[Federal Register Volume 72, Number 227 (Tuesday, November 27, 2007)]
[Rules and Regulations]
[Pages 66222-66578]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-5506]
[[Page 66221]]
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Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 409, 410, et al.
Medicare Program; Revisions to Payment Policies Under the Physician Fee
Schedule, and Other Part B Payment Policies for CY 2008; Revisions to
the Payment Policies of Ambulance Services Under the Ambulance Fee
Schedule for CY 2008; and the Amendment of the E-Prescribing Exemption
for Computer Generated Facsimile Transmissions; Final Rule
Federal Register / Vol. 72, No. 227 / Tuesday, November 27, 2007 /
Rules and Regulations
[[Page 66222]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 409, 410, 411, 413, 414, 415, 418, 423, 424, 482, 484,
and 485
[CMS-1385-FC]
RIN 0938-AO65
Medicare Program; Revisions to Payment Policies Under the
Physician Fee Schedule, and Other Part B Payment Policies for CY 2008;
Revisions to the Payment Policies of Ambulance Services Under the
Ambulance Fee Schedule for CY 2008; and the Amendment of the E-
Prescribing Exemption for Computer Generated Facsimile Transmissions
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 Tax Relief and Health Care Act of 2006, as well as
making other proposed changes to Medicare Part B payment policy. We are
making these changes to ensure that our payment systems are updated to
reflect changes in medical practice and the relative value of services.
This final rule with comment period also discusses refinements to
resource-based practice expense (PE) relative value units (RVUs);
geographic practice cost indices (GPCI) changes; malpractice RVUs;
requests for additions to the list of telehealth services; several
coding issues including additional codes from the 5-Year Review;
payment for covered outpatient drugs and biologicals; the competitive
acquisition program (CAP); clinical lab fee schedule issues; payment
for renal dialysis services; performance standards for independent
diagnostic testing facilities; expiration of the physician scarcity
area (PSA) bonus payment; conforming and clarifying changes for
comprehensive outpatient rehabilitation facilities (CORFs); a process
for updating the drug compendia; physician self referral issues;
beneficiary signature for ambulance transport services; durable medical
equipment (DME) update; the chiropractic services demonstration; a
Medicare economic index (MEI) data change; technical corrections;
standards and requirements related to therapy services under Medicare
Parts A and B; revisions to the ambulance fee schedule; the ambulance
inflation factor for CY 2008; and amending the e-prescribing exemption
for computer-generated facsimile transmissions. We are also finalizing
the calendar year (CY) 2007 interim RVUs and are issuing interim RVUs
for new and revised procedure codes for CY 2008.
As required by the statute, we are announcing that the physician
fee schedule update for CY 2008 is -10.1 percent, the initial estimate
for the sustainable growth rate for CY 2008 is -0.1 percent, and the
conversion factor (CF) for CY 2008 is $34.0682.
DATES: Effective Date: The provisions of this final rule with comment
period are effective January 1, 2008, except for the amendments to
Sec. 409.17 and Sec. 409.23 which are effective July 1, 2008, and the
amendments to Sec. 423.160 which is effective January 1, 2009.
Comment Date: Comments will be considered if we receive them at one
of the addresses provided below, no later than 5 p.m. e.s.t. on
December 31, 2007.
ADDRESSES: In commenting, please refer to file code CMS-1385-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-1385-
FC, P.O. Box 8020, Baltimore, MD 21244-8020.
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-1385-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 (HHH) 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 and comprehensive outpatient rehabilitation
facilities.
Rick Ensor, (410) 786-5617 for issues related to practice expense
methodology.
Stephanie Monroe, (410) 786-6864 for issues related to the
geographic practice cost index and malpractice RVUs.
Craig Dobyski, (410) 786-4584 for issues related to list of
telehealth services.
Ken Marsalek, (410) 786-4502 for issues related to the DRA imaging
cap.
Catherine Jansto, (410) 786-7762 for issues related to payment for
covered outpatient drugs and biologicals.
Edmund Kasaitis (410) 786-0477 for issues related to the
Competitive Acquisition Program (CAP) for part B drugs.
Anita Greenberg (410) 786-4601 for issues related to the clinical
laboratory fee schedule.
Henry Richter, (410) 786-4562 for issues related to payments for
end-stage renal disease facilities.
August Nemec (410) 786-0612 for issues related to independent
diagnostic testing facilities.
Kate Tillman (410) 786-9252 or Brijit Burton (410) 786-7364 for
issues related to the drug compendia.
[[Page 66223]]
David Walczak (410) 786-4475 for issues related to reassignment and
physician self-referral rules for diagnostic tests and beneficiary
signature for ambulance transport.
Lisa Ohrin (410) 786-4565 or Joanne Sinsheimer (410) 786-4620 for
issues related to physician self-referral rules.
Bob Kuhl (410) 786-4597 for issues related to the DME update.
Rachel Nelson (410) 786-1175 for issues related to the physician
quality reporting system for CY 2008.
Maria Ciccanti (410) 786-3107 for issues related to the reporting
of anemia quality indicators.
James Menas (410) 786-4507 for issues related to payment for
physician pathology services.
Dorothy Shannon, (410) 786-3396 for issues related to the
outpatient therapy caps.
Drew Morgan, (410) 786-2543 for issues related to the E-Prescribing
Exemption for Computer Generated Facsimile Transmissions.
Roechel Kujawa (410) 786-9111 or Anne Tayloe (410) 786-4546 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
codes identified in Addendum C and the physician self-referral
designated health services (DHS) procedures listed in Addendum I. You
can assist us by referencing the file code [CMS-1385-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 Fee Schedule
II. Provisions of the Final Rule Related to the Physician Fee
Schedule
A. Resource Based Practice Expense (PE) Relative Value Units
(RVUs)
1. Current Methodology
2. PE Proposals for CY 2008
B. Geographic Practice Cost Indices (GPCIs)
1. GPCI Update
2. Payment Localities
C. Malpractice (MP) RVUs (TC/PC issue)
D. Medicare Telehealth Services
E. Specific Coding Issues Related to PFS
1. Reduction in the Technical Component (TC) Payment for Imaging
Services Under the PFS to the Outpatient Department (OPD) Payment
Amount
2. Application of Multiple Procedure Payment Reduction for Mohs
Micrographic Surgery (CPT Codes 17311 Through 17315)
3. Payment for Intravenous Immune Globulin (IVIG) Add On Code
for Preadmission Related Services
4. Reporting of Cardiac Rehabilitation Services
F. Part B Drug Payment
1. Average Sales Price (ASP) Issues
2. Competitive Acquisition Program (CAP) Issues
G. Issues Related to the Clinical Lab Fee Schedule
1. Date of Service for the Technical Component (TC) of Physician
Pathology Services (Sec. 414.510)
2. New Clinical Diagnostic Laboratory Test (Sec. 414.508)
H. 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
Rates
2. Update to the Geographic Adjustment to the Composite Rates
I. Independent Diagnostic Testing Facility (IDTF) Issues
1. Revisions of Existing IDTF Performance Standards
2. New IDTF Standards
J. Expiration of MMA Section 413 Provisions for Physician
Scarcity Area (PSA)
K. Comprehensive Outpatient Rehabilitation Facility (CORF)
Issues
1. Requirements for Coverage of CORF Services Plan of Treatment
(Sec. 410.105(c))
2. Included Services (Sec. 410.100)
3. Physician Services (Sec. 410.100(a))
4. Clarifications of CORF Respiratory Therapy Services
5. Social and Psychological Services
6. Nursing Care Services
7. Drugs and Biologicals
8. Supplies and DME
9. Clarifications and Payment Updates for Other CORF Services
10. Cost Based Payment (Sec. 413.1)
11. Payment for Comprehensive Outpatient Rehabilitation Facility
(CORF) Services
12. Vaccines
L. Compendia for Determination of Medically Accepted Indications
for Off Label Uses of Drugs and Biologicals in an Anti-Cancer
Chemotherapeutic Regimen (Sec. 414.930)
1. Background
2. Process for Determining Changes to the Compendia List
M. Physician Self Referral Issues
1. General
2. Changes to Reassignment and Physician Self Referral Rules
Relating to Diagnostic Tests (Anti Markup Provision)
N. Beneficiary Signature for Ambulance Transport Services
O. Update to Fee Schedules for Class III DME for CYs 2007 and
2008
1. Background
2. Update to Fee Schedule
P. Discussion of Chiropractic Services Demonstration
Q. Technical Corrections
1. Particular Services Excluded From Coverage (Sec. 411.15(a))
2. Medical Nutrition Therapy (Sec. 410.132(a))
3. Payment Exception: Pediatric Patient Mix (Sec. 413.184)
4. Diagnostic X ray Tests, Diagnostic Laboratory Tests, and
Other Diagnostic Tests: Conditions (Sec. 410.32(a)(1))
R. Other Issues
1. Recalls and Replacement Devices
2. Therapy Standards and Requirements
3. Amendment to the Exemption for Computer Generated Facsimile
Transmission from the National Council for Prescription Drug
Programs (NCPDP) SCRIPT Standard for Transmitting Prescription and
Certain Prescription Related Information for Part D Eligible
Individuals
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S. Division B of the Tax Relief and Health Care Act of 2006--
Medicare Improvements and Extension Act of 2006 (Pub. L. 109-432)
(MIEA-TRHCA)
1. Section 101(b)--Physician Quality Reporting Initiative (PQRI)
2. Section 110--Reporting of Hemoglobin or Hematocrit for Part B
Cancer Anti-Anemia Drugs (Sec. 414.707(b))
3. Section 104--Extension of Treatment of Certain Physician
Pathology Services Under Medicare
4. Section 201--Extension of Therapy Cap Exception Process
5. Section 101(d)--Physician Assistance and Quality Initiative
(PAQI) Fund
III. Revisions to the Payment Policies of Ambulance Services Under
the Fee Schedule for Ambulance Services; Ambulatory Inflation Factor
Update for CY 2007
A. History of Medicare Ambulance Services
1. Statutory Coverage of Ambulance Services
2. Medicare Regulations for Ambulance Services
3. Transition to National Fee Schedule
B. Ambulance Inflation Factor (AIF) During the Transition Period
C. Ambulance Inflation Factor (AIF) for CY 2008
D. Revisions to the Publication of the Ambulance Fee Schedule
(Sec. 414.620)
IV. Refinement of Relative Value Units for Calendar Year 2008 and
Response to Public Comments on Interim Relative Value Units for 2007
A. Summary of Issues Discussed Related to the Adjustment of
Relative Value Units
B. Process for Establishing Work Relative Value Units for the
Physician Fee Schedule
C. 5 Year Review of Work RVUs
1. Additional Codes from the 5-Year Review of Work RVUs
2. Anesthesia Coding (Part of 5-Year Review)
3. Budget Neutrality Adjustment
D. Work Relative Value Unit Refinements of Interim Relative
Value Units (Interim 2007 Codes)
E. 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
2008 (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 2008 CPT Codes'')
F. Discussion of Codes and RUC/HCPAC Recommendations
G. Additional Coding Issues
H. 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 2008
V. Physician Self-Referral Prohibition: Annual Update to the List of
CPT/HCPCS Codes
VI. Physician Fee Schedule Update for CY 2008
A. Physician Fee Schedule Update
B. The Percentage Change in the Medicare Economic Index (MEI)
C. The Update Adjustment Factor (UAF)
VII. 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 2008
D. Revised Sustainable Growth Rate for 2007
E. Final Sustainable Growth Rate for 2006
F. Calculation of 2008, 2007, and 2006 Sustainable Growth Rates
VIII. Anesthesia and Physician Fee Schedule Conversion Factors for
CY 2008
A. Physician Fee Schedule Conversion Factor
B. Anesthesia Fee Schedule Conversion Factor
IX. Telehealth Originating Site Facility Fee Payment Amount Update
X. Provisions of the Final Rule
XI. Waiver of Proposed Rulemaking and Delay in Effective Date
XII. Collection of Information Requirements
XIII. Response to Comments
XIV. Regulatory Impact Analysis
Regulation Text
Addendum A--Explanation and Use of Addendum B
Addendum B--2008 Relative Value Units and Related Information Used
in Determining Medicare Payments for 2007
Addendum C--Codes With Interim RVUS
Addendum D--2008 Geographic Adjustment Factors (GAFs)
Addendum E--2008 Geographic Practice Cost Indices (GPCIs) by State
and Medicare Locality
Addendum F--CPT/HCPCS Imaging Codes Defined by Section 5102(b) of
the DRA
Addendum G--FY 2008 Wage Index for Urban Areas Based on CBSA Labor
Market Areas
Addendum H--FY 2008 Wage Index Based on CBSA Labor Market Areas for
Rural Areas
Addendum I--Updated List of CPT/HCPCS Codes Used To Describe Certain
Designated Health Services Under the Physician Self-Referral
Provision
Acronyms
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
AAP Average acquisition price
ACOTE Accreditation Council for Occupational Therapy Education
ACR American College of Radiology
AFROC Association of Freestanding Radiation Oncology Centers
AHFS-DI American Hospital Formulary Service--Drug Information
AHRQ Agency for Healthcare Research and Quality (HHS)
AIF Ambulance inflation factor
AMA American Medical Association
AMA-DE American Medical Association Drug Evaluations
AMP Average manufacturer price
AOTA American Occupational Therapy Association
APC Ambulatory payment classification
APTA American Physical Therapy Association
ASA American Society of Anesthesiologists
ASC Ambulatory surgical center
ASP Average sales price
ASTRO American Society for Therapeutic Radiology and Oncology
ATA American Telemedicine Association
AWP Average wholesale price
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)
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement Protection
Act of 2000
BLS Bureau of Labor Statistics
BMD Bone mineral density
BMI Body mass index
BMM Bone mass measurement
BN Budget neutrality
BSA Body surface area
CAD Computer aided detection
CAH Critical access hospital
CAP Competitive acquisition program
CBSA Core-Based Statistical Area
CEM Cardiac event monitoring
CF Conversion factor
CFR Code of Federal Regulations
CMA California Medical Association
CMS Centers for Medicare & Medicaid Services
CNS Clinical nurse specialist
CORF Comprehensive Outpatient Rehabilitation Facility
COTA Certified Occupational Therapy Assistant
CPEP Clinical Practice Expert Panel
CPI Consumer Price Index
CPI-U Consumer price index for urban customers
CPT (Physicians') Current Procedural Terminology (4th Edition, 2002,
copyrighted by the American Medical Association)
CRT-D Cardiac resynchronization therapy defibrillator
CT Computed tomography
CTA Computed tomographic angiography
CY Calendar year
DEXA Dual energy x-ray absorptiometry
DHS Designated health services
DME Durable medical equipment
DMEPOS Durable medical equipment, prosthetics, orthotics, and
supplies
DO Doctor of Osteopathy
DRA Deficit Reduction Act of 2005 (Pub. L. 109-432)
E/M Evaluation and management
ECI Employment cost index
EHR Electronic health record
EPC [Duke] Evidence-based Practice Centers
EPO Erythopoeitin
ESRD End stage renal disease
F&C Facts and Comparisons
FAW Furnish as written
[[Page 66225]]
FAX Facsimile
FDA Food and Drug Administration (HHS)
FMR Fair market rents
FQHC Federally qualified health center
FR Federal Register
GAF Geographic adjustment factor
GAO General Accounting Office
GII Global Insight, Inc.
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
HIPAA Health Insurance Portability and Accountability Act of 1996
(Pub. L. 104-191)
HHA Home health agency
HHS [Department of] Health and Human Services
HIT Health information technology
HMO Health maintenance organization
HPSA Health Professional Shortage Area
HRSA Health Resources Services Administration (HHS)
HUD [Department of] Housing and Urban Development
ICD Implantable cardioverter-defibrillator
ICF Intermediate care facilities
IDTF Independent diagnostic testing facility
IFC Interim final rule with comment period
IOTED International Occupational Therapy Eligibility Determination
IPPE Initial preventive physical examination
IPPS Inpatient prospective payment system
IV Intravenous
IVIG Intravenous immune globulin
IWPUT Intra-service work per unit of time
JCAAI Joint Council of Allergy, Asthma, and Immunology
LPN Licensed practical nurse
MA Medicare Advantage
MA-PD Medicare Advantage Prescription Drug Plans
MD Medical doctor
MedCAC Medicare Evidence Development and Coverage Advisory Committee
(formerly the Medicare Coverage Advisory Committee (MCAC))
MedPAC Medicare Payment Advisory Commission
MEI Medicare Economic Index
MIEA-TRHCA Medicare Improvements and Extension Act of 2006 (That is,
Division B of the Tax Relief and Health Care Act of 2006 (TRHCA)
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (Pub. L. 108-173)
MNT Medical nutrition therapy
MP Malpractice
MRA Magnetic resonance angiography
MRI Magnetic resonance imaging
MSA Metropolitan statistical area
MSP Medicare Secondary Payer
MSVP Multi-specialty visit package
NBCOT National Board for Certification in Occupational Therapy, Inc.
NCCN National Comprehensive Cancer Network
NCPDP National Council for Prescription Drug Programs
NCQDIS National Coalition of Quality Diagnostic Imaging Services
NDC National drug code
NEMC New England Medical Center
NISTA National Institute of Standards and Technology Act
NLA National limitation amount
NP Nurse practitioner
NPP Nonphysician practitioners
NQF National Quality Forum
NTTAA National Technology Transfer and Advancement Act of 1995 (Pub.
L. 104-113)
OACT [CMS'] Office of the Actuary
OBRA Omnibus Budget Reconciliation Act
OIG Office of Inspector General
OMB Office of Management and Budget
OPD Outpatient Department
OPPS Outpatient prospective payment system
OPT Outpatient physical therapy
OSCAR Online Survey and Certification and Reporting
PA Physician assistant
PC Professional component
PCF Patient compensation fund
PDP Prescription Drug Plan
PE Practice Expense
PE/HR Practice expense per hour
PEAC Practice Expense Advisory Committee
PECOS Provider Enrollment, Chain, and Ownership System
PERC Practice Expense Review Committee
PET Positron emission tomography
PFS Physician Fee Schedule
PLI Professional liability insurance
PPI Producer price index
PPS Prospective payment system
PQRI Physician Quality Reporting Initiative
PRA Paperwork Reduction Act
PSA Physician scarcity areas
PT Physical therapy
PT/INR Prothrombin time, international normalized ratio
RFA Regulatory Flexibility Act
RHC Rural health clinic
RIA Regulatory impact analysis
RN Registered nurse
RT Respiratory therapist
RUC [AMA's Specialty Society] Relative (Value) Update Committee
RVU Relative value unit
SBA Small Business Administration
SGR Sustainable growth rate
SLP Speech--language pathology
SLPs Speech--language pathologists
SMS [AMA's] Socioeconomic Monitoring System
SNF Skilled nursing facility
STS Society of Thoracic Surgeons
TA Technology Assessment
TC Technical Component
TENS Transcutaneous electric nerve stimulator
TRHCA Tax Relief and Health Care Act of 2006 (Pub. L. 109-432)
USP-DI United States Pharmacopoeia-Drug Information
WAC Wholesale acquisition cost
WAMP Widely available market price
Wet AMD Exudative age-related macular degeneration
WFOT World Federation of Occupational Therapists
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)(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 formula used to calculate payment 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).
[[Page 66226]]
2. Practice Expense Relative Value Units (PE RVUs)
Section 121 of the Social Security Act Amendments of 1994 (Pub. L.
103-32), 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 (RNs)) 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. We have since
refined and revised these inputs based on recommendations from the RUC.
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. The
difference between the facility and nonfacility RVUs reflects the fact
that a facility typically 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 through
March 1, 2005.
In the CY 2007 PFS final rule with comment period (71 FR 69624), we
revised the methodology for calculating PE RVUs beginning in CY 2007
and provided for a 4-year transition for the new PE RVUs under this new
methodology. We will continue to reexamine this policy and proposed
necessary revisions through future rulemaking.
3. Resource-Based Malpractice (MP) RVUs
Section 4505(f) of the BBA amended section 1848(c) of the Act to
require us to implement resource-based malpractice (MP) RVUs for
services furnished on or after 2000. The resource-based MP RVUs were
implemented in the PFS final rule published November 2, 1999 (64 FR
59380). The MP 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 RVUs no
less often than every 5 years. The first 5-Year Review of the physician
work RVUs was effective in 1997, published on November 22, 1996 (61 FR
59489). The second 5-Year Review went into effect in 2002, published in
the CY 2002 PFS final rule (66 FR 55246). The third 5-Year Review of
physician work RVUs went into effect on January 1, 2007 and was
published in the CY 2007 PFS final rule with comment period (71 FR
69624) (although we note that certain additional proposals relating to
the third 5-Year Review are addressed in the CY 2008 PFS proposed rule
and in this final rule with comment period).
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). As part of the CY
2007 PFS final rule with comment period (71 FR 69624), we implemented a
new methodology for determining resource-based PE RVUs and are
transitioning this over a 4-year period.
In the CY 2005 PFS final rule with comment period (69 FR 66236), 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.
As explained in the CY 2007 PFS final rule with comment period (71
FR 69624), due to the increase in work RVUs resulting from the third 5-
Year Review of physician work RVUs, we are applying a separate budget
neutrality (BN) adjustor to the work RVUs for services furnished during
2007. This approach is consistent with the method we use to make BN
adjustments to the PE RVUs to reflect the changes in these PE RVUs.
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 MP RVUs) are
adjusted by a geographic practice cost index (GPCI). The GPCIs reflect
the relative costs of physician work, PE, 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 (OACT) and is
updated annually for inflation.
The formula for calculating the Medicare fee schedule amount for a
given service and fee schedule area can be expressed as:
[[Page 66227]]
Payment = [(RVU work x budget neutrality adjuster x work GPCI) +
(RVU PE x PE GPCI) + (MP RVU x MP GPCI)] x CF.
C. Most Recent Changes to the Fee Schedule
The CY 2007 PFS final rule with comment period (71 FR 69624)
addressed certain provisions of the Deficit Reduction Act of 2005 (Pub.
L. 109-432) (DRA) and made other changes to Medicare Part B payment
policy 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 discussed 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; updated the list of certain
services subject to the physician self-referral prohibitions, finalized
ASP reporting requirements, and codified Medicare's longstanding policy
that payment of bad debts associated with services paid under a fee
schedule/charge-based system is not allowable.
We also finalized the CY 2006 interim RVUs and issued interim RVUs
for new and revised procedure codes for CY 2007.
In addition, the CY 2007 PFS final rule with comment period
included revisions to payment policies under the fee schedule for
ambulance services and announced the ambulance inflation factor (AIF)
update for CY 2007.
In accordance with section 1848(d)(1)(E)(i) of the Act, we also
announced that the PFS update for CY 2007 is -5.0 percent, the initial
estimate for the sustainable growth rate (SGR) for CY 2007 is 1.8
percent and the CF for CY 2007 is $35.9848. However, subsequent to
publication of the CY 2007 PFS final rule with comment period, section
101(a) of Division B, Title I of the Tax Relief and Health Care Act of
2006 (Pub. L. 109-432) (MIEA-TRHCA), which was enacted on December 20,
2006, amended section 1848(d) of the Act. [Division B of the Tax Relief
and Health Care Act of 2006 is entitled Medicare and Other Health
Provisions and its short title is the Medicare Improvements and
Extension Act of 2006. Therefore, the law is hereinafter referred to as
``MIEA-TRHCA''.] As a result of this statutory change, the CF of
$37.8975 was maintained for CY 2007.
II. Provisions of the Final Rule Related to the Physician Fee Schedule
In response to the CY 2008 PFS proposed rule (72 FR 38122), we
received approximately 27,000 comments. We received comments from
individual physicians, health care workers, professional associations
and societies, and beneficiaries. The majority of the comments
addressed the proposals related to anesthesia coding and the 5-Year
Review, the physician self-referral provisions and the technical
correction to Sec. 410.32(a)(1) concerning an exception to the
requirement that diagnostic services (including x-rays) must be ordered
by the treating physician. To the extent that comments were outside the
scope of the proposed rule, they are not addressed in this final rule
with comment period.
RVU changes implemented through this final rule with comment are
subject to the $20 million limitation on annual adjustments contained
in section 1848(c)(2)(B)(ii)(II) of the Act. After reviewing the
comments and determining the policies we would implement, we have
estimated the costs and savings of these policies and discuss in detail
the effects of these changes in the Regulatory Impact Analysis in
section XIV. For the convenience of the reader, the headings for the
policy issues correspond to the headings used in the CY 2008 PFS
proposed rule (72 FR 38122). More detailed background information for
each issue can be found in the CY 2008 PFS 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, PE RVUs were based on
historical allowed charges. This legislation required 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 and actual data on equipment utilization.
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.
In CY 1999, we began the 4-year transition to resource-based PE
RVUs utilizing a ``top-down'' methodology whereby we allocated
aggregate specialty-specific practice costs to individual procedures.
The specialty-specific PEs were derived from the American Medical
Association's (AMA's) Socioeconomic Monitoring Survey (SMS). In
addition, under section 212 of the BBRA, we established a process
extending through March 2005 to supplement the SMS data with data
submitted by a specialty. The aggregate PEs for a given specialty were
then allocated to the services furnished by that specialty on the basis
of the direct input data (that is, the staff time, equipment, and
supplies) and work RVUs assigned to each CPT code.
For CY 2007, we implemented a new methodology for calculating PE
RVUs. Under this new methodology, we use the same data sources for
calculating PE, but instead of using the ``top-down'' approach to
calculate the direct PE RVUs, under which the aggregate direct and
indirect costs for each specialty are allocated to each individual
service, we now utilize a ``bottom-up'' approach to
[[Page 66228]]
calculate the direct costs. Under the ``bottom-up'' approach, we
determine the direct PE by adding the costs of the resources (that is,
the clinical staff, equipment, and supplies) typically required to
furnish each service. The costs of the resources are calculated using
the refined direct PE inputs assigned to each CPT code in our PE
database, which are based on our review of recommendations received
from the AMA's Relative Value Update Committee (RUC). For a more
detailed explanation of the PE methodology see the Five-Year Review of
Work RVUs Under the PFS and Proposed Changes to the PE Methodology
proposed notice (71 FR 37242) and the CY 2007 PFS final rule with
comment period (71 FR 69629).
1. Current Methodology
a. Data Sources for Calculating Practice Expense
The AMA's SMS survey data and supplemental survey data from the
specialties of cardio-thoracic surgery, vascular surgery, physical and
occupational therapy, independent laboratories, allergy/immunology,
cardiology, dermatology, gastroenterology, radiology, independent
diagnostic testing facilities (IDTFs), radiation oncology, and urology
are used to develop the PE per hour (PE/HR) for each specialty. For
those specialties for which we do not have PE/HR, the appropriate PE/HR
is obtained from a crosswalk to a similar specialty.
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 the 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 (66 FR 55246, November 1, 2002)
(hereinafter referred to as CY 2002 PFS final rule).) The SMS PE survey
data are adjusted to a common year, 2005. The SMS data provide the
following six categories of PE costs:
Clinical payroll expenses, which are payroll expenses
(including fringe benefits) for nonphysician clinical personnel.
Administrative payroll expenses, which are payroll
expenses (including fringe benefits) for nonphysician personnel
involved in administrative, secretarial or clerical activities.
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,
(65 FR 25664, May 3, 2000).) 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 direct cost data for individual services were originally
developed by the Clinical Practice Expert Panels (CPEP). The CPEP data
include the supplies, equipment, and staff times specific to each
procedure. The CPEPs consisted of panels of physicians, practice
administrators, and nonphysicians (for example, RNs) 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
The aggregate level specialty-specific PEs are derived from the
AMA's SMS survey and supplementary survey data. To establish PE RVUs
for specific services, it is necessary to establish the direct and
indirect PE associated with each service.
(i) Direct costs. The direct costs are 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 these
resources are calculated from the refined direct PE inputs in our PE
database. These direct inputs are then scaled to the current aggregate
pool of direct PE RVUs. The aggregate pool of direct PE RVUs can be
derived using the following formula: (PE RVUs * physician CF) *
(average direct percentage from SMS/(Supplemental PE/HR data)).
(ii) Indirect costs. 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 the code level
on the basis of the direct costs specifically associated with a code
and the maximum of either the clinical labor costs or the physician
work RVUs. For calculation of the 2008 PE RVUs, we are using the 2006
procedure-specific utilization data crosswalked to 2007 services. To
arrive at the indirect PE costs:
We apply a specialty-specific indirect percentage factor
to the direct expenses to recognize the varying proportion that
indirect costs represent of total costs by specialty. For a given
service, the specific indirect percentage factor to apply to the direct
costs for the purpose of the indirect allocation is 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
[[Page 66229]]
allocation would be (0.75/0.25) = 3.0. The indirect percentage factor
is then applied to the service level adjusted indirect PE allocators.
We use the specialty-specific PE/HR from the SMS survey
data, as well as the supplemental surveys for cardio-thoracic surgery,
vascular surgery, physical and occupational therapy, independent
laboratories, allergy/immunology, cardiology, dermatology, radiology,
gastroenterology, IDTFs, radiation oncology and urology. (Note: For
radiation oncology, the data represent the combined survey data from
the American Society for Therapeutic Radiology and Oncology (ASTRO) and
the Association of Freestanding Radiation Oncology Centers (AFROC).) We
incorporate this PE/HR into the calculation of indirect costs using an
index which reflects 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.
When the clinical labor portion of the direct PE RVU is
greater than the physician work RVU for a particular service, the
indirect costs are allocated based upon the direct costs and the
clinical labor costs. For example, if a service has no physician work
and 1.10 direct PE RVUs, and the clinical labor portion of the direct
PE RVUs is 0.65 RVUs, we would use the 1.10 direct PE RVUs and the 0.65
clinical labor portions of the direct PE RVUs to allocate the indirect
PE for that service.
c. Facility/Nonfacility Costs
Procedures that can be furnished in a physician's office, as well
as in a hospital or facility setting, have two PE RVUs: facility and
nonfacility. The nonfacility 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 PE RVUs is the same for both, facility and
nonfacility 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 PFS), the PE RVUs are generally
lower for services provided in the facility setting.
d. Services With Technical Components (TCs) and Professional Components
(PCs)
Diagnostic services are generally comprised of two components; a
professional component (PC) and a technical component (TC), which may
be furnished independently or by different providers. 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. This is a result of using 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 apply the same weighted
average indirect percentage factor to allocate indirect expenses to the
global components, PC, and TCs for a service. (The direct PE RVUs for
the TC and PCs sum to the global under the bottom-up methodology.)
e. Transition Period
As discussed in the CY 2007 PFS final rule with comment period (71
FR 69674), we are implementing the change in the methodology for
calculating PE RVUs over a 4-year period. During this transition
period, the PE RVUs will be calculated on the basis of a blend of RVUs
calculated using our methodology described previously 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 CY 2006
PE RVUs for each existing code. PE RVUs for codes that are new during
this period will be calculated using only the current PE methodology,
and will be paid at the fully transitioned rate.
f. PE RVU Methodology
The following is a description of the 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 a 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 component.
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
[[Page 66230]]
RVU, the clinical PE RVU and the work RVU.
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 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 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: 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 required primarily 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. 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.
Physical therapy utilization: Crosswalk the utilization
associated with all physical therapy services to the specialty of
physical therapy.
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: The setup file contains the work RVUs from this
final rule with comment period.
(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.
[[Page 66231]]
Table 1.--Calculation of PE RVUs Under Methodology for Selected Codes
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
99213 33533 71020 71020TC 7102026 93000 93005 93010
------------------------------------------------------------------------------------------------------
CABG,
Step Source Formula Office arterial, Chest x-ray Chest x-ray Chest x-ray ECG, ECG, ECG, report
visit, est single nonfacility nonfacility nonfacility complete tracing nonfacility
nonfacility facility nonfacility nonfacility
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(1) Labor cost (Lab)........... Step 1............ AMA.............. ................. $13.32 $77.52 $5.74 $5.74 $ $6.12 $6.12 $
(2) Supply cost (Sup).......... Step 1............ AMA.............. ................. $2.98 $7.34 $3.39 $3.39 $ $1.19 $1.19 $
(3) Equipment cost (Eqp)....... Step 1............ AMA.............. ................. $0.19 $0.65 $8.17 $8.17 $ $0.12 $0.12 $
(4) Direct cost (Dir).......... Step 1............ ................. =(1)+(2)+(3)..... $16.50 $85.51 $17.31 $17.31 $ $7.43 $7.60 $
(5) Direct adjustment (Dir Adj) Steps 2-4......... See footnote \1\. ................. 0.592 0.592 0.592 0.592 0.592 0.592 0.592 0.592
(6) Adjusted labor............. Steps 2-4......... =Lab * Dir Adj... =(1) * (5)....... $7.89 $45.89 $3.40 $3.40 $ $3.62 $3.62 $
(7) Adjusted supplies.......... Steps 2-4......... =Sup * Dir Adj... =(2) * (5)....... $1.77 $4.35 $2.01 $2.01 $ $0.71 $0.71 $
(8) Adjusted equipment......... Steps 2-4......... =Eqp *Dir Adj.... =(3) * (5)....... $0.12 $0.39 $4.84 $4.84 $ $0.07 $0.07 $
(9) Adjusted direct............ Steps 2-4......... ................. =(6)+(7)+(8)..... $9.77 $50.62 $10.25 $10.25 $ $4.40 $4.40 $
(10) Conversion Factor (CF).... Step 5............ MFS.............. ................. $34.0682 $34.0682 $34.0682 $34.0682 $34.0682 $34.0682 $34.0682 $34.0682
(11) Adj. labor cost converted. Step 5............ =(Lab * Dir Adj)/ =(6)/(10)........ 0.23 1.35 0.10 0.10 ........... 0.11 0.11 ...........
CF.
(12) Adj. supply cost converted Step 5............ =(Sup * Dir Adj)/ =(7)/(10)........ 0.05 0.13 0.06 0.06 ........... 0.02 0.02 ...........
CF.
(13) Adj. equip cost converted. Step 5............ =(Eqp * Dir Adj)/ =(8)/(10)........ 0.00 0.01 0.14 0.14 ........... 0.00 0.00 ...........
CF.
(14) Adj. direct cost converted Step 5............ ................. =(11)+(12)+(13).. 0.29 1.49 0.30 0.30 ........... 0.13 0.13 ...........
(15) Wrk RVU * Wrk Scaler...... Setup File........ MFS.............. 0.8806........... 0.81 29.62 0.19 0.00- 0.19 0.15 0.00 0.15
(16) Dir--pct.................. Steps 6, 7........ Surveys.......... ................. 33.8% 32.6% 40.7% 40.7% 40.7% 37.7% 37.7% 37.7%
(17) Ind--pct.................. Steps 6, 7........ Surveys.......... ................. 66.2% 67.4% 59.3% 59.3% 59.3% 62.3% 62.3% 62.3%
(18) Ind. Alloc. formula (1st Step 8............ See Step 8....... ................. ((14)/(16)) ((14)/ ((14)/(16)) ((14)/(16)) ((14)/(16)) ((14)/(16)) ((14)/(16)) ((14)/(16))
part). * (17) (16)) * * (17) * (17) * (17) * (17) * (17) * (17)
(17)
(19) Ind. Alloc. (1st part).... Step 8............ ................. See (18)......... 0.56 3.07 0.44 0.44 ........... 0.21 0.21 ...........
(20) Ind. Alloc. formulas (2nd Step 8............ See Step 8....... ................. (15) (15) (15)+(11) (11) (15) (15)+(11) (11) (15)
part).
(21) Ind. Alloc. (2nd part).... Step 8............ ................. See (20)......... 0.81 29.62 0.29 0.10 0.19 0.26 0.11 0.15
(22) Indirect Allocator Step 8............ ................. =(19)+(21)....... 1.37 32.70 0.73 0.54 0.19 0.47 0.32 0.15
(1st+2nd).
(23) Indirect Adjustment (Ind Steps 9-11........ See footnote \2\. ................. 0.362 0.362 0.362 0.362 0.362 0.362 0.362 0.362
Adj).
(24) Adjusted Indirect Steps 9-11........ =Ind Alloc * Ind ................. 0.50 11.84 0.26 0.19 0.07 0.17 0.12 0.05
Allocator. Adj.
(25) Ind. Practice Cost Index Steps 12-16....... See Steps 12-16.. ................. 0.968 0.942 1.054 1.054 1.054 1.280 1.280 1.280
(PCI).
(26) Adjusted Indirect......... Step 17........... = Adj. Ind Alloc =(24) * (25)..... 0.48 11.15 0.28 0.21 0.07 0.22 0.15 0.07
* PCI.
(27) PE RVU.................... Steps 18-19....... =(Adj Dir+Adj =((14)+(26)) * 0.77 12.64 0.58 0.51 0.07 0.35 0.28 0.07
Ind) * budn. budn.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The direct adj = [current pe rvus * CF * avg dir pct] / [sum direct inputs] = [Step 2] / [Step 3].
\2\ The indirect adj = [current pe rvus * avg ind pct] / [sum of ind allocators] = [Step 9] / [Step 10.
[[Page 66232]]
Comments Related to PE Methodology
Comment: Several commenters recommend that the unadjusted work RVUs
be used in the allocation of the indirect PE RVUs.
Response: The decision to use the budget neutralized work RVUs in
the calculation of indirect PEs appropriately maintains the current
relationships between the work, PE, and professional liability
payments. We also believe it is important to apply the revised, budget
neutralized work RVUs consistently within the PFS framework. It would
not be consistent to apply one set of work RVUs for work payments, but
a different set for purposes of calculating indirect PEs. Therefore, we
will base the calculation of both the work payments and the indirect PE
payments on the adjusted work RVUs, and maintain the current overall
relationships between work, PE, and professional liability. The PE RVUs
in Addendum B and throughout the rest of this rule reflect this policy.
Comment: Several commenters commended CMS on the bottom up approach
to calculating resource based PE RVUs. Commenters expressed gratitude
for the transparency and straight forward nature of the revised
methodology.
Response: We appreciate the support for the revised bottom up
practice methodology and agree that the bottom up methodology is a more
straight forward methodology then its predecessor.
Comment: Some commenters contend that the approach of basing PE
calculations on the weighted average of all specialties furnishing 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 total utilization of each respective service.
Response: This issue was fully addressed in the comment and
response section of the CY 2007 PFS final rule with comment period (71
FR 69641), and we did not make any further proposals relating to this
policy in the CY 2008 PFS proposed rule. Thus, these comments are
outside the scope of the CY 2008 PFS proposed rule.
Comment: One commenter stated that the use of direct PEs in the
allocation of indirect PEs unfairly penalizes PC only billers that do
not have any direct costs. Additionally, this commenter contends that
the use of only the work RVU in the allocation of indirect PEs for this
situation underestimates the indirect PEs for PC only billers.
Response: The resource-based PE methodology uses both the work RVU
and the direct cost PE RVU in the allocation of indirect PEs. For PC
only billers, which do not have any direct costs, indirect costs will
only be allocated based upon the work RVUs. There is no provision
within the current methodology to allocate the indirect PEs
differently, and we made no proposals in the CY 2008 PFS proposed rule
regarding this allocation. Additionally, we note that a review of
comments on past regulations confirms that the physician community
believes that the work RVUs ``over allocate'' the indirect PEs. Thus,
there appear to be differing views regarding the effect of this
allocation. We will continue to allocate the indirect PEs of PC only
services on the work RVUs.
Comment: One commenter recommended that, for procedures that have
supply costs in excess of 40 to 50 percent of total direct costs, all
supply costs be passed through and exempt from the direct adjustment
factor.
Response: The resource-based PE methodology converts the direct
costs for a service, obtained from the direct cost database, into PE
RVUs by comparing the service specific aggregate costs to the aggregate
pool of costs available for expenditure on direct costs. Because the
aggregate direct costs for all services contained in the direct cost
database exceed the aggregate pool of available direct dollars, a
direct cost adjustment must be applied to scale the database to the
pool. Irrespective of the percentage of total direct costs for a
specific service represented by supplies, this adjustment will still be
applied. If this adjustment were not applied to certain services, the
system would either not be budget neutral or RVUs for all other
services would have to be reduced to offset these exemptions. We did
not make any proposals relating to this adjustment. Moreover, we see no
methodological reason to exempt any services regardless of the
percentage of their direct costs represented by supplies from the
adjustments that apply to all direct costs.
g. Discussion of Equipment Usage Percentage
In the CY 2008 PFS proposed rule (72 FR 38132), we included a
discussion about our use of the equipment usage assumption of 50
percent, and stated that we continue to receive requests that we refine
this usage percentage. Some groups and individuals state that this
usage percentage should be in the range of 70 to 80 percent while
others contend that the current utilization rate is too high at 50
percent and should be refined downward to a lower usage percentage.
If the equipment usage percentage is set too high, the result would
be insufficient allowance at the service level for the practice costs
associated with equipment. If the equipment usage percentage is set too
low, the result would be an excessive allowance for the PE costs of
equipment at the service level. Although we acknowledged the 50 percent
across the board usage rate that we currently apply for all equipment
does not capture the actual usage rates for all equipment, we indicated
we do not believe that we have sufficient empirical evidence to justify
an alternative proposal on this issue. Therefore, we requested that
commenters submit information relating to alternative percentages and
approaches that differentially classify equipment into mutually
exclusive categories with category specific usage rate assumptions. In
addition, we requested any empirical data that would assist us in these
efforts.
h. Equipment Interest Rate
As part of our calculation of the PE equipment costs, we consider
several factors, for example, the useful life of each piece of
equipment and the typical interest that would be incurred in the
purchase of the equipment. We updated the assigned useful life for all
the equipment in our PE input database in the CY 2005 PFS final rule
with comment period. However, we have used the same interest rate of 11
percent since the inception of the resource based PE methodology in
1999. There has been much discussion regarding whether this is still
the appropriate interest rate to utilize in the calculation of the
equipment costs. The majority of comments on the CY 2007 PFS final rule
with comment period requested an interest rate of prime plus 2 percent
while a small number of commenters requested an interest rate
significantly lower than prime plus 2 percent.
In the CY 2008 PFS proposed rule (72 FR 38132), we discussed the
basis for the current interest rate of 11 percent and indicated that,
based on our analysis of the revised SBA interest rate data, we believe
11 percent continues to be an appropriate assumption; therefore, we
stated would retain the interest rate used in the calculation of
equipment costs at 11 percent.
Comments Concerning Equipment Usage and Interest Rate
Comment: Several commenters, including several specialty societies,
MedPAC, and the AMA RUC offered recommendations regarding the 11
percent interest rate and the 50 percent utilization rate used to
calculate the
[[Page 66233]]
price per minute for each piece of equipment. The recommendations
received regarding the proposed 11 percent interest rate were generally
favorable with the majority of commenters recommending that we monitor
the interest rate annually to ensure that the appropriate percentage is
utilized in the calculation of the equipment costs.
The commenters' recommendations about making adjustments to the 50
percent utilization rate varied. Certain commenters recommended we do
nothing until stronger empirical evidence is available, while other
commenters recommended a decrease in the utilization assumptions, and
some commenters recommended an increase in the utilization assumption.
The particular changes recommended in the utilization assumptions were,
in most cases, directly related to a specific code. Virtually all
comments received support an on going process of obtaining reliable
empirical data to utilize in the calculation of equipment costs in the
future.
Response: As discussed in detail in the CY 2007 PFS final rule with
comment period (71 FR 69650), we agree with commenters that both the
equipment interest rate and the equipment utilization rate should
continue to 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 provision of
physicians' services. Since we did not propose a specific change, we
will maintain the assumptions of a 50-percent equipment utilization
rate and an 11-percent equipment interest rate in the calculation of
the PE RVUs published in Addendum B of this final rule with comment
period. We will continue to monitor the appropriateness of these
assumptions, and evaluate whether changes should be proposed in light
of the data available.
Comment: A few commenters recommended that the equipment
utilization rate associated with preventive services be reduced since
much of the equipment associated with preventive services is procedure
specific and thus not utilized at as high a rate as other medical
equipment.
Response: Similar to our response regarding the equipment
utilization rate associated with the entire universe of medical
equipment, we do not believe that we have any strong empirical evidence
to suggest a change in the current equipment utilization rate
associated with preventive services. We are committed to continue
working with all interested parties to identify the most accurate
utilization rate information for equipment used in the provision of
physicians' services.
2. PE Proposals for CY 2008
a. Radiology Practice Expense Per Hour
The American College of Radiology (ACR) presented CMS with
information regarding the PE/HR that was used in the PE methodology for
radiology in the CY 2007 PFS final rule with comment period. ACR
suggested that we change our methodology in a way that would weight the
survey data to provide an alternative method of representing large and
small practices. We agreed to take their approach to our contractor,
the Lewin Group, for further analysis. (We note that the Lewin Group,
in its initial analysis of the ACR survey data, had also raised
concerns about the representation of small high cost entities in the
ACR survey data.) The Lewin Group reviewed ACR's approach and concluded
that weighting the ACR survey by practice size more appropriately
accounts for the small high cost entities in the final PE/HR. After
reviewing both the ACR inquiry and the Lewin response, we also agreed
that ACR's approach more appropriately identifies the PE/HR for
radiology.
For these reasons, we proposed to revise the PE/HR associated with
radiology using the survey data weighted by practice size and included
this revised PE/HR in Table 2 of the CY 2008 PFS proposed rule which
identified the PE/HR for all specialties.
Comment: Several commenters, including the AMA's RUC, expressed
concern over the proposed increase in the PE/HR for radiology whereby
the PE/HR associated with this specialty would be developed based upon
a revised practice size weighting methodology. Commenters believed that
it is inappropriate to refine the current weighting methodology
because: (1) This weighting methodology was not done for all
specialties; and (2) some specialties requested to survey their
memberships after the deadline to submit supplemental survey data and
were denied this opportunity by CMS. Several other commenters commended
CMS on their ability to review this potential problem and offer a
timely resolution to the affected specialty.
Response: The American College of Radiology approached CMS with
questions regarding the weighting methodology that were used in the
development of their PE/HR. Specifically, ACR believed that small high
cost practices that primarily furnish professional only services were
severely underrepresented in the published PE/HR. Therefore, we
forwarded ACR's concerns to our contractor for further review. Upon
review of ACR's concerns, our contractor concluded that their initial
PE/HR recommendation to CMS was not fully representative of these
smaller high cost practices. For this reason, our contractor
recommended a revised weighting approach that would fairly represent
these small high cost practices. We agree with both the ACR and our
contractor and will finalize our proposal to use the revised PE/HR for
radiology.
Additionally, we do not believe that these revisions to the PE/HR
for radiology constitute a submission of data after the deadline. No
new data were submitted. Rather, we view this as a revision to the
weighting methodology in order to address a unique situation.
Comment: Several commenters recommended that all pain management
services be crosswalked to the interventional pain management specialty
as opposed to using the actual data which currently report the
anesthesiology specialty furnishing a significant portion of the pain
management services. According to the comments received, anesthesiology
is listed as the primary specialty on many pain management services and
since the PE/HR associated with anesthesiology is lower than
interventional pain management, pain management services are being
inappropriately valued.
Response: Physicians self-designate their respective specialty for
purposes of Medicare enrollment. If commenters believe that physicians
are incorrectly self-designating their specialty as anesthesiology when
it would be more appropriate for them to designate interventional pain
management, commenters should work with their respective specialty
organizations to ensure physicians appropriately designate the correct
specialty. If the specialty of a certain percentage of the physicians
furnishing the pain management service is actually anesthesiology, we
believe that weighting the various PE/HR for all specialties that
furnish these services, as we currently do, is the appropriate
methodology to establish the final PE/HR for pain management services.
Comment: One commenter recommends that only the PE/HR associated
with ophthalmology be used in the establishment of RVUs for CPT code
66984, Extracapsular cataract removal with insertion of intraocular
lens prosthesis (one stage procedure), manual or mechanical technique
(e.g., irrigation and aspiration or
[[Page 66234]]
phacoemulsification). The commenter contends that the 14 percent of the
utilization that is associated with optometry is in error as
optometrist would only be involved in the post-operative care of these
patients and not the surgical procedure.
Response: Although we did not make any proposals in the CY 2008 PFS
proposed rule regarding this issue, we agree that, generally,
optometrists will not be involved in the surgical procedure. As stated
by the commenter, and supported by the utilization data, there are a
significant number of services for which optometrists are involved in
the post-operative care of CPT code 66984. The resource-based PE
methodology appropriately adjusts for those services identified with
modifier 55 (post-operative care only). Since there are PEs associated
with the post-operative care of CPT code 66984, and since we adjust the
utilization for those services that are identified as the post-
operative care only of CPT code 66984, we believe the current
methodology appropriately reflects the correct weighted specialty mix
associated with this service.
Comment: One commenter recommended that the PE/HR for CPT codes
22862, Revision including replacement of total disc arthroplasty
(artificial disc) anterior approach, lumbar, single interspace, and
22865, Removal of total disc arthroplasty (artificial disc) anterior
approach, lumbar, single interspace, be crosswalked to orthopedic
surgery as opposed to the all physician PE/HR. The commenter contended
this is similar to the crosswalk change from all physicians to
orthopedic surgery that was reflected in the PE methodology in the
proposed rule for CPT code 22857, Total disc arthroplasty (artificial
disc), anterior approach, including discectomy to prepare interspace
(other than for decompression), lumbar, single interspace.
Response: CPT codes 22862 and 22865 were new for CY 2007 and absent
specific information with respect to the specialty performing the
services, we had crosswalked these codes to the all physician PE/HR. We
agree with the commenter that these codes are of a similar nature to
CPT code 22857. They are part of the same orthopedic family of codes
and should be treated consistently when applying the PE methodology.
Therefore, we will assign the orthopedic surgery PE/HR to CPT codes
22862 and 22865 as opposed to the all physician PE/HR.
Comment: Several commenters conveyed support for the Physician
Practice Information Survey which is currently being administered
throughout the nation and encouraged CMS to use this practice cost
information to update the current PE/HR data that is being utilized in
the development of resourced-based PE RVUs.
Response: The Physician Practice Information Survey is a practice
cost survey that is being conducted by the AMA with support from
various specialty societies and CMS. We look forward to analyzing the
results of the AMA data collection efforts for possible inclusion in
the resource-based PE methodology in future rulemaking cycles.
b. RUC Recommendations for Direct PE Inputs and Other PE Input Issues
In the CY 2008 PFS proposed rule (72 FR 38133), we proposed the
following concerning direct PE inputs.
(i) RUC Recommendations
In 2004, the AMA's Relative Value Update Committee (RUC)
established a new committee, 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, a
process that was previously accomplished by the Practice Expense
Advisory Committee (PEAC).
The PERC reviewed the PE inputs for nearly 300 existing codes at
its meetings held in February 2007 and April 2007. (A list of these
reviewed codes can be found in Addendum C of the CY 2008 PFS proposed
rule.)
In the CY 2007 PFS final rule with comment period, we addressed
several issues concerning direct PE inputs and encouraged specialty
societies to pursue further review of these inputs through the RUC/PERC
process. The following discussions summarize the PERC recommendations
regarding these issues:
Cardiac Catheterization Procedures
As discussed in the CY 2008 PFS proposed rule, the PERC considered
recommendations for new or updated PE inputs for the family of CPT
codes 93501 through 93556 for cardiac catheterization. The American
College of Cardiology (ACC), in cooperation with the Society of Cardiac
Angiography and Interventions (SCA&I) and the Cardiovascular Outpatient
Center Alliance (COCA), developed PE inputs for the nonfacility setting
for 13 of the 28 CPT codes in this family.
We proposed to accept the PERC recommendations for the direct PE
inputs for the nonfacility setting for the CPT codes 93501, 93505,
93508, 93510, 93526, 93539, 93540, 93542, 93543, 93544, 93545, 93555,
and 93556.
In addition, we proposed that the PE for the following CPT codes
will not be valued or applicable to the nonfacility setting: 93503,
93511, 93514, 93524, 93527, 93528, 93529, 93530, 93531, 93532, 93533,
93561, 93562, 93571, and 93572.
Comment: We received comments from the ACC and the SCA&I thanking
us for our consideration of the PERC recommendations for 13 CPT codes
for cardiac catheterization procedures performed in the nonfacility
setting and for accepting their request not to establish nonfacility PE
RVUs for the remaining 15 procedures in the cardiac catheterization
family.
Response: We appreciate the commenters' support and have accepted
the PERC recommendations for the 13 cardiac catheterization procedures
and have changed our PE database to reflect the PE inputs. For the 15
remaining codes, we will finalize the proposal and attach the ``NA''
indicator to them.
Comment: We received comments from COCA, a national organization
representing nonfacility medical cardiology practices that conducted a
``Direct Cost Study'' purporting to demonstrate that the major problem
with the 2006 RUC estimates of direct PE costs for nonfacility
outpatient cardiac catheterization was an inadequate list of direct
patient care activities. In addition, COCA contends that the total RUC
estimates of clinical labor time were so low as to lack credibility.
The commenter contends that a significant amount of the data from its
Direct Cost Study were not incorporated into the PE recommendations
that were jointly prepared and presented at the April 2007 RUC meeting
with ACC and SCA&I for the cardiac catheterization procedures. In
addition to the inadequate clinical labor inputs, the commenter
believes that the RUC process does not allow for the inclusion of
safety devices, such as crash carts, as direct PE inputs because these
are not used in the typical case; rather, these are considered indirect
PE. COCA has requested that we review the data from the Direct Cost
Study and revise the current proposed PE RVUs for these procedures to
values that reflect more appropriately the direct and indirect costs of
providing these services. As an alternative solution, COCA asks that we
tie reimbursement for these services to a reasonable percentage of the
hospital APC.
We also heard from many cardiology practices that provide cardiac
catheterizations in the nonfacility
[[Page 66235]]
setting. They had similar comments and indicated their support for
COCA's request that we review the cost study data and revise the PE
RVUs to more appropriately value the cardiac catheterization procedures
when performed in the nonfacility setting.
Response: While we understand COCA's and the other commenters'
concerns about the decrease in the PE RVUs for the cardiac
catheterization procedures, we want to clarify that the PE inputs for
these procedures were fully considered by the RUC process. The RUC has
identified standard descriptions of clinical staff activities that the
specialty societies follow as they prepare their recommendations for
direct PE inputs believed to be typical to a service and the RUC has
established standard values for some of these clinical activities. The
RUC does not deviate from accepted standard unless the specialty
society presents compelling evidence to substantiate that the variance
is typical to the practice for each procedure. In the past, the RUC has
recommended, and we agreed, that the crash cart would be included as
equipment necessary to perform the services of cardiopulmonary
resuscitation, CPT 92950, but is not necessary to perform other
services, even though many physicians have purchased and maintain crash
carts as part of their medical practices. Since the crash cart is only
specified as required for use in CPT 92950, it is considered as
indirect PE for all other procedures. We note that COCA's request in
the alternative to make payment for these procedures based on a
percentage of the OPPS APC is not feasible. The PFS and the OPPS APC
payment amounts are determined by different payment methodologies that
are specified in the statute. We rely on the RUC process to assist us
in establishing the typical PE inputs that are necessary to provide
physician services. This is because the specialty-developed PE
recommendations that are presented to the RUC are all subject to the
same multi-specialty scrutiny. We agree with the PERC's direct PE
recommendations for the 13 cardiac catheterization codes in the
nonfacility setting and we will accept the RUC PE recommendations for
these 13 procedures. However, we are sympathetic to the concerns raised
by COCA and echoed by other commenters about the extent to which the
data from the Direct Cost Study were considered in the RUC process and
we ask that the RUC provide another opportunity for the review of the
direct PE inputs for these cardiac catheterization procedures to ensure
that the data from the COCA Direct Cost Study is afforded appropriate
and adequate consideration.
Obstetric/Gynecologic PE
As discussed in the CY 2008 PFS proposed rule, we agreed with the
PERC recommendation to add a non-sterile sheet (drape) 40 in by 60 in
(supply code SB006) priced at $0.222 to the pelvic exam pack resulting
in the new price of $1.172. This change affected 236 CPT codes for
obstetric/gynecologic services containing the pelvic exam pack. We also
proposed to accept the PERC recommendations to standardize the
equipment used in post-operative visits to include both a power table
and fiberoptic light in the PE database for 70 obstetric/gynecologic
codes.
Comment: We received a comment from the society representing
gynecologic oncologists commending us for making the above changes to
the pelvic exam pack and for standardizing the equipment used in
follow-up visits. The society believes these changes enable gynecologic
oncologists to account for the additional costs incurred in their
practice specialty.
Response: We appreciate the specialty society's comments and we
will adopt the PERC recommended inputs as proposed.
Dual Energy X-Ray Absorptiometry (DEXA)
The PERC recommended revisions to the direct PE inputs for CPT
codes 77080, 77081, and 77082 to comply with established PERC
standards, and more appropriately reflect the resources used to furnish
these services. We agreed with these PERC recommendations.
Comment: We received several comments thanking us for accepting the
RUC's PE recommendations for the DEXA codes. We also received comments
from several device manufacturers and specialty societies representing
gynecologists, endocrinologists, rheumatologists, and radiologists
informing us that the PE recommendations passed by the RUC, which we
had proposed to accept in the proposed rule, contained a mistake as to
the correct DEXA equipment that is typically used to perform the
procedure represented by CPT code 77080. The RUC's PE recommendations
listed the DEXA equipment as that using a ``pencil beam'' technology,
priced at $41,000. However, the correct DEXA equipment used for CPT
77080 uses the ``fan-beam'' technology and is priced at $85,000.
Response: We were sympathetic to the concerns expressed by the
commenters about the listing of the incorrect DEXA equipment, and we
worked with the RUC staff to arrange for this equipment error to be
reconsidered by the RUC at its September 2007 meeting. The RUC agreed
to the specialty society's recommended change in the DXA equipment for
CPT 77080. We agree with the recommendations from the specialty
societies and the RUC and we have corrected our PE database to reflect
that the fan-beam DEXA equipment is typically used for CPT 77080. In
addition, a price of $3,000, with documentation, was presented for the
spinal phantom used in this procedure. We have also accepted this price
and have changed the PE database accordingly.
Comment: We received many comments expressing concerns about the
cuts to the PE RVUs for these DEXA services. These commenters believe
the cuts are a result of the new PE methodology and may result in
access problems for patients because physicians will no longer be able
to afford to provide these services in the office setting. One
commenter asked us to identify and make available to the public the
inputs used to derive the indirect PE RVUs.
Response: We are aware that the PE RVUs for these DEXA services
were negatively impacted by the change in the PE methodology, as were
those for many other services in which the previous PE RVUs were not
based on the PE resources used to furnish the service. Because the new
PE methodology now utilizes these resources, it is important to make
certain that the PE direct inputs actually reflect the typical
resources that are used to provide each service. The methodology for
determining the indirect PE RVUs, including a description of each step
in the calculation, is detailed earlier in this section. We share the
commenters concerns about beneficiary access to DEXA services and will
continue to monitor this issue.
Computer-Aided Detection (CAD) Codes
The specialty society for radiological services reviewed the direct
inputs for CPT codes 77051 and 77052 and recommended that no changes to
the PE inputs were needed. The PERC concurred with this decision and we
are in agreement.
Comment: We received a comment from the society representing
radiologists conveying their appreciation for accepting the unchanged
direct PE inputs for CAD services.
Response: We appreciate the commenter's support and will maintain
the PE inputs as proposed.
[[Page 66236]]
Nuclear Medicine Services
The specialty society representing nuclear medicine and the PERC
recommended that the direct PE inputs for 2 CPT codes contained CPEP
inputs and needed to be updated to agree with 2004 PEAC-approved
inputs. However, in reviewing the PE database, we discovered that there
were 4 other related codes which also had CPEP inputs which should be
updated. We made the appropriate adjustments to substitute the PEAC
inputs for the CPEP for CPT codes 78600, 78607, 78206, 78647, 78803 and
78807.
The specialty society also noted that for 7 CPT codes, revision of
x-ray related supplies was required, including the number of x-ray
films, developer solution, and film jackets. The PERC forwarded these
recommendations and we made the appropriate changes to the PE database
for the following CPT codes: 78600, 78601, 78605, 78606, 78607, 78610
and 78615.
Comment: The specialty society representing nuclear medicine
expressed appreciation for acceptance of their recommended inputs and
indicated it will continue to monitor the nuclear medicine codes and
provide inputs and refinements as necessary and appropriate.
Response: We appreciate the specialty society's comments and we
will adopt the PERC recommended inputs as proposed.
Transcatheter Placement of Stent(s)
At the request of the specialty societies representing radiology
and interventional radiology, the PERC considered and approved direct
PE inputs for the nonfacility setting for 3 CPT codes, 37205, 37206,
and 75960, for transcatheter placement of stent(s). Among the supplies,
a ``vascular stent deployment system'', valued at $1,645, was noted by
the society as the typical stent used for CPT codes 37205 and 37206
requiring 2 such stents for the placement in the initial vessel and 1
stent for each subsequent vessel, respectively. We reviewed a published
clinical research study that was forwarded by the specialty society.
The study indicated that 1 stent was typical for the procedure of CPT
code 37205. As discussed in the CY 2008 PFS proposed rule (72 FR
38134), absent any further verification from the specialty, we included
only 1 stent in the PE database for this code.
Comment: Commenters, representing specialty societies for
radiology, interventional radiology and vascular surgery appreciated
the proposal assigning direct PE inputs for the nonfacility setting for
these three CPT codes. However, these commenters expressed concern that
the number of stents had been reduced. One commenter agreed that two
stents may not be typical but requested guidance on how the cost of the
additional stent could be billed; another of the commenters asked that
we reconsider this decision or at a minimum include the ``average'' of
1.5 stents. One of the commenters also noted that several studies
clearly establish that these peripheral stent services are safely
performed in the nonfacility environment, with nearly all of the
procedures in the studies resulting in short observation stays,
typically of less than 4 hours.
Response: Based on a review of the literature and other information
provided by the commenters we will revise the PE database for CPT code
37205 to reflect 1.5 stents.
Comment: Two commenters, representing manufacturers, expressly
urged us to consider the safety issues surrounding the proposal to
value these procedures in the nonfacility setting and believe that this
conflicts with the decision to exclude these procedures from the
ambulatory surgical center (ASC) list. One of these commenters
acknowledged that, while we have no specific policy to identify which
procedures can be safely performed in a physician's office, we do have
some safety standards for ASCs. The commenter requested that the ASC
standards be extended to the physician office. This commenter also
referenced studies that demonstrate complications can be associated
with these procedures, and suggested that these risks need to be
addressed by appropriate safety or quality standards.
Response: We appreciate the commenters' viewpoint. However, as the
commenters acknowledged, we have no established policy to designate
procedures that can be ``safely'' performed in the physician office
setting. The purpose of the PFS is to establish proper payment for
procedures furnished by physicians and other health professionals.
Several medical specialty societies recommended the valuation of these
services in the nonfacility setting, which suggests to us that these
procedures are being furnished in nonfacility settings on a regular
basis. These societies provided the recommended PE inputs involved in
furnishing the typical service in a nonfacility setting, and these
inputs were reviewed, accepted and recommended by the RUC. We also note
that, as indicated in the previous comment, one commenter provided
literature from studies to support that these services are safely
performed in the nonfacility environment. Because it appears these
procedures are being furnished regularly in nonfacility settings, we
believe it is appropriate to value them for payment in those settings.
Therefore, we will value these procedures in the nonfacility setting as
proposed.
Comment: One commenter noted that payment for CPT code 75960, the
supervision and interpretation service associated with the 2 CPT codes
discussed above for the transcatheter placement of stent(s), is still
shown as carrier-priced in the Addendum of the proposed rule.
Response: We regret the error. The Addendum and PFS database have
been corrected to reflect the appropriate RVUs.
(ii) Remote Cardiac Event Monitoring
In the CY 2007 PFS final rule with comment period, direct PE inputs
for remote cardiac event monitoring (CEM) services represented by CPT
codes 93012, 93225, 93226, 93231, 93232, 93270, 93271, 93733, and 93736
were revised on an interim basis to reflect the unique circumstances
surrounding the provision of these services. Unlike most physicians'
services, CEM services are furnished primarily by specialized IDTFs
that, due to the nature of CEM services, must operate on a 24/7 basis.
The specialty group representing suppliers that furnish CEM services
believes that these services require additional direct PE inputs, such
as telephone line charges associated with trans-telephonic
transmissions and fees associated with providing Web access for storage
and transmission of clinical information to the patient's physician. We
continue to work with the specialty group regarding the specific direct
PE inputs, as well as the components for the indirect PE allocation,
based on surveys conducted by the specialty group. To clarify and
further the results of our discussions with and information provided
by, the specialty group, we requested comments in the CY 2008 PFS
proposed rule on the appropriateness of the above-mentioned direct PE
inputs. In addition, we invited comments on any additional direct
inputs and components of the indirect PE allocations which would be
appropriate for these services, along with supporting documentation to
justify their inclusion for PE purposes.
Comment: We received comments from medical societies, provider
organizations and a device manufacturer thanking us for working with
these organizations to develop direct PE for
[[Page 66237]]
these services that do not fit the typical physician service model.
Several comments supported the specific PE proposals supplied by the
specialty group representing providers that furnish CEM services, and
urged us to adopt them. A medical society representing cardiologists
requested to work with us and the remote CEM provider groups to gather
and review any additional necessary data prior to adoption of
additional direct PE inputs.
The CEM provider group specifically proposed that we add telephone
transmission costs to the direct PE inputs for CPT codes for CEM, 93012
and 93271 and the CPT codes for pacemaker monitoring, 93733, and 93736.
The group also identified expenses for Web-based storage, maintenance
and access to clinical information to be allocated to the CEM and
pacemaker monitoring CPT codes, as well as the holter monitoring CPT
codes 93226 and 93232. In addition to these supply PE recommendations,
the CEM provider group proposed equipment time-in-use increases for the
holter monitors, cardiac event monitors and for INR monitors (which are
discussed later in this section).
Response: We carefully reviewed the information supplied by all of
the commenters and believe that it would be valuable for the commenters
to work together, including the cardiology specialty society, before we
establish further direct PE inputs for these cardiac monitoring
services. In addition, we would like to make the CEM providers aware
that it appears the assignment we made in CY 2007 of 43,200 time-in-use
minutes for the looping CEM monitor used in CPT code 93271 (typically
used for a 30-day period) pays back the cost of this CEM monitor, that
is valued at $995, in less than 5 months, even though the CEM monitor
has an established 4-year useful life. As we discuss later in the
Prothrombin Time, International Normalized Ratio (PT/INR) section, we
believe that the time-in-use assigned to any one device should not
exceed its useful life. We will review this time-in-use assignment for
CEM monitors during our CY 2009 rulemaking.
(iii) Prothrombin Time, International Normalized Ratio (PTI/NR)
As discussed in the CY 2008 PFS proposed rule, based on comments
received and subsequent discussions with entities that furnish these
PT/INR services, we adjusted the time in use for the home monitor
equipment for G0249 Provision of test materials and equipment for home
INR monitoring to patient with mechanical heart valve(s) who meets
Medicare coverage criteria; includes provision of materials for use in
the home and reporting pwiof [prothrombin] test results to physician;
per four tests to 1440 minutes to reflect that the monitor is dedicated
for use 24 hours a day and unavailable for others receiving this
service. We invited comments on this change, as well as comments on any
additional direct inputs which would be appropriate to this service,
along with supporting documentation to justify their inclusion for PE
purposes.
Comment: We received comments from specialty societies, provider
groups, and individuals expressing their appreciation of our attempt to
correct the problem concerning the application of PE methodology for
the PT/INR service, but noted their concern that changing the INR home
monitor time-in-use minutes from 32 to 1440 does not have a rational
basis nor does it provide for an adequate recoupment of the cost of the
device. These commenters requested that we assign a more realistic
figure to capture the 28-day period that the patient is required to use
the monitor. One commenter noted that using the current 1440 minutes,
it would take 11.7 years to recoup the $2000 price of the equipment
which has an assigned life of 4 years. The commenters suggested several
alternative methodologies to calculate the time-in-use for the INR
monitor. One method suggests multiplying the 1-day time, 1440 minutes,
by 4, which represents the number of tests conducted in the 28-day
period, to equal 5,760 minutes. This method would take 3 years to get
back the $2000 value of the INR monitor. Another proposal suggests
multiplying the 1-day 1440 minutes by 28 days which is the actual time
the patient has the equipment. This method yields 40,300 minutes and
the commenter admittedly states this method greatly overestimates the
value of the INR monitor because it would take just 5 months to recoup
the $2000 price. One commenter suggested that we simply amortize the
price of the equipment, $2,000, over the useful life of 4 years.
Another commenter's suggestion uses the annual minutes figure of
150,000 that we use in our formula for deriving per minute equipment
costs, and divides it by 28 (days) to arrive at 5,753 minutes. This
method recoups the INR monitor price in 3 years.
Other commenters voiced concerns about the valuation of the INR
home monitor and offered alternatives to capture the cost of the
device. One commenter suggested that we treat the cost of the INR home
monitor as a one-time upfront cost and include this price in HCPCS code
G0248 that is used to report the demonstration of the INR monitor to
the patient, at the initial use. Another commenter recommended that the
INR home monitor be removed from the PE for both G0248 and G0249 and be
considered under the DME benefit.
Response: We understand the concerns expressed by the commenters
and appreciate their suggested alternatives that we could use to more
appropriately cover the costs of the INR home monitor. Further, we
agree that the 1440 minutes we assigned for CY 2007 seems too low
considering that the patient uses the INR home monitor for 28 days, not
just one. After reviewing all of the suggested alternatives, we
eliminated the two proposals asking us to change the mechanism of
payment for the INR home monitor. We, therefore, considered the various
suggestions for establishing a more appropriate time-in-use value for
the INR home monitor. We believe the proposal that best reflects the
policy we use to determine the time-in-use for equipment items where
the actual minutes-in-use exceed the assigned useful life is the
commenter's suggestion to amortize the $2000 INR monitor over its 4-
year life. Using this method, 4,315 minutes is the necessary time-in-
use figure to recover the purchase price of the equipment in 4 years.
We will replace the 1440 minutes assigned for CY 2007 with 4,315
minutes as the time-in-use for the INR home monitor and will change the
PE database accordingly.
(iv) Positron Emission Tomography (PET) Codes Clinical Labor Time
We received comments from the specialty society representing
nuclear medicine regarding a discrepancy in the clinical labor time for
CPT codes 78811, 78812, and 78813 which are PET codes for tumor
imaging. The specialty noted that the clinical labor time indicated in
the PE database differs by 7 minutes from the time that was previously
recommended by the PERC in April 2004. We agreed with the specialty
society that the PE database labor inputs for these 3 PET codes are
incorrect and we made the appropriate adjustments to the PE database.
Comment: The specialty society representing nuclear medicine
expressed appreciation for acceptance of its recommended inputs and
indicated it will continue to monitor the nuclear medicine codes and
provide inputs and refinements as necessary and appropriate.
Response: We thank the specialty society for reviewing the direct
inputs for their related procedures in the PE
[[Page 66238]]
database that we post as a download with each proposed and final rule
on our Web site (www.cms.hhs.gov/PhysicianFeeSchedule/PFSFRN). We will
adopt the recommended inputs as proposed.
(v) Nuclear Medicine PE Supplies
The specialty society representing nuclear medicine commented that
the PE database currently contains supply items that are inappropriate
for certain procedures and provided the information to make the
corrections. For respiratory imaging procedures represented by CPT
codes 78587, 78591, 78593, 78594, 78630, 78660, 78291, and 78195, the
specialty society noted specific IV supply items to be deleted from
procedures where they are not required. For a thyroid imaging procedure
represented by CPT code 78020, x-ray supply items were recommended for
deletion. In addition, the society recommended adding supply items for
respiratory imaging procedures, including nose clips, masks, and
nebulizer kits, as appropriate, to CPT codes 78584, 78585, 78591,
78593, 78594, 78586, 78587, 78588, and 78596. For a kidney function
study represented by CPT code 78725, injection supply items were noted
as missing and the specialty society requested that these be added. We
proposed to accept these direct PE input corrections and revised our PE
database accordingly.
Comment: The specialty society voiced its gratitude for the
acceptance of their recommended inputs.
Response: We thank the specialty society for its interest in
assuring the accuracy of the PE inputs in the procedures provided by
their members. We will adopt the PERC recommended inputs as proposed.
(vi) Arthroscopic Procedure Nonfacility Inputs
In the CY 2008 PFS proposed rule (72 FR 38135), we included a
discussion about the establishment of nonfacility direct PE inputs for
the arthroscopic procedures represented by CPT codes 29805, 29830,
29840, 29870, and 29900. Absent specific recommendations from the RUC
and because some physicians are already performing these procedures in
the office setting, we specifically requested comments regarding the
appropriateness of establishing nonfacility PE inputs for these
arthroscopic procedures when they are provided in the office setting.
We also invited comments as to the specific direct PE inputs, following
the RUC approved standardized format, that are typical in the provision
of each above listed arthroscopic procedure furnished in the
physician's office. We indicated we will review these comments to
determine whether or not it is appropriate to propose on an interim
basis PE inputs for these codes in the nonfacility setting in our final
rule.
Comment: We received comments from the specialty society
representing orthopedic surgeons in opposition to the establishment of
nonfacility PE for the arthroscopic procedures because they believe
these procedures are not safely performed in the office setting. The
specialty society indicated that one of these codes, CPT 29900,
Arthroscopy, metacarpophalangeal joint, diagnostic, includes synovial
biopsy, was surveyed by the RUC in April 2001 and, at that time, the
RUC recommended this service only as a facility-based procedure. The
RUC supported the AAOS concerns and recommended that the PE RVUs for
the nonfacility setting remain designated as ``NA.'' The specialty
society believes that if the arthroscopic procedures were valued in the
nonfacility setting, untrained physicians may begin to perform them
and, as a result, patients will face significant risks. The specialty
society believes that only credentialed physicians should perform these
procedures and that this process can only be ensured in the facility-
based setting. The specialty society also asserts the facility-based
setting is the safest setting for these procedures because it affords
the physician more clinical options for dealing with any complications
that may arise. In addition, if the procedure is furnished in the
nonfacility setting, there would be no way to address any treatable
lesion that is found and a patient would need to be seen in the
facility setting to undergo a second procedure.
Because the specialty society's position was established by an
expert panel, the society states that it will reconsider its position
if evidence is presented establishing the safety and efficacy of these
procedures in the office setting and if a method is established to
ensure that only qualified physicians perform these procedures in the
office setting.
We also received comments from orthopedic practices and individual
physicians--the majority of which indicated they are members of the
orthopedic specialty society--all stating that they are currently
performing these procedures in the nonfacility setting. These comments
requested that we establish PE inputs for the arthroscopic procedures
because this would allow patients greater access to these services in
more convenient settings and, because it would establish payment that
would more fairly compensate them for the resources they use to provide
these services in the office location. A product manufacturer supported
the views of the physicians who requested the establishment of
nonfacility PE for the nonfacility setting.
These physicians note that the safety of the in-office procedures
is well documented in the literature, and provided us with citations of
articles going back to the mid-1990s. We also received suggested PE
inputs including clinical labor, supplies and equipment that are
typically used when these procedures are provided in the nonfacility
setting.
Response: We appreciate the concern expressed by the commenters
opposing the establishment of PE for the office setting and are
sympathetic to those supporting the assignment of PE for these codes.
We are also dismayed that the parties involved on each side of this
issue have not been able to resolve these issues to date. We have
decided that the most prudent course of action is to defer proposing
nonfacility inputs for these arthroscopic procedures in this final
rule. We are hopeful that the specialty society and its physician
colleagues who provide these services in the nonfacility setting will
be able to discuss the issues of mutual concern regarding the safety of
performing these procedures in the office setting. We are hopeful that
this issue can be resolved and that the physicians performing these
services in the nonfacility setting will be given the opportunity to
have a multi-specialty review by the RUC. We are aware that this
decision to refer this issue back to the specialty society and the RUC
postpones the establishment of nonfacility PE values for these
procedures until CY 2009, at the soonest, and that a review by the RUC
process is not guaranteed. However, given the apparent level of
dissension within the specialty, we believe that the specialty society,
its physician colleagues, and the RUC should first be given an
opportunity to resolve these important issues.
(vii) Nonfacility Inputs for CPT Code 52327
As discussed in the CY 2008 PFS proposed rule we indicated that the
society representing urologists requested that we remove all of the
nonfacility PE inputs for CPT code 52327, Cystourethroscopy (including
ureteral catheterization); with subureteric injection of implant
material. The specialty society reasoned that the nonfacility PE value
is inappropriate since the procedure is never performed in the
physician office;
[[Page 66239]]
it is specific to the pediatric population; and, as such, is always
performed with general anesthesia. We agreed with the specialty society
that this procedure is incorrectly valued for the nonfacility setting
and proposed to accept its recommendation to remove the nonfacility
direct PE inputs, revising the PE database accordingly.
Comment: The specialty society thanked us for accepting its
recommendation to remove the nonfacility PE for this procedure.
However, the society indicated that a review of the PE database on our
Web site indicated that these inputs were still included and suggested
that they be deleted.
Response: We appreciate the commenter's attention to detail and
have removed the PE inputs from the PE database.
(viii) Maxillofacial Prosthetics
We have been working with the society representing maxillofacial
prosthetists since 2005 to establish nonfacility direct inputs for the
prosthetic services represented by the CPT code series, 21076 through
21087. The current PE database reflects the labor, supplies, and
equipment needed to perform each procedure. However, we do not have
pricing information and documentation for many supply items. The
society provided information and documentation for equipment prices,
but because specific time-in-use information was not provided, we
developed time in use in 2006 for each equipment item in each
procedure. For CY 2007, these equipment inputs were utilized under the
new PE methodology to calculate the nonfacility PE RVUs for these
procedures. Although we have asked the specialty society to provide the
supply pricing information and time in use data for each equipment item
for each procedure, we have not received the requested information to
date. Consequently, unless such information is provided, the PE
database will continue to have no prices associated with these
supplies. Therefore, in the CY 2008 PFS proposed rule, we proposed to
cap the time in use for each equipment item at 25 minutes until
specific information is received regarding the actual time in use.
Tables listing the needed information for were included in the proposed
rule.
Comment: The specialty society representing the maxillofacial
prosthetists supplied us with some of the requested information. The
society provided us with the time-in-use data for every piece of
equipment for each of the procedures in the CPT code series 21076
through 21087. The specialty also provided prices for the supply items
used in this code series; however, it did not provide any documentation
to support these prices.
Response: We appreciate the information provided by the specialty,
especially that in relation to the equipment time-in-use. The
recommended equipment times were compared with the total clinical labor
time for each procedure and times that were greater were reduced to
equal the labor time, in accordance with our usual allocation policy.
Capping the equipment time-in-use to match the labor time affected 4
pieces of equipment in every procedure including: the dental chair,
ceiling light, air compressor, and delivery unit. For 3 of these codes,
the time-in-use for a 5th piece of equipment, the washout and curing
unit, was also capped. We will accept the specialty's equipment time-
in-use information, with the aforementioned variances, and have changed
the PE database accordingly.
We regret that documentation for the supply prices was not
forwarded. We did, however, receive a catalog documented pricing for
articulating paper/ribbon that was submitted by a different specialty
in reference to another CPT code, and have entered this price in the PE
database for 8 of the 10 codes in this family, as appropriate. The
specialty is reminded that our policy for accepting prices for supplies
or equipment in the PE database requires the submission of acceptable
documentation, the definition of which is specified below the table
that appeared in the proposed rule listing the outstanding prices for
supply items needing documentation. We will continue to work with the
specialty as it collects and forwards this important information.
(ix) Requests for Increases in Supply Prices
We received a request from the specialty society for obstetrics and
gynecology to increase the price of supply item (kit, hysteroscopic
tubal implant for sterilization) for CPT code 58565, Hysteroscopy,
surgical; with bilateral fallopian tube cannulation to induce occlusion
by placement of permanent implants for this code which was created for
CY 2005. This hysteroscopic implant kit is priced at $980 and the
specialty is now requesting a price of $1,245, providing an invoice for
documentation. The specialty reports that the higher price is
attributed to a manufacturer change in design and materials, and
submitted the manufacturer's documents supporting these changes that
were used to secure FDA approval. Therefore, we proposed to accept the
new price of $1,245 for the hysteroscopic implant kit due to the
changes made in the modified model.
Comment: We did not receive comments on this proposal.
Response: We will finalize our proposed price of $1,245 for the
hysteroscopic implant kit and will amend our PE database, as
appropriate.
(x) 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 (see Table 2: Supply
Items Needing Specialty Input for Pricing and Table 3: Equipment Items
Needing Specialty Input for Pricing). In our CY 2008 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 containing
specific descriptors and pricing information in the form of catalog
listings, vendor Web pages, 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 2 and 3, 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. For supplies or
equipment that have previously appeared on this list, and for which we
received no or inadequate documentation, we proposed to delete these
items unless we receive adequate information to support current pricing
by the conclusion of the comment period for this proposed rule.
In Tables 4 and 5, we have listed new supplies and equipment from
the new CPT codes for CY 2008 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.
[[Page 66240]]
Table 2.--Supply Items Needing Specialty Input for Pricing
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Unit Primary associated Associated *CPT Prior item Commenter response 2008 item status
Code 2006/7 Description Unit price specialties code(s) status on table and CMS action refer to note(s)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
SC088............................ Fistula needle, Item................ ......... Dermatology......... 36522.............. Yes.............. Documentation C
dialysis, 17g. received. Revised
description per
specialty's
comments. Price
accepted at $1.62.
Gas, argon, .................... ......... Urology, Radiology, 50395.............. No............... New Item........... A, E
cryoablation. Interventional
Radiology.
Gas, helium, .................... ......... Urology, Radiology, 50395.............. No............... New Item........... A, E
cryoablation. Interventional
Radiology.
SD140............................ Pressure bag........ item................ 8.925 Cardiology.......... 93501, 93508, Yes.............. Documentation C
93510, 93526. received. Price
accepted at $19.00.
SL119............................ Sealant spray....... oz.................. ......... Radiation Oncology.. 77333.............. Yes.............. No comments B
received.
SD213............................ Tubing, sterile, non- item................ 1.99 Cardiology.......... 93501, 93508, Yes.............. Documentation C
vented (fluid 93510, 93526. received. Price
administration). accepted at $0.949.
Stent, vascular, Kit................. $1,645 Radiology, 37205, 37206....... Yes.............. Documentation C
deployment system. Interventional received. Price
Radiology. retained at $1,645.
Catheter, Kumpe..... Item................ ......... Radiology, 50385, 50386....... No............... New item........... A, E
Interventional
Radiology.
Disposable .................... ......... Oral and 21073.............. No............... New item........... A, E
aspirating syringe. Maxillofacial
Surgery.
Guidewire, angle tip .................... ......... Radiology, 50385, 50386....... No............... New item........... A, E
(Terumo), 180 cm\1\. Interventional
Radiology.
Snare, Nitinol Item................ ......... Radiology, 50385, 50386....... No............... New item........... A, E
(Amplatz). Interventional
Radiology.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\*\ CPT codes and descriptions only are copyright 2008 American Medical Association. All Rights Reserved. Applicable FARS/DFARS apply.
Note: Acceptable documentation includes--Detailed description (including system components), source, and current pricing information, such as copies of catalog pages, hard copy from specific
Web pages, invoices, and quotes (letter format okay) from manufacturer, vendors or distributors. Unacceptable documentation includes--phone numbers and addresses of manufacturer, vendors or
distributors, Web site links without pricing information, etc.
Note A: Additional documentation required. Need detailed description (including kit contents), source, and current pricing information (including pricing per specified unit of measure in
database). Accept copies of catalog pages or hard copy from specific Web pages. Phone numbers or addresses of manufacturer, vendors or distributors are not acceptable documentation.
Note B: No/Insufficient received. Retained price in database on an interim basis. Forward acceptable documentation promptly.
Note C: Submitted price accepted.
Note D: Deleted per comment or CMS.
Note E: 2007/8 price retained on an interim basis. Forward acceptable documentation promptly.
Table 3.--Equipment Items Needing Specialty Input for Pricing and Proposed Deletions
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary specialties *CPT code(s)
Code 2006/7 Description 2007/8 associated with associated with Prior status on Commenter response 2008 Item status
Price item item table and CMS action refer to note(s)
--------------------------------------------------------------------------------------------------------------------------------------------------------
EQ269.......... Ambulatory blood 3000 Cardiology......... 93784, 93786, 93788 Yes.............. Documentation C
pressure monitor. provided. Price
accepted is $1525
(Did not accept
$395 warranty
cost.).
Camera mount--floor 2300 Dermatology........ 96904.............. Yes.............. Specialty to A, E
submit, asap.
Cross slide 500 Dermatology........ 96904.............. Yes.............. Specialty to A, E
attachment. submit, asap.
Dermal imaging 4500 Dermatology........ 96904.............. Yes.............. Documentation C
software. provided. Price
accepted at $4500.
Dermoscopy 650 Dermatology........ 96904.............. Yes.............. Documentation C
attachments. provided. Price
accepted at $650 (
average of the
cost of the two
items provided).
[[Page 66241]]
EQ008.......... ECG signal 8,250 Cardiology, IM..... 93278.............. Yes.............. Documentation A, E
averaging system w- provided. Revised
P waves and late description to
potentials better describe
software. system. Price
accepted at 17,900.
Instrument, .......... Pathology.......... 88380.............. No............... New Item........... A, E
microdissection.
Lens, macro, 35- .......... Dermatology........ 96904.............. Yes.............. Deleted item as D
70mm. price is less than
$500 per
documentation
received.
Plasma pheresis 37,900 Radiology, 36481, G0341....... Yes.............. Revised description B
machine. Dermatology. based on comments
received that
light source was
not part of item.
Documentation
requested.
ED039.......... Psychology Testing .......... Psychology......... 96101, 96102....... Yes.............. Specialty to B
Equipment. submit, asap.
ER070.......... Portal imaging 377,319 Radiation oncology. 77421.............. Yes.............. Documentation C
system (w/PC work provided. Price
station and accepted at
software). $489,940 ( average
of the cost of the
two items
provided).
Strobe, 400 watts 1500 Dermatology........ 96904.............. Yes.............. Documentation B
(Studio) (2). requested.
Cryosurgery system .......... Urology, Radiology, 50593.............. No............... New item........... A, E
(for tumor Interventional
ablation)\1\. Radiology.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* CPT codes and descriptions only are copyright 2008 American Medical Association. All Rights Reserved. Applicable FARS/DFARS apply.
Note: Acceptable documentation includes--Detailed description (including system components), source, and current pricing information, such as copies of
catalog pages, hard copy from specific Web pages, invoices, and quotes (letter format okay) from manufacturer, vendors or distributors. Unacceptable
documentation includes--phone numbers and addresses of manufacturer, vendors or distributors, Web site links without pricing information, etc.
Note A: Additional documentation required. Need detailed description (including kit contents), source, and current pricing information (including
pricing per specified unit of measure in database). Accept copies of catalog pages or hard copy from specific Web pages. Phone numbers or addresses of
manufacturer, vendors or distributors are not acceptable documentation.
Note B: No/Insufficient received. Retained price in database on an interim basis. Forward acceptable documentation promptly.
Note C: Submitted price accepted.
Note D: Deleted per comment or CMS.
Note E: 2007/8 price, where specified, retained on an interim basis. Forward acceptable documentation promptly.
Table 4.--Practice Expense Supply Item Additions for CY 2008
----------------------------------------------------------------------------------------------------------------
*CPT code(s)
Equip code Supply description Unit Unit price associated with item Supply category
----------------------------------------------------------------------------------------------------------------
NA............. Blade, sharp pointed item........... 0.73 88381............... Cutters, closures.
surgical.
NA............. Buffer, lysis....... ml............. 0.46 88381............... Lab.
NA............. Caps, Capsure Macro ml............. 4.54 88380............... Lab.
LCM.
NA............. Catheter, balloon, item........... 306 68816............... Accessory.
lacrimal.
NA............. Catheter, Kumpe \1\. item........... ............ 50385, 50386........ Accessory.
NA............. Disposable ............... ............ 21073............... ....................
aspirating syringe
\1\.
NA............. Ethanol, 95%........ ml............. 0.0033 88380, 88381........ Lab.
NA............. Fee, image analysis. item........... 18 99174............... Office supply.
NA............. Gas, argon, ............... ............ 50593............... Accessory.
cryoablation.
Gas, helium, ............... ............ 50593............... Accessory.
cryoablation.
NA............. Gastrostomy. Low item........... 5 43760............... Accessory.
profile replacement
button (Mic-Key).
NA............. Gastrostomy. Stoma item........... 10 43760............... Accessory.
measuring device
(Mic-Key).
NA............. Glycerol, 3%........ ml............. 0.001 88380, 88381........ Lab.
NA............. Guidewire, angle tip item........... ............ 50385, 50386........ Accessory.
(Terumo), 180 cm
\1\.
NA............. IV infusion set, Sof- item........... 11.50 90769, 90771........ Hypodermic, IV.
set (Minimed).
NA............. Methylene blue stain ml............. 0.178 88380............... Lab.
NA............. Probe, cryoablation, item........... 1175 50593............... Accessory.
renal.
NA............. Rnase-free water.... ml............. 0.85 88381............... Lab.
NA............. Slide, microscope, item........... 1 88380, 88381........ Lab.
sterile.
NA............. Snare, Nitinol item........... ............ 50385, 50386........ Accessory.
(Amplatz) \1\.
NA............. Swab, patient prep, item........... 1.04 36592............... Pharmacy, NonRx.
1.5 ml (chloraprep).
[[Page 66242]]
NA............. Tube, jejunsostomy.. item........... 195 49441, 49446, 49451 Accessory.
and 49452.
----------------------------------------------------------------------------------------------------------------
* CPT codes and descriptions only are copyright 2008 American Medical Association. All Rights Reserved.
Applicable FARS/DFARS apply.
\1\ Price verification needed. Item(s) added to table of supplies requiring specialty input.
Table 5.--Practice Expense Equipment Item Additions for CY 2008
----------------------------------------------------------------------------------------------------------------
*CPT code(s)
Equip code Equipment description Life Unit price associated with item Equipment category
----------------------------------------------------------------------------------------------------------------
NA............... Cryosurgery system 10 ........... 50593................ Other Equipment.
(for tumor ablation)
\1\.
NA............... Cardiac coil, 1.5T 8- 5 35400 7557, 7558 and 75559. Imaging Equipment.
channel (MR).
Instrument, 7 ........... 88381................ Laboratory.
Microdissection.
NA............... Pressure sensor, 5 25000 93982................ Documentation.
wireless (for
implanted AAA sac
sensor).
NA............... Camera, ocular 5 7000 99174................ Documentation.
photoscreening, w-
laptop and software.
----------------------------------------------------------------------------------------------------------------
* CPT codes and descriptions only are copyright 2008 American Medical Association. All Rights Reserved.
Applicable FARS/DFARS apply.
\1\ Price verification needed. Item(s) added to table of equipment requiring specialty input.
(xi) Additional PE Issues Raised By Commenters
Comment: One commenter recommends that the direct inputs associated
with all fee schedule services be made available to the public.
Response: Since the inception of resource based PEs, all direct
input data has been made available to the public on the CMS Web page.
The direct inputs associated with this final rule with comment period
are also available to the public at the following Web site under CMS-
1385-IFC: http://www.cms.hhs.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage.
Comment: Several commenters recommend that we reprice supply items
over $200 in the PE direct input database annually. Additionally,
commenters also requested that we establish individual J codes for
these high cost supplies. Alternatively, several other commenters
expressed concerns over this recommendation stating that utilization
guidelines must be set up that would trigger repricing or an undue
burden would be placed upon those specialties using these high cost
supplies.
Response: Using an individual HCPCS code for each of these supplies
would be difficult as there are multiple manufacturers, with multiple
prices, associated with the majority of these codes. Having multiple
manufacturers, and thus multiple prices, also makes it difficult to
reprice these supplies within the PE methodology, which is why we
continue to work with the AMA RUC to establish direct cost input data.
Additionally, all direct inputs need to be budget neutralized within
the PE methodology. Removing these high cost supplies from the standard
PE methodology would unfairly advantage procedures that contain these
supplies as they would not be subject to the same budget neutrality
adjustments as would other supplies. Finally, we agree with those
commenters that state that any annual repricing of these supplies would
place undue burden on specific physician groups. For these reasons, we
will continue to price these high cost supplies within the standard PE
methodology.
Comment: A few comments were received that recommended that desktop
computers be included as a direct PE cost.
Response: The direct PE database includes desktop computers with
monitor when this computer is identified as being dedicated to a
specific procedure. The costs associated with computers that are used
for non-clinical purposes assigned to a specific procedure, for
example, used for administrative procedures, are more appropriately
captured in the indirect cost category.
Comment: One commenter representing home care physicians requested
that travel time and other inherent costs related to mobile medical
services such as vehicle operation and mobile communication should be
accounted for in the PE calculation.
Response: To the extent that travel time is necessary to furnish
physician services outside of the office setting, these expenses are
not considered direct costs under the PE methodology. Although the
mobile communication devices are not specifically included as direct PE
inputs, 12 minutes of clinical labor time is assigned for each of the
home visit E/M services, 6 minutes in the pre-time period and 6 minutes
in the post time period. Phone calls are standardized at 3 minutes each
for purposes of the direct PE inputs and would be included as part of
this clinical labor time.
Comment: One commenter stated that adjustments need to be made to
the PE database for certain dialysis codes and requested that for G0393
and G0392 an angioplasty balloon be added to the PE database and that
for CPT code 36870 the PE database should be revised to include an
angiographic room and a power table.
Response: The balloon catheters are reflected in the PE database,
as supply number SD152, and the angiographic room and an exam table are
included in the equipment for CPT code 36870.
Comment: Commenters expressed concern about the level of
reimbursement for intrathecal pump management services for chronic pain
patients and believe that the refill kit is not accounted for in the
PE. In addition, commenters expressed concern that reimbursement did
not cover the leasing costs for the equipment.
Response: We reviewed the PE database and have verified that a
refill kit, priced at $28, is included as a supply in CPT codes 95990
and 95991. In our PE database, equipment costs are assigned based on
the purchase price for each piece of equipment, regardless of whether
the equipment is owned, rented or leased.
Comment: A manufacturer expressed concern that the PE RVUs for
intranasal administration of vaccines (CPT codes 90467/8 and 90473/4)
are inappropriately low and should be equalized to the injectable
immunization administration PE RVUs.
[[Page 66243]]
The commenter stated that when the codes were reevaluated in 2004 there
was not enough experience in the office to fully understand the time
associated with providing an intranasal vaccine. The commenter stated
that specialty organizations have indicated that this issue is worth
reexamining and indicated that they had been encouraged to communicate
with the RUC in support of equalizing payment for the codes.
Response: We appreciate the commenter's concerns about the
disparity in the PE RVUs for the intranasal and injectable immunization
administration procedures. To the extent that these concerns relate to
the direct PE inputs, we would encourage the commenter to work with the
specialty organizations to determine if it is appropriate to bring
these codes forward for further RUC review.
Comment: One commenter requested that we publish the RUC approved
RVUs for all noncovered and carrier priced services, particularly for
the positron emission tomography (PET) and PET/CT procedures.
Response: We have made it our policy to publish work and PE RVUs
for services in instances where the information has been forwarded to
us, with a few exceptions. One exception to this policy is for carrier
priced codes. Our rationale for this policy is simply that any
published values for carrier-priced codes would be in direct
contradiction of our intentions with respect to this designation. As we
state in Addendum A, a ``C'' status indicator means that carriers price
this code establishing RVUs and payment amounts without direct guidance
from CMS. Because the commenter did not provide us with information
about specific noncovered services that do not have published RVUs, we
are not able to address this particular aspect of the comment.
Comment: Commenters representing radiation oncologists expressed
concern about the significant PE reductions in CPT code 77336 for
continuing medical physics consults. The commenters noted this code was
last reviewed by the PEAC in 2002 and the practice standard has changed
significantly. Commenters recommended that the direct PE inputs for
this code be reviewed and refined so that accurate PE data is reflected
for this code.
Response: While we appreciate that the commenters expressed their
concerns to us regarding a change in the practice standards for the
services of CPT code 77336 which they believe results in the need to
change the direct PE inputs, we believe that the appropriate course of
action for the commenters is to work together with the RUC affiliated
specialty society in order to determine if these concerns can be
appropriately addressed by the RUC.
Comment: We received comments from individuals and associations
with concerns about the new bottom-up PE methodology and the resulting
effect of decreases in the PE RVUs for various services including, but
not limited to the following: chemotherapy administration, endovenous
ablation procedures, brachytherapy treatments, 3-D imaging services,
and procedures for photopheresis and plasma pheresis.
Response: As we noted earlier in this section, we are aware that
the PE RVUs for some services were negatively impacted by the change in
our PE methodology. However, we will reiterate here that it is our
policy to make certain, to the maximum extent possible, that the direct
PE inputs used in the PE RVU calculation actually reflect the typical
resources used to provide each service. To the extent that the current
PE RVUs are lower than those determined under our previous methodology,
the difference is likely attributable to a previous PE RVU that was
based on charges that overvalued the service. Because the current
methodology uses the direct PE inputs that are inherent and typical to
each procedure, the resulting PE RVUs more accurately reflect the
resources that are used to provide the service.
Comment: One commenter explained that, in the CY 2004 PFS final
rule, we decided to set the values for the monthly ESRD-related
services for home dialysis patients (for example, G0323) at the same
rate as the monthly ESRD related services with 2 or 3 visits per month
(for example, HCPCS code G0318) to provide an incentive for the
increase use of home dialysis (as authorized under 1881(b)(3)(B) of the
Act). The commenter notes that the current payment rate for ESRD
related services, with 2 or 3 face-to-face visits per month is higher
than ESRD related services for home dialysis patients, (due to a
difference in PE). As such, the commenter is concerned that the
differential in payment rates mitigates the incentives that we
previously attempted to establish. The commenter suggested that
incentives for using home dialysis should be strengthened by using a
consistent PE value for MCP codes G0323 and G0318. However, the
commenter prefers that we establish a new payment rate for the monthly
management of home dialysis patients based on the weighted average of
the MCP for patients who dialyze in a dialysis center or other
outpatient facility.
Response: We appreciate the suggestions regarding our payment
policy for the monthly management of home dialysis patients. We intend
to consider the commenters suggestions as we continue to evaluate
payment rates for the monthly management of patients on home dialysis.
Note: We received comments regarding certain items and services
that are not germane to the PE RVUs or other components of the PFS.
These issues include comments regarding: revisions to the definition
of pre-service work and time for certain global services; inadequate
pricing of HCPCS code A4562 for pessaries, requests for payment
adjustments for certain services under PFS to approximate payment
amounts for these services established under OPPS and ASCs,
inadequate payment for pharmacy costs and nursing services for drug
administration codes, and concerns about the reduction of PE RVUs in
the nonfacility setting due to the changes in the PE methodology
along with requests to freeze payment amounts at the level of the CY
2006 transitional PE RVUs. Because these comments are outside the
scope of the issues raised in the CY 2008 PFS proposed rule, we will
not respond to these issues in this final rule with comment period.
B. Geographic Practice Cost Indices (GPCIs)
We are required by section 1848(e)(1)(A) and (C) of the Act to
develop separate Geographic Practice Cost Indices (GPCIs) to measure
resource cost differences among localities; and to review and, if
necessary, adjust the GPCIs at least every 3 years. In the CY 2008 PFS
proposed rule, we published the proposed GPCIs for CY 2008 in Addendum
E, noting that the proposed GPCIs do not reflect the 1.000 floor that
was in place during CY 2006 and CY 2007. This floor expires as of
January 1, 2008 in accordance with section 102 of the MIEA-TRHCA.
In developing a GPCI, section 1848(e)(1)(A)(i) and (ii) of the Act
require that the PE and malpractice (MP) GPCIs reflect the full
relative cost difference while section 1848(e)(1)(A)(iii) of the Act
requires that the physician work GPCIs reflect only one quarter of the
relative cost differences. Section 1848(e)(1)(C) of the Act also
specifies that if more than 1 year has elapsed since the last GPCI
revision, we must phase in the adjustment over 2 years, applying only
one half of any adjustment in each year. All GPCIs are developed
through a comparison to a national average for each component, and the
RVUs for different services uniformly weight each component.
[[Page 66244]]
1. GPCI Update
A detailed description of the methodology used to develop and
update the GPCIs can be found in the CY 2004 PFS proposed rule (68 FR
49039, August 15, 2003). There are three components of the GPCIs
(physician work, PE, and MP) and each relies on its own data source.
a. Physician Work
The physician work GPCI is developed using the median hourly
earnings from the 2000 Census of workers in six professional specialty
occupation categories which we use as a proxy for physician wages and
calculate to reflect one quarter of the relative cost differences.
Physician wages are not included in the occupation categories because
Medicare payments are a key determinant of physicians' earnings;
therefore, including physician wages in the physician work GPCI would,
in effect, make the index dependent upon Medicare payments. The
physician work GPCI was updated in 2001, 2003, and 2005 using data from
the 2000 Census; the proposed CY 2008 physician work GPCI is also based
on the 2000 Census data. Because all updates since 2001 have relied on
the 2000 Census data, the changes observed in the physician work GPCI
in the update years are due to minor changes in utilization and budget
neutrality factors; for CY 2008, Addendum E shows that there have been
small changes in the physician work GPCI. Section 102 of the MIEA-TRHCA
required application of a 1.000 floor on the work GPCI in payment
localities where the work GPCI was less than 1.000. This provision
expires on December 31, 2007. The CY 2008 proposed physician work GPCI
reflects the removal of this floor.
b. Practice Expense
The PE GPCI is developed from three data sources:
(i) Employee Wages: We use 2000 Census median hourly earnings of
four occupation categories. The physician work GPCI was updated in
2001, 2003, and 2005 using data from the 2000 Census.
(ii) Office Rents: We use residential apartment rental data
produced annually by the Department of Housing and Urban Development
(HUD) as a proxy for physician office rents. In 2001, 2003, and 2005,
we used rents in the HUD 40th percentile. For CY 2008, we have
calculated the GPCI using rents in the 50th percentile for the
physician office rent proxy. We proposed to use the 50th percentile
because although HUD generally allows payment for subsidized housing up
to the 40th percentile, in some areas it allows payment up to the 50th
percentile. We made this change to reflect the trend toward higher
rents across the country.
Fair Market Rents (FMRs) are gross rent estimates including rent
and utilities. HUD calculates the FMRs annually using: (1) Decennial
Census data; (2) American Housing Surveys conducted by the Census
Bureau for HUD to enable HUD to develop revisions between Census years;
and (3) random digit dial surveys to enable HUD to develop gross rent
change factors. The American Housing Surveys cover 11 areas annually,
rotating among the 44 largest metropolitan areas. The random digit dial
component surveys 60 FMR areas annually.
The FMR is set as a percentile point in the distribution of rents
for standard housing occupied by people who moved within the previous
15 months. The current FMR definition is the 40th percentile rent (the
amount below which 40 percent of units are rented). Each year, the 50th
percentile rent is also calculated by HUD and available through the
HUDUSER Web site.
In 2000, HUD changed its FMR policy to increase access to housing
for families receiving Section 8 rent subsidy vouchers (65 FR 58870).
To do so, HUD increased FMRs from the 40th percentile to the 50th
percentile in areas where subsidized families were highly concentrated
in certain census tracts, given evidence that affordable housing was
not well distributed. Only metropolitan areas with more than 100 census
tracts are considered for possible increase to the 50th percentile
rent. FMRs can be moved from 40th to 50th percentile or back from 50th
to 40th percentile.
In the case of the office rent index for the PE GPCI, FMRs have
been used to capture geographic differences in rental costs, in the
absence of a consistent commercial rent index that covers all
metropolitan and nonmetropolitan areas in the U.S. It has been used as
a measure of the ``average rent'' in a market. However, since 2000, the
FMRs have been a mixture of the 40th percentile and 50th percentile
rents. FMR areas move between the two cutoffs. For example, in
California, 9 counties had FMRs set at the 50th percentile in 2004. In
2007, only 2 of these 9 counties were still at the 50th percentile
level for the FMR, out of 4 total counties at the 50th percentile
level.
As described above in this section (and as detailed in 65 FR
58870), the criteria for setting the FMR at the 40th or 50th percentile
are based on concentrations of subsidized households. There is no
reason to assume that commercial rents would follow the same patterns.
Therefore, we believe the 50th percentile, or median, rents
calculated by HUD will be a more consistent, fair measure of geographic
differences for the purpose of proxying for commercial rents.
Rent data produce the most significant changes because they are
based on annual changes in HUD rents, and therefore, are more volatile
than the wage (Census) data. While it has been suggested that we
explore sources of commercial rental data for use in the GPCI, we do
not believe there is a national data source better than the HUD data.
(iii) Equipment and Supplies: We assume that items such as medical
equipment and supplies have a national market and that input prices do
not vary among geographic areas. As mentioned in previous updates, some
price differences may exist, but we believe these differences are more
likely to be based on volume discounts rather than on geographic market
differences. Equipment and supplies are factored into the GPCIs with a
component index of 1.000.
c. Malpractice
The MP GPCI is calculated based on insurer rate filings of premium
data for a $1 million to $3 million mature ``claims made'' policy along
with premium or surcharge data for mandatory patient compensation funds
(PCFs). The MP GPCI is the most volatile of the GPCIs. This GPCI was
updated in 2001 and 2003 as scheduled with the physician work and PE
GPCIs; but, there was an unscheduled update of the MP GPCI in 2004 (68
FR 49043) to reflect increases in MP premiums nationwide. The proposed
CY 2008 MP update reflects the most recent premium data available. The
physician work and PE GPCIs are being updated at the same time.
We received the following comments about our proposed GPCIs:
Comment: We received several comments expressing the concern that
San Benito County in California was placed in the wrong payment
locality.
Response: In 2003, the U.S. Census Bureau moved San Benito County
from the Rest of State Census category and placed it in the San Jose
MSA. Our data and methodology do not accommodate mid-decennial changes
in Census data, and therefore, our 2008 update reflects that San Benito
County remains in the Rest of California payment locality.
[[Page 66245]]
Comment: We received several comments about the PE GPCI for Santa
Clara County, California. In the proposed rule, the PE GPCI was lower
for Santa Clara than it has been in previous years and commenters were
concerned about why this happened.
Response: We recognize that there was a decrease in the proposed
Santa Clara County PE GPCI. We have studied this issue including
examining both the source data and the methodology for obtaining the PE
GPCI in case there was a mistake in the proposed values. However, a
close examination of the data showed that the GPCI is accurate and
reflects a decrease in the value of HUD rentals in Santa Clara County.
Comment: One commenter suggested that a GPCI adjustment should not
be applied to physician work, or that the physician work GPCI should be
1.000 for all localities.
Response: We are required to apply a GPCI adjustment to physician
work in accordance with section 1848(e) of the Act. Therefore, we will
continue to apply the physician work GPCI.
Comment: We received several comments suggesting that the PE GPCI
is inaccurate due to our continued use of HUD rental data as a proxy
for medical office space.
Response: Because Medicare is a national program, we believe it is
important to use the best data that is available on a nationwide basis.
We believe the HUD rental data is the most comprehensive and valid
indicator of the national real estate rental market that is available.
Additionally, as we stated most recently in the CY 2007 PFS final rule
with comment period (71 FR 69656), we believe the HUD rental data
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 the past, we have had both the GAO
and the Research Triangle Institute examine available data sources for
use in the PE GPCI, and both have found that available commercial data
sets either have insufficient coverage nationally or are developed by
suspect methodology. Therefore, we continue to believe the HUD rental
data is the best nationally available data source to use as a proxy for
physician office rents.
Comment: We received several comments suggesting that the GPCIs of
Hawaii/Guam and Alaska need to be adjusted to accommodate the higher
costs of transportation of supplies and equipment to these localities.
Response: The GPCIs are a proxy for costs associated with providing
services to beneficiaries, not costs associated with living in a
particular place. However, we will consider these comments as we
evaluate possible changes to our methodology.
Comment: We received comments from the Medicare Payment Advisory
Commission (MedPAC) suggesting an alternative method for calculating
the PE GPCI. This alternative PE GPCI method excludes cost measures for
equipment and supplies.
Response: We appreciate MedPAC suggesting an alternative method. We
intend to evaluate the suggested change to the PE GPCI methodology and
will propose any changes in future rulemaking.
We will finalize the GPCIs shown in Addendum E. The GPCI values
shown represent the first year of the two-year GPCI update transition
and have been budget neutralized to ensure that nationwide total RVUs
are not impacted by changes in locality GPCIs. Specifically, this is
done by applying a weight that is derived from the difference between
payments using the ``old'' GPCIs and the ``new'' GPCIs to the proposed
GPCIs that insures that total payments would not be different. As we
indicated above in this section, there is no 1.000 floor on the
physician work GPCI in 2008. The GAFs are shown in Addendum D.
2. Payment Localities
a. Background
The Medicare statute requires that PFS payments be adjusted for
certain differences in the relative costs among areas. The statute
requires an adjustment which reflects differences among areas for the
relative costs of the mix of goods and services comprising PEs (other
than Malpractice expenses) compared to the national average. The
statute also requires adjustment for the relative costs of MP expenses
among areas compared to the national average. Finally, the statute
requires adjustment for one quarter of the difference between the
relative value of physicians' work effort among areas and the national
average of such work effort.
The physician work component represents 52.466 percent of the
national average fee schedule payment amount. Thus, the statutory
requirement for geographic adjustment of only one-quarter of the
differences in the physician work component means that, on average,
only 13.117 percentage points of physician work are geographically-
adjusted, and, on average 39.349 percentage points of the physician
work component are not adjusted and represent a national fee schedule
amount.
In addition, the PE component represents 43.669 percent of the
national average fee schedule payment amount. PEs are comprised of
nonphysician employee compensation, office expenses (including rent),
medical equipment, drugs and supplies, and other expenses. As explained
above in this section, we do not make a geographic adjustment relating
to medical equipment, drugs, and supplies because there is a national
market for these items. Thus, only the categories of nonphysician
employee compensation and rents are geographically adjusted. These
categories represent, on average, 30.862 percentage points of the total
PE, and 12.807 percentage points of PEs are not geographically-
adjusted.
In total, more than half (52.156 percent) of the average PFS amount
is a national payment that is the same in all areas of the country;
that is, 52.156 percent of the average fee is not geographically-
adjusted.
There are two additional points about the geographic indices that
are important to note. First, as described above in this section, the
data used to measure cost differences among localities are proxies for
physician work, employee compensation and office rents. That is, wage
data for various categories of employees are used to proxy the actual
wages of physician employees. Second, the data used for such proxies
are based on actual Census data only for a limited number of counties.
The geographic adjustment factors (GAFs) for more than 90 percent of
counties are developed using proxies based on larger geographic areas
(for example, data for all rural areas in a State are combined and used
to proxy the values for each rural county in a State). This aggregation
is necessary for areas where country level data are not available.
Thus, the underlying data are proxies for actual costs, and the
resulting GPCIs do not measure perfectly the cost differences among
localities.
Currently, there are 89 Medicare physician payment localities to
which GPCIs are applied. The payment locality structure under the PFS
was established in 1996 and took effect January 1, 1997. The
development of this structure is described in detail in both the CY
1997 PFS proposed (61 FR 34615) and final rules (61 FR 59494).
b. Revision of Payment Localities
Over time, changing demographics and local economic conditions may
lead to increased variations in practice costs within payment locality
boundaries. We are concerned about the potential impact of these
variations and have
[[Page 66246]]
been studying this issue and potential alternatives for a number of
years. However, because changes to the GPCIs must be applied in a
budget neutral manner (and under the current locality system, budget
neutrality results in aggregate payments within each State remaining
the same), there are significant redistributive effects to any change.
Therefore, we are also concerned about the potential impact of locality
revisions.
For the past several years, we have been involved in discussions
with California physicians and their representatives about recent
shifts in relative demographics and economic conditions among a number
of counties within the current California payment locality structure.
The California Medical Association (CMA) suggested that we use our
demonstration authority to adopt an alternative locality configuration
and avoid certain redistributive effects, but such an approach was not
feasible (as discussed in the CY 2005 PFS final rule with comment
period (70 FR 70151)). In the CY 2006 PFS proposed rule (70 FR 45784),
we proposed to remove two counties from the ``Rest of California''
payment locality and create a new payment locality for each county.
These two counties were the ones with the largest difference between
the county and locality GAFs. However, there was much more opposition
than support for this proposal, in large part because of its negative
effect on payments for the counties that would have remained in the
``Rest of California'' locality. For example, the CMA commented on this
proposal stating, ``a nationwide legislative solution that would
provide additional funding * * * is the only solution we are supporting
at this time.'' We did not finalize the proposal and described our
reasons in the CY 2006 PFS final rule with comment period (70 FR
70151).
As indicated previously, we recognize that changing demographics
and local economic conditions may lead to increased variations in
practice costs within payment locality boundaries. We are concerned
about the potential impact of these variations.
In considering potential changes in payment localities, we believe
it is important to evaluate both the potential impact of intralocality
practice cost variations and the redistributive impacts that would
result from any revisions to the localities. We also indicated that we
are concerned about the considerable administrative issues in making
locality changes, particularly if such changes involve a transition,
and if they occur when new GPCI data are being phased-in. As we noted
in the response to the June 2007 General Accountability Office report
on localities (GAO-07-466), changing localities requires reprogramming
systems and extensive provider education, both of which are expensive
and burdensome administrative activities that can last for a
significant period of time. We receive claims for payment that cross
calendar years and carriers must maintain payment files for the 2
different years.
In the proposed rule we solicited comments on three possible
locality reconfigurations. We indicated that because of the importance
of striking an appropriate balance between intralocality variations and
redistributive impacts with any such locality revisions, we wanted to
be cautious and evaluate the impacts in California before considering
applying the policy more broadly in the future.
The three options from the proposed rule are described as follows:
Option 1: Using the existing locality structure, apply a rule
whereby if a county GAF is more than 5 percent greater than the GAF for
the locality in which the county resides it would be removed from the
current locality. A separate locality would be established for each
county that is removed. Based on the new fully phased-in GPCI data
(that is, for CY 2009), application of this approach in California
would remove three counties (Santa Cruz, Monterey, and Sonoma) from the
Rest of California payment locality and Marin county from the Marin/
Napa/Solano payment locality and create separate payment localities for
each of these four counties.
This approach focuses on counties for which there is the biggest
difference between the county GAF and the locality GAF.
This proposal is similar to the policy we previously proposed in
the CY 2006 PFS proposed rule (70 FR 45784) but did not adopt to
address the counties with GAFs that are most different from their
current locality designation. Implementation of this option would lead
to an increase in payment of 7.6 percent for Santa Cruz County (and
average increase of 5 percent for the other counties involved) and a
decrease in payment of 4.3 percent for Napa and Solano Counties.
Option 2: This approach is similar to option 1, but the new
localities would be structured differently. We would use the same 5
percent threshold methodology but instead of creating four new
localities in which each county becomes its own new locality, the three
counties that are removed from the Rest of California locality would
become one new locality. Marin County would still be removed from the
Marin/Napa/Solano locality to become its own locality. Application of
this approach would remove three counties (Santa Cruz, Sonoma, and
Monterey) from the Rest of California payment locality, and Marin
County from the existing Marin/Napa/Solano payment locality. This
approach groups together counties from the Rest of California locality
that have the greatest difference between the county and locality GAF.
(This option would lead to an increase of 6 percent for the new 3-
county payment locality.) These counties have similar cost structures
and grouping them together into one new locality is consistent with our
goal of homogeneous resource costs within a locality.
Option 3: Apply a methodology similar to that used in the 1997
locality revisions (61 FR 59495), but applied at the county level
rather than the ``existing locality'' level. That is, we sorted the
counties by descending GAFs and compared the highest county to the
second highest. If the difference is less than 5 percent, the counties
were included in the same locality. The third highest is then compared
to the highest county GAF. This process continues until a county has a
GAF difference that is more than 5 percent. When this occurs, that
county becomes the highest county in a new payment locality and the
process is repeated for all counties in the State. This approach would
group counties within a State into localities based on similarity of
GAFs even if the counties were not geographically contiguous.
This organizes payment localities based on costs, which would
reduce the number of payment localities in California from 9 to 6
localities. This option alleviates the greatest variations in cost
between counties in California. This proposal is unique in that the new
localities are not contiguous. Currently, all localities encompass
adjacent geographic areas.
The impacts associated with this option are significant. Depending
on the tier, changes could reflect increases of as much as 7.6 percent
or decreases of as much as 7.3 percent.
We received numerous comments on these options as discussed below:
We received similar comments from a number of individuals, State
and local medical societies, and organizations, including the
California Medical Association, on several significant issues and are
addressing these together:
Comment: Santa Cruz County should be removed from the Rest of
California payment locality due to its higher costs.
Response: We recognize that Santa Cruz County has higher costs than
other
[[Page 66247]]
counties within the Rest of California locality, and the methodologies
we presented in each of the options would result in Santa Cruz County
being removed from the Rest of California payment locality.
Comment: Many commenters were concerned about the description of
the methodology used for Options 1 and 2. Specifically, these comments
directed us to adopt a methodology suggested by the California Medical
Association. The methodology compares the highest GAF county to the
weighted average (GAF) of the remaining counties of the locality.
Response: To clarify, the methodology we used identified counties
where the county GAF was at least 5 percent higher than the GAF of the
locality and then we either left that county as a payment locality
itself or joined it with other counties into a payment locality. In
Option 1, each of these counties became a separate locality; in Option
2, we combined several of these counties into a single payment
locality. This approach is not the ``iterative methodology'' that some
commenters suggested we should follow. We recognize that there are
alternative methodologies that can be used to consider reconfigurations
to locality structures. We will consider the suggestions of the
commenters in the future.
Comment: There were concerns that combining several counties into a
single payment locality in Option 2 was arbitrary and led to lower
payments for these counties.
Response: As we stated in the proposed rule, there are trade-offs
involved in making any changes to localities, and we recognize the
importance of trying to achieve a reasonable balance among competing
priorities. One of our goals was to keep the number of payment
localities manageable. Although we recognize that there are effects on
each of the individual counties, combining counties with very similar
costs was a reasonable way to meet this goal.
Comment: Numerous commenters from California recommended that we
implement Option 3 but suggested that we erred in describing the
methodology used in the development of Table 9 of the proposed rule and
recommended that if we implement it, we should use their suggested
methodology. Commenters suggested that we really meant to insert a
hierarchical approach and discussed how these are both acceptable ways
to accomplish the restructuring of the counties. Other State societies
expressed interest in this option as long as we use the alternative
methodology suggested by the California commenters.
Response: In Option 3 in the proposed rule, we ranked the counties
by GAF from highest to lowest. We then combined into a new payment
locality the county with the highest GAF and the other counties that
have a GAF within 5 percent of the highest GAF county. Then, we found
the county with the highest GAF among the remaining counties. We
combined that county and all the counties that have a GAF within 5
percent of the new highest GAF county into a payment locality. We
continued this method until all counties were included in a locality.
As previously mentioned, there are multiple approaches to reconfiguring
the localities that result in similar outcomes. We will further study
the suggestions provided by the commenters.
Comment: We received a number of comments requesting that we
provide a wide variety of data, at the county level, from numerous
sources covering the years 1999 through 2006.
Response: We believe we provided commenters sufficient information
to fairly evaluate our proposals. We note that many of these requests
involved county level data. There is very little county level data
available nationwide. Most of our data sources are collected at the MSA
or Consolidated MSA, or Non-Metropolitan Area level, and our
methodology was designed to be used to develop GPCIs within a payment
locality analysis, not a county level analysis. We do our best to
provide requestors with sources for publicly available data and to
provide any other data that is requested of CMS. However, we often
simply do not have data available at other than the locality level.
Comment: Several commenters are concerned that the data used to
develop the latest GPCI update are out of date or inaccurate.
Response: We used the most up-to-date data available for the GPCIs
used in the calculation of the proposed options. Descriptions of the
data sources we use can be found in previous regulations (69 FR 66261)
but we will reiterate them here. For the physician work GPCI, we use
data files from the latest decennial census (currently 2000) supplied
to CMS by the Census Bureau. These data are available to any individual
or group interested in obtaining them from the Census Bureau. Data for
the rental portion of the PE GPCI update come from HUD rental files,
and these data are available online to anyone wishing to obtain them.
Wage data for the PE GPCI come from the 2000 Census files which are
available from the Census Bureau. Data for the malpractice GPCI come
from premium data that are filed by companies writing Professional
Liability Insurance in each state. These filings are provided, upon
request by our contractor, to CMS by each State Department of
Insurance. Our latest update covers premium data for 2004, 2005 and
2006.
Comment: We received comments from certain physicians in Ohio
requesting that we examine Ohio for a possible change in the current
Statewide payment locality.
Response: We are currently examining alternatives to the current
locality structure. As a part of our study we will revisit Statewide
localities to determine if revisions are appropriate.
Comment: We received a number of comments from ambulance suppliers
throughout the mid-West requesting that we make no changes that would
have a negative impact on the GPCIs in rural areas. Other commenters
expressed similar concerns about the impact of locality changes on
rural physicians and beneficiaries.
Response: The vulnerability of rural areas to decreases in relative
payments as a result of locality revisions is an issue that is of
considerable concern to us and something we take very seriously.
However, as previously noted we must find an acceptable balance between
the multiple competing concerns when making changes in localities in
order to best meet the needs of the entire program and this generally
cannot be done without having any impact on rural areas.
Comment: MedPAC provided comments outlining two possible mechanisms
for developing changes in the payment localities of the States. These
methods are similar but differ in that one method begins at the
locality level and the other starts with MSA level data. MedPAC also
suggests that we determine whether those States that are currently
single payment localities wish to remain single payment localities.
Response: As always, we value the input of MedPAC and we intend to
analyze their suggested methods carefully as we discuss possible
national policy changes.
Comment: Comments regarding changes in the payment localities in
California were universally accompanied with a belief that we should
implement these changes, without decreasing payments to any counties.
Response: We understand the desire to avoid the negative impact
implementing any of these options might have on certain areas. However,
[[Page 66248]]
the statute requires that geographic adjustments be established based
upon an index of costs that is tied to national averages. As a result,
when the average increases in one locality because of the addition of a
higher cost county, the average in the locality that previously
contained the higher cost county will necessarily decrease. Any changes
in localities will necessarily produce changes in the underlying GPCIs,
and we have no authority to assign or retain GPCIs that do not
represent the actual values for a locality.
Comment: Many commenters suggested that we consider a national
solution to payment locality structure problems, not focus on a single
state.
Response: Our proposals attempted to address locality issues in an
area of the country where the incongruity of certain GAFs within
localities is particularly evident. In addition, these issues have been
brought to our attention regularly over the past several years, and the
California Medical Association has demonstrated its desire and
willingness to work with us to develop ideas for resolving them. We
viewed these proposals relating only to California as a starting point
and, as we indicated in the proposed rule, we would consider applying
any changes to additional States in the future.
Decision: We appreciate the thoughtful comments we received in
response to the three options we included in the proposed rule. As
mentioned above, we recognize that changing the locality structure is a
complex undertaking and there are competing concerns, including budget
neutrality that results in payments in certain areas decreasing
whenever payments in other areas are increased, that must be carefully
balanced to achieve the most appropriate results. Historically, to help
us find the best balance in a particular state, we have looked to State
medical societies to work with us to provide leadership and support on
preferred approaches to locality reconfiguration in that particular
State.
The comments we received from California physicians, including the
California Medical Association's indication that it does not support
any of the options, and interested parties from other States have
convinced us that this issue requires further study and analysis.
Therefore, we will not be finalizing any of the three proposed options
in this rule. Commenters have suggested some other methodologies that
we find worthy of further exploration, including the use of
Metropolitan Statistical Areas (MSAs). We do not necessarily believe
that the county is the appropriate geographic unit on which we should
be focusing for locality revisions. Commenters also made strong
arguments for why any locality reconfiguration should be done on a
nationwide basis and not just one State at a time. Therefore, we intend
to conduct a thorough analysis of approaches to reconfiguring
localities and will address this issue again in future rulemaking.
C. Malpractice RVUs (TC/PC Issue)
In the CY 2008 PFS proposed rule (72 FR 38142), we included a
discussion about the radiology codes for which the technical component
malpractice RVUs are higher than the professional component malpractice
RVUs. In the past, several organizations have requested that we examine
these codes and make changes to this assignment of malpractice RVUs. We
asked for information about how we could address this issue and obtain
data on malpractice costs associated with these radiology codes.
We received the following comments on this issue.
Comment: The Professional Liability Insurance (PLI) workgroup of
the AMA/Specialty Society RVU update committee (RUC) supported by
several other organizations recommended that we reduce the PLI
technical component for these codes to zero. They suggest that there
are no identifiable separate costs for professional liability for
technical components. They also recommend that the PLI RVUs be
redistributed across all physicians' services. The RUC is concerned
that the Deficit Reduction Act of 2005 (Pub. L. 109-171) (DRA) cap on
the TC payment for imaging services will remove an estimated $200
million from the Part B pool (as a result of the exemption of the
reduced expenditures from the budget neutrality requirement at section
1848(c)(2)(B)(v)). The RUC believes that making the recommended changes
will keep money that would be lost due to the DRA cap in the Part B
pool. The RUC wants CMS to implement this change immediately and
consider other changes to the PLI RVU assignment later.
Response: In the CY 2008 PFS proposed rule, we explained that these
codes had not been reviewed due to a lack of suitable data on the cost
of PLI for technical staff or imaging centers. The RUC believes that no
such data are available because there are no identifiable separate
costs. At this point in time, we are not able to evaluate whether
sufficient data exists or to make a judgment on the RUC's assertion
that such data are not available because there are no identifiable
costs. We will continue to explore possible sources of information
about these costs. We made no proposal regarding malpractice RVU
assignment and we are still considering possible changes. If we
identify in the future what we believe is a more appropriate way to pay
for these services, we will propose changes through notice and comment
rulemaking.
Comment: Some commenters stated that the malpractice RVUs in the
technical component should not be zero. These commenters suggested that
we either ``flip'' the malpractice RVU assignment between the
professional and technical components or make them equal.
Response: As we stated in the CY 2008 PFS proposed rule, we do not
believe it would be appropriate to ``flip'' the PC and TC RVU values
because the professional part of the MP RVUs has undergone a resource
based review, is derived from actual data, and is consistent with the
resource based methodology for PFS payments. Further, we will not
simply equalize the PC and TC RVU values because at this time we have
no data to demonstrate that the malpractice costs for the technical
portion of these services are the same as the professional portion. We
will continue to study this issue and will propose any changes in
future rulemaking.
Comment: We received several comments recommending that we make the
PLI RVUs resource based for all codes and that we should continue to
collect and analyze appropriate malpractice premium data before making
changes to the RVU assignment.
Response: We will continue to solicit, collect, and analyze
appropriate data on this subject. Once we have sufficient information,
we will be better able to make a determination as to what, if any,
changes should be made, and we will propose any changes in future
rulemaking.
D. Medicare Telehealth Services
1. Requests for Adding Services to the List of Medicare Telehealth
Services
As discussed in the CY 2008 PFS proposed rule (72 FR 38143),
section 1834(m)(4)(F) of the Act defines telehealth services as
professional consultations, office visits, and office psychiatry
services, and any additional service specified by the Secretary. In
addition, the statute required us to establish a process for adding
services to or deleting services from the list of telehealth services
on an annual basis.
[[Page 66249]]
In the CY 2003 PFS final rule with comment period (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 furnished under the monthly capitation
payment (MCP) with two to three visits per month and four or more
visits per month (although we require at least one visit a month, in
person ``hands on'', by a physician, Certified Nurse Specialist, NP, or
PA to examine the vascular access site); and individual medical
nutrition therapy.
Requests to add services to the list of Medicare telehealth
services must be submitted and received no later than December 31 of
each calendar year to be considered for the next rulemaking cycle. For
example, requests submitted before the end of CY 2006 are considered
for the CY 2008 proposed rule. For more information on submitting a
request for an addition to the list of Medicare telehealth services,
visit our Web site at www.cms.hhs.gov/telehealth/.
We received the following requests for additional approved services
in CY 2006: (1) Subsequent hospital care (as represented by HCPCS codes
99231 through 99233); (2) neurobehavioral status exam (HCPCS code
96116); and (3) neuropsychological testing (HCPCS codes 96118 through
96120).
After reviewing the public requests, we proposed to add
neurobehavioral status exam as described by HCPCS code 96116 to the
list of Medicare telehealth services in the CY 2008 PFS proposed rule.
We also proposed to revise Sec. 410.78 and Sec. 414.65 to include
neurobehavioral status exam as a Medicare telehealth service. We did
not propose to add subsequent hospital care or neuropsychological
testing but requested comments as to how we could determine when
subsequent hospital care is actually a follow-up inpatient consultation
and specific information on neuropsychological testing. For further
information on our proposals, see the CY 2008 PFS proposed rule (72 FR
38143).
Subsequent Hospital Care
The following is a summary of the comments we received regarding
subsequent hospital care.
Comment: We received two comments regarding the conditions (or
requirements) we could apply to subsequent hospital care so that
subsequent hospital care reflects a follow-up inpatient consultation.
One commenter suggested that follow-up inpatient consultation should be
approved as a telehealth service only if the initial inpatient
consultation was performed via telehealth. The commenter does not
believe we should approve a follow-up inpatient consultation for
telehealth if the initial inpatient consultation was furnished in-
person (because it might lead to a reduction in follow-up consultations
furnished face-to-face). The commenter also agreed with our proposal
not to approve subsequent hospital care for telehealth. Another
commenter noted that follow-up inpatient consultation was previously on
the list of Medicare telehealth services and asserts that the AMA's
deletion of follow-up inpatient consultation (as described by CPT codes
99261 through 99263) created the need to approve the addition of
subsequent hospital care to the list of Medicare telehealth services
when used for follow-up inpatient consultation care. The commenter
suggested that we create a special modifier to report follow-up
inpatient consultation via telehealth.
Response: We appreciate the comments on the conditions (or
requirements) we could apply to subsequent hospital care so that
subsequent hospital care reflects a follow-up inpatient consultation.
We intend to consider the suggestions raised by the commenters as we
continue to evaluate whether subsequent hospital care should be
approved for telehealth when it is used to furnish a follow-up
inpatient consultation. With regard to the commenter who suggested the
creation of a special modifier, we will assess whether it would be
appropriate to use a modifier(s) to identify when a subsequent hospital
care service is actually a follow-up inpatient consultation.
Comment: One commenter who supports approving subsequent hospital
care for telehealth explained that recruiting specialists to North and
South Dakota is difficult and that telehealth has helped hospital
inpatients in these States to obtain access to various types of
specialty care including pulmonology, endocrinology, pediatric
gastroenterology, pediatric cardiology, and infectious disease
specialties. The commenter also mentioned that inpatient consultations
are frequently provided by infectious disease specialists for patients
in the intensive care unit (ICU) and explained that once the patient
has made progress and is moved from the ICU, the infectious disease
specialist at the distant site continues to ``follow'' the patient
until the patient is discharged from the hospital. The commenter
recognized that access to on-going specialty care for outpatients is
important but believes that obtaining access to specialty subsequent
inpatient ``follow-up'' care is even more critical. Commenters
submitted a comparative study between subsequent hospital care
furnished as a telehealth service and furnished in-person.
Response: As discussed in the CY 2008 PFS proposed rule, given the
potential acuity level of the patient in the hospital setting, we
believe that many services furnished within the scope of the subsequent
hospital service codes are not similar to the current telehealth
services. As such, we indicated that subsequent hospital care is a
category 2 service (which requires sufficient comparative analyses
before approving it for telehealth). The commenters did submit one
comparative analysis between subsequent hospital care furnished as a
telehealth service and subsequent hospital care furnished in-person.
However, the study submitted involved only continuing specialist care
(for one specialty), not continuing inpatient care by the primary
attending physician. In
[[Page 66250]]
addition, the sample size was extremely small. Thus, the study findings
are not generalizable.
As such, we continue to have concerns about using a
telecommunications system as a substitute for the on-going, day-to-day
(in-person) evaluation and management of a hospital inpatient and
believe further study is necessary. In the absence of sufficient, well-
designed comparison studies showing that the use of a
telecommunications system is an adequate substitute for the in-person
delivery of subsequent hospital care, we are not adding subsequent
hospital care to the list of Medicare telehealth services. As discussed
above in this response, we will work with the industry organizations
and groups to learn more about hospital care as a telehealth service
when it is used for follow-up inpatient consultations.
Comment: One commenter (who submitted the request to approve
subsequent hospital care for telehealth) stated that the original
request to add subsequent hospital care to the list of Medicare
telehealth services was a request to ``re-establish'' subsequent
inpatient visits (as a Medicare telehealth service). The commenter
described two scenarios in which subsequent hospital care could be
furnished as a telehealth service. The first scenario would involve a
specialty physician who furnishes an inpatient consultation as a
telehealth service (as requested by the attending physician). The
second scenario involves an attending or admitting physician who
furnishes initial hospital care in-person (not as telehealth) and
provides subsequent hospital care as a telehealth service. The
commenter believes that access to telehealth care is better than not
having access to any care and that studies have shown that telehealth
care provides better clinical outcomes than no care at all.
Additionally, the commenter asserts that tertiary care trauma surgeons,
neurologists (for initial and follow-up stroke evaluation),
psychiatrists (for initial assessment and prescriptive safety orders),
infectious disease physicians, and cardiologists can be made available
through telehealth when these specialties are not available on-site.
The commenter believes that not approving subsequent hospital care for
telehealth will severely hinder access to specialty care in the
inpatient hospital setting and will lead to grave consequences for
patients when no specialists are available on-site (at the hospital).
Response: We agree that telehealth services may help provide
greater access to specialty care, and therefore, better clinical
outcomes where a shortage of medical professionals exist (or in
situations when no care is available). As discussed in the CY 2008 PFS
proposed rule, we are considering approving subsequent hospital care
for telehealth when it is used for follow-up inpatient consultation. We
believe that permitting follow-up inpatient consultations via
telehealth will help provide greater access to specialty care in the
inpatient hospital setting.
Additionally, we note that, contrary to the commenter's assertion,
subsequent inpatient hospital visits were not previously on the list of
Medicare telehealth services. As mentioned by a previous commenter, the
AMA deleted the codes for follow-up inpatient consultation (as
described by CPT codes 99261 through 99263). Effective January 1, 2006,
these CPT codes no longer exist and were removed from the PFS, and a
conforming change was made to the list of Medicare telehealth services.
Prior to January 1, 2006, the physician (or practitioner) at the
distant site could have used these CPT codes to bill for follow-up
inpatient consultations as a telehealth service. However, subsequent
inpatient hospital visits were not on the list of Medicare telehealth
services.
Comment: One commenter cited the concerns we raised in the proposed
rule regarding the acuity level of a hospital inpatient and the use of
a telecommunications system to furnish on going evaluation and
management services in the inpatient hospital setting. The commenter
believes that patients in the emergency department typically have a
higher acuity level, are in a more precarious physical state (as
compared to a hospital inpatient) and may not have a diagnosis. The
commenter explains that hospitalized patients have already been seen
and admitted by a physician on site and have at least a preliminary
diagnosis. Despite the higher acuity level of a patient in the
emergency department, the commenter asserts that we reimburse for
telehealth care in the emergency department (but not for inpatients).
Additionally, the commenter discussed various scenarios involving
the examination of acute stroke patients via telehealth in the
emergency room and ICU. For example, the commenter provided a summary
of a study that tested whether the use of an audio and video multimedia
telecommunications system is a feasible and reliable means for
delivering emergency stroke care (using the National Institute of
Health Stroke Scale). This study concluded that ``remote examination of
acute stroke patients with a computer based telesupport system is
feasible and reliable when applied in the emergency room''. The
commenter also explained how telehealth is being used to provide 24
hour access to acute stroke care expertise for a number of hospitals in
Massachusetts and that similar programs are being established
throughout the United States, Canada, the United Kingdom, Scandinavia,
and other parts of the world. The commenter also provided a discussion
of a study that examined the fiscal impact of providing telehealth
consultation (for acutely ill and injured children in the ICU) on rural
hospitals. The study found that as a result of greater access to
pediatric consultations, savings are realized from a reduction in
patient transfers (to larger hospitals) and increased revenue for rural
hospitals.
Response: We appreciate the information the commenter has submitted
on the remote evaluation of stroke patients and pediatric telehealth
consultations in the emergency department or ICU. We intend to consider
this information as we evaluate whether to approve subsequent hospital
care for telehealth when it is used for follow up inpatient
consultation. We would also mention that the nature of the comment
indicates a misconception that we pay for emergency department services
as a telehealth service. We note that only outpatient consultations
(not visits) are approved as a Medicare telehealth service for a
patient in the emergency department. If guidance or advice is needed in
the emergency department (for example, for acute stroke care), an
outpatient consultation may be requested from an appropriate source and
may be furnished as a telehealth service. However, emergency department
services (as described by CPT codes 99281 through 99285) are not on the
list of Medicare telehealth services.
Comment: One commenter mentioned that we previously approved the
psychiatric diagnostic interview examination and subsequent ESRD
related visits furnished under the monthly capitation payment (MCP) for
telehealth without comparative analyses and data showing patient
satisfaction (which implies that subsequent hospital care could be
approved for telehealth on the same basis). The commenter also cited
the proposed regulatory impact analysis for telehealth stating that
previous additions to the list of Medicare telehealth services have not
resulted in a significant increase in Medicare program expenditures.
Response: In approving the psychiatric diagnostic interview
examination for telehealth, we considered this service to be comparable
[[Page 66251]]
to an initial office visit, or consultation service, which are
currently Medicare telehealth services. Likewise, we considered the
outpatient dialysis visits furnished under the MCP (except for one
visit to examine the vascular access site) to be comparable to office
and other outpatient visits currently on the list of Medicare
telehealth services. Therefore, we considered these services to be
category 1, and therefore, we were able to review and approve them for
telehealth without reviewing additional research studies to support
their approval. However, as discussed above in this section, because of
the potential acuity of a hospital inpatient, we were not able to
conclude that the entire scope of services described by the subsequent
hospital care codes is similar to the existing list of telehealth
services (for example, an office visit, office psychology service, or
consultation). Therefore, we considered subsequent hospital care to be
a category 2 service (which requires sufficient comparative analyses
before approving for telehealth).
For more information on the addition of the psychiatric diagnostic
interview examination see the CY 2003 PFS proposed rule (67 FR 43863).
For more information on the addition of ESRD-related visits furnished
under the MCP, see the CY 2005 PFS proposed rule (69 FR 47511).
Neurobehavioral Status Exam
Comment: Several commenters expressed support for our proposal to
add the neurobehavioral status exam to the list of Medicare telehealth
services. Commenters agreed that because the neurobehavioral status
exam is primarily a clinical interview (similar to the psychiatric
diagnostic interview which is currently a Medicare telehealth service),
it is logical and consistent to approve this service for telehealth.
Response: We agree with the commenters. As discussed in the
proposed rule, the neurobehavioral status exam is furnished by a
physician or psychologist and includes an initial assessment and
evaluation of mental status for a psychiatric patient. In this regard,
we believe the neurobehavioral status exam is similar to psychiatric
diagnostic interview examination (which is currently approved as a
Medicare telehealth service).
Comment: One commenter who supported our proposal to approve the
neurobehavioral status exam for telehealth, stated that HCPCS code
96116 is a new code that replaced HCPCS code 96115 (the predecessor to
HCPCS code 96116) in the 2006 CPT compendia. The commenter believes
that neurobehavioral status exam (as described by HCPCS code 96115) was
previously on the list of Medicare telehealth services and considers
our proposal to add neurobehavioral status exam (as described by CPT
code 96116) to be a restoration of the neurobehavioral status exam as a
telehealth service.
Response: The commenter's assertion that our proposal to add the
neurobehavioral status exam to the list of Medicare telehealth services
is a restoration of the neurobehavioral status exam as a telehealth
service is not correct. The neurobehavioral status exam (as previously
described by CPT code 96115) was not on the list of Medicare telehealth
services. The proposed addition of neurobehavioral status exam is a new
proposal.
Comment: One commenter stated that the neurobehavioral status exam
appears to require that the service be provided face to face (in
person). Therefore, the commenter requested us to clarify that face to
face services may qualify as telehealth services.
Response: As discussed in the CY 2005 PFS final rule with comment
period, only services that traditionally require a face-to-face (in-
person) physician or practitioner encounter are candidates for the list
of Medicare telehealth services. Services not requiring a face-to-face
encounter with the patient that may be furnished through the use of a
telecommunications system are already covered under Medicare. For more
information see the CY 2005 PFS final rule (69 FR 66278).
Neuropsychological Testing
Comment: We received conflicting comments regarding
neuropsychological testing. For example, one commenter agreed with the
requestor that neuropsychological testing furnished via telehealth is
not significantly different from being furnished in-person (especially
when administered by a computer). Additionally, the commenter stated
that existing telehealth services for psychiatric patients include
office visits, consultation, and office psychiatry. The commenter
believes that the patient-provider dynamics of these services would not
appear to be so significantly different from those for
neuropsychological testing as to justify not approving the services for
telehealth. The commenter also believes that testing dynamics, such as
the patient being blindfolded or having numbers assigned to his or her
fingers, could be easily reproduced with the help of someone at the
originating site.
The same commenter also provided a discussion of the importance of
early detection of dementia through neuropsychological testing. The
commenter included a letter from the Armed Forces Epidemiological Board
about brain injury in military service members with recommendations on
handling these injuries. The commenter stated that although the
Epidemiological Board addressed military patients, the principles of
its findings apply to civilian assessment and treatment of brain
injuries; that is, appropriate testing at earlier stages of brain
injury or disease is likely to elicit a more accurate patient profile,
leading to more targeted interventions and better patient outcomes.
In addition, the commenter stated that the administration of
neuropsycho- logical testing may be more difficult for some patients
than others; however, this is true in both the in-person and telehealth
setting. The commenter believes that if the patient requires immediate
in-person assistance, a telepresenter could be used to facilitate the
testing and that the determination of patient suitability for testing
should be up to the physician or practitioner at the distant site. Two
commenters agreed that a telepresenter could assist the physician or
psychologist at the distant site with the testing and that the
physician or psychologist should determine which patients (and tests)
are appropriate for telehealth.
Another commenter who provides neuropsychological testing via
telehealth explained that many standardized neuropsychological tests
are available (literally hundreds) to the physician or psychologist (or
technician) and that tests vary widely in terms of administrative
procedure and the level of interaction between the patient and
practitioner responsible for administering the test. The commenter
believes that many tests could be effectively administered via
telehealth and that it is not appropriate for us to issue a ``global
denial'' of neuropsychological testing. For example, the commenter
believes that neuropsychological testing administered via a computer
should be approved for telehealth and that testing administered by a
physician, psychologist, or qualified technician should be re-
evaluated. The commenter also explained that an RN is often used as a
telepresenter to assist the neuropsychologist or technician with
testing. When testing cannot be administered in a ``standardized
fashion'' via telehealth, a qualified technician could be present on-
site with the patient to assist a psychologist who
[[Page 66252]]
furnishes the test at the distant site. However, the commenter believes
that some testing measures may not be appropriate for telehealth. The
commenter estimated that ``fewer than 35 percent of the hundreds of
available measures do not lend themselves to standardized
administration via telehealth''. The commenter also cited the American
Psychological Association's Ethical Principles of Psychologists and
Code of Conduct and stated these guidelines would prohibit
administration of certain individual tests via telehealth.
Other commenters believe that further study is necessary. The
commenters urged us to seek additional information concerning the
provision of neuropsychological testing before making a determination
about these services for telehealth. One commenter believes that
neuropsychological testing should be considered for telehealth approval
stating, ``however it is unclear whether the technology has advanced
far enough to allow all neuropsychological testing to be provided via
telehealth without compromising the quality of care''. Additionally,
the commenter stated that more time is needed to assess how
neuropsychological testing could be provided via telehealth and listed
the following issues that need further consideration:
The variety of disorders and diagnoses appropriate via
telehealth;
The physical assistance that patients may need to complete
tests; and
The impact of face-to-face interactions with a
psychologist or trained psychological technician during testing on the
interpretation of test results.
Response: We appreciate the comments regarding the use of an
interactive audio and video telecommunications system in furnishing
neuropsychological testing services. Based on the comments received, we
believe that further study is necessary before making a determination
about neuropsychological testing for telehealth. As discussed above in
this section, we received conflicting comments as to whether the
administration of a neuropsychological test could be furnished
adequately when the practitioner who is responsible for administering
the test is not physically present with the patient.
For example, some commenters believe that neuropsychological
testing furnished via telehealth is not significantly different than
when furnished in-person and that a telepresenter could be used to
assist the physician or psychologist at the distant site if necessary.
Other commenters believed that further study is necessary before
approving neuropsychological testing for telehealth. One commenter
believed that it is unclear whether the use of a telecommunications
system for administering neuropsychological testing would compromise
quality of care and listed specific issues that need greater
exploration. Even a commenter who supports approving neuropsychological
testing for telehealth indicated that many neuropsychological testing
measures would not be appropriate for telehealth. As such, we continue
to have concerns about using an interactive audio and video
telecommunications system as a substitute for the face-to-face (in-
person) requirements of neuropsychological testing.
Comment: Two commenters believe that sufficient empirical evidence
exists to support the approval of neuropsychological testing for
telehealth. The commenters submitted summaries of two comparative
analyses between neuropsychological testing furnished via an
interactive audio and video telecommunications system and
neuropsychological testing furnished in-person.
Response: As discussed above in this section, we believe that
further study is necessary before approving neuropsychological testing
for telehealth. Although the commenters did submit comparative
analyses, in one of the studies cited, the same psychologist furnished
neuropsychological testing in both conditions (face-to-face and via
telehealth). In another study cited, study participants without
neuropsychological or psychiatric disturbance were tested.
Additionally, the studies cited had extremely small samples. As such,
we believe it would be difficult to generalize any findings to a
broader population.
Comment: One commenter questioned whether the regulatory impact
analysis for telehealth was intended to provide a rationale to make
reductions in Medicare payment for telehealth services in the future.
The commenter urged us to continue to fund a wide variety of telehealth
services.
Response: The regulatory impact analysis was not intended to be
used as a rationale for making reductions in Medicare payment for
telehealth services. The intent of the regulatory impact analysis on
telehealth was to illustrate that the proposed addition of
neurobehavioral status exam to the list of Medicare telehealth services
should not have a significant budgetary impact on the Medicare program.
For more information on our regulatory impact analysis for the proposed
addition of neurobehavioral status exam to the list of Medicare
telehealth services, see the CY 2008 PFS proposed rule (72 FR 38216).
Comment: One commenter stated that neuropsychological testing is
ancillary to a neurobehavioral status exam and that neuropsychological
testing would have little additional budgetary impact (beyond the
impact of adding neurobehavioral status exam). To support this
assertion, the commenter cited our proposed regulatory impact analysis
on the addition of neurobehavioral status exam (as described by CPT
code 96116).
Response: As discussed above in this section, we believe that
further study is necessary before approving neuropsychological testing
for telehealth.
Comment: A few commenters requested that we approve additional
services for telehealth (for example, standardized performance testing
as described by CPT code 96125).
Response: Requests for additions (including any supporting data
analyses) should be submitted through our process for adding services
and must be received by December 31 of each calendar year to be
considered for the next proposed rule. For more information on how to
submit a request for addition, please visit our Web site at http://www.cms.hhs.gov/telehealth.
Results of Evaluation of Comments
We are adding the neurobehavioral status exam as represented by
HCPCS code 96116 to the list of Medicare telehealth services.
Additionally, we are revising Sec. 410.78 and Sec. 414.65 to include
neurobehavioral status exam as a Medicare telehealth service.
As discussed above, only services that traditionally require a
face-to-face (in person) physician or practitioner encounter are
candidates for the list of Medicare telehealth services. Services not
requiring a face-to-face encounter with the patient that may be
furnished through the use of a telecommunications system are already
covered under Medicare. As discussed in chapter 15, section 30 of the
Medicare Benefit Policy Manual, payment may be made for physicians'
services delivered via a telecommunications system for services that do
not require a face-to-face patient encounter. The interpretation of an
x-ray, electrocardiogram, electroencephalogram and tissue samples are
listed as examples of these services.
[[Page 66253]]
After further review of the requested services for addition,
neuropsychological testing administered by a computer (as described by
HCPCS code 96120) is not a candidate for the list of Medicare
telehealth services. Neuropsychological testing administered by a
computer (HCPCS code 96120) does not require a face-to-face (in person)
encounter between the patient and the physician or psychologist (or
qualified technician) responsible for the administration and
interpretation of the test results (for example, the patient is
interfacing with the computer, not a physician or psychologist). As
such, a telecommunications system may be used to facilitate
neuropsychological testing administered by a computer (as described by
HCPCS code 96120); for example, Web-based computer neuropsychological
testing, and/or transmission of neuropsychological test results to an
interpreting physician or psychologist via telecommunications system.
E. Specific Coding Issues Related to the PFS
1. Reduction in the Technical Component (TC) for Imaging Services Under
the PFS to the Outpatient Department (OPD)
Effective January 1, 2007, section 5102(b)(1) of the Deficit
Reduction Act of 2005 (Pub. L. 109-171) (DRA) amended section 1848 of
the Act to require 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 in this
section) furnished on or after January 1, 2007, we cap the TC of the
PFS payment amount for the year (prior to geographic adjustment) by the
Outpatient Prospective Payment System (OPPS) payment amount for the
service (prior to geographic adjustment). We then apply the PFS
geographic adjustment to the capped payment amount.
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 PET),
magnetic resonance imaging (MRI),computed tomography (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 the CY 2008 PFS proposed
rule, we explain in detail the process we used for establishing the
list of codes that fall within the scope of this DRA provision. We also
stated that upon further review, we have determined that certain
ophthalmologic procedures meet the DRA definition of imaging
procedures, but were not included in the original list of imaging
services subject to the OPPS cap. Therefore, we proposed to add the
following procedures to the list of procedures subject to the OPPS cap,
effective January 1, 2008:
92135, Scanning computerized ophthalmic diagnostic imaging
(e.g., scanning laser) with interpretation and report.
92235, Fluorscein angioscopy (includes multiframe imaging)
with interpretation and report.
92240, Indocyanine-green angiography (includes multiframe
imaging) with interpretation and report.
92250, Fundus photography with interpretation and report.
92285, External ocular photography with interpretation and
report for documentation of medical progress (e.g., close-up
photography, slit lamp photography, goniophotography, stereo-
photography).
92286, Special anterior segment photography with
interpretation and report; with specular endothelial microscopy and
cell count.
A complete list of CPT codes that identify imaging services as
defined by the DRA OPPS cap provision, amended to include these
ophthalmologic procedures, was also published in Addendum F of the CY
2008 PFS proposed rule (72 FR 38369 through 38372). Payment for an
individual service on this list will only be capped if the PFS TC
payment amount exceeds the OPPS payment amount.
Comment: Several commenters indicated that none of the six
ophthalmologic CPT codes proposed for addition to the list of
procedures subject to the OPPS cap meet the statutory definition of
imaging under the DRA, that is, none of the procedures codes fall under
the categories of x-rays, ultrasound, MRI, PET, CT or fluoroscopy.
Specifically, they noted that CPT code 92250 utilizes a wide angle
camera used primarily for detecting retinopathy in diabetics. Likewise,
CPT codes 92235, 92240, and 92285 are all photos, using photographic
equipment, or an angioscope. The commenters concluded that the Congress
did not intend for any service that uses a camera or microscope, takes
photographs, and produces negatives to be included in the DRA
definition of imaging services.
Another commenter indicated that CPT codes 92250 and 92285 do not
meet our criterion for including a procedure under the DRA provision,
that is, services that provide visual information regarding areas of
the body that are not normally visible, thereby assisting in the
diagnosis or treatment of injury. The commenter noted that the subject
procedures take traditional pictures of parts of the eye that are
normally visualized with the naked eye. One commenter noted that the
six CPT codes have not experienced dramatic increases in utilization,
but rather, utilization has remained stable or decreased.
Response: The DRA provision describes imaging services broadly as
``imaging and computer-assisted imaging services,'' and does not
provide for the type of distinctions the commenters suggested. While it
specifically includes certain imaging modalities (x-ray, ultrasound,
MRI, PET, CT, and fluoroscopy), it does not exclude other imaging
modalities. In fact, the DRA provision excludes only one imaging
service, that is, diagnostic and screening mammography. Concerning CPT
codes 92250 and 92285, we believe the images generated by these
services may include information that requires the use of photographic
or imaging equipment and is not normally visible by the unaided human
eye. Finally, the description of imaging services to which the DRA
provision applies is not limited to procedures that have experienced
dramatic increases in utilization. We believe the six procedures meet
the DRA definition of imagining services and are similar to other
procedures already subject to the DRA provision. Therefore, we will
include these CPT codes on the list of procedures subject to the OPPS
cap. (Note: This list of procedures is published in Addendum F of this
final rule with comment period.)
Comment: Many comments requested clarification of the application
of the OPPS cap when there is no OPPS payment for comparison; where the
code is bundled under OPPS; or where
[[Page 66254]]
the OPPS payment includes items (for example, contrast agents or
radiopharmaceuticals) that are paid separately under the PFS.
Response: Where there is no OPPS payment for a procedure or where
the OPPS for a procedure is bundled, there is no OPPS amount for the
comparison with the PFS payment. Therefore, it is infeasible to apply
an OPPS cap. The codes will remain on the list of codes subject to the
OPPS cap, but will not be affected by the cap. Where the OPPS payment
includes packaged services or items that are paid separately under the
PFS, we can and do apply an OPPS cap. The physician can continue to
bill separately for such services or items when furnished in a place of
service, for example, a physician's office, where the item is paid
separately.
2. Application of Multiple Procedure Reduction for Mohs Micrographic
Surgery (CPT Codes 17311 Through 17315)
Under the multiple procedure payment reduction policy,
reimbursement for subsequent surgical procedures performed during the
same operative session by the same physician is reduced by 50 percent.
The Mohs surgery codes have been exempt from the multiple procedure
payment reduction rules since the inception of the PFS (56 FR 59602,
November 25, 1991).
The CPT Editorial Panel reviewed all of the codes on the list of
codes exempt from the multiple procedure payment reduction (the ``-51
modifier exempt list'') to identify which codes should be exempt from
the multiple procedure payment reduction rules. Based on the revisions
to the code descriptors and a clearer understanding regarding the
technical elements of the procedure, in CY 2007, the CPT Editorial
Panel removed the Mohs procedure from the -51 modifier exempt list. The
codes for Mohs surgery were revised to take into account the different
level of physician work intensity involved based on anatomic site. The
RVUs associated with the codes for each anatomic location were
recommended by the RUC, as they are for other procedures, after a
thorough discussion by the RUC of all aspects of the service. Work RVUs
were developed for each Mohs surgery base code based on an assumption
that each code is performed separately. Because the work RVUs for these
services do not take into account the efficiencies that occur when
multiple procedures are performed in one session, we do not believe
that these codes should continue to be exempt from the multiple
procedure payment reduction. Therefore, we proposed to eliminate the
modifier 51 exemption and apply the multiple procedure payment
reduction rules to these codes.
Comment: We received comments supporting our proposal and
expressing the belief that our proposal is fair and consistent with our
multiple procedure payment policies already affecting a wide range of
procedures with codes in the Surgery/Integumentary System of CPT. Many
commenters opposed our proposal to eliminate the modifier -51 exemption
and apply the multiple procedure payment reduction to these codes.
These commenters believed that eliminating these codes from the
modifier -51 exempt list would negatively impact Medicare
beneficiaries'' access to timely and quality care, and could lead to
increases in pathology charges and increase the amount spent on
multiple facility fees, thereby raising the overall cost of treating an
individual with skin cancer. In addition to these concerns, many of the
commenters do not believe we have sufficient justification to make the
change, and suggest that this is an arbitrary decision. Further, the
commenters asserted that the AMA-RUC and CPT decisions were in error
and should not be followed.
Response: We verified with the CPT Editorial Panel that the
application of the modifier -51 exempt status indicator, and
subsequently, the inclusion of this series of codes (CPT codes 17311
through 17315) in Appendix E, Summary of CPT Codes Exempt from Modifier
-51, of the 2008 CPT codebook would not be carried forward with the new
series of codes created in 2007. The CPT panel confirmed with us that
the exclusion of these codes from Appendix E was not an error. The AMA
RUC reviewed and valued the new and existing codes for Mohs surgery.
Upon completion of a thorough review and discussion of the Mohs codes,
the RUC valued these codes with the full understanding these codes were
removed from the modifier -51 exempt list and would be subject to the
multiple procedure payment reduction as well.
We believe the CPT Editorial Panel and the Mohs workgroup on the
CPT Editorial Panel gave considerable time, effort and discussion in
the creation of the new and existing codes for Mohs surgery. We also
believe the AMA-RUC carefully reviewed the rationale and deliberations
which lead to the creation of new Mohs surgery codes. In addition, we
believe the specialty society had ample time and opportunity to express
its point of view to both the CPT Panel and the AMA-RUC. As a result of
the revisions to these codes and their respective valuation, we do not
believe they should continue to be treated differently from other codes
in the Surgery/Integumentary System section of the CPT book and see no
reason not to accept the recommendations provided by the CPT Panel and
AMA-RUC. Therefore, we are finalizing our proposal to eliminate the
modifier -51 exemption and apply the multiple surgery procedure payment
reduction rules to these codes.
3. Payment for Intravenous Immune Globulin (IVIG) Add-On Code for
Preadmission Related Services
Intravenous immune globulin (IVIG) is a unique product derived from
blood plasma. This drug is paid for under the ASP methodology and the
administration of this drug is reported using the first hour and second
hour infusion codes for therapeutic, prophylactic and diagnostic
services under CPT.
We recognize the importance of IVIG to patients who require it and
are concerned about reports of problems with IVIG access and
availability. We have initiated several actions in response to concerns
about the supply of IVIG.
In July 2007, we implemented new codes for reporting IVIG for
liquid non-lyophilized IVIG.
In CY 2006 and 2007, we established payment, through the creation
of a special G-code, G0332, for preadministration services furnished in
connection with the procurement of IVIG in the physician's office. This
code is designed to compensate physicians for the extra resources
required to be expended due to market conditions to locate and obtain
the appropriate IVIG products and to schedule patient infusions.
Comment: We received several comments regarding our proposal to
continue in CY 2008 the preadministration payment under the PFS for
patients treated with IVIG in a physician's office.
The majority commenters supported our proposal and recommended that
it be finalized, and recommended that this policy be made permanent.
Commenters stated that if this code and payment are not made permanent,
we would need to present a convincing evidence to terminate this
payment. Commenters indicated that without continuation of the add on
payment, access problems for Medicare beneficiaries in need of IVIG
would be more severe.
Many commenters indicated problems with the ASP payment methodology
for IVIG stating that IVIG is a unique
[[Page 66255]]
product for which market conditions are unlike all other drugs paid
under ASP. Other commenters remarked that the addition of the four new
billing codes for liquid IVIG adopted in July 2007 should improve
market conditions and beneficiary access to IVIG. Some commenters asked
that we consider making the liquid IVIG codes permanent J-codes. A few
commenters asked that CMS consider establishing an add on payment for
IVIG similar to the add on payment for clotting factor.
Two commenters indicated that Addendum B did not include the G-code
for preadministration services and recommended that the code be
included in Addendum B for the final rule.
Response: Comments regarding the ASP pricing methodology for IVIG,
the adoption of new drug codes for liquid IVIG in CY 2007, and the
consideration of an add-on payment for IVIG similar to the add-on
payment for blood clotting factor are beyond the scope of our proposal
which focuses on payment for a service under the PFS. We will consider
these comments in context of any proposed policies for drug payments
made as part of the CY 2009 PFS proposed rule.
In terms of the preadministration service for IVIG, we will
continue the CY 2007 payment policy for code G0332 through CY 2008. We
will carefully consider all relevant information including the
conditions of the IVIG drug market during CY 2008 when we address
whether it would be appropriate to continue the payment policy as part
of the CY 2009 PFS.
We appreciate the commenters alerting us that G0332 was omitted
from Addendum B in the proposed rule and we will ensure that this code
is listed in Addendum B of this final rule with comment period.
Therefore, we are finalizing the proposal to continue to recognize
payment for preadministration services for IVIG furnished to patients
in a physician's office in CY 2008. Payment for this service will be
made based on the PE RVUs previously established for this service in CY
2007. Payment for preadminstration services for IVIG furnished to
hospital outpatients is paid under the outpatient PPS (OPPS) and is
addressed as part of that final rule.
4. Reporting of Cardiac Rehabilitation Services
For CY 2008, we proposed to assign a status indicator of ``I''
(invalid for Medicare purposes, Medicare recognizes another code for
the billing of this service) to the current CPT codes for cardiac
rehabilitation services, CPT codes 93797, Physician services for
outpatient cardiac rehabilitation; without continuous ECG monitoring
(per session), and 93798, Physician services for outpatient cardiac
rehabilitation; with continuous ECG monitoring (per session) and
proposed to establish two new Level II HCPCS codes that we believe are
more appropriate for specifically reporting cardiac rehabilitation
services under the PFS. The proposed HCPCS codes are: GXXX1, Physician
services for outpatient cardiac rehabilitation; without continuous ECG
monitoring (per hour), and GXXX2, Physician services for outpatient
cardiac rehabilitation; with continuous ECG monitoring (per hour). We
also proposed to crosswalk the current RVUs associated with CPT codes
93797 and 93798 to HCPCS Codes Gxxx1 and Gxxx1.
Comment: Many commenters, including physicians and providers of
cardiac rehabilitation services, were generally supportive of the
proposal for the specific G-codes. Commenters believed that this
proposed coding change would allow for more appropriate coding and
payment for cardiac rehabilitation services in those cases where
intensive programs provide multiple sessions each day. In addition,
commenters requested that we explicitly state that multiple sessions of
cardiac rehabilitation can be paid for the same date of service when
modifier 59 is reported. They also requested that we crosswalk the
payments for both of the proposed G-codes to the higher cost CPT code
93798 to ensure that the full range of modalities provided in certain
intensive cardiac rehabilitation programs are available.
Several of these commenters also requested that we provide
additional guidance related to reporting of the cardiac rehabilitation
G-codes, such as: (1) Explaining that it is likely to be reasonable and
necessary to cover 72 cardiac rehab sessions when multiple sessions are
provided in one day; (2) encouraging contractors to factor the ``proven
results'' of a program into coverage decisions and that 72 sessions
should be ``presumptively covered'' when they are furnished by a
certain intensive cardiac rehabilitation program; and (3) providing
further clarification and expansion of nutritional counseling by
registered dieticians, indicating that they could independently bill
for nutritional counseling within cardiac rehabilitation programs using
the medical nutrition therapy codes because the NCD does not
specifically mention these services.
Alternatively, a few commenters, including physician specialty
groups, questioned the need for the proposed G-codes, indicating that
no new data would be gained by a coding shift that changes a unit from
a session to an hour. Commenters also suggested that we work with the
AMA to address the issue of whether it would be appropriate to modify
the CPT definition for this code from a per session to per hour basis.
Many commenters also expressed concern that the use of the term
``physician services'' and ``MD services'' in the G-code descriptors
could be misinterpreted by Medicare contractors as requiring a
physician to directly deliver the care or be in attendance during each
service episode and requested that the code descriptor be revised.
Response: We are aware of several intensive cardiac rehabilitation
programs that provide multiple sessions in a day, lasting several hours
total. The NCD for cardiac rehabilitation currently states that cardiac
rehabilitation programs are covered for certain categories of patients
and that the programs must be comprehensive. To be comprehensive the
programs must include a medical evaluation, a program to modify cardiac
risk factors (for example, nutritional counseling), prescribed
exercise, education, and counseling. The NCD does not distinguish
between different approaches to the delivery of cardiac rehabilitation
services, whether the more common practice of two sessions per week or
the more intensive programs of several sessions per day. In order to
allow for flexibility and tailoring of cardiac rehabilitation programs
based on patient needs, we have not been prescriptive regarding the
precise amount of time that must be spent on each component of the
program. Regarding intensity, we expect the intensity of cardiac
rehabilitation programs to vary by patient and by program.
We believe it is important that our payment policy provides
appropriate payment for cardiac rehabilitation services. In order to
minimize the administrative burden to physicians and providers, but
permit accurate reporting and payment for cardiac rehabilitation
programs that provide more than one session per day, we believe that
continuing the use of CPT codes 93797 and 93798 and allowing physicians
and providers to bill more than one session per day under some
circumstances would be the most appropriate course. Therefore, based
upon the comments received and upon further review of this issue, for
CY 2008, we will allow physicians and providers to report more than one
unit for a date of service if
[[Page 66256]]
more than one cardiac rehabilitation session lasting at least 1 hour
each is provided on the same day.
With respect to commenters' concerns about the use of the term
``physician services'' in the proposed G-code descriptors, we note that
the descriptors for these codes were proposed to be parallel to the
descriptors of the CPT codes for cardiac rehabilitation sessions which
contain the term ``physician services'' in their descriptors. We are
not aware that physicians and providers have problems with Medicare
contractors'' interpretation of the CPT code descriptors.
After consideration of all public comments received, we are not
finalizing our proposal to establish two new G-codes for reporting
cardiac rehabilitation services. Instead, we will continue to use the
CPT codes 93797 and 93798 to report cardiac rehabilitation services
under the CY 2008 PFS.
We will provide further guidance on coding and payment instructions
for the cardiac rehabilitation services codes through program
instructions.
We will not provide the additional coverage-related guidance
requested by some commenters, such as the presumptive coverage and
independent billing for registered dieticians. These recommendations
effectively request changes to the NCD, and therefore, are outside of
the scope of this final rule with comment period.
F. Part B Drug Payment
1. Average Sales Price (ASP) Issues
Medicare Part B covers a limited number of prescription drugs and
biologicals. For the purposes of this proposed rule, the term ``drugs''
will hereafter refer to both drugs and biologicals, unless otherwise
specified. 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.
DME drugs.
Drugs specifically covered by statute (certain
immunosuppressive drugs, for example).
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 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 Medicare Part D. The
Medicare Part D program does not change Medicare Part B drug coverage.
In this section, we discuss 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.
a. ASP Payment
Section 303(c) of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Pub. L. 108-173) (MMA) amended Title XVIII
of the Act by adding section 1847A. This 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 by 11-digit National
Drug Code (NDC) to us quarterly. The manufacturers' submissions are due
to us not later than 30 days after the last day of each calendar
quarter. The methodology for developing Medicare drug payment
allowances based on the manufacturers' submitted ASP data is specified
in 42 CFR, part 414, subpart K. We update the Part B drug payment
amounts quarterly based on the data we receive. In this section of the
preamble, we discuss certain aspects of the calculation of
manufacturers' ASP data, issues related to bundled price concessions,
and other Part B drug payment issues.
Further information on manufacturers' submission of ASP data for
Medicare Part B drugs and biologicals is contained in prior rulemaking
documents and other guidance accessible on the CMS Web page at (http://www.cms.hhs.gov/McrPartBDrugAvgSalesPrice/). Specifically refer to the
April 6, 2004 ASP interim final rule with comment period (IFC) (69 FR
17935) and the CY 2007 PFS final rule with comment period (71 FR
69624), which finalized the ASP calculation and reporting requirements
of the April 6, 2004 IFC, and the Frequently Asked Questions available
on the CMS Web page.
b. Bundled Price Concessions
In the CY 2007 PFS proposed rule and final rule with comment
period, we solicited and responded to comments regarding the issue of
how to allocate price concessions across drugs that are sold under
bundling arrangements for purposes of calculating the ASP. We did not
establish a specific methodology that manufacturers must use for the
treatment of bundled price concessions for purposes of the ASP
calculation in the CY 2007 PFS final rule with comment period. In the
absence of specific guidance, we maintained existing guidance that
manufacturers may make reasonable assumptions in their calculation of
ASP, consistent with the general requirements and the intent of the
Act, Federal regulations, and their customary business practices. We
also indicated that we would be closely monitoring this issue and may
provide more specific guidance in the future if we determine it is
warranted.
As stated in the CY 2008 PFS proposed rule (72 FR 38150), in its
January 2007 Report to Congress, ``Impact of Changes in Medicare
Payments for Part B Drugs,'' the MedPAC discussed the issue of
allocation of bundled price concessions for purposes of calculating the
ASP, noting that ``some manufacturers offer provider discounts for one
of their products contingent on purchases of one or more other
products.'' This report discusses two approaches for allocating bundled
price concessions.
According to MedPAC, one option would be to require manufacturers
to allocate bundled discounts in proportion to the sales of each drug
sold under the bundled arrangement. For example, Drug A and Drug B are
sold under a bundled arrangement and have a combined bundled discount
equal to $200,000 on total sales of $1 million. If Drug A has sales of
$600,000, the manufacturer would allocate 60 percent of the bundled
discount to that drug when calculating ASP. Forty percent of the
bundled discount would be allocated to Drug B. MedPAC states that this
approach would parallel bundling requirements under Medicaid and would
be simpler to administer. However, MedPAC notes that this method might
not capture contingent discounts.
The other approach discussed by MedPAC would be to require
manufacturers to allocate bundled discounts to reflect the
contingencies in the contract. That is, manufacturers would allocate
any additional (or increased) discount to the sales of the drug (or
drugs) that the discount is meant to increase. This approach would
result in an ASP that more accurately reflects the transaction price of
drugs when a discount for one drug or drugs is contingent in whole or
in part on the purchase of another drug. For example, if a greater
discount on the purchase price of Drug A is contingent on the
[[Page 66257]]
purchase (or purchases) of Drug B, this additional discount would be
allocated to sales of Drug B in the calculation of ASP.
In its discussion of bundling, MedPAC states that the goal should
be to ensure that ASP reflects the average transaction price for drugs.
To that end, MedPAC recommends that the Secretary clarify the ASP
reporting requirements for bundled products to ensure that ASP
calculations allocate discounts to reflect the transaction price for
each drug. Further, MedPAC states that we should ensure that the
reporting requirements for allocating discounts are clear and that they
can be implemented by manufacturers in a timely fashion.
In the CY 2008 PFS proposed rule (71 FR 77176), we also discussed
the Medicaid Program: Prescription Drugs proposed rule published in the
December 22, 2006 Federal Register (hereinafter referred to as the
December 22, 2006 proposed rule) concerning the calculation of
manufacturers' average manufacturer price (AMP). In the December 22,
2006 proposed rule, we proposed that discounts associated with a
bundled sale would be allocated proportionately according to the dollar
value of the units of each drug sold under the bundled arrangement. For
bundled sales where multiple drugs are discounted, the aggregate value
of all the discounts would be proportionately allocated across all of
the drugs in the bundle. For AMP purposes, a bundled sale would mean an
arrangement regardless of physical packaging under which the rebate,
discount, or other price concession is conditioned upon the purchase of
the same drug or drugs of different types (that is, at the nine-digit
NDC level) or some other performance requirement (for example, the
achievement of market share, inclusion or tier placement on a
formulary), or where the resulting discounts or other price concessions
are greater than those which would have been available had the bundled
drugs been purchased separately or outside of the bundled arrangement.
In the December 22, 2006 proposed rule, we further proposed that the
AMP should be adjusted for bundled sales by determining the total value
of all the discounts on all drugs in the bundle and allocating those
discounts proportionately to the respective AMP calculations. The
aggregate discount is allocated proportionately to the dollar value of
the units of each drug sold under the bundled arrangement. Where
discounts are offered on multiple products in a bundle, the aggregated
value of all of the discounts should be proportionately allocated
across all of the drugs in the bundle. We received many comments on the
many aspects of the December 22, 2006 proposed rule. However, the
review of those comments and development of the final AMP calculation
policies and rule were not complete at the time the CY 2008 PFS
proposed rule was developed.
In light of MedPAC's recommendation that we clarify the ASP
reporting requirements for bundled products and our discussion of
bundled price concessions in the CY 2007 PFS rulemaking, we stated in
the CY 2008 PFS proposed rule that we believe specific guidance in the
ASP context is warranted to provide for greater consistency in ASP
reporting across manufacturers and to enhance the accuracy of the ASP
payment system. We stated that we found MedPAC's suggestion not to
defer further guidance in this area compelling with respect to the
potential that manufacturers may make differing assumptions in the
absence of specific guidance on how to allocate bundled price
concessions in the context of ASP. In addition, we stated that we
believe it is appropriate at this time to establish a specified method
for treating bundled price concessions in the calculation of ASP that
is consistent with the treatment of such discounts for purposes of the
AMP calculation, and that appropriate consistencies across the
calculations of ASP and AMP will result in a lower potential for error
and more accurate calculations of both prices.
As we noted in the CY 2008 PFS proposed rule, although ASP and AMP
serve similar, but not identical, purposes, differences between these
calculations provide a rationale for, and in some instances may
require, minor differences between the final policies adopted in
Medicaid and Medicare regulations. We believe any differences would be
necessary to clarify certain aspects of a consistent approach for
treatment of bundling, and would not result in significant policy
differences on how bundling is addressed in the context of AMP and in
the context of ASP.
Therefore, for purposes of calculating the ASP (beginning with the
reporting period for the first calendar quarter of 2008 and
thereafter), we proposed that the manufacturer must allocate the total
value of all price concessions proportionately according to the dollar
value of the units of each drug sold under a bundled arrangement to
ensure that the ASP is adjusted for bundled arrangements as defined at
proposed Sec. 414.802. For a bundled arrangement, where multiple drugs
are discounted, the aggregate value of all the discounts would be
proportionately allocated across all of the drugs sold under the
bundled arrangement. We proposed that a bundled arrangement, for ASP
purposes, would mean an arrangement, regardless of physical packaging
under which the rebate, discount, or other price concession is
conditioned upon the purchase of the same drug or biological or other
drugs or biologicals or some other performance requirement (for
example, the achievement of market share, inclusion or tier placement
on a formulary, purchasing patterns, prior purchases), or where the
resulting discounts or other price concessions are greater than those
that would have been available had the drugs or biologicals sold under
the bundled arrangement been purchased separately or outside of the
bundled arrangement. We proposed to specify at proposed Sec.
414.804(a)(2)(iii) that all price concessions on drugs sold under a
bundled arrangement must be allocated proportionately to the dollar
value of the units of each drug sold under the bundled arrangement.
In the CY 2008 PFS proposed rule, we also stated our intention to
remain consistent, as appropriate, with the final policy adopted in the
Medicaid Program: Prescription Drugs final rule with comment period
published in the July 17, 2007 Federal Register (72 FR 39142)
(hereinafter referred to as the July 17, 2007 final rule with comment
period), which was still under development at that time. We stated that
the Medicaid policies on bundled sales may ultimately differ from our
discussion of the topic in the CY 2008 PFS proposed rule as a result of
the final policy adopted in the July 17, 2007 final rule with comment
period and that our policies for ASP in this final rule with comment
period may reflect the final Medicaid policy on bundled sales, but only
to the extent that it is appropriate for ASP and the public has had the
opportunity to comment on how the final Medicaid policy for bundled
sales, if appropriately adopted for ASP purposes, would effect the
calculation of ASP. The final Medicaid policy on bundled sales adopted
in the July 17, 2007 final rule with comment period was consistent with
the discussion of this issue in the December 22, 2006 proposed rule
with certain clarifications.
Comment: We received many comments on this issue. Most of these
commenters noted that our proposal for the treatment of bundled price
concessions in the ASP context was similar to the language finalized in
the July 17, 2007 final rule with comment period. In general, most of
the
[[Page 66258]]
commenters supported an appropriately consistent approach for the
treatment of bundled price concessions within both the AMP and ASP
calculations. However, several commenters indicated that they were
still reviewing the July 17, 2007 final rule with comment period and
believe additional time may be needed to better understand how the
proposed Medicare bundled arrangement definition is to be applied.
Several commenters had questions about how the proposed bundling
policies may apply to certain contracting arrangements, and because of
these questions, recommended that we cease or delay implementation of
our proposed method for treatment of bundled price concessions for
purposes of ASP.
Response: Based on comments recommending a delay and to better
understand the concerns stated by the commenters, we are not finalizing
the regulatory language changes we proposed in the CY 2008 PFS proposed
rule at this time. Although we are not establishing a specific
methodology that manufacturers must use for the treatment of bundled
price concessions for purposes of calculating ASP at this time, we are
clarifying that, in the absence of specific guidance, manufacturers may
make reasonable assumptions in their calculation of ASP, consistent
with the general requirements and the intent of the Act, Federal
regulations, and their customary business practices. In making
reasonable assumptions for purposes of calculating ASP, one method
manufacturers could use is to reallocate price concessions that are
conditioned upon other purchases or a performance requirement (for
example, the achievement of market share, inclusion or tier placement
on a formulary) so that the total value of all such price concessions
are allocated proportionately according to the dollar value of the
units of each drug sold. However, manufacturers may have other methods
they could use to report bundled price concessions, so long as
manufacturers apply reasonable assumptions consistent with the general
requirements and the intent of the Act, Federal regulations, and their
customary business practices. Manufacturers' reasonable assumptions
consistent with our requirements, guidance and manufacturer's customary
business practices remain an important aspect of ASP reporting. These
assumptions should be submitted along with the ASP data and the signed
certification form.
Recognizing that the treatment of bundled price concessions in the
ASP calculation has implications for the integrity of the ASP payment
methodology, we will continue to monitor this issue, will consider the
comments on 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) if we determine it is warranted. As we continue to review
these issues, we want to be sure we are aware of concerns from all
stakeholders, and thus we encourage the public to provide additional
information or concerns to us on this issue as they may arise.
c. 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 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 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 furnishing fee for CY 2007 is $0.152 per unit clotting factor.
The percent increase in the CPI for medical care for the 12-month
period ending in June 2007 is 4.0 percent. Consequently, the furnishing
fee will be $0.158 per unit of clotting factor for CY 2008. While the
furnishing fee payment rate is calculated at 3 digits, the actual
amount paid to providers and suppliers is rounded to 2 digits.
In the CY 2008 PFS proposed rule, we proposed to announce the
annual update of the blood clotting factor furnishing fee, as specified
in section 1842(o)(5)(C) of the Act, by issuing program instructions
and postings on the CMS Web site in lieu of including a discussion of
this issue in PFS rulemaking for CY 2009, and thereafter, until such
time as the update methodology may be modified. We made our proposal
because the update is statutorily determined, is based on an index not
affected by administrative discretion or public comment, is based on
the percentage increase in the CPI for medical care for the 12-month
period ending with June of the previous year, and is not released by
the Bureau of Labor Statistics until after our proposed rule is
published.
As stated in the CY 2008 proposed rule, we believe that including a
discussion of the furnishing fee update in annual rulemaking does not
provide an advantage over other means of announcing this information,
so long as the current statutory update methodology continues in
effect. We believe that the public's need for information and adequate
notice regarding the updated furnishing fee can be better met by
issuing program instructions which will eliminate the discussion of the
furnishing fee update annually in rulemaking. In addition, by
communicating the updated furnishing fee in program instruction, the
actual figure for the percent change in the applicable CPI and the
updated furnishing fee calculated based on that figure can be announced
more timely than when included as part of the PFS final rulemaking
process.
Comment: We received comments in support of our proposal to
announce the update furnishing fee via program instructions beginning
in CY 2009, and to continue updating the furnishing fee according to
the consumer price index for medical care. Comments supported the
continued use of our proposed approach until such time as the
methodology is changed.
Response: After consideration of the public comments, beginning for
CY 2009, we will announce the updated blood clotting factor furnishing
fee via program instructions and via a Web posting. In addition, we may
include the updated blood clotting factor furnishing fee in the annual
PFS final rules to promote broader dissemination of the announcement.
d. Widely Available Market Prices (WAMP) and 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 widely available market price (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
[[Page 66259]]
the AMP for such drug or biological by the applicable threshold
percentage (as defined in subparagraph (B)).'' The applicable threshold
is specified in the statute 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 under this
subparagraph subject to such adjustment as the Secretary may specify
for the WAMP or the AMP, or both.'' In CY 2006 and CY 2007, 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 2008, 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. Furthermore,
information on how recent changes to the calculation of the AMP may
affect the comparison of AMP to ASP is not available at this time.
Since we do not have data that suggest another level is more
appropriate at this time, we believe that continuing the 5 percent
applicable threshold percentage for both the WAMP and AMP is
appropriate for CY 2008.
As we noted in the CY 2007 PFS final rule with comment period (71
FR 69680), we understand that there are complicated operational issues
associated with potential payment substitutions and will continue to
proceed cautiously in this area 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 part of our approach,
we intend to develop a better understanding of the issues that may be
related to certain drugs for which the WAMP and AMP may be lower than
the ASP over time.
Comment: We received several comments regarding our proposal to
maintain the threshold at 5 percent. Most commenters supported
maintaining this threshold. One commenter suggested increasing the
threshold but did not specify a percentage to which it should be
increased. Another commenter suggested increasing the threshold for AMP
to 10 percent while maintaining the 5 percent threshold for WAMP.
Response: We recognize the public's concern regarding the
establishment of an appropriate threshold for making price
substitutions. We disagree with the commenter who recommended different
thresholds for WAMP comparisons and for AMP comparisons because of
current operational difficulties associated with maintaining and
communicating different thresholds. At the current time, we also
believe that maintaining two thresholds lessens stakeholders' ability
to accurately predict the potential risk for price adjustments. After
considering public comments on this issue, and as required by statute,
we are finalizing our proposal to establish the WAMP/AMP threshold at 5
percent for CY 2008.
Comment: We received many comments suggesting that caution be
exercised in the determination of price substitutions and that we
develop a formal process and criteria to be used to determine when
substitutions are necessary. Commenters also recommended that we assure
adequate notice is provided prior to making a price substitution.
Several commenters indicated recent policy changes made to the Medicaid
AMP calculation could impact the accuracy of the comparisons between
AMP and ASP and stated that these changes should be carefully studied
and considered before implementing any pricing changes.
Additionally, several commenters opposed any price substitutions
for certain classes of providers or for certain specific drugs. The
commenters noted that certain classes of providers may be subject to
different cost structures making wholesale substitution of prices
impractical. Some commenters asserted that certain drugs experience
unique market forces that may be adversely affected by pricing
substitutions.
Response: We understand that complex operational issues, both
within CMS and externally could impact potential payment rate
substitutions. We acknowledge the recent changes to the AMP regulations
and are studying such changes carefully. Furthermore, we recognize the
variety of providers and the marketplace forces that impact drug
pricing decisions under ASP. 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 substitution.
e. Other Issues
Comment: A few commenters noted that we did not discuss the payment
for separately billable ESRD drugs in the CY 2008 PFS proposed rule.
These commenters supported continuation of the current policy of basing
the payment on the ASP+6 percent.
Response: We did not propose any policy changes to the approach
that we currently use to pay for separately billed ESRD drugs.
Therefore, for CY 2008 payment for separately billable drugs furnished
by ESRD facilities will continue at ASP+6 percent in accordance with
section 1847A of the Act.
Comment: Several commenters noted that the billing and payment
codes recently established for liquid IVIG to implement separate
payment under section 1847A(b)(4) of the Act should improve beneficiary
access to these products.
Response: We thank the commenters for communicating their support.
Comment: We received a few comments expressing concern that,
because ASP based payment limit updates lag time by at least 2 calendar
quarters, increases in market prices may not be reflected in a drug's
payment limit for at least 6 months after a pricing adjustment. One
commenter suggested that current technology should enable CMS to
decrease the lag time from 6 months to 2 to 3 months.
Response: By statute, the ASP based payment allowances are
determined on a quarterly basis and are based on ASPs reported by
manufacturers quarterly. Manufacturers must report to us no later than
30 days after the close of the calendar quarter. There is a necessary
time frame after the close of a calendar quarter for manufacturers to
calculate and submit the ASP data to CMS, for CMS to prepare and issue
the payment rates, and for the claims processing contractors to
implement the updated payment files. We implement these new payment
limits through program instructions or otherwise at the first
opportunity after we received the data, which is the calendar quarter
after receipt.
Comment: One commenter suggested that we modify the formula we use
to calculate the payment amounts based on manufacturers' ASP data so
that the formula is volume weighted as suggested by the OIG.
Response: We discussed our formula for determining the payment
amounts based on manufacturers' ASP data in the CY 2006 PFS final rule
(70 FR 70217). As we stated in the CY 2006 PFS final rule, in
establishing the formula used to calculate the payment amounts based on
manufacturers' ASP data, we considered various approaches, including
the alternative suggested by this commenter. If appropriate, we may
consider revising the methodology in the future. We did not propose to
change our current formula, and are not
[[Page 66260]]
implementing changes to our formula at this time.
Comment: We received a few requests to increase the pharmacy
supplying fee for immunosuppressive, oral anticancer, and oral anti-
emetic drugs for CY 2008 to reflect actual supplying costs. We also
received comments expressing concerns that primarily because of the
labor intensive Medicare Part B claims processing services provided by
specialty transplant pharmacies, the current supplying fee payment for
immunosuppressive drugs is substantially lower than reported actual
supplying costs. One commenter requested that we eliminate the two-
tiered pharmacy supplying fee for prescriptions filled within a 30-day
period.
Response: We are committed to assuring that our claims systems
process claims as timely and accurately as possible and that their
payment methodologies result in the determination of accurate payment
amounts. We recognize the operational complexities under which certain
providers operate and strive to develop systems and processes to
minimize such complexities. We appreciate the comments that were
provided and may consider the issue in future rulemaking if
appropriate. Since we did not propose a change to these rates for CY
2008, they will continue to be in effect in CY 2008. We received
several other comments on the use and potential impacts of the ASP
payment methodology and other issues related to Part B drugs that are
also outside the scope of this rulemaking and will not be addressed in
this final rule with comment. These topics include the following:
Requests for billing codes for specific products;
Whether alternative payment methodologies or exceptions to
the ASP based payment should be considered;
Variation in local coverage and payment policies,
including use of least costly alternative policies and invoice pricing
for compounded drugs;
Excluding prompt pay discounts from the calculation of
ASP; and
Whether coverage under Part B should be expanded to
include certain vaccines.
2. Competitive Acquisition Program (CAP) Issues
Section 303(d) of the MMA required the implementation of a CAP for
certain Medicare Part B drugs and biologicals not paid on a cost or PPS
basis. The provisions for acquiring and billing drugs under the CAP
were described in the Competitive Acquisition of Outpatient Drugs and
Biologicals Under Part B proposed rule (published in the March 4, 2005
Federal Register; hereinafter referred to as the March 4, 2005 proposed
rule) and interim final rule with comment period (published in the July
6, 2005 Federal Register; hereinafter referred to as the July 6, 2005
IFC) (70 FR 10746 and 70 FR 39022, respectively). Certain provisions
were finalized in the CY 2006 PFS final rule with comment period (70 FR
70116). We specified a single CAP drug category to include a defined
list of drugs furnished incident to a physician's service.
In this final rule with comment period, we discuss the impact of
provisions in section 108 of the MIEA-TRHCA on administrative and
operational aspects of the CAP. Topics include the implementation of a
post-payment review process and the corresponding changes to claims
processing procedures, and changes to other operational aspects of the
CAP. This final rule with comment period implements conforming changes
to the CAP regulations to reflect these provisions that made changes to
the payment process of the CAP for Part B Drugs.
When the CAP program began on July 1, 2006, physicians were given a
choice between obtaining these drugs from vendors selected through a
competitive bidding process and approved by CMS, or directly purchasing
these drugs and being paid under the ASP system. In this final rule
with comment period, we discuss areas related to transporting CAP drugs
and the administrative burden of the CAP submitted in response to the
July 6, 2005 IFC. In addition, we are finalizing portions of the July
6, 2005 IFC that were not finalized in the CY 2006 PFS final rule with
comment period and responding to the other timely comments we received
on the July 6, 2005 IFC that we have not responded to previously.
a. MMA Operational Provisions
Prior to the enactment of the MIEA-TRHCA, section 1847B(a)(3)(A) of
the Act set forth specific requirements that have a direct impact on
the administrative and operational parameters for instituting a CAP.
This section of the statute required the following:
(1) Approved CAP vendors bill the Medicare program for the drug or
biological supplied, and collect any applicable deductibles and
coinsurance from the Medicare beneficiary. (For purposes of the
preamble, the term ``approved CAP vendor'' means the term
``contractor'' as referred to in the statute.)
(2) Any applicable deductible and coinsurance may not be collected
unless the drug was administered to the beneficiary. (For purposes of
the preamble, the term ``drug'' refers to drugs and biologicals
furnished under the CAP, unless the context specifies otherwise.)
(3) Medicare can make payments only to the approved CAP vendor, and
these payments are conditioned upon the administration of the drug.
Section 108 of the MIEA-TRHCA amended this third element.
b. MIEA-TRHCA
Section 108 of the MIEA-TRHCA made changes to the CAP payment
methodology. Section 108(a)(1) of the MIEA-TRHCA amended section
1847B(a)(3)(A)(iii) of the Act by adding new language that requires
that payment for drugs and biologicals be made upon receipt of a claim
for a drug or biological supplied for administration to a beneficiary.
This statutory change took effect on April 1, 2007.
Section 108(a)(2) of the MIEA-TRHCA requires the Secretary to
establish (by program instruction or otherwise) a post-payment review
process (which may include the use of statistical sampling) to assure
that payment is made for a drug or biological only if the drug or
biological has been administered to a beneficiary. The Secretary shall
recoup, offset, or collect any overpayments determined by the Secretary
under this process.
Section 108(b) of the MIEA-TRHCA states that nothing in this
section shall be construed as requiring the conduct of any additional
competition under section 1847B(b)(1) of the Act; or requiring an
additional physician election process.
Section 108(c) of the MIEA-TRHCA states that the amendments of this
section apply to payments for drugs and biologicals supplied: (1) On or
after April 1, 2007; and (2) on or after July 1, 2006 and before April
1, 2007, for claims that are unpaid as of April 1, 2007.
Comment: Some commenters suggested that any changes to the CAP be
made only after the expiration of the current vendor contract. The
commenters stated that implementation of changes before the next vendor
contract would be unfair to bidders who chose not to participate in the
CAP because of previously issued guidance. The commenters cited the CAP
statutory reference about waiving the FAR in order to promote
competition. The commenters believe that such changes would
inappropriately favor the single
[[Page 66261]]
existing vendor, and therefore, hurt competition.
Response: We do not have the authority to delay implementing the
claims processing changes required by the MIEA-TRHCA, which were
effective April 1, 2007. Although some of our changes were not
expressly required by the statute, we believe these conforming changes
are necessary to allow the program to function in a manner that is
consistent with, and required by, the statutory changes. Further,
because the CAP is a new payment program, change that is consistent
with operational experience and improves efficiency for participants is
to be expected. Finally, we disagree that the FAR affects our ability
to make changes in the program while the current contract is in force.
Because these changes do not modify an approved CAP vendor's
responsibilities under its contract with us, we do not believe the FAR
is implicated.
Further, as we have discussed in prior rulemaking, the CAP statute
authorizes the waiver of provisions of the FAR (other than provisions
relating to confidentiality of information and such other provisions as
the Secretary determines appropriate) as necessary for the efficient
implementation of Section 1847B of the Act, in order to promote
competition.
We have discussed our approach to conforming to the confidentiality
provisions in the July 6, 2005 IFC (70 FR 39077), and we intend to
comply with this approach during future vendor bidding periods. In
implementing the CAP, we have waived all of the FAR except for the
confidentiality and the conflict of interest provisions to promote
competition and the efficient implementation of the program. We made
the decision to waive the FAR (other than the provisions on
confidentiality and conflict of interest) in order to increase the pool
of qualified vendors available to participate in the program. It is our
understanding that compliance with the FAR is not normally required of
the companies that make up the pool of potential CAP vendors. It is
also not required of other Medicare suppliers. We waived these
provisions in order to structure CAP bidding in a manner consistent
with established vendor bidding practices.
The FAR's confidentiality provisions, as well as the conflict of
interest standards and requirements found in FAR subsection 9.5, apply
to approved CAP vendors and applicants. All other provisions of the FAR
have been waived for purposes of the CAP. However, we have used certain
provisions of the FAR for guidance in implementing the CAP, and we may
from time to time used other FAR provisions as a guide, even though
they have been waived. For example, as we discussed in the July 6, 2005
IFC (70 FR 39063), we look to the provisions of the FAR to guide our
assessment of bidder's financial solvency.
However, even if the FAR were implicated, we believe these changes
promote competition because they make the program a more attractive
option for physicians, which will provide physicians who compete among
one another a more meaningful choice between the CAP and the ASP
methodology. We further believe the changes we are implementing here
are designed to improve the flexibility and administrative ease of the
CAP. Therefore, we will proceed with implementing the provisions we are
finalizing as indicated in this final rule with comment period.
c. CAP Claims Processing
In the July 6, 2005 IFC (70 FR 39042), we initially implemented a
claims processing system that enables selected approved CAP vendors to
bill the Medicare program directly, and to bill the Medicare
beneficiary and his or her third party payer after verification that
the physician has administered the drug. When a participating CAP
physician elects to join the program, he or she must agree to obtain
all drugs on the CAP drug list from the approved CAP vendor, with only
a few exceptions. For example in furnish as written (FAW) situations
(that is, where a beneficiary needs a particular formulation of a drug
not available from the approved CAP vendor) the participating CAP
physician would be allowed to obtain that drug outside of the CAP. In
the case of Medicare Secondary Payer (MSP) (that is, where a Medicare
beneficiary may have another payer primary to Medicare), the
participating CAP physicians must obtain physician administered drugs
from entities approved by the primary plan and bill the primary payer.
Detailed MSP instructions have been issued by CMS that allow the
physician to bill under the ASP methodology for the portion of the drug
not covered by the primary payer in this situation.
Prior to the MIEA-TRHCA, the claims processing procedures for the
approved CAP vendor and the participating CAP physician were as
follows:
Once a shipment is received from the approved CAP vendor,
the participating CAP physician stores the drug until the date of drug
administration.
When the drug is administered to the beneficiary, the
participating CAP physician places the prescription order number for
each drug administered on the claim form submitted to his or her
regular Part B carrier.
Similarly, when the approved CAP vendor bills Medicare for the drug
it shipped to the participating CAP physician, it places the relevant
prescription order number on the claim form submitted to the designated
carrier. The use of the prescription order number on both the
participating CAP physician's claim and the approved CAP vendor's claim
is intended to indicate drug administration to the beneficiary. The
participating CAP physician's claim and the approved CAP vendor's claim
are matched in the Medicare claims processing system so that drug
administration can be verified and payment to the approved CAP vendor
can be made.
d. Required Changes to CAP Claims Processing
As originally implemented, the claims matching process described
above in this section was completed before payment was made. However,
as of April 1, 2007, section 108 of the MIEA-TRHCA requires payment to
be made to the CAP vendor for claims upon receipt. The statute also
requires us to establish a post-payment review process to assure that
payment is made for a drug only if the drug has been administered to a
beneficiary. We are authorized under the statute to recoup, offset, or
collect any overpayments by the Secretary. We are also authorized to
conduct post-payment review using statistical sampling and to implement
the post-payment review process by program instruction or otherwise. We
implemented the necessary changes to our claims processing system and
initiated the post-payment review process on April 1, 2007 via
instructions to the CAP-designated claims processing contractor and
Questions and Answers posted on the CMS competitive bidding Web site at
http://www.cms.hhs.gov/CompetitiveAcquisforBios/15_Approved_Vendor.asp#TopOfPage.
Under the post-payment review process, the CAP-designated carrier
will use the CMS claims processing system to look for a match between
the CAP prescription order number on the participating CAP physician's
claim and the same prescription order number on the approved CAP
vendor's claim to track drug administration on a dose by dose basis. If
the CAP-designated carrier is able to find a match between the two
claims, the carrier makes a determination that the beneficiary did
receive the drug being billed for by the CAP physician. The
participating CAP
[[Page 66262]]
physician claim may also contain information on any determination of
medical necessity and coverage made by the local carrier.
We will also use statistical sampling under the post-payment review
process to determine whether drugs were medically necessary. All
Medicare claims are subject to medical necessity determinations;
however, under the changes required by the MIEA-TRHCA, CAP claims may
not all have a chance to be reviewed for medical necessity before they
are paid. Therefore, the post-payment review includes both verification
of drug administration and a medical necessity review of a
statistically valid sample of CAP claims. In conducting the post-
payment review, we will continue to monitor for fraud, waste, and
abuse. All CAP claims will remain eligible for review for medical
necessity and verification of drug administration. We anticipate that
the post-payment review process will provide us with additional
opportunities to monitor for the appropriate payment of drugs furnished
under this program.
To conduct post-payment review of claims, we may also ask for
documentation of administration from the approved CAP vendor and for
medical records from the participating CAP physician for any claim that
is identified for review. While it is standard practice for CMS to
require Medicare providers to submit medical records as part of claims
review, we reserve the right to also specifically request any other
records that verify the administration of a CAP drug. Furthermore, we
want to make it very clear to the participating CAP physician that when
electing to join the program that the physician may be asked to supply
medical records for post-payment review. Therefore, in the CY 2008 PFS
proposed rule (72 FR 38153), we proposed to revise Sec.
414.908(a)(3)(xi) and the physician election agreement form to clarify
that medical records and certain other information may be requested
from the CAP physician during the post-payment review process.
The procedures used to verify valid claims and ensure proper
payment for drugs supplied under the CAP are based on established post-
payment review processes used in other parts of the Medicare program.
The request for medical records as part of the claims payment process
during CAP post-payment review is intended to work in conjunction with
Item 12 on the Health Insurance Claim Form CMS-1500 which, when signed
by a beneficiary, authorizes the release of ``any medical information
necessary to process a claim.''
When a claim is selected for review we notify the approved CAP
vendor and request its records to verify administration. We also notify
the approved CAP vendor that we will be requesting medical records from
the participating CAP physician. If the medical record is not received
within 30 days, the claim is denied because we will not have sufficient
information to verify drug administration and medical necessity.
This review process is similar to those used elsewhere in the
Medicare program such as clinical laboratory payment review or payment
of radiology services.
As we specified in the July 6, 2005 IFC (70 FR 39038), the local
carrier's medical review policies and coverage determinations will
continue to apply in the CAP. Under our previous claims processing
methodology, the local carrier made the coverage determination on the
drug ordered by the participating CAP physician and furnished by the
approved CAP vendor as part of the claim matching process prior to
payment of the approved CAP vendor's claim. Under the new methodology,
the drug claim will be paid upon receipt unless the local carrier has
already made a coverage or medical necessity determination on the drug,
and the match has already occurred showing that the drug claim should
be denied.
As part of the post-payment review process, the CAP-designated
carrier checks the CMS central claims processing system to determine
whether the local carrier has made a coverage or medical necessity
determination on the CAP drug indicated on the participating CAP
physician's drug administration claim. If a coverage determination has
been made, the CAP-designated carrier reflects the local carrier's
decision in its post-payment review of the claim. If the local carrier
has not reviewed the drug administration portion of the participating
CAP physician's claim as of the date that the designated carrier
processes the approved CAP vendor's drug claim, the CAP-designated
carrier uses the local carrier's coverage determination policies when
conducting medical review of the claim.
Comment: One commenter stated that we had exceeded the scope of the
statute because we were planning to conduct a medical necessity review
on CAP drug claims that were selected for review as part of the
statistical sample.
Another commenter recommended that we make detailed description of
the claims sampling process available for public comment and asked that
we design the process consistent with the Medicare Program Integrity
Manual. The commenter also asked for more detail on the information
necessary to include in the medical record to ensure that the
participating CAP physician has appropriately documented the medical
necessity of the drug administered.
One commenter questioned whether we needed to obtain additional
information from the CAP participating physician on claims selected for
post pay review based on the statistical sample and stated that the
information contained on the claim form should be sufficient to verify
administration.
Another commenter questioned why we were changing the CAP claims
processing methodology to pay most claims upon receipt and to verify
administration on a post pay basis. The commenter asked whether we
would allow for extenuating circumstances if the medical record was not
supplied by the participating CAP physician within the 30-day time
period for situations such as bankruptcy, litigation, or closure of the
practice.
Response: As stated in the CY 2008 PFS proposed rule (72 FR 38153),
we were required to make changes to the CAP claims processing
methodology because section 108 of the MIEA-TRHCA amended section
1847B(a)(3)(A)(iii) of the Act by adding new language that requires the
payment for drugs and biologicals upon receipt of a claim for a drug or
biological supplied for administration to a beneficiary. This change in
the law was effective on April 1, 2007. Section 108(a)(2) of the MIEA-
TRHCA requires the Secretary to establish (by program instruction or
otherwise) a post-payment review process (which may include the use of
statistical sampling) to assure that payment is made for a drug or
biological only if the drug or biological has been administered to a
beneficiary. The Secretary is required to recoup, offset, or collect
any overpayment determined by the Secretary under this process. We
implemented the necessary changes to our claims processing system and
initiated the post-payment review process on April 1, 2007, via
instructions to the CAP-designated claims processing contractor and
Questions and Answers posted the CMS competitive bidding Web site at
http://www.cmsm.hhs.gov/CompetitiveAcquisforBios/15_Approved_Vendor.asp#TopOfPage. In the CY 2008 PFS proposed rule, we described
the changes we had made to our claims processing system and proposed
conforming changes to our regulations for additional items not covered
by the MIEA-TRHCA. Because the MIEA-TRHCA gave us authority to
[[Page 66263]]
implement its provisions by program instructions or otherwise by April
1, 2007, the necessary changes have already been made to our claims
processing system and the post-pay review process had been implemented.
The post-payment review process includes verification of drug
administration and a medical necessity review of a statistically-valid
sample of CAP claims. This process was designed in conformance with the
Medicare Program Integrity Manual and in consultation with CMS
statistical sampling experts, consistent with our authority to
establish these procedures by program instruction or otherwise. For
additional information on the requirements of the Program Integrity
Manual see http://www.cms.hhs.gov/manuals/downloads/pim83co2pdf.
All Medicare claims are subject to medical necessity
determinations; however, under the changes required by the MIEA-TRHCA,
there may not be sufficient time for all CAP claims to be reviewed for
medical necessity before they are paid. Prior to paying the approved
CAP vendor's claim, the designated carrier will check the claims
processing system to determine whether the participating CAP physician
has submitted the claim for the administration of the drug. If the
physician has submitted the claim and the local carrier has made a
determination that the drug is not payable because of a coverage or
medical necessity denial, the drug claim will be denied by the
designated carrier. However, if no determination has been made on the
physician's claim, the designated carrier will pay the approved CAP
vendor's claims for the drug under the MIEA-TRHCA, and the claim will
be subject to statistical sampling on a post-pay basis. If the claim is
selected for review, verification of drug administration and a medical
necessity review will be conducted. As part of this process, the
designated carrier will check the system to see whether the local
carrier had denied the claim as not medically necessary. If a denial
has been made, the designated carrier will deny the approved CAP
vendor's claim on medical necessity grounds. The designated carrier
will use the local carrier's policies when conducting the review.
Medical necessity review is always conducted based on medical
records obtained from the physician and will be conducted in an effort
to look behind the information on the claim form. As specified in
chapter 3 of the Medicare Program Integrity Manual, standard data
elements for post-pay medical review include signature requirements,
diagnosis requirements, and documentation of orders for testing. The
carrier may also specify additional information it will review to
document that coverage and medical necessity requirements have been
met. Under the current CAP post-pay review process, the designated
carrier requests that all records be supplied by the physician within
30 days but allows for a limited amount of time beyond that period
before the service will be considered not to have been administered.
Participating CAP physicians are encouraged to send any information
they can provide to the designated carrier within the timeframes
provided. If the physician is unable to provide all of the requested
information in a timely manner to the carrier, he or she may contact
the carrier to determine if the contractor will grant an extension.
There is also a provision in the Medicare Program Integrity Manual that
allows contractors to grant additional time in the event of a natural
disaster. As we indicated in the CY 2008 PFS proposed rule, it is
standard practice for Medicare providers to be required to submit
medical records to assist in claims review. Therefore, we are
finalizing our proposal to revise Sec. 414.908(a)(3)(xi) and the
physician election agreement to make it very clear to the CAP
participating physician that they may be asked to provide medical
records for post-payment review in the CAP.
e. Provisions for Collection of Beneficiary Coinsurance
In the CY 2006 PFS final rule with comment period, we specified at
Sec. 414.914(h)(1) that subsequent to receipt of final payment by
Medicare, or the verification of drug administration by the
participating CAP physician, the approved CAP vendor must bill any
applicable supplemental insurance policies. If a balance remains after
the supplemental insurer pays its share of the bill, or if there is no
supplemental insurance, the approved CAP vendor may bill the
beneficiary for the balance. In prior practice, a match in the claims
system between the participating CAP physician's drug administration
claim and the approved CAP vendor's drug claim and the subsequent
payment by Medicare was used to indicate that the beneficiary received
the drug. We also allowed voluntary information exchanges between the
approved CAP vendor and the participating CAP physician's office to
verify CAP drug administration. Additionally, we note that under the
CAP regulations, the participating CAP physician has a responsibility
to notify the approved CAP vendor when a drug is not administered or a
smaller amount was administered than was originally ordered.
Because section 108 of the MIEA-TRHCA requires the payment of CAP
claims upon receipt, payment of a claim by Medicare may occur before
administration of the drug has been verified. However, section
1847B(a)(3)(A)(ii) of the Act, which states that deductible and
coinsurance shall not be collected unless the drug or biological is
administered, remains unchanged. Thus, because we have interpreted this
provision as requiring verification of administration prior to the
collection of applicable cost sharing amounts, the requirement for
verification of administration similarly remains unchanged. However,
because of the statutory change of section 108(a)(1) of the MIEA-TRHCA
and its resulting impact on our claims processing methodology, the
claims processing system no longer provides a way for CMS to verify
administration on the approved CAP vendor's behalf before the approved
CAP vendor collects coinsurance from the beneficiary or the
supplemental insurer. Verification of CAP drug administration is also
conducted in the post-payment review process. The approved CAP vendor
is expected to make information available to verify administration for
post-payment review as necessary.
We believe that an approved CAP vendor can verify whether a CAP
drug was administered in a variety of ways. For example, an approved
CAP vendor may enter into a voluntary agreement with a participating
CAP physician to exchange such information as described in the CY 2006
PFS final rule with comment period (70 FR 70251). However, if a
participating CAP physician is unwilling to enter into a voluntary
agreement to verify administration, the approved CAP vendor may verify
that the drug was administered by contacting the participating CAP
physician's office to request verbal confirmation. In such an instance,
the approved CAP vendor is expected to document the verbal confirmation
of CAP drug administration, the identities of individuals who exchanged
the information, and the date and time that the information was
obtained. In addition to verifying administration through contact with
the physician's office, we also suggest that the approved CAP vendor
place a statement on beneficiaries' bills informing the individual of
the statutory requirement and suggesting that the beneficiary contact
the participating CAP physician to verify that he or she received the
dose
[[Page 66264]]
of the drug for which he or she are being billed prior to paying any
cost sharing amount.
For the reasons described above in this section, we believe that
the verification of CAP drug administration remains a required element
of the CAP; therefore, in the CY 2008 PFS proposed rule (72 FR 38155),
we proposed to add Sec. 414.906(a)(6) by specifying that all of the
following elements are required to document the verification of CAP
drug administration:
Beneficiary's name.
Health insurance number.
Expected date of administration.
Actual date of administration.
Identity of the participating CAP physician.
Prescription order number.
Identity of the individuals who supply and receive the
information.
Dosage supplied.
Dosage administered.
In the CY 2008 PFS proposed rule, these data elements were actually
proposed in Sec. 414.914 (72 FR 38226). We believe that the drug
administration verification requirements best fit in Sec. 414.914
since CAP vendors must collect this information as part of their terms
of contract. Therefore, we are finalizing Sec. 414.914 to include
these provisions.
Also, as a result of changes mandated by section 108(a)(1) of the
MIEA-TRHCA, we proposed to revise new Sec. 414.914(i)(1) to remove the
reference to ``final payment by Medicare'' and revise this language to
state, ``payment by Medicare.'' The original language was written to
indicate that an approved CAP vendor could not bill a beneficiary's
supplemental insurer for applicable amounts of cost sharing until the
CAP drug claim had matched the corresponding physician's drug
administration claim. Under the post-payment review process, the final
payment would not occur until a statistical review of the claims was
complete, a process that may take several months. Removing the word
final from this section of the regulation will clarify that the
approved CAP vendor may bill the supplemental insurer immediately after
the designated CAP carrier makes the initial payment on a CAP drug
claim. Under our current regulations, the approved CAP vendor may also
bill the beneficiary if drug administration is verified by the
participating CAP physician. This provision remains unchanged.
Under the revised CAP claims payment process, the approved CAP
vendor will bill Medicare for the CAP drug that has been provided. In
most cases Medicare will pay the claim upon receipt. If the beneficiary
has a supplemental insurance policy, and the supplemental insurer has a
crossover agreement with Medicare, the claim automatically will cross
over to the supplemental insurer for payment. The supplemental insurer
will pay its share. Upon receipt of payment from the supplemental
insurer, the approved CAP vendor may bill the beneficiary for any
residual amount. For beneficiaries who do not have a supplemental
insurance policy, the approved CAP vendor may bill the beneficiary
after payment by Medicare.
However, in either case, the approved CAP vendor may not collect
any coinsurance owed from the beneficiary or his or her supplemental
insurer unless it has verified that the drug was administered. If the
approved CAP vendor believes that the drug was administered but later
learns that it was not, the approved CAP vendor must refund any
coinsurance collected to the beneficiary and his or her supplemental
insurer, as applicable. In addition, in Sec. 414.914(i)(2), we
proposed that the approved CAP vendor must promptly refund any payment
made by CMS if the vendor has been paid for drugs that were not
administered. We also proposed to interpret the word ``promptly'' to
mean 2 weeks. Thus, the approved CAP vendor would have 2 weeks from the
date it was notified that it had been paid for a drug that had not been
administered to refund to the designated carrier any payment for the
claim and refund any cost sharing collected to the beneficiary or his
or her supplemental insurer.
Comment: We received few comments on our proposal for provisions
for collection of beneficiary coinsurance. One commenter was concerned
about the administrative burden placed on the participating CAP
physician if the approved CAP vendor calls the physician's office to
verify that a drug was administered. Another commenter agreed with our
proposal to require that the approved CAP vendor refund any cost
sharing collected in error promptly to the beneficiary and or his or
her supplemental insurance provider. The commenter also suggested that
we require the approved CAP vendor to pay a penalty above the amount
owed if it does not refund the cost sharing amount within the 2 week
time frame.
Response: Physicians and their staff are the best source of
information for drug verification since they have direct contact with
the beneficiary. We have structured the process for verification of CAP
drug administration in the least burdensome way possible for the
participating CAP physician that would still provide us with
information to comply with the statutory mandate to assure that payment
is made for a CAP drug only if it has been administered to a
beneficiary.
Physicians have flexibility in how verification for drug
administration occurs. The physician is free to enter into a voluntary
agreement with the approved CAP vendor to verify drug administration
and to specify the manner in which he or she would like the
verification to occur. Alternatively, if the physician chooses not to
enter into such an agreement and does not notify the vendor that a dose
of a CAP drug has been administered, the approved CAP vendor will
contact the physician to verify administration before collecting
coinsurance from the beneficiary.
We believe that the degree of flexibility built into this procedure
for drug administration verification minimizes the burden for
participating CAP physicians within the confines of our statutory
obligation to assure that payment is made for a CAP drug only if it has
been administered to a beneficiary. Therefore, we are finalizing our
proposal to add new Sec. 414.914(h)(1) as described above in this
section.
We are also finalizing our proposal to revise new Sec.
414.914(i)(1) to remove the reference to ``final payment by Medicare''
and revise this language to state, ``payment by Medicare.'' Under the
post-payment review process, the final payment will not occur until a
statistical review of the claims was complete, a process that may take
several months. Removing the word final from this section of the
regulation will clarify that the approved CAP vendor may bill the
supplemental insurer immediately after the designated CAP carrier makes
the initial payment on a CAP drug claim. Under our current regulations,
the approved CAP vendor may also bill the beneficiary if drug
administration is verified by the participating CAP physician. This
provision remains unchanged.
Under the revised CAP claims payment process, the approved CAP
vendor will bill Medicare for the CAP drug that has been provided. In
most cases Medicare will pay the claim upon receipt. If the beneficiary
has a supplemental insurance policy, and the supplemental insurer has a
crossover agreement with Medicare, the claim automatically will cross
over to the supplemental insurer for payment. The supplemental insurer
will pay its share. Upon receipt of payment from the supplemental
insurer the approved CAP vendor may bill the beneficiary for any
residual amount. For beneficiaries who
[[Page 66265]]
do not have a supplemental insurance policy, the approved CAP vendor
may bill the beneficiary after payment by Medicare.
However, in either case, the approved CAP vendor may not collect
any coinsurance owed from the beneficiary or his or her supplemental
insurer unless it has verified that the drug was administered. If the
approved CAP vendor believes that the drug was administered but later
learns that it was not, the approved CAP vendor must refund any
coinsurance collected to the beneficiary and his or her supplemental
insurer, as applicable.
In addition, we are finalizing Sec. 414.914(i)(2), so that the
approved CAP vendor must promptly refund any payment made my CMS if the
vendor has been paid for drugs that were not administered. We are
implementing our proposal to interpret the term ``promptly'' to mean 2
weeks so that the approved CAP vendor would have 2 weeks from the date
that they were notified that they had been paid for a drug that had not
been administered to the beneficiary to refund any payment for the
claim made to the designated carrier and refund any cost sharing
collected to the beneficiary and his or her supplemental insurer. We
are not implementing a penalty if the refund of any cost sharing
collected in error exceeds the two week time frame because section
1847B of the Act does not provide for such a remedy.
f. Approved CAP Vendor Appeals for Denied Drug Claims
In the March 4, 2005 proposed rule (70 FR 10757 through 10758) and
the July 6, 2005 IFC (70 FR 39054 through 39057), we discussed the
development of the CAP dispute resolution process and the limited
applicability of the traditional Medicare fee for service appeals
process to an approved CAP vendor's dispute of CAP drugs claims that
are denied by the CAP-designated carrier. We stated that the approved
CAP vendor could file appeals as a Medicare supplier consistent with
the rules at 42 CFR part 405, subpart I. For the purposes of the
appeals regulations at Part 405, Subpart I, we indicated that a local
carrier's initial determination of the participating CAP physician's
drug administration claim was an initial determination regarding
payment of the approved CAP vendor's drug claim. Thus, the approved CAP
vendor was to be considered a party to any redetermination of the drug
administration claim by the local carrier. In addition, the approved
CAP vendor would be considered a party to an initial determination on
the claim for payment for the drug product that the approved CAP vendor
filed with the CAP-designated carrier.
We also specified that appeals of either initial determination
would be filed with the local carrier. We stated that the local
carrier, rather than the designated carrier, possessed all information
necessary to adjudicate an appeal in this situation. Such information
included local coverage decisions, medical necessity determinations,
and information regarding payment of drug administration claims. A
dispute resolution process was set forth in Sec. 414.916.
Under our initial implementation of the provision that authorized
CAP, this alternative approach provided party status to the approved
CAP vendor on the participating CAP physician's drug administration
claim. This was necessary because an approved CAP vendor was not
permitted to receive payment for a CAP drug until the corresponding
drug administration claim was submitted by a participating CAP
physician. Payment for the approved CAP vendor's claim was authorized
when the participating CAP physician's claim and the approved CAP
vendor's claim were matched in the system.
However, changes to the claims processing requirements and the
addition of a post-payment review process required by section 108(a)(2)
of the MIEA-TRHCA (discussed above in this section) eliminate the
approved CAP vendor's dependency on a participating CAP physician's
filing of a drug administration claim in order to receive payment for a
CAP drug. Accordingly, the approved CAP vendor no longer needs party
status on the drug administration claim submitted by the participating
CAP physician. Instead, under the MIEA-TRHCA, the approved CAP vendor's
drug claim may be paid by the CAP-designated carrier once it is
received. This determination made on the claim constitutes an initial
determination as defined in Sec. 405.924. The approved CAP vendor is
considered a party to this initial determination and may request a
redetermination and subsequent appeals consistent with the process
established under 42 CFR part 405, subpart I.
The changes to CAP claims processing in this final rule with
comment period that conform to the MIEA-TRHCA result in two scenarios
that create appeals rights for the approved CAP vendor with respect to
their drug product claim: (1) Prepayment denials of the approved CAP
vendor's claim made by the CAP-designated carrier (based on information
from the local carrier that the payment for the drug should be denied
as excluded or non-covered); and (2) post-payment denials by the CAP-
designated carrier based on the post-payment review process established
under the MIEA-TRHCA.
Therefore, as proposed in the CY 2008 PFS proposed rule (72 FR
38156), we are making the following clarifications regarding the CAP
appeals process for an approved CAP vendor's denied drug claims:
For prepayment denials, the approved CAP vendor, as a
supplier, has a direct right to appeal the initial determination made
by the designated carrier on its drug product claim. The local carrier
will conduct the redetermination on prepayment denials. It is the most
appropriate entity to review prepayment denials since it is most
familiar with the relevant coverage policies for that jurisdiction. We
acknowledge that this process differs from a traditional fee-for-
service appeal since the redetermination will not be conducted by the
contractor that issued the initial determination.
For the post-payment review process, an initial
determination will be considered re-opened if the CAP-designated
carrier selects the drug claim for review. If the CAP-designated
carrier cannot verify administration or cannot determine that the drug
is covered or medically reasonable and necessary, the CAP-designated
carrier will issue a revised determination to deny coverage of the drug
product claim. The CAP-designated carrier will then determine whether
an overpayment exists, and if so, will recover the overpayment. As a
supplier, the approved CAP vendor would then have the right to request
a redetermination of the revised coverage determination, and the
overpayment assessment. The CAP-designated carrier will process the
redetermination.
We received no comments on this topic; therefore, we are finalizing
the proposed conforming changes to the CAP appeals process as described
herein.
g. Definition of Exigent Circumstances
Sections 1847B(a)(1)(A)(ii) and 1847B(a)(5)(A)(ii) of the Act
require that each physician be given the opportunity annually to elect
to obtain drugs and biologicals through the CAP and to select an
approved CAP vendor. Section 1847B(a)(5)(A)(i) of the Act allows for
selection of another approved CAP vendor more frequently than annually
in exigent circumstances as defined by CMS.
In the CY 2005 PFS final rule with comment period (70 FR 70258), we
[[Page 66266]]
stated that participating CAP physicians would have the option of
changing approved CAP vendors or opting out of the CAP program on an
annual basis. We also provided the circumstances, as specified in Sec.
414.908(a)(2), under which a participating CAP physician may choose a
different approved CAP vendor mid-year or opt-out of the CAP. These
circumstances are: (1) If the selected approved CAP vendor ceases to
participate in the CAP; (2) if the participating CAP physician leaves
the group practice that had selected the approved CAP vendor; (3) if
the participating CAP physician relocates to another competitive
acquisition area (if multiple CAP competitive areas are developed) or,
(4) for other exigent circumstances defined by CMS.
We also identified a separate exigent circumstance relating to
instances in which an approved CAP vendor declines to ship CAP drugs
(when the conditions of new Sec. 414.914(i) are met) in Sec.
414.908(a)(5). We noted that in these cases, a physician may opt-out of
his or her drug category, and because there is currently only one drug
category for the CAP, then the participating CAP physician would be
allowed to opt-out of the CAP altogether (70 FR 39081).
The CAP became operational on July 1, 2006. At that time, we
believed that most issues raised by participating CAP physicians would
relate to quality and service, which could be resolved through the
approved CAP vendor's grievance process and the dispute resolution
process conducted by the designated carrier. However, since then, we
have been contacted by a few participating CAP physicians who have
requested termination of their election agreement because they
misunderstood the CAP program or determined that it was not a viable
option for their practice.
These instances demonstrate that a practice might wish to leave the
program for other business reasons that are unrelated to the approved
CAP vendor's performance. However, we continue to believe that
opportunities for leaving the CAP outside the annual election process
should be limited because the CAP was designed as a program in which
physicians would make an annual decision to participate, as consistent
with sections 1847B(a)(1)(A)(ii) and 1847B(a)(5)(A) of the Act.
Therefore, in the CY 2008 PFS proposed rule (72 FR 38156), we
proposed to define an additional exigent circumstance for opting out of
the CAP. We proposed that within 30 days of the effective date of the
election agreement, the participating CAP physician may submit a
written request to terminate his or her participation in the CAP. The
request would be sent to the designated carrier under the dispute
resolution process, and the designated carrier would determine within 1
business day whether the request was related to the service provided by
the approved CAP vendor. If so, the designated carrier would refer the
participating CAP physician to his or her approved CAP vendor's
grievance process to further determine whether any appropriate and
reasonable steps could be taken to resolve the identified issue.
We proposed that the approved CAP vendor would have 2 business days
to respond to the participating CAP physician's concern, consistent
with Sec. 414.914(f)(5). If the approved CAP vendor is unable to
identify a solution for resolving the issue that is consistent with the
CAP statute, regulations, contracts and guidance, and that is
acceptable to the physician, then the participating CAP physician would
be referred back to the designated carrier for assistance under the
dispute resolution process. We also proposed that the participating CAP
physician's request would be handled under the dispute resolution
process because protocols and defined time frames have already been
developed for handling participating CAP physician and approved CAP
vendor complaints in this set of procedures.
We proposed that if the designated carrier does not believe that
the participating CAP physician's request is related to an issue that
could be resolved by the approved CAP vendor, then the designated
carrier would conduct an investigation and attempt to resolve any
issues identified in the physician's request to terminate his or her
CAP election agreement. If the designated carrier is unable to resolve
the situation to the physician's satisfaction within 2 business days,
then it can either make a recommendation to CMS that the physician be
permitted to terminate his or her CAP election agreement, or request a
2-day extension to continue examining the issue. We stated that we
believed that 4 business days would be sufficient to conclude this
process because it would give the designated carrier time to gather
information from other affected parties, such as the participating CAP
physician's local carrier, but still prepare a speedy summary of the
issues involved in the physician's request.
Under our proposal, after the 2-day or 4-day period, as applicable,
the designated carrier would forward its recommendation and the
physician's request to CMS. We would then review the recommendation and
make a final decision within 2 business days from the date that we
received the request.
We proposed that if the participating CAP physician demonstrated
that remaining in the CAP was a significant burden, then we would allow
that physician to terminate his or her participation in the program. We
would inform the designated carrier of our decision, which the
designated carrier would then communicate to the participating CAP
physician in writing. As part of this process, the physician's
termination date for his or her CAP election agreement would be
determined and communicated to all parties involved, including the
physician's local carrier.
Conversely, if we did not believe that the physician demonstrated
that CAP participation constituted a significant burden, then we would
not allow the physician to terminate his or her CAP contract.
Subsequently, we would inform the physician of our decision in writing
via the designated carrier. We would also include a recommendation for
corrective action.
In the CY 2008 PFS proposed rule, we also proposed that, even if we
agreed to terminate the participating CAP physician's CAP election
agreement, the physician would still be required to continue to
cooperate in any post-payment review and appeal of claims for drugs
that the approved CAP vendor had already provided and been paid for.
The physician would also have to make arrangements with the approved
CAP vendor for the return of any unused drugs that had not been
administered to the beneficiary prior to the effective date of the
physician's termination from the CAP. If the approved CAP vendor had
billed CMS for drugs that had not yet been administered to a
beneficiary, then the vendor would be required to correct the claim and
return any overpayment.
Comment: We received several comments that supported defining an
additional exigent circumstance for leaving the CAP because of a burden
on the practice. Several commenters addressed the timeframe for leaving
the CAP. Of these comments, all supported a 30-day timeframe, though
several encouraged a longer window. Commenters who encouraged a longer
time period believe that 30 days was insufficient time to determine the
suitability of the CAP for their practice.
While most commenters agreed that a demonstration of burden should
be required, one commenter stated that allowing physicians to opt-out
for any reason would be desirable. One commenter suggested that
physicians should be allowed to opt-out of the CAP
[[Page 66267]]
at any time for any reason. Several commenters asked that the opt-out
process be simplified. Another commenter requested that the process for
determining whether to grant a physician's request to leave the CAP be
outlined.
Response: Based on the comments, we are revising our proposal to
make it more flexible. While we recognize the concerns raised by
commenters who recommended that we allow physicians to leave the CAP
for any reason at any time, we continue to believe that there should be
limits on a participating CAP physician's ability to leave the CAP. The
CAP statute contemplates an annual election process. Our proposal to
allow a 30-day period for opting out because of a burden is based on
our authority to specify ``exigent circumstances,'' and we do not
believe it would be appropriate to allow physicians to opt-out under
this process without some exigency that makes termination of CAP
participation necessary. However, in recognition of these comments, and
because we agree that participating CAP physicians should have a
sufficient opportunity to assess the suitability of the CAP for their
practice, we are making the following changes to the opt-out process.
First, we note that we intend to take a broad view of what would
constitute a burden to the practice resulting in an ``exigent
circumstance.'' We believe that a broad view is appropriate because
there may be many reasons why a participating CAP physician may find
CAP participation more burdensome than he or she expected, and we do
not wish at this time to place a limit on what those reasons may be. As
we gain experience with this process, we may in a future rulemaking
specify a list of ``exigent circumstances'' or prescribe more specific
standards for what constitutes an ``exigent circumstance'' for purposes
of the opt-out process; however, for now we will assess requests on a
case-by-case basis under the process described in this preamble and set
forth in the regulations at Sec. 414.908.
In response to comments seeking greater flexibility in the process
and a longer window in which to assess the CAP's suitability for the
physician's practice, we are implementing a two-tiered process that
would both expand the initial time frame for requesting to opt-out of
the CAP and would allow for requests to opt-out at any time based on a
change in circumstances that was not previously known to the
participating CAP physician. We believe that such a process, which we
outline below, strikes a balance between providing participating CAP
physicians with flexibility to opt-out of the CAP when participation is
burdensome, while still placing appropriate limits on a physician's
ability to leave the CAP outside the annual election process.
Thus, under the two-tiered process we are finalizing in this rule,
we are changing to 60 days the initial period during which a physician
can request termination of his or her CAP participation agreement as a
result of exigent circumstances. We agree with commenters that allowing
physicians more time to determine whether the CAP is suitable for their
practices is advisable. We believe that an initial 60-day period will
allow the participating CAP physician time to make a more complete
assessment of the CAP's suitability. Although certain burdens will be
likely to be apparent immediately, the first 30 days may be a period
with a steep learning curve for the practice as it adapts to the CAP
drug ordering process, and the first 30 days may involve working out
any ``start up'' issues within the practice or with the approved CAP
vendor. For this reason, the first 30 days may not be a fully
representative time period during which to assess ongoing CAP
participation. We believe an additional 30 days of CAP participation
would be sufficient to identify, in the vast majority of cases, whether
participation will constitute a burden to the practice.
Under this process, therefore, if a participating CAP physician's
election agreement was effective on January 1, 2008, then he or she
would have until March 1, 2008, to request to terminate participation
in the program if CAP participation results in a burden to the
practice. In addition, based on the concerns raised by commenters, we
will allow physicians to leave the CAP at any time after the first 60
days if they can show that a change in circumstances that was not known
to the practice previously results in a burden to the practice. As
noted above, we believe that in the vast majority of cases
participating CAP physicians will be able to identify a burden, if any,
within the first 60 days. However, we also recognize that issues may
arise during the course of the year that would result in an ``exigent
circumstance,'' but that were not known to the participating CAP
physician during the first 60 days of CAP participation. In such
instances, we agree with commenters that physicians should have a
longer window to request an opt-out.
For purposes of the two-tiered process, then, examples of burdens
that we would expect a practice could identify within the first 60 days
may include difficulties with CAP billing or drug ordering
requirements, or documentation that the practice's initial
understanding of these requirements was based on inaccurate information
provided by a third party. Examples of burdens that might arise after
the initial 60 days could include a change in practice personnel,
patient population, computer systems, or vendor behavior that makes it
harder to participate in the program. Where an opt-out request is
submitted after the initial 60 days, we will require the participating
CAP physician to demonstrate the request is based on information that
he or she did not have within the first 60 days.
All requests to terminate participation, whether within the first
60 days or thereafter, would be submitted to the CAP-designated carrier
and processed under the dispute resolution process. The request would
need to document the physician's burden. Upon completion of the process
outlined in proposed Sec. 414.917, we would make the decision about
whether the participating CAP physician's participation in the CAP will
be terminated.
If the physician has not demonstrated that CAP participation
represents a burden for his or her practice--either during the first 60
days or, if thereafter, as a result of a change in circumstances that
was not known to the practice previously, then we would not allow the
physician to terminate his or her participation in CAP because, as
noted above, we continue to believe that a participating CAP
physician's ability to opt-out of the CAP under this process should be
limited to ``exigent circumstances,'' as contemplated by the statute
and our regulations.
We would inform the physician of our decision in writing via the
designated carrier. We would also include a recommendation for
corrective action, if appropriate. For example, if the reason that the
CAP participating physician wanted to leave the program was that the
approved CAP vendor was not delivering drugs timely, the designated
carrier would investigate the situation. If it found that the approved
CAP vendor was complying with our regulations on drug delivery at Sec.
414.914(f) and Sec. 414.902 but that the participating CAP physician
was not ordering drugs consistent with the vendor's procedures, then
the CAP-designated carrier could educate the physician about the proper
drug ordering procedures and facilitate a discussion between the
approved CAP vendor and the participating CAP physician about how the
physician could order drugs in a way that met the
[[Page 66268]]
needs of his or her practice and the drug ordering requirements of the
CAP vendor. The CAP-designated carrier would document the result of
that discussion in writing. The participating CAP physician would have
the right to request a reconsideration of our decision as specified in
Sec. 414.916(c). We are revising Sec. 414.916(c) to clarify that the
physician reconsideration process would apply to reconsiderations of
our decision on whether the participating CAP physician may opt-out of
the CAP.
Based on our experience with the program, we continue to believe
that handling all requests to terminate CAP election under the dispute
resolution process is reasonable and straightforward. We further
believe the use of our pre-existing process will not create unnecessary
delays in processing opt-out requests, particularly in light of the
short time frames we have specified for responding to opt-out requests.
Moreover, we believe the dispute resolution process is sufficiently
detailed that it provides an ample description of how a physician's
request to terminate CAP participation will be assessed.
Physicians will still be required to return unused CAP drugs and to
complete any required CAP claims processing activities as described in
proposed Sec. 414.917. The notification to a physician will also
include the end date of CAP participation in order to facilitate an
orderly and efficient changeover between the CAP and ASP payment
systems.
Therefore, we are finalizing Sec. 414.908 and Sec. 414.917 as
proposed, subject to the changes described in this section. (We are
making an additional technical change to Sec. 414.908 to consolidate
the ``additional opt-out'' provision, currently set forth at Sec.
414.908(a)(5), with the other opt-out provisions at Sec.
414.908(a)(2). We believe this nonsubstantive change will improve the
clarity of the regulations.) Finally, we also are finalizing Sec.
414.916(c) as amended as described in this section.
h. Transporting CAP Drugs
Although section 1847B((b)(4)(E) of the Act provides for the
shipment of CAP drugs to settings other than a participating CAP
physician's office under certain conditions, we did not propose to
implement the CAP in alternative settings. In the July 6, 2005 IFC (70
FR 39047), we described both comments that supported the idea of
allowing participating CAP physicians to transport drugs to multiple
office locations, and comments that raised concerns about the risk of
damaging a drug that has not been kept under appropriate conditions
while being transported.
As stated in Sec. 414.906(a)(4), we implemented the CAP with a
restriction that CAP drugs be shipped directly to the location where
they will be administered. However, we were aware that physicians may
desire to administer drugs in alternative settings, especially in a
home. We sought comment on how this could be accommodated under the CAP
in a way that addresses the concerns about product integrity and damage
to the approved CAP vendors' property expressed by the potential
vendors.
Several comments submitted in response to the July 6, 2005 IFC
suggested either narrowing or removing the restriction on transporting
drugs to other locations. Commenters believed that physicians,
particularly those who specialize in oncology, and their staff are
knowledgeable about drug stability and handling, and therefore, were
capable of assuming this responsibility. Other commenters indicated
that transporting the drug to another office location may allow for
flexibility in scheduling patient visits. It would allow practices with
satellite operations that are not open every business day to receive
shipments of CAP drugs at another practice location and then to
administer the drugs in the satellite office.
We also received several comments discussing the impact of CAP-
delivery times on rural clinics and offices with satellite locations.
Many of these responses discussed how easing the restriction on
transporting CAP drugs between locations would be welcome in rural
areas and for satellite offices with limited hours.
These comments and our experience with the CAP thus far have caused
us to consider revising our policy. Therefore, in the CY 2008 PFS
proposed rule (72 FR 38157), we requested comments on the potential
feasibility of narrowing the restriction on transporting CAP drugs
where this is permitted by State law and other applicable laws and
regulations. We asked commenters to consider how such a policy could be
constructed so that the approved CAP vendor could retain control over
how the drugs that it owns are handled. We also requested comments on
other issues that we should take into account concerning transportation
of CAP drugs between practice locations listed on a physician's CAP
election agreement form. Additionally, we also solicited comments on
the following areas that we could use in the development of future
proposals:
How to structure requirements so that drugs are not
subjected to conditions that will jeopardize their integrity, stability
or sterility while being transported and steps to keep transportation
activities consistent with all applicable laws and regulations;
Whether any agreement allowing participating CAP
physicians to transport CAP drugs to alternate practice locations
should be voluntary. This means that approved CAP vendors would not be
required to offer such an agreement and physicians who participate in
the CAP would not be required to accept such an offer; and
Whether the agreement should be documented in writing, and
whether it is necessary to create any restrictions on which CAP drugs
could be transported.
We stated that we were not making a specific proposal at this time
but that we would use any information received to structure a future
proposal in the event we made one.
Comment: Several commenters supported the concept of easing the
restriction on transporting CAP drugs if this could be done safely, and
if changes were consistent with applicable rules, regulations, and
within the limitations of product stability and integrity. The
restriction on transporting CAP drugs was perceived as a barrier to
physician participation in the program. One commenter stated that
elimination of the restriction would result in the same flexibility as
the ASP (buy and bill) method of acquiring drugs. Another commenter
expressed a strong desire to implement these changes promptly.
A few commenters also cautioned us to be certain that appropriate
safeguards would be in place if we chose to ease the transportation
restriction. One commenter asked that the safeguards be available for
public scrutiny before they are implemented. Conversely, other
commenters stated that a physician's certification or discretion were
satisfactory.
Response: We are sympathetic to the concerns expressed by the
commenters and expect to issue a proposal in the CY 2009 PFS proposed
rule that would allow the transportation of CAP drugs from one
physician practice location in certain circumstances. We further expect
that our proposal would propose to permit transport of CAP subject to
voluntary agreements between the approved CAP vendor and the
participating CAP physician that complied with all applicable State and
Federal laws and regulations and product liability requirements. We
welcome comments on how to structure such a proposal.
[[Page 66269]]
i. Alternatives to the CAP Prescription Order Number
In the July 6, 2005 IFC (70 FR 39043 and 39049), we responded to
several comments regarding the administrative burden that the CAP
ordering and claims payment process imposes upon participating CAP
physicians; specifically, activities associated with using and tracking
the prescription order number were mentioned. We received additional
comments on this issue in response to the IFC as well.
After the close of the comment period, we also received an inquiry
from the current approved CAP vendor about the potential length of the
CAP prescription order number and whether it could present a burden to
participating CAP physicians. A 30-byte field is currently available on
the electronic claim form for prescription numbers; however, it is not
necessary for the prescription order number to be 30 bytes long.
Typically, 15 or fewer total characters have been used by the approved
CAP vendor.
The requirements for developing the CAP prescription order number
are as follows: The first 9 characters are the approved CAP vendor's ID
and the HCPCS code of the drug that is being billed; the approved CAP
vendor sets the remaining characters. The assigned CAP prescription
order number is captured in Loop 2410, REF02 (REF01=XZ) of the ANSI
4010A1 electronic claims transaction. This segment of the electronic
claims transaction is part of a specific data format that Medicare
claims must adhere to in order to meet national electronic standards
for the automated transfer of certain health care data as mandated by
the Health Insurance Portability and Accountability Act of 1996 (Pub.
L. 104-191) (HIPAA).
Each prescription order number is unique to a dose of a CAP drug
that is being shipped for administration to a particular beneficiary.
The prescription order number is generated by the approved CAP vendor
and, as stated in the July 6, 2005 IFC (70 FR 39042), each dose of a
CAP drug is required to have a separate prescription order number.
After the drug is administered, the participating CAP physician's drug
administration claim is submitted with a no-pay line containing the
prescription order number. The approved CAP vendor's claim for the CAP
drug also contains the prescription order number.
When the CAP was implemented, the prescription order number was
used in the claims matching process to facilitate accurate payment of
the approved CAP vendor. Prior to payment, this system paired an
approved CAP vendor's drug claim to a participating CAP physician's
drug administration claim using the prescription order number. A
matching prescription order number between these two claims indicated
that the drug had been administered.
Since the CAP began, the claims process has changed because of
statutory changes. Section 108(a)(2) of the MIEA-TRHCA requires us to
make payment upon receipt of an approved CAP vendor's drug claim and
then to conduct a post-payment review of claims. As stated in the MIEA-
TRHCA, the post-payment review process is intended to ``assure that
payment is made only for a drug or biological * * * if the drug or
biological has been administered to a beneficiary.''
Under this new process, the prescription order number still plays a
pivotal role. Prior to the payment of the approved CAP vendor's drug
claim, the CAP-designated carrier uses the prescription order number to
check the claims processing system to ascertain whether the local
carrier has adjudicated the drug administration claim. If the local
carrier has done so, then the CAP-designated carrier will look to see
whether the local carrier has determined that the CAP drug administered
by the participating CAP physician is covered and is medically
necessary. The local carrier's decision determines whether the CAP-
designated carrier will pay the approved CAP vendor's drug claim. If
the participating CAP physician's local carrier has not made a
determination on the physician's claim and the CAP drug claim, then the
designated carrier will pay the approved CAP vendor's claim upon
receipt and use the CAP prescription order number to help verify drug
administration on a post-payment basis.
The prescription order number is also still used in other CAP
processes. Each dose of a CAP drug that is shipped by the approved CAP
vendor is tracked using the prescription order number. Moreover, the
prescription order number is particularly useful in certain situations
such as those that involve recurring cyclic drug treatment regimens. In
these cases, the prescription order number minimizes the possibility of
confusion by serving as a unique differentiating factor between highly
similar drug claims. Also, the prescription order number is valuable
during instances in which the anticipated day of service submitted by
the participating CAP physician differs from the actual date of drug
administration. In these situations, the prescription order number
would clarify confusion stemming from discrepancies in dates. Overall,
we believe that the prescription order number remains an appropriate
and necessary tool to track the administration of a specific dose of a
drug and for the accurate execution of the post-payment review process.
Although we believe that the use of the prescription order number
is necessary to facilitate accurate review of CAP claims, we are aware
that it may be considered an inconvenience by some potential
participating CAP physicians and approved CAP vendors. Therefore, in
the CY 2008 PFS proposed rule (72 FR 38158), we requested comments on
alternative methods to accurately track the administration of specific
doses of drugs in order to meet the requirements stated in section
108(a)(2) of the MIEA-TRHCA. These comments could then be used in the
development of a proposal for future rulemaking.
Comment: We received a few comments on this issue. One commenter
suggested that the CAP-designated carrier should simply match vendor
and physician claims but did not provide any details about how that
could be accomplished without the prescription order number. Another
commenter stated that the CAP prescription order number was no longer
needed to verify drug administration and should be eliminated. Instead
they recommended that we should rely on the approved e-CAP vendor's
verification of drug administration and the physician's records of drug
administrations.
Response: While the records of participating CAP physicians and the
CAP vendor are currently used in the post pay review process, the CAP
prescription order number plays an important role in that it enables
the designated carrier to identify the exact doses of a drug that was
administered and provides a link between the approved CAP vendor's
claim and the participating CAP physician's claim that is not available
otherwise.
We do not believe the suggestions that we have received thus far
would allow us to discontinue the use of the prescription order number.
The prescription order number allows us to better ``assure that payment
is made only for a drug or biological * * * if the drug or biological
has been administered to a beneficiary'' since it tracks the
administration of a specific dose of a drug, which allows CMS to match
the vendor and the physician claim in the post pay review process.
However, we would appreciate receiving other suggestions that would
allow drug administration verification on a dose specific basis. Since
we did not make a specific proposal about this
[[Page 66270]]
issue, we will not make any changes at this time to the requirement
that the CAP prescription order number be supplied by the approved CAP
vendor and included on claims from both the participating CAP physician
and the approved CAP vendor.
j. Prefilled Syringes
In the July 6, 2005 IFC (70 FR 39061), we described public comments
which stated that participating CAP physicians could not vouch for the
quality of products that were opened by an approved CAP vendor for
repackaging, for mixing the drug with other drugs or injectable fluids
(admixture), or for removing a part of the contents to supply the exact
dose for a beneficiary. Several commenters recommended that approved
CAP vendors deliver their products in the same form in which they are
received from the manufacturer, without opening packaging or
containers, mixing or reconstituting vials, or repackaging.
Specifically, the commenters were concerned about the capabilities of
individuals who mix the drug, as well as shipping conditions, storage,
and stability.
We responded by stating that the CAP is not intended to require
approved CAP vendors to perform pharmacy admixture services (for
example, to furnish reconstituted or otherwise mixed drugs repackaged
in IV bags, syringes, or other containers that are ready to be
administered to a patient) when furnishing CAP drugs. Admixture
services for injectable drugs require specialized staff, training, and
equipment, and these services are subject to standards such as United
States Pharmacopoeia Chapter 797, Pharmaceutical Compounding--Sterile
Preparations. These requirements have significant impact on drug
shipping, storage, and stability requirements, as well as system cost
and complexity. As stated in Sec. 414.906(a)(4), the approved CAP
vendor must deliver ``CAP drugs directly to the participating CAP
physician in unopened vials or other original containers as supplied by
the manufacturer or from a distributor that has acquired the products
directly from the manufacturer.''
Since issuing the July 6, 2005 IFC, we have become aware that
bevacizumab (Avastin[supreg]) is being used for the treatment of
exudative age-related macular degeneration (wet AMD) in very small
doses. Although this is an off label use, it is gaining acceptance
among ophthalmologists who treat wet AMD, and this use has been the
subject of several carriers' local coverage determinations. Bevacizumab
is considerably less expensive than certain other drugs used in the
treatment of wet AMD.
The smallest commercially-available package of bevacizumab is a
100mg single use vial, while a dose used to treat wet AMD is
approximately 1mg. Some local carriers who have issued coverage
instructions for the use of bevacizumab in the treatment of wet AMD
allow physicians to obtain these small doses of drug from a pharmacy
that is capable of preparing sterile products. We expect to issue
instructions that will allow participating CAP physicians to use the
furnish as written option, as appropriate, and to obtain small doses of
bevacizumab outside of the CAP in prefilled syringes if their local
carrier's coverage determinations allow such a practice and if it is
consistent with applicable laws and regulations. We believe that this
approach will minimize the waste associated with using a 100mg single
use vial for the treatment of wet AMD and will increase the flexibility
for participating CAP physicians by making an alternative quantity of
this drug available to participating CAP physicians whose carriers have
applicable policies.
However, this option is not available in all areas. Therefore, we
stated that we are considering reassessing our policy on the use of
prefilled syringes to determine whether it would be feasible to make
the option of using prefilled syringes supplied by an approved CAP
vendor available to all physicians who participate in the CAP, rather
than requiring physicians to go outside the CAP in order to obtain CAP
drugs in prefilled syringes. In the CY 2008 PFS proposed rule (72 FR
38159), we requested comments on whether allowing approved CAP vendors
to repackage CAP drugs in certain situations may be beneficial to
beneficiaries, the program, and to the physicians who participate in
it.
In considering whether to propose a change to our regulations in
the future, we also solicited comments on:
Whether approved CAP vendors are likely to be pharmacies
or have access to pharmacy services with trained personnel and
facilities for the small scale preparation of sterile drug products in
response to a specific prescription order for a specific patient;
Whether an approved CAP vendor should be given an
opportunity to supply bevacizumab under the CAP if it is repackaged in
a patient-specific dose consistent with applicable state laws and
regulations upon request from a participating CAP physician;
Whether this sort of activity should be restricted to
bevacizumab, or possibly phased-in for other CAP drugs. If we were to
apply this sort of policy to other CAP drugs, we would also have to
determine how phasing-in might occur, which drugs it should apply to
and whether the preparation of admixtures (including the preparation of
sterile syringes, minibags, and mixing of drugs and solutions intended
for intravenous administration) should be allowed as well;
How this sort of service could be limited to participating
CAP physicians who voluntarily agree to use it, and whether such an
agreement should be made in writing between the approved CAP vendor and
the participating CAP physician;
How such a program could be structured so that the service
and staff engaged in providing the service would be required to meet
all applicable laws (including Stark, Anti-kickback, and State pharmacy
laws), as well as regulations for the preparation of sterile products,
(including standards for product integrity and sterility);
Whether the cost of preparing such product would be
included in the CAP vendor's bid price; and
Whether any other important elements should be evaluated
if we consider changing CAP policy on prefilled syringes in the future.
Comment: We received several comments on these issues. Overall,
responses were generally equally divided among those who supported
prefilled syringes, those who advocated a cautious approach, and those
who opposed the practice.
Those who opposed making prefilled syringes available through the
CAP cited stability and sterility concerns. Those commenters also
raised concerns about whether the CAP vendor's preparation of a
particular drug product for an off-label use by participating CAP
physicians would violate existing drug law because of the potential
scale of an approved CAP vendor's activities and because the drug was
being prepared for use in a manner other than as described in its FDA-
approved labeling. Several commenters urged that caution be used in
developing changes to the aspects of the CAP that are discussed above
in this section, but many of these commenters were not completely
opposed to the preparation of prefilled syringes by approved CAP
vendors.
Several commenters were quite supportive of using prefilled
syringes. One commenter stated that pharmacy preparation of prefilled
syringes was regarded as a ``convenient and safe practice'' and would
avoid both waste
[[Page 66271]]
and some of the risk associated with transferring sterile products.
Another commenter also recommended that a mechanism to pay for the
preparation and waste associated with the process be established.
There was a general point of agreement between commenters who urged
a cautious approach and those who agreed with the concept of prefilled
syringes. These commenters agreed that that additional flexibility or
enhancements to the CAP would be welcome provided that they did not
affect beneficiary safety and were consistent with applicable laws,
regulations, product stability, and product integrity requirements.
Response: We appreciate the comments on prefilled syringes and we
will consider whether to develop a proposal that is consistent with
applicable laws, regulations, product stability, and product integrity
concerns in future rulemaking. Because we did not propose a change to
our current regulations on the use of prefilled syringes in the CAP,
they remain unchanged for the present time. We may make a proposal in
the future.
k. Contractual Provisions
Section 1847B of the Act is generally silent on the subject of
disputes surrounding the delivery of drugs and the denial of drug
claims. However, section 1847B(b)(2)(A)(ii)(II) of the Act states that
a grievance process is a quality and service requirement expected of
approved CAP vendors. In the July 6, 2005 IFC (70 FR 39055 through
39058), we described the process for the resolution of approved CAP
vendors' claims denials and the resolution of participating CAP
physicians' drug quality and service complaints. We encouraged
participating CAP physicians, beneficiaries, approved CAP vendors, and
the designated carrier to use informal communication as a first step to
resolve service-related administration issues. However, we recognized
that certain disputes would require a more structured approach, and
therefore, we established processes under Sec. 414.916 and Sec.
414.917.
Suspension and termination from the CAP were the only remedies
described under the CAP dispute resolution processes. Having gained
some experience with the CAP, we believe that having an intermediate
level of remedy for less serious but persistent problems is desirable
in order to bridge the gap between taking no action and suspension or
termination of an approved CAP vendor.
We believe that additional contractual obligations, such as
additional reporting requirements, could be useful, particularly if
they provide an opportunity for the approved CAP vendor to come into
compliance using objective goals and a set timeline. Therefore, in the
CY 2008 PFS proposed rule (72 FR 38160), we requested comments on what
types of potential contractual provisions could be used to encourage
approved CAP vendors to comply with CAP requirements for less serious
violations, such as missing reporting deadlines, or participation in
inappropriate promotional strategies. We also requested comments on the
following:
The type of contractual provisions that would be suitable.
For example, requests for specific or targeted reporting and monitoring
activities in response to specific violations.
Whether an approved CAP vendor's code of conduct could be
used to address these types of less serious situations and how that
could be accomplished; and
Whether the CAP physician election agreement should be
revised to include provisions to address participating CAP physicians'
noncompliance with CAP rules or the CAP election agreement.
Comment: One commenter agreed with the use of contractual
provisions, including additional reporting requirements, as an
intermediate form of remedy in response to a CAP vendor's noncompliance
with CAP requirements. The commenter also noted that a vendor code of
conduct would be useful.
Response: We plan to develop a proposal for additional provisions
that could be added to the CAP contract. These provisions would be used
to encourage approved CAP vendors to comply with CAP requirements. We
will propose such provisions in a future rulemaking period.
l. Finalizing Remaining Provisions of the July 6, 2005 Interim Final
Rule with Comment Period
In this PFS final rule with comment, we are finalizing the portions
of the July 6, 2005 IFC that were not finalized in previous rulemaking.
We are also responding to other timely comments we received on the July
6, 2005 IFC that we have not responded to previously.
Comments that we will be addressing in this rule include the
following:
The use of e-prescribing in CAP.
Updating CAP prices and data reporting.
The application of Comprehensive Error Rate Testing (CERT)
to CAP claims.
The 14-day participating CAP physician billing
requirement.
The impact of CAP participation on clinical research.
Licensure requirements for CAP pharmacies and
distributors.
Community mental health centers and participation in the
CAP.
Administrative and financial burden of CAP participation
for physicians.
We have addressed drug transportation previously in this section of
this final rule with comment period.
Basis and Scope (Sec. 414.900)
These provisions provide that the regulations in this subpart
implement sections 1847A and 1847B of the Act. We received no comments
on these provisions and we are finalizing the corresponding regulatory
text at Sec. 414.900 in its entirety.
Definitions (Sec. 414.902)
Section 414.902 lists the definitions used in 42 CFR Subpart K. We
did not receive any comments about the revisions to this section that
we made in the July 6, 2005 IFC (70 FR 39093). At this time, we are
finalizing the regulatory text at Sec. 414.902 as it currently reads.
Competitive Acquisition Program as the Basis for Payment (Sec.
414.906)
Section 414.906 specifies how payment for CAP drugs is determined,
including vendor responsibilities for billing, shipment and delivery;
computation of the payment amount; substitution of CAP drugs and
resupply of a participating CAP physician's drug inventory.
i. 2005 Comments
In the July 6, 2005 IFC (70 FR 39074), we discussed the methodology
used to update CAP drug prices during the bidding process. We responded
to comments that suggested that single price updates for CAP drugs
should be tied to changes in ASP prices. We stated that we did not
believe that there had been enough experience with the ASP payment
methodology to update the bids based on growth in the ASP. We also
solicited comments on this method of updating single drug prices to the
payment year in order to develop and refine the CAP in the future.
(a) Updating CAP Prices and Data Submission
Comment: We received comments about updating CAP drug prices more
frequently than annually. One commenter suggested that we should
consider quarterly data submissions and
[[Page 66272]]
pricing updates even during the phase in period in order to produce
greater savings in instances where vendors' overall costs for CAP drugs
were declining, while providing greater protection for vendors in
instances where vendors were experiencing cost increases. Another
commenter encouraged us to compare CAP prices to ASP prices using the
most recent data available and to account for manufacturer price
adjustments in a timely manner.
Response: In the July 6, 2005 IFC (70 FR 39076), we stated, ``when
the administrative mechanisms of the CAP are operational and vendors
have more experience under the program, we will consider whether more
frequent reporting (of reasonable net acquisition costs) would be
appropriate.'' Section 414.914 requires that the CAP contract must
provide for the disclosure of the approved CAP vendor's reasonable, net
acquisition costs for a specified period of time, not to exceed
quarterly and provide for appropriate adjustments as described in Sec.
414.906(c)(1). This section describes the computation of an annual
update to the payment amount and allows updates more often than
annually but no more often than quarterly in any of the following
cases: introduction of new drugs; expiration of a drug patent or
availability of a generic drug; material shortages that result in a
significant price increase for the drug; and withdrawal of a drug from
the market. Also, the CAP payment amount is limited by the weighted
payment amount established under section 1847A of the Act across all
drugs for which a composite bid is required in the category, and
limited by the payment amount established under section 1847A of the
Act for each other drug for which the approved CAP vendor submits a
bid. It is not clear how the commenter is proposing that we account for
changes in manufacturer's price adjustments in a more timely manner.
Because the CAP has been operational for 15 months, we are still
gaining experience with the reporting and update mechanisms already in
place. At present, we believe these processes are sufficient to address
the needs of the CAP; however, as the program grows, we may consider
other options, including more frequent price updates.
(b) Impact of CAP on Clinical Research
Comment: Some commenters stated that they were concerned that CAP
participation would conflict with the Medicare National Coverage
Decision (NCD) on Clinical Trials. Since the NCD enables Medicare to
reimburse physicians for the current standard of care drugs that are
administered to beneficiaries in the control group of clinical trial
protocols, commenters were concerned that physicians would not be able
to enroll Medicare beneficiaries in clinical trials if drugs required
in the protocol were not on the CAP drug list. In addition, some
commenters expressed their concern that there was a lack of built in
oversight in CAP to ensure that vendors would buy drugs directly from a
manufacturer or wholesaler. The commenters were concerned that this
could result in the acquisition of counterfeit product, and that as a
result, such products could infiltrate clinical trials and compromise
the results of cancer clinical research that a CAP physician might be
participating in.
Response: As a result of an executive memorandum issued by the
President of the United States in June 2000, we instituted the NCD in
September 2000 as explained in our ``September 2000 Program
Memorandum'' on clinical trials available at http://www.cms.hhs.gov/ClinicalTrialPolicies/. The NCD stipulates that Medicare will provide
payment for routine costs associated with qualifying clinical trials
and for items or services needed to treat complications arising from
participation in such trials. The NCD was revised in July 2007 as
outlined in CAG-00071R, the ``Decision Memorandum for the Clinical
Trial Policy,'' which may be found at https://www.cms.hhs.gov/mcd. More
information about the National Coverage Decision on Clinical Trials can
be found on the CMS Web site at http://www.cms.hhs.gov/ClinicalTrialPolicies/ and through a Medicare Learning Network article
at http://www.cms.hhs.gov/MLNMattersArticles/.
We are very aware of the importance of clinical trial research in
the treatment of cancer, and we do not believe that CAP participation
has imposed any undue hardships on participating CAP physicians or
their Medicare patients who engage in such activities. Participating
CAP physicians do not have to buy and bill for the medications they
receive from the approved CAP vendor. The vendor is responsible for
billing the designated carrier and the beneficiary. Thus, if the
standard of care drug needed for the control group of a research
protocol is on the CAP drug list, the participating CAP physician may
order the medication from the approved CAP vendor. This should not
affect the participating CAP physician's ability to enroll Medicare
patients in clinical trials. Moreover, participating CAP physicians may
still purchase and bill for medications that are not on the CAP drug
list through the ASP system, which would allow them to obtain the non-
CAP drugs required in a research protocol. If a particular NDC for a
drug is not on the CAP drug list but is part of the research protocol,
a participating CAP physician may buy the medication on their own and
bill for it via the ``furnish as written'' provision, which allows the
physician to bill for the drug under the ASP methodology in that
instance, even though it is on the CAP drug list.
Though we have had no reports that CAP physicians have been
prevented from engaging in clinical trial research because of their CAP
participation, we are mindful that this could be an issue because of
the way some studies are structured. In the event that we receive
comments that demonstrate that this has become a problem in the future,
we will address the issues accordingly and possibly propose mechanisms
to facilitate participation in clinical trial research and the CAP.
We would also like to reemphasize that CAP is a voluntary program.
If physicians do not believe that the ``furnish as written'' option and
the CAP drug list are sufficient to meet their clinical research needs,
then they may decline to join the CAP and continue to purchase and bill
for medication under the ASP system.
We also are cognizant of the importance of preserving drug quality
and integrity in the CAP and have structured the program accordingly.
The importance of drug quality and oversight are recognized in both the
vendor bidding process and in the CAP dispute resolution process
administered by the designated carrier. We have discussed our concern
for maintaining CAP drug quality in the program as a whole on several
occasions, most recently in the CY 2006 PFS final rule with comment
period (70 FR 70244). Section 1847B of the Act and Sec. 414.908(b)
delineate several requirements that vendors must meet in order to be
selected to participate in the CAP, including an ability to ensure
product integrity, at least 3 years experience in furnishing Part B
Injectable drugs, and acquisition of all CAP drugs directly from the
manufacturer or from the distributor that has acquired the products
directly from the manufacturers. After an entity has been awarded a
contract, we work closely with the CAP-designated carrier and the
approved CAP vendor to monitor and respond to any concerns that are
raised by participating CAP physicians under the dispute resolution
process.
[[Page 66273]]
We have not received any complaints regarding CAP drug quality and
integrity. If such an event were to occur, it would be investigated and
resolved promptly so that patient health and safety would not be
jeopardized. In light of all of these requirements and protections, we
do not believe that research and CAP participation are incompatible.
At this time, we are finalizing the remaining provisions of this
section.
Competitive Acquisition Program (Sec. 414.908)
This section specifies the process for a physician to select an
approved CAP vendor. It also details the responsibilities of a
participating CAP physician, such as including the specific information
required on the prescription order, notifying the CAP vendor about
changes in drug administration, and adhering to the timeframe for
submission of claims.
Moreover, Sec. 414.908 delineates the process for selecting
approved CAP vendors. It also outlines additional factors that are
considered both during and after the vendor selection process such as
exclusion of entities from participation in Medicare or other Federal
health care programs under section 1128 of the Act.
i. 2005 Comments
(a) Physician Administrative and Financial Burden
Comment: We received several comments from individual physicians
and physician groups expressing their concern that CAP could place a
significant burden on physicians. Some commenters stated that the
requirement to maintain a separate inventory of CAP drugs will increase
physicians' administrative burden and costs. Others indicated that
physicians would have no incentive to participate in the CAP unless
these extra administrative costs could be reimbursed. One commenter
indicated that the program was impractical and economically unfeasible.
Response: In the July 6, 2005 IFC (70 FR 39049), we discussed the
issue of administrative burden. Although we agree that a physician may
have to make some adjustments in his or her practice in order to comply
with the requirements of the CAP, we believe that the relief from the
financial burden of purchasing drugs and billing Medicare for them will
be a substantial benefit for many physicians. We do not believe that
the clerical and inventory resources associated with participation in
the CAP exceed the clerical and inventory resources associated with
buying and billing drugs under the ASP system. A physician is free to
design his or her practice in a way that minimizes the extent of
changes necessary to comply with the CAP requirements. For example, an
electronic inventory of CAP drugs is required, but separate drug
storage is not; it is a suggested option if such a procedure makes it
easier on the physician's practice to track the CAP drugs. We recognize
that although a physician's staff or their software vendor may need to
make system changes to bill using the CAP format and to accommodate the
CAP modifiers and prescription numbers, these initial changes would be
a one-time occurrence.
In the ASP system, the payment for clerical and inventory resources
associated with buying and billing for drugs is bundled into the drug
administration payment under the physician fee schedule. We have
adopted this same logic in the CAP and believe that the drug
administration payment is sufficient to cover any associated expenses
of participating in the CAP.
If a physician perceives that CAP participation would be more
burdensome than the ASP system, then he or she is under no obligation
to join the CAP because it is a voluntary program. Additionally, as
described in other parts of this rule, participating CAP physicians may
also petition to terminate their CAP election due to exigent
circumstances through the dispute resolution process in the event that
they find the participation in the program becomes a burden.
Comment: One commenter expressed disappointment that community
mental health centers (CMHCs) cannot elect to participate in the CAP.
Response: As noted in the July 6, 2005 IFC (70 FR 39030), CMHCs can
not elect to participate in the CAP for provision of Part B drugs. The
CAP statute is clear that only physicians may elect to have section
1847B of the Act apply in lieu of the ASP payment methodology.
(b) E-Prescribing
Comment: One commenter recommended that CAP vendors should be
capable of accepting and submitting e-prescribing transactions in
accordance with the final e-prescribing standards issued for Medicare
Part D. The commenter reasoned that vendor compliance would not be an
undue hardship because vendors already will have a fairly rigorous
technical infrastructure in place.
Response: Section 101 of the MMA amended title XVIII of the Act to
establish a voluntary prescription drug benefit program. The MMA
electronic prescription program provisions found in section 1860D-4(e)
of the Act apply to the electronic transmission of prescription and
certain prescription-related information for Medicare Part D drugs for
Part D eligible individuals. The Part D e-prescribing requirements do
not apply to the electronic transmission of prescriptions and
prescription related information for Part B drugs unless those
prescriptions are written for Part D eligible persons and the
prescribed drug is a Part D drug. Prescription Drug Plan (PDP) sponsors
Medicare Advantage (MA) organizations offering Medicare Advantage-
Prescription Drug Plans (MA-PD) are required to establish electronic
prescription drug programs to provide for electronic transmittal of
certain information to the prescribing provider and dispensing pharmacy
and pharmacist. Prescribers and dispensers of Part D drugs are not
required to write prescriptions electronically, but those that do so
would be required to comply with any applicable final e-prescribing
standards that are in effect when they conduct electronic prescription
transactions, or seek or transmit prescription information or certain
other related information electronically.
We responded to a comment on whether participating physicians would
be required to incorporate e-prescribing technologies into the CAP in
the July 6, 2005 IFC (70 FR 39039). At that time, we stated that we
would monitor the development of the program to see if some aspects of
it could be adapted to the CAP. Since publication of the IFC, we have
adopted three foundation standards (70 FR 67568), recognized six
initial standards in a Request for Applications (RFA) (Available
through http://www.grants.nih.gov/grants/guide/rfa-files/FRA-HS-06-001.htm), and conducted a pilot program in 2006 to test the six initial
standards and their ability to interoperate with the foundation
standards. More information about the MMA e-prescribing program and the
outcome of the pilots can be found on the CMS Web site at http://www.cms.hhs.gov/EPrescribing/. The MMA requires the adoption of
additional standards by the Secretary by April 1, 2008. We will
continue to track the development of the e-prescribing program to see
whether it would be appropriate to incorporate some of the program's
elements into the CAP at a later date.
[[Page 66274]]
(c) The Comprehensive Error Rate Testing (CERT) Program and CAP Claims
The purpose of the CERT program is to monitor and report the
accuracy of Medicare fee for service payments. In the July 6, 2005 IFC
(70 FR 39038), we discussed CERT and how it would apply to CAP claims.
While we anticipated that CERT would apply to CAP, the process had not
been determined at that point. We received no additional comments on
this issue and have implemented CERT review of CAP claims since
publication of the July 6, 2005 IFC. CAP claims paid by the designated
carrier may be selected for review in a manner consistent with other
claims the carrier processes.
(d) 14-Day Billing Requirement
In the July 6, 2006 IFC (70 FR 39050), we summarized and responded
to comments about the 14-day requirement for physicians to file claims
for CAP drug administration. Although a number of commenters considered
the time period to be too brief and were opposed to it, we decided to
implement the 14-day requirement at Sec. 414.908(a)(3)(x) because the
approved CAP vendor's payment for drugs furnished under the CAP
depended on a match between the vendor's drug claim and the physician's
drug administration claim. Implementation of the post-payment review as
mandated by section 108 of the MIEA-TRHCA has superseded our original
implementation of CAP claims processing procedures, which had required
a pre-payment claims matching process for CAP drug claims, and the 14-
day billing requirement was not finalized in previous rules (70 FR
70260).
Comment: In 2006 several commenters asked us to allow at least 30
days or more for physicians to submit CAP drug administration claims.
During this comment period, we also received several comments stating
that the 14-day requirement be withdrawn because changes to the claims
processing system made it unnecessary and such an action would
encourage physician participation in the CAP.
Response: Our 14-day standard was based on a review of Medicare
claims that showed approximately 75 percent of part B drug and drug
administration claims were submitted within 14 days of the date of
service. It was initially implemented as a means of facilitating the
CAP claims matching process that was in effect prior to the
implementation of the post-payment review process as mandated by
section 108 of the MIEA TRHCA. As the commenters indicated, a 14-day
requirement is less than is allowed under claim submission requirements
used in other parts of the program.
We agree that the claims processing changes required by Section 108
of MIEA-TRHCA have altered the role of the claims submission standard.
However, we do not believe that it has eliminated the need for a
claims-matching process under the CAP. Under the new payment process
that resulted from the MIEA-TRHCA, the CAP-designated carrier also
conducts a pre-payment review in which it checks for any local carrier
decisions about medical necessity prior to paying for drug claims
submitted by the approved CAP vendor. Retaining a claims submission
requirement for participating CAP physician drug administration claims
may prevent the agency from paying for drugs that have been denied on a
medical necessity basis by the local carrier because when the local
carrier reviews the physician's claim it makes a determination on
whether the CAP drug that was administered was medically necessary. We
are not eliminating the requirement for prompt billing altogether, as
requested by commenters, because it will continue to facilitate a
quicker determination that the drug can be administered.
However, we acknowledge that a somewhat longer claims submission
standard would not adversely affect the post-payment review process
because it still would allow for a relatively quick match between the
claim for a particular dose of a CAP drug and the claim for its
administration. Also, separate analyses of previous claims submission
data and CAP drug claims lead us to conclude that the overwhelming
majority of participating CAP drug administration claims are submitted
within 30 days of the date of service. We further believe that, in
light of the comments, increasing the 14-day claims submission
requirement would make the CAP more appealing to physicians and provide
them with greater claims submission flexibility.
Therefore, we are increasing the requirement for timely CAP drug
administration claim submission from 14 days to 30 days. We are
finalizing the requirements at Sec. 414.908 to include this revision.
ii. Regulatory Text
At this time, we are finalizing Sec. 414.908 as amended to reflect
the changes discussed in this final rule with comment period.
The Bidding Process (Sec. 414.910)
This section outlines the specific criteria for the submission of a
bidding price for a CAP drug, and specifies what costs should be
included in the bid price. We received no comments on this provision
and are now finalizing the regulatory text for Sec. 414.910.
Conflicts of Interest (Sec. 414.912)
Section 414.912 states conflict of interest requirements and
standards that vendor applicants and approved CAP vendors must meet in
order to participate in CAP. We received no comments on this provision,
and therefore, are finalizing Sec. 414.912.
Terms of Contract (Sec. 414.914)
Section 414.914 outlines the contract provisions between CMS and
the approved CAP vendor such as contract length and termination, and
specific requirements that the approved CAP vendor must comply with.
i. 2005 Comments
(a) Licensure Requirements for Cap Pharmacies and Distributors
Comment: Some commenters requested clarification on the types of
licenses that are required of CAP vendors. A few commenters also asked
us to specify whether a CAP vendor will be operating as a pharmacy or
as a wholesale distributor since licensing requirements and regulatory
laws for these two types of entities can vary by state, and since
pharmacies and distributors are two different models.
Response: As specified in Sec. 414.914, approved CAP vendors and
their subcontractors must meet applicable licensure requirements in
each State in which it supplies drugs under the CAP. This includes
appropriate licensure in States that the CAP vendor ships drug to even
though the vendor does not maintain a physical establishment in these
States. In the July 6, 2005 IFC (70 FR 39066), we stated that a vendor,
its subcontractor, or both must be licensed appropriately by each State
to conduct its operations under the CAP. Therefore, a vendor under the
CAP would be required to be licensed as a pharmacy, as well as a
distributor if a State requires it. It is the CAP vendor's
responsibility to determine which State and national requirements it
must adhere to. Based on our experience with the CAP, we are not
persuaded by the comments that any changes to this policy are necessary
at this time.
ii. Regulatory Text
We finalized portions of Sec. 414.914 in the CY 2006 PFS final
rule with
[[Page 66275]]
comment period (70 FR 70333) and are now finalizing the remainder of
the regulatory text.
Dispute Resolution for Vendors and Beneficiaries (Sec. 414.916)
This section discusses the steps, timeframes, and requirements of
the dispute resolution process that are available to an approved CAP
vendor and beneficiaries to address the issue of denied CAP drug
claims. It also describes the protocol that physicians would utilize to
appeal the suspension of their CAP contract.
We did not receive any comment on this comments on this provision
in response to the CY 2006 PFS proposed rule. However, a revision to
this section will be made in light of the exigent circumstance
discussion in section (g) of this section of the preamble. We are
revising Sec. 414.916(c) to clarify that the physician reconsideration
process would apply to reconsiderations of our decision on whether the
participating CAP physician may opt out of the CAP. We are finalizing
Sec. 414.916 at this time.
Dispute Resolution and Process for Suspension or Termination of
Approved CAP Contract (Sec. 414.917)
This section discusses the steps and timeframes of the process
available to participating CAP physicians for the resolution of quality
or service issues concerning an approved CAP vendor.
We did not receive any comments on this section during the comment
period for the July 6, 2005 IFC. Comments that we received on this
section during the comment period for the CY 2008 PFS proposed rule are
discussed above in this section. We are now finalizing the regulatory
text for this section as described in this final rule with comment
period.
Assignment (Sec. 414.918)
Section 414.918 specifies that payment for a competitively biddable
drug may be made only on an assignment related basis. We received no
comments on this provision and are now finalizing Sec. 414.918.
Judicial Review (Sec. 414.920)
Section 414.920 outlines the areas under the CAP that are not
subject to administrative or judicial review. We received no comments
on this provision and are now finalizing this section.
m. Brief Summary of Comments We Are Not Addressing
In response to the FY 2007 IPPS final rule with comment period (71
FR 47870), we received a comment related to the payment rate for
intravenous immunoglobulin (IVIG) therapy in Medicare. We will not be
addressing this comment since it is outside the scope of both the CY
2008 PFS proposed rule and the FY 2007 IPPS final rule with comment
period. In addition, in response to the CY 2007 PFS proposed rule, one
commenter recommended that we implement continuous open enrollment in
the CAP and eliminate the requirement for annual physician election,
and specify who are the appropriate people to sign the CAP election
form. We are not addressing these comments because it is outside the
scope of the proposed rule.
G. Issues Related to the Clinical Laboratory Fee Schedule
1. Date of Service for the Technical Component of Physician Pathology
Services (Sec. 414.510)
In the CY 2007 PFS final rule with comment period (72 FR 69787), we
added Sec. 414.510 for the date of service of a clinical diagnostic
laboratory test that uses a stored specimen.
When we added Sec. 414.510, we indicated the provision applies to
clinical diagnostic laboratory tests. For outpatients, clinical
diagnostic laboratory tests are paid under the Medicare Part B clinical
laboratory fee schedule. Upon further review, we believe the provision
should also apply to the technical component (TC) of physician
pathology services. In practice, the collection date for both clinical
laboratory services and the TC of physician pathology services is
similar. Therefore, we believe Sec. 414.510 should apply to both types
of services. This will improve claims processing and adjudication in
relation to the clarity of dates of service, accuracy of payment, and
detection of duplicate services. For outpatients, the TC of physician
pathology services can be paid under the Physician Fee Schedule (PFS)
or the hospital Outpatient prospective payment system (OPPS). As a
result, for Sec. 414.510, in the CY 2008 PFS proposed rule (72 FR
38160), we proposed to revise the section heading and introductory
sentence to specify that the provision applies to both clinical
laboratory and pathology specimens. We also proposed revising Sec.
415.130(d) to include a reference to Sec. 414.510.
Comment: Some commenters supported our proposal to revise the
section heading and introductory sentence for Sec. 414.510 to specify
that the provision applies to both clinical laboratory and pathology
specimens. (We also proposed revising Sec. 415.130(d) to include a
reference to Sec. 414.510.) One commenter asked that we clarify
whether the provision applies to pathology tests where the technical
component and the professional component (PC) are performed by the same
lab and billed globally.
Response: Concerning one line global billing, we would like to
point out that the TC and the PC of a laboratory test should be on
separate line items on the same claim when two different dates of
service are involved, even when both services are performed by the same
independent laboratory. One line global billing is not appropriate in
this instance. Program instructions on this issue will be forthcoming.
Comment: One commenter requested revisions to our regulations to
specify that if the clinical laboratory test specimen is collected
outside the hospital by nonhospital personnel, the beneficiary
qualifies as a nonhospital patient.
Response: We do recognize that the determination of whether the
beneficiary qualifies as an inpatient, outpatient, or nonpatient is
important for payment purposes. However, we do not agree that the
laboratory date of service regulation should be amended to address the
employment arrangements of the personnel performing the specimen
collection. Furthermore, this comment is outside the scope of our
proposal to broaden the clinical laboratory date of service rules we
adopted last year.
We continue to believe the date of service should relate to clear
calendar dates for the specimen collection and day of discharge from
the hospital if the specimen was collected while the patient was
undergoing a hospital procedure.
We are implementing our proposed regulation at Sec. 414.510 on the
date of service of the TC of the physician pathology service.
2. New Clinical Diagnostic Laboratory Test (Sec. 414.508)
a. Background
In the CY 2007 PFS final rule with comment period (71 FR 69701), we
adopted a new subpart G under part 414 that implemented section 942(b)
of the MMA requiring that we establish procedures for determining the
basis for, and amount of payment for any clinical diagnostic laboratory
test for which a new or substantially revised HCPCS code is assigned on
or after January 1, 2005 (``new tests'').
Under Sec. 414.508, we use one of two bases for payment to
establish a payment amount for a new test. Under Sec. 414.508(a), the
first basis, called
[[Page 66276]]
``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. If we use crosswalking, we assign to the new test
code the local fee schedule amount and national limitation amount (NLA)
of the existing test code or codes. If we crosswalk to multiple
existing test codes, we determine the local fee schedule amount and NLA
based on a blend of payment amounts for the existing test codes. The
second basis for payment is ``gapfilling.'' Under Sec. 414.508(b), we
use gapfilling when no comparable existing test is available. We
instruct each Medicare carrier or MAC to determine a carrier-specific
amount for use in the 1st year that the new code is effective. The
sources of information that these carriers or MACs examine in
determining carrier-specific amounts 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 (although not similar enough to justify
crosswalking) or otherwise relevant.
After the first year, the carrier-specific amounts are used to
calculate the NLA for subsequent years. Under Sec. 414.508(b)(2), the
test code is paid at the NLA, rather than the lesser of the NLA and the
carrier-specific amounts.
We instruct our carriers or MACs to use the gapfill method through
program instruction, which lists the specific new test code and the
timeframes to establish carrier-specific amounts. During the first year
a new test code is paid using the gapfill method, contractors are
required to establish carrier-specific amounts on or before March 31.
Contractors may revise their payment amounts, if necessary, on or
before September 1. In this manner, a carrier or MAC may revise its
carrier-specific amount based on additional information during the 1st
year.
In the CY 2007 PFS final rule with comment period (71 FR 69702), we
also described the timeframes for determining the amount of and basis
for payment for new tests. The codes to be included in the upcoming
year's fee schedule (effective January 1) are available as early as
May. We then list the new clinical laboratory test codes on our Web
site, usually in June, along with registration information for the
public meeting.
The public meeting is held no sooner than 30 days after we announce
the meeting in the Federal Register. The public meeting is typically
held in July. In September, we post our proposed determination of the
basis for payment for each new code and seek public comment on these
proposed determinations of the basis for payment. The updated clinical
laboratory fee schedule is prepared in October for release to our
contractors during the first week in November so that the updated
clinical laboratory fee schedule is ready to pay claims effective
January 1 of the following calendar year.
We received comments in response to the CY 2007 PFS proposed rule
concerning information to be presented during the public meeting
process. In responding to these comments in the CY 2007 PFS final rule,
we stated that we did not believe that opportunities for information
gathering on new tests have been fully utilized within the public
meeting process. Payment recommendations from the public have sometimes
lacked charge, cost, and clinically-detailed information for the new
clinical laboratory tests. We also stated that when soliciting public
input for the meeting we would recommend that all participants in the
public meeting consultation process strive for transparency and try to
provide as much supporting information as possible to assist us in
evaluating their recommendations.
In addition, in the CY 2007 PFS final rule with comment period, in
response to comments suggesting that the method used by contractors to
determine their price for gapfilled tests should be more specific, we
indicated that we would engage in discussions with our carrier
contractors and laboratory industry representatives to explore their
experiences with the gapfill process. We also agreed to host a forum to
listen to suggestions from the public and said that we expected to
solicit comments on a potential reconsideration process in a future
rulemaking.
As explained in the CY 2008 PFS proposed rule, we discussed these
issues with our contractors. We also solicited comments on the gapfill
process in the July 16, 2007 clinical laboratory public meeting.
Discussions with our contractors and other interested parties
revealed that the length of time we allow for a contractor to establish
a carrier-specific amount may sometimes be insufficient for obtaining
additional sources and data on a new test. However, our contractors and
other interested parties were also concerned that if procedures and
determinations were permitted to extend over too long a time frame, the
uncertainty of the final payment amount would be detrimental for
laboratories, practitioners, and patients for incorporating new
technology tests and improving patient care. In the CY 2008 PFS
proposed rule, we also encouraged the public to submit written comments
on gapfilling and said that we would respond to them to the extent they
related to a proposal in the rule.
In the CY 2008 PFS proposed rule, we proposed a reconsideration
process for determining the basis for and amount of payment for any new
test for which a new or substantially revised HCPCS code is assigned on
or after January 1, 2008. This proposed change attempted to balance
additional opportunities for public input against the necessity for
establishing final fees for new clinical laboratory test codes.
Section 1833(h)(8)(A) of the Act provides broad authority to
develop through regulation procedures for the method for determining
the basis for and amount of payment for new tests. We believe that we
have authority under section 1833(h)(8)(A) of the Act to establish
procedures under which we may reconsider the basis for and amount of
payment for a new test. Furthermore, under section 1833(h)(8)(D) of the
Act, the Secretary may convene such other public meetings to receive
public comments on payment amounts for new tests as the Secretary deems
appropriate.
We note that, under both section 1833(h)(8)(B)(v) of the Act and
Sec. 414.506(d)(2), the Secretary must make available to the public a
list of ``final determinations.'' We do not believe that these
provisions preclude us from reconsidering our final determinations. It
is not unusual for us to provide for discretionary reopening or
reconsideration of final agency action. It is not unusual for us to
provide for discretionary reopening or reconsideration of final agency
action. For example, under Sec. 405.1885, we may reopen a final agency
determination regarding payment to a provider of services.
Comment: Commenters were supportive of our proposal to add Sec.
414.509 concerning a reconsideration process for new lab test payment
determinations. Generally, commenters believed that in contrast to
several other payment systems, which have been significantly revised in
the last several years, the procedures for operating the clinical
laboratory fee schedule have remained relatively static. They further
commented that the implementation of a reconsideration process would be
a significant step in helping assure reasonable pricing decisions for
new
[[Page 66277]]
tests, and they commended us for our actions in this regard.
Response: We appreciate the support for our proposal for a
reconsideration process for new lab test payment determinations. We
believe this additional opportunity to revisit payment determinations
for clinical laboratory test codes will foster accurate payment levels
for new tests. We will discuss specific suggestions for revisions to
Sec. 414.509 below in this section.
b. Basis for Payment
Under our existing procedures for determining the basis for payment
of a new test, either to crosswalk or gapfill, we receive comments on
the appropriate basis for payment for a new test both at the public
meeting in July and after we announce our proposed determinations in
September. In November, we post our determination on the basis for
payment for the new test on the CMS Web site. This determination of the
basis for payment is final, except in the case of a gapfilled test for
which we later determine that gapfilling is not appropriate under Sec.
414.508(b)(3).
In the CY 2008 PFS proposed rule, we proposed to create a
reconsideration process for determinations of the basis, either
crosswalking or gapfilling, for payment of a new clinical diagnostic
laboratory test. Consistent with our existing process, we would make a
determination using the information gathered from the public meeting
process and post a determination of the basis for payment, either to
crosswalk or gapfill, on the CMS Web site, likely in September. We
would accept written comments asking for a reconsideration on this
basis determination for 30 days after we posted the determination on
the CMS Web site. If a commenter recommended that we switch from
gapfilling to crosswalking for a new code, the commenter would also
have the opportunity to recommend the code or codes to which to
crosswalk the new test code. Under Sec. 414.508, claims would be paid
using this basis to calculate fees beginning January 1.
After considering the comments received and the information from
the public meeting, we would post our decision on our Web site as to
whether we elect to reconsider our determination of the basis for
payment. If we elect to reconsider the basis for payment (that is,
whether to crosswalk or gapfill a test), we would post our
determination as to whether we would change the basis for payment on
the CMS Web site. Our decision regarding the basis for payment would be
final and not subject to further reconsideration.
If we change our prior determination of the basis for payment, the
new determination would be effective on January 1. We would not reopen
or otherwise reprocess claims with dates of service prior to the
effective date of the revised determination.
We note that, under our proposed reconsideration processes (for
both the basis for payment and amount of payment) we would make two
separate decisions. First, we would decide whether to reconsider our
prior determination. If we elect to reconsider our prior determination,
we would then determine whether we should change our prior
determination.
Comment: One commenter suggested that the agenda for the public
meeting should announce a list of requests received by CMS to
reconsider the basis for and amount of payment for a new clinical
laboratory test, and the agenda should invite comment, either written
or orally, on the requests. The commenter stated that in this way, we
will receive views on the validity of the requests for reconsideration.
Another commenter indicated that more than one public meeting per year
should be hosted by CMS to discuss comments under the reconsideration
process, as well as the payment determination process.
Response: We are receptive to suggestions on providing information
about the public meeting agenda. We do not believe a revision to the
regulatory text at subpart of Sec. 414.509(a) is required in order to
disseminate information on our meetings. We publish a public meeting
notice in the Federal Register to announce the meeting. The notice
includes many details about the purpose and registration process for
the meeting and also refers to additional Web site information for the
meeting. If we receive a request to reconsider the basis of payment for
a new test within the 60-day window after we post our basis of payment
on the CMS Web site, the requestor could also request to present his or
her comment orally at the next clinical laboratory public meeting. We
can include this information in the meeting agenda that will be posted
on the CMS Web site. Members of the public who are interested in
addressing a particular reconsideration request at the laboratory
public meeting can let us know of their interest in doing so after they
review the reconsideration requests that will be addressed at the
laboratory public meeting. In addition, we will accept written comments
on the reconsideration request after the public meeting. We will accept
written comments during the same time period we set for accepting other
comments after the clinical laboratory public meeting--usually 2 weeks.
We note that, if the party that submitted the reconsideration request
does not choose to present at the public meeting, members of the public
may not comment on the reconsideration request and we will not accept
written comments.
However, hosting more than one public meeting per year is a timing
issue which is limited by the constraints of the process. Currently,
there is a limited amount of time between the receipt of the new test
codes for the upcoming year and the deadline to issue them via CMS
instruction; therefore, we cannot accommodate two public meetings in a
year. As a result, we are finalizing Sec. 414.509(a) with revisions to
specify that other commenters may speak about reconsideration requests
on the laboratory public meeting agenda and that we will accept written
comments on reconsideration requests addressed at the public meeting.
c. Amount of Payment
i. Crosswalking
Under our existing procedures, commenters recommend the code or
codes to which to crosswalk a new clinical laboratory test both at the
public meeting in July and during the comment period after we issue our
proposed determination in September. We consider the appropriate basis
for payment and the amount of payment at the same time. Therefore,
commenters that recommend crosswalking as the basis for payment for a
new test also make recommendations concerning the code or codes to
which to crosswalk the new test. In November, we post the code or codes
to which we will crosswalk the test and the payment amount for the test
on the CMS Web site. This determination is final.
In the CY 2008 PFS proposed rule (72 FR 38162), we proposed to
create a reconsideration process under which we may reevaluate the code
or codes and their corresponding fees to which we crosswalk a new
test's fees. We would accept reconsideration requests and written
comments on the crosswalked code or codes and the resulting amount of
payment for the new code for 60 days after we posted the determination
on the CMS Web site, sometime in November. In addition, we proposed
that a commenter who had submitted a written comment within the 60-day
comment period would also be given the opportunity to present its
comment at the public meeting. After considering the comments received
and the
[[Page 66278]]
information of the public meeting, we would post our decision as to
whether we had elected to reconsider our determination of the
crosswalked code or codes and the resulting amount of payment on the
CMS Web site. If we elect to reconsider the amount of payment and had
determined that we should revise the amount of payment, we would post a
new determination of the code or codes to which we would crosswalk the
test on the CMS Web site. We proposed that, after we posted our
determination of the code or codes to which the test would be
crosswalked on the CMS Web site, we would pay claims on the basis of
this determination beginning January 1. Our decision regarding the
amount of payment would be final and not subject to further
reconsideration.
If we change our prior determination of the amount of payment, the
new determination would be effective January 1. We would not reopen or
otherwise reprocess claims with dates of service prior to the effective
date of the revised determination.
As discussed in section II.G.2.b., we may also change the basis for
payment for a new test as the result of reconsideration. If we change
the basis for payment from gapfilling to crosswalking, we would also
determine the code or codes to which we would crosswalk the test.
Because we believe it is important to establish final payment amounts
within a reasonable amount of time, we also proposed that these
determinations of crosswalked payment amounts would not be subject to
reconsideration.
Comment: Some commenters indicated that Sec. 414.509(b)(1) should
establish payment amounts at the national limitation amount (NLA) of
the tests to which the new tests are crosswalked. The NLA should
replace carrier-specific amounts below the NLA for new tests. The
commenters believe that if the amount of payment is lower than the NLA
in a carrier's geographic area, patient access to a new test will be
limited in the geographic area.
Response: In the CY 2008 PFS proposed rule, we did not make policy
proposals regarding the level of payment for crosswalked tests. Rather,
our policy proposals were limited to the reconsideration process.
Accordingly, we believe that this comment is outside of the scope of
this rulemaking
Comment: One commenter suggested that a similar reconsideration
process should also be available for existing laboratory tests. The
commenter pointed out that the payment amounts determined for certain
laboratory tests by one or another Medicare carrier or MAC now differ
from the payment amounts determined for these same tests by other
Medicare contractors and from the corresponding NLA.
Response: Section 1833(h)(1) of the Act sets forth the calculation
of the payment amounts for test codes included on the clinical
laboratory fee schedule to be the lower of the charge submitted, the
carrier-specific amount, or the NLA. We believe changes to payment
amounts for tests that are not ``new tests'' under section
1833(h)(8)(A) of the Act would require a statutory change.
Comment: One commenter recommended that CMS clarify how fee
schedule amounts below the NLA will be adjusted as carriers are phased
out and their functions are moved to MACs.
Response: This comment is outside the scope of our proposal. If
necessary we may address this comment in a future program memorandum.
We are finalizing Sec. 414.509(b)(1). Consistent with the
revisions we made to Sec. 414.509(a), we are revising Sec.
414.509(b)(1) to provide that other commenters may speak about
reconsideration requests on the lab public meeting agenda and that we
will accept written comments on reconsideration requests addressed at
the public meeting.
ii. Gapfilling
As discussed in this preamble and in accordance with Sec.
414.508(b), after we determine that gapfilling will be the basis for
payment for a new clinical diagnostic laboratory test, we instruct our
carriers or MACs to determine carrier-specific gapfill amounts by April
1 and finalize carrier-specific amounts by September 30. We include the
determinations of carrier-specific amounts and the NLA for the new test
code in the clinical laboratory fee schedule the following November
when we post our payment determinations on the CMS Web site. Except in
the case of a gapfilled test for which we determine that gapfilling was
not appropriate under Sec. 414.508(b)(3), these determinations are
final.
We proposed to provide for a reconsideration process for gapfilled
payment amounts. Under this process, by April 30, we would post the
carrier-specific amounts on the CMS Web site at http://www.cms.hhs.gov/ClinicalLabFeeSched/02_clinlab.asp.
Interested parties would submit written comments to CMS (which we
would provide to the carriers for their consideration) on the carrier-
specific amounts within 60 days from the date of posting the carrier-
specific amounts.
In the CY 2008 PFS proposed rule, we stated that carriers or MACs
would finalize carrier-specific amounts by September 30 and that we
would set the NLA at the median of the carrier-specific amounts, and we
would post the carrier-specific amounts and the NLA on our Web site. In
addition, we stated that the public would have 60 days to submit a
reconsideration request.
We also proposed that if we elect to act on the reconsideration
request to reconsider the carrier-specific amounts and decide to revise
our prior determination, we would adjust the NLA based on comments
received. We would post the revised NLA on the CMS Web site and payment
for the test would be made at the NLA beginning January 1. This
determination would be final and not subject to further
reconsideration.
In addition we proposed that, if we change the basis of payment
from crosswalking to gapfilling as the result of a reconsideration, the
new gapfilled payment amount would be subject to reconsideration under
proposed Sec. 414.509(b)(2). Unlike a crosswalked test, the payment
amount for a gapfilled test is not established when we determine the
basis for payment because it takes approximately 9 months for our
contractors to establish carrier-specific amounts. Thus providing for
reconsideration of gapfilled payment amounts would not lengthen the
period of time it would take to determine a final payment amount.
We proposed to amend Sec. 414.508(b)(3) to provide that Sec.
414.508(b)(3) applies to new tests for which a new or substantially
revised HCPCS code assigned on or before December 31, 2007. We proposed
that the more comprehensive reconsideration procedures would apply to
new or substantially revised HCPCS codes assigned after December 31,
2007.
Comment: One commenter suggested that we should accept comments
after the carrier-specific amounts become final, which is currently on
September 30.
Response: We appreciate this commenter's input. We have decided to
revise the reconsideration process that we proposed. Under the final
policy we are adopting in this final rule with comment period, we will
post interim determinations of carrier-specific amounts on the CMS Web
site in April and, for 60 days, we will accept written comments that we
will share with our carriers and MACs. However, we will not accept
reconsideration requests on the interim carrier-specific amounts. In
September, we will post final carrier-
[[Page 66279]]
specific amounts on the CMS Web site. Interested parties may request
reconsideration of the final carrier-specific amounts within 30 days of
when we post the final carrier-specific amounts on the CMS Web site.
Based on the written reconsideration requests received, we would
evaluate whether we should reconsider the carrier-specific amounts and
NLA.
If we elect to reconsider the carrier-specific amounts and the NLA,
we will process the request for reconsideration between the end of the
30-day comment period and the deadline for dissemination of the
information to the Medicare carriers or MACs via CMS instruction so
that we can finalize our determinations prior to January 1. A request
for reconsideration can be denied or reconsidered for a different
payment amount.
If we elect not to reconsider the carrier-specific amounts and the
NLA, we will post the carrier-specific amounts and NLA on the CMS Web
site on or before January 1. These amounts would be based on the
carrier-specific amounts and NLA we had posted in September. Payment
for the test would be made at the NLA on January 1. This determination
would be final and not subject to further reconsideration.
In addition, after the final test codes and payment amounts are
effective on January 1, there is no reconsideration process that occurs
after that date.
Comment: One commenter suggested that CMS provide a rationale for
either accepting or declining a reconsideration after it is received
and for deciding whether to change a prior determination.
Response: We do not plan to post a rationale for our decision to
accept or decline a reconsideration request. This is consistent with
our policy in other areas of the Medicare program when we make a
decision about whether to reopen a previous decision.
Comment: One commenter suggested that we should convene an expert
advisory committee, broadly representative of the laboratory industry,
to advise CMS on pricing along with standardizing the sources and
quality of charge and cost data.
Response: The purpose of the Clinical Laboratory public meeting is
to convene industry experts and entertain comments, both orally and in
writing, as well as any charge and cost data that is available from the
industry. In fact, we specifically asked, via public notice, those in
the clinical laboratory industry to provide charge and cost data
related to the agenda items at the annual public meeting. We welcome
any related information that industry representatives would like to
provide via the public meeting forum and during the associated comment
period.
Comment: There were specific concerns raised by commenters
regarding varying payment amounts set by carriers when the gapfilling
basis is utilized to determine payment amounts for a new test code.
These commenters recommended that we establish formal procedures for
carriers or MACs to apply when establishing payment amounts, including
a formal appeals process. The commenters stated the payment amounts
should be calculated using information on the following factors,
resources needed to perform the test, staff expertise, time needed to
perform the test and the test's potential value. In addition, the
commenters suggested we should publish the gapfill payment amounts
determined by carriers or MACs and an explanation of the payment
amounts.
Response: Although we appreciate the comments on the establishment
of payment amounts for new clinical laboratory test codes using the
gapfill basis and the suggested improvements to the way we set rates,
these comments are outside the scope of this rulemaking. In the CY 2008
PFS proposed rule, we proposed policies and requested comment regarding
our proposed reconsideration process. We made no policy proposals with
respect to the methodology our contractors use to establish gapfilled
payment amounts. However, in the interest of transparency we will
instruct carriers or MACs to provide a rationale for their final
carrier-specific amounts, which we will post on our Web site.
Comment: One commenter suggested that we should establish a
temporary NLA based on the carrier-specific amounts posted on April 30
within the first year of the gapfill process.
Response: We appreciate the commenter's suggestion; however, we are
concerned that establishing a temporary NLA within a 3 month time
period is not possible due to our substantial program requirements each
year. Currently, clinical laboratory fee schedule payment rates are
established on a calendar year basis. During the year preceding each
January 1, an extensive multi-step process is in place in order to
bring those payment rates to fruition. Currently, that process does not
allow for additional ratesetting procedures.
d. Jurisdiction for Reconsideration Decisions
In the CY 2008 PFS proposed rule (72 FR 38163), we proposed that
jurisdiction for reconsideration would rest exclusively with the
Secretary. A decision whether to reconsider a determination would be
committed to the discretion of the Secretary. Accordingly, a refusal to
reconsider an initial determination would not be subject to
administrative or judicial review. We recognize that parties
dissatisfied with an initial determination as to the amount of payment
for a particular claim for laboratory services may appeal the initial
determination under part 405, subpart I of our regulations. Under our
proposal, a party could challenge under part 405, subpart I a
determination regarding the amount of payment for a new test--
regardless of whether the amount of payment was established as the
result of a reconsideration--but a party could not challenge a decision
not to reconsider.
Comment: One commenter stated that comments should be allowed on
the final payment determination amounts.
Response: This comment appears to request an extension of the
reconsideration process or a change in the jurisdiction as proposed in
Sec. 414.509. The commenter did not provide additional information on
the circumstances that would warrant an extension of the
reconsideration process. Also, the comment did not specify the length
of time for an extension or procedures for an extension or change of
jurisdiction. We believe Sec. 414.506 through Sec. 414.509 permit
adequate opportunities for public participation in the process of
establishing a payment amount and requesting a reconsideration. More
than 2 years can elapse if all steps of these reconsideration
procedures are necessary for the establishment of the basis and payment
for a new test code. We do not agree that revisions to Sec. 414.509(d)
are warranted.
3. Technical Revisions
We also proposed technical revisions to Sec. 414.502, Sec.
414.506, and Sec. 414.508. Under section 1833(h)(8)(A) of the Act, the
term ``new tests'' is defined as any clinical diagnostic laboratory
test for which a new or substantially revised HCPCS code is assigned on
or after January 1, 2005. However, our regulations do not define the
term ``new test.'' Therefore, we proposed to define the term ``new
test'' under Sec. 414.502 using the statutory definition. In addition,
under Sec. 414.506 and Sec. 414.508, we proposed to replace
references to ``new clinical diagnostic laboratory test that is
assigned a new or substantially revised code on or after January 1,
2005'' with references to ``new test.''
Response: We received one supportive comment on this subpart,
[[Page 66280]]
and we appreciate the positive input received on our technical
revisions. Therefore, we are finalizing the technical revisions as
proposed.
H. Revisions Related to Payment for Renal Dialysis Services Furnished
by End-Stage Renal Disease (ESRD) Facilities
In the CY 2008 PFS proposed rule (72 FR 38163), 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 rate.
Specifically, we proposed the following provisions which are
described in more detail below in this section.
A growth update to the drug add-on adjustment to the
composite rates for 2008 required by section 1881(b)(12)(F) of the Act.
An update to the wage index adjustments to reflect the
latest hospital wage data, including a reduction to the wage index
floor and a revised budget neutrality adjustment to the wage index for
2008.
We received approximately 7 comments on these proposed changes
which are discussed in detail below in this section.
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 and the AWP payment methodology. In 2005, we generally paid
for ESRD drugs based on average acquisition costs. Thus the difference
from AWP pricing was calculated using acquisition costs. However, in
2006 when we moved to ASP pricing for ESRD drugs, we recalculated the
difference from AWP pricing using ASP prices.
Comment: Two commenters supported our continued use of ASP+6
percent to pay for separately billable ESRD drugs.
Response: Although these comments are outside the scope of the
proposed rule, we appreciate the support of our previous decision to
pay for separately billable ESRD drugs at ASP+6 percent.
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 2007 drug add-on adjustment to the composite rate is 14.9
percent. The drug add-on adjustment for 2007 incorporates an inflation
adjustment of 0.5 percent. This computation is explained in detail in
the CY 2007 PFS final rule with comment period (71 FR 69682 through
69684). We note that the drug add-on adjustment of 15.1 percent that
was published in the CY 2007 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 adjustment payment system that was subsequently enacted
by the MIEA-TRHCA, effective April 1, 2007. 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 14.9 percent add-on
adjustment beginning April 1, 2007. This adjustment was necessary to
ensure that the total drug add-on dollars remain constant.
(a) Estimating Growth in Expenditures for Drugs and Biologicals for CY
2008
In the CY 2007 PFS final rule with comment period (71 FR 69682), we
established a methodology for annually estimating the growth in ESRD
drugs and biological expenditures that uses the Producer Price Index
(PPI) for pharmaceuticals as a proxy for pricing growth in conjunction
with 2 years of ESRD drug data to estimate per patient utilization
growth.
For CY 2008, we proposed to continue using this methodology to
update the drug add-on adjustment, using expenditure data from CY 2005
and CY 2006 to estimate the growth in per patient utilization of drugs.
However, we also proposed using only drug expenditure data from
independent ESRD facilities because we were unable to determine
utilization change in hospital-based dialysis facilities due to the
changes in payment methodology for these types of dialysis facilities
from CY 2005 to CY 2006. In 2005, payments to hospital-based facilities
were based on cost (or a percentage of charges), whereas payments to
those facilities in 2006 were based on ASP pricing. Because of the cost
payment methodology, the ``drug unit'' fields on the 2005 hospital-
based ESRD facility bills were not used for payment purposes, and
therefore, the data may not have been accurately reported on those
bills. As such, we were unable to accurately isolate the per unit
payment differential for hospital-based ESRD facility drug expenditures
between 2005 (cost payments) and 2006 (ASP payments) for purposes of
estimating the residual utilization change between years. We proposed
imputing the same utilization growth for hospital-based ESRD facilities
as estimated for independent ESRD facilities.
Comment: One comment urged us to reevaluate the data and
methodology used to estimate utilization changes. The comment was
specifically concerned about the timeliness of the data and that the
exclusion of hospital-based drug data may significantly skew the
accuracy of the utilization growth calculation. However, the comment
did not suggest an alternative methodology.
Response: The data from CY 2005 and CY 2006 represent the most up
to date and latest full years of data available. Contrary to the
commenter's suggestion, as we indicated in the CY 2008 PFS proposed
rule, including hospital-based data in the computation would have
resulted in a negative utilization growth. Therefore, we opted to
exclude those data to avoid penalizing ESRD facilities because of the
problems with the hospital-based ESRD facility drug data. We believe
our approach provides the most reasonable result given the available
data.
Comment: One comment suggested that we adopt an index that would
account for both price and utilization such as the National Health
Expenditures (NHE) index. This would avoid the data issues associated
with estimating utilization growth.
Response: We do not believe that the NHE projections would be the
best proxy for 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
and does not capture the nuances of both labor and economic markets as
accurately as does the specific PPI forecast. We believe that, despite
some of the limitations in the data, estimating utilization growth
[[Page 66281]]
from reported ESRD claims data provides the most accurate measure of
actual ESRD facility drug utilization.
Comment: One comment suggested that the PPI may not result in an
accurate assessment of prices for ESRD drugs and that there are other
available indices that would provide more accurate data on ESRD drugs.
In addition, they stated that should we choose to move forward with the
PPI, the most up to date PPI forecast should be used.
Response: We do not know of any better price index than the PPI for
measuring price growth for ESRD drugs. However, we welcome any
suggestion the industry may have on an alternative price index suitable
for measuring price growth of ESRD drugs. Global Insight, Inc. is a
nationally recognized economic and financial forecasting firm that
contracts with CMS to forecast the components of our market baskets.
The current projection of the PPI for prescription drugs is based on
the 2007 second quarter forecast using historical data through the
first quarter of 2007, the most current data available at this time.
Comment: One comment recommended that a mechanism be established to
provide for a forecasting error adjustment of prior estimates.
Response: While we appreciate the concern related to the 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 statute in estimating
growth in ESRD drug expenditures for CY 2008. Moreover, forecast error
adjustments are rarely made in our prospective payment systems.
(b) Estimating Growth in Per Patient Drug Utilization
To isolate and project the growth in per patient utilization of
ESRD drugs for CY 2008, we removed the enrollment and price growth
components from the historical data and considered the residual to be
utilization growth. As discussed previously, we proposed to use
independent ESRD facility drug expenditure data from CY 2005 and CY
2006 to estimate per patient utilization growth for CY 2008.
We first estimated total drug expenditures. For the CY 2008 PFS
proposed rule (72 FR 38165), we used the final CY 2005 ESRD facility
claims data and the latest available CY 2006 ESRD facility claims data,
updated through December 31, 2006. That is, for CY 2006 we used claims
that were received, processed, paid, and passed to the National Claims
History File as of December 31, 2006. For this final rule with comment
period, we are using more updated CY 2006 claims with dates of service
for the same time period. This updated CY 2006 data file includes all
claims that were received, processed, paid, and passed to the National
Claims History File as of June 30, 2007 for CY 2006.
For the CY 2008 PFS proposed rule, we adjusted the December 2006
file to reflect our estimate of what total drug expenditures would be
using the final June 30, 2007 bill file for CY 2006. The net adjustment
we applied to the CY 2006 claims data was an increase of 12 percent to
the December 2006 claims file. For this final rule with comment period,
we are using the CY 2006 claims file as of June 30, 2007, which
represents the final claims file for that year. To calculate the
proposed per patient utilization growth, we removed the enrollment
component by using the growth in enrollment data between 2005 and 2006.
This was approximately 3 percent. To remove the price effect, we
calculated the weighted difference between 2005 average acquisition
price (AAP) and 2006 ASP pricing for the original top ten drugs for
which we had average acquisition prices. We weighted the differences by
the 2006 independent ESRD facility drug expenditure data. This process
led to an overall 3 percent reduction in price between 2005 and 2006
(72 FR 38165 through 38166).
After removing the enrollment and price effects from the
expenditure data, the residual growth would reflect 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 3
percent (1.00 - 0.03 = 0.97) into the total drug expenditure change
between 2005 and 2006 of -0.2 percent (1.00 -0.00 = 1.00). The result
is a proposed utilization growth factor equal to 1.00 (1.00/1.03 *
0.97) = 1.00.
Since we observed no growth in per patient utilization of drugs
between 2005 and 2006, we proposed no projected growth in per patient
utilization for all ESRD facilities for CY 2008.
c. Applying the Proposed Growth Update to the Drug Add-On Adjustment
In the CY 2007 PFS final rule with comment period (71 FR 69684), we
revised our update methodology by applying the growth update to the per
treatment drug add-on amount. That is, for CY 2007, we applied the
growth update factor of 4.03 percent to the $18.88 per treatment drug
add-on amount for an updated amount of $19.64 per treatment.
For CY 2008, we proposed to update the per treatment drug add-on
amount of $19.64 established in CY 2007 by converting the update into
an adjustment factor as specified in section 1881(b)(12)(F) of the Act.
(i) Update to the Drug Add-On Adjustment
In the CY 2008 PFS proposed rule (72 FR 38166), we estimated no
growth in per patient utilization of ESRD drugs for CY 2008. Using the
projected growth of the CY 2008 PPI for prescription drugs of 3.66
percent, we projected that the combined growth in per patient
utilization and pricing for CY 2008 would result in an update equal to
the PPI growth, or 3.66 percent (1.0 * 1.0366 = 1.0366). This proposed
update factor was applied to the CY 2007 per treatment drug add-on
amount of $19.64 (reflecting a 14.9 percent adjustment in CY 2007),
resulting in a proposed weighted average increase to the composite rate
of $0.72 for CY 2008 or a 0.5 percent increase in the drug add-on
percentage. Thus, the total proposed drug add-on adjustment to the
composite rate for CY 2008, including the growth update was 15.5
percent (1.149 * 1.005 = 1.155).
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 intend to reevaluate our
methodology for estimating the growth update at that time.
Comment: One comment suggested that we should work with the kidney
care community as we consider a CY 2010 transition to trend analysis
using ASP-based historical data. The comment expressed concern that
using actual historical ESRD drug expenditure data reflecting ASP
pricing could adversely affect ESRD facilities due to changes in ASP
pricing for EPO and Procrit.
Response: Once we begin using trend analysis to update the drug
add-on adjustment, we will provide details of that methodology in
future rulemaking.
[[Page 66282]]
(ii) Final Growth Update to the Drug Add-On Adjustment for 2008
Similar to the proposed rule, we estimated no growth in per patient
utilization of ESRD drugs for CY 2008. To remove the price effect, we
used 2006 weights for each of the top ten ESRD drugs billed by
independent ESRD facilities. These weights are shown in Table 6.
Table 6.--CY 2006 Drug Weights for Independent Facilities
------------------------------------------------------------------------
2006
Independent drugs weights
(percent)
------------------------------------------------------------------------
EPO........................................................ 75.2
Paricalcitol............................................... 11.6
Sodium--ferric--glut....................................... 2.9
Iron--sucrose.............................................. 5.7
Levocarnitine.............................................. 0.3
Doxercalciferol............................................ 3.1
Calcitriol................................................. 0.1
Iron--dextran.............................................. 0.0
Vancomycin................................................. 0.1
Alteplase.................................................. 0.9
------------------------------------------------------------------------
We removed the enrollment and price effects from the independent
ESRD facility 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 3 percent (1.00-0.03 = 0.97)
into the total drug expenditure change between 2005 and 2006 of -0.1
percent (1.00-0.00 = 1.00). The result is a utilization growth factor
equal to 1.00 (1.00/1.03 * 0.97) = 1.00.
Using the latest projected growth of the CY 2008 PPI for
prescription drugs of 3.5 percent, we project that the combined growth
in per patient utilization and pricing of ESRD drugs for CY 2008 would
result in an update equal to the PPI growth or 3.5 percent (1.00 *
1.035 = 1.035). This update factor was applied to the CY 2007 average
per treatment drug add-on amount of $19.64 (reflecting a 14.9 percent
adjustment for CY 2007), resulting in a weighted average increase to
the composite rate of $0.69 for CY 2008 or a 0.5 percent increase in
the drug add-on percentage for CY 2008. Thus, the total drug add-on
adjustment to the composite rate for CY 2008, including the growth
update is 15.5 percent (1.149 * 1.005 = 1.155).
2. Update to the Geographic Adjustment to the Composite Rates
Section 1881(b)(12)(D) of the Act, as added by section 623(d) of
the MMA, gives the Secretary the authority to revise the wage indexes
previously applied to the ESRD composite rates. The wage index values
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 Core-Based Statistical Area (CBSA) Definitions
In the CY 2008 PFS proposed rule (72 FR 38166), we clarified that
this and all subsequent ESRD rules and notices are considered to
incorporate the CBSA changes published in the most recent OMB bulletin
that applies to the hospital wage data used to determine the current
ESRD wage index. The OMB bulletins may be accessed online at http://www.whitehouse.gov/omb/bulletins/index.html.
(b) Updated Wage Index Values
In the CY 2006 PFS final rule with comment period (70 FR 70167), we
described that methodology for calculating the CY 2006 wage index
values and stated that we intend to update the ESRD wage index values
annually. Current wage index values for CY 2007 were developed from FY
2003 wage and employment data obtained from the Medicare hospital cost
reports. The ESRD wage index 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.
We proposed to use the same methodology for CY 2008 (72 FR 38167),
with the exception that FY 2004 hospital data will be used to develop
the CY 2008 ESRD wage index values. For a detailed description of the
development of the CY 2008 wage index values based on FY 2004 hospital
data, see the FY 2008 IPPS final rule entitled ``Changes to the
Hospital Inpatient Prospective Payment Systems and Fiscal Year 2008
Rates'' (72 FR 47320). Section G 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 2008 Final Rule Occupational Mix Adjusted and
Unadjusted Average Hourly Wage and Pre-Reclassified Wage Index by
CBSA.''
Comment: One commenter expressed concern in regard to our use of
acute care hospital wage data in the calculation of the wage index
stating that the cost for hospital based facilities and ambulatory
centers varies greatly. The commenter urged us to locate an alternative
data source that reflects information directly tied to ESRD facilities.
Response: At the present time, data that is specific to independent
dialysis facilities is not available upon which to base the wage index.
As described in the CY 2007 PFS final rule with comment period (71 FR
69685), 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. In
addition, several of our major prospective payment systems (PPS)
utilize the same wage index (for example, Skilled Nursing Home PPS,
Inpatient Psychiatric Facility PPS, Inpatient Rehabilitation Facility
PPS, Home Health PPS, and Hospice PPS.)
(i) Third Year of the Transition
In the CY 2006 PFS final rule with comment period (70 FR 70169), we
indicated that we would apply a 4-year transition period to mitigate
the impact on composite rates resulting from our adoption of CBSA-based
geographic designations. Beginning January 1, 2006, during each year of
the transition, an ESRD facility's wage-adjusted composite rate (that
is, without regard to any case-mix adjustments) will be a blend of its
old MSA-based wage-adjusted payment rate and its new CBSA-based wage-
adjusted payment rate for the transition year involved. In addition,
beginning in CY 2006 we provided a gradual reduction in the wage index
floor. We indicated that we would reassess the need for a wage index
floor for CY 2008. In the CY 2008 PFS proposed rule (72 FR 38167), we
proposed a further reduction in the wage index floor. 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 and the applicable wage index floor is as follows:
In CY 2006, the first year of the transition, we
implemented a 75/25 blend. The wage index floor was reduced from 0.9000
to 0.8500.
In CY 2007, the second year of the transition, we
implemented a 50/50 blend. The wage index floor was reduced from 0.8500
to 0.8000.
For CY 2008, consistent with the transition blends
announced in the CY 2006 PFS final rule with comment period (70 FR
70170), we are implementing a 25/75 blend between an ESRD facility's
MSA based composite
[[Page 66283]]
rate, and its CY 2008 CBSA-based rate reflecting its revised wage index
values. In addition, we proposed to continue the wage index floor, but
to further reduce it from 0.8000 to 0.7500.
An example of how the wage-adjusted composite rates would be
blended during CY 2008 and the additional subsequent transition year
follows.
Example: An ESRD facility has a wage-adjusted composite rate
(without regard to any case-mix adjustments) of $135.00 per treatment
in CY 2007. Using CBSA-based geographic area designations, the
facility's CY 2008 wage-adjusted composite rate, reflecting its wage
index value would be $145.00. During the remaining 2 years of the 4-
year transition period to the new CBSA-based wage index values, this
facility's blended rate through 2009 would be calculated as follows:
CY 2008 = 0.25 x $135.00 + 0.75 x $145.00 = $142.50
CY 2009 = 0 x $135.00 + 1.0 x $145.00 = $145.00
We note that this hypothetical example assumes that the calculated
wage-adjusted composite rate of $145.00 for CY 2008 does not change in
CY 2009. In actuality, the wage-adjusted composite rate for CY 2009
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 2 years of the transition period. As noted above in this
section, the 4-year transition period will expire and in CY 2009 and
forward, we will be using CBSA-based wage index values.
Comment: Several commenters expressed concern in regard to our
proposal to decrease the wage index floor from 0.80 to 0.75. In
addition, one commenter indicated that a defunct licensing board in
Puerto Rico has inhibited licensing of dialysis technicians for a long
period of time. As a result, registered nurses are the only group of
licensed professional qualified to furnish dialysis within this area.
In addition, a commenter believes that decreasing the floor will
make it difficult to recruit and retain qualified personnel in areas
affected by the removal of the floor. The commenter also identified the
recent transition to the ASP drug pricing methodology and increases in
operating expense as factors that have compounded the impact of any
further drop in the wage index floor.
Response: As described in the CY 2007 PFS final rule with comment
period (71 FR 69686 through 69687), the proposed wage index floor was
substantially higher than the actual wage index values for urban
locales in Puerto Rico, without application of any floor and prior to
the application of the BN adjustment. Specifically, the proposed wage
index floor was 0.80 whereas the actual wage index values ranged from
0.3241 to 0.4893. Similarly, the proposed wage index floor for CY 2008
is 0.75 whereas the actual wage index values for urban locales in
Puerto Rico range from 0.3064 to 0.4729. Therefore, we believe that the
CY 2008 wage index floor of 0.75 compared to actual wage levels is an
appropriate level and the new floor would not impede the ability of
ESRD facilities to recruit and retain staff.
(ii) 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 from which to calculate ESRD
wage index values. The affected areas were rural Massachusetts, rural
Puerto Rico and the urban area of Hinesville, GA (CBSA 25980). For both
CY 2006 and CY 2007, we calculated the ESRD wage index values for those
areas as follows:
For rural Massachusetts, because we had not determined a
reasonable proxy for rural data in Massachusetts, we used the FY 2005
wage index value for rural Massachusetts.
For rural Puerto Rico, the situation is similar to rural
Massachusetts. However, since all geographic areas in Puerto Rico were
subject to the wage index floor in CY 2006 and CY 2007, we applied the
ESRD wage index floor to rural Puerto Rico as well.
For the urban area of Hinesville, GA, we calculated the CY
2006 and CY 2007 wage index value for Hinesville, GA (CBSA 25980) based
on the average wage index value for all urban areas within the State of
Georgia.
In the CY 2008 PFS proposed rule (72 FR 38168), we proposed an
alternative methodology for establishing a wage index value for rural
Massachusetts. Since we have used the same wage index value for two
years with no updates, we believed it was appropriate to establish a
methodology that uses reasonable proxy data for rural areas (including
rural Massachusetts) and also permits annual updates to the wage index
value based on that proxy data. Therefore, in cases where there is a
rural area without hospital wage data, we proposed to use the average
wage index values from all contiguous CBSAs to represent a reasonable
proxy for that rural area.
In determining the imputed rural wage index, we interpret the term
``contiguous'' to mean sharing a border. In the case of Massachusetts,
the entire rural area consists of Dukes and Nantucket Counties. We
determined that the borders of Dukes and Nantucket counties are
``contiguous'' with Barnstable and Bristol counties. Under the proposed
methodology, the wage index values for the counties of Barnstable (CBSA
12700, Barnstable Town, MA--(1.2539)) and Bristol (CBSA 39300,
Providence-New Bedford-Fall River, RI-MA--(1.0783)) are averaged,
resulting in a proposed imputed wage index value of 1.1665 for rural
Massachusetts for CY 2008.
For rural Puerto Rico, we proposed to continue to apply the wage
index floor in CY 2008. Since all areas in Puerto Rico that have a wage
index are eligible for the proposed CY 2008 ESRD wage index floor of
0.7500, we proposed to also apply the floor to ESRD facilities located
in rural Puerto Rico.
For Hinesville, GA (CBSA 25980) which is an urban area without
specific hospital wage data, we proposed to continue using the same
methodology used to impute a wage index value for that area as we used
in CY 2006 and CY 2007. Specifically, we used the average wage index
value for all urban areas within the State of Georgia for purposes of
calculating the wage index value for Hinesville. Therefore, for CY 2008
we proposed that the wage index value for urban CBSA (25980)
Hinesville-Fort Stewart, GA is calculated as the average of the wage
index values of all urban areas in Georgia.
We solicited comments on these proposed approaches to calculate the
wage index values for areas without hospital wage data for CY 2008 and
subsequent years. We indicated that we would continue to evaluate
existing hospital wage data and, possibly, wage data from other
sources, such as the Bureau of Labor Statistics, to determine if other
methodologies of imputing a wage index value for these areas may be
feasible. We received one comment on this issue.
Comment: One commenter was supportive of our methodology used in
calculating wage index values for areas with no hospital wage data
including rural Massachusetts, Puerto Rico, and an urban area in
Georgia. However, the commenter requested that we carefully evaluate
the extent to which these methodologies would be appropriate in other
situations nationwide.
Response: We agree with the commenter. As additional areas are
[[Page 66284]]
identified for which hospital wage data does not exist, we will
reevaluate the extent to which the methodologies used for
Massachusetts, Puerto Rico, and Georgia would be appropriate and
consider alternative methodologies on an as needed basis.
We are finalizing the ESRD wage index and associated policies as
proposed for CY 2008. In addition, we note that we plan to evaluate any
policies adopted in the FY 2008 IPPS final rule (72 FR 47130, 47337
through 47338) that affect the wage index, including how we treat
certain New England hospitals under section 601(g) of the Social
Security Amendments of 1983 (Pub. L. 98-21).
(iii) 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 this BN adjustment
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 are not proposing any changes to the
case-mix measures for CY 2008, the current case-mix budget neutrality
will remain in effect for CY 2008. For CY 2008, we again proposed to
apply the BN adjustment directly to the ESRD wage index values, as we
did in CY 2007. As we explained in the CY 2007 PFS final rule with
comment period (71 FR 69687 through 69688), 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 previously in this section. Because
the ESRD wage index is only applied to the labor related portion of the
composite rate, we computed the BN adjustment based on that proportion
(53.711 percent).
To compute the proposed CY 2008 wage index BN adjustment, we used
the proposed wage index values, 2006 outpatient claims (paid and
processed as of December 31, 2006), and geographic location information
for each facility.
Using the treatment counts from the 2006 claims and facility-
specific CY 2007 composite rates, we computed the estimated total
dollar amount each ESRD provider would have received in CY 2007 (the
2nd year of the 4-year transition). The total of these payments became
the target amount of expenditures for all ESRD facilities for CY 2008.
Next, we computed the estimated dollar amount that would have been paid
to the same ESRD facilities using the proposed ESRD wage index for CY
2008 (the 3rd year of the 4-year transition). The total of these
payments became the third year amount of wage-adjusted composite rate
expenditures for all ESRD facilities.
After comparing these two dollar amounts (target amount divided by
3rd year new amount), we calculated an adjustment factor that, when
multiplied by the applicable CY 2008 ESRD proposed wage index value
would result in payments to each facility that remain within the target
amount of composite rate expenditures when totaled for all ESRD
facilities. The proposed BN adjustment for the CY 2008 wage index was
1.054955.
We also must apply the BN adjustment to the proposed wage index
floor of 0.7500 which resulted in a proposed adjusted wage index floor
of 0.7912 (0.7500 x 1.054955) for CY 2008.
Comment: One commenter expressed concern in regard to the
calculation of the BN adjustment for the geographic wage index stating
that the methodology included in the proposed rule lacked transparency.
The commenter urged us to provide the data and methodology used in
calculating the BN adjustment.
Response: The commenter did not identify where transparency was
lacking or any missing elements that would enable the community to
assess the impact of the proposed changes. However, we received a
similar request for clarification during last year's rulemaking process
and provided an extensive description of the manner in which budget
neutrality is applied to the wage index in the CY 2007 PFS final rule
with comment period (71 FR 69687 through 69688). While claims data have
been updated since publication of that final rule with comment period,
the methodology has not changed.
During the CY 2008 PFS proposed rule comment period, we made
available an ESRD Composite Rate Payment System File. This file
contained select claims level data from the 2006 ESRD facility
outpatient claims, updated through December 31, 2006. For more
information on this file, see the following page on the CMS Web site at
http://www.cms.hhs.gov/LimitedDataSets/06.asp#TopOfPage.
After publication of this final rule with comment period, we intend
to provide the updated version of the CY 2006 outpatient claims (paid
and processed as of June 30, 2007) that were used to compute the BN
adjustment.
To compute the final CY 2008 ESRD wage index BN adjustment, we used
FY 2004 pre-floor, pre-reclassified, non-occupational mix-adjusted
hospital wage data to compute the wage index values, 2006 outpatient
claims (paid and processed as of June 30, 2007), and geographic
location information for each ESRD facility which may be found through
Dialysis Facility Compare. The FY 2004 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 2008 Final
Rule Occupational Mix Adjusted and Unadjusted Average Hourly Wage and
Pre-Reclassified Wage Index by CBSA.''
Dialysis Facility Compare Information can be found on the CMS Web
site at http://www.cms.hhs.gov/DialysisFacilityCompare/.
Using treatment data from the latest 2006 claims file and facility-
specific CY 2007 composite rates, we computed the estimated total
dollar amount each ESRD provider would have received in CY 2007 (the
2nd year of the 4-year transition). The total of these payments became
the target amount of expenditures for all ESRD facilities for CY 2008.
Next, we computed the estimated dollar amount that would have been paid
to the same ESRD facilities using the ESRD wage index for CY 2008 (the
3rd year of the 4-year transition). The total of these payments became
the 3rd year new amount of wage adjusted composite rate expenditures
for all ESRD facilities.
After comparing these dollar amounts (target amount divided by 3rd
year new amount), we calculated an adjustment factor that when
multiplied by the applicable CY 2008 wage index value, will result in
aggregate payments to ESRD facilities that will remain within the
target amount of composite rate expenditures. When making this
calculation, the ESRD wage index floor value of 0.7500 is used whenever
appropriate.
The final BN adjustment for the CY 2008 wage index is 1.055473.
To ensure budget neutrality, we also must apply the BN adjustment
to all index values, including the wage index floor of 0.7500, which
results in an adjusted wage index floor of 0.7916 for CY 2008.
(iv) ESRD Wage Index Tables
The final CY 2008 wage index tables applicable to ESRD facilities
are located
[[Page 66285]]
in Addenda G and H of this final rule with comment period.
I. Independent Diagnostic Testing Facility (IDTF) Issues
In the CY 2008 PFS proposed rule (72 FR 38169 through 38171), we
clarified our interpretation of several of the existing performance
standards at Sec. 410.33(b), and Sec. 410.33(g), proposed a new IDTF
performance standard at Sec. 410.33(g)(15), and a new proposed IDTF
provision at Sec. 410.33(i).
We received numerous comments concerning the revisions to existing
performance standards and new provisions affecting IDTFs and have
revised our proposed changes, where applicable, to reflect the issues
brought forth by the commenters. We are adopting the provisions
contained in the proposed rule as final with the following changes.
1. Revisions of Existing IDTF Performance Standards
a. Sec. 410.33(g)(6)
In Sec. 410.33(g)(6), we had proposed to revise this existing
performance standard to include the requirement that an IDTF must list
our designated contractor as a Certificate Holder on the comprehensive
liability insurance policy by revising Sec. 410.33(g)(6) to state,
``Has a comprehensive liability insurance policy in the amount of at
least $300,000 per location that covers both the supplier's place of
business and all customers and employees of the supplier and ensures
that this insurance policy must remain in force at all times. The
policy must be carried by a nonrelative owned company. Failure to
maintain required insurance at all times will result in revocation of
the IDTF's billing privileges retroactive to the date the insurance
lapsed. IDTF suppliers are responsible for providing the contact
information for the issuing insurance agent and the underwriter. In
addition, we proposed that the IDTF must: ensure that the insurance
policy must remain in force at all times and provide coverage of at
least $300,000 per incident; notify the CMS-designated contractor in
writing of any policy changes or cancellations; and list the CMS-
designated contractor as a Certificate Holder on the policy.''
Comment: One commenter suggested that we amend the Sec.
410.33(g)(6) provision on the comprehensive liability insurance policy
to state that IDTFs should have a comprehensive liability insurance
policy of at least $100,000 per incident, $300,000 aggregate and that
CMS should require the IDTF to list Medicare contractors as certificate
holders for notification purposes only.
Response: After receiving numerous comments supporting the proposed
figures, we are adopting the proposed figure of $300,000 per incident.
Comment: Several commenters recommended that we revise the proposed
performance standard found at Sec. 410.33(g)(6) to remove the
requirement that our designated contractor be listed as a Certificate
Holder on the liability insurance policy. One commenter supported the
proposed changes to the performance standard at Sec. 410.33(g)(6), but
expressed concerned about whether underwriters were willing to list the
government as a certificate holder on an insurance policy.
Another commenter questioned whether insurance underwriters will be
open to the idea of adding the government as a certificate holder on an
insurance policy and suggested that CMS survey several insurance
carriers which provide this type of coverage to determine if this
performance standard is achievable. One commenter stated that the
comprehensive liability insurance policy provision (Sec. 410.33(g)(6))
which requires the IDTF to list the Medicare contractor as the
certificate holder on the policy is too burdensome and obtrusive on
small business entities. They recommended using a comparable approach
to the one required by DMEPOS supplier, and have the IDTF provide a
copy of the annual renewal of the insurance coverage for the IDTF to
the Medicare contractor (the renewal package would include information
on the coverage levels, as well as the premiums paid).
One commenter suggested removing the contractor as the certificate
holder for the comprehensive liability insurance policy, but if they
are named as a certificate holder for the comprehensive liability
insurance policy that it be only for notification purposes.
Response: Given the concerns raised about the increased
administrative burden, we agree that our designated contractor should
not be included as a Certificate Holder on the IDTF's comprehensive
liability insurance policy. We have revised the performance standard
found at Sec. 410.33(g)(6) to remove the requirement that our
designated contractor be listed as a Certificate Holder on the IDTF's
comprehensive liability insurance policy. However, we believe that it
is essential that a Medicare fee for service (FFS) contractor be
allowed to verify information contained in the comprehensive liability
insurance policy. We believe that a Medicare contractor (that is,
carrier or Part A/Part B Medicare Administrator Contractor) should be
able to verify the issuance of a comprehensive liability insurance
policy with an insurance agent or, as necessary, an underwriter. This
approach will allow a Medicare FFS contractor to review and verify that
a comprehensive liability insurance policy has been issued and is in
effect at the time of enrollment and throughout the enrollment period.
We have revised Sec. 410.33(g)(6) to read, ``Has a comprehensive
liability insurance policy in the amount of at least $300,000 per
location that covers both the supplier's place of business and all
customers and employees of the IDTF. The policy must be carried by a
nonrelative-owned company. Failure to maintain required insurance at
all times will result in revocation of the IDTF's billing privileges
retroactive to the date the insurance lapsed. IDTF suppliers are
responsible for providing the contact information for the issuing
insurance agent and the underwriter. In addition, the IDTF must--
Ensure that the insurance policy must remain in force at
all times and provide coverage of at least $300,000 per incident; and
Notify the CMS designated contractor in writing of any
policy changes or cancellations.''
b. Sec. 410.33(g)(2)
In Sec. 410.33(g)(2), we proposed to establish a 30-day reporting
period for certain reportable events and a 90-day reporting period for
all other reportable events.
Comment: One commenter asked that we define the term ``nonrelative
owned'' while another commenter asked that we remove this term
altogether because we are not precluding self insurance.
Response: While we do not believe that it is necessary to define
the term ``nonrelative owned'' in this rulemaking effort, a non-
relative owned company applies to insurance policies obtained through a
familial relationship, not a related organization or business partner.
Therefore, we are not removing this term from the performance standard.
Comment: Several commenters supported our proposal to revise the
reporting requirements found in the performance standard found at Sec.
410.33(g)(2). One commenter supported the CMS proposal to revise the
reporting requirements found in performance standard at Sec.
410.33(g)(2) to establish separate reporting periods for different
reportable events. The proposed changes will provide the information
desired by CMS in a timely
[[Page 66286]]
manner while minimizing the administrative burdens on both IDTFs and
the Medicare contractors caused by the current notification standard.
Response: We appreciate these comments and agree that revising this
standard will reduce the administrative burden on both IDTFs and our
contractors.
Comment: One commenter recommended that we revise the CMS-855B to
list the specific changes that must be reported within 30 calendar days
of the change. However, one commenter stated that requiring the
reporting of changes depending on the type change in 30 or 90 days puts
an unfair burden on IDTFs.
Response: We agree that the CMS-855B should be revised and should
list the specific changes that must be reported within 30 calendar days
of the change. Currently, IDTFs are required to report all changes in
30 days. Our proposal would limit the number of reportable events that
would need to be reported within 30 days of the change. We intend to
revise the CMS-855B to clarify which reportable events must be reported
within 30 and 90 days. We will use the Paperwork Reduction Act process
to seek specific comments in seeking revisions to the CMS-855B.
Comment: One commenter recommended that we allow IDTFs to make
changes online.
Response: We are developing the Provider Enrollment, Chain, and
Ownership System (PECOS) Web, which will allow all providers and
suppliers, including IDTFs, to enroll or report enrollment changes via
the Internet. We are hoping to implement PECOS Web in most parts of the
country by March 2008.
Comment: One commenter suggested that all changes should be
reported to CMS within 90 days or in the alternative. This commenter
also recommended that IDTFs report any changes that have occurred in
the preceding quarter on a quarterly basis.
Another commenter suggested that we should allow at least 90 days
for reporting changes in contact information with the contractor. This
commenter also suggested that we further define what the policy and
coverage requirements for self insurance and the term ``independent
underwriter.''
Response: Section 410.33(g)(2) requires IDTFs to report all changes
in 30 days. By adopting our proposal, we limit the number of reportable
events that would need to be reported within 30 days of the change. As
stated above, we intend to revise the CMS-855B to clarify what items
must be reported within 30 and 90 days. Since many IDTFs operate on
different schedules, it would not be practical to implement a quarterly
reporting requirement.
As a result of the issues raised by the commenters, we are revising
Sec. 410.33(g)(2) to read, ``Provides complete and accurate
information on its enrollment application. Changes in ownership,
changes of location, changes in general supervision, and adverse legal
actions must be reported to the Medicare FFS contractor on the Medicare
enrollment application within 30 calendar days of the change. All other
changes to the enrollment application must be reported within 90
days.''
c. Sec. 410.33(g)(8)
We received the following comments in response to our proposal at
Sec. 410.33(g)(8).
Comment: Several commenters recommended that we consider limiting
the types of beneficiary complaints that are subject to the performance
standard found in Sec. 410.33(g)(8). Another commenter recommended
that the standard found in Sec. 410.33(g)(8) apply only when a
beneficiary formalizes their complaint in writing. Other commenters
stated that the proposed change in Sec. 410.33(g)(8) is unnecessary,
not to mention ambiguous and labor intensive to implement.
One commenter recommended that we model the IDTF documentation
requirement after standards established by the Food and Drug
Administration. Specifically, this commenter recommends that IDTFs
maintain a record for each serious complaint received by the facility
for at least 3 years from the date the complaint was received.
Another commenter recommended that we clarify that IDTFs are
required to monitor only those beneficiary complaints that relate to
the quality of care the patient receives.
One commenter stated that the standard at Sec. 410.33(g)(8) be
clarified to eliminate the documentation of routine billing questions
so there is no unnecessary burden on small business entities.
One commenter suggested that instead of adopting Sec. 410.33(g)(8)
as written for documenting a beneficiary's questions or complaints,
IDTFs should be required to develop and adhere to a complaint policy
that includes documentation of material medical or billing complaints,
and that if CMS adopts the current provision, the word questions should
be changed to complaints. The commenter also maintains that IDTFs
should be allowed to keep documents that are older than 30 days at a
site other than the IDTF's physical location and CMS should clarify how
long the IDTFs are required to keep each complaint and whether an IDTF
will be required to record the insurance claim number for each
complaint.
Other commenters recommended that we clarify Sec. 410.33(g)(8) to
specifically state that this standard relates to complaints regarding
the provision of service, because as written, it will impose a sweeping
new recordkeeping requirement that drastically affects small business
entities.
Response: Based upon the comments received, we have revised this
provision to clarify and limit the amount of documentation that is
necessary when a clinical complaint is received in writing. We also are
clarifying and limiting the amount of documentation that is necessary
when a clinical complaint is received in writing. We believe that
complaints should be readily available for examination and we will
establish a time frame for maintaining this documentation. Therefore,
we have revised Sec. 410.33(g)(8) accordingly.
Comment: One commenter recommended that we develop a standardized
complaint form and an electronic Web-based platform for submitting
complaints regarding an IDTF.
Response: We believe that an IDTF can document any formal
complaints it receives in the most convenient way possible for that
IDTF.
After reviewing public comments regarding our proposed change to
Sec. 410.33(g)(8), we are adopting this proposed change with
modifications. By revising this language, we believe that we are
reducing the paperwork burden on IDTFs to maintain and respond to
written clinical complaints, rather than all questions and complaints
it receives from beneficiaries. Section 410.33(g)(8) is revised to
read, ``Answer, document, and maintain documentation of a beneficiary's
written clinical complaint at the physical site of the IDTF (for mobile
IDTFs, this documentation would be stored at their home office.) This
includes, but is not limited to, the following:
The name, address, telephone number, and health insurance
claim number of the beneficiary.
The date the complaint was received; the name of the
person receiving the complaint; and a summary of actions taken to
resolve the complaint.
If an investigation was not conducted, the name of the
person
[[Page 66287]]
making the decision and the reason for the decision.''
By making this change, we believe that we are reducing the
paperwork burden on IDTFs by asking them to maintain and respond to
written clinical complaints, rather than address all questions and
complaints it receives from beneficiaries.
d. Sec. 410.33(b)(1)
We received the following comments in response to our proposal at
Sec. 410.33(b)(1).
Comment: Several commenters agreed with our proposal to delete the
requirement that the supervising physician is responsible for the
overall operation and administration of an IDTF.
Response: We appreciate these comments and are adopting this change
in the final regulation.
Comment: One commenter recommended that we delay the implementation
of our clarification that a physician providing general supervision can
oversee a maximum of three IDTF sites by noting that term, ``sites''
includes fixed, as well as mobile sites.
Response: We believe that a physician providing general supervision
can oversee a maximum of three IDTF sites which includes fixed as well
as mobile sites.
Comment: One commenter recommended that we clarify that the three
site limitation only relates to the provision of general supervision.
In addition, one commenter recommended that we clarify that while a
physician may only provide general supervision to three IDTF sites,
this provision does not apply to the number of interpreting physicians
at an IDTF site.
Response: We agree with this comment and will clarify that the
supervision limitation only applies to general supervision.
Comment: One commenter stated that our proposal to consider each
mobile IDTF unit as one IDTF site was unreasonable.
Response: We disagree and we believe that a physician providing
general supervision can oversee a maximum of three IDTF sites. We
maintain that fixed and mobile IDTFs essentially are furnishing the
same services. We note that the term, ``sites'' includes fixed as well
as mobile sites because there are three concurrent locations where
testing may occur at a given time.
Comment: One commenter stated individual locations should be
counted only if they have separate Medicare PINs.
Response: With Medicare's implementation of the National Provider
Identifier (NPI) on or before May 23, 2008, Medicare contractors will
no longer issue billing numbers to the public. Providers and suppliers
will use their assigned NPI to submit claims to Medicare. As such,
organizations may obtain one or many NPIs. Accordingly, we are not able
to adopt this suggestion.
Comment: One commenter suggested that it would be inappropriate to
require that a mobile IDTF have a different supervising physician for
every three office locations that it visits, therefore this provision
should apply only to those IDTFs in a fixed location.
Response: We believe that a physician providing general supervision
can oversee a maximum of three IDTF sites and note that the term,
``sites'' includes fixed, as well as mobile sites, because there are
three concurrent locations where testing may occur at a given time. A
mobile IDTF may visit multiple locations and it would still be
considered one mobile unit. The number of places a mobile IDTF visits
does not change the fact that this is a single unit and up to three
fixed base or mobile units may be under the general supervision of one
physician.
Comment: One commenter stated that the mobile unit described at
Sec. 410.33(b)(1) should be consistent with the language used on the
CMS-855B enrollment application.
Response: We will consider revising the CMS-855B to incorporate
this recommendation.
Comment: One commenter recommended treating fixed base sites and
portable units on a comparable basis in that a supervising physician
not be limited to supervising three portable units, but also could
supervise three sites from which portable units are dispatched.
Response: A mobile IDTF may visit multiple locations, and it would
still be considered one mobile unit. The number of places a mobile IDTF
visits does not change the fact that this is a single unit and up to
three fixed base or mobile units may be under the general supervision
of one physician. Under the commenter's scenario, any number of mobile
units could be in use and a physician would not be able to provide
general supervision to an infinite number of mobile units.
Comment: One commenter recommended that we revise Sec. 410.33(b)
to move to a diagnostic equipment threshold limit instead of an IDTF
site limit since, as proposed, the provision allowing fixed based IDTFs
to run limitless testing procedures at the IDTF is equated with a
mobile unit running one test at a time. Therefore the number of
supervising physicians should be determined through testing volume and
not location.
Another commenter recommended that a maximum threshold of 15 units
per supervising physician would be advisable and that is should be made
clear that this section applies to general supervision and not direct
or personal supervision.
Response: Due to the varied and ever changing equipment used by
IDTFs, it would be impractical to establish such limits.
Comment: One commenter recommended that we conduct additional
audits, monitoring, and enforcement actions, where warranted, to
address existing compliance problems.
Response: We agree with the commenters that audits, monitoring, and
enforcement efforts are effective ways to identify individual
compliance issues. We already require that Medicare contractors conduct
an onsite visit to verify the performance standards found in this
section prior to initial enrollment. We will consider adding and/or
redirecting existing resources to ensure that an IDTF remains in
compliance with these standards.
Comment: One commenter requested clarification to differentiate
between fixed and mobile IDTFs business models and the differences by
which IDTFs using these models provide services.
Response: A fixed base IDTF performs all of its diagnostic testing
at the practice location found on the Medicare enrollment application
(CMS-855), whereas a mobile IDTF travels and performs its diagnostic
tests at locations other than a single practice location.
Comment: One commenter requested that we clarify the definition of
``site'' versus ``testing locations'' distinction.
Response: We consider sites and testing locations to be a practice
location for both fixed base and mobile IDTFs.
Comment: One commenter suggested that the language at Sec.
410.33(i)(3) is in error and was meant to be a definition, because it
explains the first two parts of the effective date provision. The
commenter stated that they believe that the date which a signed
enrollment application is submitted should be considered the date of
filing and that any time lag in contractor decisions should be excluded
when determining the date of filing.
Response: We agree with the commenter and are revising Sec.
410.33(b)(1) accordingly.
After reviewing the public comments, we are amending the provision
to
[[Page 66288]]
remove the following sentence from Sec. 410.33(b)(1), ``The IDTF
supervising physician is responsible for the overall operation and
administration of the IDTFs, including the employment of personnel who
are competent to perform test procedures, record and report test
results promptly, accurately and proficiently, and for assuring
compliance with the applicable regulations''.
We are adopting the provision at Sec. 410.33(b)(1) which clarifies
the meaning of what constitutes three IDTF sites to include both fixed
sites and mobile units. This includes moving portable diagnostic
equipment to another location and used it to provide IDTF services.
Accordingly, we believe that a physician providing general supervision
as defined in Sec. 410.32(b)(3)(i) can oversee a maximum of three
sites (that is, fixed or mobile) where concurrent operations can be
performed. In addition, we are clarifying that that this provision
applies only to general supervision within an IDTF setting. Section
410.33(b)(1) is revised to read, ``Each supervising physician must be
limited to providing general supervision to no more than three IDTF
sites. This provision applies to both fixed sites and mobile units
where three concurrent operations are capable of performing tests.''
2. New IDTF Standards
a. Sec. 410.33(i)
In Sec. 410.33(i), we proposed to establish an initial enrollment
date for IDTFs and to limit the retrospective period for which an IDTF
can obtain payment for services after enrolling into the Medicare
program.
Comment: One commenter recommended that we adopt an accelerated
rollout plan of the PECOS Web to facilitate the enrollment process for
IDTFs.
Response: We expect to implement PECOS Web in most parts of the
country by March 2008.
Comment: One commenter recommended that we ensure that Medicare
contractors process enrollment applications in a timely manner so that
beneficiaries will have access to quality and convenient healthcare
delivery at an IDTF.
Response: We will continue to work with all Medicare contractors to
ensure that applications are processed in a timely and accurate manner.
With the implementation of PECOS Web, we believe that many of the
processing delays that have occurred within the last year will be
corrected. Specifically, PECOS Web will facilitate the submission of a
complete application and allow applicants to make any necessary changes
to their enrollment application in a timely manner.
Comment: Several commenters recommended that we revise our
proposals to allow an IDTF to begin billing Medicare for claims with
dates of service on or after the day on which the IDTF submits a
``substantially correct'' or ``substantially complete'' enrollment
application or the date the IDTF first furnishes services at its
location, whichever is later.
Response: We disagree with the recommendation to permit an IDTF to
submit claims with dates of service on or after the day which the IDTF
submits a ``substantially correct'' enrollment application or the date
the IDTF first furnishes services at its location, whichever is later.
We believe that it is essential that all providers and suppliers,
including IDTFs, submit a complete application at the time of filing or
perfect the submission of their enrollment application in response to a
contractor's request for information. Accordingly, an applicant who
submits a complete application or responds in a timely manner to a
request for additional information is not disadvantaged by this
proposal. However, it is important to note that if an application is
rejected in accordance with the provisions found at Sec. 424.525, the
applicant will need to submit a new application to enroll in the
Medicare program. In this case, the applicant only will be able to seek
payments for those services furnished on or after the date of filing or
when the Medicare contractor has approved the second application
request.
Comment: One commenter recommended that retroactive billing (once
approval has been determined) be allowed back to the time of the
initial application (even if the first submission is rejected).
Response: As stated above in this section, we disagree with this
recommendation. We believe that an IDTF should be allowed to bill for
services furnished on or after the date of filing or the date the
practice location became operational. However, we do not believe that
it is appropriate to allow an IDTF to bill for services back to the
filing date of the initial application if the initial application was
rejected due to the nonsubmission of information or denied because the
applicant did not meet the program requirements to enroll as an IDTF.
Comment: One commenter recommended that a 60-day period be allowed
for retroactive billing before an IDTF is enrolled.
Response: While we believe that an IDTF should be allowed to bill
for services furnished on or after the date of filing or the date the
practice location became operational, we do not believe that it is
appropriate to allow an IDTF to bill for services prior to the filing
date associated with when the application was submitted.
Comment: One commenter recommended that Medicare contractors follow
a protocol that outlines the items that will require a contractor to
reject or deny an enrollment application.
Response: Medicare contractors are bound by applicable enrollment
regulations and CMS manual instructions. Specifically, all Medicare
contractors are required to follow regulations found at Sec. 424.525
and manual instructions found in publication 100-8, Chapter 10 of the
Program Integrity Manual (PIM) when rejecting an enrollment application
for insufficient information. In addition, Medicare contractors are
required to follow regulations found at Sec. 424.530 and manual
instructions found in publication 100-8, Chapter 10 of the PIM when
denying an enrollment application.
Comment: One commenter recommended that we not implement our
proposal to preclude an IDTF from being allowed to bill Medicare
retroactively for services that are rendered prior to the provider
being formally approved by the applicable Medicare contractor to
participate in the Medicare program.
Response: Since our proposal specifically allows an IDTF to receive
reimbursement for services furnished on or after the filing or the date
the IDTF opened a new practice location, whichever was later, we
believe that we are allowing IDTFs a limited amount for retroactive
billing. As stated in the preamble to the proposed rule, the purpose of
this rulemaking effort is to establish a date of enrollment for IDTFs
where we believe that the enrolling IDTF meets all of the program
requirements to participate in the Medicare program.
Comment: One commenter recommended that we clarify that our
proposed change in billing be applied only to new or initial enrollment
applications and would not affect existing operations when changes or
additions are made to an enrollment application, such as the addition
of a new physician or piece of equipment.
Response: In general, we agree with this commenter in that the
proposed change only will apply to new or initial enrollment
applications. Since the provision is designed to limit
[[Page 66289]]
retrospective billing prior to enrollment in the Medicare program, we
do not believe this change will impact existing IDTFs who are making a
change to an existing enrollment record for a fixed or mobile practice
location. However, it is important to note that the limitations on
retroactive billing will apply to existing IDTFs who are adding a new
fixed or mobile practice location to their existing enrollment record.
Moreover, a limitation on retroactive billing may apply when there is
change of ownership.
Comment: One commenter stated that they had no issues with the
effective date of the billing privileges provision. However, this
commenter suggested that this provision be tied to a requirement that
the CMS designated contractor process the application in a timely
fashion.
Response: We are also concerned about delays associated with the
enrollment process. However, we recognize that many of the delays are
the result of IDTF suppliers not submitting a complete application at
the time of filing or failing to submit complete and timely responses
to a contractor's request for information.
In addition, we believe that it is appropriate to expect meaningful
Medicare contractor processing timeliness standards. As necessary, the
agency can update or revise processing standards through the manual
instructions and through contracts with Medicare Administrative
Contractors. We fully expect that most enrollment applications will be
processed in accordance with CMS processing requirements found in
Publication 100-8, Chapter 10 of the PIM. The PIM establishes
processing standards for initial applications, changes of information,
and reassignments that all Medicare contractors must adhere to.
Specifically, we currently require Medicare contractors to process 80
percent of initial applications within 60 days, 90 percent of initial
applications within 120 days, and 99 percent of initial applications
within 180 days. We also require Medicare contractors to process 80
percent of changes of information and reassignments within 45 days, 90
percent of changes of information and reassignments within 60 days, and
99 percent within 90 days.
With the implementation of PECOS Web, an internet version of the
Medicare enrollment process, in FY 2008, we expect to establish more
stringent contractor processing timeliness standards for applications
submitted via PECOS Web.
Comment: One commenter stated that the effective date of the
billing privileges provision may economically affect small and medium
sized business in that the IDTF must list the credentialed employees on
the application itself in order for the application to be processed,
and that these businesses cannot use or bill for their services during
the time periods that they are not enrolled. Further, the commenter
states that it would be impractical to hire these technicians if they
cannot use them to perform the tests for the time it takes to get
approved.
Response: We disagree with the commenter because all IDTFs should
have proper staffing, including credentialed technicians, at the time
the IDTF practice location is applying to participate in the Medicare
program or when the IDTF is operational.
Comment: One commenter suggested that an IDTF that is enrolled and
in good standing in the Medicare program at one location be able to
enroll new sites retroactively to the first date of service at the new
location.
Response: We disagree with this recommendation because the approval
of one practice location does not necessarily mean that a second
practice location meets the requirements for approval.
Comment: One commenter recommended that we require that applicants
be notified of their enrollment status within 60 days of submitting
their applications.
Response: We believe that this comment is outside the scope of this
final rule. However, given certain resource limitations, contractors
are unable to respond to such status inquiries. With the implementation
of PECOS Web, providers and suppliers, except DMEPOS suppliers, will be
able to check the status of their applications via the Internet.
After reviewing the public comments we are finalizing the provision
at Sec. 410.33(i) to state that we will establish an initial
enrollment date for an IDTF that would be the later of: (1) the date of
filing of a Medicare enrollment application that was subsequently
approved by Medicare FFS contractor; or (2) the date an IDTF first
started furnishing services at its new practice location. We also
adopted the ``date of filing'' as the date that the Medicare FFS
contractor receives a signed provider enrollment application that the
Medicare FFS contractor is able to process for approval. If the
Medicare FFS contractor rejects or denies an enrollment application
that is not later overturned during the appeals process, the new date
of filing would be established when an IDTF submits a new enrollment
application that the contractor is able to process to approval.
With the implementation of an Internet enrollment process referred
to as the PECOS Web in 2008, the date of filing for applications
submitted through PECOS Web will be the date the Medicare contractor
receives all of the following: (1) A signed Certification Statement;
(2) an electronic version of the enrollment application; and (3) a
signature page that the Medicare contractor processes to approval.
While this change limits the retrospective payments that an IDTF
may obtain from the Medicare program, we believe that this approach
will ensure that a Medicare contractor is able to verify that an IDTF
meets all program requirements at the time of filing, including the
performance standards outlined in Sec. 410.33(g) before payment for
service occurs.
b. Sec. 410.33(g)(3)
We received the following comments regarding our proposal at Sec.
410.33(g)(3) to expressly preclude hotels and motels from being
considered an appropriate site for an IDTF setting.
Comment: One commenter stated that many IDTFs have contracts
directly with a hotel or motel where they rent space for studies and
that they disagreed with the rules' provision to ban such a situation.
Response: We disagree with this comment because we believe that
space located within a hotel or motel can easily be transferred to
other uses other than providing sleep studies.
Comment: Several commenters stated that a hotel or motel room is
not appropriate places for diagnostic testing to take place.
Response: We agree with these comments and have revised Sec.
410.33(g)(3) accordingly.
Comment: One commenter suggested that the provision at Sec.
410.33(g)(3) be changed to state that the requirements for hand washing
and patient privacy only apply to IDTFs that see patients and to
clarify that being able to access records electronically fulfills the
requirement of storing business and medical records.
Response: We have amended Sec. 410.33(g)(3) to state that the
requirements for hand washing and patient privacy only apply to IDTFs
that see patients and to clarify that being able to access records
electronically fulfills the requirement of storing business and medical
records.
We are adopting a revision to Sec. 410.33(g)(3) to expressly
preclude hotels and motels from being considered an appropriate site
for an IDTF setting.
[[Page 66290]]
Based on public comments, we believe that a hotel or motel is not an
appropriate place for diagnostic testing to take occur. Accordingly, we
have revised Sec. 410.33(g)(3) to read, ``Maintain a physical facility
on an appropriate site. For the purposes of this standard, a post
office box, commercial mailbox, motel, or hotel are not considered an
appropriate site. 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.''
Additionally, we have added an exception at Sec. 410.33(g)(3)(ii),
where IDTFs that do not see beneficiaries at their locations are exempt
from providing hand washing and patient privacy accommodations.
c. Sec. 410.33(g)(15)
At Sec. 410.33(g)(15), we proposed a new performance standard
which stated, ``Does not share space, equipment, or staff or sublease
its operations to another individual or organization.''
Comment: One commenter stated that they were concerned about the
emergence of arrangements in which a physician practice leases a block
of time from an imaging provider (such as an IDTF) or agrees to pay the
provider a per service fee to use its facility. The group practice then
refers its patients to the imaging provider for imaging tests and bills
the insurer for the services, usually profiting from the difference
between the insurer's payment rates and the fees the practice pays to
the imaging provider.
Response: We agree with the commenter and reiterate that our
proposals are designed to prohibit such practices.
Comment: Several commenters supported our proposal to prohibit
IDTFs from sharing space, equipment, or staff, or subleasing their
operations to another individual or organization.
Response: We appreciate these comments and agree that there has
been a proliferation of share use agreements between IDTFs and
physicians and/or other organizations that have allowed the sharing of
space and equipment.
Comment: One commenter stated that they applauded our efforts to
address an alarming proliferation of referring physicians entering into
``lease'' or similar purchased test arrangements with imaging centers
for the primary purpose of enabling physicians to profit from their own
referrals.
Response: We appreciate these comments as our proposals are
designed to prohibit such practices.
Comment: Several commenters recommended that CMS not finalize Sec.
410.33(g)(15) because it severely restricts the use of an IDTF's
property and places unnecessary limitations on the entity.
Response: We disagree with this comment. With the revisions we are
making to Sec. 410.33(g)(15), we believe that an IDTF's property is
fully available for use solely by the IDTF. The adopted provision at
Sec. 410.33(g)(15) will allow an IDTF to conduct all of its approved
diagnostic testing procedures.
Comment: One commenter stated that the proposed rule would prohibit
an IDTF from participating in any type of leasing arrangement.
Response: In this final rule with comment period, we are
prohibiting the leasing or subleasing of an IDTF practice location, as
well as diagnostic equipment that are used in taking the initial
diagnostic test. In addition, we are prohibiting leasing and subleasing
to a third party.
Comment: One commenter requested that we clarify whether the
proposed performance standard found at Sec. 433.10(g)(15) would permit
a multi-specialty clinic and an IDTF to be enrolled as a clinic and an
IDTF, and for portions of space and staff to be used for both clinic
and IDTF activities.
Response: While we understand the commenter's concern, we do not
believe that it is appropriate to co-locate a multi-specialty clinic in
the same practice location as an IDTF. Specifically, while we are not
prohibiting the sharing common of hallways, parking, or common areas,
we believe that a multi-specialty clinic cannot occupy or be co-located
within the same practice location. For example, a multi-specialty
clinic and an IDTF could not enroll or remain enrolled using the same
suite number within the same office building.
Comment: Some commenters recommended that we define the term,
``individual or organization'' to exclude hospitals and nonreferring
radiologists, because hospitals and nonreferring radiologists are not
in a position to self-refer.
Response: We disagree that the terms ``individual and
organization'' needs to be defined. For the purposes of this rule, an
individual is a person, and an organization is any entity other than an
individual.
Comment: One commenter recommended that we permit an adjoining
physician practice or a radiology group that is the owner of an IDTF to
share space, equipment, and staff.
Response: While we agree that it is common for IDTFs to share
common areas (that is, waiting rooms) with the adjoining physician
practice or radiology group that is an owner of the IDTF, we do not
believe that it is appropriate for IDTFs to share common practice
locations or diagnostic testing equipment.
Comment: Several commenters recommended that we not extend the
prohibition of sharing space, equipment, and staff to the mobile IDTF
setting.
Another commenter recommended that the proposed restriction on
sharing space, equipment, and staff should not apply to mobile IDTFs,
as this would add both physical and financial burdens that mobile units
simply could not meet.
Response: We agree with these commenters that requiring mobile
IDTFs to adhere to limitations regarding space, equipment, and staffing
may limit beneficiary access to necessary mobile services and increase
the costs of providing necessary diagnostic care. Accordingly, we are
excluding mobile IDTFs from the provisions found at Sec.
410.33(g)(15).
Comment: One commenter recommended that we revise our proposals to
account for certain practical implications concerning the imaging
industry, including common and legitimate sharing practices between
multiple IDTFs, between IDTFs and hospitals, and between IDTFs and
radiologist.
Response: While we agree that it reasonable for IDTFs located
within a hospital to share practice locations and diagnostic testing
equipment, we continue to have significant concerns regarding the
sharing of space by IDTFs in a nonhospital setting.
Comment: One commenter recommended that we revise the performance
standard found at Sec. 410.33(g)(15) to state, ``Does not share space,
equipment or staff or sublease its operations to another individual,
organization, employee or contractor of such organizations, that refers
Medicare patients to the IDTF for designated health services.''
Response: We have considered this comment in revising the
performance standard at Sec. 410.33(g)(15).
Comment: One commenter believed that the performance standard found
in Sec. 410.33(g)(15) applies to hospitals.
Response: Upon review of the comments, we have revised Sec.
410.33(g)(15) to exclude hospitals.
[[Page 66291]]
Comment: Several commenters recommended that we clarify that the
proposed performance standard found in Sec. 410.33(g)(15) would apply
only to newly enrolling IDTFs and not IDTFs already enrolled in the
Medicare program. Specifically, these commenters requested that we
clarify that this new standard would allow an IDTF to continue to lease
personnel and equipment from third parties provided that the IDTF uses
the personnel, space, and equipment exclusively throughout the lease
term.
Response: We maintain that the provision found in Sec.
410.33(g)(15) applies to both newly enrolling IDTFs, as well as those
IDTFs currently enrolled in the Medicare program. This provision does
not prohibit an IDTF from leasing space or equipment that is used
solely by that IDTF-party, such as a building management company or an
equipment manufacturer. This does not preclude an IDTF from leasing any
part of its practice location or equipment used in conducting the
initial diagnostic procedure to another Medicare-enrolled individual or
group to conduct diagnostic testing activities.
Comment: One commenter recommended that we clarify that employees
of affiliated employers under the Fair Labor Standards Act are not
considered ``shared staff'' under this new standard. In addition,
several commenters recommended that the prohibition on sharing
``staff'' be limited to sharing nonphysician personnel.
Response: The new sharing provision has been modified to exclude
the prohibition on the sharing of staff.
Comment: One commenter recommended that if we adopt the proposed
performance standard found in Sec. 410.33(g)(15) that the
implementation date be delayed for at least 12 months to provide IDTFs
and physician practices with sufficient time to find new office space,
recruit additional staff, notify their patients and generally
restructure their existing relationships. Another commenter recommended
that we clarify our proposed performance standard found in Sec.
410.33(g)(15).
Response: We agree with commenters and we are adopting a 1-year
delay in implementation (effective January 1, 2009) of the space-
sharing provision for IDTFs that are currently occupying a practice
location with another Medicare-enrolled individual or organization that
is found at Sec. 410.33(g)(15)(i).
Comment: One commenter recommended that we clarify whether the
proposed prohibition on sharing space, equipment, and staff is intended
to apply when the IDTF leases or subleases space from a hospital on a
full-time, exclusive basis. Other commenters recommended that we
exclude mobile IDTFs from the prohibition to share space because it is
impractical in complying with this provision. One commenter stated that
the sharing of staff standard is impractical to comply with and should
not be extended to mobile IDTFs, because accredited and trained
contracted personnel are sometimes necessary to contract with on a
temporary basis.
Another commenter suggested that we not apply this provision to
mobile IDTFs and instead, permit an IDTF to share space, equipment and
staff with an entity that is related to the IDTF, such as through
common control or ownership. Also, this commenter recommended that we
should clarify in what situation an IDTF could not share staff, such
as; supervising physician and nonphysician personnel.
Response: This provision is not intended to restrict an IDTF from
entering into a rental agreement for space or equipment, excluding
hospitals, as long as that IDTF, or the owner of the IDTF are
exclusively using that space or equipment. We are excluding mobile
IDTFs from the prohibition on sharing space and staff.
Comment: One commenter stated that the sharing of space provision
should not apply to a Medicare-certified IDTF that leases or subleases
space and/or qualified technical staff from a hospital on a full time,
exclusive basis (they are not ``shared'' with the hospital).
Response: We agree with the comment and the standard has been
revised to reflect this concern.
Comment: One commenter wanted clarification on whether we will
permit an IDTF to utilize a common area in a building where an IDTF
enters into a lease or sublease with a hospital for the full-time,
exclusive use of the operation of the IDTF.
Response: We will permit an IDTF to utilize a common area in a
building where an IDTF enters into a lease or sublease with a hospital
for the full-time exclusive use of the operation of the IDTF. However,
the IDTF must have its own practice location that is only used by that
IDTF.
Comment: One commenter requested clarification on whether we intend
to prohibit only new space, equipment, or staff sharing arrangements
from the effective date of the rule or if it will apply to existing
arrangements. If it applies to existing arrangements, then the
commenter requests that the implementation be delayed by 1 year.
Response: While we intend to prohibit the sharing of space at a
practice location from the effective date of the rule for newly-
enrolling IDTFs (including those with applications that are still
pending as of January 1, 2008), we are adopting a 1-year delay in
implementation (effective January 1, 2009) of the space-sharing
provision for IDTFs that are currently occupying a practice location
with another Medicare-enrolled individual or organization that is found
at Sec. 410.33(g)(15)(i).
Comment: One commenter requested clarification as to whether we
will permit an IDTF that leases or subleases space and/or staff from a
hospital to purchase back-office services from the hospital. (These
types of service may include, but are not limited to, transcription,
billing, collection, recordkeeping, and computer access services, based
upon a flat fee or at cost plus to the hospital).
Response: We will permit an IDTF to lease or sublease space from a
hospital and to purchase services from the hospital which may include,
but are not limited to, transcription, billing, collection,
recordkeeping, and computer access services, based upon a flat fee or
at cost plus to the hospital.
Comment: One commenter recommended that there should be an
exception made at Sec. 410.33(g)(15) for companies operating both an
IDTF and portable x ray supplier, since both are surveyed and subject
to multiple standards under the Medicare program.
Response: While we understand this concern, we believe that an IDTF
must have a practice location where only one Medicare-enrolled IDTF is
furnishing services. If another Medicare-enrolled entity is using the
same practice location space as an IDTF, especially for shortened
periods of time, our designated contractor is not able to determine
which entity is responsible for meeting performance standards at a
given time.
Comment: One commenter urged us to address the sharing of space,
staff, and equipment provision by specifically excluding radiologists
and radiology groups, who are not self-referring, from the sharing
arrangements in IDTFs due to the increased costs and possible detriment
to the beneficiary (numerous visits to different locations and
increased stress) that may occur in this situation.
Response: We believe that the practice location and equipment that
an IDTF uses for its initial diagnostic testing cannot be used by
another Medicare provider or supplier, and therefore, we
[[Page 66292]]
are not excluding radiologists and radiology groups.
Comment: One commenter agreed that it would be inappropriate to
commingle the clinical staff listed on the CMS-855 enrollment
application during the times that the IDTF is open; however, the
commenter maintains that non-clinical space and staff (such as waiting
rooms, receptionists, and schedulers) should be shared with other
entities.
Response: We agree with this comment and have amended the provision
to reflect these concerns.
Comment: One commenter recommends that the sharing of nonclinical
space, equipment and personnel be allowed between an IDTF and an
adjacent facility, because it does not offer the same potential for
abuse as situations where the clinical operations of the IDTF would be
commingled.
Response: We have amended the provision found at Sec.
410.33(g)(15) to address these concerns.
Comment: One commenter recommends that the sharing of space between
a group or a physician practice and its own IDTF should not be
prohibited. Another commenter recommends changing the proposed Sec.
410.33(g)(15) because they believe it would prohibit wholly-owned
corporate subsidiaries and affiliated under common control from sharing
space, equipment, and staff in a cost efficient manner.
Response: We disagree with this recommendation since it is not
feasible to distinguish between two different practices that are co-
located at the same practice location. Also, this provision would not
prohibit wholly-owned corporate subsidiaries and affiliated entities
under common control from sharing equipment, as long as the change in
equipment location is timely reported. In addition, the IDTF's practice
location must be separately distinguishable and not commingled with
another Medicare provider or supplier.
Comment: One commenter recommends changing the proposed Sec.
410.33(g)(15) to read as follows: ``Does not share space, equipment, or
staff or sublease it operations to another individual or organization,
except for a subsidiary or affiliated IDTF that is wholly owned by, and
under the complete control of, the IDTF.''
Response: We understand the commenter's recommendation and we have
amended Sec. 410.33(g)(15) to address the commenter's concern.
Comment: One commenter recommends that CMS specifically exempt
IDTFs that have common ownership and common control from the definition
of ``individual or organization,'' if CMS implements Sec.
410.33(g)(15) as written.
Response: We disagree with the commenter's recommendation. While
IDTFs may have common ownership, each practice location is enrolled
separately.
Comment: One commenter offered support for our provision to
prohibit fixed site IDTFs from sharing space, equipment, and staff or
subleasing their operations to another individual or organization.
Response: We appreciate the commenters support on the proposed
provisions.
Comment: One commenter suggested excluding radiologist and
radiology groups from the definition of individual or organization in
the regulatory language at Sec. 410.33(g)(15) so that imaging IDTFs
can share space, equipment, and staff with radiologists and radiology
groups.
Response: We disagree with this recommendation because IDTFs enroll
each practice location separately.
Comment: One commenter suggested that we clarify in the preamble
that the prohibition does not preclude affiliated companies (which do
not have any referring nonradiologist physicians as owners) that
provide services integrally related to the operations of an imaging
IDTF (such as interoperable information system, centralized
credentialing, staff and billing) from sharing space, equipment and
staff.
Response: We modified Sec. 410.33(g)(15) to reflect concerns about
the sharing of space and equipment. Since Medicare enrolls each IDTF at
a separate location, we believe that it is not necessary to address how
affiliated companies interact with an IDTF as long as each IDTF is in
compliance with the provisions of this final rule with comment period.
Comment: One commenter suggested that CMS clarify that an ownership
or investment interest held by radiologists and radiology groups in an
imaging IDTF does not constitute sharing under Sec. 410.33(g)(15).
Response: We agree that an ownership or investment interest held by
radiologists and radiology groups in an imaging IDTF does not
constitute sharing under Sec. 410.33(g)(15).
Comment: One commenter suggested that we revise this provision to
specify that an IDTF cannot share its space, equipment or staff with
another individual or organization that has Medicare billing
privileges, and that it is okay for another non-Medicare enrolled
entity to use the IDTF's space, equipment, and staff.
Response: We agree with the commenter. The IDTF may not share
clinical space or the diagnostic equipment involved in the original
diagnostic test with a Medicare-enrolled provider or supplier.
Based on public comments, we have removed the sharing of staff
aspect of this provision, and we are revising Sec. 410.33(g)(15) to
read, ``With the exception of hospital-based and mobile IDTFs, a fixed-
base IDTF does not--
Share a practice location with another Medicare-enrolled
individual or organization;
Lease or sublease its operations or its practice location
to another Medicare-enrolled individual or organization; or
Share diagnostic testing equipment used in the initial
diagnostic test with another Medicare-enrolled individual or
organization.''
We believe that it is inappropriate for a fixed-base (physical
site) IDTF to commingle its practice location or the equipment used in
conducting the initial diagnostic test with another individual or
organization enrolled in the Medicare program. By sharing space and/or
equipment, Medicare contractors are not able to determine if an IDTF
meets all of enrollment requirements at Sec. 424.500 through Sec.
424.555 or whether each IDTF meets and maintains all performance
standards and other requirements under Sec. 410.33 and other
applicable requirements.
After examining public comments, we believe that it is appropriate
to establish two exceptions to the prohibition associated with sharing
space and clinical equipment. These exceptions apply to mobile IDTFs or
IDTFs that are co-located within a hospital.
A mobile IDTF, by its very nature, may share space with other
Medicare-enrolled entities. As such, we believe that it would be
detrimental to the IDTF industry to apply this new performance standard
to mobile IDTFs, because this may limit beneficiary access to necessary
mobile IDTF services and increase the costs of providing necessary
diagnostic care. In addition, we believe that hospital-based IDTFs are
inherently located within a larger facility type and based on the need
of the hospital, may appropriately share space or clinical equipment to
gain operating efficiencies with little additional risk to the Medicare
program or its beneficiaries.
Finally, while all IDTF provisions are effective on the
implementation date of this final rule with comment period, we believe
that additional time may be needed for some IDTFs to change their
business model if they are sharing a
[[Page 66293]]
practice location with another Medicare-enrolled individual or
organization. Accordingly, we are adopting a 1-year transition period
for IDTFs that are currently enrolled and are sharing a practice
location with another Medicare individual or organization. While this
1-year transition period applies to the provision found at Sec.
410.33(g)(15)(i) related to the sharing of space, it does not apply to
the provisions found at Sec. 410.33(g)(15)(ii) or Sec.
410.33(g)(15)(iii). Accordingly, IDTFs are prohibited from maintaining
or establishing leasing or subleasing agreements or the sharing of
diagnostic testing equipment used in taking the initial diagnostic
test, after the effective date of this rule.
3. Additional Comments and Responses
Comment: One commenter recommended that our proposal to prohibit
the sharing of space, equipment, and staff be applied consistently in
all imaging centers, whether enrolled as an IDTF or as a physician-
directed clinic.
Another commenter recommended that any policy initiative intended
to eliminate certain suspect leasing or space sharing arrangements
should be applied to all imaging providers, not just IDTF providers.
One commenter supported the proposed prohibition on shared
equipment but urged us to apply this prohibition to all entities
(including physician practices, mobile units, and hospitals) that
provide imaging services.
Some commenters believe an exception should be made to include
cardiologists that are certified for the interpretation of nuclear
cardiology studies in an IDTF as well as allow interpretation of
nuclear cardiology studies for an IDTF.
One commenter stated that since self-insurance is permitted, the
requirement that the insurance be purchased from a ``non-relative owned
company'' should be removed, or replaced with a provision that permits
an alternate method of meeting the requirement by maintaining insurance
through a relative-owned company that has been approved by a state
department of insurance or comparable state agency or that can be
validated by a placing broker.
Another commenter recommended that CMS should end payments to
independent contractor physicians who are not board-certified in Sleep
Disorders Medicine.
One commenter recommended that CMS require interpreting physicians
to have board certification in Sleep Medicine in metropolitan areas.
One commenter recommended that we edit the location of service
language at Sec. 410.33(e)(2) to redefine the location from which a
service is billed.
Another commenter recommended requiring a hospital licensed entity
and actual radiology group to be the owners of entities that do not
have to register as IDTFs and allow related entities of the hospital
and radiology group to also own the imaging center.
Response: We appreciate these comments and we will consider these
recommendations in a future rulemaking effort.
J. Expiration of MMA Section 413 Provisions for Physician Scarcity Area
(PSA)
Section 413(a) of the MMA added a new section 1833(u) to the Act.
That section provided a 5 percent incentive payment to physicians
furnishing services in physician scarcity areas (PSAs) for physicians'
services furnished on or after January 1, 2005, and before January 1,
2008. Specifically, section 1833(u) of the Act provided for payment of
an additional 5 percent of the payment amount for services furnished by
primary care physicians in a primary care scarcity area and by non-
primary care physicians in a specialist care scarcity area.
Because the provisions of section 1833(u) of the Act do not apply
to services furnished after December 31, 2007, in the CY 2008 PFS
proposed rule, we provided notification that these 5 percent incentive
payments will no longer be made for services furnished on or after
January 1, 2008.
The list of zip codes for both primary care and specialty PSAs can
be found on the CMS Web site at http://www.cms.hhs.gov/hpsapsaphysicianbonuses/01_overview.asp.
Comment: We received comments expressing concern over the
expiration of this provision. Commenters stated that the expiration of
this provision may exacerbate the problems beneficiaries in rural areas
experience in accessing medical services.
Response: We acknowledge the commenters' concerns regarding access
to care, especially in rural areas. We provided notification of the
pending expiration of this provision in the CY 2008 PFS proposed rule.
We note that the Congress specifically established the PSA incentive
program to apply only to claims for services furnished between January
1, 2005, and January 1, 2008. We do not have authority under the
current statute to extend PSA bonus payments beyond this time frame.
K. Comprehensive Outpatient Rehabilitation Facility (CORF) Issues
In the CY 2008 PFS proposed rule (72 FR 38171), we discussed
Medicare payment for comprehensive outpatient rehabilitation facility
(CORF) services, including nursing services delivered within a CORF,
which are defined by HCPCS code (G0128) for such services. We also
explained that we use the payment amount established by an existing fee
schedule other than the PFS when the PFS does not establish a payment
amount for the CORF service. Specifically, we use the existing fee
schedules for prosthetic and orthotic devices, DME and supplies, and
drugs and biologicals for prosthetics and orthotics devices, durable
medical equipment (DME) and supplies, and drugs and biologicals,
respectively, provided by CORFs that are considered CORF services.
Covered DME, orthotic and prosthetic devices, and supplies provided by
a CORF are paid under the DMEPOS fee schedule.
Drugs and biologicals that are not considered to be self-
administered are specified as CORF services at section 1861(cc)(1)(F)
of the Act. However, as discussed in the proposed rule, we believe that
drugs and biologicals provided to CORF patients are not appropriately
provided as part of a rehabilitation plan of treatment and, as such, we
proposed to remove drugs and biologicals from the scope of CORF
services as defined at Sec. 410.100. After reviewing comments, we have
decided to retain within the definition of CORF services drugs and
biologicals that are not self-administered, as discussed below in
section II.K.7. However, as we are not aware of any non-self-
administered drugs and biologicals that appropriately may be included
as part of a rehabilitation plan of treatment, we intend to closely
track the provision of drugs and biologicals in the CORF setting and do
not expect CORFs to bill for such drugs and biologicals. In addition,
because we believe it is appropriate for pneumococcal, influenza, and
hepatitis B vaccines to be administered to CORF patients in the CORF
setting, even though such vaccines fall outside the scope of CORF
services, we also proposed to revise the conditions of participation at
Sec. 485.51(a) to permit CORFs to provide to their patients
pneumococcal, influenza, and hepatitis B vaccines in addition to CORF
services.
Because the regulations under 42 CFR parts 410 and 413 were never
updated to reflect the change in CORF payment methodology from a
``reasonable cost'' basis to 80 percent of the lesser of a
[[Page 66294]]
payment amount under an existing fee schedule or the CORF's actual
charge, we proposed to add a new subpart M to 42 CFR part 414 to
reflect the change in CORF payment methodology.
In addition, we proposed revisions to the definitions of certain
CORF services under Sec. 410.100, in order to limit the scope of such
services and items to those appropriately provided by qualified CORF
personnel and related to the rehabilitation goals of the plan of
treatment established under Sec. 410.105(c). Specifically, we proposed
to clarify the definition of physician services; respiratory therapy
services; psychological and social services; nursing services; drugs
and biologicals; supplies, appliances, and equipment; and the home
environment evaluation. We also proposed to add clarifying language to
Sec. 410.105(b)(3) to make clear that physical therapy, occupational
therapy, and speech-language pathology services can be provided offsite
in the patient's home. In Sec. 410.105(c), we proposed to clarify that
CORF services, that are not skilled rehabilitation services, must
directly relate to the physical therapy or other rehabilitation plan of
treatment and its associated goals.
1. Requirements for Coverage of CORF Services Plan of Treatment (Sec.
410.105(c))
In accordance with section 1861(cc)(1) of the Act, requiring that
CORF services be furnished ``under a plan (for furnishing such items
and services to such individual) established and periodically reviewed
by a physician,'' Sec. 410.105(c) provides that CORF services as
defined under Sec. 410.100 are covered only if furnished under a
written plan of treatment. Specifically, the plan of treatment must:
(1) Be established and signed by a physician prior to the commencement
of treatment in the CORF setting; and (2) indicate the diagnosis and
anticipated rehabilitation goals, and prescribe the type, amount,
frequency, and duration of the services to be furnished. We interpret
these provisions as requiring that the services furnished under the
rehabilitation plan of treatment must relate directly to the
rehabilitation of injured, disabled, or sick patients. Services
provided in the CORF setting that do not relate directly to such
rehabilitation goals and treatment plan are not covered as CORF
services.
Therefore, we proposed to revise Sec. 410.105(c) to clarify our
policy that CORF services are covered only if they relate directly to
the rehabilitation of injured, disabled, or sick patients. We believe
our policy is consistent with the statutory requirements under section
1861(cc) of the Act. Section 1861(cc)(1) of the Act specifies that CORF
services must be furnished under a plan of treatment. Section
1861(cc)(1)(H) of the Act further states that ``other items and
services'' are considered CORF services only if ``medically necessary
for the rehabilitation of the patient.'' We believe the implication of
this limitation for ``other items of services'' is that all other CORF
services (that is, those listed under sections 1861(cc)(1)(A) through
(G) of the Act) also must be necessary for the rehabilitation of the
patient. In addition, we noted that section 1861(cc)(2)(A) of the Act
specifies that a CORF facility is a facility ``primarily engaged in
providing * * * diagnostic, therapeutic, and restorative services to
outpatients for the rehabilitation of injured, disabled, or sick
persons'' (emphasis added). We believe this requirement further signals
the Congress's intent that the services provided in a CORF setting be
covered as CORF services only if such services relate directly to the
rehabilitation of the patient.
Comment: One commenter supported the proposal to clarify that all
services provided in a CORF must be directly related to the
rehabilitation treatment plan. The commenter noted that this proposal
is directly aligned with the goals and purpose of physical therapy.
Response: We appreciate the commenter's support of this
clarification. Because the CORF is defined as a facility that is
primarily engaged in providing diagnostic, therapeutic and restorative
services to outpatients for the rehabilitation of injured, disabled or
sick persons, we believe the intent of the statute is that all services
rendered in a CORF must relate to the patient's rehabilitation needs
which are stated in the patient's plan of treatment established by the
physician. Section 1861(cc)(1) of the Act and Sec. 410.100 clarify
that physician services, and services of other qualified professionals,
can be provided in a CORF; but, a physician must first certify that the
patient requires skilled rehabilitation services, including physical
therapy, occupational therapy, speech-language pathology, and
respiratory therapy, and then establish the CORF patient's
rehabilitation plan of treatment.
Therefore, we are finalizing Sec. 410.105(c) as proposed with the
exception that we have added language to clarify our policy that the
rehabilitation plan of treatment, along with its goals, is specific to
the skilled rehabilitation services for physical therapy, occupational
therapy, speech-language pathology, or respiratory therapy and that
these services are distinct from all other CORF services which, when
provided, must directly relate to the goals of the rehabilitation
treatment plan.
2. Included Services (Sec. 410.100)
Section 410.100 establishes the services that are covered under the
CORF services benefit, consistent with section 1861(cc)(1) of the Act.
Because of the change in payment methodology from that based on cost to
payment under the PFS and other existing fee schedules beginning in CY
1999, this section does not reflect our current payment policies.
Therefore, we proposed to clarify our payment policy in the
introductory paragraph of this section by including a cross reference
to proposed Sec. 414.1101, which sets forth the payment methodology
for CORF services, including identifying the applicable fee schedule
for each CORF service. In addition, we proposed to revise:
The definition of physician services to reflect the change
in payment methodology for CORF services;
The definitions of physician services, respiratory therapy
services, social and psychological services, and nursing services to
ensure that these definitions include only those services appropriately
provided by qualified nonphysician and physician personnel and related
to the rehabilitation plan of treatment established under Sec.
410.105(c); and
The definition of supplies, equipment, and appliances to
conform to the statutory provision at section 1861(cc)(1)(G) of the
Act.
We also proposed to remove the provision for drugs and biologicals.
Although vaccines are not included in the definition of CORF services
at section 1861(cc)(1) and Sec. 410.100, we proposed to make revisions
to the CORF conditions of participation at Sec. 485.51 to reflect
current coverage and payment policy for vaccines provided in the CORF
setting.
3. Physician Services (Sec. 410.100(a))
Section 410.100(a) defines the physician services included within
the scope of CORF services. Specifically, those services of a CORF
physician described as administrative in nature are considered CORF
services, to the exclusion of diagnostic and therapeutic services,
which are physician services under section 1861(q) of the Act and
separately billable as physician services under 42 CFR part 414,
subpart B. Section 1861(cc)(1) of the Act excludes from the definition
of CORF services
[[Page 66295]]
any item or service that, if furnished to an inpatient of a hospital,
would be excluded under section 1861(b) of the Act. Section 1861(b)(4)
of the Act excludes from the definition of ``inpatient hospital
services'' the ``medical or surgical services provided by a
physician,'' which would include the diagnostic and therapeutic
services of a physician. Consequently, diagnostic and therapeutic
services provided in the CORF setting by a physician are not considered
CORF services. In contrast, because those services of a CORF physician
that are of an administrative nature are not ``medical'' services, such
services are included in the definition of CORF services.
In accordance with section 1861(cc)(2)(B)(i) of the Act and Sec.
485.70(a)(1), the CORF physician must be either a medical doctor (MD)
or a Doctor of Osteopathy (DO). The conditions of participation at
Sec. 485.70(a)(2) and (3) further require that the physician have
training or experience in the medical management of patients requiring
rehabilitation services. The conditions of participation at Sec.
485.58(a)(1)(i) also require the CORF facility physician to provide, in
accordance with accepted principles of medical practice, medical
direction, medical supervision, medical care services and consultation.
In the CY 2008 PFS proposed rule, we proposed to revise Sec.
410.100(a) to clarify that only those physician services required and
provided by the CORF facility physician that are administrative in
nature are considered CORF services, whereas diagnostic and therapeutic
services provided by a physician to CORF patients are considered
physician services under section 1861(q) of that Act. Specifically, we
proposed to define CORF physician services as those services provided
by a CORF facility physician that are administrative in nature, such as
consultation with and medical supervision of nonphysician staff,
patient case review conferences, utilization review, and the review of
the therapy plan of treatment, as appropriate.
Services provided to a CORF patient by the CORF facility physician
or other physician that are not administrative in nature but that are
diagnostic or therapeutic services are considered physician services
under section 1861(q) of the Act. Where these services are covered,
they are separately payable to the physician as physician services
under the PFS at the nonfacility payment amount.
In addition, Sec. 410.100(a) currently provides that physician
services included within the definition of CORF services are reimbursed
on a reasonable cost basis under part 413, and that physician services
to CORF patients not included within the definition of CORF services
but billed as physician services are paid by the carrier on a
reasonable charge basis subject to the provisions of subpart E of part
405 of this chapter. This description of the payment methodology for
physician services provided in the CORF setting under Sec. 410.100(a)
is inconsistent with the payment methodology set forth under section
1834(k)(1) of the Act for CORF services and section 1848 of the Act for
physician services, as well as the preamble discussion in the CY 1999
PFS final rule (63 FR 58860). In the CY 1999 PFS final rule, we stated
that we would base payment for diagnostic and therapeutic physician
services provided to individuals in the CORF setting on the PFS amount
for the services. Therefore, we proposed to revise Sec. 410.100(a) to
remove the reference to reasonable cost based payments for CORF
physician services and the reference to reasonable charge based
payments for non CORF physician services. In place of these references,
we proposed to revise Sec. 410.100(a) to add a reference to 42 CFR
part 414, subpart B, setting forth the payment methodology for non CORF
physician services.
Comment: One commenter stated that the nonfacility fee schedule
amounts for CORF services fail to fairly compensate the CORF for
services provided by a CORF physician that are administrative in
nature. The commenter stated that the PFS nonfacility amounts,
containing higher PE RVUs (than those for the facility setting) for
CORFs, are inappropriately low to cover these costs for the CORF
setting. The commenter believes that the required level of physician
activity in a CORF is greater than that in a physician office. Since
there is no separate facility payment to the CORF, the commenter
requests that we develop a new set of codes with associated fees to pay
for the required CORF administrative physician services in a manner
similar to that we employed to establish G0128 in the CY 1999 PFS final
rule to pay for CORF nursing services.
Response: The 1997 BBA required CMS to establish prospectively
determined payments for all outpatient physical therapy, occupational
therapy and speech-language pathology services regardless of the site-
of-service and additionally required that all other CORF services also
be based on existing fee schedules. When we implemented these BBA
requirements during the CY 1999 rulemaking process, we specifically
addressed the issue of a site-of-service differential payment to
institutional providers of outpatient therapy services, including
CORFs. In the CY 1999 PFS final rule, we reasoned that a site-of-
service differential payment to a facility provider would create
payment incentives that favor one setting over another. In addition, we
believe that the law intended the creation of a ``level playing field''
for these services and that we accomplished this with the selection of
the PFS nonfacility rate to pay for all rehabilitation and CORF
services. Therefore, we will continue to make payment at the PFS
nonfacility rate for CORF services and will not change this policy to
allow a separate site-of-service differential payment to the CORF.
Accordingly, we are finalizing Sec. 410.100(a) as proposed.
4. Clarifications of CORF Respiratory Therapy Services
Section 1861(cc)(1)(B) of the Act states that CORF services include
respiratory therapy services along with physical therapy, occupational
therapy, and speech-language pathology services. Because respiratory
therapists (RTs) are not recognized as independent practitioners in the
Act or regulations, and respiratory therapy services are not
specifically identified in a statutory benefit category except as
specified in the CORF services benefit at section 1861(cc)(1)(B) of the
Act, separate payment, except that made to the CORF provider, is not
made for services provided by RTs.
The description of CORF respiratory therapy services currently
includes some services that we believe are more appropriately provided
by a physician rather than a RT. As discussed above in section II.K.3.,
diagnostic and other medical services provided in the CORF setting by a
physician are not considered CORF services, and therefore may not be
included in a respiratory therapy plan of treatment. In addition, the
description of respiratory therapy services under Sec. 410.100(e)
currently includes services that in accordance with Sec. 410.105(c)
must be performed by a physician, and not a RT. For example, only the
physician may indicate the clinical diagnosis and rehabilitation goals,
and prescribe the type, amount, frequency, and duration of the services
to be furnished under the rehabilitation plan of treatment.
Therefore, we proposed to amend Sec. 410.100(e) to revise the
definition of respiratory therapy services to include only those
services that can be appropriately provided to CORF patients by RTs
under a physician-established respiratory therapy plan of
[[Page 66296]]
treatment in accordance with current medical and clinical standards and
the requirements of Sec. 410.105(c). Specifically, we proposed to
remove from the definition of CORF respiratory therapy services at
Sec. 410.100(e)(1) the terms ``diagnostic evaluation'',
``management'', and ``assessment'' because these services are performed
by the physician to establish the medical and therapy-related diagnosis
and the respiratory therapy plan of treatment. These services, referred
to in the proposed rule as ``evaluation and management (E/M)''
services, may be provided by either the CORF facility physician, as
CORF physician services or as non-CORF physician services, or by the
patient's referring physician, as appropriate. We also proposed to
remove diagnostic tests and periodic assessment at Sec.
410.100(e)(2)(v) and (vi), respectively, from the description of CORF
respiratory therapy services. As discussed above, we believe that under
current medical standards, diagnostic tests that are or become
necessary for patients receiving rehabilitation services should be
provided by physicians. In addition, we believe that under current
medical standards, periodic assessment of chronically ill patients in
order to determine their need for respiratory services should be within
the purview of the physician. We note that these services are covered
under the physician services benefit category at section 1861(s)(2)(C)
of the Act when provided by the physician to a CORF patient, and
therefore, may be separately billable by the physician under the PFS.
In addition to RTs, we noted that the conditions of participation
also recognize respiratory therapy technicians as CORF personnel;
however, during the CY 1999 PFS rulemaking to recognize the 1997 BBA
payment requirements, we did not include services performed by
respiratory therapy technicians because we believed that current
medical standards for skilled respiratory therapy services provided to
patients in the CORF setting required the educational requirements
possessed by RTs. This determination to only recognize the services of
RTs, and not those provided by respiratory therapy technicians in
carrying out the therapy plan of treatment was further supported in the
CY 2002 and CY 2003 rulemaking (66 FR 55311 and 67 FR 79999), when we
developed and discussed G codes for certain CORF respiratory therapy
services and specifically recognized the RT as the appropriate level of
personnel to provide these CORF services. The three HCPCS codes G0237,
G0238, and G0239 are specific to services provided under the
respiratory therapy treatment plan and, as such, are not designated as
subject to the therapy caps. Therefore, in the CY 2008 PFS proposed
rule, we proposed to revise the description of respiratory therapy
services to include only those services that are appropriately provided
under a respiratory therapy treatment plan. In so doing, we sought to
clarify those services that we believe the physician should provide,
such as E/M services, diagnostic tests, and establishing the
rehabilitation plan of treatment. In addition, we stated that a
condition of coverage for the respiratory therapy service is that it be
provided by an individual meeting the educational and training level of
the RT, rather than the RT technician. For these reasons, we indicated
we would accept comments on the service description at Sec.
410.100(e), and the personnel qualifications at Sec. 485.70(j) and (k)
for a respiratory therapist and a respiratory therapy technician,
respectively.
Comment: One commenter opposed the proposed revisions to the
definition of CORF respiratory therapy services which removes
diagnostic E/M services from the list of services at Sec.
410.100(e)(1) and diagnostic tests from Sec. 410.100(e)(2)(v). The
commenter suggested that respiratory therapists, by virtue of their
training and competency testing, can and do provide such services as
part of their scope of work and asks us to add at Sec. 410.100(e)(2)
certain tests, specifically ``pulmonary function tests, spirometry and
blood gas analyses'', as well as services for ``assessment, evaluation
and monitoring of the patient's responses to the respiratory treatment
plan.'' The commenter also requested that we reinsert the term
``assessment'' in the definition of respiratory therapy services at
Sec. 410.100(e)(1) in order to bring consistency to the definitions of
all other CORF therapy services, such as physical therapy, occupational
therapy, and speech-language pathology. Lastly, the commenter objected
to the CORF requirement that the respiratory therapy treatment plan be
entirely established by the physician.
Response: Section 1861(cc)(1) of the Act states that respiratory
therapy can be provided in a CORF, by qualified professional personnel,
only under a treatment plan established and reviewed by a physician. In
order to determine the need for and to construct an appropriate CORF
respiratory therapy plan of treatment, a physician provides E/M
services and often uses diagnostic tests, such as pulmonary function
and spirometry tests, in order to establish the patient's medical and
therapy related diagnoses. These findings are then detailed in the
patient's rehabilitation treatment plan which, in the CORF, the
physician must wholly establish.
The plan of treatment is described at Sec. 410.105(c) and must
include services furnished under a written plan of treatment that: (1)
Is established and signed by a physician before the treatment is begun;
(2) prescribes the type, amount, frequency, and duration of the
services to be furnished, and indicates the diagnosis and anticipated
rehabilitation goals. The respiratory treatment plan must be reviewed
at least every 60 days by the physician who must certify that the
patient is making reasonable progress in attaining the treatment goals
and that the treatment is having no harmful effects. Therefore, we
believe that the E/M services and diagnostic services associated with
establishing, periodically reviewing, and overseeing the respiratory
therapy treatment plan are appropriately furnished by the physician. As
discussed above, physician services, including E/M services and
diagnostic services performed by the physician, are separate Medicare
benefits, defined at sections 1861(q) and 1861(s)(3) of the Act,
respectively. These therapeutic and diagnostic services are covered and
separately paid to the physician, not the CORF, when they are furnished
to a CORF patient in the CORF setting by the physician, as discussed
previously in this section at II.K.3.
We agree with the commenter's request to reinsert the word
``assessment'' in the definition of respiratory therapy services at
Sec. 410.100(e)(1). Because assessments are conducted as an integral
part of any service, we agree that revising the definition more
accurately describes the services provided by RTs, as well as other
qualified and recognized CORF personnel. As illustrated below,
assessments can be made by the RT using the physiologic data gathered
from the monitoring services that are inherent to CORF respiratory
therapy services.
Also, we would like to clarify the term ``monitoring'' as used in
Sec. 410.100(e)(1) specifically as it relates to the provision of CORF
respiratory therapy services. As we stated in the CY 2003 PFS final
rule with comment period (when we created 3 G-codes--G0237, G0238, and
G0239--to better describe CORF respiratory therapy activities), we
incorporated the term ``monitoring'' in to each of the 3 G-code
descriptors. We further described this ``monitoring'' to include
physiologic or
[[Page 66297]]
other data about the patient during the period before, during, and
after the activities. It can represent, for example, pulse oximetry
readings, electrocardiography data, pulmonary testing measurements of
strength or endurance performed to assess the status of the patient
before, during and after the activities. In order to further illustrate
and clarify our intention, we provided an example in which pursed lip
breathing, used to create positive pressure in the upper respiratory
tract and to improve respiratory muscle action and described as G0237,
was identified as an included service in the patient's respiratory
therapy treatment plan.
Before providing this service, the RT assesses the patient to
determine the appropriateness of providing this pursed lip breathing
activity and may check the patient's oxygen saturation level (via pulse
oximetry). If appropriate, the RT then provides the initial training
and necessary retraining in order to ensure that the patient can
accurately perform this activity. After this session, the RT may again
check the patient's oxygen saturation level, or perform peak
respiratory flow, or other respiratory parameters. These services are
considered ``monitoring'' and are bundled into the payment for G0237
(as well as HCPCS codes G0238 and G0239).
Another example of monitoring includes the provision of a 6-minute
walk test that is typically conducted before the start of the patient's
respiratory therapy activities. When this ``test'' is conducted, the RT
uses this information to form an assessment of the patient's condition
and uses it to guide and monitor the activities that are furnished as
specified in the treatment plan. This assessment, determined by data
from monitoring activities is included as part of the activities
inherent to G0237. The time spent by the RT, face-to-face and one-on-
one, with the patient to conduct these respiratory measures is counted
as part of each of the respiratory therapy 15-minute G-codes. When
provided as part of a CORF respiratory therapy treatment plan, payment
for these monitoring activities is bundled into the payment for other
services provided by the RT, including the three respiratory therapy
specific G-codes. The bundling of these monitoring activities into each
CORF respiratory therapy service is to acknowledge that these
activities are inherent to the services we envisioned RTs would provide
in the CORF setting. Similarly, assessment, including the use of
monitoring data, is included as part of services provided by other
rehabilitation therapists. The G-codes were specifically created to
better describe the services provided as part of a respiratory therapy
plan of care under the CORF benefit.
Comment: One commenter indicated that the personnel qualifications
in the regulations for RTs and RT technicians are out of date and that
for over a decade the term respiratory therapist has been used to
describe both respiratory therapy care professional categories
currently defined in the CORF regulations. Rather, the commenter states
that the certified respiratory therapist (CRT) and the registered
respiratory therapist (RRT) have replaced the older terms, RT techs and
RTs, respectively. The commenter explained that the CRT designation is
awarded after successfully passing the entry-level examination, while
qualifications to sit for the RRT examination include graduation from
advanced levels of respiratory therapy educational programs and
obtaining the CRT credential. Based on the newer terminology for
respiratory therapists, along with information provided regarding the
CRT and RRT credentialing processes, the commenter requested that we
change the CORF conditions of participation to reflect the newer
qualifications. In addition, the commenter requested that we change the
coverage provisions to recognize both the CRT and RRT as qualified
personnel to provide CORF respiratory therapy services.
Response: Based on the information provided by the commenter, we
will work within CMS to develop and update the personnel qualifications
for RTs and RT technicians at Sec. 485.70(j) and (k), respectively.
This request involves changes to longstanding provisions for CORF
personnel qualifications, and we believe that other organizations,
individuals, and medical specialties should have the opportunity to
comment on such changes. We will propose updated qualifications for the
CRT and RRT in future rulemaking to seek and review comments from other
interested parties, before finalizing any changes to these personnel
qualifications. In that rulemaking, we will revisit the issue of the
respiratory therapy professional(s) best qualified to provide services
under the CORF respiratory therapy plan of treatment. Until such time,
we expect that the RT, and not the RT technician, will provide the
services of the respiratory therapy treatment plan as previously
discussed in CY 2002 and CY 2003 rulemaking and, again, reinforced in
this final rule.
We are finalizing our proposal to revise Sec. 410.100(e)(1), with
the exception that we will not remove the term ``assessment'' for the
reasons discussed above. We will also adopt the revisions to Sec.
410.100(e)(2), as proposed.
5. Social and Psychological Services
In accordance with section 1861(cc)(1)(D) of the Act, social and
psychological services are included within the definition of CORF
services under Sec. 410.100(h) and (i), respectively. In addition,
Sec. 485.58 specifies that the CORF must provide a coordinated
rehabilitation program that includes, at a minimum, social or
psychological services, along with physical therapy services and
physician services, and that these services must be consistent with the
therapy plan of treatment.
As discussed in the CY 2008 PFS proposed rule, the current
description of social work services considered CORF services under
Sec. 410.100(h) includes: (1) Assessment of the social and emotional
factors related to the individual's illness, need for care, response to
treatment, and adjustment to care furnished by the facility; (2)
casework services to assist in resolving social and emotional problems
that may have an adverse effect on the beneficiary's ability to respond
to treatment; and (3) assessment of the relationship of the
individual's medical and nursing requirements to his or her home
situation, financial resources, and the community resources available
upon discharge from facility care. The current description of CORF
psychological services under Sec. 410.100(h) includes:
(1) Assessment diagnosis and treatment of an individual's mental
and emotional functioning as it relates to the individual's
rehabilitation; (2) psychological evaluations of the individual's
response to and rate of progression under the treatment plan; and (3)
assessment of those aspects of an individual's family and home
situation that affect the individual's rehabilitation treatment. We
believe these current definitions of CORF social and psychological
services are too broad. As discussed above in this section, we proposed
to revise Sec. 410.105 to clarify our policy that CORF services are
covered only if they are provided under the rehabilitation plan of
treatment and relate directly to the rehabilitation of the patient. As
such, we are concerned that the current descriptions of CORF social and
psychological services may be misconstrued to include social and
psychological services for the treatment of mental illness, which we
believe is outside the scope of coverage for CORF social and
psychological services because these services do not relate directly to
a rehabilitation plan of
[[Page 66298]]
treatment and the associated rehabilitation goals.
In addition, we believe it unnecessary to distinguish between CORF
social services and CORF psychological services given their
similarities, and therefore, we proposed to merge the two definitions
into a single definition of CORF social and psychological services. As
noted at section 1861(cc)(2)(B) of the Act, we believe that CORFs are
required to provide either social services or psychological services,
and not both types of services. We believe that merging the Sec.
410.100(h) and (i) into a single definition of CORF social and
psychological services is warranted to clarify the similarities between
them.
Therefore, we proposed to clarify the description of social and
psychological services at Sec. 410.100(h) to include only those
services that address the patient's response and adjustment to the
treatment plan; rate of improvement and progress towards the
rehabilitation goals, or other services as they directly relate to the
physical therapy, occupational therapy, speech-language pathology, or
respiratory therapy plan of treatment. In addition, we proposed to
change the heading at Sec. 410.100(h) from ``social services'' to
``social and psychological services,'' and to eliminate the separate
definition for psychological services under Sec. 410.100(i).
Because we proposed to revise the description of social and
psychological services in Sec. 410.100(h), we also solicited comments
concerning the CORF personnel qualifications in the conditions of
participation at Sec. 485.70(g) and (l) for psychologists and social
workers, respectively, and comments relating to the appropriate CPT
codes to represent these CORF services.
Due to the specificity of the purpose of CORF social and
psychological services requiring that these covered services directly
relate to the patient's rehabilitation treatment plan, we also invited
comments on which CPT codes would be appropriate for CORF social and
psychological services. We believe that the procedure codes for health
and behavior assessment and treatment, represented by CPT codes 96150
through 96154, specific to the patient's physical health problems, best
describe the social and psychological services required in the CORF
setting.
Comment: A commenter suggested that the proposed definition of
social and psychological services is too restrictive. The commenter
recommends including social work, biopsychosocial functioning, and
discharge plans in the new proposed definition of social and
psychological services.
One commenter is concerned that clarifying that CORFs are not
intended to be used to treat mental illness may result in denial of the
CORF benefit to persons who need CORF services, but who also suffer
from a mental illness (for example, patient with schizophrenia suffers
a stroke). A CORF patient's mental illness may need to be accounted for
in developing a rehabilitation plan of treatment. The commenter urges
us to avoid causing a ``chilling effect'' on those individuals
providing social and psychological services in CORFs at the expense of
allowing a patient to recover as fully as possible.
A CORF provider cautioned that by not treating social and
psychological services as a stand-alone CORF service (like physical
therapy or occupational therapy) may have an adverse effect on the
patient's ability to make progress toward rehabilitation goals. They
also state that social and psychological services may be needed even
beyond the conclusion of other CORF services.
Response: We believe that our proposal to combine the descriptions
of social services and psychological services into one definition best
describes the services that CORFs are required to provide to their
patients, as an adjunct to the rehabilitation plan of treatment. A
broader definition of these services could be interpreted to include
treatment of mental illness which the CORF statute and regulations do
not permit, thereby causing Medicare to pay for services that fall
outside the clearly defined scope of the CORF benefit.
We proposed to combine the definitions of social services and
psychological services to clarify and simplify the associated
regulatory provisions. We believe that our proposal does not result in
any actual change to either the social or psychological services, or
the rehabilitation services, provided to CORF patients that relate
directly to their rehabilitation plan of treatment and the associated
rehabilitation goals.
Therefore, we will finalize our proposal to combine the
descriptions of social services at Sec. 410.100(h) and psychological
services at Sec. 410.100(i) into one definition for social and
psychological services at new Sec. 410.100(h) to make clear that these
CORF services are the same, regardless of whether provided by a
qualified social worker or a psychologist.
Comment: One commenter stated that because there are several levels
of social work education and licensure for social workers, a
recommendation as to the qualifications for CORF social workers depends
on whether we change our proposal to include the treatment of mental
illness. As proposed, the commenter supports the Bachelor of Social
Work (BSW) as the appropriate qualification educational level. However,
if the scope of services is expanded to include the treatment of mental
illnesses, then the commenter believes that the educational level of
the Masters of Social Work (MSW) would be the appropriate
qualification.
A CORF provider stated that the personnel qualifications to perform
CORF social and psychological services should be either a licensed
psychologist at a Masters or PhD level, or a licensed social worker.
A medical society representing psychiatrists suggested we use an
existing set of qualifications for CORF psychologists and social
workers, such as those established by the Office of Personnel
Management.
Response: We believe that the appropriate qualification for
individuals providing social and psychological services in the CORF
setting is a BSW for social workers and a Masters-level degree for
psychologists. In response to the comment, the combination of social
and psychological services into one definition was made for
clarification and simplification, and does not result in any change to
the scope of social and psychological services provided to CORF
patients. Therefore, we believe it is appropriate to maintain the
existing personnel qualifications for individuals providing these
unique services in the CORF setting.
Comment: In terms of what CPT codes might best describe the
proposed CORF social and psychological services, one commenter
suggested that CPT code 96155 should be added to the suggested list of
CPT codes 96150 through 96154 in order to allow CORFs to bill for
social and psychological services provided to a patient's family
without the patient presence.
Another commenter suggested that limiting the services to those
described by CPT codes 96150 through 96154 is potentially too
restrictive because it may not describe all of the services provided by
CORFs. The commenter believes that this restriction would not permit
CORFs to code the social or psychological services provided to the
highest specificity, although no specific CPT codes were offered for
consideration.
In addition, one commenter believes that using a full range of CPT
codes to describe CORF social and psychological services is
inappropriate because these codes were not intended to be used for
providing non-clinical CORF services. This commenter specifically
objects to the use of CPT codes 96150 through
[[Page 66299]]
96154 because these services are specifically used by PhD level
psychologists to provide clinical services. The commenter notes that
other CPT codes are inappropriate to CORF use, including the CPT code
range 90801 through 90899 that is used to treat mental illnesses, and
the E/M CPT code series (CPT codes 99XXX), because all of these CPT
codes represent clinical services. Rather, they believe that the social
and psychological services provided in CORFs have ``strong case
management and patient assessment components'' as they relate to the
rehabilitation treatment plan. Instead of using existing CPT code(s),
the commenter suggested we develop HCPCS code(s) specifically for CORF
social and psychological services in order to keep case management
services clearly distinguished from patient treatment.
Response: In an effort to address the coding issues, at this time
we believe that only CPT code 96152, Health and behavior intervention,
each 15 minutes, face to-face; individual, best describes these unique
CORF social and psychological services and should be used to bill for
all social and psychological services provided in CORFs.
We are sensitive to the concerns expressed by the commenter that
CPT codes 96150 through 96154 do not accurately represent the
descriptions of CORF social and psychological services, and that there
may be a need to develop a HCPCS code designed specifically for use in
the CORF setting. However, in this final rule, we do not believe it is
appropriate to create a HCPCS code to reflect the nonclinical nature of
the CORF social and psychological services when we did not propose
doing so in the proposed rule. However, we will consider the
commenter's views in making the determination regarding the necessity
to create a new HCPCS code to describe CORF social and psychological
services in the future.
6. Nursing Care Services
Because the PFS does not contain a CPT code for nursing services,
we established in the CY 1999 PFS final rule a new HCPCS code (G0128)
for direct face to face skilled nursing services delivered to a CORF
patient by an RN as part of a rehabilitation therapy plan of treatment.
In the CORF conditions of participation at Sec. 485.70(b) and (h),
qualified personnel for nursing services include an LPN or vocational
nurse and an RN, respectively. However, when the HCPCS code G0128 was
created for CORF nursing services we determined that a condition for
coverage is that the nursing service be provided by an individual
meeting the qualifications of an RN, rather than the LPN, for CORF
clinical nursing services as they relate, or are part of, the therapy
plan of treatment. Because we established coverage for CORF nursing
services only when provided by an RN, in the CY 2008 PFS proposed rule,
we proposed to revise new Sec. 410.100(i) (that is, the current Sec.
410.100(j) is redesignated as Sec. 410.100(i)) to specifically reflect
this coverage decision. We also requested comments on the
appropriateness of the personnel qualification standards at Sec.
485.79(b) and (h) for the LPN and for the RN, respectively.
Comment: We received a comment that opposed the proposed revisions
that would allow skilled nursing services to be performed only by
registered nurses. The commenter suggested that the CORF nursing
services provided by either a registered nurse or the licensed practice
nurse should be determined by the legal scope of practice as outlined
in State law by a State board of nursing.
Response: During the CY 1999 final rule, we defined HCPCS code
G0128 as a face-to-face nursing service delivered to a CORF patient
that is directly related to a rehabilitation plan of treatment. We
believe that the level of skill needed to render clinical nursing
services as they relate to, or are supportive of the rehabilitation
plan of treatment is more appropriately performed by registered nurses.
Comment: One commenter asked us to provide an example of nursing
services that would be appropriately furnished and separately payable
as such in a CORF that also meets the criteria of directly relating to
the rehabilitation treatment plan. This commenter also requests
clarification as to whether an RN can provide services as part of the
respiratory therapy treatment plan and if one of the HCPCS G-codes for
respiratory therapy services, G0237, G0238, and G0239 can be used to
bill for these services.
Response: In the CY 1999 PFS final rule, we established coverage
for CORF nursing services only when provided by an RN. HCPCS code G0128
is used to bill for services that are not included in the work or PEs
of other therapy or physician services. Because of the advances in
medical science since the inception of the CORF benefit in 1982, the
need for nursing services necessary to be provided as an adjunct to the
rehabilitation treatment plan has decreased significantly. In the CY
1999 PFS final rule, we used the example of a RN who instructs a
patient in the proper procedure of ``in and out'' urethral
catheterization to illustrate one such nursing service directly related
to the rehabilitation treatment plan. At that time, nursing services
might have been provided to patients receiving respiratory therapy
services relating to tracheostomy tube suctioning. Another nursing
service might be related to the cleaning instructions for ileostomy or
colostomy bags for a patient receiving physical therapy services where
the care is imminent to the start or completion of a therapy session.
Comment: Another commenter noted that CORFs are required to provide
the 3 core services, including physician services, physical therapy
services, and social or psychological services, and asked that we
clarify the amount that these other non-core services--specifically
nursing services and respiratory therapy services--can comprise of the
total CORF services. The commenter cites examples of CORFs where non-
core services comprise the majority of services, sometimes as much as
90 percent or more, including wound care services where RNs are used to
provide the majority of these services and other CORFs specializing
predominantly in respiratory therapy services. Specifically, the
commenter requested that we unambiguously address our intent as it
relates to the provision of non-core services.
Response: The CORF statutory provision at section 1861(cc)(2)(B) of
the Act and Sec. 485.58 require that the CORF, as a minimum condition
of participation, provide three core services-- physician services,
physical therapy services, and social or psychological services. When a
CORF provides only the three required core services, we expect that
physical therapy services would comprise a clear majority of the total
CORF services, since social and psychological services are provided
only as an adjunct to the rehabilitation services and CORF physician
services are administrative in nature and not easily identified.
However, when a CORF provides physical therapy services and other
skilled rehabilitation services, we expect that physical therapy
services will be the predominant rehabilitation service provided. The
case noted by the commenter where CORFs specialize in providing a
preponderance of respiratory therapy services is counter to our
expectations.
The example cited by the commenter where the CORF is using RNs to
provide wound care services, which together with other non-core
services constitute the majority of services provided to a
[[Page 66300]]
patient, exemplifies a situation in which the CORF is providing nursing
services that are not in support of a rehabilitation plan of treatment.
In this situation, the services provided by the RNs do not conform to
the requirement that nursing services must directly relate to or
further a rehabilitation treatment plan and its goals, and therefore,
are noncovered. As we discussed previously in section II.K.6 of this
final rule with comment period, we specifically define and require CORF
nursing services to relate to the rehabilitation plan of treatment,
with such nursing services necessary for the attainment of the
rehabilitation goals of the physical therapy, occupational therapy,
speech language pathology, or respiratory therapy plan of treatment. We
believe only professional therapists/pathologists, such as PTs, OTs,
SLPs, and RTs, may appropriately provide these rehabilitation services
and that it is inappropriate for an RN to provide these services.
Nursing services may not substitute for or supplant the services of
these therapists/pathologists, but instead should lend support to or
further the services provided by professional therapists/pathologists
under the rehabilitation plan of treatment. Therefore, CORF nursing
services are covered as CORF services only when provided by a RN and
only to the extent that they support or are an adjunct to the
rehabilitation services provided by professional therapists/
pathologists under the rehabilitation plan of treatment.
In addition to above clarification regarding the coverage and
provision of the listed CORF services, we would also like to clarify
that CORFs cannot provide services that are not included in the
definition of CORF services at Sec. 410.100 (other than vaccines) and
that those services included in the definition of CORF services are
covered only to the extent that they support or further the
rehabilitation plan of treatment. For example, we believe that CORF
services do not include the provision of hyperbaric oxygen services,
infusion therapy services, or diagnostic sleep studies because they do
not meet the definition of CORF services at Sec. 410.100 or they do
not relate to the rehabilitation plan of treatment. We believe that
these services and other services not specifically listed as CORF
services may be covered under other categories of Medicare benefits,
such as physician services and diagnostic services.
Comment: One commenter asked us to clarify if a RN could perform
respiratory therapy services in a CORF.
Response: As we have discussed, we believe only professional
therapists/pathologists, such as PTs, OTs, SLPs, and RTs, may
appropriately provide rehabilitation services, such as respiratory
therapy services, and that it is inappropriate for an RN to provide
these services. Therefore, respiratory therapy services provided by an
RN are not considered CORF services under Sec. 410.100. Services
performed by an RN may not substitute for or supplant the services of
these therapists, but instead are covered as CORF services only to the
extent that they support or are an adjunct to the rehabilitation
services provided by professional therapists/pathologists under the
rehabilitation plan of treatment.
We would like to clarify that any CORF nursing service must be
provided by a RN and coded as G0128 indicating that CORF ``nursing
services'' were provided. Services provided by an RN may only be billed
as CORF nursing services, provided they meet the definition of CORF
nursing services at Sec. 410.100(i). We are aware that some CORFs have
billed RN services inappropriately as E/M services, such as CPT code
99211. In addition, we believe some physicians have inappropriately
billed the services of CORF RNs as incident to physician services.
Because CORF services are a distinct benefit category, and because any
therapeutic and diagnostic services (as opposed to administrative and
supervisory services) furnished by physicians are not CORF services,
any service furnished by CORF personnel, including RNs, PTs, OTs, SLPs,
and RTs, are not considered to be furnished incident to physicians''
services, and thus cannot be billed as services incident to physician
services. Therefore, the CORF nursing services of RNs may only be
billed using G0128, provided that such services meet the definition of
CORF nursing services at Sec. 410.100(i).
Therefore, we are finalizing Sec. 410.100(i) as proposed.
7. Drugs and Biologicals
Section 410.100(k) currently provides that drugs and biologicals
included within the definition of CORF services includes drugs and
biologicals that are prescribed by a physician and administered by a
physician or a CORF RN and not otherwise excluded from Medicare Part B
payment under Sec. 410.29 (relating to self-administered drugs). In
addition, in accordance with Sec. 410.105(c), drugs and biologicals
administered to a CORF patient will be covered as CORF services only if
included as part of the rehabilitation plan of treatment. However, we
are unable to identify any physician prescribed drugs or biologicals
that are not self administered that would be appropriately provided
under a patient's rehabilitation plan of treatment. We also expressed
our concerns about the potential for duplicative billing for drugs and
biologicals provided in the CORF setting because they could be billed
by the CORF or the physician furnishing such drugs and biologicals.
Therefore, we proposed to remove Sec. 410.100(k) and invited
comments on this proposed revision, particularly on the appropriateness
of including drugs and biologicals under a CORF patient's
rehabilitation plan of treatment.
Comment: One commenter objected to the proposed removal of the
provision for drugs and biologicals from the CORF benefit and believes
there is an inherent risk that neither the CORF nor the physician would
be paid for drugs and biologicals provided to CORF patients when they
are purchased by the CORF. The commenter explained that, under our
proposal, the CORF would no longer be permitted to submit claims for
the drugs and biologicals they purchase, and further stated that, under
this scenario, the physician also could not be compensated because the
drug or biological provided in this manner would not satisfy the CMS
incident to rules. The commenter questioned our concerns about the
possibility of duplicative billing permitted under the current payment
methodologies although they believe that we might be justified in our
proposal should we have proof that both the CORF and physician are
being paid for the same drug and biological. Until such time, the
commenter requested we continue to permit both the CORF and the
physician to submit claims for the drugs and biologicals provided to
CORF patients.
Another commenter also disagreed with our proposal to remove drugs
and biologicals as a CORF service claiming that when the Congress
created the CORF benefit, it ``intended to create a new type of
facility that could provide all of the services required by a patient
in a coordinated fashion.'' They also challenged our authority to
remove this provision and believe that duplicative billing
possibilities by the CORF and the physician administering the drug or
biological is not cause for us to rewrite the statute.
Response: The purpose of our proposal was not intended to deny
patients access to or to avoid making payment for medically necessary
drugs and biologicals. Because we proposed to make payment directly to
physicians for the drugs and biologicals provided in the CORF setting,
CORFs opting to continue purchasing these drugs and biologicals would
not also be paid.
[[Page 66301]]
Nevertheless, we are persuaded by the commenter challenging our legal
authority to remove drugs and biologicals from our regulatory
definition of CORF services Sec. 410.100 in light of their inclusion
in the statutory definition of CORF services under section 1861(cc)(1)
of the Act. As explained in the legislative history of the CORF
statute, the intent of this benefit was to simplify coordination of,
and access to, ``a broad array of rehabilitation services'' (H.R. Rep.
No. 96-1167, 96th Cong., 2nd Sess., at 375 (1980). Although as
discussed in the proposed rule, we have been unable to identify among
currently available drugs or biologicals that are not self-administered
any such drugs or biologicals that appropriately may be included in as
part of a rehabilitation plan of treatment, we cannot rule out the
possibility that others will alert us to such drugs or biologicals or
that future non self-administered drugs or biologicals appropriately
may be included under a rehabilitation plan of treatment. Therefore, in
order to ensure that, should we learn of any non self-administered
drugs or biologicals that appropriately may be included in a
rehabilitation plan of treatment, we may give effect to Congressional
intent that CORFs be able to provide any such drugs or biologicals in
coordination with other CORF rehabilitation services, we will not
remove the reference to drugs and biologicals from the definition of
CORF services under Sec. 410.100 as proposed.
Instead, we will retain the existing definition of CORF-covered
drugs and biologicals provided at new Sec. 410.100(j) (that is, the
current Sec. 410.100(k) is redesignated as Sec. 410.100(j)) with the
exception of adding the word ``by'' to the new Sec. 410.100(j)(1) to
clarify our policy that, in accordance with existing professional
standards, the administration of the drug can by provided by a RN but
not by others under the supervision of an RN. As we are not aware of
any non-self-administered drugs and biologicals that appropriately may
be included in a rehabilitation plan of treatment, we intend to closely
track the provision of drugs in the CORF setting. If in the future we
learn that the administration of drugs or biologicals in the CORF
setting is an appropriate service to include in the rehabilitation
treatment plan, the regulatory framework will allow for coverage of
such drugs or biologicals. In the mean time, we do not expect to see
CORFs submitting claims for drugs and biologicals for the reasons noted
above.
8. Supplies and DME
Payment for supplies and DME as part of CORF services is specified
at Sec. 410.100(l) as ``[s]upplies, appliances and equipment'' and
includes nonreusable supplies, medical equipment and appliances, and
DME as defined in Sec. 410.38 (except for renal dialysis systems).
These are CORF covered services when provided for the patient's use
outside the CORF whether purchased or rented, and is paid under the
DMEPOS fee schedule. We believe that the provision at Sec. 410.100(l)
is too broad, out of date, and inconsistent with current terminology
used for covered services or items. The CORF provision at section
1861(cc)(1)(G) of the Act applies only to supplies and DME, yet the
regulatory provision also encompasses medical equipment and appliances.
Because we believe the requirements of Sec. 410.100(l) are
inconsistent with those of section 1861(cc)(1)(G) of the Act, we
proposed to revise both the title and description at new Sec.
410.100(k) (that is, the current Sec. 410.100(l) is redesignated as
Sec. 410.100(k)) by deleting reference to medical equipment and
appliances to reflect the CORF statutory provision by including only
the items specified under section 1861(cc)(1)(G) of the Act. [Note: The
preamble discussion incorrectly noted this new section as Sec.
410.100(k) instead of Sec. 410.100(j). Section 410.100(k) is correct
in this final rule with comment period.] We also noted that DME, as
well as prosthetics, orthotics, and supplies, provided in the CORF
setting requires the CORF's participation in the competitive bidding
process, where applicable, in accordance with 42 CFR part 414 subpart
F. In this final rule with comment period, we have added language at
Sec. 414.1105(c)(2) to clarify that payment for DME, prosthetics,
orthotics, and supplies determined under the DMEPOS competitive bidding
program is a single payment amount, rather than an amount determined
under a fee schedule. While a payment amount determined under a
competitive bidding program is not generally thought of as a ``fee
schedule'' for purposes of section 1834(k)(3) of the Act we believe the
term refers to a single payment amount determined through an existing
prospective payment system. The Congress amended the Act to replace
reasonable cost-based payment for CORF services with prospective
payments. Therefore, we believe the reference to ``fee schedule'' at
section 1834(k)(3) of the Act is meant to broadly refer to existing
prospective payment systems for the CORF-covered services or items,
including amounts determined prospectively under a competitive bidding
program, and should not be referring only to ``fee schedules'' in the
narrow sense. We did not receive comments, in support of or in
opposition to, our proposal to specify the new Sec. 410.100(k) to
include only supplies and durable medical equipment as specified at
section 1861(cc)(G) of the Act in the CORF benefit provision.
Therefore, we are finalizing Sec. 410.100(k) as proposed with the
exception that we will add the revision, discussed above, regarding the
single payment amount determined under the DMEPOS competitive bidding
program.
9. Clarifications and Payment Updates for Other CORF Services
Section 4078 in the Omnibus Budget Reconciliation Act of 1987 (Pub.
L. 100-203) (OBRA) amended section 1861(cc)(1) of the Act to provide
that there is no requirement that any item or service furnished by a
CORF in connection with physical therapy, occupational therapy, and
speech pathology services under the plan of treatment be furnished at a
single fixed location; however, such items and services are covered as
CORF services only if payment is not otherwise made under Medicare. In
the CY 2008 PFS proposed rule, we noted that such items and services
may be covered under the Medicare home health benefit established under
sections 1861(g), (m), and (p) of the Act. Accordingly, physical
therapy, occupational therapy, and speech-language pathology services
provided in the home are not covered as CORF services if such services
and related items are covered under the Medicare home health benefit.
Because the CORF regulations were not revised to reflect these changes
in coverage and payment methodology, we proposed to clarify the
regulations at new Sec. 410.100(l) (that is, the current Sec.
410.100(m) which is redesignated as Sec. 410.100(l)) and Sec.
410.105(b)(3) to reflect these requirements.
In Sec. 410.105(b)(3), we proposed to clarify that physical
therapy, occupational therapy, and speech-language pathology services
can be furnished in the patient's home when payment for these therapy
services is not otherwise made under the Medicare home health benefit.
In addition, we proposed to revise Sec. 410.100(l) to clarify that
the patient must be present during the home environment evaluation that
is performed by the PT, OT or SLP, as appropriate, because we believe
that the patient's presence is necessary to fully
[[Page 66302]]
evaluate the potential impact of the home situation on the patient's
rehabilitation goals.
Comment: Some commenters supported our proposal to clarify the CORF
therapy services that can be provided in the home and who can provide
these services. One of these commenters expressed concern about the
requirement that the patient be present for the home environment
evaluation and requested that we further clarify this proposal.
Response: Section 1861(cc)(1)(H) of the Act states that there is no
requirement for physical therapy, occupational therapy, or speech-
language pathology services to be provided at a fixed location such as
at the CORF's physical location. This provision was further clarified
in section 4078 of OBRA 1987 to clearly permit that, so long as the
physical therapy, occupational therapy, or speech language pathology
services are not otherwise covered under the Medicare home health
benefit, these therapy services can be provided in the patient's home.
Section 410.105(b)(3) also provides that only physical therapy,
occupational therapy, or speech-language pathology services can be
provided offsite, in the patient's home, and that all other CORF
services must be provided in the CORF facility. We also proposed to
clarify the provision at the new Sec. 410.100(l) (that is, the current
Sec. 410.100(m) is redesignated as Sec. 410.100(l)) regarding the
provision of a single home environment evaluation, to include the
presence of the patient, which can be performed by a PT, OT, or SLP, as
appropriate. [Note: The preamble discussion incorrectly noted this new
section as Sec. 410.100(l) instead of section Sec. 410.100(k).
Section 410.100(l) is correct in this final rule with comment period.]
Therefore, we are finalizing the new Sec. 410.100(l) (that is, the
current Sec. 410.100(m) is redesignated as Sec. 410.100(l)), as
proposed.
10. Cost Based Payment (Sec. 413.1)
Section 413.1(a)(2)(iv) currently provides for cost-based payment
for CORF services, which reflects the payment methodology provided for
under section 1833(a) of the Act, requiring payment on the basis of the
lesser of the provider's reasonable costs or customary charges. As
discussed above, this payment methodology is inconsistent with section
1834(k) of the Act, requiring that the payment basis for outpatient
physical therapy services (including outpatient speech-language
pathology services), outpatient occupational therapy services, and all
other CORF services provided on or after January 1, 1999 be 80 percent
of the lesser of: (1) The actual charge for the services; or (2) the
applicable fee schedule amount. Therefore, we proposed to remove Sec.
413.1(a)(2)(iv) to clarify that cost based payment is not applicable to
CORF services. We also proposed to remove Sec. 413.1(a)(2)(vi) for
OPTs or rehabilitation agencies as referenced at section 1861(p) of the
Act, because these providers were also affected by the same payment
changes required by the 1997 BBA for physical therapy, occupational
therapy, and speech-language pathology services effective for CY 1999.
We did not receive comments to these technical corrections
regarding the change in payment methodology for CORFs and OPTs that was
effective CY 1999. Therefore, we are finalizing the technical
corrections to remove references to cost-based payment for CORFs and
OPTs at Sec. 413.1(a)(2)(iv) and (vi).
11. Payment for Comprehensive Outpatient Rehabilitation Facility (CORF)
Services
In the CY 2008 PFS proposed rule, we proposed to establish a new
regulatory subpart M at 42 CFR part 414 to specify the payment
methodology for comprehensive outpatient rehabilitation services
covered under Part B of Title XVIII of the Act that are described at
section 1861(cc)(1) of the Act. Specifically, this proposed subpart
would identify and describe how payment is determined for services
included as CORF services under Sec. 410.100.
Proposed Sec. 414.1100 sets forth the basis and scope for payment
for CORF services. Proposed Sec. 414.1105 sets forth the payment
methodology for CORF services, including identifying the applicable fee
schedule for each type of CORF service identified in Sec. 410.100.
Section 1834(k)(1)(B) of the Act provides that the payment basis
for CORF services is 80 percent of the lesser of: (1) the actual charge
for the services; or (2) the applicable fee schedule amount. The term
``applicable fee schedule amount'' is defined under section 1834(k)(3)
of the Act to mean, for services furnished in a year, the payment
amount determined under the PFS established under section 1848 of the
Act for such services for the year ``or, if there is no such fee
schedule established for such services, the amount determined under the
fee schedule established for such comparable services as the Secretary
specifies.'' Accordingly, we proposed at new Sec. 414.1105(a) to base
payment for a CORF service on 80 percent of the lesser of the actual
charge or the PFS amount for the service when the PFS establishes a
payment amount for such service. Payment for CORF services under the
PFS is made for physical therapy, occupational therapy, speech-language
pathology, and respiratory therapy services, as well as the related
nursing and social and psychological services. In the CY 1999 PFS final
rule (63 FR 58860), we explained that we interpret section 1834(k)(3)
of the Act, defining the term ``applicable fee schedule amount,'' as
requiring us to use the payment amount established by an existing fee
schedule other than the PFS when the PFS does not establish a payment
amount for the CORF service. Therefore, in the CY 2008 PFS proposed
rule we proposed at new Sec. 414.1105(c) that payment for covered DME,
orthotic and prosthetic devices and supplies provided by a CORF be
based on the lesser of 80 percent of actual charges or the payment
amount established under the DMEPOS fee schedule under sections 1834
and 1847 of the Act and in 42 CFR part 414, subparts D and F. Finally,
we proposed at new Sec. 414.1105(d) that if there is no fee schedule
amount established for a CORF service, payment shall be based on the
lesser of 80 percent of actual charges or the amount determined under
the fee schedule established for a comparable service, as specified by
the Secretary.
As discussed in section II.K.3., physician services included within
the definition of CORF services under Sec. 410.100(a) are limited to
those services of a CORF physician described as administrative in
nature, to the exclusion of diagnostic and therapeutic services which
are considered separately billable physician services. Medicare
generally does not permit providers to separately bill for their
administrative costs; rather, such costs typically are subsumed in the
payment amounts for covered medical services and items furnished to
Medicare beneficiaries. Under the PFS these costs are included in the
payment amount as part of the indirect PEs that are reflected in the PE
RVUs for each service and also captured as part of the post-visit work
RVU component. Similarly, we believe payment to CORFs for the
administrative duties of a CORF physician, required as a condition of
participation at Sec. 485.58(a), such as participating in patient case
review conferences is subsumed within PFS payments to CORFs for
physical therapy, occupational therapy, speech-language pathology, and
respiratory
[[Page 66303]]
therapy services, and the related nursing, and social and psychological
services. Generally, administrative costs associated with the provision
of such services is incorporated into payment amounts established under
the PFS through the PE RVUs representing the resources necessary to
perform each service in the physician office or nonfacility setting.
Therefore, we believe it unnecessary to separately compensate CORFs for
CORF physician services given that such services are administrative in
nature, and proposed at Sec. 414.1105(b) not to separately pay CORFs
for CORF physician services.
To ensure that CORFs are not paid twice for CORF services, we
proposed at new Sec. 414.1105 to base payment for a CORF service on
the applicable fee schedule amount only to the extent that payment for
such service is not included in the payment amount for other CORF
services. Accordingly, under proposed Sec. 414.1105(c) a CORF could
not bill separately for supplies included in the PE RVU component of
the payment amount established for a service under the PFS. However, we
noted that CORFs could bill separately for certain splint and cast
supplies for the application of casts and strapping because these
supplies have been removed from the payment amounts established under
the PFS. We also noted that Medicare makes separate payment for
surgical dressings, which are also referenced at section 1861(s)(5) of
the Act, only when used by the beneficiary in his or her home. No
separate payment is made when these surgical dressings are used in the
CORF setting; rather the dressings' costs are bundled into the payment
amount established under the PFS for the provided services.
For CORF services based on the payment amount determined under the
PFS, we proposed at new Sec. 414.1105(a)(2) to use the PFS amount
applicable to services furnished in a nonfacility setting, with no
separate payment made for facility costs. We proposed to use the PFS
nonfacility amount for CORF services in order to offset any costs of
providing such services in the CORF setting. [Note: in the proposed
rule we incorrectly referenced the codification of the regulation text
under proposed subpart M as Sec. 414.1001 or Sec. 414.1101 rather
than Sec. 414.1105. However, the proposed regulation text was
presented accurately as Sec. 414.1105 in the ``List of Subjects''
under the proposed subpart.]
Other than the objection discussed above in section II.K.7
regarding the proposed removal of the CORF provision for drugs and
biologicals, we did not receive other comments about our proposal to
create a regulatory provision to specify the payment methodologies for
the CORF services identified at section 1861(cc)(1) of the Act.
Therefore, we are finalizing our proposal to add a new regulatory
provision defining the payment methodologies used to pay for CORF
services except that we also include a section for payment of drugs and
biologicals included within the definition of CORF services under the
new Sec. 410.100(j), as explained in section II.K.7. We will implement
this proposal, including the addition of the payment provision for
drugs and biologicals included within the definition of CORF services
under the new Sec. 410.100(j), and revise, by adding a new subpart M
to part 414. The basis and scope for payment for CORF services is set
forth at Sec. 414.1100 and Sec. 414.1105 sets forth the payment
methodology for CORF services, including identifying the applicable fee
schedule for each type of CORF service identified in Sec. 410.100.
12. Vaccines
Section 485.51(a) defines a CORF as a nonresidential facility that
``is established and operated exclusively for the purpose of
providing'' rehabilitation services by or under the supervision of a
physician. Because vaccines administered in the CORF setting are not
rehabilitation services furnished under a plan of treatment relating
directly to the rehabilitation of the patient (or, presumably, even
medically necessary for the rehabilitation of the patient), in
accordance with Sec. 485.51(a), a CORF may not administer vaccines to
its patients. However, in the CY 2008 PFS proposed rule we noted that
nothing in the Medicare statute would prohibit a CORF from providing
pneumococcal, influenza, and hepatitis B vaccines to its patients
provided the facility is ``primarily engaged in providing * * *
diagnostic, therapeutic, and restorative services to outpatients for
the rehabilitation of injured, disabled, or sick persons'' (section
1861(cc)(2)(A) of the Act). Accordingly, under the statute, such
vaccines may be covered separately from the CORF services benefit under
section 1861(s)(10) of the Act--defining the term ``medical and other
health services'' to include the pneumococcal, influenza, and hepatitis
B vaccines--provided the applicable conditions of coverage under Sec.
410.58 and Sec. 410.63 are met. In order to include coverage and
payment for these vaccines when provided to CORF patients in the CORF
setting, we proposed to amend the CORF conditions of participation at
Sec. 485.51 to permit CORFs to provide vaccines to their patients in
addition to rehabilitation services. Such vaccines would be covered in
the CORF setting provided the conditions of coverage under Sec. 410.58
and Sec. 410.63 are met. In accordance with sections 1833(a)(1) and
1842(o)(1) of the Act, payment for covered pneumococcal, influenza, and
hepatitis B vaccines provided in the CORF setting is based on 95
percent of the average wholesale price (AWP).
Comment: We received a few comments strongly supporting the
proposal to permit vaccines to be provided in the CORF setting in
addition to the CORF services. These commenters also strongly supported
our proposal to clarify our policy regarding the administration of
vaccines to CORF patients by revising the CORF conditions of
participation to permit the provision of vaccines, in addition to CORF
services. These commenters believe that increasing the number and types
of providers where vaccinations can be furnished will not only help to
ensure increased access to these vaccinations but will result in
improved health outcomes and lower costs.
Response: We agree with the commenters and will implement our
proposal to revise the CORF conditions of participation, accordingly.
L. Compendia for Determination of Medically-Accepted Indications for
Off-Label Uses of Drugs and Biologicals in an Anti-Cancer
Chemotherapeutic Regimen (Sec. 414.930)
1. Background
a. Statutory Requirements
Section 1861(t)(2)(B)(ii)(I) of the Act lists three drug compendia
that may be used in determining the medically-accepted indications of
drugs and biologicals used in an anti-cancer chemotherapeutic regimen.
The three drug compendia listed are:
American Hospital Formulary Service-Drug Information (AHFS-
DI)
American Medical Association Drug Evaluations (AMA-DE)
United States Pharmacopoeia Drug Information (USP-DI)
Section 1861(t)(2) of the Act provides the Secretary the authority
to revise the list of compendia for determining medically-accepted
indications for drugs. Due to changes in the pharmaceutical reference
industry, fewer of the statutorily named compendia are available for
our reference. (That is, AMA-DE is no longer in publication; USP-DI has
been purchased by Thomson Micromedex and it is our understanding that
the
[[Page 66304]]
name ``USP-DI'' may not be used after 2007.)
Section 6001(f)(1) of the Deficit Reduction Act of 2005 (Pub. L.
109-171) (DRA) amends both ``sections 1927(g)(1)(B)(i)(II) and
1861(t)(2)(B)(ii)(I) of the Act by inserting ``(or its successor
publications)'' after `United States Pharmacopeia Drug Information'.''
We interpret this DRA provision as explicitly authorizing the Secretary
to continue recognition of the compendium currently known as USP-DI
after its name change if the Secretary determines that it is in fact a
successor publication rather than a substitute publication.
b. Requests To Amend the Compendia Listings
We received requests from the stakeholder community for recognition
of additional compendia under the following authorities:
Section 1861(t)(2)(B) of the Act which allows the
Secretary to identify additional authoritative compendia; and
Section 1873 of the Act which allows the Secretary to
recognize a successor publication if one of the statutorily-named
compendia changes its name.
In contrast, others suggested that the Secretary consider
elimination of certain listed compendia. However, as we stated in the
CY 2008 PFS proposed rule (72 FR 38177), there was no established
regulatory process by which we could accept and act definitively on
such requests. In addition, we saw the need to increase transparency of
decision making criteria.
c. Technology Assessment of Drug Compendia Used To Determine Medically-
Accepted Uses of Drugs and Biologicals in an Anti-Cancer
Chemotherapeutic Regimen
We commissioned a technology assessment (TA) from the Agency for
Healthcare Research and Quality (AHRQ) on the currently listed
compendia (AHFS and USP-DI), as well as other compendia (that is,
National Comprehensive Cancer Network (NCCN), ClinPharm, DrugDex, Facts
& Comparisons (F&C)) which might provide comparable information. AHRQ
contracted the TA to the New England Medical Center (NEMC) and Duke
Evidence-based Practice Centers (EPCs) and found little agreement in
the evidence cited among drug compendia. In addition, the TA found
little agreement between the EPCs' independent identification of
evidence on 14 example off-label indications and evidence cited in the
drug compendia. The TA can be found at http://www.cms.hhs.gov/ mcd/
viewtechassess.asp? where=index&tid=46.
d. Medicare Evidence Development and Coverage Advisory Committee
(MedCAC)
On March 30, 2006, the MedCAC (formerly the Medicare Coverage
Advisory Committee (MCAC)) met in public session to advise CMS on the
evidence about the desirable characteristics of compendia to determine
medically-accepted indications of drugs and biologicals in anti-cancer
therapy and the degree to which the currently listed and other
available compendia display those characteristics. All information on
this MedCAC meeting can be found on the CMS Web site at http://www.cms.hhs.gov/mcd/viewmcac.asp?where=index&mid=33. The agenda
included a presentation of the TA performed for AHRQ by staff of the
NEMC and Duke EPCs, scheduled stakeholder presentations, as well as an
opportunity to hear testimony from members of the audience. As is
customary, the MedCAC panelists elicited additional information from
the presenters and discussed the evidence in preparation for a formal
vote.
The MedCAC identified the following desirable characteristics:
Extensive breadth of listings.
Quick processing from application for inclusion to
listing.
Detailed description of the evidence reviewed for every
individual listing.
Use of pre specified published criteria for weighing
evidence.
Use of prescribed published process for making
recommendations.
Publicly transparent process for evaluating therapies.
Explicit ``Not recommended'' listing when validated
evidence is appropriate.
Explicit listing and recommendations regarding therapies,
including sequential use or combination in relation to other therapies.
Explicit ``Equivocal'' listing when validated evidence is
equivocal.
Process for public identification and notification of
potential conflicts of interest of the compendia's parent and sibling
organizations, reviewers, and committee members, with an established
procedure to manage recognized conflicts.
The MedCAC concluded that none of the compendia fully display the
desirable characteristics. The voting results can be viewed at the same
Web site provided previously for the MedCAC meeting. In addition the
MedCAC noted significant variability among the compendia. There was no
agreement among the panel members that any particular predetermined
number of compendia was desirable.
Participants in the meeting also discussed the clinical usefulness
of drug compendia in the treatment of cancer. It was reported that
oncologists do not rely on compendia when making treatment decisions,
relying instead on published treatment guidelines, clinical trial
protocols, or consultation with peers.
Prior to the CY 2008 PFS proposed rule, we received, and reviewed,
unsolicited comments from professional societies regarding additions
and deletions to the listing of compendia for purposes of section
1861(t) of the Act. We received 46 public comments regarding these
provisions on the CY 2008 PFS proposed rule.
2. Process for Determining Changes to the Compendia List
A compendium for the purpose of this section is defined as a
comprehensive listing of FDA-approved drugs and biologicals or a
comprehensive listing of a specific subset of drugs and biologicals in
a specialty compendium, for example, a compendium of anti-cancer
treatment. A compendium: (1) Includes a summary of the pharmacologic
characteristics of each drug or biological and may include information
on dosage, as well as recommended or endorsed uses in specific
diseases; (2) is indexed by drug or biological; (3) differs from a
disease treatment guideline, which is indexed by disease. We believe
that the use of compendia to determine medically-accepted indications
of drugs and biologicals in the manner specified in section
1861(t)(2)(B)(ii)(I) of the Act is more efficiently accomplished if the
information contained is organized by the drug or biological and if the
listings are comprehensive.
We proposed an annual process, incorporating public notice and
comment, to receive and make determinations regarding requests for
changes to the list of compendia used to determine medically-accepted
indications for drugs and biologicals used in anti-cancer treatment as
described in section 1861(t)(2)(B)(ii)(I) of the Act. The specific
details of the proposed process were outlined in PFS CY 2008 proposed
rule (72 FR 38118). We received the following comments on our proposed
process.
Comment: Several commenters remarked that we should correlate Part
B and Part D compendia for consistency within the Medicare program.
Response: The Social Security Act separately determines the
Agency's use
[[Page 66305]]
of authoritative compendia for specific programs. The use of any
compendium for Part D or for Medicaid is beyond the scope of this
regulation.
Comment: Many commenters voiced concerns about the time line
proposed by CMS to address requests for changes to the list of
compendia.
Response: We are striving to achieve a more expedient and
predictable time line that will better serve the needs of those who
care for Medicare beneficiaries. We have carefully considered the
comments and made the following revisions:
(1) In order to shorten the proposed timeline, CMS will not publish
an annual notice for formal requests.
(2) We expect to receive requests annually during a 30-day window
starting January 15th.
(3) We expect to post these complete requests received by March
15th for public notice and comment on the CMS Web site.
(4) We will accept public comments for a 30 day period beginning on
the day that the request is posted by CMS on the Web site.
Comment: Some commenters suggested alternative review cycles
including changing the annual review to: a rolling review process; an
every 3-year review process; or an every 5-year review process.
Response: We appreciate the commenters' suggestions regarding
alternative review cycles; however, at this time, we believe that an
annual review cycle is the best balance of these suggestions to promote
a publicly responsive review process. Due to the general stability of
the compendium publishing market, an annual review process is
sufficient. However, if we determine that the public interest would be
served by an immediate compendia review, we reserve the right to
internally generate a request at any time.
Comment: Several commenters suggested specific additions to the
list of compendia.
Response: The addition or deletion of specific compendia is beyond
the scope of this regulation. Formal requests for additions and
deletions may be submitted during the annual open request period
established in this final rule with comment period.
Comment: The comments received from several associations and
manufacturers stated that the language used for the individual
desirable characteristics was not clear and that we did not give the
appropriate consideration to quality concerns and the potential
conflicts of interest.
Response: We appreciate the commenters' concerns and strive to
provide clarity on the MedCAC desirable characteristics that we will
utilize in the compendia review process. The characteristics presented
here represent an evidence-based consensus from the MedCAC panel on the
desirability and priority of those characteristics. We recognize that
different compendia might attempt to achieve these characteristics in
individualized ways. CMS plans to use the desirable characteristics as
framework and guidance in the review process. However, we believe that
the public interest is best served by CMS attention to the quality and
the integrity of each compendium's evidence evaluation process.
Comment: A few commenters made the general suggestion for CMS to
prioritize the desirable characteristics identified at the MedCAC
meeting, March 2006.
Response: We wish to clarify that the desirable characteristics
recommended by the MedCAC will serve as guidance and a framework which
will aid in the CMS review process. As stated in the CY 2008 PFS
proposed rule, we ``may consider additional reasonable factors in
making a determination'' as deemed appropriate. While we have decided
not to rank the MedCAC desirable characteristics, we do consider the
characteristics referencing transparency and conflict of interest to be
of high priority to preserve the integrity and minimize bias during the
review process.
Comment: Some commenters stated that a deletion from the list of
compendia could cause a beneficiary to lose coverage of an off-label
treatment regimen already begun.
Response: We understand the concern expressed by the commenters on
a beneficiary's loss of coverage during the continuance of off-label
treatment in the absence of compendium support; however local
contractors have additional authority to make determinations regarding
medically accepted indications. While we require local contractors to
use the compendia as a reference in the determination of ``medically-
accepted'' off-label treatment regimens, the compendia are not the sole
reference for these determinations. Section 1861(t)(2)(B)(ii)(II) of
the Act provides that local contractors use ``supportive clinical
evidence in peer-reviewed medical literature'' to aid in making
determinations of ``medically-accepted'' off-label treatment regimens
when appropriate.
Comment: Commenters asked that we recognize compendia indexed by
disease.
Response: In order to meet our criteria, a compendium should: (1)
Include a summary of the pharmacologic characteristics of each drug or
biological and may include information on dosage, as well as
recommended or endorsed uses in specific diseases; (2) be indexed by
drug or biological; (3) differ from a disease treatment guideline,
which is indexed by disease. We believe that the use of compendia to
determine medically-accepted indications of drugs and biologicals in
the manner specified in section 1861(t)(2)(B)(ii)(I) of the Act is more
efficiently accomplished if the information contained is organized by
the drug or biological and if the listings are comprehensive.
Comment: Several commenters suggested that we should regulate a
time frame for compendia to update their recommendations.
Response: We believe that the public interest is served if
compendia generally update their recommendations in a timely manner
when new evidence regarding the use of drugs warrants an update. We
also believe that this is consistent with spirit of the MedCAC's
recommendations. However, medical evidence on a particular use of a
specific drug may at times be complex and inconsistent, and thus, merit
a prolonged rather than an expedited analysis. We do not believe that
we should establish in regulation a specific broad time line
requirement at this time. However, we will consider public input
regarding a compendium's timely updating of its recommendations as an
additional criterion in our compendium review process.
Comment: We received comments suggesting that a compendium's use of
grades of evidence may add a confusing factor in determining whether a
compendium citation supports a particular drug use. Commenters stated
that it is desirable for a compendium to clarify in a summary
recommendation whether it regards each drug use as medically-accepted.
Response: We recognize and support the desirability of an explicit
summary recommendation for each drug or biological cited in each
compendium. This will facilitate the consistent interpretation of off-
label recommendations by Medicare contractors.
Comment: One commenter suggested that a recognized compendium
should include and identify a well designed clinical trial that is
pending FDA approval.
Response: We do not believe that we can specify how a compendium
[[Page 66306]]
references materials regarding clinical trials for a drug not yet FDA-
approved.
Comment: Two commenters claimed that section 1861(t)(2) of the Act
mandates separate processes for adding and removing compendia.
Response: While we appreciate the thoughtful interpretation of the
language, we do not agree separate processes are required by the
statute.
Comment: One commenter suggested that the identity of the members
of the compendium's advisory board and scientific review committee
should become public record. The commenter also requested that we to
establish a formal process to facilitate stakeholder/compendia
communication.
Response: Public identification of members of the compendium's
advisory board and the scientific review committees and establishing a
formal process for stakeholders/compendia communication is beyond our
authority and scope of this regulation.
Based on the public comments received, we have made revisions to
the proposed compendia review process. We appreciate the need for a
more expedient process to provide a useful compendia list for Medicare
providers and have made the necessary changes.
Requests may be submitted in two ways (no duplicates please).
Electronic submissions are encouraged to facilitate administrative
efficiency. We will identify the electronic address to be used for
submissions. Hard copy requests can be sent to the Centers for Medicare
& Medicaid Services, Coverage and Analysis Group, Mailstop C1-09-06,
7500 Security Boulevard, Baltimore, MD, 21244. Please allow sufficient
time for hard copies to be received prior to the close of the receipt
period.
We may consider additional reasonable factors in making a
determination. (For example, we may consider factors that are likely to
impact the compendium's suitability for this use, such as but not
restricted to a change in ownership or affiliation, suspension of
publication, the standards applicable to the evidence considered by the
compendium, and any relevant conflicts of interest. We may consider
that broad accessibility by the general public to the information
contained in the compendium may assist beneficiaries, their treating
physicians, or both, in choosing among treatment options.)
We will also consider a compendium's grading of evidence
used in making recommendations regarding off-label uses and the process
by which the compendium grades the evidence.
We may, at our discretion, combine and consider multiple
requests that refer to the same compendium, even if those requests are
for different actions. This facilitates administrative efficiency in
our review of requests.
We will notify the public of additions or deletions to the
list of compendia on the CMS Web site.
In keeping with our desire to shorten the compendia review
time line, we will publish our decision no later than 90 days following
the close of the public comment period.
M. Physician Self-Referral Issues
1. General
In the CY 2008 PFS proposed rule (72 FR 38122), we proposed several
revisions to the physician self-referral regulations. We also solicited
comments regarding potential changes to or limitations on the use of
the in-office ancillary services exception in Sec. 411.355(b). We
received approximately 1100 pieces of timely correspondence in response
to these proposals.
We received the following comments regarding finalizing our
proposals:
Comment: Many commenters were concerned about the perceived
complexity and breadth of the physician self-referral proposals.
Several commenters questioned our ability to analyze sufficiently, and
give adequate consideration to, the public comments due to the brief
time period between issuance of the CY 2008 PFS proposed rule (72 FR
38122) and the statutory deadline for publication of this final rule
with comment period. Some commenters suggested that we not finalize any
of the proposals at this time. Many of those commenters asserted that
we should further contemplate the issues and propose revised regulatory
provisions in the CY 2009 PFS proposed rule if we continue to believe
that such revisions are necessary.
Response: We are not inclined to follow the commenters' suggestion
regarding reproposal of the physician self-referral provisions in the
CY 2009 PFS proposed rule. However, given the number of physician self-
referral proposals, the significance of the provisions both
individually and in concert with each other, and the volume of public
comments, we do not believe it is prudent to finalize any of the
proposals in this rule (except for the proposal for anti-markup
provisions for diagnostic tests, as discussed below in this section).
Although we are not finalizing the proposed revisions to the other
physician self-referral regulations in this final rule with comment
period, we are confident that we have sufficient information, both from
the commenters and our independent research, to finalize revisions to
the physician self-referral regulations without the need for new
proposals and additional public comment. We intend to publish a final
rule that addresses the following proposals:
Burden of proof;
Obstetrical malpractice insurance subsidies;
Unit-of-service (per-click) payments in lease
arrangements;
The period of disallowance for noncompliant financial
relationships;
Ownership or investment interests in retirement plans;
``Set in advance'' and percentage-based compensation
arrangements;
``Stand in the shoes'' provisions;
Alternative criteria for satisfying certain exceptions;
and
Services furnished ``under arrangements.'' Because we did
not make a specific proposal regarding the in-office ancillary services
exception, but rather merely solicited comments regarding its scope and
application, any revisions to the exception in Sec. 411.355(b) will be
accomplished through a future notice of proposed rulemaking with
provisions for public comment.
A measured, thoughtful approach to the final physician self-
referral rules is critical. We believe that the future rulemaking will
address the public comments and present a coordinated, comprehensive
approach to accomplishing the goals described in the proposed rule,
namely, minimizing the threat of program and patient abuse while
providing sufficient flexibility to enable those who are parties to
financial arrangements to satisfy the requirements of, and remain in
compliance with, the physician self-referral law and the exceptions
thereto.
2. Changes to Reassignment and Physician Self-Referral Rules Relating
to Diagnostic Tests (Anti-Markup Provisions)
Medicare regulations currently prohibit the markup of the technical
component (TC) of certain diagnostic tests that are performed by
outside suppliers and billed to Medicare by a different individual or
entity (Sec. 414.50). In addition, Medicare program instructions
restrict who may bill for the professional component (PC) (the
interpretation) of diagnostic tests (Section 30.2.9.1 of the CMS
Internet-Only Manual, Publication 100-04, Medicare Claims Processing
Manual, Chapter 1, general billing requirements, as amended or replaced
from time to time).
[[Page 66307]]
In the CY 2007 PFS proposed rule (71 FR 48982), we stated that
recent changes to our rules on reassignment concerning the right to
receive Medicare payment may have led to some confusion as to whether
the anti-markup and purchased interpretation requirements apply in
certain situations where a reassignment has occurred pursuant to a
contractual arrangement. In addition, we expressed concern about the
existence of certain arrangements that we believe are not within the
intended purpose of the physician self-referral exception for in-office
ancillary services, which permits physician group practices to bill for
certain services referred by group physicians and furnished by a
contractor physician in a ``centralized building.'' We also expressed
concern that allowing physician group practices or other suppliers to
purchase or otherwise contract for the provision of diagnostic testing
services and to then realize a profit when billing Medicare may: (1)
Lead to program and patient abuse in the form of overutilization of
services; and (2) result in higher costs to the Medicare program (71 FR
49054). In the CY 2007 PFS proposed rule, we proposed to amend Sec.
424.80 to provide that, if the TC of a diagnostic test (other than a
clinical diagnostic laboratory test paid under section 1833(a)(2)(D) of
the Act, which is subject to the special rules set forth in section
1833(h)(5)(A) of the Act) is billed by a physician or medical group
(the ``billing entity'') under a reassignment involving a contractual
arrangement with a physician or other supplier who performs the
service, the amount billed to Medicare by the billing entity would be
limited. We also proposed that, to bill for the TC, the billing entity
would be required to perform the interpretation. In addition, we
considered imposing certain conditions on when a physician or medical
group can bill for the reassigned PC of a diagnostic test. For our
physician self-referral rules, we proposed to modify the definition of
``centralized building'' at Sec. 411.351. Finally, we solicited
comments on the specific application of our proposals. (See the CY 2007
and CY 2008 PFS proposed rules for more information on these proposals
(71 FR 49054 through 49057 and 72 FR 38179 through 38180,
respectively).)
We received numerous comments on the proposals in the CY 2007 PFS
proposed rule. Because we decided to study the issues further, we did
not finalize our proposals in the CY 2007 PFS final rule with comment
period. Rather, based on the comments received and other information
that we considered, in the CY 2008 PFS proposed rule, we proposed to
impose an anti-markup limitation on the TC and PC of diagnostic tests.
We stated that we would apply the anti-markup provision irrespective of
whether: (1) The billing entity outright purchases the TC or the PC; or
(2) the physician or other supplier performing the TC or PC reassigns
his or her right to bill the Medicare program to the billing entity
(unless the performing supplier is a full-time employee of the billing
entity). That is, we proposed to limit the payment to the billing
entity to the lowest of: (1) The performing physician's or other
supplier's net charge to the billing entity; (2) the billing entity's
actual charge; or (3) the fee schedule amount for the service that
would be allowed if the physician or other supplier performing the
service billed directly. To prevent gaming, whereby the performing
physician's or other supplier's net charge to the billing entity is
inflated to cover the cost of equipment or space that is leased by the
billing entity to the performing physician or other supplier, we stated
that we would define ``net charge'' as exclusive of any amount that
takes into consideration such charges.
We also stated that we were concerned that overutilization of
diagnostic tests could continue despite our proposal to apply an anti-
markup provision to TCs that are reassigned to, or outright purchased
by, group practices. That is, we intended to address the situation in
which the TC is performed by a part-time or leased employee of the
group practice in a ``centralized building,'' and the group neither
receives a reassignment from the employee technician (if the technician
is not able to bill for the TC in his or her own right), nor purchases
the TC outright from the technician. Therefore, we proposed to apply an
anti-markup provision to TCs that are performed in a centralized
building, and sought comments on whether we should have such a
provision and, if so, how we should effect such a provision (for
example, by amending the definition of ``centralized building'' or
through some other means). We stated that we would except from the
anti-markup provision PCs performed by a physician pursuant to an
arrangement with an independent laboratory as we do not believe that
such PCs ordered by an independent laboratory pose a significant risk
of program abuse because the independent laboratory does not order the
diagnostic test. We proposed revisions to Sec. 424.80 (reassignments)
and Sec. 414.50 (purchased diagnostic tests). (We did not propose
regulatory text revisions for our proposals to apply an anti-markup
provision to TCs that are performed in a centralized building, and not
apply the anti-markup provision to PCs billed by independent
laboratories whose personnel do not order the diagnostic test.)
Many commenters supported our proposals to prohibit the markup of
the TC and PC of diagnostic tests in order to prevent physicians,
physician group practices, and medical groups from profiting through
the ordering of such tests. Commenters that supported our proposals
often cited a concern about overutilization. Many commenters were
opposed to our proposals. These commenters stated that the Medicare
program and its beneficiaries are better served by physicians who refer
tests to specialists (such as pathologists who contract directly with
group practices), instead of physicians who use large reference
laboratories. These commenters asserted that, because physicians
develop a working relationship with particular pathologists, and
because the pathologists ``specialize'' in a particular type of biopsy
(for example, prostate biopsies), results are obtained more quickly and
quality is enhanced. Finally, most commenters who responded to our
proposal to apply an anti-markup to reassignments from part-time
employees, irrespective of whether they were in support generally of
our proposals, opposed this specific proposal.
After careful consideration of all of the comments, we are adopting
our proposals, with modification. We are imposing an anti-markup
provision on TCs of diagnostic tests that are ordered by the billing
physician or other supplier (or ordered by a party related by common
ownership or control to such billing supplier), if the TC is outright
purchased or if the TC is performed at a site other than the office of
the billing physician or other supplier.\1\ (For purposes of the anti-
markup provisions, the ``office of the billing physician or other
supplier'' has its common meaning. The term is defined at revised Sec.
414.50(a)(2)(iii) as space where the physician or other supplier
regularly furnishes patient care. With respect to a billing physician
or other supplier that is a physician
[[Page 66308]]
organization (as defined at Sec. 411.351 of this chapter), the
``office of the billing physician or other supplier'' is space in which
the physician organization provides substantially the full range of
patient care services that the physician organization provides
generally.) We are also imposing an anti-markup provision on PCs of
diagnostic tests that are ordered by the billing physician or other
supplier (or ordered by a party related by common ownership or control
to such billing supplier), if the PC is outright purchased or if the PC
is not performed in the office of the billing physician or other
supplier. Also, part-time employees are treated no differently than
full-time employees or contractors who reassign benefits.
---------------------------------------------------------------------------
\1\ We note that, in our proposals, we used the term ``billing
entity'' to refer to a billing physician or medical group. In this
final rule with comment period, the anti-markup provisions
potentially apply to TCs and PCs billed by any supplier; therefore,
we use the terms ``billing physician or other supplier'' and
``billing supplier.'' These terms are used interchangeably.
---------------------------------------------------------------------------
We are primarily revising Sec. 414.50, although we have also
revised Sec. 424.80 by adding (d)(3) to alert the reader that, in the
case of the reassignment of the TC or PC of a diagnostic test, the
reader should consult Sec. 414.50 to investigate whether the anti-
markup provisions apply to the TC or PC. We are also revising our
definition of ``entity'' at Sec. 411.351, which is relevant to our
rules on physician self-referral. Currently, the definition of
``entity'' provides an exception for a physician's practice when it
bills Medicare for a diagnostic test in accordance with Sec. 414.50.
We are revising the definition of ``entity'' at Sec. 411.351 to
exclude a physician's practice when it bills Medicare for the TC or PC
of a diagnostic test in accordance with Sec. 414.50.
Examples of the application of the final provisions to particular
facts appear immediately below, followed by a discussion of the
specific comments we received on our proposals. We note that the
following examples are intended only to illustrate the application of
the anti-markup provisions of this final rule with comment period; they
are not intended to address whether the physician self-referral rules
would prohibit payment due to financial relationships that may exist
between the billing supplier and any physician ordering a test or
performing the TC or PC of a test.
Example 1. A urology group practice contracts with a leasing
company that supplies a technician and a pathologist to perform
testing on prostate samples. The technician performs the tissue
sampling and the pathologist reads the slides. All work is done
outside of the office of the billing group practice, and instead is
performed in space that is rented exclusively ``24/7'' by the group
practice (thus meeting the definition of a ``centralized building''
at Sec. 411.351) for the sole purpose of providing pathology
services for the group's patients. Because the centralized building
does not qualify as ``the office of the billing physician or other
supplier,'' the anti-markup provisions apply to both the TC and the
PC, and the group may bill Medicare the lowest of the following: (1)
The leasing company's net charge to the group; (2) the group's
actual charge; or (3) the fee schedule amounts for the TC and
interpretation that would be allowed if the leasing company were
enrolled in and billed Medicare directly.
Example 2. Same as Example 1, except that the TC and PC are
performed by the group practice's employee technician and a
pathologist who is an independent contractor of the group practice,
respectively. Here, the anti-markup provisions again apply to both
the TC and the PC because the work was not done in the ``office of
the billing physician or other supplier'' (that is, the office of
the group practice). It does not matter that the technician is an
employee and the pathologist is an independent contractor because
the work was not performed in the office of the billing group
practice.
Example 3. A physician in a group practice orders a diagnostic
test and a technician who is a part-time employee of the group
performs the test in the group's office. A physician who is an
independent contractor of the group performs the PC in the group's
office and reassigns his or her right to payment to the group. The
anti-markup provisions do not apply to the group's billing of the TC
or the PC.
Example 4. Same as Example 3, except that the independent
contractor physician performs the PC in his or her home and
reassigns his or her right to payment to the group. The group's
billing of the TC is not subject to the anti-markup provision, but
the group's billing of the PC is subject to the anti-markup
provision because the work was not performed in the office of the
billing supplier.
Example 5. A group practice purchases both a diagnostic test and
its interpretation from a laboratory and bills the TC and PC to
Medicare. The anti-markup provisions apply to both the TC and the
PC. Because the TC and the PC were purchased, the location(s) at
which the TC and the PC were performed does not matter.
Example 6. A group practice orders a diagnostic test from an
independent laboratory. The laboratory performs the test and
contracts with a physician to perform the PC. The laboratory bills
Medicare for both the TC and the PC. The laboratory is not subject
to the anti-markup provision for the PC, because the laboratory did
not order the test.
Example 7. Same as Example 6, except that a physician orders a
diagnostic test from an independent diagnostic testing facility
(IDTF). The IDTF bills Medicare for both the TC and the PC of the
test. The anti-markup provisions do not apply because the IDTF did
not order the test.
a. Authority
Comment: Several commenters questioned whether we have the
authority pursuant to section 1842(n) of the Act to impose an anti-
markup provision as described in the CY 2008 PFS proposed rule. The
commenters specifically noted that, in section 1842(n) of the Act, the
Congress directed the Secretary to impose an anti-markup on the TC of
diagnostic tests, yet our proposal applied to the TC and the PC of
diagnostic tests. Commenters stated that the interpretation of a
diagnostic test is a physician service, and that section 1848 of the
Act mandates that physician services be paid the lesser of the billing
physician's actual charge or the fee schedule amount, and therefore, we
have no authority to extend the anti-markup rule to physician services.
Response: We believe that several provisions of the Medicare
statute provide us with the requisite authority to impose anti-markup
provisions on the TC and PC of certain diagnostic tests. Section
1842(n)(1)(A) of the Act, which was enacted as part of the Omnibus
Budget Reconciliation Act of 1987, provides that, if the diagnostic
test was not performed or supervised by the billing physician and also
was not performed or supervised by a physician with whom the billing
physician shares a practice, the Medicare payment is the lower of the
costs (net of any discount) charged by the performing supplier to the
billing physician, or the performing supplier's reasonable charge (or
other applicable limit). This is commonly known as the anti-markup
provision. Although, to date, this statutory provision has been
implemented through the regulation in Sec. 414.50 that imposes an
anti-markup provision on the TC only of a diagnostic test, nothing in
this section limits our authority to apply this section to the PC of a
diagnostic test.
Moreover, we believe that we can interpret the language ``shares a
practice'' as giving us the authority to impose an anti-markup
provision on the TC of tests that are outright purchased by a billing
physician or group, as well as on the TC of tests for which payment is
reassigned to the billing physician or group. Although we previously
implemented this statutory provision through regulation in Sec. 414.50
by enacting an anti-markup provision on the TC of ``purchased''
diagnostic tests from an outside supplier, the statutory provision does
not speak in terms of ``purchased'' tests. In the intervening time
since CMS promulgated the regulation in Sec. 414.50, other changes to
the Medicare program, in particular, the changes made by section 952 of
the MMA to the reassignment exceptions authority, have created
incentives for conduct that we believe increases the risk of
overutilization and abuse of the Medicare program. We believe that the
language ``shares a practice'' in section 1842(n)(1) of the Act can
cover not just
[[Page 66309]]
tests that are outright purchased, but also tests for which payment is
reassigned to the billing supplier. We are amending Sec. 414.50 in
this final rule to provide that TCs and PCs that are not performed in
the office of the billing physician or other supplier are subject to
the anti-markup provision. We believe that, if the TC or PC is not
purchased and is performed in the office of the billing supplier by an
employee (whether full-time or part-time) or an independent contractor
who reassigns benefits, a sufficient nexus with the practice of the
billing supplier (that is, the billing physician or group) is
established such that the employee or independent contractor may be
viewed as ``sharing a practice'' with the billing supplier for purposes
of section 1842(n)(1) of the Act. In addition, we believe that we have
authority under sections 1102(a) and 1871(a) of the Act (our general
rulemaking authority) to impose anti-markup provisions on the TC and PC
of diagnostic tests in order to fully effectuate the Congress' intent
in enacting section 1842(n)(1) of the Act.
We find additional authority in section 1842(b)(6) of the Act. This
section generally prohibits Medicare payment to anyone other than the
Medicare beneficiary or the physician or other person who furnished the
item or service to the beneficiary. We allow a physician or other
supplier to bill for tests and test interpretations that are purchased
from an outside supplier because we have deemed the test or
interpretation to be performed by the billing supplier; however, we are
not required to deem the test or interpretation as having been
performed by the billing supplier, nor are we required to do so without
placing limits on the amount the purchasing supplier may bill.
Likewise, whereas section 1842(b)(6) of the Act also provides
exceptions (known as the reassignment exceptions) to the general rule
that payment may be made only to the beneficiary or the physician or
other person who furnished the item or service, such exceptions allow
us (``payment may be made''), but do not require us, to make payment to
an individual or an entity other than the beneficiary or the physician
or other person who furnished the item or service to the beneficiary.
(We note that the Congress specifically provided for CMS to implement
safeguards in the context of reassignments pursuant to a contractual
arrangement. Section 952 of the MMA permitted Medicare to pay a
physician or entity billing for an item or service as a result of a
reassignment created pursuant to a contractual arrangement, regardless
of the site of service. However, in section 952 of the MMA, the
Congress specifically authorized the Secretary to subject such
arrangements to ``such program integrity and other safeguards as the
Secretary may determine to be appropriate.'') Therefore, we believe
that we have ample authority under section 1842(b)(6) of the Act to
place restrictions on the billing of tests and interpretations when the
tests or interpretations were performed by someone other than the
billing supplier, particularly with respect to situations in which
there is the potential for overutilization.
We do not view the application of the anti-markup provision to the
PC of diagnostic tests as representing a conflict with section 1848 of
the Act as stated by the commenters. Although section 1848 of the Act
does outline how physician services will be paid in the typical
situation, section 1848 of the Act does not preclude us from setting
conditions on physician payment or from deviating from the payment
methodology outlined in section 1848 of the Act where a physician or
other supplier is seeking to take advantage of a special situation made
available to physicians or other suppliers by CMS. Payment pursuant to
the terms of section 1848 of the Act is available for all the
diagnostic tests in question. Physicians and other suppliers are free
not to take advantage of the purchased test option or the reassignment
option, and bill and receive payment only for tests they have
personally performed. Where physicians and other suppliers choose to
take advantage of these options, for purposes of convenience or for
other reasons, we have the authority under our general rulemaking
authority in sections 1102(a) and 1871(a) of the Act, as well as under
our authority to set conditions for the payment of purchased and
reassigned tests in section 1842(b)(6) of the Act, to promulgate rules
to ensure that these options do not increase the likelihood of Medicare
program abuse.
b. Scope of Application of the Anti-Markup Provisions
Comment: One commenter offered alternatives to our proposals. The
commenter stated that, at least initially, the anti-markup provisions
should apply exclusively to gastroenterology, dermatology, and urology
physician group practices because those specialties order a significant
number of pathology tests. The commenter suggested that we could
subsequently broaden application of the anti-markup provisions to the
extent that ``new abusive'' arrangements develop. Alternatively,
according to the commenter, CMS could define the specialties to which
the anti-markup provisions would apply on the basis of objective
criteria. For example, the anti-markup provisions could apply to group
practices billing for pathology services where at least 75 percent of
the members are from a single nonpathology specialty and where at least
75 percent of the pathology services billed by the group practice were
ordered by members of the group. The commenter asserted that such a
definition should cover most of the abusive arrangements that have
developed in recent years. The commenter urged us to impose a broad
prohibition on profiting from pathology tests, which would apply
without regard to whether the histotechnologists are full-time
employees or independent contractors of the group practice. According
to the commenter, a prohibition on profiting could be accomplished by
prohibiting any markup over the direct costs incurred by the group
practice in providing such services, and direct costs should be limited
to the compensation paid to the persons providing the services and the
cost of the equipment and supplies utilized in performing the services.
Finally, the commenter suggested the alternative of amending the
requirements for ``group practices'' in Sec. 411.352 to prohibit
gastroenterology, dermatology and urology group practices from
profiting from Medicare payments for pathology services performed
within the group practice.
Response: We decline to adopt any of the approaches suggested by
the commenter. The anti-markup provisions in this final rule with
comment period apply to group practices (as well as all other
suppliers) regardless of specialty. We believe that making the rule
applicable to all suppliers ensures fair and equitable treatment among
types of suppliers and also ensures that the potential for
overutilization is addressed regardless of the particular type of
supplier involved. As we discuss in greater detail below, we agree with
the commenter that it should not matter whether the person performing
the TC is a full-time employee, part-time employee or independent
contractor. If the TC (or PC) is purchased, or if it is performed in a
place other than the office of the billing supplier, the anti-markup
provision will apply, irrespective of the employment status of the
person performing the TC (or PC). We are not revising the requirements
for ``group practices'' at Sec. 411.352 at this time. We did not
propose to amend
[[Page 66310]]
these provisions and believe that such a change would be outside the
scope of the proposed rulemaking.
Comment: A commenter suggested that we consider an anti-markup
provision that would apply to any group practice where at least 90
percent of the practice is comprised of a single specialty other than
pathology that orders the pathology tests billed by the group. The
anti-markup rule should prohibit the markup of the direct costs
incurred by the group (such as compensation paid to the
histotechnologists and pathologists, and equipment and supplies
utilized).
Response: We believe that the commenter's suggestion would be
cumbersome and difficult to administer, and therefore, we are not
persuaded to adopt it. We believe that the anti-markup rules that we
have finalized are much more practical and will be an effective
deterrent to the ordering of medically unnecessary tests.
Comment: One commenter stated that the anti-markup provisions
should apply equally to all physicians, including pathologists. The
commenter noted that, in some cases, a pathologist performing the PC
purchases the TC from a hospital or another pathology laboratory and
bills globally. In addition, the commenter asserted that it is a myth
to say that pathologists do not order tests and, therefore, should be
exempt from the proposed anti-markup provision applicable to the PC of
a diagnostic test. Another commenter stated that there is no more
likelihood of abuse in specialty physician-owned pathology laboratories
than with pathology groups ordering expensive and unneeded special
tests and stains on specimens that they then interpret in the pathology
group-owned histology laboratory.
Response: The revisions to Sec. 414.50 and Sec. 424.80 concerning
the anti-markup requirements apply equally to all physicians, including
pathologists. We recognize that, in some situations, a pathologist may
order additional tests to be performed by an outside pathologist. Where
a pathologist orders and bills for a test that he or she did not
personally perform, the anti-markup provisions may apply to the TC or
PC, or both (depending on whether the TC or PC was purchased or, if
not, whether the TC or PC was performed in the pathologist's office).
If the pathologist did not order the test, the anti-markup rules do not
apply.
Comment: One commenter requested clarification that Sec. 414.50
applies only to physicians and medical groups, and not to suppliers,
such as medical foundations, that, under State laws governing the
corporate practice of medicine, are required to enroll in Part B as a
clinic or group practice. The commenter asserted that, in States
prohibiting the corporate practice of medicine, many suppliers enrolled
as a clinic or group practice are unable to directly employ the
radiologist or other physician who performs a test interpretation.
Response: In this final rule with comment period, we are revising
Sec. 414.50 to apply to all suppliers. However, the anti-markup
provisions do not apply to TCs and PCs that are not purchased and that
are performed in the office of the billing physician or other supplier.
Therefore, in the commenter's example, if clinic personnel order, for
example, the TC and PC, and the TC and PC are performed in the clinic's
office, neither the TC nor the PC will be subject to the anti-markup
provisions.
Comment: Two commenters asserted that IDTFs operate similarly to
independent laboratories in that the tests are ordered by a financially
independent physician. The commenters also said that the physician
performing the interpretation sees the patient. Therefore, the
commenters recommended that we provide an exception to the proposed
anti-markup rules for purchased interpretations for imaging suppliers,
such as IDTFs, if the current purchased interpretation rules are met.
Response: We are not persuaded to provide an exception to the final
anti-markup provisions for purchased interpretations for imaging
suppliers if the current purchased interpretation rules are met. We
note that, if the interpreting physician sees the patient, the
purchased interpretation rules are not fully met. Therefore, the
imaging supplier is not satisfying all of the purchased interpretation
rules, and the imaging supplier should only bill for the TC portion of
the test.
Comment: One commenter requested clarification that the anti-markup
proposals do not apply to radiologists who have contractual
arrangements with IDTFs. The commenter asserted that radiologists and
IDTFs are not in a position to refer to each other or to themselves
because both are dependent upon referrals from other physicians in the
community. Another commenter asked us to clarify that the anti-markup
for the PC will not apply to an IDTF that purchases the PC from the
interpreting physician, particularly in States in which the corporate
practice of medicine doctrine applies. Another commenter stated that
the anti-markup provision for the PC should not be applied to
physicians or group practices that bill for the professional services
performed by an independent contractor or part-time employee if those
services were performed pursuant to the order of another practitioner
who is independent of the group, and thus would not profit from his or
her referral.
Response: As finalized, the anti-markup provisions are applicable
to all types of suppliers. However, in the situation in which an IDTF,
radiology practice, or other supplier does not order the diagnostic
test, the anti markup provisions do not apply.
Comment: A few commenters questioned whether the proposed anti-
markup provision, for the PC of diagnostic tests, would apply to IDTFs
that purchase the PC from an interpreting physician, particularly in
States where the corporate practice of medicine prohibits an IDTF from
hiring the physician as an employee.
Response: The anti-markup rules will not apply to entities that are
enrolled as an IDTF where the IDTF does not order the test. If the IDTF
orders the test, the anti markup provisions will apply to the same
extent that they apply to other suppliers.
Comment: A few commenters urged us to clarify in Sec. 424.80 that
the anti-markup provisions apply to reassignments under both the
contractual arrangement exception as well as the employee reassignment
exception. The commenters also suggested that Sec. 424.80 and Sec.
414.50 should state that the anti-markup provisions are limited to
claims submitted by physicians and medical groups and do not apply to
claims submitted by independent laboratories. The commenters were
concerned that the preamble language on the applicability of the anti-
markup provisions to independent laboratories was not carried over and
included in the regulatory text in Sec. 424.80 and Sec. 414.50.
Response: We have determined to revise Sec. 414.50, with a cross
reference in new Sec. 424.80(d)(3). As finalized, the anti-markup
provisions apply to reassignments under both the employee exception and
the contractual arrangements exception, to the extent that the services
for which payment is reassigned are not performed in the office of the
billing physician or other supplier. The anti-markup provisions apply
to a billing supplier only if the billing supplier orders the TC.
Therefore, if an independent laboratory does not order the TC, the
anti-markup provisions will not apply to the laboratory billing of the
TC or the PC.
Comment: Two commenters urged us to create an exception for
entities that are located off-campus from a hospital
[[Page 66311]]
which are jointly owned by radiologists and the hospital and which have
an exclusive contract for the provision of professional interpretations
to the hospital. According to the commenters, it is important to allow
such joint ventures to exist, because the profits generated by the
ventures give financial stability to community hospitals that otherwise
would be financially impaired as outpatient imaging continues to
migrate away from the hospital. In States in which the corporate
practice of medicine doctrine exists, the joint ventures do not
directly employ the physicians, but rather typically contract with the
professional radiology practice to provide the PC. The commenter stated
that the radiologists providing the professional reads are neither
full-time employees nor exclusively employed by the joint venture
imaging center to which they reassign their right to Medicare payment.
Response: We do not believe that it is necessary to create such an
exception. The comment is unclear as to which entity, the joint venture
imaging center or the hospital, is billing for the service; however, if
the imaging center is billing for the PC, the anti-markup provision
will not apply if the physician performs the PC in the imaging center's
office. If the imaging center, or an entity related to it by common
ownership or control, orders the TC, and the physician does not perform
the PC in the imaging center's office, the anti-markup provision will
apply.
Comment: Some commenters believed that the anti markup provisions
should not apply to imaging suppliers that meet the purchased test
rules in CMS manuals.
Response: In the CY 2007 PFS proposed rule, we stated that we were
considering placing restrictions on the ordering of PCs that would be
similar to the purchased interpretation rules in our manuals. After
giving the matter considerable thought, we believe that an anti-markup
billing provision is necessary to guard against potential
overutilization and that it would not be sufficient simply to require
that billing entities meet the purchased interpretation rules in our
manuals.
Comment: In the proposed rule, we proposed to add new Sec.
424.80(d)(3) to require that, in order to bill for the TC, the billing
entity must directly perform the PC of the service. Two commenters
asked that we clarify what we meant by ``directly perform.'' Other
commenters recommended that we clarify in Sec. 424.80 the requirement
to bill for the TC of a diagnostic test, and clarify in Sec. 414.50
the requirement that a billing entity must directly perform the PC of
the service.
Response: We are not finalizing the proposed change to Sec.
424.80(d)(3). We note that the requirement continues to appear in our
manuals at CMS Internet-Only Manual, Pub. 100-04, Chapter 1, section
30.2.9. Currently, we are considering whether to retain this
requirement in the manuals or to withdraw it.
Comment: One commenter supported generally the establishment of an
anti-markup provision on purchased interpretations, but voiced concerns
that our proposal to incorporate the billing rules for purchased
diagnostic testing services to all reassigned services (unless
performed by a full-time employee of the group) could adversely affect
the billing practices of pathologists and pathology groups who often
depend upon the reassignment rules to bill for services performed by
independent contractor and part-time pathologists. Therefore, the
commenter requested an exception from our proposed rules for
independent laboratories and single-specialty pathology physician
groups.
The commenter also asserted that reassignment arrangements between
pathology groups do not raise the same threat of abuse because the vast
majority of pathology services are initiated by a request for a
consultation from a referring physician of another specialty, and the
pathologist is not in a position to influence the referrals from
ordering physicians. The commenter further stated that a broader
exception for single-specialty pathology physician groups and
independent laboratories that covers both the TC and PC of a pathology
service is supported by the existing physician self-referral law and
regulations. The commenter stated that, the ``Congress recognized that
certain physicians, specifically pathologists, diagnostic radiologists
and radiation oncologists, who order certain services pursuant to a
consultation with another physician do not have the same risk of abuse
and, consequently, will not be treated as having made a restricted
referral to an entity with which they have a financial interest.'' The
commenter urged us, for this same policy reason, to recognize an
exception for single-specialty pathology physician groups and
independent laboratories that bill for pathology services performed or
supervised by another pathologist, whether an independent contractor or
full-time or part-time employee.
Response: In order to be fair and to avoid the appearance of giving
preferential treatment to one physician specialty group over another,
the anti-markup provisions on the TC and PC of diagnostic tests are
potentially applicable to all physician specialty groups that order
tests and wish to bill for the TC or PC, or both, performed by another
person or group and billed as a purchased test or billed through a
reassignment. (Whether the anti-markup provision for the TC or the
anti-markup provision for the PC will, in fact, apply depends on
whether the TC or the PC was purchased, or, if not purchased, whether
the TC or the PC was performed in the office of the billing physician
or other supplier.) Therefore, we are not recognizing an exception for
single-specialty pathology physician groups that bill for pathology
services performed or supervised by another pathologist, unless the
single-specialty pathology physician group does not order the test. If
a pathologist in the single-specialty pathology physician group orders
and bills for the test performed by another supplier, the anti-markup
rules apply. If the pathologist does not order the test and wishes to
bill for the test, which is performed by another supplier, the anti-
markup rules will not apply. Finally, we note that clinical diagnostic
laboratory tests performed by independent laboratories and paid under
section 1833(a)(2)(D) of the Act are not subject to the anti-markup
provisions pertaining to diagnostic tests.
c. Overutilization
Comment: Many commenters in favor of the proposed rulemaking cited
overutilization as a concern in the existing billing and payment
environment. Commenters opposed to our proposals denied that
contractual arrangements for pathology services lead to
overutilization.
In support of their contention that current arrangements facilitate
overutilization, some commenters cited various studies for the
proposition that physician self-referral leads to increased
utilization. For example, one commenter cited 1989 studies from the OIG
and GAO that found that physicians who had an ownership or investment
interest in a laboratory ordered more tests than those physicians who
did not have such an interest. This commenter also noted that an
analysis by the Florida Cost Containment Board in 1998 found that
physician-owned clinical laboratories, diagnostic imaging centers,
physical therapy centers, and rehabilitation centers performed more
procedures on a per-patient basis than those facilities that were not
physician-owned. The commenter also cited the 2007 study by
[[Page 66312]]
the McKinsey Global Institute that found that the United States spends
more of its wealth on health care than any other developed country, and
that one reason for the difference in spending is due to profit
incentives in physician ownership of medical facilities. Other
commenters mentioned the 2007 OIG studies of three urology practices,
which the commenters described as finding that all three practices
substantially increased the number of biopsies ordered per patient
after entering into an arrangement for contracted pathology services,
and that, after entering into such an arrangement, all three practices
billed significantly more biopsies than what their respective carriers
paid on average to other suppliers. One commenter cited a study by the
Center for Health Policy Studies that examined the effects of State
``direct billing'' laws. Under such laws, the pathologist or entity
performing the ordered pathology services is required to bill for the
services. This study found that laboratory charges per enrollee under
private health insurance programs were 41 percent higher in non-direct
billing States than in direct billing States. Another commenter stated
that a study in the American Journal of Roentgenology in 2002 confirmed
that physician self-referral may be contributing to the uncontrolled
growth in imaging services. According to the commenter, that study
reported that, when a managed care organization prohibited certain non-
radiologist specialties from billing for imaging services, total
billings for imaging declined 20 to 25 percent from the amount of
billings that were expected based on the previous trend in imaging
growth.
One commenter stated that it is unaware of any evidence of
overutilization by gastroenterologists who have entered into
contractual arrangements for pathology services. Another commenter
stated that its managed ``pod labs'' are vital to the accurate
detection and treatment of prostate cancer and do not expose Medicare
to an undue risk of program abuse. The commenter asserted that no data
supports the accusation that its managed laboratories facilitate the
generation of medically unnecessary biopsies, and in any event,
clinical indications for prostate biopsy are not subject to
manipulation.
Another commenter stated that urological pathology volume is based
upon objectively demonstrated medical necessity, and is not affected by
profit margin or who is billing for services. This commenter suggested
that specific requirements could be placed on contractual arrangements
to address overutilization concerns, while preserving the benefits of
these types of arrangements. The commenter stated that the best way to
ensure that contractual arrangements are maximizing their potential for
improving care and outcomes, while discouraging overutilization, is to
prohibit arrangements that are merely passive investments of the
treating physicians. The commenter asserted that physicians who own
off-site pathology laboratories should be actively involved in their
direction and supervision, and responsible for the services provided by
the laboratory. The commenter offered several specific recommendations,
including: (1) If a group practice intends to bill for the TC, it must
also perform the PC; (2) consistent with CLIA regulations, a
pathologist may not be the medical director of more than five
laboratories; and (3) refined credentialing criteria for pathologists.
In its comments to the CY 2008 PFS proposed rule, MedPAC stated that it
agrees that allowing physicians to purchase or contract for the
provision of diagnostic tests and to realize a profit when billing
Medicare could lead to overuse of services and higher program costs.
One commenter discussed available types of diagnostic tests for
prostate cancer and stated that there does not appear to be any added
benefit to the patient from receiving a 12-part biopsy series instead
of a smaller number. According to the commenter, this method of biopsy
results only in increased diagnosis of minimal prostate disease or
atypical small acinar proliferations, which leads only to further
biopsies and increased medical costs. The commenter stated that the
argument of urologists, that 12 biopsies is the standard of care, is
shown to be fallacious by the fact that, when members of a particular
urology group perform prostate biopsies in local hospitals, they are
doing only two-part biopsies. However, another commenter stated that he
knows of more than one urologist who routinely submitted two core
biopsies for review, but after employing a pathologist, switched to 12
core biopsies. Another commenter stated that patient care improves with
contractual arrangements because the test results are timelier and are
of higher quality. Faster results, together with the opportunity to
collaborate with pathologists, permit urologists to better manage their
patients' care. According to the commenter, the number of cores taken
for each prostate biopsy is a direct result of the evolving
understanding of the nature of prostate cancer, rather than, as some
state, the formation of urology specialty laboratory arrangements
between urologists and pathologists. One commenter stated that, whereas
it understood our concern of overutilization, the current malpractice
system creates far more incentive to perform unnecessary tests.
Two commenters stated that the incessant complaints of profits
being made at the expense of the Medicare program do not serve any
purpose. The commenters claimed that, unless a profit can be achieved,
no one will perform services needed by Medicare or any other program.
The commenters suggested that, regardless of who collects the fees for
pathology and laboratory services and makes a profit, whether an
individual pathologist, a commercial laboratory, or a physician
specialty practice, this should not be a focus of CMS. Rather, CMS
should review the standards of care and hold suppliers to those
standards. The commenters pointed out that the National Comprehensive
Cancer Network developed standards for a patient with early prostate
cancer. At first, the standard was only two cores. In the mid 1990s,
the standard was increased to six cores, then, with additional
research, the standard was increased to ten cores, and, recently, the
recommendation was further increased to 12 cores. The research has
shown a dramatic increase in prostate cancer detection with increased
core sampling. The commenters stated that it is hypocritical that
pathologists are claiming overutilization of services by physician
specialty groups, when these same pathologists accepted 12 core
biopsies without a whisper of discontent. These commenters asserted
that overutilization would cease to be an issue if CMS actively pursued
those practitioners, including pathologists, who do not follow the
accepted and published standards of care.
Response: It is difficult to determine whether and the extent to
which overutilization is due to, or facilitated by, arrangements that
allow the referring physician or group practice to bill for the TC and
the PC of diagnostic tests. Our proposals were not predicated upon a
belief that there was a correlation between the size of the group
practice and the volume of diagnostic tests and the risk of program
abuse. We appreciate that, for a particular practice specialty, an
increase in biopsies ordered may be due to a change in business
arrangements that produces profits for the referring physician or group
practice, or it may be due to a change in the standard protocols (or in
[[Page 66313]]
the referring physician's or group's perception of the appropriate
standard of care). Nevertheless, studies have shown that, in the
aggregate, utilization of diagnostic tests increases in the case of
physician self-referral. We believe it is appropriate to guard against
the potential for overutilization through an anti-markup provision on
the TC and PC of diagnostic tests. We decline to use a specific number
of prostate biopsies as a trigger point for application of the anti-
markup provisions, as we believe the appropriate number of biopsies is
largely patient-specific.
Comment: Several commenters stated that contractual arrangements
for anatomic pathology testing pose no risk of overutilization because
Medicare patients would not be subjected to unnecessary testing due to
the invasive nature of test procedures such as colon or prostate
biopsies.
Response: We are skeptical that the risk of overutilization for
biopsies is appreciably less than that of other types of diagnostic
tests. In any event, in enacting the anti-markup provision in section
1842(n)(1) of the Act, the Congress made no exception for biopsies or
other minimally invasive tests, and in order to effectuate
Congressional intent we are not providing for such an exception.
d. Quality and Patient Access
Comment: Many commenters, both in favor of and against the proposed
rulemaking, focused on the issue of the quality of the diagnostic
testing, particularly pathology services.
Two commenters stated that the financial incentive inherent in some
arrangements can result in physicians selecting laboratories not on the
basis of quality but on the potential for profit from these
arrangements. One commenter believes that ``by reducing pathologists to
the status of indentured servants of clinicians who `own' the patients
and their biopsies, the autonomy and quality of the pathology services
provided is fatally eroded.'' According to one commenter, aspects of
pathology practice, such as the adequacy of the biopsy, the sampling
procedure, the need for deeper or additional sections, the severity of
a process, the adequacy of margins, the need for re-excision, the
appropriateness of special studies, and the need for outside expert
consultation despite increased expense, ultimately are decided based on
what provides the maximum economic benefit to the ordering and billing
physician. The other commenter stated that a gastroenterology group
practice that had been sending its pathology work to his pathology
practice ended the relationship because it entered into an arrangement
with another pathology group under which the gastroenterology group
practice could bill for the TC. The commenter stated that the
gastroenterology group said that there was no dissatisfaction with
quality or the service of the commenter's work, but rather it was
purely a business decision that enabled the gastroenterology group
practice to capture additional revenue in an environment of shrinking
reimbursement. Another commenter stated that he received a biopsy for
review that was performed on a urologist who routinely sent his (the
urologist's) patients' biopsies to his (the urologist's) employed
pathologist. The commenter stated that what was good enough for the
urologist's patients was not good enough for the urologist.
One commenter stated that captive pathology arrangements are
detrimental to patient care. The commenter stated that a local
gastroenterology group was able to locate a pathologist who was
desperate for work and who reads the biopsies only once a week. The
commenter called the turn-around time of once per week ``atrocious.''
The commenter claimed that pathologists who are not willing to work for
less than fair market value are being put out of work by physicians who
are ignorant of the value of quality pathology services and who hire
anyone willing to read slides for any price under any condition.
Another commenter asserted that, although gastroenterologists claim
they get better service from pathologists who allow the
gastroenterologists to bill for the pathology services, the ``better
service'' is, in reality, more money for the gastroenterologists.
One commenter stated that surgeons and surgical pathologists need
to work in close contact with each other, and that the pathologist in a
``pod lab'' has little or no interaction with surgeons and other
clinicians. Hospital-based pathologists meet on a regular basis with
surgeons and other clinicians to share insights and perspectives on
cases, sometimes with immeasurable patient benefit. The ``pod lab''
arrangement impacts negatively upon the ``pod'' pathologist's
professional growth. Another commenter suggested that we should be
aware that the ``current campaign'' against so-called ``pod labs'' is
led by a few self-interested private pathologists, some in leadership
positions in their national organizations, who wish to monopolize the
outpatient biopsy market. The commenter stated that these pathologists
are using scare tactics to paint with the same brush any nontraditional
pathology arrangement, without regard to any real demonstration of
quality problems. The commenter suggested that, instead of focusing on
the ``straw man'' of ``pod labs,'' we should require all suppliers of
pathology services to demonstrate quality of service and
appropriateness of utilization in order to end the ongoing abusive
pathology practices that are occurring in traditional pathology groups,
independent laboratories and academic medical centers.
One commenter asserted that the use of contractual arrangements
allows specialization by pathologists that otherwise would be seen only
in the largest medical centers or reference laboratories. Moreover, the
commenter stated that pathologists who work together in contractual
arrangements with various groups have the unique opportunity to consult
with each other on a regular basis. An entity that manages ``pod labs''
stated that internal data generated by group practices that refer to
their own managed laboratories show a higher positive incidence of
prostate cancer now than before they contracted with the commenter. One
commenter contended that most gastroenterologists who enter into
contractual arrangements with pathology laboratories do so in order to
achieve a higher quality of patient care through timely diagnoses and
the use of pathology personnel who are experts in gastrointestinal and
liver pathology. The commenter expressed certainty that our proposal
would have an adverse effect on practice efficiency and the quality of
patient care.
A commenter stated that large corporate laboratories do not always
provide the highest level of care available. According to the
commenter, large laboratories have an incentive to hire the cheapest
physician labor in order to ``churn out'' a high volume of services.
The commenter argued that the interaction between the urologists in a
group practice and a dedicated pathologist in that practice will lead
to better outcomes. Another commenter stated that some gastrointestinal
group practices have opened their own pathology laboratories because
they believed that the pathology reports they received from general
laboratory companies were in some ways lacking. A commenter echoed that
sentiment, and added that the fact that the pathologist was practicing
in its office meant that the group can easily discuss the pathologist's
findings with him and even review slides together.
One commenter contended that, based on her experience gained from
working for large, national laboratories, sections are poorly processed
there and, often,
[[Page 66314]]
much of the tissue is lost. According to the commenter, extra ribbons
are not collected at these laboratories and immunostains often do not
contain the area suspicious for carcinoma. There is no communication
with the physician's office and usually no clinical information is
exchanged. She further asserted that group practices that send tissue
samples to large laboratories run the risk that an inexperienced
pathologist could be performing the work. The commenter related a
personal experience in which biopsies were read at a large national
laboratory as showing HGPIN, a precursor to adenocarcinoma. The
commenter stated that the slides she reviewed on re-biopsy showed no
HGPIN, and, not only was the patient made to worry unnecessarily, but
the mistaken biopsy review led to the expense of a re-biopsy and
another reading. Another commenter stated that its clients say that it
provides better quality services and in a timelier manner than do the
national commercial laboratories. According to the commenter, this is
because physician practices that send anatomic pathology specimens to
large commercial laboratories do not choose the pathologists who
interpret the slides and thus do not know the qualifications of the
pathologist.
Response: We believe that, everything else being equal, there can
be some advantages to a physician or group practice referring to the
same pathologist, if the referring physician or group practice chooses
the pathologist on the basis of his or her qualifications and
experience, and the service that he or she provides. However, we also
believe that, where there is a financial reward for choosing a
pathologist or other diagnostic specialist based on financial self-
interest, there is the potential to disregard, or at least subordinate,
quality considerations. This final rule with comment period eliminates
the profit incentive in choosing a pathologist or other specialist
while preserving the referring physician or group practice's right to
continue to use the pathologist or other specialist of its choosing.
That is, if a billing group practice currently has a contractual
arrangement with a particular histotechnologist and particular
pathologist because it believes that the histotechnologist and the
pathologist provide superior quality and service, it may continue to
refer to them; it only will be prevented from marking up the TC and PC
(unless the TC and PC are not purchased and are provided in the office
of the group practice).
Comment: Many commenters asserted that there would be no adverse
effect on patient access if the proposal was adopted. Other commenters
stated that patient care would be significantly disrupted if the
proposal was adopted. Specifically, commenters stated that the proposed
changes would limit access to multiple urologic services in a local
area, namely, radiation therapy, lithotripsy, and many in-office
procedures such as thermal ablative procedures for prostate
obstruction. These commenters contended that many in-office procedures
are never performed in hospitals, and that, if the proposed changes to
the reassignment and purchased diagnostic test rules become effective,
it would be difficult, if not impossible, to provide these services to
Medicare beneficiaries.
Response: We are skeptical that our proposal would cause any
patient access problem. There appear to be adequate choices throughout
the country for physicians and group practices to obtain timely access
to diagnostic testing. No evidence was brought to our attention that a
patient access problem previously existed and was somehow alleviated
when physicians and group practices began entering into contractual
arrangements for the provision of pathology and other diagnostic
services. In any event, as noted above, our proposal as finalized does
not prohibit physicians and group practices from continuing to use the
same diagnostic services that they have been using to date.
e. Purchased Tests as They Relate to Reassigned Tests
Comment: We received comments stating that physician contractual
arrangements with pathologists constitute an attempt to evade the
restrictions of the physician self-referral law. Several commenters
stated that there is no practical distinction between a purchased
service and a reassigned service. One commenter stated that the
proposal effectively eliminates the reassignment rules. The commenter
argued that, although CMS states that, under section 952 of the Act, it
is required to recognize contractual reassignments only to the extent
they meet program integrity and other standards determined by the
Secretary, the commenter asserts that the Congress surely did not mean
that this statutory provision could be administratively repealed by
merging it into the already existing purchased diagnostic test rules.
Another commenter stated that our proposal appears to be mixing the
purchased diagnostic test policies with contractual reassignments,
which could result in confusion for the imaging industry.
Response: We are concerned that some current arrangements are not
in accord with the spirit or the letter of the anti-markup provision in
section 1842(n)(1) of the Act. Section 1842(n)(1)(A) of the Act, which
was enacted as part of the Omnibus Budget Reconciliation Act of 1987
(Pub. L. 100-203), provides that, if a diagnostic test described in
section 1861(s)(3) of the Act (other than a clinical diagnostic
laboratory test) was not performed or supervised by the billing
physician and also was not performed or supervised by a physician with
whom the billing physician ``shares a practice,'' Medicare payment is
the lower of the costs (net of any discount) charged by the performing
supplier to the billing physician, or the performing supplier's
reasonable charge (or other applicable limit). We implemented the anti-
markup provision of section 1842(n)(1) of the Act by promulgating
current Sec. 414.50, ``Physician billing for purchased diagnostic
tests.'' The current version of Sec. 414.50 applies to TCs performed
by an ``outside supplier,'' but that term is undefined. We acknowledge
that some have understood Sec. 414.50 as applying only to TCs that are
outright purchased, instead of reassigned, but as we indicated in the
CY 2007 PFS proposed rule (71 FR 49056), and as some commenters have
noted, reassigned tests are functionally the equivalent of purchased
tests. When section 1842(n)(1) of the Act was enacted, there was
perhaps more of a difference between purchased tests and reassigned
tests, but subsequent events have blurred the distinction between tests
that are outright purchased and tests for which payment is reassigned.
At the time section 1842(n)(1) of the Act was enacted,
reassignments under the contractual arrangement reassignment exception
in section 1842(b)(6)(A)(ii) of the Act were permitted only to the
extent the work was performed on the premises of the billing supplier.
Therefore, at that time, a physician reassigning benefits to another
physician was either an employee of the billing supplier or a
contractor who was furnishing the services on the premises of the
billing supplier. However, in our January 4, 2001 (Phase I) final rule
with comment period, we provided that, for purposes of our rules on
physician self-referral, an independent contractor physician is a
``physician in the group practice,'' as defined at Sec. 411.351,
during the time the physician is providing care to the group practice's
patients ``in the group practice's facilities'' (66 FR 885 through
[[Page 66315]]
886, 955). Further, in that same rulemaking, we provided that a group
practice's facilities (again, for purposes of our rules on physician
self-referral) can include a ``centralized building'' (66 FR 888
through 889). As defined at Sec. 411.351, space qualifies as a group
practice's ``centralized building'' if it is leased ``24/7'' by the
group practice, irrespective of the amount of square footage of the
space and irrespective of the proximity (or lack thereof) to the
group's facilities. Following that rulemaking, a group practice could,
in compliance with our rules on physician self-referral, refer patients
for designated health services (DHS) (such as diagnostic testing) to an
independent contractor physician, and such physician could perform or
supervise the performance of diagnostic tests in a centralized
building, provided that all requirements of an exception were
satisfied. Further, the independent contractor physician arguably
satisfied the ``on the premises'' requirement of section
1842(b)(6)(A)(ii) of the Act and, thus, was permitted to reassign
benefits to the group practice for the work performed in the
centralized building, because we considered a centralized building to
be the group practice's facilities. In any event, in section 952 of the
MMA of 2003, the Congress amended section 1842(b)(6)(A)(ii) of the Act
to remove the requirement that the services must be performed on the
premises of the billing supplier in order to utilize the contractual
arrangement exception. Therefore, following the MMA amendment, it is
clear that independent contractor physicians who perform or supervise
the performance of diagnostic tests in a centralized building may
reassign payment for such tests to the group practice that owns or
leases the centralized building.
Being mindful of the Congress' intent to impose an anti-markup on
the TC of diagnostic tests that are not performed or supervised by a
physician who ``shares a practice'' with the billing physician, we are
amending Sec. 414.50 in this final rule with comment period to provide
that TCs that are not performed in the office of the billing physician
or other supplier are subject to the anti-markup provision. With
respect to a physician organization (such as a group practice), we
consider the ``office of the billing physician or other supplier'' to
be medical office space in which the physician organization provides
substantially the full range of patient care services that the
physician organization provides generally. Therefore, with respect to
group practices, we do not consider space to be the ``office of the
physician or other supplier'' if that space does not meet the
requirement regarding patient care services in revised Sec.
414.50(a)(2)(iii) (for example, space that is utilized as a
``centralized building'' for purposes of the exceptions for physician
services and in-office ancillary services in Sec. 411.355(a) and (b),
respectively, but in which the group practice provides diagnostic
testing services only).
We believe that, if the TC is performed by an employee (full-time
or part-time), or by an independent contractor who reassigns benefits,
in the office of the billing physician or other supplier, a sufficient
nexus with the practice of the billing supplier is established. (In
this regard, we note that, if the TC is performed by someone other than
an employee or a contractor who reassigns benefits, that is, someone
who sells the test to the billing physician or other supplier, the
anti-markup provision will apply regardless of where the service is
performed.) Further, we see no reason to distinguish between the TC and
the PC of diagnostic tests for purposes of the anti-markup provisions.
Although the Congress did not establish an anti-markup provision in
section 1842(n)(1) of the Act or elsewhere for the PC of diagnostic
tests, the omission may have been inadvertent. That is, it is not
immediately clear why the Congress, if it wished to prevent
overutilization of diagnostic testing, would not have desired an anti-
markup on the PC, because without such a provision, the incentive to
order unnecessary tests (and profit on the PC) remains. We believe
that, in order to fully effectuate the Congress' intent to prevent or
limit the ordering of unnecessary diagnostic tests, it is necessary to
impose an anti-markup provision on the PC of diagnostic tests.
Accordingly, our revisions to Sec. 414.50 apply to PCs to the same
extent as they apply to TCs.
We see no reason to distinguish between physicians and physician
group practices on the one hand, and other types of suppliers on the
other hand, that bill for diagnostic tests. In the proposed rule, we
used the terminology ``physician or medical group,'' which we borrowed
from the existing manual provisions on purchased tests and purchased
test interpretations. However, the term ``medical group'' is not
defined and is not commonly used elsewhere. We are amending Sec.
414.50 so that it applies to a billing ``physician or other supplier.''
Any enrolled supplier that bills for a diagnostic test or its
interpretation is potentially subject to the anti-markup provisions in
Sec. 414.50.
f. Definition of ``Entity''
Comment: One commenter stated that, although we proposed to expand
the purchased diagnostic test rule in Sec. 414.50 to apply also to the
purchased PC of a diagnostic test, it was not entirely clear whether we
proposed to expand the scope of the exception in the definition of
``entity'' at Sec. 411.351 for purposes of our rules on physician
self-referral. The commenter noted that the definition of ``entity'' at
Sec. 411.351 provides that a physician's practice is not acting as an
``entity'' when it bills Medicare for ``a diagnostic test in accordance
with Sec. 414.50.'' The commenter contended that the phrase
``diagnostic test'' is currently interpreted to mean only the TC, in
part because Sec. 414.50 currently applies only to the TC. The
commenter also stated that if the scope of Sec. 414.50 is expanded to
cover both the TC and the PC, one could interpret the phrase in Sec.
411.351, ``diagnostic test in accordance with Sec. 414.50,'' to mean
that a physician practice is not an entity when it bills Medicare for
either the TC or the PC in accordance with Sec. 414.50. The commenter
suggested that, if we finalize our proposal to apply an anti-markup
provision to purchased TCs and PCs, we should revise the definition of
``entity'' at Sec. 411.351 to clarify that the exception for purchased
diagnostic tests applies to both the TC and the PC. Another commenter
also supported changing the definition of ``entity'' at Sec. 411.351
to except from that definition a supplier that is billing for the PC in
accordance with the anti-markup provisions of Sec. 414.50.
Response: Under our physician self-referral rules in part 411,
subpart J of this chapter, a physician may not refer a patient for
certain designated health services (DHS) to an entity with which the
physician (or an immediate family member) has a financial relationship,
and the entity may not bill Medicare for such DHS, unless an exception
applies. The definition of ``entity'' at Sec. 411.351 ``does not
include a physician's practice when it bills Medicare for a diagnostic
test in accordance with Sec. 414.50.'' The rationale for excluding
from the definition of ``entity,'' and hence from the application of
our physician self-referral rules, a physician practice that is billing
for a TC that is subject to the anti-markup provision, is that there is
no risk of overutilization arising from a financial relationship
between the referring physician and the physician's practice billing
for the service. We believe the same rationale should apply to PCs made
subject to an anti-markup provision under this final rule with
[[Page 66316]]
comment period. We are amending slightly the definition of ``entity''
at Sec. 411.351 to make clear that the exclusion applies to both TCs
and PCs. As amended, the pertinent language reads ``does not include a
physician's practice when it bills Medicare for the TC or the PC of a
diagnostic test for which the anti-markup provision is applicable in
accordance with Sec. 414.50.''
We note that, under our physician self-referral rules, an
independent contractor physician is a ``physician in the group'' for
purposes of the physician services exception in Sec. 411.355(a) and
the in-office ancillary services exception in Sec. 411.355(b), only
with respect to services performed on the group's premises (including a
``centralized building'' as defined at Sec. 411.351). Therefore, one
practical effect of the change in the definition of ``entity'' is that
a group practice that currently may not bill for a PC performed by an
independent contractor physician, because the independent contractor
physician is not performing the PC on the group's premises, will be
able to do so without running afoul of the physician self-referral
rules if the PC is billed in accordance with the anti-markup provisions
of this final rule with comment period.
g. Employment Status
Comment: A commenter that supported our proposed changes to the
reassignment rules pertaining to diagnostic tests stated that it was
appropriate for CMS to focus on the billing of diagnostic tests
performed by someone other than a full-time employee. The vast majority
of commenters that addressed the employment status issue, however,
opposed applying the anti-markup provisions to part-time employees and
independent contractors based simply on their employment status. Three
commenters asserted that the proposed changes are unnecessary and would
negatively impact the way physicians provide care to patients, possibly
resulting in the termination of part-time physicians or a prohibition
on part-time physicians furnishing diagnostic tests. Many commenters
claimed that, if the proposed changes to the purchased diagnostic test
rules are implemented, physicians and group practices would not be able
to provide certain routine medical procedures if limited to using full-
time employees. One commenter requested that we exempt part-time
employees and independent contractors from the anti-markup rules
provided that the billing supplier satisfies a physician self-referral
exception and the services are furnished in the billing supplier's
office. A few commenters proposed that CMS not apply the anti-markup
requirements to technicians who work on-site at the medical group and
who work at least half-time for that specific group.
One commenter stated that limiting reimbursement for the PC of
diagnostic tests performed by outside suppliers would create an
incentive to hire full-time staff and then overutilize pathology
services in an attempt to recoup the costs of such personnel. The
commenter urged us not to penalize physician groups by having the anti-
markup rules apply when using part-time employees or independent
contractors who furnish services on less than a full-time basis. Two
commenters considered our proposal to be premised on the unsupported
belief that group practices that perform a lower volume of diagnostic
tests and, therefore, need only employ pathologists on a part-time
basis, present more risk of program abuse. Another commenter stated
that forcing suppliers and their staff into full-time relationships
will impose needless costs and will require forgoing efficiencies that
are available through more flexible supplier-staff relationships.
Several commenters believed that applying an anti-markup provision
based upon the employment status of the technician or physician would
unfairly disadvantage individuals who want to work only part-time (for
example, mothers of young children). One of these commenters stated
that we essentially placed a hurdle in front of group practices that
wish to accommodate the professional and personal needs of its
employees, and that, given the shortage of qualified health
professionals in many areas, we should be making it easier, and not
more difficult, for professionals to provide care.
Response: We agree that it is not necessary or advisable to premise
the application of the anti-markup provisions on the employment status
of the person performing the TC or PC. We are revising the language in
Sec. 414.50 to clarify that an outside supplier is someone who is not
an employee of the billing physician or other supplier and who does not
furnish the test or interpretation to the billing supplier under a
reassignment that meets the requirements of Sec. 424.80. Therefore,
diagnostic testing services furnished by part-time employees and
independent contractors in the office of the billing supplier will not
be subject to the anti-markup rules, unless the services of the
independent contractor are billed as a purchased diagnostic test.
Comment: One commenter stated that the anti-markup provisions
should apply only when the diagnostic service is provided in a
centralized building outside of the physician's primary office site
where he or she provides his or her professional services, and should
not apply based on the employment status of the individual performing
the TC.
Response: We agree generally and have revised Sec. 414.50 and
Sec. 424.80 to specify that the anti-markup rules apply to purchased
tests and interpretations (regardless of site of service) and to TCs
and PCs performed at a site other than the office of the billing
supplier. With respect to physician group practices, the group's
``office'' is the medical office space in which the physician
organization provides substantially the full range of patient care
services that the physician organization provides generally. The
group's office does not include space utilized by the group as a
``centralized building'' (or other space) where only (or primarily)
diagnostic testing is performed by radiologists or pathologists.
Comment: One commenter found the proposed definition of an outside
supplier as someone other than a full-time employee of the billing
physician or medical group to be confusing and inconsistent with the
definitions at Sec. 411.351. Thus, the commenter recommended replacing
the term ``full-time employee of the billing physician or medical
group'' with the defined term ``member of the group or member of a
group practice.''
Response: In the CY 2007 PFS proposed rule (71 FR 49054), we
proposed that TCs and PCs that are reassigned under the contractual
arrangements exception in section 1842(b)(6)(A)(ii) of the Act would be
subject to an anti-markup provision. We received comments expressing
concern that our proposals would be ineffective to the extent that
contractors who performed TCs and PCs for multiple group practices
would now become part-time employees of the same group practices. In
response, in the CY 2008 PFS proposed rule, we proposed that the anti-
markup provisions would apply to reassigned TCs and PCs that are not
performed by full-time employees. However, we believe we can guard
adequately against potential overutilization by imposing an anti-markup
provision on purchased PCs and TCs, and, with respect to non-purchased
TCs and PCs, imposing an anti-markup provision on the TCs and PCs that
are performed outside of the office of the billing physician or other
supplier, without regard to the employment status of the person
[[Page 66317]]
performing the TC or PC, thus leaving intact the part-time employment
arrangements that have traditionally existed. Therefore, we believe it
is unnecessary and inadvisable to adopt the commenter's suggestion.
Comment: Several commenters requested that we clarify what is meant
by a ``full-time employee.'' They urged us to use the Department of
Labor's Bureau of Labor Statistics standard, which is 35 hours per
week.
Response: For the reasons stated above, we do not believe it is
necessary to define ``full-time employee.''
Comment: Several commenters suggested that we exempt TCs and PCs
furnished by part-time employees of the billing supplier from the anti-
markup provisions, provided that the employees are working exclusively
for one billing supplier, such as a single health care organization.
Other commenters suggested that, instead of providing that the anti-
markup provisions would apply to the TCs and PCs performed by part-time
employees, we apply an anti-markup provision to work performed by
employees who work for more than a certain number of physician
practices.
Response: We considered creating an exception from the anti-markup
provisions for services provided by part-time employees who work
exclusively for one billing supplier. We also considered restricting
the application of the anti-markup provision to work performed by
employees who work for more than a certain number of physicians'
practices. We rejected both approaches as unnecessary given our
decision to base the application of the anti-markup primarily on the
site of service, as well as because we believe that each approach would
add undue complexity to the rule and would be difficult for both
billing suppliers and for us to administer. We will monitor the
effectiveness of our site-of-service approach in addressing our
concerns regarding potential overutilization. If arrangements that
currently are taking place at a site other than the office of the
billing physician or other supplier simply migrate to the ``office of
the billing physician or other supplier'' in order to escape the
application of the anti-markup provisions, we may revisit the idea of
imposing an anti-markup provision for services performed by a
technician or physician who works for more than a certain number of
physician practices.
h. Deductibles and Coinsurance
Comment: Several commenters observed that there appeared to be a
drafting error regarding the application of deductibles and coinsurance
to the anti-markup limits in proposed Sec. 414.50 and Sec. 424.80. In
both sections, the maximum payment is set as an amount that is net of
deductibles and coinsurance, that is, ``less the applicable deductibles
and coinsurance.'' The commenters noted that the price limitation
should represent the Medicare allowable amount, which should include
any coinsurance or deductibles to be paid by the Medicare beneficiary.
One of the commenters stated that the current language could be
interpreted such that the combined Medicare and beneficiary payment to
the physician could exceed the amount that a physician paid an outside
supplier of a TC or PC by 20 percent, the applicable coinsurance for
PFS services. The commenter recommended that the language be revised to
read ``the payment to the billing physician or medical group, including
applicable deductibles and coinsurance, may not exceed the lowest of
the following amounts.''
Response: Proposed Sec. 414.50 and proposed Sec. 424.80 stated
that, payment to the billing supplier, ``less the applicable
deductibles and coinsurance'' may not exceed the lowest of the
following amounts: (1) The supplier's net charge to the physician; (2)
the physician's actual charge; or (3) the fee schedule amount for the
test that would be allowed if the supplier billed directly. The quoted
language referenced above is identical to that in current Sec. 414.50
and is virtually identical to that in section 1842(n)(1) of the Act. We
read the statute and regulations as saying that the contractor's
payment to the billing supplier, in the situation in which the anti-
markup provision applies, is the lowest of the performing supplier's
net charge, or the billing supplier's actual charge, or the applicable
fee schedule amount, less any applicable deductible and coinsurance
amounts.
We agree with the commenters that the total payment (that is, by
the contractor and the beneficiary or third party payor on behalf of
the beneficiary) is limited to the lowest of the three amounts
specified above. This interpretation represents historical Medicare
policy, and we believe that this policy has been implemented correctly
by the carriers. However, we are refining the language of the
regulation as suggested by the commenter for greater clarity. We do not
consider this a substantive change. We are revising Sec. 414.50 to
read ``the payment to the billing physician or other supplier
(including applicable deductibles and coinsurance paid by the
beneficiary or on behalf of the beneficiary) for the technical or
professional component of the test may not exceed the lowest of the
following amounts * * *''
i. Net Charge
Comment: Several commenters addressed the question of how to
determine the net charge for purposes of applying the anti-markup
provisions. Commenters asserted that most physicians are paid an
aggregate monthly or annual amount for their services and therefore
there is no ``charge'' to report on a claim. One commenter stated that
independent contractors are frequently paid based on time spent
furnishing the services, as opposed to a per-interpretation price.
Alternatively, payment may be made at a fixed rate per month or year.
Yet another model is a per-service price reflecting a blended rate of
different payor pricing, not just the Medicare allowable amount.
Employees, including part-time employees, are often salaried.
Consequently, according to the commenter, there is no cost or charge
per professional interpretation, and it would be impossible for a group
practice to determine the unit price for purposes of the anti-markup
provision. The commenter contended that all of the various types of
employment relationships would have to be restructured, at great cost
and administrative burden, to practices.
One commenter stated that it would not be administratively feasible
to determine the net charge per test in order to apply the anti-markup
provisions to part-time employees or independent contractors who are
paid on an hourly basis or a per-diem rate. Other commenters complained
that the proposed rules do not address how the billing entity is
supposed to determine the net charge per service on the claim.
According to these commenters, it causes confusion as well as the risk
of false claims liability to require physician practices to include a
charge for all diagnostic test services. Another commenter pointed to
what it saw as difficulties in allocating charges between the TC and
the PC when a billing supplier purchases both the TC and the PC.
A few commenters urged us to provide guidance on how to determine
the ``net charge'' for a service. One commenter requested that we
clearly state that the billing entity must calculate its net unit
price, which may reflect payments divided by the number of slides
referred; for example, if the billing entity pays a supplier a set
amount per month or per year to prepare and read all the slides that
were
[[Page 66318]]
referred. One commenter stated that it agreed with the proposed
approach of not allowing the net charge to reflect the cost incurred by
the performing supplier of leasing equipment or space from the billing
supplier. The commenter expressed concern, however, that participants
in some joint venture laboratories may inappropriately attempt to
inflate the acquisition cost of the service, and suggested that we not
permit other related costs, such as separately purchased or leased
equipment, supplies, insurance, etc., to be included when determining
the amount charged by the person performing the TC or PC. If these
costs were included, it would have the effect of raising the net
charge, and permit the billing suppliers to charge Medicare a higher
price.
Response: We are leaving the responsibility for determining the net
charge for a test with the billing supplier. The anti-markup provision
imposed on the PC through this final rule with comment period is
similar to the longstanding provision for prohibiting a markup on the
TC. Thus, we do not believe most suppliers will experience significant
difficulty in calculating the net charge, despite the fact that some
physicians are paid an aggregate monthly or annual amount for their
services. Suppliers that incur difficulty in calculating the net charge
may structure arrangements so that the anti-markup provisions do not
apply (for example, by ensuring that tests and interpretations are not
purchased and are performed in the office of the billing physician or
other supplier), may allow the performing supplier to bill for the TC
or PC, or may use a payment method (such as per-procedure) that yields
an easily ascertainable net charge. Suppliers must calculate the net
charge in a reasonable manner. This final rule with comment period does
not prevent suppliers from using any particular method that yields an
accurate net charge. For example, in some situations, it may be
appropriate to divide a technician's weekly compensation by the number
of procedures performed to arrive at the net charge for each procedure
performed during that week. Because suppliers would have the burden of
establishing that the charge billed was the net charge, suppliers
should retain contemporaneous documentation of the methodology and
information used to calculate the net charge.
We are not adopting at this time the commenter's suggestion that,
to guard against parties artificially inflating the cost of the TC or
PC, we specifically prohibit the performing supplier to take into
account, when calculating its net charge, the costs of equipment or
services (such as insurance), obtained from the billing supplier.
However, we note that, to the extent that a billing supplier would sell
goods or services at an inflated price so as to game the application of
the anti-markup provisions, such excess compensation may constitute a
violation of our rules on physician self-referral and may also be a
violation of the anti-kickback statute (section 1128B(b) of the Act).
We will monitor financial relationships between billing and performing
suppliers and, if it appears that parties are attempting to evade
application of the anti-markup provisions through the sale of goods and
services, we may modify the provisions.
Comment: One commenter expressed concern about expanding the anti-
markup provision to cover the PC, noting that, because a per-
interpretation price is not the most efficient method of compensation
for purchased PCs, practices would likely develop a system of
compensation that would pay the reading physician differently depending
on the patient's payor. For example, practices might pay the reading
physician on a salary basis for reads for patients of private and non-
Medicare payors and on a per-read basis for Medicare patients.
According to the commenter, this could result in lower costs associated
with non-Medicare patients than with Medicare patients, depending on
the way in which the physician and the practice negotiate payment for
the different groups of patients. The commenter questioned whether it
is appropriate to charge Medicare more on a per-procedure basis than
other payors.
Response: Nothing in this final rule with comment period requires
practices to pay for professional services for Medicare patients on a
per-procedure basis or using any particular payment method. What is
important is that the practice calculates an accurate net charge for
purposes of these regulations. In reviewing the accuracy of the net
charges of a practice that pays differently for professional services
based on the payor status of the patients, we would look to see whether
the use of different payment structures results in inappropriate
shifting of costs to Medicare (that is, by paying physicians more for
Medicare reads than non-Medicare reads, the practice is able to collect
more reimbursement under the anti-markup provisions). Moreover, we note
that section 1128(b)(6)(A) of the Act provides for the permissive
exclusion of providers or suppliers that submit bills or requests for
payment based on charges or costs to Medicare that are substantially in
excess of the party's usual charges or costs, absent a finding of good
cause for the differential. Responsibility for that statute is
delegated to the OIG.
Comment: One commenter questioned whether the anti-markup
provisions would apply to diagnostic tests performed through block
lease arrangements. This commenter (and another commenter) also stated
that it would be difficult to calculate the per-test charge on tests
performed in block lease arrangements.
Response: The anti-markup rules do apply to diagnostic tests
performed through block lease arrangements, and the burden is on the
billing entity to determine how to calculate its net charge per test.
Comment: Several commenters urged us to ensure that the calculation
of the payment level under the anti-markup rules will not impose new
administrative burdens on the billing supplier. A few commenters stated
that the billing supplier should be able to mark up the PC between 7
and 10 percent to cover the costs of billing. A few commenters asserted
that the proposed anti-markup provisions will adversely affect group
practices that wish to bill globally for interpretations performed by
teleradiologists located outside of the billing group practice's
office. The commenters were concerned that billing physicians or other
suppliers would not be able to include administrative expenses in the
price paid for the interpretation. One commenter stated that, by
limiting reimbursement to a practice's actual acquisition cost, we are
ignoring the role of the RBRVS system to appropriately establish a
proper payment amount for services.
Response: Where the anti-markup provisions are applicable, the
billing supplier will be responsible for calculating the net charge.
Suppliers that do not wish to contend with calculating the net charge
will have to structure arrangements so that the anti-markup provisions
do not apply (for example, by requiring the suppliers performing the TC
and PC to bill for them, or by ensuring that the TC and PC are
performed in the office of the billing physician or other supplier), or
utilize a per-procedure method of payment or other method that yields
an easily ascertainable net charge. Similarly, suppliers that do not
wish to incur the cost of billing without being able to mark up the TC
or PC, should structure arrangements so that the anti-markup provisions
do not apply.
[[Page 66319]]
Comment: One commenter contended that, in a medical foundation
context, there is no way to determine the net charge to the foundation
for the services of the interpreting physician. The commenter stated
that the anti-markup proposal would result in the need to generate
artificial invoices, greatly complicating and needlessly burdening
medical foundations.
Response: A medical foundation, or any other medical group
practice, billing for the TC or PC of a diagnostic test that it did not
perform will need to calculate its own net charge per test. We perceive
no need to generate artificial invoices. The purpose of this
requirement is to address potential program abuse where physicians and
other suppliers order tests and bill for tests that they did not
perform at a markup from the price paid for the test.
Comment: Several commenters inquired how we would be able to verify
the true cost of purchasing a TC or PC of a diagnostic test. The
commenters questioned our rationale for this proposal and asserted that
the proposal would be detrimental because it would have the effect of
precluding suppliers from recouping overhead costs. The commenters
voiced concerns that we are trying to eliminate purchased diagnostic
tests entirely.
Response: We can verify the true cost of a purchased TC or PC by
requesting supporting documentation from the provider or supplier. The
burden of proof in substantiating the validity of a claim rests with
the billing provider or supplier. The anti-markup provisions finalized
in this rule are not designed to prevent the billing supplier from
recovering overhead expenses or to eliminate purchased diagnostic tests
entirely, but rather to minimize program and patient abuse. Where the
TC or PC is performed in the office of the billing physician or other
supplier, the billing supplier will be able to recoup some or all of
the overhead it incurs in the performance of the TC or PC by billing at
the fee schedule amount (or at the Medicare limiting charge amount).
If, however, the billing supplier has incurred overhead expenses for a
TC or PC that was performed at a site other than the office of the
billing supplier (such as in space leased by a billing group practice
and utilized by the group practice as a ``centralized building'' that
does not meet the definition of ``office of the billing physician or
other supplier'' at Sec. 414.50(a)(2)(iii)), the billing supplier will
not be able to recoup the overhead, but rather will be limited to the
lowest of the performing supplier's net charge, the billing supplier's
actual charge, or the applicable fee schedule amount. (In the unlikely
event that the lowest of the three amounts is either the billing
supplier's actual charge or the applicable fee schedule amount, the
billing supplier may be able to recoup its overhead but nevertheless
would be receiving less payment than the performing supplier's net
charge.) We believe that this result is appropriate. If billing
suppliers were able to recoup overhead incurred for TCs and PCs that
are performed at sites other than their offices, the effectiveness of
the anti-markup provisions would be undermined, because there would be
an incentive to overutilize to recover the overhead incurred for
purchasing or leasing space.
Comment: One commenter recommended that we require, as a condition
for reassignment of a purchased interpretation, that the parties to the
arrangement calculate a net charge for the service. The commenter
stated that, if this condition applied, per-diem or other time-based
arrangements, which are more susceptible to markups, would not be
permitted.
Response: We realize that, in most circumstances, a group practice
would not want to pay an independent contractor more for a service than
the payment it receives from an insurer for furnishing the service.
However, we are under the impression that some physician group
practices that have exclusive contracts with hospitals under which the
group practice furnishes all PCs of inpatient and outpatient radiology
services often hire independent contractors to provide PCs that are
needed at night or on weekends. We have been informed that, in some of
these cases, the group practice willingly pays its independent
contractors more for their services than the group practice receives in
reimbursement so that the group practice physicians do not have to
provide services late at night. There may also be other reasons (for
example, as an improper inducement for referrals) why parties could
agree to an amount that does not accurately reflect the true net
charge.
As explained above, we believe that a group practice may pay an
independent contractor on a per-diem or hourly basis, and also arrive
at an appropriate amount to bill Medicare for each service based on the
number and differing work intensities of the services provided.
Comment: One commenter recommended that we prohibit any mark-up
over the direct costs incurred by the group practice in providing
diagnostic testing services. Direct costs would be defined as limited
to the compensation paid to the persons providing the services and the
cost of equipment and supplies utilized in performing the services. One
commenter asserted that the proposed restrictions would not allow a
billing practice to be paid for its legitimate overhead costs. Two
commenters requested that we permit employers to include in the
calculation of a supplier's net charge the lower of the following: (1)
A reasonable practice expense (PE) derived from its own relative value
cost; or (2) the actual overhead costs attributable to the supplier.
The commenters suggested that this would permit a group to utilize
part-time diagnostic physicians without financially penalizing the
employer, and at the same time safeguard against artificially inflated
overhead costs.
Response: In effect, the commenters requested that we adopt a ``net
charge plus'' approach. In order for the anti-markup provisions to have
real effect, it is necessary that payment by Medicare be limited to the
lowest of: (1) The physician's or other supplier's net charge to the
billing supplier; (2) the billing supplier's actual charge; or (3) the
fee schedule amount for the service that would be allowed if the
physician or other supplier billed directly. If we were to allow
billing suppliers to include costs in addition to the performing
supplier's net charge, we would defeat the purpose of the anti-markup
provisions.
Comment: A few commenters requested that we ensure consistency in
the language in Sec. 414.50 and Sec. 424.80. For example, proposed
Sec. 414.50(a)(3)(i) states that net charge does not include ``any
charge that is intended to reflect the cost of equipment or space
leased to the outside supplier,'' whereas Sec. 424.80 states that it
does not include ``any charge that is intended to cover or address the
cost of this equipment.''
Response: As noted above, we have effectuated the anti-markup
provisions by revising Sec. 414.50, and by placing a cross reference
to that section in new Sec. 424.80(d)(3). The language of proposed
Sec. 414.50(a)(3)(i), ``reflect the cost of equipment or space
leased'' survives.
Comment: One commenter recommended that we include in the net
charge the costs incurred by the purchasing supplier to facilitate test
interpretations, specifically, the cost of teleradiography to transmit
images to the interpreting physician and the cost of producing a
written report of the interpretation.
Response: To the extent that costs such as those noted by the
commenter are incurred by the billing supplier, as opposed to the
performing supplier, we are not persuaded to permit the inflation
[[Page 66320]]
of the net charge to include such costs. As discussed above with
respect to the recoupment of overhead costs, we believe that allowing
billing suppliers to recoup the costs suggested by the commenter would
defeat the purpose of the anti-markup provisions.
i. Miscellaneous
Comment: One commenter suggested that, as an alternative to an
anti-markup provision, we prescribe a fixed dollar amount (for example,
based on a percentage of what Medicare would pay for the PC if billed
directly), as a ceiling for Medicare payment. The ceiling would be
adjusted for certain PEs such as bona fide collection costs and bad
debt.
Response: We believe that setting a fixed dollar amount for
diagnostic tests and interpretations performed under particular
circumstances is problematic. There would be difficulties in
determining what the fixed dollar amount should be, and what, if any,
PEs should be taken into consideration to augment the fixed dollar
amount. In addition, we did not propose such an approach, and believe
it may be outside the logical outgrowth test for issuing final rules to
adopt the commenter's approach in this final rule with comment period.
Moreover, even if we were able to adopt such an approach without first
specifically proposing one, it would take us considerable time to study
the feasibility of prescribing a payment ceiling for TCs and PCs under
particular circumstances, and we believe that it is important to issue
a final rulemaking on this subject without further delay in order to
address our current concerns with potential overutilization.
Comment: Two commenters stated that, in addition to restrictions
contained in the proposed rule, we should also require that: (1) A
pathologist not be allowed to work for more than one physician group
practice; (2) a pathologist not be allowed to work for, or have any
arrangement with, independent reference laboratories; and (3) medical
liability insurance for the pathologist should be paid by the physician
group practice billing for the pathologist's services. (The commenters
explained that the purpose of the second proposed requirement is to
eliminate the possibility that a reference laboratory could provide a
pathologist to a physician group practice in return for receiving the
right to bill for the TC.) One of the commenters was also concerned
that, if a single pathologist is performing work for the billing
physician practice, appropriate or optimal quality assurance will not
take place. The commenter stated that, in her pathology group practice,
all malignancies are reviewed by at least two pathologists.
Response: With respect to the commenters'' first suggested
requirement, we proposed that an anti-markup provision would apply to
PCs that are reassigned by someone who is not a full-time employee of
the supplier billing for the PC, because we were concerned with the
potential for overutilization where a single physician performs
interpretations for more than one group practice in contiguous
centralized buildings (such as in ``pod'' or ``condo'' laboratories).
Specifically, we were concerned that a physician who formerly
reassigned benefits under the contractual arrangements reassignment
exception could simply be made a part-time employee of a number of
group practices. As noted above, in response to public comments, we are
not imposing an anti-markup on the PC of a diagnostic test simply
because the PC was performed by someone other than a full-time employee
of the billing supplier. Rather, we are addressing our concerns
regarding potential overutilization by imposing an anti-markup on the
PC of a diagnostic test if it is purchased or if it is not performed in
the office of the billing physician or other supplier. We believe our
decision to impose an anti-markup provision on PCs that are ordered by
the billing supplier and performed at a site other than the office of
the billing supplier (for example, in space that the billing supplier
utilizes as a ``centralized building'' but that does not meet the
definition of ``office of the billing physician or other supplier'' in
revised Sec. 414.50(a)(2)(iii)), regardless of the employment status
of the physician, will adequately address our concerns with
overutilization. As for the other two proposed requirements and the
second commenter's implied proposed requirement, we do not believe it
is within the scope of this rule to attempt to restrict a pathologist
from working for more than one supplier, or to require a group practice
to pay for a pathologist's malpractice premiums, or to impose quality
standards for pathologist performed PCs.
Comment: A commenter recommended that we revise the definition of
``centralized building'' at Sec. 411.351 to include the following
language: ``In the case of a space used for the performance of the [TC]
of a diagnostic test, which is billed by a group practice, such space
can qualify as a centralized building only if the group complies with
the requirements of Sec. 414.50 or Sec. 424.80(d)(3) when billing for
the [TC].'' The commenter also suggested that, by changing the
definition of ``centralized building,'' a physician or medical group
would be prohibited from marking up what it paid for the TC of a test
that was performed in a centralized building, unless it was performed
by a full-time employee.
Response: We are not revising the definition of ``centralized
building'' in this rule. Because the anti-markup provisions will apply
to all TCs and PCs that are both: (1) Ordered by a group practice (or
an entity related to the group practice by common ownership or control;
see Sec. 413.17 regarding ``common ownership or control''); and (2)
performed at a site other than the office of the physician or other
supplier, it is not necessary at this time to narrow the definition of
a ``centralized building'' in order to guard against potential
overutilization.
Comment: One commenter expressed concern regarding physicians who
have invested heavily in in-office equipment and have followed CMS
guidelines established for the in-office ancillary services exception
in Sec. 411.355(b) for purposes of the physician self-referral rules.
The commenter recommended that we regulate the usage of ancillary
services through medical necessity guidelines and by requiring that the
services be provided at fair market value, rather than by the proposed
changes to the reassignment and purchased test rules.
Response: As finalized, the anti-markup provisions do not apply to
non-purchased TCs and PCs performed in the office of the billing
physician or other supplier. We note that in the CY 2008 PFS proposed
rule, we sought comments as to whether we should narrow the in-office
ancillary services exception, including whether we should exclude
certain types of services from the protection of the exception. We
received many comments on this issue, and if we are inclined to make
any changes to the in-office ancillary services exception we will first
propose such changes in a notice of proposed rulemaking.
Comment: One commenter urged us to require that imaging technology
be provided only by physicians trained in modality-specific
interpretation of imaging procedures who follow the guidelines of
specialty organizations such as the American College of Cardiology and
the American Society of Echocardiography. In addition, the commenter
supported the accreditation of facilities that provide such imaging
services, provided that we allow adequate time for practices to become
accredited by relevant organizations that
[[Page 66321]]
are dedicated to improving the quality of imaging services.
Response: The comment is outside the scope of the proposed rule.
Moreover, currently we do not have the statutory authority to restrict
payment for these procedures to physicians who possess the training and
accreditation recommended by the commenter.
Comment: One commenter urged us to enforce the anti-markup
requirements on purchased diagnostic tests by auditing pathology
practices and laboratories. The commenter contended that there is
widespread ordering of unnecessary tests by pathologists with no
regulatory oversight by CMS. The commenter suggested that effective
enforcement and application of current anti-markup rules to the
pathology community would obviate the need to add new regulations that
would limit physician practices from providing quality pathology
services to their Medicare patients. The commenter also suggested that
we adopt reasonable protocols and standards for the review of Pap
smears, among other tests, which, according to the commenter, would
significantly reduce unnecessary testing by pathologists and result in
tremendous cost savings to the Medicare program.
Response: Our contractors perform pre-pay and post-pay reviews of
services, including reviews to determine if the services were
reasonable and necessary. However, the extremely large number of claims
that contractors must handle each year, as well as the difficulty in
sometimes knowing whether services were reasonable and necessary,
underscores the need to adopt rules to address the potential for
overutilization in other ways, rather than relying solely on reviews
for medical necessity. The proposed anti-markup provisions would apply
equally to all physicians, including pathologists. However, section
1842(n)(1) of the Act does not authorize the anti-markup on diagnostic
tests to apply to clinical laboratory tests, and we did not propose to
extend the anti-markup provisions to such tests. We are concerned with
preventing the billing supplier from ordering unnecessary tests for
profit. Laboratories typically do not order tests, and therefore, there
has not been a concern about abuse by laboratories in purchasing
diagnostic tests. The comment that we should adopt protocols or
standards for the review of Pap smears and other tests is outside the
scope of the proposed rule.
Comment: One commenter urged us to prohibit any markup of the TC of
surgical pathology specimens and let each physician decide where the TC
is performed in addition to where the PC is performed.
Response: Section 414.50 and section 30.2.9 of Pub. 100-04, Chapter
1, CMS Internet-Only Manual, currently prohibit markups of the TC of a
diagnostic test if the TC is performed by an outside supplier. As
finalized, our revisions to Sec. 414.50 will prohibit the markup of a
TC if the TC is ordered by the billing supplier and is either purchased
or performed somewhere other than the office of the billing supplier.
Physicians are permitted to determine where the TC and PC are
performed, provided that the arrangement is in compliance with the
purchased test rules and physician self-referral rules.
Comment: One commenter stated that the proposed anti-markup
provisions are unfair and would interfere with existing business
relationships. The commenter asserted that medical practices should
have the freedom to hire in-house professionals or contract with other
practices to perform services without fear of financial penalty.
Response: We are not persuaded that our anti-markup proposals, as
finalized in this final rule with comment, are unfair. The proposals as
finalized are designed to reduce overutilization of diagnostic tests,
so that tests are ordered because they are medically necessary and are
not ordered because a profit can be made on each test. Practices can
maintain relationships with other professionals on a part-time or
contractual basis. If the services are furnished in the office of the
billing supplier, the anti-markup rules will not apply, unless the
services of an independent contractor are billed as a purchased test.
N. Beneficiary Signature for Ambulance Transport Services
Section 424.36 requires that a beneficiary's signature must appear
on all claims submitted for Medicare services, unless the beneficiary
has died, or another exception applies. However, ambulance suppliers
and providers have stated that, in emergency situations, it is often
impossible or impractical for ambulance providers or suppliers to
obtain a beneficiary's or other authorized person's signature on a
claim to properly bill Medicare for ambulance transport services
because: (1) Many beneficiaries are incapable of signing claims due to
their medical condition at the time of transport; (2) another person
authorized to sign the claim under Sec. 424.36(b) is not available, or
is unwilling to sign the claim at the time of transport; and (3) if an
individual listed in Sec. 424.36(b) is not available or is unwilling
to sign a claim on behalf of the beneficiary at the time of transport,
it is impractical later to locate the beneficiary (or the beneficiary's
authorized representative) to obtain a signature on the claim form
before submitting it to Medicare for payment.
As stated in the CY 2008 PFS proposed rule (72 FR 38187), we are
sympathetic to the concerns of ambulance providers and suppliers
insofar as emergency transport services are involved. Therefore, we
proposed to revise Sec. 424.36 to provide that, for emergency
ambulance transport services, where the ambulance provider or supplier
documents that the beneficiary was physically or mentally incapable of
signing a claim form at the time the service was provided and that none
of the individuals listed in Sec. 424.36(b)(1) through (b)(5) \2\ was
available or willing to sign a claim on behalf of the beneficiary, the
ambulance provider or supplier could submit the claim without a
beneficiary signature. Under our proposal, such claim submission would
be permitted only if: (1) The beneficiary was physically or mentally
incapable of signing the claim form at the time the service was
provided; (2) none of the individuals listed in Sec. 424.36(b)(1)
through (b)(4) was available or willing to sign the claim form on
behalf of the beneficiary at the time the service was provided; and (3)
the ambulance provider or supplier maintains in its files for a period
of at least 4 years from the date of service certain documentation.
Required documentation would include: (1) A signed contemporaneous
statement, made by an ambulance employee present during the trip to the
receiving facility, that the beneficiary was physically or mentally
incapable of signing a claim form and that none of the individuals
listed in Sec. 424.36(b)(1) through (b)(4) was available or willing to
sign the claim form on behalf of the beneficiary at the time the
service was provided; (2) the date and time the beneficiary was
transported, and the name and location of the facility where the
beneficiary was received; and (3) a signed contemporaneous statement
from a representative of the facility that received the beneficiary,
which documents the name of the beneficiary and the time and date that
the beneficiary was received by that facility.
---------------------------------------------------------------------------
\2\ We are making a technical change in the final rule. The
references in the proposed rule to Sec. 424.36(b)(5) were in error,
as individuals are specified only in Sec. 424.36(b)(1) through
(b)(4).
---------------------------------------------------------------------------
For non-emergency ambulance transport services, the ambulance
[[Page 66322]]
provider or supplier would continue to be required to obtain a
beneficiary's signature on a claim form (or the signature of someone
who is authorized to sign on behalf of the beneficiary under Sec.
424.36(b)(1) through (b)(4)) prior to submitting claims to Medicare.
We received comments from two national associations that represent
providers and suppliers of ambulance services and hospitals. The
remainder of the comments came from ambulance owners and employees. The
commenters generally agreed that we should eliminate the beneficiary
signature requirement entirely when a beneficiary is mentally or
physically incapable of signing a claim and no other person authorized
to sign a claim on behalf of the beneficiary is available or willing to
sign at the time of transport. In addition, the commenters argued that
the proposed documentation requirements would be costly and burdensome
to ambulance providers and suppliers.
We are adopting our proposal, with modification. Specifically, we
are allowing a secondary form of verification to be used in lieu of the
proposed signed contemporaneous statement from a representative of the
facility that received the beneficiary (which remains an alternative).
We are also amending Sec. 424.32(a) to clarify that the beneficiary
signature requirement is satisfied if one of the exceptions in Sec.
424.36 is satisfied. Finally, we are making a technical change to our
proposal. In the proposed rule, we stated that ambulance providers and
suppliers could utilize proposed Sec. 424.36(b)(6) if none of the
individuals listed in Sec. 424.36(b)(1) through (b)(5) were available
or willing to sign the claim on behalf of the beneficiary at the time
the service was provided. The references to Sec. 424.36(b)(5) were in
error, as individuals are specified only in Sec. 424.36(b)(1) through
(b)(4).
Comment: The majority of the commenters opposed our proposed
changes to the beneficiary signature requirements in Sec. 424.36. The
commenters stated that the proposed changes would have the unintended
effect of increasing the administrative and compliance burden on
providers and suppliers of ambulance services and on the hospitals.
Response: The proposal would not have imposed any additional
burdens on providers and suppliers of ambulance services. Rather, the
proposal, which we are adopting with some modification, set forth an
alternate method of satisfying the beneficiary signature requirement
for claims submitted for emergency ambulance services. Those ambulance
providers and suppliers that believe that it is burdensome to comply
with new Sec. 424.36(b)(6), may avail themselves of the other means
specified in Sec. 424.36 for satisfying the beneficiary signature
requirement.
Comment: Commenters asserted that when a beneficiary is physically
or mentally incapable of signing a claim, the ambulance industry has
already been signing claims on behalf of such beneficiaries in
accordance with the requirements listed in the CMS Internet-Only Manual
(IOM), Pub. 100-02, Medicare Benefit Policy Manual, Chapter 10, Section
20.1.2 and IOM, Pub. 100-04, Medicare Claims Processing Manual, Chapter
1, Section 50.1.6(A)(3)(c), without any objections from CMS
contractors. The commenters stated that the ambulance industry has also
been relying on Sec. 424.36(b)(5) as further authority to sign claims
on behalf of beneficiaries when beneficiaries are incapable of signing
and the requirements of Sec. 424.36(b)(1) through (b)(4) have not been
met.
Response: Section 424.36(b)(5) applies only if the beneficiary is
physically or mentally incapable of signing the claim and none of the
persons listed in Sec. 424.36(b)(1) through (b)(4) is available to
sign the claim. Note that we interpret Sec. 424.36(b), including Sec.
424.36(b)(5), as meaning that neither the beneficiary nor any of the
persons listed in Sec. 424.36(b)(1) through (b)(4) is available at
all, not just that none of them is available at the time the service is
performed. Thus, even assuming that Sec. 424.36(b)(5) applies to
ambulance providers (and we believe that this subparagraph was intended
to apply only to institutional providers such as a hospital), an
ambulance provider would not be allowed to rely on Sec. 424.36(b)(5)
to sign a claim for ambulance services simply because the beneficiary
was incapable of signing the claim at the time of delivery to the
hospital or ESRD facility and none of the persons listed in Sec.
424.36(b)(1) through (b)(4) was available and willing to sign the claim
for ambulance services at the time of delivery. Instead, the provider
would be required, in advance of submitting the claim, to make
reasonable efforts to locate and obtain a signature from the
beneficiary or, if the beneficiary is not capable of signing, one of
the alternative individuals specified in Sec. 424.36(b)(1) through
(b)(4). It would make little sense to specify different categories of
individuals in Sec. 424.36(b)(1) through (b)(4) who could sign a claim
on behalf of a beneficiary who is unable to sign, if a provider was
allowed to file a claim without making an effort to obtain a signature
from one of the other authorized individuals. To the extent that
ambulance suppliers have been relying on Sec. 424.36(b)(5) under any
circumstances, such suppliers have been failing to follow the
regulations, as this subparagraph does not pertain to suppliers. We are
clarifying Sec. 424.36(b)(5) to provide that, before a provider may
avail itself of the exception in Sec. 424.36(b)(5), it must make
reasonable efforts (including over a reasonable period of time) to have
either the beneficiary or one of the individuals specified in Sec.
424.36(b)(1) through (b)(4) to sign the claim. Similarly, the sections
of the CMS IOM cited by the commenters, Pub. 100-02, Chapter 10,
section 20.1.2 and Pub. 100-04, Chapter 1, section 50.1.6(A)(3)(c)
imply that reasonable efforts must be made to locate other individuals
prior to submitting the claim. We plan to issue clarifying instructions
in the near future, to ensure that our regulations and manual
instructions on the beneficiary signature requirement are fully
consistent with each other.
In contrast, the proposal, as adopted with modification, allows
ambulance providers and suppliers, in the case of emergency transport,
to sign the claim, if certain documentation requirements are met, where
the beneficiary is not capable of signing the claim at the time of
transport.
Comment: Most of the commenters agreed that some of our proposed
documentation requirements are already being followed by ambulance
providers and suppliers. However, they strongly objected to proposed
Sec. 424.36(b)(6)(ii)(C), which would have required a signed
contemporaneous statement from a representative of the facility that
received the beneficiary, documenting the name of the beneficiary, and
the date and time the beneficiary was received by that facility. The
commenters asserted that it is not practical or feasible to obtain a
signed contemporaneous statement from a representative of the receiving
facility documenting the name of the beneficiary and the date and time
the beneficiary was received by that facility. The commenters stated
that hospital personnel in emergency departments often are either too
busy or refuse to sign any forms when receiving a patient. In addition,
the commenters contended that attempting to obtain a signature from a
representative of the hospital would decrease the amount of time
available for ambulances to serve their respective communities.
Therefore, the commenters recommended that CMS modify the proposed
beneficiary
[[Page 66323]]
signature requirements for ambulance services in Sec. 424.36(b)(6) to
include only proposed subsection Sec. 424.36(b)(6)(i). One commenter
stated that a signature from hospital staff does not add any more
credibility to the ambulance provider or supplier's claim that the
patient was unable to sign the claim than what is already present from
the EMT's attestation that the patient was unable to sign.
Response: We are not persuaded to modify the proposed alternative
to the beneficiary signature requirement in Sec. 424.36(b)(6) to
include only Sec. 424.36(b)(6)(i). The purpose of the proposed
requirement to secure a signed contemporaneous statement from a
representative of the facility that received the beneficiary, as a
means of satisfying the alternative, was to ensure that someone other
than an ambulance employee verifies the transport and receipt of the
beneficiary; the purpose was not to obtain verification that the
beneficiary was unable to sign the claim. We continue to believe that
in many, if not most, cases the ambulance transport personnel will have
no difficulty in securing a signature from personnel at the hospital or
other facility that acknowledges receipt of the patient. Indeed, it is
our understanding that, as protection from liability or for other
purposes, some ambulance providers and suppliers routinely secure a
signature from the receiving facility in order to document that the
patient was transported. We note that our proposal would not have
required the hospital or other receiving facility to do anything more
than acknowledge receipt through a signature. That is, the ambulance
provider or supplier could add a signature block and an attestation
clause, acknowledging receipt, to its trip ticket or other form that
would already contain the necessary patient information (that is, the
beneficiary's name and the date and time of delivery). However, after
further consideration, we are revising Sec. 424.36(b)(6)(ii)(C) to
provide an alternative to the requirement under Sec. 424.36(b)(6) that
ambulance providers or suppliers must obtain a signed contemporaneous
statement from a representative of the facility that received the
beneficiary, which documents the name of the beneficiary and the date
and time the beneficiary was received by that facility. The final rule
allows the ambulance provider or supplier to meet the condition
specified in Sec. 424.36(b)(6) by obtaining a secondary form of
verification, prior to submitting the claim for payment. Secondary
methods of verification may include the patient care or trip report,
the patient medical record, the hospital registration/admissions sheet,
the hospital log, or other internal hospital or facility records.
Regardless of its specific form, the documentation must be from the
receiving facility must indicate that the beneficiary in question was
transported to the facility by the ambulance provider or supplier that
is submitting the claim, and must be signed by a representative of the
facility.
Comment: One commenter stated that the proposal was fair and
correct, would not create a heavy burden on the service provider and
can be accomplished in a timely manner. A signed contemporaneous
statement used on a limited basis and tightly controlled so that it
will not become a routine event should help compliance in this area. A
clear and standardized format for the contemporaneous statement should
be issued to allow for proper compliance with the new rule.
Response: We understand the commenter as supporting our proposal
and as saying that ambulance providers and suppliers should not be
entitled to routinely rely on proposed Sec. 424.36(b)(6), but rather
should be able to rely on this exception only when the beneficiary is,
in fact, unable to sign the claim, and only when the proposed
documentation requirements have been satisfied. We agree that in most
cases an ambulance provider or supplier should not have difficulty in
obtaining a signature from the hospital or other facility that
acknowledges receipt of the beneficiary; however, we are modifying the
proposal to provide for an alternate method of documenting that the
beneficiary was transported to the facility. We do not believe that it
is necessary to prescribe a specific form for ambulance providers and
suppliers to use as a contemporaneous statement to document the
transport of the beneficiary, but instead are allowing ambulance
providers and suppliers to use existing forms of their own, or, where
necessary, to modify their forms to comply with the requirements of the
new Sec. 424.36(b)(6)(ii). We again emphasize that ambulance providers
and suppliers that do not wish to take advantage of the new exception
in Sec. 424.36(b)(6) to the beneficiary signature requirement, may
instead obtain the beneficiary's signature prior to submitting the
claim, satisfy one of the exceptions in Sec. 424.36(b)(1) through
(b)(5), or, where appropriate, bill the beneficiary.
Comment: Several commenters recommended that we eliminate the
beneficiary signature requirement entirely. They believe that the
requirement is not necessary because, for every transport of a Medicare
beneficiary, the ambulance crew completes a trip report that described
the condition of the beneficiary, treatment, origin/destination, etc.
Also, the origin and destination facilities complete their own records,
which document that the beneficiary was sent or received. Commenters
stated that if it becomes necessary to audit claims, CMS can obtain
information from the transporting and receiving facilities in order to
establish that the beneficiary was, in fact, transported as claimed by
the ambulance provider or supplier.
Response: We proposed an alternative, optional method of fulfilling
the beneficiary signature requirement for claims for emergency
transport services. We did not propose to eliminate the signature
requirement and are not prepared to do so at this time. The beneficiary
signature requirements help ensure that services were in fact rendered
and were rendered as billed. Although we agree that documentation
obtained from the transporting and (particularly) from the receiving
facility may help to alleviate any concern whether services were
furnished or were furnished as claimed, we do not believe that it is
our responsibility to attempt to locate such documentation should
claims be called into question (and it is also uncertain whether we
would have the right to compel the transporting or receiving facility
to provide us with such documentation). Therefore, to the extent that
an ambulance provider or supplier wishes to use third-party
documentation to demonstrate that a beneficiary was transported as
claimed, instead of having the beneficiary sign the claim or meeting
one of the exceptions in Sec. 424.36(b)(1) through (b)(4), it must
follow the procedures in new Sec. 424.36(b)(6).
Comment: Most of the commenters questioned the need for the
beneficiary signature, because they asserted that the beneficiary
signature is no longer necessary given that it is not required for the
assignment of benefits or the authorization of records release to CMS
or its contractors. In addition, the commenters stated that almost
every covered ambulance transport is to or from a facility (that is, a
hospital or skilled nursing facility) where a valid signature is
already on file. These facilities typically obtain the beneficiary's
signature at the time of admission, authorizing the release of medical
records for their services, or any related services. The commenters
believe that ambulance transport to a facility, for purposes of
receiving treatment at that facility, constitutes a
[[Page 66324]]
``related service,'' because the ambulance transports the patient to or
from that facility for treatment or admission. Commenters also noted
that, with respect to beneficiaries who are eligible both for Medicare
and Medicaid, a signature is already on file with the State Medicaid
office. Therefore, they argued that duplicating the requirement for a
signature is costly and burdensome on ambulance service providers.
Response: The purpose of the assignment of benefits signature is
different than the purpose of the beneficiary signature to file a
claim. As stated above, the purpose of the beneficiary signature to
file a claim is to ensure that services were furnished and were
furnished as billed. Although the assignment of benefits signature is
not required for services billed on mandatory assignment, the
beneficiary signature is still required for submitting a claim to
Medicare.
A beneficiary's signature on file at a hospital or a skilled
nursing facility does not indicate that an ambulance provider or
supplier was authorized to submit a claim for transport services on
behalf of the beneficiary or that transport services in fact were
furnished. Rather, the signature on file at a facility is used for
claims filed by that facility for treatment the facility furnished to
the beneficiary. Similarly, the fact that a beneficiary's signature may
be on file with a State Medicaid office (or elsewhere) does not in any
way speak to the issue of whether the ambulance provider or supplier
was authorized to submit a claim for transport services on behalf of
the beneficiary or that transport services in fact were furnished.
Comment: A commenter stated that when submitting claims
electronically, a provider or supplier must answer ``Y'' or ``N'' for
the question of whether the provider or supplier has obtained a
beneficiary signature. The commenter suggested that we should add
language to the regulations to indicate that the beneficiary signature
requirement will be met if one of the exceptions to the requirement is
met.
Response: We agree that it is proper and accurate to answer ``Y''
(for yes) to the question in the case where the beneficiary has not
signed the claim but one of the alternatives in Sec. 424.36(b) through
Sec. 424.36(e) has been satisfied. We are clarifying Sec.
424.32(a)(3) (basic requirements of all claims) accordingly.
Comment: Many commenters stated that the proposal would encourage
ambulance providers and suppliers to seek signatures from patients who
are in need of medical care and under mental duress. They stated that
beneficiaries under duress should not be required to sign anything.
Response: We agree that beneficiaries under duress should not be
required to sign claims; in fact, we consider a beneficiary signature
obtained under duress to be invalid. We do not agree, however, that our
proposal encouraged ambulance providers and suppliers to obtain
beneficiary signatures under duress. As stated above, the proposal was
intended to provide ambulance providers and suppliers with another
alternative to obtaining the beneficiary's signature. It was not, and
the final rule is not, a narrowing of the available alternatives to
ambulance providers and suppliers. Moreover, the commenters appear to
assume that if ambulance providers and suppliers are to obtain a
beneficiary's signature, they must do so at the time of transport.
However, ambulance providers and suppliers have always been able to
obtain the beneficiary's signature (or the signature of one of the
persons specified in Sec. 424.36(b)(1) through (b)(4)) at any time
prior to submitting the claim. In fact, as noted above, before
providers may avail themselves of the exception in Sec. 424.36(b)(5),
they are required to make reasonable efforts to have the beneficiary or
one of the persons specified in Sec. 424.36(b)(1) through (b)(4) sign
the claim. With this final rule, ambulance providers and suppliers, in
the case of emergency transport services, may submit the claim without
making such reasonable efforts if they satisfy the documentation
requirements of new Sec. 424.36(b)(6).
O. Update to Fee Schedules for Class III Durable Medical Equipment
(DME) for CYs 2007 and 2008
1. Background
a. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) Classifications
Under Sec. 414.210, for Medicare payment purposes, fee schedules
are determined for the following classes of equipment and devices:
Inexpensive or routinely purchased items as specified in
Sec. 414.220.
Items requiring frequent and substantial servicing, as
specified in Sec. 414.222.
Certain customized items, as specified in Sec. 414.224.
Oxygen and oxygen equipment, as specified in Sec.
414.226.
Prosthetic and orthotic devices, as specified in Sec.
414.228.
Other DME (capped rental items), as specified in Sec.
414.229.
Transcutaneous electric nerve stimulators (TENS), as
specified in Sec. 414.232.
We designate the items in each class of equipment or device through
our program instructions.
Under section 513 of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 360c), the Food and Drug Administration (FDA) must classify
devices into one of three regulatory classes: Class I, class II, or
class III. FDA classification of a device is determined by the amount
of regulation necessary to provide a reasonable assurance of safety and
effectiveness; class III devices typically posing the greatest risk.
See the CY 2008 PFS proposed rule (72 FR 38188) for a specific
explanation of the three regulatory classifications of devices.
b. DMEPOS Payment
Section 302(b)(1) of the MMA amended section 1847 of the Act to
require the Secretary to establish and implement competitive
acquisition programs for the furnishing under Medicare Part B of
certain types of DMEPOS. Section 1847(a)(2)(A) of the Act provides that
devices determined by the FDA to be class III devices under the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) cannot be included
in the competitive acquisition programs. As part of the transition to
competitive acquisition, the Congress mandated in sections
1834(a)(14)(G) through (I) of the Act that the fee schedule amounts for
DME, other than class III devices, be frozen at 2003 levels through
2008.
For class III devices, section 1834(a)(14)(G)(i) of the Act
mandates that an annual update factor based on the percentage change in
the consumer price index for urban customers (CPI-U) be applied to the
fee schedule amounts for CYs 2004 through 2006. Section
1834(a)(14)(H)(i) of the Act, as added by section 302 of the MMA, gives
the Secretary discretion in determining the appropriate fee schedule
update percentage for CY 2007 for DME which are class III medical
devices described in section 513(a)(1)(C) of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 360c(a)(1)(C)).\3\ Specifically, for 2007,
the 2006 fee schedule amounts for class III devices are to be updated
by the percentage change determined to be appropriate by the Secretary,
taking into account recommendations contained in
[[Page 66325]]
a report of the Comptroller General of the United States under section
302(c)(1)(B) of the MMA. Also mandated by section 1834(a)(14)(I)(i) of
the Act, for 2008, the 2007 fee schedule amounts for class III devices
are to be increased by an annual factor based on the percentage change
in the CPI-U, as applied to the 2007 payment amount determined after
application of the percentage change under section 1834(a)(14)(H)(i) of
the Act.
---------------------------------------------------------------------------
\3\ Section 513(a)(1)(C) of the Federal Food, Drug, and Cosmetic
Act has been codified as 21 U.S.C. 360c(a)(1)(C). Accordingly, we
believe that the references to 21 U.S.C. 360(c)(1)(C) in sections
1834(a)(14)(G)(i), (H)(i), and (I)(i) of the Act are scrivener's
errors.
---------------------------------------------------------------------------
As stated above in this section of this final rule with comment
period, section 1834(a)(14)(H)(i) of the Act mandated that the
Secretary take into account recommendations by the Comptroller General
of the United States, who is the head of the Government Accountability
Office (GAO), when determining the appropriate update percentage for
class III devices for 2007. On March 1, 2006, the GAO published a
report, ``Class III Devices do not Warrant a Distinct Annual Payment
Update'' (GAO-06-62). The GAO concluded in that report, ``because the
initial payment rates for all classes of devices on the Medicare DME
fee schedule are based on retail prices or an equivalent measure, they
account for the costs of class III and similar class II devices in a
consistent manner. Distinct updates for two different classes of
devices are unwarranted.'' The GAO recommended that the Secretary
establish a uniform payment update to the DME fee schedule for 2007 for
class II and class III devices.
In the May 1, 2006 Federal Register, we published the Competitive
Acquisition for Certain Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies (DMEPOS) and Other Issues proposed rule (71 FR
25660). We solicited comments on how to determine the appropriate fee
schedule percentage change for class III devices for 2007 and 2008. We
stated that we would consider the comments received in conjunction with
the recommendations in the GAO report in determining the appropriate
update percentage for these devices for 2007 and 2008.
A majority of the submitted public comments indicated that the GAO
report was flawed since it did not recommend a specific update factor
or take into account changes over time in the costs of producing,
supplying and servicing class III devices. Several commenters
recommended that we continue to use the CPI-U to adjust fee schedule
amounts for class III devices, but offered no substantive information
that would otherwise support a distinct update factor for class III
devices. Another commenter recommended that the class III proposal be
included in a separate rulemaking procedure because it is not related
to competitive acquisition.
2. Update to Fee Schedule
We believe that the GAO has done a thorough job in reviewing
Medicare payment rules and methods and issues associated with the costs
of furnishing class III devices. Accordingly, we agree with the finding
in the report that the costs of furnishing class II and class III DME
devices have been factored into the fee schedule amounts calculated for
these devices. We also agree with the GAO recommendation that a uniform
payment update be established to the DME fee schedule for 2007 for
class II and class III devices. For class II devices, the MMA provided
for a zero percent payment update from 2004 through 2008. Accordingly,
for 2007, in the CY 2008 PFS proposed rule we proposed a zero percent
update for class III devices (72 FR 38188 through 38189). Also, in
accordance with the MMA, we proposed to use the percent change in the
CPI-U to update the class III device 2007 fee schedule amounts for
2008.
Comment: One commenter supported an update based on the CPI-U but
did not provide any additional information. A second commenter
indicated that class III devices are innovative, beneficial, cost-
effective devices and supported a reasonable payment update but did not
recommend a specific update and also did not provide any information
explaining why class III devices should receive a different update for
2007 than other DME.
Response: We do not believe that the information submitted by the
commenters provides any information that would indicate that class III
devices warrant a different update than other DME. Accordingly, for
2007, we are adopting the proposed update methodology of applying a
zero percent update for class III devices. Also, in accordance with the
MMA, we are adopting the proposed methodology of applying the percent
change in the CPI-U to update the class III device 2007 fee schedule
amounts for 2008. The change in the CPI-U for the 12-month period
ending with June 2007 was 2.7 percent. Therefore, a 2.7 percent
increase will be applied to the 2007 fee schedule amounts for class III
DME to determine the 2008 fee schedule amounts for these items.
P. Discussion of Chiropractic Services Demonstration
In the CY 2006 PFS final rule with comment period (70 FR 70266) and
the CY 2007 PFS final rule with comment period (71 FR 69707), we
included a discussion of the 2-year chiropractic services demonstration
that ended on March 31, 2007. This demonstration was authorized by
section 651 of the MMA to evaluate the feasibility and advisability of
covering chiropractic services under Medicare. These services extended
beyond the current coverage for manipulation to care for
neuromusculoskeletal conditions typical among eligible beneficiaries,
and covered diagnostic and other services that a chiropractor was
legally authorized to perform by the State or jurisdiction in which the
treatment was provided. The demonstration was conducted in four sites,
two rural and two urban. The demonstration was required to 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 budget neutrality 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 stated in the CY 2006 and CY 2007 PFS final rules with comment
period, we would make adjustments to the chiropractor fees under the
Medicare PFS to recover aggregate payments under the demonstration in
excess of the amount estimated to yield budget neutrality. We will
assess budget neutrality by determining the change in costs based on a
pre- and post-comparison of aggregate payments and the rate of change
for specific diagnoses that were treated by chiropractors and
physicians in the demonstration sites and control sites. Because the
aggregate payments under the expanded chiropractor services may have an
impact on other Medicare expenditures, we will not limit our analysis
to reviewing only chiropractor claims.
Any needed reduction to chiropractor fees under the PFS would be
made in the CY 2010 and CY 2011 physician fee schedules as it will take
approximately 2 years after the demonstration ends 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 budget
neutrality and the proposed
[[Page 66326]]
offset during the CY 2009 PFS rulemaking process.
Comment: We received a number of comments on the methodology for
determining budget neutrality. One commenter indicated that it
continues to oppose our methodology for assuring budget neutrality
under the demonstration. Instead of the application of an adjustment to
the national chiropractor fee schedule, the commenter recommends that
CMS make an adjustment to the totality of services payable under the
Part B Trust Fund. This would be consistent with the requirements in
section 651(f)(1)(A) of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA).
Another commenter stated that CMS should apply budget neutrality
only to the chiropractic codes used in the demonstration project.
Because the demonstration did not require a physician referral,
physicians should not be penalized for any utilization of chiropractic
services. The commenter further noted that if budget neutrality is not
limited to the chiropractic codes, CMS should incorporate estimates of
the impact on other services into its SGR ``law and regulation'' factor
estimates.
Response: Section 651(f)(1)(B) of the MMA requires that ``* * * the
Secretary shall ensure that the aggregate payment 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 budget neutrality. Our
methodology meets the statutory requirement for budget neutrality and
appropriately impacts the chiropractic profession that is directly
affected by the demonstration. The budget neutrality adjustment under
the PFS will be limited to adjusting chiropractor fee schedule codes
(comprised of the 3 currently covered CPT codes 98940, 98941, and
98942). No other codes would be affected.
Comment: One commenter noted that there are numerous dimensions to
the analysis of effectiveness of treatment. By restricting our analysis
only to Medicare expenditure, CMS would miss the important dimension of
the effect of care on the beneficiary. Combining claims data with a
measurement of functional status would permit a more useful examination
of the impact of expanding chiropractor services. The commenter
recommends that if CMS undertakes any further examination of the
effectiveness of any intervention for neuromuscular conditions,
functional status be considered.
Response: The budget neutrality analysis is only one part of a
broader evaluation of the chiropractic services demonstration. A survey
was conducted of beneficiaries who received chiropractic services under
the demonstration to determine the benefits of treatment and
satisfaction with the chiropractic care provided under the
demonstration. These results will be included in a Report to Congress
on the demonstration.
Q. Technical Corrections
1. Particular Services Excluded From Coverage (Sec. 411.15)
Sections 612 and 613 of the MMA added coverage under Part B for
cardiovascular disease screening tests and diabetes screening tests,
effective for services furnished on or after January 1, 2005, subject
to certain eligibility and other limitations. These provisions were
implemented in the CY 2005 PFS final rule with comment period (69 FR
66236) and were codified in Sec. 410.17 and Sec. 410.18,
respectively. However, at the time we neglected to make additional
conforming changes to Sec. 411.15, which discusses particular services
excluded from coverage, to reflect this expansion in coverage.
To conform the regulations to the MMA provisions, we proposed a
technical correction to the provisions in Sec. 411.15 by specifying
additional exceptions to provide payment for cardiovascular disease
screening tests and diabetes screening tests that meet the eligibility
limitation and the conditions for coverage that we specified under
Sec. 410.17, Cardiovascular Disease Screening Tests, and Sec. 410.18,
Diabetes Screening Tests.
Comment: One commenter suggested that the psychiatric screening
examination should be included in the list of preventive health
screenings and examinations exceptions from services that are excluded
from Medicare coverage under proposed Sec. 411.15. The commenter
suggested the advantage for having Medicare cover psychiatric screening
examination is that better patient outcomes and decreased use of
services often occur as a result of early identification of psychiatric
disorders.
Response: The purpose of the proposed technical correction in Sec.
411.15 was to conform that provision to the cardiovascular disease
screening test and the diabetes screening test benefits that were
established in Sec. 410.17 and Sec. 410.18, respectively. These two
part B screening benefits were specifically authorized by sections 612
and 613 of the MMA. The proposed rule did not address the possibility
of coverage of a psychiatric screening examination under Medicare Part
B. There is no statutory provision that authorizes a benefit for
psychiatric screening. Therefore, the commenter's suggestion in this
regard falls outside the scope of this final rule.
2. Medical Nutrition Therapy (Sec. 410.132(a))
In the CY 2006 PFS final rule with comment period (70 FR 70160), we
added individual medical nutrition therapy, as represented by HCPCS/CPT
codes G0270, G0271, 97802, 97803, and 97804 to the list of telehealth
services. In the CY 2008 PFS proposed rule, we proposed a technical
correction to Sec. 410.132(a) to conform the regulations to include an
exception for services provided at Sec. 410.78. This revised paragraph
reads as follows: ``(a) Conditions for coverage of MNT services.
Medicare Part B pays for MNT services provided by a registered
dietitian or nutrition professional as defined in Sec. 410.134 when
the beneficiary is referred for the service by the treating physician.
Except as provided at Sec. 410.78, services covered consist of face to
face nutritional assessments and interventions in accordance with
nationally accepted dietary or nutritional protocols.''
Comment: We received one comment concurring with the proposed
technical correction.
Response: We are finalizing the technical correction to Sec.
410.132(a) as proposed.
3. Payment Exception: Pediatric Patient Mix (Sec. 413.184)
In the CY 2006 PFS final rule with comment period (70 FR 70214), we
revised Sec. 413.180 through Sec. 413.192 regarding criteria and the
application procedures for requesting an exception to the ESRD
composite rate payment. As part of the revisions we intended to amend
the section heading of Sec. 413.184 to reflect that, as specified in
the statute, this exception only pertains to a pediatric ESRD facility.
However, this change was not made. Therefore, we proposed to revise the
section heading of Sec. 413.184 to read as follows: ``Payment
exception: Pediatric patient mix.''
We did not receive any comments regarding this proposal. Therefore,
we are finalizing this provision as proposed.
[[Page 66327]]
4. Diagnostic X-Ray Tests, Diagnostic Laboratory Tests, and Other
Diagnostic Tests: Conditions (Sec. 410.32(a)(1))
Section 1861(r)(5) of the Act was amended by section 4513(a) of the
BBA to allow Medicare payment for a chiropractor's manual manipulation
of the spine to correct subluxation, without requiring the subluxation
to be demonstrated by an x-ray. The BBA provision was effective for
services furnished on or after January 1, 2000. Prior to this statutory
change, the subluxation was required to be demonstrated by an x-ray.
Because chiropractors are limited by statute in the services they can
provide under Medicare, it was necessary to create an exception to the
requirement that diagnostic services (including x-rays) must be ordered
by the treating physician as provided in Sec. 410.32(a). This
exception, which permits a physician who is not a treating physician to
order and receive payment for an x-ray that is used by a chiropractor,
is specified in Sec. 410.32(a)(1).
Because of the BBA change, which removed the requirement that
subluxation must be demonstrated by an x-ray, the so-called
``chiropractic exception'' at Sec. 410.32(a)(1) is no longer
warranted. We do not believe it is necessary or appropriate to continue
to permit payment for an x-ray ordered by a nontreating physician when
a chiropractor, not the ordering physician, will use that x-ray.
Therefore, we proposed to revise Sec. 410.32 by removing paragraph
(a)(1) and redesignating paragraphs (a)(2) and (a)(3) as (a)(1) and
(a)(2), respectively.
Comment: We received several comments on this proposal. Some
commenters noted that x-rays are not necessary to identify spinal
subluxations, but stated that the ability to obtain an x-ray for
Medicare beneficiaries is critical to providing responsible, safe, and
medically prudent care. They stated that without this ability they fear
beneficiaries and the chiropractic profession as a whole will be at a
higher risk for receiving and providing the wrong type of care. The
majority of commenters expressed concern that without the chiropractic
exception at Sec. 410.32(a)(1), the beneficiary may incur greater out
of pocket expenses to obtain a noncovered x-ray when needed by the
chiropractor. Other commenters believed that the overall costs for
medical services may increase because a beneficiary wanting to seek
chiropractic care directly may elect to first seek care for their
condition from a medical doctor (MD) or doctor of osteopathy (DO) to
obtain an order for a covered chiropractic x-ray, resulting in added
costs for physician E/M services. Finally, many chiropractors commented
that they are qualified to provide x-rays and other services that
Medicare does not cover when furnished by a chiropractor and they
believe that x-rays can be essential to rule out ``red flags'' and
contraindications that may indicate the need for further diagnostic
imaging or a referral to another health care professional.
Response: We believe that retaining the chiropractic exception
would be inconsistent with the statutory provision at section
1861(r)(5) of the Act which defines a chiropractor as a physician only
for the purposes of sections 1861(s)(1) and 1861(s)(2)(A) of the Act
and only with respect to treatment by means of manual manipulation of
the spine (that is, to correct a subluxation). This statutory provision
does not include diagnostic services at section 1861(s)(3) of the Act,
which is the benefit category under which x-rays are covered under
Medicare. In addition, commenters noted that x-rays are not required to
identify subluxations; rather, commenters stated that they use the x-
rays to rule out other conditions where manual manipulation of the
spine would be contraindicated or for which further imaging studies are
indicated. While the use of x-rays for this purpose is outside the
scope of covered chiropractic services, it is also not addressed by the
chiropractic exception at Sec. 410.32(a)(1). The chiropractic
exception only permits a non treating physician to order an x-ray to
identify a subluxation. Therefore, we are finalizing our proposal to
revise Sec. 410.32 by removing paragraph (a)(1) and redesignating
paragraphs (a)(2) and (a)(3) as (a)(1) and (a)(2), respectively, so
that it is consistent and conforms to the statutory revisions mandated
by the BBA.
R. Other Issues
1. Recalls and Replacement Devices
In the CY 2008 PFS proposed rule (72 FR 38191), we included a
discussion about recent recalls of implantable cardioverter-
defibrillator (ICDs) and cardiac resynchronization therapy
defibrillators (CRT-Ds). These recalls, as well as previous recalls of
ICDs and pacemakers in CY 2004 and CY 2005, raise issues both with
regard to the additional costs of replacement devices and with regard
to the additional physicians' services and diagnostic tests that
beneficiaries who have these devices often need.
The impact of the costs of replacement devices for Medicare payment
of inpatient and outpatient hospital services is addressed in separate
rulemaking for the respective inpatient and outpatient hospital payment
systems. However, in the CY 2008 PFS proposed rule, we also
acknowledged there are costs associated with physician monitoring of
patients treated with recalled devices. This could involve extra visits
to physicians' offices or hospital outpatient departments, as well as
additional diagnostic tests which might be needed to care for the
beneficiaries who have the recalled devices. Based on our concern of
the potential costs to both Medicare and the beneficiary for these
unforeseen extra services, we solicited comments on how to identify and
address additional health care costs and Medicare expenditures
associated with device recall actions.
Comment: We received several comments acknowledging the potential
for additional costs that may result from recalled devices,
particularly in light of the increases in technology. Commenters stated
that such costs should be the responsibility of device manufacturers
and not the Medicare program, private payers, or the general public.
Some commenters expressed concern that we would impose a financial
penalty on physicians who deal with the consequences of product
recalls. Several of the commenters suggested alternatives that could be
used to address this issue, such as development of a modifier or a
specific ``recall code'' that could be used to track the additional
time and work associated with these recalls, and urged us to ensure
that these additional costs are accounted for in the SGR target.
Commenters also stressed that any proposal should be ``vetted'' through
the appropriate stakeholders.
Response: We appreciate the suggestions that the commenters
provided. It is not our intention to ``penalize'' physicians who care
for patients affected by implantable device recalls. Rather, it is our
intention to ensure that costs of the additional physicians' services
and diagnostic tests associated with recalled devices are recognized
and appropriately addressed. We will consider the concerns and
suggestions provided by the commenters as we develop a plan to address
this issue.
[[Page 66328]]
2. Therapy Standards and Requirements
a. Revisions to Personnel Qualification Standards for Therapy Services
In the CY 2005 PFS final rule with comment period (69 FR 66354), we
amended Sec. 410.59, Sec. 410.60, and Sec. 410.62 to refer to the
qualifications for physical therapists (PTs), occupational therapists
(OTs) and speech-language pathologists (SLPs) at Sec. 484.4, which
sets the personnel qualifications required under the HHA Conditions of
Participation.
Section 484.4 contains requirements for persons furnishing services
in HHAs that include physical therapists (PTs), physical therapist
assistants (PTAs), occupational therapists (OTs), occupational therapy
assistants (OTAs) and SLPs. The CY 2005 PFS final rule with comment
period clarified that the personnel qualifications in Sec. 484.4 are
applicable to all outpatient PT, OT, and SLP services ``in order to
create consistent requirements for therapists and therapy assistants''
(69 FR 66345).
In the CY 2008 PFS proposed rule (72 FR 38191), we proposed to
update the personnel qualifications in Sec. 484.4 for PTs, PTAs, OTs,
and OTAs. We also proposed to revise the qualifications for SLPs to
remove a reference to audiologists in the definition for speech-
language pathologists because a speech-language pathologist would not
have a Certificate of Clinical Competence in audiology, as implied by
the regulation, unless that person was dually qualified as an
audiologist.
We proposed these changes for the following reasons.
The current regulations at Sec. 484.4 contain outdated
terminology relating to several of the relevant professional
organizations.
The standards that now exist in the fields of physical
therapy and occupational therapy have changed since a substantial
portion of these qualification requirements were developed.
Some of the current qualification requirements do not
address individuals who have been trained outside of the United States,
or refer to outdated requirements.
These revisions would have the benefit of establishing
consistent standards across provider/supplier lines.
Although all States license PTs, some States have no licensing
provisions for PTAs, OTs, OTAs, and SLPs. We proposed to revise our
requirements to recognize as qualified PTs, OTs, PTAs, or OTAs who meet
their respective State qualifications (or have received State
recognition as PTs, OTs, PTAs or OTAs) before January 1, 2008.
We did not propose to allow those who, before January 1, 2008, meet
only the State qualifications to practice physical therapy, and not the
education requirements, to provide services under the Home Health PPS
or the Hospice PPS. As we indicated in the CY 2008 PFS proposed rule,
we did not expect that there are therapists furnishing services in a
HHA or hospice that do not meet either the current or proposed revised
qualifications.
Grandfathering Provision for Home Health
Comment: Commenters were concerned about the inconsistency in
standards between settings, stating that there is no justification for
the absence of a grandfathering provision for therapists and assistants
practicing in Home Health settings. Many also indicated a concern that
currently licensed or regulated professionals would not be allowed to
continue to practice in a HHA or hospice, and recommended that
sufficient time be allowed before implementation of the new standards
for new professionals to meet their training.
Response: The commenters make a compelling case for the
grandfathering provisions to be applied uniformly across payment
systems. We agree that it is important to apply consistent standards
and we will apply the grandfathering provision in all settings as
specified in part 484 of our regulations. Since all of part 484
describes personnel qualifications, we refer to part 484 in this rule
rather than specifically to Sec. 484.4. The cross-reference has also
been changed in the regulation text from Sec. 484.4 to part 484 in all
applicable sections. Although we proposed that these grandfathering
provisions would be included in revisions to Sec. 409.17, Sec.
409.23, Sec. 410.43, Sec. 410.59, Sec. 410.60, Sec. 482.56, Sec.
485.70, Sec. 485.705, Sec. 491.9, the application of the
grandfathering provisions to home health in part 484 makes some
sections of proposed regulation text unnecessary and necessitates
changes in the language of others. The changes proposed to sections
Sec. 485.705 and Sec. 491.9 have been omitted, as they are no longer
necessary.
Delay in Implementation of New Personnel Qualifications
Comment: Some commenters requested that we delay implementation of
consistent therapy standards and qualifications until we can apply them
consistently to SNF services, and provide education to providers and
suppliers.
Response: We believe a 2-year delay in implementation of personnel
qualifications will provide sufficient time for new personnel to come
into compliance with the new standards. Therapists and assistants who
met the qualifications of their State's practice act (in other words,
who are licensed, certified or otherwise regulated by the State as a
practitioner in the particular discipline) prior to December 31, 2009,
will not be required to upgrade their qualifications. However, in
States that have no regulations for practitioners in a particular
discipline and for services furnished incident to the services of
physicians where licensure does not apply, therapists and assistants
must be qualified by education and examination as described in this
final rule with comment period. Those who currently qualify to provide
services without licensure by meeting the Medicare education or
examination standards in effect at the time of the CY 2008 proposed
rule will continue to qualify under those policies. On January 1, 2010,
any individual who has not met the earlier requirements must meet the
new requirements.
Consistent Policy Standards
Comment: Many commenters indicated we have not provided a
justification for applying the personnel and policy standards that we
have articulated for Part B services consistently to Part A services.
Most of these comments came from commenters who also support the right
of States to create Medicare standards, who represent interest groups
other than Medicare beneficiary/therapy users, and who believe we favor
professional organizations in setting policies.
Response: Under both Medicare Part A and B, we must ensure that all
services are described within a statutory benefit category. In order to
do so, we frequently establish qualifications for health care
professionals who furnish, or are involved in furnishing, Medicare
services. In many Part A settings, we have historically relied on
Medicare contractors to review facility records, State laws and local
policies to determine that services have been furnished by qualified
therapists. As a result of information provided by new contractors,
which has been confirmed by numerous comments to the proposed rule, we
have concluded that therapy is not always being furnished by
individuals trained as therapists--even in some Part A settings.
Therefore, we believe it is critical that we establish in regulations
consistent standards for
[[Page 66329]]
qualified therapists in the Medicare program.
Comment: Some commenters objected to the use of the terms therapy
and rehabilitation to mean physical therapy (PT), occupational therapy
(OT), and speech-language pathology (SLP) services. The commenters
recommended allowing any State licensed or authorized health
professional to provide rehabilitation services if the provider's
medical staff and State law would permit them to do so. The commenters
recommended convening a work group to discuss the creation of rational
personnel qualifications and scope of services.
Response: The terms ``therapy'' and ``rehabilitation'', as used in
this section of this final rule with comment period, apply only to the
Medicare benefit for PT, OT, and SLP services and to the qualified
professionals who provide them. The qualifications have been
established to assure that all of the personnel who provide these
services are suitably trained in the discipline they practice. We see
no reason to believe the skills and training required to furnish
therapy and rehabilitation in Part A settings are less than those
required in Part B settings, and therefore, qualifications for
personnel in the inpatient setting should not be less stringent than in
the outpatient setting. Therefore, we will adopt the proposed
qualifications (with minor modifications), and these qualifications
will be made applicable in Part A and Part B settings.
Grandfathering Provision
Comment: Many commenters believe that a grandfathering provision is
not necessary for physical therapists and speech-language pathologists
since the changes to their qualifications are not substantial.
Response: We agree and have removed reference to physical
therapists and speech-language pathologists from the relevant
grandfather clauses in the final rule with comment period.
Comment: Several commenters believe that our proposal to require
those who were grandfathered to continue to practice at least part time
without an interruption of more than 2 years is not necessary, and that
the language is confusing.
Response: We agree and have removed the requirement for continued
practice from this final rule with comment period.
Comment: We received many comments concerning application of a
requirement for State licensure, registration, certification or other
regulation to physical therapist assistants. The commenters indicate
large numbers of PTAs in California and other States are licensed but
do not meet the proposed education and examination requirements. The
commenters report implementation of the proposed qualifications would
cause severe access problems for beneficiaries and operational
disruption for facilities. All commenters supported the adoption of a
grandfather clause to allow currently practicing PTAs to continue
furnishing services to Medicare patients, and many requested the
grandfathering be implemented when the rule is finalized in November,
rather than January 1, 2008.
Response: We will recognize as qualified to provide Medicare
services those therapists and assistants who are licensed or otherwise
regulated by their States before December 31, 2009. Individuals who are
not licensed or otherwise regulated as PTs, OTs, PTAs, and OTAs in
their States may furnish services incident to a physician's service if
they meet the education and examination requirements in this final rule
with comment period. These changes will be effective on the date this
final rule with comment period is effective.
Personnel Qualifications--General
For therapists and assistants trained outside the United States or
trained by the United States military, we proposed standards we
considered comparable to those applied to therapists and assistants
trained in the United States. However, we noted we would not recognize
as qualified therapists or therapy assistants individuals trained in
other disciplines for purposes of furnishing PT, OT, or SLP services to
Medicare beneficiaries.
Comment: APTA recommends the use of the term ``substantially
equivalent'' to replace ``comparable'' to avoid confusion in the
language concerning those trained outside the United States.
Response: We have modified the language to substitute in
regulations the term ``substantially equivalent'' for ``comparable''.
Comment: Several commenters believe that the qualifications for
military trained OTs/OTAs (when applicable) and PTs/PTAs should be the
same as for all OTs/OTAs and PTs/PTAs.
Response: We agree that separate qualifications for U.S. military-
trained therapy personnel are not necessary for PTs, OTs, and OTAs,
since the training programs available in the military already meet the
same standards as other U.S.-trained OTs and PTs and OTAs. For PTAs who
may, in the future, be trained in the military, we will apply the
standard of substantial equivalency consistent with those trained
outside the United States, or the same standards as other United States
trained PTAs, as appropriate.
Comment: Some commenters recommended that licensure be the only
qualification for PTs and OTs. The commenters recommended we defer to
individual States or to the medical staff of a hospital to determine
the qualifications for physical therapists and occupational therapists.
Commenters agreed generally that we should rely on State licensure
in those States where it exists and for those settings where licensure
is applicable. The commenters note that there have been attempts to
deregulate health professions in the name of regulatory reform and they
recommend inclusion (for OT) and continuation (for PT) of education and
exam requirements to assure there will be standards in place when
licensure does not apply.
Response: We believe it is appropriate, as we proposed, to require
qualifications related to education and examination to address those
situations where licensure does not apply. We added language in
regulations to indicate that when licensure or other regulation is not
applicable for therapists and assistants, the education and examination
requirements apply.
Comment: Several commenters support applying the proposed
qualifications and therapy standards for staff providing services
incident to the services of physicians. Some continue to object to the
implementation of section 1862(a)(20) of the Act.
Response: Section 1862(a)(20) of the Act excludes from payment
under Medicare Parts A and B any expenses for outpatient PT or OT
services furnished incident to the services of a physician that do not
meet the standards and conditions that apply to therapists, except
``any licensing requirement specified by the Secretary.'' Therefore, as
we described in the proposed rule, we will not apply the requirement
that therapists and assistants be licensed or otherwise regulated by a
State in the case of services furnished incident to the services of
physicians. We will apply education and examination requirements.
In the proposed rule, we explained that when we referred to persons
who are licensed, certified, and otherwise regulated by a State, we
interpreted ``otherwise regulated'' to mean that, while a State may not
regulate a profession by granting a license or certifying educational
or training
[[Page 66330]]
credentials, it may nevertheless regulate the practice of a profession
by application of certain other requirements.
We received no comments on the use of this term, and therefore, we
intend to use it as proposed. Because we believe the term
``certification'' is redundant to ``otherwise regulated'', that term
has been omitted.
Occupational Therapy
We proposed to require that OTs beginning their practice after
January 1, 2010, must be licensed, certified, registered or otherwise
regulated as an OT, and have graduated from an occupational therapist
curriculum accredited by the Accreditation Council for Occupational
Therapy Education (ACOTE) of the American Occupational Therapy
Association (AOTA), and also have successfully completed the
certification examination developed and administered by the National
Board for Certification in Occupational Therapy (NBCOT). We established
that ``successfully completed'' means the individual must perform
sufficiently well on the exam to receive (or be eligible to receive)
certification. For services incident to a physician's or nonphysician
practitioner's service where the licensure requirement does not apply,
we proposed the education and examination requirements continue to
apply.
OT Comments
Comment: AOTA recommended qualifications based on licensure or
education and examination.
Response: We require qualifications based both on licensure and on
education and examination so that there are appropriate qualifications
that apply where licensure is not applicable, for example, to therapy
services furnished incident to the physician's service.
Comment: The NBCOT recommended that qualified OTs be credentialed
by their examination and be members in good standing of their
organization. The AOTA recommended that AOTA approve any new
credentialing body that might develop in the future.
Response: We recognize that currently the ACOTE or the World
Federation of Occupational Therapists (WFOT) credential education
programs for OTs and/or OTAs and the NBCOT determines eligibility and
furnishes examinations. We have modified the policy to approve those
organizations and added ``or successor organizations'' to allow for
changes in the ACOTE title. We do not agree membership in NBCOT should
be a requirement. Since NBCOT is already approved by The American
National Standards Institute (ANSI), the National Commission for
Certifying Agencies and the National Organization for Competency
Assurance, CMS does not believe it is necessary to grant AOTA's request
to permit it to approve any future credentialing body.
International OT/OTA
We also proposed that OTs who are educated outside the United
States: (1) Be graduates of an occupational therapy curriculum
accredited by the WFOT; (2) have successfully completed the NBCOT
International Occupational Therapy Eligibility Determination (IOTED)
review; and (3) have successfully completed the certification
examination for Registered Occupational Therapist. We proposed to adopt
similar standards for OTAs (but with an OTA curriculum) and requested
comments on qualifications for internationally educated occupational
therapy assistants.
Comment: The AOTA and NBCOT support the proposal that the
internationally educated OT standards should be comparable to United
States trained OTs and that the NBCOT conduct the credentialing process
for these OTs. The AOTA requests that there be a way to allow a
professionally recognized credentialing body other than NBCOT to
develop or administer the examination.
NBCOT reports there are no internationally trained OTAs and
recommends qualifications for such OTAs be stricken from the rules.
Response: This final rule with comment period recognizes the ACOTE,
NBCOT or WFOT to contribute to credentialing internationally trained
OTs and OTAs. Although NBCOT may not now recognize internationally
trained OTAs, such OTAs do exist. In addition, we are adopting
regulations in anticipation of any international programs that meet the
qualifications in the future.
Comment: AOTA commented that the proposals for those who began
practice between December 31, 1977, and January 1, 2008, are archaic
and cannot be directly applied to many professionals qualified by their
States.
Response: We agree that the current language is not applicable and
we have updated this language for the new qualifications in this final
rule with comment period, adding current credentialing bodies for
United States trained and internationally trained OTs. To assure that
no one covered under the existing qualifications is inadvertently
disqualified, the prior language continues to apply for those who are
not licensed but were qualified under the previous policy.
Comment: Commenters note that many States allow graduate OTs and
OTAs to furnish services under a temporary license or permit while
eligible for examination. The commenters expressed concern that the
qualifications in the proposed rule would limit new graduates from
entering the workforce.
Response: We agree that it is not necessary to change the current
requirement of eligibility for the examination for United States
trained OTs and OTAs when they are licensed or otherwise regulated by
their States. However, we will require foreign trained OTs and OTAs
(when applicable) to have passed the examination, and not merely be
eligible for it. We believe this requirement is appropriate in the case
of foreign trained individuals in order to ensure that they have
acquired sufficient knowledge through their education program to pass
the examination and, thus, are adequately prepared to begin furnishing
services to Medicare beneficiaries.
Physical Therapy
For PTs, we proposed the therapist must be licensed as a physical
therapist by the State in which practicing and accredited by the CAPTE
based on APTA guidelines. When the licensure requirement is not
applicable (that is, for services furnished incident to the services of
physicians and NPPs), we proposed to require that PTs must be
accredited by the CAPTE. We requested comments on qualifications for
PTs which include satisfactory completion of a curriculum and a
national examination each approved by the APTA.
Comment: APTA recommended that we remove the requirement that a PT
pass a National Examination approved by the APTA. Since all States
require a national licensing exam, APTA does not believe it is
necessary for APTA to approve the exam. State Boards supported State
licensing requirements, which include examination.
Response: In cases where the licensing standards do not apply (for
therapy services incident to a physician's service or in the event a
State deregulates PT practice), we believe it is important to have
standards in place to ensure that an individual is qualified to furnish
physical therapy services. We will not finalize the requirement for
APTA to approve the licensing exam. Instead, we will accept a national
licensing exam used by State boards to qualify personnel who have
[[Page 66331]]
been trained in a physical therapy curriculum.
We proposed that licensure or certification, or other regulation by
the State in which services are furnished would be required for PTAs
under our regulations. We also proposed that PTAs be accredited by the
CAPTE. We requested comments on appropriate qualifications for PTAs.
Comment: APTA believes it is critical that we require approval by
APTA for foreign trained PTAs. The Commission on Accreditation of
Physical Therapist Education (CAPTE) of the APTA has been nationally
recognized since 1977 as the only organization that approves PT and PTA
education programs; it has no financial interest in the credentialing
bodies for PTs or PTAs.
Some commenters disagreed with our proposal to allow the APTA to
approve the credentialing body that establishes qualifications for
foreign trained PTs and/or PTAs. They suggest that the U.S. Citizenship
and Immigration Services and the Department of Homeland Security
approve credentialing bodies that set standards and credential
individuals and the States decide whether to license that individual.
The commenters note there are currently no approved foreign PTA
programs.
Response: While commenters tell us there are no foreign PTA
programs that meet their credentialing standards, there may be PTA
programs in foreign countries that meet the standards in the future.
Therefore, this final rule with comment period addresses this future
need. The CAPTE of the APTA is approved by the U.S. Department of
Education (USDE) and the Council for Higher Education Accreditation
(CHEA). We find no reason to doubt that CAPTE/APTA will make fair
determinations on the appropriateness of educational programs in the
United States or credentials evaluation organizations for foreign
trained PTs and PTAs. However, in response to comments, we have
recognized both CAPTE and a credentials evaluation organization
identified in 8 CFR 212.15(e) (the Homeland Security Act) as it relates
to physical therapists and assistants to determine an education program
to be substantially equivalent to PT and PTA entry level education in
the United States. We believe the additional requirement for passing a
national examination will mitigate any variations in credentialing.
Comment: Several commenters stated that adoption of the proposed
qualifications for PTs would usurp the rights of State governments in
licensing and determining the scope of practice for healthcare
professionals, creating ``a monopoly for curriculum approval''.
Response: As we indicated in the proposed rule, we believe it is
important to establish consistent and meaningful standards and
conditions for the provision of Medicare covered services. Professional
standards change periodically and these are often eventually adopted by
State licensing boards, each of which has different language in its
statutes. We believe the standards we proposed would not usurp or
interfere with the adoption of standards by States. Rather, in most
cases the standards incorporate the State standards. However, we
believe it is necessary for CMS to address circumstances where State
licensing or other regulation are not applicable. We are not creating a
monopoly for curriculum approval by recognizing CAPTE. While it is the
only existing credentialing body used by the States in their licensing
process, we assess other credentialing qualifications if they are
developed. Therefore, we are finalizing standards that include State
standards (licensing or other regulation), as well as education and
examination. We will assess other credentialing qualifications if they
are developed.
b. Application of Consistent Therapy Standards
(1) Personnel Qualifications
We believe therapy services should be provided according to the
same standards and policies in all settings, to the extent possible and
consistent with statute. Therefore, we proposed to revise our
regulations to cross-reference the personnel qualifications for
therapists in Sec. 484.4 to the personnel requirements for PTs, OTs,
PTAs, OTAs, and SLPs in the following sections:
Sec. 409.10 and Sec. 409.16 (Inpatient hospital services
and inpatient critical access hospital services).
Sec. 409.23 (Posthospital SNF care).
Sec. 410.43 (Partial hospitalization services).
Sec. 410.59 (Outpatient occupational therapy services).
Sec. 410.60 (Outpatient physical therapy services).
Sec. 410.62 (Outpatient SLP services).
Sec. 418.92 (Hospice).
Sec. 482.56 (Optional hospital services, Rehabilitation
services).
Sec. 485.70 (Specialized providers).
Sec. 485.705 (Clinics, Rehabilitation agencies, Public
health agencies).
Sec. 491.9 (Rural health clinics and Federally qualified
health centers (FQHCs)).
We also solicited comments on whether the personnel qualifications
at Sec. 484.4 should be made applicable in other settings.
Consistent Personnel Qualification Standards
Comment: Many commenters supported consistent personnel
qualifications. Commenters indicated beneficiaries deserve to be
treated by qualified professionals in both inpatient and outpatient
settings.
We also heard from commenters who oppose the application of
consistent qualifications for therapists in Part A settings. The
commenters stated that if only qualified physical therapists provide
physical therapy services in Part A settings, it will prevent hospitals
from continuing to employ athletic trainers to provide physical
medicine and rehabilitation services. The commenters suggest the
medical staff should decide the qualifications for therapists at a
hospital.
Response: The policies outlined in the proposed rule apply only to
therapy services. The State Operations Manual Appendix A Survey
Protocol, Regulations and Interpretive Guidelines for Hospitals (Rev.
1, 05-21-04) Sec. 482.56 Condition of Participation: Rehabilitation
Services indicates that therapy services, if provided, must be in
accordance with acceptable standards of practice which include
compliance with any applicable Federal or State laws, regulations or
guidelines, as well as standards and recommendations promoted by APTA,
ASHA, and AOTA. In States where there are no personnel qualifications
for therapists or assistants, hospitals should currently be following
the personnel qualification standards set by those professional
organizations. Most States and all of the professional organizations
require graduation from approved education programs and a passing grade
on a national examination. Therefore, we do not anticipate that
adherence to the personnel qualifications in this final rule will cause
any changes in hospital personnel.
At the same time, we recognize that there may be athletic trainers
(AT), lymphedema specialists, low vision specialists, nurses,
physicians, and other staff employed in hospital settings who furnish
other services for which they are qualified, and for which payment is
included in the payment to the facility. Those services should be
appropriately documented as, for example, athletic training or
lymphedema services. Where the services of health care professionals
who are not PTs, OTs, PTAs, OTAs, or SLPs are now being appropriately
furnished, documented and reimbursed,
[[Page 66332]]
we anticipate the application of consistent personnel qualifications
relating to PT, OT and SLP services will have no effect on the
appropriate provision of these other services. In settings where
therapy services are separately billable, there will only be an impact
on current practice if services that are being documented as PT, OT, or
SLP services are being furnished by personnel who do not meet the
requirements to be considered qualified therapists. Personnel who do
not meet the applicable professional standards to be considered
qualified therapists cannot furnish or be paid for PT, OT, and SLP
services.
Comment: Several commenters indicated that therapy services are not
covered in rural health clinics.
Response: Rural Health Clinics (RHCs) provide a core set of primary
health care services as defined in statute. RHC services include the
services that would commonly be furnished in a physician's office,
(such as PT, OT, and SLP services), but only when directly provided by
a Medicare approved RHC provider, such as a physician, nurse
practitioner, or physician assistant. A certified nurse midwife,
clinical psychologist, and or clinical social worker may provide RHC
services, but not PT, OT, or SLP services, because PT, OT, and SLP
services are not in their scope of practice. A face-to-face encounter
with any other practitioner including, for example, a PT, OT, or SLP,
athletic trainer, kinesiologist, or registered nurse is not covered as
an RHC encounter, even if the service may be medically necessary,
because these are not Medicare approved RHC providers (as defined in
statute). Since therapists are not approved RHC providers, we will
remove the reference in Sec. 491.9 to personnel qualifications for
therapists.
Consistent Policies
(2) Application of Consistent Therapy Standards
In tandem with cross-referencing Part A and Part B therapy
personnel requirements in the regulations, we proposed to clarify our
policies to improve consistency in the standards and conditions for
Part A and Part B therapy services. Many, but not all, of the policies
described for therapy services in Part B settings are also appropriate
to Part A settings.
Specifically, in Sec. 409.17, we proposed to clarify that hospital
services include physical therapy, occupational therapy, and SLP. We
also proposed to add regulations for inpatient hospital services to
include a plan for therapy services consistent with the plan required
for outpatient therapy services. We invited comment on PT, OT, and SLP
plan of treatment policies that are appropriately applied to all
therapy services, whether provided under Medicare Part A or B.
While the concept of consistent policies was strongly supported,
many commenters were concerned about the application of specific Part B
policies to Part A settings.
Comment: Several commenters indicated concern that application of
the Part B policies, especially plan and documentation polices, to the
inpatient hospital setting would impact treatment and increase the
paperwork burden to staff.
Response: We are aware that inpatient stays are short. If
clinically appropriate documentation is now provided, the new policies
are unlikely to increase the burden. We have not delineated which of
the Part B policies would apply in Part A specifically to allow some
flexibility in the application of the general treatment guidelines as
appropriate to the setting. We anticipate addressing these issues in
manual instructions.
We note that we continue to believe the general concept that
therapy services should be provided in a similar manner by qualified
personnel in all settings is an appropriate one.
Comment: The AOTA requests that any change to the therapy plan of
care be incorporated ``as soon as possible'' rather than
``immediately.''
Response: We recognize that the term ``immediately'' could be
relative. Therefore, we have substituted ``as soon as possible'' to
refer to changes in the plan in Sec. 424.24 and Sec. 482.56.
Comment: Commenters indicated concern that the outpatient plan of
care certification requirement would be transferred to inpatient policy
and that an ordered service that is being provided under the care of a
hospital physician would also require certification for every change in
the provision of treatment.
Response: The policy at Sec. 409.17 and Sec. 482.56 is compatible
with the concept of the therapy plan as part of the overall plan in a
facility. Also, we defer to hospital policies and procedures for
changes to the plan. Guidance will be provided in manuals concerning
modifications in the provision of care that do not constitute changes
to the plan. Requirements concerning orders for establishment of a
therapy plan (development and implementation) in the hospital are not
changed by this final rule with comment period. We anticipate
clarifying further in manual instructions documentation requirements
that are consistent with the care of inpatients and will take into
account comments received. We believe that, in general, good practice
would call for documentation of significant changes to the patient's
response to treatment in all settings, even if the Medicare program
does not specifically require it.
Comment: AOTA asserts that in the inpatient setting, goal setting
and treatment planning may not fit the mold of what is typically
required by CMS in outpatient settings, that is, functional
restoration. They indicate concern that therapy will not be provided
consistent with their professional guidelines or scope of practice.
Response: We recognize that some of the services furnished by
therapists in the acute inpatient hospital setting may not achieve
functional changes expected in other settings. We have noted in Sec.
482.56 that the provision of care and the personnel qualifications must
be in accordance with national acceptable standards of practice.
Although documentation is not relevant to billing in this setting, it
is still critical that the services furnished be accurately documented.
We anticipate issuing further guidance regarding documentation for
therapy services in hospital settings in Medicare manuals.
Comment: AOTA requests removal of the reference to review of the
plan prior to certification in Sec. 409.17(e). APTA agrees that the
review language is unnecessary.
Response: We agree that it is unnecessary in the regulation to
remind physicians or nonphysician practitioners to read the plan before
they certify it and we have removed the paragraph from Sec. 410.61(e)
and Sec. 409.17(e), and Sec. 482.56(e).
Comment: Several commenters agree with the proposal that in the
hospital setting the physician's review and approval of a therapy plan
should be implied in the physician's review and approval of a facility
plan that includes therapy services. The commenters believe the same
rationale applies to services furnished in skilled nursing facilities
and urge CMS to state that, in the SNF Part A setting, review of the
therapy plan is implied by the physician's review of the facility plan.
Response: We agree with the commenters regarding the implied
physician review and approval of the therapy plan in the Part A SNF
setting. We have recognized this issue previously in the preamble to
the Prospective Payment System and Consolidated Billing for Skilled
Nursing Facilities; Update Notice (69 FR 45780),
[[Page 66333]]
where we stated that `` * * *. It is not necessary for a SNF to obtain
a separate physician signature on the therapy treatment plan itself
prior to billing Part A for therapy services * * * .''
Delay in Implementing Policies
Comment: Many commenters requested delays in the implementation of
the policies for Part A therapy services, indicating they want time to
have input into the manual guidelines and may need time to learn new
procedures.
Response: We will delay the implementation of the policies pending
the issuance of manual guidance which we anticipate that we will
develop in mid 2008.
Students
Comment: Many commenters believe that it is imperative that we not
inadvertently develop a policy that prevents students from receiving
clinical training. APTA suggests we consider conforming the policies
for students to the SNF policy for services provided by aides and
students. The SNF policy allows services by aides and students in the
``line of sight'' of the therapist to count toward minutes accrued on
the Minimum Data Set.
Response: We will consider conforming all policies for student
supervision to the SNF policy for line of sight supervision, and will
address this issue in manual guidance.
c. Outpatient Therapy Certification Requirements
In 1988, in an attempt to control the expanding utilization of
therapy services, we added a 30-day recertification requirement for
outpatient therapy services to our regulation at Sec. 424.24. This
requires that a physician certifies a plan of care for 30 days,
regardless of the appropriate length of treatment. To continue
treatment past 30 days, the physician is required to recertify the
plan. As explained in the CY 2008 PFS proposed rule, after many years
of experience with the current recertification requirements, we now
believe that requiring recertification at 30-day intervals may not
always provide sufficient flexibility to the physician to order the
appropriate amount of therapy for the patient's needs. Therefore, we
proposed to change the plan recertification schedule in Sec. 424.24 to
an episode length based on the patient's needs, not to exceed 90 days.
Comment: We received strong support for changing the
recertification schedule to a date determined by the physician (not to
exceed 90 days) from the therapy associations, medical societies,
facilities, and individuals. They emphasized that physician approval of
a clinically appropriate length of treatment at the initial
certification will improve the patients' access to treatment, reduce
administrative burden to physicians, therapists and office staff and
reduce unnecessary visits for patients. Several indicated that a limit
is not necessary since the physician should determine the episode
length. MedPAC indicated a concern about reducing the number of
physician reviews of the services in the context of the increasing
utilization of therapy services
Response: We agree that a physician is qualified to certify the
appropriate length of care in the initial certification; and that
recertification should be required as often as the individual's
condition requires. However, we believe a 90-day limit is a reasonable
modification of the policy at this time. We will continue to review the
utilization of therapy services to assess any changes in the relative
utilization patterns for beneficiaries or providers/suppliers that may
suggest changes in practice related to this policy. As we proposed,
after 2 years, if we determine that there are changes in relative
utilization patterns that suggest inappropriate utilization of therapy
services based on the certification timing, we will reconsider this
policy.
Comment: One commenter stated that a physician generally does not
have statistical data from which to make a decision regarding the
appropriateness of initiation or continuation of therapy, and,
therefore, recertification of therapy by physicians seems meaningless.
The commenter urges the use of risk-adjusted data based on gains in
functional status relative to number of visits to inform physician
decision making for appropriate utilization.
Response: We agree that collection of data related to the patient's
functional condition and relative utilization of services may be useful
in our ongoing development of recommendations for alternatives to
therapy caps. On September 6, 2007, we released a Request for Task
Order Proposals to the pool of contractors under the CMS MRAD (Master
Research And Development) contract vehicle. The goal of this request
for proposals is to develop recommendations for alternatives to therapy
caps for CMS covered Outpatient Therapy services.
Comment: There was very strong support for extension of the 90 day
recertification policy to CORF settings, consistent with the proposed
policy for all other settings. There were no comments opposed to
consistent recertification policy in the CORF.
Response: We will apply this policy consistently across settings,
including the CORF reference in Sec. 410.105(c)(ii)(2) and 424.27(b).
Review of Plan
We proposed that review of the plan as required in Sec. 424.24
would continue to be required at certification and recertification.
Since the plan may be established by a nurse practitioner, a clinical
nurse specialist, or a physician assistant (nonphysician
practitioners), as well as a physician, we proposed to modify the
language in Sec. 410.61 to include those professionals among those who
may review the plan. Since the certification and recertification of the
plan for Part B services requires a signature, we proposed to remove
the current redundant requirement at Sec. 410.61(e) to date and sign a
review at the same time the plan is certified. In addition, we proposed
to revise Sec. 424.24 to remove reference to a certification
``statement.''
Comment: We received one comment supporting the changes to the
review language and no dissenting comments.
Response: We are finalizing the proposed changes to the review of
plan language in this final rule with comment period.
3. Amendment of the Exemption for Computer-Generated Facsimile
Transmission From the National Council for Prescription Drug Programs
(NCPDP) SCRIPT Standard for Electronically Transmitting Prescription
and Certain Prescription-Related Information for Part D Eligible
Individuals
a. Legislative History
Section 101 of the MMA amended title XVIII of the Act to establish
a voluntary prescription drug benefit program. Prescription Drug Plan
(PDP) sponsors and Medicare Advantage (MA) organizations offering
Medicare Advantage--Prescription Drug Plans (MA-PD) are required to
establish electronic prescription drug programs to provide for
electronic transmittal of certain information to the prescribing
provider and dispensing pharmacy and pharmacist. This would include
information about eligibility, benefits (including drugs included in
the applicable formulary, any tiered formulary structure and any
requirements for prior authorization), the drug being prescribed or
dispensed and other drugs listed in the medication history, as well as
the availability of lower cost, therapeutically appropriate
[[Page 66334]]
alternatives (if any) for the drug prescribed. The MMA directed the
Secretary to issue uniform standards for the electronic transmission of
such data.
There is no requirement that prescribers or dispensers implement e-
prescribing. However, prescribers and dispensers who electronically
transmit prescription and certain other prescription-related
information for covered drugs prescribed for Medicare Part D eligible
beneficiaries, directly or through an intermediary, would be required
to comply with any applicable final standards that are in effect.
b. Foundation Standards and Exemption for Computer Generated Facsimiles
(Faxes)
In the E-Prescribing and the Prescription Drug Program final rule
(70 FR 67568, November 7, 2005), we adopted the NCPDP SCRIPT standard,
Implementation Guide, Version 5, Release 0 (Version 5.0), May 12, 2004,
excluding the Prescription Fill Status Notification Transaction (and
its three business cases; Prescription Fill Status Notification
Transaction--Filled, Prescription Fill Status Notification
Transaction--Not Filled, and Prescription Fill Status Notification
Transaction--Partial Fill), hereafter referred to as NCPDP SCRIPT 5.0,
as the standard for communicating prescriptions and prescription-
related information between prescribers and dispensers. Subsequently,
on June 23, 2006 (71 FR 36020), HHS published an interim final rule
that maintained NCPDP SCRIPT 5.0 as the adopted standard, but allowed
for the voluntary use of a subsequent backward compatible version of
the standard, NCPDP SCRIPT 8.1. As use of either of these two named
versions of the NCPDP SCRIPT standard is permitted, for ease of
reference, we will simply refer to ``NCPDP SCRIPT'' in this rule.
The November 7, 2005 final rule also established an exemption to
the requirement to utilize NCPDP SCRIPT for entities that transmit
prescriptions or prescription-related information by means of computer
generated facsimiles (faxes generated by one computer and
electronically transmitted to another computer or fax machine which
prints out or displays a image of the prescription or prescription-
related information). Providers and dispensers who use this technology
are not compliant with NCPDP SCRIPT. The exemption was intended to
allow such providers and dispensers time to upgrade to software that
utilizes the NCPDP SCRIPT standard, rather than forcing them to revert
to paper prescribing.
c. Elimination of Exemption
In the CY 2008 PFS proposed rule (72 FR 38194), we proposed to
revise Sec. 423.160(a)(3)(i) to eliminate the computer generated fax
exemption to the NCPDP SCRIPT Standard for the communication of
prescription or certain prescription related information between
prescribers and dispensers for the transactions listed at Sec.
423.160(b)(1)(i) through (xii).
Since computer-generated faxing retains some of the disadvantages
of paper prescribing (for example, the administrative cost of keying
the prescription into the pharmacy system and the related potential for
data entry errors that may impact patient safety), we believed it was
important to take steps to encourage prescribers and dispensers to move
toward use of NCPDP SCRIPT.
In our November 7, 2005 final rule discussion of computer-generated
faxing, we distinguished between cases where the prescriber's or
dispenser's software has the ability to generate transactions utilizing
the NCPDP SCRIPT, but the prescriber has not activated the feature on
their software, and other cases where software (such as a word
processing program) is used to create a document that can be sent as a
fax that results in print out or displays a image of a prescription or
response at the receiving end, but does not have true e-prescribing
(electronic data interchange using NCPDP SCRIPT) capabilities.
We believed the elimination of the computer-generated fax exemption
would encourage prescribers and dispensers using this computer-
generated fax technology to, where available, utilize true e-
prescribing capabilities.
It might also encourage those without such capabilities to upgrade
their current software products, or, where upgrades are not available,
to switch to new products that would enable true e-prescribing.
Because the elimination of the computer-generated facsimile
exception would encourage those prescribers that are already using e-
prescribing software that is capable of true e-prescribing to utilize
those capabilities, we believed that the elimination of the computer-
generated fax exemption would increase the number of NCPDP SCRIPT
transactions fairly significantly in a relatively short time period,
and that this could, in turn, create a ``tipping point'' that could
create economic incentives for independent pharmacies to adopt NCPDP
SCRIPT capable software to begin to exchange true e-prescribing
transactions with their prescriber partners.
We proposed to eliminate the computer generated fax exemption
effective 1 year after the effective date of the CY 2008 PFS final
rule, on January 1, 2009. We believed that this would provide
sufficient notice to prescribers and dispensers who would need to
implement or upgrade e-prescribing software to look for products and
upgrades that are capable of generating and receiving transactions that
utilize NCPDP SCRIPT. It would also afford current e-prescribers time
to work with their trading partners to eventually eliminate computer-
to-fax transactions.
We believed the elimination of the exemption for computer-generated
faxing would encourage e-prescribers and dispensers to move as quickly
as possible to use of the NCPDP SCRIPT standard with what we perceived
to be minimal impact.
We solicited comments on the impact of the proposed elimination of
this exemption.
Comment: Several commenters concurred with our proposal to
eliminate the exemption for computer-generated faxes. These commenters
indicated that lifting the exemption for computer generated faxes would
act as an incentive to move prescribers and dispensers toward true e-
prescribing (electronic data interchange using the NCPDP SCRIPT
standard) and that once the benefits of true e-prescribing are realized
by a core group of prescribers and dispensers, word of mouth would help
foster more extensive adoption.
Less than half of all commenters disagreed with our proposal to
eliminate the exemptions for computer-generated faxes, citing concerns
about increased hardware/software costs, transaction fees,
certification and other activation costs. Some commenters agreed that
many prescribers who are already e-prescribing likely already possess
the ability to generate NCPDP SCRIPT compliant transactions using their
software or can comply by obtaining a version upgrade under their
maintenance agreements. Some commenters also questioned whether lifting
the exemption would move the industry forward toward, or raise barriers
to, greater use of true e-prescribing. We also received comments from
some individuals who erroneously thought that we had proposed the
elimination of all faxes, including paper-to-paper faxes.
Response: For new e-prescribers, the cost of implementing a product
that can generate an NCPDP SCRIPT-compliant transaction would not
differ from a
[[Page 66335]]
product that could not, and we expect that, over time, the market will
move toward the exclusive use of NCPDP SCRIPT-compliant transactions.
Moreover, the adoption of the PQRI structural measure discussed section
II.S.1. of this final rule with comment period will provide an
incentive to providers to implement e-prescribing. We recognize that
pharmacies that are not now conducting transactions that utilize NCPDP
SCRIPT will incur costs to implement this capability, and that
pharmacies will likely experience an increase in e-prescribing
transaction volumes and costs. However, those costs would be balanced
by administrative savings. We refer to the November 7, 2005 final rule
(70 FR 67568) for a further discussion of potential costs associated
with e-prescribing.
As more prescribers and dispensers embrace interoperable health
information technology in general, and the use of e-prescribing
standards in particular, they will see real value and realize costs
savings. Dispenser data entry time and transcription errors due to data
re-entry or illegible paper prescriptions will be reduced. Prescribers
and dispensers will spend less time on the phone requesting and
responding to refill requests. Improved workflow will free up staff
time for patient counseling and other services. Patient safety will
improve as providers are linked with medication history, allergy
information and/or drug contraindications that will result in a
reduction of adverse drug events.
Comment: Many commenters agreed that the proposed compliance date
of January 1, 2009 was a reasonable timeframe for those who needed to
comply. Others urged us to extend the compliance date to April 1, 2009,
to coincide with the projected effective date of the next set of e-
prescribing standards, or to January 1, 2010, to give prospective e-
prescribers more time to identify compliant products. Some commenters
recommended that the requirement to use the adopted e-prescribing
standards should only apply to those prescribers/dispensers who have
software or applications that have the ability to generate transactions
utilizing NCPDP SCRIPT. Others suggested that the use of computer-
generated faxes continue to be permitted for those prescribers and
dispensers who already have the functionality to engage in transactions
utilizing NCPDP SCRIPT, and allow those who adopt software that
generates transactions utilizing NCPDP SCRIPT after the compliance date
of January 1, 2009, an additional 1 year to comply with the NCPDP
SCRIPT requirement.
Response: The 2006 CMS e-prescribing pilot noted that the majority
of e-prescribing software currently being used by prescribers is
already able to transmit information using NCPDP SCRIPT. Moreover,
commenters agreed that most current e-prescribers could become
compliant by installing an NCPDP SCRIPT-enabled version upgrade.
Therefore, we believe that the January 1, 2009 compliance date provides
adequate time for current e-prescribers in the industry to comply with
the NCPDP SCRIPT e-prescribing standard provisions while encouraging
other prescribers and dispensers to move closer toward true e-
prescribing. We do not see a purpose in affording new e-prescribers an
additional year to comply, since it should not take more time to
implement an NCPDP SCRIPT-compliant product than a noncompliant
product.
Comment: Many commenters suggested that we continue to allow for
the use of computer-generated faxes in the case of transmission failure
and network outages.
Response: Computer-generated faxes may be needed for prescriptions
which fail in electronic data interchange (EDI) transmission. Allowing
computer-generated faxes as a fall back measure would allow the
prescription to be expedited to the pharmacy, ensuring timely
dispensing of the medication, thus enhancing patient safety. We agree
that there should be a viable contingency plan in the event that an
EDI-transmitted prescription fails due to network transmission failures
or similar, temporary communication problems that are episodic and non-
repetitive in nature. We find the use of computer-generated faxes, but
only in instances of the aforementioned transmission failures or
similar communication problems of a temporary/transient nature, to be
an acceptable and viable solution. We do not, however, consider it to
be a permanent substitute for ongoing EDI transmission problems. As we
will continue to allow computer-generated faxes as a fallback in cases
of temporary/transient transmission failures and communications
problems, we will not totally eliminate but instead amend the exemption
for computer-generated facsimile transmission from the NCPDP SCRIPT
Standard to account for this contingency.
Comment: Approximately one-fourth of commenters from all sectors of
the health care industry called for the delay of the elimination of the
exemption for computer-generated faxes until such time as the Drug
Enforcement Agency (DEA) changes its rules to allow the e-prescribing
of controlled substances. Commenters believe that the current DEA
position on disallowing e-prescribing of controlled substances creates
a barrier to adoption, and the proposed CMS compliance date of January
2009 will only exacerbate the issue.
Response: As we have no indication as to when the Drug Enforcement
Agency will make a determination on the e-prescribing of controlled
substances, it would be difficult for us to predicate eliminating the
exemption for computer-generated faxes based upon such an unknown
timetable. However, we concur with commenters who stated that the
inability to prescribe these controlled substances electronically
hampers e-prescribing adoption by providers. We continue to work with
the DEA to help facilitate a solution that addresses both the
enforcement requirements of the DEA with respect to prescribing of
controlled substances, and the needs of the healthcare community for a
solution that is scalable and commercially viable.
Comment: One commenter suggested that we exempt controlled
substances from this requirement.
Response: The November 7, 2005 E-prescribing final rule (70 FR
67568) recognizes the DEA's role in the enforcement of the prescribing
of controlled substances. As controlled substances cannot be legally e-
prescribed, an exemption from the NCPDP SCRIPT standard for the e-
prescribing of controlled substances would have no effect.
Comment: Some commenters were confused as to whether the computer
generated fax exemption would affect the exemption in the long term
care setting, and requested that we clarify that prescribers and
dispensers in the long term care setting were exempt from the
requirement to use NCPDP SCRIPT despite the amendment of the exemption
of the computer generated faxes.
Response: Our amendment of the exemption for computer generated
faxes does not apply at this time to the long term care industry as
defined under Medicare Part D. At the time the CY 2008 PFS proposed
rule (72 FR 38194) was published in the Federal Register, the long term
care industry exemption for using adopted standards in e-prescribing
(as contained in the November 7, 2005 final rule (70 FR 67568)) was,
and remains, in place. Based on the comments we received, we are
finalizing an amendment of the exemption for computer-generated faxes.
[[Page 66336]]
S. Division B of the Tax Relief and Health Care Act of 2006--Medicare
Improvements and Extension Act of 2006 (Pub. L. 109-432) (MIEA-TRHCA)
In addition to the provisions of the MIEA-TRHCA discussed in
sections II.B. (GPCIs) and II.F. (CAP), additional provisions of the
MIEA-TRHCA are discussed in this section of the final rule with comment
period.
1. Section 101(b)--Physician Quality Reporting Initiative (PQRI)
a. Background
(i) Program Background and Statutory Basis
Section 101(b) of the MIEA-TRHCA amended section 1848 of the Act by
adding subsection (k). Section 1848(k)(1) of the Act requires the
Secretary to implement a system for the reporting by eligible
professionals of data on quality measures as described in section
1848(k)(2) of the Act. Section 1848(k)(3)(B) of the Act specifies that
for the purpose of the quality reporting system, eligible professionals
include physicians, other practitioners as described in section
1842(b)(18)(C) of the Act, physical and occupational therapists, and
qualified speech-language pathologists. Section 101(c) of the MIEA-
TRHCA authorizes ``Transitional Bonus Incentive Payments for Quality
Reporting'' in 2007, specifically for satisfactory reporting of quality
data, as defined by section 101(c)(2) of the MIEA-TRHCA. We have named
this quality reporting system the ``Physician Quality Reporting
Initiative (PQRI)'' for ease of reference.
For 2007, section 1848(k)(2)(A)(i) of the Act, as added by the
MIEA-TRHCA, provides that the quality measures for the PQRI shall be
the 66 physician quality measures published as 2007 Physician Voluntary
Reporting Program (PVRP) quality measures on the CMS web site as of the
date of enactment of this subsection, except for any changes based on
the results of a consensus-based process in January 2007. Based on
actions approved at the AQA Alliance (formerly the Ambulatory Care
Quality Alliance) meeting on January 22, 2007, 8 measures were added to
the 66 measures from the PVRP. Thus, the final ``2007 PQRI Quality
Measures'' comprise 74 measures, which are applicable to specific
combinations of patient conditions and Medicare Physician Fee Schedule
(PFS) covered professional services. The measure titles, descriptions,
and specifications are available for download from the PQRI Measures/
Codes page of the PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI.
Section 1848(k)(2)(A)(ii) of the Act does not allow for any further
additions to or deletions from the 2007 PQRI Quality Measures after
January 2007, and does not allow modifications or refinements (such as
code additions, corrections, or revisions) to the detailed
specifications for the 2007 PQRI quality measures after the July 1,
2007, beginning date of the reporting period. The final 2007
specifications for the 2007 PQRI quality measures are available as a
download from the Measures/Codes page of the PQRI section of the CMS
Web site at http://www.cms.hhs.gov/pqri. Additional information on the
2007 PQRI is also available from this section of the CMS Web site,
including, but not limited to:
Tools to help professionals select measures;
Tools to help professionals capture data on 2007 PQRI
quality measures;
Explanations of the calculation of eligibility for and
amount of bonus payment for satisfactory reporting; and
A description of the methodology that we will use to
validate whether professionals have satisfactorily reported the MIEA-
TRHCA required minimum number of applicable measures.
Section 1848(k)(2)(B) of the Act further requires that the
Secretary publish in the Federal Register not later than August 15,
2007, proposed quality measures that would be appropriate for eligible
professionals to use to submit data to the Secretary in 2008. The final
2008 PQRI quality measures must be determined and published by November
15, 2007, as specified in section 1848(k)(2)(B) of the Act as amended
by the MIEA-TRHCA.
(ii) Overview of the PQRI Section in the Final Rule With Comment Period
In the CY 2008 PFS proposed rule (72 FR 38196 through 38199), we
provided a slightly longer summary of the MIEA-TRHCA requirements and
the PQRI program than is provided immediately above in this section,
and explained our interpretation of applicable statutory and
government-wide policies relevant to defining a consensus organization
and consensus-based measure development process, and our policy for
determining which measures meet requirements for inclusion in PQRI. In
satisfaction of the MIEA-TRHCA requirement to publish proposed 2008
PQRI measures by August 15th, we published 148 proposed 2008 PQRI
quality measures in the CY 2008 PFS proposed rule (72 FR 38199 through
38202). We invited comments on the implications of including or not
including any specific measure(s), and on our plans to explore
mechanisms for submission of electronic clinical performance
measurement information and/or summary measure results information
extracted from electronic health records (EHRs) and/or clinical data
registries.
In this PQRI section of the final rule with comment period, we
first address the general or overview public comments.
(iii) General/Program Comments and Responses
Comment: We received a number of comments commending CMS and the
PQRI program for being responsive to stakeholder concerns, focusing on
health care quality and performance improvement, and consistently using
accurate and inclusive terminology (for example, where appropriate,
``eligible professionals'' rather than ``physicians'') while
implementing on an aggressive timeline a functional program with an
extensive and well-received education and outreach component. A number
of commenters also expressed a desire to continue to work with us in a
spirit of partnership to advance and improve the program and its
utility to beneficiaries, professionals, and the industry at large.
Response: We appreciate the constructive input of the wide variety
of stakeholders who have provided insights, information, and partnered
with us to disseminate informational materials about PQRI to the
eligible professionals in the health care community. We plan to
continue dialogue with stakeholder organizations and will consider
their and PQRI participants' input (including questions and comments
submitted via informal, as well as formal, channels of inquiry) as we
continue working to provide 2007 PQRI participants with reporting rate
and clinical performance results feedback reports and (for those
participants achieving satisfactory reporting per MIEA-TRHCA
requirements) PQRI incentive payments in mid-2008, and as we develop
and implement strategies for individual-clinician-level and related
quality reporting and improvement initiatives for 2008 and beyond.
Comment: We received numerous comments identifying specific ways in
which commenters recommended we enhance the PQRI in the future. One
theme was that, although defined per MIEA-TRHCA as professionals
eligible to participate in PQRI, some clinicians may be unable to
participate due to lack of PQRI measures applicable to their practices.
A closely related concern was that some clinicians with otherwise
applicable PQRI measures may be
[[Page 66337]]
unable to participate due to data submission relying on the Part B PFS
Fee-For-Service claims mechanism. These limitations include that some
PQRI-eligible professionals (such as physical and occupational
therapists) who cannot currently participate in PQRI because
reimbursement for the MPFS covered professional services they furnish
is claimed in a format (X12 837-I electronic transaction or the UB04
form) that does not allow for attribution of each service to the
individual professional who furnished it.
Several commenters suggested that submission of electronic clinical
information (ECI) from registries and/or electronic health records
(EHRs) may potentially address the limitations of claims-based quality
measures data submission. Other commenters simply urged us to find a
mechanism, potentially a claims-based mechanism, to afford all eligible
professionals the opportunity to participate prior to proceeding with
PQRI subsequent to 2007.
Response: We agree with the goal of offering the opportunity to
participate in PQRI to as many eligible professionals as feasible and
practical, consistent with the MIEA-TRHCA statutory requirements. In
support of this goal, especially where there are gaps in available
consensus measures for specific practitioners, we have worked to
encourage and contract for the development of quality measures and to
fund consensus projects. For 2008, we have supported via contract with
Quality Insights of Pennsylvania (QIP) the development of structural
measures and measures applicable to a broad cross-section of PQRI
eligible professionals, including some nonphysician practitioners
(NPPs) who had few or no measures available in 2007. We prioritized
development of these measures based on the existing gaps in measures
available or otherwise in development and on a need to address as broad
a cross section of eligible professions or specialties as possible
within the limited volume of measures for which we could support
development in time for inclusion in the 2008 PQRI.
We plan to continue working to fill gaps in available consensus-
endorsed or -adopted measures consistent with available time and
resources. However, we largely depend on and encourage the development
of measures by professional organizations and other measure developers.
We note that MIEA-TRHCA includes a provision that requires the
Secretary to include measures developed by specialty societies.
Ideally, in the future CMS would not need to be closely involved in the
development of clinician-level quality measures, but would select from
measures that meet the MIEA-TRHCA requirements.
In regard to the potential use of nonclaims mechanisms for
submission of electronic clinical information, we agree with this goal;
however it is not feasible to implement for 2008. In regard to claims-
based alternatives to enable participation by professionals for whose
covered professional services payment is made under or based on the
MPFS but claimed via institutional formats (X12 837-I electronic
transaction or UB04 form), we have analyzed the possibilities and
determined that the MIEA-TRHCA requirement that satisfactory reporting
and amount of any incentive payment be determined at the individual-
professional level cannot be satisfied without extensive modifications
to the claims processing systems of CMS and providers, which would
represent a material administrative burden to us and providers, and/or
modifications to the industry standard claims formats, which would
require substantial time to effect via established processes and
structures that we do not maintain or control.
Comment: Although most commenters acknowledged that we proposed and
will finalize 2008 measures in response to MIEA-TRHCA statutory
mandate, numerous commenters expressed concerns that we are proceeding
with design and implementation of PQRI 2008 before we have been able to
evaluate the 2007 PQRI. One such commenter specifically declined to
comment on the 2007 PQRI in advance of public availability of 2007 PQRI
evaluation information and requested that we solicit comments on the
2007 PQRI, and the 2007 PQRI evaluation information, in the CY 2009 PFS
proposed rule. Specific examples of evaluation information that
commenters requested CMS consider and publish include:
Rates of participation by eligible professionals;
Cost or administrative burden of the PQRI from the
perspective of participating professionals and the Medicare program;
The apparent impact of PQRI on professionals' clinical
performance; and
The impact on beneficiaries.
Some of these commenters, and several other commenters who did not
specifically raise concerns about program-level evaluation, requested
that we consider delaying the start of the 2008 reporting period until
mid-2008 to give 2007 participants a chance to assess their 2008
results to identify process changes to improve their 2008 reporting
rate and clinical performance results.
Response: We are in the process of operationalizing, in a phased
manner appropriate to data availability and analytic infrastructure
implementation, a comprehensive ongoing program monitoring strategy
that will provide interim indications, at the program level, of some of
the same aspects of the program we will ultimately examine in our
evaluation(s) of the impact of the 2007 program after the conclusion of
the 2007 reporting period. To the extent feasible within the limits of
available resources including, but not limited to, funding and
sufficiently complete data, we anticipate conducting an evaluation of
the 2007 PQRI. The aspects of PQRI impact we would expect to assess
include participation rates by specialty/profession, associated trends
in clinical performance and beneficiary outcomes, and other observable
impacts on participants, the Medicare program, and beneficiaries.
Although we have not yet finalized the operational details of our
evaluation strategy, we do anticipate making the results of the
evaluation, at the national level, available to the public. We may also
make publicly available the results of such analyses aggregated at
other meaningful levels (for example, State, specialty, or profession).
We do not at this time plan to make results publicly available in a
format or with content that would enable identification of individual
professionals or specific practices' specific reporting or performance
results. We have not made a determination as to the most appropriate
venue(s) for making PQRI evaluation information available to the
public.
This section of the final rule with comment period is specific to
the establishment of measures appropriate for use by professionals to
submit quality-of-care data in 2008, as we are directed to do by
section 101(b) of the MIEA-TRHCA. The incentive bonus requirements and
reporting period for PQRI in 2008 are addressed in section 101(d) of
the MIEA-TRHCA, Physician Assistance and Quality Improvement (PAQI),
section (II.S.5.) of this final rule with comment period. Such details
of the 2008 bonus-incentive program are beyond the scope of this MIEA-
TRHCA Section 101(b), PQRI section of this final rule with comment
period.
Comment: A number of comments requested or recommended that we make
readily available on an ongoing basis more detailed information on the
measure development process and measures in development. Numerous
commenters also requested final
[[Page 66338]]
measure specifications be published as far in advance of the beginning
of the reporting period as possible, and that more detailed information
about measures proposed or finalized for use in PQRI be published in,
at the same time as, or in advance of future rulemaking.
Response: We agree that it could be useful to our stakeholder
partners in health care quality measurement and improvement, including
but not limited to potential measure developers, to make available in a
prominent place (such as the CMS PQRI Web site) additional information
on measure development in context of PQRI, potentially including
guidance to other publicly available sources of general information on
health care quality measurement and development of specific metrics. We
will consider our options to accomplish this in a practical and
sustainable way and use various appropriate communications channels to
notify stakeholder organizations and the community at large of our
strategy once we have developed it.
We agree with the commenters that it is desirable to provide final
measure specifications sufficiently in advance of the reporting period
to allow reasonable time for professionals to analyze new or revised
measures and implement any needed changes in their office workflows to
accurately capture and successfully submit data on a selection of
measures applicable to their practice on which they can act to improve
the quality of the services they furnish. We are aware that such ``lead
time'' should also help the eligible professionals' specialty or
professional societies be better prepared to support the professionals'
selection of relevant, actionable measures. Having detailed information
on measures available in advance of the reporting period also enhances
the ability of vendors (such as practice-management software, billing
services, and electronic health records vendors) to support
professionals' successful implementation of revised data-capture
processes for the measures.
The MIEA-TRHCA requires that we publish the final list of 2008 PQRI
measures no later than November 15, 2007. We would expect to publish
detailed specifications shortly after that date. Detailed measure
specifications for measures new or revised for 2008 PQRI will be
published on the Measures/Codes page of the CMS PQRI Web site at http:/
/www.cms.hhs.gov/pqri. These detailed specifications will include
instructions for reporting and identify the circumstances in which each
measure is applicable. The detailed technical specifications for
measures in the final listing for the 2008 PQRI remain potentially
subject to corrections until the start of the 2008 reporting period, as
we stated in the proposed rule.
Comment: Many commenters expressed concerns that recent legal
rulings raise concerns about whether the individual participating
professionals' reporting and clinical performance results may
constitute administrative data potentially subject to disclosure
requirements of the Freedom of Information Act (FOIA). Commenters urged
that any clinician performance program or system should remain
voluntary and its results confidential.
Response: Commenting on or otherwise addressing the legal standing
of PQRI participants' reporting and performance results in context of
FOIA, other applicable statutes, or case law is outside the scope of
this rule. At this time, we have no plans to publish without
participants' voluntary consent either 2007 or 2008 PQRI participants'
reporting or performance results in a way that would be specifically
identified or readily identifiable at the individual-professional,
group practice-site, or billing unit (Taxpayer Identification Number)
levels. As mentioned in response to comments urging us to share
information resulting from its 2007 PQRI program-evaluation analyses,
we do plan to make available information at various meaningful levels
of aggregation other than the individual professional, practice, or
billing unit.
Comment: Several commenters recommended specific enhancements to
PQRI participant feedback reporting including displays of additional
analyses (beyond the measure calculation as specified) for specific
measure(s) and/or provision of interim reporting and performance
results during the 2008 reporting period. Some commenters recommended
we conduct additional analyses of measure data but did not specifically
tie that recommendation to the participant feedback report content.
Response: Detailed design of the participant feedback reports and
specific analyses of PQRI data for purposes other than calculating
bonus payment eligibility or amount (for example, for future measure
development or refinement) are outside the scope of this section of
this final rule with comment period. However, we will consider these
recommendations as part of the ongoing dialogue with the stakeholder
and participant community in order to collaboratively identify ways to
enhance the measures' and/or program's value to its participants and
the Medicare program. We are currently assessing the feasible options
and timeframe within which we may be able to provide meaningful interim
feedback reports to 2008 PQRI participants. As a matter of practical,
operational reality, it is highly probable that we will not be able to
make any 2008 interim feedback reports available until after we make
available the 2007 final feedback reports. The 2007 PQRI was unable to
offer during the reporting period any interim feedback reports of
participants' reporting and performance rates to date because the
aggressive statutory timeframe for implementing the program did not
allow for the necessary data infrastructure (including analytic
programming and report access mechanisms) to be implemented in time to
provide accurate, meaningful results feedback for 2007 in an
appropriately secure/confidential report access environment prior to
mid 2008.
Comment: Some commenters requested specific or general
clarifications or additional guidance on the PQRI program, and how to
code its measures, in the implementation support tools (for example, a
handbook, or worksheets) provided on the CMS PQRI Web site.
Response: Although not directly applicable to the proposed rule
content on which we sought comment, these comments are appreciated and
will be taken into consideration along with other input that these
materials' users have provided via less formal avenues of
communication.
Comment: Many commenters expressed concern that the burden of data
collection and submission may be an obstacle to program participation
for some practices. Some commenters further noted that the claims-based
submission process may be particularly burdensome for those practices
that are simultaneously implementing electronic health records or whose
PQRI-eligible members already participate in a medical data registry.
Response: To implement a data submission mechanism that was
technically feasible for CMS and providers, and that is broadly
available to and already used by the vast majority of PQRI-eligible
professionals, we determined that claims-based data submission is the
only possible mechanism for 2007 and the only viable mechanism for full
operationalization in 2008. Thus, measures appropriate for use by
professionals to submit quality-of-care data to CMS in 2008 must be
specified for claims-based submission and analysis. We are, however,
committed to exploring and supporting practical, effective mechanisms
for quality-of-care data submission that
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promote efficiency by streamlining participants' and our data
collection and handling. As discussed below in this section, in the
registry- and EHR-based submission topics of this section of this final
rule with comment period, we plan to test in 2008 registry- and EHR-
based mechanisms for data submission, in order to develop the potential
ability to fully implement such mechanisms in the future. Those
professionals whose practices that have implemented the referenced HIT
will have available EHR and e-prescribing structural measures for
reporting in 2008, which would, if reported, count toward
professionals' eligibility for the incentive payment discussed below in
section II.S.5. of this final rule with comment period.
Comment: Several comments recommended or urged us to consider using
the group practice as the unit of analysis, and to consider developing
and implementing sampling methodologies at the group level as a means
of reducing reporting burden in the future.
Response: The 2007 unit of analysis is established at the
individual-professional level by MIEA-TRHCA, and we have not proposed
to change that for 2008. As the 2007 PQRI evaluation results become
available and further legislative action provides additional guidance,
such alternatives may indeed prove important to explore or develop.
b. MIEA-TRHCA Requirements for Measures Included in the 2008 PQRI
(i) MIEA-TRHCA Requirements for 2008 Quality Measures
(A) Overview and Summary
As noted in the CY 2008 PFS proposed rule (72 FR 38196 through
38197), section 1848(k)(2)(B)(i) of the Act requires, ``for purposes of
reporting data on quality measures for covered professional services
furnished during 2008, the quality measures specified under this
paragraph for covered professional services shall be measures that have
been adopted or endorsed by a consensus organization (such as the
National Quality Forum or AQA), that include measures that have been
submitted by a physician specialty, and that the Secretary identifies
as having used a consensus-based process for developing such measures.
Such measures shall include structural measures, such as the use of
electronic health records and electronic prescribing technology.''
Section 1848(k)(2)(B)(ii) of the Act requires that ``[n]ot later
than August 15, 2007, the Secretary shall publish in the Federal
Register a proposed set of quality measures that the Secretary
determines are described in clause (i) and would be appropriate for
eligible professionals to use to submit data to the Secretary in 2008.
The Secretary shall provide for a period of public comment on such set
of measures.''
In the CY 2008 PFS proposed rule (72 FR 38197), we explained our
interpretation of these statutory requirements and the policies used in
selecting measures to propose as appropriate for professionals to use
to submit data on the quality of covered professional services
furnished to Medicare beneficiaries in 2008.
In examining the statutory requirements of section 1848(k)(2)(B)(i)
of the Act, we believe that the requirement that measures be endorsed
or adopted by a consensus organization applies to each measure that
would be included in the measures set for submitting quality data on
covered professional services furnished during 2008. Likewise, the
requirement for measures to have been developed using a consensus based
process applies to each measure. By contrast, we do not interpret the
provision requiring inclusion of measures submitted by a specialty to
apply to each measure. Rather, we believe this requirement means that
in endorsing or adopting measures, a consensus organization must
include in its consideration process at least some measures submitted
by a physician or an organization representing a particular specialty.
Similarly, we interpret the requirement that 2008 measures include
structural measures, such as the use of EHRs and electronic prescribing
technology, to mean that the 2008 measure set must include at least 2
structural measures.
In examining sections 1848(k)(2)(B) of the Act, we believe that the
Secretary is given broad discretion to determine which quality measures
meet the statutory requirements and are appropriate for inclusion in
the final set of measures for 2008. We do not interpret the Act to
require that all measures that meet the basic requirements of section
1848(k)(2)(B)(i) of the Act must be included in the 2008 set of quality
measures. We next discuss the statutory requirements for consensus
organizations and the use of a consensus-based process for developing
quality measures as they relate to the requirements for the set of
measures for 2008 in the context of other applicable Federal law and
policy.
The MIEA-TRHCA requires that measures used for 2008 be identified
by the Secretary as having been endorsed or adopted by a consensus
organization and have been developed through the use of a consensus-
based process. As stated in the proposed rule (72 FR 38197 through
38199), we believe that these requirements should be interpreted in the
context of the National Institute of Standards and Technology Act
(NISTA) (15 U.S.C. 271 et seq.) as amended by the National Technology
Transfer and Advancement Act of 1995 (Pub. L. 104-113) (NTTAA) and
implemented by Revised OMB Circular No. A-119 (OMB A-119) dated
February 10, 1998.
Per the NTTAA, except when it is inconsistent with applicable law
or otherwise impractical, all Federal agencies and departments shall
use standards that are developed or approved by voluntary consensus
standards bodies. OMB A-119 provides specific policy guidance to
agencies on the appropriate interpretation of agency responsibilities
under the NTTAA. As we discussed in the proposed rule (72 FR 38197
through 38199), OMB A-119 establishes as government-wide policy that
agencies ``must use voluntary consensus standards, both domestic and
international, in its regulatory and procurement activities in lieu of
government unique standards, unless use of such standards would be
inconsistent with applicable law or otherwise impractical.'' OMB A-119
further explains that in determining whether use of existing voluntary
consensus standards in its regulatory and procurement activities is
otherwise impractical, `` `Impractical' includes circumstances in which
such use would fail to serve the agency's program needs; would be
infeasible; would be inadequate, ineffectual, inefficient, or
inconsistent with agency mission; or would impose more burdens, or be
less useful, than the use of another standard.'' OMB A-119 also
provides that ``voluntary consensus standards'' are standards developed
or adopted by voluntary consensus standards bodies, and defines
``voluntary consensus standards body'' as an organization maintaining
the following attributes: (1) Openness; (2) Balance of interest; (3)
Due process; (4) An appeals process; (5) Consensus; which is defined as
general agreement, but not necessarily unanimity, and also includes a
process for attempting to resolve objections by interested parties. The
process requires that, as long as all comments have been fairly
considered, each objector is advised of the disposition of his or her
objection(s) and the reasons for the disposition, and the consensus
body members are given an opportunity to change their votes after
reviewing the comments. Voluntary consensus
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standards must include provisions requiring that owners of relevant
intellectual property have agreed to make that intellectual property
available to all interested parties on a nondiscriminatory, royalty-
free, or reasonable royalty basis.
Other types of standards that are distinct from voluntary consensus
standards but that may be used by federal agencies when voluntary
consensus standards are not available and practical to address the
government's programmatic needs, include government-unique standards,
industry standards, company standards, nonconsensus standards, or de
facto standards which are developed in the private sector but not in
the full consensus process of a voluntary consensus standards body. For
further discussion of the NTTAA, OMB A-119, and their relevance to
quality measures for use of professionals to submit quality-of-care
data to the Secretary, please review the 2008 MPFS Proposed Rule PQRI
section at 72 FR 38197-38199.
Two consensus organizations are referenced in section
1848(k)(2)(B): the National Quality Forum (NQF) and the AQA Alliance.
The NQF has a formal organizational structure and established processes
that are intentionally designed to comply with the NTTAA and OMB A-119.
Membership is open and includes a broad cross-section of stakeholder
perspectives. In determining whether or not to endorse a standard, the
NQF uses a formal process that consists of five principal steps that
follow a project's conceptualization, prioritization, and planning. The
steps are: (1) Consensus Standard Development; (2) Widespread Review;
(3) Member Voting and Member Council Approval; (4) Board of Directors
Action; and (5) Evaluation that includes an appeals process. The NQF
meets the NTTAA requirements for a voluntary consensus standards body
within the meaning of the NTTAA and its endorsed healthcare quality
measures constitute voluntary consensus standards within the meaning of
NTTAA.
The AQA is also referenced in section 1848(k)(2)(B) of the Act as a
consensus organization for the purpose of identifying measures that
have successfully completed review by a consensus organization, though
it does not feature all of the structural characteristics or processes
of a voluntary consensus standards body per NTTAA and the OMB A-119. By
citing AQA as an example of an acceptable consensus organization,
section 1848(k)(2)(B) of the Act establishes that AQA adoption
satisfies the requirement of section 1848(k)(2)(B) of the Act that PQRI
quality measures be adopted or endorsed by a consensus organization. We
believe it follows that the Congress did not intend to require all 2008
quality measures under section 1848(k)(2)(B) of the Act to meet the
requirements to be considered voluntary consensus standards under the
NTTAA. However, by giving NQF and AQA as examples of consensus
organizations, we believe the Congress intended that consensus
organizations should, in the context of section 1848(k)(2)(B) of the
Act, have a breadth of stakeholder involvement and voting participation
substantially comparable to that of the NQF or AQA.
Given the potential for apparent overlap of NQF and AQA as
consensus organizations under the MIEA-TRHCA, it is important to
distinguish their roles. As currently established, the principal
purpose of AQA for physician quality measures is to select among NQF
endorsed measures for coordinated implementation. However, during a
time of rapid physician quality measures development and
implementation, it is impractical to delay implementation of physician
quality measures until the formal processes of NQF are completed.
Therefore, AQA has been able to enable CMS to incorporate new measures
into the quality reporting system by providing consensus review
acceptable under MIEA-TRHCA for implementation of a measure prior to
actual NQF endorsement. In the event of a determination by NQF to
decline endorsement of a particular measure after it had been adopted
by AQA, we anticipate that AQA would withdraw its adoption of such a
measure.
Turning to the requirement of a consensus-based process for
developing quality measures, we interpret this requirement in light of
the NTTAA and the importance of broad consensus for health care quality
measures used for regulatory purposes. In this context we have outlined
in the proposed rule, and rather than cite the proposed rule, we will
for readers' convenience reiterate below the process of health care
quality measurement development and distinguish basic development steps
from the completion of a consensus-based development process as
required under MIEA-TRHCA.
Many organizations are involved in the development of health care
quality measures. These organizations include physician organizations,
health care providers, Federal agencies, accreditation organizations,
disease-focused not-for-profit organizations, research organizations,
and health plans. The basic development processes of leading health
care quality measure developers generally use standardized methods that
include identification of a quality goal or gap, literature and
evidence review, expert and technical evaluation, specification
development, testing, organizational review, and that may include
public comment.
In the framework of the NTTAA, upon completion of the basic
development work, healthcare quality measures do not constitute
voluntary consensus standards, even though they may have utilized
consensus as a mechanism of achieving agreement among the developer's
participants or within the developer's organizational structure.
Rather, to achieve the status as a voluntary consensus standard under
NTTAA, the measure must go through the additional development that
occurs through the broader consensus process of consensus endorsement.
During this process, based on the need to achieve agreement, quality
measures are often modified in order to achieve the necessary broad
consensus.
Consistent with this concept, we interpret ``consensus-based
process for developing measures'' as used in MIEA-TRHCA to encompass
not only the basic development work of the formal measure developer,
but also to include the achievement of consensus among stakeholders in
the health care system based on at least a level of openness, balance
of interest, and consensus reflected in the structures and processes of
the NQF or the AQA as of the date of enactment of MIEA-TRHCA.
Based on the considerations previously discussed, we apply the
following policies in identifying measures that meet the MIEA-TRHCA
requirements for having used a consensus-based process for development
and the requirement for having been endorsed or adopted by a consensus
organization such as the NQF or AQA, and that are appropriate for
inclusion as 2008 measures:
(1) We interpret ``a consensus-based development process'' as
meaning that in addition to the measure development, the measure has
achieved adoption or endorsement by a consensus organization having at
least the basic characteristics of the AQA as a consensus organization
as of December 2006, when the MIEA-TRHCA incorporating reference to AQA
was passed and signed into law. Those basic characteristics include a
comparable level of openness, balance of interest, and consensus-based
on voting participation. As discussed above in this section and further
clarified in points (3) and (5) of this section, we do not
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interpret ``consensus-based development process'' per section
1848(k)(2)(B) of the Act to require that the consensus organization or
process meet all of the criteria of the NTTAA and OMB A-119 definition
of a voluntary consensus standards body.
(2) ``Voluntary consensus standard'' is interpreted to mean a
voluntary consensus standard that has been endorsed as such by a
consensus organization that meets the requirements of the NTTAA, and
the provisions of OMB A-119, for a voluntary consensus standards body.
(3) Where there are available quality measures, and some of these
measures meet the definition of ``voluntary consensus standards'' while
others do not, those measures that meet the definition of ``voluntary
consensus standards'' are preferred to other measures not meeting the
requirements of the NTTAA.
(4) In view of the preference for voluntary consensus standards,
if, as of the earlier of November 15, 2007, or the date of publication
of this final rule, a measure has been specifically considered by NQF
for possible endorsement but NQF has declined to endorse it, we
proposed not to include it in the final set of 2008 PQRI Quality
Measures, even if previously adopted by AQA.
(5) Although the AQA does not meet the requirements of the NTTAA
for a voluntary consensus standards body, it is a consensus
organization per section 1848(k)(2)(B) of the Act. In circumstances
where no voluntary consensus standard (NQF-endorsed) measure is
available, and the measure has not been specifically declined for
endorsement by NQF, a quality measure that has been adopted by the AQA
(or another consensus organization with comparable consensus-
organization characteristics), will meet the requirements of MIEA-TRHCA
if we determine that it is appropriate for eligible professionals to
use to submit data.
(6) We are unaware of other consensus organizations that are
comparable to the NQF in terms of meeting the formal requirements of
the NTTAA, or of organizations other than AQA that do not strictly meet
the requirements of the NISTA, as amended by the NTTAA, but that
feature the breadth of stakeholder involvement in the consensus process
necessary to meet the intent of the MIEA-TRHCA. However, the MIEA-TRHCA
does not limit consensus organizations to the NQF or the AQA, nor
restrict the field of potential consensus organizations. The MIEA-
TRHCA, thereby, maintains flexibility in potential sources of measure
consensus review, which is, like having multiple sources of measure
development, key to maintaining a robust marketplace for development
and review of quality measures.
(7) The basic steps for developing the physician level measures may
be carried out by a variety of different organizations. We do not
interpret the MIEA-TRHCA to place special restrictions on the type or
make up of the organizations carrying out this basic development of
physician measures, such as restricting the initial development to
physician-controlled organizations. Any such restriction would unduly
limit the basic development of physician quality measures and the scope
and utility of measures that may be considered for endorsement as
voluntary consensus standards.
(8) The policies we proposed were based on the preference as
articulated in NTTAA and OMB A-119 for ``voluntary consensus
standards'' to government-unique standards. However, the MIEA-TRHCA
does not require that quality measures meet the NTTAA or OMB A-119
definition of ``voluntary consensus standards'' in order to be used for
PQRI. Thus, though we prefer to use quality measures meeting the NTTAA
and OMB A-119 criteria for voluntary consensus standards, neither this
CMS preference nor the NTTA or OMB A-119 preclude CMS from exercising
our discretion under the MIEA-TRHCA to select measures for PQRI meeting
the less stringent consensus requirements of the MIEA-TRHCA, when
necessary to meet our program needs as determined by the Secretary.
(B) Summary of Comments and CMS's Responses
Comment: Many commenters thanked us for clarifying the requirements
for consensus-based development, consensus endorsement or adoption, and
the basic, high level structure of the measure-development process. As
discussed above in context of the PQRI program/overview content and
comments topic, multiple commenters requested additional and more
detailed information about measure development and related processes
and organizations. In context of the consensus requirements, several
commenters requested further explanation of the detailed definition or
distinction between the stages of measure development.
Response: We are pleased that many commenters that found our
description of the measurement development processes useful and were
supportive of our interpretation of the statutory requirements for
consensus endorsement and adoption and consensus-based development
process. In terms of providing additional clarification, the status for
PQRI implementation of measures that have been approved by AQA but
declined for endorsement by NQF is clarified in the final language.
Measures approved by AQA are sufficient for inclusion in 2008 PQRI in
terms of the statutory requirements for consensus-organization adoption
or endorsement and consensus-based development requirements of MIEA-
TRHCA. Measures, however, that have been specifically declined for
endorsement by NQF, are not selected for use in 2008 PQRI, based on our
preference for Voluntary Consensus Standards (72 FR 38198).
Comment: Many commenters requested or recommended that measure
development processes employ robust mechanisms for incorporation of
broadly inclusive consensus and/or public comment during the initial,
as well as final phase of development. However, some commenters
expressed the counterbalancing concern that we should more specifically
clarify that appropriate quality measures for PQRI should in fact be
based on evidence interpreted in processes which include consensus
methods and organizations, as opposed to measures that are based
primarily on stakeholder consensus about measure need and design
without a firm foundation in scientifically sound clinical evidence.
Response: As described in the proposed rule (72 FR 38197 through
38198) the basic (initial) development processes of measure developers
typically include various standardized processes that include both an
evaluation of the evidence base for a measure and a public comment
opportunity. We do not believe that we should delineate these processes
via rulemaking, nor require a particular evidence base for a measure.
Rather, the adequacy of measures from these and many other standpoints
is subject to evaluation during the consensus process.
Comment: Several commenters suggested we consider establishing as
policy that quality measures to be used by, and analyzed at the level
of, individual PQRI-eligible professionals, must be developed by
clinician-controlled organizations to assure relevance and promote
uptake by the eligible professional community. Multiple commenters
suggested explicit preference be given for measures developed or
endorsed by physician
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specialty societies, in context of consensus-organization review and
CMS measure selection processes. Some commenters stated that the AMA-
PCPI should be the sole source for physician-level measures. One
commenter specifically presented an interpretation of the MIEA-TRHCA
requirement for the 2008 PQRI measures to include measures submitted by
a physician specialty as meaning that the 2008 PQRI should include only
measures developed by physician organizations, to assure physician
control of available measures applicable to assessing the clinical
performance of individual physicians. Other commenters expressed
differing viewpoints, commenting on the importance of an open process
for initial measure development, and noting that no single organization
stands ready to lead in the quality arena. Multiple commenters pointed
to concerns about existing measure development and consensus
organizations particularly in terms of structure and transparency,
opposing any single organization controlling measurement development,
opposing requiring PQRI measurement development to come solely from
physician controlled organizations, and supporting alternatives to
existing organizations.
Response: Physician involvement and leadership is standard in the
work of both measure developers and consensus organizations. As a
result, physicians are actively involved at all levels of measurement
development and consensus adoption and endorsement. We are in agreement
that physician expertise is an important ingredient in measurement
development and in the consensus process. We further recognize the
leadership of physician organizations, as is reflected in the large
number of physician quality measures included in PQRI which were
developed by the AMA-PCPI and its participating specialty societies.
However, we do not agree that physicians should be in complete
control of the process of measure development, as would be the case if
measures were required to be developed solely by physician-controlled
organizations. Any such restriction would unduly limit the basic
development of physician quality measures and the scope and utility of
measures that may be considered for endorsement as voluntary consensus
standards. Rather, as we described in the proposed rule, the basic
steps for developing the physician level measures are appropriately
carried out by a variety of different organizations. We do not
interpret the MIEA-TRHCA to place special restrictions on the type or
make up of the organizations carrying out this basic development of
physician measures, such as restricting the initial development to
physician-controlled organizations. Similarly, we do not interpret
MIEA-TRHCA to require that each measure included in the 2008 PQRI have
been developed by a physician specialty.
Finally, we do not interpret MIEA-TRHCA to limit the field of
potential consensus organizations to those it named as examples of
acceptable organizations, so long as the requirements for broad
consensus we articulated as required under MIEA-TRHCA is achieved. The
MIEA-TRHCA, thereby, maintains flexibility in potential sources of
measure consensus review, which is, like having multiple sources of
measure development, key to maintaining a robust marketplace for
development and review of quality measures.
Comment: Many commenters suggested we establish a centralized
process or structure to prioritize measure development in specific
ways. Some commenters recommended priority be given to meaningful,
actionable gaps in care or specific high-impact disease conditions.
Others recommended that the first priority be assuring measure
availability for all PQRI-eligible professions and specialties.
Commenters recommended a centralized establishment of national
priorities for measure development and suggested that such
prioritization would help to align clinician-focused quality measures
with measures used in other governmental and private-sector initiatives
focused on other provider types, and advance measurement and close gaps
in care for high-prevalence and/or high-cost conditions.
Response: Health care quality measures are currently developed by a
variety of organizations and used by a variety of governmental,
nongovernmental, and public-private partnership initiatives which have
various and at times differing programmatic needs for quality measures.
Although a cooperative and voluntarily coordinated approach to agreeing
upon quality goals which would guide development and selection of
measures may be of value, the Secretary retains the authority to select
from available measures meeting applicable statutory requirements those
most appropriate for use in this program.
Comment: Many commenters illustrated, directly or indirectly, that
the proposed rule language (72 FR 38198 through 38199) reads to a
material proportion of reviewers as meaning or implying that a measure
must be both adopted by the AQA ``and'' endorsed by the NQF to be
included in the PQRI for 2008. Several of these comments also
specifically requested clarification of the status of measures that
will, as of the date CMS finalizes the list of 2008 PQRI quality
measures, be AQA-adopted but not yet reviewed by NQF.
Response: In general, the consensus requirement under the MIEA-
TRHCA is met if a measure is either NQF-endorsed or AQA-adopted.
However, where an AQA-adopted measure has been specifically considered
by NQF but declined for endorsement, we have not selected such measures
for 2008. This derives from our stated preference for standards of a
voluntary consensus standards organization (such as NQF) over an
organization which does not (such as AQA). Also, as stated in the
proposed rule (72 FR 38198), in the event of a determination by NQF to
decline endorsement of a particular measure after it had been adopted
by AQA, we anticipate that AQA would withdraw its adoption of that
measure. Thus, a measure that has been AQA adopted and then reviewed by
NQF with a decision to decline endorsement we would expect would, soon
after the NQF decision, be neither NQF-endorsed nor AQA-adopted and
therefore it would be undesirable to include a measure imminently
destined to not retain approval of either consensus organization simply
because we may have been identifying final 2008 measures during the
brief period of lag between the NQF's decision to decline endorsement
and the AQA's opportunity to reconsider its adoption of the measure.
To further clarify this point, of the measures proposed for 2008
(72 FR 38199 through 38202), the only ones that might be removed as a
result of having been AQA adopted but then subsequently declined NQF
endorsement are certain measures that were included in the 2007 PQRI on
the basis of AQA adoption and that have since been declined for
endorsement by NQF after specifically being considered.
For newly-proposed measures (those not part of the 2007 PQRI set),
either NQF or AQA consensus endorsement or adoption is sufficient for
PQRI. Most of these measures will have been adopted by the AQA but not
yet reviewed by NQF. Others may have been endorsed by the NQF, but not
yet adopted by the AQA.
Comment: One commenter suggested that the entirety of the PQRI
section of the proposed rule could potentially be
[[Page 66343]]
construed to imply that there may be, based on which specific entities
develop or own a measure, different levels of consensus-standard status
required for measures to qualify for our consideration for inclusion in
PQRI.
Response: The measure developer was listed for identification
purposes only. This was necessary for measures that when proposed were
still under development. The remaining measures that had achieved
consensus endorsement or adoption were sufficiently identified by
consensus organization, without listing the developer. The statutory
requirements for consensus-organization adoption or endorsement,
consensus-based development and statutory and policy preferences for
measures that have achieved the status of voluntary consensus standards
apply equally to all potential PQRI quality measures regardless of the
organization type or specific identity of any given measure's developer
or owner.
Comment: We received a large number of comments on the
interpretation of the requirement of per Section 1848(k)(2)(B)(i) of
the Act, that 2008 PQRI measures ``shall be measures that have been
adopted or endorsed by a consensus organization (such as the National
Quality Forum or AQA)''. These comments reflected a diversity of
opinion amongst various stakeholders on key conceptual points related
to the balance between rigor and flexibility in measure review and
approval, as well as on the suitability of specific organizations for
their roles as we define them in the PFS rule.
Many commenters encouraged us to rely solely on highly structured,
scientifically rigorous processes for measure approval to promote
stability in measures over time. Many other comments advised against
requiring a degree of formality or scientific rigor in the review
process that would unduly slow the availability and implementation of
new quality measures to fill current gaps in professionals or clinical
foci for which applicable measures exist.
Several commenters closely related to the recommendation of
reliance on more rigorous review processes further suggested we
identify a single voluntary consensus standards body to be considered
qualified to establish measures as PQRI measures. The rationales
provided for this suggestion include enhanced probability of a cohesive
or coordinated universe of endorsed measures and prevention of
endorsement of duplicate or near duplicate (``competing'' or
``conflicting'') measures.
The value of having multiple consensus organizations available to
approve measures was noted by many comments that were closely related
to, or that were elaborating upon, maintaining flexibility and
adaptability of the universe of available measures. These commenters
included observations that setting requirements that limit the total
available capacity for measure review will slow the development not
only of specific additional quality measures but likely also innovative
advancement in the science of health care quality measurement. Some of
these commenters urged us to remain alert for the development of
additional organizations into potential consensus organizations on par
with the NQF or with the AQA as of the date MIEA-TRHCA was signed into
law, and two commenters named two specific potential candidates that
might choose to develop to that degree in the near future.
Response: We believe the existence of multiple consensus
organizations promotes availability of a broad array of measures from
which we can select those most appropriate for use in PQRI based on
program policy goals. The availability of the AQA as a consensus
organization meeting the requirements of MIEA-TRHCA, though it does not
meet the full NTTAA and OMB A-119 criteria for a voluntary consensus
standards body (VCSB), has proven important to the consensus
development of the 2008 PQRI measures. Specifically, the AQA's more
flexible and expeditious processes have made measures available on a
shorter timeline than would be possible within the more rigorous
processes of a VCSB. At present, we are able to identify only the NQF
and the AQA as satisfying the consensus organization requirements of
MIEA-TRHCA. Should additional organizations develop to feature
consensus characteristics at least comparable to the level of openness,
balance of interest, and broadly representative voting membership
demonstrated by the AQA as of the date MIEA-TRHCA became law, we would
consider measures endorsed by those organizations eligible for
consideration for inclusion in PQRI.
We concur with the commenters identifying the desirability of
alignment or harmony of quality measures across settings to more
effectively promote overall CMS quality goals. We strive to achieve
synergy between measures used in various settings and quality related
initiatives to the extent practical.
Comment: Many commenters concurred with our interpretation that NQF
is a VCSB per NTTAA and OMB A-119. Several commenters also commended
NQF for the scientific rigor of its structure and review processes.
Some commenters in favor of establishing a single consensus
organization entity whose approval would qualify a measure for PQRI
inclusion went on to name NQF as the leading or only named candidate
for such an organization. Simultaneously, multiple concerns were raised
about the uneven (project-driven) NQF funding stream and its resultant
potentially long or uncertain review timeframes, and the potential for
this to impede measure development. Several comments also raised
concern that the NQF's processes for review of physician-applicable
measures are not yet as developed and predictable as those measures
applicable to other types of providers. A few commenters noted that the
NQF determinations on physician-applicable measures apparently vary
unpredictably between workgroups and that the appeals process is not
clearly identifiable.
Some comments recommended that CMS or another agency should provide
steady core funding to the NQF on an ongoing basis.
Response: The NQF is currently the only organization we identified
that reviews health care quality measures while simultaneously meeting
the NTTAA and OMB A-119 definition of a VCSB. NQF processes for review
and endorsement of physician-applicable measures are expected to
develop and stabilize as it gains more experience with such measures.
We will continue to monitor the NQF and its processes and work with NQF
and its members to promote the prompt achievement of that growth.
The funding stream of the NQF is outside the scope of this
rulemaking. The concerns raised over the current NQF funding mechanism
and internal operational structures does, however, highlight the
desirability of having an alternative source or multiple alternative
sources of consensus-organization review of quality measures to assure
that the measure has been vetted in a process that offers at least a
reasonable degree of openness, balance of interests, and broad voting
participation.
Comment: Multiple comments expressed concerns about the AQA's
structure and original intended purpose not being ideally suited to its
current role in PQRI, and its role in the measure endorsement process
being confusing or its role not clearly adding value to the process.
Multiple other comments commended the AQA as currently
[[Page 66344]]
structured, including its responsiveness, openness, breadth of
participation, and utility as a forum for building consensus among
stakeholders in quality measurement. Several comments also noted that
the AQA is currently re-evaluating its structure, and recommended
either that the AQA be required to restructure itself to meet the NTTAA
and OMB A-119 criteria for a VCSB or that we reassess the AQA after any
restructure to assure that it retains at least the comparable level of
consensus-organization characteristics that it featured at the time
MIEA-TRHCA became law.
Response: As noted above in this section, we interpret that the AQA
currently meets the MIEA-TRHCA intended definition of a consensus
organization for purposes of measure approval, as its mention in MIEA-
TRHCA as an example of a consensus organization confirms it did at the
time the statute was enacted. Further, we have expressed what we
understand its value to be for the purpose of making quality measures
available for consideration for inclusion in the PQRI. We do not have
direct control over the AQA; requiring the AQA to take any specific
action or restructure in any specific way would be outside the scope of
CMS authority. However, we are observing the AQA's re-evaluation of its
structure and will consider altering its role in relation to approval
of future PQRI measures based on its resultant structure.
Comment: Several commenters requested we specifically define the
minimum criteria to be a non-VCSB consensus organization meeting the
requirements of MIEA-TRHCA.
Response: We have defined the requirement as being that an
organization must possess a level of consensus-organization
characteristics at least comparable to those of the AQA as of the date
MIEA-TRHCA became law. To attempt to quantify or score an
organization's level of consensus characteristics would be difficult to
do in a way that was not misleading or arbitrary. The key features, as
stated in the proposed rule (at 72 FR 38198), include openness, balance
of interest, and consensus based on voting participation.
c. The Final 2008 PQRI Quality Measures
In the proposed rule (72 FR 38199), we solicited comments on the
implications of including or excluding 148 specific quality measures in
7 broad categories. We received numerous comments both general and
measure-specific, which are summarized and addressed as follows.
Comment: Many comments on measure inclusion were general or
conceptual and, in fact, mirrored comments on prioritization of measure
development or endorsement.
Specific to measure selection, some commenters supported our
including or excluding measures based on a targeted focus on specific
gaps in care, while other commenters supported maximum inclusivity of
conditions, services, and professionals. Some of the comments specific
to measure selection stated two main perspectives: (1) We should set
the priorities and/or prioritization process in collaboration with a
maximally inclusive and representative cohort of stakeholders (to
specifically include pharmaceutical, device, and information technology
manufacturers and trade associations, as well as clinicians and
consumers); and (2) the prioritization or selection of quality measures
should be accomplished by a VCSB in a formal consensus process.
Response: In selecting measures, we have sought to achieve a broad
opportunity for eligible professionals to participate, and to promote
the quality goals forming the basis for the measures themselves. The
general quality goal underlying the measures as developed is a
performance gap relating to important processes or outcomes of care.
While we agree that prioritized themes for quality improvement can be
useful in certain contexts, for PQRI the scope of practice of the
various eligible professionals varies significantly. Therefore, it
would be difficult to limit measures selected to a few specific
prioritized quality goals without also limiting the opportunity to
participate. With respect to the role of a VCSB under MIEA-TRHCA, it is
to achieve consensus endorsement of particular measures, rather than to
prioritize measures for PQRI. The responsibility for selection of
measures for PQRI is directed to the Secretary, based on proposing
measures, soliciting public comment, and then finalizing the measures.
Public comment could include the views of a VCSB as to which measures
are most appropriate for PQRI based on quality goals or other
considerations. These could then be considered, in conjunction with the
other public comments and the program needs as determined by the
Secretary, in finalizing the measures.
Comment: Several comments in context of measure selection urged us
to select or prioritize for PQRI inclusion measures aligned or
harmonized with those used in other governmental initiatives that focus
other provider types in addition to or instead of individual PQRI-
eligible professionals.
Response: We concur with comments identifying the desirability of
alignment or harmony of quality measures across settings to more
effectively promote overall CMS quality goals. We strive to achieve
such synergy among settings and initiatives to the extent practical.
Comment: We received several comments specifically commending or
recommending inclusion of specific quality measures, including, but not
limited to: Specific eyecare measures; vaccination and preventive
services measures; diabetic foot and ankle measures; and perioperative
care measures including venous thromboembolism(VTE) prophylaxis.
Response: All of the proposed measures strongly supported by
multiple comments are included in the final 2008 measures listed below
in this section.
Comment: We received many comments expressing concern that the
following 2007 PQRI measure that has achieved NQF endorsement was not
included in measures proposed for 2008: ``Age Related Macular
Degeneration: Dilated Macular Examination''.
Response: As noted in the proposed rule's correction notice (72 FR
43581), the omission of this measure was a technical/editorial error
that was corrected via that notice. The measure titled ``Age Related
Macular Degeneration: Dilated Macular Examination'' is included in the
final list in Table 7.
Comment: Several commenters recommended changes to specific quality
measures' titles, definitions, and detailed specifications or coding.
Many of these recommendations were based on alternative interpretations
of clinical evidence or concerns about the utility of the measures.
Some requests were specifically concerned that measures be expanded or
constrained to include or exclude specific professionals from those to
whom the measure may be applicable.
Response: Quality measures that have completed the consensus
processes of NQF or AQA have a designated party (generally the
developer/owner) who has accepted responsibility for maintaining the
measure. In general, it is the role of the measure owner, developer or
maintainer to make any changes to the basic elements of a measure.
Examples of such basic elements would be the particular process of care
covered by the measure, professional services to which the measure
applies, or the diagnosis (or diagnoses) defining the denominator
[[Page 66345]]
population. A request to modify any basic elements of a measure should
be addressed to the measure's maintainer. In addition, NQF has for its
endorsed measures an established maintenance process which may be
accessed. Measure maintenance and modification activities are conducted
by the developers/owners and/or maintainers of measures outside the CMS
rule-making process. In implementing the measures for PQRI, CMS may,
when necessary, make certain technical modifications to assure that
reporting and performance rates can be calculated. These technical
modifications do not modify the basic elements of the measure and are
carried out in collaboration with the measure developer/owner or
maintainer.
Comment: Many commenters requested the inclusion for 2008 of
additional measures not proposed as PQRI measures in the proposed rule.
Measures requested included additional structural measures, additional
measures of medication use appropriateness and compliance, measures
applicable to additional clinical topics, and the measures identified
in the proposed rule as mandatory for erythropoietin stimulating agent
reimbursement in 2008.
Response: The MIEA-TRHCA requires that measures proposed for use in
the 2008 PQRI be published in the Federal Register prior to August 15,
2007. We are also required by other applicable statutes to provide
opportunity for public comment on provisions of policy or regulation
that are established via notice and comment rulemaking. Measures that
were not included in the proposed rule for inclusion in the 2008 PQRI
that were recommended to CMS via comments on the proposed rule have not
been placed before the public with opportunity for the public to
comment on them within the rulemaking process. When measures have been
published in the Federal Register, but in other contexts and not
specifically proposed as PQRI measures, such publication does not
provide true opportunity for public comment on those measures'
potential inclusion in PQRI. Thus, such additional measures recommended
via comments on the proposed rule cannot be included in the 2008
measures MIEA-TRHCA requires be finalized via publication in the
Federal Register by November 15, 2007. However, we have captured these
recommendations and will have them available for consideration in
identifying measure sets for future years' PQRI and other initiatives
to which those measures may be pertinent.
The measures we identify for 2008 in this final rule with comment
period will be final as of the effective date of this final rule, and
no changes (no additions or deletions of measures) will be made after
that date. However, as was done for 2007, we may make modifications or
refinements, such as code additions, corrections, or revisions, to the
detailed specifications for the 2008 measures until the beginning of
the reporting period. Such specification modifications may be made
through the last day preceding the beginning of the reporting period.
The 2008 measures specifications will be available on the PQRI section
of the CMS Web site at http://www.cms.hhs.gov/pqri when they are
sufficiently developed or finalized, but in no event later than
December 31, 2007. No further changes to the specifications will be
made after the start of the 2008 reporting period. The measures'
detailed specifications will include instructions for reporting and
identify the circumstances in which each measure is applicable.
The final 2008 PQRI Quality Measures are listed in Tables 7 through
13, and fall into 7 broad categories. The final measures for 2008 were
selected based upon the following:
The achievement of NQF endorsement or AQA adoption by the
earlier of November 15, 2007, or the date of publication of this final
rule with comment period;
Identification in the proposed rule for use in 2008 with
opportunity for public comment via the rulemaking process;
Development completion in a sufficiently timely manner
that implementation for 2008 would be practical;
Their importance in relation to quality goals;
Their meaningfulness as measures of quality;
Their utility in the PQRI program such as through
augmenting the scope of services provided by eligible professionals to
which PQRI measures apply;
The degree to which they meet the needs of the Medicare
program and their functionality in terms of ability to be collected and
calculated in the PQRI program;
Statutory requirement for inclusion in quality measures
for 2008.
(i) Measures Selected From the 2007 PQRI Quality Measures
We include in the final 2008 PQRI measures the following 2007 PQRI
measures in Table 7, proposed as 2008 PQRI measures (72 FR 38199
through 38200). The measures in Table 7 include measures submitted by
specialties, in compliance with section 1848(k)(2)(B) of the Act.
Table 7.--2007 PQRI Measures
------------------------------------------------------------------------
-------------------------------------------------------------------------
Hemoglobin A1c Poor Control in Type 1 or 2 Diabetes Mellitus.
Low Density Lipoprotein Control in Type 1 or 2 Diabetes Mellitus.
High Blood Pressure Control in Type 1 or 2 Diabetes Mellitus.
Screening for Future Fall Risk.
Heart Failure: Angiotensin-Converting Enzyme (ACE) Inhibitor or
Angiotensin Receptor Blocker (ARB) Therapy for Left Ventricular
Systolic Dysfunction (LVSD).
Oral Antiplatelet Therapy Prescribed for Patients with Coronary Artery
Disease.
Beta-blocker Therapy for Coronary Artery Disease Patients with Prior
Myocardial Infarction (MI).
Heart Failure: Beta-blocker Therapy for Left Ventricular Systolic
Dysfunction.
Antidepressant Medication During Acute Phase for Patients with New
Episode of Major Depression.
Medication Reconciliation.
Assessment of Presence or Absence of Urinary Incontinence in Women Aged
65 Years and Older.
Characterization of Urinary Incontinence in Women Aged 65 Years and
Older.
Plan of Care for Urinary Incontinence in Women Aged 65 Years and Older.
Chronic Obstructive Pulmonary Disease (COPD): Spirometry Evaluation.
Chronic Obstructive Pulmonary Disease (COPD): Bronchodilator Therapy.
Asthma: Pharmacologic Therapy.
Stroke and Stroke Rehabilitation: Computed Tomography (CT) or Magnetic
Resonance Imaging (MRI) Reports.
Stroke and Stroke Rehabilitation: Carotid Imaging Reports.
Primary Open Angle Glaucoma: Optic Nerve Evaluation.
[[Page 66346]]
Age-Related Macular Degeneration: Dilated Macular Examination.
Diabetic Retinopathy: Documentation of Presence or Absence of Macular
Edema and Level of Severity of Retinopathy.
Diabetic Retinopathy: Communication with the Physician Managing Ongoing
Diabetes Care.
Perioperative Care: Timing of Antibiotic Prophylaxis--Ordering
Physician.
Perioperative Care: Selection of Prophylactic Antibiotic--First OR
Second Generation Cephalosporin.
Perioperative Care: Discontinuation of Prophylactic Antibiotics (Non-
Cardiac Procedures).
Perioperative Care: Venous Thromboembolism (VTE) Prophylaxis (when
indicated in All patients).
Osteoporosis: Management Following Fracture.
Osteoporosis: Communication with the Physician Managing Ongoing Care
Post-Fracture.
Aspirin at Arrival for Acute Myocardial Infarction (AMI).
Electrocardiogram Performed for Non-Traumatic Chest Pain.
Electrocardiogram Performed for Syncope.
Vital Signs for Community-Acquired Bacterial Pneumonia.
Assessment of Oxygen Saturation for Community-Acquired Bacterial
Pneumonia.
Assessment of Mental Status for Community-Acquired Bacterial Pneumonia.
Empiric Antibiotic for Community-Acquired Bacterial Pneumonia.
Asthma Assessment.
Perioperative Care: Timing of Prophylactic Antibiotics--Administering
Physician.
Stroke and Stroke Rehabilitation: Deep Vein Thrombosis Prophylaxis (DVT)
for Ischemic Stroke or Intracranial Hemorrhage.
Stroke and Stroke Rehabilitation: Discharged on Antiplatelet Therapy.
Stroke and Stroke Rehabilitation: Anticoagulant Therapy Prescribed for
Atrial Fibrillation at Discharge.
Stroke and Stroke Rehabilitation: Tissue Plasminogen Activator (t-PA)
Considered.
Stroke and Stroke Rehabilitation: Screening for Dysphagia.
Stroke and Stroke Rehabilitation: Consideration of Rehabilitation
Services.
Screening or Therapy for Osteoporosis for Women Aged 65 Years and Older.
Osteoporosis: Pharmacologic Therapy.
Use of Internal Mammary Artery (IMA) in Coronary Artery Bypass Graft
(CABG) Surgery.
Preoperative Beta-blocker in Patients with Isolated Coronary Artery
Bypass Graft (CABG) Surgery.
Perioperative Care: Discontinuation of Prophylactic Antibiotics (Cardiac
Procedures).
Appropriate Treatment for Children with Upper Respiratory Infection
(URI).
Appropriate Testing for Children with Pharyngitis.
Myelodysplastic Syndrome (MDS) and Acute Leukemias: Baseline Cytogenetic
Testing Performed on Bone Marrow.
Myelodysplastic Syndrome (MDS): Documentation of Iron Stores in Patients
Receiving Erythropoietin Therapy.
Multiple Myeloma: Treatment with Bisphosphonates.
Chronic Lymphocytic Leukemia (CLL): Baseline Flow Cytometry.
Hormonal Therapy for Stage IC-III ER/PR Positive Breast Cancer.
Chemotherapy for Stage III Colon Cancer Patients.
Plan for Chemotherapy Documented Before Chemotherapy Administered.
Radiation Therapy Recommended for Invasive Breast Cancer Patients Who
Have Undergone Breast Conserving Surgery.
Advance Care Plan.
------------------------------------------------------------------------
Please note that detailed specifications for some 2007 PQRI
measures may have been updated or modified during the NQF endorsement
process during 2007. The detailed 2008 PQRI measure specifications for
any given measure may, therefore, be different from detailed
specifications for the same measure used for 2007. All specifications
for 2008 measures must be obtained from the specifications document for
2008 measures, which will be available on the CMS PQRI Web site on or
before December 31, 2007.
The following measures proposed for 2008 (72 FR 38200) are not
included in the final 2008 PQRI measures listed in Table 7 because they
have been considered by NQF and did not achieve endorsement:
Dialysis Dose in End Stage Renal Disease (ESRD) Patients.
Hematocrit Level in ESRD Patients.
Comment: We did not receive any comments specifically suggesting
that any of the 2007 PQRI measures proposed for 2008 be removed from
the 2008 PQRI measures. Some commenters suggested alternative measures
apparently in addition to the measures we had proposed.
Response: We have not included in final 2008 PQRI measures any
measures that were not identified in the proposed rule as proposed 2008
measures for the reporting system as required by Section 1848(k)(1) and
1848(k)(2)(B) of the Act. As discussed above in this rule, we were
obligated by MIEA-TRHCA and other applicable statutes to publish and
provide opportunity for public comment on proposed PQRI quality
measures. Measures recommended via comments on the proposed rule that
were not included in the proposed rule have not been placed before the
public with opportunity for the public to comment on their potential
use in PQRI. Thus, such additional measures recommended via comments on
the proposed rule cannot be included in the 2008 measures MIEA-TRHCA
requires be finalized via publication in the Federal Register by
November 15, 2007. However, we have captured these recommendations and
will have them available for consideration in identifying measure sets
for future years' PQRI and other initiatives to which those measures
may be pertinent.
(ii) AMA--PCPI Measures
The measures listed in Table 8, which were developed via the
American Medical Association (AMA) Physicians Consortium for
Performance Improvement (PCPI), are finalized as 2008 PQRI measures as
of the date of publication of this final rule with comment period. All
of these measures were proposed as 2008 PQRI measures (72 FR 38200
through 38201). The measures listed in Table 8 achieved AQA adoption or
NQF endorsement on or before October 31, 2007.
We will publish the detailed specifications for all final PQRI
measures on the CMS PQRI Web site at http://www.cms.hhs.gov/pqri on or
before December 31, 2007.
[[Page 66347]]
Table 8.--AMA/PCPI Measures Finalized for 2008 With Consensus-
Organization Approval by 10/31/2007
------------------------------------------------------------------------
-------------------------------------------------------------------------
Prevention of Ventilator-Associated Pneumonia--Head elevation.
Prevention of Catheter-Related Bloodstream Infections (CRBSI)--Central
Venous Catheter Insertion Protocol.
ACE Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy in patients
with CKD.
Chronic Kidney Disease (CKD): Laboratory Testing (Calcium, Phosphorus,
Intact Parathyroid Hormone (iPTH) and Lipid Profile).
Influenza Vaccination in patients with End Stage Renal Disease (ESRD).
Vascular Access for patients undergoing Hemodialysis.
Plan of Care for ESRD patients with Anemia.
Plan of Care for Inadequate Hemodialysis in ESRD patients.
Plan of Care for Inadequate Peritoneal Dialysis.
Assessment of GERD Symptoms in Patients Receiving Chronic Medication for
GERD.
Testing of patients with Chronic Hepatitis C (HCV) for Hepatitis C
Viremia.
Initial Hepatitis C RNA Testing.
HCV Genotype Testing Prior to Therapy.
Consideration for Antiviral Therapy in HCV Patients.
HCV RNA Testing at Week 12 of Therapy.
Hepatitis A and B Vaccination in patients with HCV.
Counseling patients with HCV Regarding Use of Alcohol.
Counseling of patients Regarding Use of Contraception Prior to Starting
Antiviral Therapy.
Patients who have Major Depression Disorder who meet DSM IV Criteria.
Patients who have Major Depression Disorder who are assessed for suicide
risks.
Patients with Osteoarthritis who have an assessment of their pain and
function.
Acute Otitis Externa (AOE): Topical Therapy.
Acute Otitis Externa (AOE): Pain Assessment.
Acute Otitis Externa (AOE): Systemic Antimicrobial Therapy--Avoidance of
Inappropriate Use.
Otitis Media with Effusion (OME): Diagnostic Evaluation--Assessment of
Tympanic Membrane Mobility.
Otitis Media with Effusion (OME): Hearing Testing.
Otitis Media with Effusion (OME): Antihistamines or Decongestants--
Avoidance of Inappropriate Use.
Otitis Media with Effusion (OME): Systemic Antimicrobials--Avoidance of
Inappropriate Use.
Otitis Media with Effusion (OME): Systemic Corticosteroids--Avoidance of
Inappropriate Use.
Breast cancer patients who have a pT and pN category and histologic
grade for their cancer.
Colorectal cancer patients who have a pT and pN category and histologic
grade for their cancer.
Appropriate initial evaluation of patients with Prostate Cancer.
Inappropriate use of Bone Scan for staging Low-Risk Prostate Cancer
patients.
Review of treatment options in patients with clinically localized
Prostate Cancer.
Adjuvant Hormonal therapy for High-risk Prostate Cancer patients.
Three-dimensional radiotherapy for patients with Prostate Cancer.
Chronic Kidney Disease (CKD): Blood Pressure Management.
Chronic Kidney Disease (CKD): Plan of Care: Elevated Hemoglobin for
Patients Receiving Erythropoiesis--Stimulating Agents (ESA).
------------------------------------------------------------------------
The AMA PCPI measures that were proposed in Table 17 of the
proposed rule (72 FR 38200 through 38201) were under development at the
time the proposed rule was published. Several of these measures did not
complete development or did not complete development in a sufficiently
timely manner to permit implementation in the 2008 PQRI program. We
have not included in the final PQRI measures listed in Table 8 the
following proposed 2008 measures (from Table 17 of the proposed rule,
72 FR 38200 through 38201) for which development was not completed or
not completed in sufficient time for implementation for 2008:
Stress Ulcer Disease (SUD) Prophylaxis in Ventilated Patients
Perioperative Temperature Management for Surgical Procedures
Under General Anesthesia
Assessment of Thromboembolic Risk Factors in patients with
Atrial Fibrillation
Chronic Anticoagulation in patients with Atrial Fibrillation
Monthly INR Measurements in patients with Atrial Fibrillation
GFR Calculation in patients with Chronic Kidney Disease (CKD)
Permanent Catheter Vascular Access for patients Receiving
Hemodialysis
Patients with Osteoarthritis who receive Anti inflammatory or
Analgesia Medication
Documentation of hydration status in Pediatric Patients with
Acute Gastroenteritis (PAG)
Weight measurement in patients with PAG
Recommendation of appropriate oral rehydration solution in PAG
patients
Education parents of PAG patients
Perioperative Cardiac risk assessment (history)
Perioperative Cardiac risk assessment (current symptoms)
Perioperative Cardiac risk assessment (physical examination)
Perioperative Cardiac risk assessment (electrocardiogram)
Perioperative Cardiac risk assessment (continuation of Beta
Blockers).
During completion of the measure development process, the measure
developer eliminated the restriction to ventilated patients of the
proposed (72 FR 38201) measure titled, ``Prevention of Catheter-Related
Bloodstream Infections in Ventilated Patients--Catheter Insertion
Protocol''. This measure is, therefore, listed in the Final 2008 PQRI
measures in Table 8 as ``Prevention of Catheter-Related Bloodstream
Infections (CRBSI)--Central Venous Catheter Insertion Protocol''.
During completion of the measure development process, several of
the measures proposed for 2008 in Table 17 of the proposed rule (72 FR
38200 through 38201) were combined into one measure by the measure
developer. The final, combined measures contain the substantive
components of each of the measures. The following is reflected in the
Final 2008 PQRI Measures listed in Table 8:
Proposed measures (72 FR 38201) titled ``Blood Pressure
Measurement in patients with CKD'' and ``Plan of Care for patients with
CKD and Elevated Blood Pressure'' were combined into the measure
entitled ``Chronic Kidney Disease (CKD): Blood Pressure Management.''
Proposed measures (72 FR 38201) ``Calcium, Phosphorus and
Intact
[[Page 66348]]
Parathyroid Hormone Measurement in patients with CKD'' and ``Lipid
Profile in patients with CKD'' were combined into the measure in Table
8 entitled ``Chronic Kidney Disease (CKD): Laboratory Testing (Calcium,
Phosphorus, Intact Parathyroid Hormone (iPTH) and Lipid Profile).''
Proposed measures (72 FR 38201) ``Hemoglobin Monitoring in
patients with CKD'' and ``Erythropoietin Overuse in patients with CKD
and normal Hemoglobin'' were combined into the measure in Table 8
entitled ``Chronic Kidney Disease (CKD): Plan of Care: Elevated
Hemoglobin for Patients Receiving Erythropoiesis-Stimulating Agents
(ESA).''
During the measure development process, several measures listed in
the proposed rule (72 FR 38201) as pertaining to the medical conditions
Acute Otitis Externa (AOE) and Otitis Media with Effusion (OME) were
narrowed to apply to only one or the other. The measure developer made
these refinements as a result of more in-depth consideration of the
evidence for the clinical relevance of each specific measure to each or
either condition. Modifications to the measures' titles reflect these
decisions. Otitis Media with Effusion (OME) was eliminated from the
proposed 2008 measures below. The revised measure titles are listed in
Table 8 for each proposed 2008 measures:
Measure proposed (72 FR 38201) as ``Patients with Acute
Otitis Externa (AOE) or Otitis Media with Effusion (OME) who receive
Topical Therapy'' is now entitled ``Acute Otitis Externa (AOE): Topical
Therapy.''
Measure proposed (72 FR 38201) as ``Patients with AOE/OME
who have a pain assessment'' is now entitled ``Acute Otitis Externa
(AOE): Pain Assessment.''
Measure proposed (72 FR 38201) as ``Patients with AOE/OME
who are inappropriately prescribed antimicrobials'' is now entitled
``Acute Otitis Externa (AOE): Systemic Antimicrobial Therapy--Avoidance
of Inappropriate Use''. Acute Otitis Externa (AOE) was eliminated from
the proposed (72 FR 38201) measures below. The revised measure titles
are listed in Table J2 for each proposed 2008 measures.
Measure proposed (72 FR 38201) as ``Patients with AOE/OME
who have an assessment of tympanic membrane mobility'' is now entitled
``Otitis Media with Effusion (OME): Diagnostic Evaluation--Assessment
of Tympanic Membrane Mobility.''
Measure proposed (72 FR 38201) as ``Patients with AOE/OME
who undergo hearing testing'' is now entitled ``Otitis Media with
Effusion (OME): Hearing Testing.''
Measure proposed (72 FR 38201) as ``Patients with AOE/OME
who inappropriately receive antihistamines/decongestants'' is now
entitled ``Otitis Media with Effusion (OME): Antihistamines or
Decongestants--Avoidance of Inappropriate Use.''
Measure proposed (72 FR 38201) as ``Patients with AOE/OME
who inappropriately receive systemic antimicrobials'' is now entitled
``Otitis Media with Effusion (OME): Systemic Antimicrobials--Avoidance
of Inappropriate Use.''
Measure proposed (72 FR 38201) as ``Patients with AOE/OME
who inappropriately receive systemic steroids'' is now entitled
``Otitis Media with Effusion (OME): Systemic Corticosteroids--Avoidance
of Inappropriate Use.''
Comment: We received several comments from organizations involved
in the measure development process noting that the measure titles as
proposed in Table 17 of the proposed rule (72 FR 38200 through 38201)
were incorrect or obsolete based on progress in measure development
between the time the proposed rule went on display (July 2, 2007) and
the date the commenters submitted their comment letters (various
specific dates at the end of August, 2007).
Response: As stated above, the measure titles in Table 8 reflect
the correct titles as of the conclusion of the development process
preparing these measures for consensus-organization review in the late
summer and early fall of 2007.
Comment: We received comments in support of certain measures listed
in Table 8, such as the Chronic Kidney Disease measures. Other
commenters suggested including additional measures not proposed as 2008
PQRI measures. No commenters opposed inclusion of any of the measures
listed on Table 8.
Response: The measures from Table 16 of the proposed rule (72 FR
38200 through 38201) that were sufficiently completed in time for use
in the 2008 PQRI are included in Table 8. As discussed above, several
of the CKD measures proposed in Table 16 of the proposed rule (72 FR
38201) have been combined into with one another as listed in Table 8.
As iterated above in response to comments on measures in Table 7,
we cannot include in the 2008 PQRI measures that were not published as
proposed 2008 PQRI measures in the Federal Register by August 15, 2007.
We have, however, made note of the measures suggested and may consider
them for inclusion in future quality-reporting initiatives to which
they may be relevant.
(iii) Nonphysician Measures
We include measures in the final 2008 PQRI quality measures listed
in Table 9 developed by Quality Insights of Pennsylvania (under the
Medicare Quality Improvement Organization (QIO) contract for the State
of Pennsylvania) that were proposed as 2008 PQRI measures in Table 18
of the proposed rule (72 FR 38201 through 38202). These measures were
developed primarily to afford expanded reporting opportunities for NPPs
who had few or no measures available in 2007. Some may also be
applicable to physicians. The clinicians who could report each measure
are identified in the measure's detailed specifications, which will be
available on the Measures/Codes page of the CMS PQRI Web site at http:/
/www.cms.hhs.gov/pqri as far in advance of the 2008 reporting period as
practical. We have not included in the final PQRI measures listed in
Table 9 the following measures proposed in Table 18 of the proposed
rule (72 FR 38201 through 38202) whose development was not completed in
a sufficiently timely manner for implementation in the 2008 PQRI
program:
Universal Hypertension Screening.
Universal Hypertension Screening Follow-up.
During completion of the measure development process, several of
the measures proposed for 2008 in Table 18 of the proposed rule (72 FR
38201 through 38202) were combined into one measure by the measure
developer. The final, combined measures contain the substantive
components of each of the measures. The following is reflected in the
Final 2008 PQRI Measures listed in Table 8:
Proposed (72 FR 38201) measures titled ``Universal Weight
Screening (BMI)'' and ``Universal Weight Screening Follow-up (BMI)''
were combined into the measure entitled ``Universal Weight Screening
and Follow-up.''
Proposed (72 FR 38201) measures ``Patient Co-development
of Treatment Plan'' and ``Patient Co-development of Plan of Care'' were
combined into the measure in Table 8 entitled ``Patient Co-development
of Treatment Plan/Plan of Care.''
Comment: We received numerous comments pertaining to the measures
proposed in Table 18 of the proposed rule (72 FR 38201 through 38202),
now listed in Table 9 of this final rule with
[[Page 66349]]
comment period. Most of these comments addressed the scope of
applicability of these measures to particular non-physician
specialties, such as speech language pathologists (SLPs) and
occupational therapists.
Response: The applicability of the final 2008 PQRI measures is
dependent on whether the given practitioner can bill for the services
identified by the procedures or services represented by the Current
Procedural Terminology (CPT) Category I codes in the measure's
denominator per its detailed specifications. The inclusion of specific
procedures or services in a measure's denominator is determined during
the measure development and consensus process, based on the clinical
relevance of the measure to particular services/procedures. The
determination of services/procedures to which a specific measure is
relevant and therefore applicable is not subject to change via the
rulemaking process. The measures in Table 9 achieved AQA consensus
adoption on or before October 19, 2007. These measures have not yet
been reviewed by the NQF.
We will publish the detailed specifications for all final PQRI
measures, including these QIP nonphysician measures, on the CMS PQRI
Web site at http://www.cms.hhs.gov/pqri on or before December 31, 2007.
Table 9.--Quality Insights of Pennsylvania Nonphysician Measures
------------------------------------------------------------------------
-------------------------------------------------------------------------
Universal Weight Screening (BMI) and Follow-up.
Universal Influenza Vaccine Screening and Counseling.
Universal Documentation and Verification of Current Medications in the
Medical Record.
Screening for Clinical Depression.
Screening for Cognitive Impairment.
Patient Co-development of Treatment Plan/Plan of Care.
Pain Assessment Prior to Initiation of Patient Treatment.
------------------------------------------------------------------------
(iv) Structural Measures Currently Under Development
We include structural measures in the final 2008 PQRI measures
listed in Table 10 developed by Quality Insights of Pennsylvania (under
the Medicare Quality Improvement Organization (QIO) contract for the
State of Pennsylvania), that were proposed as 2008 measures in Table 19
of the proposed rule (72 FR 38202). These measures meet the requirement
of section 1848(k)(2)(B)(i) of the Act.
Comment: Numerous comments expressed support of the measures listed
in Table 10. Other commenters stated a belief that there is a lack of
scientific evidence to support the benefits of e-prescribing.
Response: As required by MIEA-TRHCA, the final 2008 PQRI measures
shall include structural measures such as the use of EHRs and
electronic prescribing technology. The determination of the sufficiency
of the scientific basis for quality measures is part of the review and
evaluation during the measure development and consensus processes. The
measures are included in Table 10. These measures were adopted by the
AQA on or before October 31, 2007.
Table 10.--Quality Insights of Pennsylvania Structural Measures
------------------------------------------------------------------------
-------------------------------------------------------------------------
HIT--Adoption/Use of E-Prescribing.
HIT--Adoption/Use of Health Information Technology (Electronic Health
Records).
------------------------------------------------------------------------
(v) Additional AQA Starter-Set Measures
We include measures in the final 2008 PQRI measures from the AQA
starter set that were not included in the 2007 PQRI quality measures
but that are relevant to Medicare beneficiaries and which we proposed
as 2008 measures in Table 20 of the proposed rule (72 FR 38202). We
have not included in the final 2008 measures listed in Table 11 the
following measure that was listed in Table 20 of the proposed rule (72
FR 38202), because its adaptation to the claims-based provider-self-
reported format was not found to be feasible:
Beta Blocker Therapy (persistent for 6 months or more)
Post MI.
We received several comments in support of the measures listed in
Table 20 of the proposed rule (72 FR 38202) and now listed in Table 11,
as preventive care measures and measures related to smoking cessation.
Table 11.--Additional AQA Starter-Set Measures
------------------------------------------------------------------------
-------------------------------------------------------------------------
Dilated eye exam in diabetic patient.
Screening Mammography.
Colorectal Cancer Screening.
Inquiry regarding Tobacco Use.
Advising Smokers to Quit.
------------------------------------------------------------------------
(vi) Other NQF-Endorsed Measures
We include in the final 2008 PQRI measures other measures endorsed
by the NQF that were not included in the 2007 PQRI quality measures but
that were proposed as 2008 measures (72 FR 38202) and that are relevant
to Medicare beneficiaries, address overuse/misuse of pharmacologic
therapy, and/or that expand the specialty applicability and patient
population. We have not included in the final PQRI measures listed in
Table 12 the following proposed measure (72 FR 38202), because its
adaptation to the PQRI format was subsequently not found to be
feasible:
Annual Therapeutic monitoring for patients on the
following persistent medications: Angiotensin Converting Enzyme
Inhibitor (ACE)/Angiotensin Receptor Blocker (ARB), Digoxin, Diuretics,
Anticonvulsants; and Statins.
We received several comments in support of including the measures
listed in Table 12. We did not receive any comments opposing the
inclusion of any of the measures listed in Table 12.
Table 12.--Other NQF-Endorsed Measures
------------------------------------------------------------------------
-------------------------------------------------------------------------
Inappropriate antibiotic treatment for adults with acute bronchitis.
Disease Modifying Anti-rheumatic Drug Therapy in Rheumatoid Arthritis.
Angiotensin Converting Enzyme Inhibitor (ACE) or Angiotensin Receptor
Blocker (ARB) Therapy for patients with coronary artery disease and
diabetes and/or left ventricular systolic dysfunction (LVSD).
Urine screening for microalbumin or medical attention for nephropathy in
diabetic patients.
Influenza vaccination for patients >= 50 years old.
Pneumonia vaccination for patients 65 years and older.
------------------------------------------------------------------------
(vii) Podiatric Measures
We include measures in the final 2008 PQRI quality measures listed
in Table 13 developed by the American Podiatric Medical Association
(APMA). These two measures are finalized as 2008 PQRI measures as of
the date of publication of this final rule with comment period. These
measures were proposed as 2008 PQRI measures in Table 21 of the
proposed rule (72 FR 38202), and were
[[Page 66350]]
adopted by the AQA on or before October 31, 2007.
A third proposed measure (72 FR 38202), titled ``Diabetic Foot and
Ankle Care, Peripheral Arterial Disease: Ankle Brachial Index (ABI)
Measurement'' has not achieved AQA adoption or NQF endorsement in time
to be included in this final rule with comment period, and is therefore
not included in the final 2008 PQRI quality measures.
Comment: A number of comments expressed support of these measures.
We received comments requesting correction of the title of this topic
and the substantive title/heading for the table from ``Podiatric
Measures'' to ``Diabetic Foot and Ankle Measures'' to reflect the
potential applicability of these measures beyond podiatrist. At the
same time, we received comments that these measures are not applicable
to orthopedic surgeons.
Response: We have retained the original measure-category title to
reflect the developer, and thus the origin of the measures, rather than
the scope of applicability. This identification of nomenclature is
aligned with the nomenclature used for other categories of measures,
such as those in Table 11, which are identified as originating in the
AQA Starter Set rather than by the type of services to which they
pertain. MIEA-TRHCA makes no presumption as to applicability based
solely on measure title or specifications, let alone the categorization
that may be applied to various groups of measures for identification
and ease of reference. Rather, measures are presumed applicable to a
practitioner based on the scope and pattern of practice of the
physician reporting the measure in combination with its specifications.
Table 13.--Podiatric Measures
------------------------------------------------------------------------
-------------------------------------------------------------------------
Diabetic Foot and Ankle Care, Peripheral Neuropathy: Neurological
Evaluation.
Diabetic Foot and Ankle Care, Ulcer Prevention: Evaluation of Footwear.
------------------------------------------------------------------------
d. Addressing a Mechanism for Submission of Data on Quality Measures
via a Medical Registry or Electronic Health Record
(i) Addressing a Mechanism for Submission of Data on Quality Measures
via a Medical Registry--Background and Summary of Proposed Rule
As explained in the proposed rule (72 FR 38202), section 1848(k)(4)
of the Act, as amended by the MIEA-TRHCA, requires that ``as part of
the publication of proposed and final quality measures for 2008 under
clauses (i) and (iii) of paragraph (2)(B), the Secretary shall address
a mechanism whereby an eligible professional may provide data on
quality measures through an appropriate medical registry''.
In the proposed rule, we discussed what constitutes a medical
registry and the general desirability of registries serving as an
alternative to claims based reporting. We proposed to address reporting
from medical registries by testing one or more of five mechanisms for
such reporting during 2008, and requested comment on five options for
data submission by registries. These options vary as to whether
individual beneficiary-level data is submitted by the registry, as well
as the number and type of data elements needed from the registry. The
five options were described in detail in the proposed rule (72 FR 38203
through 38204).
The 2008 registry reporting is only a test of the feasibility and
accuracy for the two selected submission options (identified as Options
2 and 3 in the proposed rule (72 FR 38203 through 38204)) and described
again, in summary, below in response to comments. In order to qualify
for the incentive bonus for PQRI data submission, practitioners will
need to continue their quality data codes through the claims process.
(ii) Addressing a Mechanism for Submission of Data on Quality Measures
via a Medical Registry--Summary of Comments and CMS's Responses
Comment: The majority of the comments advocated the use of option
2, 3, or 5. There was not significant support for option 1 or option 4;
instead the preponderance of comments on options 1 and 4 were in
opposition to their implementation.
Response: We have decided to test options 2 and 3 in 2008.
We agree that option 1 should not be tested. Under this option only
the quality data codes for selected PQRI measures would be reported by
the registry without submission of associated diagnosis or service
rendered. Under this option, the denominator information would have to
be obtained from the claims and linked to the quality data codes
submitted via the registry. This option would create an added
administrative burden for the CMS systems that would need to link data
from the two sources at the beneficiary or episode/encounter/procedure
level.
We also agree that option 4 should not be tested. Option 4 would
place significant burden upon practitioners, by requiring practitioners
not only to submit claims to Medicare for the services provided, but
also enter data obtained from the explanation of benefits into the
registry.
Option 5, which calls for a ``data dump'' was supported by some
commenters as this option would potentially provide the most complete
and robust set of data for purposes of clinical improvement. It could
also be beneficial in evaluating a physician's practice, particularly
since it would not necessarily need to be limited to Medicare Part B
beneficiaries or soley PQRI measures. Thus, while we agree that data
submission via registry-based mechanisms in models such as Option 5 has
significant potential over time because of the comprehensiveness of the
data, we do not believe that this option is currently practical for
implementation even on a test basis. We intend to continue to explore
ways to enhance our ability to capture registry data so that it may be
suitable for future use.
Under Option 2, the registry would provide the quality data codes
and diagnosis codes and beneficiary identification (HIC) numbers or
other limited beneficiary information for identification. Using the
beneficiary information to match registry information to a submitted
claim for a particular service, CMS would have the data needed to
calculate a practitioner's reporting and performance rates.
Under Option 3 the registry will calculate and submit reporting and
performance rates for various measures to CMS, rather than have CMS
calculate the rates. While this is compatible with the role of a
registry in providing feedback to the physician, for future PQRI
implementation, a validation process for the registry calculations
would need to be in place and provided to CMS.
Comment: Many commenters requested that registry-based mechanisms
for 2008 be made a fully operational alternative through which
participants could achieve satisfactory reporting and quality for a
2008 PQRI incentive payment. Several commenters suggested we find a way
to let participants in testing activities ``get credit'' toward PQRI
reporting for their participation in the test.
Response: We proposed a test of registry submission (72 FR 38203
through 38204). It is not feasible or practical to implement registry
submission without such testing. Any registries and any of their
subscribers participating in any testing activities in 2008 will be
participating in this data-submission testing on a strictly voluntary
basis. Any registry seeking to participate in the testing should notify
their subscribers to continue submitting
[[Page 66351]]
quality data codes on their Part B professional services claims in
order to pursue PQRI bonus payments.
Comment: We received several comments requesting that a specific
organization's registry be deemed or ``certified'' to satisfy PQRI
reporting. Additionally, it was suggested that we implement a mechanism
to make those professionals submitting data to the registry potentially
able to qualify for a 2008 PQRI bonus payment on the basis of
participating in the registry. We received several related comments
suggesting we consider deeming specialty boards' maintenance of
certification (MOC) programs so that successful participation in a
deemed MOC would qualify a professional for a 2008 PQRI bonus payment.
Response: We believe that, in the long run, registries having such
deemed status may be a very suitable and desirable way for quality data
submission and measures calculation to be conducted for physicians and
other practitioners. However, at the present time we do not find it
feasible or practical to implement such a suggestion.
Comment: Several commenters encouraged us to maintain for the
foreseeable future multiple options for PQRI participants to submit
data, including claims based, as well as registry or EHR-based
submission mechanisms. Some of these comments noted that the state of
the art for medical registries is embryonic to nascent. Commenters also
noted that the percentage of eligible professionals who use EHRs
capable of successful data extraction and transmission to a CMS data
warehouse is relatively low. Related comments recommended we develop a
long term strategy that will be sufficiently flexible to allow for
innovative developments in the registry field as it begins to grow in
sophistication and market penetration.
Response: For 2008, claims-based submission will remain the only
mechanism of PQRI quality measure data submission. We hope in future
years to make alternative ECI-based submission mechanisms available.
However, we recognize that for the near future, claims-based submission
is likely to be the only mechanism that will provide an avenue for
virtually all eligible practitioners to participate within PQRI. As a
result, we would anticipate that claims based submission would be
maintained.
Comment: Several commenters expressed concern that many registries
are proprietary and charge a fee for using the registry. Commenters
expressed concern about using proprietary registries, specifically that
such use raises potential antitrust (barrier to competition) issues, as
well as barriers to participation by professionals who would have to
subscribe to a proprietary registry. Several commenters urged that any
CMS registry-based mechanism be in the public domain and supported by a
public domain registry available to individual professionals.
Response: In the proposed rule, we discussed registry-based
reporting as an alternative, not a requirement. We agree that
physicians should not be required to use any particular proprietary
service. Rather, the purpose in addressing registries is to allow
physicians who find it desirable to submit data to registries to be
able to avoid duplicate data submission to CMS through the claims
process.
Comment: A few commenters expressed concern that creating new
registries or altering existing interfaces would be burdensome and
costly.
Response: We are not recommending developing new registries and any
decision to do so should be made independently of PQRI. Nevertheless,
there are currently various registries in existence which may,
ultimately, be capable of interfacing with the CMS data warehouse. As
has been previously discussed, for 2008, we will only be testing
registry-based data submission. As envisioned for the future, registry-
based submission of quality-measures data would be an alternative, not
a requirement.
Comment: Some comments expressed concerns about transmitting
patient data through registries or EHRs in context of applicable
statutes, regulations, and policies protecting patient privacy.
Response: Preserving the confidentiality of patients' individually
identifiable and protected health information is a high priority at
CMS. Generally, personally identifiable data on individuals and/or
their health are protected by the Privacy Act of 1974 and/or the Health
Insurance Portability and Accountability Act of 1996 (Pub. L. 104-191)
(HIPAA). HIPAA establishes protections specific to certain individually
identifiable health information, and the Privacy Act establishes the
protections specific to certain information that the government
maintains which is individually identifiable. HIPAA and its extensive
implementing regulations have established privacy and security
standards for health care plans, health care clearinghouses, and
providers that conduct electronic transactions covered by HIPAA. These
entities are termed ``covered entities''. All patient registries, EHRs,
data transmission, and data storage done by or on behalf of a covered
entity must be HIPAA compliant. The claims-based method of reporting
currently uses patient identifiers for submission of quality data along
with data required to process the provider's claim for payment. The use
of registries or EHRs would require, for purposes of validation, the
same information as currently used by the claims-based method of
submitting quality-measures data.
(iii) Addressing a Mechanism for Submission of Data on Quality Measures
Via a Medical Registry--Final Plan
For 2008, we will test Options 2 and 3 on a voluntary basis, based
on self-nomination by the registries. Each registry participating in
the testing of each option must maintain compliance with all applicable
statutory and regulatory requirements and any contractual obligations
to the professionals/providers for processing, storing, and
transmitting the data required by the option.
Functionally, the registry would act as a data submission vendor
for the eligible professional. A ``data submission vendor'' is defined
for purposes of this rule as an entity that has permission from the
eligible professional to provide medical registry data to the Quality
Reporting System developed per the MIEA-TRHCA. This definition
parallels the definition of ``data submission vendor'' as used in other
programs, such as the Hospital Compare data-submission process, where
examples of such vendors include Joint Commission Oryx vendors.
In the testing process, again in parallel to similar mechanisms
already implemented for other provider types by CMS, we anticipate the
registry, acting as a data submission vendor, will submit data to the
CMS clinical data warehouse, using a CMS-specified record layout based
on the quality measures' specifications as published by CMS. For
purposes of this rule, the term ``CMS clinical data warehouse'' is
defined as a clinical data warehouse designated by CMS for use in this
testing. The exact warehouse infrastructure may vary between the
testing activity in 2008 and any full implementation of registry-based
data submission that may in the future follow from that testing.
Options 1 and 4 as described in the proposed rule will not be
tested in 2008, and we do not envision any future consideration. Thus,
they are not described in this rule. Option 5, while of potential
interest for future consideration, is also not described
[[Page 66352]]
below. As options 2 and 3 will be tested in 2008, they are described
below.
Option 2: Registries provide the quality codes and diagnosis codes.
In testing this option, we will use claims data extracted from the
National Claims History to capture the payment information at the NPI/
Tax ID level. All PQRI reporting and performance calculations will be
performed using registry data. The registries will, therefore, be
required to include specific data elements in their databases in order
to include the codes needed to calculate performance measures and to
match registry data to claims data. Although not identified in the
proposed rule, we have upon further technical analysis concluded that
along with data elements previously identified, patient identifiers
will also be needed from the registry under this option. Patient
identifier data are needed specifically in order to allow matching of
registry data with Medicare claims. It is our understanding that for
many, if not all, registries, inclusion of at least the patient
identifier data elements will represent an addition to their databases.
While developing and through the implementation of the testing
phase we may discover additional data elements are needed to support
reliably valid analyses. The following is a list of examples of the
minimum data elements we believe will be needed from a registry under
Option 2:
Beneficiary/procedure-level data (ICD 9 and CPT codes)
HCPCS quality-data codes (G codes and CPT category II codes
and modifiers)
NPI and Tax ID
Date of service
Beneficiary Date of Birth
HIC number
Option 3: Registries calculate the reporting and performance rates
for Medicare beneficiaries only, and submit these rates to CMS (that
is, aggregate information by NPI within a Tax ID). We assume no
beneficiary level information will be shared. Registries will be
required to include data elements in their databases to capture either
quality-data codes or the clinical data needed to compute the quality-
data codes. Registries will be required to perform the necessary
calculations to be able to submit completed numerator/denominators for
both reporting and performance rates. Additionally, the registries must
have a validation strategy in place.
For any option, the registry must maintain compliance with all
applicable statutory or regulatory requirements and any contractual
obligations to the providers for processing, storing, and transmitting
the data required by the option. To be considered an appropriate
registry from which we can accept and process data for the purposes of
calculating PQRI measures, a registry must also comply with the
interoperability standards recognized by the Secretary, and therefore,
applicable to HHS initiatives. Examples of standards recognized by the
Secretary include Consolidated Health Informatics Initiative (CHI)
standards and standards subsequently recognized by the Secretary under
Executive Order 13410 in place of CHI standards. A description of the
specific health informatics standards adopted by the Federal
government, as well as the specific interoperability standards
recognized by the Secretary, is available on the HHS Office of the
National Coordinator for Health Information Technology (ONC) Web site
at http://www.hhs.gov/healthit/chiinitiative.html.
We will request that registries interested in participating in the
testing of the registry based quality data submission project self
nominate. A letter stating the registries interest should be received
by CMS by 6 PM, Eastern time, on January 4, 2008. Self-nomination
letters should be sent to: ``PQRI IT Testing Nomination'', Centers for
Medicare and Medicaid Services Office of Clinical Standards and
Quality, Quality Measurement and Health Assessment Group, 7500 Security
Boulevard, Mail Stop S3-02-01, Baltimore, MD 21244-8532.
We plan to select for testing, from the self nominees, a group of
registries that comply with all applicable statutory and/or regulatory
requirements, and any contractual obligations to the professionals/
providers for processing, storing, and transmitting the data required
by the option(s) tested. Registries selected must also comply with
applicable system interoperability standards recognized by the
Secretary and be technically capable of interfacing with the CMS
clinical warehouse electronic data exchange interface. The number of
registries selected for testing may be limited to those that are
technically capable or those that already contain key minimum data
elements for testing purposes. Additionally, the actual level of
complexity and effort required for testing from the CMS data
infrastructure may also limit registry participation in the testing
phase. (Experience with other initiatives has suggested that some data
submission vendors and their software are more easily interfaced and
tested with the CMS data warehouse electronic data exchange interface
than others.)
In addition to the requirements listed above in this section, any
registry that self-nominates for 2008 testing must, at a minimum, have
the following characteristics:
(1) Be able to separate and report information for Medicare
beneficiaries only.
(2) Use at least 1 PQRI measure that is selected for 2008
inclusion. We will consider other measures recommended by specialty
registries for possible future use in quality reporting and
performance.
(3) Provide the data as outlined in the rule for the particular
available option under which they are submitting data (that is, being
able to report using option 2 and/or option 3).
(4) Have a validation process for their data.
(5) Have or have applied for a QualityNet Exchange account.
We expect that information on the results of the testing in 2008
will be posted on the CMS PQRI Web site at http://www.cms.hhs.gov/pqri.
(iv) Electronic Health Records (EHRs)
The proposed rule noted (72 FR 38204) that we would explore the
operational feasibility of accepting clinical quality data for a
limited number of PQRI measures from EHRs, and solicited comments on
this concept. The summaries of, and our responses to, the numerous
comments we received on this topic are presented at the end of this
PQRI-specific section.
Having conducted further technical analyses and reviewed public
comments received on the proposed rule, we have determined that we
will, in 2008, partner with several self nominated EHR vendors/groups
that we select to develop and test EHR clinical quality data
submission. Since mechanisms for submission of electronic clinical data
extracted from an EHR will only be for testing purposes in 2008,
vendors should notify their clients that the practitioners will need to
submit their quality data codes through the claims process to be
eligible for a 2008 bonus payment.
EHR vendors/groups who wish to participate in the development and
testing process may self-nominate by sending a letter to CMS expressing
their interest. Self-nomination letters should be sent to: ``PQRI IT
Testing Nomination'', Centers for Medicare and Medicaid Services Office
of Clinical Standards and Quality, Quality Measurement and Health
Assessment Group, 7500 Security Boulevard, Mail Stop S3-02-01,
Baltimore, MD 21244-8532.
[[Page 66353]]
The letter must be received by CMS by 6 p.m., e.s.t., on January 4,
2008. Vendors who are selected for this process must:
(1) Be able to submit data according to the HL7 technical
specifications for submission of data to the Outpatient Clinical
Warehouse, as defined for the Doctor's Office Quality--Information
Technology (DOQ-IT) Project; and
(2) Have or have applied for a QualityNet Exchange account.
As with registry-based mechanisms, vendors and their customers
(eligible professionals) who choose to participate in the testing in
2008 will be doing so on a strictly voluntary basis. We will continue
to express this, and will urge EHR vendors to explain this to their
customers when seeking volunteers to participate in the testing with
them.
For more information on required capability (1), above, please see
the QualityNet Exchange User's Guide, and the DOQ-IT measures'
technical specifications (as implemented in the DOQ-IT project), both
available for download free of charge from http://qualitynet.org.
Additionally, 5 overlapping DOQ-IT and PQRI quality measures have been
updated for potential use in the 2008 testing. The updated detailed
technical specifications for these five DOQ-IT/PQRI overlapping
measures are available for download from the 2008 PQRI Information page
of the CMS PQRI Web site at http://www.cms.hhs.gov/pqri.
Comment: Numerous comments were received regarding accepting
clinical quality data from EHRs for use in PQRI. While some commenters
opposed the idea of using EHR-derived data in PQRI, the majority of
responses were in favor of accepting clinical quality data from an EHR.
Response: Although we will be unable to offer EHR-based data
submission mechanism on other than a test basis, we are encouraged by
the generally positive response to the pursuit of this option due to
its substantial potential to enhance data quality and reduce data
collection burden on providers.
Comment: Numerous comments expressed concerns about data security,
especially as it pertains to patient privacy, and patient privacy as it
relates to CMS use of the quality data, in the context of EHR-based
data submission mechanisms.
Response: Preservation of patient confidentiality is imperative. It
is the inescapable responsibility of every party that collects, stores,
handles, or uses patients' personally identifiable health information
for any purpose. In order to participate in the 2008 testing, all
participating parties must be able to ensure that uses and disclosures
of protected health information EHRs, data transmission mechanisms, and
data receipt and storage systems will be in compliance with all
applicable statutes and regulations and any contractual obligations to
the professionals/providers for processing, storing, and transmitting
the data required by each option tested. Moreover, although EHR
submission may involve identifiable personal health information, that
information is limited to what is minimally necessary to be able to
audit the data accuracy and completeness in addition to the particular
clinical information (lab values, vital sign values, documentation of a
procedure or test ordered or performed) necessary to calculate the
performance measure. It does not involve submitting the entire patient
medical record, and it is possible that the information as transmitted
can have the patient's actual identifying information (for example,
name, and HIC number) ``masked'' by using a practice-internal chart ID
or other method that still allows for accurate audit.
Comment: Multiple comments urged us to develop and implement EHR-
based data submission mechanisms in a way that minimizes the burden
such submission might impose.
Response: We agree that data submission burden is an important
factor to consider in PQRI data submission.
Comment: We received several comments expressing concern over
professionals losing ``control'' of patient records as a result of EHR-
based PQRI quality data submission. The comments appeared to assume
that our plan was either to import and maintain within our data
warehouse entire patient medical records or to implement an interface
that would allow our warehouse to access and mine the data from
patients' medical records.
Response: The patient's health record is populated and maintained
in a practitioner's office, regardless of whether its content is stored
on paper or electronic format or media. Nothing in this rule affects
the rights of patients or practitioners with respect to the information
contained in a patient's health record.
We plan to accept clinical data that is extracted from medical
records and then submitted to us by a professional (or a data-
submission vendor acting on a professional's behalf).
We would not attempt to upload entire medical records into the data
warehouse, only the data elements minimally necessary to accomplish the
purposes of PQRI. We do not plan to enable our system to directly mine
data from the practice's medical records database; that will need to be
accomplished by the professional or a data vendor acting on the
professional's behalf. The data submission requires an affirmative
action on the part of the professional to submit the data or to
instruct his or her data submission vendor to submit the data to our
warehouse.
2. Section 110--Reporting of Hemoglobin or Hematocrit for Part B Cancer
Anti-Anemia Drugs (Sec. 414.707(b))
Medicare Part B provides payment for certain drugs used to treat
anemia. Anemia is common in cancer patients and may be caused by either
the cancer itself or by various anti-cancer treatments, including
chemotherapy, radiation therapy, and surgical therapy. Anemia occurs
when the number of red blood cells is reduced by an anti-cancer
treatment. This happens due to the effect of chemotherapy or radiation
therapy on the bone marrow, wherein red blood cells are produced by
dividing precursor cells. This chemotherapy effect is commonly referred
to as ``bone marrow suppression.'' Anemia may also result from blood
loss in association with surgical therapy for the cancer.
Anemia adversely impacts the quality of life for beneficiaries
being treated for cancer. Fatigue and reduced performance capacity are
the side effects of anemia that cancer patients report as the most
disabling and contributing to poor quality of life. The treatment of
anemia in cancer patients commonly includes the use of drugs,
specifically erythropoiesis stimulating agents (ESAs) such as
recombinant erythropoietin and darbepoietin. Although other
pharmacologic interventions are available, ESAs are the most commonly
used drugs to treat anemia in this setting. Notably, recent research
has prompted a Black Boxed warnings in the labels for ESAs, noting
significant adverse effects including a higher risk of mortality and
tumor progression in some populations.
In 2006, we implemented a revised ESA claims monitoring policy
based on the last hemoglobin or hematocrit value from the preceding
month on Medicare claims for payment of ESAs administered to
beneficiaries with anemia due to end-stage renal disease (ESRD)
receiving dialysis treatments in facilities. For many years prior, we
have required the reporting of these red blood cell indicators on the
Medicare claims by ESRD facilities to ensure that the beneficiaries'
anemia was addressed.
[[Page 66354]]
Section 110 of the MIEA-TRHCA amends section 1842 of the Act by
adding a new subsection (u) that reads as follows: ``Each request for
payment, or bill submitted, for a drug furnished to an individual for
the treatment of anemia in connection with the treatment of cancer
shall include (in a form and manner specified by the Secretary)
information on the hemoglobin or hematocrit levels for the
individual.'' Section 110 of the MIEA-TRHCA requires such reporting for
drugs furnished on or after January 1, 2008. In addition, subsection
(b) directs the Secretary to use the rulemaking process under section
1848 of the Act to address the implementation of this requirement.
By requiring the reporting of anemia quality indicators for
Medicare Part B anti-anemia drugs that are used in the context of
cancer treatment, we will facilitate assessment of the quality of care
for this condition. We will use the information reported to help
determine the prevalence and severity of anemia associated with cancer
therapy, the clinical and hematologic responses to the institution of
anti-anemia therapy, and the outcomes associated with various doses of
anti-anemia therapy.
While not specifically addressing other indications, the recent
research on the adverse effects of ESAs in patients with cancer does
raise concerns as to whether patients receiving ESAs for other
conditions, such as in the treatment of HIV-AIDS and for some surgical
patients, are also at higher risk. We solicited public comment on the
potential of expanding this regulation to include all uses of ESAs.
Comments and Responses
In general, commenters responded favorably to requiring the
reporting of the most recent hemoglobin or hematocrit level on claims
seeking payment for the administration of ESAs for all uses. One
commenter supported broadening the requirement for reporting hemoglobin
and hematocrit levels for all ESA claims and stated that such
requirements would provide valuable data concerning reasonable care.
The commenter stated that any new information on the use of ESAs for
other, non-cancer diseases gained by the data collection would be
helpful in understanding the effects of ESA use in different diseases.
Another commenter supported the broad goal of gathering the information
to improve the quality of care. Thus, in light of the potential adverse
events from ESA use and in accordance with our reading of Congressional
intent, we believe it is appropriate to require reporting of the
hemoglobin or hematocrit with respect to all ESA claims, and therefore,
we have revised the regulations text to reflect this policy in this
final rule with comment period.
Most commenters' concerns were limited to the implementation of the
requirement and possible subsequent undue administrative burden placed
on providers. A few commenters addressed a recently published National
Coverage Determination on the use of ESAs for certain patients and
others included comments related to our ESAs claims monitoring policy
(EMP). We are not addressing those comments in this final rule with
comment period as the issues are outside the scope of this regulation.
Comment: A commenter recommended that we exercise caution in
implementing the anemia quality indicator secondary to a recent Food
and Drug Association (FDA) Black Boxed Warning (BBW) on the use of
ESAs. The commenter noted that anemia measures were removed from the
Physician Consortium for Performance and Improvement ESRD measurement
set pending further clarification by either the FDA or the National
Kidney Foundation.
Response: This final rule with comment period does not establish
new or additional standards related to anemia or the administration of
ESAs. It simply mandates the reporting of the most recent hemoglobin or
hematocrit level on claims for payment of the administration of ESAs to
treat anemia. Similar to claims for ESAs administered in renal dialysis
facilities, the requirement to report a recent hemoglobin or hematocrit
on claims for the administration of ESAs for any use is not a
development of a clinical standard. Thus, we believe that collecting
this information will not impact nor be impacted by any consensus
standard organizations' development of practice standards, quality
measures or new scientific evidence.
Comment: A commenter asked that we clarify if the reporting
requirement applies to all anemia treatment, which includes, but is not
limited to, the use of ESAs.
Response: The statutory requirement does not limit the scope to
ESAs. We recognize that other drugs and vitamin and mineral supplements
such as Vitamin B12, folic acid, and iron may also be used in the
treatment of anemia. ESAs are only FDA approved for the treatment of
anemia while the other agents are commonly used to treat a variety of
conditions other than anemia. Vitamin and mineral supplements are
commonly self administered and we expect that most uses of these agents
would not result in claims for Medicare payment in the context of the
treatment of anemia related to anti cancer therapy. However, if payment
is requested for these anti-anemia drugs furnished to an individual for
the treatment of anemia in connection with the treatment of cancer, we
believe that they are within the scope of the statute.
We believe that the reporting of hemoglobin or hematocrit levels on
claims for ESAs is consistent with Congressional intent that quality
indicator data be submitted for patients receiving anti-anemia drugs
and to ensure that anemia is addressed.
Comment: Several commenters recommended that we provide clear
instruction on the scope and reporting of the hemoglobin or hematocrit
levels.
Response: We will use the change request process to issue
implementing instructions to Medicare contractors. Instructions to
Medicare contractors include requirements for provider education.
Comment: Several commenters expressed concern that the requirement
will be burdensome for providers. One commenter asked that we delay the
implementation of this requirement until the administrative burden to
practitioners is understood.
Response: We do not have the authority to delay the effective date
of the statutory requirement. In addition, we believe that reporting
the most recent hemoglobin or hematocrit level on a claim for ESA will
not result in undue administrative burdens on providers. Many local
Medicare contractors already require such reporting for claims
submitting within their jurisdictions. ESRD providers have been
reporting hemoglobin or hematocrit levels on claims for ESAs for
several years.
Comment: A commenter recommended that should we broaden the
reporting requirement to all ESA use and that we should assess minimal
data sets for understanding how beneficiaries with various underlying
conditions respond to a particular course of anemia management.
Response: We appreciate the recommendation and shall review
available data sets when assessing responses to anemia management.
Comment: A commenter recommended that we include anemia quality
indicators in the Physician Quality Reporting Initiative (PQRI) data
reporting.
Response: This comment is addressed above in the section of this
final rule specific to 2008 PQRI measures. The identification or
establishment of PQRI
[[Page 66355]]
measures is not within the scope of this section of this final rule
with comment period.
Comment: A commenter asked that retail pharmacies be exempt from
this requirement.
Response: The MIEA TRHCA does not provide for any exemption for
retail pharmacies.
Comment: One commenter asked that we clarify whether a provider may
report a hematocrit or hemoglobin level.
Response: A provider seeking payment for ESAs may report the
patient's most recent hematocrit or hemoglobin level on the claim.
Comment: Several commenters asked that we clarify the requirement
to report ``the most recent'' hemoglobin or hematocrit level. They
expressed concern that we may require a patient to have a hemoglobin or
hematocrit level drawn each time an ESA is administered.
Response: We are not determining in this regulation when a
hematocrit or hemoglobin level should be drawn to inform a provider's
decision to administer ESA therapy. The requirement is that ``the most
recent'' hemoglobin or hematocrit level be reported on the claim. Thus,
the provider should report the most recent level preceding the ESA
administration. We recognize that in some instances the same hemoglobin
or hematocrit value might be reported on more than one claim.
Comment: Several commenters stated that we should permit providers
to report hematocrit or hemoglobin levels in either box 19 or 24A of
the CMS 1500 form. The CMS 1500 form was recently modified to allow
reporting in box 24A; however, many providers utilize billing vendors
that provide software and are unable to modify their product in time
for the January 1, 2008 implementation.
Response: We will consider this information when developing claims
processing systems instructions.
Comment: One commenter suggested that we employ Q codes for
reporting the most recent hemoglobin or hematocrit levels. The
commenter stated that permitting a provider to report the level in box
19 would not allow an automated extraction of the data element (the
hemoglobin or hematocrit level) for data analysis.
Response: We are working with claims processing systems to ensure
appropriate retrieval of data sets.
3. Section 104--Extension of Treatment of Certain Physician Pathology
Services Under Medicare
The technical component (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 professional component (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 with comment period (64 FR 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 provision, 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
with comment period (64 FR 59408 through 59409), 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 with comment period (64 FR
59408 through 59409), in Sec. 415.130, we specified 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 PFS final rule with comment
period are implemented in the following year. However, in this case,
the change to Sec. 415.130 was delayed 1 year (until 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 by section 542 of
the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection
Act of 2000 (Pub. L. 106-554) (BIPA) and section 732 of the MMA, which
directed us to continue payment to independent laboratories for the TC
of physician pathology services for hospital patients through CY 2006.
In the CY 2007 PFS final rule with comment period (71 FR 69700), we
announced that beginning January 1, 2007, we would no longer allow the
carriers to pay the independent laboratory for the TC of physician
pathology services to hospital patients. In effect, we would be: (1)
Implementing the provisions of the CY 2000 PFS final rule with comment
period whose implementation had been delayed by section 542 of the BIPA
and section 732 of the MMA; and (2) ensuring that the Medicare program
does not make duplicate payments for the same service.
Subsequent to publication of the CY 2007 PFS final rule with
comment period, the MIEA-TRHCA was enacted. Section 104 of the MIEA-
TRHCA provided for an additional 1 year extension to allow carriers to
continue to pay independent laboratories under the PFS for the TC
portion of physician pathology services furnished to patients of a
covered hospital.
Consistent with this legislative change, we are amending Sec.
415.130(d) to specify that for services furnished after December 31,
2007, an independent laboratory may not bill the carrier for the TC of
physician pathology services furnished to a hospital inpatient or
outpatient.
Comment: Many commenters asked us to implement the grandfather
provision on a permanent basis, and if this cannot be accomplished
administratively, the commenter requested that we implement this
provision no earlier than July 1, 2008. The commenter indicated that
this delay would allow the grandfathered independent laboratories the
opportunity to implement new billing requirements and inform customers
of this change.
Response: We will delay implementation of this provision only if
legislation is enacted requiring a further delay. Otherwise, we will,
as explained in the CY 2008 PFS proposed rule, implement this provision
effective for TC services furnished on or after January 1, 2008.
Comment: A commenter indicated a potential problem in the preamble
language of the CY 2008 PFS proposed rule that explains the
implementation of the TC physician pathology provision effective
January 1, 2008. In the CY 2008 PFS proposed rule, the preamble reads,
``Consistent with this legislative change, we are amending Sec.
415.130(d) to reflect that for services furnished after December 31,
2007, an independent laboratory may not bill the carrier for physician
pathology services furnished to a hospital inpatient or outpatient''
(72 FR 38205). As currently written, this language would mean that the
independent laboratory cannot bill the carrier for the PC of physician
pathology services for hospital patients, an unintended result.
Response: The preamble inadvertently omitted the term ``technical
component'' and should read, ``For
[[Page 66356]]
services furnished after December 31, 2007, an independent laboratory
may not bill the carrier for the technical component of physician
pathology services furnished to a hospital inpatient or outpatient.''
We proposed this language in the regulations text of the proposed rule
and are finalizing this language in this final rule with comment
period.
4. Section 201--Extension of Therapy Cap Exception Process
Section 1833(g)(1) 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 services furnished as outpatient hospital
services. Section 1833(g)(2) of the Act provides that, for CY 1999
through CY 2001, the caps were $1500, and for the calendar 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).
The cap for CY 2008 will be $1810 per beneficiary for PT and SLP
services combined, and $1810 for OT services. Therapy caps apply to
expenses incurred for therapy services in all outpatient settings
except the outpatient hospital department. As explained below in this
section, the statute requires that we implement the therapy caps
without providing for an exceptions process beginning on January 1,
2008.
Section 5107(a) of the DRA required the Secretary to develop an
exceptions process for the therapy caps effective for expenses incurred
during CY 2006. Details of the CY 2006 exceptions process were
published in a manual change on February 13, 2006 (CR4364, which
consists of Transmittal 855, Transmittal 47, and Transmittal 140).
Section 201 of the MIEA-TRHCA extended the exceptions process to apply
for expenses incurred through December 31, 2007. Therapy cap exception
policies for 2007 were specified in Change Request 5478 which consists
of three transmittals with current numbers of--
Transmittal 1145CP, Pub. 100-04;
Transmittal 63BP, Pub. 100-02; and
Transmittal 181PI, Pub. 100-08.
The transmittals are incorporated into the Internet Only Manuals
available at http://www.cms.hhs.gov/Manuals and are also available on
our Web site at http://www.cms.hhs.gov/Transmittals/.
In accordance with the statute as amended by the MIEA-TRHCA, we
will continue to implement therapy caps, but the exceptions process
will no longer be applicable for expenses incurred for services
furnished beginning on January 1, 2008. As noted previously in this
section, under current law, therapy caps will continue to apply to
expenses incurred for therapy services after December 31, 2007, with
one exception. That is, in accordance with section 1833(g) of the Act,
the therapy caps will remain inapplicable to expenses incurred for
therapy services furnished in the outpatient hospital setting.
We received several comments on this proposal.
Comment: Most commenters understood that we have no authority to
change therapy caps, but still commented in favor of repealing them.
Some commenters supported the continuation of the exceptions process as
a well-conceived method of eliminating unnecessary treatment. Some
commenters objected to the inapplicability of the caps for therapy
expenses incurred in the outpatient hospital setting. One commenter
supported the repeal of therapy caps and stated it is not an effective
cost control when a steady source of replacement patients is available.
Another commenter opposed the policy underlying the statutory
provision to apply a financial cap on therapy services. The commenter
cited other means of ensuring appropriate utilization of therapy
services including CCI edits, edits required by the Deficit Reduction
Act, local coverage determination policies, and Transmittal 63, which
required greater documentation. The commenter indicated that we are
effectively achieving the objective to assure appropriate utilization
of therapy services without the financial caps.
Response: We do not have the authority to repeal therapy caps, to
change the exception to applicability of the caps for services provided
in the outpatient hospital setting, or to extend the therapy cap
exceptions process beyond the period for which was made applicable by
statute (CYs 2006 and 2007).
Comment: Several commenters urged CMS to implement the
recommendations contained in the Computer Science Corporation (CSC)
Outpatient Therapy Service Pilot Report of 2006 to collect patient-
specific data using available measurement tools. Although they
acknowledged that we may have concerns about the use of proprietary
tools, the commenter urged the use of therapy-specific tools already on
the market that were recommended by both CSC and MedPAC, including the
National Outcomes Measurement System.
Response: In evaluating alternative payment systems, we will
consider all methods of obtaining the required patient-related
information including reports of past and future contract deliverables.
Comment: Many commenters are deeply concerned about the negative
impact the caps would have, in the absence of the exceptions process,
on an estimated 14.5 percent of the physical therapy (PT) users who
would exceed the cap. The commenters commended CMS for progress made
toward alternatives to the financial caps in recent years and urged a
high priority in resources and funding to continuing research to
identify alternatives that would also ensure access to medically
necessary therapy services. The commenters support the collection of
patient outcome data with patient assessment tools and use of risk
adjustment to account for individual differences. They support the
ongoing study for which CMS recently issued a Request for Task Order
(RTOP-CMS-07-033) and look forward to participating in the study.
Many commenters reported that they will be collecting and reporting
outcome data before January 1, 2008. They urged CMS to use clinical
outcome data to determine the amount of care needed by individuals and
offered assistance in data collection.
Response: We recently issued a request for proposals (RTOP-CMS-07-
033) to continue our study of therapy services. The study will: (1)
Identify, collect and use therapy-related information that is tied to
beneficiary needs and treatment effectiveness; and (2) develop payment
method alternatives to the current cap on outpatient therapy services.
We welcome any information concerning clinical outcome data studies
from providers or suppliers. If the information is applicable to our
deliberations on payment alternatives, we will consider it along with
the results of past and future contract deliverables.
Comment: One commenter recommended that we continue to collect
outpatient therapy utilization information for 2006 and 2007.
Response: We contracted with the CSC (HHSM-500-2007-00322G) to
extract 2006 therapy utilization data and provide a high level
analysis. To the extent possible, we intend to further
[[Page 66357]]
study the impact of therapy caps including the 2006 exceptions process.
5. Section 101(d)--Physician Assistance and Quality Initiative (PAQI)
Fund
Section 1848(l) of the Act, as added by section 101(d) of the MIEA-
TRHCA requires the Secretary to establish a Physician Assistance and
Quality Initiative (PAQI) Fund (the Fund) which shall be available for
physician payment and quality improvement initiatives, and which may
include application of an adjustment to the update of the PFS
conversion factor (CF). The provision makes available $1.35 billion to
the Fund for services furnished during CY 2008. Specifically, the
provision directs the Secretary to provide for expenditures from the
Fund in a manner designed to provide (to the maximum extent feasible)
for the obligation of the entire $1.35 billion for payment for
physicians' services furnished during CY 2008. The provision also
requires that if expenditures from the Fund are applied to, or
otherwise affect, a CF for a year, the CF for a subsequent year shall
be computed as if the adjustment to the CF had never occurred. We note
that the Transitional Medical Assistance, Abstinence Education, and
Qualifying Individual Programs Extension Act of 2007 (Pub. L. 110-90)
recently was signed into law and it provides an additional $325 million
to be used as a part of the PAQI Fund for payment with regard to
services furnished in 2009 and $60 million for payment for physicians'
services furnished on or after January 1, 2013. The legislation does
not make any other changes to the program, and therefore, remains as
discussed in the proposed rule.
As the MIEA-TRHCA legislation indicates, this Fund can be used for
physician payment and quality improvement, including application of an
adjustment to the update of the conversion factor. In the CY 2007 PFS
proposed rule, we proposed to use the $1.35 billion to fund bonus
payments to be made during CY 2009 for physician reporting of measures
during CY 2008. Specifically, we proposed that the physician quality
initiative for CY 2008 be structured and implemented in the same manner
as the 2007 PQRI with regard to the professionals eligible to
participate in the program, reporting quality measures via claims
submission, and the standards for satisfactory reporting.
The differences between CY 2007 and CY 2008 that we currently
anticipate are noted below in this section. As we monitor the
implementation of the 2007 PQRI and possibly make refinements to the
2007 program, we anticipate that such refinements would also apply
under the 2008 program. Such refinements, should they be needed, will
be noted with guidance linked from the CMS quality reporting Web site
at http://www.cms.hhs.gov/PQRI.
As with the 2007 PQRI, we proposed that eligible professionals who
successfully report a designated set of quality measures in 2008 may
earn a bonus payment of a percentage of total allowed charges for
covered Medicare services, subject to a cap based on the volume of
quality reporting. In contrast to 2007, we proposed that eligible
professionals could report applicable measures for services furnished
from January 1, 2008 through December 31, 2008, and allowed charges
during such period would be the basis for calculating the bonus
payments. We proposed that the CY 2008 measures that we finalize in
this final rule with comment period would apply for CY 2008. We also
proposed to estimate all of the bonus payments that would be payable to
physicians using the same method as the one used for reporting during
2007 and to calculate the amount of the bonus payment, after the close
of CY 2008 reporting period. Given that we proposed to use the PAQI
Fund for the 2008 PQRI program, we also proposed that the bonus
payments to individual physicians be subject to an aggregate cap of
$1.35 billion. Because we proposed to scale aggregate payments to
physicians in a manner such that Medicare would pay $1.35 billion
during CY 2009 for measures reported for services furnished during CY
2008, we were unable to provide an exact percentage for the bonus
payment. However, we anticipated that the bonus payments would be
approximately 1.5 percent of allowed charges for participating
professionals (and we did not expect that the ultimate percentage
amount would exceed 2 percent).
Comment: Comments received on the proposed rule were generally
opposed to using the PAQI Fund for CY 2008 PQRI bonus payments. Almost
all comments on this issue requested that we use the entire $1.35
billion to help offset the estimated negative 9.9 percent physician
update for CY 2008.
Response: In the CY 2007 PFS proposed rule, we acknowledged this
alternative approach of using the $1.35 billion in some manner to
reduce the update to the PFS of negative 9.9 percent that is projected
for CY 2008. However, we noted that there are fundamental operational
problems with this approach that make it not feasible. The $1.35
billion is a fixed dollar amount. Once the amount is reached, there is
no authority to pay any more than that amount. Medicare is an
entitlement program that covers medically necessary services for
eligible beneficiaries, but such coverage is not limited to a fixed
dollar amount for a year. While we estimate that the $1.35 billion
would reduce the negative update by approximately 2 percentage points,
actual spending could be above or below the estimate. To insure that we
do not exceed the Fund amount, we would have to estimate an amount to
reduce the update by that is low enough to ensure the $1.35 billion
funding cap is not exceeded. While this approach might reduce the CY
2008 negative update, it could still leave money in the Fund. We are
concerned that there may be potential oversight or other legal
consequences in the event that we significantly exceed the Fund or do
not apply the entire Fund. Therefore, we believe the best use of the
Fund is to apply it to extend PQRI into CY 2008.
Comment: Commenters asserted that use of the PAQI Fund for anything
other than the physician update was inconsistent with Congressional
intent. Commenters cited TRHCA language that the Fund ``may include
application of an adjustment to the update of the conversion factor.''
Commenters further noted that this use must have been Congressional
intent, since the legislation includes explicit language of how to deal
with the update in subsequent years when the Fund is used towards the
update: ``[I]n the case that expenditures from the Fund are applied to,
or otherwise affect, a conversion factor * * * the conversion factor
under such subsection shall be computed for a subsequent year as if
such application or effect had never occurred.''
Many commenters cited the Congressional Budget Office's cost
estimate for the TRHCA legislation, which anticipated CMS developing a
plan to use approximately 90 percent of the Fund in CY 2008 and the
remaining funds in CY 2009. These comments cited section 101(d) of the
MIEA-TRHCA, where the Congress stated that the Fund should be used ``to
the maximum extent feasible'' for physicians' services during CY 2008,
interpreting Congressional intent to be that CMS do its best to
distribute most of the money in CY 2008, and any remaining monies in CY
2009.
Commenters rejected the rationale that there were serious legal and
operational barriers to applying the PAQI Fund to the physician update;
they expressed confidence that we could find some way to use the Fund
to offset the reduction.
[[Page 66358]]
Further, commenters noted that it was within our discretion to
apply the PAQI Fund to the physician update, and they were highly
critical of our unwillingness to take administrative steps to mitigate
the negative 9.9 percent physician update.
Response: Section 101(d) of the MIEA-TRHCA directs the Secretary to
establish a PAQI Fund to be available to the Secretary for physician
payment and quality improvement initiatives, which may include
application of an adjustment to the update of the CF under that
subsection. The legislation clearly indicates that the Secretary has
the discretion to use the Fund for physician payment and quality
improvement initiatives, including application of an adjustment to the
update of the conversion factor. However, we are not required to use
the funds for the update.
As noted above, there are fundamental operational problems with
applying the PAQI Fund to the conversion factor update. We are
concerned that there may be potential oversight or other legal
consequences in the event the Agency significantly exceeds the Fund or
does not apply the entire Fund. For the reasons previously discussed,
we believe it is in the best interests of the program to apply this
Fund to the extension of PQRI.
Comment: Commenters rejected the notion that use of the $1.35
billion to fund the CY 2008 PQRI is the best way to insure physicians
get the greatest benefit from the PAQI Fund's resources. Commenters
stated that the PQRI does not provide all physicians with an
opportunity to participate and that many specialties treat patients
with conditions for which PQRI measures do not apply. In contrast,
using the Fund to offset the negative update for CY 2008 would benefit
all physicians.
Response: Medicare payment systems need to encourage reliable, high
quality and efficient care, rather than making payment simply based on
the quantity of services provided and resources consumed. Applying the
$1.35 billion to PQRI bonuses allows CMS to further the goal of
improving quality and efficiency by utilizing the infrastructure that
both physicians and Medicare have invested in for the CY 2007 PQRI. We
believe implementing this Fund through an extension of the PQRI program
is the best way to ensure that the Fund is being used to increase
quality and efficiency of care for Medicare beneficiaries.
Comment: Commenters rejected the notion that using the PAQI Fund
for bonuses would improve quality. For most physicians, the proposed
estimated 1.5 percent bonus payment is insufficient to cover the costs
to institute such quality reporting measures. Commenters noted that if
CMS truly wished to encourage more providers to participate in the
PQRI, ``new money'' must be found to fund the initiative. Commenters
suggested bonuses between 5 and 10 percent of allowed charges would
more reasonably cover the costs of improving their infrastructure to
appropriately report quality measures.
Response: Funding the PQRI is consistent with the goal of improving
quality and efficiency in Medicare. Eligible professional can
participate in the PQRI by reporting the appropriate quality measure
data on claims submitted to their Medicare claims processing
contractor. We provide educational resources on the PQRI Web site that
allow eligible professionals to integrate PQRI reporting into their
care delivery process without significant changes in their
infrastructures.
We appreciate the desire of eligible professionals to improve their
infrastructure to better track quality of care. For many eligible
professionals, such infrastructure is already in place for PQRI and
will not require additional investment. However, we note that PQRI
bonuses are financial incentives to participate in a voluntary quality
reporting program and were not intended to cover the costs of
significantly improving the infrastructure of eligible professionals.
Comment: Many commenters noted that the PQRI has not been proven to
have any positive effect on patient care or health outcomes. Rather
than utilizing the $1.35 billion to support an unproven program, it
would be better to directly improve physician reimbursement and better
cover the costs of the necessary care they are currently providing to
beneficiaries.
Response: The PAQI Fund was made available to the Secretary for
physician payment and quality improvement initiatives. We are actively
engaged with the physician community in identifying ways to align
Medicare's physician payment system with the goals of health
professionals for high-quality care. Using the PAQI Fund to pay for the
PQRI aligns reimbursement with quality and efficiency. We have worked
collaboratively with the physician community to develop measures that
capture the quality of care being provided to our Medicare
beneficiaries. The PQRI encourages physicians to provide the type of
care that is best suited for our beneficiaries: Care focused on
prevention and treating complications; and care focused on the most
effective, proven treatments available.
We acknowledge the relative newness of the PQRI. To that end, we
are committed to continue working with the physician community in an
open and transparent way to insure that the PQRI supports the best
approaches to provide high quality health care services.
Comment: Commenters noted that Congressional intent was to provide
some relief and stability to the physician payment system during CY
2008. However, under the terms of the proposed rule, CMS cannot let
physicians know the amount of the reporting bonus until well after the
close of the CY 2008 reporting period, and physicians would not receive
bonuses until some time in CY 2009.
Response: Section 101(d) of the MIEA-TRHCA charges the Secretary
with a timely obligation of all available funds for services furnished
during CY 2008, directing the Secretary to provide for expenditures
from the Fund in a manner designed to provide (to the maximum extent
feasible) for the obligation of the entire $1.35 billion for
physicians' services furnished during CY 2008. Although the legislation
is clear that payment of the Fund is based on services furnished during
CY 2008, the legislation does not limit the Secretary to paying from
the PAQI Fund during CY 2008.
Comment: One commenter stated that quality payments should not be
geographically adjusted. The commenter suggested that PQRI payments
should be based on RVUs, not allowed charges.
Response: Section 101(c) of MIEA-TRHCA authorizes a financial
incentive for eligible professionals to participate in a voluntary
quality reporting program. Eligible professionals, who choose to
participate and successfully report on a designated set of quality
measures for services paid under the Medicare Physician Fee Schedule
and provided between July 1 and December 31, 2007, may earn a bonus
payment of 1.5 percent of their allowed charges during that period,
subject to a cap. In the CY 2008 PFS proposed rule (72 FR 38206), we
proposed that the physician quality initiative for CY 2008 be
structured and implemented in the same manner as the 2007 PQRI, as
described above. This includes calculating the amounts of the 2008
bonus payments based upon a percentage of allowed charges, as was
statutorily required for 2007 bonus payments. By definition, allowed
charges include the geographical adjustments in payments, as determined
by the geographic practice cost indices (GPCIs), which
[[Page 66359]]
reflect the variation in practice costs from area to area.
III. Revisions to the Payment Policies of Ambulance Services Under the
Fee Schedule for Ambulance Services; Ambulatory Inflation Factor Update
for CY 2007
As discussed in the CY 2008 PFS proposed rule (72 FR 38207), 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 Act, Medicare Part B
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
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 as specified in
Sec. 410.40. Part 414, subpart H, describes how payment is made for
ambulance services covered by Medicare.
3. Transition to National Fee Schedule
The national fee schedule for ambulance services was phased in over
a 5-year transitional 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
MMA, 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 through CY 2009. Thus, as of
January 1, 2007, the total payment amount for ground ambulance
providers and suppliers is based on either 100 percent of the national
ambulance fee schedule amount, or a combination of 80 percent of the
national ambulance fee schedule and 20 percent of the regional
ambulance fee schedule.
B. Ambulance Inflation Factor (AIF) During the Transition Period
As we noted in the previous section, the national fee schedule for
ambulance services was phased in over a 5 year transition period
beginning April 1, 2002, as specified in Sec. 414.615. During the
transition period, the ambulance inflation factor (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 supplier's reasonable charge or provider's
reasonable cost portion of the blended payment amount, respectively,
for each ambulance provider or supplier. Then, the two amounts were
added together to determine the total payment amount for each provider
or supplier.
C. Ambulance Inflation Factor (AIF) for CY 2008
Section 1834(l)(3)(B) of the Act provides the basis for updating
payment amounts for ambulance services. Section 414.610(f) specifies
that certain components of the ambulance fee schedule are updated by
the AIF annually, based on the consumer price index for all urban
consumers (CPI-U) (U.S. city average) for the 12-month period ending
with June of the previous year. In the CY 2008 PFS proposed rule, we
stated the AIF for CY 2008 would be announced as part of this final
rule with comment period. For CY 2008, the percentage is 2.7 percent.
In addition, as set forth in Section III.D., we also proposed to
announce the AIF for CY 2009 and subsequent years via CMS instruction
and on the CMS Web site.
D. Revisions to the Publication of the Ambulance Fee Schedule (Sec.
414.620)
Currently, Sec. 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. As
explained in the CY 2008 PFS proposed rule, we believe it is
unnecessary to undertake notice and comment rulemaking to update the
AIF because the statute and regulations specify the methods of
computation of annual inflation updates, and we have no discretion in
that matter. Thus, the annual AIF notice does not change or establish
policy, but merely applies the update methods specified in the statute
and regulations.
As discussed in the proposed rule, by mid-July of each year, we
have the CPI-U for the 12-month period ending with June of such year.
Therefore, we know what the AIF for the upcoming calendar year will be
by mid-July of each year. However, Sec. 414.620 currently states that
the AIF will be announced in the Federal Register. Each document
published in the Federal Register requires scheduling and a thorough
review by CMS, HHS, and OMB prior to publication. Therefore, even
though we
[[Page 66360]]
know the AIF by mid-July of each year, the final rule announcing the
AIF is not published until November. This publication timeframe does
not allow Medicare contractors the optimal amount of time to update
their systems to implement the proper payment for Medicare ambulance
claims by January 1 of the coming year. In addition, it does not
provide an optimal amount of time for either the Medicare contractors
or the ambulance industry to take advantage of testing systems to make
sure that the update is working properly as implemented. We believe
that announcing the AIF via CMS instructions and on the CMS Web site
would enable the AIF to be released earlier in the calendar year,
allowing the Medicare contractors to test their data systems, and to
timely effectuate and provide accurate payments on Medicare ambulance
claims.
Therefore, we proposed to revise Sec. 414.620 to state that we
will announce the AIF via CMS instruction and on the CMS Web site and
to remove the language that states that we will announce the AIF by
notice in the Federal Register.
Comment: Comments received regarding the issue of announcing the
AIF via CMS instruction and on the CMS Web site were very supportive of
this proposal.
Response: As we proposed, we are revising Sec. 414.620 to state
that CMS will announce the AIF via CMS instruction and on the CMS Web
site, and to remove the language that states that we will announce the
AIF by notice in the Federal Register.
IV. Refinement of RVUs for CY 2008 and Response to Public Comments on
Interim RVUs for 2007
[If you choose to comment on issues in this section, please include
the caption ``Interim Relative Value Units'' at the beginning of your
comments.]
A. Summary of Issues Discussed Related to the Adjustment of Relative
Value Units
Section IV.B. and IV.C. of this final rule with comment describes
the methodology used to review the comments received on the RVUs for
physician work, including the additional codes from the 5-Year Review
of work RVUs, and the process used to establish RVUs for new and
revised CPT codes. Changes to the RVUs and billing status codes
reflected in Addendum B are effective for services furnished beginning
January 1, 2008.
B. Process for Establishing Work Relative Value Units for the Physician
Fee Schedule
The CY 2007 PFS final rule with comment period (71 FR 69624)
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, 2007. We considered the RVUs for the interim codes
to be subject to public comment under the annual refinement process. In
the CY 2008 PFS proposed rule we also proposed work RVUs for additional
codes from the 5-Year Review of work RVUs. In this section, we address
comments and summarize the refinements to the additional codes from the
5-Year Review of work RVUs, the interim work RVUs published in the CY
2007 PFS final rule with comment period, and our establishment of the
work RVUs for new and revised codes for the CY 2008 PFS.
C. 5-Year Review of Work RVUS
1. Additional Codes From the 5-Year Review of Work RVUs
The CY 2008 PFS proposed rule (72 FR 38146) discussed the RUC
recommendations on work RVUs for a number of codes from the 5-Year
Review that were deferred from the CY 2007 PFS rulemaking and listed
the specific codes in Table 10. We proposed to accept all of the RUC
recommendations, with the exception of CPT code 93325, Doppler
echocardiography color flow velocity mapping (List separately in
addition to codes for echocardiography), which we proposed to bundle.
We also noted that CPT codes 92557, 92567, 92568, 92569, 92579, 92601,
92602, 92603 and 92604 previously had no work RVUs assigned to them.
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 17
codes.
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: Work RVU
Revisions for Additional 5-Year Review Codes. 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.
Carrier Medical Directors.
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 work RVUs were significantly
different from the proposed work RVUs
[[Page 66361]]
in the CY 2008 PFS proposed rule to demonstrate that the proposed work
RVUs should be modified. We did not modify the work 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 work
RVUs should be, we eliminated the outlier group, and looked for
agreement among the remaining groups as to the basis for new work 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 the additional codes for 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 CY 2008 PFS proposed rule 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 CY 2008 PFS proposed rule.
2008 Work RVUs. This column contains the work RVUs for the
CY 2008 PFS.
Basis for Decision. This column indicates whether the CY
2008 work RVUs resulted from comments received or the refinement panel
process.
Table 14.--Work RVU Revisions for Additional 5-Year Review Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Work RVUs
CPT/HCPCS code \1\ Mod Descriptor Proposed work requested by RUC rec 2008 work RVU Basis for decision
RVU commenters
--------------------------------------------------------------------------------------------------------------------------------------------------------
92557................... ........... Comprehensive hearing 0.60 1.40 0.60 0.60 Refinement.
test.
92579................... ........... Visual audiometry (vra) 0.70 1.70 0.70 0.70 Refinement.
99326................... ........... Domicil/r-home visit 2.27 2.85 2.27 2.63 Refinement.
new pat.
99327................... ........... Domicil/r-home visit 3.03 3.75 3.03 3.46 Refinement.
new pat.
99328................... ........... Domicil/r-home visit 3.78 4.26 3.78 4.09 Refinement.
new pat.
99334................... ........... Domicil/r-home visit 0.76 1.25 0.76 1.07 Refinement.
est pat.
99335................... ........... Domicil/r-home visit 1.26 2.00 1.26 1.72 Refinement.
est pat.
99336................... ........... Domicil/r-home visit 2.02 2.75 2.02 2.46 Refinement.
est pat.
99337................... ........... Domicil/r-home visit 3.03 4.05 3.03 3.58 Refinement.
est pat.
99343................... ........... Home visit, new patient 2.27 2.65 2.27 2.53 Refinement.
99344................... ........... Home visit, new patient 3.03 3.60 3.03 3.38 Refinement.
99345................... ........... Home visit, new patient 3.78 4.26 3.78 4.09 Refinement.
99347................... ........... Home visit, est patient 0.76 1.10 0.76 1.00 Refinement.
99348................... ........... Home visit, est patient 1.26 1.70 1.26 1.56 Refinement.
99349................... ........... Home visit, est patient 2.02 2.50 2.02 2.33 Refinement.
99350................... ........... Home visit, est patient 3.03 3.45 3.03 3.28 Refinement.
93325................... ........... Doppler color flow add- 0.07 0.30 CPT 0.07 Comments.
on.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ All CPT codes and descriptors copyright 2007 American Medical Association.
Discussion of Comments by Clinical Area
For CPT code 92557, Comprehensive audiometry threshold evaluation
and speech recognition, and CPT code 92579, Visual reinforcement
audiometry (VRA), the RUC recommended 0.60 work RVUs for CPT 92557 and
0.70 work RVUs for CPT code 92579, 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 not appropriate considering the time and
intensity involved in performing these services. 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 2007
multi-specialty validation panel ratings, we have assigned 0.60 work
RVUs to CPT code 92557 and 0.70 work RVUs to CPT code 92579.
For CPT code 99326, Domiciliary or rest home visit for the
evaluation and management of a new patient, which requires these three
key components: A detailed history; a detailed examination; and medical
decision making of moderate complexity; CPT code 99327, Domiciliary or
rest home visit for the evaluation and management of a new patient,
which requires these three key components: A comprehensive history; a
comprehensive examination; and medical decision making of moderate
complexity; CPT code 99328, Domiciliary or rest home visit for the
evaluation and management of a new patient, which requires these three
key components: A comprehensive history; a comprehensive examination;
and medical decision making of high complexity; CPT code 99334,
Domiciliary or rest home visit for the evaluation and management of an
established patient, which requires at least two of these three key
components: A problem focused interval history; a problem focused
examination; straightforward medical decision making; CPT code 99335,
Domiciliary or rest home visit for the evaluation and management of an
established patient, which requires at least two of these three key
components: An expanded problem focused interval history; an expanded
problem focused examination; medical decision making of low complexity;
CPT code 99336, Domiciliary or rest home visit for the evaluation and
management of an established patient, which requires at least two of
these three key components:
[[Page 66362]]
A detailed interval history; a detailed examination; medical decision
making of moderate complexity; CPT code 99337, Domiciliary or rest home
visit for the evaluation and management of an established patient,
which requires at least two of these three key components: A
comprehensive interval history; a comprehensive examination; and
medical decision making of moderate to high complexity; CPT code 99343,
Home visit for the evaluation and management of a new patient, which
requires these three key components: A detailed history; a detailed
examination; and medical decision making of moderate complexity; CPT
code 99344, Home visit for the evaluation and management of a new
patient, which requires these three components: A comprehensive
history; a comprehensive examination; and a medical decision making of
moderate complexity; CPT code 99345, Home visit for the evaluation and
management of a new patient, which requires these three key components:
A comprehensive history; a comprehensive examination; and medical
decision making of high complexity; CPT code 99347, Home visit for the
evaluation and management of an established patient, which requires at
least two of these three key components: A problem focused interval
history; a problem focused examination; straightforward medical
decision making; CPT code 99348, Home visit for the evaluation and
management of an established patient, which requires at least two of
these three key components: A problem focused interval history; a
problem focused examination; straightforward medical decision making;
CPT code 99349, Home visit for the evaluation and management of an
established patient, which requires at least two of these three key
components: A detailed interval history; a detailed examination;
medical decision making of moderate complexity; and CPT code 99350,
Home visit for the evaluation and management of an established patient,
which requires at least tow of these three key components: A
comprehensive interval history; a comprehensive examination; medical
decision making of moderate to high complexity, the RUC recommended
that the work RVUs for these codes be maintained at their current
values: 2.27 work RVUs for CPT code 99326; 3.03 work RVUs for CPT code
99327; 3.78 work RVUs for CPT code 99328; 0.76 work RVUs for CPT code
99334; 1.26 work RVUs for CPT code 99335; 2.02 work RVUs for CPT code
99336; 3.03 work RVUs for CPT code 99337; 2.27 work RVUs for CPT code
99343; 3.03 for CPT code 99344; 3.78 work RVUs for CPT code 99345; 0.76
work RVUs for CPT code 99347; 1.26 work RVUs for CPT code 99348; 2.02
work RVUs for CPT code 99349; and 3.03 work RVUs for CPT code 99350,
which we accepted.
Comment: Commenters disagreed with the RUC-recommended work values
for these services, which we had accepted. The commenters disagreed
with the RUC-recommended work RVUs and believed the services were
undervalued. The commenters also believed that the home visit work RVUs
should remain ``relatively'' the same with respect to office visit
codes as they did prior to the five-year review and requested that CMS
reject the RUC recommended work RVUs and follow their survey values.
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 2007
multi-specialty validation panel ratings, we have assigned 2.63 work
RVUs to CPT code 99326; 3.46 work RVUs to CPT code 99327; 4.09 work
RVUs to CPT code 99328; 1.07 work RVUs to CPT code 99334; 1.72 work
RVUs to CPT code 99335; 2.46 work RVUs to CPT code 99336; 3.58 work
RVUs to CPT code 99337; 2.53 work RVUs to CPT code 99343; 3.38 work
RVUs to CPT code 99344; 4.09 work RVUs to CPT code 99345; 1.00 work
RVUs to CPT code 99347; 1.56 work RVUs to CPT code 99348; 2.33 work
RVUs to CPT code 99349; and 3.28 work RVUs to CPT code 99350.
For CPT code 93325, Doppler echocardiography color flow velocity
mapping (List separately in addition to codes for echocardiography),
the RUC 5-Year Review workgroup recommended sending the code to the CPT
Editorial Panel so that it could bundle CPT code 93325 into doppler
echo code 93307. However, we believe that the technology of doppler
imaging has evolved over the past 2 decades to enable color flow
velocity and spectral analysis, both important components of doppler
imaging, to be furnished concurrently or in concert to obtain more
accurate interpretation and documentation of the anatomy and
physiologic function of the structure(s) and organ being evaluated.
Since the services described in 93325 have become intrinsic to the
performance of other echocardiography services, we proposed to bundle
93325 into CPT codes 76825, 76826, 76827, 76828, 93303, 93304, 93307,
93308, 93312, 93314, 93315, 93317, 93320, 93321, 93350 and assign CPT
code 93325 a status indicator of ``B'' (Bundled).
Comment: Commenters uniformly opposed this proposal. They did not
support the bundling of CPT codes 93325 into all of the codes we
proposed. The commenters would prefer for CMS to adopt the new CPT code
and not bundle CPT code 93325 with any other codes with CPT code 93325.
The commenters believed we are circumventing the existing process to
address bundling of these services and we should follow that process.
Alternatively, the commenters believed that if we must bundle the
codes, then we should increase the RVUs for the codes in which CPT code
93325 is being bundled to recognize the work, PE, and malpractice
components that are unique to CPT code 93325.
Response: Based on comments received, we have decided to accept the
RUC recommendation and allow the RUC to value the new CPT code for CY
2009 for bundling CPT code 93325 with CPT codes 93320 and 93307. As a
result of this decision, the work RVUs for CPT code 93325 will be
maintained for CY 2008 at the 2007 work value of 0.07. The cardiology
community has indicated to the RUC and CMS that the newly bundled CPT
code represents the first of a series of coding changes they intend to
propose over the course of the next year. These changes would result in
the bundling of CPT code 93325 and other echocardiography codes to
reflect the utilization of ultrasound services that are routinely
performed together when providing care to a patient. We appreciate the
initiative the cardiology community is taking on this issue, and we
will reassess the echocardiography codes once this process is complete.
2. Anesthesia Coding (Part of 5-Year Review)
Although anesthesia services are paid under the PFS, under section
1848(b)(2)(B) of the Act, they are paid on the basis of an anesthesia
code specific base unit and time units that vary based on the actual
anesthesia time of the case. Since anesthesia services do not have a
work RVU per code as do other medical and surgical services, a work
value must be imputed for each anesthesia code. The imputed value is
determined by multiplying the national average allowed charge for each
anesthesia service by its anesthesia work share and dividing this
amount by the general PFS conversion factor (CF). This places the work
of the anesthesia service on the same relative value scale as all other
physicians' services.
As discussed in the CY 2008 PFS proposed rule, in the second 5-Year
Review of anesthesia work implemented in 2002, the AMA RUC and the
[[Page 66363]]
American Society of Anesthesiologists (ASA) used a building block
approach to estimate the value of anesthesia work and compared this
value to the imputed work value to determine whether the work of
anesthesia services is properly valued. Under the building block
approach, each anesthesia code was uniformly divided into five
components; pre anesthesia, equipment and supply preparation,
induction, post induction anesthesia, and post anesthesia. Work is
determined for each of the five components and summed to calculate
total anesthesia work for the anesthesia code. The imputed value for
the anesthesia code is compared to the building block estimate of work
in order to assess whether, and if so, to what extent, the anesthesia
code is not properly valued.
The most significant component of work for the anesthesia service
is the intensity for the post-induction anesthesia time. The ASA
thought that the RUC significantly misvalued this component in the
second 5-Year Review. In addition, the ASA was dissatisfied that the
RUC did not extend the analysis from the 19 high volume anesthesia
codes reviewed by the RUC to all anesthesia codes.
In the CY 2007 PFS final rule with comment period, we addressed the
issue of the work of anesthesia services under the third 5-Year Review
of work. As explained in that rule, we made very modest adjustments to
the work of the 19 anesthesia codes surveyed and analyzed by the RUC in
the second 5-Year Review of work. These adjustments were made
recognizing that the work of the pre- and post-anesthesia service
components was linked to certain E/M services. Since we accepted the
AMA RUC's recommendations for increased work values for certain E/M
codes for the third 5-Year Review of work, we recalculated the work of
the 19 anesthesia services to incorporate these higher work values. The
adjustment in work was reflected by increasing the anesthesia CF by
less than 1 percent.
However, on the more significant issue of the valuation of work in
the post induction anesthesia period, we took no action. Rather, in the
CY 2007 PFS final rule with comment period, we asked the RUC to review
and consider this issue as part of the third 5-Year Review of work. We
also asked the RUC to consider how increases in the work of pre- and
post-anesthesia services could cause adjustments to the anesthesia
services not specifically reviewed by the ASA and the RUC.
In January 2007, the ASA requested the AMA RUC to review the
undervaluation of the work of the post-induction anesthesia period and
to consider also an analytic approach, based on linear regression
analysis, which could be used to evaluate the work of the entire
anesthesia service. The linear regression model relates the work of the
post-induction period time and the work of the entire anesthesia
service to the base unit value for the anesthesia code. Under this
model, the work of anesthesia services is undervalued by approximately
34 percent.
The RUC established an anesthesia workgroup to examine this
proposal. The workgroup discussed this proposal extensively at its two
teleconferences, prior to the April RUC meeting, and at the April RUC
meeting itself. In May 2007, the AMA RUC, based on the analyses and
recommendations of its workgroup, submitted a recommendation to CMS for
a 32 percent increase in the work of anesthesia services.
The workgroup approved the ASA's use of the linear regression model
to value only the work of the post-induction period time. In contrast
to the ASA proposal, the workgroup considered an analytic approach
different from the regression model developed by the ASA. This approach
is based on a building block approach that could be used to evaluate
the work of all anesthesia service components other than the post
induction period time. For example, for pre-anesthesia time, the
methodology is as shown in Table 15.
Table 15.--Pre-Anesthesia Time
------------------------------------------------------------------------
-------------------------------------------------------------------------
All Anesthesia codes with 3 base units--linked to the work of 99201.
All Anesthesia codes with 4 base units--linked to the blend of work for
99201 and 99202.
All Anesthesia codes with 5 to 15 base units--linked to the work of
99202.
All Anesthesia codes with 16 to 30 base units--linked to the work of
99252.
------------------------------------------------------------------------
Note: The source of the link for work is the pre anesthesia valuation
from the 19 surveyed anesthesia codes whose base units varied from 3
units to 25 units.
Similar approaches are used for each anesthesia component:
Preparation time, induction period time, and post-anesthesia time.
Systematically, codes with lower anesthesia base unit values have lower
work values for each component of the building block approach than do
codes with higher anesthesia base unit values. For the given building
block component, the work value of that component is the same for all
anesthesia services that have the same base unit value.
According to the workgroup's revised methodology which is extended
from the 19 surveyed codes to all CPT anesthesia codes, the work of
anesthesia services is undervalued by approximately 32 percent. Thus,
based on the acceptance of the workgroup and the RUC's recommendation,
an adjustment of approximately 25 percent would be applied to the
anesthesia CF.
Increases in the work of anesthesia services would have to be
offset by additional adjustments to the PFS BN adjustor for work. We
estimated that the increase in the anesthesia CF would result in an
additional 1.0 percent increase in the BN adjuster for work.
Other adjustments also affect the anesthesia CF. For example, an
increase in anesthesia work may have implications for PE because
indirect PEs are allocated based on the sum of work and direct PEs.
When we ran the PE RVU program, there was a 1 percent decrease in the
aggregate anesthesia PEs for CY 2008. Thus, an adjustment was made to
the PE share of the anesthesia service of the CY 2008 anesthesia CF for
this component.
We proposed to accept the RUC's recommendation and increase the
work of anesthesia services by 32 percent.
Comment: Organizations and individual commenters supported our
proposal and urged us to take action to implement this proposal in CY
2008. They commented that this proposal improves the valuation of the
work of anesthesia services and will help ensure that Medicare
beneficiaries have access to quality anesthesia care. One commenter
indicated that three additional anesthesia codes, 00142, 00210 and
00562, have been identified as misvalued during the AMA RUC's
evaluation of the work of anesthesia services. Both CMS and the AMA RUC
agreed that the RUC would review the base units for 00142 at the
September 2007 RUC meeting and that the other codes, as agreed by the
ASA, would be referred to the CPT so that the codes descriptors could
be clarified. The RUC reviewed and approved the ASA's request to
support the current base unit value of four units for anesthesia code
00142.
Response: We have decided to accept the RUC's recommendation and
increase the work of anesthesia services by 32 percent. We have also
accepted the RUC's recommendation to maintain the value of four base
units for anesthesia code 00142.
3. Budget Neutrality Adjustment
Due to the proposed work RVU changes for the additional codes from
the 5-Year Review of Work RVUs and
[[Page 66364]]
the proposed increases in the work of anesthesia services, in the CY
2008 PFS proposed rule, we proposed to revise the work adjustor to
maintain budget neutrality. Based upon the increases, the proposed
revised work adjustor was estimated to be 0.8816. Further discussion of
this work adjustor was included in the impact section of the CY 2008
PFS proposed rule (72 FR 38211 through 38220).
Comment: Several commenters recommended that we reconsider applying
the BN adjustment associated with the 5-Year Review of work RVUs to the
CF rather than the work RVUs.
Response: We appreciate the commenters' interest in this topic.
However, this issue was fully addressed in the CY 2007 PFS final rule
with comment period (71 FR 69735), and we made no further proposals
regarding this issue in the CY 2008 PFS proposed rule. We continue to
believe that it is most appropriate to apply the BN adjustment to work
RVUs and refer the commenters to the CY 2007 PFS final rule for an
explanation of our decision.
We note that as a result of the changes made in response to
comments received and the work of the refinement panel, the separate
work adjustor has changed from the proposed 0.8816. The separate work
adjustor for CY 2008 will be 0.8806.
D. Work Relative Value Unit Refinements of Interim Relative Value Units
1. Interim 2007 Codes
Although the RVUs in the CY 2007 PFS final rule with comment period
were used to calculate 2007 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 comments on the following CPT codes.
Anticoagulation Management Codes
The CPT Editorial Panel created two anticoagulation management
codes in February 2006: 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 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; each
subsequent 90 days of therapy (must include a minimum of 3 INR
measurements). The RUC reviewed the codes and recommended 1.65 work
RVUs for code 99363 and 0.63 work RVUs for 99364. In the CY 2007 PFS
final rule with comment period, we decided not to accept the RUC
recommendation and decided that the services provided by 99363 and
99364 are bundled into existing E/M services. Hence, there is no
separate payment under the PFS. Currently clinicians managing
anticoagulation therapy may bill, if appropriate, the CPT code that
best represents the level of outpatient E/M service provided on that
day, including CPT code 99211.
Comment: We received comments from commenters who strongly disagree
with our decision to continue to consider anticoagulation management
codes to be bundled into the work of E/M codes and noted that these CPT
codes recognize the important work of managing serious disease. The
commenters also requested that we not finalize our decision to consider
these services bundled but instead change their status to separately
payable, covered services.
Response: We generally do not pay separately for disease-specific
management services. We believe the services represented by CPT codes
99363 and 99364 are inherent in the services captured by the existing
E/M codes. We will continue to recognize codes 99363 and 99364 as
bundled services and continue to pay for E/M services as appropriate.
Medical Genetics and Genetic Counseling
CPT code 96040, Medical genetics and genetic counseling services,
each 30 minutes face-to-face with patient/family, was reviewed in the
CY 2007 PFS final rule with comment period and assigned status B
(bundled service).
Comment: Commenters disagree with the assigned status indicator of
B (bundled service) for this service and urge CMS to reconsider its
decision to make this a bundled service because they believe it is a
separate and distinct procedure.
Response: The procedure does not contain any physician work and is
a code that is designed to capture clinical labor time and PE. To the
extent that this service is covered, we believe this service like other
counseling services, is incorporated into existing E/M services, and
therefore, will maintain the status assignment of B.
Home Ventilator Management
For CPT code 94005, Home ventilator management care plan oversight
of a patient (patient not present) in home, domiciliary or rest home
(eg, 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. We assigned a status
indicator of B (bundled service) to this service in the CY 2007 PFS
final rule with comment period because: (1) The patient is not present
when this service is rendered; and (2) we believe this service is
captured in E/M services.
Comment: Commenters believe this service should not be bundled and
recommend that this code be separately payable.
Response: We continue to believe this service should be assigned a
status indicator of B (Bundled) for the reasons previously stated in
the CY 2007 PFS final rule with comment period: (1) The patient is not
present when the service is rendered; and (2) we believe this service
is captured in the E/M services. (Note: The RUC-recommended RVUs for
this code will be reflected in Addendum B.)
In the CY 2007 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 2007. In addition to PE comments discussed in
section II.A.2. of this final rule with comment period, concerning PE
inputs:
Comment: One commenter, representing a network of providers,
requested that the PE inputs for CPT codes 35475 and 35476 be reviewed.
These codes are used as the basis for the PE inputs for HCPCS codes
G0392 and G0393 that were included in Addendum C. The commenter
believes that the PE inputs have changed since the service was reviewed
in 2004. The commenters also believed that items were missing from the
PE database and included a list of these items.
Response: We suggest that the commenter work with the specialty
group to determine if the PE inputs for CPT codes 35475 and 35476
should be reviewed by the RUC PE subcommittee. We have also reviewed
the PE database regarding the missing PE items noted by the commenter
and have verified that all PE inputs from CPT 35475 and 35476 have been
crosswalked to G0392 and G0393, respectively.
Comment: One commenter, representing the specialty of dermatology,
requested that the Unna
[[Page 66365]]
boot be removed from the PE database as a supply item and be assigned a
HCPCS Q code so that it could be billed separately.
Response: This issue was specifically addressed in the CY 2007 PFS
final rule with comment period (71 FR 69644 through 69645). We
clarified that the policy we finalized relating to splint and cast
supplies did not change the HCPCS Q-code descriptors or their pairing
with certain CPT codes for payment purposes.
Comment: One commenter, representing the ophthalmology association,
disagreed with our assessment that the specific topography equipment
priced at $44,000 is not typically used with CPT code 92025,
Computerized corneal topography, unilateral or bilateral, with
interpretation and report, and questioned our substitution of the
topography equipment priced at $13,495. The commenter pointed out that
the $44,000 topography equipment is the only equipment that will
provide the services of this procedure.
Response: We have reviewed the request from the commenter and agree
that the $13,495 topography unit we assigned for CY 2007 should be
replaced with the $44,000 equipment that is specifically designed for
the procedure inherent to CPT code 92025.
Comment: One commenter, representing therapeutic radiology,
requested that 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 treat the radiation source (Cobalt 60), as a direct PE rather
than an indirect one. Since Cobalt 60 is: (1) Purchased by the
physician; (2) exceeds the $500 threshold (price is $15,000); and, (3)
is clearly attributable to the procedure; it meets the established
criteria for treatment as a direct expense. The commenter indicated
that this radiation source must be replaced monthly, requiring a useful
life assignment of 0.08 years.
Response: Based on this comment, we have re-examined our assignment
of the Cobalt 60 radiation source used in CPT code 77371 as indirect
PE. While the radiation source may meet some of the criteria to be
considered as a direct PE input for equipment (for example, that it is
an expense to the physician and its price is above the $500 threshold),
the commenter did not present information that is needed to verify the
1-month useful life that was requested. We lack the required evidence
needed to determine the amount of viable radiation contained in the
$15,000 source that is consumed through the provision of the radiation
treatments versus the amount that was not utilized but could have been
used, during the 1-month time period. This unused amount would be
considered a wasted resource and cannot be accounted for as a direct PE
input. Consequently, we will not include the Cobalt-60 radiation source
as a direct PE input as the commenter requested.
E. 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 2008
(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 2008
CPT Codes'')
One aspect of establishing RVUs for 2008 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 169 new and
revised CPT codes from the RUC. Our staff and medical officers reviewed
the RUC recommendations by comparing them to our reference set or to
other comparable services for which work RVUs had previously been
established. We also considered the relationships among the new and
revised codes for which we received RUC recommendations and agreed with
the majority of the relative relationships reflected in the RUC values.
In some instances, although we agreed with the relationships, we
nonetheless revised the work RVUs to achieve work neutrality within
families of codes. That is, the work RVUs 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 received approximately 7 recommendations from the Health Care
Professional Advisory Committee (HCPAC).
Table 16: AMA RUC and HCPAC Recommendations and CMS Decisions for
New and Revised 2008 CPT Codes lists the new or revised CPT codes, and
their associated work RVUs, that will be interim in 2008. Table 16
includes the following information:
A ``'' identifies a new code for CY 2008.
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.
2008 Work RVUs. This column establishes the interim 2008
work RVUs for physician work.
Table 16.--AMA RUC and HCPAC Recommendations and CMS' Decisions for New and Revised 2008 CPT Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
HCPAC
CPT \1\ code Mod Descriptor RUC recommendation recommendation CMS decision 2008 work RVU
--------------------------------------------------------------------------------------------------------------------------------------------------------
20555... ............... PLACE NDL MUSC/TIS FOR RT 6.00................ ................... Agree.............. 6.00
20660............. ............... APPLY, REM FIXATION 4.00................ ................... Agree.............. 4.00
DEVICE.
20690............. ............... APPLY BONE FIXATION 8.65................ ................... Agree.............. 8.65
DEVICE.
20692............. ............... APPLY BONE FIXATION 16.00............... ................... Agree.............. 16.00
DEVICE.
20985 *. ............... CPTR-ASST DIR MS PX...... 2.50................ ................... Agree.............. 2.50
[[Page 66366]]
20986 *. ............... CPTR-ASST DIR MS PX IO Carrier Priced...... ................... Agree.............. Carrier Priced.
IMG.
20987 *. ............... CPTR-ASST DIR MS PX PRE Carrier Priced...... ................... Agree.............. Carrier Priced.
IMG.
21073... ............... MNPJ OF TMJ W/ANESTH..... 3.33................ ................... Agree.............. 3.33
22206... ............... CUT SPINE 3 COL, THOR.... 37.00............... ................... Agree.............. 37.00
22207... ............... CUT SPINE 3 COL, LUMB.... 36.50............... ................... Agree.............. 36.50
22208... ............... CUT SPINE 3 COL, ADDL SEG 9.66................ ................... Agree.............. 9.66
23515............. ............... TREAT CLAVICLE FRACTURE.. 11.00............... ................... Disagree........... 9.53
23585............. ............... TREAT SCAPULA FRACTURE... 16.25............... ................... Disagree........... 14.07
23615............. ............... TREAT HUMERUS FRACTURE... 14.00............... ................... Disagree........... 12.12
23616............. ............... TREAT HUMERUS FRACTURE... 21.00............... ................... Disagree........... 18.19
23630............. ............... TREAT HUMERUS FRACTURE... 12.00............... ................... Disagree........... 10.39
23670............. ............... TREAT DISLOCATION/ 14.00............... ................... Disagree........... 12.12
FRACTURE.
23680............. ............... TREAT DISLOCATION/ 15.00............... ................... Disagree........... 12.99
FRACTURE.
24357... ............... REPAIR ELBOW, PERC....... 5.32................ ................... Agree.............. 5.32
24358... ............... REPAIR ELBOW W/DEB, OPEN. 6.54................ ................... Agree.............. 6.54