B drugs sold under
bundling arrangements for purposes of the calculation of ASP. We also
noted that in considering this issue our goal is to ensure that the ASP
is an accurate reflection of market prices for Part B drugs and that
the treatment of bundled price concessions in the ASP calculation does
not create inappropriate financial incentives.
In the CY 2007 PFS proposed rule, we solicited comments on a number
of issues related to bundled price concessions, including how
frequently Part B drugs are sold under bundling arrangements, the
different structures of bundling arrangements that may exist (for
example, the number of products
[[Page 69674]]
included in a bundling arrangement; whether the price concessions are
contingent on the purchase of only one product, the purchase of
multiple products, or the inclusion of one or more products on a
formulary; and the timing of the price concessions), and the extent to
which sales of Part B drugs are bundled with sales of non-Part B drugs
or non-drug products. We also sought comments on what effect bundling
arrangements may have on the ASP calculation, on beneficiary access to
high quality, appropriate care (including access to drugs that may not
have clinical alternatives), and on costs to the Medicare program and
beneficiaries. In addition, we solicited comments on whether additional
guidance on apportioning bundled price concessions for purposes of the
calculation of ASP is needed and potential methodologies that Medicare
could consider requiring. Furthermore, we solicited comments on how
variation in the structure of bundling arrangements may affect the
impact of potential apportionment methodologies on the ASP calculation.
Comment: Some commenters recommended that we provide guidance on
the treatment of bundled price concessions in the ASP calculation. A
number of these commenters stated that having specific guidance on this
issue would promote consistency in ASP reporting across manufacturers.
In addition, many commenters believed that we should issue another
proposed rule with a specific proposal and offer an opportunity for
public comment before finalizing any policy. Many of these commenters
were also concerned about how the treatment of bundled price
concessions in the ASP calculation would affect providers who do not
purchase the drug as part of a bundling arrangement.
Some commenters did not take a position on whether specific
guidance was needed on the treatment of bundled price concessions in
the ASP calculation, citing both the general desirability of having
guidance on various ASP reporting issues and concerns that a specific
methodology with regard to bundled price concessions and ASP might be
inflexible and hinder beneficial arrangements.
While most commenters did not offer a specific suggestion on a
potential methodology for the treatment of bundled price concessions in
the ASP calculation, a few commenters did. One commenter suggested that
Medicare adopt for ASP purposes the apportionment methodology that the
Medicaid rebate program requires manufacturers to use in the
calculation of AMP and BP. The current Medicaid National Drug Rebate
Agreement states that ``for Bundled Sales, the allocation of the
discount is made proportionately to the dollar value of the units of
each drug sold under the bundled arrangement.''
Another commenter suggested that we adopt the current Medicaid
rebate program methodology for apportioning bundled price concessions
described above, but create an exception for dominant drugs without
significant clinical alternatives. This commenter stated that drug
manufacturers do not have an incentive to provide discounts on dominant
drugs that do not have significant clinical alternatives. As a result,
the commenter believes that in situations where a ``dominant'' drug is
bundled with non-dominant drugs, none of the bundled price concessions
should be apportioned to the ``dominant'' drug. Furthermore, the
commenter stated that if the Medicaid methodology were employed without
an exception for dominant drugs, there would be the potential to lower
the ASP for a dominant drug in a bundle while increasing the ASP for
the other, non-dominant drugs in that bundle. The commenter believes
such a policy would result in an unfair competitive advantage and would
impose additional costs on the public health system and the Medicare
program. The commenter stated that determining whether a bundling
arrangement contained a dominant drug would be relatively easy for
manufacturers, and suggested a number of criteria such as a drug's
indication and risk profile, whether it is a single source product, its
patent-protected status, the drug's market share, the relative
magnitude of incentives provided on the drug both before and after it
is inclusion in the bundle, the effect of the introduction of the drug
into the bundle on the sales volume of other products in the bundle,
and Medicare expenditures on the drug relative to potential
alternatives.
In contrast, another commenter urged us not to adopt a methodology
where price concessions offered on drugs sold under bundling
arrangements are allocated across those drugs based on specified
criteria. The commenter stated that the ASP is intended to reflect the
prices available in the market for each product, and they believe
reallocating discounts across drugs is unnecessary and could result in
inaccurate ASPs, impaired beneficiary access, and inappropriate
financial incentives. Another commenter stated that manufacturers
should be allowed to make reasonable assumptions concerning the
treatment of bundled price concessions in the ASP calculation, and that
any bundled price concessions that meet a safe harbor to the OIG anti-
kickback statute should be handled like nonbundled price concessions
for ASP calculation purposes.
We also received some comments expressing satisfaction with current
contracts with drug manufacturers, and raising concerns that the
establishment of guidelines concerning the treatment of bundled price
concessions in the ASP calculation may require them to renegotiate
those contracts. In addition, we received some comments expressing
concern about the affect of bundling arrangements on physician and
health care provider's choice of products.
A number of commenters also raised the issue of Part B drugs being
bundled with non-Part B drugs or other products. Some stated that when
Part B drugs are bundled with other products, the bundled price
concessions should not be apportioned from other products to Part B
drugs, citing concerns that the Part B drug payment rates would be
inappropriately low. However, another commenter believes that bundled
price concessions should be allocated from non-Part B drug products to
Part B drugs, stating that it otherwise results in government
overpayments. A number of other commenters offered suggestions on how a
bundle should be defined, with several commenters suggesting that
discounts contingent on the placement of one or more products on a
formulary should not constitute a bundle. We also received comments
recommending that for the purposes of the ASP calculation we only
consider bundling arrangements to exist in situations where several
different products are sold for a single price, and the individual
products do not have separately identifiable prices.
Finally, we note that the MedPAC commented that it would be
examining the issue of bundled price concessions and the ASP in the
upcoming year.
Response: In considering the issue of bundled price concessions,
our goal is to ensure the accuracy of the ASP calculation and to
prevent the treatment of bundled price concessions in the ASP
calculation from creating inappropriate financial incentives. A number
of comments suggested, that potential bundling arrangements may be
complex and vary widely in terms of the structure and types of
performance requirements upon which a bundled discount may be
conditioned, the magnitude of price concessions, and the
characteristics of the drugs or other products included in the bundle
(for example, whether the bundle includes
[[Page 69675]]
Part B drugs only or other products, the market position of products in
the bundle, the relative sales volume of products in the bundle, and
how commonly a particular product is sold under a bundling
arrangement). Given the potentially wide range of bundling arrangements
that might exist, based on the information we currently have about such
arrangements, we are not in a position to determine, at this time,
whether there is a universal approach for treating bundled price
concessions in the ASP calculation that would address all potential
structures of bundling arrangements in a manner that would achieve our
goal of ensuring the accuracy of the ASP payment methodology and
preventing inappropriate financial incentives.
Furthermore, we note that we received a comment suggesting that
Medicare adopt a special policy concerning the treatment of bundled
price concessions in the ASP calculation for bundling arrangements that
include dominant drugs without significant clinical alternatives. We do
not believe it would be feasible for the Medicare program to establish
a definition of a dominant drug without significant clinical
alternatives that would be precise enough to clearly delineate when a
product was or was not dominant, especially given the potential for
great variation in the structure of bundling arrangements and the
characteristics of drugs included in those arrangements.
Since we do not yet fully understand the variety of bundling
arrangements that exist in the marketplace and how they are likely to
evolve over time, we believe it is important to be cautious in
establishing a specific methodology that all manufacturers must follow
for ASP purposes. Consequently, we are not establishing a specific
methodology that manufacturers must use for the treatment of bundled
price concessions for purposes of the ASP calculation at this time. In
the absence of specific guidance, the manufacturer may make reasonable
assumptions in its calculations of ASP, consistent with the general
requirements and the intent of the Act, Federal regulations, and its
customary business practices. Our intent in not being prescriptive in
this area at this time is to allow manufacturers the flexibility to
adopt a methodology with regard to the treatment of bundled price
concessions in the ASP calculation that, based on their particular
circumstances, will best ensure the accuracy of the ASP calculation and
not create inappropriate financial incentives.
Recognizing that the treatment of bundled price concessions in the
ASP calculation has implications for the integrity of the ASP payment
methodology, we will be paying close attention to this issue and may
provide more specific guidance in the future through rulemaking or
through program instruction or other guidance (consistent with our
authority under section 1847(c)(5)(C) of the Act) if we determine it is
warranted. Furthermore, as we continue to monitor this issue, we want
to be sure we are aware of concerns from all stakeholders, and thus we
encourage the public to relay additional information or concerns to us
on this issue as they may arise. In addition, we note that MedPAC has
indicated it will be studying this issue in the upcoming year, and we
look forward to its work in this area.
Finally, we emphasize that we expect manufacturers of drugs
reimbursed by Medicare Part B to comply with all applicable laws,
regulations, and legal decisions including, but not limited to the
Stark law, other relevant anti-kickback laws, antitrust laws, and laws
governing fair trade practices. Our discussion of this issue should not
be construed as an endorsement or authorization of any pricing
practices that contravene any laws, legal decisions, or regulations.
f. Other ASP Reporting Issues
Comment: Several commenters stated that it can be difficult for
manufacturers to determine which drugs are subject to the ASP reporting
requirements, considering that section 1927(b)(3)(A)(iii) of the
statute states that ASP data must be reported for drugs that are
described in subparagraph (C), (D), (E), or (G) of section 1842(o)(1),
or 1881(b)(13)(A)(ii) of the Act.
Response: In general, these subparagraphs refer to broad categories
of drugs covered by Medicare Part B such as drugs that are administered
incident to a physician's service in physician offices; certain
immunosuppressive, oral anticancer, and oral anti-emetic drugs supplied
by pharmacies; infusion drugs furnished through an item of DME;
intravenous immune globulin (IVIG), inhalation drugs furnished through
an item of DME, and separately payable drugs furnished by ESRD
providers. Because Medicare Part B drugs are subject to local coverage
determinations (LCDs) by the local claims processing contractors and
the scope of Part B drug coverage varies among contractors, we do not
maintain a list of all drugs covered under Part B at any given time in
all contractor jurisdictions. However, the following resources may be
helpful and can be retrieved at http://www.cms.hhs.gov/McrPartBDrugAvgSalesPrice/02_aspfiles.asp#TopOfPage.
The NDC to HCPCS crosswalk is posted quarterly on our Web site and
lists a majority of billing codes used by providers to submit claims
for drugs. We welcome ongoing feedback on the accuracy of the
crosswalk. We also publish a list of many of the frequently
administered drugs that are billed using the not otherwise classified
billing codes.
Comment: Several commenters suggested that we develop a formal
process for requesting a determination of whether for a particular NDC
the ASP reporting requirements apply. These commenters contend such a
process is necessary particularly for drugs that may be typically self-
administered, may be used for prevention or cosmetic purposes, are
available in potentially noncovered forms, and new drugs for which LCDs
have not yet been made.
Response: Medicare Part B drug coverage under title XVIII is
generally limited to certain drugs within specific benefit categories
as described at the beginning of this section. For the most part, we
believe manufacturers have identified the drugs for which they have an
ASP reporting obligation. Medicare has established processes for
issuing national, as well as local, coverage determinations for Part B
drugs and other services. Therefore, we are not persuaded by the
commenters that an entirely separate process is necessary for assisting
manufacturers in determining whether a drug qualifies for coverage
under Part B as a means of determining whether it is subject to the ASP
reporting requirements. We encourage manufacturers to contact us
directly to discuss the specifics of their ASP reporting concerns.
Comment: One commenter asked us to clarify whether manufacturers
have to include in their calculation of the ASP for a given NDC sales
of that NDC that are used for purposes not covered by Medicare Part B.
The commenter also wanted to know if NDCs that are labeled for Medicare
noncovered indications are subject to the ASP reporting provisions.
Response: With respect to whether a manufacturer may exclude sales
for noncovered uses from its calculation of the ASP for an NDC and
whether NDCs that are labeled for cosmetic or other typically
noncovered use (for example, contraception) are exempt from the ASP
reporting requirements, we believe the statute provides no such
exclusion.
[[Page 69676]]
Comment: Another commenter suggested that we clarify whether
manufacturers are required to report ASP data for infusion drugs
administered via DME and for a drug that is usually self-administered
and not covered by Medicare Part B (even if Medicare utilization data
suggests that there are small levels of utilization which a
manufacturer believes are contractor mistakes).
Response: Section 1927(b)(3)(A)(iii) of the Act specifies the drugs
for which manufacturers have to report ASP data, and it includes
infusion drugs furnished through an item of DME (by reference to
section 1842(o)(1)(D) of the Act). Manufacturers must report ASP data
for these drugs quarterly.
With respect to drugs that a manufacturer believes are noncovered
by Medicare despite a local claims processing contractor's payments for
the drug, we are aware of one such situation and have been working
closely with the manufacturer to resolve the matter. We encourage
manufacturers to contact us directly so that we can consider these
issues on a case-by-case basis.
Comment: One manufacturer expressed concern that submitting ASP
data for a noncovered drug may be viewed as a claim for coverage.
Response: We do not believe that reporting ASP data for a drug, in
the absence of other actions, would be a claim of coverage for the
drug.
Comment: A few commenters requested clarification regarding when a
manufacturer's reporting obligation for an NDC ends. One commenter
noted that ASP will not be a positive number unless there is product
sold in a quarter, and suggest there is no need to report the ASP after
the last lot is sold.
Response: In the March 3, 2006 Federal Register (71 FR 10975), we
clarified that manufacturers would no longer report ASP data for an NDC
beginning the reporting period after they report the ASP data for the
quarter during which the expiration date of the last lot sold occurs.
We are aware that a manufacturer's ASP will not be a positive value
unless a reportable sale occurs in the reporting period. However, for
single source drugs, manufacturers not only have a requirement to
report ASP but also wholesale acquisition cost (WAC).
Comment: Several commenters requested that we clarify whether the
manufacturer that holds title to the NDC is always responsible for
reporting the ASP data, and whether certain exceptions are permissible
such as when manufacturers establish licensing agreements or a
manufacturer divests a product but the NDC's labeler code is not
changed. Some commenters stated that the title-holding manufacturer
should determine which entity has the ASP reporting obligation. In
addition, a commenter requested that manufacturers not be required to
certify ASP data that they did not have access to or did not generate.
One commenter suggested that a manufacturer's ASP reporting obligation
would cease upon the transfer of the product to another manufacturer
with control over its pricing.
Response: For ASP purposes, the definition of manufacturer has the
same definition set forth in section 1927(k)(5) of the Act, which is
the definition included in the Medicaid drug rebate statute. We believe
that likewise the ASP reporting obligation should follow the process
established under the Medicaid drug rebate program, and we see no
reason to establish separate guidance at this time. Further, we believe
that manufacturers have means of dealing with these issues within their
business arrangements.
Comment: One commenter recommended that we provide guidance that
sales between wholly-owned subsidiaries of a common parent company
would not constitute a sale for ASP reporting and calculation purposes.
Response: We will consider the issue and any broader implications
it may have for the ASP calculation, and may issue additional guidance
if we determine it is appropriate.
Comment: Some manufacturers supported maintaining the same
definition of manufacturer for ASP purposes and for Medicaid AMP and BP
purposes. Several commenters requested that we formally state that
wholesalers and distributors do not have to report ASP data. A retail
pharmacy chain requested that retail pharmacies be excluded from the
definition of manufacturer in so far as they repackage drugs for
purposes of dispensing drugs to customers under state law. Similarly, a
mail order pharmacy requested that we clarify that mail order
pharmacies are not considered manufacturers. One commenter suggested
that only the holders of the product's New Drug Approval, Abbreviated
New Drug Approval, or Biologic License Application should be considered
manufacturers or repackagers for the purposes of reporting ASP.
Response: Under section 1847A of the Act, entities that fall under
the definition of manufacturers in section 1927(k)(5) of the Act must
report ASP data. This definition is separate from the FDA process for
drug applications. We interpret manufacturer for ASP purposes to have
the same meaning as under the Medicaid Rebate Agreement. Therefore,
wholesalers that relabel or repackage NDCs and pharmacies must report
ASP data to the extent that they qualify as manufacturers for Medicaid
drug rebate purposes.
Comment: A few commenters requested that we formalize our guidance
on whether sales in the United States include sales to purchasers in
the territories.
Response: We are not addressing this issue in the regulations text.
Comment: A few commenters requested that we incorporate into the
regulation our current guidance on the treatment of returned units.
Response: We issued guidance on our Web site in September 2004
instructing manufacturers not to make adjustments to the ASP
calculation to account for returns. We stated in that guidance
beginning with the data submission for sales during the third quarter
of 2004 and thereafter, manufacturers should not subtract the value of
the returns from the numerator of the ASP calculation and should not
subtract the number of units returned from the denominator. In other
words, the value of returns should not be included in the numerator and
the number of returned units should not be included in the denominator
when calculating the ASP for a reporting quarter. This continues be our
guidance as we study the issue further, but we have decided not to
place this guidance into the regulation text at this time.
Comment: Some of the commenters noted that, at this time,
manufacturers' reasonable assumptions continue to be an important
principle in ensuring that the calculation of ASP is appropriate.
Several commenters suggested we include in the final rule guidance we
have previously provided through Q&A that in the absence of guidance
manufacturers may make reasonable assumptions and should provide those
assumptions in their ASP submission.
Response: We agree with these commenters; manufacturers' reasonable
assumptions remain an important aspect of ASP reporting. The
complexities of each calculation can differ across manufacturers.
Therefore, it is essential that each manufacturer examine the facts and
complexities of its business practices and products to determine how it
will comply with the ASP reporting requirements. We posted a frequently
asked question on our Web site to inform manufacturers of the
importance of reasonable assumptions. In that guidance we state, ``In
the absence of specific guidance in the Act or Federal regulations, the
manufacturer
[[Page 69677]]
may make reasonable assumptions in its calculations of ASP, consistent
with the general requirements and the intent of the Act, Federal
regulations, and its customary business practices. These assumptions
should be submitted along with the ASP data and the signed
certification form.''
Comment: Some commenters wanted to know whether data on nominal
sales must be reported at this time as required under section
1927(b)(3)(A)(iii)(III) of the Act.
Response: We currently consider the requirements of section
1927(b)(3)(A)(iii)(III) of the Act for the reporting of nominal prices
for purposes of ASP to be met when the manufacturer reports its ASPs,
to the extent that the ASPs accurately account for nominal prices that
are excluded from the ASP calculation. Thus, we are not currently
requiring this information to be separately reported from the ASP. As
we gain more experience with the ASP system, we may require this
information to be separately reported in the future. We note that our
interpretation of the reporting requirement for nominal prices for
purposes of ASP has no effect on any Medicaid reporting requirement.
Comment: Several commenters stated that the statute does not
require certification of the ASP by the manufacturer's chief financial
officer (CFO), chief executive officer (CEO) or individual who has
delegated authority to sign for and reports directly to either the CFO
or CEO. A large international manufacturer commented that it was
impractical to have ASP reports certified by international executives.
Another manufacturer commented that its organizational structure did
not have executives matching the specified titles, and therefore, it
was impossible to comply with this requirement. Further, many
commenters stated that it was inappropriate to require certification of
the ASP data until sufficient guidance on how to calculate the ASP has
been established. A few commenters suggested that the certification
language should be revised to acknowledge that reasonable assumptions
had been made and to reflect the limited ability of manufacturers to
accurately estimate lagged price concessions and determine whether fees
were passed on in whole or in part. Another commenter stated that the
penalties for failing to report accurate ASP data are a sufficient
deterrent to abuse, and the certification is unnecessary and should be
eliminated.
Response: Because of the consequences for failing to submit
accurate and timely ASP data, we continue to believe there is good
reason to require that each ASP report be certified by the manufacturer
at this time. With the ASP data being the basis of Medicare payment
rates for the vast majority of Part B covered drugs and biologicals, we
believe that certification requirement is an important program
safeguard. We acknowledge the operational constraints some
manufacturers may experience in obtaining certain senior executive
level signatures to coincide with the quarterly ASP reporting
deadlines, although our experience is that nearly all manufacturers are
able to do so without causing a delay in reporting their ASP data
timely.
Comment: Several commenters noted that the Medicaid AMP and BP can
be restated within the specified time period. These commenters
requested that we establish procedures to identify potentially errant
ASP data and to allow for corrections of ASP data.
Response: If a manufacturer has good cause for resubmitting its
quarterly ASP data, it may do so following the submission instructions
available at http://questions.cms.hhs.gov/cgi-bin/cmshhs.cfg.
Resubmission of ASP data does not constitute a release from liability
for failure to submit timely and accurate ASP data.
Comment: Several manufacturers suggested that the reasonable
assumptions submitted along with the ASP data be afforded the same
confidential protections as specified for the ASP data.
Response: We provided guidance on our Web site addressing this
issue. That guidance states, ``As indicated in section 1927(b)(3)(D) of
the Act, as amended by MMA section 303(i)(4)(D), information disclosed
by the manufacturer in connection with the requirement for ASP data
submission is confidential and, not withstanding other laws, shall not
be disclosed by the Secretary (or contractor therewith) in a form which
discloses the identity of a specific manufacturer or wholesaler, prices
charged for drugs by such manufacturer or wholesaler, except as
necessary by the Secretary to carry out the provisions of section 1847A
or 1847B of the Act, and to permit the OIG, the Comptroller General,
and the Director of the Congressional Budget Office to review the
information provided. http://questions.cms.hhs.gov/cgi-bin/cmshhs.cfg.
As is good practice with any sensitive material, manufacturers should
clearly mark their reported ASP data, if applicable, to indicate that
the information contained therein is confidential, proprietary, or
contains trade secrets, for example, as appropriate.
Comment: One commenter asked that we clarify that the number units
to be reported are the number of units sold excluding exempted sales.
Response: The commenter is correct. Effective with the publication
of the FY 2007 IPPS final rule (August 18, 2006, 71 FR 47870), we
revised the definition of unit in Sec. 414.802. ``Unit'' means the
product represented by the 11-digit NDC. During the first 3 years of
the CAP (as defined in Sec. 414.902), the method of counting units
excludes units of CAP drugs (as defined in Sec. 414.902) for use under
the CAP (as defined in Sec. 414.902). The CAP is the Competitive
Acquisition for Outpatient Part B Drug and Biologicals which began in
July 2006. Units of drugs sold to an approved CAP vendor for use under
the CAP are excluded from the ASP calculation. Manufacturers must
report the number of units sold after adjusting for exempted sales,
including exempted sales known on a lagged basis.
Comment: In response to the April 6, 2006 IFC, a commenter stated
that some manufacturers submit AMP and then restate it in subsequent
periods to take into account rebates. The commenter requested that we
provide assurance that they will not be liable for misrepresentation of
nominal sales, if the manufacturer bases its nominal sales on AMP for
the reporting quarter and then the manufacturer modifies AMP
subsequently to take into account rebates.
Response: Nominal sales for ASP purposes are calculated based on
the AMP for the reporting quarter. We have not provided guidance on how
a manufacturer should handle identification of nominal sales if current
reporting quarter AMP is subsequently restated for Medicaid purposes.
We did not receive comments on this issue in response to our request in
the proposed rule regarding the method manufacturers must use to
identify nominal sales. We believe that maunfacturers may have
considered this issue in making their comments in support of continued
use of the AMP as the basis for determining nominal sales excluded from
the calculation of ASP. We will continue to work with manufacturers to
determine if further guidance on this issue is warranted. With regard
to the comment concerning liability, if the Secretary determines that a
manufacturer has made a misrepresentation in the reporting of its ASP
for a drug, the Secretary may apply a civil money penalty as specified
in section 1847A(d)(4) of the Act.
Comment: One commenter suggests we explore methods of receiving ASP
data by e-mail. This commenter also
[[Page 69678]]
recommends we include information in the final rule on where and how to
submit ASP data.
Response: At this time, we do not permit electronic mail submission
of ASP data because the confidentiality of the ASP data would not be
assured. However, we continue to explore opportunities for enhancing
the efficiency of the ASP submission process. Procedural information on
how and where to submit ASP data is provided in a Q&A on our Web site.
We believe it is best to provide information on the logistics of how
and where to submit the ASP data through our Web site, which can be
updated more quickly than a regulation.
Comment: We received comments recommending we provide guidance in
the final regulation on requirements related to the reporting of WAC
and urged Addendum A to be revised to include this information.
Response: In the CY 2006 PFS final rule, we clarified that
manufacturers must report WAC for all single source drugs (including
new drugs) each reporting period in addition to reporting ASP.
Manufacturers must report the WAC in effect on the last day of the
reporting period. Effective July 2006, we revised the reporting
template, Addendum A, to include a specific column for reporting WAC.
Addendum A can be found on our Web site at-- http://www.cms.hhs.gov/McrPartBDrugAvgSalesPrice/.
Comment: We received comments suggesting that we publicize the NDC-
HCPCS crosswalk and have a process for informing manufacturers of where
changes have occurred, and a process for soliciting and responding to
input on the crosswalk. Also, they suggest establishing procedures so
manufacturers can determine whether we are defining package codes
correctly.
Response: Every quarter, we publish on the CMS Web site a crosswalk
of NDCs to HCPCS codes. Included in the crosswalk is information on the
package size and package quantity that we believe is reflected by each
NDC. The crosswalk file provides an e-mail address
([email protected]) to which individuals can send comments.
Furthermore, as of July 2006, manufacturers are now required to report
with their ASP submission specific information on the package size of
each NDC as specified in more detail in the Appendix A data elements
guide on our Web site.
Comment: We received comments requesting clarification of how and
when civil monetary penalties would apply in certain situations where
ASP was misreported.
Response: If the Secretary determines that manufacturer has made a
misrepresentation in the reporting of its ASP for a drug, the Secretary
may apply a civil money penalty in section 1847A(d)(4) of the Act.
Comment: One commenter suggested that we consider requiring
manufacturers to report ASP data monthly.
Response: Section 1927(b)(3) of the Act sets forth the quarterly
reporting requirement. We believe changes to the frequency of ASP
reporting would require a statutory change.
Comment: One commenter noted that for Medicaid BP determinations
manufacturers may not exempt prices given to State pharmacy assistance
programs that we have not identified as a State Pharmaceutical
Assistance Program excluded from the Medicaid BP and may not exclude
Medicaid supplemental rebates that are not under an approved
supplemental rebate agreement. This commenter asked whether the same
rule applies to excluding exempt sales from the ASP calculation.
Response: To be excluded from the ASP calculation, the Medicaid
supplemental rebates must be under an approved supplemental rebate
agreement authorized by us through a Medicaid State plan, and the State
pharmacy assistance programs must be identified by us as State
Pharmaceutical Assistance Program excluded from the Medicaid BP.
Comment: We received a comment in response to the April 6, 2004
IFC, asking us to provide more clarification on a methodology that we
indicated manufacturers should use in situations where a manufacturer
is unable to associate price concessions with individual 11-digit NDCs.
The commenter requested information on several technical aspects of the
formula, including one scenario involving bundled price concessions.
Response: In the April 6, 2004 IFC with comment, we indicated that
if a manufacturer is unable to associate price concessions to the
individual NDC level, the manufacturer should associate those price
concessions within the group of NDCs for which it can associate the
price concessions based on the percentage of sales (in dollars) for the
group of NDCs that is attributable to each individual NDC. This
guidance was issued in the early stages of ASP implementation, and was
intended to address situations where manufacturers are unable to
associate price concessions to the 11-digit NDC level such as when a
manufacturer reporting maintains data on rebates at the drug level
rather than at the 11-digit NDC level.
In response to the commenter's request for clarification on a
technical aspect of the methodology described above in a situation
involving bundled price concessions, we are clarifying in this final
rule with comment that this policy was not intended to be guidance on
the treatment of bundled price concessions (for example, when price
concessions on one drug are contingent on the purchase of one or more
other drugs) in the ASP calculation. As discussed in more detail
elsewhere in this preamble, we have not provided specific guidance on
the methodology manufacturers should use for the treatment of bundled
price concessions in the ASP calculation. In terms of the commenter's
request for additional clarification on other technical aspects of the
calculation described above, we believe the level of detail prescribed
on the technical aspects of the calculation is sufficient, given the
variation in price concession offerings across manufacturers.
After consideration of the public comments, we are finalizing
subpart J (Sec. Sec. 414.800 through 414.806) by--(1) revising Sec.
414.802 and Sec. 414.804 as specified in this section of the preamble
to this final rule with comment; and (2) incorporating the provisions
of Sec. 414.800 and Sec. 414.806 as specified in the April 6, 2004
IFC without change.
2. Intravenous Immune Globulin (IVIG)
Comment: We received several comments urging the continuation of
the 1-year temporary preadministration-related services fee for IVIG
that we established for 2006. Commenters stated that there continue to
be concerns with IVIG access and availability and that eliminating the
fee will have an adverse impact on beneficiary access to care.
Furthermore, some indicated that we did not provide any rationale in
the proposed rule for why the fee was no longer needed.
A number of commenters expressed concerns about the adequacy of
Medicare's drug and drug administration payment rates for IVIG, and
made some suggestions for changes to these payment rates that they have
previously expressed to us. For example, some urged us to take actions
such as establishing separate HCPCS codes for each IVIG product,
increasing payment for IVIG administration in physicians' offices, and
instituting a payment adjustment to the ASP-based payment rates for
IVIG.
One commenter provided information from a survey conducted of 800
patients with primary immune deficiency
[[Page 69679]]
syndrome. The commenter stated that since the beginning of 2005,
Medicare patients receiving IVIG have been more likely than patients
with other types of insurance to report a shift in site of care,
increased intervals between infusions, reduced IVIG dosages, and
adverse health effects, and they believe that this is the result of
Medicare reimbursement issues.
Response: We recognize the importance of IVIG to patients who need
it and we are concerned about reports of problems with IVIG access and
availability. Since 2005, we have taken several specific actions that
are within our statutory authority in response to the IVIG concerns
that have been raised, including creating separate billing codes for
lyophilized and non-lyophilized IVIG in April 2005, having discussions
with manufacturers about their ASP data to confirm that their ASPs have
been developed in accordance with applicable guidance, and for 2006
establishing a temporary additional payment for IVIG preadministration-
related services to compensate physicians and hospital OPDs for extra
resources expended on locating and obtaining appropriate IVIG products
and on scheduling patients infusions during a period where there may be
temporary market instability. In addition, we continue to work with
manufacturers, patient groups, and stakeholders to understand the
present situation and to assess potential actions that could help
ensure an adequate supply of IVIG and patients receiving appropriate,
high quality care.
Furthermore, there are currently two studies underway in HHS
concerning IVIG. The HHS Assistant Secretary for Planning and
Evaluation has commissioned a study to better understand the market for
IVIG and evaluate the demand, supply, and access to IVIG. The HHS OIG
is also conducting a study on availability and pricing of IVIG. We
anticipate that these studies will provide more information on IVIG
supply, demand, and pricing.
With several studies on IVIG not yet completed and with comments
from stakeholders suggesting that some beneficiaries are experiencing
IVIG access issues such as delayed treatments and site of service
shifts, we believe it is appropriate to continue the temporary IVIG
preadministration-related services payment into CY 2007 to help ensure
continued patient access to IVIG. We will continue to review IVIG
access during CY 2007 as additional information becomes available, and
we will discontinue this temporary preadministration-related service
payment during CY 2007 through rulemaking if we determine it is no
longer warranted. Consequently, in 2007, we will temporarily allow a
separate payment for each day of IVIG administration to physicians and
hospital OPDs that administer IVIG to Medicare beneficiaries. This
payment is for the extra resources expended on locating and obtaining
appropriate IVIG products and on scheduling patients' infusions during
this time when there may continue to be transient disruptions in the
marketplace. In 2007, the preadministration-related service payment
will continue to be billed under the same HCPCS code as 2006: G0332,
preadministration-related services for intravenous infusion of
immunoglobulin, per infusion encounter (This service is to be billed in
conjunction with administration of immunoglobulin). This payment will
on average be about $71 per day of IVIG administration in physicians'
offices. The payment for preadministration-related services is in
addition to the separate payments Medicare makes for the IVIG product
itself and its administration.
We note that for 2007 we reviewed and revised the resource based
relative value units crosswalk for G0332. We continue to believe the
administrative resources associated with IVIG preadministration-related
services are similar to the clinical staff resources associated with
ESRD management services, where both types of services are typically
conducted over the course of a month, without requiring face-to-face
visits with clinical staff for this ongoing preparation for treatment
of these patients. Considering the expected staff resources required to
prepare for IVIG infusions for patients who require them, we believe
those resources are greater than the lowest level ESRD-related service
described by HCPCS code G0319, End stage renal disease (ESRD) related
services during the course of treatment, for patients 20 years of age
and over; with one face-to-face physician visit per month, but we do
not believe they are as great as those required by the mid-level ESRD-
related code G0318, End stage renal disease (ESRD) related services
during the course of treatment, for patients 20 years of age and over;
with 2 or 3 face-to-face physician visits per month. Therefore, for
2007, we have crosswalked G0332 to a 50 percent blend of the 2007
transitional PE RVUs for G0318 and G0319. As we did for 2006, we have
not allocated physician work RVUs to G0332 since we do not believe
there is physician work associated with G0332.
We believe that continuation of this temporary separate payment
provided through G0332 in CY 2007 for the physician office and hospital
outpatient resources associated with additional IVIG preadministration-
related services will help facilitate beneficiary access to care in
this current period where there may be continuing market fluctuations
for IVIG products. At the same time, we will continue to work with the
IVIG community, manufacturers, providers, and other stakeholders, and
will be monitoring IVIG market developments and access to care closely.
Commenters made several suggestions for changes to Medicare IVIG-
related payments. Regarding comments requesting the establishment of
brand-specific HCPCS codes for IVIG products, while HCPCS coding is
outside the scope of this rulemaking, we note that HCPCS coding
procedures do not provide for brand-specific coding. For further
discussion of HCPCS coding procedures, see http://www.cms.hhs.gov/medicare/hcpcs/codpayproc.asp.
Commenters also expressed concern regarding Medicare ASP+6 percent
payment rates for IVIG, suggesting we make an adjustment to the payment
rate. Section 1847(o)(1)(E) of the Act specifies that the payment
amount for IVIG furnished in physicians' offices and the home will be
the amount provided under section 1847A of the Act. With limited
exceptions not applicable here, section 1847A of the Act specifies that
the payment amount is 106 percent of a drug's ASP. We do not have the
discretion to adjust the payment rate upward by adjusting the
percentage that is added on to the ASP to arrive at the payment rate.
While some commenters suggested we use inherent reasonableness
authority to increase the IVIG payment rate, we do not believe that we
have the data to support a determination concerning inherent
reasonableness. Finally, we received several comments requesting that
we classify IVIG therapy as a biological response modifier. We note
that the term ``biological response modifier'' is used in the text
preceding CY 2006 CPT codes, and as such, we refer commenters to the
AMA CPT Editorial Panel, as they are the creators and maintainers of
CPT codes and CPT code instructions.
3. Clotting Factor Furnishing Fee
Section 303(e)(1) of the MMA added section 1842(o)(5) of the Act
which requires the Secretary, beginning in CY 2005, to pay a furnishing
fee, in an amount the Secretary determines to be appropriate, to
hemophilia treatment
[[Page 69680]]
centers and homecare companies for the items and services associated
with the furnishing of blood clotting factor. Section 1842(o)(5)(C) of
the Act specifies that the furnishing fee for clotting factor for years
after CY 2006 and subsequent years will be equal to the fee for the
previous year increased by the percentage increase in the consumer
price index (CPI) for medical care for the 12-month period ending with
June of the previous year.
The 2006 furnishing fee for clotting factor is $0.146. The percent
increase in the CPI for medical care for the 12-month period ending
with June 2006 is 4.1 percent. Consequently, the furnishing fee will be
$0.152 per unit clotting factor for CY 2007. While the furnishing fee
payment rate is calculated at 3 digits, the actual amount paid to
providers and suppliers is rounded to 2 digits.
4. Widely Available Market Prices (WAMP) and Average Manufacturer Price
(AMP) Threshold
Section 1847A(d)(1) of the Act states that ``the Inspector General
of HHS shall conduct studies, which may include surveys to determine
the widely available market prices (WAMP) 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 ASP
under this section for drugs and biologicals with--
The WAMP for these drugs and biologicals (if any); and
The AMP (as determined under section 1927(k)(1) of the
Act) for such drugs and biologicals.''
Section 1847A(d)(3)(A) of the Act states that, ``the Secretary may
disregard the ASP for a drug or biological that exceeds the WAMP or the
AMP for such drug or biological by the applicable threshold percentage
(as defined in paragraph 1847A(d)(3)(B)).'' The applicable threshold is
specified as 5 percent for CY 2005. For CY 2006 and subsequent years,
section 1847A(d)(3)(B) of the Act establishes that the applicable
threshold is the percentage applied thereafter, subject to such
adjustment as the Secretary may specify for the WAMP or the AMP, or
both. In CY 2006, we specified an applicable threshold percentage of 5
percent for both the WAMP and AMP. We based this decision on the
limited data available to support a change in the current threshold
percentage.
For CY 2007, we proposed to specify an applicable threshold
percentage of 5 percent for the WAMP and the AMP. At present, the OIG
is continuing its comparison of both the WAMP and the AMP. Currently,
we do not have data that suggests that another level is more
appropriate. Therefore, we believe that continuing the 5 percent
applicable threshold percentage for both the WAMP and AMP is
appropriate.
We received numerous comments regarding our decision to maintain
the WAMP and AMP threshold at 5 percent, as well as our request for
comments regarding operational issues surrounding implementation of the
5 percent threshold.
Comment: Several comments supported our decision to continue using
5 percent as the threshold and commended us for requesting comments on
the important operational issues associated with price comparisons.
Other commenters acknowledged that that there are many operational
issues involved with implementation of the 5 percent threshold and
advised us to proceed cautiously before adjusting payment amounts.
These commenters stated that the AMP and the ASP use different
methodologies when accounting for price concessions and such
differences could result in varied ASP and AMP values. They also
indicated that we have never issued a final rule describing how the AMP
is calculated. The commenters indicated that such differences must be
accounted for prior to substituting the WAMP or the AMP for the ASP.
Commenters also encouraged us to provide stakeholders with an
opportunity to comment through rulemaking prior to proceeding with the
substitutions of payment allowances. Commenters were particularly
interested in the methodology utilized by the OIG in conducting its
surveys.
Response: We understand that there are complicated operational
issues associated with potential payment rate substitutions. Therefore
we will proceed cautiously and provide stakeholders, particularly
manufacturers of drugs impacted by potential price substitutions, with
adequate notice of our intentions regarding such, including the
opportunity to provide input with regard to the processes for
substituting the WAMP or the AMP for the ASP. As required by statute,
we are finalizing our proposal to establish the WAMP and AMP threshold
at 5 percent for CY 2007.
5. Payment for Drugs Furnished During CY 2006 and Subsequent Years in
Connection With the Furnishing of Renal Dialysis Services if Separately
Billed by Renal Dialysis Facilities
In the CY 2006 PFS final rule (70 FR 70116), we stated that payment
for a drug furnished during CY 2006 in connection with renal dialysis
services and separately billed by freestanding renal dialysis
facilities and hospital-based facilities would be based on section
1847A of the Act. For CY 2007, we clarified that the policy would
extend for CY 2006 and subsequent years until otherwise specified. We
received comments regarding our policy clarification of the policy, as
well as our intention to extend the policy beyond CY 2006 until
otherwise specified.
Comment: Several commenters supported our decision to clarify that
the payment policy for separately-billed ESRD drugs applied to CY 2006
and subsequent years until otherwise specified. These commenters viewed
the current payment policy as the best option available under the
statute, citing consistency with the methodology used to pay for other
Part B drugs. Commenters indicated that the current methodology was
more accurate and easier to administer than attempting to update a
prior year's acquisition cost data. Other commenters, while applauding
our decision to clarify the policy, explicitly encouraged us to be more
direct and expressly state that the payment for drugs furnished in
connection with renal dialysis services and separately billed by
freestanding renal dialysis facilities and hospital-based facilities
will be based on ASP+6 percent. They indicated that stating that
payment would be based on ASP+6 percent rather than stating that
payment will be based on section 1847A of the Act would avoid
confusion, provide clarity for the provider community, and ensure
consistency with current regulatory language.
Response: We appreciate the commenters who acknowledge that the
current payment methodology is the most appropriate option available.
We also thank the commenters who noted the discrepancy between the
preamble language and regulatory text. We acknowledge that we
inadvertently made reference to ASP+6 percent in our regulatory text
instead of referring to section 1847A of the Act. In accordance with
section 1881(b)(13)(A)(iii), payment for drugs furnished in 2006 and
subsequent years will be based on the acquisition costs or the amount
determined under section 1847A of the Act, as the Secretary may
specify. The
[[Page 69681]]
amount determined under section 1847A of the Act, except in limited
circumstances, is ASP+6 percent. Therefore, we are revising the
regulatory text to state that payment for a drug furnished during CY
2006 and subsequent years, until otherwise specified, in connection
with renal dialysis services and separately billed by freestanding
renal dialysis facilities and hospital-based facilities is based on
section 1847A of the Act.
Comment: MedPAC expressed concern that there is no recent evidence
that ASP+6 percent reflects the variation in the acquisition of costs
of physicians and dialysis providers and thus, the current payment rate
should not be set indefinitely. They also recommended that in the
future we periodically collect acquisition cost data from providers to
gauge the appropriate percentage of ASP for the payment amount,
acknowledging that an analysis of this data could lead to a different
percentage amount for the payment rate.
Response: We acknowledge MedPAC's recommendations. We will continue
to monitor the payment methodology in relation to the acquisition costs
of physician and dialysis providers for future analysis.
6. Other Issues
Comment: We have received several comments requesting the creation
or revision of billing codes for certain drug products.
Response: Requests for the creation of new or revised billing codes
for drug products is outside the scope of this rulemaking. There is a
separate, well-established, process for the public to make requests for
new or revised billing codes for drug products through the HCPCS panel.
More information on the HCPCS coding process can be obtained at the
following Web site: http://www.cms.hhs.gov/MedHCPCSGenInfo/.
Comment: We received a few comments recommending that Medicare
increase the pharmacy supplying fee it pays for immunosuppressive, oral
anti-cancer, and oral-antiemetic drugs for 2007. We also received a
comment suggesting that we have a process in place to increase the
supplying fee over time so that it remains adequate. In addition, we
received a comment asking that we make clear in the final rule that we
will continue to reimburse the supplying fee in 2007 at the 2006 rates.
Response: We pay a supplying fee for Medicare Part B drugs and
biologicals eligible for a supplying fee are 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.
For 2006, we pay a supplying fee of $24 per prescription for the first
prescription in a 30-day period, and $16 per prescription for all
subsequent prescriptions in a 30-day period. Medicare also pays a
special supplying fee rate of $50 for the first immunosuppressive
prescription after a Medicare covered transplant. Since we did not
propose a change to these rates for 2007, they will continue to be in
effect in 2007.
Comment: We received a comment asking that we clarify how infusion
drugs administered through DME will be paid in 2007, in light of the
competitive bidding program that is authorized to be phased-in
beginning in 2007.
Response: Beginning in 2004, infusion drugs furnished through an
item of DME covered under section 1861(n) of the Act are paid at 95
percent of the AWP in effect as of October 1, 2003. These payment rates
continue until such time as the Secretary establishes a competitive
acquisition program for these drugs in specific competitive acquisition
areas, in which case the payment rates in the competitive acquisition
areas will be determined under the CAP. Beginning in 2007, the
Secretary has the authority, under section 1847 of the Act, to phase-in
implementation of the competitive acquisition program, which will be
the subject of separate rulemaking.
G. Revisions Related to Payment for Renal Dialysis Services Furnished
by End Stage Renal Disease (ESRD) Facilities
In the CY 2007 PFS proposed rule (71 FR 48982), we outlined the
proposed updates to the case-mix adjusted composite rate payment system
established under section 1881(b)(12) of the Act, added by section 623
of the MMA. These included updates to the drug add-on component of the
composite rate system, as well as the wage index values used to adjust
the labor component of the composite payment rate.
Specifically, we proposed the following provisions which are
described in more detail below in this section.
A method to annually calculate the growth update to the
drug add-on adjustment required by section 1881(b)(12) of the Act, as
well as an estimated growth update adjustment to the add-on amount for
CY 2007.
An update to the wage index adjustments to reflect the
latest hospital wage data, including a BN adjustment to the wage index
for CY 2007.
We received a total of 10 comments from the ESRD community that
represented major organizations and concerned individuals. The comments
and responses are summarized in the following sections.
Comment: Several comments focused on the need to specify that
payment for separately billable ESRD drugs in CY 2007 will continue at
ASP +6 percent. The comments cross referenced a section in the CY 2007
PFS proposed rule (71 FR 49004) that discussed proposals for
establishing the ASP rate for WAMPs and AMP. This proposal preceded the
section outlining the proposed payment changes for ESRD facilities, and
thus led to some confusion regarding the use of the ASP-based payment
methodology for separately billable ESRD drug payments in CY 2007.
Response: As noted in section II.E.5., entitled, ``Payment for
Drugs Furnished during CY 2006 and Subsequent Years in Connection with
the Furnishing of Renal Dialysis Services if Separately Billed by Renal
Dialysis Facilities,'' we proposed no policy changes to the approach
that we currently use to pay for separately billed ESRD drugs.
Therefore, for CY 2007, payment for separately billable drugs furnished
by ESRD facilities will continue at ASP+6 percent in accordance with
section 1847A of the Act.
Comment: We received a comment recommending that we implement the
MedPAC's recommendation that the composite rate be equalized between
hospital-based and independent dialysis facilities. The commenter
stated that, notwithstanding the language under 1881(b)(7) of the Act,
we had the statutory authority to administratively revise the current
hospital-based/independent facility rate structure to provide the same
rate to both facility types.
Response: While section 1881(b)(7) of the Act provided some
discretion in establishing the initial composite payment rates, it did
specify the need to differentiate between hospital-based and other
renal dialysis facilities. Therefore, based on our analysis of cost
differences, we established separate composite rates for hospital-based
facilities and independent facilities. Section 1881(b)(12) of the Act,
added by section 623(d) of MMA, established a new basic case-mix
adjusted payment system. The statute instructed us to use, as one of
the elements of the new system, the services comprising the
[[Page 69682]]
composite rate established under section 1881(b)(7) of the Act. We
believe that the statute requires that we carry forward the composite
rate structure established in accordance with section 1881(b)(7) of the
Act prior to enactment of MMA. The statute directed us to substitute,
in place of a payment system based solely on the composite rate
established under section 1881(b)(7) of the Act, a payment system
comprised of the original composite rate, incorporating the services
included under that composite rate, plus a drug add-on component.
Moreover, the 1.6 percent update established under section 623(a) of
MMA clearly contemplated that the update would be applied to ``such
composite rate payment amounts * * *'' in effect in the prior year.
Therefore, in accordance with section 1881(b)(12) of the Act, we will
continue to maintain the separate composite rates for hospital-based
and freestanding facilities that were established under section
1881(b)(7) of the Act.
1. Growth Update to the Drug Add-On Adjustment to the Composite Rates
Section 623(d) of the MMA added section 1881(b)(12)(B)(ii) of the
Act which required the establishment of an add-on to the composite rate
to account for changes in the drug payment methodology stemming from
enactment of the MMA. Section 1881(b)(12)(C) of the Act provides that
the drug add-on must reflect the difference in aggregate payments
between the revised drug payment methodology for separately billable
ESRD drugs (acquisition costs in CY 2005; ASP+6 percent in CY 2006) and
the AWP payment methodology in effect in CY 2004.
In addition, section 1881(b)(12)(F) of the Act requires that,
beginning in CY 2006, we establish an annual update to the drug add-on
to reflect the estimated growth in expenditures for separately billable
drugs and biologicals furnished by ESRD facilities. This growth update
applies only to the drug add-on portion of the case-mix adjusted
payment system.
The CY 2006 drug add-on adjustment to the composite rate is 14.5
percent. The drug add-on adjustment for CY 2006 incorporates an
inflation adjustment of 1.4 percent. This computation is explained in
detail in the CY 2006 PFS final rule with comment period (70 FR 70162).
We note that the drug add-on adjustment of 14.7 percent that was
published in the CY 2006 PFS final rule with comment period did not
account for the 1.6 percent update to the composite rate portion of the
basic case-mix adjusted payment system that was subsequently enacted by
the DRA, effective January 1, 2006. Since we compute the drug add-on
adjustment as a percentage of the weighted average base composite rate,
the drug add-on percentage was decreased to account for the higher
composite payment rate resulting in a 14.5 percent add-on adjustment
for CY 2006. This adjustment was necessary to ensure that the total
drug add-on dollars remained constant.
a. Estimating Growth in Expenditures for Drugs and Biologicals for CY
2007
In developing the growth update to the drug add-on for CY 2006, we
conducted a trend analysis of prior years' ESRD drug expenditure data
(2001 through 2004). All 4 years of data used for the trend analysis
reflected expenditures associated with payment for separately billed
drugs and biologicals under the AWP methodology. Therefore, we could
develop growth estimates for CY 2006 using comparable historical
expenditure data. To extend the trend analysis for CY 2007, we would
need to include drug expenditure data from CY 2005. However, in CY
2005, section 1881(b)(13)(A)(ii) of the Act required that we use a
different drug payment methodology, based on average acquisition costs,
rather than the AWP methodology used in prior years. Therefore, ESRD
drug expenditure data for CY 2005 are not comparable to expenditure
data for CY 2001 through CY 2004 for trend analysis purposes. This data
issue will extend to subsequent years' data as well since we are now
paying for separately billable drugs using ASP+6 percent. Because we do
not have comparable data on which to base continuing trend analysis, we
decided to re-evaluate our methodology for updating the drug add-on
adjustment.
Section 1881(b)(12)(F) of the Act specifies that the drug update
must reflect ``the estimated growth in expenditures for drugs and
biologicals that are separately billable * * *'' By referring to
``expenditures'', we believe the statute contemplates that the update
would account for both increases in drug prices, as well as increases
in utilization of those drugs.
In order to meet this requirement, we proposed an update
methodology that uses the producer price index (PPI) for prescription
drugs as a proxy measure of drug pricing growth, in conjunction with an
estimate of per patient growth in drug utilization. We proposed to
estimate growth in per patient utilization of drugs by using historical
data from 2004 and 2005.
In addition, we indicated that we would reconsider our methodology
for updating the drug add-on component of the payment system when we
have sufficient historical data reflecting the revised drug payment
methodology using ASP pricing.
Comment: Commenters were generally favorable toward using a
standard index to update the drug add-on adjustment, but were concerned
about the calculation of the utilization factor. They suggested that we
use our National Health Expenditures (NHE) projection that uses only
the Medicare Part B component of the projection to estimate
prescription drug expenditures.
Response: We do not believe that the Part B drug projections
included in the NHE projections would be the best proxy for the growth
in ESRD drug expenditures. The NHE projections are based on the
economic, demographic and Medicare spending projections contained in
the Medicare Trustees Report, as opposed to an independent forecast of
economic assumptions, such as the Global Insights projections of the
PPI for prescription drugs that are used in our Medicare market basket
forecasts to update many of our payment systems. The NHE projection
modeling approach is at an aggregate level. It does not capture the
nuances of both labor and economic markets as accurately as does the
specific PPI forecast from Global Insights, Inc. We believe that using
the PPI is a more accurate predictor of ESRD drug pricing growth. In
addition, we believe that estimating utilization from reported ESRD
claims data, as discussed below in this section, is superior to using
NHE's Part B projections.
b. Estimating Growth in Per Patient Drug Utilization
To isolate and project the growth in per patient utilization of
ESRD drugs for CY 2007, we needed to remove the enrollment and price
growth components from the latest historical drug expenditure data and
consider the residual utilization growth. We proposed to use total drug
expenditure data from CYs 2004 and 2005 to estimate per patient
utilization growth for CY 2007.
We first estimated total drug expenditures. For the CY 2007 PFS
proposed rule (71 FR 49007), we used the final CY 2004 ESRD facility
claims data and the latest available CY 2005 ESRD facility claims data,
updated through December 31, 2005. That is, for CY 2005 we used claims
that were received, processed, paid, and passed to the National Claims
History File as of December 31, 2005. For this final rule with comment
period, we are using
[[Page 69683]]
more updated CY 2005 claims with dates of service for the same time
period. This updated CY 2005 data file includes claims that were
received, processed, paid, and passed to the National Claims History
File as of June 30, 2006.
For the proposed rule, we adjusted the December 2005 file to
reflect our estimate of what the total drug expenditures would be using
the final June 30, 2006 bill file for CY 2005. The net adjustment we
applied to the CY 2005 claims data was an increase of 13 percent to the
December 2005 expenditure data. For this final rule, we are using the
CY 2005 claims file as of June 30, 2006, which represents the final
claims file for that year. Next, we removed the enrollment and price
growth components from total estimated drug expenditures for CYs 2004
and 2005.
To calculate the per patient utilization growth, we removed the
enrollment component by using the growth in enrollment data between
2004 and 2005. This was approximately 3 percent. To remove the price
effect, we used a two-step process. For the proposed rule, we first
calculated a weighted average between erythopoeitin (EPO) and non-EPO
price growth factors to account for the growth in pre-MMA pricing
between 2004 and 2005. Since EPO was priced at $10 per thousand units
prior to the implementation of the MMA, there was no growth for EPO
between 2004 and 2005. For the non-EPO drugs, we used the PPI as a
proxy for the growth between the 2 years to maintain consistency with
the established methodology for calculating the drug add-on adjustment
for CY 2005 which used the PPI to estimate the price growth in
separately billable drugs (69 FR 66321). For the proposed rule, we next
incorporated the estimated negative 13 percent weighted price
difference between 2005 AWP and 2005 AAP pricing as was published in
the CY 2005 PFS final rule with comment period (69 FR 66319 through
66334). This two-step process accounts for the price effect from 2004
to 2005, that is, an overall 12 percent reduction in price between 2004
and 2005.
For the proposed rule, following the removal of the enrollment and
price effects from the expenditure data, we expected the residual
growth to reflect the per patient utilization growth. To remove the
enrollment and price effects, we divided the product of the enrollment
growth of 3 percent (1.03) and the price reduction of 12 percent (1.00
- 0.12 = 0.88) into the total drug expenditure decrease between 2004
and 2005 of 9 percent (1.00 - 0.09 = 0.91). The result was a proposed
utilization factor equal to 1.00 ((0.91/1.03)/0.88) = 1.0).
We observed no growth in per patient utilization of drugs between
2004 and 2005. Therefore, we projected no growth in per patient
utilization for CY 2007.
Comment: On commenter suggested that we should use the drug
expenditure weights we developed in computing the drug add-on
adjustment related to ASP pricing for 2006, rather than the weights
developed by the OIG with respect to acquisition costs for 2005. This
would have resulted in an overall price reduction of 13.2 percent
rather than the overall reduction of 12 percent we used in our
calculation.
Response: We believe it would be more appropriate to use the
published OIG weights as they represent the weights that were used to
develop the 2005 drug add-on adjustment. If we were to use updated
weights, it would be more appropriate to use actual 2005 weights.
Preliminary analysis suggests that if we were to develop weights based
on the most recent 2005 expenditure data, the resulting price reduction
factor would be well under 13.2 percent. However, as discussed above in
this section, we believe the price reduction calculation should be
consistent with the calculation used to develop the 2005 drug add-on
adjustment. Therefore, for this final rule with comment we are using
the same 12 percent price reduction factor calculated in the proposed
rule.
Comment: One commenter indicated that their analysis resulted in a
slightly different value for the reduction in total drug expenditures
than we calculated between 2004 and 2005. Rather than the 9 percent
reduction we calculated for the proposed rule, this commenter computed
a 9.198 percent reduction using the 2004 5 percent sample file compared
to the 2005 ESRD file.
Response: Although the 2004 5 percent file may have contained a
significant number of ESRD claims, our analysis uses 100 percent of the
2004 ESRD facility claims. As such, we believe the results calculated
by the commenter are consistent with our results, but that slight
differences would be expected when an incomplete file is used. For the
final rule, using the latest, complete ESRD claims file for CY 2005
(June 30, 2006), we computed a 9.5 percent reduction in total ESRD
facility drug expenditures between CY 2004 and CY 2005.
Comment: We received one comment that the source of the 3 percent
enrollment growth we projected for CY 2007 was unclear, and did not
match the Part B enrollment growth included in the 2006 Trustees
Report.
Response: The 3 percent enrollment growth projection represents the
estimated growth factor specific to dialysis patients between CY 2004
and CY 2005.
Comment: One comment expressed concern that we were basing payment
policy on the assumption that the new EPO monitoring policy would
decrease utilization of drugs.
Response: The determination of the CY 2007 update was not based on
an assumption that the new EPO monitoring policy would decrease
utilization. The discussion of the EPO monitoring policy was only
intended to illustrate the need to use the latest data available to
determine utilization, especially since new policies such as the EPO
monitoring could affect utilization growth in the future. The potential
effect of the monitoring policy was not incorporated into the
computation of the CY 2007 adjustment factor.
i. Applying the Growth Update to the Drug Add-On Adjustment
For CY 2006, we estimated the growth update by trending drug
expenditures forward based on four years of AWP payment data (CY 2001
through CY 2004). We then applied the estimated growth update
percentage to the total amount of drug add-on dollars established for
CY 2005 to come up with a dollar amount for the CY 2006 growth update.
In addition, we projected the growth in dialysis treatments for CY 2006
based on the projected growth in ESRD enrollment. We divided the
projected total dialysis treatments for CY 2006 into the projected
dollar amount of the CY 2006 growth to develop the per treatment growth
update amount. This growth update amount, combined with the CY 2005 per
treatment drug add-on amount, resulted in an average drug add-on amount
per treatment of $18.88 (or a 14.5 percent adjustment to the composite
rate) for CY 2006.
Beginning in CY 2007, we proposed to annually update the per
treatment drug add-on amount of $18.88 established in CY 2006 and
convert the update to an adjustment factor as stipulated in section
1881(b)(12)(F) of the Act. By proposing to apply the update to the CY
2006 per treatment add-on amount, the need to estimate growth in
dialysis treatments is eliminated for CY 2007 and future years.
We received no comments on this proposed change and are therefore
adopting this provision in this final rule.
[[Page 69684]]
ii. Update to the Drug Add-On Adjustment
In the proposed rule, we estimated no growth in per patient
utilization of ESRD drugs for CY 2007. Using the projected growth of
the CY 2007 PPI for prescription drugs of 4.9 percent, we projected
that the combined growth in per patient utilization and pricing for CY
2007 would result in an update equal to the PPI growth or 4.9 percent
(1.0 x 1.049 = 1.049). This proposed update factor was applied to the
CY 2006 average per treatment drug add-on amount of $18.88 (reflecting
a 14.5 percent adjustment in CY 2006), resulting in a proposed weighted
average increase to the composite rate of $0.93 for CY 2007 or a 0.6
percent increase in the CY 2006 drug add-on percentage. Thus, the total
proposed drug add-on adjustment to the composite rate for CY 2007,
including the growth update, was 15.2 percent (1.145 x 1.006 = 1.152).
In addition, we proposed to continue to use this method to estimate
the growth update to the drug add-on component of the case-mix adjusted
payment system until we have at least 3 years worth of ASP-based
historical drug expenditure data that could be used to conduct a trend
analysis to estimate the growth in drug expenditures. Given the time
lag in the availability of ASP drug expenditure data, we expect that
the earliest we could consider using trend analysis to update the drug
add-on adjustment would be 2010. We proposed to reevaluate our
methodology for estimating the growth update at that time.
Comment: We received comments requesting clarification concerning
the PPI projections we use in calculating the growth update to the drug
add-on adjustment.
Response: We use the PPI for prescription drugs developed by Global
Insight for the fourth quarter of 2007, which represents a four quarter
average percent change projection between 2006 and 2007. For the final
rule we are using the latest projection for 2007 which is 4.03 percent.
Comment: A number of comments recommended that a mechanism be
established to provide for forecasting error adjustment of prior
estimates. This adjustment would be applied only for the years covered
by the proposed interim methodology for updating the drug add-on
adjustment. The comments suggest that once stable expenditure data is
available to use historical trend analysis for updating the drug add-on
adjustment, the forecast error adjustment would no longer be necessary.
Response: We have not accepted this recommendation. While we
appreciate the concern related to accuracy of an update based on proxy
measures for price and the proposed utilization computations, the very
nature of estimating future expenditures under a prospective payment
system requires that those estimates are based on the best historical
data available. As such, we believe we have met our obligation under
the statue in estimating the growth in ESRD drug expenditures for CY
2007. Moreover forecast error adjustments are rarely made in any of
CMS' prospective payment systems.
We also note that even after ASP expenditure data become available
for purposes of using trend analysis to estimate future expenditures,
those estimates may not be the same as actual expenditures. That could
also be the case for the 2006 update currently in effect. While the
commenters are not suggesting that we revisit the 2006 update, we
believe that once we set the policy of adjusting any year's estimated
update, we would need to do so for all years, not just those covered by
the proposed interim update methodology.
Comment: One commenter wanted an update on the steps we were taking
to obtain drug utilization data from hospital-based ESRD facilities for
purposes of refining the drug add-on adjustment related to those
providers. In last year's final rule we indicated that we would pursue
options for obtaining that data (70 FR 70163).
Response: We have determined that a separate data collection of
historical drug dosing data for hospital based facilities would be both
burdensome and costly. Therefore, we decided not to pursue that avenue
for estimating the drug add-on amount related to those facilities.
However, once we have 2006 ASP data, we will evaluate the difference in
payments to hospital-based ESRD facilities under cost reimbursement
compared to ASP-based payments to determine if our drug add-on estimate
was reasonable.
iii. Final Growth Update to the Drug Add-On Adjustment for 2007
Similar to the proposed rule, we estimated no growth in per patient
utilization of ESRD drugs for CY 2007. We removed the enrollment and
price effects from the expenditure data to determine the per patient
utilization growth. To do this, we divided the product of the
enrollment growth of 3 percent (1.03) and the price reduction of 12
percent (1.00-0.12 = 0.88) into the total drug expenditure decrease
between 2004 and 2005 of 9.5 percent (1.0-0.095 = 0.0905). The result
is a utilization factor equal to 1.0 ((0.905/1.03)/0.88) = 1.0).
Using the projected growth of the CY 2007 PPI for prescription
drugs of 4.03 percent, we projected that the combined growth in per
patient utilization and pricing for CY 2007 would result in an update
equal to the PPI growth or 4.03 percent (1.0 x 1.0403 = 1.0403). This
update factor was applied to the CY 2006 average per treatment drug
add-on amount of $18.88 (reflecting a 14.5 percent adjustment in CY
2006), resulting in a weighted average increase to the composite rate
of $0.76 for CY 2007 or a 0.5 percent increase in the CY 2006 drug add-
on percentage. Thus, the total drug add-on adjustment to the composite
rate for CY 2007, including the growth update, is 15.1 percent (1.145 x
1.005 = 1.151).
c. OIG Report on New Drug Codes
Section 623(c)(1) of the MMA mandated that the OIG conduct two
studies to determine the difference between the Medicare payment amount
for separately billable ESRD drugs and the facilities' acquisition
costs for these drugs, as well as estimating the growth rate of
expenditures for these drugs. The initial study, ``Medicare
Reimbursement for Existing End Stage Renal Disease Drugs'' (OEI-03-04-
00120), was completed in May 2004, and reported on existing ESRD drugs.
This report was used to set the CY 2005 payment rates for ESRD drugs
billed by independent dialysis facilities (69 FR 66322). The second
study (``Medicare Reimbursement for New ESRD Drugs'' (OEI-03-06-00200))
focused on new drugs. New drugs for the purpose of this study were
defined as an ESRD drug that did not have a billing code prior to
January 1, 2004.
One drug, darbepoetin alfa (Aranesp) accounted for the majority of
all payments for new drugs. Therefore, this was the only new ESRD drug
studied. The OIG report found that use of this drug was limited to a
small number of facilities (only 157 facilities reported using this
drug with concentrated use in approximately 55 of these facilities).
Because of the recent changes we made to the drug payment methodology
and the lack of comparable historical data, the OIG report made no
estimate of an expenditure growth rate for this drug.
Darbepoetin alfa (Aranesp) is currently paid as a separately
billable drug at ASP+6 percent. Because of the recent (CY 2006)
implementation of the ASP+6 percent drug payment methodology, the small
number of facilities using this drug for ESRD
[[Page 69685]]
patients, and the lack of historical data for trending purposes, we
have no data to indicate that any difference in payment methods for
Aranesp (between CY 2004 and CY 2006) would affect our calculation of
the drug add-on or of the growth update. Moreover, since Aranesp was
approved in 2001 for use in ESRD patients, we believe that expenditures
for Aranesp were reflected in the historical data used to establish the
CY 2005 drug add-on under a generic drug code. Therefore, we proposed
to make no additional changes to the drug add-on adjustment for CY
2007. We received no comments on this issue.
2. Update to the Geographic Adjustments to the Composite Rates
Section 1881(b)(12)(D) of the Act, added by section 623(d) of the
MMA, gave the Secretary the authority to revise the wage indexes
previously applied to the ESRD composite rates. The wage indexes are
calculated for each urban and rural area. The purpose of the wage index
is to adjust the composite rates for differing wage levels covering the
areas in which ESRD facilities are located.
a. Updates to the CBSA Definitions
In the CY 2007 proposed rule (71 FR 49008), we published revised
CBSA-based geographic areas which reflected all of the changes
announced by OMB in Bulletins 05-02 and 06-01 issued February 22, 2005
and December 5, 2005, respectively. Those bulletins changed the titles
of several of the MSAs and Metropolitan Divisions used in connection
with the urban wage index.
b. Updated Wage Index Values
In the CY 2006 PFS final rule with comment period, we stated that
we intended to update the wage index values annually (70 FR 70167).
Current ESRD wage index values for CY 2006 were developed from FY 2002
wage and employment data obtained from the Medicare hospital cost
reports. The values are calculated without regard to geographic
reclassifications authorized under sections 1886(d)(8) and (d)(10) of
the Act and utilize pre-floor hospital data that is unadjusted for
occupational mix.
The methodology for calculating the CY 2006 wage index values was
described in the CY 2006 PFS final rule with comment period (70 FR
70168). We proposed to use the same methodology for CY 2007, with the
exception that FY 2003 hospital data will be used to develop the CY
2007 ESRD wage index values. For a detailed description of the
development of the CY 2007 ESRD wage index values based on FY 2003
hospital data see the FY 2007 IPPS final rule entitled, ``Changes to
the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2007
Rates,'' (71 FR 48016). Section F of the preamble to that final rule
describes the cost report schedules, line items, data elements,
adjustments, and wage index computations. The wage index data affecting
ESRD composite rates for each urban and rural locale may also be
accessed on the CMS Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS/WIFN/list.asp. The wage data are located in the
section entitled, ``FY 2007 Final Rule Occupational Mix Adjusted and
Unadjusted Average Hourly Wage and Pre-Reclassified Wage Index by
CBSA''.
Comment: One commenter criticized our use of hospital wage and
employment data to develop the ESRD wage index. The commenter
maintained that the use of hospital data presumed that wage levels in
hospitals and freestanding ESRD facilities are similar, a conclusion
which has not been substantiated. The commenter urged us to locate an
alternative data source that reflects information directly tied to ESRD
facilities.
Response: Although the mix of occupations in hospitals is broader
and more diverse, ESRD facilities compete with hospitals for labor.
While the use of wage and employment data from freestanding ESRD
facility cost reports would result in the development of a wage index
which reflected ESRD wage levels among independent facilities, the
administrative burden posed by the need for the Medicare fiscal
intermediaries to engage in a separate data collection to compile,
edit, and validate ESRD wage and employment data would be considerable.
Given the similarity of the labor market for professional, technical,
and nursing staff between hospitals and ESRD facilities, we believe our
use of hospital wage and employment data obtained from the Medicare
cost reports to develop the ESRD wage index is appropriate.
(i) Wage Index Values for Areas With No Hospital Data
In CY 2006, while adopting the CBSA designations, we identified a
small number of ESRD facilities in both urban and rural geographic
areas where there is no hospital wage data on which to base the
calculations of the CY 2006 ESRD wage index values.
The first situation was rural Massachusetts. Because there were no
reasonable proxies for rural data within Massachusetts, we used the
prior year's acute care hospital wage index value for rural
Massachusetts. For CY 2007, we proposed to continue to use this value
and requested public input on an alternative methodology.
Since there may be additional rural areas in the future similarly
impacted by a lack of hospital wage data on which to derive a hospital
wage index, we stated that we were considering alternative
methodologies for imputing a rural wage index for areas in States where
no hospital wage data are available. We also described an alternative
methodology whereby we would impute a rural wage index value by using a
simple average CBSA-based rural wage index value at the Census Division
level. For CY 2007, hospital wage data are not available to compute a
rural wage index for ESRD facilities in rural Massachusetts, and this
proposed alternative methodology could be applied in this case.
Massachusetts is located in Census Division I (New England).
Under this proposed alternative methodology, the States in Census
Division I for which rural wage index values are available would be
used; this would result in a simple average proposed rural wage index
value of 1.0227 (1.0770 after applying BNF).
Rural Puerto Rico is similar to rural Massachusetts in that there
are ESRD facilities where there are no acute care hospitals and,
therefore, no hospital data. However, the situation for facilities in
rural Puerto Rico is different in that the floor would be applied to
rural Puerto Rico ESRD facilities. All areas in Puerto Rico that have
an index are eligible for the floor because they have wage-index values
that are less than 0.8000. For CY 2007, we proposed to apply the floor
to rural Puerto Rico.
The third situation involves an urban area in Hinesville, GA (CBSA
25980). For CY 2006, we used a wage index value based on the average of
the wage index values in all of the other urban areas within the same
State to serve as a reasonable proxy for the urban areas without
hospital wage index data. Specifically, we used the average wage index
value for all urban areas within the State of Georgia as the urban wage
index for purposes of calculating the value for Hinesville for CY 2006.
For CY 2007, we proposed to continue using this method for Hinesville,
GA (CBSA 25980).
We solicited comments on maintaining our current policy for
establishing wage index values for rural and urban areas without
hospitals or adopting an alternative approach. We also indicated that
we would continue to evaluate existing hospital wage data and,
possibly, wage data from other
[[Page 69686]]
sources, such as the Bureau of Labor Statistics, to determine if other
methodologies of imputing a wage index value where hospital wage data
are not available may be feasible.
We received no comments on maintaining our current policy for
establishing wage index values for rural and urban areas without
hospitals, or an alternative approach for developing wage index values
for rural areas without hospitals for CY 2007 and subsequent years.
Therefore, for CY 2007, we will maintain our current policies for
establishing wage index values for rural and urban areas:
For rural Massachusetts, we will continue to use the prior
year's acute care hospital wage index value for rural Massachusetts.
For rural Puerto Rico, we will apply the CY 2007 ESRD wage
index floor.
For Hinesville, GA (CBSA 25980), we will use the average
wage index value for all urban areas within the State of Georgia as the
urban wage index for purposes of calculating the value for Hinesville
for CY 2007.
(ii) Second Year of the Transition
For each transition year, the share of the blended wage-adjusted
base payment rate that is derived from the MSA-based and CBSA-based
wage index values is shown in Table 10. In the CY 2007 PFS proposed
rule, we proposed no changes to the transition. CY 2007 is the second
year of the 4-year transition period. Consistent with the transition
blends, we are implementing a 50/50 blend between an ESRD facility's
MSA-based composite rate, and its CY 2007 CBSA-based rate reflecting
its revised wage index values.
For CY 2007, we are reducing the wage index floor to 0.80. As we
stated in the CY 2006 PFS final rule with comment period, we intend to
reassess the continuing need for a wage index floor in CY 2008 and CY
2009 (70 FR 70169 through 70170). The wage index floors, caps, and
blended shares of the composite rates applicable to all ESRD facilities
during CYs 2007 through 2009 are shown in Table 10. They are identical
to the values shown in Table 20 of the CY 2006 PFS final rule with
comment period (70 FR 70170) for the applicable years.
Table 10.--Wage Index Transition Blend
----------------------------------------------------------------------------------------------------------------
Old MSA New CBSA
CY payment Floor Ceiling (percent) (percent)
----------------------------------------------------------------------------------------------------------------
2007................................ 0.80*.................. None................... 50 50
2008................................ Reassess............... None................... 25 75
2009................................ Reassess............... None................... 0 100
----------------------------------------------------------------------------------------------------------------
*Each wage index floor is multiplied by a BN adjustment factor. For CY 2007 the BN adjustment is 1.052818
resulting in an actual wage index floor of 0.8423.
The following is an example of how the wage-adjusted composite
rates would be blended during CY 2007 and the 2 subsequent transition
years.
Example: An ESRD facility has a wage-adjusted composite rate
(without regard to any case-mix adjustments) of $135.00 per treatment
in CY 2006. Using CBSA-based geographic area designations, the
facility's CY 2007 wage-adjusted composite rate, reflecting its wage
index value as shown in Addendum H, would be $145.00. During the
remaining 3 years of the 4-year transition period to the new CBSA-based
wage index values, this facility's blended rate through CY 2009 would
be calculated as follows:
CY 2007 = (0.50 $135.00) + (0.50 x $145.00) = $140.00
CY 2008 = (0.25 x $135.00) + (0.75 x $145.00) = $142.50
CY 2009 = (0.00 x $135.00) + (1.00 x $145.00) = $145.00
We note that this hypothetical example assumes that the calculated
wage-adjusted composite rate of $145.00 for CY 2007 does not change in
CYs 2008 and 2009. In actuality, the wage-adjusted composite rate would
change because of annual revisions to the wage index. However, the
example serves only to demonstrate the effect on the composite rate of
the CBSA-based wage index values which will be phased-in during the
remaining 3 years of the transition period.
Comment: One commenter representing a number of dialysis facilities
in Puerto Rico disagreed with our proposal to reduce the wage index
floor to 0.80, pointing out that wage index values have not been
realistically updated in quite some time. The commenter was concerned
with further reductions in composite payments and recommended that the
reduction in the wage index floor for CY 2007 be suspended. Another
commenter also recommended that the impact of any further planned
proposed reductions in the wage index floor be thoroughly considered
before implementation because of potential impact on the ability of
dialysis facilities to recruit and retain qualified personnel.
Response: We believe that the ESRD wage index should not be
artificially constrained by the application of floors and ceilings. We
eliminated the cap of 1.30 because of the effect it had on restricting
payments in high wage areas. While we would like to eliminate the floor
as well, we recognized that its immediate elimination could
substantially reduce composite payments in locales where prevailing
labor costs are lower. Accordingly, in CY 2006 we implemented a
reduction in the wage index floor to 0.85, and proposed a further
reduction to 0.80 in CY 2007. We plan to reassess the continuing
application of the wage index floor in connection with the CY 2008 and
CY 2009 updates to the composite payment rates.
The actual wage index values for urban locales in Puerto Rico,
without application of any floor and prior to the application of the CY
2007 the BN adjustment, are shown in Table 11.
Table 11.--Wage Index Values for Urban Locales in Puerto Rico
------------------------------------------------------------------------
CBSA code Urban area Wage index
------------------------------------------------------------------------
10380...................... Aguadilla-Isabela-San 0.3922
Sebastian.
21940...................... Fajardo.................... 0.4044
25020...................... Guayama.................... 0.3241
32420...................... Mayaguez................... 0.3857
38660...................... Ponce...................... 0.4851
[[Page 69687]]
41900...................... San German-Cabo Rojo....... 0.4893
41980...................... San Juan-Caguas-Guaynabo... 0.4397
49500...................... Yauco...................... 0.3861
------------------------------------------------------------------------
The proposed CY 2007 wage index floor of 0.80 is substantially
higher than each of the above wage index values. After application of
the BN adjustment to the wage index floor of 0.80, each area in Puerto
Rico has a wage index of 0.8423 reflected in its composite rate.
Therefore, we believe that the CY 2007 wage index floor of 0.80
compared to actual wage levels will not adversely affect access to care
for dialysis patients in Puerto Rico.
With respect to the commenter's concern that the wage index values
have not been updated in quite some time, we point out that the CY 2007
wage index values were developed from the latest available FY 2003
hospital wage and employment data obtained from the Medicare cost
reports. While we will not suspend application of the proposed 0.80
wage index floor in CY 2007, we intend to carefully assess the
potential impact of any further proposed reductions in the wage index
floor for CY 2008 and following years.
c. Budget Neutrality (BN) Adjustment
Section 1881 (b)(12)(E)(i) of the Act, as added by section 623(d)
of the MMA, requires that any revisions to the ESRD composite rate
payment system as a result of the MMA provision (including the
geographic adjustment) be made in a budget neutral manner. This means
that aggregate payments to ESRD facilities in CY 2007 should be the
same as aggregate payments that would have been made if we had not made
any changes to the geographic adjusters. We note that the BN adjustment
discussed in this final rule only addresses the impact of changes in
the geographic adjustments. A separate BN adjustment was developed for
the case-mix adjustments, currently in effect. Since we did not propose
any changes to the case-mix measures for CY 2007, the current case-mix
BN will remain in effect for CY 2007. For CY 2007, we again proposed to
apply a BNF directly to the ESRD wage index values, as we did in CY
2006. As we explained in the CY 2006 PFS final rule with comment period
(70 FR 70170 through 70171), we believe this is the simplest approach
because it allows us to maintain our base composite rates during the
transition from the current wage adjustments to the revised wage
adjustments described earlier in this section. Because the ESRD wage
index is only applied to the labor-related portion of the composite
rate, we computed the proposed BNF adjustment based on that proportion
(53.711 percent).
To compute the proposed CY 2007 wage index BNF, we used the
proposed wage index values, 2005 outpatient claims (paid and processed
as of December 31, 2005), and geographic location information for each
facility.
Using treatment counts from the 2005 claims and facility-specific
CY 2006 composite rates, we computed the estimated total dollar amount
each ESRD provider would have received in CY 2006 (the first year of
the 4-year transition). The total of these payments became the target
amount of expenditures for all ESRD facilities for CY 2007. Next, we
computed the estimated dollar amount that would have been paid to the
same ESRD facilities using the ESRD wage index for CY 2007 (the second
year of the 4-year transition). The total of these payments became the
second year new amount of wage-adjusted composite rate expenditures for
all ESRD facilities.
After comparing these dollar amounts (target amount divided by
second year new amount), we calculated an adjustment factor that, when
multiplied by the applicable CY 2007 ESRD wage index, would result in
aggregate payments within the target amount of composite rate
expenditures. The proposed BN adjustment factor for the CY 2007 wage
index was 1.053069.
To ensure BN we also must apply the BNF to the wage index floor of
0.8000 which resulted in a proposed adjusted wage index floor of 0.8425
for CY 2007.
Comment: We received comments asking that we clarify the
calculation of the wage index BNF so that commenters could understand
that the BNF is being calculated correctly. One commenter asked that we
provide both the data and the methodology so that they could assess the
accuracy of our computations.
Response: During the comment period on the CY 2007 PFS proposed
rule, we made available an ESRD Composite Payment System File. This
file contained select claim level data from the 2005 ESRD facility
outpatient claims, updated through December 31, 2005. For more
information on this file, see the following link: http://www.cms.hhs.gov/IdentifiableDataFiles/05.asp#TopOfPage.
After the publication of this final rule with comment period, we
intend to make available the updated version of the CY 2005 outpatient
claims (paid and processed as of June 30, 2006) that were used to
compute the BNF.
To compute the final CY 2007 ESRD wage index BNF, we used FY 2003
pre-floor, pre-reclassified, non-occupational mix-adjusted hospital
wage data to compute the wage index values, 2005 outpatient claims
(paid and processed as of June 30, 2006), and geographic location
information for each ESRD facility which may be found through Dialysis
Facility Compare. The FY 2003 hospital wage index data for each urban
and rural locale by CBSA may also be accessed on the CMS Web site at:
http://www.cms.hhs.gov/AcuteInpatientPPS/WIFN/list.asp. The wage index
data are located in the section entitled, ``FY 2007 Final Rule
Occupational Mix Adjusted and Unadjusted Average Hourly Wage and Pre-
Reclassified Wage Indexes by CBSA''.
Dialysis Facility Compare can be found by going to the following
CMS Web site: http://www.cms.hhs.gov/DialysisFacilityCompare/.
Using treatment counts from the latest 2005 claims file and
facility-specific CY 2006 composite rates, we computed the estimated
total dollar amount each ESRD provider would have received in CY 2006
(the first year of the 4-year transition). The total of these payments
became the target amount of expenditures for all ESRD facilities for CY
2007. Next, we computed the estimated dollar amount that would have
been paid to the same ESRD facilities using the ESRD wage index for CY
2007 (the second year of the 4-year transition). The total of these
payments became the second year new amount of wage-adjusted composite
rate expenditures for all ESRD facilities.
After comparing these dollar amounts (target amount divided by
second year new amount), we calculated an adjustment factor that, when
multiplied by the applicable FY 2007 wage index value, will result in
aggregate payments to ESRD facilities that will remain
[[Page 69688]]
within the target amount of composite rate expenditures. When making
this calculation, the ESRD wage index floor value of 0.8000 is used
whenever appropriate.
The final BN adjustment factor for the CY 2007 wage index is
1.052818.
To ensure BN we also must apply the BNF to all index values,
including the wage index floor of 0.8000, which results in an adjusted
wage index floor of 0.8423 for CY 2007.
d. ESRD Wage Index Tables
Addenda F and G show the CY 2007 ESRD wage index, including the BNF
adjustment, for urban areas (Addendum F) and rural areas (Addendum G).
H. Private Contracts and Opt-Out Provision--Practitioner Definition
Section 4507 of the BBA amended section 1802 of the Act to permit
certain physicians and practitioners to opt-out of Medicare if certain
conditions were met, and to provide through private contracts services
that would otherwise be covered by Medicare. Before enactment of the
BIPA (Pub. L. 106-554), section 1802(b)(5)(C) of the Act, which refers
to the definition of ``practitioner'' at section 1842(b)(18)(C) of the
Act, did not include registered dietitians or nutrition professionals
among the practitioners who may choose to opt-out of Medicare. Section
105(d) of the BIPA amended the definition of practitioner located at
section 1842(b)(18)(c) of the Act to include registered dietitians or
nutrition professionals. Because section 1802(b)(5)(C) of the Act
references section 1842(b)(18)(c) of the Act in order to define the
term practitioner for purposes of opting out of Medicare, current law
permits registered dietitians or nutrition professionals to opt-out of
Medicare. Because the definition of practitioner located at Sec.
405.400 does not include registered dietitians or nutrition
professionals, we proposed to amend that section so that it is
consistent with section 1802(b)(5)(C) of the Act.
Commenters were very supportive of our proposals. Therefore, we are
finalizing the changes to Sec. 405.400 as proposed.
I. Changes to Reassignment and Physician Self-Referral Rules Relating
to Diagnostic Tests
In the CY 2007 PFS proposed rule, we stated that recent changes to
our rules on reassignment of the right to receive Medicare payment may
have led to some confusion as to whether the anti-markup and purchased
interpretation requirements apply to certain situations where a
reassignment has occurred under a contractual arrangement. We also
stated that we were concerned about the existence of certain
arrangements that are not within the intended purpose of our physician
self-referral rules, which allow physician group practices to bill for
services furnished by a contractor physician in a ``centralized
building'' as defined at Sec. 411.351. We are concerned that allowing
physician group practices or other suppliers to purchase or otherwise
contract for the provision of diagnostic tests and then to realize a
profit when billing Medicare may lead to patient and program abuse in
the form of over utilization of services and result in higher costs to
the Medicare program.
We proposed to amend our reassignment regulations to clarify how
the purchased test and purchased interpretation rules apply in the case
of a reassignment made under the contractual arrangement exception set
forth at Sec. 424.80(d)(2). In addition, we proposed to change the
definition of ``centralized building'' at Sec. 411.351 of the
physician self-referral regulations to place certain restrictions on
what types of space ownership or leasing arrangements will qualify for
purposes of the physician self-referral in-office ancillary services
exception and physician services exception. We received numerous
comments on our proposals. Instead of issuing final regulations at this
time, we are studying the issues further and plan to issue final
regulations in the near future. We remain committed to addressing
revenue-driven arrangements that may be facilitating over utilization
of diagnostic services, but do not wish to unduly impact legitimate
group practice arrangements that enable Medicare beneficiaries to have
the convenience of receiving medical services at one location.
J. Supplier Access to Claims Billed on Reassignment
Section 1842(b)(6) of the Act generally provides that Medicare may
pay Part B benefits only to the physician or other supplier who
performed the service, or to the beneficiary. This provision, known as
the prohibition on reassignment, contains several exceptions. Section
952 of the MMA amended section 1842(b)(6)(A)(ii) of the Act to allow a
physician or other person who was in a contractual arrangement rather
than in an employee-employer relationship to reassign his or her right
to bill and receive payment, irrespective of whether the services were
performed on the premises of the entity. In implementing section 952 of
the MMA, we amended Sec. 424.80(d) to provide that a supplier, who
reassigns his or her right to bill Medicare to an entity with which he
or she is employed as an independent contractor, has the right to
access the entity's billing information concerning the services the
supplier is alleged to have performed and for which the entity billed
Medicare. We extended such a right in order to give added assurance
that the services for which such an entity billed Medicare were in fact
performed and were performed as billed. In the CY 2007 PFS proposed
rule, we stated that we believe that employees, in addition to
independent contractors, should have access to records on billings for
services furnished by them (71 FR 49057 through 49058). We proposed
changing the title of Sec. 424.80(d) and amending Sec. 424.80(d)(2)
of our regulations to state that the individual supplier who reassigns
his or her right to bill and receive Medicare payment to an entity has
unrestricted access to claims information submitted by that entity for
services furnished by the individual supplier, irrespective of whether
the supplier is an employee or an independent contractor of the entity
receiving payment. Under our proposal, if an entity receiving the
reassigned benefits were to refuse to provide the billing information
to the employee supplier requesting the information, the entity's right
to receive reassigned benefits could be revoked under Sec.
424.82(c)(3) (which is currently the case with respect to an entity's
refusal to provide billing information to an independent contractor
supplier).
We are adopting the proposal without modification.
Comment: Two commenters who support the proposal stated they are
unsure how having unrestricted access to submitted claims data will
correspond to improved program integrity. They believe that a more
practical approach to ensure Medicare program integrity would be to
incorporate physician involvement in compliance programs that are
structured to address risk areas particular to their operations. These
commenters are also concerned that providing unrestricted access to
submitted claims data is not a clear requirement for a billing entity
to meet.
Response: We believe that by allowing a physician or other supplier
access to billing information concerning services allegedly performed
by that physician or other supplier, we gain more assurance that
entities that are billing on reassignment are billing for services
actually performed and are otherwise billing accurately for such
services.
[[Page 69689]]
With respect to the commenters' suggestion that physician involvement
in compliance programs offers a more practical approach to ensure
Medicare program integrity, we believe that physicians should be
engaged already in compliance programs, and that such involvement
should include the physician regularly requesting access to billing
records for services that he or she allegedly performed and that are
being billed to Medicare, through a reassignment, by the entity that
employs the physician as an independent contractor or employee. We
disagree that our proposal would pose an unclear requirement for
entities to meet. An entity that bills Medicare for services that were
allegedly performed by a physician or other supplier in the entity's
employ may not unreasonably refuse to provide access (or unreasonably
delay in providing access) to the physician or other supplier with
respect to the relevant billing information. We do not believe it is
practical or necessary to attempt to define by regulation just how soon
after a request an entity has to provide access, or whether, in a given
case, an entity would be justified in refusing to provide access if the
physician or supplier has already gained access to the records. Rather,
we believe that entities should be guided by common sense and when in
doubt may wish to err on the side of providing access, because an
entity that unreasonably refuses to provide billing information or does
not provide it in a timely manner may have its right to receive
reassigned benefits revoked under Sec. 424.82(c)(3).
Comment: We received one comment opposing the proposal. According
to this commenter, in section 952 of the MMA, the Congress authorized
us to make changes to the reassignment rules with respect to contractor
arrangements only. The Congress evidenced no intent to change the
reassignment rules with respect to employees, and nor is there any
evidence of which the commenter is aware that right of access by
employee suppliers is a current program integrity issue. The commenter
also believes that access to billing information is a matter that
should be left to the terms of a provider's employment contract.
Response: For the reasons stated in the CY 2007 PFS proposed rule
(71 FR 49057), we believe we are permitted, but not required, to make
payment under the reassignment provisions. Moreover, we are under a
statutory command, through section 1833(e) of the Act, to not make
payment unless we are satisfied that payment is correct. Our rulemaking
authority for our proposal is not based on section 952 of the MMA, but
rather on our general rulemaking authority found at sections 1102(a)
and 1871(a) of the Act. We also believe for the reasons stated in the
proposed rule that the same program integrity concerns with respect to
contractor access to billing records also apply to employee access to
billing records. And, we reiterate that we are aware of allegations of
employee suppliers being denied access to their billing records.
Moreover, we do not believe it is sufficient to leave it to physicians
and other suppliers to negotiate access to billing records as a
condition of their employment, as the parties may have unequal
bargaining power.
Comment: A commenter stated that if the supplier has claims
liability, he or she should have access to the billing records, but
that if the supplier does not have claims liability he or she should
not have access to the billing records.
Response: Irrespective of whether the supplier has claims
liability, we have an interest in knowing whether we are paying
correctly for services that were furnished or furnished as billed.
Therefore, we wish to provide a right of access to billing information
to all suppliers who are furnishing services and reassigning payment to
their employers, and we encourage them to avail themselves of this
right in order to ensure that we are paying properly.
K. Coverage of Bone Mass Measurement
In an IFC entitled ``Medicare Coverage of and Payment for Bone Mass
Measurements'' published in the Federal Register on June 24, 1998 (63
FR 34320), we implemented section 4106 of the BBA by establishing a new
section, Sec. 410.31, Bone Mass Measurement: Conditions for Coverage
and Frequency Standards. Section 4106 of the BBA statutorily defined
BMM and individuals that are qualified to receive a BMM. The June 24,
1998 IFC, under the ``reasonable and necessary'' provisions of section
1862(a)(1)(A) of the Act, also established conditions for coverage of
the tests that must be ordered by physicians or NPPs. Lastly, as
directed by section 4106 of the BBA, we established frequency standards
governing the time period when qualified individuals would be eligible
to receive covered BMMs.
1. Provisions of the June 24, 1998 IFC
The June 24, 1998 IFC implemented section 4106 of the BBA by
establishing conditions for coverage and frequency standards for BMMs
to ensure that they are paid for uniformly throughout the Medicare
program and that they are reasonable and necessary for Medicare
beneficiaries who are eligible to receive these measurements. This
section summarizes the provisions discussed in the June 24, 1998 IFC.
a. Coverage Conditions and Frequency Standards
We established conditions for coverage and frequency standards for
medically necessary BMMs for five categories of Medicare beneficiaries
in Sec. 410.31.
In Sec. 410.31(a), we defined ``bone mass measurement'' based on
the statutory definition in section 4106 of the BBA. In accordance with
the ``reasonable and necessary'' provisions of section 1862(a)(1)(A) of
the Act, we established the conditions for coverage of BMMs in Sec.
410.31(b) of the regulations. Consistent with Sec. 410.32 (Diagnostic
x-ray tests, diagnostic laboratory tests, and diagnostic tests:
Conditions), we provided that coverage be available for the BMM only if
it is ordered by the physician or a qualified NPP (as defined in Sec.
410.32(a)) treating the beneficiary following an evaluation of the
beneficiary's need for the test, including a determination as to the
medically appropriate procedure to be used for the beneficiary. We
believed that BMMs were not demonstrably reasonable and necessary
unless (among other things) they are ordered by the physician treating
the beneficiary following a careful evaluation of the beneficiary's
medical need, and they are employed to manage the beneficiary's care.
To ensure that the BMM is performed as accurately and consistently
in accordance with appropriate quality assurance guidelines as
possible, we required that it be performed under the appropriate
supervision of a physician as defined in Sec. 410.32(b)(3). To ensure
that the BMM is medically appropriate for the five categories specified
in the law, we provided that it be reasonable and necessary for
diagnosing, treating, or monitoring the condition of the beneficiary
who meets the coverage requirements specified in Sec. 410.31(d).
Furthermore, in Sec. 410.31(c), we set forth limitations on the
frequency for covering a BMM. Generally, we cover a BMM for a
beneficiary if at least 23 months have passed since the month the last
BMM was performed. However, we allow for coverage of follow-up BMMs
performed more frequently than once every 23 months when medically
necessary. We listed the following examples of situations where more
frequent BMMs procedures may be medically necessary to include:
Monitoring beneficiaries on long-term glucocorticoid
(steroid) therapy of more than 3 months.
[[Page 69690]]
Allowing for a confirmatory baseline BMM (either central
or peripheral) to permit monitoring of beneficiaries in the future if
the initial test was performed with a technique that is different from
the proposed monitoring method.
b. Beneficiaries Who May Be Covered
In Sec. 410.31(d), we amended our regulations to conform to the
statutory requirement that the following categories of beneficiaries
may receive Medicare coverage for a medically necessary BMM:
A woman who has been determined by the physician or a
qualified NPP treating her to be estrogen-deficient and at clinical
risk for osteoporosis, based on her medical history and other findings.
An individual with vertebral abnormalities as demonstrated
by an x-ray to be indicative of osteoporosis, osteopenia, or vertebral
fracture.
An individual receiving (or expecting to receive)
glucocorticoid (steroid) therapy equivalent to 7.5 mg of prednisone, or
greater, per day, for more than 3 months.
An individual with primary hyperparathyroidism.
An individual being monitored to assess the response to or
efficacy of an FDA-approved osteoporosis drug therapy.
c. Waiver of Liability
Section 410.31(e) provides that Medicare payment would be denied
for a BMM in accordance with section 1862(a)(1)(A) of the Act if the
regulatory standards are not satisfied. Existing regulations concerning
limitation on liability are set forth in Sec. 411.400 through Sec.
411.406 and are applicable to denial of BMMs under Sec. 410.31.
d. Payments for BMMs
Medicare payments for covered BMMs are paid for under the PFS (42
CFR part 414) as required by statute. In the June 24, 1998 IFC, we
revised the definition of ``physician services'' in Sec. 414.2 to
include bone mass measurements. When BMM procedures are furnished to
hospital inpatients and outpatients, the TCs of these procedures are
payable under existing payment methods for hospital services. These
methods include payments under the prospective payment system, on a
reasonable cost basis, or under a special provision for determining
payment rates for hospital outpatient radiology services.
In the June 24, 1998 IFC, we revised Sec. 414.50(a), regarding
physician billing for purchased diagnostic tests, to clarify that the
section does not apply to payment for BMMs.
e. Conforming Changes
In the June 24, 1998 IFC, to allow for appropriate placement in the
CFR of the BMM coverage requirements, we redesignated Sec. 410.31
(Prescription drugs used in immunosuppressive therapy) as Sec. 410.30.
2. Additional Scientific Evidence
In 2004, the Surgeon General issued a report, Bone Health and
Osteoporosis (U.S. Department of Health and Human Services, Bone Health
and Osteoporosis: A Report of the Surgeon General. Rockville, MD: U.S.
Department of Health and Human Services, Office of the Surgeon General,
2004). This report provides scientific evidence related to the
prevention, assessment, diagnosis, and treatment of bone disease. The
report states that identification of those at risk of bone disease and
fracture is important so that appropriate interventions can be
implemented. However, as the report states, ``Assessing the risk of
bone disease and fracture remains a challenge. Not all of the risk
factors have been identified, and the relative importance of those that
are known remains unclear.''
As bone strength is not measured directly, bone mineral density
(BMD) remains the single best predictor of fracture risk, with the most
widely accepted method for measuring BMD being the dual energy x-ray
absorptiometry (DXA) for a bone density study at the axial skeleton
(for example, hips and spine). As there are many sources of variability
in the measurement of BMD, a quality control system related to both the
methodology and reporting of test results is important to ensure the
validity of DXA analysis.
In addition to DXA of the axial skeleton, bone mass can also be
measured using other techniques. These other techniques include DXA
bone density study for the appendicular skeleton (for example, radius,
wrist, heel); quantitative computerized tomography (QCT), BMD study for
the axial skeleton or appendicular skeleton; radiographic
absorptiometry (photodensitometry, radiogrammetry); single-photon
absorptiometry (SPA); single energy x-ray absorptiometry (SXA) for the
appendicular skeleton; and ultrasound BMD study for the appendicular
skeleton. For these techniques (except for SPA which was not
discussed), the 2004 Surgeon General report states, ``While these
methods do assess bone density and may provide an indication of
fracture risk, it is important to note that the WHO [World Health
Organization] recommendations and other guidelines for using BMD and
interpreting BMD results for diagnosis are based on DXA measurements of
the hip or spine.'' The report further states, ``Incorporating these
techniques for bone assessment into future clinical trials and
observational studies will help in better understanding their
appropriate use as a means of predicting the risk of bone disease and
fracture.''
3. Changes to the June 24, 1998 IFC
We received 18 public comments on the June 24, 1998 IFC. The
majority of the comments had specific recommendations for changes to
the IFC. Based on the comments received on the IFC, the Surgeon
General's report, and other evidence, we proposed changes to Sec.
410.31. We solicited comments on these proposals.
4. Analysis of and Response to Comments on the June 24, 1998 IFC and
the CY 2007 PFS Proposed Rule
In this final rule, we are responding to the public comments that
we received on our proposed revisions to Sec. 410.31. In addition, as
we stated in CY 2007 proposed rule, we are responding to the public
comments received on the June 24, 1998 IFC. We received approximately
35 timely public comments on our proposed revisions to the regulations
regarding coverage for bone mass measurements (Sec. 410.31). Most
commenters supported the proposed coverage revisions and noted their
specific concerns and provided suggested revisions to several of the
coverage provisions. However, most of the commenters expressed
significant concerns regarding proposed payment reductions for these
tests that would result from initiatives described in other sections of
the proposed rule relative to PE and other payment calculations.
Comments and our responses regarding the proposed payment reductions
are detailed in section II.A.4. of the preamble to this final rule. The
following is a summary of our proposals and the comments received and
our responses on the coverage for bone mass measurement:
a. ``BMM'' Definition (Sec. 410.31(a))
At Sec. 410.31(a)(2), we proposed to revise the definition of
``bone mass measurement'' to remove coverage for the use of SPA, which
uses isotope sources to measure BMD. Many medical experts indicate that
SPA has largely been replaced by the newer techniques of DXA, which are
believed to be superior in accuracy and precision. Medicare claims data
in recent years
[[Page 69691]]
continue to show a steady decline in the use of the SPA procedure by
the beneficiary population. Further, there is a lack of evidence to
support continued use of SPA, an older procedure where the metrics have
not been correlated with fracture rate.
We proposed to revise the definition of a ``bone mass measurement''
to read, ``Is performed with either a bone densitometer (other than a
single-photon or dual-photon absorptiometry) or with a bone sonometer
system that has been cleared for marketing for this use by the FDA
under 21 CFR part 807, or approved for marketing by the FDA for this
use under 21 CFR part 814.''
Comment: We requested comments on our proposal to noncover SPA,
including any evidence of benefit for this technique, particularly in
comparison with other alternatives. Most of the commenters supported
the position that SPA has largely been replaced by the newer, more
accurate, and precise techniques such as SEXA and DXA, and we should
not continue to cover them. However, a commenter from the June 24, 1998
IFC suggested that while use of SPA devices (at the wrist) is declining
as newer and faster equipment is becoming available, we should continue
to cover their use indefinitely based on the view that their accuracy
and precision are close to that of x-ray based techniques at the wrist
and heel and that their radiation exposure is low.
Response: We agree with the more recent comments concerning SPA and
note that we proposed to noncover SPA tests beginning in CY 2007. In
response to the June 24, 1998 IFC comment regarding continuing coverage
indefinitely, we note that Medicare claims data in recent years
continue to show a steady decline in the use of the SPA procedure by
the beneficiary population as the more accurate and precise procedures
have become much more widely available. We agree that there is a lack
of evidence to support continued use of the older SPA procedure where
the metrics have not been correlated with fracture risk. Therefore, we
are revising the definition of ``bone mass measurement'' in Sec.
410.31(a) to remove coverage for the use of SPA. As a result, the
status indicator for CPT code 78350 will change from active (A) to
noncovered (N) effective January 1, 2007.
Comment: A June 24, 1998 IFC commenter expressed the view that
available research and their experience had demonstrated that the use
of peripheral DXA at the heel is superior to any other BMD test taken
at any other peripheral site. The commenter believes that the heel DXA
is a superior approach for the initial osteoporosis screening because
of its--(1) strong correlation to fracture probability; (2) the
reactive nature of the heel to bone mass changes; (3) patient
preference for a less threatening exam; (4) the elimination of
radiation exposure to the abdomen that results from a central bone mass
measurement; and (5) the ability of the peripheral heel DXA to deliver
a service at a lower cost than most other BMM technologies.
Response: Based on our review of the available medical literature,
we have determined that there is insufficient evidence to conclude that
peripheral DXA at the heel is a superior method of BMD measurement when
compared to other peripheral sites. Thus, we are not making any changes
to our proposal based on this comment.
Comment: A commenter expressed concern about our statement in the
June 24, 1998 IFC indicating that QCT can measure bone density at the
spine and hip. The commenter indicated that only central (axial) DXA
can measure BMD at the spine or hip and QCT is limited to the spine or
the wrist. The commenter also stated that spine QCT exposes the patient
to a significantly higher dose of radiation and that the technique is
significantly less precise than central DXA or peripheral DXA or
ultrasound. The commenter recommended that we drop coverage of this
technique once there is sufficient geographic overlap between QCT and
the alternative techniques, which are believed to be less costly,
safer, and a more precise means of measuring bone mass than the QCT
technique.
Response: On the basis of our review of the existing medical
literature, we have determined that QCT can provide both central (spine
and hip) and peripheral BMD measurements but does expose the patient to
significantly higher doses of radiation. Though the appropriate use of
QCT has yet to be defined, it may be used as an alternative to spine
and hip DXA measurements as a method for measuring BMD (Surgeon
General's Report, 2004). Therefore, we are not making any changes to
our proposal as a result of this comment.
Comment: Another commenter from the June 24, 1998 IFC stated that
there is insufficient evidence to support the clinical utility of BMD
measurements of an individual's finger, tibia, or patella, which are
performed by the use of either a peripheral x-ray or an ultrasound
device, and suggested that measurement of those peripheral sites not be
covered under Medicare.
Response: Measurement of peripheral bone density for screening and
initial diagnosis can be accomplished by various techniques, though the
appropriate use of these technologies in the prediction of bone disease
and the risk of fracture has yet to be clearly defined. Therefore, we
are not revising our proposal based on this comment.
b. Conditions for Coverage (Sec. 410.31(b))
In Sec. 410.31(b), we proposed to revise the conditions for
coverage for BMMs by requiring that for a medically necessary BMM to be
covered for an individual being monitored to assess the response to or
efficacy of an FDA-approved osteoporosis drug therapy (Sec.
410.31(d)(5)) the individual would be required to meet the present
conditions for coverage under Sec. 410.31(b), and the monitoring would
have to be performed by the use of an DXA system (axial system).
We recognized that in the June 24, 1998 IFC, we allowed the
physician or qualified NPP treating the beneficiary more flexibility in
ordering those diagnostic measurements, but we proposed to limit that
flexibility for the type of BMM that is used for monitoring individuals
receiving osteoporosis drug therapy and other purposes (as discussed
later in this section) because of new evidence and other information
received since publication of the June 24, 1998 IFC that supports the
need for requiring the use of the DXA measurement (axial skeleton) in
those circumstances. In addition to the 2004 Surgeon General's Report
that recognized the superiority of the DXA (axial skeleton) for
measuring bone mass over time, the International Society for Clinical
Densitometry currently recommends that if an individual has a low bone
mass using a peripheral measurement (appendicular skeleton) he or she
should have a DXA (axial skeleton) performed for monitoring or
confirmatory diagnostic purposes.
Therefore, we also proposed to revise Sec. 410.31(b) by adding a
requirement that in the case of any individual who qualifies for a BMM
as provided for in Sec. 410.31(d) and who receives a confirmatory
baseline BMM to permit monitoring in the future, Medicare may cover a
medically necessary BMM for that individual, if the present conditions
for coverage under Sec. 410.31(b) are met, and the BMM is performed by
a DXA system (axial skeleton) (if the initial measurement was not
performed by this system).
As indicated previously in this section, the most widely accepted
method for measuring BMD is the use of DXA (Surgeons General's Report
2004) at axial skeletal sites. DXA (axial skeleton) measures BMD at the
hip and
[[Page 69692]]
spine (sites likely to fracture in patients who have osteoporosis). DXA
is precise, safe, and low in radiation exposure, and permits more
accurate and reliable monitoring of individuals over time. DXA of the
femoral neck is the best validated test to predict hip fracture and is
comparable to forearm measurements for predicting fractures at other
sites (Evidence Report/Technology Assessment No 28, Agency for
Healthcare Research and Quality (AHRQ), January 2001).
Comment: Several June 24, 1998 IFC commenters expressed concern
regarding the following statement from the June 24, 1998 IFC that
``there is a consensus that measurements of the central skeletal sites
is the preferred method of assessment'' as compared with measurements
of peripheral skeletal sites. These commenters stated that peripheral
devices provide basically the same measurement benefits as central
devices and have the added advantages of being easier to use, allowing
greater patient accessibility, and reducing patient radiation exposure.
However, the majority of the commenters on both the IFC and the
proposed rule, strongly supported the aforementioned statement from the
IFC and expressed specific concern that the IFC allowed for coverage of
peripheral BMMs that have not been demonstrated to be useful in
monitoring patients who are receiving osteoporosis drug therapies.
These commenters agreed that only central devices (especially the DXA
device) were useful in monitoring patients receiving pharmacologic
therapy and they specifically recommended that peripheral tests be
limited to screening for osteoporosis, and not be used for monitoring
patients receiving FDA-approved osteoporosis drug therapy.
Response: As we indicated in the proposed rule, we agree that the
most widely accepted method for measuring BMD is the use of dual x-ray
absorptiometry (DXA) (Surgeon General's report 2004) at central
skeletal sites. DXA measures BMD at the hip and spine (sites likely to
fracture in patients who have osteoporosis), is precise, safe, and low
in radiation exposure, and permits monitoring over time. DXA of the
femoral neck is the best validated test to predict hip fracture and is
comparable to forearm measurements for predicting fracture at other
sites (AHRQ report 2001). The World Health Organization (WHO)
classification of BMD for the diagnosis of osteoporosis is based
primarily on reference data obtained by DXA of the axial skeleton. When
monitoring the effectiveness of therapy, these central skeletal sites
are more likely than peripheral sites to show an increase in BMD over
time. For these reasons, we believe that the use of DXA at central
sites is the best method for measuring BMD for both monitoring patients
receiving FDA-approved osteoporosis drug therapy, and confirming BMD
measurements performed on peripheral devices for patients who may be
monitored in the future. In view of the comments received and our
review of the medical literature, and other information, we are
adopting our revision of Sec. 410.31(b) without change.
Comment: While most of the commenters supported our proposal to
limit coverage of monitoring patients receiving osteoporosis drug
therapy and for performing confirmatory baseline tests to the DXA of
the central (axial) skeleton, several commenters urged us not to
preclude coverage of QCT of the central (axial) skeleton for these
purposes for individuals who have had an initial screening with a
peripheral test. These commenters stated that the QCT technology has
been relied upon for some time now by certain hospitals and imaging
centers, and it would be unfair to them and their patients to preclude
coverage for their tests in the final rule.
Response: We agree with the commenters who supported our proposal
to limit coverage of monitoring patients receiving osteoporosis drug
therapy, for performing confirmatory baseline test to the DXA of the
central (axial) skeleton, and to not allow coverage of the QCT for
these purposes. (Surgeon General's Report, 2004). The radiation
exposure is significantly higher, for example, with the use of the
lumbar spine QCT than is the case with the use of the DXA at central
skeletal sites (Surgeon General's Report, 2004). Therefore, we are not
making any change to our proposal based on these comments.
Comment: A commenter supported our proposal to change the
conditions of coverage and standards on frequency of bone mass
measurements to encourage the use of DXA of the axial skeleton for
confirmatory baseline tests and for monitoring a patient's response to
therapy, but cautioned that the medical literature does not support the
use of DXA or other BMMs to assess efficacy of osteoporosis therapies.
The commenter recommended that CMS clarify that BMM is not appropriate
for monitoring the efficacy of osteoporosis therapies in preventing
bone fractures.
Response: We recognize that the goals of monitoring patients are to
increase adherence to treatment regimens and determine treatment
response even though monitoring by densitometry has not been
demonstrated to be effective in improving compliance (NIH Consensus
Panel, 2001). Importantly, BMD changes are not correlated with the
fracture risk reduction resulting from antiresorptive treatment (Roux,
Garnero 2005). Therefore, while the efficacy of antiresorptive
treatments has been verified in large trial powered to show reductions
in fracture risk, it does not appear that fracture risk can be measured
in individual patients being treated for osteoporosis. We are not
making any changes to the final rule based on this comment.
c. Bone Mass Measurement: Standards on Frequency of Coverage (Sec.
410.31(c))
To conform the examples of a BMM exception to the standards on
frequency of coverage in Sec. 410.31(c)(2) to the regulation change we
proposed in Sec. 410.31(b)(3), we proposed to revise the confirmatory
baseline test example in Sec. 410.31(c)(2)(ii) to read, ``Allowing for
a confirmatory baseline measurement to permit monitoring of
beneficiaries in the future if the requirements of paragraph (b)(3) of
this section are met.''
Comment: A number of commenters offered recommendations on the
exceptions in paragraph (c)(2) to the general rule in paragraph (c)(1)
that provided that ``Except as allowed under paragraph (c) (2) of this
section, Medicare may cover a bone mass measurement (BMM) for a
beneficiary if at least 23 months have passed since the month the last
BMM was performed.'' The exceptions specified were-- (1) monitoring
beneficiaries on long-term glucocorticoid (steroid) therapy of more
than 3 months; and (2) allowing for a confirmatory baseline BMM to
permit monitoring of beneficiaries in the future. These commenters
indicated that in addition to the exceptions specified in paragraph
(c)(2), there were certain individuals who were at higher risk of bone
loss due to a disease, drug therapy, or other reasons who should be
measured more frequently than once every 2 years. Most of these
commenters recommended that these individuals should have a follow-up
measurement at least once every 12 or every 12 to 18 months. Another
commenter asked us to make an exception under paragraph (c) (2) for
individuals with hyperparathyroidism who due to their diagnosis require
both a DXA of the axial and the appendicular skeleton upon initial
testing.
Response: In establishing the frequency of coverage general rule in
Sec. 410.31(c)(1) of the IFC, we relied upon the guidance of the
American Association of Clinical
[[Page 69693]]
Endocrinologists, the ACR, and the National Osteoporosis Foundation,
which appeared to be generally in agreement for the need to follow
certain clinical guidelines for performing follow-up BMMs to the
initial BMM that is performed. Based on that information, we specified
in the June 24, 1998 IFC a general frequency of coverage interval of
one follow-up examination every 2 years, identifying examples of
situations where more frequent BMMs may be covered when medically
necessary. We have decided to basically retain that general frequency
of coverage standard and continue to allow Medicare contractors to
cover additional exceptions to the specified exception examples based
on medical necessity, even though there is a lack of evidence that
adjusting therapy based on serial densitometry at any level improves
outcomes (AHRQ Report 2001). Follow-up testing should be done when the
expected change in BMD is at least equal to or exceeds the least
significant change, which is the smallest change in BMD that is beyond
the range of error, as changes in BMD are usually small in proportion
to the error inherent in the test itself (Baim, Wilson et al., 2005).
Each DXA facility should determine its precision error and then
calculate the least significant change (Baim, Wilson et al., 2005).
Regarding the comment on individuals with hyperparathyroidism, we
recognize that the mechanics of bone loss may be different for these
patients than they are for estrogen-deficient post-menopausal women,
resulting in fracture risks that may be different and more difficult to
determine (Miller, Bilezikian, 2002). Thus, it may be medically
necessary for a treating provider to perform both a DXA of the axial
and the appendicular skeleton in the initial screening of patients with
this diagnosis. However, we believe the evidence is insufficient to
establish a national policy exception to the 2-year frequency standard
for these individuals as specified in Sec. 410.31(c). Nonetheless, we
have decided to allow the treating provider to determine what is
medically necessary in any particular case, subject to the review of
the local Medicare contractor.
Comment: A June 24, 1998 IFC commenter questioned whether we would
cover bone mass measurements for individuals on steroid therapy every 6
months after the initial treatment, as well as a baseline exam at the
start of therapy as was suggested in the reference to the
recommendations of others in the June 24, 1998 IFC (63 FR 34234).
Response: For those individuals on steroid therapy who are at high
risk for osteoporosis, as well as for other medical circumstances where
it might be appropriate to cover more than one BMM every 2 years, the
treating provider currently has considerable flexibility in accordance
with our regulations to determine the frequency of testing in any
particular case, subject to the review of the local Medicare
contractor. However, in the absence of sufficient evidence in the
medical literature to support any specific frequency interval for
individuals receiving steroid therapy, we are not establishing any
specific frequency interval for coverage of these individuals in this
regulatory example of possible exceptions to the general standard in
section Sec. 410.31(c) of the final rule. Rather, we are leaving this
to our local Medicare contractors, based on the best evidence that is
available to them and their medical consultants.
Comment: A June 24, 1998 IFC commenter expressed concern regarding
our policy in Sec. 410.31(c)(2)(ii) that allows coverage of a
confirmatory baseline BMM (either central or peripheral) to permit
monitoring of beneficiaries in the future if the initial test was
performed with a technique that is different from the proposed
monitoring method. That is, a qualified individual may be tested
initially with DXA at the hip and spine and then have a confirmatory
test with a peripheral device on which the patient is to be monitored
every 2 years. The commenter suggested that this policy be revised to
preclude coverage of the confirmatory test by the use of a peripheral
device because its precision is significantly poorer than the
stationary table DXA. The commenter believes that peripheral devices
are best suited for screening and initial diagnosis and not for
monitoring a patient's response to drug therapy.
Response: We agree that confirmatory testing with a peripheral
device should be precluded from coverage. As stated in the Surgeon
General's report, as well as recommendations by the International
Society of Clinical Densitometry (Journal of Clinical Densitomery 2004;
7:1-5), central skeletal sites are most appropriate for monitoring the
effectiveness of therapy, as they are more likely than peripheral sites
to show an increase in BMD in response to treatment. Therefore, we
included a provision in the proposed rule revising Sec.
410.31(c)(2)(ii) to preclude coverage of a confirmatory test that is
performed with the use of a peripheral device and to limit such
coverage to a central (axial) DXA. For the reasons described above, as
well as the general support of the public commenters on the proposed
rule, we are adopting this revision as final without change.
d. Bone Mass Measurement: Beneficiaries Who May Be Covered (Sec.
410.31(d))
The Congress has recognized that individuals receiving long-term
glucocorticoid steroid therapy are qualified individuals for purposes
of section 1861(rr)(1) of the Act. Therapy to prevent bone loss in most
patients beginning long-term therapy has been recommended at a
prednisone equivalent of greater than 5 mg/day for at least 3 months
(McIlwain, 2003). Based on our review of the current evidence, we
proposed to reduce the dosage equivalent in Sec. 410.31(d)(3) from an
average of 7.5 mg/day of prednisone for at least 3 months to an average
of 5.0 mg/day of prednisone for the same period.
Comment: A number of commenters expressed concern that certain
categories of individuals that warranted inclusion under the BMM
benefit were not covered and they recommended that the IFC be revised
to include them in the final rule. However, a commenter noted that the
Medicare law needed to be amended so that the legal definition of
``qualified'' individuals for BMM coverage keeps pace with additional
current scientific and clinical evidence on who is at risk for
osteoporosis. Overall, more than 27 additional categories of
``qualified'' individuals were recommended for coverage of bone mass
measurements under the benefit. These included patients diagnosed with
male hypogonadism, Parkinson's disease, multiple sclerosis, myasthenia
gravis, Gaucher's disease, mastocytosis, malabsorption syndromes,
history of bulimia, chronic lung disease, renal disease, diabetes
mellitus, rheumatoid arthritis, secondary hyperparathyroidism and
nonvertebral fractures, tobacco dependence, as well as patients on
heparin therapy, anticonvulsant therapy, methotrexate therapy, thyroid
replacement therapy, and antiepileptic drug therapy, etc.
Response: We have carefully reviewed the above additional
categories of individuals who have been recommended for Medicare
coverage under the final rule, and have concluded that they do not
qualify for coverage under the specific statutory language mentioned
above. Section 1861(rr) of the Act provides that the term ``qualified
individual'' for purposes of this benefit means ``an individual who is
(in accordance with regulations prescribed by the Secretary)--(A) an
estrogen-deficient
[[Page 69694]]
woman at clinical risk for osteoporosis; (B) an individual with
vertebral abnormalities; (C) an individual receiving long-term
glucocorticoid steroid therapy; (D) an individual with primary
hyperparathyroidism; or (E) an individual being monitored to assess the
responsive to or efficacy of an approved osteoporosis drug therapy.''
Therefore, we believe a change in the Medicare statute would be
required in order for us to cover these additional categories of
individuals under the BMM benefit.
Comment: Most of the commenters supported our broad interpretation
of the statutory category of ``An estrogen-deficient woman and at
clinical risk for osteoporosis'' that was specified in the interim
final regulation provision Sec. 410.31(d)(1). A June 24, 1998 IFC
commenter noted that because the risk factors associated with
osteoporosis are so numerous and complex, it is appropriate to allow a
woman's treating physician or other treating practitioner to determine
whether she is estrogen-deficient or a clinical risk of osteoporosis.
However, several June 24, 1998 IFC commenters were concerned about how
the definition would be implemented by Medicare contractors. A
commenter expressed concern that because there is not an existing ICD-
9-CM diagnosis code to describe the condition of estrogen-deficient,
this could result in the need for practitioners to use several other
ICD-9-CM codes that describe conditions likely to result from estrogen
deficient, and in variations in Medicare coverage from carrier to
carrier.
Response: We allowed the treating physician or other treating
practitioner the discretion and flexibility to determine whether a
female beneficiary is estrogen-deficient and at clinical risk for
osteoporosis. Creating a code specifically for reimbursement when the
condition is described by other codes is not required. Therefore, we
are not making any changes to our proposals based on these comments.
Comment: Several IFC commenters indicated that the beneficiary
category in Sec. 410.31(d)(5) of ``An individual being monitored to
assess the response to or efficacy of an FDA-approved osteoporosis drug
therapy'' is too limited and should be expanded to include coverage of
individuals receiving other treatments, including certain medications
that do not have FDA approval for osteoporosis treatment, and certain
rehabilitation treatments such as therapy-weight lifting and similar
interventions. A commenter noted, for example, that didronel, which has
been approved by the FDA for the treatment of Paget's disease, is not
FDA-approved for osteoporosis treatment but, its safety and efficacy in
reducing or reversing steroid-induced osteoarthritis is supported by a
large body medical literature.
Response: We recognize that not all Medicare beneficiaries who are
treated for osteoporosis are prescribed FDA-approved osteoporosis drug
therapy. However, in implementing the statutory mandate in section
1861(rr)(2) of the Act to include as a ``qualified individual'' for
Medicare-covered bone mass measurements ``an individual being monitored
to assess the response to, or efficacy of an approved osteoporosis drug
therapy,'' we do not believe it is appropriate for us to extend such
coverage to beneficiaries who are receiving non-FDA approved
osteoporosis drug therapies. Thus, we are not adopting the changes
recommended by the commenters.
Comment: A number of commenters addressed our proposal to revise
Sec. 410.31(d)(3) which stated that one of the categories of
beneficiaries who was entitled to receive Medicare coverage for a
medically necessary BMM was ``An individual receiving (or expecting to
receive) glucocorticoid (steroid) therapy equivalent to 7.5 mg of
prednisone, or greater, per day for more than 3 months.'' The majority
of these commenters suggested that the minimum requirement of 7.5 mg of
prednisone, or greater, per day provision was too strict, and that a
dose requirement of 5.0 mg per day was more appropriate. However,
several commenters stated that even lower dosage amounts than 5.0 mg
have been shown to cause significant bone loss over prolonged periods
of time, usually because of comorbidities such as rheumatoid arthritis.
A commenter recommended that this beneficiary category be expanded to
allow coverage for any patient taking steroids for longer than 3 months
regardless of the dose that is taken by the patient. Another commenter
was also concerned about the 7.5 mg of prednisone, or greater, per day
provision, but suggested a minor change that would allow an individual
receiving (or expecting to receive) glucocorticoid (steroid) therapy
equivalent to an average of 7.5 mg of prednisone, or greater, per day
for more than 3 months to be covered under the benefit. This commenter
stated that use of the average measurement is more in line with the
realities of modern medicine and would clarify that those individuals
who are receiving the same dosage at different intervals (every other
day) are eligible for coverage.
Response: We agree that the minimum 7.5 mg of prednisone dose
provision needs to be lowered and that use of an average dose
measurement in specifying this standard is appropriate. Patients with
glucocorticoid-induced osteoporosis appear to be at high risk for
fractures. Researchers have reported that reductions in bone mass have
been seen as early as 3 months after starting therapy (McIlwain, 2003).
Therapy to prevent bone loss in most patients beginning long-term
therapy has been recommended at a prednisone equivalent of >=5 mg/day
for at least 3 months (McIlwain, 2003). Based on the comments that we
have received and our review of the current evidence, we are adopting
our proposal to revise Sec. 410.31(d)(3) to reduce the minimum dosage
requirement from 7.5 mg to an average of 5.0 mg/day of prednisone for
at least 3 months.
Comment: Several IFC commenters expressed concern that Medicare
beneficiaries at risk for osteoporosis due to their use of
antiepileptic drugs are not eligible for an initial bone mass screening
because they are not included in any of the five categories of patients
defined as ``qualified individuals.'' The commenter indicates that if
it is not possible to change this under current law is it possible for
us to confirm that follow-up monitoring tests would be covered every 2
years for a patient on anti-epileptic drugs who shows signs of
osteoporosis and who is then placed on osteoporosis FDA-approved drug
therapy.
Response: We agree that patients on antiepileptic drugs may be at
increased risk for fractures. Still, the current law does not generally
address this group of patients as ``qualified'' individuals under
section 1861(rr) of the Act. Monitoring of individuals on anti-
epileptic drugs who may also be FDA-approved drug therapy for
osteoporosis, of course, may be covered as provided under the BMM
benefit.
e. Use of the NCD Process (Sec. 410.31(f))
To facilitate future consideration of coverage of additional BMM
systems for purposes of proposed paragraphs Sec. 410.31(b)(2) and
(b)(3), which will limit coverage of BMMs for monitoring individuals
receiving osteoporosis drug therapy and for performing confirmatory
baseline measurements, we proposed to identify additional BMM systems
for those purposes through the NCD process. By using the NCD process,
we could conduct a timely assessment of FDA-approved BMMs. Use of an
NCD to add coverage of effective BMM systems for these purposes is
authorized by the reasonable and necessary provision of
[[Page 69695]]
sections 1862(a)(1)(A) and 1871(a)(2) of the Act.
Comment: One commenter requests that we give Medicare carriers
discretion to cover new and advanced technologies that become available
to screen for risk of fracture rather than requiring that such
technologies be evaluated through the NCD as specified in the proposed
rule. The commenter stated that the NCD process can be long and
cumbersome, and that requiring that new technologies be added through
this process could prevent beneficiaries from having access to these
new and better technologies for some length of time.
Response: The IFC implemented section 4106 of the BBA by
establishing conditions for coverage and frequency standards for BMMs
to ensure that (among other things) they are paid for uniformly
throughout the Medicare program. To ensure that important new and
advanced BMM technologies as defined under the statute and regulations
are paid for uniformly under the program, we believe they should be
identified and evaluated through the NCD process. By relying on the NCD
process for this purpose, we believe we will able to conduct a timely
assessment of FDA-approved BMMs for possible uniform coverage under the
program that is not possible if we left this to local contractor
discretion. In most circumstances, the NCD process is required to be
completed within 9 to 12 months of the time that we accept a formal
request for an NCD on a particular procedure.
Comment: Several commenters noted that the WHO is currently in the
process of developing a standardized methodology for determining
fracture risk. A commenter indicated that although DXA is one important
tool for measuring fracture risk, there are other clinical risk factors
that are also important to evaluation, specifically to determine which
patients are likely to best respond to treatment. The commenters
suggested that employing the new risk assessment methodology may lead
to better patient outcomes by helping providers better identify those
patients who should be on therapy and they ask CMS to recognize this
new assessment methodology for coverage under Medicare Part B when WHO
completes its work on it.
Response: We do not know enough about the parameters of the
standardized methodology for determining fracture risk that the WHO is
developing to respond very specifically to this comment. However, if
this standardized methodology for measuring fracture risk relies on the
use of a device or technique that meets our definition of a BMM as
defined in Sec. 410.31(a), we believe it would be appropriate to
consider evaluating any formal request for an NCD for such a device or
technique, if it were submitted to us for evaluation.
f. Other Issues
Comment: A commenter questioned why there was no discussion in the
IFC about the importance of ethnicity as a risk factor for low bone
mass and osteoporosis. The commenter suggests that ethnicity is one of
the most important risk factors for low bone mass and osteoporosis.
Response: We agree that ethnicity as well as many other risk
factors may result in certain individuals being considered to be more
likely to develop osteoporosis than other individuals. For example, the
National Osteoporosis Foundation (NOF) and other medical professional
organizations have reported that Caucasians and Asians appear to be
more at risk for developing osteoporosis than other ethnic groups.
However, the NOF has also indicated that significant risk has been
reported in people of all ethnic backgrounds, including African-
Americans and Hispanic-Americans. The reason that this subject was not
discussed in the IFC was that ethnicity was not specifically identified
in the BMM Amendment that was enacted in 1997 as a risk factor or
medical indication that warranted Medicare coverage of bone mass
measurements. Therefore, a careful examination of this subject is
beyond the scope of this final rule. However, we expect that in
completing an evaluation of the beneficiary's need for the bone mass
measurement, as provided in Sec. 410.31(b)(1), the physician or other
qualified practitioner (as these terms are defined in the regulation)
will take ethnicity and other significant risk factors into account in
ordering medically necessary tests for individual patients to the
extent that it is possible to do so under the statutory beneficiary
categories specified in Sec. 410.31(d).
Comment: Several commenters indicated that the IFC offered
insufficient guidance on how to document the medical necessity of bone
mass measurements performed on ``qualified individuals'' (Sec.
410.31(d)) by the use of ICD-9-CM diagnosis codes. The commenter
suggested that we develop national guidelines that would help providers
in documenting the medical necessity of bone mass measurements.
Response: The IFC did not provide guidance on the ICD-9-CM
diagnosis codes that could be used by physicians or other providers in
documenting Medicare claims for bone mass measurements. However, our
original intent was that local Medicare contractors were to be
responsible for developing those appropriate specific diagnostic coding
guidelines for the physicians and other providers in their respective
localities and for communicating those guidelines to them and to the
general medical community, and they have been doing that successfully
since 1998. We expect our contractors will continue to do this as
necessary in the future.
Comment: A commenter suggests the need for a unique CPT code or
modifier to help distinguish a ``confirmatory baseline bone mass
measurement'' from a BMM that may be in violation of the frequency of
coverage standard of one follow-up monitoring test every 2 years.
Response: We do not believe there is a need to establish a unique
CPT code or modifier to distinguish a ``confirmatory baseline bone mass
measurement'' for a BMM that may be in violation of the frequency of
coverage standard of one follow-up monitoring test every 2 years
because local Medicare contractors rely on the use of frequency screens
(or edits) in determining whether follow-up tests are medically
necessary for individual patients. These frequency screens (or edits)
do not require the use of a unique CPT code or modifier by providers in
billing for these follow-up tests in order for local contractors to be
effective in making their medical necessity determinations.
In view of the comments and our review of the medical literature,
and other information, we are adopting our proposed revisions to Sec.
410.31 as final without change.
L. Independent Diagnostic Testing Facility (IDTF) Issues
1. IDTF Changes
During the course of a national review in 2003-2004, the OIG found
a potential $71 million in improper payments made to IDTFs (Review of
Claims Billed by Independent Diagnostic Testing Facilities for Services
Provided to Medicare Beneficiaries During Calendar Year 2001 (A-03-03-
00002)). The OIG found that erroneous payments were made as the result
of poor or missing documentation or lack of medical necessity.
Moreover, in recent years, we have determined with the help of our
contractors that a number of IDTFs in California and other States are
perpetrating schemes to defraud the Medicare program.
[[Page 69696]]
Since 2000, the number of IDTFs in California has increased by 40
percent, which is a far greater percentage increase than the Medicare
population in that State. The number of IDTFs billing Medicare in
California alone increased more than 400 percent from 2000 to 2005. The
increased use of IDTF services has not lowered the use of diagnostic
testing within other settings. The increased rates of utilization
within IDTFs are likely to be unrealistic due to an increase in the
need for diagnostic testing within California's Medicare population.
Also, these IDTFs are growing at a rate faster than we can survey these
facilities. The actual growth of IDTFs is not a problem. However, the
results of the OIG audit make it clear that we need to closely monitor
IDTFs and establish standards to ensure quality care for Medicare
beneficiaries. To address the erroneous payments identified by the OIG,
we proposed to establish IDTF performance standards similar to those in
Sec. 424.57 which we adopted for Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies (DMEPOS) Suppliers in the
Additional Supplier Standards final rule published in the October 11,
2000 Federal Register (65 FR 60366).
In the CY 2007 PFS proposed rule, we proposed that each IDTF be
required to be in compliance with the proposed fourteen suppler
standards discussed in section II.L.2. of this final rule with comment
period to obtain or retain enrollment in the Medicare program (71 FR
49061). Accordingly, at Sec. 410.33(h), we proposed that if an IDTF
fails to meet one or more of the standards at the time of enrollment or
at the time of re-enrollment, then its enrollment application would be
denied. Also, if at any time we determine that an enrolled IDTF no
longer meets the performance standards, its billing privileges would be
revoked.
We believe that these performance standards are needed to ensure
that minimum quality standards are met to protect beneficiaries, as
well as the Medicare Trust Fund. These standards are merely good
business practices that will help to ensure that suppliers are
providing a quality care to Medicare beneficiaries. Examples of the
kind of standards are a primary business phone number and address.
Another example is a posting of standards for review by patients and
the public.
For IDTFs, we proposed to adopt a number of standards that we
adopted for DMEPOS suppliers, including supplier standard number 6
which requires a supplier to maintain a comprehensive liability
insurance policy of $300,000 or 20 percent of its average annual
Medicare billings, whichever amount is greater, that covers both the
place of business and all customers and employees of the IDTF.
Furthermore, we proposed in the new performance standard number 7
that an IDTF agrees not to directly solicit patients. This provision
does not preclude the IDTF from public advertisement or marketing its
services to physicians and other suppliers, however it does prohibit
recruitment of beneficiaries through direct solicitation.
Additionally, the IDTF will be required to grant us, or our
designated fee-for-service contractors, including our agents, to have
access to the IDTF physical location, all equipment, and beneficiary
medical records during normal business hours. For portable equipment,
an IDTF will be required to maintain a catalog of portable equipment
and be able to produce the cataloged equipment within 2 business days.
If the IDTF denies this access, the IDTF's Medicare enrollment will be
immediately revoked.
To ensure that equipment used by an IDTF is maintained and operates
properly, we sought public comments regarding IDTF supplier standard
number 11, which requires that an IDTF must have its testing equipment
calibrated per equipment instructions or in compliance with applicable
industry standards. Specifically, we sought public comments regarding
the organizations or entities that may currently establish testing
specifications for diagnostics equipment. Further, if these
organizations or entities do not exist, we invited public comments on
the establishment of a supplier standard that relies on the
manufacturer's maintenance and calibration standards.
2. Performance Standards for IDTFs
The IDTF would be required to meet the following standards as of
January 1, 2007 and any newly or reenrolling IDTF would be required to
certify in its enrollment application that it meets and will continue
to meet the standards. At Sec. 410.33, we proposed to specify that the
IDTF is required to--
Operate its business in compliance with all applicable
Federal, State, and local licensure and regulatory requirements for the
health and safety of patients;
Provide complete and accurate information on its
enrollment application as stated in the ``Requirements for Providers
and Suppliers to Establish and Maintain Enrollment final rule'' (April
21, 2006, 71 FR 20754). Any change in enrollment information must be
reported to the designated fee-for-service contractor on the Medicare
enrollment application within 30 calendar days;
Maintain a physical facility on an appropriate site. For
the purposes of this standard, a post office box or commercial mailbox
is not considered a physical facility. The physical facility must
contain space for equipment appropriate to the services designated on
the enrollment application, facilities for hand washing, adequate
patient privacy accommodations, and the storage of both business
records and current medical records;
Have all applicable testing equipment available at the
physical site, excluding portable equipment. A catalog of portable
equipment, including equipment serial numbers, must be maintained at
the physical site. In addition, portable equipment must be made
available for inspection within 2 business days of our inspection
request. The IDTF will be required to maintain a current inventory of
the equipment (including serial/registration numbers), provide this
information to the designated fee-for-service contractor and notify the
contractor of any changes in equipment;
Maintain a primary business phone under the name of the
business. The business phone must be located at the designated site of
the business. The telephone number or toll free numbers must be
available in a local directory and through directory assistance;
Have a comprehensive liability insurance policy of at
least $300,000 or 20 percent of its average annual Medicare billings,
whichever amount is greater, that covers both the place of business and
all customers and employees of the IDTF. The insurance policy must be
carried by a non-relative owned company. The policy must list the
serial numbers of any and all equipment used by the IDTF;
Agree not to directly solicit patients, which includes,
but is not limited to, a prohibition on telephone, computer, or in-
person contacts. The IDTF will accept only those patients referred for
diagnostic testing by an attending physician, who is furnishing a
consultation or treating a beneficiary for a specific medical problem
and who uses the results in the management of the beneficiary's
specific medical problem. NPPs may order tests as set forth in Sec.
410.32(a)(3);
Answer beneficiaries' questions and respond to their
complaints. Documentation of those contacts must be maintained at the
physical site;
Openly post these standards for review by patients and the
public;
Disclose to the government, any person having ownership,
financial or
[[Page 69697]]
control interest, or any other legal interest in the supplier at the
time of enrollment or within 30 days of a change;
Have its testing equipment calibrated per equipment
instructions and in compliance with applicable national standards;
Have technical staff on duty with the appropriate
credentials to perform tests. The IDTF must produce the applicable
Federal or State licenses and/or certifications of the individuals
performing these services;
Have proper medical record storage and be able to retrieve
medical records upon request from CMS or its designated fee-for-service
contractor within 2 business days; and
Permit CMS, including its agents or its designated fee-
for-service contractors, to conduct unannounced, on-site inspections to
confirm the IDTF's compliance with these standards. The IDTF is
required to provide access, during regular business hours, to CMS and
beneficiaries, as well as maintain a visible sign posting the normal
business hours of the IDTF.
3. Supervision
To ensure quality care is provided to Medicare beneficiaries, we
proposed to revise Sec. 410.33(b)(1) to read that physicians will be
limited to providing supervision to ``no more than three IDTF sites.''
4. Place of Service
In addition to establishing specific performance standards for
IDTFs, at Sec. 410.33(i), we proposed to define the ``point of the
actual delivery of service'' as the correct ``Place of Service'' for
the claim form in the case of diagnostic testing performed outside the
IDTF's physical location. For example, when an IDTF performs a
diagnostic test at a beneficiary's residence, we believe that it is
reasonable to establish the beneficiary's residence as the ``Place of
Service.'' Previously, there has been no set procedure, so therefore,
we believe that the information is gathered at the collection point
from the beneficiary, and this is the point service. While most
diagnostic tests are performed in an office setting, we solicited
public comments regarding the types of services that can be safely and
appropriately used in a residential setting.
5. Analysis of and Responses to Public Comments
Comment: Several commenters agreed with our proposal to limit the
number of IDTFs that a physician can oversee to three. Conversely, some
commenters expressed concern about our proposal to limit the number of
IDTFs that a physician can oversee.
Response: While we understand the concerns associated with limiting
the number of IDTFs that a physician can oversee to three, we believe
that limiting the number of IDTFs that a physician can oversee will
promote quality of care. We are defining the supervising physician to
be the person who is listed in Attachment 2, Section E on the CMS-855B
enrollment application.
Comment: Several commenters suggested that the proposed standards
be revised to reflect that mobile IDTFs will have different needs and
requirements from those IDTFs which are stationary.
Response: We appreciate this comment and have revised our policy in
this final rule with comment period to address IDTF performance
standards for both fixed and mobile IDTFs.
Comment: Several commenters recommended that we expand the proposed
IDTF performance standards to all imaging services.
Response: While we appreciate this comment, we will consider this
change in a future rulemaking document.
Comment: One commenter expressed concern regarding our proposal
that an IDTF maintain a physical facility on an appropriate site and
that IDTFs would be required to maintain a specified number of square
feet per facility.
Response: While we understand the commenter's concern, it was never
our intent to establish a minimum square foot requirement. We believe
that the size of an IDTF can vary depending on the services performed.
Accordingly, we believe that the size of a fixed-based IDTF should be
of sufficient size to provide the services offered by the IDTF, such as
maintaining records, and performing administrative tasks.
Comment: Several commenters recommended that physicians can be
proficient in analyzing test results without being considered a
specialist in the field relating to that specific type of diagnostic
testing.
Response: This issue is outside of the scope of the provisions of
the proposed rule, and therefore, we are not providing a response at
this time.
Comment: In lieu of the specific performance standards proposed,
several commenters recommended that we use accreditation as a method
for improving compliance and limiting fraud and abuse with IDTFs.
Response: While we appreciate this comment, we are not able to
adopt this recommendation. We believe that it is essential that we
obtain additional information from the public before adopting IDTF
accreditation standards.
Comment: Several commenters recommended establishing a grace period
before carriers begin the revocation process for those IDTFs that fail
to meet the new performance standards.
Response: While we understand the concerns of the commenters, we do
not believe that it is practical to delay implementation of these
standards. With the publication of this final rule with comment period,
all IDTFs are being notified of the new performance standards.
Moreover, we believe that most IDTFs meet the performance standards
that we are adopting, or that they can do so within the time period
between the publication of this final rule with comment period and its
effective date. In addition, as we put this policy into operation, we
will consider phasing-in our implementation approach. In the event that
an IDTF's billing privileges are revoked, the supplier can appeal the
revocation.
Comment: Several commenters expressed the concern that an
unannounced site visit by CMS or our representatives could be
potentially disruptive to an IDTF's operations.
Response: We believe that unannounced site visits are a useful tool
to ensure that IDTFs are meeting their enrollment requirements and
performance standards. We will work closely with our contractors to
limit any disruptions during a site visit.
Comment: One commenter recommended that we eliminate the IDTF
benefit.
Response: We believe that establishing performance standards and
the other changes in this regulation will improve quality and assist us
in our efforts to reduce fraud and abuse in the Medicare program.
Accordingly, we are finalizing this proposal.
Comment: One commenter recommended eliminating the requirement to
maintain a primary business phone located at the designated site for
business, especially with regards to mobile IDTFs.
Response: We believe that it is essential that fixed and mobile
IDTFs maintain a primary business telephone number. Moreover, we
believe the primary business telephone number for fixed-based IDTFs is
located at the practice location for the IDTF. For mobile IDTFs, we
believe that the primary business telephone number is the home location
for the mobile facility.
Comment: Several commenters recommended that we clarify where
[[Page 69698]]
mobile IDTFs would store patient records.
Response: We believe that it is appropriate for a mobile IDTF to
store patient records at their home location.
Comment: In lieu of the proposed performance standards, several
commenters recommended that we implement modality specific standards to
address the diverse nature of the services provided by IDTFs.
Response: We are not able to adopt this recommendation because we
believe that it is essential that we obtain additional information from
the public before adopting modality-specific standards.
Comment: Several commenters stated that our proposal for a
physician to be responsible for overall operations and administration
of an IDTF has no basis, and that a physician should solely play a
clinical or technical role.
Response: We believe that a supervising physician, as identified in
Attachment 2 of the CMS-855B Medicare enrollment application, is
fundamentally responsible for the proper administration of an IDTF's
services.
Comment: Several commenters questioned our interpretation for the
point-of-service for services provided outside the IDTF, specifically
at the beneficiary's residence.
Response: The beneficiary's location will be considered the place
of service for pure, home-based testing. Those diagnostic tests which
have another element outside of the testing location will continue to
have the IDTF as the place of service of that diagnostic procedure.
Comment: Several commenters recommended that there is a need for a
supervising physician within an IDTF and that the language in the
proposed rule stating that, ``a physician could oversee no more than
three IDTFs,'' could be interpreted to mean that a physician does not
have to oversee an IDTF.
Response: We concur with this recommendation and believe that this
standard should be interpreted as a physician will oversee one to no
more than three IDTFs, not that an IDTF does not need a supervising
physician.
Comment: We received numerous comments concerning one aspect of
performance standard 6. We proposed that the IDTF would have to
maintain a comprehensive liability insurance policy of $300,000 or 20
percent of the IDTF's Medicare billings, whichever amount is greater.
We received comments suggesting the removal of the 20 percent condition
as this would be an undue burden to the IDTF. Additionally, we received
comments suggesting that we establish a flat rate such as the $300,000
proposed, having a $300,000 policy for each facility, an increase to a
$500,000 flat coverage, a comprehensive insurance policy of $1 million,
or an aggregate rate of $3 million.
Response: In order to reduce administrative burden associated with
calculating comprehensive liability insurance for suppliers and to
ensure compliance of this new standard, we will establish a
comprehensive liability insurance amount of $300,000 per location for
IDTFs. We agree with the recommendation that comprehensive liability
insurance coverage of $300,000 per facility location is more
appropriate, given that the likelihood of an incident occurring would
increase as the number of facilities increases. We believe that the
$300,000 per location represents the reasonable level of coverage for a
facility's comprehensive liability insurance and we will change
performance standard 6 to reflect this change.
Comment: One commenter suggested that we eliminate the provision
that insurance policy must be carried by a non-relative-owned company.
Response: Consistent with our DMEPOS supplier standards, we believe
the comprehensive liability insurance must be obtained from a verified
third party to ensure that the coverage exists.
Comment: Several commenters recommended our performance standards
address State requirements, and that we should develop a Federal set of
standards that would not vary from State to State.
Response: While we understand this concern, we believe that each
State should continue to establish its own licensing requirements.
Further, we believe that all IDTFs must maintain compliance with
applicable Federal, State, and local licensure and regulatory
requirements.
Comment: Several commenters expressed concern with our proposed
supplier standard 7 which states that an IDTF agrees not to directly
solicit patients, and these commenters recommended that we remove or
clarify standard seven.
Response: We understand the concerns of the commenters, but we are
not attempting to prohibit public advertising. Supplier standard 7 is
designed to prohibit an IDTF or its representative from direct, person-
to-person solicitation of beneficiaries by means of phone, computer, or
in-person. Clearly, an IDTF can use public advertisement, including
advertising on television, radio, internet, direct mailing, billboards,
or newspapers.
Comment: One commenter recommended that complaints by beneficiaries
should be documented on paper and kept at a home office location.
Response: At this time, we are not requiring that an IDTF collect
and maintain a log of beneficiaries' questions and complaints because
we did not propose this requirement in the CY 2007 PFS proposed rule.
In a future rulemaking document, we will address a formal collection
process for this documentation.
Comment: Several commenters expressed concern regarding the storage
and specifications of medical records (namely the comprehensive medical
records of the beneficiaries they are currently treating or have
treated), as well as how we would be defining current medical records,
largely due to the additional burden of HIPAA requirements associated
with a patient's comprehensive medical treatments.
Response: We view current medical records as consisting of the
services provided by the IDTF to its current and prior patients. Upon
request, CMS or its contractors may request comprehensive medical
records for an IDTF.
Comment: Several commenters expressed support for IDTF supplier
standard 11 which mandates the calibration of all IDTF testing
equipment. These commenters recommended that we work with the National
Electrical Manufacturers Association (NEMA) prior to establishing any
calibration and maintenance requirements.
Response: We appreciate these comments and intend to work with NEMA
and other organizations in the development of calibration and
maintenance requirements.
Comment: We received a comment stating that IDTFs should not be
required to post performance standards.
Response: We believe that posting performance standards educates
patients of an IDTF regarding their rights within the IDTF setting.
Therefore, we will adopt this standard as proposed.
Comment: Several commenters recommended that we postpone
implementing the proposed IDTF performance standards in 2007 and work
with industry to develop standards for the CY 2008 PFS.
Response: Given the widespread support of IDTF performance
standards, we believe it is appropriate to implement our proposed
changes as soon as possible. Therefore, we will
[[Page 69699]]
implement the IDTF standards in this final rule with comment period.
Comment: Several commenters recommended that our proposed 30-day
timeframe for reporting changes in enrollment data was insufficient and
that IDTFs should be allowed to continue to report changes within 90
days.
Response: Consistent with the reporting requirements for DMEPOS
suppliers, and given the fraud and abuse concerns in this area, we
believe that it is appropriate to adopt the 30-day timeframe for IDTFs
to report changes in enrollment information.
6. Provisions of the Final Rule.
a. Performance Standards for IDTFs
We received numerous valuable comments concerning the proposed
supplier standards and have revised them to reflect the issues brought
forth during the comment period. Therefore, we have amended these new
standards to reflect the differences in an IDTF's setting and the
services which they provide. We are adopting the provisions contained
in the proposed rule as final with the following changes.
We are revising supplier standard number 3 to address concerns
regarding how performance standards affect mobile IDTFs, rather than
fixed location IDTFs. Specifically, we are adopting a position that
IDTF performance standards apply to the home location of the mobile
IDTF, not the mobile vehicle. Accordingly, the home location of the
mobile IDTF, not the mobile IDTF vehicle, is required to maintain
patient records, a primary business phone, and meet all other
performance standards met by fix location IDTFs.
We are revising supplier standard number 6 to establish a set
amount for comprehensive liability insurance in the amount of $300,000
per location (an amount similar to the amount of insurance coverage for
DMEPOS suppliers). We are adopting, for IDTFs, supplier standard number
6 which requires a supplier to maintain a comprehensive liability
insurance policy of $300,000 for each IDTF location, which covers both
the place of business and all customers and employees of the IDTF. We
believe that the second part of the proposed provision of 20 percent of
its average annual Medicare billings, if greater than the $300,000
would be a burdensome task for supplier to calculate on annual basis
and lead to compliance concerns.
We are clarifying supplier standard number 7 that an IDTF agrees
not to directly solicit patients. While this provision does not
preclude an IDTF from public advertisement or marketing of its services
to beneficiaries, physicians and other suppliers, it does prohibit
recruitment of beneficiaries through direct solicitation, namely
through person-to-person contact, whether it be in-person, by computer,
or telephone.
Since we did not include the requirement in the CY 2007 PFS
proposed rule, we are revising performance standard 8 and removing the
sentence concerning the documentation of contacts concerning
beneficiaries' questions and complaints because we believe it would be
unfair and confusing to the public, and would present an undue
paperwork burden.
We are revising supplier standard number 11 to state that each
piece of diagnostic testing equipment be maintained and calibrated to
its manufacturer's standards. To ensure that equipment used by an IDTF
is maintained and operates properly, we sought public comments
regarding IDTF supplier standard number 11, which requires that an IDTF
must have its testing equipment calibrated per equipment instructions
or in compliance with applicable industry standards. Specifically, we
sought public comments regarding the organizations or entities that may
currently establish testing specifications for diagnostics equipment.
We received a number of comments supporting this proposal with minor
changes suggested by leaders within this industry. We are adopting a
recommendation that we use each manufacturer's maintenance and
calibration standards which they have determined are appropriate for
the diagnostic testing equipment they manufacture for use within these
IDTFs. We will continue to consult with industry leaders regarding the
best approaches to ensure that all IDTF testing equipment is maintained
and calibrated in accordance with manufacturer's specifications.
We are clarifying supplier standard number 14 that fixed and mobile
IDTFs are required to grant CMS, or our designated fee-for-service
contractors, access to the IDTF physical location, all equipment, and
beneficiary medical records during normal business hours. We also
adopted the position that for portable equipment, an IDTF will be
required to maintain a catalog of portable equipment and be able to
produce the cataloged equipment within 2 business days. If the IDTF
denies CMS or our designated fee-for-service contractor access to its
fixed located or the home location for a mobile vehicle, the IDTF's
Medicare enrollment will be denied if initially enrolling or revoked if
currently enrolled in the Medicare program.
Accordingly, at Sec. 410.33(h), we are stating that if an IDTF
fails to meet one or more of the standards at the time of enrollment,
then the enrollment application would be denied. Also, we are adopting
the position that if at any time we determine that an enrolled IDTF no
longer meets one or more of the IDTF performance standards, the IDTF's
billing privileges would be revoked.
As specified in Sec. 410.33, the IDTF will be required to meet the
following standards as of January 1, 2007 and any newly or reenrolling
IDTF will be required to certify in its enrollment application that it
meets and will continue to meet the standards.
Operate its business in compliance with all applicable
Federal, State, and local licensure and regulatory requirements for the
health and safety of patients;
Provide complete and accurate information on its
enrollment application as stated in the ``Requirements for Providers
and Suppliers to Establish and Maintain Enrollment final rule''
published in the April 21, 2006 Federal Register (71 FR 20754). Any
change in enrollment information must be reported to the designated
fee-for-service contractor on the Medicare enrollment application
within 30 calendar days;
Maintain a physical facility on an appropriate site. For
the purposes of this standard, a post office box or commercial mailbox
is not considered a physical facility. The physical facility, including
mobile units, must contain space for equipment appropriate to the
services designated on the enrollment application, facilities for hand
washing, adequate patient privacy accommodations, and the storage of
both business records and current medical records within the office
setting of the IDTF, or IDTF home office, not within the actual mobile
unit;
Have all applicable diagnostic testing equipment available
at the physical site, excluding portable diagnostic testing equipment.
A catalog of portable diagnostic testing equipment, including
diagnostic testing equipment serial numbers, must be maintained at the
physical site. In addition, portable diagnostic testing equipment must
be made available for inspection within 2 business days of our
inspection request. The IDTF will be required to maintain a current
inventory of the diagnostic testing equipment (including serial/
registration numbers), provide this information to the designated fee-
for-service contractor and
[[Page 69700]]
notify the contractor of any changes in equipment;
Maintain a primary business phone under the name of the
business. The primary business phone must be located at the designated
site of the business, or within the home office of mobile IDTF units.
The telephone number or toll free numbers must be available in a local
directory and through directory assistance;
Have a comprehensive liability insurance policy of at
least $300,000 per location that covers both the place of business and
all customers and employees of the IDTF. The insurance policy must be
carried by a non-relative owned company. The policy must list the
serial numbers of any and all diagnostic equipment used by the IDTF,
whether the equipment is stationary, in a mobile unit, or at the
beneficiary's residence;
Agree not to directly solicit patients, which includes,
but is not limited to, a prohibition on telephone, computer, or in-
person contracts. The IDTF will accept only those patients referred for
diagnostic testing by an attending physician, who is furnishing a
consultation or treating a beneficiary for a specific medical problem
and who uses the results in the management of the beneficiary's
specific medical problem. NPPs may order tests as set forth in Sec.
410.32(a)(3);
Answer beneficiaries' questions and respond to their
complaints;
Openly post these standards for review by patients and the
public;
Disclose to the government, any person having ownership,
financial or control interest, or any other legal interest in the
supplier at the time of enrollment or within 30 days of a change;
Have its testing equipment calibrated and maintained per
equipment instructions and in compliance with applicable manufacturers
suggested maintenance and calibration standards;
Have technical staff on duty with the appropriate
credentials to perform tests. The IDTF must produce the applicable
Federal or State licenses and certifications of the individuals
performing these services;
Have proper medical record storage and be able to retrieve
medical records upon request from CMS or our designated fee-for-service
contractor within 2 business days; and
Permit CMS, including our agents or our designated fee-
for-service contractors, to conduct unannounced, on-site inspections to
confirm the IDTF's compliance with these standards. The IDTF is
required to provide access, during regular business hours, to CMS and
beneficiaries, as well as maintain a visible sign posting the normal
business hours of the IDTF.
While we understand that these additional standards could lead
certain IDTFs to withdraw from the Medicare program rather than comply
with the new standards, we believe that legitimate businesses would not
oppose these changes. Moreover, we emphasize that services provided by
an IDTF are also readily available to beneficiaries through other
avenues such as physicians' offices, outpatient laboratories,
outpatient radiology facilities, and outpatient clinics. We believe
that the implementation of these standards would improve the quality of
services provided to Medicare beneficiaries by IDTFs without any
associated access concerns.
b. Supervision
To ensure quality care is provided to Medicare beneficiaries, we
are adopting the position to revise Sec. 410.33(b)(1) to read that
physicians will be limited to providing supervision to ``no more than
three (3) IDTF sites.'' This reference to the supervising physician
applies to the individual listed as the supervising physician in the
Medicare enrollment application (that is, CMS-855 B, Attachment 2,
Section E), not the physician supervising the interpretation of a
diagnostic test.
c. Place of Service
In addition to establishing specific performance standards for
IDTFs, we are defining the ``point of the actual delivery of service''
as the correct ``Place of Service'' on the claim form. In the case of
diagnostic testing that is performed completely outside of a fixed
facility location, we believe that the point of actual delivery of
service is the beneficiary's' residence, or location where the test is
being administered. As such, these services should be billed to the
designated Medicare contractor. For example, when a diagnostic test is
performed at a beneficiary's residence, we believe that it is
reasonable to establish the beneficiary's residence as the ``Place of
Service'' and that these services be billed to the designated Medicare
contractor where the beneficiary resides. Previously, there has been no
set policy regarding diagnostic testing performed by beneficiary.
Accordingly, mobile IDTF and portable x-ray supplier services performed
in beneficiary's residence would be billed to the designated Medicare
contractor where the beneficiary resides, rather than the home location
of the mobile IDTF or portable x-ray supplier.
However, when a diagnostic test contains a home-based element (that
is, the beneficiary performs a portion of the testing in his or her
residence) and a facility-based element (that is, an IDTF reads or
monitors the test results), the place of service is not clearly
established and the fixed location of the IDTF will remain as the place
of service for these tests. Accordingly, diagnostic tests containing
both home-based and facility-based elements are billed to the
designated Medicare contractor associated with the practice location of
the fixed IDTF.
In a future rulemaking effort, we will seek public input regarding
the appropriate place of service for diagnostic testing when services
are rendered in multiple parts in different locations.
M. Independent Laboratory Billing for the TC of Physician Pathology
Services to Hospital Patients
The TC of physician pathology services refers to the preparation of
the slide involving tissue or cells that a pathologist will interpret.
(In contrast, the pathologist's interpretation of the slide is the PC
service. If this service is furnished by the hospital pathologist for a
hospital patient, it is separately billable. If the independent
laboratory's pathologist furnishes the PC service, it is usually billed
with the TC service as a combined service.)
In the CY 2000 PFS final rule (64 FR 59380 and 59408 through
59409), we stated that we would implement a policy to pay only the
hospital for the TC of physician pathology services furnished to
hospital patients. Before that proposal, any independent laboratory
could bill the carrier under the PFS for the TC of physician pathology
services for hospital patients. As stated in the CY 2000 PFS final
rule, this policy has contributed to the Medicare program paying twice
for the TC service, first through the inpatient prospective payment
rate to the hospital where the patient is an inpatient and again to the
independent laboratory that bills the carrier, instead of the hospital,
for the TC service.
Therefore, in the CY 2000 PFS final rule at Sec. 415.130, we
provided that, for services furnished on or after January 1, 2001, the
carriers would no longer pay claims to the independent laboratory under
the PFS for the TC of physician pathology services for hospital
patients.
Ordinarily, the provisions in the final PFS are implemented in the
following year. However, in this case, the change to Sec. 415.130 was
delayed one year (until
[[Page 69701]]
January 1, 2001), at the request of the industry, to allow independent
laboratories and hospitals sufficient time to negotiate arrangements.
Moreover, our full implementation of Sec. 415.130 was further delayed
through CY 2006. Most recently, under section 732 of the MMA, we were
required to pay separately under Medicare Part B for the TC of
physician pathology services for services furnished during 2005 and
2006.
However, we continue to believe that hospital prospective payment
amounts already compensate hospitals for the TC of physician pathology
tests and that additional payment under the PFS is inappropriate.
Therefore, we are amending Sec. 415.130 to provide that, for services
furnished after December 31, 2006, an independent laboratory may not
bill the carrier for the TC of physician pathology services furnished
to a hospital inpatient or outpatient. Under Sec. 415.130(d), we will
pay under the PFS for the TC of a physician pathology service furnished
by an independent laboratory for services provided to an inpatient or
outpatient of a ``covered hospital'' (as defined in Sec.
415.130(a)(1)) on or before December 31, 2006.
We received comments from individuals and groups.
Comment: Several commenters stated that the policy, in the CY 2000
PFS final rule, was based on flawed assumptions and facts, and that the
hospital's inpatient payment rate does not include payment for this
service.
Response: We addressed specific comments regarding the
establishment of the inpatient prospective payment system (IPPS) and
the inclusion of the TC physician pathology costs in this payment
system in the final rule published in the CY 2000 PFS final rule (64 FR
59408 through 59409). We believe that our discussion in that final rule
is still valid.
Comment: Several commenters indicated that hospitals and
independent laboratories will have to set up costly and
administratively complex billing systems and procedures. These
commenters and others asked us to allow hospitals and independent
laboratories that have these grandfathered arrangements to continue
bill in the same manner.
Response: We are not requiring the hospitals to establish new
billing procedures or systems. The billing of TC physician pathology
services involves the same billing procedures and processes that the
hospital may have established for any outsourced diagnostic tests for
hospital inpatients, such as MRI, CT scan, and ultrasound scans. Only
hospitals that have outsourced no other diagnostic services other than
physician pathology services may have to establish new billing systems
or procedures.
Similarly, we are not requiring independent laboratories to
establish new billing procedures and systems. Independent laboratories
have similar billing systems in operation for clinical laboratory
services that are provided to hospital inpatients. Also, neither
individual laboratories nor any industry laboratory specialty group for
independent laboratories has commented on this increased complexity,
cost, and burden.
Comment: One individual commented on a draft instruction that has
been sent to the Medicare carriers for comment. The instruction
implements the payment policy for physician pathology TC services
beginning in 2007.
Response: This item is not a subject of the proposed rule and we
are not addressing this comment as part of this rule. The draft
Internet Only Manual instructions are reviewed by carriers during their
development. There is a formal review process for evaluation of these
comments apart from the regulation process.
Comment: Several commenters identified an issue involving proposed
Sec. 415.130. The commenters expressed concern that the effect of the
proposed regulation would not be limited to the TC of physician
services. Proposed Sec. 415.130 reads, ``For services furnished after
December 31, 2006, an independent laboratory may not bill the carrier
for physician pathology services furnished to a hospital inpatient or
outpatient.''
Response: We appreciate the issue that the commenters have
identified through their careful reading of the proposed rule. The
quoted sentence omitted the reference to the ``technical component'' of
physician pathology services. We are revising the regulation text
accordingly as this was clearly our intent.
N. Public Consultation for Medicare Payment for New Outpatient Clinical
Diagnostic Laboratory Tests
Section 1833(h) of the Act requires the Secretary to establish fee
schedules for clinical laboratory tests under Medicare Part B. We
proposed to implement section 942(b) of the MMA which specifies annual
procedures for consulting the public on how to establish payment for
new clinical laboratory test codes to be included in the annual update
of the clinical laboratory fee schedule.
1. Medicare, Medicaid, and SCHIP Benefits Improvement Protection Act of
2000 (BIPA)
Section 531(b) of BIPA mandated that we establish, no later than 1
year after the date of enactment, procedures that permit public
consultation for payment determinations for new clinical diagnostic
laboratory tests under Medicare Part B in a manner consistent with the
procedures established for implementing ICD-9-CM coding modifications.
In the CY 2002 PFS final rule (66 FR 58743), we specified the
procedures to implement section 531(b) of BIPA.
These procedures were most recently used to determine the payments
for new 2006 clinical laboratory fee schedule codes. First, we convened
a public meeting to solicit expert input on the nature of the new tests
before rate determinations were made. We have held these meetings each
year since 2002 to receive this expert input on the next year's codes.
Our most recent meeting was announced in the Federal Register on May
27, 2005 (70 FR 30734) and occurred on July 18, 2005. In that meeting,
we requested that presenters address the new test codes, each test's
purpose, method, cost, and a recommendation for one of two methods
(crosswalking or gapfilling) for determining payment for the new
clinical laboratory codes. Crosswalking and gapfilling are discussed in
section II.N.2.d of this final rule with comment period.
Following the public meeting, we posted a summary of the new codes
and the payment recommendations that were presented during the public
meeting on our Web site. The summary also displayed our tentative
payment determinations and indicated a comment period for interested
parties to submit written comments. After reviewing the comments
received, we issued Medicare Transmittal 750, 2006 Annual Update for
Clinical Laboratory Fee Schedule, which provided all instructions and
final rate determinations for the 2006 clinical laboratory fee schedule
including the new codes and fees, on November 18, 2005.
2. Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (MMA)
In the CY 2007 PFS proposed rule (71 FR 49064), we proposed to
implement section 942(b) of the MMA which requires that we establish
procedures for consulting the public on how to establish payment for
new clinical laboratory test codes to be included in
[[Page 69702]]
the annual update of the clinical laboratory fee schedule. Similar
procedures were already mandated by legislation in section 531(b) of
the BIPA which requires payment determinations for new clinical
diagnostic laboratory tests under Medicare Part B be made in a manner
consistent with the procedures established for implementing ICD-9-CM
coding modifications.
Specifically, the MMA requires the Secretary to establish by
regulation procedures for determining the basis for and amount of
payment for a clinical diagnostic laboratory test that is assigned a
new or substantially revised HCPCS code on or after January 1, 2005. We
refer to these tests as ``new tests.''
a. Basis and Scope (Sec. 414.500)
We proposed to add a new subpart implementing provisions of section
1833(h)(8) of the Act--procedures for determining the basis for, and
amount of, payment for a new clinical diagnostic laboratory test with
respect to which a new or substantially revised HCPCS code is assigned
on or after January 1, 2005.
We received no comments on this subpart. Therefore, we are
finalizing Sec. 414.500 as proposed.
b. Definition (Sec. 414.502)
As specified in section 942(b) of the MMA, we are defining the term
``Substantially Revised Healthcare Common Procedure Coding System
Code'' to mean a code for which there has been a substantive change to
the definition of the test or procedure to which the code applies (such
as a new analyte or a new methodology for measuring an existing analyte
specific test).
We did not receive comments on this subpart. Therefore, we are
finalizing Sec. 414.502 as proposed.
c. Procedures for Public Consultation for Payment for a New Clinical
Diagnostic Laboratory Test (Sec. 414.506)
For a clinical laboratory test that is assigned a new or
substantially revised code on or after January 1, 2005, section
1833(h)(8)(B) of the Act provides that determinations of payment
amounts for new tests shall be made only after the Secretary:
Makes available to the public (through an Internet Web
site and other appropriate mechanisms) a list that includes codes for
which establishment of a payment amount is being considered for the
next calendar year;
Publishes a Federal Register notice of a meeting to
receive public comments and recommendations (and data on which
recommendations are based) on the appropriate basis for establishing
payment amounts for the list of codes made available to the public on
the same day the list of codes is made available;
Convenes a meeting that includes representatives of CMS
officials involved in determining payment amounts, to receive public
comments and recommendations (and data on which the recommendations are
based) not less than 30 days after publication of the notice in the
Federal Register; and
Considers the comments and recommendations (and
accompanying data) received at the public meeting, develops and makes
available to the public (through an Internet Web site and other
appropriate mechanisms)--
+ A list of determinations for the appropriate basis for
establishing a payment amount for each code, together with an
explanation of the reasons for each determination, the data on which
the determinations are based, and a request for public written comments
on the proposed determination; and
+ A list of final determinations of the payment amounts for tests,
together with the rationale for each determination, the data on which
the determinations are based, and responses to comments and suggestions
from the public.
In the CY 2007 PFS proposed rule, we indicated these procedures
have been most recently used to finalize the payments for new 2006
clinical laboratory fee schedule codes and we believe that our current
process for providing for public consultation on the establishment of
payment amounts for new clinical laboratory tests is consistent with
the requirements of section 1833(h)(8)(B) of the Act. We currently make
available to the public through a posting on the CMS Web site a list of
new laboratory test codes for the next calendar year. We publish a
Federal Register notice of a meeting to receive public comments and
recommendations and convene the meeting with appropriate CMS officials
in attendance. We consider the input received at the public meeting and
we make available to the public on the CMS Web site a list of the
proposed determinations and seek comment. We then make available to the
public our final determinations in the instructions that we provide to
our claims processing contractors to implement the Medicare Part B
clinical laboratory fee schedule each year.
The most significant change required by section 1833(h)(8)(A) of
the Act with respect to our procedures for public consultation is that
we codify this process in regulations. Therefore, we proposed to codify
our current process for public consultation for new clinical diagnostic
laboratory tests paid under the Medicare Part B clinical laboratory fee
schedule at new Subpart G--Payment for New Clinical Diagnostic
Laboratory Tests (Sec. 414.502 through Sec. 414.506).
Comment: Several comments supported the consultation process for
new clinical diagnostic laboratory tests paid under the Medicare Part B
clinical laboratory fee schedule. Commenters suggested changes to the
meeting and posting of data presented in the meeting. For example, a
commenter suggested we should require a 60-day time period from the
Federal Register notice of the public meeting and the date of the
public meeting. Commenters also requested that we post on the Internet
additional detail regarding data and rationale used for public
recommendations and final payment decisions.
Response: We want to take this opportunity to explain the
timeframes for the annual update to the clinical laboratory fee
schedule. The Medicare Part B clinical laboratory fee schedule utilizes
the codes developed by the AMA's Current Procedural Terminology (CPT)
Editorial Panel. The CPT codes are developed as the result of quarterly
meetings throughout the year and the codes to be included in the
upcoming year's fee schedule (effective January 1st) are available as
early as May. We then list the new clinical laboratory tests codes on
our Web site in June along with registration information for the public
meeting. We schedule the date of the public meeting not fewer than 30
days after announcing the meeting in the Federal Register. This
timeframe results in a July date for the public meeting, followed by a
posting of our tentative payment determinations and a comment period in
September. The updated clinical laboratory fee schedule is prepared in
October for release to our contractors during the first week in
November. Our contractors have many information system steps to
complete during the months of November and December so that the updated
clinical laboratory fee schedule is ready to pay claims effective
January 1st of the calendar year.
With the constraints of the this process, we will strive to provide
as much time as is feasible between the announcement of the meeting and
the meeting itself. As required under both the statute and Sec.
414.506, the public meeting will take place ``not fewer'' than 30 days
after we publish notice of
[[Page 69703]]
the meeting in the Federal Register. Our proposed regulatory language
allows us flexibility to provide additional time when feasible.
However, extending the notification period announcing the date of the
public meeting to 60 days from the Federal Register notice of the
public meeting could cause delays to the rate-setting process and to
the timely release of the updated clinical laboratory fee schedule.
Commenters also requested that when we announce public
recommendations or our determinations, we should include data and the
rationale on which the recommendation or determination is based.
However, we note that recommendations from the public meeting have
sometimes lacked the detail requested by commenters. We have considered
all payment recommendations received from the public, even those that
have sometimes lacked the supporting detail requested by commenters. In
some cases, companies have expressed concern about revealing data to
laboratory competitors during the public meeting. When soliciting
public input for the meeting, we will recommend that all participants
in the public consultation process strive for transparency and try to
provide as much supporting information as possible to assist us and
others in evaluating the recommendation. As required by the statute, we
will provide the rationale for our payment determinations.
Comment: Two commenters stated that a whole new generation of
diagnostic tests will contribute to treatment that is more tailored to
the individual so that maintaining the current system for setting
payment will not be sufficient because the new generation tests are
more complex than the individual test codes currently paid under the
clinical laboratory fee schedule. Also, the commenters indicated that
some of the new generation tests may be performed by only one
laboratory in the country so that establishing a payment amount for the
new test becomes a de facto national price which may be insufficient
for other laboratories in the future.
Response: We appreciate the commenters' recognition that
establishing payment for new technology testing is complex and subject
to many professional perspectives. In this rulemaking, we are complying
with the MMA mandate to codify a public consultation process for
payment of new clinical laboratory test codes. The statute requires
that we host a public meeting to receive recommendations on individual
test codes added to the Medicare Part B clinical laboratory fee
schedule. We state in the public meeting notice that presentations
should address the new test code(s) and descriptor(s), the test purpose
and method, costs and charges, and other background information. We
certainly encourage presenters to include in their presentations market
availability of the test and other information on the new technology.
Also, a question and answer period is scheduled during the meeting to
permit a robust discussion of each new test code. As noted, when we
have hosted the public meetings in the past, the laboratory industry
has sometimes submitted payment recommendations that are sparse of
information and data supporting the payment recommendations. Thus, we
do not believe opportunities for information gathering on new
technology tests have been fully utilized within the public meeting
process. While we can work with laboratories to explore other payment
options for new technology tests, we must implement the statutorily
required public meeting process. We encourage the laboratory industry
to fully participate in this process and to include in its public
recommendations data detailed background information on market
availability and other concerns that laboratories have for the new
technology test codes.
Comment: We received a comment requesting that we establish a
reconsideration process that would allow interested parties to request
a formal review of payment rate determinations. The commenter suggested
that interested parties be given an opportunity to request and receive
a reconsideration of a CMS decision to crosswalk or gapfill a new or
revised test code, CMS crosswalk determination, a contractor
determination of a gapfill price, or a CMS calculation of the NLA for a
new test.
Response: We understand the concerns of the commenter, but we are
not establishing a formal reconsideration process in this final rule.
However, we are revising Sec. 414.508 to provide that, if we gapfill a
test, but determine after the first year of gapfilling that carrier-
specific gapfilled amounts will not pay for the test appropriately, we
may crosswalk the test. Furthermore, we expect to solicit comments on a
potential reconsideration process in a future rulemaking.
After careful review of the public comments, we are finalizing
Sec. 414.506 as proposed.
d. Payment for a New Clinical Diagnostic Laboratory Test--Crosswalking
and Gapfilling (Sec. 414.508)
We proposed to add new Sec. 414.508 to indicate when, in
establishing the payment amount for a new clinical laboratory test, one
of two payment methods can be utilized. The first payment method,
called ``crosswalking,'' is used if a new test is determined to be
comparable to an existing test, multiple existing test codes, or a
portion of an existing test code. We proposed that a new test code
would be assigned the related existing local fee schedule amounts and
national limitation amount (NLA).
In new Sec. 414.508, we proposed to use the second method, called
``gapfilling,'' when no comparable, existing test is available.
Currently when using this method, manual instructions are provided to
each Medicare carrier to determine a payment amount for its geographic
area(s) for use in the first year, and the carrier-specific amounts are
used to establish an NLA for following years. Consistent with our
current process, the sources of information carriers examine in
determining gapfill amounts, if available, include--
Charges for the test and routine discounts to charges;
Resources required to perform the test;
Payment amounts determined by other payers; and
Charges, payment amounts, and resources required for other
tests that may be comparable or otherwise relevant.
Currently, our manual instructions allow carriers to consider other
sources of information as appropriate, including clinical studies and
information provided by clinicians practicing in the area,
manufacturers, or other interested parties. Carriers are also
instructed to establish carrier specific amounts on or before March 31
of the year and to revise their carrier specific amount, if necessary,
on or before September 1 of the year. In this manner, a carrier may
revise its carrier specific amount based on additional information, but
there is also a specific time frame to perform this revision so that we
have adequate time to receive and use the carrier specific amounts for
the calculation of the next year's clinical laboratory fee schedule.
In light of MMA provisions, we proposed to prospectively eliminate
payment of new gapfilled tests at a carrier specific amount after the
first year in new Sec. 414.508. Section 1833(h)(8)(A) of the Act gives
the
[[Page 69704]]
Secretary authority to establish procedures for determining the payment
amount for laboratory tests for which new or substantially revised
HCPCS codes were established on or after January 1, 2005. Under this
authority, in new Sec. 414.508(b), we proposed to pay for a new
gapfilled laboratory test under our existing methodology for the first
year (the carrier would establish a gapfill amount.) Beginning in the
second year, the test would be paid at the national limitation amount.
This would result in consistent payment in geographic areas for a new
test using the median of the carriers' gapfilled amounts.
Comment: Commenters were supportive of our proposal to set the
price for gapfilled tests at the NLA. Other commenters suggested that
the method used by contractors to determine their price for gapfilled
tests should be more specific.
Response: We appreciate the support for our proposal to establish
the payment rate for a gapfilled test at the NLA. However, we do not
agree specific changes to the gapfilling methodology should be made in
the final rule, without a chance to receive multi-stakeholder input on
the commenter's suggestions. We do believe that we must engage the
clinical laboratory community and our contractors in additional
discussions regarding the procedures and data used to determine the
payment amounts for gapfilled tests. We will plan to discuss with our
contractors their experience establishing the gapfill amounts and also
to host a forum or meeting during the upcoming year to listen to
additional suggestions from the public. After participating in these
additional information gathering steps, we will consider possible
changes to the regulations for the 2008 proposed rule and/or additional
subregulatory guidance if appropriate.
As discussed above, in response to a comment suggesting that we
establish a reconsideration process, we are revising Sec. 414.508 to
provide that we may crosswalk a test if we determine that carrier-
specific gapfilled amounts will not pay for the test appropriately.
We are finalizing Sec. 414.508 with the exceptions noted above in
this section.
3. Other Laboratory Issues
a. Quality
In the CY 2007 PFS proposed rule (71 FR 49064), we discussed that
we are exploring the development of measures related to the quality and
efficiency of care, including those involving clinical laboratory fee
schedule services. We stated our interest to work with physicians,
providers and the clinical laboratory community to identify ways to
promote utilization decisions such as using a laboratory claims
attachment standard involving the Logical Observation Identifiers Names
and Codes (LOINC[supreg]) database as a means for reporting test result
data. This could be one possible component of a comprehensive system of
collecting clinical laboratory test data. Detailed information on the
LOINC[supreg] reporting system is available at the Web site at http://www.loinc.org.
Comment: Several commenters endorsed our interest in working with
the laboratory community on laboratory quality of care initiatives.
However, two commenters objected to LOINC[supreg] reporting system as
operationally burdensome for laboratory information systems because it
would require merging a data quality field from the laboratory
information system to the laboratory billing system, training
information systems staff, and sending reference laboratory result data
to the referral laboratory who prepares the claim. One of these
commenters also stated that regulations on privacy of medical
information should be considered. One commenter indicated that the
LOINC[supreg] reporting system requires narrative reporting for some
microbiology tests which is not in a data quality field format.
Response: We are pleased the commenters supported the development
of measures related to the quality of clinical laboratory services. We
agree that it is imperative to work with physicians, providers and the
clinical laboratory community to identify quality measures that can
efficiently be incorporated into the laboratory billing system. We
understand the reporting of laboratory quality measures must reach
compatibility with privacy rules. Furthermore, the important role of
quality measures in the evolution of healthcare reporting will remain
strong. While changes to information technology may be required,
laboratories should be anticipating further interest to include a
laboratory quality measure field in laboratory billing systems.
b. Blood Glucose Monitoring in SNFs
In the CY 2007 PFS proposed rule (71 FR 49064), we included a
discussion of our longstanding policy on blood glucose monitoring in
SNFs submitted for payment under the Medicare Part B clinical
laboratory fee schedule. We explained that section 1862(a)(1)(A) of the
Act requires that a service be reasonable and necessary for diagnosis
and treatment to be eligible for coverage by Medicare. Our regulations
at Sec. 410.32(a) already require that, for any diagnostic test,
including a clinical diagnostic laboratory test, to be considered
reasonable and necessary, it must be both ordered by the physician and
the ordering physician must use the result in the management of the
beneficiary's specific medical problem. Tests not ordered by the
physician who is treating the beneficiary are not reasonable and
necessary.
In the context of blood glucose monitoring, we most recently
explained this policy in Transmittal AB-00-108, which is available on
our Web site at http://www.cms.gov/transmittals/downloads/ab00108.pdf.
This interpretation of Sec. 410.32 also is the basis for our policy in
section 90.1 of Chapter 7 of the Medicare Claims Processing Manual
(``Skilled Nursing Facility Part B Billing,'' which is available on our
Web site at http://www.cms.hhs.gov/manuals/downloads/clm104c07.pdf.)
In addition, separate authority under section 1835(a)(2)(B) of the
Act provides that, in the case of certain ``medical and other health
services'' (including clinical diagnostic laboratory services), payment
may be made for Part B services that are furnished by a provider of
services only if a physician certifies--and recertifies where those
services are furnished over a period of time, with such frequency, and
accompanied by such supporting material, as may be provided by
regulation--that those services were medically necessary. In the CY
2007 PFS proposed rule (71 FR 49065), we proposed to use our authority
under section 1835(a)(2)(B) of the Act to amend Sec. 424.24 to provide
that, for each blood glucose test furnished to a resident of a SNF, the
physician must certify that the test is medically necessary. We also
proposed to clarify that a physician's standing order is not sufficient
to order a series of blood glucose tests.
Comment: Many commenters explained that it is common medical
practice in the nursing home for the physician to certify a standing
order for a 1-month time period for the nurse to perform daily glucose
monitoring fingerstick tests throughout the month and based on the
results, the nursing staff dispense insulin, as needed by the patient.
Thus, the commenters objected that the proposal will impose a burden on
SNFs who perform tests under these situations.
Response: This amendment to Sec. 424.24 establishes a
certification requirement that affects only services that are furnished
by a provider of services for which the provider of
[[Page 69705]]
services seeks payment under Medicare Part B. To the extent payment is
available under Medicare Part A or the services are not furnished by a
provider of services (as defined under section 1861(u)of the Act), this
certification requirement does not apply.
Payment for glucose monitoring is encompassed under other payment
systems that are available to the nursing homes. Medicare pays as part
of the bundled payment to the facility for beneficiaries in a Part A-
covered stay in a hospital or in a SNF. It is when the provider
requests Medicare to separately pay for a blood glucose test under the
outpatient Part B clinical laboratory fee schedule that the service
must meet the certification requirement under Sec. 424.24(f).
We also note that the revisions to Sec. 424.24 does not alter
existing policies issued under section 1862(a)(1)(A) of the Act. As
discussed above in this section, under Sec. 410.32(a), the test must
be ordered by the physician who is treating the beneficiary and the
physician must use the results promptly in the management of the
beneficiary's specific medical condition.
Comment: Some commenters raised concerns that coverage policies are
not consistently describing diabetes care categories, glucose
monitoring protocols, and an individual glucose test service. The
commenters suggested more specific coverage policies would benefit
providers.
Response: We understand the suggestion that refinements to coverage
policies could benefit providers. The 2002 NCD for blood glucose tests
specifies coverage and frequency limitations for reimbursement under
the Part B. The NCD is not specific to nursing home common practices
and applies to all providers submitting claims for payment under the
clinical laboratory fee schedule. During the years since the release of
the NCD, laboratories along with other providers who seek payment from
the clinical laboratory fee schedule have had opportunity to carefully
review the NCD and request further refinements and examples to enhance
the NCD's interrelationship with payment under the clinical laboratory
fee schedule. Interested parties can find more information on the
coverage policy process on our Web site at http://www.cms.hhs.gov/center/coverage.asp.
With respect to the burden of this certification requirement, we
believe that, by enacting section 1835(a)(2)(B) of the Act, the
Congress recognized that it may be appropriate for the Secretary to
impose conditions of payment for services furnished by providers of
services for which providers bill separately under Medicare Part B. We
recognize the value of blood glucose testing and strongly support this
testing when it is medically necessary. However, we must also ensure
that blood glucose testing is medically necessary when furnished by a
provider of services for which the provider bills Medicare Part B. We
believe that this revision to Sec. 424.24 strikes the appropriate
balance between our commitment to beneficiary access to blood glucose
testing and our obligation to ensure that each test is medically
necessary.
We do not believe that our amendment to Sec. 424.24 imposes a new
obligation. As discussed above in this section, Sec. 410.32(a) and our
program instructions already require that a laboratory test must be
ordered by a physician and the ordering physician must use the result
in the management of the beneficiary's specific medical problem.
However, as discussed in the proposed rule, we have received inquiries
regarding the application of Sec. 410.32(a) in the context of blood
glucose testing provided by SNFs. In addition, we received a specific
inquiry asking for clarification of section 90.1 of Chapter 7 of the
Medicare Claims Processing Manual. Furthermore, we have become aware
that some providers have filed claims before Administrative Law Judges
challenging our policy regarding blood glucose testing in SNFs.
To the extent there has been confusion regarding our policies, our
amendment to Sec. 424.24 provides a clear rule that, for payment to be
made for blood glucose tests under Medicare part B to a provider of
services, a physician must certify that each test is medically
necessary. We also have clarified that a physician's standing order is
not sufficient to order a series of blood glucose tests.
Comment: One commenter alerted that some home health providers are
engaging in inappropriate physician ordering of clinical diagnostic
blood glucose tests, for payment under the Part B benefit, so that the
clarification to the regulation should apply not just to SNFs but also
to home health agencies.
Response: We agree with the commenter that the regulation should
apply to providers of services who bill to the Medicare Part B clinical
laboratory fee schedule, including home health agencies. We are
revising Sec. 424.24(f) to provide that the certification requirement
applies to all providers of services.
Comment: One commenter disagreed with our proposal stating that it
would impose an unfair burden on clinical laboratories that provide
services to SNFs because the independent laboratory is not informed or
responsible for the documentation requirements in the SNF.
Response: Independent clinical laboratories are not providers of
services, so our amendment to Sec. 424.24 does not affect these
entities. We disagree that an independent clinical laboratory that is
providing services to SNF customers should not be informed or ensure
the medical necessity documentation is sufficient. Independent clinical
laboratories must comply with Sec. 410.32(a). Furthermore, independent
clinical laboratories must be certified under the Clinical Laboratory
Improvement Amendments of 1988 (CLIA) (Pub. L. 100-578). Under the
standard for test requests at Sec. 493.1241, the laboratory must have
a written or electronic request for patient testing from an authorized
person. An independent clinical laboratory, whether it is providing
services to SNF customers or other provider types, must remain informed
and involved to ensure the laboratory service is rendered in accordance
with the regulation and instructions applicable for receiving payment
under the clinical laboratory fee schedule.
Comment: One commenter asserted that we are obligated to perform a
Regulatory Impact Analysis for our proposal to clarify Sec. 424.24
requiring the physician to certify each test is medically necessary and
stating that a physician's standing order is not sufficient to order
blood glucose tests for payment under the Medicare Part B clinical
laboratory fee schedule. Another commenter stated our amendment to
Sec. 424.24 does not comport with the Paperwork Reduction Act of 1995
to publish a notice in the Federal Register on collection of
information.
Response: We do not believe our amendment to Sec. 424.24 requires
a regulatory impact analysis or a Paperwork Reduction Act notice. We
believe that Sec. 424.24(f) does not impose any new obligations, but
merely codifies as a condition of payment what has long been required
under Sec. 410.32(a) and our program instructions.
After careful review of public comments, we are finalizing Sec.
424.24(f) as proposed.
c. Other Lab Issues--Proposed Clinical Diagnostic Laboratory Date of
Service (DOS) for Stored Specimens
In the CY 2007 PFS proposed rule (71 FR 49064), we proposed to add
new Sec. 414.510 to address concerns regarding
[[Page 69706]]
the date of service of a clinical diagnostic laboratory test that use a
stored (or ``archived'') specimen. In the final rule of coverage and
administrative policies for clinical diagnostic laboratory services (66
FR 58792) that we published in the November 23, 2001 Federal Register,
we adopted a policy under which the date of service for clinical
diagnostic laboratory services generally is the date the specimen is
collected. However, for laboratory tests that use an archived specimen,
the date of service is the date the specimen was obtained from the
storage. We defined an ``archived'' specimen as a specimen that is
stored for more than 30 calendar days before testing. The date of
service for these archived specimens is the date the specimen was
obtained from storage. Specimens stored 30 days or less have a date of
service of the date the specimen was collected. In situations in which
a specimen is taken while the patient is treated in a hospital setting,
but then later used for a test after the patient has been discharged
from the hospital setting, date of service of a test may affect payment
because, if the date of service falls during an inpatient stay or
outpatient procedure, payment for the laboratory test usually is
bundled with the hospital service. To address concerns raised for tests
related to cancer recurrence and therapeutic interventions, we proposed
to modify our policy so that the date of service would be the date the
specimen is obtained from storage, even if the specimen is obtained
less than 31 days from the date it was collected, without violating the
unbundling rules as long as the following conditions are met:
The test is ordered by the patient's physician at least 14
days following the date of the patient's discharge from the hospital.
The test could not reasonably have been ordered while the
patient was hospitalized.
The procedure performed while the beneficiary is a patient
of the hospital is for purposes other than collection of the specimen
needed for the test.
The test is reasonable and medically necessary.
Comment: One commenter suggested adding a condition stating the
test cannot be performed by the hospital laboratory.
Response: We disagree that the regulations should limit the type of
laboratory performing the test on the specimen. The purpose of the
regulatory change is directed to date of service for specimens.
Comment: Two commenters supported our proposal. However, one
commenter expressed concern that on a rare occasion a test that
otherwise meets the conditions of the regulation may be ordered by the
patient's physician less than 14 days following the date of the
discharge from the hospital. The commenter requested the regulation be
revised to reflect these rare situations.
Response: At this time, we do not believe it is appropriate to
create an exception to the 14-day requirement. We remain very concerned
that only tests that can legitimately be distinguished from the care a
beneficiary receives in the hospital be subject to this provision
regarding the date of service of the test, which results in separate
payment for the test. We believe it is more difficult to determine that
a test ordered less than 14 days before discharge is appropriately
separable from the hospital stay that preceded the test. We would like
more information about the circumstances and tests cited by the
commenters before taking any additional action in this area. We are
very concerned about the possibilities for unbundling care that
appropriately should be associated with the hospital stay in these
circumstances and will continue to review this policy in the future to
ensure that our goal of appropriately recognizing hospital and post-
hospital care is achieved.
Comment: Two commenters suggested rewording the second condition
which states the test could not reasonably have been ordered while the
patient was hospitalized. The commenters suggested the necessity of the
test they are concerned with is unrelated to the procedure performed in
the hospital but is necessary to determine cancer recurrence and
therapeutic interventions after the patient is discharged from the
hospital.
Response: We agree that the second criterion could be clarified, to
state that it would be inappropriate to have collected the specimen
other than during the procedure, and have done so in this final rule.
Our intent in establishing this criterion was to ensure that tests that
meet the definitions in this provision are not directly related to the
care provided in the hospital, and we believe the modification we are
finalizing meets that intent more clearly than our original proposal.
Comment: Three commenters discussed several high complexity
clinical laboratory tests that are performed on specimens collected as
a part of an inpatient procedure. The tests determine the sensitivity
of the patient's cancer to particular types of chemotherapy. The
specimen is prepared so that the live cancer cells, collected at the
time of the procedure, are cultured at the laboratory and ultimately
tested. The commenters believe the result of this type of laboratory
test does not relate to the procedure performed in the hospital, nor
would the result typically affect treatment during the hospital stay if
it were available immediately. The commenters requested the regulation
specify the date of service for these types of fresh tissue sample
tests to be different than the date of service for fixed tissue samples
to permit separate payment under Medicare Part B.
Response: We agree with the commenters that these tests, which are
almost always used to determine post-hospital chemotherapy care for
patients who also require hospital treatment for tumor removal or
resection, appear to be unrelated to the hospital treatment in cases
where it would be medically inappropriate to collect a test specimen
other than at the time of surgery, especially when the specific drugs
to be tested are ordered at least 14 days following hospital discharge,
as discussed above for tests on stored tissue samples. We are very
concerned about unbundling services that are appropriately associated
with hospital treatment, and therefore, believe it is critical to move
cautiously in the area of determining different dates of service for
tests for which the specimen collection occurs during a hospital
service. As a result, we are adding Sec. 414.510(b)(4), specifically
for chemotherapy sensitivity tests, because we understand that the
results of these tests, even if they were available immediately and not
several weeks following the collection of the specimen, would almost
never affect the treatment regimen at the hospital. Therefore, we see a
valid distinction between these tests and other tests of cultured
specimens that give results after hospital discharge, but that are
directly related to not only the condition for which the patient is
hospitalized, but would typically be used for the specific care during
the hospital stay as well, if available during the hospital stay. This
section will allow separate payment for chemotherapy sensitivity tests,
as identified by the Secretary in subregulatory guidance, from the
inpatient procedure as long as certain criteria are met.
We are finalizing Sec. 414.510 as proposed with the exceptions
noted above in this section.
O. Criteria for National Certifying Bodies That Certify Advanced
Practice Nurses
Federal regulatory qualifications for NPs at Sec. 410.75 require
that an
[[Page 69707]]
individual be certified as an NP by a recognized national certifying
body that has established standards for NPs. Similarly, Federal
regulatory qualifications for clinical nurse specialists (CNSs) at
Sec. 410.76 require that an individual be certified as a CNS by a
national certifying body that has established standards for CNSs and
that is approved by the Secretary.
Currently, there is not a list of recognized or approved national
certifying bodies for NPs and CNSs in regulations. However, Chapter 15,
section 200 of the Benefit Policy Manual, Pub. 100-02 contains a list
of national certifying bodies that are recognized by Medicare as being
appropriate for certification of NPs. Although the manual provision
regarding CNS services at Chapter 15, section 210 of the Benefit Policy
Manual lists only the American Nurses Credentialing Center as an
approved national certifying body for CNSs, we indicated that the list
of recognized certifying bodies in the manual provision for NP services
would also apply for CNSs in the ``Revisions to Payment Policies Under
the CY 2003 Physician Fee Schedule and Inclusion of Registered Nurses
in the Personnel Provision of the Critical Access Hospital Emergency
Services Requirement for Frontier Areas and Remote Locations; Payment
Policies final rule (December 31, 2002, 67 FR 79987). The national
certifying bodies that are listed under the manual instruction at
section 200, and that currently apply for both NPs and CNSs
(collectively, advanced practice nurses) are as follows:
American Academy of Nurse Practitioners;
American Nurses Credentialing Center;
National Certification Corporation for Obstetric,
Gynecologic and Neonatal Nursing Specialties;
National Certification Board of Pediatric Nurse
Practitioners and Nurses;
Oncology Nurses Certification Corporation;
Critical Care Certification Corporation.
In the December 31, 2002 final rule, in response to a public
comment, we stated, ``it is not the agency's intention to be overly
restrictive in our program requirements and consequently prevent
qualified CNSs who specialize in areas of medicine other than those
certified by the American Nurses Credentialing Center (ANCC) from
participating under the CNS benefit and from rendering care to patients
in need of specialized services. Furthermore, the intent of the
revision to the certification requirement for CNSs is to recognize all
appropriate national certifying bodies for CNSs as the program does for
NPs.'' Accordingly, in an effort to recognize all appropriate national
certifying bodies for CNSs and NPs, we added, at that time, the
Oncology Nurses Certification Corporation (ONCC) and the Critical Care
Certification Corporation (CCCC) to the list of recognized national
certifying bodies for advanced practice nurses.
The National Board on Certification of Hospice and Palliative Care
Nurses (NBCHPN) has requested that we now follow the same course of
action as we did for the ONCC and the CCCC by adding its name to the
list of recognized national certifying bodies. That is, NBCHPN believes
that it is an appropriate national certifying body based on its
certification experience, principles, services, and the certification
exam that it administers to advanced practice nurses who specialize in
palliative care for hospice patients.
The NBCHPN stated in information it sent to the agency that its
organization is a well-established certification body with more than a
12-year history of certification and that it has been certifying
advanced practice hospice and palliative nurses since 2003 in
partnership with the ANCC. Starting in 2005, the NBCHPN became sole
proprietor of the Advanced Certified Hospice and Palliative Nurse
(ACHPN) examination. Master's level NPs and CNSs sit for this ACHPN
examination that is based on a role delineation study for the advanced
practice level of hospice and palliative nursing. Additionally, the
NBCHPN stated that it has met the requirements of the American Board of
Nursing Specialties and is an active member of the Board of
Specialties, as is the ANCC. The Executive Director of the NBCHPN
stated that she believes that the absence of the NBCHPN from the
current list of recognized national certifying bodies presents a
barrier for advanced practice nurses in the hospice palliative care
specialty because they are denied enrollment on the basis that they do
not meet the certification qualification requirement. The Web site for
the NBCHPN can be found at http://www.nbchpn.com.
We solicited public comments on whether it would be appropriate to
include the NBCHPN under the list of recognized and approved national
certifying bodies for NPs and CNSs under manual instructions for both
NPs and CNSs. We also solicited public comments on criteria or
standards that we could use to determine whether an organization is an
appropriate national certifying body for advanced practice nurses. We
realize that the agency may receive other requests in the future from
organizations that wish to be added to the list of recognized or
approved national certifying bodies. In anticipation of those requests,
we are interested in developing certification standards that would
facilitate the process for making these decisions.
We appreciate the comments that we received on these two issues
related to the NP and CNS benefits. However, we are delaying our
decision about whether to include the NBCHPN under the manual
instruction listing of recognized national certifying bodies for NPs
and CNSs until we have had more time to examine and investigate the
comments that we received about this issue.
In regards to the issue concerning our establishment of
certification criteria or standards to determine whether an
organization should be listed as a recognized national certifying body
for NPs and CNSs (that is, advanced practice nurses), we will consider
the information that we received in comments on this issue for future
rulemaking, and would consider proposing specific certification
standards that an organization must meet in order to be included under
the manual instruction listing of recognized national certifying bodies
for NPs and CNSs.
P. Chiropractic Services Demonstration
In the CY 2006 PFS final rule with comment period (70 FR 70266), we
included a discussion of the 2-year demonstration authorized by section
651 of the MMA to evaluate the feasibility and advisability of covering
chiropractic services under Medicare. These services extend beyond the
current coverage for manipulation to care for neuromusculoskeletal
conditions typical among eligible beneficiaries, and cover diagnostic
and other services that a chiropractor is legally authorized to perform
by the State or jurisdiction in which the treatment is provided. The
demonstration is being conducted in four sites, two rural and two
urban. The demonstration must be budget neutral as the statute requires
the Secretary to ensure that the aggregate payment made under the
Medicare program does not exceed the amount which would be paid in the
absence of the demonstration.
Ensuring BN requires that the Secretary develop a strategy for
recouping funds should the demonstration result in costs higher than
those that would occur in the absence of the demonstration. As we
[[Page 69708]]
stated in the CY 2006 PFS final rule with comment period (70 FR 70266),
we would make adjustments in the national chiropractor fee schedule to
recover the costs of the demonstration in excess of the amount
estimated to yield BN. We will assess BN by determining the change in
costs based on a pre- and post-comparison of costs and the rate of
change for specific diagnoses that are treated by chiropractors and
physicians in the demonstration sites and control sites. We will not
limit our analysis to reviewing only chiropractor claims, because the
costs of the expanded chiropractor services may have an impact on other
Medicare costs.
Any needed reduction would be made in the 2010 and 2011 physician
fee schedules as it will take approximately 2 years to complete the
claims analysis. If we determine that the adjustment for BN is greater
than 2 percent of spending for the chiropractor fee schedule codes
(comprised of the 3 currently covered CPT codes 98940, 98941, and
98942), we would implement the adjustment over a 2-year period.
However, if the adjustment is less than 2 percent of spending under the
chiropractor fee schedule codes, we would implement the adjustment over
a 1-year period. We will include the detailed analysis of BN and the
proposed offset during the CY 2009 rulemaking process. Physical therapy
(PT) services performed by chiropractors under the demonstration are
subject to the PT therapy cap. These services are included under the
cap because chiropractors are subject to the same rules as medical
doctors for therapy services under the demonstration.
Comment: One commenter indicated that it continues to oppose our
methodology for assuring BN under the demonstration. Instead of the
application of an adjustment to the national chiropractor fee schedule,
the commenter recommends that we make an adjustment to the totality of
services payable under the Part B Trust Fund and that this would be
consistent with the requirements in section 651(f)(A) of the MMA.
Response: Section 651(f)(1)(B) of the MMA requires that ``* * * the
Secretary shall ensure that the aggregate payments made by the
Secretary under the Medicare program do not exceed the amount which the
Secretary would have paid under the Medicare program if the
demonstration projects under this section were not implemented.'' The
statute does not specify a specific methodology for ensuring BN. We
believe our intended methodology meets the statutory requirements.
Q. Promoting Effective Use of Health Information Technology (HIT)
We recognize the potential for health information technology (HIT)
to facilitate improvements in the quality and efficiency of health care
services. One recent RAND study found that broad adoption of electronic
health records (EHRs) could save more than $81 billion annually and, at
the same time, improve quality of care.\1\ The largest potential
savings that the study identified was in the hospital setting because
of shorter hospital stays promoted by better coordinated care; less
nursing time spent on administrative tasks; better use of medications
in hospitals; and better utilization of drugs, laboratory services, and
radiology services in hospital outpatient settings. The study also
identified potential quality gains through enhanced patient safety,
decision support tools for evidence-based medicine, and reminder
mechanisms for screening and preventive care. Despite these large
potential benefits, the study found that only about 20 to 25 percent of
hospitals have adopted HIT systems.
---------------------------------------------------------------------------
\1\ RAND News Release: Rand Study Says Computerizing Medical
Records Could Save $81 Billion Annually and Improve the Quality of
Medical Care, September 14, 2005, available at: http://rand.org/news/press.05/09.14.html.
---------------------------------------------------------------------------
It is important to note the caveats to the RAND study. The
projected savings are across the health care sector, and any Federal
savings would be a reduced portion of the total savings. In addition,
there are significant assumptions made in the RAND study. National
savings are projected in some cases based on one or two small studies.
Also, the study assumes patient compliance, in the form of
participation in disease management programs and following medical
advice. For these reasons, extreme caution should be used in
interpreting these results.
In his 2004 State of the Union Address, the President announced a
plan to ensure that most Americans have EHRs within 10 years.\2\ One
part of this plan involves developing voluntary standards and promoting
the adoption of interoperable HIT systems that use these standards. The
2007 Budget states that ``The Administration supports the adoption of
HIT as a normal cost of doing business to ensure patients receive high
quality care.''
---------------------------------------------------------------------------
\2\ Transforming Health Care: The President's Health Information
Technology Plan, available at: http://www.whhitehouse.gov/infocus/technology/economic_policy200404/chap3.html.
---------------------------------------------------------------------------
Over the past several years, we have undertaken several activities
to promote the adoption and effective use of HIT in coordination with
other Federal agencies and with the Office of the National Coordinator
for HIT. One of those activities is promotion of data standards for
clinical information, as well as for claims and administrative data.
As noted above in this section, the Administration supports the
adoption of HIT as a normal cost of doing business. The adoption and
use of HIT may contribute to improved processes and outcomes of care,
including shortened illnesses and the avoidance of adverse drug
reactions.
Nine commenters responded to our HIT proposals. The following is a
summary of the comments addressing the use of HIT to enhance quality of
care, the costs associated with HIT adoption, the importance of
interoperability standards, and the impact of new rules related to
Medicare fraud and abuse statutes.
Comment: Several commenters stated that adoption of HIT could lead
to improved quality, enhanced patient safety, and increased efficiency.
Some commenters noted that HIT can reduce administrative costs;
however, more commenters focused on the potential financial barriers to
the adoption of HIT.
We received several comments addressing the high costs associated
with HIT implementation. Most commenters stated that adoption of HIT is
not a normal cost of doing business in health care. Several commenters
emphasized that any reduction in physician payment related to the
sustainable growth rate (SGR) would make it difficult for physicians to
invest in HIT. Some commenters noted that incentives, such as loans,
grants, and tax credits, could aid physicians by reducing the burden of
cost for implementing HIT. A few commenters stated that implementation
of HIT should be a shared expense between providers, purchasers, and
payers.
Most commenters highlighted lack of interoperability standards as a
current barrier to HIT implementation. Several commenters noted that
interoperability standards are a critical component of any HIT system
and must include a standard set of policies, procedures, and standards
for data collection and documentation. One commenter stated that
progress has been slow in disseminating standards and this discourages
physician practices from making large investments in HIT that quickly
may become obsolete.
One commenter applauded new regulatory provisions related to HIT
for physician self-referral and anti-kickback statutes. However, the
commenter further stated that Medicare fraud and
[[Page 69709]]
abuse statutes continue to hinder the adoption of HIT because the rules
are still unclear on some issues.
We received a few comments noting that specific issues related to
HIT use in health care, such as the protection of patient privacy and
data stewardship, still need to be resolved.
Response: We thank all commenters for their thoughtful and valuable
discussion of the issues. In the HIT section of the preamble to the
proposed rule, we recognized the potential for effective HIT to
facilitate improvements in the quality and efficiency of health care
services. We also pointed out our promotion of the adoption and
effective use of HIT in coordination with other Federal agencies and
the Office of the National Coordinator for HIT. Here, we will discuss
three areas that we are emphasizing to promote the effective use of
HIT, in light of the comments we received: (1) Value-based purchasing,
(2) the recent CMS and OIG final rules regarding donation of certain
HIT, and (3) infrastructure and interoperability standards.
We continue our work toward the implementation of value-based
purchasing payment system reforms because we believe that, among other
advantages, value-based purchasing can encourage physicians to invest
in activities, such as effective HIT, that have the potential to
improve quality and decrease unnecessary costs. However, linking a
portion of Medicare payments to valid measures of quality and effective
use of resources could give physicians more direct incentives to
implement innovative ideas and approaches that may result in improved
value of care. We agree with the commenters that noted that the use of
effective HIT could increase quality, efficiency, and patient safety.
We also agree with the commenters that noted that effective use of HIT
can be used to decrease the burden of reporting to value-based
purchasing programs. However, we disagree with the commenters that
recommended direct government funding of HIT. As stated in the
President's 2007 Budget, ``the Administration supports the adoption of
[HIT] as a normal cost of doing business to ensure patients receive
high quality care.''
Commenters noted that multiple stakeholders in the health care
system, including purchasers and payers, benefit from provider adoption
and use of effective HIT and should share in the cost. CMS and OIG have
recently issued final rules to allow hospitals and other health care
providers under some circumstances to donate electronic prescribing and
EHRs technology to physicians and others without running afoul of the
Stark (physician self-referral) and anti-kickback statutes. We believe
that these rules facilitate the adoption of HIT by physicians and other
health care providers who might otherwise have been unable or unwilling
to invest in the technology.
We also believe that these regulatory changes help to stimulate the
adoption of effective HIT, and that, as HIT use spreads, the benefits
relative to the costs of implementation may increase for all
stakeholders.
The majority of commenters pointed out that the current lack of HIT
infrastructure, including lack of interoperability standards, is a
major obstacle to adoption and effective use of HIT. To address the
lack of infrastructure, the Secretary has undertaken a national
strategy that calls for Federal agencies to collaborate with private
stakeholders in the development of architecture, standards,
certification processes, and methods of governance to facilitate the
adoption of effective HIT. In September 2005, the Secretary selected 16
commissioners to serve on the American Health Information Community
(AHIC), which is a federally chartered collaborative forum of private
and public interests charged with advising the Secretary on how to make
health information digital and interoperable. The goals of the
Community include immediate access to vital medical information at the
point of care, privacy protection, better data for research, and
overall cost savings. The work of the Community has been divided among
four workgroups: (1) The EHRs Workgroup, (2) the Chronic Care
Workgroup, (3) the Consumer Empowerment Workgroup, and (4) the
Biosurveillance Workgroup, (5) the Confidentiality, Privacy, and
Security Workgroup, and (6) the Quality Workgroup. The AHIC Workgroups
have made recommendations, as their initial ``breakthroughs,''
pertaining to: An electronic medication summary and registration
history; secure messaging capabilities for individuals with chronic
disease; biosurveillance monitoring; and, through secure means,
broadening the availability and access to current and historical
laboratory results and interpretations. More information about the
Community is available at: http://www.hhs.gov/healthit/ahic.html.
R. Health Care Information Transparency Initiative
The United States (U.S.) faces a dilemma in health care. Although
the rate of increase in health care spending slowed last year, costs
are still growing at an unsustainable rate. The U.S. spends $1.9
trillion on health care, or 16 percent of the gross domestic product
(GDP). By 2015, projections are that health care will consume 20
percent of GDP. As indicated in the 2006 Annual Report of the Boards of
Trustees, the Medicare program alone consumes 3.2 percent of the GDP
and by 2040 it will consume 8.0 percent of the GDP.
Part of the reason health care costs are rising so quickly is that
most consumers of health care, that is, patients, are frequently not
aware of the actual cost of their health care. Health insurance
coverage shields them from the full cost of services, and they have
only limited information about the quality and costs of their care.
Consequently, consumers do not have incentives or means to carefully
shop for providers offering the best value. Thus, providers of health
care are not subject to the competitive pressures that exist in other
markets for offering quality services at the best possible price.
Reducing the rate of increase in health care prices and avoiding health
services that are of little value could help to stem the growth in
health care spending, and potentially reduce the number of individuals
who are unable to afford health insurance. Part of the President's
health care agenda is to expand Health Savings Accounts (HSAs), which
would provide consumers with greater financial incentives to compare
providers in terms of price and quality, and choose those physicians
and services that offer the best value.
In order to exercise those choices, consumers must have accessible
and useful information on the price and quality of health care items
and services. Typically, health care providers do not publicly quote or
publish their prices. Moreover, list prices, or charges, generally
differ from the actual prices negotiated and paid by different health
plans. Thus, even if consumers were financially motivated to shop for
the BP, it would be very difficult at the current time for them to
access usable information.
For these reasons, HHS has launched a major health care information
transparency initiative. This effort builds on steps taken by CMS to
make quality and price information available. For example, Medicare has
provided unprecedented information about drug prices in the Medicare
prescription drug benefit, and is now adding to these efforts in other
areas. Medicare payment information for common elective procedures and
other common admissions for all hospitals by county has been posted on
our Web site at http://www.cms.hhs.gov/HealthCareConInit/.
[[Page 69710]]
On our Web site, we will be posting geographically-based Medicare
payment information for common procedures for ambulatory surgery
centers, hospitals, OPDs, and physician offices. In addition, a number
of tools providing usable healthcare information are already available
to Medicare beneficiaries. Supported by the public and private quality
alliances, consumers can access ``Compare'' Web sites through
www.medicare.gov where they can evaluate important aspects of their
health care options for care at a hospital, nursing home, home health
agency (HHA), and dialysis facility, as well as compare their costs and
coverage when choosing a prescription drug plan.
We are developing a new project with the goals of providing
Medicare beneficiaries with more comprehensive information on quality
and costs, including more complete measures of health outcomes,
satisfaction, and volume of services that matter to consumers, and more
comprehensive measures of costs for entire episodes of care, not just
payments for particular services and admissions. We intend for this
Medicare project to incorporate private health care data, Medicaid
data, and Medicare data to measure cost and quality of care information
at the physician and hospital levels. Under this project, quality,
cost, pricing, and patient information will be reported to Medicare
beneficiaries in a meaningful and transparent way.
In response to the CY 2007 PFS proposed rule (71 FR 49064), we
received the following comments on the transparency issue.
Comment: Most commenters supported our efforts to release quality
information to create a more transparent health care system so that
patients and consumers will be able to make more informed decisions
about their health care. Several commenters questioned the usefulness
of price information and many suggested criteria for determining what
information would be most credible, accessible and meaningful both to
consumers and to providers and other stakeholders. The commenters
stated that the information must be valid, reliable, and sensitive to
the care being delivered in order for the information to be useable.
Several commenters also noted the importance of relying on the AQA (a
multi-stakeholder group identifying ambulatory quality measures) and
the joint steering committee formed by AQA, the Hospital Quality
Alliance (HQA), and the Quality Alliance Steering Committee, to be the
forum where all stakeholders come together to identify useful measures.
One commenter also noted the important work of the AMA Consortium for
Performance Improvement in bringing together multiple physician medical
specialties.
Response: We agree that physician price and quality information
must be credible, accessible, and meaningful to consumers and other
stakeholders. To ensure this is the case for our transparency efforts,
we rely heavily on physician groups and broad stakeholder coalitions to
help advise as to the measures we are using, particularly for quality
and in considering episodes of care. We are actively working with the
AMA Consortium for Performance Improvement, the AQA, the National
Quality Forum (NQF), and various medical specialty groups to identify
useful quality measures. We are conducting research and working
directly with the AQA to identify potential episode of care measures.
We are building on the model we used for inpatient and ambulatory
surgery centers to provide the most accurate information possible when
releasing Medicare payment data. By December 2006, we plan to release
Medicare data, including the number of services, charges and payment
rates for a group of common physicians' services by locality.
Comment: Many comments focused on the usefulness of price
information. One commenter questioned the premise that consumers should
use price information in health care decisions. Several other
commenters noted the limitations of price information and the need for
consumers and patients to understand the context for it. They added
that providing price information on health care services should not be
placed in the same class as shopping for airline tickets or hotel
accommodations. They further questioned whether price plays a
significant role in choosing a physician or hospital, particularly when
a patient is facing a life threatening illness. Other commenters have
advised that the price is subject to individual health plan benefit
packages and could change depending on the course of beneficiary
illness. Further, in an emergency, additional services may be required
which will therefore raise the costs of services for beneficiaries.
Response: We agree that making health care decisions, including the
selection of providers, is a serious undertaking. For this reason, it
is critical that consumers, patients, and their families have
information which will help them make important health care decisions.
For those patients in the early stages of illness, or those who may
need preventive care, choosing a provider based on the knowledge of the
potential overall costs of care, and taking into account whether the
physician is effective at helping the patient prevent life threatening
illnesses, could help the patient avoid unnecessary costs later on.
For patients with life threatening illnesses, cost is also at
issue. However, most insurance, including Medicare, does require cost
sharing, and if information on price and quality is available it may be
possible for beneficiaries to choose high quality providers at a
reduced cost, which would therefore minimize the patient's out-of-
pocket costs. We also agree that it is important to recognize that
beneficiary out-of-pocket costs are in part driven by the type of
coverage the beneficiary has and whether the beneficiary has any
supplemental coverage. Combining information on multiple services
related to the same clinical condition into a broader episode of care
could provide a prospective patient and his or her family even more
useful cost and quality information. For example, if a patient has a
serious illness, he or she (or his or her family) would be better able
to choose a physician or other health care provider that more closely
suits the patient's preferences by comparing, before treatment: (1) The
cost of treatment; (2) the various types of services and treatments
associated with that particular illness; and (3) the outcome for
patients with similar health conditions.
Comment: One commenter questioned whether releasing price
information could increase health care costs because the pricing
information could encourage patients to delay necessary care and which
presumably may result in more advanced disease. The commenter stated
that price information should not be released for E/M, and preventive
services.
Response: We believe that the release of price information will not
inhibit a patient's use of appropriate health care services, in
particular, preventive or evaluative services. It is our expectation
that the transparency of price and quality information will encourage
patients to obtain health care services that are proven in quality of
care and outcomes for patients and the provision of these chosen
services should result in a decrease in the overall costs of health
care.
Comment: One commenter thought that payment information should be
broken into the work component, PE and malpractice. They further
suggested arraying information to reflect the relative costliness of
different settings of
[[Page 69711]]
care for the same services, such as ambulatory surgery centers, OPDs,
or physicians' offices.
Response: We agree that those separate service components could be
of some interest, but we do not understand how they would be of benefit
to the patient or consumer when he or she is making health care
decisions. Such service component break outs provide no information on
out-of-pocket or overall costs as to the specific service or as to a
broader episode of care that takes into consideration care delivered
across settings and time.
We believe that providing comparative information on the costs of
care in different settings when the services and patient needs are
similar is an interesting concept. We will consider suggestions as to
how this type of data may be provided.
Comment: One commenter stated that it is inappropriate to make
public efficiency information, cost and utilization ratings without
commensurate quality data, and that efficiency measurement should be
restricted to areas where this type of data are available, and risk
adjusted. Further, the commenter added that payers should make their
methodology and data sources easily available to physicians.
Response: We agree that both cost and quality data are important
for consumers to make informed decisions about providers and treatment
options. We are exploring a range of options for how to measure
efficiency, including risk adjustment options. We also agree that it is
important for physicians to understand how cost and quality data are
being measured.
Comment: One commenter questioned whether all the resources going
into the transparency efforts might be better spent supporting
physician adoption of EHRs, patient registries, and group medical
visits.
Response: Our transparency efforts are aimed at helping consumers
make better informed health care decisions. We have many other
initiatives aimed at supporting these other important physician tools,
for example, Quality Improvement Organizations (QIOs) are working
across the country to provide technical assistance to physicians to
help these physicians redesign work practices to adopt EHRs. Several
significant initiatives, including the Physician Group Practice
demonstration and the Medicare Health Support program are identifying
effective care management strategies, including the physician adoption
of EHRs, patient registries, and group medical visits as recommended by
the commenter. Further, we are working with the Department to lessen
the barriers to IT adoption by identifying and endorsing standards for
seamless movement of information across settings.
Comment: One commenter said the primary driver of health care costs
was the lack of productivity increases in health care and questioned
whether providing more information to consumers would have any impact
on the efficiency of the system. The commenter stated that the reason
for this lack of productivity improvement was due to the labor
intensive nature of our health care system since the United States
government did not purchase HIT directly for providers.
Response: We agree that health care is labor intensive and that
increased adoption of effective HIT has the potential to improve
productivity. For these reasons, increasing adoption of effective HIT,
including EHRs is one the most important initiatives for this
administration. As we have stated previously in our other responses in
this section, we have in place a number of initiatives aimed at
lessening the barriers to adoption and initiatives supporting both
hospitals and physicians. However, we strongly support the notion that
market forces, including consumers empowered to make more informed
health care decisions, are also critical for improving the value of the
health system.
Comment: One commenter stated that health plans should be required
to release their fee schedules showing total charges and methods of
calculating fees for physicians and hospitals.
Response: The purpose of our transparency initiative is to make it
easier for consumers and patients to make better informed health care
decisions based on their own unique health circumstances. We have
partnered with the Agency for Healthcare Research and Quality, and we
are exploring, in the context of the AQA and the Quality Alliance
Steering Committee, a variety of options for releasing pricing, payment
and episode of care costs.
Comment: One commenter questioned whether physicians could report
directly to us or to carriers on the clinical quality measures
currently reflected in the Physician Voluntary Reporting Program (PVRP)
initiative instead of through the established mechanism of G-codes or
CPT category II codes (if available).
Response: Currently, the PVRP data are not reported publicly, as
would be the case in a transparency initiative, but are provided
confidentially to physicians. These measures are based on the work of a
multi-stakeholder consensus process through the National Quality Forum
and the AQA. We are also relying on this process to identify physician
quality measures for transparency. The PVRP can be a building-block for
future efforts to measure physician quality.
Further, we are seeking to benefit the Medicare program by applying
quality measures developed by the private sector to comprehensive data
on physicians' services to improve the quality of Medicare services,
and to provide Medicare beneficiaries with useful quality information.
Specifically, under a new Medicare project that will begin in six
areas, data from Medicare and private purchasers are being combined to
create quality measures that will be reported to Medicare
beneficiaries. Information on physician performance on quality will be
used for feedback to physicians on services provided to Medicare
beneficiaries, and information on physician performance will be made
available to beneficiaries. The purpose of this important project is to
encourage improvements in the quality of Medicare services, and provide
information to Medicare beneficiaries that will permit them to make
more informed choices about how and where they will receive their care.
Over time, using the experience of these initiatives, we will identify
which measures and what data collection mechanisms are best used to
release physician specific information to Medicare beneficiaries.
Regarding the earlier comment about G-code reporting, we chose the
path of reporting quality measures on claims through G-codes because
those claims could be built on existing data systems, creating fewer
burdens for physician offices and CMS. Physicians, predominantly,
already use claims supported data systems so, therefore, we believe at
this time it is the most practical system. In the future, we hope to be
able to accept, and for physicians to be able to report, using the
electronic means outlined by the commenter. We ask the commenter to
work with us to ensure that EHRs and other information systems are
designed to collect the clinical data components necessary to measure a
broad range of quality indicators.
Comment: A commenter also suggested that group practices should be
allowed to create scores for their whole group and report at the
aggregate level. The commenter stated that group practices have
internal mechanisms, including incentive structures, for improving
quality that should be used.
[[Page 69712]]
Response: We recognize that comparing groups of physicians by price
and quality measures could be useful both for consumers and patients in
regions where these groups are widely available. We also appreciate the
usefulness of the data for internal quality improvement for physician
groups. However, for purposes of consumer choice, it may be important
to have physician-specific information. Even with a group,
beneficiaries would want to know the physician's treatment patterns,
including quality information, to best suit the beneficiary's needs or
preferences. We agree that information on both price and quality on
individual physicians would be useful for consumers and patients.
S. Bad Debt Payment for Services Associated With Reasonable Charge/Fee
Schedules
Under the Medicare program, payment may be made for unrecovered
costs (bad debt) attributable to uncollectible deductible and
coinsurance of Medicare beneficiaries as specified in Sec. 413.89 and
the Provider Reimbursement Manual (PRM) (CMS Pub. 15 Part 1, Chapter
3). Entities currently eligible to receive Medicare bad debt payments,
with some limitations, include hospitals, skilled nursing facilities
(SNFs), CAHs, RHCs, ESRD facilities, FQHCs, community mental health
clinics, health maintenance organizations (HMOs) reimbursed on a cost
basis, competitive medical plans (CMPs), and health care pre-payment
plans. The bad debt policy for ESRD facilities is set forth in Sec.
413.178.
The current bad debt regulation at Sec. 413.89(i) excludes payment
of bad debts specifically for those services furnished by anesthetists
paid under a fee schedule. In the February 10, 2003 Federal Register,
we published the Provider Bad Debt Payment proposed rule where we
proposed to amend the language in the existing bad debt regulations to
clarify that bad debts are not recognized or reimbursed for all covered
services paid for under a reasonable charge-based methodology or a fee
schedule (68 FR 6682). As stated in that proposed rule, the proposed
amendment was intended to clarify our longstanding policy and is not a
change in policy.
In this final rule with comment period, we are finalizing the
amendment to the regulations, as proposed in the February 10, 2003
proposed rule, to clarify that payment of bad debts for covered
services paid for under a reasonable charge-based methodology or a fee
schedule is not allowable. In the February 10, 2006 Federal Register
(71 FR 6991), we issued a notice extending the timeline for publication
of a final rule associated with provisions of the February 10, 2003
proposed rule by one year to February 10, 2007. At this time, we are
not finalizing other proposed provisions of the February 10, 2003
proposed rule.
We received the following comment regarding this provision from the
February 10, 2003 proposed rule.
Comment: A commenter stated that the clarification of policy that
bad debt reimbursement is not available for services paid under a fee
schedule is a change in policy for outpatient therapy.
Response: During the initial stages of developing the Medicare
program in 1966, the issue of ``bad debt'' arose but was not mentioned
explicitly in the statute. However, at that time, based on the intent
of the anti-cross-subsidization principle found in the definition of
``reasonable cost'' at section 1861(v)(1)(A) of the Act, Medicare
adopted the policy to pay for the unrecovered costs attributable to
uncollectible deductible and coinsurance of Medicare beneficiaries.
Accordingly, we believe that this statutory prohibition on cross-
subsidization does not apply where services are reimbursed on anything
other than the basis of ``reasonable costs''.
The Medicare program has never allowed payment of bad debts for
services paid for on the basis of a fee schedule or reasonable charge
methodology, such as but not limited to, services of physicians,
suppliers, certified registered nurse anesthetists, or NPs. Under a fee
schedule or reasonable charge methodology, Medicare does not share
proportionately in an entity's incurred costs but rather makes payment
for a specific service. The payment is not related to the cost of a
service and thus, does not embody the concept of unrecovered costs due
to uncollected amounts of deductibles and coinsurance. Thus, payment of
bad debt applies only to services reimbursed on the basis of reasonable
cost or to services paid under one of Medicare's prospective payment
systems that have a basis in reasonable costs that do not reflect
Medicare payment of bad debts during a specified provider base period.
Accordingly, when outpatient therapy services began to be paid for on a
fee schedule methodology, payment of bad debts associated with these
services was no longer available.
Therefore, we do not agree with the commenter and we are revising
Sec. 413.89(i) and adding new Sec. 413.178(d) as proposed.
III. Revisions to the Payment Policies of Ambulance Services under the
Fee Schedule for Ambulance Services and the Ambulance Inflation Factor
Update for CY 2007.
Under the ambulance fee schedule, the Medicare program pays for
transportation services for Medicare beneficiaries when other means of
transportation are contraindicated. Ambulance services are classified
into different levels of ground (including water) and air ambulance
services based on the medically necessary treatment provided during
transport. These services include the following levels of service:
For Ground--
+ Basic Life Support (BLS)
+ Advanced Life Support, Level 1 (ALS1)
+ Advanced Life Support, Level 2 (ALS2)
+ Specialty Care Transport (SCT)
+ Paramedic ALS Intercept (PI)
For Air--
+ Fixed Wing Air Ambulance (FW)
+ Rotary Wing Air Ambulance (RW)
A. History of Medicare Ambulance Services
1. Statutory Coverage of Ambulance Services
Under sections 1834(l) and 1861(s)(7) of the Social Security Act
(the Act), Medicare Part B (Supplemental Medical Insurance) covers and
pays for ambulance services, to the extent prescribed in regulations,
when the use of other methods of transportation would be
contraindicated by the beneficiary's medical condition.
The House Ways and Means Committee and Senate Finance Committee
Reports that accompanied the 1965 Social Security Amendments suggest
that the Congress intended that--
The ambulance benefit cover transportation services only
if other means of transportation are contraindicated by the
beneficiary's medical condition; and
Only ambulance service to local facilities be covered
unless necessary services are not available locally, in which case,
transportation to the nearest facility furnishing those services is
covered (H.R. Rep. No. 213, 89th Cong., 1st Sess. 37 and Rep. No. 404,
89th Cong., 1st Sess. Pt 1, 43 (1965)).
The reports indicate that transportation may also be provided from
one hospital to another, to the beneficiary's home, or to an extended
care facility.
2. Medicare Regulations for Ambulance Services
[[Page 69713]]
Our regulations relating to ambulance services are set forth at 42
CFR part 410, subpart B and 42 CFR part 414, subpart H. Section
410.10(i) lists ambulance services as one of the covered medical and
other health services under Medicare Part B. Therefore, ambulance
services are subject to basic conditions and limitations set forth at
Sec. 410.12 and to specific conditions and limitations included at
Sec. 410.40. Part 414, subpart H, describes how payment is made for
ambulance services covered by Medicare.
The national fee schedule for ambulance services is being phased in
over a 5-year transition period beginning April 1, 2002 as specified in
Sec. 414.615. As of January 1, 2006, the total payment amount for air
ambulance providers and suppliers is based on 100 percent of the
national ambulance fee schedule. In accordance with section 414 of the
Medicare Prescription Drug, Improvement and Modernization Act of 2003
(MMA) (Pub. L. 108-173), we added Sec. 414.617 which specifies that
for ambulance services furnished during the period July 1, 2004 through
December 31, 2009, the ground ambulance base rate is subject to a floor
amount, which is determined by establishing nine fee schedules based on
each of the nine census divisions, and using the same methodology as
was used to establish the national fee schedule. If the regional fee
schedule methodology for a given census division results in an amount
that is lower than or equal to the national ground base rate, then it
is not used, and the national fee schedule amount applies for all
providers and suppliers in the census division. If the regional fee
schedule methodology for a given census division results in an amount
that is greater than the national ground base rate, then the fee
schedule portion of the base rate for that census division is equal to
a blend of the national rate and the regional rate. For CY 2006, this
blend is 40 percent regional ground base rate and 60 percent national
ground base rate. As of January 1, 2007, the total payment amount for
ground ambulance providers and suppliers will be based on either 100
percent of the national ambulance fee schedule or 80 percent of the
national ambulance fee schedule and 20 percent of the regional
ambulance fee schedule.
B. Provisions of the Final Regulation
In this rule, we are finalizing changes to the fee schedule for
payment of ambulance services by adopting revised geographic
designations for urban and rural areas as set forth in OMB's Core-Based
Statistical Areas (CBSAs) standard. We are adding the definition of
``urban area'' as defined by the Executive Office of Management and
Budget (OMB). In addition, we are removing the definition of
``Goldsmith modification'' and amending our definition of ``rural
area'' to include areas determined to be rural under the most recent
version of the Goldsmith modification.
We are withdrawing our proposal to change the language of our
regulation defining ``specialty care transport (SCT)'' to conform to
our existing payment policies. In response to public comments, we are
broadening and clarifying our interpretation of the existing language
and responding to other issues associated with the definition of SCT.
In addition, we are discontinuing our annual review of the original
CF assumptions and of the original air ambulance rates from the initial
implementation of the fee schedule in 2002 because we have not
identified any significant differences from those assumptions in the 4
years since the implementation of the fee schedule. We will continue to
monitor payment and billing data on an ongoing basis and make
adjustments to the CF and to air ambulance rates as appropriate to
reflect any significant changes in these data.
Finally, in response to public comment, we are withdrawing our
proposal to revise our current definition of ``Emergency response'' to
further specify the conditions that warrant a higher payment for
immediate response. Our reasons for withdrawing our proposal are
explained in section III.B.4. of this preamble.
1. Adoption of New Geographic Standards for the Ambulance Fee Schedule
Historically, the Medicare ambulance fee schedule has used the same
geographic area designations as the acute care hospital IPPS and other
Medicare payment systems to take into account appropriate urban and
rural differences. This provides a consistent and objective national
definition for ambulance payment purposes within the ambulance fee
schedule and generally across Medicare payment systems. It also
utilizes geographic area designations that more realistically reflect
rural and urban populations, resulting in more accurate payments for
ambulance services. Accordingly, we are adopting OMB's CBSA-based
geographic area designations, which have been adopted for the IPPS, to
more accurately identify urban and rural areas for ambulance fee
schedule payment purposes. We are also adopting the most recent
modification of the Goldsmith Modification, consistent with the
provisions of section 1834(l), to more accurately determine rural
census tracts within metropolitan areas.
These changes will affect whether certain areas are recognized as
rural or urban. The distinction between urban and rural is important
for ambulance payment purposes because ambulance payments are based on
the point of pick-up for the transport, and the point of pick-up for
urban and rural transport is paid differently. Of particular
significance to the ambulance fee schedule, the changes would affect
whether or not certain areas are eligible for certain rural bonus
payments under the ambulance fee schedule. For example, the changes
would affect whether or not certain areas are recognized as what we
refer to as ``Super Rural Bonus'' areas established by section 414(c)
of the MMA and set forth in section 1834(l)(12) of the Act. That
section specifies that, for services furnished during the period July
1, 2004 through December 31, 2009, the payment amount for the ground
ambulance base rate is increased by a ``percent increase'' (Super Rural
Bonus) where the ambulance transport originates in a rural area (which
includes Goldsmith areas) that we determine to be in the lowest 25th
percentile of all rural populations arrayed by population density.
a. Core-Based Statistical Areas (CBSAs): Revised Office of Management
and Budget (OMB) Metropolitan Area Definitions
In the February 27, 2002 final rule (67 FR 9100), we stated that we
could not easily adopt and implement, within the timeframe necessary to
implement the fee schedule, a methodology for recognizing geographic
population density disparities other than MSA/nonMSA. We also stated
that we would consider alternative methodologies that may more
appropriately address payment to isolated, low-volume rural ambulance
providers and suppliers at a later date. The application of any rural
adjustment is determined by the geographic location of the beneficiary
at the time he or she is placed on board the ambulance. We are now
finalizing the adoption of OMB's revised geographic area designations
for urban and rural areas and the most recent modification of the
Goldsmith Modification to address payment to those isolated, low-volume
rural providers and suppliers.
Prior to the 2000 decennial census, geographic areas were
consistently defined by OMB as Metropolitan Statistical Areas (MSAs)
with an MSA being defined as an urban area and
[[Page 69714]]
anything outside an MSA being defined as a rural area. In addition, for
purposes of ambulance policy, we recognized the 1990 update of
Goldsmith areas (generally, rural census tracts within counties that
covered large tracts of land with one predominant urban area only) as
rural areas (65 FR 55077 through 55100). In Fall 1998, OMB chartered
the Metropolitan Area Standards Review Committee to examine the
Metropolitan Area (MA) standards and develop recommendations for
possible changes to those standards. Three notices related to the
review of the standards were published on the following dates in the
Federal Register, providing an opportunity for public comment on the
recommendations of the Committee: December 21, 1998 (63 FR 70525
through 70561); October 20, 1999 (64 FR 56627 through 56644); and
August 22, 2000 (65 FR 51059 through 51077).
In the December 27, 2000, Federal Register (65 FR 82227 through
82238), OMB announced its new standards. In that notice, OMB defined a
CBSA, beginning in 2003, as ``a geographic entity associated with at
least one core of 10,000 or more population, plus adjacent territory
that has a high degree of social and economic integration with the core
as measured by commuting ties.'' CBSAs are conceptually areas that
contain a recognized population nucleus and adjacent communities that
have a high degree of integration with that nucleus. The purpose of the
new OMB standards is to provide nationally consistent definitions for
collecting, tabulating, and publishing Federal statistics for a set of
geographic areas.
The OMB standards designate and define two categories of CBSAs:
Metropolitan Statistical Areas (MSAs); and Micropolitan Statistical
Areas (65 FR 82227 through 82238). According to OMB, MSAs are based on
urbanized areas of 50,000 or more population and Micropolitan
Statistical Areas (referred to in this discussion as Micropolitan
Areas) are based on urban clusters of at least 10,000 population but
less than 50,000 population. Counties that do not fall within CBSAs are
deemed ``Outside CBSAs.''
Under the ambulance fee schedule, MSAs would continue to be
recognized as urban areas and all other areas outside MSAs (including
Micropolitan Areas, areas ``Outside CBSAs'', and areas that are
determined to be rural under the most recent modification of the
Goldsmith Modification) would be recognized as rural areas. As noted
previously, these designations are important because under the
ambulance fee schedule, Medicare transports are designated either urban
or rural based on the pick-up point of the transport.
As of June 6, 2003, the new OMB definitions recognized 49 new MSAs
and 565 new Micropolitan Areas, and extensively revised the composition
of many of the existing MSAs. There are 1,090 counties in MSAs under
the new definitions (previously, there were 848 counties in MSAs). Of
these 1,090 counties, 737 are in the same MSA as they were prior to the
changes, 65 are in a different MSA, and 288 were not previously
designated to any MSA (69 FR 49027).
There are 674 counties in Micropolitan Areas. Of these, 41 were
previously in an MSA, while 633 were not previously designated to an
MSA. There are five counties that previously were designated to an MSA,
but are no longer designated to either an MSA or a new Micropolitan
Area (Carter County, Kentucky; St. James Parish, Louisiana; Kane
County, Utah; Culpepper County, Virginia; and King George County,
Virginia) (69 FR 49027).
Our adoption of CBSA-based geographic area designations means that
ambulance providers and suppliers that pick up Medicare beneficiaries
in areas that are now outside of MSAs (but had been within MSA areas)
may experience increases in payment, while those ambulance providers
and suppliers that pick up Medicare beneficiaries in areas that are now
within MSA areas (but had been outside of MSAs) may experience
decreases in payment.
The use of updated geographical areas means the recognition of new
urban and rural boundaries based on the population migration that
occurred over a 10-year period, between 1990 and 2000.
We believe that updating the MSA definition to conform with OMB's
CBSA-based geographic area designations, coupled with updating the
Goldsmith Modification (that is, using the current Rural Urban
Commuting Areas (RUCAs) version, as discussed in section III.B.1.b of
this final rule), will more accurately reflect the contemporary urban
and rural nature of areas across the country for ambulance payment
purposes and cause ambulance fee schedule payments to become more
accurate.
As of October 1, 2004, the IPPS adopted OMB's revised metropolitan
area definitions to identify ``urban areas'' for payment purposes.
Under the IPPS, MSAs are considered urban areas and Micropolitan Areas
and areas ``Outside CBSAs'' are considered rural areas as specified in
Sec. 412.64(b). We are adopting similar CBSA-based designations of
``urban area'' and ``rural area'' under the ambulance fee schedule for
the reasons discussed. Therefore, we are revising Sec. 414.605 to
include a definition of urban area and to reflect OMB's revised CBSA-
based geographic area designations in our definition of rural area.
Comment: Some commenters suggested that we should mitigate any
financial impact of the CBSA-based geographic changes by holding
negatively-affected ambulance companies harmless or by adopting a
phase-in of the CBSA-based geographic changes.
Response: While we understand the concern of some ambulance
companies about the CBSA-based geographic changes, we think most
negative impacts will be mitigated when we incorporate the updated
Goldsmith Modification using RUCAs, as we discuss in section III.B.1.b.
of this final rule. The RUCAs allow us to continue to recognize sub-
county rural areas in CBSA-based MSAs. Further, we believe that
accurate payments to rural areas should not be further delayed.
Ambulance payments will not reflect the population changes documented
by the CY 2000 decennial census and reflected in CBSA-based geographic
designations until CY 2007. Finally, ambulance providers and suppliers
who benefit from the floor amount based on Regional fee schedules will
continue to receive transition payments through CY 2009, mitigating the
overall financial impacts of the ambulance fee schedule.
Comment: Several commenters suggested delaying the implementation
of the CBSA-based geographic changes until the findings of the GAO
report on costs and access as they relate to ambulance services is
published. The final report is currently due to be published by
December 2007.
Response: We contacted the GAO concerning this report. At this
time, the draft findings are not available and GAO is not permitted to
discuss the report until its release. In view of the mitigating effects
of our use of RUCAs, and in light of the fact that no ``super rural
bonus'' areas are affected by the CBSA-based geographic designations,
we think that the better course of action is to finalize our adoption
of CBSA-based urban and rural designations. However, we will maintain
contact with the GAO and, when their findings are available, we will
consider whether any further adjustments are necessary.
b. Updated Goldsmith Modification: Rural Urban Commuting Areas (RUCAs)
The Goldsmith Modification evolved from an outreach grant program
sponsored by the Office of Rural Health
[[Page 69715]]
Policy of the Health Resources and Services Administration (HRSA). This
program was created to establish an operational definition of rural
populations lacking easy access to health services in Large Area
Metropolitan Counties (LAMCs). Dr. Harold F. Goldsmith and his
associates created a methodology for identifying rural census tracts
located within a large metropolitan county of at least 1,225 square
miles. Using a combination of data on population density and commuting
patterns, census tracts were identified as being so isolated by
distance or physical features that they were more rural than urban in
character. The original Goldsmith Modification was developed using data
from the 1980 census. To more accurately reflect current demographic
and geographic characteristics of the nation, HRSA's Office of Rural
Health Policy, in partnership with the Department of Agriculture's
Economic Research Service and the University of Washington, developed
an update to the Goldsmith modification designated as Rural-Urban
Commuting Area Codes (RUCAs) (69 FR 47518 through 47519).
Rather than being limited to LAMCs, RUCAs use urbanization,
population density, and daily commuting data to categorize every census
tract in the country. Thus, RUCAs are used to identify rural census
tracts in all metropolitan counties. Section 1834(l) of the Act
requires that we use the most recent modification of the Goldsmith
Modification to determine rural census tracts within MSAs. Therefore,
we are removing the definition of ``Goldsmith modification'' at Sec.
414.605 and incorporating a reference to the most current version of
the Goldsmith modification, which are the Rural Urban Commuting Areas
(RUCAs), in the definition of ``rural area.''
Comment: We received numerous comments from members of the
ambulance industry that were concerned about the geographic status of
their pick-up areas. Ambulance companies located in areas that have
been traditionally recognized as rural areas were concerned that
population shifts based on whole county designations might not
accurately reflect pockets of rurality within those counties.
Response: The most recent modification of the Goldsmith
Modification, which we are adopting in this final rule, uses RUCAs to
recognize levels of rurality in census tracts located in every county
across the nation. As a result, many counties that are designated urban
at the county level based on population do, indeed, have rural census
tracts within them that will be recognized as rural areas through our
use of RUCAs. While this may not mean that every commenter will be
ultimately satisfied, we believe that using RUCAs to identify sub-
county rural areas within urban counties will resolve many of the
commenters' concerns.
Comment: Although a number of commenters were supportive of our use
of RUCAs, they requested that we clarify how we intend to define
rurality using RUCA categories.
Response: The RUCA system is an updated version of the Goldsmith
Modification that uses a 10-point scale of rurality. RUCA levels are
assigned to a census tract based on the association of a given area's
population to the nearest urban commuting area as follows:
(1) Metropolitan-area core: Primary flow within an urbanized area
(UA).
(2) Metropolitan-area high commuting: Primary flow 30% or more to a
UA.
(3) Metropolitan-area low commuting: Primary flow 5 percent to 30
percent to a UA.
(4) Large town core: Primary flow within a place of 10,000 to
49,999.
(5) Large town high commuting: Primary flow 30 percent or more to a
place of 10,000 to 49,999.
(6) Large town low commuting: Primary flow 5 percent to 30 percent
to a place of 10,000 to 49,999.
(7) Small town core: Primary flow within a place of 2,500 to 9,999.
(8) Small town high commuting: Primary flow 30 percent or more to a
place of 2,500 to 9,999.
(9) Small town low commuting: Primary flow 5 percent to 30 percent
to a place of 2,500 to 9,999.
(10) Rural areas: Primary flow to a tract without a place of 2,500
or more.
Furthermore, census tracts under RUCAs can be broken down by zip
code for every county, allowing us to modify rural and urban areas
within a given county. In the May 26, 2006 proposed rule (71 FR 30358),
we did not specify where we would draw the line on the RUCA scale for
urban/rural purposes. According to HRSA, the generally accepted
breakpoint is to define a level less than 4.0 on the scale as urban and
levels equal to or greater than 4.0 on the scale as rural. Under
section 330A of the Public Health Service Act, the Office of Rural
Health Policy within HRSA determines eligibility for its rural grant
programs through the use of the RUCA code methodology. Under this
methodology, any rural census tract that is in a RUCA code 4.0 or
higher is determined to be a rural census tract. We agree with the
majority of the commenters who suggested that we follow HRSA's
guidelines and consider areas to be rural if they fall within RUCA
levels 4 through 10. One commenter suggested that a rurality level of
2.0 might be a better breakpoint for EMS purposes. However, we believe
that HRSA's guidelines accurately identify rural areas for ambulance
payment purposes and are generally consistent with Medicare payment
policies. We will, therefore, consider any census tract falling at or
above RUCA level 4.0 to be a rural area for purposes of payment for
ambulance services. We are finalizing our proposal to use the most
recent modification of the Goldsmith Modification incorporating RUCAs,
as directed by section 1834(l) of the Act. We will use 4.0 on the RUCA
scale as the delineation between rural and urban (4.0 and greater is
rural and less than 4.0 is urban).
Comment: One commenter discussed zip code areas that ``bleed'' from
one type of geographic area to another, such as from rural to urban.
This commenter was concerned that zip codes that were predominantly,
but not totally, located within a rural area would not receive rural
payments for ambulance pick-ups in those areas due to the urban
influence of part of the zip code area.
Response: When we review a claim for ambulance services, we
specifically examine the zip code for the pick-up point to determine
whether that zip code contains both urban and rural areas. Census
tracts under RUCAs can be broken down by zip code for every county,
which allows us to identify rural and urban areas within a given
county. Generally, we would categorize a zip code as urban or rural,
and make payment accordingly, based on where the bulk of the population
in that zip code resides.
Comment: Several commenters were concerned about the impact of the
proposed CBSA-based geographic changes on the provisions of the
Medicare Modernization Act (MMA) for rural service areas, specifically
concerning the ``Super Rural Bonus'' areas.
Response: The ``Super Rural Bonus'' areas are areas that we
determine to be in the lowest 25th percentile of all rural populations
arrayed by population density in accordance with section 1834(l)(12) of
the Act. Ambulance pick-ups in these areas currently receive a 22.6
percent add-on to their Medicare payments. None of the Super Rural
Bonus areas should be adversely affected by the proposed CBSA-based
changes, as our use of RUCA levels will preserve the rural status of an
area
[[Page 69716]]
whether or not it is located in a county which is designated as urban
under the OMB definitions. Areas that do lose their rural status to
become urban have become urban because of a significant increase in the
surrounding population.
Comment: One commenter stated that the ambulance is dispatched to
the patient to provide care at his or her pick-up point and, therefore,
the ambulance payment system should reflect this procedure. Another
commenter suggested that we should retain the Goldsmith Modification in
its current form and not update payments under the ambulance fee
schedule to reflect the use of RUCAs.
Response: We agree that the ambulance pick-up point is the
determining factor in establishing payment under the ambulance fee
schedule, and we intend to retain this procedure in the payment
process. In addition, we agree that we need to recognize levels of
rurality, and are doing so by adopting the updated Goldsmith
Modification which uses RUCAs to identify rural areas within urban
counties. We are directed by section 1834(l) of the Act to use the most
recent update of the Goldsmith Modification in the payment process.
Comment: Another commenter suggested that we allow ambulance
companies to present data to justify rurality, similar to the IPPS
hospital reclassification process.
Response: Once again, we understand the concern of some ambulance
companies to retain the rural status of their pick-up areas. However,
as discussed in this section, we believe that, where applicable, the
use of the RUCAs, and our ability to identify rural zip codes within
census tracts, will address this concern in a consistent manner.
Therefore, we do not believe it is necessary to complicate the payment
process by developing an additional data submission and evaluation
methodology. While the commenter directly referred to the hospital
reclassification process that is administered under the IPPS, wherein
hospitals can apply for geographic reclassification for purposes of
determining the wage index adjustment to their inpatient payments, the
hospital reclassification process was established by statute
specifically for inpatient hospitals. Therefore, this IPPS
reclassification methodology does not apply to ambulance services.
2. Specialty Care Transport (SCT)
In the February 27, 2002 Federal Register (67 FR 9100), we
published a final rule with comment period entitled ``Fee Schedule for
Payment of Ambulance Services and Revisions to the Physician
Certification Requirements for Coverage of Nonemergency Ambulance
Services'' that implemented the ambulance fee schedule. In that final
rule, we defined SCT in Sec. 414.605 as the ``interfacility
transportation of a critically injured or ill beneficiary by a ground
ambulance vehicle, including medically necessary supplies and services,
at a level of service beyond the scope of the EMT [(Emergency Medical
Technician)]--Paramedic. SCT is necessary when a beneficiary's
condition requires ongoing care that must be furnished by one or more
health professionals in an appropriate specialty area, for example,
nursing, emergency medicine, respiratory care, cardiovascular care, or
a paramedic with additional training.''
Additionally, ambulance vehicle staff must be certified as
emergency medical technicians and legally authorized to operate all
lifesaving and life-sustaining equipment that are on board the vehicle
as specified in Sec. 410.41(b)(1). Typically, a SCT level of care
occurs when the patient, who is already receiving a high level of care
in the transferring facility, requires a further level of care that the
transferring facility is not able to provide.
We implemented the SCT level of payment for hospital-to-hospital
ground ambulance transports upon implementation of the ambulance fee
schedule on April 1, 2002 and we defined SCT at Sec. 414.605. The
definition of SCT in Sec. 414.605 refers to ``interfacility
transportation.'' As we stated in the preamble to the February 27, 2002
final rule with comment period (67 FR 9100), the SCT level of care
includes the situation where a beneficiary is taken by ground ambulance
from the hospital to an air ambulance and then from the air ambulance
to the final destination hospital. Also, we stated in the preamble for
both the September 12, 2000 proposed rule (65 FR 55077) and the
February 27, 2002 final rule (67 FR 9108), that SCT was proposed as a
level of interhospital service. As stated in our May 26, 2006 proposed
rule, we based our payment for SCT-level ground ambulance transports on
hospital-to-hospital ambulance transportation data.
Subsequent to the implementation of the ambulance fee schedule, we
clarified our definition of SCT as hospital-to-hospital transport in a
Program Memorandum to Medicare contractors, which was issued on
September 27, 2002. (Program Memorandum Intermediaries/Carriers,
Transmittal AB-02-130--Change Request 2295, September 27, 2002). That
document and subsequent questions and answers related to the definition
of SCT were made available to the public on the Ambulance policy Web
page on the CMS Web site.
In addition, we clarified our definition of SCT in the Medicare
Benefit Policy Manual, Chapter 10--Ambulance Services, in which we
stated that SCT is regarded as a highly-skilled level of care of a
critically injured or ill patient during transfer from one hospital to
another. We have also clarified our policy in Ambulance Open Door
Forums, conference calls, and oral and paper communication written in
response to questions posed by individuals and groups representing the
ambulance industry.
Despite our previous attempts to clarify the scope of SCT
transport, we continued to receive questions from ambulance suppliers
and providers and there was confusion on this point among the Medicare
contractors. For this reason, we had proposed to change the definition
of ``specialty care transport'' at Sec. 414.605 to read ``hospital-to-
hospital'' transport as opposed to ``interfacility'' transportation to
conform our regulation text to our existing policy.
Comment: Many commenters suggested that we expand the SCT level of
ambulance service to include transportation for neonates and adults
transported from the scene of an accident to a hospital, as well as
transport between hospitals and between hospitals and skilled nursing
facilities (SNFs). In addition, commenters requested a clearer
definition of the terms ``hospital'' and ``critical care.'' Some
commenters suggested that we reconvene the Negotiated Rulemaking
Committee to develop a definition of ``critical care.''
Response: We carefully considered the commenters'' recommendations
to expand our interpretation of the term ``interfacility'' to include
other origin and destination points in addition to hospitals. The SCT
level of transport is intended to be used only for transfer of the most
critically ill beneficiaries, who require ongoing specialized care
beyond the scope of the EMT-paramedic. Typically, SCT level transport
occurs when a beneficiary who is already receiving a high level of
specialized care in one facility is moved to another facility to
receive more specialized services. Although such specialized care is
usually provided in a hospital, we recognize that some beneficiaries
receive specialized care in a skilled nursing facility (SNF) and may
require the SCT level of transport from the SNF to a hospital or from a
hospital to a SNF.
[[Page 69717]]
Therefore, we are withdrawing our proposal to revise Sec. 414.605 to
read ``hospital-to-hospital'' instead of ``interfacility'' and
expanding our interpretation of ``interfacility'' to include both
hospitals and SNFs. In addition, in response to comments, we are
further clarifying the kinds of facilities that we include as origin or
destination points for ``interfacility'' transport for SCT purposes.
Many of our Medicare contractors indicate that they have been
administering the ``interfacility'' requirement in the SCT definition
broadly, paying claims at the SCT level of service beyond the scope of
``hospital-to-hospital.'' An examination of the latest available claims
data shows that SCT-level payments are made predominantly for hospital-
to-hospital transportation, as expected, with a small percentage of
SCT-level ambulance transports involving other origin and destination
points, primarily SNFs.
Therefore, for purposes of SCT payment, we consider a ``facility''
to include a SNF or a hospital that participates in the Medicare
program. In addition, we consider the term ``facility'' to include a
hospital-based facility that meets our requirements for provider-based
status, as specified at Sec. 413.65. Facilities that meet our
requirements for provider-based status, like the main provider with
which they are affiliated, are held to high standards of safety and
patient care. Therefore, we believe that such facilities, due to their
close association with a Medicare hospital and their adherence to high
standards of care under our regulations, are also among the facilities
equipped to provide the SCT level of care to patients and to provide
the additional specialized care that is required under the SCT level of
ambulance transport. We will continue to enforce our medical necessity
requirements concerning all interfacility transports so that we can
remain assured that they are occurring for only the most critical
patients.
We appreciate the request by commenters that we clarify the kinds
of facilities we consider to be included for SCT payment purposes. As
explained above, our claims data indicate that SCT level care is needed
primarily during inter-hospital transfers and, in some cases, during
transfers between a hospital and a SNF. Therefore, for purposes of SCT
payment, we consider a ``facility'' to include only a SNF or a hospital
that participates in the Medicare program, or a hospital-based facility
that meets our requirements for provider-based status.
Medicare hospitals include, but are not limited to, rehabilitation
hospitals, cancer hospitals, children's hospitals, psychiatric
hospitals, Critical Access Hopitals (CAHs), inpatient acute-care
hospitals, and Sole Community Hospitals (SCHs).
However, we do not agree with commenters who recommended that a
more comprehensive definition of ``critical care'' is warranted at this
time. The Negotiated Rulemaking Committee was unable to precisely
define ``critical care'' at the time it originally convened and
recognized that a definition provided at the State or local level would
be expected to fit, since there are no national standards available
(Summary Minutes, Medicare Ambulance Fee Schedule Negotiated
Rulemaking, October 4 and 5, 1999). We have no additional data that
would permit us to develop a more precise definition at this time. In
addition, we believe that a more precise definition might conflict with
State or local parameters already in place, as well as possibly
limiting the scope of SCT payments in localities where a broader State
or local definition would otherwise apply.
``Critical care'' will continue to be interpreted by our Medicare
contractors in conjunction with directives provided at the State or
local level.
Comment: Many commenters also suggested that we consider including
the ongoing monitoring of a patient by a specially-trained health care
professional, beyond the scope of the EMT-Paramedic, to be within the
realm of the SCT level of service.
Response: We carefully considered these commenters' concerns, and
we agree that in cases where a critically injured or ill patient
requires the SCT-level of transport from one facility to another, the
ongoing care that must be furnished by a health professional in an
appropriate specialty area, beyond the scope of the EMT-Paramedic, may
include ongoing determinations as to whether the patient requires
specialized care during the transport. We do not require that
specialized treatment actually be furnished during the transport to
satisfy the standard for SCT-level transport. However, we do require
that the need for specialized treatment can only be ascertained by a
health professional with specialized training beyond the scope of the
EMT-Paramedic. We agree with commenters who indicated that an ambulance
service should not be expected to bear the cost of an additional health
professional to accompany a patient ``just in case'' the need for
specialized treatment arises during transport. When such ``specialized
monitoring'' is medically necessary, we agree that it is part of the
ongoing care that falls within the definition of SCT.
Comment: One commenter stated that certain modifiers, such as the
``D'' modifier representing a stand-alone emergency room or the ``I''
modifier used when transferring a patient from the airport or helipad
to the ambulance, exclude these types of ambulance transports from the
SCT level of service.
Response: The commenter is correct that we generally do not
recognize either ``D'' or ``I'' modifier-type ambulance transports to
be SCT level ambulance services. The ``D'' modifier would be used to
describe a non-hospital-based, non-hospital-owned, or non-hospital-
operated diagnostic facility or clinic. We have defined the SCT level
of ambulance service as interfacility ground transportation, involving
transport between hospitals, hospital-based facilities and SNFs.
Therefore, a stand-alone emergency room that is not provider-based or a
freestanding clinic that is not provider-based would not meet the
requirements for an origin or destination point for SCT level
transport. The ``I'' modifier indicates an origin or destination that
is a transfer point between ambulances, such as transfer from air to
ground ambulance service at a helicopter pad. Unless the origin of the
first leg of the transport is a facility and unless the SCT level of
care is medically necessary after the transfer occurs, we would not
consider the transport from the transfer point to the final destination
to be SCT level transport.
3. Recalibration of the Ambulance Fee Schedule Conversion Factor
In the February 27, 2002 final rule with comment period (67 FR 9102
and 9103), we indicated that we would adjust the CF if actual
experience under the fee schedule was significantly different from the
assumptions used to determine the initial CF and air ambulance rates.
We specifically stated that we would monitor payment data and evaluate
whether the assumptions used were accurate.
We have continued to review our assumptions annually to determine
whether or not a CF adjustment is warranted. We examined the effects of
the relative volumes of the different levels of ambulance services
(service mix) and the extent of low billing charges to determine
whether we should adjust the CF to reflect actual practices. In the 4
years since the implementation of the ambulance fee schedule, no
significant differences from our original assumptions have emerged. We
have observed only insignificant differences, and, to date, no
adjustments in any 1
[[Page 69718]]
year have been warranted. It is for this reason that we believe it is
appropriate to discontinue our annual review of the original CF
assumptions. We also believe that the formal annual review of air
ambulance rates should be discontinued as we will monitor all ambulance
rates and make adjustments on an ``as needed'' basis. The ambulance
industry has available multiple venues for notifying us of potential
issues. These include the ambulance fee schedule open door forums and
telephone calls to designated CMS personnel. As an additional
safeguard, we generally conduct a review of ambulance data each year in
preparation for issuing the Ambulance Inflation Factor (AIF).
Therefore, we are revising Sec. 414.610 (g) to indicate that we
will monitor payment and billing data on an ongoing basis and adjust
the CF and air ambulance rates as appropriate to reflect annual
practices under the fee schedule.
Comment: Commenters were supportive of our proposal to discontinue
the annual practice of examining the low biller data and the CF via the
rulemaking process.
Response: We appreciate the support of the commenters on these
points.
We are finalizing our proposal to discontinue the annual practice
of examining the low biller data and the CF, as well as air ambulance
rates, and to change the language at Sec. 414.610(g) to reflect this.
4. Hospital-to-Hospital Ambulance Service: Emergency Response
In Sec. 414.605, we define ``emergency response'' for purposes of
ambulance service to mean ``responding immediately at the BLS (Basic
Life Support) or ALS1 (Advanced Life Support Level 1) level of service
to a 911 call or the equivalent in areas without a 911 call system. An
immediate response is one in which the ambulance entity begins as
quickly as possible to take the steps necessary to respond to the
call.'' In our February 27, 2002 final rule with comment period (67 FR
9100), in our definition of ``emergency response'' we stated that the
additional payment for emergency response is for the additional
overhead cost of maintaining the resources required to respond
immediately to a call and not for the cost of furnishing a certain
level of service to the beneficiary.
The current emergency response definition has created confusion for
those transports that originate at a hospital emergency department and
the ambulance is transporting the beneficiary to an emergency
department at another hospital for either admittance or treatment. For
example, in most of these cases, the beneficiary must be stabilized
prior to the transport. Therefore, the need to maintain a state of
readiness to respond immediately to an urgent call, warranting a higher
emergency response payment, does not appear to be applicable to these
situations.
Another example occurs when the ambulance is owned by the
originating hospital. We stated in a Program Memorandum to the Medicare
contractors (Transmittal AB-02-130, Change Request 2295, September 27,
2002) that upon receipt of a call for ambulance services, the
dispatcher makes the determination of whether the call constitutes an
Emergency response. When the ambulance service is already readily
available at the originating hospital, an emergency call may not be
necessary, much less through a dispatcher for a 911 service.
While we recognize that there may be instances when an emergency
response payment is warranted for a transport between two hospital
emergency departments, we believe that payment based on readiness to
respond immediately is not justified 100 percent of the time. For this
reason, we believed our current definition of Emergency response needed
to be clarified to reflect only circumstances where payment for
immediate response is truly warranted. We proposed to revise the
definition of Emergency response to mean that an ambulance entity--
Maintains readiness to respond to urgent calls at the BLS
or ALS1 level of service; and
Responds immediately at the BLS or ALS1 level of service
to 911 calls, the equivalent in areas without a 911 call system or
radio calls within a hospital system when the ambulance entity is owned
and operated by the hospital.
Comment: We received many comments on revising the definition of
``emergency response''. Most commenters expressed concern that this
revised definition would put private ambulance services at a
disadvantage. They interpreted our proposed definition to include only
ambulance services owned and operated by hospitals that respond to
radio calls within a hospital system. Essentially, their interpretation
of our proposed definition was that only ambulance services owned and
operated by hospitals would be able to transport patients at the
``emergency response'' level of service and, therefore, be able to
receive the higher ``emergency response'' payment as a result.
Response: Certainly, this was not our intent. Our view of the
problem we were attempting to address was the issue of ``readiness''
when responding to a 911 call. We expect ``emergency response'' payment
to be made only in circumstances where readiness to respond immediately
is truly required. Therefore, we proposed to clarify the circumstances
under which we expected this to occur. However, we agree with comments
stating that ambulance service calls generally do not originate through
a 911 service but through the hospital's radio dispatch at the location
where the ambulance is stationed. Private ambulance services stationed
at inpatient hospitals would, therefore, be at a disadvantage if we
specify that responding to hospital radio calls only qualifies as
``emergency response'' when the ambulance entity is owned or operated
by the hospital. This would not affect off-site ambulance services
whose calls originate through a 911 or equivalent service. We agree
that the proposed change in the definition of ``emergency response''
could have an unintended adverse effect on private ambulance services
in these circumstances.
Comment: Several commenters stated that our existing definition of
emergency response more clearly reflects the intent of the Negotiated
Rulemaking Committee in that all ambulance services should have equal
access to the use of the emergency level of service by accessing it
through established State protocols, such as 911 or an equivalent
service.
Response: We also agree that the current definition of emergency
response is consistent with the Negotiated Rulemaking Committee's
intent and does not present other problems raised by commenters. For
the BLS and ALS1 levels of service, an ambulance service that qualifies
for an emergency response is assigned a higher relative value to
recognize the additional costs incurred in responding immediately. We
think that requiring an ambulance service to respond to a 911 call, or
the equivalent in areas without a 911 call system, satisfies this
requirement.
Therefore, we are withdrawing our proposal to revise the
``emergency response'' definition and will retain the current
definition at 414.605. We expect that the State protocol (a 911 call or
the equivalent in areas without a 911 call system) for requesting
emergency ambulance services will be followed in all instances.
[[Page 69719]]
C. Analysis of and Responses to Public Comments
We received a total of 102 timely public comments in response to
the May 26, 2006 proposed rule (71 FR 30358). Commenters included
national trade associations, health care providers, hospitals, CMS
contractors, and private citizens.
All public comments were reviewed and grouped by like or related
topics. Comments are addressed in the individual sections of discussion
to which they apply.
D. Ambulance Inflation Factor (AIF) for 2007
Section 1834(l)(3)(B) of the Act provides the basis for updating
payment amounts for ambulance services. Our regulations at Sec.
414.610(f) provide that the ambulance fee schedule must be updated by
the AIF annually, based on the CPI for all urban consumers (CPI-U)
(U.S. city average) for the 12-month period ending with June of the
previous year. For CY 2007, that percentage is 4.3 percent.
Section 414.620 specifies that changes in payment rates resulting
from incorporation of the AIF will be announced by notice in the
Federal Register without opportunity for prior comment. We find it
unnecessary to undertake notice and comment rulemaking because the
statute and regulations specify the methods of computation of annual
updates. This notice does not change policy, but merely applies the
update methods specified in the statute and regulations.
The national fee schedule for ambulance services has been phased in
over a 5-year transition period beginning April 1, 2002 as specified in
Sec. 414.615.
Prior to January 1, 2006, during the transition period, the AIF was
applied separately to both the fee schedule portion of the blended
payment amount (regardless of whether a national or regional fee
schedule applied) and to the reasonable cost or charge portion of the
blended payment amount, respectively, for each ambulance provider or
supplier. Then, these two amounts were added together to determine the
total payment amount for each provider or supplier. Beginning January
1, 2006, the total payment for air ambulance providers and suppliers is
based on 100 percent of the national ambulance fee schedule, while the
total payment amount for ground ambulance providers and suppliers is
based on either 100 percent of the national ambulance fee schedule or a
combination of the national ambulance fee schedule and the regional
ambulance fee schedule. As of January 1, 2007, the combination rate
will be 80 percent of the national ambulance fee schedule and 20
percent of the regional ambulance fee schedule.
IV. Five-Year Refinement of Relative Value Units Under the Physician
Fee Schedule: Responses to Public Comments on the Five Year Review of
Work Relative Value Units
A. Scope of the Five-Year Review
This final rule includes the culmination of the third 5-Year Review
of work RVUs required by the statute. The work RVUs affected by this
review will be effective for services furnished beginning January 1,
2007.
In the June 29, 2006 proposed notice, ``Five-Year Review of Work
Relative Value Units Under the Physician Fee Schedule and Proposed
Changes to the Practice Expense Methodology'', we explained the process
used to conduct the 5-Year Review of work RVUs. In response to our
solicitation of public comments that appeared in the November 15, 2004
Federal Register (69 FR 66370), we received comments from approximately
35 specialty groups, organizations, and individuals involving over 500
Current Procedural Terminology (CPT) codes. After review by our medical
staff, we shared these comments with the AMA's Relative Value Update
Committee (RUC) along with additional services we had identified as
potentially misvalued.
After a comprehensive review process, the RUC submitted work RVU
recommendations for all of these codes except for the codes that were
withdrawn or referred to the CPT Editorial Panel for further review or
action, and CPT code 32020 for which no specialty society expressed an
interest in conducting a survey. We analyzed all of the RUC
recommendations by evaluating the methodology used by each workgroup to
develop the recommendations, the recommended work RVUs, and the
rationale for the RUC recommendations. When appropriate and feasible,
if we had concerns about the application of a particular methodology,
we assessed whether the recommended work RVUs were appropriate by using
alternative methodologies.
In conducting our review of the RUC recommendations we considered
whether: (1) The code was part of a completed survey process; (2) the
methodology used by the specialty society followed the standard RUC
process; (3) the survey respondents stated the work had or had not
changed in the past 5 years; (4) databases (for example, Society of
Thoracic Surgeons (STS), National Surgical Quality Improvement Program
(NSQIP), and Medicare diagnosis-related group (DRG)) were used in lieu
of the standard RUC methodology or as a supplement to the standard
methodology; and (5) the intra-service work per unit of time (IWPUT)
calculation was used to determine work RVUs in lieu of the standard RUC
process. Although we recognize that the work values of codes may change
over time, it is the responsibility of the specialty society to present
compelling evidence that a code is misvalued. (For additional
information on the review process, please see the June 29, 2006
proposed notice (71 FR 37172).)
B. Review of Comments
Many commenters expressed support for our proposed valuations of
many of the services. However, other commenters expressed specific
concern or disagreement with the proposed valuation of approximately
106 codes, with the major concern being that the codes would be
undervalued.
We convened a multi-specialty panel of physicians to assist us in
the review of comments. The comments we did not submit for panel review
are discussed at the end of this section. The panels were moderated by
our medical staff and consisted of:
Clinicians representing the commenting specialty(s), based
on our determination of those specialties which are most identified
with the services in question. Although commenting specialties were
welcomed to observe the entire refinement process, they were only
involved in the discussion of those services for which they were
invited to participate.
Primary care clinicians nominated by the American Academy
of Family Physicians (AAFP) and the American College of Physicians.
Four carrier medical directors.
One to two clinicians who practice in related specialties
and have knowledge of the services under review.
We submitted 30 codes for evaluation by the panel. The panel
discussed the work involved in each procedure under review in
comparison to the work associated with other services on the fee
schedule. We assembled a set of reference services and asked the panel
members to compare the clinical aspects of the work for services they
believed were incorrectly valued to one or more of the reference
services. In compiling the reference set, we attempted to include: (1)
Services that are commonly furnished for which work RVUs are not
[[Page 69720]]
controversial; (2) services that span the entire spectrum of work
intensity 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. Group members were encouraged to make
comparisons to these reference services. 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 for each service, each participant rated the work for that
procedure. Ratings were individual and confidential; there was no
attempt to achieve consensus among the panel members.
We then analyzed the ratings based on a presumption that the RVUs
published in the proposed notice were correct. To overcome that
presumption, the inaccuracy of the proposed RVUs had to be apparent to
the broad range of physicians participating in the panel. Ratings of
work were analyzed for consistency among the groups represented on the
panel. In general terms, we used statistical tests to determine whether
there was enough agreement among the groups on the panel, and if so,
whether the agreed-upon RVUs were significantly different from the
proposed RVUs that appeared in the June 29, 2006 proposed notice to
demonstrate that the proposed RVUs should be modified. 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 to the basis for
new RVUs. We used the same methodology in analyzing the ratings that we
first used in the refinement process for the CY 1993 physician fee
schedule final rule published in the November 25, 1992 Federal Register
which described the statistical tests in detail (57 FR 55938).
Our decision to convene a multi-specialty panel of physicians and
to apply the statistical tests described above in this section 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. Of the 30 codes reviewed by the multi-specialty
panel, all were the subject of requests for increased values.
Of the proposed codes that were reviewed, 11 increased, and 19 were
not changed.
Table 12 lists the codes reviewed during the 5-Year Review on which
we received comments. This table includes the following information:
CPT/HCPCS Code. This is the CPT or alphanumeric HCPCS code
for a service.
Modifier. A modifier -26 is shown if the work RVUs
represent the professional component (PC) of the service.
Description. This is an abbreviated version of the
narrative description of the code.
Proposed Work RVUs. This column includes the work RVUs
proposed in the June 29, 2006 proposed notice for each reviewed code.
Requested Work RVUs. This column identifies the work RVUs
requested by the commenters. If the commenters requested different
RVUs, the table lists the highest requested RVUs.
RUC Recommendation. This column identifies the work RVUs
recommended by the RUC that appeared in the June 29, 2006 proposed
notice.
HCPAC Recommendation. This column identifies the work RVUs
recommended by the HCPAC that appeared in the June 29, 2006 proposed
notice.
2007 Work RVUs. This column contains the work RVUs for the
CY 2007 physician fee schedule.
Basis for Decision. This column indicates whether the CY
2007 work RVUs resulted from comments received or the refinement panel
process.
BILLING CODE 4120-01-P
[[Page 69721]]
[GRAPHIC] [TIFF OMITTED] TR01DE06.007
[[Page 69722]]
[GRAPHIC] [TIFF OMITTED] TR01DE06.008
[[Page 69723]]
[GRAPHIC] [TIFF OMITTED] TR01DE06.009
BILLING CODE 4120-01-C
C. Discussion of Comments by Clinical Area
1. Dermatology and Plastic Surgery
In addition to comments received in support of our proposed work
RVUs for services reviewed by the RUC's Workgroup 1, we received the
following comments.
For CPT code 17004, Destruction (e.g., laser surgery,
electrosurgery, cryosurgery, chemosurgery, surgical curettement), all
benign or pre-malignant lesions (e.g., actinic keratoses) other than
skin tags or cutaneous vascular proliferative lesions; 15 or more
lesions, the RUC considered a change to the work RVUs for this CPT code
based on the understanding that when rank order anomalies arising from
the 5-Year Review were identified, the specialty could bring these
additional codes forward for re-evaluation at the February 2006 RUC
meeting. A standard RUC survey was conducted for this code. During the
discussion, the RUC agreed that the descriptor of the code needed to be
changed, as well as the intra-service descriptor and time to reflect
only the destruction of pre-malignant lesions. The RUC agreed that, due
to these changes, a work value halfway between the 25th and median
survey percentile was appropriate and recommended work RVUs of 1.80 for
CPT code 17004.
CMS Proposed Valuation
For CPT code 17004, we believed that the work associated with
benign and pre-malignant lesions does not really differ; therefore, the
recommended work RVUs for CPT code 17004 were too high. We used a
``building block'' methodology to develop our proposed RVUs for this
service. That is, based on our proposed valuation of CPT code 17003
(the code used for 2-14 lesions), of 0.07 work RVUs for each additional
lesion, the 14th lesion would equal 0.91 work RVUs (0.07 x 13 lesions)
plus the 0.6 work RVUs for the initial lesion, base code CPT code
17000, which is billed once in conjunction with 17003, for a total of
1.51 work RVUs for the service. We proposed to value CPT code 17004, at
the level determined for the 15th lesion, at 1.58 work RVUs by adding
the 0.07 work RVU increment of CPT code 17003 and the 0.6 work RVUs for
the base code, CPT code 17000, which is not billed in conjunction with
CPT code 17004.
Comment: While the American Academy of Dermatology (AAD) was
pleased that the RUC-recommended work RVUs were accepted for the 36 CPT
codes for the excision of benign and malignant lesions, both the AADA
and the RUC disagreed with our proposed valuation of 1.58 work RVUs for
CPT code 17004 and requested that we accept the RUC-recommended 1.8
work RVUs. They continue to support the premise that benign and pre-
malignant lesions are not comparable and believe that recent changes to
the code descriptors made by the CPT editorial panel to CPT codes
17000-17004 and CPT codes 17110-17111 for CPT 2007 also support this
position. These descriptor changes specifically differentiate between
destruction of pre-
[[Page 69724]]
malignant and benign lesions, respectively. The RUC and AADA maintain
that the destruction of pre-malignant lesions in CPT 17004 requires a
greater mental effort and judgment, technical skill, intensity and time
than that for the destruction of benign lesions in CPT code 17111. In
addition, the commenters presented data collected during the survey
process to show that the median number of lesions destroyed in the
typical service of CPT code 17004 was 22 lesions, and the average
number was 23.439.
Response: We have reviewed the information supplied by the RUC and
the AADA, especially for the median number of lesions destroyed in the
typical service of CPT code 17004. By applying the same calculations we
used in the proposed rule to value the 15th lesion at 1.58 work RVUs,
we determined that the RUC proposed work value of 1.8 work RVUs
represents 18 lesions for a typical service for CPT code 17004.
Final Decision: Based on these comments and our calculations, we
now believe that the RUC recommendation is reasonable and will accept
the RUC-recommended work value of 1.80 work RVUs for CPT 17004.
Other Issues
Comment: The American Society of Plastic Surgeons (ASPS) was
pleased that we agreed with the RUC recommendations for the codes
performed by plastic surgeons. ASPS also clarified that the reason CPT
code 19361 was withdrawn from the 5-Year Review process and sent to CPT
was due to the ambiguity of the code descriptor, and not due to an
invalid survey as was listed in Table 3 of the June 29, 2006 proposed
notice (71 FR 37189).
Response: We thank the society for the clarification and regret the
erroneous rationale that was noted for the withdrawal of CPT code 19361
from this 5-Year Review process.
2. Orthopedic Surgery
In addition to comments received in support of our proposed work
RVUs for services reviewed by the RUC's Workgroup 2, we received
comments on the following CPT codes.
For CPT code 27130, Arthroplasty, acetabular and proximal femoral
prosthetic replacement (total hip arthroplasty), with or without
autograft or allograft; CPT code 27236, Open treatment of femoral
fracture, proximal end, neck, internal fixation or prosthetic
replacement; and CPT code 27447, Arthroplasty, knee, condyle and
plateau; medial AND lateral compartments with or without patella
resurfacing (total knee arthroplasty), we originally presented these
codes to the workgroup with data other than survey data supporting the
work RVU requests. Because of concerns regarding the methodology used
by the specialty society, the codes were temporarily withdrawn with the
understanding that survey data could be presented at the October 2006
meeting. After reviewing the survey data in October 2006, the RUC did
not find any compelling evidence to change the current work RVUs
assigned to these services. Based on this review, the RUC recommended
maintaining the current work RVUs of 20.09 work RVUs for CPT code
27130, 15.58 work RVUs for CPT code 27236, and 21.45 work RVUs for CPT
code 27447, but also recommended using the new physician time survey
data for each of these services.
CMS Proposed Valuation
We disagreed with the RUC-recommended values for CPT codes 27130,
27236 and 27447, based on the specialty's presentation to the workgroup
in August. We instead proposed alternative work RVUs determined by
comparing these codes to services with similar times and adjusting for
any differences in hospital visits. As a result of this analysis, we
proposed 15.96 work RVUs for CPT code 27130, 12.77 work RVUs for CPT
code 27236, and 19.30 work RVUs for CPT code 27447.
Comment: Several commenters, including societies representing
orthopedics and the RUC, expressed concern about the methodology we
used to develop our proposed work RVUs for these services. Commenters
questioned the comparisons we used to arrive at the proposed values
(that is, high volume orthopedic procedures being compared to rarely
furnished non-orthopedic procedures of lower risk and intensity), and
also stated that our proposed work RVUs would create substantial rank
order anomalies within the families. The American Academy of
Orthopaedic Surgeons/American Association of Orthopaedic Surgeons
(AAOS) and the American Society for Surgery of the Hand (ASSH) stated
that we had misunderstood the method that was used to develop the RUC-
recommended work RVUs for these procedures. They indicated that we were
incorrect in stating that a RUC survey had not been conducted for these
codes; the work RVU recommendations that were adopted by the RUC are
based on surveys conducted by AAOS and are the result of extensive RUC
review and discussion.
AAOS acknowledged that the initial recommendations presented by
AAOS in August 2005 were based on NSQIP and DRG data due to flaws in
the original surveys. However, based on reservations expressed by CMS
at that time, subsequent surveys were conducted. The RUC-recommended
work RVU recommendations were then based on this survey data and the
NSQIP data was used only as an adjunctive methodology to credit or
discredit the survey data.
In addition, these codes were compared with other RUC-reviewed
codes to show that the recommended values and times placed the codes in
proper rank order. The RUC-recommended values are further supported
when compared to other procedures within the associated families. The
commenters urged us to reconsider our position and accept the RUC
recommendations.
Response: The commenters are correct that we based our rejection of
the RUC-recommended work RVU for these services (CPT codes 27130,
27236, and 27447) on the August workgroup presentation and had
inadvertently overlooked the surveys that were presented at the October
meeting. After reviewing the more recent survey data, we now agree that
the RUC recommendations appear reasonable. Therefore, based on a review
of the information provided by the commenters, we have decided to
accept the RUC recommendation to maintain the current work RVUs of
20.09 for CPT code 27130, 15.58 work RVUs for CPT code 27236 and 21.45
work RVUs for CPT code 27447.
3. Gynecology, Urology, Pain Medicine, and Neurosurgery
We received comments disagreeing with our proposed work RVUs on the
following two services: CPT code 22612, Arthrodesis, posterior or
posterolateral technique, single level; lumbar (with or without lateral
transverse technique); and CPT code 63048, Laminectomy, facetectomy and
foraminotomy (unilateral or bilateral with decompression of spinal
cord, cauda equina and/or nerve root(s), (e.g., spinal or lateral
recess stenosis)), single vertebral segment; each additional segment,
cervical, thoracic, or lumbar (List separately in addition to code for
primary procedure.). The RUC had recommended increases in work RVUs for
these two codes, but less than the increases requested by the specialty
society. The RUC agreed that these procedures were undervalued due to
increases in length of stay and the incorrect assumptions made in the
[[Page 69725]]
previous valuation of the service. The specific RUC-recommended work
RVUs were 22.00 work RVUs for CPT code 22612 and 3.55 work RVUs for CPT
code 63048.
CMS Proposed Valuation
We had technical concerns with the recommendations for CPT codes
22612 and 63048. The workgroup had recommended the survey's 25th
percentile for CPT code 22612 to keep the appropriate rank order with
the reference service, CPT code 22595, that the RUC stated is a more
complex procedure. However, there was a typographical error in the
information presented by the specialty society that listed the work
RVUs for the reference code as 23.36, rather than the correct value of
19.36 work RVUs. Therefore, the recommended work value of 22.00 RVUs
appeared appropriate and we proposed to maintain the current work RVUs
of 20.97 for this service.
There was what we believed to be an additional typographical error
in the specialty society survey data for CPT code 63048. The summary
information presented to the RUC lists the reference code as also being
CPT code 63048. Therefore, there is no information submitted that
compares the respondents' estimates of complexity and intensity between
CPT code 63048 and a reference code. Because we do not have sufficient
information to decide if the recommended work RVUs are appropriate, we
proposed to maintain the current work RVUs of 3.26 for CPT code 63048.
Comment: We received comments from the North American Spine
Society, the American Association of Orthopaedic Surgeons, the American
Association of Neurological Surgeons (AANS), and the RUC requesting
that we do not implement our proposed RVUs for these services (CPT
codes 22612 and 63048), but rather accept the RUC-recommended work
RVUs. The commenters stated that we had misunderstood the process used
by the presenting societies to develop the suggested RVUs for both
codes. The commenters stated that the survey respondents did not notice
the values for a reference service, but rather were asked to compare
the current work and intensity with the work and intensity of
furnishing the procedure in 2000. Therefore, the societies contend, the
misprint of the value for what was listed as a ``reference'' code had
no effect on the valuation of CPT code 22595, nor did the absence of a
separate reference code for CPT code 63048 negatively affect its
valuation. According to the commenters, they believe that the workgroup
based its recommendation on the validity of the survey data and the
building block methodology presented as additional rationale. The
specialty society representing spine surgeons also commented that when
the respondents were asked to rate how the complexity and intensity of
these services had changed in the past 5 years, the ratings showed that
the survey respondents believed that the intensity and complexity for
both codes had increased.
The AAFP questioned why we would propose a value for CPT code 22612
that, though equal to the current value, was still higher than a more
complex reference code. According to the AAFP, the RUC appeared to be
recommending that the ratio of work between CPT codes 22612 and 22595
was 0.942 work RVUs; therefore, we should have recommended a work value
of 18.23 work RVUs for CPT code 22612.
Response: We thank the commenters for clarifying the process used
in surveying for these services. However, we still have concerns
regarding the RUC recommendations for these services. First, though the
survey respondents did not see the erroneous work RVUs listed for CPT
code 22595, the reference code used for CPT code 22612, the workgroup
did account for these errors. As a result, the RUC recommendation for
CPT code 22612 was higher than the current work RVUs for CPT code
22595, a procedure the workgroup considered more complex. Second,
although the survey respondents may have indicated on the rating scale
that CPT codes 22612 and 63048 were more complex procedures in 2005
than they were in 2000, when they were asked simply whether the work
for these services had changed in the last 5 years, 80 percent
disagreed for CPT code 22612 and 50 percent disagreed for CPT code
63048. Therefore, based on the comments received, we referred this code
to a multi-specialty refinement panel for review.
Final Decision: As a result of our analysis of the refinement panel
ratings, we have assigned 21.79 work RVUs to CPT code 22612 and 3.47
work RVUs to CPT code 63048.
For CPT code 61697 Surgery of complex intracranial aneurysm,
intracranial approach; carotid circulation; CPT code 61700 Surgery of
simple intracranial aneurysm, intracranial approach; carotid
circulation; and CPT code 61702 Surgery of simple intracranial
aneurysm, intracranial approach; vertebrobasilar circulation), we
received the following comments.
Comment: The AANS disagreed with the RUC recommendations that we
proposed to accept for CPT codes 61697, 61700 and 61702 because of
changes made by the workgroup to ``standardize the pre-service and
post-service times.'' The commenter stated that the standard 60 minutes
of pre-service time was not adequate for such complex neurological
procedures and stated reasons for the need for extended times. AANS
also objected to the adjustments made by the workgroup to the level and
number of post-operative visits by changing each post-operative
critical care visit to a single high level subsequent hospital care
visit. The society stated its belief that this change ``significantly
understates the post-operative time and intensity of the work that was
described by survey respondents,'' and urged us to add the time and
work RVUs of an additional critical care code, CPT code 99233, to all
three services.
Response: We do not believe that, based on this comment, we have
sufficient information to make the requested change. Therefore, we
referred this code to a multi-specialty refinement panel for review.
Final Decision: As a result of our analysis of the refinement panel
ratings, we have assigned 57.31 work RVUs to CPT code 61697.
4. Radiology, Pathology, and Other Miscellaneous Services
In addition to comments received in support of our proposed work
RVUs for services reviewed by the RUC's Workgroup 4, we received the
following comments.
For CPT code 76075, Dual energy x-ray absorptiometry (DXA), bone
density study, one or more sites; axial skeleton (e.g., hips, pelvis,
spine), the RUC recommended a reduction from the current 0.30 work RVUs
for the DXA service because the workgroup believed that the actual work
is less intense and more mechanical than the specialty society's
description of the work. The RUC-recommended work RVUs for this code
were 0.20 and we agreed with this recommendation.
Comment: Many commenters, including individual providers, national
and State organizations, specialty societies, manufacturers, and
Congressional and State legislators, wrote expressing concern about the
proposed reduction in payments for this service, some of which is
attributable to the proposed work RVUs. These commenters expressed
concern that the proposed reduction in payment would have a detrimental
impact on beneficiary health and is contrary to a Surgeon General's
Report that
[[Page 69726]]
emphasized the importance of such testing.
The ACR commented that, while they participated in the survey
process that resulted in the RUC-recommended work RVU for this service,
other specialties that provide this service such as family medicine,
internal medicine and rheumatology were not represented. ACR encouraged
us to consider comments from other specialty societies and
organizations furnishing this service, including those that do not
participate in the RUC process (such as the International Society for
Clinical Densitometry (ISCD)), so that their views may be considered.
ACR indicated that it would like to participate should it be determined
that this will be addressed through a refinement panel. Other
commenters, including specialty organizations and the ISCD, provided
additional information regarding this service. Many of the commenters
also expressed concern about the payment for CPT code 76077, although
this code was not included in the 5-Year Review of work. Changes in
payment for this code are attributed to the changes in PE methodology
discussed in section II.A. of this final rule with comment period.
Response: We proposed to accept the RUC-recommended work RVU of
0.20 for CPT code 76075, which was lower than the requested 0.30 work
RVUs requested by the specialty. Therefore, based on the comments
received, we referred this code to a multi-specialty refinement panel
for review.
Final Decision: As a result of our analysis of the refinement panel
ratings, we have assigned 0.20 work RVUs to 76075. (Note: For 2007, CPT
code 76075 has been renumbered to 77080.)
For CPT code 95872, Needle electromyography using single fiber
electrode, with quantitative measurement of jitter, blocking and/or
fiber density, any/all sites of each muscle studied, the RUC agreed
that there was compelling evidence that CPT code 95872 was undervalued
and recommended increasing the existing work RVUs from 1.50 to 3.00
work RVUs.
CMS Proposed Valuation
We had concerns that the work recommendation for 95872, which was
based on the survey's 75th percentile for work, is inappropriate for
this service. To determine our proposed valuation for CPT code 95872,
we utilized a multi-tiered approach. First, we calculated the pre-
service and post-service work RVUs using the surveyed physician time
data. Then, to determine an intra-service work RVU, we subtracted the
surveyed intra-service time from the current time and multiplied this
difference in time by the calculated IWPUT using the specialty
recommended total work RVUs. Adding these calculated work RVUs resulted
in a work valuation of slightly less than 2.00 work RVUs, which is
approximately the same value as the survey median work RVU. In
accordance with this analysis and the survey median, we proposed a work
RVU of 2.00.
Comment: The RUC believes, and specialty societies for neurology
agree, that the RUC's justification to increase the work of CPT code
95872 to 3.00 work RVUs is reasonable and outweighs our proposed
valuation of 2.00 work RVUs, which is solely based on IWPUT. Commenters
provided additional information concerning the activities associated
with this procedure and requested acceptance of the RUC-recommended
work RVUs.
Response: Based on the comments received, we referred this code to
a multi-specialty refinement panel for review.
Final Decision: As a result of our analysis of the refinement panel
ratings, we have assigned 2.88 work RVUs to CPT code 95872.
5. Evaluation and Management (E/M) Services
Comment: There was strong support for the proposal to increase work
RVUs for E/M services from many commenters, including specialty
societies, the RUC, MedPAC and individual physicians. For example,
specialty societies or organizations representing internal medicine,
family physicians, thoracic medicine, rheumatology, endocrinology,
neurology, HIV medicine, clinical oncology, group practice, infectious
disease, critical care, physical medicine, emergency medicine,
geriatrics, geriatric psychiatry, osteopathy, urology,
gastroenterology, pediatrics, renal medicine, as well as the RUC, all
expressed their appreciation for our acceptance of the RUC
recommendations for E/M services. The American College of Physicians
stated that our proposed E/M work RVUs are supported by data from the
annual National Ambulatory Medical Care Survey which show that patients
now have more chronic conditions, are older, and have more diagnoses
per encounter. In addition, the commenter contended that the proposed
increased values for E/M services would provide an incentive for
appropriate E/M service utilization and would also ensure a sufficient
supply of primary care physicians. Another commenter applauded the E/M
proposals because ``they correct the dramatic erosion of the relative
weight accorded to E/M services over the past 14 years.''
However, an umbrella specialty society for surgery raised several
objections to our proposal. First, the commenter contended that the
compelling evidence standard was not met because any false assumptions
involved in the original valuation of the codes were corrected in the
first 5-Year Review and because any increase in work for E/M services
has been compensated by the billing of higher-level office visits.
Second, the commenter expressed concern that the proposal will lead to
rank order anomalies because of the disproportionate distribution of
values within the E/M family and suggested that we spread out the
increases more proportionately by increasing the values of lower E/M
codes and decreasing the proposed increases to CPT codes 99213 and
99214. These concerns were also echoed in the comments from the
specialty societies representing colon and rectal surgery, vascular
surgery, orthopaedic surgery, hand surgery, prosthetic urology and from
other commenters.
The specialty society representing otolaryngology submitted a
similar comment that also stated that the proposed increases are
excessive and unsupported by a careful analysis of the data, including
an analysis of the IWPUT. In addition, the commenter stated that the
IWPUTs that result from our proposal are illogical within families of
codes and exceed the levels of many complex surgical procedures. The
society recommended that we either maintain the 2006 work RVUs or
transition the new work RVUs over several years.
The society representing social workers, as well as individual
social workers and other NPPs, commented that clinical social workers
and other NPPs are unable to use the E/M codes and requested that we
withdraw the proposed increase for E/M services until all Medicare
providers can receive fair and adequate increases. The society
representing psychologists recommended that we reduce the increase for
E/M services because it is inequitable to reward some at the expense of
others or that they be permitted to bill for E/M services.
Response: We appreciate the strong support shown for our proposed
work RVUs for E/M services and are appreciative of the thoughtful
concerns raised by other commenters. We certainly understand how
contentious this issue has been, particularly in light
[[Page 69727]]
of the large BN adjustment that our acceptance of the RUC
recommendations for these services would require. The concerns
surrounding the valuation of E/M services were discussed during at
least three RUC meetings before consensus was finally reached. We
believe the final RUC recommendations represented acceptable relative
values for the E/M services in question. After reviewing the comments,
we believe that the RUC recommendations for the E/M services should be
implemented in full beginning January 1, 2007.
With regard to the question of compelling evidence of the need for
a change to the work RVUs, we believe that the rationale for revision
of these RVUs did not rest solely on previous false assumptions, but
also on the claim that there has been a change in the complexity of the
patient population resulting in more diagnoses per encounter and more
ambitious management goals. In reviewing the RUC's recommendations for
the 5-Year Review, we found the evidence in support of a change in the
work for E/M services as compelling as the evidence presented for most
of the codes that we proposed to revise in this 5-Year Review. As to
the comments regarding the IWPUTs of the E/M services, we are not yet
convinced about the validity of the IWPUT analysis when applied to such
``cognitive'' services, particularly if such an analysis were to be
used to negate the findings of acceptable surveys. In addition, even if
there might be merit to the contention that the RUC recommendations
will cause some rank order anomalies, we do not have the information
that would be needed to rectify this; this is an issue that might be
better handled by the RUC and the specialties involved.
Though we are sympathetic to the concerns of those who would not
benefit from an increase to E/M services, but would face potential
reductions in payment as a result of the BN adjustment, we do not
believe that the appropriate answer would be to deprive primary care
physicians, and other practitioners who provide these services, of an
increase that the commenters otherwise appeared to consider reasonable
and commenters did not suggest other viable alternatives. We would be
happy to work with any group or individual that believes they have been
unfairly impacted by this change to determine if there is any other
appropriate other measure that might address their concerns.
We also do not believe that it would be either equitable or
appropriate to transition the E/M increases, as suggested by some
commenters. The work RVUs for E/M services were accepted by a RUC
consensus and we believe them to be reasonable. We have never before
transitioned changes in work RVUs that we accept based on RUC
recommendations, and we believe it would be unfair in this case to
single out these increases for transition when other services that
received even greater increases would benefit immediately.
We did not propose to make any changes in our policy regarding the
types of suppliers that can bill for E/M services, and are not making
any changes at this time. Our Internet Only Manual 100-02 Chapter 15
Section 160 continues to state that ``any therapeutic services that are
billed by clinical psychologists (CPs) under CPT psychotherapy codes
that include medical evaluation and management services are not
covered.''
Comment: Several commenters representing renal physicians and
patients, as well as the RUC, requested that we make an adjustment for
the ESRD-related services, which have been valued using the E/M codes
as building blocks, by adding the increase in the E/M RVUs to these
services.
Response: Since the G-codes now used for these ESRD-related
services have markedly different descriptors than the previously valued
CPT codes, we are unable to determine at this time which levels of E/M
visits are most appropriately associated with these G-codes. As
explained in the CY 2004 PFS final rule (68 FR 63218), we established
RVUs for these G-codes to equal the aggregate payments for the services
provided under the CPT codes that had been previously recognized for
these services. Because we based our payment of the G-codes on the
aggregate payments for CPT codes 90918-90921, the specific CPT codes
that are building-blocks of this payment system cannot be directly
correlated. We suggest that the specialty could request that the CPT
panel consider revising the CPT codes for these ESRD-related services
to mirror our current G-codes; these could then be reviewed by the RUC
to determine the level of E/M services that are typically associated
with each code.
Comment: An organization representing long term care providers
commented that we stated incorrectly at the end of the discussion
concerning the RUC recommendations for the E/M services that nursing
facility codes are not part of the 5-Year Review process. The commenter
clarified that the RUC requested that these codes not be surveyed until
after the 5-Year Review, when there could be appropriately valued codes
to use as reference services. Though the surveys will be conducted
after the RVUs for E/M services are published, the commenter requested
that we review the recommendations and update the nursing facility E/M
RVUs to become effective in January 2008.
Response: The commenter is correct. The RUC recommended delaying
the survey of these services pending RUC recommendations on E/M codes
that could be used as reference services. If we receive the RUC's
recommendations in time, we will review the recommendations for the
work RVUs for nursing facility E/M services and publish our proposals
in next year's proposed rule and will consider this part of the third
5-Year Review.
Comment: The specialty society representing home care physicians
stated that the home care visit and domiciliary care visit codes were
not included in the 5-Year Review; the domiciliary codes so that they
could be valued through the RUC and, the home visits so that they could
be used as reference codes. The society recommended that we adjust the
work RVUs for these codes to reflect the revalued comparable office E/M
codes for new and established patients. The commenter contended that
the home visit and domiciliary care codes have been ``referenced'' to
the office visit codes in the past and the changes proposed through the
5-Year Review process should be reflected in these derivative code
families.
Response: It is unfortunate that these services were not included
in the recent 5-Year Review and that the specialty did not propose them
for review. We believe that it would be inappropriate to apply
increases to these codes without a multi-specialty review of the work
involved in these services. However, we would be willing to consider
any RUC recommendations that might be forthcoming for revised work RVUs
for the home visit and domiciliary care codes. Such a RUC review could
be completed at the same time that the RUC is reviewing the nursing
facility E/M services previously discussed in this section. As we
indicated for the nursing facility E/M codes in the prior response, we
would consider forthcoming RUC recommendations for the home care and
domiciliary care E/M codes as part of the third 5-Year Review because
of the similarity to the other E/M services considered in this review.
We continue to believe acceptance of the RUC recommendations for E/
M services is appropriate and will implement the proposed work RVUs for
E/M services beginning January 1, 2007.
[[Page 69728]]
6. Cardiothoracic Surgery
We received a number of comments concerning the cardiothoracic
surgery proposals.
Comment: Commenters were supportive of the proposed valuation of
the congenital cardiac surgery services and CPT code 32020, Tube
thoracostomy with or without water seal (e.g., for abscess, hemothorax,
empyema) (separate procedure) . However, commenters did not agree with
the proposed work RVUs for the general thoracic and adult cardiac
surgery codes. One commenter questioned why the work RVUs had not been
maintained at the current levels. Commenters representing surgical
specialties, including thoracic and cardiac surgery, questioned the
methodology we used to arrive at the proposed work RVUs. They believe
the proposed work values create rank order anomalies and disturb the
relativity within the cardiothoracic family. Additionally, the
commenters stated that we failed to include pre- and post-service work
in the add-on codes, contrary to a policy stated in the CY 2002
physician fee schedule final rule (67 FR 79966). The commenters
provided additional detailed information concerning the STS database,
as well as their use of mean values for the intra-service time and the
intensity survey methods used to estimate IWPUT.
Response: As we discussed in the June 29, 2006 proposed notice, the
general thoracic and adult cardiac surgery codes submitted to the RUC
for review did not undergo the standard RUC survey methodology (71 FR
37218). Rather, the data pertaining to these codes were derived from
the STS database, a voluntary registry developed by the STS that has
reportedly captured data on approximately 70 percent of all cardiac
surgical procedures in the United States.
We believe the STS database represents a significant advance in the
effort to improve the quality of patient care and we hope that this
kind of data collection will be emulated by other specialties. We also
believe that the time and visit data contained in this database could
be a useful adjunct to the RUC's validation of the standard RUC survey
results.
We appreciate the detailed information provided by the commenters
in response to the concerns we had outlined in the June 29, 2006
proposed notice. Based upon a review of the specific information
provided by the commenters concerning the STS database, as well as the
information provided specifically addressing the use of the mean values
for the intra-service time and methodology used to estimate IWPUT, we
will accept the RUC-recommended work RVUs for these services.
We note that it is our responsibility to assure all medical
specialties that we will review and evaluate their services using an
approach that is accepted by the RUC and CMS. We will continue to work
with the RUC to better determine how to use the alternative data
sources such as the STS data to compare the relativity of services.
Unless an alternative approach can be found that can be applied to all
services, we would not want to see the RUC abandon its survey
methodology. We understand that the standard RUC survey process is not
flawless, but it does provide an even playing field for all specialties
and we would be concerned if each specialty was allowed to develop its
own unique method for estimating work RVUs. Therefore, we will work
with the RUC and continue to review this issue to determine the
appropriate use of data sources other than the RUC survey.
Comment: The STS and the American Association for Thoracic Surgery
(AATS) requested that we approve the RUC-recommended work RVUs of 49.41
for CPT code 33548, indicating that this was submitted as part of the
5-Year Review process since the valuation of this service was based on
a reference code (CPT code 33542) that was in the refinement process.
The commenter also stated that this was part of the RUC recommendations
forwarded in September 2005.
Response: We did not receive CPT code 33548 as part of the 5-Year
Review process, and therefore, we will maintain the current value for
this service.
7. General, Colorectal and Vascular Surgery
For the following services, we received comments that disagreed
with our proposed work RVUs.
a. Vascular Surgery
For CPT code 33877, Repair of thoracoabdominal aortic aneurysm with
graft, with or without cardiopulmonary bypass; CPT code 34201,
Embolectomy or thrombectomy, with or without catheter; femoropopliteal,
aortoiliac artery, by leg incision; CPT code 35081, Direct repair of
aneurysm, pseudoaneurysm, or excision (partial or total) and graft
insertion, with or without patch graft; for aneurysm, pseudoaneurysm,
and associated occlusive disease, abdominal aorta; CPT code 35102
Direct repair of aneurysm, pseudoaneurysm, or excision (partial or
total) and graft insertion, with or without patch graft; for aneurysm,
pseudoaneurysm, and associated occlusive disease, abdominal aorta
involving iliac vessels (common, hypogastric, external); CPT code 35556
Bypass graft, with vein; femoral-popliteal; CPT code 35566 Bypass
graft, with vein; femoral-anterior tibial, posterior tibial; CPT code
35583 In-situ vein bypass; femoral-popliteal; and CPT code 35585, In-
situ vein bypass; femoral-anterior tibial, posterior tibial, or
peroneal artery, the RUC reviewed both the survey data and the NSQIP
data for these services.
For these codes, the RUC believed that physicians responding to the
survey underestimated the intra-service time and that the NSQIP data
more accurately reflected the actual intra-service times for these
procedures. For CPT code 33877, the RUC accepted a work value greater
than the survey's 75th percentile that was derived from a building
block approach using the NSQIP data for the service. For CPT codes
34201, 35102, 35556, 35566, and 35585, the RUC used the same
methodology and accepted work values greater than the survey's median
percentile. However, for CPT codes 35081 and 35583, the recommended
increase was no greater than the surveyed median work RVUs.
The RUC-recommended work RVUs for these services were: 33877 =
64.04 work RVUs; 34201 = 18.31 work RVUs; 35081 = 31.00 work RVUs;
35102 = 36.28 work RVUs; 35556 = 27.25 work RVUs; 35566 = 32.00 work
RVUs; 35583 = 26.00 work RVUs; and 35585 = 32.00 work RVUs.
CMS Proposed Valuation
We agreed with the RUC-recommended work RVUs for CPT codes 35081
and 35583. We disagreed with the RUC recommendations for CPT codes
33877, 34201, 35102, 35556, 35566, and 35585. For these services, the
RUC used the NSQIP time data to increase the work values above the
survey median, and for several codes above the 75th percentile. We
rejected this use of the NSQIP data and proposed to use the survey
median work RVUs for these CPT codes: 33877 = 53.00 work RVUs; 34201 =
17.00 work RVUs; 35102 = 34.00 work RVUs; 35556 = 25.00 work RVUs;
35566 = 30.00 work RVUs; and 35585 = 30.00 work RVUs. All of these
proposed work RVUs are higher than the current values.
Comment: We received comments from the American College of Surgeons
(ACS) and Society for Vascular Surgery (SVS) concerning these CPT
codes. The ACS and the SVS, as well as the RUC,
[[Page 69729]]
stated that our proposed work RVUs would undervalue several of the
vascular surgery procedures. Both the ACS and the RUC maintained that
we should accept the RUC recommendations for all these services.
For CPT code 33877, the commenters contended that the proposed
value would create a rank order anomaly with the partial esophagectomy
service, CPT code 43118, for which we proposed 61.08 work RVUs, even
though it is a less intense procedure. The ACS also maintained that,
under our proposal, the IWPUT of this service would be too low.
For CPT code 34201, the commenters disagreed with our proposal to
reject the NSQIP-derived increase with one noting that we accepted the
NSQIP-derived reduction in length of stay for CPT code 34201. The RUC
commented that the presenting specialty assumed NSQIP time to be more
accurate than RUC survey time and used NSQIP time when available,
whether it increased or reduced the RUC survey times.
For CPT code 35102, the commenters asserted that we proposed work
RVUs that would decrease the IWPUT to 0.075, which is inconsistent with
other similar surgical procedures. Therefore, they urged us to accept
the RUC recommendation of 36.28 work RVUs for this service.
For CPT codes 35556, 35566, 35583 and 35585, the commenters
maintained that the NSQIP data demonstrated that survey respondents
consistently underestimated their intra-service time. The ACS commented
that our proposals would lead to low IWPUTs that are considerably less
than similar surgical procedures. The RUC commented that we would be
creating rank order anomalies between these codes and the total
colectomy services, CPT codes 44150 and 44151.
The SVS also disagreed with our proposed work RVUs for seven of its
specialty's services, and disagreed with the RUC recommendations for
all but one of the codes. In the extensive and detailed comments we
received, the society defended the use of the NSQIP data to deviate
from the survey median, stating that NSQIP intra-service time and
hospital length of stay were used even when it reduced the
recommendation compared to the RUC survey.
The commenter also offered additional rationale to support their
requested work RVUs for CPT codes 33877, 35101, 35081, 35556, 35566,
35583 and 35585. In each case, the SVS presented the building block
components for each service, a comparison with other vascular codes by
IWPUT analysis, and a detailed comparison to other selected procedures.
The commenters also provided an additional discussion asserting that
the number of hospital visits assigned by the RUC, and accepted by us,
was underestimated for these services (with the exception of CPT code
33877.)
Response: We appreciate the comments that were submitted on our
proposed work RVUs for these vascular surgery services. However, we
note that there is disagreement among the commenters, with ACS and the
RUC requesting that we accept the RUC recommendations for these codes
and the SVS requesting acceptance of yet higher values for all the
services (with the exception of CPT code 33877.) In addition, we have
concerns that the SVS-recommended IWPUTs, for all but CPT code 33877,
might be overstated. Therefore, based on the comments, we are accepting
the RUC-recommended work RVUs of 64.04 for CPT code 33877, but referred
the other seven codes to a multi-specialty refinement panel for review.
Final Decision: As a result of our analysis of the refinement panel
ratings, we have assigned 17.94 work RVUs to CPT code 34201, 31.00 work
RVUs to CPT code 35081, 34.00 work RVUs to CPT code 35102, 25.00 work
RVUs to CPT code 35556, 30.00 work RVUs to CPT code 35566, 26.00 work
RVUs to CPT code 35583, and 30.00 work RVUs to CPT code 35585.
b. Colorectal Surgery
For CPT code 44120, Enterectomy, resection of small intestine;
single resection and anastomosis; CPT code 44130, Enteroenterostomy,
anastomosis of intestine, with or without cutaneous enterostomy
(separate procedure); and CPT code 47600, Cholecystectomy, the RUC
believed the physicians responding to the survey underestimated their
intra-service time. Therefore, the RUC applied what was believed to be
an appropriate IWPUT to the additional NSQIP time and added the
resulting work RVUs to the survey median. The RUC-recommended work
values for these CPT codes were as follows: 44120 = 20.11 work RVUs;
44130 = 20.87 work RVUs; and 47600 = 15.88 work RVUs.
CMS Proposed Valuation
We had concerns with the RUC recommendation to use the NSQIP data
to increase the work RVUs, for CPT codes 44120, 44130 and 47600, above
the survey median, and, for 47600, above the 75th percentile. While we
support the use of such a database as validation for survey results, we
believe that the application of the NSQIP IWPUT to the difference in
intra-time between the survey and NSQIP is questionable for the
following reasons.
It is still not clear whether the NSQIP data is truly
representative and the IWPUT applied to the additional time is higher
than the IWPUT for the rest of the intra-time. In addition, this
methodology assumes, without evidence, that there is a linear
relationship between the survey respondents' estimate of time and
estimate of work RVUs; however, even if the survey time estimates had
matched the NSQIP data, it is not clear whether or by how much the
respondents would have increased their work value estimate. Finally,
until we have available valid and representative data such as the NSQIP
for all procedures, there is the risk that applying the data randomly
could distort the relativity between services. Therefore, we proposed
to use the median survey values of 18.00, 20.00 and 14.00 as the work
RVUs for CPT codes 44120, 44130 and 47600, respectively.
Comment: We received comments from the ACS and the American Society
of Colon and Rectal Surgeons (ASCRS), as well as the RUC, urging us to
accept the RUC recommendations for these 3 services. These commenters
stated that the median work value that we proposed in the June 29, 2006
proposed notice for CPT code 44120 was incorrect; CPT code 44120 should
be 19.00 work RVUs, not 18.00 work RVUs (71 FR 37228).
The ACS presented a lengthy defense of the NSQIP data that was
echoed in the ASCRS comments. For example, ACS contended that the NSQIP
data on intra-service skin-to-skin time is verified through operating
room logs and is the ``absolute gold standard'' for estimating surgeon
intra-service time. The commenters also disagreed that this data cannot
be used until it is available for all services, since the best data
should always be used rather than relying on ``the lowest common
denominator.'' The ACS further stated that a variety of different
methodologies have been used to evaluate physician services and we have
not, until now, required that one methodology be used for all codes.
Finally, the ACS disputed our concerns that the NSQIP might not be
representative, though it did agree that the number of Veterans
Administration hospitals currently reporting is greater than the number
of community and academic hospitals.
For CPT codes 44120 and 44130, ASCRS and ACS, as well as the RUC,
contended that two reference codes were considered by the workgroup
that
[[Page 69730]]
led the RUC to agree that the survey median work RVUs underestimated
the total work of these procedures and would create rank order
anomalies.
For CPT code 47600, the ACS maintained that the RUC's
recommendation was based on a belief that the survey's median work RVU
underestimated the total work for this procedure because the survey
respondents were not considering the correct patient demographics. The
commenters stated that, if we did not accept the recommendations where
the use of NSQIP resulted in a value greater than the survey median, we
should also do the same for those recommendations that were lower than
the median. The commenters emphasized that the RUC also used a
comparison with a reference code to develop the recommendation for this
procedure.
Conversely, the American College of Physicians (ACP) expressed
support for our decision to reject the RUC recommendations that were
based on extraction of time information from the NSQIP database rather
than the survey median. The ACP questioned the representative nature of
the data in the database and stated that allowing work values to be
adjusted from the survey median, based on dubious relationships between
work and time, would hurt the integrity of the RBRVS and should not be
allowed.
Response: We appreciate the comments regarding the use of NSQIP
data in the valuation of physician work. However, we would consider
this the beginning of the discussion, not the end. There are still many
issues that need to be fully explored (for example: what the criteria
should be for the acceptance of a given database; whether databases can
take the place of surveys; whether IWPUT should be used to create work
RVUs, rather than to validate them; and, whether there is a linear
relationship between survey respondents' estimate of work and time.)
In the case of these three services, CPT codes 44120, 44130 and
47600, although the commenters offered some valid points regarding the
use of NSQIP, not all the concerns discussed in the proposed notice and
summarized in this section of this final rule with comment period have
been thoroughly discussed. Therefore, based on the comments received,
we referred this code to a multi-specialty refinement panel for review.
Final Decision: As a result of our analysis of the refinement panel
ratings, we have assigned 18.00 work RVUs to CPT code 44120, 20.00 work
RVUs to CPT code 44130, and 15.85 work RVUs to CPT code 47600.
For the proctoscopy-anoscopy family of codes in Table 13, the RUC
agreed that the surveyed median work RVUs, and often even the 25th
percentile, were inconsistent with the reference code. Therefore, the
RUC did not reference the surveyed RVUs in arriving at the
recommendations. Rather, the RUC used the surveyed times for each
service and applied what the workgroup considered an appropriate IWPUT
to these times to arrive at the recommended work RVUs for this family.
TABLE 13.--Proctoscopy-Anoscopy Family of Codes
------------------------------------------------------------------------
CPT Code Descriptor
------------------------------------------------------------------------
45300........................ Proctosigmoidoscopy, rigid; diagnostic,
with or without collection of
specimen(s) by brushing or washing
(separate procedure).
45303........................ Proctosigmoidoscopy, rigid; with dilation
(e.g., balloon, guide wire, bougie).
45305........................ Proctosigmoidoscopy, rigid; with biopsy,
single or multiple.
45307........................ Proctosigmoidoscopy, rigid; with removal
of foreign body.
45308........................ Proctosigmoidoscopy, rigid; with removal
of single tumor, polyp, or other lesion
by hot biopsy forceps or bipolar
cautery.
45309........................ Proctosigmoidoscopy, rigid; with removal
of single tumor, polyp, or other lesion
by snare technique.
45315........................ Proctosigmoidoscopy, rigid; with removal
of multiple tumors, polyps, or other
lesions by hot biopsy forceps, bipolar
cautery or snare technique.
45317........................ Proctosigmoidoscopy, rigid; with control
of bleeding (e.g., injection, bipolar
cautery, unipolar cautery, laser, heater
probe, stapler, plasma coagulator).
45320........................ Proctosigmoidoscopy, rigid; with ablation
of tumor(s), polyp(s), or other
lesion(s) not amenable to removal by hot
biopsy forceps, bipolar cautery or snare
technique (e.g., laser).
45321........................ Proctosigmoidoscopy, rigid; with
decompression of volvulus.
45327........................ Proctosigmoidoscopy, rigid; with
transendoscopic stent placement
(includes predilation).
46600........................ Anoscopy; diagnostic, with or without
collection of specimen(s) by brushing or
washing (separate procedure).
46604........................ Anoscopy; with dilation (e.g., balloon,
guide wire, bougie).
46606........................ Anoscopy; with biopsy, single or
multiple.
46608........................ Anoscopy; with removal of foreign body.
46610........................ Anoscopy; with removal of single tumor,
polyp, or other lesion by hot biopsy
forceps or bipolar cautery.
46611........................ Anoscopy; with removal of single tumor,
polyp, or other lesion by snare
technique.
46612........................ Anoscopy; with removal of multiple
tumors, polyps, or other lesions by hot
biopsy forceps, bipolar cautery or snare
technique.
46614........................ Anoscopy; with control of bleeding (e.g.,
injection, bipolar cautery, unipolar
cautery, laser, heater probe, stapler,
plasma coagulator).
46615........................ Anoscopy; with ablation of tumor(s),
polyp(s), or other lesion(s) not
amenable to removal by hot biopsy
forceps, bipolar cautery or snare
technique.
------------------------------------------------------------------------
The specific RUC work RVU recommendations for these colon and
rectal surgery CPT codes were as follows: 45300 = 0.91 work RVUs; 45303
= 2.22 work RVUs; 45305 = 2.01 work RVUs; 45307 = 2.22 work RVUs; 45308
= 2.01 work RVUs; 45309 = 2.22 work RVUs; 45315 = 2.22 work RVUs; 45317
= 1.08 work RVUs; 45320 = 2.43 work RVUs; 45321 = 2.76 work RVUs; 45327
= 3.63 work RVUs; 46600 = 0.49 work RVUs; 46604 = 1.08 work RVUs; 46606
= 1.76 work RVUs; 46608 = 1.95 work RVUs; 46610 = 1.95 work RVUs; 46611
= 1.08 work RVUs; 46612 = 2.14 work RVUs; 46614 = 1.08 work RVUs; and
46615 = 1.18 work RVUs.
CMS Proposed Valuation
We proposed not to accept the RUC recommendations for all the
presented codes in the proctoscopy-anoscopy family. We proposed to
maintain the
[[Page 69731]]
current work RVUs for CPT codes 45300, 45303, 45305, 45307, 45308,
45309, 45315, 45317, 45320, 45321, 45327, 46600, 46604, 46606, 46608,
46610, 46611, 46612, 46614 and 46615.
As we stated in the June 29, 2006 proposed notice, we believe that
the method used by the RUC to obtain work values for these services was
flawed (71 FR 37229). The calculation of the recommended work RVUs
depended solely on applying a workgroup-derived IWPUT to the surveyed
physician time from surveys that were considered otherwise unusable. We
also stated that we do not believe that the use of IWPUT, in the
absence of other supporting data, has been previously accepted by the
RUC. We believe the RUC has established rules that state that IWPUT
cannot be the sole rationale for valuation and it appears that this
workgroup might not have adhered to that standard. However, we stated
that, if the specialty society wishes to resurvey these codes and the
RUC submits work RVU recommendations to us, we would certainly be
willing to consider them.
Comment: The ASCRS expressed their appreciation for the opportunity
to again present survey data to the RUC for these services and the ACS
stated that it will be working with ASCRS to facilitate this process.
The RUC commented that the specialty society recommendations for these
services were presented at the October 2006 RUC meeting.
Response: At the October 2006 RUC meeting, the Society presented
the original surveys with additional rationales to support the
requested work RVUs. After much discussion, the RUC decided that the
original surveys were still not usable and that new surveys would be
needed before a recommendation for revised work RVUs could be made.
Therefore, we are maintaining the current work RVUs for this series of
codes, as proposed.
Other Issues
Comment: A few commenters, while agreeing with the increase in work
RVUs for CPT code 19180 (total mastectomy), expressed concern that the
work RVUs for CPT code 19160 (partial mastectomy) were not reviewed.
These commenters believed that the work RVUs for CPT code 19160 should
be addressed in a similar fashion and the work RVUs should be adjusted
to avoid a potentially adverse impact on patient treatment for breast
cancer. One of these commenters suggested that this disparity in work
RVUs needed to be addressed before the next 5-year review, as this
disparity could impact on medical decision-making.
Response: As part of the 5-year review process, the
specialtysocieties were asked to identify whether the RUC-recommended
changes in the work RVUS created anomalies within a family of codes.
Any such potential anomalies identified by the specialty societies were
then reviewed at subsequent RUC meetings. Unfortunately, this potential
anomaly was not identified or reviewed. However, we will ask the RUC to
review this code (CPT code 19160) and will consider this RUC
recommendation as part of the third 5-Year Review.
8. Otolaryngology and Ophthalmology
In addition to comments received in support of the proposed work
RVUs for services reviewed by the RUC's workgroup 8, we received the
following comments.
For CPT code 31360, Laryngectomy; total, without radical neck
dissection; CPT code 31365, Laryngectomy; total, with radical neck
dissection; CPT code 31390, Pharyngolaryngectomy, with radical neck
dissection; without reconstruction; and CPT code 31395,
Pharyngolaryngectomy, with radical neck dissection; with
reconstruction, the specialty society presented survey data with the
rationale that the current work RVUs create rank order anomalies, and
that there also has been a change in the patient population. The RUC
agreed that increasing the work RVUs of these procedures by accepting
the 75th percentile of survey results corrected the specific rank order
anomalies and also accounted for the change in the patient population.
The RUC-recommended work RVUs for these CPT codes are as follows: 31360
= 28.00 work RVUs; 31365 = 37.00 work RVUs; 31390 = 40.00 work RVUs;
and 31395 = 44.00 work RVUs.
For CPT code 31367, Laryngectomy; subtotal supraglottic, without
radical neck dissection and CPT code 31368, Laryngectomy; subtotal
supraglottic, with radical neck dissection, the specialty society
presented survey data with the rationale that the current work values
are based on a flawed methodology that creates rank order anomalies,
and that there also has been a change in patient population. The RUC
agreed with the specialty society and recommended increasing the work
RVUs for these services to maintain rank order between the codes in the
family and to establish the correct intensity of the procedure based on
the change in patient population. The RUC-recommended work RVUs for
these CPT codes are as follows: 31367 = 27.36 work RVUs; and 31368 =
36.00 work RVUs.
For CPT code 41155, Glossectomy; composite procedure with resection
floor of mouth, mandibular resection, and radical neck dissection
(Commando type), the specialty society presented survey data, noting
that the current work RVUs create a rank order anomaly. The RUC agreed
that increasing the work RVUs would correct these rank order anomalies
and that these increases were justified by the survey results. The RUC-
recommended 40.00 work RVUs for CPT code 41155.
For CPT code 42845, Radical resection of tonsil, tonsillar pillars,
and/or retromolar trigone; closure with other flap, the specialty
society's survey data demonstrated that the code was currently
undervalued due to a previous flawed methodology. The RUC believed that
the survey results reflected the appropriate physician work and time
necessary in performing this procedure and recommended the 32.00 work
RVUs for CPT code 42845.
CMS Proposed Valuation
For the laryngopharyngectomy procedures, including CPT codes 31360,
31365, 31367, 31368, 31390 and 31395, the number of hospital days
decreased by at least 2 days and the post-operative outpatient visits
increased by 1 day. However, in one instance the number of outpatient
visits decreased (CPT code 31395). The median values for intra-service
times were accepted by the RUC for these services, which is an
indication that a lower value than the 75th percentile for work also
may be appropriate. Therefore, we proposed using median values for
these services resulting in the following work RVUs for these CPT
codes: 31360 = 24.00 work RVUs; 31365 = 31.50 work RVUs; 31367 = 24.00
work RVUs; 31368 = 30.50 work RVUs; 31390 = 35.00 work RVUs; and 31395
= 39.50 work RVUs.
CPT code 41155 was valued by the RUC at the 75th percentile for
work, but CPT code 41150 was valued based on the median work value. The
median values for intra-service times were accepted by the RUC for
these services, which is an indication that a value other than the 75th
percentile for work also may be appropriate. Therefore, we proposed
36.00 work RVUs of for CPT code 41155.
CPT code 42845 was valued by the RUC at the 75th percentile for
work rather than the median as the RUC recommended for the other
procedures in this family (CPT codes 42842 and 42844). Therefore, we
proposed 29.00 work RVUs for CPT code 42845.
[[Page 69732]]
Comment: The RUC and several specialty societies, including the
American Head and Neck Society (AHNS) and the American Academy of
Otolaryngology-Head and Neck Surgery (AAO-HNS), disagree with the
proposed work RVUs for CPT codes 31360, 31365, 31367, 31368, 31390,
31395, 41135, 42845. They provided information, data, and rationales
concerning the valuation of these services and, recommended that we
accept the RUC recommendations. The specialty societies objected to our
proposed RVUs on the grounds that they created rank order anomalies;
they believe the reference codes used were a poor choice that resulted
in an underestimation of work by the survey respondents; and they
believe the codes had been undervalued for years.
Response: Based on the comments received, we referred these codes
to a multi-specialty refinement panel for review. Panel review is
appropriate for reasons including the RUC acceptance of the median
values for intra-service times, which is an indication that a value
other than the 75th percentile for work may be appropriate, and the
need for further discussion regarding the appropriateness of the
reference codes chosen by the survey respondents as comparable services
to the codes being valued.
Final Decision: As a result of our analysis of the refinement panel
ratings, we have assigned 26.22 work RVUs to CPT code 31360, 35.00 work
RVUs to CPT code 31365, 27.00 work RVUs to CPT code 31367, 30.50 work
RVUs to CPT code 31368, 38.33 work RVUs to CPT code 31390, 39.50 work
RVUs to CPT code 31395, 40.00 work RVUs to CPT code 41155, and 29.00
work RVUs to CPT code 42845.
Miscellaneous Issues
Comment: The American Academy of Ophthalmology (AAO) stated its
belief that the 5-Year Review process was fair in its consideration of
the ophthalmic codes. However, the AAO expressed disappointment in the
decrease in value for cataract surgery (CPT code 66984) and its hope
that this ``downward reimbursement reward'' does not lead to a decrease
in research and innovation in medical care. The AAO also expressed
disappointment in our decision to unlink the long-standing relationship
of the Ophthalmology Examination codes (92002-92014) to the E/M codes.
The AAO urged us to reaffirm this linkage and increase those values to
reflect the proposed increases in E/M services. If this is not
possible, AAO suggested that the work values prior to the linkage in
1996 be restored since they were lowered during the first 5-Year Review
to facilitate the linkage process.
Response: We acknowledge that currently the work RVUs for
ophthalmology examination services are linked to the work RVUs for
certain E/M codes. However, the work RVUs for the E/M codes are being
increased based on our acceptance of the rationale that the work
required to furnish these services has itself changed. This increase in
work RVUs also implies that the E/M services today are not exactly the
same services to which we initially linked the eye examination
services. Unfortunately, because the specialty did not bring the
ophthalmology examination codes to the 5-Year review for evaluation of
any change in the work of furnishing these services, it is not known to
what extent, if at all, the work for the ophthalmology examination
codes would have mirrored the change in the work of the E/M codes. We
note that the E/M increases have been added to other services only when
the E/M codes were clearly used as the building blocks for valuing the
services, for example, for global surgical services with post-operative
visits. Therefore, we will implement the work RVUs for CPT codes 92002-
92014 as proposed. However, if received in time for next year's
proposed rule, we would be willing to consider any RUC recommendations
for work RVUs for these services for implementation in FY 2008 and
would consider this as part of the third 5-Year Review.
Comment: For CPT code 69210 Removal impacted cerumen (separate
procedure), one or both ears, while we accepted the RUC-recommended
work RVUs for this service, in the June 29, 2006 proposed notice we had
expressed concern about the valuation of this service for the use of
this code for routine removal of ear wax and indicated we would monitor
the use of this code for the appropriate circumstances (71 FR 37233).
The RUC and other specialty societies provided additional information
to address our concern with this valuation for the use of this code for
routine removal of ear wax during a physical examination of a patient.
One commenter believes that there is the potential for misuse of this
code due to a lack of understanding by other specialties of the
physician work included in this procedure. The commenter recommends
that we issue clarifying instructions or an educational article so that
this code will be used in a manner consistent with the criteria
outlined by AAO-HNS and contained in the July 2005 issue of the AMA's
CPT Assistant.
Response: We appreciate these comments and will consider the
suggestions made by the commenters.
9. HCPAC codes
In addition to comments received in support of the proposed work
RVUs for services reviewed by the HCPAC, we received the following
comments.
For CPT code 10060, Incision and drainage of abscess (e.g.,
carbuncle, suppurative hidradenitis, cutaneous or subcutaneous abscess,
cyst, furuncle, or paronychia); simple or single; CPT code 11040,
Debridement; skin, partial thickness; CPT code 11041 Debridement; skin,
full thickness; CPT code 11042 Debridement; skin, and subcutaneous
tissue; and CPT code 29580 Strapping; Unna boot, the HCPAC agreed with
the specialty society that there was compelling evidence that the
valuation of these services was incorrect due to a flawed methodology
used in the previous Harvard valuation for the podiatric codes
considered under the 5-Year Review.
For CPT codes 10060 and 29580, the HCPAC supported an increase in
the existing work values for these codes and recommended work RVUs of
1.50 for CPT code 10060 and 0.60 work RVUs for CPT code 29580, both of
which represent the median of the survey data for these services.
For CPT code 11040, the HCPAC did not support the work RVU increase
recommended by the specialty society, but instead recommended 0.55 work
RVUs, which represented the 25th percentile work RVU from the survey
data.
For CPT code 11041, the HCPAC recommended a decrease in the work
RVUs and, based on the median from the survey data, recommended 0.80
work RVUs.
For CPT code 11042, the HCPAC did not agree with the specialty
society that the work RVUs should be increased to 1.20 work RVUs. The
HCPAC recommended maintaining the current work RVUs of 1.12 for this
CPT code, which was slightly higher than the survey's 25th percentile
work value of 1.10 work RVUs.
The HCPAC-recommended work values for these services were as
follows: 10060 = 1.50 work RVUs; 11040 = 0.55 work RVUs; 11041 = 0.80
work RVUs; 11042 = 1.12 work RVUs; and 29580 = 0.60 work RVUs.
CMS Proposed Valuation
For CPT code 10060, we compared the survey times with the current
Harvard-based times used to value this service. These times are
comparable
[[Page 69733]]
and, therefore, we proposed maintaining the current work RVUs of 1.17
for this code.
For CPT codes 11040, 11041 and 11042, the survey times all reflect
significant reductions from current Harvard-based times used to value
these services. Based on this comparison, which shows decreases in time
ranging from 47 percent to 68 percent, we believe that the low values
from the surveys more accurately represent the valuation of these
services. Therefore, we proposed to assign work RVUs as follows: 11040
= 0.48 work RVUs; 11041 = 0.60 work RVUs; and 11042 = 0.80 work RVUs.
In addition, to ensure that the other codes in this family are properly
valued, we recommended the RUC review the valuation of CPT codes 11043
and 11044.
For CPT code 29580, we compared the current Harvard-based times
with the survey times. For this code, there was a small reduction in
survey time as compared to the current Harvard-based time used to value
this service, and, therefore, we do not believe the recommended
increase in work RVUs is supported. We proposed to assign 0.55 work
RVUs to this service, which represents the 25th percentile of the
survey and more accurately reflects the time associated with this
service.
Comment: The American Podiatric Medical Association (APMA) and the
HCPAC disagreed with the rationale we provided to explain our
disagreement with the HCPAC-recommended work RVUs for 5 CPT codes
(11060, 11040, 11041, 11042, and 29580) that are predominantly provided
by the podiatry specialty. The commenters noted that our proposed
valuation of these services was based solely on a comparison of the
RUC-surveyed times to the Harvard-based times, despite the HCPAC's
concurrence with the specialty that the current Harvard work values
were incorrect due to a flawed methodology. In addition, the commenters
noted that our proposed valuation fails to address the intensity
measures inherent to each service. The specialty presented recent
literature abstracts to demonstrate that the treatment of diabetic
ulcers has become more complicated in recent years and also supports
that the diabetic ulcer is the primary cause of infections and,
ultimately, leads to amputations in this population. The APMA and the
HCPAC urged us to consider these inherent risks in treating this
population and to accept the HCPAC-recommended work RVUs.
For CPT codes 11040, 11041 and 11042, the HCPAC recommended an
increased work RVU for CPT 11040, a slight decrease in work RVUs for
11041, and the same work RVUs for 11042. Based on their belief that
there is increased complexity and inherent risks in treating the
diabetic patient, the APMA and the HCPAC in their comments urged us to
accept the HCPAC-recommended work RVUs for this family of codes at 0.55
work RVUs, 0.80 work RVUs and 1.2 work RVUs, respectively. The
commenters also strongly object to our reliance on a time-based
comparison from the RUC surveys and the Harvard data (which the HCPAC
and APMA agreed was based on a flawed methodology) to derive the work
RVUs for these debridement codes.
For CPT code 11060, the APMA and the HCPAC requested that we accept
the HCPAC recommendations for this 10-day global service based on the
lack of intensity measures in our valuation that relied on a comparison
of the RUC surveyed time to the Harvard-based time which, as mentioned
previously, had been determined to be based on a flawed methodology.
The APMA believes that by using this time-based comparison and
maintaining the current RVUs at 1.17 work RVUs, we are proposing to
distort the relativity of CPT 10060 with other comparable services (for
example, CPT codes 10140 and 11421) and results in an unreasonably low
IWPUT, at 0.009. The HCPAC and the APMA urged us to accept the
recommended work value at 1.5 work RVUs that represents an IWPUT of
0.031.
For CPT code 29580, the specialty society indicated that the
typical patient requiring the application of an Unna boot is a diabetic
with lower extremity edema, often with the presence of an ulcer. The
typical patient requires repetitive applications of this Unna boot
strapping, so most applications will also require the removal of the
Unna boot, a thorough cleansing of the area, physical examination, and
a careful reapplication of the strapping material. The APMA believes
that our valuation of 0.55 work RVUs--using just the surveyed time,
without specifically addressing the intensity measures inherent to the
care of the diabetic patient--undervalues this service. The HCPAC and
the APMA urged us to adopt the recommended value (survey median) of
0.60 work RVUs.
Response: We appreciate the comments and information forwarded by
the HCPAC and the APMA. However, based on our review of the data and
literature contained in their comments, we are not convinced that the
complexity and intensity measures inherent to the treatment of the
diabetic patient have changed significantly over the past 5 years. In
addition, we understand the specialty's concern that the Harvard time
data was flawed. However, we believe that the lower times presented
from the survey do not warrant the recommended work RVUs. Nonetheless,
we believe that the HCPAC and the APMA should have the opportunity to
present their evidence relative to the work RVUs for these five codes
to a multi-specialty panel for review. As such, we have referred CPT
codes 10060, 11040, 11041, 11042, and 29580 for refinement.
Final Decision: As a result of our analysis of the refinement panel
ratings, we have assigned 1.17 work RVUs to CPT code 10060, 0.50 work
RVUs to CPT code 11040, 0.60 work RVUs to CPT code 11041, 0.80 work
RVUs to CPT code 11042, and 0.55 work RVUs to CPT code 29580.
Other Issues
Other commenters representing nutritionists and dietitians
referenced the medical nutrition codes that were referred to the CPT
Editorial Panel, indicating that these services should be assigned work
RVUs. This issue is discussed in section II.B.4.c. of this final rule
with comment period, as it was specifically addressed in the CY 2007
PFS proposed rule (71 FR 48982).
D. Other Issues Under the 5-Year Review
1. Anesthesia Services
Although anesthesia services are paid under the PFS, they are paid
on the basis of an anesthesia code-specific base unit and time units
that vary based on the anesthesia time of the case. Since anesthesia
services do not have a work value per code as do other medical and
surgical services, a work value must be imputed for each anesthesia
code.
As a result of its relationship with the RUC and the past
recommendations for valuing anesthesia services, which were discussed
in detail in the June 29, 2006 proposed notice (71 FR 37237), the
American Society of Anesthesiologists (ASA) requested that we address
the valuation of anesthesia services reported under CPT codes 00100
through 01999. The ASA furnished an analysis that builds on the
methodology used in the last 5-Year Review for the valuation of work
for anesthesia services. We recommended that the valuation of
anesthesia services, namely the proposed valuation of the post-
induction time, be referred to the AMA RUC for review and
consideration.
Comment: The RUC indicated that it will consider any specific CMS
request and asked that we clarify the scope of review and elements of
the anesthesia
[[Page 69734]]
relativity that is supposed to be addressed. Many commenters, including
individuals and a specialty group, expressed concern that the proposed
reductions in payment for anesthesia services may lead to future
manpower shortages and could affect the provision of surgical services.
They asked us to work with the ASA and the RUC to appropriately value
the work of anesthesia services.
Response: We understand that the ASA and the RUC will be reviewing
this issue in an upcoming meeting and will make a recommendation to CMS
in 2007.
A second issue concerning anesthesia services pertains to the
impact of the revised work values for E/M services and their
relationship to the valuation of pre- and post-anesthesia services,
components of the building-block approach. The pre- and post-anesthesia
services derive their work values from the lower level E/M codes for
new patients, the subsequent hospital care codes, and the initial
inpatient consultation codes.
In the June 29, 2006 proposed notice, we proposed to increase the
work of the pre- and post-anesthesia components of the 19 anesthesia
codes, previously reviewed by the AMA RUC in the last 5-Year Review of
work. Specifically, we proposed to increase the anesthesia work to
reflect the increased work values for the E/M codes where there were
increases in the work of those E/M codes.
Comment: One specialty group noted that we should refer the
valuation of pre- and post-anesthesia issues to the RUC for its review
and consideration, and should not make any changes in the value of pre-
and post-anesthesia services at this time. The ASA requested that we
increase the work of all anesthesia services, not just the 19
anesthesia codes, to account for the increase in work values for E/M
codes. They noted that all anesthesia services have E/M services
included in the pre- and post-anesthesia components and the work of all
anesthesia services should be increased.
Response: We disagree with the comment asking us to defer action on
re-valuing the work of anesthesia services to account for the increased
work of certain E/M codes. We are making the adjustment, but will ask
the RUC and the ASA to review the E/M codes assigned to the pre- and
post-anesthesia periods to ensure that they are still clinically
relevant. While we understand the concerns of the ASA, we are unable to
make that type of adjustment across all anesthesia services. The pre-
and post-anesthesia components of the anesthesia service are not
uniformly linked to the same E/M code. Rather, the E/M code can vary
based on the complexity of the anesthesia service. For example, for
cataract anesthesia, the pre-anesthesia service is linked to a blend of
CPT codes 99201 and 99202 and the post-anesthesia service is linked to
CPT code 99211. The work values for each of these E/M codes did not
change in this 5-Year Review of work. Conversely, for anesthesia for
coronary bypass surgery, the pre-anesthesia service is linked to CPT
code 99232 and the post-anesthesia service is linked to a blend of CPT
codes 99231 and 99232. The work value for each of these E/M services
increased in this 5-Year Review of work. Thus, in the June 29, 2006
proposed notice, we proposed to increase the work for E/M services in
anesthesia for coronary bypass surgery but made no adjustment in the
work for cataract anesthesia (71 FR 37237).
It is not clear how the pre- and post-anesthesia services of the
non-surveyed anesthesia codes would be tied to the 19 surveyed codes
and whether the work of the proposed linked E/M services are increased.
We will look at this issue in context of any proposed changes that may
be made to anesthesia work next year.
2. Discussion of Post-Operative Visits included in the Global Surgical
Packages
We have established a national definition for a global surgical
package so that payment is made consistently for the same set of
services across all contractor jurisdictions. In constructing the RVUs
for a global surgery service, all services that are believed to be
typically included in the defined global period are built into the
final resource-based RVUs and are not separately billable within the
defined global period as reflected in the proposed work RVUs in Addenda
B and C. This includes pre-surgery work, the intra-service time of
actually furnishing the surgical procedure, and the post-operative
(follow-up) visits associated with the monitoring and recovery of the
patient.
As stated above in this section, we proposed to apply the RUC-
recommended new values for the E/M services to all surgical services
with a 10-or 90-day global period. However, because of variations in
the patient population and in practice patterns, there is some question
whether the assumptions about the number and level of visits within the
global period reflect the actual post-operative work furnished. Some
surgeons have commented that they furnish more visits than are included
in the global period for their services. It is also likely that some
patients require fewer than the ``typical'' number of follow-up visits
included in the global period.
Although we are not proposing any changes to our global policy at
this time, we solicited comments concerning our current policy of
including these post-operative visits in the global surgical packages
and what advantages or disadvantages might be associated with proposing
a change to this policy in the future.
We received several comments concerning incorporating the new E/M
values into all surgical services with a 10- or 90-day global period.
With respect to our request for comments concerning our current policy
of including these post-operative visits in the global surgical
packages, we also received many suggestions. These comments and
suggestions are addressed in this section.
Comment: Many commenters, including specialties representing
primary care physicians and surgeons, as well as the RUC, supported the
incorporation of the revised E/M work RVUs into the surgical global
periods for each CPT code with a global of 010 and 090 as recommended
by the RUC. Commenters, including the RUC, noted that we may have
incorrectly implemented the RUC recommendation. They indicated that in
implementing this proposal, we used discounted work RVUs, developed for
pricing post services under the first 5-Year Review, rather than the
undiscounted work RVUs that reflect the actual RVUs accepted by us for
the E/M services. This resulted in incorrect, and lower, work RVUs
being added to all of the services with post-operative visits in the
010 and 090 global periods and was contrary to the RUC recommendation
that the full increase of the E/M be incorporated. The RUC requested
that we review the calculations and implement the correct work RVUs for
all procedures that have a 010 and 090 global period to reflect their
recommendation. Other commenters stated that we should verify the
accuracy of the data to ensure that the values, as recommended by the
RUC, are appropriately implemented.
A few commenters also suggested that, should changes be made to the
valuation of the E/M services, these changes would need to be carried
through to the global package revisions.
Response: We have discussed this issue with the RUC and will ensure
that the correct undiscounted values are incorporated.
[[Page 69735]]
Comment: MedPAC stated that in comparison to other payment systems,
the unit of payment under the PFS is very narrow and consists of many
discrete services. MedPAC reiterated its longstanding concern that such
a unit of payment might give physicians a financial incentive to
increase payments by increasing the volume of services, which could
lead to unnecessary services being provided. Therefore, in the absence
of information suggesting that access to appropriate care is being
compromised, MedPAC supports the current concept of packaging/bundling
these services to encourage efficient and appropriate care. Several
commenters representing surgical specialties agreed with this position,
and additionally one commenter stated that such a change might also
increase the risk of ``fee splitting.'' The commenter also supports the
expansion of the global concept into disease management.
Other commenters suggested that we drop the global surgical model
and replace this concept with a system that measures the actual amount
of post-service work included in these global surgical services.
Commenters suggested that this would ``level'' the playing field for
documentation requirements and be less detrimental to ``centers for
excellence'' which usually provide more care than is currently included
within the global period. Commenters also suggested there are
additional advantages to eliminating the global surgical model
including the valuation of services being straightforward, the
reduction of errors in PE valuation, and the facilitation of research,
quality improvement and utilization tracking. However, there would be
an associated increase in the volume of claims to be processed.
One commenter suggested that we meet with stakeholders prior to
implementing such a change, while another commenter urged us to conduct
a study on impact of revising the global surgical concept.
Response: We appreciate these comments and suggestions and will
consider these along with additional information as we continue to
study this issue.
3. Budget Neutrality
As discussed in the June 29, 2006 proposed notice, section
1848(c)(2)(B)(ii) of the Act requires that increases or decreases in
RVUs for a year may not cause the amount of expenditures for the year
to differ by more than $20 million from what expenditures would have
been in the absence of these changes. If this threshold is exceeded, we
must make adjustments to preserve budget neutrality (BN). This year, we
expected that BN adjustments would be required as a result of changes
in RVUs resulting from the 5-Year Review. We considered making the
statutorily required BN adjustments (under section
1848(c)(2)(B)(ii)(II) of the Act) to account for the 5-Year Review of
physician work by reducing all work RVUs. We estimated that all work
RVUs would have to have been reduced by 10 percent under this option.
Alternatively, we considered making an adjustment to the PFS CF to meet
the provisions of section 1848(c)(2)(B)(ii)(II) of the Act. This option
would have required an estimated 5 percent reduction to the CF. We also
noted that the application of the BN adjustments to the CF would
negatively impact all PFS services; whereas the application of the BN
adjustment to the work RVUs would impact only those services that have
physician work RVUs. Because the need for BN adjustment would be
largely due to changes proposed as a result of the 5-Year Review of
work RVUs, we believed it was more equitable to apply the adjustment
across services that have work RVUs. We proposed to establish a BN
adjustor that would reduce all work RVUs by an estimated 10 percent to
meet the BN provisions of section 1848(c)(2)(B)(ii)(II) of the Act.
Comment: We received numerous comments on this issue. Many of the
commenters were opposed to our proposal and requested that the
adjustment be made to the CF for the following reasons:
(1) Applying the BN adjustor to all work RVUs has been problematic
in the past.
(2) By imposing the full burden of BN on the pool of work values,
we would be significantly mitigating the improved accuracy of the
values that have now been assigned to E/M services.
(3) This approach obfuscates the recommended changes of the RUC and
could potentially have an inappropriate effect on relativity.
(4) The application of a separate work adjustor is not consistent
with our goal of cost transparency and may adversely affect payments by
non-Medicare payers.
These commenters, which include the AMA, the RUC, and the AMA-
HCPAC, asserted that applying the BN adjustor to the work RVUs is
contrary to our longstanding policy. In addition, they do not believe
that we provided an adequate rationale for shifting to this new
approach, which we have previously stated is neither appropriate, nor
effective. These associations noted that when in the past we applied a
BN adjustor to the work RVUs, it caused considerable confusion among
many non-Medicare payers, as well as physician practices that use the
Medicare relative values as efficiency measures, and that the constant
fluctuations in the work RVUs due to BN adjustments impeded the process
of establishing work RVUs for new and revised services.
In addition to these objections, numerous specialty societies,
organizations, groups, and providers also indicated that an adjustment
to the CF is preferable because it would recognize that BN is mandated
for monetary reasons. Thus, the CF, as the monetary multiplier in the
Medicare payment formula, is the most appropriate place to adjust for
BN.
A number of commenters, including representatives of some radiology
and oncology providers, were supportive of our proposal because it
fairly applies the required BN adjustment to the portion of the fee
schedule that was the subject of review.
A few commenters also stated that although the BN adjustment
methodology set forth in the June 29, 2006 proposed notice is not
ideal, they believe that it is the best of the available alternatives
under the circumstances (71 FR 37241). These commenters also believe
that making all BN and scaling adjustments on a fee-schedule-wide basis
would apparently result in unacceptable fee-schedule-wide reductions
and is clearly inequitable for TC services. Another commenter urged us
to delay the implementation of the BN adjustor for 1 year to allow more
time to explore ways to increase recognition of E/M services without
imposing such a financial hardship on select physician and nonphysician
providers and to allow physicians and nonphysicians the opportunity to
work with us to suggest alternative approaches.
Other commenters also discussed the interaction of the application
of the BN adjustment and the DRA OPD cap on imaging services. As
required by the DRA, reductions in imaging payments because of the OPD
cap result in actual savings to the Medicare program (that is, they are
not done in a budget neutral manner). The commenters note that if the
BN is applied to the CF and not to the work RVUs, then the impact of
the DRA cap on total Medicare spending is lower. This is because
applying BN to the CF will narrow the payment differential between
imaging services furnished in physicians' offices and hospital OPDs,
and thus reduce the effect of the DRA cap on payments for imaging
services.
[[Page 69736]]
Response: We appreciate the information presented by the
commenters. We do not have the authority to delay implementing the BN
adjustment and we must apply a BNF to offset the increases in work RVUs
effective for 2007.
We are very appreciative of the work the RUC and the specialty
societies have done in the past several years to prepare for this 5-
Year Review. As a result of their dedication and analysis, the work
RVUs are now more accurate and reflective of the time and resources
associated with them. We do not believe that applying the BN on the
work RVUs would undermine or diminish the RUC or specialty societies'
contributions or the resulting improvements.
Section 1848(c)(2)(B)(ii)(II) of the Act requires a BN adjustment.
Regardless of whether the BN is achieved by applying an adjustment
factor to the work RVUs, as we proposed in the proposed rule, or the
CF, which is the preferred option of many of the commenters, the values
associated with the work ultimately will be decreased. Therefore, we do
not agree with the commenters' suggestions that applying the BN to the
work RVUs would do the system a great harm. Specifically, we disagree
that it would significantly reverse the improved accuracy of the values
that have now been assigned to E/M services. Further, we do not think
that this approach would distort the relativity of the RVUs. Because
such an adjustment is uniformly applied to all the work RVUs, it does
not alter the relationship among them.
We also note that this rule finalizes a change in the PE
methodology. Changes to the PE RVUs are being budget neutralized within
those PE RVUs. Applying BN adjustments at this time, within each set of
RVUs, maintains equity and helps to ensure that the weights between
work, PE and malpractice are consistent with the weighting used in the
MEI.
Therefore, for the reasons discussed above in this section, we will
be applying the statutorily-required BN adjustment to the work RVUs as
proposed in the proposed rule. We note that we previously applied a
separate adjustor to the work RVUs following the first 5-Year Review of
physician work in 1997. We understand that many commenters would find
it preferable for us to make the required BN adjustment to the CF.
However, we believe the best and most equitable approach to applying BN
for this 5-Year Review of work is to adjust the work RVUs for 2007
using a separate adjustor for those RVUs. Achieving BN by adjusting the
CF would have the effect of reducing payment for all services on the
fee schedule. This would include reductions to RVUs for a number of
services that have no physician work and were, therefore, outside the
scope of the 5-Year Review. We believe it would be unfair, given the
significant negative update to the CF this year, to impose additional
reducations resulting from the BN adjustment on codes that have no work
values associated with them.
We share the commenters' concerns about transparency and recognize
the Medicare PFS is used by other payors and for other purposes than
just Medicare payments. To maintain a high level of transparency in the
fee schedule, the Addendum B published in this rule will show the RVUs
without the BN adjustment applied. This will serve as a reference for
any interested party and should help to minimize any confusion about
the unadjusted codes. There also is a discussion of the BN work
adjustor and the payment formula for 2007 included in the section IX.
of this final rule with comment period, ``Anesthesia and Physician Fee
Schedule Conversion Factors for 2007.'' Payment for services will be
calculated as follows:
Payment = [(RVU work x BN adjustor x GPCI work) + (RVU PE x GPCI PE) +
(RVU malpractice x GPCI malpractice)] x CF.
We appreciate the commenters pointing out to us that the approach
used in applying BN has an interactive effect with the DRA imaging OPD
cap and has an effect on the total Medicare spending on physicians'
services. However, as previously described in this section, we continue
to believe the most equitable way to adjust for changes in the work
RVUs resulting from the 5-Year Review is to apply a BN adjuster to work
RVU.
Comment: Some commenters suggested that applying the BN adjustment
to the CF could also be applied to the PE BN application, but only
after we have addressed all of the RUC's recommendations related to the
methodology and the PE relativity is stable. Ultimately, however, PEs
for individual services should be evaluated under a 5-Year Review, at
which point a similar application for BN to the CF could be
appropriate.
Response: We appreciate and will consider these suggestions as we
proceed with the implementation of the revised PE methodology.
4. Review Process
Comment: MedPAC and several specialties, as well as the RUC,
commented on the process used for the 5-Year Review, including the
methodology and data sources used in the review process. MedPAC stated
that it continues to have concerns that overvalued services are ignored
and referenced the MedPAC March 2006 Report to Congress. In this
report, it recommended the creation of a standing panel to--
Assist in identifying misvalued services;
Establish a process for analyzing data to ensure automatic
review of new services after a certain period; and
Periodically review all services.
Several specialty societies expressed support for the existing RUC
methodologies for estimating intensity, but also supported the use of
objective data from large clinical databases and urged us not to
discount the use of alternative data sources.
Response: As indicated earlier in this section, we believe that it
will be necessary for the RUC and the specialty societies to join us in
further dialog concerning the role of alternative databases. There are
still many questions that need to be fully explored including: what
should the criteria be for the acceptance of a given database; can
databases take the place of surveys; can IWPUT be used to create work
RVUs, rather than just to validate them; is there a linear relationship
between survey respondents' estimate of work and time; and, can survey
respondents accurately estimate IWPUTs. We are also continuing to
examine how best to identify misvalued services. As part of this
initiative, the RUC has indicated that it has established a
subcommittee to suggest approaches to identifying overvalued services
and the RUC's Research Subcommittee has initiated discussion regarding
existing time data and indicated its willingness to consider issues
related to any other concerns that we and the specialty societies wish
to address regarding the use of databases in the valuation of physician
work. We look forward to working with these groups and will carefully
evaluate suggestions and recommendations that are provided.
V. Refinement of Relative Value Units for Calendar Year 2007 and
Response to Public Comments on Interim Relative Value Units for 2006
[If you choose to comment on issues in this section, please include the
caption ``Interim Relative Value Units'' at the beginning of your
comments.]
[[Page 69737]]
A. Summary of Issues Discussed Related to the Adjustment of Relative
Value Units
Section V.B. and V.C. of this final rule with comment 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 PFS reflected in Addendum B
are effective for services furnished beginning January 1, 2007
B. Process for Establishing Work Relative Value Units for the 2006
Physician Fee Schedule
The CY 2006 PFS final rule with comment period (70 FR 70116)
contained the work RVUs for Medicare payment for existing procedure
codes under the PFS and interim RVUs for new and revised codes
beginning January 1, 2006. We considered the RVUs for the interim codes
to be subject to public comment under the annual refinement process. In
this section, we summarize the refinements to the interim work RVUs
published in the CY 2006 PFS final rule with comment period and our
establishment of the work RVUs for new and revised codes for the CY
2007 PFS.
C. Work Relative Value Unit Refinements of Interim Relative Value Units
1. Methodology (Includes Table titled ``2006 Interim Work Relative
Value Units for Codes Reviewed Under the Refinement Panel Process ``)
Although the RVUs in the CY 2006 PFS final rule with comment period
were used to calculate 2006 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 for 7 CPT codes
with interim work RVUs.
To evaluate these comments, we used a process similar to the
process used since 1997. (See the CY 1998 PFS final rule published in
the October 31, 1997 Federal Register (62 FR 59084) for the discussion
of refinement of CPT codes with interim work RVUs.) We convened a
multi-specialty 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, which are contained in Table 14, 2006 Interim
Work Relative Value Units for Codes Reviewed Under the Refinement Panel
Process. 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:
Clinicians representing the commenting specialty(ies),
based on our determination of those specialties which are most
identified with the services in question. Although commenting
specialties were welcomed to observe the entire refinement process,
they were only involved in the discussion of those services for which
they were invited to participate.
Primary care clinicians nominated by the AAFP and the
American College of Physicians.
Four carrier medical directors.
One or two clinicians who practice in related specialties
and have knowledge of the services under review.
The panel discussed the work involved in the procedure under review
in comparison to the work associated with other services under the PFS.
We assembled a set of reference services and asked the panel members to
compare the clinical aspects of the work for the service a commenter
believed was incorrectly valued to one or more of the reference
services. In compiling the reference set, we attempted to include: (1)
Services that are commonly furnished for which work RVUs are not
controversial; (2) services that span the entire spectrum of work
intensity from the easiest to the most difficult; and (3) at least
three services furnished 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 for each
service, each participant rated the work for that procedure. Ratings
were individual and confidential; 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 that 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 general terms, we used statistical tests
to determine whether there was enough agreement among the groups on the
panel and, if so, whether the agreed-upon RVUs were significantly
different from the interim RVUs published in Addendum C of the CY 2006
PFS final rule with comment to demonstrate that the interim RVUs should
be modified. 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 to the basis for new RVUs. We used the same
methodology in analyzing the ratings that we first used in the
refinement process for the CY 1993 PFS final rule published in the
November 25, 1992 Federal Register which described the statistical
tests in detail (57 FR 55938). Our decision to convene a multi-
specialty panel of physicians and to apply the statistical tests
described above in this section 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.
Table 14 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.
2006 Work RVU. The work RVUs that appeared in the CY 2006
final rule are shown for each reviewed code.
Requested Work RVU. This column identifies the work RVUs
requested by commenters.
2007 Work RVU. This column contains the final RVUs for
physician work as a result of the multi-specialty panel (Note: Values
for 10- and 90-day global period codes do not reflect E/M increases.
Increases due to E/M changes are reflected in Addenda B.)
[[Page 69738]]
Table 14.--2006 Interim Work Relative Value Units for Codes Reviewed Under the Refinement Panel Process
----------------------------------------------------------------------------------------------------------------
2006
CPT code \1\ Mod Descriptor Interim Requested 2007 work
work RVU work RVU RVU \2\
----------------------------------------------------------------------------------------------------------------
22523............................... ..... PERCUT KYPHOPLASTY, THOR.... 8.94 8.94 8.94
22524............................... ..... PERCUT KYPHOPLASTY, LUMBAR.. 8.54 8.54 8.54
22525............................... ..... PERCUT KYPHOPLASTY, ADD-ON.. 4.47 4.67 4.47
88334............................... ..... INTRAOP CYTO PATH CONSULT 2. 0.59 0.80 0.73
95251............................... ..... GLUC MONITOR, CONT, PHYS I&R 0.52 0.85 0.85
----------------------------------------------------------------------------------------------------------------
\1\ All CPT codes and descriptions copyright 2005 AMA. All rights reserved and applicable FARS/DFARS clauses
apply.
\2\ Values for 10- and 90-day global period codes do not reflect E/M increases. Increases due to E/M changes are
reflected in Addendum B.
2. Interim 2006 Codes
For CPT code 22523, Percutaneous vertebral augmentation, including
cavity creation (fracture reduction and bone biopsy included when
performed) using mechanical device, one vertebral body, unilateral or
bilateral cannulation (e.g., kyphoplasty); thoracic; CPT code 22524,
Percutaneous vertebral augmentation, including cavity creation
(fracture reduction and bone biopsy included when performed) using
mechanical device, one vertebral body, unilateral or bilateral
cannulation (e.g., kyphoplasty); lumbar; and CPT code 22525,
Percutaneous vertebral augmentation, including cavity creation
(fracture reduction and bone biopsy included when performed) using
mechanical device, one vertebral body, unilateral or bilateral
cannulation (e.g. kyphoplasty); each additional thoracic or lumbar
vertebral body (List separately in addition to code for primary
procedure), the RUC recommended 8.94 work RVUs for CPT code 22523, 8.54
work RVUs for CPT code 22524 and 4.47 work RVUs for CPT code 22525,
which we accepted.
Comment: Commenters disagreed with the RUC-recommended work values
for these services, which we had accepted. The commenters believed that
the recommended values were primarily based on a comparison to
vertobroplasty services and did not reflect important data that is
associated with kyphoplasty procedures. Based on these comments, we
referred these codes to the multi-specialty validation panel for
review.
Response: As a result of the statistical analysis of the 2006
multi-specialty validation panel ratings, we have assigned 8.94 work
RVUs to CPT code 22523, 8.54 work RVUs to CPT code 22524 and 4.47 work
RVUs to CPT code 22525.
For CPT code 88334, Pathology consultation during surgery;
cytologic examination (e.g., touch prep, squash prep), each additional
site, the RUC recommended a work RVU of 0.80 for this service based on
a comparison of this procedure to CPT code 88332, Pathology
consultation during surgery; each additional tissue block, with frozen
section(s). The RUC reviewed the specialty society's survey data and
noted that the surveyed CPT code 88334, when compared to the reference
CPT code 88332 has higher intensity/complexity measures (20 minutes)
and an additional five minutes of intra-service time (15 minutes).
Although CPT code 88334 has an additional 5 minutes of intra-service
time, we believed that CPT code 88334 is very similar in work to CPT
code 88332, and therefore, should be valued the same. We assigned 0.59
work RVUs to CPT code 88334.
Comment: Commenters did not agree with our comparison of CPT code
88334 to 88332, as there is increased work mainly vested on the
necessity to examine every field under 10X magnification in CPT code
88334, which is not inherent in the frozen section process represented
by CPT code 88332. Based on these comments, we referred this code to
the multi-specialty validation panel for review.
Response: As a result of the statistical analysis of the 2006
multi-specialty validation panel ratings, we have assigned 0.73 work
RVUs to CPT code 88334.
For CPT code 95251, Ambulatory continuous glucose monitoring of
interstitial tissue fluid via a subcutaneous sensor for up to 72 hours;
physician interpretation and report, the RUC recommended a work RVU of
0.85 for this service. We disagree with the RUC's recommendation
because we believe the work for this service is similar to CPT code
93268, Patient demand single or multiple event recording with
presymptom memory loop, 24-hour attended monitoring, per 30-day period
of time; includes transmission, physician review and interpretation,
which involves the review of data over a 30-day period. Therefore, we
assigned 0.52 work RVUs to 95251.
Comment: Commenters disagreed with our comparison of CPT code 95251
to 93268, as they believe the amount and complexity of the data that
needs to be reviewed for CPT code 95251 is considerable. Based on these
comments, we referred this code to the multi-specialty validation panel
for review.
Response: As a result of the statistical analysis of the 2006
multi-specialty validation panel ratings, we have assigned 0.85 work
RVUs to CPT code 95251.
For CPT code 61630, Balloon angioplasty, intracranial (e.g.,
atherosclerotic stenosis), percutaneous; CPT code 61635, Transcatheter
placement of intravascular stent(s), intracranial (e.g.,
athersosclerotic stenosis), including balloon angioplasty if performed;
CPT code 61640, Balloon dilatation of intracranial vasospasm,
percutaneous, initial vessel; CPT code 61641, Balloon dilatation of
intracranial vasospasm, percutaneous, initial vessel; each additional
vessel in same vascular family; and CPT code 61642, Balloon dilatation
of intracranial vasospasm, percutaneous, initial vessel; each
additional vessel in different vascular family, the RUC recommended
21.08 work RVUs for CPT code 61630, 23.08 work RVUs for CPT code 61635,
12.32 work RVUs for CPT code 61640, 4.33 work RVUs for CPT code 61641
and 8.66 work RVUs for CPT code 61642. We assigned a status indicator
of N for these services because they are noncovered under Medicare due
to a National Coverage Decision (NCD).
Comment: Commenters questioned the assignment of the status
indicator of N for these services. Commenters also requested that the
RVUS be published for these services. (Note: In the correction notice
that appeared in the February 24, 2006 Federal Register (71 FR 9458),
RVUs were published for CPT codes 61630 and 61635.)
Response: Based on an NCD regarding the non-coverage of performance
of percutaneous transluminal angioplasty to treat obstructive lesions
of the
[[Page 69739]]
vertebral and cerebral arteries we will maintain the status indicator
of N for these services. (Note: The RUC-recommended RVUs for these
codes will be reflected in Addendum B.)
For CPT codes 98960, Education and training for patient self-
management by a qualified, nonphysician health care professional using
a standardized curriculum, face-to-face with the patient (could include
caregiver/family) each 30 minutes; individual patient; CPT code 98961,
Education and training for patient self-management by a qualified,
nonphysician health care professional using a standardized curriculum,
face-to-face with the patient (could include caregiver/family) each 30
minutes; 2-4 patients; and CPT code 98962, Education and training for
patient self-management by a qualified, nonphysician health care
professional using a standardized curriculum, face-to-face with the
patient (could include caregiver/family) each 30 minutes; 5-8 patients,
a status indicator of N was erroneously assigned for these services in
the CY 2006 PFS final rule published in the November 21, 2005 Federal
Register (70 FR 70282). The status indicator was corrected to B in the
correction notice that appeared in the February 24, 2006 Federal
Register (71 FR 9458).
Comment: Commenters questioned the assigned status indicator of N
for these services and urged acceptance of the RVUs, as physician
education is a service covered under Medicare Part B and, as one
commenter indicated, included and reported in an E/M code. However, the
commenter stated that the E/M service that we might believe is
appropriate (CPT code 99211) is not sufficient for the amount of time
and work described by these services. Other commenters requested that
the RUC-assigned RVUs be published, even if they are not used for
Medicare payment, as other payers use the PFS to establish payment.
Response: As stated above in this section, the status indicator for
these codes was corrected to a status indicator of B in the correction
notice that appeared in the February 24, 2006 Federal Register (71 FR
9458). We believe these services are bundled into E/M services. Other
than the diabetic education services (CPT codes G0108 and G0109)
specified by the Congress, we do not cover separate education services
outside of demonstrations or the Medicare Health Support program. For
diabetic education services, CPT codes G0108 and G0109 should be used
to bill for these services. CPT codes 98960-98962 will not be
recognized as separate services for diabetic education. Additional
information on the DSMT benefit is available in Sec. 410.140 through
Sec. 410.146, and on our Web site at http://www.cms.hhs.gov/DiabetesSelfManagement/. We are available to discuss certification
requirements with interested providers. As requested by the commenters,
we have published the RUC-assigned RVUs for these codes.
For CPT code 99143, Moderate sedation services (other than those
services described by codes 00100-01999) provided by the same physician
performing the diagnostic or therapeutic service that the sedation
supports, requiring the presence of an independent trained observer to
assist in the monitoring of the patient's level of consciousness and
physiological status, under 5 years of age; first 30 minutes intra-
service time, CPT code 99144, Moderate sedation services (other than
those services described by codes 00100-01999) provided by the same
physician performing the diagnostic or therapeutic service that the
sedation supports, requiring the presence of an independent trained
observer to assist in the monitoring of the patient's level of
consciousness and physiological status, age 5 years or older; first 30
minutes intra-service time, CPT code 99145, Moderate sedation services
(other than those services described by codes 00100-01999) provided by
the same physician performing the diagnostic or therapeutic service
that the sedation supports, requiring the presence of an independent
trained observer to assist in the monitoring of the patient's level of
consciousness and physiological status, age 5 years or older; each
additional 15 minutes intra-service time, CPT code 99148, Moderate
sedation services (other than those services described by codes 00100-
01999) provided by a physician other than the health care professional
performing the diagnostic or therapeutic service that the sedation
supports, under 5 years of age; first 30 minutes intra-service time,
CPT code 99149, Moderate sedation services (other than those services
described by codes 00100-01999) provided by a physician other than the
health care professional performing the diagnostic or therapeutic
service that the sedation supports, age 5 years or older; first 30
minutes intra-service time, and CPT code 99150, Moderate sedation
services (other than those services described by codes 00100-01999)
provided by a physician other than the health care professional
performing the diagnostic or therapeutic service that the sedation
supports, each additional 15 minutes intra-service time, the CPT
Editorial Panel created six new codes to accurately report 2 separate
families of moderate sedation. One family describes the provision of
moderate sedation services by the physician who is performing the
diagnostic or therapeutic service and supervising an independent
trained observer while the other family describes moderate sedation
services performed by a physician (other than an anesthesiologist)
other than the physician performing a diagnostic or therapeutic
service. These new codes replace CPT code 99141, Sedation with or
without analgesia (conscious sedation); intravenous, intra-muscular or
inhalation, and CPT code 99142, Sedation with or without analgesia
(conscious sedation); oral, rectal and/or intranasal, which were
bundled under the PFS. The RUC recommended 0.70 work RVUs for CPT code
99143, 0.66 work RVUs for CPT code 99144, 0.23 work RVUs for CPT code
99145, 1.75 work RVUs for CPT code 99148, 1.65 work RVUs for CPT code
99149 and 0.47 work RVUs for CPT code 99150. We questioned whether the
RUC-assigned values are appropriate and carrier priced these codes in
order to gather information for utilization and proper pricing.
Comment: Commenters requested that the RUC-recommended value for
these services be accepted as these values were based on valid surveys
and vetted through the RUC process. The RUC also indicated it would be
happy to provide any additional information that would address any
concerns we might have.
Response: We will maintain carrier pricing of these codes and will
continue to monitor utilization.
Comment: Commenters requested that we publish the RVUs for
noncovered services for which we receive RUC recommendations.
Response: In response to comments, we have published the RVUs for
noncovered services for which we received RUC recommendations (with the
exception of carrier-priced codes).
In the CY 2006 PFS final rule with comment period (70 FR 66370), we
also responded to the RUC recommendations on the PE inputs for the new
and revised CPT codes for 2006. We received the following comments:
Comment: Although we assigned non-facility PE inputs based on
information provided by the RUC for CPT code 28890, Extracorporeal
shock wave, high energy, performed by a physician, requiring anesthesia
other than local, including ultrasound guidance, involving the plantar
fascia, one commenter expressed concern that the
[[Page 69740]]
PE RVUs are not sufficient to cover the actual costs associated with
the performance of this procedure in the office setting. The commenter
acknowledged that a single payment scheme for the purchase or rental of
the equipment associated with its service does not exist and believes
the expense to be higher than what was represented in the PE database.
The commenter indicated that a ``technical fee'' is frequently paid
when the procedure is performed in the office setting. The costs
associated with this ``technical fee'' can include: The shock wave
equipment, a specialized transport truck, a service contract with the
manufacturer, salary/benefits for technologist and the transport
driver, medical director fee, anesthesia fee, supplies and training
material, malpractice and liability insurance, and fuel cost.
Response: Under the PFS, the PE component is based on the resources
used to furnish each service and, for CPT code 28890, consists of a
total of 133 minutes of clinical labor, disposable supplies, including
the necessary items to provide the regional anesthetic block, and
equipment over $500, including the ``shock-wave'' machine. The PE
methodology utilizes the price of equipment (as if the physician owned
it) and considers the time used for performing the procedure (36
minutes). Costs of leasing arrangements or per use fees are not
recognized in our PE methodology. Therefore, we are maintaining the
direct PE inputs for this service (except as discussed previously in
this rule) because they are consistent with the typical clinical labor,
supplies, and equipment needed to provide this service in the
physician's office.
Comment: We received three comments concerning the PE inputs for
CPT codes 36475, Endovenous ablation therapy of incompetent vein,
extremity, inclusive of all imaging guidance and monitoring,
percutaneous, radiofrequency, first vein treated, and 36476, Endovenous
ablation therapy of incompetent vein, extremity, inclusive of all
imaging guidance and monitoring, percutaneous, radiofrequency, second
and subsequent veins treated in a single extremity, each through
separate access sites (List separately in addition to code for primary
location). Two comenters supported our proposal to add the tilt table
for these services and also suggested the tilt table be added to CPT
codes 36478 and 36479--the entire endovenous family. One commenter
requested that 15 minutes of clinical labor time be added to CPT codes
36475 and 36476. However, the commenters disagreed with the addition of
15 minutes of clinical labor time to CPT codes 36475 and 36476,
indicating that the description of the physician work for these codes
states that, when needed, the physician places the patient in the
required position. One of these commenters indicated that this was also
to be addressed at the February 2006 RUC meeting.
Response: At the February 2006 RUC meeting, the PERC recommended
the addition of the tilt table to the family of CPT codes, 36475,
36476, 36478 and 36479. However, the PERC did not accept the additional
clinical labor time. The tilt table was added to the PE database for
these CPT codes, in concert with the PERC recommendations for CY 2007,
and the PE RVUs in Addendum B reflect these changes.
D. 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 2007
(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 2007
CPT Codes'')
One aspect of establishing RVUs for 2007 was to assign interim work
RVUs for all new and revised CPT codes. As described in our November
25, 1992 notice on the 1993 PFS (57 FR 55951) and in section III.B. of
the CY 1997 PFS final rule (61 FR 59505), 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 230 new and
revised CPT codes from the RUC. Of the 230 codes, 56 were modified by
editorial changes, 57 were renumbered and the work RVUs associated with
these services were assigned to the new codes (not included in Table
15), and 1 code was renumbered and assigned a new work RVU (included in
Table 15). 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 were 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 98
percent of the RUC-recommended values.
We received one recommendation from the Health Care Professional
Advisory Committee (HCPAC), which we accepted.
Table 15, titled ``AMA RUC and HCPAC Recommendations and CMS
Decisions for New and Revised 2007 CPT Codes,'' lists the new or
revised CPT codes, and their associated work RVUs, that will be interim
in 2007. This table includes the following information:
A ``'' identifies a new code for 2007.
CPT code. This is the CPT code for a service.
Modifier. A ``26'' in this column indicates that the work
RVUs are for the PC 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.
2007 Work RVUs. This column establishes the interim 2007
work RVUs for physician work. (Note: Values for 10- and 90-day global
period codes reflect E/M increases from the 5-Year Review.)
BILLING CODE 4120-01-P
[[Page 69741]]
[GRAPHIC] [TIFF OMITTED] TR01DE06.010
[[Page 69742]]
[GRAPHIC] [TIFF OMITTED] TR01DE06.011
[[Page 69743]]
[GRAPHIC] [TIFF OMITTED] TR01DE06.012
BILLING CODE 4120-01-C
[[Page 69744]]
Table 16, which is titled ``AMA RUC Anesthesia Recommendations and
CMS Decisions for New and Revised 2007 CPT Codes,'' lists the new or
revised CPT codes for anesthesia and their base units that will be
interim in 2007. 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 greater detail following
this table.
2007 Base Units. This column establishes the 2007 base
units for these services.
Table 16.--AMA RUC Anesthesia Recommendations and CMS Decisions for New and Revised CPT Codes
----------------------------------------------------------------------------------------------------------------
RUC 2007 base
*CPT code Description recommendation CMS decision units
----------------------------------------------------------------------------------------------------------------
00625................... ANES SPINE TRANTHOR W/O 13.00 Agree............... 13.00
VENT.
00626................... ANES, SPINE TRANSTHOR W/ 13.00 Agree............... 15.00
VENT.
----------------------------------------------------------------------------------------------------------------
* All CPT codes copyright 2006 AMA.
New CPT code.
E. 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 RVUs. It is arranged by type of service in CPT
order. This summary refers only to work RVUs.
For CPT code 22857, Total disc arthroplasty (artificial disc),
anterior approach, including diskectomy to prepare interspace (other
than for decompression), lumbar, single interspace; CPT code 22862,
Revision including replacement of total disc arthroplasty (artificial
disc) anterior approach, lumbar, single interspace (includes approach);
and CPT code 22865, Removal of total disc arthroplasty (artificial
disc), anterior approach, lumbar, single interspace, the RUC
recommended 25.07 work RVUs for CPT code 22857, 30.57 work RVUs for CPT
code 22862 and 29.57 work RVUs for CPT code 22865. We are assigning a
status indicator of R (Restricted) to these services due to an NCD for
non-coverage of Lumbar Artificial Disc Replacement with the
ChariteTM lumbar artificial disc for patients over the age
of 60.
For CPT code 94005, Home ventilator management care plan oversight
of a patient (patient not present) in home, domiciliary or rest home
(e.g., assisted living) requiring review of status, review of
laboratories and other studies and revision of orders and respiratory
care plan (as appropriate), within a calendar month, 30 minutes or
more, the RUC-recommended 1.50 work RVUs for this code. We are
assigning a status indicator of B (Bundled) to this service because:
(1) The patient is not present when this service is rendered and (2) we
believe this service is captured in E/M services. (Note: The RUC-
recommended RVUs for this code will be reflected in Addendum B.)
For CPT code 96040, Medical genetics and genetic counseling
services, each 30 minutes face-to-face with patient/family, this
procedure does not have any physician work and to the extent that these
services are covered, we consider them bundled into E/M services and
have assigned as status indicator of B. (Note: The RUC-recommended RVUs
for this code will be reflected in Addendum B.)
For CPT code 96904, Whole body integumentary photography, for
monitoring of high risk patients with dysplastic nevus syndrome or a
history of dysplastic nevi, or patients with a personal or familial
history of melanoma, this procedure does not have any physician work.
We have assigned a status indicator of R (Restricted) to this service,
and will only recognize this code when services are performed on
patients with melanoma and not when services are performed for
screening based on family history (because we did not cover
screenings). We will implement edits for situations involving patients
with melanoma and/or dysplastic nevus syndrome.
For CPT code 99363, Anticoagulant management for an outpatient
taking warfarin, physician review and interpretation of International
Normalized Ratio (INR) testing, patient instructions, dosage adjustment
(as needed), and ordering of additional tests; initial 90 days of
therapy (must include a minimum of 8 INR measurements; and CPT code
99364, Anticoagulant management for a patient taking warfarin,
physician review and interpretation of International Normalized Ratio
(INR) testing, patient instructions, dosage adjustment (as needed), and
ordering of additional tests; each subsequent 90 days of therapy (must
include a minimum of three INR measurements), the RUC recommended 1.65
work RVUs for CPT code 99363 and 0.63 work RVUs for CPT code 99364. We
believe these services are bundled into E/M services and have assigned
a status indicator of B to these codes. (Note: The RUC-recommended RVUs
for these codes will be reflected in Addendum B.)
F. Additional Pricing Issue
We are carrier-pricing the global and TC for the codes listed in
Table 17. The TC is not paid in the facility setting under the PFS and
the RUC did not forward recommendations in the non-facility setting
because these services are performed infrequently, if at all in the
non-facility setting. Work RVUs will continue to be used to establish
payment for the PC.
Table 17.--Carrier Priced Codes
------------------------------------------------------------------------
Short
CPT code * Mod descriptor Status indicator
------------------------------------------------------------------------
70170......... .............. X-RAY EXAM OF Carrier Priced.
TEAR DUCT.
70170......... TC............ X-RAY EXAM OF Carrier Priced.
TEAR DUCT.
[[Page 69745]]
70555......... .............. FMRI BRAIN BY Carrier Priced.
PHYS/PSYCH.
70555......... TC............ FMRI BRAIN BY Carrier Priced.
PHYS/PSYCH.
71090......... .............. X-RAY EXAM OF Carrier Priced.
EYE SOCKETS.
71090......... TC............ X-RAY EXAM OF Carrier Priced.
EYE SOCKETS.
73530......... .............. X-RAY EXAM OF Carrier Priced.
HIP.
73530......... TC............ X-RAY EXAM OF Carrier Priced.
HIP.
74190......... .............. X-RAY EXAM OF Carrier Priced.
PERITONEUM.
74190......... TC............ X-RAY EXAM OF Carrier Priced.
PERITONEUM.
74305......... .............. X-RAY BILE Carrier Priced.
DUCTS/PANCREAS.
74305......... TC............ X-RAY BILE Carrier Priced.
DUCTS/PANCREAS.
74328......... .............. X-RAY BILE DUCT Carrier Priced.
ENDOSCOPY.
74328......... TC............ X-RAY BILE DUCT Carrier Priced.
ENDOSCOPY.
74330......... .............. X-RAY BILE/PANC Carrier Priced.
ENDOSCOPY.
74330......... TC............ X-RAY BILE/PANC Carrier Priced.
ENDOSCOPY.
74340......... .............. X-RAY GUIDE FOR Carrier Priced.
GI TUBE.
74340......... TC............ X-RAY GUIDE FOR Carrier Priced.
GI TUBE.
74355......... .............. X-RAY GUIDE, Carrier Priced.
INTESTINAL
TUBE.
74355......... TC............ X-RAY GUIDE, Carrier Priced.
INTESTINAL
TUBE.
74360......... .............. X-RAY GUIDE, GI Carrier Priced.
DILATION.
74360......... TC............ X-RAY GUIDE, GI Carrier Priced.
DILATION.
74420......... .............. CONTRST X-RAY, Carrier Priced.
URINARY TRACT.
74420......... TC............ CONTRST X-RAY, Carrier Priced.
URINARY TRACT.
74425......... .............. CONTRST X-RAY, Carrier Priced.
URINARY TRACT.
74425......... TC............ CONTRST X-RAY, Carrier Priced.
URINARY TRACT.
74445......... .............. X-RAY EXAM OF Carrier Priced.
PENIS.
74445......... TC............ X-RAY EXAM OF Carrier Priced.
PENIS.
74450......... .............. X-RAY, URETHRA/ Carrier Priced.
BLADDER.
74450......... TC............ X-RAY, URETHRA/ Carrier Priced.
BLADDER.
74470......... .............. X-RAY EXAM OF Carrier Priced.
KIDNEY LESION.
74470......... TC............ X-RAY EXAM OF Carrier Priced.
KIDNEY LESION.
74775......... .............. X-RAY EXAM OF Carrier Priced.
PERINEUM.
74775......... TC............ X-RAY EXAM OF Carrier Priced.
PERINEUM.
75801......... .............. LYMPH VESSEL X- Carrier Priced.
RAY, ARM/LEG.
75801......... TC............ LYMPH VESSEL X- Carrier Priced.
RAY, ARM/LEG.
75803......... .............. LYMPH VESSEL X- Carrier Priced.
RAY, ARMS/LEGS.
75803......... TC............ LYMPH VESSEL X- Carrier Priced.
RAY, ARMS/LEGS.
75805......... .............. LYMPH VESSEL X- Carrier Priced.
RAY, TRUNK.
75805......... TC............ LYMPH VESSEL X- Carrier Priced.
RAY, TRUNK.
75810......... .............. VEIN X-RAY, Carrier Priced.
SPLEEN/LIVER.
75810......... TC............ VEIN X-RAY, Carrier Priced.
SPLEEN/LIVER.
75894......... .............. X-RAYS, Carrier Priced.
TRANSCATH
THERAPY.
75894......... TC............ X-RAYS, Carrier Priced.
TRANSCATH
THERAPY.
75896......... .............. X-RAYS, Carrier Priced.
TRANSCATH
THERAPY.
75896......... TC............ X-RAYS, Carrier Priced.
TRANSCATH
THERAPY.
75898......... .............. FOLLOW-UP Carrier Priced.
ANGIOGRAPHY.
75898......... TC............ FOLLOW-UP Carrier Priced.
ANGIOGRAPHY.
75940......... .............. X-RAY Carrier Priced.
PLACEMENT,
VEIN FILTER.
75940......... TC............ X-RAY Carrier Priced.
PLACEMENT,
VEIN FILTER.
75945......... .............. INTRAVASCULAR Carrier Priced.
US.
75945......... TC............ INTRAVASCULAR Carrier Priced.
US.
75960......... .............. TRANSCATH IV Carrier Priced.
STENT RS & I.
75960......... TC............ TRANSCATH IV Carrier Priced.
STENT RS & I.
75970......... .............. VASCULAR BIOPSY Carrier Priced.
75970......... TC............ VASCULAR BIOPSY Carrier Priced.
75980......... .............. CONTRAST X-RAY Carrier Priced.
EXAM BILE DUCT.
75980......... TC............ CONTRAST X-RAY Carrier Priced.
EXAM BILE DUCT.
75992......... .............. ATHERECTOMY, X- Carrier Priced.
RAY EXAM.
75992......... TC............ ATHERECTOMY, X- Carrier Priced.
RAY EXAM.
76001......... .............. FLUOROSCOPE Carrier Priced.
EXAM,
EXTENSIVE.
76001......... TC............ FLUOROSCOPE Carrier Priced.
EXAM,
EXTENSIVE.
76125......... .............. CINE/VIDEO X- Carrier Priced.
RAYS ADD-ON.
76125......... TC............ CINE/VIDEO X- Carrier Priced.
RAYS ADD-ON.
76932......... .............. ECHO GUIDE FOR Carrier Priced.
HEART BIOPSY.
76932......... TC............ ECHO GUIDE FOR Carrier Priced.
HEART BIOPSY.
76940......... .............. US GUIDE, Carrier Priced.
TISSUE
ABLATION.
76940......... TC............ US GUIDE, Carrier Priced.
TISSUE
ABLATION.
76941......... .............. ECHO GUIDE FOR Carrier Priced.
TRANSFUSION.
76941......... TC............ ECHO GUIDE FOR Carrier Priced.
TRANSFUSION.
76945......... .............. ECHO GUIDE, Carrier Priced.
VILLUS
SAMPLING.
76945......... TC............ ECHO GUIDE, Carrier Priced.
VILLUS
SAMPLING.
76975......... .............. GI ENDOSCOPIC Carrier Priced.
ULTRASOUND.
76975......... TC............ GI ENDOSCOPIC Carrier Priced.
ULTRASOUND.
[[Page 69746]]
76998......... .............. US GUIDE, Carrier Priced.
INTRAOP.
76998......... TC............ US GUIDE, Carrier Priced.
INTRAOP.
77013......... .............. CT GUIDE FOR Carrier Priced.
TISSUE
ABLATION.
77013......... TC............ CT GUIDE FOR Carrier Priced.
TISSUE
ABLATION.
77022......... .............. MRI FOR TISSUE Carrier Priced.
ABLATION.
77022......... TC............ MRI FOR TISSUE Carrier Priced.
ABLATION.
92978......... .............. INTRAVASC US, Carrier Priced.
HEART ADD-ON.
92978......... TC............ INTRAVASC US, Carrier Priced.
HEART ADD-ON.
92979......... .............. INTRAVASC US, Carrier Priced.
HEART ADD-ON.
92979......... TC............ INTRAVASC US, Carrier Priced.
HEART ADD-ON.
93501......... .............. RIGHT HEART Carrier Priced.
CATHETERIZATIO
N.
93501......... TC............ RIGHT HEART Carrier Priced.
CATHETERIZATIO
N.
93503......... .............. INSERT/PLACE Carrier Priced.
HEART CATHETER.
93505......... .............. BIOPSY OF HEART Carrier Priced.
LINING.
93505......... TC............ BIOPSY OF HEART Carrier Priced.
LINING.
93508......... .............. CATH PLACEMENT, Carrier Priced.
ANGIOGRAPHY.
93508......... TC............ CATH PLACEMENT, Carrier Priced.
ANGIOGRAPHY.
93510......... .............. LEFT HEART Carrier Priced.
CATHETERIZATIO
N.
93510......... TC............ LEFT HEART Carrier Priced.
CATHETERIZATIO
N.
93511......... .............. LEFT HEART Carrier Priced.
CATHETERIZATIO
N.
93511......... TC............ LEFT HEART Carrier Priced.
CATHETERIZATIO
N.
93524......... .............. LEFT HEART Carrier Priced.
CATHETERIZATIO
N.
93524......... TC............ LEFT HEART Carrier Priced.
CATHETERIZATIO
N.
93526......... .............. RT & LT HEART Carrier Priced.
CATHETERS.
93526......... TC............ RT & LT HEART Carrier Priced.
CATHETERS.
93527......... .............. RT & LT HEART Carrier Priced.
CATHETERS.
93527......... TC............ RT & LT HEART Carrier Priced.
CATHETERS.
93528......... .............. RT & LT HEART Carrier Priced.
CATHETERS.
93528......... TC............ RT & LT HEART Carrier Priced.
CATHETERS.
93529......... .............. RT, LT HEART Carrier Priced.
CATHETERIZATIO
N.
93529......... TC............ RT, LT HEART Carrier Priced.
CATHETERIZATIO
N.
93530......... .............. RT HEART CATH, Carrier Priced.
CONGENITAL.
93530......... TC............ RT HEART CATH, Carrier Priced.
CONGENITAL.
93531......... .............. R & L HEART Carrier Priced.
CATH,
CONGENITAL.
93531......... TC............ R & L HEART Carrier Priced.
CATH,
CONGENITAL.
93539......... .............. INJECTION, Carrier Priced.
CARDIAC CATH.
93540......... .............. INJECTION, Carrier Priced.
CARDIAC CATH.
93541......... .............. INJECTION FOR Carrier Priced.
LUNG ANGIOGRAM.
93542......... .............. INJECTION FOR Carrier Priced.
HEART X-RAYS.
93543......... .............. INJECTION FOR Carrier Priced.
HEART X-RAYS.
93544......... .............. INJECTION FOR Carrier Priced.
AORTOGRAPHY.
93545......... .............. INJECT FOR Carrier Priced.
CORONARY X-
RAYS.
93555......... .............. IMAGING, Carrier Priced.
CARDIAC CATH.
93555......... TC............ IMAGING, Carrier Priced.
CARDIAC CATH.
93556......... .............. IMAGING, Carrier Priced.
CARDIAC CATH.
93556......... TC............ IMAGING, Carrier Priced.
CARDIAC CATH.
93561......... .............. CARDIAC OUTPUT Carrier Priced.
MEASUREMENT.
93561......... TC............ CARDIAC OUTPUT Carrier Priced.
MEASUREMENT.
93562......... .............. CARDIAC OUTPUT Carrier Priced.
MEASUREMENT.
93562......... TC............ CARDIAC OUTPUT Carrier Priced.
MEASUREMENT.
93571......... .............. HEART FLOW Carrier Priced.
RESERVE
MEASURE.
93571......... TC............ HEART FLOW Carrier Priced.
RESERVE
MEASURE.
93600......... .............. BUNDLE OF HIS Carrier Priced.
RECORDING.
93600......... TC............ BUNDLE OF HIS Carrier Priced.
RECORDING.
93602......... .............. INTRA-ATRIAL Carrier Priced.
RECORDING.
93602......... TC............ INTRA-ATRIAL Carrier Priced.
RECORDING.
93603......... .............. RIGHT Carrier Priced.
VENTRICULAR
RECORDING.
93603......... TC............ RIGHT Carrier Priced.
VENTRICULAR
RECORDING.
93609......... .............. MAP Carrier Priced.
TACHYCARDIA,
ADD-ON.
93609......... TC............ MAP Carrier Priced.
TACHYCARDIA,
ADD-ON.
93610......... .............. INTRA-ATRIAL Carrier Priced.
PACING.
93610......... TC............ INTRA-ATRIAL Carrier Priced.
PACING.
93612......... .............. INTRAVENTRICULA Carrier Priced.
R PACING.
93612......... TC............ INTRAVENTRICULA Carrier Priced.
R PACING.
93615......... .............. ESOPHAGEAL Carrier Priced.
RECORDING.
93615......... TC............ ESOPHAGEAL Carrier Priced.
RECORDING.
93618......... .............. HEART RHYTHM Carrier Priced.
PACING.
93618......... TC............ HEART RHYTHM Carrier Priced.
PACING.
93619......... .............. ELECTROPHYSIOLO Carrier Priced.
GY EVALUATION.
93619......... TC............ ELECTROPHYSIOLO Carrier Priced.
GY EVALUATION.
93640......... .............. EVALUATION Carrier Priced.
HEART DEVICE.
93640......... TC............ EVALUATION Carrier Priced.
HEART DEVICE.
[[Page 69747]]
93641......... .............. ELECTROPHYSIOLO Carrier Priced.
GY EVALUATION.
93641......... TC............ ELECTROPHYSIOLO Carrier Priced.
GY EVALUATION.
96020......... .............. FUNCTIONAL Carrier Priced.
BRAIN MAPPING.
96020......... TC............ FUNCTIONAL Carrier Priced.
BRAIN MAPPING.
------------------------------------------------------------------------
* All CPT codes copyright 2006 AMA.
G. Establishment of Interim PE RVUs for New and Revised Physician's
Current Procedural Terminology (CPT) Codes and New Healthcare Common
Procedure Coding System (HCPCS) Codes for 2007
We have developed a process for establishing interim PE RVUs for
new and revised codes that is similar to that used for work RVUs. Under
this process, the RUC recommends the PE 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 PE inputs for the
new and revised 2007 codes were submitted to us as interim
recommendations.
We have accepted, in the interim, the PE 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 2007 CPT
Codes'' except as noted below in this section.
For CPT code 15731, Forehead flap with preservation of vascular
pedicle (e.g., axial pattern flap, parmedian forehead flap); and CPT
code 15830, Excision, excessive skin and subcutaneous tissue (includes
lipectomy); abdomen, infraumbilical panniculectomy, we assigned 5
minutes for each post-operative visit for the digital camera used in
the post-operative visits, rather than the entire clinical labor time
for each post-operative period.
For CPT code 22527, Percutaneous intradiscal electrothermal
annuloplasty, unilateral or bilateral including fluoroscopic guidance;
one or more additional levels (List separately in addition to code for
primary procedure, we deleted the ambulatory blood pressure monitor
because it duplicates the function of the 3-channel ECG machine.
For CPT code 55876, Placement of interstitial device(s) for
radiation guidance (e.g., fiducial markers, dosimeter), prostate (via
needle, any approach), single or multiple, we deleted one package of
gold markers (contains 3 markers each) because we believe that the
typical number of gold markers used in this procedure is 2 or 3 and we
entered an interim price of $119 per 3-pack. We are asking the
specialty to provide us with: (a) Verification of the typical number of
gold markers used in this procedure; and (b) documentation as to the
typical price of these markers.
For CPT code 76776, Ultrasound, transplanted kidney, real time and
duplex Doppler with image documentation, we deleted the color laser
printer because it is contained in the ultrasound room that is also
used for the procedure.
For CPT code 77371, Radiation treatment delivery, stereotactic
radiosurgery (SRS) (complete course of treatment of cerebral lesion[s]
consisting of 1 session); multi-source Cobalt 60 based, we designated,
as an interim measure, the $15,000 radiation source with a specific 1-
month life (that was included in the list of direct-expense equipment
items for this service), as an indirect expense because we believe it
does not meet the criteria for inclusion as a direct expense. To the
extent that the specialty disagrees with our decision to assign the
radiation source cost as an indirect expense, the interim nature of
this designation gives the specialty the opportunity to provide us with
documentation to support their belief that the radiation source should
be considered a direct expense.
For CPT code 94644, Continuous inhalation with aerosol medication
for acute airway obstruction; first hour, we did not include the peak
flow meter as a supply item for this service because this item is
reusable and was previously removed from the PE database at the time
the supplies were re-priced.
For CPT code 96040, Medical genetics and genetics counseling
services, each 30 minutes face-to-face with patient/family, the payment
rate, at $0.567, for ``genetic counselor'' was created from a non-BLS
source that listed a 2003 national annual average salary of $53,377.
This salary was inflated to include fringe benefits ($53,377 multiplied
by 1.366), then deflated by the MEI to the year 2002 (the same year as
the other labor costs in the PE database), then divided by 2080 (the
number of hours in a work year), and finally divided by 60 (the number
minutes in an hour). We were not able to include a price for the
pedigree software equipment as it was not provided with the PE inputs.
For CPT code 96904, Whole body integumentary photography, for
monitoring of high risk patients with dysplastic nevus syndrome or a
history of dysplastic nevi, or patients with a personal or familial
history of melanoma, the payment rate, at $0.383, for ``medical
photographers'', was created from a non-BLS source that gave a 2003
national annual average salary of $36,000. This salary was inflated by
a factor of 1.366 to include fringe benefits, then deflated by the MEI
to 2002 (the labor base year), then divided by 2080 (the number of
annual work hours), and lastly, divided by number 60 (the number of
minutes in an hour). We are asking the specialty to submit acceptable
documentation for all of the cameras and related equipment that are
listed for this service. The prices submitted by the specialty have
been entered on an interim basis for CY 2007.
For CPT code 58240, Pelvic exenteration for gynecologic malignancy,
with total abdominal hysterectomy or cervicectomy, with or without
removal of tube(s), with or without removal of ovary(s), with removal
of bladder and ureteral transplantations, and/or abdominoperineal
resection of rectum and colon and colostomy, or any combination
thereof, the supplies for this service were correctly entered as a
quantity of 6--the number of post-operative visits (POVs)--rather than
4, as listed on the PE spreadsheet in the RUC recommendations. The
correct labor and equipment times were entered as reflected by the
level and number of POVs.
For CPT code 92025, Computerized corneal topography, unilateral or
bilateral with interpretation and report, the specific topography
equipment (at $44,000) requested for this procedure was not included
because we do not believe it is the typical unit used in physician
offices. Instead, we used the existing topography unit (at $13,495) and
added a printer and computer with
[[Page 69748]]
monitor to the PE database for this service.
VI. Physician Self-Referral Prohibition: Annual Update to the List of
CPT/HCPCS Codes
A. General
Section 1877 of the Act prohibits a physician from referring a
Medicare beneficiary for certain designated health services (DHS) to a
health care entity with which the physician (or a member of the
physician's immediate family) has a financial relationship, unless an
exception applies. Section 1877 of the Act also prohibits the DHS
entity from submitting claims to Medicare or billing the beneficiary or
any other entity for Medicare DHS that are furnished as a result of a
prohibited referral.
As specified in our regulations at Sec. 411.351, the following
services are DHS:
Clinical laboratory services.
Physical therapy, occupational therapy, and speech-
language pathology services.
Radiology and certain other imaging services.
Radiation therapy services and supplies.
Durable medical equipment and supplies.
Parenteral and enteral nutrients, equipment, and supplies.
Prosthetics, orthotics, and prosthetic devices and
supplies.