[Federal Register Volume 73, Number 36 (Friday, February 22, 2008)]
[Rules and Regulations]
[Pages 9672-9679]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-2811]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 410

[CMS-6024-F]
RIN 0938-AN10


Medicare Program; Prior Determination for Certain Items and 
Services

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

ACTION: Final rule.

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SUMMARY: This final rule establishes a process for Medicare contractors 
to provide eligible participating physicians and beneficiaries with a 
determination of coverage relating to medical necessity for certain 
physicians' services before the services are furnished. This rule is 
intended to afford the physician and beneficiary the opportunity to 
know the financial liability for a service before expenses are 
incurred. This final rule establishes reasonable limits on physicians' 
services for which a prior determination of coverage may be requested 
and discusses generally our plans for establishing the procedures by 
which those determinations may be obtained. This rule also responds to 
public comments on the August 30, 2005 proposed rule.

DATES: Effective Date: March 24, 2008.

FOR FURTHER INFORMATION CONTACT: Debbie Skinner, (410) 786-7480.

SUPPLEMENTARY INFORMATION:

I. Background

A. Background of Rulemaking

    On August 30, 2005, we published a rule (70 FR 51321) proposing to 
implement section 938 of the Medicare Prescription Drug, Improvement, 
and Modernization Act of 2003 (MMA) (Pub. L. 108-173, enacted on 
December 8, 2003), establishing the reasonable limits on physicians' 
services for which a prior determination of coverage may be requested 
and we discussed our plans for establishing the procedures by which 
those determinations may be obtained.
    The notice and comment period closed on October 29, 2005. We 
received seven timely public comments, which were useful in identifying 
issues and concerns. We have made changes to this final rule to address 
the public comments.

[[Page 9673]]

B. Overview of Existing Statutes and Policies

    Section 1862(a)(1)(A) of the Social Security Act (the Act) 
prohibits Medicare payments for items and services that are not 
reasonable and necessary for the diagnosis and treatment of an illness 
or injury. However, section 1879 of the Act provides that under certain 
circumstances Medicare will pay for services that are not considered 
reasonable and necessary if both the beneficiary and physician did not 
know and could not have reasonably been expected to know that Medicare 
payment would not be made.
    A physician may be held financially liable for noncovered services 
he or she furnishes if, for example, the Medicare contractor or CMS 
publishes specific requirements for those services or the physician has 
received a denial or reduction of payment for the same or similar 
service under similar circumstances. In cases where the physician 
believes that the service may not be covered as reasonable and 
necessary, an acceptable advance notice of Medicare's possible denial 
of payment must be given to the patient if the physician does not want 
to accept financial responsibility for the service. These notices are 
referred to as Advance Beneficiary Notices (ABNs).
    ABNs must be given in writing, in advance of providing the service. 
They must include: the description of the service; an explanation of 
why the service may not be covered; a good faith cost estimate for the 
service; and the beneficiary's signature indicating the beneficiary has 
received and understood the notice.
    ABNs enable beneficiaries to make an informed decision about 
whether or not to receive an item or service that could potentially be 
denied as not reasonable and necessary. Currently, there is no process 
for the beneficiary or his or her physician to find out with greater 
certainty if that item or service would be considered reasonable and 
necessary for that beneficiary before incurring financial liability. 
Consequently, beneficiaries may still be discouraged from obtaining 
services because they are uncertain whether or not Medicare contractors 
will deem those services reasonable and necessary in their particular 
case.
    To address this issue, section 938 of the MMA requires the 
Secretary to establish a process whereby eligible requesters may submit 
to the contractor a request for a determination, before the furnishing 
of the physician's service, as to whether the physician's service is 
covered and consistent with the applicable requirements of section 
1862(a)(1)(A) of the Act (relating to medical necessity). This MMA 
section also provides that the following are eligible requesters: a 
participating physician, but only with respect to physicians' services 
to be furnished to an individual who is entitled to benefits and who 
has consented to the physician making the request for those services; 
and an individual entitled to benefits, but only with respect to a 
physician's service for which the individual receives an ABN under 
section 1879(a) of the Act.
    Requesting a prior determination under this process is at the 
discretion of the eligible beneficiary or physician. Full knowledge 
regarding financial liability for the service would be available to 
physicians and beneficiaries before expenses are incurred, but prior 
determination of coverage is not required for submission of a claim. If 
the physician wants a prior determination, there must first be consent 
from the beneficiary. In cases where a prior determination has been 
requested, an ABN should only be provided if the beneficiary wants the 
procedure and (1) the prior determination confirms noncoverage; or (2) 
a decision could not be made because requested materials were not 
received; or (3) the decision on the prior determination has not yet 
been received. We note that if the decision is favorable, then an ABN 
is unnecessary.
    This final rule establishes reasonable limits on the physicians' 
services for which a prior determination of coverage may be requested 
and discusses generally our plans for establishing the process by which 
prior determinations may be obtained. The procedures that Medicare 
contractors would use to make the determinations will be established in 
our manuals.

II. Provisions of the Proposed Rule

    In 42 CFR 410.20(d)(1), we proposed to define a prior determination 
of medical necessity as a decision by a Medicare contractor, before a 
physician's service is furnished, as to whether or not the physician's 
service is covered consistent with the requirements of section 
1862(a)(1)(A) of the Act relating to medical necessity.
    In Sec.  410.20(d)(2), we proposed that each Medicare contractor 
must, through the procedure established in CMS instructions, allow 
requests for prior determinations from eligible requesters under the 
contractor's respective jurisdiction for those services identified by 
CMS and posted on that specific Medicare contractor's Web site.
    We proposed that each contractor's list would consist of the 
following: At least the 50 most expensive physicians' services listed 
in the Medicare Physician Fee Schedule (MPFS) Database performed at 
least 50 times annually minus those services excluded by Sec.  
410.20(d)(3)(with adequate national or local coverage determinations); 
and plastic and dental surgeries that may be covered by Medicare and 
that have an average allowed charge of at least $1,000.
    In Sec.  410.20(d)(3), we proposed that those services for which 
there is a national coverage determination (NCD) in effect or a local 
coverage determination/local medical review policy (LCD/LMRP) in effect 
through the local contractor at the time of the request for prior 
determination would not be eligible for prior determination. This 
exclusion only applies when the NCD or LCD/LMRP, in CMS' judgment, 
provides the sufficiently specific reasonable and necessary criteria 
for the specific procedure for which the prior determination is 
requested.
    In Sec.  410.20(d)(4), we proposed that CMS may increase the number 
of services in the initial pool that are eligible for prior 
determination (over the minimum of 50) through manual instructions. Our 
reason for this provision was to ensure that CMS can provide for prior 
determinations for additional services when we detect a need. Sections 
1869(h)(3) through (h)(6) of the Act are specific with respect to 
various aspects of the prior determination process. Therefore, in Sec.  
410.20(d)(5), we specified those mandatory provisions. The detailed 
procedures to be followed by our contractors would be published in our 
manual instructions. Section 410.20(d)(5)(i) generally explained the 
prior determination process and accompanying documentation that may be 
required. Section 410.20(d)(5)(ii) described how contractors will 
respond to prior determination requests. The statute requires that 
contractors must mail the requester the decision no later than 45 days 
after the request is received. Section 410.20(d)(5)(iii) explained the 
binding nature of a positive determination. Section 410.20(d)(5)(iv) 
explained the limitation on further review.

III. Analysis of and Response to Public Comments

    We received seven public comments on the proposed rule. Summaries 
of the comments received and our responses to those comments are set 
forth below.

[[Page 9674]]

General

    Comment: One commenter asked CMS to ensure that physicians give 
their patients ABNs only when they have analyzed a particular procedure 
and have formed a reasonable belief that it may not be covered.
    Response: Regulations governing ABNs and other notices of 
noncoverage, meeting the requirements of section 1879 of the Act, are 
found at 42 CFR 411.408. Instructions specific to the ABN are found in 
the on-line Medicare Claims Processing Manual, Publication 100-04, 
Chapter 30. This comment will be considered by the agency, but is 
beyond the scope of this regulation.

List of Eligible Services

    Comment: We received several comments recommending that the list of 
services eligible for prior determination be expanded. Several of these 
commenters suggested the list of 50 eligible services should be 
expanded, while another commenter suggested that CMS should include all 
services above a certain dollar amount.
    Response: We are revising Sec.  410.20(d)(2) of this final rule to 
include a provision that will allow us to expand or contract the number 
of services eligible for prior determination in the future through 
manual instructions. We are also allowing prior determinations for 
plastic and dental surgeries over $1,000.
    We did not include all services above a certain dollar amount 
because administrative constraints necessitate that we control the 
number of eligible services. Using a monetary cut-off would lead to 
uncertainty regarding how many services would be eligible in subsequent 
years due to inflation cost of the services.
    Comment: Several commenters agreed with our approach that allows 
plastic and dental surgeries to be eligible for prior determination 
since many providers and beneficiaries currently have no way of knowing 
whether these services will be considered reasonable and necessary.
    Response: We agree that this approach will be beneficial to both 
providers and beneficiaries.
    Comment: One commenter suggested that CMS take the denial rate into 
account when determining which services are eligible for prior 
determination.
    Response: For administrative consistency and other reasons, we 
chose to focus on cost. Denial rates are contractor specific and 
therefore are not applicable to a list formulated for the entire 
nation. Additionally, although a service may have a relatively high 
denial rate, that number may be insignificant depending on the number 
of services performed annually.

Exclusion of Services for Which There Is a Local Coverage Determination 
(LCD) or National Coverage Determination (NCD)

    Comment: We received several comments stating that CMS should not 
exclude from the list of eligible services those services for which 
there is an LCD or an NCD in place. One commenter stated that 
beneficiaries will not have access to LCDs. Several stated that a 
beneficiary requester would not necessarily understand the LCD or NCD, 
and it would not provide them with enough information to make an 
informed decision. Several commenters indicated concern that the LCD or 
NCD would not be clear enough to provide the requester with information 
to make an informed decision.
    Response: We have clarified Sec.  410.20(d)(3) to state that 
services for which there is an NCD or LCD in place will remain on the 
``list of eligible services.'' In cases where the NCD or LCD provides 
sufficiently specific reasonable and necessary criteria addressing the 
particular clinical indication for the physician's service for which 
the prior determination is requested, the NCD or LCD will serve as the 
prior determination. Requesters will be sent a copy of the NCD or LCD 
with an explanation that this NCD/LCD will serve as the prior 
determination because it provides the necessary information for the 
beneficiary or provider to know whether or not the service will be 
considered reasonable and necessary. These explanations should also 
contain summary information clear enough for providers and 
beneficiaries alike to understand what is covered and what is not 
covered. In cases where the NCD or LCD does not provide sufficiently 
specific reasonable and necessary criteria addressing the particular 
clinical indication for the physician's service at issue, requesters 
will be sent a prior determination that is not based upon the NCD/LCD.
    Comment: One commenter wanted to know how CMS would make the 
determination as to whether the LCD/NCD in question provides 
sufficiently specific reasonable and necessary criteria for the 
procedure for which the prior determination is requested.
    Response: The contractors will make that decision by reviewing the 
LCD or NCD to determine whether or not the specific reasonable and 
necessary criteria addressing the particular clinical indication for 
the procedure is addressed by the LCD.
    Comment: Several commenters suggested that since section 938 of the 
MMA requires CMS to include a copy of any relevant LCD or NCD with the 
prior determination decision, those services should not be initially 
excluded.
    Response: We have clarified that services for which there is an NCD 
or LCD in place will not be excluded and will remain on the ``list of 
eligible services,'' if they meet the other criteria for being placed 
on the list. In cases where the relevant LCD or NCD provides 
sufficiently specific reasonable and necessary criteria addressing the 
particular clinical indication for the physician's service at issue, 
the contractor will include a copy of the NCD or LCD with the decision 
of noncoverage, in accordance with section 938 of the MMA.
    Comment: One commenter asked how CMS plans to handle instances 
where the specific clinical situation determines whether or not a 
service is medically necessary per an LCD or an NCD or how borderline 
cases will be handled (that is, physicians might disagree as to whether 
clinical criteria in the LCD are met).
    Response: It will be up to the contractor to determine whether the 
clinical criteria in the NCD or LCD are met.
    Comment: One commenter asked whether contractors would develop LCDs 
solely in response to a high volume of prior determination requests.
    Response: Contractors will continue to develop LCDs in accordance 
with instructions in CMS manuals.

Processing Timeframe

    Comment: We received several comments stating that the 45-day 
processing time is too long to be helpful to the beneficiary or 
provider.
    Response: Section 410.20(d)(5)(ii) requires that ``* * * notice 
will be provided within 45 days (the same time period as the time 
period applicable to the contractor providing notice of initial 
determinations on a claim for benefits under section 1869 (a)(2)(A) of 
the Act).'' Contractors will be instructed to process requests and send 
out responses as quickly as possible, taking into consideration the 
beneficiary's physical condition, the urgency of treatment, and the 
availability of the necessary documentation.

Miscellaneous Comments

    Comment: Several commenters suggested that CMS needs to clarify how 
information on this process (including

[[Page 9675]]

the list of eligible services) will be disseminated to providers and 
beneficiaries.
    Response: In addition to using the contractors' Web sites, we are 
looking into a number of ways to disseminate the information to both 
providers and beneficiaries. We will issue manual instructions 
regarding the list of eligible services.
    Comment: One commenter stated that CMS should investigate the 
possibility of allowing for submission of prior determination requests 
electronically.
    Response: We do not intend to accept these requests electronically. 
We do not consider this a ``prior authorization,'' for which there is 
an electronic form, but rather a coverage determination request. (See 
the statutory excerpt in Sec.  410.20(d)(5)(ii)(A)(3), specifically 
calling this decision a coverage determination.) This is an optional 
process, and it does not preclude either the beneficiary or the 
provider from obtaining or performing the service and submitting the 
claim for payment.
    Comment: Several commenters stated that the regulation should 
include how frequently the list will be updated. Another commenter 
stated that contractors should be required to provide written notice of 
any changes to the list to providers and beneficiaries.
    Response: We agree with the commenters that the regulation should 
include how frequently the list will be updated. In Sec.  410.20(d)(2), 
we have added a phrase to state that the list will be updated annually 
in conjunction with the release of the MPFS. Written notice will be 
provided, at a minimum, on the contractors' Web sites.
    Comment: One commenter stated that the process the contractors use 
should be subject to notice and comment.
    Response: The statute provides the basic process contractors are to 
follow when processing requests (that is, who can make a request, what 
is to be included in a request, what is to be included in a response, 
processing timeframe, requester rights following a negative 
determination, and, requester rights not to request a prior 
determination). The statutory process to be used by contractors was 
included in the proposed rule and was subject to comment. The detailed 
administrative matters will be in the manuals, which will allow us the 
flexibility to modify the administrative issues quickly if we find the 
procedures could be performed in a more effective manner. Contractors 
must adhere to policy as stipulated in CMS manuals.
    Comment: One commenter stated the list of 50 services should be 
subject to notice and comment. One commenter also suggested that any 
additional services added under Sec.  410.20(d)(4) should be subject to 
comment.
    Response: The criteria we will use to select the list of services 
were provided in the August 2005 proposed rule (70 FR 51321) and were 
subject to public comment. This list will be updated annually based on 
the MPFS, which is also available to the public. Because the list will 
be determined annually based on a ministerial execution of the already-
published criteria, rather than the adoption of new substantive rules, 
we do not believe that any further opportunity for public comment is 
either required by law or useful. Additionally, we do not believe it is 
prudent to solicit comments on the specific services since the list is 
not static and will change based on the fee schedule.
    Comment: One commenter stated that the list of eligible services 
should be available to providers and beneficiaries somewhere other than 
the contractor's Web site.
    Response: We agree that this would be helpful. We are looking into 
a number of other ways to disseminate the information to both providers 
and beneficiaries. We will issue manual instructions regarding the list 
of eligible services. The list will be available by calling 1-800-
Medicare and on the www.Medicare.gov Web site.
    Comment: One commenter stated that the regulation should specify 
that the requestor be given written notice.
    Response: We agree with the commenter and have clarified in Sec.  
410.20(d)(5)(ii)(A) that the requester must receive written notice, as 
required by statute.
    Comment: One commenter stated that the notice of non-coverage 
should also be required to explain that someone who receives such a 
notice may still obtain the service, submit a claim to Medicare, and 
then appeal the claim if it is denied.
    Response: We agree with the commenter. Section 410.20(d)(5)(iv)(B) 
of the regulation provides that a negative determination does not 
impact the right of the requester to obtain services and appeal any 
denial under the existing claims appeals system. Through our manuals, 
we will require contractors to include that information in the prior 
determination notice, where there is a negative determination.
    Comment: One commenter stated that the regulation should include 
recourse to the beneficiary, and a consequence to the provider, if a 
provider fails to submit the necessary accompanying documentation.
    Response: With regard to instances where the provider fails to 
submit the necessary documentation, Sec.  410.20(d)(5)(ii)(B)(2) 
provides that if a contractor makes a determination that it lacks 
sufficient information to make a coverage determination with respect to 
a physician's service, the contractor will include in the notice a 
description of the additional information that was required to make a 
coverage determination, as required by the statute. We believe this 
provides the type of recourse to beneficiaries to cure flaws in their 
original requests that the Congress intended.
    Comment: One commenter requested that we clarify what we mean by 
``plastic and dental surgeries that have an average allowed charge of 
at least $1,000.''
    Response: We have clarified in Sec.  410.20(d)(2)(ii) that we mean 
at least $1,000 based on the MPFS amount, (not including the adjustment 
for location by the geographic practice cost index (GPCI)).
    Comment: One contractor requested that CMS provide contractors with 
the necessary resources to implement this process, and suggested that 
contractors be part of the development of the process.
    Response: With contractor input, we will determine the resources 
and instructions the contractors will need to implement this process. 
Contractors will be involved in the necessary clearance processes.
    Comment: One commenter requested that CMS clarify how contractors 
should handle requests submitted for services not on the list of 
eligible services.
    Response: The detailed procedures specified in our manual 
instructions will include a provision that the contractor will send 
back the request with an explanation that it is not an eligible 
service.
    Comment: One commenter asked us to clarify in the regulation text 
whether or not services receiving an affirmative prior determination 
decision are still subject to eligibility and reimbursement criteria.
    Response: Yes, services receiving affirmative prior determinations 
are still subject to eligibility and reimbursement criteria when 
adjudicated on a claim.

IV. Provisions of the Final Rule

    Section 1869(h)(1) of the Act, as added by section 938 of the MMA, 
requires the Secretary to establish a prior determination process for 
certain physicians' services. Sections 1869(h)(3) through (h)(6) of the 
Act are specific with respect to various aspects of the prior 
determination process, and we

[[Page 9676]]

intend to follow these provisions in establishing the prior 
determination process. We will issue the detailed procedures through 
our instructions to contractors in our manuals.
    Section 1869(h)(2) of the Act, as added by section 938 of the MMA, 
requires the Secretary to establish by regulation reasonable limits on 
the physicians' services for which a prior determination may be 
requested. This section provides that in establishing the reasonable 
limits, the Secretary may consider the dollar amount involved with 
respect to the physician's service, administrative costs and burdens, 
and other relevant factors.
    We evaluated national data on physicians' services including 
payment amounts, utilization, and denial rates. We considered using 
denial rates as one of the determining factors. However, denial rates 
vary according to contractor, and although a service may have a 
relatively high denial rate, that number may be insignificant depending 
on the number of services performed annually. This information did not 
readily lend itself to establishing a national list. Accordingly, we 
have decided to use other factors instead.
    Based on our analysis, we are establishing an initial pool of 
eligible physicians' services with the highest average allowed charges 
that are performed at least 50 times annually. The definition of 
physicians' services in the MMA provision (section 938) is the one in 
section 1848(j)(3) of the Act. The definition includes the physician 
administration of a drug (but not the cost of the drug itself) and 
certain services not traditionally performed by a physician, such as 
physical therapy and occupational therapy, which are paid using the 
MPFS.
    We are also establishing a list of plastic and dental surgeries 
that may be covered by Medicare and that have an amount of at least 
$1,000 in the MPFS (not including the adjustment for location by the 
GPCI). We will identify the specific services that are eligible for 
prior determinations through manual instructions based on the criteria 
outlined in the regulation. We have decided not to identify a specific 
number of eligible services in the regulation text in order to provide 
the agency with flexibility in identifying an adequate/sufficient list 
of services eligible for prior determinations.
    Specifically, in Sec.  410.20(d)(1)(i), we define a ``prior 
determination of medical necessity'' as an individual decision by a 
Medicare contractor, before a physician's service is furnished, as to 
whether or not the physician's service is covered consistent with the 
requirements of section 1862(a)(1)(A) of the Act relating to medical 
necessity. We have also incorporated the statutory definition of an 
``eligible requester,'' which had been included in the preamble to the 
proposed rule, into the regulatory text. Therefore, in Sec.  
410.20(d)(1)(ii), we define an ``eligible requester'' to include a 
participating physician or a physician who accepts assignment, but only 
with respect to physicians' services to be furnished to an individual 
who is entitled to receive benefits and who has consented to the 
physician making the request for those physician's services; and an 
individual entitled to benefits, but only with respect to a physician's 
service for which the individual receives, from a physician, an advance 
beneficiary notice under section 1879(a) of the Act. We clarified that 
physicians who accept assignment for services eligible for a prior 
determination are eligible requesters because this is consistent with 
the statute and will maximize the benefit of the prior determination 
process for beneficiaries.
    In Sec.  410.20(d)(2), we state that each Medicare contractor will, 
through the procedure established in our manual instructions, allow 
requests for prior determinations of medical necessity from eligible 
requesters under the contractor's respective jurisdiction for those 
services that we identify (updated in conjunction with the update to 
the MPFS) and posted on that specific Medicare contractor's Web site. 
Only those services listed on the contractor's Web site on the date the 
request for a prior determination is made would be subject to prior 
determination.
    The list of services will be posted by the Healthcare Common 
Procedure Coding System procedure code and code description on each 
carrier's Web site and will include the following: The most expensive 
physicians' services included in the MPFS which are performed at least 
50 times annually; and plastic and dental surgeries that may be covered 
by Medicare and that have an amount of at least $1,000 (not including 
adjustment for location by the GPCI).
    We have three reasons for establishing the limit on physicians' 
services based on the dollar amount of the service and including 
certain plastic and dental surgeries. First, beneficiaries are more 
likely to be discouraged from obtaining the most expensive physicians' 
services because they are uncertain whether or not they would have to 
incur financial liability if Medicare does not pay for the service. The 
plastic and dental surgeries included are also relatively expensive, 
and there may be significant individual considerations in determining 
what is covered and what is excluded. Second, the majority of these 
services tend to be non-emergency surgical procedures generally 
performed in an inpatient setting. Since these services are not 
typically emergency services, beneficiaries would have adequate time to 
request a prior determination. Third, limiting prior determinations to 
these services is reasonable given the administrative resources 
required to process each prior determination request.
    In Sec.  410.20(d)(3), we state that in instances where an NCD or 
an LCD exists that has sufficiently specific reasonable and necessary 
criteria addressing the particular clinical indication for the 
physician's service for which the prior determination is requested, the 
contractor will send a copy of the LCD or NCD with an explanation that 
this NCD/LCD will serve as the prior determination. Our reason for this 
provision is that many NCDs and LCDs already provide the information 
necessary to make an informed decision about whether or not a service 
will be covered.
    In Sec.  410.20(d)(4), we state that we will identify through 
manual instructions the number of services that are eligible for a 
prior determination consistent with the criteria established in the 
regulation. Our reason for this provision is to ensure that we can 
adjust the number of eligible services when we detect a need.
    Sections 1869(h)(3) through (h)(6) of the Act are specific with 
respect to various aspects of the prior determination process. 
Therefore, in Sec.  410.20(d)(5), we specify those mandatory 
provisions. The detailed procedures to be followed by our contractors 
will be published in our manual instructions. Section 410.20(d)(5)(i) 
generally explains the prior determination process and accompanying 
documentation that may be required. Section 410.20(d)(5)(ii) describes 
how contractors will respond to prior determination requests. Section 
938 of the MMA provides that notice will be provided ``within the same 
time period as the time period applicable to the contractor providing 
notice of initial determinations on a claim for benefits under section 
1869(a)(2)(A) of the Act.'' Therefore, the statute requires that 
contractors must mail the requester the decision no later than 45 days 
after the request is received. Contractors will be instructed to 
process the requests as quickly as possible (but no longer than 45 
days), taking into consideration the beneficiary's physical condition, 
the urgency of treatment, and the

[[Page 9677]]

availability of the necessary documentation. Section 410.20(d)(5)(iii) 
explains the binding nature of a positive determination. Section 
410.20(d)(5)(iv) explains the limitation on further review.

V. Collection of Information Requirements

    Under the Paperwork Reduction Act (PRA) of 1995, we are required to 
provide 30-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether or not an information collection 
should be approved by OMB, section 3506(c)(2)(A) of the PRA of 1995 
requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements (ICRs):

Section 410.20 Physicians' Services

Prior Determination of Medical Necessity for Physicians' Services
    Section 410.20(d)(5) states that before a physician's service is 
furnished, an eligible requester, such as a physician or beneficiary, 
may request an individualized decision, a ``Prior Determination of 
Medical Necessity,'' by a Medicare contractor as to whether or not the 
physician's service is covered consistent with the requirements of 
section 1862(a)(1)(A) of the Act relating to medical necessity. CMS may 
require that the request be accompanied by a description of the 
physician's service, supporting documentation relating to the medical 
necessity of the physician's service, and other appropriate 
documentation. In the case of a request submitted by an eligible 
requestor who is described in section 1869(h)(1)(B)(ii) of the Act, the 
Secretary may also require that the request be accompanied by a copy of 
the advance beneficiary notice involved.
    The burden associated with this requirement would be the time spent 
by a requester to provide the appropriate level of documentation, as 
outlined in this section, to a Medicare contractor so that the 
contractor can provide a ``Prior Determination of Medical Necessity.''
    We estimate 5,000 requests will be made on an annual basis, and it 
will require 15 minutes per request, for an annual burden of 1,250 
hours.
    We received one comment in response to the proposed rule stating 
that this estimate appeared to be too low. We stand by our original 
estimate that 5,000 requests will be made on an annual basis and it 
will require 15 minutes per request, for an annual burden of 1,250 
hours.
    If you comment on these information collection and record keeping 
requirements, please mail copies directly to the following: Centers for 
Medicare & Medicaid Services, Office of Strategic Operations and 
Regulatory Affairs, Division of Regulations Development, Attn.: Melissa 
Musotto, CMS-6024-F, Room C5-14-03, 7500 Security Boulevard, Baltimore, 
MD 21244-1850. Office of Information and Regulatory Affairs, Office of 
Management and Budget, Room 10235, New Executive Office Building, 
Washington, DC 20503, Attn: Carolyn Lovett, CMS Desk Officer, CMS-6024-
F, [email protected]. Fax (202) 395-6974.

VI. Regulatory Impact Statement

    We have examined the impact of this rule as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review), the 
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), 
section 1102(b) of the Social Security Act, the Unfunded Mandates 
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more in any 1 year). This rule 
does not reach the economic threshold and thus is not considered a 
major rule. Furthermore, this rule will not result in an increase in 
benefit spending.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, non-profit organizations, and government 
jurisdictions. While most hospitals and most other providers and 
suppliers are small entities, either by non-profit status or by having 
revenues of $6.5 million to $31.5 million in any 1 year, individual 
physicians and beneficiaries are not included in the definition of a 
small entity. Accordingly, we are not preparing an analysis for the RFA 
because we have determined that this rule will not have a significant 
economic impact on a substantial number of small entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 100 beds. We are not preparing an 
analysis for section 1102(b) of the Act because we have determined that 
this rule will not have a significant impact on the operations of a 
substantial number of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in expenditure in any 1 year by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $120 million. This rule will have no consequential effect on 
the governments mentioned or on the private sector.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a final rule (and subsequent final 
rule) that imposes substantial direct requirement costs on State and 
local governments, preempts State law, or otherwise has Federalism 
implications. Since this regulation will not impose any costs on State 
or local governments, the requirements of E.O. 13132 are not 
applicable.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 410

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


0
For the reasons set forth in the preamble, the Centers for Medicare & 
Medicaid Services amends 42 CFR chapter IV as set forth below:

[[Page 9678]]

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

Subpart B--Medical and Other Health Services

0
1. The authority citation for part 410 continues to read as follows:

    Authority: Sections 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

0
2. Section 410.20 is amended by adding new paragraph (d) to read as 
follows:


Sec.  410.20  Physicians' services.

* * * * *
    (d) Prior determination of medical necessity for physicians' 
services--(1) Definitions. (i) A ``Prior Determination of Medical 
Necessity'' means an individual decision by a Medicare contractor, 
before a physician's service is furnished, as to whether or not the 
physician's service is covered consistent with the requirements of 
section 1862(a)(1)(A) of the Act relating to medical necessity.
    (ii) An ``eligible requester'' includes the following:
    (A) A participating physician (or a physician that accepts 
assignment), but only with respect to physicians' services to be 
furnished to an individual who is entitled to receive benefits under 
this part and who has consented to the physician making the request 
under this section for those physicians' services.
    (B) An individual entitled to benefits under this part, but only 
with respect to physicians' services for which the individual receives, 
from a physician, an advance beneficiary notice under section 1879(a) 
of the Act.
    (2) General rule. Each Medicare contractor will, through the 
procedures established in CMS manual instructions, allow requests for 
prior determinations of medical necessity from eligible requesters 
under its respective jurisdiction for those services identified by CMS 
(updated annually in conjunction with the update to the MPFS and posted 
on that specific Medicare contractor's Web site by the Healthcare 
Common Procedure Coding System procedure code and code description). 
Only those services listed on that Medicare contractor's Web site on 
the date the request for a prior determination is made are subject to 
prior determination. Each contractor's list will consist of the 
following:
    (i) The national list, provided by CMS, of the most expensive 
physicians' services (as defined in section 1848(j)(3) of the Act) 
included in the MPFS which are performed at least 50 times annually.
    (ii) The national list, provided by CMS, of plastic and dental 
surgeries that may be covered by Medicare and that have an amount of at 
least $1,000 on the MPFS (not including the adjustment for location by 
the GPCI).
    (3) Services with local coverage determinations (LCDs) or national 
coverage determinations (NCDs). In instances where an LCD or an NCD 
exists that has sufficiently specific reasonable and necessary criteria 
addressing the particular clinical indication for the procedure for 
which the prior determination is requested, the contractor will send a 
copy of the LCD or NCD to the requestor along with an explanation that 
the LCD or NCD serves as the prior determination and that no further 
determination will be made.
    (4) Identification of eligible services. CMS will identify the 
number of services that are eligible for a prior determination through 
manual instructions consistent with the criteria established in the 
regulation.
    (5) Statutory procedures. Under sections 1869(h)(3) through (h)(6) 
of the Act, the following procedures apply:
    (i) Request for prior determination--(A) In general. An eligible 
requester may submit to the contractor a request for a determination, 
before the furnishing of a physician's service, as to whether the 
physician's service is covered under this title consistent with the 
applicable requirements of section 1862(a)(1)(A) of the Act (relating 
to medical necessity).
    (B) Accompanying documentation. CMS may require that the request be 
accompanied by a description of the physician's service, supporting 
documentation relating to the medical necessity of the physician's 
service, and other appropriate documentation. In the case of a request 
submitted by an eligible requester who is described in section 
1869(h)(1)(B)(ii) of the Act, the Secretary may require that the 
request also be accompanied by a copy of the advance beneficiary notice 
involved.
    (ii) Response to request--(A) General rule. The contractor will 
provide the eligible requester with written notice of a determination 
as to whether--
    (1) The physician's service is covered (the physician's service is 
covered consistent with the requirements of section 1862(a)(1)(A) of 
the Act relating to medical necessity); or
    (2) The physician's service is not covered (the physician's service 
is not covered consistent with the requirements of section 
1862(a)(1)(A) of the Act relating to medical necessity); or
    (3) The contractor lacks sufficient information to make a coverage 
determination with respect to the physician's service.
    (B) Contents of notice for certain determinations--(1) Coverage. If 
the contractor makes the determination described in paragraph 
(d)(5)(ii)(A)(1) of this section, the contractor will indicate in the 
prior determination notice that the physician service is covered 
consistent with the requirements of section 1862(a)(1)(A) of the Act 
relating to medical necessity.
    (2) Noncoverage. If the contractor makes the determination 
described in paragraph (d)(5)(ii)(A)(2) of this section, the contractor 
will include in the notice a brief explanation of the basis for the 
determination, including on what national or local coverage or 
noncoverage determination (if any) the determination is based, and a 
description of any applicable rights under section 1869(a) of the Act.
    (3) Insufficient information. If the contractor makes the 
determination described in paragraph (d)(5)(ii)(A)(3) of this section, 
the contractor will include in the notice a description of the 
additional information required to make the coverage determination.
    (C) Deadline to respond. The notice described in paragraphs 
(d)(5)(ii)(A)(1) through (d)(5)(ii)(A)(3) of this section will be 
provided by the contractor within 45 days of the date the request for a 
prior determination is received by the contractor.
    (D) Informing beneficiary in case of physician request. In the case 
of a request by a participating physician or a physician accepting 
assignment, the process will provide that the individual to whom the 
physician's service is to be furnished will be informed of any 
determination described in paragraph (d)(5)(ii)(A)(2) of this section 
(relating to a determination of non-coverage). The beneficiary will 
also be notified that, notwithstanding the determination of non-
coverage, the beneficiary has the right to obtain the physician's 
service in question and have a claim submitted for the physician's 
service.
    (iii) Binding nature of positive determination. If the contractor 
makes the determination described in paragraph (d)(5)(ii)(A)(1) of this 
section, that determination will be binding on the contractor in the 
absence of fraud or evidence of misrepresentation of facts presented to 
the contractor.
    (iv) Limitation on further review--(A) General rule. Contractor 
determinations described in paragraph (d)(5)(ii)(A)(2) of this section 
or paragraph (d)(5)(ii)(A)(3) of this section (relating to pre-service 
claims) are not subject to administrative appeal or judicial review.

[[Page 9679]]

    (B) Decision not to seek prior determination or negative 
determination does not impact the right to obtain services, seek 
reimbursement, or appeal rights. Nothing in this paragraph will be 
construed as affecting the right of an individual who--
    (1) Decides not to seek a prior determination under this paragraph 
with respect to physicians' services; or
    (2) Seeks such a determination and has received a determination 
described in paragraph (d)(5)(ii)(A)(2) of this section, from receiving 
(and submitting a claim for) those physicians' services and from 
obtaining administrative or judicial review respecting that claim under 
the other applicable provisions of this part 405 subpart I of this 
chapter. Failure to seek a prior determination under this paragraph 
with respect to physicians' services will not be taken into account in 
that administrative or judicial review.
    (C) No prior determination after receipt of services. Once an 
individual is provided physicians' services, there will be no prior 
determination under this paragraph with respect to those physicians' 
services.

    Editorial Note: This document was received at the Office of the 
Federal Register on February 11, 2008.


(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
    Dated: May 31, 2007.
Leslie V. Norwalk,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: October 30, 2007.
Michael O. Leavitt,
Secretary.
[FR Doc. E8-2811 Filed 2-21-08; 8:45 am]
BILLING CODE 4120-01-P