Federal Register, Volume 74 Issue 226 (Wednesday, November 25, 2009)

[Federal Register Volume 74, Number 226 (Wednesday, November 25, 2009)]
[Rules and Regulations]
[Pages 61738-62188]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-26502]

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Part II

Book 2 of 2 Books

Pages 61737-62206

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 410, 411, 414 et al.

Medicare Program; Payment Policies Under the Physician Fee Schedule and
Other Revisions to Part B for CY 2010; Final Rule; Medicare Program;
Solicitation of Independent Accrediting Organizations To Participate in
the Advanced Diagnostic Imaging Supplier Accreditation Program; Notice

Federal Register / Vol. 74, No. 226 / Wednesday, November 25, 2009 /
Rules and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 410, 411, 414, 415, 485, and 498

[CMS-1413-FC]
RINs 0938-AP40

Medicare Program; Payment Policies Under the Physician Fee
Schedule and Other Revisions to Part B for CY 2010

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 implements changes to the
physician fee schedule and other Medicare Part B payment policies to
ensure that our payment systems are updated to reflect changes in
medical practice and the relative value of services. It also implements
or discusses certain provisions of the Medicare Improvements for
Patients and Providers Act of 2008. (See the Table of Contents for a
listing of the specific issues addressed in this rule.)
This final rule with comment period also finalizes the calendar
year (CY) 2009 interim relative value units (RVUs) and issues interim
RVUs for new and revised codes for CY 2010. In addition, in accordance
with the statute, it announces that the update to the physician fee
schedule conversion factor is -21.2 percent for CY 2010, the
preliminary estimate for the sustainable growth rate for CY 2010 is -
8.8 percent, and the conversion factor (CF) for CY 2010 is $28.4061.

DATES: Effective Dates: With the exception of the provisions of Sec.
414.68 and Sec. 414.210(e)(5), this final rule is effective on January
1, 2010. The provisions of Sec. 414.68 are effective on October 30,
2009, and the provisions of Sec. 414.210(e)(5) are effective on July
1, 2010.
Comment Date: To be assured consideration, comments must be
received at one of the addresses provided below, no later than 5 p.m.
on December 29, 2009.

ADDRESSES: In commenting, please refer to file code CMS-1413-FC.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the instructions under
the ``More Search Options'' tab.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1413-FC, P.O. Box 8013,
Baltimore, MD 21244-8013.
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 to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1413-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 before the close of the comment period
to either of the following addresses:
a. For delivery in Washington, DC--
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Room 445-G, Hubert H. Humphrey Building, 200
Independence Avenue, SW., Washington, DC 20201.
(Because access to the interior of the Hubert H. Humphrey 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.)
b. For delivery in Baltimore, MD--
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call telephone number (410) 786-9994 in advance to schedule your
arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.

FOR FURTHER INFORMATION CONTACT: Rick Ensor, (410) 786-5617, for issues
related to practice expense methodology.
Craig Dobyski, (410) 786-4584, for issues related to geographic
practice cost indices and malpractice RVUs.
Ken Marsalek, (410) 786-4502, for issues related to the physician
practice information survey and the multiple procedure payment
reduction.
Regina Walker-Wren, (410) 786-9160, for issues related to the
phasing out of the outpatient mental health treatment limitation.
Diane Stern, (410) 786-1133, for issues related to the physician
quality reporting initiative and incentives for e-prescribing.
Lisa Grabert, (410) 786-6827, for issues related to the Physician
Resource Use Feedback Program.
Colleen Bruce, (410) 786-5529, for issues related to value-based
purchasing.
Sandra Bastinelli, (410) 786-3630, for issues related to the
implementation of accreditation standards.
Jim Menas, (410) 786-4507, for issues related to teaching
anesthesia services.
Sarah McClain, (410) 786-2994, for issues related to the coverage
of cardiac rehabilitation services.
Dorothy Shannon, (410) 786-3396, for issues related to payment for
cardiac and pulmonary rehabilitation services.
Roya Lotfi, (410) 786-4072, for issues related to the coverage of
pulmonary rehabilitation.
Jamie Hermansen, (410) 786-2064, for issues related to kidney
disease patient education programs.
Terri Harris, (410) 786-6830, for issues related to payment for
kidney disease patient education.
Brijet Burton, (410) 786-7364, for issues related to the compendia
for determination of medically-accepted indications for off-label uses
of drugs and biologicals in an anti-cancer chemotherapeutic regimen.
Henry Richter, (410) 786-4562, or Lisa Hubbard, (410) 786-5472, for
issues related to renal dialysis provisions and payments for end-stage
renal disease facilities.
Cheryl Gilbreath, (410) 786-5919, for issues related to payment for
covered outpatient drugs and biologicals.
Edmund Kasaitis, (410) 786-0477, or Bonny Dahm, (410) 786-4006, for
issues related to the Competitive Acquisition Program (CAP) for Part B
drugs.
Pauline Lapin, (410) 786-6883, for issues related to the
chiropractic services demonstration BN issue.
Monique Howard, (410) 786-3869, for issues related to CORF
conditions of coverage.
Roechel Kujawa, (410) 786-9111, for issues related to ambulance
services.
Anne Tayloe Hauswald, (410) 786-4546, for clinical laboratory
issues.
Troy Barsky, (410) 786-8873, or Roy Albert, (410) 786-1872, for
issues related to physician self-referral.
Christopher Molling, (410) 786-6399, or Anita Greenberg, (410) 786-
4601, for issues related to the repeal of transfer of title for oxygen
equipment.

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Michelle Peterman, (410) 786-2591, or Iffat Fatima, (410) 786-6709
for issues related to the grandfathering provisions of the durable
medical equipment, prosthetics, orthotics, and supplies (DMEPOS)
Competitive Acquisition Program.
Ralph Goldberg, (410) 786-4870, or Heidi Edmunds, (410) 786-1781,
for issues related to the damages process caused by the termination of
contracts awarded in 2008 under the DMEPOS Competitive Bidding program.
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; the physician self-referral designated
health services (DHS) codes listed in Tables 31 and 32; services for
consideration for the Five-Year Review of work RVUs for services as
discussed in section II.P., and information concerning services
provided under arrangement as discussed in section II.N.2.
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.regulations.gov. Follow the search instructions 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.

Table of Contents

To assist readers in referencing sections contained in this
preamble, we are providing a 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
(CFR). Information on the regulation's impact appears throughout the
preamble, and therefore, is not discussed exclusively in section XIII.
of this final rule with comment period.

I. Background
A. Development of the Relative Value System
1. Work RVUs
2. Practice Expense Relative Value Units (PE RVUs)
3. Resource-Based Malpractice (MP) RVUs
4. Refinements to the RVUs
5. Adjustments to RVUs Are Budget Neutral
B. Components of the Fee Schedule Payment Amounts
C. Most Recent Changes to the Fee Schedule
II. Provisions of the Final Regulation and Analysis of the Public
Comments
A. Resource-Based Practice Expense (PE) Relative Value Units
(RVUs)
1. Practice Expense Methodology
a. Data Sources for Calculating Practice Expense
b. Allocation of PE to Services
c. Facility and Non-Facility Costs
d. Services With Technical Components (TCs) and Professional
Components (PCs)
e. Transition Period
f. PE RVU Methodology
2. PE Revisions for CY 2010
a. SMS and Supplemental Survey Background
b. Physician Practice Information Survey (PPIS)
c. Equipment Utilization Rate
d. Miscellaneous PE Issues
e. AMA RUC PE Recommendations for Direct PE Inputs
f. Practice Expense for Intranasal Vaccine Administration Codes
(CPT Codes 90467, 90468, 90473, and 90474)
B. Geographic Practice Cost Indices (GPCIs): Locality Discussion
1. Update--Expiration of 1.0 Work GPCI Floor
2. Payment Localities
C. Malpractice Relative Value Units (RVUs)
1. Background
2. Methodology for the Revision of Resource-Based Malpractice
RVUs
D. Medicare Telehealth Services
1. Requests for Adding Services to the List of Medicare
Telehealth Services
2. Submitted Requests for Addition to the List of Telehealth
Services
a. Health and Behavior Assessment and Intervention (HBAI)
b. Nursing Facility Services
c. Critical Care Services
d. Other Requests
e. Summary: Result of Evaluation of 2010 Requests
3. Other Issues
E. Specific Coding Issues Related to the Physician Fee Schedule
1. Canalith Repositioning
2. Payment for an Initial Preventive Physical Examination (IPPE)
3. Audiology Codes: Policy Clarification of Existing CPT Codes
4. Consultation Services
F. Potentially Misvalued Codes Under the Physician Fee Schedule
1. Valuing Services Under the Physician Fee Schedule
2. High Cost Supplies
3. Review of Services Often Billed Together and the Possibility
of Expanding the Multiple Procedure Payment Reduction (MPPR) to
Additional Nonsurgical Services
4. AMA RUC Review of Potentially Misvalued Services
a. Site of Service
b. ``23-Hour'' Stay
c. AMA RUC Review of Potentially Misvalued Codes for CY 2010
5. PE Issues--Arthoscopy
6. Establishing Appropriate Relative Values for Physician Fee
Schedule Services
G. Issues Related to the Medicare Improvements for Patients and
Providers Act of 2008 (MIPPA)
1. Section 102: Elimination of Discriminatory Copayment Rates
for Medicare Outpatient Psychiatric Services
2. Section 131(b): Physician Payment, Efficiency, and Quality
Improvements--Physician Quality Reporting Initiative (PQRI)
3. Section 131(c): Physician Resource Use Measurement and
Reporting Program
4. Section 131(d): Plan for Transition to Value-Based Purchasing
Program for Physicians and Other Practitioners
5. Section 132: Incentives for Electronic Prescribing (E-
Prescribing)--The E-Prescibing Incentive Program
6. Section 135: Implementation of Accreditation Standards for
Suppliers Furnishing the Technical Component (TC) of Advanced
Diagnostic Imaging Services
7. Section 139: Improvements for Medicare Anesthesia Teaching
Programs
8. Section 144(a): Payment and Coverage Improvements for
Patients With Chronic Obstructive Pulmonary Disease and Other
Conditions--Cardiac Rehabilitation Services
9. Section 144(a): Payment and Coverage Improvements for
Patients With Chronic Obstructive Pulmonary Disease and Other
Conditions--Pulmonary Rehabilitation Services
10. Section 144(b): Repeal of Transfer of Title for Oxygen
Equipment
11. Section 152(b): Coverage of Kidney Disease Patient Education
Services
12. Section 153: Renal Dialysis Provisions
13. Section 182(b): Revision of Definition of Medically-Accepted
Indication for Drugs; Compendia for Determination of Medically-
Accepted Indications for Off-Label Uses of Drugs and Biologicals in
an Anti-Cancer Chemotherapeutic Regimen
H. Part B Drug Payment
1. Average Sales Price (ASP) Issues
2. Competitive Acquisition Program (CAP) Issues
I. Provisions Related to Payment for Renal Dialysis Services
Furnished by End-Stage Renal Disease (ESRD) Facilities
J. Discussion of Chiropractic Services Demonstration
1. Background
2. Analysis of Demonstration
3. Payment Adjustment
K. Comprehensive Outpatient Rehabilitation Facilities (CORF) and
Rehabilitation Agency Issues

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L. Ambulance Fee Schedule: Technical Correction to the Rural
Adjustment Factor Regulations (Sec. 414.610)
M. Clinical Laboratory Fee Schedule: Signature on Requisition
N. Physician Self-Referral
1. General Background
2. Physician Stand in the Shoes
3. Services Provided ``Under Arrangements'' (Services Performed
by an Entity Other Than the Entity That Submits the Claim):
Solicitation of Comments
O. Durable Medical Equipment-Related Issues
1. Damages to Suppliers Awarded a Contract Under the Acquisition
of Certain Durable Medical Equipment, Prosthetics, Orthotics, and
Supplies (Medicare DMEPOS Competitive Bidding Program) Caused by the
Delay of the Program
2. Notification to Beneficiaries for Suppliers Regarding
Grandfathering
P. Five-Year Refinement of Relative Value Units
Q. Other Issues--Therapy Caps
III. Refinement of Relative Value Units for Calendar Year 2010 and
Response to Public Comments on Interim Relative Value Units for 2009
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. Work Relative Value Unit Refinements of Interim Relative
Value Units
D. Interim 2009 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
2010 (Includes Table Titled ``AMA RUC Recommendations and CMS'
Decisions for New and Revised 2010 CPT Codes'')
F. Discussion of Codes and AMA RUC 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 2010
IV. Physician Self-Referral Prohibition: Annual Update to the List
of CPT/HCPCS Codes
A. General
B. Annual Update to the Code List
V. Physician Fee Schedule Update for CY 2010
A. Physician Fee Schedule Update
B. The Percentage Change in the Medicare Economic Index (MEI)
C. The Update Adjustment Factor (UAF)
VI. Allowed Expenditures for Physicians' Services and the
Sustainable Growth Rate (SGR)
A. Medicare Sustainable Growth Rate
B. Physicians' Services
C. Preliminary Estimate of the SGR for 2010
D. Revised Sustainable Growth Rate for 2009
E. Final Sustainable Growth Rate for 2008
F. Calculation of 2010, 2009, and 2008 Sustainable Growth Rates
VII. Anesthesia and Physician Fee Schedule Conversion Factors for CY
2010
A. Physician Fee Schedule Conversion Factor
B. Anesthesia Conversion Factor
VIII. Telehealth Originating Site Facility Fee Payment Amount Update
IX. Provisions of the Final Rule
X. Waiver of Proposed Rulemaking and Delay in Effective Date
XI. Collection of Information Requirements
XII. Response to Comments
XIII. Regulatory Impact Analysis
Regulation Text
Addendum A--Explanation and Use of Addendum B
Addendum B--Relative Value Units and Related Information Used in
Determining Medicare Payments for CY 2010
Addendum C--Codes With Interim RVUs
Addendum D--2010 Geographic Adjustment Factors (GAFs)
Addendum E--2010 Geographic Practice Cost Indices (GPCIs) by State
and Medicare Locality
Addendum F--CY 2010 ESRD Wage Index for Non-Urban Areas Based on
CBSA Labor Market Areas
Addendum G--CY 2010 ESRD Wage Index for Urban Areas Based on CBSA
Labor Market Areas
Addendum H--CPT/HCPCS Imaging Codes Defined by Section 5102(b) of
the DRA
Addendum I--List of CPT/HCPCS Codes Used To Define Certain
Designated Health Services Under Section 1877 of the Social Security
Act

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:

AA Anesthesiologist assistant
AACVPR American Association of Cardiovascular and Pulmonary
Rehabilitation
AANA American Association of Nurse Anesthetists
ABMS American Board of Medical Specialties
ABN Advanced Beneficiary Notice
ACC American College of Cardiology
ACGME Accreditation Council on Graduate Medical Education
ACLS Advanced cardiac life support
ACR American College of Radiology
AED Automated external defibrillator
AFROC Association of Freestanding Radiation Oncology Centers
AHA American Heart Association
AHFS-DI American Hospital Formulary Service--Drug Information
AHRQ [HHS'] Agency for Healthcare Research and Quality
AMA American Medical Association
AMA-DE American Medical Association Drug Evaluations
AMP Average manufacturer price
AO Accreditation organization
AOA American Osteopathic Association
APA American Psychological Association
APTA American Physical Therapy Association
ARRA American Recovery and Reinvestment Act (Pub. L. 111-5)
ASC Ambulatory surgical center
ASP Average sales price
ASRT American Society of Radiologic Technologists
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 (Pub. L. 106-554)
BLS Basic Life support
BN Budget neutrality
BPM Benefit Policy Manual
CABG Coronary artery bypass graft
CAD Coronary artery disease
CAH Critical access hospital
CAHEA Committee on Allied Health Education and Accreditation
CAP Competitive acquisition program
CBIC Competitive Bidding Implementation Contractor
CBP Competitive Bidding Program
CBSA Core-Based Statistical Area
CF Conversion factor
CfC Conditions for Coverage
CFR Code of Federal Regulations
CKD Chronic kidney disease
CLFS Clinical laboratory fee schedule
CMA California Medical Association
CMHC Community mental health center
CMP Civil money penalty
CMS Centers for Medicare & Medicaid Services
CNS Clinical nurse specialist
CoP Condition of participation
COPD Chronic obstructive pulmonary disease
CORF Comprehensive Outpatient Rehabilitation Facility
COS Cost of service
CPEP Clinical Practice Expert Panel
CPI Consumer Price Index
CPI-U Consumer price index for urban customers
CPR Cardiopulmonary resuscitation
CPT [Physicians'] Current Procedural Terminology (4th Edition, 2002,
copyrighted by the American Medical Association)
CR Cardiac rehabilitation
CRNA Certified registered nurse anesthetist
CRP Canalith repositioning
CRT Certified respiratory therapist
CSW Clinical social worker
CY Calendar year
DEA Drug Enforcement Agency
DHS Designated health services
DME Durable medical equipment
DMEPOS Durable medical equipment, prosthetics, orthotics, and
supplies
DOQ Doctor's Office Quality
DOS Date of service
DRA Deficit Reduction Act of 2005 (Pub. L. 109-171)

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DSMT Diabetes self-management training
E/M Evaluation and management
EDI Electronic data interchange
EEG Electroencephalogram
EHR Electronic health record
EKG Electrocardiogram
EMG Electromyogram
EMTALA Emergency Medical Treatment and Active Labor Act
EOG Electro-oculogram
EPO Erythopoeitin
ESRD End-stage renal disease
FAX Facsimile
FDA Food and Drug Administration (HHS)
FFS Fee-for-service
FR Federal Register
GAF Geographic adjustment factor
GAO General Accounting Office
GEM Generating Medicare [Physician Quality Performance Measurement
Results]
GFR Glomerular filtration rate
GPO Group purchasing organization
GPCI Geographic practice cost index
HAC Hospital-acquired conditions
HBAI Health and behavior assessment and intervention
HCPAC Health Care Professional Advisory Committee
HCPCS Healthcare Common Procedure Coding System
HCRIS Healthcare Cost Report Information System
HDRT High dose radiation therapy
HH PPS Home Health Prospective Payment System
HHA Home health agency
HHRG Home health resource group
HHS [Department of] Health and Human Services
HIPAA Health Insurance Portability and Accountability Act of 1996
(Pub. L. 104-191)
HIT Health information technology
HITECH Health Information Technology for Economic and Clinical
Health Act (Title IV of Division B of the Recovery Act, together
with Title XIII of Division A of the Recovery Act)
HITSP Healthcare Information Technology Standards Panel
HIV Human immunodeficiency virus
HOPD Hospital outpatient department
HPSA Health Professional Shortage Area
HRSA Health Resources Services Administration (HHS)
IACS Individuals Access to CMS Systems
ICD International Classification of Diseases
ICF Intermediate care facilities
ICR Intensive cardiac rehabilitation
ICR Information collection requirement
IDTF Independent diagnostic testing facility
IFC Interim final rule with comment period
IMRT Intensity-Modulated Radiation Therapy
IPPE Initial preventive physical examination
IPPS Inpatient prospective payment system
IRS Internal Revenue Service
ISO Insurance services office
IVD Ischemic Vascular Disease
IVIG Intravenous immune globulin
IWPUT Intra-service work per unit of time
JRCERT Joint Review Committee on Education in Radiologic Technology
KDE Kidney disease education
LCD Local coverage determination
MA Medicare Advantage
MA-PD Medicare Advantage--Prescription Drug Plans
MAV Measure Applicability Validation
MCMP Medicare Care Management Performance
MDRD Modification of Diet in Renal Disease
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)
(Pub. L. 109-432)
MIPPA Medicare Improvements for Patients and Providers Act of 2008
(Pub. L. 110-275)
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (Pub. L. 108-173)
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007 (Pub. L.
110-173)
MNT Medical nutrition therapy
MOC Maintenance of certification
MP Malpractice
MPPR Multiple procedure payment reduction
MQSA Mammography Quality Standards Act of 1992 (Pub. L. 102-539)
MRA Magnetic resonance angiography
MRI Magnetic resonance imaging
MSA Metropolitan statistical area
NBRC National Board for Respiratory Care
NCD National Coverage Determination
NCQDIS National Coalition of Quality Diagnostic Imaging Services
NDC National drug code
NF Nursing facility
NISTA National Institute of Standards and Technology Act
NP Nurse practitioner
NPI National Provider Identifier
NPP Nonphysician practitioner
NQF National Quality Forum
NRC Nuclear Regulatory Commission
OACT [CMS'] Office of the Actuary
OBRA Omnibus Budget Reconciliation Act
ODF Open door forum
OGPE Oxygen generating portable equipment
OIG Office of Inspector General
OMB Office of Management and Budget
ONC [HHS'] Office of the National Coordinator for Health IT
OPPS Outpatient prospective payment system
OSCAR Online Survey and Certification and Reporting
PA Physician assistant
PAT Performance assessment tool
PC Professional component
PCI Percutaneous coronary intervention
PDP Prescription drug plan
PE Practice expense
PE/HR Practice expense per hour
PEAC Practice Expense Advisory Committee
PERC Practice Expense Review Committee
PFS Physician Fee Schedule
PGP [Medicare] Physician Group Practice
PHI Protected health information
PHP Partial hospitalization program
PIM [Medicare] Program Integrity Manual
PLI Professional liability insurance
POA Present on admission
POC Plan of care
PPI Producer price index
PPIS Physician Practice Information Survey
PPS Prospective payment system
PPTA Plasma Protein Therapeutics Association
PQRI Physician Quality Reporting Initiative
PR Pulmonary rehabilitation
PRA Paperwork Reduction Act
PSA Physician scarcity areas
PT Physical therapy
PTCA Percutaneous transluminal coronary angioplasty
PVBP Physician and Other Health Professional Value-Based Purchasing
Workgroup
RA Radiology assistant
RBMA Radiology Business Management Association
RFA Regulatory Flexibility Act
RHC Rural health clinic
RIA Regulatory impact analysis
RN Registered nurse
RNAC Reasonable net acquisition cost
RPA Radiology practitioner assistant
RRT Registered 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
SMS [AMA's] Socioeconomic Monitoring System
SNF Skilled nursing facility
SOR System of record
SRS Stereotactic radiosurgery
STARS Services Tracking and Reporting System
TC Technical Component
TIN Tax identification number
TRHCA Tax Relief and Health Care Act of 2006 (Pub. L. 109-432)
TTO Transtracheal oxygen
UPMC University of Pittsburgh Medical Center
USDE United States Department of Education
USP-DI United States Pharmacopoeia--Drug Information
VBP Value-based purchasing
WAMP Widely available market price

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) are based on national uniform relative
value units (RVUs) based on the relative 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'

[[Page 61742]]

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
on 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 (DHHS). 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, with appropriate adjustment of the conversion factor (CF), in a
manner to assure that fee schedule amounts for anesthesia services are
consistent with those for other services of comparable value. We
established a separate CF for anesthesia services, and we continue to
utilize time units as a factor in determining payment for these
services. As a result, there is a separate payment methodology for
anesthesia services.
We establish physician work RVUs for new and revised codes based on
our review of recommendations received from the American Medical
Association's (AMA) Specialty Society Relative Value Update Committee
(RUC).
2. Practice Expense Relative Value Units (PE RVUs)
Section 121 of the Social Security Act Amendments of 1994 (Pub. L.
103-432), enacted on October 31, 1994, amended section
1848(c)(2)(C)(ii) of the Act and required us to develop resource-based
PE RVUs for each physician's service beginning in 1998. We were to
consider general categories of expenses (such as office rent and wages
of personnel, but excluding malpractice expenses) comprising PEs.
Section 4505(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L.
105-33), amended section 1848(c)(2)(C)(ii) of the Act to delay
implementation of the resource-based PE RVU system until January 1,
1999. In addition, section 4505(b) of the BBA provided for a 4-year
transition period from charge-based PE RVUs to resource-based RVUs.
We established the resource-based PE RVUs for each physicians'
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 Calendar Year (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.
3. Resource-Based Malpractice (MP) RVUs
Section 4505(f) of the BBA amended section 1848(c) of the Act
requiring 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 all
RVUs no less often than every 5 years. The first Five-Year Review of
the physician work RVUs was published on November 22, 1996 (61 FR
59489) and was effective in 1997. The second Five-Year Review was
published in the CY 2002 PFS final rule with comment period (66 FR
55246) and was effective in 2002. The third Five-Year Review of
physician work RVUs was published in the CY 2007 PFS final rule with
comment period (71 FR 69624) and was effective on January 1, 2007.
(Note: Additional codes relating to the third Five-Year Review of
physician work RVUs were addressed in the CY 2008 PFS final rule with
comment period (72 FR 66360).)
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

[[Page 61743]]

methodology for determining resource-based PE RVUs and are
transitioning it over a 4-year period.
In the CY 2005 PFS final rule with comment period (69 FR 66236), we
implemented the first Five-Year Review of the MP 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 revisions to the 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 2009 PFS final rule with comment period
(73FR 69730), as required by section 133(b) of the Medicare
Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L.
110-275), the separate budget neutrality (BN) adjustor resulting from
the third Five-Year Review of physician work RVUs is being applied to
the CF beginning with CY 2009 rather than the work RVUs.

B. Components of the Fee Schedule Payment Amounts

To calculate the payment for every physicians' 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 expense in an
area compared to the national average costs for each component.
RVUs are converted to dollar amounts through the application of a
CF, which is calculated by CMS' Office of the Actuary (OACT).
The formula for calculating the Medicare fee schedule payment
amount for a given service and fee schedule area can be expressed as:

Payment = [(RVU work x GPCI work) + (RVU PE x GPCI PE) + (RVU
malpractice x GPCI malpractice)] x CF.

C. Most Recent Changes to the Fee Schedule

The CY 2009 PFS final rule with comment period (73 FR 69726)
implemented changes to the PFS and other Medicare Part B payment
policies. It also finalized the CY 2008 interim RVUs and implemented
interim RVUs for new and revised codes for CY 2009 to ensure that our
payment systems are updated to reflect changes in medical practice and
the relative value of services. The CY 2009 PFS final rule with comment
period also addressed other policies, as well as certain provisions of
the MIPPA.
As required by the statute, and based on section 131 of the MIPPA,
the CY 2009 PFS final rule with comment period also announced the
following for CY 2009: the PFS update of 1.1 percent, the initial
estimate for the sustainable growth rate of 7.4 percent, and the
conversion factor (CF) of $36.0666.

II. Provisions of the Final Regulation

In response to the CY 2010 PFS proposed rule (74 FR 33520) we
received approximately 16,500 timely public comments. These included
comments from concerned citizens, individual physicians, health care
workers, professional associations and societies, manufacturers and
Congressmen. The majority of the comments addressed proposals related
to the MIPPA provisions concerning teaching anesthesiology and cardiac
and pulmonary rehabilitation, the physician practice information survey
(PPIS), and the impact of the proposed rule on specific specialties. To
the extent that comments were outside the scope of the proposed rule,
they are not addressed in this final rule with comment period.

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 stated that the revised PE
methodology must consider the staff, equipment, and supplies used in
the provision of a variety of 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[dash]specific practice costs to individual
procedures. The specialty[dash]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 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 provide 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

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explanation of the PE methodology, see the Five-Year Review of Work
Relative Value Units Under the PFS and Proposed Changes to the Practice
Expense Methodology proposed notice (71 FR 37242) and the CY 2007 PFS
final rule with comment period (71 FR 69629).

Note: In section II.A.1 of this final rule with comment period
rule, we discuss the current methodology used for calculating PE. In
section II.A.2. of this final rule with comment period, which
contains PE proposals for CY 2010, we summarize and respond to
comments on our proposal to use data from the AMA Physician Practice
Information Survey (PPIS) in place of the AMA's SMS survey data and
supplemental survey data that is currently used in the PE
methodology, as well as our proposal concerning equipment
utilization assumptions.

1. Practice Expense Methodology
a. Data Sources for Calculating Practice Expense
The AMA's SMS survey data and supplemental survey data from the
specialties of cardiothoracic 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 currently 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 CY 2002 PFS final rule with comment period (66 FR
55246).) 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 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, those
entities and organizations representing the specialty itself). (See the
Criteria for Submitting Supplemental Practice Expense Survey Data
interim final rule with comment period (65 FR 25664).) Originally, the
deadline to submit supplementary survey data was through August 1,
2001. In the CY 2002 PFS final rule (66 FR 55246), the deadline was
extended through August 1, 2003. To ensure maximum opportunity for
specialties to submit supplementary survey data, we extended the
deadline to submit surveys until March 1, 2005 in the Revisions to
Payment Policies Under the Physician Fee Schedule for CY 2004 final
rule with comment period (68 FR 63196) (hereinafter referred to as CY
2004 PFS final rule with comment period).
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. The CPEP data has been regularly
updated by various RUC committees on PE.
b. Allocation of PE to Services
Currently, the aggregate level specialty-specific PEs are derived
from the AMA's SMS survey and supplementary survey data. For CY 2010,
we discuss in section II.A.2. of this final rule with comment period
how a new data source, PPIS, will be used. 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 x physician CF) x
(average direct percentage from survey PE/HR data)).
(ii) Indirect costs. Currently, the SMS and supplementary survey
data are the sources for the specialty-specific aggregate indirect
costs used in our PE calculations. For CY 2010, we discuss in section
II.A.2. of this final rule with comment period how a new data source,
PPIS, will be used. We then allocate the indirect costs to the code
level on the basis of the direct costs specifically associated with a
code and the greater of either the clinical labor costs or the
physician work RVUs. For calculation of the 2010 PE RVUs, we use the
2008 procedure-specific utilization data crosswalked to 2010 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
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 currently use the specialty-specific PE/HR from the SMS
survey data, as well as the supplemental surveys for cardiothoracic
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

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American Society for Therapeutic Radiology and Oncology (ASTRO) and the
Association of Freestanding Radiation Oncology Centers (AFROC)). As
discussed in the CY 2008 PFS final rule with comment period (72 FR
66233), the PE/HR survey data for radiology is weighted by practice
size. For CY 2010, we discuss in section II.A.2. of this final rule
with comment period how a new data source, PPIS, will be used. 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 and Non-Facility 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
non-facility. The non-facility setting includes physicians' offices,
patients' homes, freestanding imaging centers, and independent
pathology labs. Facility settings include hospitals, ambulatory
surgical centers (ASCs), and skilled nursing facilities (SNFs). The
methodology for calculating PE RVUs is the same for both facility and
non-facility RVUs, but is applied independently to yield two separate
PE RVUs. Because the PEs for services provided in a facility setting
are generally included in the payment to the facility (rather than the
payment to the physician under the 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), both of
which may be performed independently or by different providers. When
services have TCs, PCs, and global components that can be billed
separately, the payment for the global component equals the sum of the
payment for the TC and PC. 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, PCs, and TCs for a service. (The
direct PE RVUs for the TC and PC 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), the change to the PE methodology was implemented over a 4-
year period. In CY 2010, the transition period for the change to the PE
methodology is complete and PE RVUs will be calculated based entirely
on the current methodology.
f. PE RVU Methodology
The following is a description of the PE RVU methodology. While
there are some changes to the data sources, the methodology remains the
same.
(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/non-facility 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. For CY 2010, we discuss in section
II.A.2. of this final rule with comment period how a new data source,
PPIS, will be used.
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 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. For CY 2010, we discuss in section II.A.2. of this final
rule with comment period how a new data source, PPIS, will be used.
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 TCs
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 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

[[Page 61746]]

indirect allocator is: indirect percentage * (direct PE RVU/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 PE RVU/direct percentage) + clinical PE
RVU.

Note: For global services, the indirect allocator is based on
both the work RVU and the clinical labor PE RVU. We do this to
recognize that, for the professional service, indirect PEs will be
allocated using the work RVUs, and for the TC service, indirect PEs
will be allocated using the direct PE RVU and the clinical labor PE
RVU. This also allows the global component RVUs to equal the sum of
the PC and TC RVUs.

For presentation purposes in the examples in the Table 1, the
formulas were divided into two parts for each service. The first part
does not vary by service and is the indirect percentage * (direct PE
RVU/direct percentage). The second part is either the work RVU,
clinical PE RVU, or both depending on whether the service is a global
service and whether the clinical PE RVU exceeds the work RVU (as
described earlier in this step.)
Apply a BN adjustment to the indirect allocators.
Step 9: Calculate the current aggregate pool of indirect PE RVUs by
multiplying the current aggregate pool of PE RVUs by the average
indirect PE percentage from the physician specialty survey data. This
is similar to the Step 2 calculation for the direct PE RVUs.
Step 10: Calculate an aggregate pool of 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 TCs 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 component.)
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 ratesetting purposes, but
all specialties are included for purposes of calculating the final BN
adjustment. (See ``Specialties excluded from ratesetting calculation''
below in this section.)
(v) Setup File Information
Specialties excluded from ratesetting 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 modifiers: 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
proposed rule.
(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; 0.9 for certain expensive
diagnostic equipment (see section II.A.2. of this final rule with
comment period rule) and 0.5 for others.
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.

Note: To illustrate the PE calculation, in Table 1 we have used
the conversion factor (CF) of $28.3769 which is the CF effective
January 1, 2010 as published in this final rule with comment period.

BILLING CODE 4120-01-P

[[Page 61747]]

[GRAPHIC] [TIFF OMITTED] TR25NO09.173

[[Page 61748]]

[GRAPHIC] [TIFF OMITTED] TR25NO09.174

BILLING CODE 4120-01-C

[[Page 61749]]

2. PE Revisions for CY 2010
a. SMS and Supplemental Survey Background
Currently, we use PE/HR obtained from the SMS surveys from 1995
through 1999. For several specialties that collected additional PE/HR
data through a more recent supplemental survey, we accepted and
incorporated these data in developing current PE/HR values.
While the SMS survey was not specifically designed for the purpose
of establishing PE RVUs, we found these data to be the best available
at the time. The SMS was a multi-specialty survey effort conducted
using a consistent survey instrument and method across specialties. The
survey sample was randomly drawn from the AMA Physician Masterfile to
ensure national representativeness. The AMA discontinued the SMS survey
in 1999.
As required by the BBRA, we also established a process by which
specialty groups could submit supplemental PE data. In the May 3, 2000
interim final rule entitled, Medicare Program; Criteria for Submitting
Supplemental Practice Expense Survey Data, (65 FR 25664), we
established criteria for acceptance of supplemental data. The criteria
were modified in the CY 2001 and CY 2003 PFS final rules with comment
period (65 FR 65380 and 67 FR 79971, respectively). We currently use
supplemental survey data for the following specialties: cardiology;
dermatology; gastroenterology; radiology; cardiothoracic surgery;
vascular surgery; physical and occupational therapy; independent
laboratories; allergy/immunology; independent diagnostic testing
facilities (IDTFs); radiation oncology; medical oncology; and urology.
Because the SMS data and the supplemental survey data are from
different time periods, we have historically inflated them by the MEI
to help put them on as comparable a time basis as we can when
calculating the PE RVUs. This MEI proxy has been necessary in the past
due to the lack of contemporaneous, consistently collected, and
comprehensive multispecialty survey data.
b. Physician Practice Information Survey (PPIS)
The AMA has conducted a new survey, the PPIS, which was expanded
(relative to the SMS) to include nonphysician practitioners (NPPs) paid
under the PFS. The PPIS, administered in CY 2007 and CY 2008, was
designed to update the specialty-specific PE/HR data used to develop PE
RVUs.
The AMA and our contractor, The Lewin Group (Lewin), analyzed the
PPIS data and calculated the PE/HR for physician and nonphysician
specialties, respectively. The AMA's summary worksheets and Lewin's
final report are available on the CMS Web site at http://www.cms.gov/PhysicianFeeSched/. (See AMA PPIS Worksheets 1-3 and Lewin Group Final
Report PPIS.) We also included a table in the proposed rule showing the
current indirect PE/HR based on SMS and supplemental surveys, the PPIS
indirect PE/HR, and the indirect cost percentages of total costs (74 FR
33530 through 33531).
The PPIS is a multispecialty, nationally representative, PE survey
of both physicians and NPPs using a consistent survey instrument and
methods highly consistent with those used for the SMS and the
supplemental surveys. The PPIS has gathered information from 3,656
respondents across 51 physician specialty and health care professional
groups. We believe the PPIS is the most comprehensive source of PE
survey information available to date.
As noted, the BBRA required us to establish criteria for accepting
supplemental survey data. Since the supplemental surveys were specific
to individual specialties and not part of a comprehensive
multispecialty survey, we had required that certain precision levels be
met in order to ensure that the supplemental data was sufficiently
valid, and acceptable for use in the development of the PE RVUs.
Because the PPIS is a contemporaneous, consistently collected, and
comprehensive multispecialty survey, we do not believe similar
precision requirements are necessary and we did not propose to
establish them for the use of the PPIS data.
For physician specialties, the PPIS responses were adjusted for
non-response bias. Non-response bias is the bias that results when the
characteristics of survey respondents differ in meaningful ways, such
as in the mix of practice sizes, from the general population. The non-
response adjustment was developed based on a comparison of practice
size and other characteristic information between the PPIS survey
respondents and data from the AMA Masterfile (for physician
specialties) or information from specialty societies (for non-physician
specialties). For six specialties (chiropractors, clinical social
workers, nuclear medicine, osteopathic manipulative therapy, physical
therapy, and registered dietitians) such an adjustment was not possible
due to a lack of available characteristic data. The AMA and Lewin have
indicated that the non-response weighting has only a small impact on
PE/HR values.
Under our current policy, various specialties without SMS or
supplemental survey data have been crosswalked to other similar
specialties to obtain a proxy PE/HR. For specialties that were part of
the PPIS for which we currently use a crosswalked PE/HR, we proposed
instead to use the PPIS-based PE/HR. We also proposed to continue
current crosswalks for specialties that did not participate in PPIS.
Supplemental survey data on independent labs, from the College of
American Pathologists, was implemented for payments in CY 2005.
Supplemental survey data from the National Coalition of Quality
Diagnostic Imaging Services (NCQDIS), representing IDTFs, was blended
with supplementary survey data from the American College of Radiology
(ACR) and implemented for payments in CY 2007. Neither IDTFs, nor
Independent Labs, participated in the PPIS. Therefore, we proposed to
continue using the current PE/HR that was developed using their
supplemental survey data.
We did not propose to use the PPIS data for reproductive
endocrinology, sleep medicine, and spine surgery since these
specialties are not separately recognized by Medicare and we do not
know how to blend this data with Medicare recognized specialty data. We
sought comment on this issue.
We did not propose changes to the manner in which the PE/HR data
are used in the current PE RVU methodology. We proposed to update the
PE/HR data itself based on the new survey. We proposed to utilize the
PE/HR developed using PPIS data for all Medicare recognized specialties
that participated in the survey for payments effective January 1, 2010.
The impact of using the new PPIS-based PE/HR is discussed in the
Regulatory Impact Analysis in section XIII. of this final rule with
comment period.
The following is a summary of the public comments received on the
PPIS survey and our responses.
Comment: MedPAC was generally supportive of the use of the PPIS
survey data, stating:

Ensuring the accuracy of PE payments is important given that
close to half of all payments under the physician fee schedule are
associated with practice expense. The Commission has repeatedly
raised concerns that the specialty-specific cost data that CMS uses
to derive PE RVUs are not current for most specialties, which might
lead to payments becoming inaccurate over time.

[[Page 61750]]

Compared with the multiple data sources that CMS currently relies on
for practice cost information, the PPIS is a step forward because:
(1) It reflects current practice patterns and costs; (2) it measures
costs of nearly all physician and nonphysician specialties; and (3)
it uses a standard protocol for all specialty groups that was
designed to derive PE RVUs. However, CMS should provide more
information about the PPIS's response rate and representativeness.
We are also concerned that CMS has not laid out options for ensuring
the accuracy of PE RVUs in the long term. As a future step, CMS
should consider alternatives for collecting specialty-specific cost
data or options to decrease the reliance on such data.

Response: We agree with MedPAC that the PPIS is a step forward
compared to the data sources currently used in the development of the
PE RVUs.
With respect to additional information on the PPIS survey, the AMA
has continued to respond to requests from the individual specialty
societies for additional data analysis as they have done since the PPIS
results were first released. We have also performed further analyses in
response to comments received on the proposed rule. The results of
these analyses are available on our Web site (described later in this
section) and have not changed our conclusion that the PPIS is the most
comprehensive, multi-specialty, contemporaneous, consistently collected
PE data source available.
We also agree with MedPAC that it is appropriate to consider the
future of the PE RVUs moving forward. We did not propose any changes to
the methodology in conjunction with the use of the PPIS data. However,
we seek comments from other stakeholders on the issues raised by MedPAC
for the future. In particular, we seek comments regarding MedPAC's
suggestion that we consider alternatives for collecting specialty-
specific cost data or options to decrease the reliance on such data.
For example, MedPAC stated that ``CMS should consider if Medicare or
provider groups should sponsor future data collection efforts, if
participation should be voluntary (such as surveys) or mandatory (such
as cost reports), and whether a nationally representative sample of
practitioners would be sufficient for either a survey or cost
reports.'' MedPAC also stated that one option for decreasing the
reliance on specialty-specific cost data would be the elimination of
specialty-specific cost pools from the method used to derive indirect
PE RVUs. We would address any changes through future rulemaking.
Comment: In addition to MedPAC, numerous specialty groups and
individual physicians and practitioners supported utilizing the PPIS
data. The commenters included family practice, general practice,
geriatrics, pediatrics, internal medicine, obstetrics and gynecology,
general surgery, infectious disease, emergency medicine, psychiatry,
anesthesiology, colorectal surgery, dermatology, endocrinology,
gastroenterology, neurology, neurosurgery, ophthalmology, optometry,
orthopedic surgery, osteopathic physicians, otolaryngology, pathology,
physical medicine and rehabilitation, physical and occupational
therapy, plastic surgery, podiatry, pulmonary disease, spine surgery,
thoracic surgery, transplant surgery, and vascular surgery.
Those in favor of using the PPIS data made one or more of the
following points:
PPIS was a nationally representative survey providing the
most up-to-date and comprehensive data available from 51 specialties.
It was a highly scientific and controlled undertaking, using a survey
instrument that the AMA took great care to design, test, and implement.
Seventy organizations contributed to the costs of the
survey and agreed to take responsibility for communicating and
publicizing the effort in order to enhance response rates. All groups
had ample time to review and provide input and received monthly updates
on response rates for their group.
PPIS followed the exacting criteria that CMS has
established for gathering this type of data and for producing results
that are acceptable for submission. The AMA worked with CMS's
contractor to ensure that all data met these criteria and were analyzed
consistently across the various physicians and practitioner
specialties. Any data that did not meet the criteria such as response
outliers were excluded.
The vast majority of the data currently used are
completely outdated. MedPAC and GAO have been calling on CMS to update
PE payments. The annual update of such data is inadequate to capture
the true changes in practice costs that physicians have experienced
over the years.
Supplemental survey data from a limited number of
specialties have caused significant distortions and misallocations of
PE payments, and provided an unfair advantage to some specialties. Many
organizations were unable to submit supplemental survey data due to the
high cost of gathering the data.
Concurrently and uniformly collected data will correct
payment imbalances caused by the supplemental surveys. Due to BN, this
leads to a shift in payment to some specialties at the expense of
others. The new data will reduce the payment gap between primary care
and other specialties.
Blending PPIS data with existing data would preserve
distortions and continue utilization of data that are more than 10
years old for some groups.
Response: We appreciate the support of this broad-based and diverse
mix of primary care, surgical, and other nonsurgical specialties for
our proposal. We agree with the commenters that the PPIS is the most
comprehensive, multi-specialty, contemporaneous, consistently collected
PE data source available.
Comment: There were also many specialty groups and individual
physicians and practitioners strongly opposed to the use of the PPIS
data. The commenters included representatives of the specialties of
cardiology, radiation oncology, medical oncology, interventional
radiology, hematology, nuclear medicine, urology, rheumatology, and
dieticians. Those opposed to using the PPIS data made one or more of
the following points:
Some commenters stated that data were not collected in a
contemporaneous, consistent, and comprehensive way;
Some commenters stated that the PPIS should be subject to
the same level of analysis as the supplemental surveys to assess
accuracy and precision. The commenters also indicated that the survey
did not meet the target goal for useable responses. The commenters
stated that the low response rates, for some specialties, means that
the data are not representative of the specialties' PEs. The commenters
also stated that specialty societies should be given the names of the
survey respondents, especially those that failed to fully complete the
survey, so they could be contacted;
Some commenters stated that there was not adequate
transparency in the PPIS survey process and that there was insufficient
information provided about the survey methodology and process;
Some commenters stated that CMS should withdraw the
proposal and take the time necessary to adequately examine the data
submitted by AMA, consider changes to the PE methodology, and solicit
public input on the validity of the data and the most appropriate way
to integrate this data into the PFS; and
Some commenters stated that if PPIS data is used, it
should be blended with supplemental survey data and/or phased in over a
number of years.

[[Page 61751]]

Response: The PPIS uses a consistent survey instrument and
methodology across all specialty and health care professional groups.
The sample was drawn from the AMA's Physician Masterfile, which is a
listing of all member and non-member physicians in the United States.
The survey was conducted in conjunction with national medical specialty
societies and other health care professionals, representing 51
specialties and health professions in order to maximize the overall
response rate. Respondents could submit information through multiple
modalities, including telephone, fax, and Web-based reporting.
The survey was conducted by external contractors. In 2007 the PPIS
project was contracted to the Gallup Organization. In late 2007 the AMA
transitioned the survey effort to dmrkynetec, formally Doane Marketing
Research, to complete the project. Dmrkynetec conducted the majority of
the specialty level surveys that were previously implemented by CMS.
Dmrkynetec used the same survey instruments as did the Gallup
Organization in order that survey data collected by Gallup could be
appropriately merged in the dmrkynetec data collection.
The survey methodology was highly consistent with the prior SMS
methodology because only small deviations were allowed to accommodate
practice style differences across the various groups surveyed. The PPIS
was conducted in accordance with known conventions governing PE
collection activities. One hundred completed surveys for each specialty
was set as a goal for the PPIS, but was not a minimum requirement. More
than 7,000 surveys were collected for 51 physicians, non MD/DO
specialties, and health professions. For the majority of specialties,
at least 100 surveys were collected.
The AMA provided specialty groups with information on the survey
throughout the survey process. Monthly progress reports were issued on
response rates. Due to confidentiality agreements with the AMA and
participating specialty groups, raw survey data was not distributed to
CMS or the specialty groups. However, this does not mean that analysis
was not performed on the PPIS data.
In conjunction with publication of the proposed rule, we posted
information on our Web site on physician response rates, precision and
PE/HR. In addition, we posted Lewin's report entitled, ``Physician
Practice Information Survey (PPIS) Data Submitted for 2010: Non-MD/DO
and Health Professionals Practice Information'' (June 19, 2009). This
report includes information on the PPIS survey process as well as the
methodology for determining the PE/HR.
As noted earlier in our response to the MedPAC comment, the AMA has
continued to respond to requests from the individual specialty
societies for additional data analysis, as they have done since the
PPIS results were first released. In response to comments received on
the proposed rule, we have also performed additional analyses of
summary data supplied by the AMA, the supplemental survey, and
cardiology, urology, and radiology groups. This additional analysis
indicates that while the PE/HR for these specialties differs between
the data sources reviewed for certain practice sizes, these differences
do not validate the commenters' conclusion that the PPIS data is
invalid. We continue to believe that the PPIS is the most appropriate
data source available for the development of resource-based PE RVUs. To
view this analysis, please see our Web site at http://www.cms.hhs.gov/PhysicianFeeSched/. (At this Web site, Go to ``PFS Federal Regulation
Notices'' tab, and then chose ``CMS-1413-P.'' Lewin's original report
is listed under the CY 2010 PFS proposed rule page. The additional AMA
information and analysis of the PPIS is available at http://www.ama-assn.org/go/ppisurvey.
We disagree with some commenters that the same precision
requirements that applied to the individual specialty supplemental
surveys should apply to the broad multispecialty contemporaneous PPIS.
Each individual specialty supplemental survey was being used alongside
the multispecialty contemporaneous SMS survey data for all the other
specialties. This is not the case for the PPIS data. We proposed to use
the PPIS data in its entirety for all Medicare recognized specialties,
with the exception of two supplier specialties that did not participate
in the PPIS. Precision requirements were appropriate, and required by
the BBRA, in the context of the selective acceptance of individual
supplemental surveys, but are not necessary in the context of the much
broader adoption of the PPIS data.
We also disagree that we should blend the supplemental survey data
with the PPIS data. One of the advantages of the PPIS data is precisely
that it is contemporaneous and collected in a consistent, broad multi-
specialty manner. Blending this data with the supplemental survey data
weakens the advantage of using the PPIS data, as was pointed out by
commenters who favored its use.
However, we do recognize that some specialties experience
significant payment reductions with the use of the PPIS data. Given the
magnitude of these payment reductions for some specialties, we agree
with commenters who suggested a transition to the new PE RVUs developed
using the PPIS data. Historically, we have provided for 4-year
transitions when we have significantly altered the PE methodology.
While we did not propose any changes to the methodology in the proposed
rule, we are persuaded by commenters that the use of the new PPIS data
has a sufficiently significant impact to warrant the use of such a
transition. In light of the comments received and our past practice, we
are finalizing a 4-year transition (75/25, 50/50, 25/75, 0/100) from
the current PE RVUs to the PE RVUs developed using the new PPIS data.
Comment: Some commenters that supported the use of the PPIS data
and some who opposed its use claimed that Medicare pays only 51 percent
of direct costs. Commenters maintained that the PE methodology results
in the underpayment of procedures with high direct costs, and will
shift procedures from the office to the higher cost hospital setting.
Response: The purpose of the resource-based PE methodology is to
develop RVUs within the overall PFS BN requirements. We are unaware of
any independent analysis that indicates that Medicare pays 51 percent
of direct costs as a result of these BN requirements. In the PE
methodology, there is a scaling factor applied in the development of
the direct PE portion of the PE RVUs and there is a scaling factor
applied in the development of the indirect PE portion. We believe that
commenters may be misinterpreting the scaling factor applied in the
development of the direct cost portion of the PE RVUs.
The PPIS data indicated a significant decrease in the percentage of
PEs that are attributable to direct PEs and a corresponding increase in
the percentage that are attributable to indirect PEs. The incorporation
of the PPIS data, therefore, results in a decrease in the scaling
factor applied in the development of the direct cost portion of the PE
methodology from its current value of 0.63 to its new value of 0.51 and
a corresponding increase in the scaling factor applied in development
of the indirect cost portion. As stated earlier, the PPIS is the most
comprehensive, multi-specialty, contemporaneous, consistently

[[Page 61752]]

collected source of PE data. The PPIS data indicates that direct costs
are a smaller proportion of total PE costs for almost every single
specialty surveyed (see Table 2). We are incorporating this result into
our methodology and disagree with commenters that this empirically
based decrease in the scaling factor for the direct cost portion of the
PE RVU using the PPIS survey data is inappropriate.
Comment: The American Society of Clinical Oncology (ASCO) noted
that section 303 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Pub. L. 108-173) (MMA) added section
1848(c)(2)(H) of the Act, which requires us to use their supplemental
survey submitted in 2003 for oncology drug administration services.
Response: We have reviewed the MMA provision and agree that, as
amended, section 1848(c)(2)(H)(i) of the Act requires that we continue
to use the supplemental survey data for oncology. We have revised the
PE/HR for medical oncology, hematology, and hematology/oncology to
reflect the continued use of these supplemental survey data.
Comment: Several commenters indicated that PPIS data for
reproductive endocrinology, sleep medicine, and spine surgery should
not be used because they are not separately recognized specialties by
Medicare and it is difficult to blend this data with data from
specialties that are recognized. Other commenters disagreed and
recommended weights we could use to blend the PPIS data with the data
from the recognized specialties for certain services.
Some commenters encouraged us to make these Medicare-recognized
specialties because they perform work that is separate and apart from
their parent specialty, require additional training, and have separate
liability issues. Other commenters opposed the recognition of separate
specialties for these groups, indicating that they are not markedly
different from their parent specialties.
Response: We did not specifically solicit comments on whether
reproductive endocrinology, sleep medicine, and spine surgery should be
separately recognized Medicare specialties, nor did we make such a
proposal. Specialties seeking such recognition must make a formal
request using our existing process. (See the CMS Internet-Only Medicare
Claims Processing Manual, Pub. L. 100-04, Chapter 26, Section 10.8,
Requirements for Specialty Codes.)
We did consider the comments on blending in the PPIS data for the
above physician groups as suggested by some commenters. However, we are
more persuaded by the commenters who indicated that determining the
correct blend would be difficult. We are reluctant to assign
utilization weights to the mix of specialties that perform these
services in the absence of actual claims data. We suggest that the
commenters who wish us to use the PPIS data for these groups apply for
a specialty code using our normal process. If approved, the claims data
associated with the new specialty code could be used to incorporate the
PPIS survey data for that specialty.
Comment: A group of commenters indicated that they were precluded
from participating in the PPIS. Some commenters representing portable
x-ray suppliers indicated that an inability to participate in the PPIS
resulted in an inappropriately low crosswalk for their specialty to
radiology.
Response: We did not exclude any specialty from participating in
PPIS. Individual specialties made the decision whether to participate.
However, we agree with the commenters representing portable x-ray
suppliers that radiology may not be the most appropriate crosswalk for
their specialty given the relatively low amount of physician time in
the services performed by the specialty. In light of these comments, we
are changing the PE/HR crosswalk for portable x-ray suppliers to IDTF,
a specialty similar with respect to the physician time issue.
Comment: As noted earlier, commenters representing freestanding
radiation oncology centers are opposed to the use of the PPIS data.
However, if CMS were to use the PPIS data, these commenters requested
that CMS adjust the PE/HR used for freestanding radiation oncology
centers by eliminating the weighting of the data and by eliminating 21
survey responses whose physician hour information was missing from the
data and imputed. The commenters also requested that we update the
weights used to blend the hospital-based and freestanding radiation
oncology center survey data based on more recent claims data.
Response: We agree with the commenters that it would be more
consistent with the methodology used for other specialties to remove
the 21 survey responses whose physician hour information was missing
from the data and imputed. We also agree it is more appropriate to
update the weights used to blend the hospital-based and freestanding
radiation oncology center survey data based on more recent claims data.
However, we disagree that it is appropriate to eliminate the weighting
of the survey data, especially with the 21 observations with imputed
physician practice hours removed from the survey sample respondent mix.
Consistent with the weighting methodology for other physician
specialties, we applied the AMA Masterfile weights to the data. More
details on our analysis of this comment can be found on our Web site.
Comment: Some commenters indicated that since, by statute,
registered dieticians are paid 85 percent of what a physician would be
paid for providing medical nutrition therapy services, the PPIS survey
data for registered dieticians should not be used in calculation of PE
RVUs; and that we should, therefore, base the RVUs for these services
only on the physician specialties that provide the service.
Response: We agree with commenters that, under the current PE
methodology, the PPIS survey data for registered dieticians should not
be used in the calculation of PE RVUs since they are paid 85 percent of
what a physician would be paid for providing the service. To include
them in the PE calculation would influence the rate setting to include
what the services would be paid if performed by registered dieticians
and not strictly on what the payment rate would be if provided by
physicians. We will crosswalk the specialty of registered dietician to
the ``all physician'' PE/HR rate.
In summary, based on the decisions described above, Table 2 shows
the indirect PE/HR for the specialties that have PPIS survey data that
we are adopting to calculate the PE RVUs. Also shown for these
specialties is the previous indirect PE/HR used to calculate the PE
RVUs. Note that for oncology, clinical laboratories, and IDTFs we are
continuing to use the supplemental survey data as described above.
Consistent with our past practice, the previous indirect PE/HRs for
these specialties have been updated to CY 2006 using the MEI to put
them on a comparable basis with the PPIS survey data.

[[Page 61753]]

Table 2--Indirect PE/HR for the Specialties That Have PPIS Survey Data
----------------------------------------------------------------------------------------------------------------
Previous Final rule
Specialty indirect indirect Previous Final rule
PE/HR PE/HR indirect % indirect %
----------------------------------------------------------------------------------------------------------------
All Physicians.............................................. $59.04 86.36 67 74
Allergy and Immunology...................................... 153.29 162.68 62 67
Anesthesiology.............................................. 19.76 29.36 56 82
Audiology................................................... 59.04 72.17 67 85
Cardiology.................................................. 131.02 88.04 56 65
Cardiothoracic Surgery...................................... 61.75 67.83 68 83
Chiropractor................................................ 49.60 65.33 69 86
Clinical Laboratory (Billing Independently)................. 66.46 68.32 37 37
Clinical Psychology......................................... 29.07 20.07 90 93
Clinical Social Work........................................ 29.07 17.80 90 97
Colon & Rectal Surgery...................................... 53.93 90.84 77 80
Dermatology................................................. 158.49 184.62 70 70
Emergency Medicine.......................................... 36.85 38.36 88 94
Endocrinology............................................... 49.60 84.39 69 73
Family Medicine............................................. 52.79 90.15 62 76
Gastroenterology............................................ 101.30 96.78 70 75
General Practice............................................ 52.79 78.59 62 69
General Surgery............................................. 53.93 82.73 77 82
Geriatrics.................................................. 49.60 54.14 69 74
Hand Surgery................................................ 98.56 148.78 72 77
Independent Diagnostic Testing Facilities................... 466.16 501.45 50 51
Internal Medicine........................................... 49.60 84.02 69 76
Interventional Pain Medicine................................ 59.04 156.79 67 70
Interventional Radiology.................................... 118.48 82.56 58 81
Medical Oncology............................................ 141.84 145.81 59 59
Nephrology.................................................. 49.60 66.00 69 80
Neurology................................................... 66.05 110.39 74 87
Neurosurgery................................................ 89.64 115.76 86 87
Nuclear Medicine............................................ 118.48 39.80 58 77
Obstetrics/Gynecology....................................... 69.74 99.32 67 67
Ophthalmology............................................... 103.28 170.07 65 70
Optometry................................................... 59.04 88.02 67 77
Oral Surgery (Dentist only)................................. 96.01 173.19 71 65
Orthopaedic Surgery......................................... 98.56 131.40 72 81
Osteopathic Manipulative Therapy............................ 59.04 53.93 67 93
Otolaryngology.............................................. 96.01 141.54 71 75
Pain Medicine............................................... 59.04 122.42 67 70
Pathology................................................... 59.80 74.98 70 74
Pediatrics.................................................. 51.52 76.27 62 69
Physical Medicine and Rehabilitation........................ 84.92 110.13 71 84
Physical Therapy............................................ 35.17 57.26 65 84
Plastic Surgery............................................. 99.32 134.81 67 74
Podiatry.................................................... 59.04 74.76 67 82
Psychiatry.................................................. 29.07 30.10 90 94
Pulmonary Disease........................................... 44.63 55.26 76 74
Radiation Oncology (Hospital Based & Freestanding).......... 114.00 165.10 50 57
Radiology................................................... 118.48 95.60 58 71
Rheumatology................................................ 84.92 98.08 71 67
Urology..................................................... 119.57 97.01 69 73
Vascular Surgery............................................ 60.10 83.98 63 73
----------------------------------------------------------------------------------------------------------------

c. Equipment Utilization Rate
As part of the PE methodology associated with the allocation of
equipment costs for calculating PE RVUs, we currently perform these
calculations with an equipment usage assumption of 50 percent. In the
CY 2008 PFS proposed rule (72 FR 38132), we noted that if the assumed
equipment usage percentage is set too high, the result would be an
insufficient allowance at the service level for the practice costs
associated with equipment. If the assumed equipment usage percentage is
set too low, the result would be an excessive allowance for the
practice costs of equipment at the service level. We acknowledged that
the current 50 percent usage assumption does not capture the actual
usage rates for all equipment, but stated that we did not believe that
we had strong empirical evidence to justify any alternative approaches.
In the CY 2008 PFS final rule with comment period, we summarized
comments received on this issue. Commenters' recommendations about
making adjustments to the 50 percent utilization rate assumption
varied. Some commenters recommended that we do nothing until stronger
empirical evidence is available. Other commenters recommended a
decrease in the utilization assumption while others recommended an
increase in the utilization assumption. We agreed with the commenters
that the equipment utilization rate should continue to be examined for
accuracy. We indicated that we would continue to monitor the
appropriateness of the equipment utilization assumption, and evaluate
whether changes should be proposed in light of the data available.

[[Page 61754]]

In the CY 2010 PFS proposed rule (74 FR 33532), we acknowledged
that since the publication of the CY 2008 PFS final rule with comment
period, MedPAC addressed this issue in its March 2009 Report to
Congress (see http://www.medpac.gov/documents/Mar09_EntireReport.pdf).
In part of its discussion, MedPAC stated:

In 2006, the Commission sponsored a survey by NORC of imaging
providers in six markets, which found that MRI and CT machines are
used much more than the 25 hours per week that CMS assumes (Table
2B-6). According to data from this survey, MRI scanners are used 52
hours per week, on average (median of 46 hours), and CT machines are
operated 42 hours per week, on average (median of 40 hours) (NORC
2006). Although the survey results are not nationally
representative, they are representative of imaging providers in the
six markets included in the survey. We also analyzed data from a
2007 survey of CT providers by IMV, a market research firm (IMV
Medical Information Division 2008). IMV data are widely used in the
industry and have also appeared in published studies (Baker et al.
2008, Baker and Atlas 2004). Using IMV's data on 803 nonhospital CT
providers (imaging centers, clinics, and physician offices), we
calculated that the average provider uses its CT scanner 50 hours
per week, which is twice the number CMS assumes. The IMV survey also
found that nonhospital providers increased the average number of
procedures per CT machine by 31 percent from 2003 to 2007, which
indicates that providers either used their machines more hours per
day or performed more scans per hour (IMV Medical Information
Division 2008) (p. 108).

In the proposed rule, we stated that the studies cited by MedPAC
indicated that the current equipment usage rate assumption is
significantly understated, especially with respect to the types of high
cost equipment that were the subject of the studies. The current 50
percent utilization rate translates into about 25 hours per week out of
a 50-hour work week. The median value of 46 hours for Magnetic
Resonance Imaging equipment from the first study cited by MedPAC is
equivalent to a utilization rate of 92 percent on a 50-hour week. For
Computed Tomography scanners, averaging the value from the first study
of 40 hours per week and the value from the second study of 50 hours
per week yields 45 hours and is equivalent to a 90 percent utilization
rate on a 50-hour work week. Therefore, in the CY 2010 PFS proposed
rule, we proposed to increase the equipment usage rate to 90 percent
for all services containing equipment that cost in excess of $1 million
dollars. We stated that the studies cited by MedPAC suggested that
physicians and suppliers would not typically make huge capital
investments in equipment that would only be utilized 50 percent of the
time. We stated that we would continue to explore data sources
regarding the utilization rates of equipment priced at less than $1
million dollars, but we did not propose a change in the usage rate for
this less expensive equipment.
The following is a summary of the public comments received and our
responses.
Comment: We received comments supporting our proposal to apply a 90
percent equipment utilization rate to expensive equipment priced at
more than $1 million and comments opposing our proposal. MedPAC stated:

``The Commission supports CMS's proposal as it applies to
diagnostic imaging machines that cost more than $1 million, and we
encourage CMS to explore increasing the equipment use factor for
diagnostic imaging machines that cost less than $1 million. MedPAC
did not contemplate applying the policy to radiation therapy
machines.''

Commenters supporting our proposal cited the MedPAC studies and the
rationale we provided in the proposed rule.
Commenters opposing our proposal stated that the Balanced Budget
Act of 1997 (BBA) directed CMS to ``utilize, to the maximum extent
practicable, generally accepted cost accounting principles which: (1)
Recognize all staff, equipment, supplies and expense, not just those
which can be tied to specific procedures; and (2) use actual data on
equipment utilization and other key assumptions.'' The commenters
stated that the equipment usage proposal violates this provision of the
BBA since we lacked sufficient empirical justification for the change.
The commenters indicated that the National Opinion Research Center
survey data, which was one data source used by MedPAC, was not
nationally representative, and was never intended to determine
equipment usage rates.
Some commenters referenced information submitted by the Radiology
Benefit Management Association (RBMA) based on a survey of its members.
The commenters stated that the information supported maintaining a 50
percent utilization usage rate assumption for diagnostic imaging
equipment. The commenters also stated that the information indicated
differences in utilization rates between rural and urban areas and that
our proposal would create access issues, especially in rural areas.
In MedPAC's comment letter, it agreed with CMS that ``decreasing PE
RVUs for expensive diagnostic imaging services should not affect access
to care in rural areas.''
The AMA submitted summary equipment utilization data from the PPIS
survey on MRI, CT, angiography, IMRT, and gamma camera. It stated that
although there was a relatively small sample size, the survey responses
suggest that equipment utilization varies depending on the type of
equipment involved. The AMA requested that we allow specialty societies
to provide data supporting lower utilization rates, if appropriate. It
stated that this would allow for varying equipment utilization rate
assumptions depending on the type of equipment being used, rather than
a single utilization assumption.
Some commenters indicated that even if the available data did
indicate a higher utilization rate for certain types of diagnostic
equipment, we should not apply the change to all types of expensive
diagnostic equipment. For example, we should not apply the usage rate
to new imaging technology.
Some commenters requested that we not change the equipment usage
rate assumption to 90 percent for any equipment until additional data
sources can be identified. The commenters suggested that the equipment
usage rate policy should not be limited to increasing usage rate
assumptions but should also include potentially decreasing equipment
usage rate assumptions when appropriate.
If we were to implement a higher utilization rate, some commenters
suggested that the change be phased in over a number of years.
Response: We appreciate all of the comments received on this issue.
At the time that we published the proposed rule, we had the data on MRI
and CT from the MedPAC analysis. We indicated that the MedPAC studies
suggested that physicians and suppliers would not typically make
significant capital investments in equipment that would only be
utilized 50 percent of the time. Commenters opposed to our proposal
have questioned both the validity of the MedPAC analysis for CT and MRI
and extrapolation of this data to all expensive equipment, particularly
therapeutic equipment. While we are persuaded by PPIS data on
angiography, IMRT, and Gamma Camera that the extrapolation of the MRI
and CT data to all expensive equipment may be inappropriate, we
disagree with commenters who indicated that we do not have an empirical
basis for applying a 90 percent usage rate to MRIs and CTs.
As described earlier, the MedPAC analysis was performed on two data
sources for different types of equipment. The first data source was the
survey done by NORC for MRIs and CTs. The second data source was the
IMV data for

[[Page 61755]]

CT scans. With respect to MRIs and CTs, we have now also received
summary information from the RBMA and summary PPIS survey data from the
AMA. The PPIS survey data results for MRIs (n=97) and CTs (n=86) are
consistent with the findings from the MedPAC studies on MRIs and CTs.
However, the data from the RBMA (17 members submitted a total of 46
center surveys) indicates a lower utilization rate for CT and MRI.
As we have described in section II.A.2.b. of this final rule with
comment, the PPIS is the best available data source currently available
on PEs. Given the corroboration of the MedPAC analysis by the PPIS
data, we are confident that we are using the best data currently
available on the utilization of MRIs and CTs (90 percent), consistent
with the BBA requirement that we use actual data on equipment
utilization.
We are open to receiving more comprehensive data than the responses
of 16 RBMA members on this issue from the RBMA or other members of the
public. We will evaluate any data submitted for consideration in future
rulemaking.
We continue to agree with the MedPAC analysis and comment
indicating that decreasing the PE payments for expensive diagnostic
imaging services should not affect access to care in rural areas.
We also agree with commenters that it would be appropriate to
transition the new PE RVUs developed using the higher 90 percent
utilization rate for MRIs and CTs. As discussed elsewhere in this final
rule, we are providing for a 4-year transition (25/75, 50/50, 75/25,
100/0) to the new PE RVUs.
As indicated above, we are not finalizing our proposal to increase
the utilization rate assumption for expensive equipment other than MRIs
and CTs, including therapeutic equipment. We are finalizing our
proposal to increase the utilization rate to 90 percent for expensive
diagnostic equipment priced at more than $1 million.
d. Miscellaneous PE Issues
As we have discussed in the past rulemaking (see the CY 2007 and CY
2008 PFS final rules with comment period (71 FR 69647 and 72 FR 66236,
respectively), we continue to have concerns about the issue of PE RVUs
for services which are utilized 24 hours a day/7 days a week, such as
certain monitoring systems. For example, the PE equipment methodology
was not developed with this type of 24/7 equipment in mind. As stated
in the CY 2010 PFS proposed rule (74 FR 33532), we are continuing to
analyze the issue of PEs for services, which are utilized 24 hours a
day/7 days a week to identify any modifications to our methodology that
would address the specific ``constant use'' issues associated with
these services. Services that are currently contractor priced in CY
2009 would remain contractor priced in CY 2010. We also indicated that
any proposed changes will be communicated through future rulemaking.
Comments: We received three comments regarding the proposal to
continue to contractor price these services. All three commenters
supported the establishment of a national price for cardiac outpatient
telemetry. The commenters also indicated that they believe they were
the only ones that should be billing these codes.
Response: We will finalize our proposal to continue to contractor
price these services in 2010 so that we may conduct further analysis.
Any proposed changes will be communicated through future rulemaking.
As discussed in the proposed rule, (74 FR 33532) we received
comments regarding the PE direct cost inputs (for example, supply costs
and the useful life of the renewable sources) related to the high dose
radiation therapy (HDRT) and placement CPT codes (CPT codes 77785,
Remote afterloading high dose rate radionuclide brachytherapy; 1
channel, 77786, Remote afterloading high dose rate radionuclide
brachytherapy; 2-12 channels, 77787, Remote afterloading high dose rate
radionuclide brachytherapy; over 12 channels). Based on our review of
these codes and comments received, we requested that the AMA RUC
consider these CPT codes for additional review.
Comment: The AMA RUC reviewed these CPT codes based on our request
and recommended revisions to the clinical labor staff type, supplies,
and equipment. The AMA RUC also recommended further discussion between
the specialty and CMS regarding a resolution regarding the useful life
of Iridium-192 source. The AMA RUC and other commenters stated that the
useful life of the Iridium-192 source is 70 to 90 days. However, many
commenters stated that physician offices enter into 1 year contracts
for its replacement.
Several commenters supported the AMA RUC's recommended changes to
the practice expense inputs for these codes. The commenters agreed that
certain direct PE inputs were previously omitted.
Response: We accept the AMA RUC's recommendations regarding the
direct PE inputs for these CPT codes. Based on the comments received
and further analysis, we are changing the useful life of the Iridium-
192 source from 5 years to 1 year and it will be considered as
equipment. We are also revising the direct PE inputs for clinical labor
staff type, supplies, and equipment.
e. AMA RUC Recommendations for Direct PE Inputs
The AMA RUC provided recommendations for PE inputs for the codes
listed in Table 3 (74 FR 33532).

Table 3--Codes With AMA RUC PE Recommendations
------------------------------------------------------------------------
CPT \1\ code Description
------------------------------------------------------------------------
37183.................................. Remove hepatic shunt (tips).
47382.................................. Percut ablate liver rf.
50200.................................. Biopsy of kidney.
55873.................................. Cryoablate prostate.
93025.................................. Microvolt t-wave assess.
------------------------------------------------------------------------
\1\ CPT codes and descriptions are Copyright 2009 American Medical
Association.

In the proposed rule, we stated that we were in agreement with the
AMA RUC recommendations for the direct PE inputs for the codes listed
in Table 3 and proposed to adopt these for CY 2010.
Comment: Several commenters stated that it did not appear that we
had adopted the AMA RUC recommendations for these codes. Commenters
requested that we review their direct PE inputs to determine if we had
adopted the RUC's recommendations.
Response: We have reviewed the direct PE inputs for these codes and
it appears that some were omitted in error. We have now updated the PE
inputs for these codes consistent with the RUC recommendation.
f. Practice Expense for Intranasal Vaccine Administration Codes (CPT
Codes 90467, 90468, 90473, and 90474)
Comment: We received a comment from a manufacturer that the payment
for the intranasal vaccine administration codes (represented by CPT
codes 90467, 90468, 90473, and 90474) is approximately half the rate of
the injected vaccine administration codes (represented by CPT codes
90465, 90466, 90471, and 90472). The commenter stated that the apparent
source of the difference is the clinical staff time inputs of the PE
component of the RVUs for these codes. The commenter noted that these
codes are used to administer the intranasal form

[[Page 61756]]

of the influenza vaccine to healthy individuals between 2 to 49 years
of age.
Response: We responded to a similar comment in the CY 2008 PFS
final rule with comment period (72 FR 66242). At that time, we stated
that a manufacturer had 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. The commenter stated that when the
codes were re-evaluated 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 AMA RUC in support of
equalizing payment for the codes. In our response we stated that we
appreciated 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 related to the direct PE
inputs, we encouraged the commenters to work with the specialty
organizations to determine if it was appropriate to bring these codes
forward for further AMA RUC review.
The AMA RUC reviewed the immunization administration services (CPT
codes 90465 through 90474) in February 2008. It recommended similar PE
inputs for the intramuscular and intranasal immunization administration
codes. In the CY 2009 PFS final rule with comment period (73 FR 38512),
we stated that we accepted all of the AMA RUC recommendations, except
for inclusion of the clinical staff time related to quality activities
for the codes. In the CY 2009 PFS final rule with comment period (73 FR
69736), we stated that we had reexamined the issue and that there was
evidence to support the inclusion of QA time in this case. We revised
the PE database to reflect QA time for these codes.

B. Geographic Practice Cost Indices (GPCIs): Locality Discussion

1. Update--Expiration of 1.0 Work GPCI Floor
Section 1848(e)(1)(A) of the Act requires us to develop separate
Geographic Practice Cost Indices (GPCIs) to measure resource cost
differences among localities compared to the national average for each
of the three fee schedule components (that is, work, PE and
malpractice). While requiring that the PE and malpractice GPCIs reflect
the full relative cost differences, section 1848(e)(1)(A)(iii) of the
Act requires that the physician work GPCIs reflect only one-quarter of
the relative cost differences compared to the national average.
Section 1848(e)(1)(C) of the Act requires us to review and, if
necessary, adjust the GPCIs at least every 3 years. This section 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. As discussed in the CY 2009
PFS final rule with comment period (73 FR 69740), the CY 2009
adjustment to the GPCIs reflected the fully implemented fifth
comprehensive GPCI update. We noted that a 1.0 work GPCI floor was
enacted and implemented for CY 2006, and was set to expire on June 30,
2008. We also noted that section 134 of the MIPPA extended the 1.0 work
GPCI floor from July 1, 2008, through December 31, 2009. Additionally,
section 1848(e)(1)(G) of the Act, as amended by section 134(b) of the
MIPPA, set a permanent 1.5 work GPCI floor in Alaska for services
furnished beginning January 1, 2009. Therefore, as required by the
MIPPA, beginning on January 1, 2010, the 1.0 work GPCI floor will be
removed. However, the 1.5 work GPCI floor for Alaska will remain in
place. See Addenda D and E of this final rule for the GPCIs and
summarized geographic adjustment factors (GAFs), respectively.
Comment: A few commenters urged us to make the 1.0 work GPCI floor
permanent.
Response: With regard to the 1.0 work GPCI floor, we do not have
the authority to extend this provision beyond December 31, 2009. As
explained in the CY 2010 PFS proposed rule (74 FR 33533), section 134
of the MIPPA only extended the 1.0 work GPCI floor from July 1, 2008,
through December 31, 2009.
2. Payment Localities
a. Background
As stated above in this section, section 1848(e)(1)(A) of the Act
requires us to develop separate GPCIs to measure resource cost
differences among localities compared to the national average for each
of the three fee schedule components (this is, work, PE, and
malpractice). Payments under the PFS are based on the relative
resources involved in furnishing physicians' services, and are adjusted
for differences in relative resource costs among payment localities
using the GPCIs. As a result, PFS payments vary between localities.
The current PFS locality structure was developed and implemented in
1997. There are currently 89 localities including 37 higher-cost areas;
16 Rest of State areas (comprising the remaining counties not located
in a higher-cost area within a State); 34 Statewide areas; and Puerto
Rico and the Virgin Islands which are designated as ``territory-wide''
localities. The development of the current locality structure is
described in detail in the CY 1997 PFS proposed rule (61 FR 34615) and
the subsequent final rule (61 FR 59494).
As we have frequently noted, any changes to the locality
configuration must be made in a budget neutral manner within a State
and can lead to significant redistributions in payments. For many
years, we have not considered making changes to localities without the
support of a State medical association in order to demonstrate
consensus for the change among the professionals whose payments would
be affected (with some increasing and some decreasing). However, we
have recognized that, over time, changes in demographics or local
economic conditions may lead us to conduct a more comprehensive
examination of existing payment localities.
Payment Locality Approaches Discussed in the CY 2008 PFS Proposed Rule
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.
In the CY 2008 PFS proposed and final rules with comment period, we
described three potential options for changing the payment localities
in California (72 FR 38139 and 72 FR 66245, respectively).
After reviewing the comments on these options, we decided not to
proceed with implementing any of them at that time. We explained that
there was no consensus among the California medical community as to
which, if any, of the options would be most acceptable. We also
received suggestions from the Medicare Payment Advisory Commission
(MedPAC) for developing changes in payment localities for the entire
country and other States expressed interest in having their payment
localities reconfigured as well. In addition, other commenters wanted
us to consider a national reconfiguration of localities rather than
just making changes one State at a time. Because of the divergent views

[[Page 61757]]

expressed in comments, we explained in the CY 2008 PFS final rule with
comment period that we intended to conduct a thorough analysis of
potential approaches to reconfiguring localities and would address this
issue again in future rulemaking.
Interim Study of Alternative Payment Localities Under the PFS
As a follow-up to the CY 2008 PFS final rule with comment period,
we contracted with Acumen, LLC (Acumen), to conduct a preliminary study
of several options for revising the payment localities on a nationwide
basis. The contractor's interim report was posted on the CMS Web site
on August 21, 2008, and we requested comments from the public. The
report entitled, ``Review of Alternative GPCI Payment Locality
Structures,'' is still accessible from the CMS PFS Web page under the
heading ``Interim Study of Alternative Payment Localities under the
PFS.'' The report may also be accessed directly from the following
link: http://www.cms.hhs.gov/PhysicianFeeSched/10_Interim_Study.asp#TopOfPage. We accepted comments on the interim report through
November 3, 2008. The alternative locality configurations discussed in
the report are described briefly below in this section.
Option 1: CMS Core Based Statistical Area (CBSA) Payment Locality
Configuration
This option uses the Office of Management and Budget (OMB's)
Metropolitan Statistical Area (MSA) designations for the payment
locality configuration. MSAs would be considered as urban CBSAs.
Micropolitan Areas (as defined by OMB) and rural areas would be
considered as non-urban (rest of State) CBSAs. This approach would be
consistent with the inpatient hospital prospective payment system
(IPPS) pre-reclassification CBSA assignments and with the geographic
payment adjustments used in other Medicare payment systems. This option
would increase the number of localities from 89 to 439.
Option 2: Separate High Cost Counties From Existing Localities
(Separate Counties)
Under this approach, higher cost counties are removed from their
existing locality structure and they would each be placed into their
own locality. This option would increase the number of localities from
89 to 214 using a 5 percent GAF differential to separate high cost
counties.
Option 3: Separate MSAs From Statewide Localities (Separate MSAs)
This option begins with Statewide localities and creates separate
localities for higher cost MSAs (rather than removing higher cost
counties from their existing locality as described in option 2). This
option would increase the number of localities from 89 to 130 using a 5
percent GAF differential to separate high cost MSAs.
Option 4: Group Counties Within a State Into Locality Tiers Based on
Costs (Statewide Tiers)
This option creates tiers of counties (within each State) that may
or may not be contiguous but share similar practice costs. This option
would increase the number of localities from 89 to 140 using a 5
percent GAF differential to group similar counties into Statewide
tiers.
Additionally, as discussed in the interim locality study report,
our contractor, Acumen, applied a ``smoothing'' adjustment to the
current PFS locality structure, as well as to each of the alternative
locality configurations (except option 4: Statewide Tiers). The
``smoothing'' adjustment was applied to mitigate large payment
differences (or payment ``cliffs'') between adjacent counties. Since
large payment differences between adjacent counties could influence a
physician's decision on a practice location (and possibly impact access
to care), the ``smoothing'' adjustment was applied to ensure that GAF
differences between adjacent counties do not exceed 10 percent. (For
more information on the ``smoothing'' adjustment see the interim
locality study report on the PFS Web page via the link provided above).
b. Summary of Public Comments on Interim Locality Study Report
In the CY 2009 PFS proposed rule (73 FR 38514), we encouraged
interested parties to submit comments on the options presented both in
the proposed rule and in the interim report posted on our Web site. We
also requested comments and suggestions on other potential alternative
locality configurations (in addition to the options described in the
report). Additionally, we requested comments on the administrative and
operational issues associated with the various options under
consideration. We also emphasized that we would not be proposing any
changes to the current PFS locality structure for CY 2009 and that we
would provide extensive opportunities for public comment before
proposing any change.
In the CY 2010 PFS proposed rule (74 FR 33533), we noted that
approximately 200 industry comments were submitted on the alternative
locality options discussed in the CY 2009 PFS proposed rule and on the
interim locality study report. Comments were submitted from various
specialty groups, medical societies, state medical associations,
individual practitioners, and beneficiaries. Commenters generally
commended us for acknowledging the need to reconfigure PFS payment
localities and expressed support for our study of alternative locality
configurations. Some urged us to expedite any changes while other
commenters requested that we take a cautious approach.
Several commenters who supported the adoption of an MSA-based PFS
locality structure suggested that option 3 could be used as a
transition to the CMS CBSA locality configuration (option 1). Many
commenters from the State of California supported option 3 (Separate
High Cost MSAs) because the commenters believe it would improve payment
accuracy (over the current locality configuration) and mitigate
possible payment reductions to rural areas as compared to option 1 (CMS
CBSA) and option 4 (Statewide Tiers. Because of the payment reductions
to rural areas, most commenters did not support option 4 (Statewide
Tiers).
Many commenters also acknowledged the significant redistribution of
payments that would occur under each option and requested that we
minimize the payment discrepancy between urban and rural areas to
ensure continued access to services. One medical association stated
that ``budget neutral redistributions would only exacerbate an already
flawed and under-funded Medicare PFS'' and suggested that States with a
Statewide locality be given the option of remaining a Statewide
locality. The commenter also requested that we continue our policy of
allowing any State the option of converting to a Statewide locality.
For a more detailed discussion of the comments submitted on the
interim locality study, see the CY 2010 PFS proposed rule (74 FR
33534).
We did not make a specific proposal for changing the PFS locality
structure in the CY 2010 PFS proposed rule. As noted by the commenters
and reflected in the report, significant payment redistribution would
occur if a nationwide change in the PFS locality configuration were
undertaken. All four of the potential alternative payment locality
configurations reviewed in the report would increase the number of
localities and separate higher cost,

[[Page 61758]]

typically urban areas from lower cost, typically rural ``Rest of
State'' areas. In general, payments to urban areas would increase while
rural areas would see a decrease in payment under each of the options
studied because they would no longer be grouped with higher cost
``urbanized'' areas. We intend to continue our review of the
suggestions made by the commenters and consider the impact of each of
the potential alternative locality configurations.
Comment: We received some comments on the locality discussion from
various specialty groups and medical societies. A few commenters
expressed support for our decision to defer proposing changes to the
PFS locality reconfiguration and recommended that we continue pursuing
a cautious approach. One State Medical Association stated that it is
hopeful that the Congress will provide a method to update all payment
localities in a manner that prevents cuts to payments in lower-cost
counties. However, in the event the Congress does not provide
additional funding to hold lower cost counties harmless, the commenter
supports a PFS locality configuration based on MSAs. Another commenter
noted that the redistribution of payments could have a negative impact
on access to care. The commenter stated that geographic location should
not be a detriment as to whether a physician can provide care to a
Medicare beneficiary. One specialty group stated that changes in
localities should only be made to improve the relative accuracy of
Medicare payment. In the event we make a proposal to change the PFS
locality structure, the commenter urged us to provide sufficient data
for the public to ascertain the impact on specific geographic areas.
Response: We agree that a nationwide locality reconfiguration
requires a cautious approach and will carefully consider the
commenter's suggestion regarding an MSA-based locality configuration.
We would also like to thank the public again for the many thoughtful
comments on the interim locality study report entitled, ``Review of
Alternative GPCI Payment Locality Structures''. A final report will be
posted to the CMS Web site after further review of the studied
alternative locality approaches. As explained in the CY 2010 PFS
proposed rule, we are not proposing changes in the PFS locality
structure at this time. In the event we decide to make a specific
proposal for changing the locality configuration, we would provide data
on the impact of the changes. We would also provide extensive
opportunities for public input (for example, Town Hall meetings or Open
Door Forums, as well as opportunities for public comments afforded by
the rulemaking process).

C. Malpractice Relative Value Units (RVUs)

1. Background
Section 1848(c) of the Act requires that each service paid under
the PFS be comprised of three components: Work, PE, and malpractice.
From 1992 to 1999, malpractice RVUs were charge-based, using weighted
specialty-specific malpractice expense percentages and 1991 average
allowed charges. Malpractice RVUs for new codes after 1991 were
extrapolated from similar existing codes or as a percentage of the
corresponding work RVU. Section 4505(f) of the BBA required us to
implement resource-based malpractice RVUs for services furnished
beginning in 2000. Initial implementation of resource-based malpractice
RVUs occurred in 2000. The statute also requires that we review, and if
necessary adjust, RVUs no less often than every 5 years. The first
review and update of resource based malpractice RVUs was addressed in
the CY 2005 PFS final rule (69 FR 66263). Minor modifications to the
methodology were addressed in the CY 2006 PFS final rule (70 FR 70153).
In the CY 2010 PFS proposed rule, we proposed to implement the second
review and update of malpractice RVUs.
2. Methodology for the Revision of Resource-Based Malpractice RVUs
The proposed malpractice RVUs were developed by Acumen, LLC
(Acumen) under contract to us (74 FR 33537).
The methodology used in calculating the proposed second review and
update of resource-based malpractice RVUs largely parallels the process
used in the CY 2005 update. The calculation requires information on
malpractice premiums, linked to the physician work conducted by
different specialties that furnish Medicare services. Because
malpractice costs vary by State and specialty, the malpractice premium
information must be weighted geographically and across specialties.
Accordingly, the malpractice expense RVUs that we proposed are based
upon three data sources:
Actual CY 2006 and CY 2007 malpractice premium data.
CY 2008 Medicare payment data on allowed services and
charges.
CY 2008 Geographic adjustment data for malpractice
premiums.
Similar to the previous update of the resource-based malpractice
expense RVUs, we proposed to revise the RVUs using specialty-specific
malpractice premium data because they represent the actual malpractice
expense to the physician. In addition, malpractice premium data are
widely available through State Departments of Insurance. We proposed to
use actual CY 2006 and CY 2007 malpractice premium data because they
are the most current data available (CY 2008 malpractice premium data
were not consistently available during the data collection process).
Accounting for market share, three fourths of all included rate filings
were implemented in CY 2006 and CY 2007. The remaining rate filings
were implemented in CY 2003 through CY 2005 but still effective in CY
2006 and CY 2007. Carriers submit rate filings to their State
Departments of Insurance listing the premiums and other features of
their coverage. The rate filings include an effective date, which is
the date the premiums go into effect. Some States require premium
changes to be approved before their effective date; others just require
the rate filings to be submitted. We attempted to capture at least 2
companies and at least 50 percent of the market share, starting with
the largest carriers in a State.
The primary determinants of malpractice liability costs continue to
be physician specialty, level of surgical involvement, and the
physician's malpractice history. We collected malpractice premium data
from 49 States and the District of Columbia for all physician
specialties represented by major insurance providers. Rate filings were
not available through Departments of Insurance in Mississippi or Puerto
Rico. Premiums were for $1 million/$3 million, mature, claims-made
policies (policies covering claims made, rather than services furnished
during the policy term). A $1 million/$3 million liability limit policy
means that the most that would be paid on any claim is $1 million and
that the most that the policy would pay for several claims over the
timeframe of the policy is $3 million. We collected data from
commercial and physician-owned insurers and from joint underwriting
associations (JUAs). A JUA is a State government-administered risk
pooling insurance arrangement in areas where commercial insurers have
left the market. Adjustments were made to reflect mandatory surcharges
for patient compensation funds (PCFs) (funds to pay for any claim
beyond the statutory amount, thereby limiting an individual physician's
liability in cases of a large suit) in States where PCF participation
is mandatory. We sought to collect premium data representing at least
50

[[Page 61759]]

percent of physician malpractice premiums paid in each State as
identified by State Departments of Insurance and by the National
Association of Insurance Commissioners (NAIC).
Rather than select the top 20 physician specialties as we did when
the malpractice RVU were originally established and updated, we
included premium information for all physician and surgeon specialties,
and risk classifications available in the collected rate filings. Most
insurance companies provided crosswalks from insurance service office
(ISO) codes to named specialties; we matched these crosswalks to CMS
specialty codes. We also preserved information obtained regarding
surgery classes, which are categorizations that affect premium rates.
For example, many insurance companies grouped general practice
physicians into nonsurgical, minor-surgical and major-surgical classes,
each with different malpractice premiums. Some companies provided
additional surgical subclasses; for example, distinguishing general
practice physicians that conducted obstetric procedures, which further
impacted malpractice rates. We standardized this information to CMS
specialty codes.
We proposed a resource based methodology for developing malpractice
RVUs for technical component (TC) services (for example diagnostic
tests). Currently, the MP RVUs for TC services and the TC portion of
global services are based on historical allowed charges and have not
been made resource based due to a lack of available malpractice premium
data for nonphysician suppliers. Over the last few years, we have
requested malpractice premium data for nonphysician suppliers, but had
not received any data prior to last year. In response to our request in
last year's rulemaking cycle, one commenter did provide information on
one of the largest insurance companies that provides liability
insurance for medical physicists employed by imaging facilities. After
our contractor, Acumen, verified the medical physicist premium
information submitted in response to last year's proposed rule, we
proposed to use the medical physicist premium data as a proxy for the
malpractice premiums paid by all entities providing TC services;
primarily independent diagnostic testing facilities (IDTFs).
Other than the change in methodology for developing malpractice
RVUs for TC services, our proposed methodology for updating malpractice
RVUs conceptually followed the same approach, with some minor
refinements, used to originally develop the resource based malpractice
RVUs in CY 2000 and used in the CY 2005 update. These refinements
included an expansion in the malpractice premium data collection to
include additional specialties, a distinction between major and minor
surgical risk factors, and a proposal to use the malpractice risk
factor of the specialty that performs a given service the most
(dominant specialty) for services with less than 100 occurrences. We
solicited comments on our proposed methodology for updating the
malpractice RVUs and posted the Acumen report, ``Interim Report on
Malpractice RVUs for the CY 2010 Medicare Physician Fee Schedule
Proposed Rule'' on the CMS Web site. The interim report on Malpractice
RVUs for the CY 2010 PFS proposed rule and Malpractice premium amounts
and risk factors by specialty, which was produced by Acumen, LLC under
contract to CMS, is accessible from the CMS PFS Web page under the
heading ``Interim Report on Malpractice RVUs for the CY 2010 Medicare
PFS Proposed rule.'' The report and malpractice premiums may also be
accessed directly on the CMS Web site at http://www.cms.hhs.gov/PhysicianFeeSched/05_Malpractice_Report.asp#TopOfPage.
A more detailed explanation of our proposed malpractice RVU update
can be found in the CY 2010 PFS proposed rule (74 FR 33537).
We received over 250 industry comments on the CY 2010 proposed
malpractice RVU update.
Comment: Many commenters commended us for employing an expanded
data collection that included premium information for all physician
specialties, rather than just the top 20 Medicare physician
specialties. Commenters also applauded our use of the most current PLI
premium data available from State filings.
Response: We agree with the commenters that the use of the most
current PLI data and the expanded data collection is appropriate.
Comment: Some commenters supported the use of medical physicist
data as a proxy for developing malpractice RVUs for TC services. The
commenters expressed their belief that using medical physicist data
provide a better reflection of PLI premiums paid by entities furnishing
TC services than the current charge-based approach or cross-walking to
physician specialties. Many commenters did not support the proposed
change to resource-based MP RVUs for TC services because premium
amounts paid by medical physicists were used as a proxy for all
entities furnishing TC services. The commenters objected to our
proposed use of medical physicist data, stating that the use of this
data will result in inappropriately low MP RVUs for the affected
services. The commenters indicated that we should use premium data from
the suppliers of these TC services, such as IDTFs and audiologists.
Some commenters requested that we work with the Radiology Business
Management Association (RBMA) to obtain PLI premium information for
IDTFs. Other suppliers of TC services, including suppliers of imaging
services and remote cardiac monitoring services, also submitted
liability policy information. Several commenters requested that we use
the current charge-based malpractice RVUs until data from TC suppliers
can be collected.
Response: We appreciate all the comments received on this issue.
While we agree with the commenters who stated that the medical
physicist data provide a better reflection of PLI premiums paid by
entities furnishing TC services than the current charge-based approach
or crosswalking to physician specialties, we also agree with the
commenters who indicated that we should use premium data from the
suppliers of these services, if the data are available and meet the
same standards as the other premium data collected for use in the
development of the malpractice RVUs. As noted earlier, we have
repeatedly requested PLI data sources for suppliers of TC services. Our
proposal for TC services was based on the first verifiable data source
provided to us. In the comment period, alternative PLI sources were
recommended for use with the TC services. In some circumstances, the
information submitted by the commenters included insurance coverage
beyond the scope of the malpractice RVUs (for example, property
liability, errors and omissions liability) and/or coverage limits
beyond the $1 million/$3 million coverage malpractice premium
collection parameters used for professional services. However, these
same commenters also submitted the names of several insurance companies
who provide malpractice insurance for IDTFs. We contacted these
insurance companies in an attempt to collect premium data for the
suppliers of TC services. We were able to verify the premium
information for IDTFs consistent with the information collected for
physician specialties. Therefore, we are using this verified premium
data in the calculation of the malpractice RVUs for TC services.
Comment: Many commenters stated that all services have some level
of malpractice risk and that it was

[[Page 61760]]

inappropriate for CMS to allow rounding to result in zero malpractice
RVUs for some services.
Response: After considering the comments on this issue, we agree
that it would be inappropriate for services to receive zero payment for
malpractice due to rounding. These services will be assigned 0.01
malpractice RVUs for CY 2010.
Comment: One commenter did not support the use of work RVUs to
account for differences in risk-of-service for drug administration
services and that these services were being inappropriately penalized
in the malpractice risk allocation.
Response: When developing the current resource-based PE RVU
methodology, we received similar comments since the work RVUs are also
a component of the indirect PE allocation. In response to those
comments, we modified the resource-based PE methodology to allow the
allocation to be done using the greater of the clinical labor involved
in the service or the work RVUs. In light of similar comments on this
issue in the malpractice allocation, we will make a similar
modification. Specifically, we will use the greater of the clinical
labor involved in the service or the work RVUs in the malpractice
allocation.
Comment: The AMA RUC and other commenters requested that we use the
generally lower malpractice survey data from the Physician Practice
Information Survey (PPIS) for NPPs instead of crosswalking NPPs to the
lowest physician specialty (allergy/immunology). One commenter also
noted that the average premiums collected for diagnostic radiology were
lower than the average reported premium from the AMA PPIS data.
Response: The resource-based malpractice RVUs are based on
verifiable PLI premium data. We do not believe it would be appropriate
to base the malpractice RVUs for nonphysician specialties or selected
specialties on survey data and use premium data for all other
specialties. Therefore, we do not agree with the commenters who
suggested the use of survey data for NPPs or selected specialties.
Comment: The AMA RUC and two other commenters requested that we
crosswalk gynecologic oncology to general surgery and surgical oncology
(instead of crosswalking it to medical oncology) because gynecologic
oncologists are predominantly cancer surgeons.
Response: We agree with the commenters and will crosswalk
gynecologic oncology to general surgery premium data.
Comment: Some commenters raised questions about our proposal to
crosswalk maxillofacial surgery and oral surgery to allergy/immunology.
The commenters suggested that we use PLI data collected from the
American Association of Maxillofacial Surgery (AAOMS) or the PPIS data
instead of crosswalking to the lowest physician specialty.
Response: As noted earlier, the resource-based malpractice RVUs are
based on verifiable premium data. We do not agree with the commenters
who suggested the use of unverified maxillofacial surgery and oral
surgery PLI information. However, we do agree that it would be more
appropriate to use a surgical specialty's premium data rather than
allergy/immunology premium data for surgical specialties. Therefore, we
will crosswalk these specialties to the similar specialty of plastic
surgery.
Comment: Some commenters did not support using the global surgery
indicator for assigning the major or minor risk factor to surgical
procedures. The commenters stated that using this methodology for
determining the surgical class will not adequately address all the
instances in which a surgical procedure should be classified as major.
The commenters requested that we work with PLI insurance companies and
the AMA RUC to determine a more comprehensive definition of major and
minor surgical classifications. One commenter requested that we assign
the surgical risk factor to injection procedures performed during
cardiac catheterization as described by CPT codes 93501 through 93572.
Response: For the original implementation of resource-based MP RVUs
(CY 2000), we assigned one of two risk factors to each service based on
code range: surgery and nonsurgery (the surgery risk factor did not
distinguish between major and minor). This methodology of assigning
risk factors to specific services was also used in the first Five-Year
Review. For the second malpractice RVU update, we proposed to assign
each service code to one of the following three risk factors:
Nonsurgical; minor surgical; and major surgical (74 FR 33539). Risk
factor classes for each service were assigned based on procedure code
ranges and whether or not the service had a 90-day global period. The
90-day global period was used to assign surgical codes to major
surgery.
After consideration of the comments, we will not finalize our
proposal but will continue to use our current approach for assigning
risk factors to individual services while we study this issue further.
We will consider the request to assign the surgical risk factor to
injection procedures as part of our further study and would propose any
changes through future rulemaking.
As is done under the current methodology, we will continue to
assign each service to either a nonsurgical or surgical risk factor
based on CPT code ranges: Surgery (CPT code range 10000 through 69999;
92980 through 92998; 93501 through 93536; 92973 through 92974; 93501
through 93533; 93580 through 93581; 93600 through 93613; 93650 through
93652; 92975; 92980 through 92998; 93617 through 93641); and nonsurgery
(all other CPT codes). Consistent with current practice, the surgery
risk factor would not distinguish between major and minor.
Comment: While commenters agreed with most of our proposed claims
based dominant specialty designations for codes with less than 100
allowed services, the commenters disagreed with our proposal for some
services. The commenters believe that the claims have been miscoded,
resulting in erroneous specialty designations.
Response: Service specific malpractice RVUs are determined based on
the weighted average risk factor(s) of the specialties that furnish the
service. For rarely-billed Medicare services (that is, when allowed
services are less than 100), we proposed to use the risk factor of the
dominant specialty as reflected in our claims data. In the past, we had
used all the specialties performing these low volume services as
reflected in our claims data. Approximately 2,000 services met the
criteria for ``low volume.'' The dominant specialty for each `low
volume' service was determined from CY 2008 Medicare claims data.
By using the dominant specialty from our claims data to assign the
specialty for these low volume services, we attempted to strike a
balance between our preference for the empirical, objective use of all
of our claims data in the development of the malpractice RVUs and the
desire of commenters to override our claims data for these low volume
services using less objective criteria. After careful consideration of
the comments, we continue to believe that a more balanced approach
between the complete reliance on all of the specialties in our claims
data and the subjective review of each low volume service is the most
appropriate way of approaching the development of malpractice RVUs for
these low volume services. We disagree with the commenters that we
should override the dominant specialty from the claims data

[[Page 61761]]

with the recommended specialty. Therefore, we will finalize our
proposal to use Medicare claims data to assign a dominant specialty to
low volume services.

D. Medicare Telehealth Services

1. Requests for Adding Services to the List of Medicare Telehealth
Services
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 requires us to establish a process for adding
services to or deleting services from the list of telehealth services
on an annual basis.
In the December 31, 2002 Federal Register (67 FR 79988), we
established a process for adding services to or deleting services from
the list of Medicare telehealth services. This process provides the
public with 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 professional
consultations, office visits, and office psychiatry services. In
reviewing these requests, we look for similarities between the
requested and existing telehealth services for the roles of, and
interactions among, the beneficiary, the physician (or other
practitioner) at the distant site and, if necessary, the telepresenter.
We also look for similarities in the telecommunications system used to
deliver the proposed service, for example, the use of interactive audio
and video equipment.
Category #2: Services that are not similar to the current
list of telehealth services. Our review of these requests includes an
assessment of whether the use of a telecommunications system to deliver
the service produces similar diagnostic findings or therapeutic
interventions as compared with the face-to-face ``hands on'' delivery
of the same service. Requestors should submit evidence showing that the
use of a telecommunications system does not affect the diagnosis or
treatment plan as compared to a face-to-face delivery of the requested
service.
Since establishing the process, we have added the following to the
list of Medicare telehealth services: psychiatric diagnostic interview
examination; ESRD services with two to three visits per month and four
or more visits per month (although we require at least one visit a
month to be furnished in-person ``hands on'', by a physician, clinical
nurse specialist (CNS), nurse practitioner (NP), or physician assistant
(PA) to examine the vascular access site); individual medical nutrition
therapy; neurobehavioral status exam; and follow-up inpatient
telehealth consultations.
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 2009 are considered
for the CY 2011 proposed rule. Each request for adding a service to the
list of Medicare telehealth services must include any supporting
documentation you wish us to consider as we review the request. Because
we use the annual PFS rulemaking process as a vehicle for making
changes to the list of Medicare telehealth services, requestors should
be advised that any information submitted is subject to disclosure for
this purpose. For more information on submitting a request for an
addition to the list of Medicare telehealth services, including where
to mail these requests, visit our Web site at http://www.cms.hhs.gov/telehealth/.
2. Submitted Requests for Addition to the List of Telehealth Services
We received requests in CY 2008 to add the following services as
Medicare telehealth services effective for CY 2010: (1) Health and
behavior assessment and intervention (HBAI) procedures; and (2) nursing
facility services. In addition, we received a number of requests to add
services that we did not approve as Medicare telehealth services in
previous PFS rules. These requested services include critical care
services; initial and subsequent hospital care; group medical nutrition
therapy; diabetes self-management training; speech and language
pathology services; and physical and occupational therapy services.
In the CY 2010 PFS proposed rule (74 FR 33543), we responded to
these requests. We proposed to add individual HBAI services to the list
of Medicare telehealth services, and we proposed to revise our
regulations at Sec. 410.78 and Sec. 414.65 accordingly. We proposed
to revise Sec. 410.78 to restrict physicians and practitioners from
using telehealth to furnish the physician visits required under Sec.
483.40(c). We proposed to revise Sec. 410.78 to specify that the G-
codes for follow-up inpatient telehealth consultations (as described by
HPCPCS codes G0406 through G0408) include follow-up telehealth
consultations furnished to beneficiaries in hospitals and SNFs. We did
not propose to add group HBAI, family-with-patient HBAI, nursing
facility services, critical care services, or any of the other
requested services to the list of Medicare telehealth services. The
following is a summary of the discussion from the proposed rule, a
summary of comments we received, and our responses.
a. Health and Behavior Assessment and Intervention (HBAI)
The American Psychological Association (APA) submitted a request to
add HBAI services (as described by HCPCS codes 96150 through 96154) to
the list of approved telehealth services. The APA asked us to evaluate
and approve HBAI services as a Category 1 service because they
are comparable to the psychotherapy services currently approved for
telehealth.
As discussed in the CY 2010 PFS proposed rule (74 FR 33543),
clinical psychologists furnish HBAI services to beneficiaries to help
them manage or improve their behavior in response to physical problems.
Elements of HBAI services typically include interviewing, observing,
and counseling beneficiaries to help them modify their behavior. These
elements are also common to the office psychiatry services currently
approved for telehealth. In the proposed rule, we stated that we
believe the interaction between a practitioner and a beneficiary
receiving individual HBAI services (as described by HCPCS codes 96150
through 96152) is similar to the assessment and counseling elements of
the individual office psychiatry services currently approved for
telehealth. Therefore, we proposed to revise Sec. 410.78 and Sec.
414.65 to include individual HBAI services as Medicare telehealth
services.
With regard to group HBAI (as described by HCPCS code 96153) or
family-with-patient HBAI (as described by HCPCS code 96154), we noted
that group services are not currently approved as Medicare telehealth
services. Group counseling services have a different interactive
dynamic between the physician or practitioner and his or her patients
as compared to individual services. Since the interactive dynamic for
group HBAI services is not similar to that for individual HBAI services
or any other approved telehealth services, we stated that we do not
believe that group HBAI or family-with-patient HBAI services should be
considered as Category 1 requests. To be considered as a
Category 1 request, a service must be similar to the current
list of Medicare telehealth services. (See 70 FR 45787 and 70157, and
73 FR 38516 and 69743). Instead,

[[Page 61762]]

we believe that group HBAI and family-with-patient HBAI must be
evaluated as Category 2 services. Accordingly, we need to
evaluate whether these are services for which telehealth can be an
adequate substitute for a face-to-face encounter. The requestor did not
submit evidence suggesting that the use of a telecommunications system
to deliver these services would produce similar diagnostic findings or
therapeutic interventions as compared to the face-to-face delivery of
these services. Therefore, we did not propose to add group HBAI (as
described by HCPCS code 96153) or family-with-patient HBAI (as
described by HCPCS code 96154) to the list of approved Medicare
telehealth services.
Comment: The APA stated that it was pleased that we proposed to add
individual HBAI to the list of approved telehealth services and that it
may wish to resume the discussion of adding other HBAI services in the
future. Other commenters were also pleased that we proposed to add
individual HBAI to the list of approved telehealth services. However,
they disagreed with our proposal not to add the other HBAI services to
the list of approved Medicare telehealth services. The commenters noted
that CMS has no evidence that it is not appropriate to furnish group
services via telehealth. In addition, the commenters believe that the
involvement of family members in patient counseling can often be
critical in developing an appropriate plan of care.
Response: Office psychiatry services currently approved for
telehealth are individual rather than group services. There are no
group services approved for telehealth. In order to add services for
Medicare telehealth that are not similar to the existing list of
Medicare telehealth services, we evaluate comparative studies to assess
whether the use of an interactive audio and video telecommunications
system is an adequate substitute for the in-person (face-to-face)
delivery of the requested service. Requestors did not submit sufficient
comparative analyses showing that the use of a telecommunications
system is an adequate substitute for group counseling services
furnished in person.
b. Nursing Facility Services
Section 149 of the MIPPA added SNFs as telehealth originating sites
effective for services furnished on or after January 1, 2009. We
received a request from the American Telemedicine Association (ATA) to
add subsequent nursing facility care; nursing facility discharge
services; and other nursing facility services to the list of approved
telehealth services. The Center for Telehealth and e-Health Law
submitted a request to add the same nursing facility services and
indicated its support of ATA's request. We also received a request from
the Marshfield Clinic to add the same services requested by the ATA,
plus the initial nursing facility care services.
The procedure codes included in these requests are used to report
evaluation and management (E/M) services furnished onsite to patients
in SNFs. The requestors drew analogies to the E/M services currently
approved for Medicare telehealth, and they provided evidence in support
of their belief that the use of telehealth could be a reasonable
surrogate for the face-to-face delivery of this type of care.
As discussed in the CY 2010 PFS proposed rule (74 FR 33543), the
long-term care regulations at Sec. 483.40 require that residents of
SNFs receive initial and periodic personal visits. These regulations
insure that at least a minimal degree of personal contact between a
physician or a qualified NPP and a resident is maintained, both at the
point of admission to the facility and periodically during the course
of the resident's stay. We believe that these Federally-mandated visits
should be conducted in-person, and not as Medicare telehealth services.
We proposed to revise Sec. 410.78 to restrict physicians and
practitioners from using telehealth to furnish the physician visits
required under Sec. 483.40(c).
We reviewed the use of telehealth for each of the subcategories of
nursing facility services included in these requests. We identified the
E/M services that fulfill Federal requirements for personal visits
under Sec. 483.40 and we did not propose to add any procedure codes
that are used exclusively to describe these Federally-mandated visits.
Initial Nursing Facility Care
The initial nursing facility care procedure codes (as described by
HCPCS codes 99304 through 99306) are used to report the initial E/M
visit in a SNF or NF that fulfills Federally-mandated requirements
under Sec. 483.40(c). We did not propose to add the initial nursing
facility care services (as described by HCPCS codes 99304 through
99306) to the list of approved Medicare telehealth services because
these procedure codes are used exclusively to describe E/M services
that fulfill Federal requirements for personal visits under Sec.
483.40.
Subsequent Nursing Facility Care
The subsequent nursing facility care procedure codes (as described
by HCPCS codes 99307 through 99310) are used to report either a
Federally-mandated periodic visit under Sec. 483.40(c), or any E/M
visit, prior to and after the initial physician visit, that is
reasonable and medically necessary to meet the medical needs of the
individual resident. In the past, we have not added hospital E/M visits
to the list of approved Medicare telehealth services because of our
concern regarding the use of telehealth for the ongoing E/M of a high-
acuity hospital inpatient. (See 69 FR 47511, 69 FR 66276, 72 FR 38144,
72 FR 66250, 73 FR 38517, and 73 FR 69745.) Many residents of SNFs also
require medically complex care, and we have similar concerns about
allowing physicians or NPPs to furnish E/M visits via telehealth to
residents of SNFs.
The complexity of care required by many residents of SNFs may be
significantly greater than the complexity of care generally associated
with patients receiving the office visits approved for telehealth.
Accordingly, we do not consider E/M visits furnished to residents of
SNFs similar to the office visits on the current list of Medicare
telehealth services. Therefore, we believe the use of subsequent
nursing facility care for medically necessary E/M visits that are in
addition to Federally-mandated periodic personal visits must be
evaluated as a Category 2 service.
We evaluated whether these are services for which telehealth can be
an adequate substitute for a face-to-face encounter. The requestors
submitted supporting documentation to demonstrate that the use of
telehealth could be a reasonable surrogate for the face-to-face
delivery of this type of care. However, we did not receive sufficient
comparative analysis or other compelling evidence to demonstrate that
furnishing E/M visits via telehealth to residents of SNFs is an
adequate substitute for the face-to-face encounter between the
practitioner and the resident, especially in cases where the resident
requires medically complex care. We were also concerned that one study
demonstrated that services provided via telehealth do not elicit
adequate participation in informed medical decision-making from
residents with low to moderate illness when compared to face-to-face
encounters. We determined that telehealth is not an adequate substitute
for the face-to-face delivery of E/M visits to residents of SNFs.
Therefore, we did not propose to

[[Page 61763]]

add subsequent nursing facility care services to the list of approved
Medicare telehealth services.
Nursing Facility Discharge Day Management
The nursing facility discharge day management codes (as described
by HCPCS codes 99315 and 99316) are used to report an E/M visit that
prepares a resident for discharge from a nursing facility. We note that
there is no Medicare Part B requirement to furnish and bill an E/M
visit in preparation for a resident's discharge from a SNF. However, if
a physician or qualified NPP bills a Nursing Facility Discharge
Services code, we believe that a face-to-face encounter will better
insure that the resident is prepared for discharge. We do not have
evidence that nursing facility discharge services furnished via
telehealth are equivalent to face-to-face provision of this service. We
did not propose to add the nursing facility discharge day management
services to the list of approved Medicare telehealth services.
Other Nursing Facility Service
In 2006, CPT added a procedure code for Other Nursing Facility
Service (CPT code 99318) to describe an annual nursing facility
assessment. An annual assessment is not one of the required visits
under the long-term care regulations at Sec. 483.40. For Medicare
purposes, this code can be used in lieu of a Subsequent Nursing
Facility Care code to report a Federally-mandated periodic personal
visit furnished under Sec. 483.40(c). An annual assessment visit
billed using CPT code 99318 does not represent a distinct benefit
service for Medicare Part B physician services, and it cannot be billed
in addition to the required number of Federally-mandated periodic
personal visits. Under Medicare Part B, we cover this procedure code if
the visit fully meets the CPT code 99318 requirements for an annual
nursing facility assessment. In order to cover and pay for this
service, we also require that this annual assessment falls on the 60-
day mandated visit cycle. We did not propose to add the other nursing
facility care services described by this code to the list of approved
Medicare telehealth services because this code is payable by Medicare
only if the visit is substituted for a Federally-mandated visit under
Sec. 483.40(c). We believe all of the Federally-mandated periodic
visits must be conducted in person.
Follow-up Inpatient Consultations
Prior to 2006, follow-up inpatient consultations (as described by
CPT codes 99261 through 99263) were approved telehealth services. In
2006, the CPT Editorial Panel of the American Medical Association (AMA)
deleted the codes for follow-up inpatient consultations. In the
hospital setting, the AMA advised practitioners to bill for services
that would previously have been billed as follow-up inpatient
consultations using the procedure codes for subsequent hospital care
(as described by CPT codes 99231 through 99233). In the nursing
facility setting, the AMA advised practitioners to bill for these
services using the procedure codes for subsequent nursing facility care
(as described by CPT codes 99307 through 99310).
In the CY 2009 PFS final rule with comment period (73 FR 69745), we
created follow-up inpatient telehealth consultation codes (as described
by HCPCS codes G0406 through G0408) to furnish care to hospital
inpatients, and we added these G-codes to the list of Medicare
telehealth services. These HCPCS codes are limited to the range of
services included in the scope of the previous CPT codes for follow-up
inpatient consultations, and the descriptions limit the use of such
services for telehealth.
In the CY 2010 PFS proposed rule (74 FR 33547), we stated that if
the former codes for follow-up consultations (as described by CPT codes
99261 through 99263) still existed, these procedure codes would also be
available to practitioners providing follow-up consultations via
telehealth to SNF patients. Although we did not receive a public
request to add follow-up inpatient consultations for SNF patients to
the list of approved Medicare telehealth services, we stated that we
also recognized a need to establish a method for practitioners to
provide these services. For CY 2010, we proposed to revise Sec. 410.78
to specify that the G-codes for follow-up inpatient telehealth
consultations (as described by HCPCS codes G0406 through G0408) include
follow-up inpatient telehealth consultations furnished to beneficiaries
in SNFs, as well as in hospitals. The HCPCS codes clearly designate
these services as follow-up consultations provided via telehealth, and
not as subsequent care used for E/M visits. Utilization of these codes
for patients in SNFs will facilitate payment for these services, as
well as enable us to monitor whether the codes are used appropriately.
(See the CMS Internet-Only Medicare Claims Processing Manual, Pub. 100-
04, Chapter 12, Section 190, for the definition of follow-up inpatient
telehealth consultations.)
The following is a summary of the comments we received regarding
our proposed decisions on Nursing Facility Services.
Comment: Commenters supported our proposal to restrict physicians
and practitioners from using telehealth to furnish the physician visits
required under Sec. 483.40(c). Commenters also supported our proposal
to expand the definition of Follow-Up Inpatient Telehealth
Consultations (as described by HCPCS codes G0406-G0408) to allow their
use for residents of SNFs. Commenters noted that this change would be a
positive step towards increasing access to care for Medicare
beneficiaries in rural areas.
Some commenters disagreed with our proposal not to add Nursing
Facility Services to the list of approved Medicare telehealth services.
Commenters acknowledged Congressional intent expressed in section 413
of the MMA that the use of telehealth should not be a substitute for
the Federally-mandated periodic personal visits required under Sec.
483.40(c). All commenters agreed with our proposal not to add any
procedure codes that are used exclusively to describe these Federally-
mandated visits. Commenters stated that they believed that the Congress
intended to allow the use of telehealth to furnish E/M medically
necessary visits onsite to residents of SNFs that are in addition to
Federally-mandated periodic personal visits. Some commenters also noted
that due to health professional shortages in rural areas, many SNFs
lack essential onsite services. Some commenters believe adding nursing
facility visits to the list of approved telehealth services will
improve the quality of care furnished to residents of SNFs. Commenters
also noted that not adding nursing facility visits to the list of
approved Medicare telehealth services will not prevent the use of
telehealth to furnish services to residents of SNFs, including those
residents requiring medically complex care. These same residents could
be transported to physicians' offices or hospitals where they could
receive similar E/M visits via telehealth.
Response: We did not receive sufficient comparative analysis or
other compelling evidence to demonstrate that furnishing E/M visits via
telehealth to residents of SNFs is an adequate substitute for the face-
to-face encounter between the practitioner and the resident, especially
in cases where the resident requires medically complex care. We are
further concerned that the use of telehealth may not elicit adequate
participation from residents of SNFs in

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making informed medical decisions with their clinicians when compared
to face-to-face encounters.
We agree with the commenters who noted that expanding the
definition of Follow-Up Inpatient Telehealth Consultations (G0406-
G0408) to allow their use for residents of SNFs will increase access to
care for Medicare beneficiaries in rural areas. We believe the
availability of inpatient consultations to furnish care via telehealth
to residents of SNFs is consistent with the addition of SNFs as
approved telehealth originating sites. Physicians and NPPs who furnish
inpatient consultations via telehealth complement the care provided by
the SNF and furnished onsite by the attending physician or physician of
record.
c. Critical Care Services
In the CY 2009 PFS final rule with comment period (73 FR 69744), we
did not add critical care services to the list of approved Medicare
telehealth services. In 2009, Philips Healthcare submitted an expanded
request to add critical care services to the list of approved Medicare
telehealth services. It stated that critical care services can be
approved as a Category 1 service based on their similarity to
the inpatient consultation services currently approved for Medicare
telehealth. The requestor also stated that many of the components of
critical care are similar to a high-level inpatient consultation
service, which is currently approved for Medicare telehealth. Common
components include obtaining a patient history, conducting an
examination, and engaging in complex medical decision-making for
patients who may be severely ill. Because we classified critical care
as a Category 2 service last year, the requestor also
submitted evidence to support its belief that the use of telehealth
could be a reasonable surrogate for the face-to-face delivery of this
type of care.
In the CY 2010 PFS proposed rule (74 FR 33548), we stated that
remote critical care services are different than the telehealth
delivery of critical care (as described by HCPCS codes 99291 and
99292). We did not propose adding critical care services (as described
by HCPCS codes 99291 and 99292) to the list of approved Medicare
telehealth services. We reiterated that our decision not to add
critical care services to the list of approved telehealth services does
not preclude physicians from furnishing telehealth consultations to
critically ill patients.
Comment: A commenter disagreed with our proposal not to add
critical care services to the list of approved Medicare telehealth
services. The commenter submitted a new study to support its belief
that these services are comparable to critical care furnished in-
person. The commenter asserted that the role of the intensivist,
whether in-person or remotely, is to provide the required expertise and
ability to direct onsite clinical staff to perform any necessary hands-
on intervention, not necessarily to effectuate them personally. To
support this, the commenter submitted a vignette describing critical
care services, including an analysis detailing the types of services
furnished when critical care (as described by HCPCS codes 99291 and
99292) was billed by a sample of intensivists. The commenter noted that
the critical care services included in this sample did not require
hands-on intervention.
Another commenter who submitted the CY 2009 request submitted
descriptions of telestroke technology to support the assertion that the
elements of a stroke-related neurological assessment performed by a
neurologist are effectively the same whether furnished in-person or via
telehealth. The commenter acknowledges that some telestroke services
satisfy the criteria for billing consultations via telehealth, but
noted that the payment is less than the same neurological assessment
furnished in-person and billed as a critical care service. The
commenter requested that we consider adding critical care services to
the list of approved Medicare telehealth services when the underlying
diagnosis is stroke-related.
Response: We continue to believe that remote critical care services
are different from the telehealth delivery of critical care services
(as described by HCPCS codes 99291 and 99292). The AMA created remote
critical care tracking codes. Such codes track utilization of a
service, facilitating data collection on, and assessment of, new
services and procedures. We believe that the data collected for these
tracking codes will help provide useful information on how to best
categorize and value remote critical care services in the future.
We did not find the studies submitted during the comment period
persuasive that telehealth can be an adequate substitute for the face-
to-face delivery of critical care services (as described by HCPCS codes
99291 and 99292). As described in these studies, the role of the
physician furnishing remote critical care services includes monitoring
patients and directing on-site staff to intervene, as necessary. Within
the current standards of practice, we believe that critical care
services (as described by HCPCS codes 99291 and 99292) require the
physical presence of a physician who is available to furnish any hands-
on intervention. We continue to believe that remote critical care
services are different services than the telehealth delivery of
critical care (as described by HCPCS codes 99291 and 99292). As noted
above, we believe that the data collected for the remote critical care
tracking codes will help provide useful information on how to best
categorize and value remote critical care services in the future.
d. Other Requests
We received a number of requests to add services that we reviewed
and did not accept in previous PFS Rules. The following are brief
summaries of our discussions from the proposed rule, summaries of
comments received, and our responses.
Initial and Subsequent Hospital Care
We received a request to add initial hospital care (as described by
HCPCS codes 99221 through 99223) and subsequent hospital care (as
described by HCPCS codes 99231 through 99233) to the list of approved
Medicare telehealth services. In response to previous requests, we did
not add initial or subsequent hospital care to the list of approved
telehealth services because of our concern regarding the use of
telehealth for the ongoing E/M of a high-acuity hospital inpatient.
(See 69 FR 47510 and 66276, 72 FR 38144 and 66250, and 73 FR 38517 and
69745.) We did not receive any new information with this request that
would alter our previous decision. Therefore, we did not propose adding
initial hospital care or subsequent hospital care to the list of
approved Medicare telehealth services. We did not receive any comments
on this proposal.
Group Medical Nutrition Therapy Services
We received a request to add group medical nutrition therapy (MNT)
services (as described by HCPCS codes G0271 and 97804) to the list of
approved Medicare telehealth services. In response to a previous
request, we did not add group MNT to the list of approved telehealth
services because we believe that group services are not appropriately
delivered through telehealth. (See 70 FR 45787 and 70157.) We did not
receive any new information with this request that would alter our
previous decision. Therefore, we did not propose adding group MNT to
the list of approved Medicare telehealth services. We did

[[Page 61765]]

not receive any comments on this proposal.
Diabetes Self-Management Training (DSMT)
We received a request to add diabetes self-management training
(DSMT) (as described by HCPCS codes G0108 and G0109) to the list of
approved telehealth services. In response to previous requests, we did
not add DSMT to the list of approved telehealth services because of the
statutory requirement that DSMT include teaching beneficiaries to self-
administer injectable drugs. Furthermore, DSMT is often performed in
group settings and we believe that group services are not appropriately
delivered through telehealth. (See 70 FR 45787 and 70157, and 73 FR
38516 and 69743.) We did not receive any new information with this
request that would alter our previous decision. Therefore, we did not
propose to add DSMT to the list of approved Medicare telehealth
services.
Comment: We received two comments opposing our proposal not to add
DSMT to the list of approved Medicare telehealth services. The American
Association of Diabetes Educators (AADE) agrees that telehealth is not
an appropriate venue for initial DSMT when it includes teaching
beneficiaries to self-administer injectable drugs. One commenter
submitted studies to support its belief that the use of a
telecommunications system was equivalent to the face-to-face delivery
of follow-up DSMT.
Response: We believe that skill-based training, such as teaching
patients how to inject insulin, would be difficult to accomplish
effectively without the physical presence of the teaching practitioner.
We disagree that this training element should be carved out of
individual DSMT for purposes of providing Medicare telehealth services.
The training involved in teaching beneficiaries the skills necessary
for the self-administration of injectable drugs is a key component of
this statutorily described benefit (and therefore inherent in the codes
that describe DSMT). We continue to believe that it would not be
appropriate to add individual follow-up DSMT to the list of approved
Medicare telehealth services.
Speech and Language Pathology Services
We received a request to add various speech and language pathology
services to the list of approved telehealth services. Speech-language
pathologists are not permitted under current law to furnish and receive
payment for Medicare telehealth services. Therefore, we did not propose
to add any speech and language pathology services to the list of
approved Medicare telehealth services. (For further discussion, see 69
FR 47512 and 66276, and 71 FR 48995 and 69657.)
Comment: The American Speech-Language Hearing Association (ASHA)
commented that telehealth has been successfully applied to speech-
language pathology and audiology services. ASHA requested that CMS
support expansion of Medicare telehealth coverage for speech-language
pathologists in communications with Congress. The American Academy of
Audiology commented on the shortage of audiologists in rural areas. The
group requested that we use our administrative authority to add
audiology services to the list of approved Medicare telehealth
services.
Response: It is not within our administrative authority to pay
speech-language pathologists and audiologists for services furnished
via telehealth. The statute authorizes the Secretary to pay only for
telehealth services furnished by a physician or a practitioner as those
terms are defined in the statute.
Physical and Occupational Therapy Services
We received a request to add various physical and occupational
therapy services to the list of approved Medicare telehealth services.
The statute does not authorize Medicare payment to physical and
occupational therapists for Medicare telehealth services. Therefore, we
did not propose to add any physical and occupational therapy services
to the list of approved Medicare telehealth services. (For further
discussion, see 71 FR 48995 and 69657.)
e. Summary: Result of Evaluation of 2010 Requests
We will finalize our proposal to add the individual HBAI services
(as described by HCPCS codes 96150 through 96152) and not to add group
HBAI (as described by HCPCS code 96153) or family-with-patient HBAI (as
described by HCPCS code 96154) to the list of approved Medicare
telehealth services. We will also finalize our proposal to add
individual HBAI services to the list of approved Medicare telehealth
services at Sec. 410.78 and Sec. 414.65.
We will finalize our proposal to revise Sec. 410.78 to restrict
physicians and practitioners from using telehealth to furnish the
physician visits required under Sec. 483.40(c). We will finalize our
proposal not to add Nursing Facility Services (as described by HCPCS
codes 99304 through 99318) to the list of approved Medicare telehealth
services. We will also finalize our proposal to revise Sec. 410.78 to
specify that the G-codes for follow-up inpatient telehealth
consultations (as described by HPCPCS codes G0406 through G0408)
include follow-up telehealth consultations furnished to beneficiaries
in hospitals and SNFs.
We will finalize our proposals not to add critical care services
(as described by HCPCS codes 99291 and 99292) or any of the other
requested services to the list of approved Medicare telehealth
services.
3. Other Issues
We received other comments on matters related to Medicare
telehealth services that were not the subject of proposals in the CY
2010 PFS proposed rule. We thank the commenters for sharing their views
and suggestions. Because we did not make any proposals regarding these
matters, we do not generally summarize or respond to such comments in
this final rule. However, we have chosen to summarize and respond to
the following comments in order to furnish more information.
Comment: The American Society of Nephrology requested clarification
on whether Medicare would pay for kidney disease patient education
furnished via telehealth. Other commenters specifically requested that
we add kidney disease patient education services to the list of
approved telehealth services.
Response: Kidney disease patient education services are not
approved Medicare telehealth services. Any interested parties may
submit requests to add services to the list of Medicare telehealth
services. Requests submitted before the end of CY 2009 will be
considered for the CY 2011 PFS proposed rule. Requestors should be
advised that each request to add a service to the list of Medicare
telehealth services must include any supporting documentation the
requestor wishes us to consider as we review the request. For more
information on submitting a request for an addition to the list of
Medicare telehealth services, including where to directly mail these
requests, visit our Web site at http://www.cms.hhs.gov/telehealth.
Comment: We received a few comments that questioned our criteria
and process for reviewing requests to add to the list of approved
Medicare telehealth services. The commenters stated that our standards
interfere with appropriate physician medical judgment under section
1801 of the Act. One commenter noted that since the

[[Page 61766]]

standards are not specified in regulation text, we can change them
without formal rulemaking.
Response: Our established criteria and process for reviewing
requests to add to the list of approved Medicare telehealth services
were subject to full notice and comment procedures in the CY 2003 PFS
proposed and final rules. Since we did not make any proposals relating
to the criteria or process, any potential revisions to the process for
adding or deleting services from the list of approved Medicare
telehealth services are outside the scope of this final rule.
Comment: We received a request to provide a list of physician
services that can be furnished without an in-person examination.
Response: General guidance regarding physician services that can be
furnished by visualizing some aspect of the patient's condition without
an in-person examination is provided in the CMS Internet-Only Medicare
Benefits Policy Manual, Pub. 100-02, Chapter 15, Sec. 30.

E. Specific Coding Issues Related to the Physician Fee Schedule

1. Canalith Repositioning
In 2008, the CPT Editorial Panel created a new code for canalith
repositioning (CRP). This procedure is a treatment for vertigo which
involves therapeutic maneuvering of the patient's body and head in
order to use the force of gravity to redeposit the calcium crystal
debris in the semicircular canal system.
In the CY 2009 PFS final rule with comment period (73 FR 69896),
new CPT code 95992, Canalith repositioning procedure(s) (e.g., Epley
maneuver, Semont maneuver), per day, was assigned the bundled status
indicator (B). We explained that this procedure previously was billed
as part of an evaluation and management (E/M) service or under a number
of CPT codes, including CPT code 97112, Therapeutic procedure, one or
more areas, each 15 minutes; neuromuscular reeducation of movement,
balance, coordination, kinesthetic sense, posture, and/or
proprioception for sitting and/or standing activities. We also
explained that because neurologists and therapists are the predominant
providers of this service to Medicare patients (each at 22 percent), it
was assigned as a ``sometimes therapy'' service under the therapy code
abstract file.
After publication of the CY 2009 PFS final rule with comment
period, we received comments on this issue from an organization
representing physical therapists, as well as others expressing
opposition to our decision to bundle the new code. Commenters stated
that they believe that our decision to bundle CPT code 95992 was flawed
since physical therapists are unable to bill E/M services. One
commenter also stated that therapists would be precluded from using
another code for billing for this service because CPT correct coding
instructions require that the provider/supplier select the procedure
that most accurately defines the service provided.
Based upon the commenters' feedback, we realized that we had failed
to address how therapists would bill for the service since they cannot
bill E/M services. In order to address this situation so that access to
this service would not be impacted we released a MedLearn article
informing PTs to continue using one of the more generally defined
``always therapy'' CPT codes (97112) as a temporary measure. See http://www.cms.hhs.gov/transmittals/downloads/R1691CP.pdf and http://www.cms.hhs.gov/MLNMattersArticles/downloads/MM6397.pdf.
In response to the concerns raised and upon additional review of
this issue in the CY 2010 PFS proposed rule, we proposed to change the
status indicator for this code from B (Bundled) to I (Not valid for
Medicare purposes). We proposed that physicians would continue to be
paid for CRP as a part of an E/M service. Physical therapists would
continue to use one of the more generally defined ``always therapy''
CPT codes (97112). We stated that we believe that this will enable
beneficiaries to continue to receive this service while at the same
time it will address our concerns about the potential for duplicate
billing for this service to the extent that this service is paid as a
part of an E/M service. As a result of this proposal, CPT code 95992
would be removed as a ``sometimes'' therapy code from the therapy code
list.
The following is a summary of the comments we received regarding
the canalith repositioning proposal.
Comment: Some commenters stated that the canalith repositioning
treatment requires 20 minutes of intraservice time as valued by the AMA
RUC and that the pre-time was specifically removed because the service
is typically performed with an E/M code. The commenters also stated
that they believe we expected physicians to forgo payment for CRP and
asked that we pay it separately from an E/M service. The commenters
requested that CMS recognize the service as separate and distinct from
an E/M service.
Response: As we stated in the CY PFS final rule (73 FR 69896)
canalith repositioning has been billed using E/M codes and therapy
service codes in the past and we believe it should continue to be
billed this way. Physicians will continue to be paid for the work
performed when CRP is billed using E/M codes.
Comment: Some commenters opposed designating CPT code 95992 as not
valid for Medicare purposes. The commenters stated that the code was
developed to describe and value CRP and that it should be utilized.
Another commenter stated that it is not consistent with CPT coding
principles to direct therapists to use a less specific code.
Response: As stated in the CY 2010 PFS proposed rule we initially
decided to bundle this code, but upon further review proposed to change
the status indicator to ``I'' (not valid for Medicare purposes).
Physicians will continue to be paid for CRP as part of an E/M service.
Physical therapists will continue to use an ``always therapy'' CPT code
as they have in the past. The code will be removed from the
``sometimes'' therapy list. This change will address our concerns about
the potential for duplicate billing of this service while still
allowing physicians and therapists to perform the service.
Comment: Some commenters are concerned that audiologists have no
way to bill for CRP. They requested that CMS reconsider allowing
payment to audiologists for this treatment.
Response: Audiological tests are covered under the benefit category
for other diagnostic tests. There is no statutory authority to allow
audiologists to bill Medicare for treatment services, such as CRP. CRP
may be covered under the benefit category for physician services or
physical therapy services. If covered as a physician service, it may be
furnished incident to a physician's service by any qualified staff.
We will finalize our proposal to designate CPT code 95992 as ``I'',
not valid for Medicare purposes. We will also remove it from the
``sometimes'' therapy code list in order to allow therapists to bill
appropriately for the service, using one of the more generally defined
``always therapy'' codes.
2. Payment for an Initial Preventive Physical Examination (IPPE)
In the CY 2010 PFS proposed rule, we proposed to increase the
payment for an initial preventive physical examination (IPPE) furnished
face-to-face with the patient and billed with HCPCS code G0402, Initial
preventive physical examination; face-to-face visit, services limited
to new beneficiary during the first 12 months of Medicare enrollment
beginning January 1, 2010. The IPPE service includes a broad array of

[[Page 61767]]

components and focuses on primary care, health promotion, and disease
prevention.
Section 101(b) of the MIPPA changed the IPPE benefit by adding to
the IPPE visit the measurement of an individual's body mass index and,
upon an individual's consent, end-of-life planning. Section 101(b) of
the MIPPA also removed the screening electrocardiogram (EKG) as a
mandatory service of the IPPE.
In order to implement this MIPPA provision, in the CY 2009 PFS
final rule with comment period (73 FR 69870), we created HCPCS code
G0402 as a new HCPCS code and retained, on an interim basis, the work
RVUs of 1.34 assigned to HCPCS code G0344, the code that was previously
used to bill for the IPPE. While we did not believe the revisions to
the IPPE required by MIPPA impacted the work RVUs associated with this
service, we solicited public comments on this issue, as well as
suggested valuations of this service to reflect resources involved in
furnishing the service. (For a summary of the comments received on the
CY 2009 PFS final rule with comment period, see the CY 2010 PFS
proposed rule (74 FR 33549)).
Based on a review of the comments received on the CY 2009 PFS final
rule with comment period and upon further evaluation of the component
services of the IPPE, we stated in the CY 2010 PFS proposed rule that
we believe the services, in the context of work and intensity,
contained in HCPCS code G0402 are most equivalent to those services
contained in CPT code 99204, Evaluation and management new patient,
office or other outpatient visit, and proposed increasing the work RVUs
for HCPCS code G0402 to 2.30 effective for services furnished beginning
on January 1, 2010.
The following is a summary of the comments we received regarding
the proposed increase to the payment for the IPPE billed with HCPCS
code G0402.
Comment: All commenters strongly supported CMS' proposal to
increase the payment for the IPPE. Commenters believe that the CY 2010
payment will fairly account for the services rendered.
Response: We are finalizing our proposal to increase the work RVUs
for the IPPE to 2.30 effective for services furnished beginning January
1, 2010.
3. Audiology Codes: Policy Clarification of Existing CPT Codes
In the CY 2009 PFS final rule with comment period (73 FR 69890), we
noted that the AMA RUC reviewed and recommended work RVUs for 6
audiology codes with which we agreed (that is, CPT codes 92620, 92621,
92625, 92626, 92627, and 92640). We also noted that in the Medicare
program, audiology services are covered under the diagnostic test
benefit and that some of the work descriptors for these services
include ``counseling,'' ``potential for remediation,'' and
``establishment of interventional goals.''
Since audiology services fall under the diagnostic test benefit,
aspects of services that are therapeutic or management activities are
not payable to audiologists. This distinction is of particular
importance since CPT codes 92620, 92621, 92626, 92627, and 92640 are
``timed'' codes. These codes are billed based on the actual time spent
furnishing the service.
We noted that we do not believe these aspects fit within the
diagnostic test benefit. We solicited comments on this issue. For a
summary of the comments received and our responses to those comments,
see the CY 2010 PFS proposed rule (74 FR 33550).
The following is summary of the comments we received regarding the
policy clarification of existing CPT codes for audiology services.
Comment: We received additional comments reiterating the comments
to which we had responded previously in the proposed rule that
``counseling,'' ``potential for remediation,'' and ``establishment of
interventional goals'' were part of the diagnostic test and were not
therapeutic or management activities. Other commenters agreed with the
clarification as it was presented in the proposed rule.
Response: After a careful consideration of all the comments, we are
finalizing the clarification of audiology services with respect to CPT
codes 92620, 92621, 92625, 92626, 92627, 92640, and other audiologist
services as discussed in the proposed rule. Although we understand that
test results are sometimes appropriately and briefly conveyed to the
patient at the time of the diagnostic test, any therapeutic activities
or activities that should be billed as E/M services associated with
these audiology codes are not payable to audiologists because they do
not fall within the benefit category under which these tests are
covered.
4. Consultation Services
a. Background
The current physician visit and consultation codes were developed
by the American Medical Association (AMA) Current Procedural
Terminology (CPT) Editorial Panel in November 1990. A consultation
service is an evaluation and management (E/M) service furnished to
evaluate and possibly treat a patient's problem(s). It can involve an
opinion, advice, recommendation, suggestion, direction, or counsel from
a physician or qualified NPP at the request of another physician or
appropriate source. (See the Internet-Only Medicare Claims Processing
Manual, Pub. 100-04, chapter 12, Sec. 30.6.10 A for more information.)
A consultation service must be documented and a written report given to
the requesting professional. Currently, consultation services are
predominantly billed by specialty physicians. Primary care physicians
infrequently furnish these services.
The required documentation supports the accuracy and medical
necessity of a consultation service that is requested and provided.
Medicare pays for a consultation service when the request and report
are documented as a consultation service, regardless of whether
treatment is initiated during the consultation evaluation service. (See
the Internet-Only Medicare Claims Processing Manual, Pub. 100-04,
chapter 12, Sec. 30.6.10 B.) A consultation request between
professionals may be done orally by telephone, face-to-face, or by
written prescription brought from one professional to another by the
patient. The request must be documented in the medical record.
In the Physician Fee Schedule Final Rule issued June 5, 1991, (56
FR 25828) we stated that the agency's goal for the development of the
new visit and consultation codes was that they meet two criteria: (1)
They should be used reliably and consistently by all physicians and
carriers; that is, the same service should be coded the same way by
different physicians; and (2) they should be defined in a way that
enables us to properly crosswalk the new codes to the relative values
for the Harvard vignettes so valid RVUs for work are assigned to the
new codes.
Based on requests from the physician community to clarify our
consultation payment policy and to provide consultation examples, we
convened an internal workgroup of medical officers within CMS (then
called the Health Care Financing Administration, or HCFA) and revised
the payment policy instructions in August 1999 in the Medicare Claims
Processing Manual (at Sec. 30.6.10 as cited above). We provided
examples of consultation services and examples of clinical scenarios
that did not satisfy Medicare criteria for consultation services.
Without explicit instructions for every possible clinical scenario
outlined in national policy

[[Page 61768]]

instructions or in AMA coding definitions or coding instructions, the
local policy interpretations by Medicare contractors were not
universally equivalent or acceptable to the physician community and
resulted in denials in different localities. Some Medicare contractors
would consider a consultation service with treatment to be an initial
visit rather than a consultation thus resulting in a denial for the
billed consultation. We clarified in the 1999 revision that Medicare
would pay for a consultation whether treatment was initiated at the
consultation visit or not. The physician community has stated that
terms such as referral, transfer and consultation, used interchangeably
by physicians in clinical settings, confuse the actual meaning of a
consultation service and that interpretation of these words varies
greatly among members of that community as some label a transfer as a
referral and others label a consultation as a referral. Although we
clarified the terms referral and consultation in the 1999 revision,
there was disagreement with our policy by physicians in the health care
community and by AMA CPT staff. We provided our documentation guidance
so physicians would be in compliance with our payment policy. The
consultation definition in the AMA CPT simply stated that the
consultant's opinion or other information must be communicated to the
requesting physician.
Additional manual revisions in both January and September 2001 (at
Sec. 30.6.10 as cited above) clarified that NPPs can both request and
furnish consultation services within their scope of practice and
licensure requirements. We continued to explain our documentation
requirements to the physician community through our Medicare
contractors and in our discussions with the AMA CPT staff. Under our
current policy and in the AMA CPT definition, a consultation service
must have a request from another physician or other professional and be
followed by a report to the requesting professional. The AMA CPT
definition does not state that the request must be written in the
requesting physician's medical record. However, we require the request
to be documented in the requesting physician's plan of care in the
medical record as a condition for Medicare payment. The E/M
documentation guidelines which apply to all E/M visits or consultations
(http://www.cms.hhs.gov/MLNEdWebGuide/25_EMDOC.asp) clearly state that
when referrals are made, consultations are requested, or advice is
sought, the medical record should indicate to whom and where the
referral or consultation is made or from whom the advice is requested.
Our Medicare contractors are responsible for reviewing and paying
consultation claims when submitted. When there is a question that
triggers a review of a consultation service, our Medicare contractors
will look at both the requesting physician's medical record (where the
request should be noted) and the consultant's medical record where the
consultation is reported and at the report generated for the requesting
physician. Medicare contractors do not look for evidence of
documentation on every claim, only when there is a concern raised
during random sampling or during a specific audit performed by a
contractor. The AMA CPT coding manual, which is not a payment manual,
does not specify these requirements, and, therefore, as we understand
it, many physicians do not agree with the CMS policy.
In March 2006, the Office of the Inspector General (OIG) published
a report entitled, ``Consultations in Medicare: Coding and
Reimbursement'' (OEI-09-02-00030). The stated purpose of the report was
to assess whether Medicare's payments for consultation services were
appropriate. While the OIG study was being conducted, we continued our
ongoing discussions with the AMA CPT staff for potential changes to the
consultation definition and guidance in CPT. The findings in the OIG
report (based on claims paid by Medicare in 2001) indicated that
Medicare allowed approximately $1.1 billion more in 2001 than it should
have for services that were billed as consultations. Approximately 75
percent of services paid as consultations did not meet all applicable
program requirements (per the Medicare instructions) resulting in
improper payments. The majority of these errors (47 percent of the
claims reviewed) were billed as the wrong type or level of
consultation. The second most frequent error was for services that did
not meet the definition of a consultation (19 percent of the claims
reviewed). The third category of improperly paid claims was a lack of
appropriate documentation (9 percent of the claims reviewed). The OIG
recommended that CMS, through our Medicare contractors, should educate
physicians and other health care practitioners about Medicare criteria
and proper billing for all types and levels of consultations with
emphasis on the highest levels and follow-up inpatient consultation
services.
We agreed with the OIG findings that additional education would
help physicians understand the differences in the requirements for a
consultation service from those for other E/M services. With each
additional revision from 1999 until the OIG study began, we continually
educated physicians through the guidance provided by our Medicare
contractors. However, there remained discrepancies with unclear and
ambiguous terms and instructions in the AMA CPT definition of a
consultation, transfer of care and documentation, and the feedback from
the physician community that indicated they disagreed with Medicare
guidance.
Prior to the official publication of the OIG report, we issued a
Medlearn Matters article, effective January 2006, to educate the
physician community about requirements and proper billing for all types
and levels of consultation services as requested by the OIG in their
report. The Medlearn Matters article reflected the manual changes we
made in 2006 and the AMA CPT coding changes as noted below. (This
article and related documents can be accessed at http://www.cms.hhs.gov/MLNMattersArticles/2005MMA/itemdetail.asp?filterType=none&filterByDID=-99&sortByDID=7&sortOrder=ascending&itemID=CMS053630&intNumPerPage=2000.)

Our consultation policy revisions continued as a work-in-progress
over several years as disagreements were raised by the physician
community. We continued to work with AMA CPT coding staff in an attempt
to have improved guidance for consultation services in the CPT coding
definition. In looking at physician claims data (for example, the low
usage of confirmatory consultation services) and in response to
concerns from the physician community regarding how to correctly use
the follow-up consultation codes, the AMA CPT Editorial Panel chose to
delete some of the consultation codes for 2006. The Follow-Up Inpatient
Consultation codes (CPT codes 99261 through 99263) and the Confirmatory
Consultation codes (CPT codes 99271 through 99275) were deleted. During
our ongoing discussions, the AMA CPT staff maintained that physicians
did not fully understand the use of these codes and historically
submitted them inappropriately for payment as was reflected in the OIG
study.
We issued a manual revision in the Medicare Claims Processing
Manual (at Sec. 30.6.10 as cited above) simultaneously with the
publication of AMA CPT 2006

[[Page 61769]]

coding changes removing the follow-up consultation codes, and
instructed physicians to use the existing subsequent hospital care
code(s) and subsequent nursing facility care codes for visits following
a consultation service. The confirmatory consultation codes (which were
typically used for second opinions) were also removed and we instructed
physicians to use the existing E/M codes for a second opinion service.
We further clarified the documentation requirements by making it easier
to document a request for a consultation service from another physician
and to submit a consultation report to the requesting professional.
Again, physicians stated that a consultant has no control over what a
requesting or referring physician writes in a medical record, and that
they should not be penalized for the behavior of others. However, our
consultation policy instructions apply to all physicians, whether they
request a consultation or furnish a consultation. As noted above,
documentation by both the requesting physician and the physician who
furnishes the consultation is required under the E/M documentation
guidelines. The E/M documentation guidelines have been in use since
1995. In our discussions with the AMA CPT staff and physician groups,
and national physician open door conference calls, we have emphasized
that the requesting physician medical record is not reviewed unless
there is a specific audit or random sampling performed. The physician
furnishing the consultation service should document in the medical
record from whom a request is received.
We continue to hear from the AMA and from specific national
physician specialty representatives that physicians are dissatisfied
with Medicare documentation requirements and guidance that distinguish
a consultation service from other E/M services such as transfer of
care. CPT has not clarified transfer of care. Many physician groups
disagree with our requirements for documentation of transfer of care.
Interpretation differs from one physician to another as to whether
transfer of care should be reported as an initial E/M service or as a
consultation service.
Despite our efforts, the physician community disagrees with
Medicare interpretation and guidance for documentation of transfer of
care and consultation. The existing consultation coding definition in
the AMA CPT definition has been ambiguous and confusing for certain
clinical scenarios and without a clear definition of transfer of care.
The CPT consultation codes are used by physicians and qualified NPPs to
identify their services for Medicare payment. There has been an absence
of any guidance in the AMA CPT consultation coding definition that
distinguishes a transfer of care service (when a new patient visit is
billed) from a consultation service (when a consultation service is
billed). Although Medicare has provided guidance, there has continued
to be disagreement with our policy from AMA CPT staff and some members
of the physician community. Because of the disparity between AMA coding
guidance and Medicare policy, some physicians have stated that they
have difficulty in choosing the appropriate code to bill. The payment
for both inpatient consultation and office/outpatient consultation
services is higher than for initial hospital care and new patient
office/outpatient visits. However, the associated physician work is
clinically similar. Many physicians contend that there is more work
involved with a new patient visit than a consultation service because
of the post work involvement with a new patient. The payment for a
consultation service has been set higher than for initial visits
because a written report must be made to the requesting professional.
However, all medically necessary Medicare services require
documentation in some form in a patient's medical record. Over the past
several years, some physicians have asked CMS to recognize the
provision of the consultation report via a different form of
communication in lieu of a written letter report to the requesting
physician so as to lessen any paperwork burden on physicians. We have
eased the consultation reporting requirements by lessening the required
level of formality and permitting the report to be made in any written
form of communication, (including submission of a copy of the
evaluation examination taken directly from the medical record and
submitted without a letter format) as long as the identity of the
physician who furnished the consultation is evident. Although
preparation and submission of the consultant's report is no longer the
major defining aspect of consultation services, the higher payment has
remained. (See the Internet-Only Medicare Claims Processing Manual,
Pub. 100-04, chapter 12, Sec. 30.6.10 F.)
Both AMA CPT coding rules and Medicare Part B payment policy have
always required that there is only one admitting physician of record
for a particular patient in the hospital or nursing facility setting.
(AMA CPT 2009, Hospital Inpatient Services, Initial Hospital Care,
p.12) This physician has been the only one permitted to bill the
initial hospital care codes or initial nursing facility codes. All
other physicians must bill either the subsequent hospital care codes,
subsequent nursing facility care codes or consultation codes. (See the
Internet-Only Medicare Claims Processing Manual, Pub. 100-04, chapter
12, Sec. 30.6.9.1 G.)
Beginning January 1, 2008, we ceased to recognize office/outpatient
consultation CPT codes for payment of hospital outpatient visits (72 FR
66790 through 66795). Instead, we instructed hospitals to bill a new or
established patient visit CPT code, as appropriate to the particular
patient, for all hospital outpatient visits. Regardless of all of our
efforts to educate physicians on Medicare guidance for documentation,
transfer of care, and consultation policy, disagreement in the
physician community prevails.
b. Summary of CY 2010 Proposal
In the CY 2010 PFS proposed rule (74 FR 33551), we proposed,
beginning January 1, 2010, to budget neutrally eliminate the use of all
consultation codes (inpatient and office/outpatient codes for various
places of service except for telehealth consultation G-codes) by
increasing the work RVUs for new and established office visits,
increasing the work RVUs for initial hospital and initial nursing
facility visits, and incorporating the increased use of these visits
into our PE and malpractice RVU calculations.
We noted that section 1834(m) of the Act includes ``professional
consultations'' (including the initial inpatient consultation codes
``as subsequently modified by the Secretary'') in the definition of
telehealth services. We recognize that consultations furnished via
telehealth can facilitate the provision of certain services and/or
medical expertise that might not otherwise be available to a patient
located at an originating site. Therefore, for CY 2010, we proposed to
create HCPCS codes specific to the telehealth delivery of initial
inpatient consultations. The purpose of these codes would be solely to
preserve the ability for practitioners to provide and bill for initial
inpatient consultations delivered via telehealth. These codes are
intended for use by practitioners when furnishing services that meet
Medicare requirements relating to coverage and payment for telehealth
services. Practitioners would use these codes to submit claims to their
Medicare contractors for payment of initial inpatient consultations
provided via

[[Page 61770]]

telehealth. The proposed HCPCS codes would be limited to the range of
services included in the scope of the CPT codes for initial inpatient
consultations, and the descriptions would be modified to limit the use
of such services for telehealth. The HCPCS codes would clearly
designate these as initial inpatient consultations provided via
telehealth, and not initial hospital care or initial nursing facility
care used for inpatient visits. Utilization of these codes would allow
us to provide payment for these services, as well as enable us to
monitor whether the codes are used appropriately.
We also stated that, if we create HCPCS G-codes specific to the
telehealth delivery of initial inpatient consultations, then we would
crosswalk the RVUs for these services from the RVUs for initial
hospital care (as described by CPT codes 99221 through 99223). We
believed this is appropriate because a physician or practitioner
furnishing a telehealth service is paid an amount equal to the amount
that would have been paid if the service had been furnished without the
use of a telecommunication system. Since physicians and practitioners
furnishing initial inpatient consultations in a face-to-face encounter
to hospital inpatients must continue to utilize initial hospital care
codes (as described by CPT codes 99221 through 99223), we believe it is
appropriate to set the RVUs for the proposed inpatient telehealth
consultation G-codes at the same level as for the initial hospital care
codes.
We considered creating separate G-codes to enable practitioners to
bill initial inpatient telehealth consultations when furnished to
residents of SNFs and crosswalking the RVUs to initial nursing facility
care (as described by CPT codes 99304 through 99306). For the sake of
administrative simplicity, if we create HCPCS G-codes specific to the
telehealth delivery of initial inpatient consultations, they will be
defined in Sec. 410.78 and in our manuals as appropriate for use to
deliver care to beneficiaries in hospitals or skilled nursing
facilities.
We stated in the CY 2010 PFS proposed rule that if we adopt this
proposal, we would then make corresponding changes to our regulations
at Sec. 410.78 and Sec. 414.65. In addition, we would add the
definition of these codes to the CMS Internet-Only Medicare Benefit
Policy Manual, Pub. 100-02, Chapter 15, Medicare Claims Processing
Manual, Pub. 100-04, Chapter 12, Section 190.
Outside the context of telehealth services, physicians will bill an
initial hospital care or initial nursing facility care code for their
first visit during a patient's admission to the hospital or nursing
facility in lieu of the consultation codes these physicians may have
previously reported. The initial visit in a skilled nursing facility
and nursing facility must be furnished by a physician except as
otherwise permitted as specified in Sec. 483.40(c)(4). In the nursing
facility setting, an NPP who is enrolled in the Medicare program, and
who is not employed by the facility, may perform the initial visit when
the State law permits this. (See this exception in the Internet-Only
Medicare Claims Processing Manual, Pub. 100-04, chapter 12, Sec.
30.6.13 A). An NPP, who is enrolled in the Medicare program, is
permitted to report the initial hospital care visit or new patient
office visit, as appropriate, under current Medicare policy.
Because of an existing CPT coding rule and current Medicare payment
policy regarding the admitting physician, we will create a modifier to
identify the admitting physician of record for hospital inpatient and
nursing facility admissions. For operational purposes, this modifier
will distinguish the admitting physician of record who oversees the
patient's care from other physicians who may be furnishing specialty
care. The admitting physician of record will be required to append the
specific modifier to the initial hospital care or initial nursing
facility care code which will identify him or her as the admitting
physician of record who is overseeing the patient's care. Subsequent
care visits by all physicians and qualified NPPs will be reported as
subsequent hospital care codes and subsequent nursing facility care
codes.
We believe that the rationale for a differential payment for a
consultation service is no longer supported because documentation
requirements are now similar across all E/M services. To be consistent
with OPPS policy, as noted above, we will pay only new and established
office or other clinic visits under the PFS.
We proposed that this change would be implemented in a budget
neutral manner, meaning it would not increase or decrease PFS
expenditures. We proposed to make this change budget neutral for the
work RVUs by increasing the work RVUs for new and established office
visits by approximately 6 percent to reflect the elimination of the
office consultation codes and the work RVUs for initial hospital and
facility visits by approximately 2 percent to reflect the elimination
of the facility consultation codes. We crosswalked the utilization for
the office consultation codes into the office visits and the
utilization of the hospital and facility consultation codes into the
initial hospital and facility visits. We proposed that this change
would be made budget neutral in the PE and malpractice RVU
methodologies through the use of the new work RVUs and the crosswalked
utilization.
We solicited comments on the proposal to eliminate payment for all
consultation services codes under the PFS and to allow all physicians
to bill, in lieu of a consultation service code, an initial hospital
care visit or initial nursing facility care visit for their first visit
during a patient's admission to the hospital or nursing facility.
Additionally, we solicited comments on the proposal to create HCPCS G-
codes to identify the telehealth delivery of initial inpatient
consultations.
We received many comments on our proposal. MedPAC also commented on
our proposal. The following is a summary of the comments we received
regarding the discussion of the proposed changes to consultation
services and our responses.
Comment: One commenter noted that ``there may be both advantages
and disadvantages to this proposal,'' but urged that we refrain from
finalizing it for January 1, 2010. The commenter expressed concerns
about whether there would be sufficient time to educate physicians who
currently employ the consultation codes in order to avoid ``a flood of
claim denials and appeals.'' Other commenters raised similar concerns
about whether there would be adequate time to educate physicians and
billing personnel about the change and to assess the effects of the
proposal.
Response: We agree that adoption of this proposal would call for
appropriate measures to educate physicians and billing personnel about
the change. However, we do not believe that the requisite educational
efforts are extensive and complex enough as to warrant delaying
implementation of the proposal. Essentially, the proposal would require
physicians to cease submitting the consultation codes on their Medicare
claims, and to employ the appropriate visit codes in their place. The
determination of the appropriate visit code would be made solely on the
basis of the existing rules and guidelines for the use of these codes,
without any reference to the guidelines that have been employed for the
use of the consultation codes. The guidelines for use of the visit
codes are well established and well known and used by nearly all
physicians. It is not necessary to develop any complicated coding
crosswalk or guidelines for translating the consultation code

[[Page 61771]]

requirements for purposes of applying the visit codes. The major
effects of the provision may actually simplify coding because
physicians will use the office and hospital visit codes in place of
consultations and will not have to determine whether the requirements
to bill a consult are met. For these reasons, we believe the proposal
should be implemented beginning January 1, 2010.
Comment: Some commenters urged delay or deferral of the proposal in
order to allow time to determine whether the new CPT definition of
``transfer of care'' that goes into effect for 2010 would address
concerns about the use of consultation codes. Other commenters stated
more generally that the proposed change is not the appropriate way to
resolve the confusion about using consultation codes versus patient
visits.
Response: As we discussed in presenting our proposal, the confusion
and disagreement about the proper use of the consultation codes have
persisted for a long time. We discussed in detail our efforts over a
period of years to clarify the guidelines and to resolve the persistent
disagreements. As a result of this experience, we are skeptical that
any further changes in guidelines or definitions would resolve these
issues. We appreciate the efforts by the CPT committee to develop a new
definition of transfer of care. However, we do not believe that this
new definition will clarify all the ambiguities and resolve all the
differences about the appropriate use of these codes.
As we stated when we implemented the PFS in 1992, one of our goals
for the development of new visit and consultation codes was that they
should be used reliably and consistently by all physicians and
carriers, that is, that the same service should be coded the same way
by different physicians. In addition, as we discussed in the CY 2010
PFS proposed rule, we believe that the confusion and disagreement about
the use of the consultation codes have produced a situation in which
that goal is far from being met.
As we also discussed in the proposed rule, we believe that a good
deal of this confusion and disagreement arises from the use of terms
such as referral, transfer, and consultation which are used sometimes
interchangeably and sometimes inconsistently, by physicians in clinical
settings.
The divergent interpretations and uses of these terms have served
to confuse the meaning of a consultation service, as some label a
transfer as a referral while others label a consultation as a referral.
Even with the new definition of ``transfer of care,'' we foresee many
clinical situations in which two physicians may not agree as to whether
the referral was for consultation or transfer of care, and it may be
difficult to resolve the issue based upon the conflicting
interpretations reflected in the two physicians' medical records.
Comment: A number of commenters recommended a delay in order to
develop alternative approaches on this issue. The commenters
recommended that we revise the consultation codes or provide additional
payments to physicians who provide thorough consultation reports to
referring physicians.
Response: As we discussed in the proposed rule, we have considered
numerous approaches to the issues posed by the use of the consultation
codes over a period of years, and we have adopted some measures in an
attempt to resolve those issues. We believe that, if there any other
realistic and reasonable resolution to the issues surrounding the
consultation codes, it would have emerged by now during the discussions
that we have recounted above. The specific proposal mentioned by the
commenter would have us pay more to physicians that provide thorough
consultation reports to the referring physicians. However, we
previously have tried to resolve the issues surrounding consultations
in part by revising the documentation requirements, with the result
that the documentation requirements for consultation codes have been
reduced to the point where there is no longer a sufficient difference
between the requirements for consultations and those for visits to
justify a payment differential. The commenter's idea would have us
return to increasing documentation requirements to receive higher
payment for providing a thorough consultation report. We believe that
any attempt to increase documentation requirements again to justify a
payment differential will lead to objections from some physicians, and
that it would be very difficult or impossible to define the
requirements for a ``detailed report'' with sufficient precision to
justify the provision of an additional payment.
Comment: Other commenters disagreed with our assessment that there
is no substantial difference in work between consultations and visits.
The commenters observed that consultations necessarily involve more
complex cases that the referring physician is unable to treat.
Furthermore, the commenters stated that these services require greater
cognitive work and more complex medical decision making. Several
commenters emphasized that consultation services required greater
knowledge and expertise, acquired through additional training and
experience, than is required for initial hospital and office visits.
The preparation of a written report to the referring physician also
requires additional time, regardless of the format in which the report
is provided. One commenter expressed disagreement with our statement
that ``the higher work value for consultations is entirely related to
the provision of a written report to the requesting physicians.''
However, other commenters agreed with our assessment that there is no
substantial difference in work between consultations and visits.
Response: To some degree, greater complexity and cognitive effort
may be relative to the training and specialization of the physician. A
case that presents clinical complexity and complex medical decision-
making for one physician may be relatively simple and straightforward
to another physician because of their repeated experience evaluating
the same or similar problems. Evaluation and management services,
although similar in the types of activities that occur during the
encounter, may vary widely in the types of conditions being evaluated.
The major difference between the work of a hospital or office visit and
a consultation is that the patient has been referred to the consultant
to obtain a specialized opinion. However, with the requirements
lessened upon the consultant, the actual work done during the encounter
with a patient for a consultation or an office or hospital visit has
become harder to distinguish in terms of clinical complexity and
medical decisionmaking. Further, many physicians contend that a new
patient office visit may actually require more work than a consultation
service because of the post work involvement with a new patient. As we
discussed in the proposed rule, the documentation requirements for
consultation services have been reduced to the point where it is
difficult to justify a payment differential between consultations and
new visits. Therefore, for these reasons, we support the view of those
commenters who contend that in most cases, there is no substantial
difference in work between consultations and visits.
Comment: Several commenters objected to the proposal on the grounds
that it constitutes an unprecedented elimination of a set of CPT codes
widely used by large numbers of physicians. Some commenters also stated
that the proposal circumvents the CPT and AMA RUC processes.

[[Page 61772]]

Response: We do not agree that discontinuing the use of these codes
for Medicare purposes is unprecedented. On the contrary, our proposal
follows existing program precedent. As we noted in the proposed rule,
beginning January 1, 2008, we ceased to recognize office/outpatient
consultation CPT codes for payment of hospital outpatient visits (72 FR
66790 through 66795). Instead, we instructed hospitals to bill a new or
established patient visit CPT code, as appropriate to the particular
patient, for all hospital outpatient visits. We also do not believe
that we have in any way circumvented the existing CPT and AMA RUC
processes. We described in the CY 2010 PFS proposed rule the numerous
attempts that we have made to resolve the relevant issues with AMA CPT
staff. Despite all of our efforts to devise and implement relevant
guidance, and educate physicians regarding documentation, transfer of
care, and consultation policy, there is still substantial disagreement
and inconsistency within the physician community regarding these
issues.
Comment: Some commenters stated that the overall payment decreases
that various specialists would face as a result of the proposed change
are unwarranted.
Response: In making the proposal to eliminate use of the
consultation codes under the PFS, it has not been our intention to
increase or to decrease overall payments for any group or groups of
physicians. Rather, our intent has been to provide for correct and
consistent coding for services provided by physicians, as well as to
provide for appropriate payment for the specific services that have
been billed using the consultation codes, specifically, as well as the
evaluation and management codes. It is in the nature of any budget
neutral payment system for changes such as this to have a somewhat
differential impact on various groups of providers and/or
practitioners. In this particular case, we do not believe that these
impacts are disproportionate to the goals we have sought to achieve in
making and finalizing this proposal. It is important to keep in mind
that, while elimination of the differential payment for consultation
services will have a greater negative impact on some physician
specialties than on others, all physicians will benefit from the budget
neutral increase in the payment levels for the visit codes.
For more information on the impact of the changes in this rule, see
section XIII. of this final rule with comment period.
Comment: Some commenters objected to our failure to increase the
bundled payments for post-operative visits occurring over a 10-day or
90-day global period. For example, one major specialty society
recommended extending the incremental work RVU increase to the E/M
codes that are built into the 10-day and 90-day global codes.
``Arbitrarily changing the work RVUs for some E/M codes without
adjusting the E/M components of other procedural codes undermines the
relative value scale on which physician payment is based.'' The
commenters otherwise supported the proposal, but strongly recommended
that the global codes be increased for the sake of consistency.
However, some other commenters who supported the proposal urged us to
maintain this position in the final rule on the grounds that these
services, by their very nature, were never billed as consultations.
Response: Payment for major surgeries includes bundled payment for
the related post-operative visits occurring over a 10-day or 90-day
global period. Historically, when payments for new and established
office visits were increased after the third Five-Year Review, we also
increased the bundled payments for these post-operative visits in the
global period. However, we did not propose to increase the payments for
the major surgeries to reflect the increase in the visits. We agree
with those commenters who contended that consistency requires that we
increase the bundled payments for these services proportionately in
order to account for the increase in the visits that are incorporated
into these bundles. We have accordingly increased the payments for
those services in conjunction with finalizing our proposal to eliminate
use of the consultation codes in the PFS. However, the increases in the
payments for these services due specifically to this change are quite
small because visits are a relatively small proportion of the total
global payment amount.
Comment: A few commenters objected that we did not make available
the crosswalk we used to relate the consultation codes to visit codes
for purposes of ensuring BN. Other commenters expressed concerns about
the assumptions we used in crosswalking the consultation codes to
existing E/M codes. For example, one commenter stated that, for E/M
services, a physician must consider three elements (extent of history
obtained, extent of examination performed, and complexity of medical
decision making) in determining the appropriate code level. However,
for subsequent hospital care or hospital outpatient E/M services, only
two of these three elements are necessary. In contrast, all three
elements must be considered in determining the appropriate coding level
for consultation services, both initial and follow-up consultations.
There is no established patient visit code or subsequent hospital care
code that adequately describes the work of consultation codes (CPT
codes 99245 and 99255) when a patient is seen for follow-up
consultation. One of these commenters noted that while there are five
consultation codes, there are only three initial visit codes, and
expressed concern that it would be difficult for physicians to
accurately employ the visit codes for the services previously billed
under the consultation codes. Another commenter observed that none of
the E/M codes reflect the face-to-face times reflected in the highest
level consultation codes (for example, 80 minutes for CPT code 99245
and 110 minutes for CPT code 99255). Still other commenters took issue
with some elements of the destination mapping in our crosswalk, for
example, the assumption that 50 percent of the cases represented as
office consultation code (CPT code 99245) would be coded as a new
patient office visit code (CPT code 99205), and 50 percent as an
established patient office visit code (CPT code 99215).
Response: We made the relevant crosswalk available on our Web site
at http://www.cms.hhs.gov/PhysicianFeeSched/PFSFRN/itemdetail.asp?filterType=none&filterByDID=-99&sortByDID=4&sortOrder=descending&itemID=CMS1223902&intNumPerPage=10.
As we have noted above, we did not develop that crosswalk for
purposes of providing any guidelines or principles for using the visit
codes in place of the consultation codes that physicians have employed
prior to the implementation of this proposal. Rather, the crosswalk was
developed solely for purposes of making the requisite BN calculations.
For purposes of coding specific cases, adoption of this proposal will
essentially require physicians to cease submitting the consultation
codes on their Medicare claims, and to employ the appropriate visit
codes in their place. The determination of the appropriate visit code
should be made solely on the basis of the existing rules and guidelines
for the use of the relevant visit codes (for example, office visit or
inpatient visit), without any reference to the guidelines that have
been employed for the use of the consultation codes. The guidelines for
use of the visit codes are well established and well understood.
Therefore, we do not believe that it is necessary to provide any coding

[[Page 61773]]

crosswalk or guidelines for translating the consultation code
requirements into the appropriate visit codes. Commenters are correct
that while there are five consultation codes, there are only three
initial visit codes, that none of the E/M codes reflect the face-to-
face times reflected in the highest level consultation codes, and
various other differences between the two sets of codes. Nevertheless,
it remains possible to determine the appropriate visit code for the
services in question by applying the appropriate guidelines and
requirements for using those codes. There are, for example, legitimate
coding measures to take into account face-to-face times over and above
the times specified in the relevant visit codes. Since we ordinarily
refrain from providing coding advice in this context, we recommend that
physicians, coders, and billing personnel consult the appropriate
manuals and coding authorities about how to make the appropriate coding
determinations for services previously coded under the consultation
codes.
In crosswalking the codes for purposes of making the requisite BN
calculations, we employed the same estimating techniques that we
normally employ in such calculations. In the absence of concrete data
on certain factors in the calculation, we also employed standard
assumptions that are appropriate in a system based on averages. For
example, office consultation CPT code 99245 was employed to report
consultations provided to new or established patients in a physician's
office or other ambulatory setting. For purposes of making the BN
calculations, it was necessary to apportion the utilization of that
code between the separate office visit codes for new patients (CPT code
99205) and established patients (CPT code 99215). In the absence of
concrete data on the number of new and established patients reported
under CPT 99245, we employed the standard technique of assuming that
half the patients were new patients, and half the patients were
established patients. Such an assumption minimizes the range of
potential error and negative impacts in a system based of averages.
Similarly, with respect to the new or established patient initial
inpatient consultation codes such as CPT code 99251, it was necessary
to apportion the utilization estimates between inpatient visits in a
hospital setting and in nursing homes. In this case, we believe that
there would be far fewer consultation visits in nursing homes than in
the inpatient hospital setting. Therefore, we adopted a standard
assumption that 70 percent of the cases would be in inpatient hospitals
(CPT initial hospital inpatient visit code 99221) and 30 percent in
nursing homes (CPT initial nursing care facility visit code 99304). We
employed similar assumptions throughout the crosswalk.
Comment: Several commenters maintained that we had not adequately
responded to the OIG report about the use of consultation codes prior
to developing this proposal. These commenters noted that the majority
of the billing errors detected by the OIG were created by lack of
documentation and/or services that did not meet the definition of
consultation, and that the OIG recommended education and outreach to
physicians to reduce such errors. The commenters recommended that we
not proceed with the proposal until we can demonstrate that education
and outreach efforts cannot improve the situation.
Response: Prior to the official publication of the OIG report, we
issued a Medlearn Matters article, effective January 2006, to educate
the physician community about requirements and proper billing for all
types and levels of consultation services as requested by the OIG in
their report. The Medlearn Matters article reflected the manual changes
we made in 2006 and the AMA CPT coding changes as noted below. We have
also answered numerous questions and inquiries regarding the use of
these codes at open door forums and other settings.
With each additional revision from 1999 until the OIG study began,
we made repeated efforts to educate physicians through the guidance
provided by, and through, our Medicare contractors. However, there were
continued discrepancies with unclear and ambiguous terms and
instructions in the AMA CPT consultation coding definition, transfer of
care and documentation, and the feedback from the physician community
indicated they disagreed with Medicare guidance. Despite our best,
these disagreements and misunderstandings among the physician community
with Medicare interpretations and guidance relating to documentation of
transfer of care and consultation have continued.
Comment: A number of commenters expressed concern about the effects
of this proposal on coordination of payment between CMS and other
payers. The commenters believe that if other payers continue to
recognize consultation codes, the result could be confusion, erroneous
billings, and serious delays or even denials of payment.
Response: We do not have the authority to determine which services
will be recognized and paid by other third party payers. Some payers
may choose to adopt this policy subsequent to this final rule. In cases
where other payers do not adopt this policy, physicians and their
billing personnel will need to take into consideration that Medicare
will no longer recognize consultation codes submitted on bills, whether
those bills are for primary or secondary payment. In those cases where
Medicare is the primary payer, physicians must submit claims with the
appropriate visit code in order to receive payment from Medicare for
these services. In these cases, physicians should consult with the
secondary payers in order to determine how to bill those services in
order to receive secondary payment. In those cases where Medicare is
the secondary payer, physicians and billing personnel will first need
to determine whether the primary payer continues to recognize the
consultation codes. If the primary payer does continue to recognize
those codes, the physician will need to decide whether to bill the
primary payer using visit codes, which will preserve the possibility of
receiving a secondary Medicare payment, or to bill the primary payer
with the consultation codes, which will result in a denial of payment
for invalid codes.
Comment: One commenter stated that we had not responded to several
letters over the last few years requesting clarification of the
confusion over consultation and transfer of care, and providing
suggested language to clarify the confusion. In addition, the commenter
stated that the agency has never responded to a request that the
contractors suspend audits of consultation services pending resolution
of the confusion.
Response: We have received many similar requests and suggestions
regarding the confusion over consultation and transfer of care over
many years. We have continuously discussed these issues in the
appropriate forums, including proposed and final rules, manual
instructions, Medlearn matters articles, and meetings of the AMA CPT
Committee. We recounted this extensive history in the proposed rule. As
for the status of audits of consultation services, we generally do not
discuss the specific audit measures and priorities that we are
currently pursuing. In general, the goal of medical review is to
identify, through analysis of data and evaluation of other information,
program vulnerabilities concerning coverage and coding made by
individual providers and to take the

[[Page 61774]]

necessary action to prevent or address the identified vulnerabilities.
Comment: A few commenters stated that it was inconsistent to
continue separate payment for consultation services under the
telehealth benefit, but to discontinue them in other contexts in which
physician services are provided. Some commenters also stated that
discontinuing the consultation codes may be contrary to the statute.
Specifically, section 1845(c)(5) of the Act, states:

Coding.--The Secretary shall establish a uniform coding system
for the coding of all physician services. The Secretary shall
provide for an appropriate coding structure for visits and
consultations. The Secretary may incorporate the use of time in the
coding for visits and consultations. The Secretary, in establishing
such coding system, shall consult with the Physician Payment Review
Commission and other organizations representing physicians.

Response: We note that section 1845(c)(5) of the Act calls for the
Secretary to provide for ``an appropriate coding structure for visits
and consultations.'' We believe the use of the adjective
``appropriate'' indicates that the statute is granting the Secretary
discretion to determine the structure of coding for these services. For
the reasons given above and in our proposed rule, we believe that we
are creating an appropriate coding structure for visits and
consultations by employing a set of codes that accurately describes,
and permits appropriate payment for, those services. We also note that
discontinuing the use of the consultation codes does not imply
discontinuing payment for consultation services, but only discontinuing
the payment differential between consultations and visits. These
services will continue to be reported, coded, and paid under the PFS.
On the other hand, as we noted previously, section 1834(m) of the Act
merely states that the definition of telehealth services includes
``professional consultations,'' and points to the initial inpatient
consultation codes (``as subsequently modified by the Secretary'') as
part of the coding structure for such services. We believe it is more
consistent with legislative intent, as expressed in this provision, to
retain the separate recognition of consultation services in the context
of telehealth services. We believe that we have appropriately exercised
the Secretary's discretion under section 1845(c)(5) of the Act in
eliminating the consultation codes under the PFS, while at the same
time respecting the legislative intent underlying section 1834(m) of
the Act for separate recognition of consultation services in the
context of telehealth.
Comment: MedPAC commented that the proposed change ``seems an
appropriate policy response'' to the relaxation of documentation
requirements. However, the Commission noted that:

* * * reduced consultation documentation may not sufficiently
meet the needs of the requesting physician, and thus not help
achieve the goals and benefits of well-coordinated care. While CMS'
proposed payment policy for consultation may be appropriate in the
light of current practice, in the future, the agency may wish to
consider whether to increase the requirements for consultations in
order to better coordinate care and increase consultation payments
commensurately.

Other commenters expressed similar concerns that the elimination of
the consultation codes might financially discourage coordination of
care and communication among physicians.
Response: We appreciate MedPAC's evaluation that our proposal has
merit as a response to the reduction in the documentation requirements
for consultation services. We also agree with MedPAC that promoting
effective coordination of care must be an essential goal of our payment
systems. However, we are not aware of any evidence that the reduced
consultation documentation requirements are currently failing to
sufficiently meet the needs of referring physicians, or that the
benefits of effective coordination of care are otherwise not being
realized as result of these reduced requirements. If we become aware of
such evidence in the future, we would certainly consider whether there
is an appropriate policy response to promote more effective
coordination of care. It is, however, premature to consider what the
appropriate responses might be until and unless specific evidence of an
issue comes to our attention. Nevertheless, we will certainly be
attentive to any concerns that develop about the effects of this policy
on the goal of promoting effective coordination of care.
Comment: Many other commenters supported the proposal. The
commenters agreed with us that the documentation requirements are now
generally similar among consultation services, office visits, and
hospital and facility visits. The commenters also agreed that the
proposed change would simplify documentation and resolve the confusion
surrounding the billing of consultation codes, ``transfer of care,''
and other matters.
Response: We appreciate the support of the commenters, and we
continue to believe that the approach we proposed is the most
appropriate policy response to the confusion, disagreement, and
problems that have beset the use of the consultation codes under the
PFS. Accordingly, we are adopting our proposal in this final rule.
Specifically, beginning January 1, 2010, we will eliminate the use
of all consultation codes (inpatient and office/outpatient codes for
various places of service except for telehealth consultation G-codes)
on a budget neutral basis by increasing the work RVUs for new and
established office visits, increasing the work RVUs for initial
hospital and initial nursing facility visits, and incorporating the
increased use of these visits into our PE and malpractice RVU
calculations.
Since section 1834(m) of the Act includes ``professional
consultations'' (including the initial inpatient consultation codes
``as subsequently modified by the Secretary'') in the definition of
telehealth services, we will not eliminate the use of these codes in
the telehealth context. Therefore, for CY 2010, we will create HCPCS
codes specific to the telehealth delivery of initial inpatient
consultations. Specifically, we are establishing the following HCPCS
codes to describe initial inpatient consultations approved for
telehealth:
G0425, Initial inpatient telehealth consultation,
typically 30 minutes communicating with the patient via telehealth.
G0426, Initial inpatient telehealth consultation,
typically 50 minutes communicating with the patient via telehealth.
G0427, Initial inpatient telehealth consultation,
typically 70 minutes or more communicating with the patient via
telehealth.
The purpose of these codes is solely to preserve the ability for
practitioners to provide and bill for initial inpatient consultations
delivered via telehealth. These codes are intended for use by
practitioners when furnishing services that meet Medicare requirements
relating to coverage and payment for telehealth services. Practitioners
will use these codes to submit claims to their Medicare contractors for
payment of initial inpatient consultations provided via telehealth. The
new HCPCS codes will be limited to the range of services included in
the scope of the CPT codes for initial inpatient consultations, and the
descriptions will limit the use of such services for telehealth.
Utilization of these codes will allow us to provide payment for these
services, as well as enable us to monitor whether the codes are used
appropriately.

[[Page 61775]]

As we also stated in the CY 2010 PFS proposed rule, we will
crosswalk the RVUs for these services from the RVUs for initial
hospital care (as described by CPT codes 99221 through 99223). We
believed this is appropriate because a physician or practitioner
furnishing a telehealth service is paid an amount equal to the amount
that would have been paid if the service had been furnished without the
use of a telecommunication system. Since physicians and practitioners
furnishing initial inpatient consultations in a face-to-face encounter
to hospital inpatients must continue to utilize initial hospital care
codes (as described by CPT codes 99221 through 99223), we believe it is
appropriate to set the RVUs for the proposed inpatient telehealth
consultation G-codes at the same level as for the initial hospital care
codes. As we stated in the CY 2010 PFS proposed rule, we also will make
corresponding changes to our regulations at Sec. 410.78 and Sec.
414.65. In addition, we will add the definition of these codes to the
CMS Internet-Medicare Claims Processing Manual, Pub. 100-04, Chapter
12, Section 190.
Outside the context of telehealth services, physicians will bill an
initial hospital care or initial nursing facility care code for their
first visit during a patient's admission to the hospital or nursing
facility in lieu of the consultation codes these physicians may have
previously reported. The initial visit in a skilled nursing facility
and nursing facility must be furnished by a physician except as
otherwise permitted as specified in Sec. 483.40(c)(4). In the nursing
facility setting, an NPP who is enrolled in the Medicare program, and
who is not employed by the facility, may perform the initial visit when
the State law permits this. (See this exception in the Internet-Only
Medicare Claims Processing Manual, Pub. 100-04, chapter 12, Sec.
30.6.13 A). An NPP, who is enrolled in the Medicare program is
permitted to report the initial hospital care visit or new patient
office visit, as appropriate, under current Medicare policy. Because of
an existing CPT coding rule and current Medicare payment policy
regarding the admitting physician, we will create a modifier to
identify the admitting physician of record for hospital inpatient and
nursing facility admissions. For operational purposes, this modifier
will distinguish the admitting physician of record who oversees the
patient's care from other physicians who may be furnishing specialty
care. The admitting physician of record will be required to append the
specific modifier to the initial hospital care or initial nursing
facility care code which will identify him or her as the admitting
physician of record who is overseeing the patient's care. Subsequent
care visits by all physicians and qualified NPPs will be reported as
subsequent hospital care codes and subsequent nursing facility care
codes.
As proposed, this change will be implemented in a budget neutral
manner, meaning that it will not increase or decrease aggregate PFS
expenditures. We will make this change budget neutral for the work RVUs
by increasing the work RVUs for new and established office visits by
approximately 6 percent to reflect the elimination of the office
consultation codes and the work RVUs for initial hospital and facility
visits by approximately 0.3 percent to reflect the elimination of the
facility consultation codes. As discussed above, in this final rule we
are also increasing the incremental work RVUs for the E/M codes that
are built into the 10-day and 90-day global surgical codes. As we did
for the CY 2010 PFS proposed rule, we have crosswalked the utilization
for the office consultation codes into the office visits and the
utilization of the hospital and facility consultation codes into the
initial hospital and facility visits. And, as we proposed, this change
will be made budget neutral in the PE and malpractice RVU methodologies
through the use of the new work RVUs and the crosswalked utilization.

F. Potentially Misvalued Services Under the Physician Fee Schedule

1. Valuing Services Under the Physician Fee Schedule
As explained in the CY 2010 PFS proposed rule (74 FR 33554), the
American Medical Association's (AMA) Relative Value System Update
Committee (RUC) provides recommendations to CMS for the valuation of
new and revised codes, as well as codes identified as misvalued. On an
ongoing basis, the AMA RUC's Practice Expense (PE) Subcommittee reviews
direct PE (clinical staff, medical supplies, medical equipment) for
individual services and examines the many broad and methodological
issues relating to the development of PE relative value units (RVUs).
To address concerns expressed by stakeholders with regard to the
process we use to price services paid under the PFS, the AMA RUC
created the Five-Year Review Identification Workgroup. As we stated in
the CY 2009 PFS proposed rule (73 FR 38582), the workgroup identified
some potentially misvalued codes through several vehicles. It focused
on codes for which there have been shifts in the site of service (site
of service anomalies), codes with a high intra-service work per unit of
time (IWPUT), high volume codes, new technology designation, and shifts
from practice expense to work. We also identified other methods that
the AMA RUC could undertake to assist in identifying potentially
misvalued services including reviewing the fastest growing procedures,
Harvard-valued codes, and practice expense RVUs. There were 204
potentially misvalued services identified in 2008.
We believe that there are additional steps we can take to address
the issue of potentially misvalued services. In the CY 2009 PFS
proposed rule, we identified approaches to address this issue including
reviewing services often billed together and the possibility of
expanding the multiple procedure payment reduction (MPPR) to additional
nonsurgical procedures and the update of high cost supplies.
Comment: We received several comments concerning the misvalued code
initiative. One commenter, representing a physician specialty
organization, expressed concern about the ongoing misuse of
intraservice work per unit of time (IWPUT) as a means to determine
appropriate work values. The commenter states that IWPUT was never
intended to compare intensity or work across specialties and was to be
used only as a measure of relativity between codes or in families of
codes. Commenters also expressed concern about the need for
transparency concerning the development of values for codes, including
the review of PE inputs; the need for CMS to consider the underlying
reasons why utilization for certain services may increase; and the
economic and public health implications of appropriate valuation of
services. A commenter also recommended that the agency become more
proactive in identifying problematic trends in utilization and in re-
evaluating new technology. The commenter recognized that additional
resources would be needed and acknowledged that the Congress may need
to ensure adequate resources are available but believes that such an
investment could result in lower overall costs in the system over the
long-term.
Response: We thank the commenters for sharing their concerns and
will consider them as we continue examining the valuation of services
under the misvalued code initiative.
We also share some the concerns expressed by the commenter with
regards to IWPUT, which is a

[[Page 61776]]

calculation that was used as the primary tool to value physician
services for some codes during the third Five-Year Review. This
calculation poorly assesses intensity for services that are short in
time duration and also services that are short in time duration and of
high intensity. The IWPUT has also been used to align procedures within
a family of codes. It has value in some instances, such as in
validating the RVUs for a given procedure using the building block
methodology. However, the IWPUT has not proven to be a valuable tool in
evaluating or validating cognitive services. The building block
methodology is the accepted methodology used by the AMA RUC and CMS for
valuing all physician procedures and services. We believe that the
building block methodology should be consistently used when the AMA RUC
considers valuation of physician services for its recommendations.
2. High Cost Supplies
In the CY 2010 PFS proposed rule (74 33554), we referenced our CY
2009 PFS proposal concerning updating prices for high cost supplies (73
FR 38582) and (73 FR 69882), and stated that we are continuing to
examine alternatives on the best way to obtain accurate pricing
information and will propose a revised process in future rulemaking.
The following is a summary of the comments received to date
regarding high cost supplies and our response.
Comment: Several commenters expressed support for this initiative.
A few commenters were disappointed that we did not propose any new
methodologies in the CY 2010 PFS proposed rule.
Commenters were in agreement that we must ensure accurate pricing
of supplies, as the cost of supplies plays an important role in the
payment calculation for services under the PFS.
Commenters also offered the following suggestions for pricing high
cost supplies including:
Identify high cost disposable supplies (that is, over
$200) with separate HCPCS codes;
Use the supply pricing methodology used by the Veterans
Administration;
Work with specialty societies to obtain invoices for high
priced items from a designated group of physicians that are
geographically representative; and
Work with the industry or physicians directly to get
current pricing information.
MedPAC stated it is important for us to update the prices of higher
priced supplies on a regular basis as inaccurate prices can distort PE
RVUs over time. MedPAC believes that prices drop over time as items
diffuse through the market and as other companies begin to produce
them, and encouraged us to regularly update information.
A few commenters also recommended that any pricing proposal should
be available for public comment through future rulemaking, possibly on
an annual basis. This would enable stakeholders to evaluate and provide
feedback to the agency on pricing accuracy as well as practical
availability of the item itself.
Response: We want to thank the commenters for sharing their
suggestions and will take these comments into consideration as we
explore the best way to address this issue.
3. Review of Services Often Billed Together and the Possibility of
Expanding the Multiple Procedure Payment Reduction (MPPR) to Additional
Nonsurgical Procedures
In the CY 2009 PFS final rule with comment period (73 FR 69882), we
stated that we planned to perform a data analysis of nonsurgical CPT
codes that are often billed together. We stated that we would identify
whether there are inequities in PFS payments that are a result of
variations between services in the comprehensiveness of the codes used
to report the services or in the payment policies applied to each (for
example, global surgery and MPPRs). The rationale for the MPPR is that
certain clinical labor activities, supplies, and equipment are not
performed or furnished twice when multiple procedures are performed.
The MPPR currently applies to certain diagnostic and surgical
procedures (73 FR 38586). We stated that we would consider developing a
proposal either to bundle more services or expand application of the
MPPR to additional procedures. Additionally, the Medicare Payment
Advisory Committee (MedPAC) requested that we consider duplicative
physician work and PE in any expansion of the MPPR.
In the CY 2010 PFS proposed rule (74 FR 33554), we stated that we
planned to analyze codes furnished together more than 75 percent of the
time, excluding E/M codes. We also stated that we planned to analyze
both physician work and PE inputs. If duplications are found, we said
that we would consider whether to propose to implement an MPPR or to
bundle the services involved. We stated that we would propose any
changes through future rulemaking.
Comment: Several commenters did not support the analysis of codes
furnished together more than 75 percent of the time. The commenters
stated that limiting the review to codes performed together 90 to 95
percent of the time was more appropriate. A few commenters suggested
that 75 percent should not be the only criterion we use when
considering whether to implement an MPPR or bundle services. Some
commenters requested that we postpone our review of services that are
often billed together and rely on the work that is being done in this
area by the AMA RUC. The commenters believe that the work the AMA RUC
is doing will be informative regarding which services should be
considered in the future in determining whether to propose to expand
the MPPR or to bundle services. The AMA RUC stated that it wants to
work with CMS to accurately assess these services.
A few commenters generally supported the analysis of codes
furnished together more than 75 percent of the time. One commenter
stated that almost all imaging procedures and equipment have become
more efficient in recent years allowing more procedures in a given
time.
Most commenters were in agreement that this policy should not be
expanded until CMS has additional data and there is an opportunity for
public comment through future rulemaking.
Response: We appreciate the comments received and will consider
these comments as we explore the best way to address this issue. We
also look forward to working with the AMA RUC to accurately assess
these services.
4. AMA RUC Review of Potentially Misvalued Codes
a. Site of Service
In the CY 2009 PFS final rule with comment period (73 FR 69883), we
said that although we would accept the AMA RUC valuation for these site
of service anomaly codes for 2009, we indicated that we had concerns
about the methodology used by the AMA RUC to review these services
because they may have resulted in removal of hospital days and deletion
or reallocation of office visits without extraction of the associated
RVUs from the valuation of the code. We also stated that we would
continue to examine these codes and would consider whether it would be
appropriate to propose additional changes in future rulemaking.
In the CY 2010 PFS proposed rule (74 FR 33554), we proposed work
RVU changes to several of the codes where the valuation had been
adjusted to

[[Page 61777]]

reflect changes in the site of service but the RVUs had not been
extracted by the AMA RUC. The proposed work RVUs were recalculated
based upon the AMA RUC-recommended inputs (that is, changes in pre-
service and post-service times and associated E/M services). The
proposed work RVUs for each CPT code were recalculated using the pre-
AMA RUC review work RVUs as a starting point, and adjusted for the
addition or extraction of pre-service and post-service times, inpatient
hospital days, discharge day management services and outpatient visits
as recommended by the AMA RUC.
In addition to the proposed revisions to the AMA RUC-recommended
RVUs, we encouraged the AMA RUC to utilize the building block
methodology as described in the CY 2007 PFS proposed rule (71 FR 37172)
in the future when revaluing codes with site of service anomalies. We
recognized that the AMA RUC looks at families of codes and may assign
RVUs based on a particular code ranking within the family. However, we
stated that we believed that the relative value scale requires each
service to be valued based on the resources used in furnishing the
service.
We also sought public comment on alternative methodologies that
could be used to establish work RVUs for codes that would have a
negative valuation under the methodology we utilized to develop
proposed revisions to the AMA RUC-recommended values described above.
The following is summary of the comments we received regarding the
proposed revisions to the codes with site of service anomalies.
Comment: Some commenters supported CMS' attempt to account for
recognized changes in physician work for certain procedures in which
the typical site of service has changed. However, other commenters
opposed the proposed work RVUs and found the methodology unclear and
problematic since some cases resulted in negative work values. Many
commenters recommended the acceptance of the AMA RUC recommended values
and encouraged CMS to work with them to develop a clearer methodology.
Response: As a result of the comments, we are not finalizing our
proposal to change the work RVUs for codes with site of service
anomalies that were included in Table 8 of the CY 2010 proposed rule
(74 FR 33555). Although we still have concerns about the methodology
used by the AMA RUC to review the services, we are accepting the AMA
RUC-recommended work RVUs in the interim and request that the AMA RUC
utilize the building block methodology to revalue the services listed
in Table 4.

TABLE 4--CY 2010 CMS Interim Work RVUs for Site of Service Anomalies Reviewed by the AMA RUC in CY 2009
----------------------------------------------------------------------------------------------------------------
2009 AMA RUC 2010 CMS
CPT code \1\ Descriptor recommended CMS decision interim work
work RVU RVU \2\
----------------------------------------------------------------------------------------------------------------
21025............................ Excision of bone, lower 9.87 Agree.............. 10.03
jaw.
23415............................ Release of shoulder 9.07 Agree.............. 9.23
ligament.
25116............................ Remove wrist/forearm 7.38 Agree.............. 7.56
lesion.
42440............................ Excise submaxillary 7.05 Agree.............. 7.13
gland.
52341............................ Cysto w/ureter stricture 5.35 Agree.............. 5.35
tx.
52342............................ Cysto w/up stricture tx. 5.85 Agree.............. 5.85
52343............................ Cysto w/renal stricture 6.55 Agree.............. 6.55
tx.
52344............................ Cysto/uretero, stricture 7.05 Agree.............. 7.05
tx.
52345............................ Cysto/uretero w/up 7.55 Agree.............. 7.55
stricture.
52346............................ Cystouretero w/renal 8.58 Agree.............. 8.58
strict.
52400............................ Cystouretero w/congen 8.66 Agree.............. 8.69
repr.
52500............................ Revision of bladder neck 7.99 Agree.............. 8.14
52640............................ Relieve bladder 4.73 Agree.............. 4.79
contracture.
53445............................ Insert uro/ves nck 15.21 Agree.............. 15.39
sphincter.
54410............................ Remove/replace penis 15.00 Agree.............. 15.18
prosth.
54530............................ Removal of testis....... 8.35 Agree.............. 8.46
57287............................ Revise/remove sling 10.97 Agree.............. 11.15
repair.
62263............................ Epidural lysis mult 6.41 Agree.............. 6.54
sessions.
62350............................ Implant spinal canal 6.00 Agree.............. 6.05
cath.
63650............................ Implant neuroelectrodes. 7.15 Agree.............. 7.20
63685............................ Insrt/redo spine n 6.00 Agree.............. 6.05
generator.
64708............................ Revise arm/leg nerve.... 6.22 Agree.............. 6.36
64831............................ Repair of digit nerve... 9.00 Agree.............. 9.16
65285............................ Repair of eye wound..... 14.43 Agree.............. 14.71
----------------------------------------------------------------------------------------------------------------
\1\ All CPT codes copyright 2009 American Medical Association.
\2\ 2010 CMS Interim Work RVUs may differ from AMA RUC-recommended work RVU due to work increases in 10 and 90
day global codes as a result of the elimination of the consultation codes.

b. ``23-Hour'' Stay
Services that are performed in the hospital outpatient setting and
require a stay of less than 24 hours are considered outpatient
services. We received recommendations from the AMA RUC for inclusion of
inpatient services for services that are typically performed in an
outpatient setting.
In the 2010 PFS proposed rule (74 FR 33556), we stated that we
believed the use of E/M codes for services rendered in the post-service
period for procedures requiring less than a 24-hour hospital stay would
result in overpayment for pre- and post-service work that would not be
provided. Therefore, we stated that we would not allow an additional E/
M service to be billed for care furnished during the post procedure
period when care is furnished for an outpatient service requiring less
than a 24-hour hospital stay.
The following is summary of the comments we received regarding the
proposed revisions to the ``23-Hour'' stay.
Comment: The majority of commenters disagreed with CMS'

[[Page 61778]]

proposal because they believed it would result in surgeons not being
paid for the work they perform. Commenters urged CMS to engage in a
discussion at CPT and/or the AMA RUC regarding alternative E/M coding
solutions.
Response: As a result of the comments, we are not finalizing our
proposal and will work with CPT and the AMA RUC regarding alternative
E/M coding solutions to address our concerns about using inpatient
hospital visit codes as a proxy for the work being performed.
c. AMA RUC Review of Potentially Misvalued Codes for CY 2010
We are addressing the AMA RUC's recommendations from the February
and April 2009 meetings for potentially misvalued codes in this final
rule with comment period in a manner consistent with the way we address
other AMA RUC recommendations. Specifically, we completed our own
review of the AMA RUC recommendations and we describe the AMA RUC's
recommendations, indicate whether or not we accept them, and provide a
rationale for our decision in this final rule with comment period. The
values for these services are interim values for the next calendar
year.
The AMA RUC continued its review of potentially misvalued codes
using various screens, including codes with site of anomalies, high
IWPUT, high volume, fastest growing procedures, and other CMS requests.
For CY 2010, the AMA RUC submitted recommendations for 113 codes. Of
those codes 1 was recommended for a reduction in valuation; 7 were
recommended for an increase in valuation; 11 were recommended to
maintain the same valuation; 45 were referred to CPT for further code
clarification, 33 were recommended for PE changes and 16 were
recommended for clinical labor revisions.
We have agreed to accept the valuation for these codes for CY 2010
as interim, including the conforming changes to the PE inputs for these
codes, as applicable with the exception of CPT 92597, Evaluation for
use and/or fitting of voice prosthetic device to supplement oral
speech. With the enactment of the MIPPA, speech-language pathologists
were able to bill the Medicare program independently as private
practitioners effective July 1, 2009. In response, speech-language
pathologists requested that the AMA RUC value the work of certain
codes. Previously, the work of the speech-language pathologists had
been accounted for and paid under the PE component for these codes. CPT
code 92597 was evaluated by the AMA RUC, after which the AMA RUC
recommended a work RVU of 1.48 based upon a survey that included
speech-language pathologists and otolaryngologists, the most frequent
providers of the service. The work description for CPT code 92597
includes initial fitting of a prosthesis. The code descriptor for CPT
code 31611, Construction of tracheoesophageal fistula and subsequent
insertion of an alaryngeal speech prosthesis (eg, voice button, Blom-
Singer prosthesis), with a work RVU of 5.92 also includes insertion or
fitting of a speech prosthesis. Otolaryngologists perform this service
a majority of the time. It appears that both codes include fitting a
prosthesis and that there is an overlap of work between CPT codes 92597
and 31611. To account for the overlap of work between these two codes,
for CPT code 92597 we have assigned a work RVU value at the 25th
percentile, 1.26 work RVUs. We note that the work RVU for CPT code
31611 may not have been reviewed by the RUC since 1995. We invite the
RUC to review these two codes and any others for which work may
overlap.
We continue to have concerns about the methodology used by the AMA
RUC to review services with site of service anomalies. We request that
the AMA RUC utilize the building block methodology to revalue these
services.
The AMA RUC also recommended that we review claims data for CPT
codes 76970, Ultrasound study follow-up (specify), 94450, Breathing
response to hypoxia (hypoxia response curve), 94014, Patient-initiated
spirometric recording per 30-day period of time; includes reinforced
education, transmission of spirometric tracing, data capture, analysis
of transmitted data, periodic recalibration and physician review and
interpretation, 94015, Patient-initiated spirometric recording per 30-
day period of time; recording (includes hook-up, reinforced education,
data transmission, data capture, trend analysis, and periodic
recalibration) and 94016, Patient-initiated spirometric recording per
30-day period of time; physician review and interpretation only. We
will take the AMA RUC's suggestions under consideration and further
investigate these claims.
5. PE Issues--Arthoscopy
Previously, the AMA RUC recommended that an arthoscopic procedure
(CPT code 29870, Arthroscopy, knee, diagnostic, with or without
synovial biopsy (separate procedure)) not be valued in the non-facility
setting because they believed the procedure was unsafe to perform
outside of the facility setting. In the CY 2008 PFS final rule (72 FR
66238), we deferred proposing non-facility inputs for these types of
procedures. We stated that the physicians performing arthroscopic
services in the non-facility setting should be given the opportunity to
have a multi-specialty review by the AMA RUC.
Comment: We have received many inquiries about why CPT code 29870
was not valued in the non-facility setting. For CY 2010, in response to
a request from CMS, the AMA RUC has recommended PE inputs for CPT code
29870.
Response: We accept the AMA RUC's recommended PE inputs for this
procedure and are valuing this code in the non-facility setting.
BILLING CODE 4120-01-P

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6. Establishing Appropriate Relative Values for Physician Fee Schedule
Services
In MedPAC's March 2006 Report to Congress, MedPAC made a number of
recommendations to improve the review of the relative values for PFS
services. Since that time, we have taken significant actions to improve
the accuracy of the RVUs. As MedPAC noted in its recent March 2009
Report to Congress, ``CMS and the AMA RUC have taken several steps to
improve the review process'' in the intervening years since those
initial recommendations. Many of our efforts to improve the accuracy of
RVUs have also resulted in substantial increases in the payments for
primary care services.
The original March 2006 recommendation was summarized in the March
2008 Report to Congress:

We also recommended that CMS establish a group of experts,
separate from the AMA RUC, to help the agency conduct these and
other activities. This recommendation was intended not to supplant
the AMA RUC but to augment it. To that end, the panel should include
members who do not directly benefit from changes to Medicare's
payment rates, such as experts in medical economics and technology
diffusion and physicians who are employed by managed care
organizations and academic medical centers.

The idea of a group of experts separate from the AMA RUC, to help
the agency improve the review of relative values, raises a number of
issues. In the proposed rule, we solicited input on specific points
concerning the creation of such a group, including:
How could input from a group of experts best be
incorporated into existing processes of rulemaking and agency receipt
of AMA RUC recommendations?
What specifically would be the roles of a group of experts
(for example, identify potentially misvalued services, provide
recommendations on valuation of specified services, review AMA RUC
recommendations selected by the Secretary, etc.)?
What should be the composition of a group of experts? How
could such a group provide expertise on services that clinician group
members do not furnish?
How would such a group relate to the AMA RUC and existing
Secretarial advisory panels such as the Practicing Physician Advisory
Committee?
We also requested comments on the resources required to establish
and maintain such a group. We stated that we would consider these
comments as we consider the establishment of a group of experts to
assist us in our ongoing reviews of the PFS RVUs.
Comments: We received comments from many organizations, specialty
societies, and groups, including the AMA, the AMA RUC, and MedPAC
concerning the creation of a group of experts.
Some commenters expressed support of such a panel. The commenters
offered suggestions concerning its establishment and operations. The
commenters stated that adequate resources and funding would be needed.
The commenters viewed the panel as a vehicle to independently assess
the AMA RUC recommendations. Several commenters stressed the importance
of including consumers or purchasing representatives on such a panel
and that the current process is too narrowly focused on resource costs.
Commenters stated there is a need to restructure the payment system so
that it appropriately values coordinated care delivery, encourages
appropriate use of services, and rewards value and not volume.
Other commenters opposed creation of such a panel. The commenters
stated that the current process has been successful, is transparent,
and the rulemaking process provides additional oversight of the AMA
RUC's recommendations. The commenters also stated that the AMA RUC has
the technical knowledge and objective judgment to assist CMS in
maintenance of the RVUs and that a superimposed panel would lack its
insight. Commenters also stated that the addition of a separate group
would increase demands on CMS; create coordination problems; and would
be fiscally unsound and imprudent. Commenters noted that CMS and the
AMA RUC have made strides in the misvalued codes initiative. Some of
the commenters suggested that we consider enhancing the existing
refinement panel process used to address the comments received on
interim work RVUs (see section III for additional information on this
process). Some commenters expressed concern that the refinement panels
have not been adequately developed and that there is a lack of
transparency.
MedPAC stated there are valid reasons that a panel should be
established. It stated that CMS needs a regular source of expertise
available to assist in valuing services and that such expertise is not
solely the domain of the AMA RUC.
Response: We appreciate all of the comments and suggestions
provided regarding the creation of a group of experts. We will take
these comments into consideration as we continue to explore this issue.
We also appreciate the comments raised concerning the existing
refinement panel process. Any revisions to this process would be
discussed in future rulemaking.

G. Issues Related to the Medicare Improvements for Patients and
Providers Act of 2008 (MIPPA)

This section addresses certain provisions of the Medicare
Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L.
110-275). We proposed to revise our policies and regulations as
described below in order to conform them to the statutory amendments.
1. Section 102: Elimination of Discriminatory Copayment Rates for
Medicare Outpatient Psychiatric Services
Prior to the enactment of the MIPPA, section 1833(c) of the Act
provided that for expenses incurred in any calendar year in connection
with the treatment of mental, psychoneurotic, and personality disorders
of an individual who is not an inpatient of a hospital, only 62[frac12]
percent of such expenses are considered to be incurred under Medicare
Part B when determining the amount of payment and application of the
Part B deductible in any calendar year. This provision is known as the
outpatient mental health treatment limitation (the limitation), and has
resulted in Medicare paying only 50 percent of the approved amount for
outpatient mental health treatment, rather than the 80 percent that is
paid for most other outpatient services.
Section 102 of the MIPPA amends the statute to phase out the
limitation on recognition of expenses incurred for outpatient mental
health treatment, which will result in an increase in the Medicare Part
B payment for outpatient mental health services to 80 percent by CY
2014. When this section is fully implemented in 2014, Medicare will pay
for outpatient mental health services at the same level as other Part B
services. For CY 2010, section 102 of the MIPPA provides that Medicare
will recognize 68[frac34] percent of expenses incurred for outpatient
mental health treatment, which translates to a payment of 55 percent of
the Medicare-approved amount. Section 102 of the MIPPA specifies that
the phase out of the limitation will be implemented as shown in Table 6
provided that the patient has satisfied his or her deductible.

[[Page 61787]]

Table 6--Implementation of Section 102 of the MIPPA
----------------------------------------------------------------------------------------------------------------
Recognized
Calendar year incurred Patient pays Medicare pays
expenses
----------------------------------------------------------------------------------------------------------------
CY 2009 and prior calendar years................................ 62.50% 50% 50%
CY 2010 and CY 2011............................................. 68.75% 45% 55%
CY 2012......................................................... 75.00% 40% 60%
CY 2013......................................................... 81.25% 35% 65%
CY 2014......................................................... 100.00% 20% 80%
----------------------------------------------------------------------------------------------------------------

At present, Sec. 410.155(c) of the regulations includes examples
to illustrate application of the current limitation. We proposed to
remove these examples from the regulations and, instead, provided
examples in the CY 2010 PFS proposed rule (74 FR 33521), in our manual,
and under provider education materials as needed. (See the CY 2010 PFS
proposed rule (74 FR 33557) for the examples illustrating the
application of the limitation in various circumstances as it is
gradually reduced under section 102 of the MIPPA.) Section 102 of the
MIPPA did not make any other changes to the outpatient mental health
treatment limitation. Therefore, other aspects of the limitation will
remain unchanged during the transition period between CYs 2010 and
2014. The limitation will continue to be applied as it has been in
accordance with our regulation at Sec. 410.155(b) which specifies that
the limitation applies to outpatient treatment of a mental,
psychoneurotic, or personality disorder, identified under the
International Classification of Diseases (ICD) diagnosis code range
290-319. We use this ICD diagnosis code range, place of service code,
and the procedure code to identify services to which the limitation
applies.
Additionally, we proposed to make technical corrections to Sec.
410.155(b)(2) in order to update and clarify the services already under
these regulations to which the limitation does not apply. We proposed
the following technical changes:
Under Sec. 410.155(b)(2)(ii), revise the regulation to
specify the HCPCS code, M0064 (or any successor code), that represents
the statutory exception to the limitation for brief office visits for
the sole purpose of monitoring or changing drug prescriptions used in
mental health treatment.
At Sec. 410.155(b)(2)(iv), we proposed to revise the
regulation to add neuropsychological tests and diagnostic psychological
tests to the examples of diagnostic services that are not subject to
the limitation when performed to establish a diagnosis.
Under Sec. 410.155(b)(2)(v), we proposed to revise the
regulation to specify the CPT code 90862 (or any successor code) that
represents pharmacologic management services to which the limitation
does not apply when furnished to treat a patient who is diagnosed with
Alzheimer's disease or a related disorder.
Finally, we proposed to add a new paragraph (c) to Sec. 410.155
that provides a basic formula for computing the limitation during the
phase-out period from CY 2010 through CY 2013, as well as after the
limitation is fully removed from CY 2014 onward.
The following is a summary of the comments we received regarding
the proposed implementation of section 102 of the MIPPA.
Comment: All of the comments on section 102 of the MIPPA support
the enactment by the Congress and implementation by CMS of this
provision that will eventually achieve parity in payment for outpatient
mental health services under the Medicare Part B program with the
program's payment for other outpatient services. Most of the commenters
describe the limitation as discriminatory and inequitable, and believe
that it should have been eliminated a long time ago. The majority of
the commenters believe that the elimination of the limitation will
increase access to outpatient mental health services in the Medicare
population. Therefore, elimination of the limitation will have a
positive impact on Medicare beneficiaries because they will have to pay
less out-of-pocket. Also, commenters believe that physicians and other
providers of outpatient mental health care will be ``held harmless''
with respect to this change because, although they will collect less
from the patient, they will ultimately be able to collect from the
program the full Medicare approved amount for outpatient mental health
services. The commenters that embrace our proposal to implement section
102 of the MIPPA, request that we maintain our proposal in the final
rule, and encourage CMS to finalize section 102 of the MIPPA in a
timely fashion.
Response: We appreciate the supportive comments received on our
proposal to implement section 102 of the MIPPA and the encouragement to
finalize our proposal. Also, we are grateful for the offerings made by
a few commenters to assist in educating the provider community about
section 102 of the MIPPA.
Comment: One commenter opposed two of our technical corrections to
current regulations on the limitation at Sec. 410.155(b)(2) and
provided suggested changes. Specifically, under Sec.
410.155(b)(2)(iv), we proposed to insert neuropsychological tests along
with diagnostic tests that are performed to establish a diagnosis as
diagnostic services that are not subject to the limitation. While this
commenter has no issue with including neuropsychological tests, the
commenter believes that a complete list of services would include
outpatient consultation codes, all outpatient new patient and initial
visit evaluation and management (E/M) codes, and the psychiatric
diagnostic and evaluation interview codes (90801 and 90802).
Accordingly, the commenter believes that if we expand the list of
identified services not subject to the limitation by inserting
neuropsychological tests only, without including the complete listing
of services, we could be subjecting services inappropriately to the
limitation.
On this particular technical correction, another commenter
suggested that we should consider including a definition of
``diagnostic services'' to provide further guidance to the field on
this issue.
The other technical correction that the commenter opposed is the
provision under Sec. 410.155(b)(2)(v) that lists medical management
services billed under CPT code 90862 (or its successor code), as
opposed to psychotherapy, as not being subject to the limitation when
furnished to treat a patient who is diagnosed with Alzheimer's disease
or a related disorder. The commenter believes that medical management
services are not limited to those billed under CPT code 90862, but also

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includes E/M of a patient with a mental illness using the outpatient E/
M codes (CPT codes 99211 through 99215), and in a nursing facility, the
subsequent nursing facility care E/M CPT codes (CPT codes 99307 through
99310). Hence, this commenter suggests that the proposed technical
correction would unnecessarily and improperly limit the exception to
only those instances when CPT code 90862 is billed. This commenter
urged that the exception to the limitation for the treatment of a
patient who is diagnosed with Alzheimer's disease or a related disorder
should continue to include all non-psychotherapy services. Accordingly,
this commenter suggested that the current language under regulations
should be retained or that new language clarify that any outpatient
service including CPT code 90862, E/M codes, and any other non-
psychotherapy service provided to a patient with Alzheimer's disease or
a related condition is not subject to the limitation.
One commenter who supports our implementation of the MIPPA
provision commented that it is appropriate to update the list of
services to which the limitation does not apply by specifying HCPCS
code M0064, neuropsychological tests and diagnostic psychological
tests, as well as CPT code 90862 when reporting services provided to a
patient with Alzheimer's disease or a related disorder.
Response: The intent of our technical corrections to Sec. 410.155
was to clarify, not to expand, our current policy. We intended to amend
the existing regulations in a way that would update and clarify the
already stated policy. Diagnostic psychological and neuropsychological
tests are diagnostic services that are excluded from the limitation
when performed to establish a diagnosis. The neuropsychological test
codes were established years after the CPT codes for diagnostic
psychological tests and that is why the reference to neuropsychological
tests had not been included under current regulations. Additionally, in
the context of psychiatric mental health services, the specific
diagnostic services for which we have national policy regarding the
limitation are the psychiatric diagnostic services under CPT codes
90801 and 90802, and, the CPT codes for diagnostic psychological and
neuropsychological testing. In the absence of national policy
concerning application of the limitation to diagnostic services billed
under the outpatient consultation codes or the outpatient new patient
and initial visit E/M codes, contractors use their discretion in making
decisions about whether the limitation should be applied to such
services under a variety of circumstances. To list these additional
outpatient consultation and E/M codes as suggested by the commenter
would represent an expansion of the current regulatory exception at
Sec. 410.155(b)(2)(iv).
However, we believe that if we revise the wording under Sec.
410.155(b)(2)(iv) to specify that psychiatric diagnostic services
billed under CPT codes 90801 and 90802 (or successor codes) and
diagnostic psychological and neuropsychological tests billed under CPT
code range 96101 through 96125 (or any successor code range) that are
performed to establish a diagnosis are not subject to the limitation,
we will address the commenter's concerns. Also, such a change will
provide the field with specific guidance on our definition of
``diagnostic services'' in terms of mental health services.
We agree with the commenter that our technical correction to Sec.
410.155(b)(2)(v) might have been read to restrict application of the
exception to CPT code 90862. We will refrain from addressing
specifically in the regulation outpatient E/M codes or nursing facility
E/M codes. Rather, we will continue to leave in the hands of our
contractors decisions as to whether the exception applies for these
codes under particular circumstances. We have provided policy guidance
to our contractors that medical management services furnished under CPT
code 90862 to treat a patient diagnosed with Alzheimer's disease or a
related disorder are not subject to the limitation. Therefore, we
believe it is consistent with current national policy to amend the
regulatory exception under Sec. 410.155(b)(2)(v) to read, ``medical
management such as that furnished under CPT code 90862 (or its
successor code), as opposed to psychotherapy, furnished to a patient
diagnosed with Alzheimer's disease or a related disorder.''
We received comments on issues that are outside the scope of our
proposals for section 102 of MIPPA. These comments are not addressed in
this final rule with comment.
2. Section 131: Physician Payment, Efficiency, and Quality
Improvements--Physician Quality Reporting Initiative (PQRI)
a. Program Background and Statutory Authority
The Physician Quality Reporting Initiative (PQRI) is a voluntary
reporting program that provides an incentive payment to eligible
professionals who satisfactorily report data on quality measures for
covered professional services during a specified reporting period.
Under section 1848(k)(3)(B) of the Act, the term ``eligible
professional'' means any of the following a: (1) physician; (2)
practitioner described in section 1842(b)(18)(C); (3) physical or
occupational therapist or a qualified speech-language pathologist; or
(4) qualified audiologist. The PQRI was first implemented in 2007 as a
result of section 101 of Division B of the Tax Relief and Health Care
Act of 2006--the Medicare Improvements and Extension Act of 2006 (Pub.
L. 109-432) (MIEA-TRHCA), which was enacted on December 20, 2006. The
PQRI was extended and further enhanced as a result of the Medicare,
Medicaid, and SCHIP Extension Act of 2007 (Pub. L. 110-173) (MMSEA),
which was enacted on December 29, 2007, and the MIPPA, which was
enacted on July 15, 2008. Changes to the PQRI as a result of these
laws, as well as information about the PQRI in 2007, 2008, and 2009,
are discussed in detail in the CY 2008 PFS proposed rule (72 FR 38196
through 38204), CY 2008 PFS final rule with comment period (72 FR 66336
through 66353), CY 2009 PFS proposed rule (73 FR 38558 through 38575),
and CY 2009 PFS final rule with comment period (73 FR 69817 through
69847). In addition, detailed information about the PQRI is available
on the CMS Web site at http://www.cms.hhs.gov/PQRI.
We received several comments from the public on the CY 2010 PFS
proposed rule related to the PQRI. General comments about the PQRI are
addressed immediately below.
Comment: Many commenters supported proposed program changes for
2010, in particular those that make reporting flexible and less
burdensome such as changes to the criteria for satisfactory reporting
of measures groups (specifically, the removal of the requirement to
report on consecutive patients), the proposed electronic health record-
based (EHR-based) reporting mechanism, and the group practice reporting
option.
Response: We appreciate the commenters' support of the changes
proposed for the 2010 PQRI, many of which are finalized herein. We
agree with commenters that many of the changes that we are finalizing
for the 2010 PQRI, including the ones listed above, provide eligible
professionals with greater flexibility and make reporting less
burdensome.
Comment: Several commenters suggested that we consider and
recommend to the Congress a modified version of the proposed option

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presented by the Senate Finance Committee in the April 29, 2009,
``Description of Policy Options, Transforming the Health Care Delivery
System: Proposals to Improve Patient Care and Reduce Health Care
Costs'' to add a new participation option allowing eligible
professionals to receive PQRI incentive payments for 3 successive years
if, on a triennial (every 3 year) basis, the eligible professional: (1)
participates in a qualified American Board of Medical Specialties
(ABMS) certification known as the Maintenance of Certification (MOC),
or equivalent programs; and (2) completes a qualified MOC practice
assessment. Such practice assessments typically consist of the use of
performance measures to evaluate practice activities, which includes
documentation of evidence of practice changes to improve quality, and
re-evaluation to determine the effect of a change in the practice
process or structure of care.
Response: Section 1848(m)(1) of the Act specifies the PQRI
incentive amount for each program year and how the incentive payment
amount is to be calculated for each reporting period during the program
year. We do not have the authority to change how the incentive payment
amount is determined and, therefore, cannot continue payments beyond
the authorized program year.
With respect to the commenters' suggestion to provide PQRI
incentive payments to eligible professionals who participate in an ABMS
MOC program and complete a qualified MOC practice assessment, section
1848(m)(3)(A) of the Act dictates the criteria that eligible
professionals must meet in order to be treated as satisfactorily
submitting data on quality measures. These criteria include the
reporting, by eligible professionals, of quality data on a standardized
set of national consensus-based measures. For years after 2009, section
1848(m)(3)(D) of the Act gives us the discretion to revise the criteria
for satisfactorily submitting data on quality measures. The proposed
criteria for 2010, which did not explicitly include the option
suggested by the commenters, were discussed in the CY 2010 PFS proposed
rule (74 FR 33565 through 33569). We believe that basing criteria for
satisfactory reporting solely on participation in an ABMS MOC and
completion of a qualified MOC practice assessment without the
submission of PQRI measures results would defeat the ability of CMS to
analyze and compare eligible professional performance based on a
standardized set of measures. PQRI is not based upon such
qualifications, but rather on the submission of data on quality
measures to measure eligible professional performance.
However, to the extent that ABMS member certification boards
collect information on PQRI quality measures from eligible
professionals, the ABMS member boards may qualify as registries under
the PQRI and report such information to CMS on behalf of eligible
professionals. Currently, one of the ABMS member boards has qualified
as a CMS PQRI registry and successfully submitted data on PQRI measures
on behalf of eligible professionals. This would allow eligible
professionals to concurrently participate in an ABMS MOC and PQRI.
Comment: Several commenters suggested that we expand our education
and outreach efforts so that professionals can gain a better
understanding of the program, coding, and how to participate
satisfactorily. Specifically, commenters suggested that we:
Publish a list of professions that have participated in
PQRI.
Communicate potential incentive amounts that could be
earned by an individual participant.
Work with the AMA and other national stakeholder
organizations to increase education and outreach for professionals
about the requirements for satisfactorily reporting under various
options.
Use provider-neutral language, such as ``clinician'' or
``provider'' in describing the array of eligible professionals.
Response: We value the input received from stakeholders and
participants who have provided constructive feedback and have
collaborated with us to disseminate educational PQRI materials to
eligible professionals in the health care community. We will continue
to work with national and regional stakeholder organizations to educate
their members on program requirements for satisfactory reporting.
We also plan to continue to host monthly national provider calls in
which we expect to provide guidance on specific topics, including
having our PQRI subject matter experts available to answer questions on
the PQRI. Information about upcoming calls can be obtained from the CMS
Sponsored Calls page of the PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI/04_CMSSponsoredCalls.asp#TopOfPage. We will
continue to make PQRI educational materials and other resources
available on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI as well. Updated educational materials and
resources for the 2010 PQRI will be made available as soon as possible
following publication of this final rule with comment period. Where
appropriate, we will consistently use inclusive terminology such as
``eligible professionals'' rather than ``physicians'' in PQRI
educational resources and related documents. We encourage eligible
professionals to visit this Web site and to review the frequently asked
questions (FAQs) found on this Web site. Eligible professionals are
also encouraged to join the physician listserv to obtain periodic
updates about the PQRI. Instructions for joining the listserv can be
found at https://list.nih.gov/archives/physicians-1.html.
Finally, we anticipate conducting and publishing an evaluation of
the 2008 PQRI similar to the ``PQRI 2007 Reporting Experience'' posted
on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI/Downloads/PQRI2007ReportFinal12032008CSG.pdf. Although we have not yet
finalized the operational details of our evaluation strategy, we expect
the report to 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.
Comment: Several commenters requested that we provide more detailed
educational resources well in advance of the 2010 PQRI start date and
provide enough lead time so that electronic systems may be updated to
allow data capture for new or revised 2010 PQRI measures.
Response: We agree with the commenters that it is desirable to
provide final measure specifications and other educational resources
sufficiently in advance of the start of a new program year to allow
reasonable time for professionals to analyze new or revised reporting
options and measures, and implement any needed changes in their office
workflows so that they may accurately capture and satisfactorily submit
data on a selection of measures applicable to their practice. We are
aware that such lead time would also help the eligible professionals'
specialty or professional societies to prepare to support the
professionals' selection of relevant measures. Having detailed
information on measures available in advance also enhances the ability
of vendors (such as practice-management software, billing services, and
electronic health record vendors) to support professionals' successful
implementation of revised data capture processes for the measures. We
are

[[Page 61790]]

targeting finalization and publication of the detailed specifications
for all 2010 PQRI measures on the CMS Web site, by November 15, 2009,
but no later than December 31, 2009. The detailed specifications
include instructions for reporting and identifying the circumstances in
which each measure is applicable. The specifications for measures in
the final listing for the 2010 PQRI, including a measure's title,
remain potentially subject to corrections until the start of the 2010
reporting period. We are also committed to making other educational
resources for the 2010 PQRI available on the PQRI section of the CMS
Web site at http://www.cms.hhs.gov/PQRI as quickly as possible after
publication of this final rule with comment period.
As discussed below, to assist eligible professionals who may need
additional time to make updates to their electronic systems or practice
workflows, we also are finalizing a 6-month reporting period beginning
July 1, 2010, for claims-based reporting of individual measures. Thus,
the 6-month reporting period will be available for both those who wish
to report individual measures, as well as measures groups through
claims or a qualified registry.
Comment: Some commenters requested that we provide detailed data
used to determine that a professional failed to report on 80 percent of
eligible cases and to inform them about what they need to do to rectify
errors.
Response: We considered recommendations about PQRI participant
feedback reports as part of an ongoing dialogue with the stakeholder
and participant community. We convened a multi-specialty focus group
and have revised the design and content of the 2008 PQRI feedback
reports, which were recently released. These revised feedback reports
include more detailed information at the individual eligible
professional level than was provided in the 2007 PQRI feedback reports.
Comment: Several commenters stated that the 2007 feedback reports
were too difficult to obtain, did not provide sufficient detailed
information to allow correction, and were not available on an interim
basis to prevent eligible professionals from making the same errors in
the following program year.
Response: To address concerns expressed about our secure method
used to obtain the feedback reports (which requires eligible
professionals to register and obtain an Individuals Authorized Access
to CMS Computer Services, or IACS, account), we identified an
alternative feedback report request process for individual eligible
professionals requesting NPI level reports, which allows an individual
participant to obtain his or her own feedback report through their
carrier or MAC after providing appropriate identification. Information
about this new process is available on the PQRI section of the CMS Web
site and was discussed on the October 15, 2009, PQRI national provider
call.
We have assessed the feasibility of providing some type of interim
feedback report to participants. We have determined, however, detailed,
accurate, participant-level interim feedback reports cannot be provided
in an appropriately secure access environment. However, given that the
most prevalent underlying reasons for failure to meet incentive
eligibility are due to (1) failure by the professional to identify and
report on at least 80 percent of denominator-eligible cases for the
measures selected, and (2) quality data code errors due to incorrect or
insufficient coding, we have determined that an aggregate-level quality
data submission error report could be published on a quarterly basis on
the PQRI section of the CMS Web site, to provide information on the
types of submission errors found for each measure. Following the
posting of the ``PQRI 2007 Reporting Experience'' report, we have
continued to post updated error reports on a quarterly basis on the
PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI.
Comment: Several commenters who participated in the 2008 PQRI have
commented on the lack of timely feedback reports and incentive
payments.
Response: For claims-based reporting, PQRI analysis of individual
professionals' claims begins after the conclusion of the program year
when all claims have been processed. Conducting individual-level
analysis on a portion of a professional's claims during the program
year would result in inaccurate data and presents a significant expense
to CMS. We acknowledge participating professionals' need for interim
information on the accuracy of their quality reporting through claims.
Therefore, we have posted aggregate-level information on the PQRI
section of the CMS Web site on a quarterly basis describing quality-
data code submission errors that we observe on claims for each PQRI
measure and anticipate continuing to do so in the future.
In addition, many registries provide interim feedback to their
clients. Therefore, eligible professionals who participate in PQRI
through a qualified registry may be able to receive interim feedback
from the registry and have the opportunity to correct those errors
prior to the program year data submission deadline.
Comment: Several commenters requested that we establish a formal
appeals process for those professionals who participate in PQRI but do
not qualify for the incentive payment.
Response: Section 1848(m)(5)(e) of the Act provides that with
respect to the PQRI there shall be no administrative or judicial review
under section 1869, section 1879, or otherwise of (1) The determination
of measures applicable to services furnished by eligible professionals;
(2) the determination of satisfactory reporting; and (3) the
determination of any incentive payment. Since 2007, we have addressed
inquiries about the PQRI through the question-and-answer sessions held
during monthly PQRI national provider calls and open door forums. More
recently, a dedicated Help Desk has been implemented to respond to
participants' inquiries related to all aspects of the PQRI, including
assisting eligible professionals in understanding why they did not
receive a PQRI incentive payment. The Help Desk is available from 7
a.m. to 7 p.m. CT and can be reached by phone at (866) 288-8912 or via
e-mail at [email protected].
Comment: Several commenters expressed the need to evaluate the
impact of PQRI and make evaluation results available to stakeholders.
Some commenters stated that an evaluation of outcomes achieved is
needed before deciding whether to expand the program, impose penalties,
or make participation mandatory. One commenter noted that such an
evaluation is needed to restore confidence in the PQRI since the
program's validity within the eligible professional community has been
compromised due to the PQRI being rushed. Other commenters urged us to
provide medical specialty organizations with the PQRI data files so
that they may perform an independent analysis to assist CMS to improve
the clinical appropriateness of physician quality measures and better
understand or correct potential barriers to satisfactory reporting.
Response: We have conducted and published an evaluation of the 2007
PQRI and have posted the ``PQRI 2007 Reporting Experience'' on the PQRI
section of the CMS Web site at http://www.cms.hhs.gov/PQRI/Downloads/PQRI2007ReportFinal12032008CSG.pdf. We anticipate conducting a similar
evaluation of the 2008 PQRI and expect to include participation rates
by

[[Page 61791]]

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 for the 2008 PQRI
and beyond, we do anticipate making the results of the evaluation, at
the national level, available to the public. We also may 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' reporting or performance results.
Comment: Several commenters urged CMS to expand PQRI in a manner
that would allow participation by therapy professionals who practice in
institutional settings such as hospitals, rehabilitation facilities,
and skilled nursing facilities and submit their individual National
Provider Identifier (NPI) either through claims or through registry-
based reporting.
Response: As we stated in the CY 2008 PFS final rule with comment
period (74 FR 69820 through 69821), 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 statutory
requirements. Except for group practices participating in the group
practice reporting option, which begins in 2010, the determination of
satisfactory reporting and the calculation of any earned incentive
payment amount must be determined at the individual professional level,
regardless of the method of reporting quality data. For therapy
professionals who practice in institutional settings, we cannot make
the determination of satisfactory reporting and calculate earned
incentive payment amounts at the individual eligible professional level
without extensive modifications to the claims processing systems of CMS
and providers, which would represent a material administrative burden
to us and to providers. It would also require modifications to the
industry standard claims formats, which would require substantial time
to effect through established processes and structures that we do not
maintain or control. We have also found that most institutions that
employ therapists do not tie the individual therapist to the service
rendered to an individual patient. Instead, therapists are hired for a
fixed number of hours per day per week. In this case, there are no
provider identifiers available to use in processing these claims.
Comment: Several commenters indicated that we should convert PQRI
from a pay-for-reporting program to a pay-for performance program,
stating that reporting on quality measures is not sufficient and that
consumers need performance data for informed choice based on quality
and value.
Response: Our plans for a report to Congress on transitioning to a
physician value-based purchasing program are discussed in section
II.G.4. of this final rule with comment period.
Comment: Some commenters expressed concern that the impact analysis
of the estimated costs for participation by professionals for claims-
based, registry-based, and EHR-based reporting contained in the CY 2010
PFS proposed rule (74 FR 33664 through 33665) are too low or inaccurate
and should be rectified in the final rule. One commenter noted that one
estimate of the cost for a practice to participate in PQRI ranges from
$55,000 to $1.3 million. Other commenters cited an example from a
practice with 1 full-time eligible professional and 1 part-time
eligible professional where it was determined that the cost for claims-
based reporting in PQRI was $1,780 per year, or $1,186 per eligible
professional. Some commenters suggested that we conduct a survey of
successful PQRI participants and/or data submission vendors to
determine all participation costs and publish survey results in future
rules.
Response: As stated in the CY 2010 PFS proposed rule (74 FR 33664),
individual eligible professionals and group practices may have
different processes for integrating the PQRI into their practices' work
flows. Therefore, it is difficult for us to accurately quantify the
cost burden because it would vary with each eligible professional by
the number of measures applicable to the eligible professional, the
number of measures on which an eligible professional chooses to report,
the complexity of the measure(s) chosen by the eligible professional,
the eligible professional's patient population and how frequently the
professional's selected measure(s) apply to the professional's patient
population, the eligible professional's familiarity, understanding, and
experience with the PQRI, and the reporting option selected by the
eligible professional. To be able to provide any cost estimates we had
to use certain assumptions with respect to the number of measures
reported on and the number of reporting instances per eligible
professional. Given that practices vary in size and patient population,
these assumptions will not hold true for every practice participating
in PQRI and some practices' costs associated with PQRI participation
will exceed the estimates provided in our cost estimates while other
practices will have costs below our estimates. We cannot assess the
examples offered by commenters without additional information on the
number of measures reported by each eligible professional in the
practice and the number of reporting instances per eligible
professional. We will consider, however, the commenters' suggestions
for future years but believe that it would be unlikely that we would be
able to obtain a representative sample of survey respondents given the
many variables that impact participation costs.
Comment: A specific concern cited by commenters with respect to the
impact analysis was that reliance on historical data from the Physician
Voluntary Reporting Program (PVRP) is inappropriate and does not take
into consideration the development and maintenance of new workflows
necessary to participate in PQRI and the new measure, measure
specification changes and reporting option changes that occur on an
annual basis.
Response: Information from the PVRP was used solely for developing
cost estimates for participation in PQRI through the claims-based
reporting mechanism; not through other reporting mechanisms. To develop
our cost estimates for claims-based reporting, we applied information
from PVRP on how much time it takes one eligible professional, in a
median practice, to report one measure one time through claims to our
assumptions. We recognize that the PVRP cost estimates are historical,
but we do not believe that the process for reporting measures through
claims has changed significantly from PVRP to PQRI in a way to
considerably change the amount of time it takes one eligible
professional to report one measure one time through claims. However,
for our impact analysis, we did use a higher average practice labor
cost than what was indicated in the information from the PVRP (that is,
we used $55 per hour instead of $50 per hour) to account for increases
in labor costs over time (74 FR 33655).
Comment: Other commenters had specific concerns about the estimates
provided for participation in PQRI via registries. Some commenters
offered anecdotal information that the annual cost to one practice of
participating in a specific registry is approximately $3,000. Another
commenter believed that more than 5 minutes is needed for

[[Page 61792]]

an eligible professional to authorize a registry to submit quality
measure results and numerator and denominator data on their behalf.
Other commenters were concerned that our estimate of $1,500 to $5,000
to purchase an EHR product was too low. One commenter noted that EHR
systems have capital costs of over $1 million per year. Another
commenter noted that researchers recently found that it would cost
about $124,000 for a single doctor or small practice to upgrade to EHRs
over 5 years.
Response: We appreciate the input from commenters and have taken
the additional information provided by commenters into consideration to
revise the estimates associated with registry and EHR reporting where
appropriate in sections XIII.E.2 and XI. of this final rule with
comment period.
For registry reporting, however, we note that many registries offer
additional services beyond what is required to participate in PQRI. In
the example provided by commenters, it is not clear whether those costs
that are not related to reporting PQRI quality measure results and
numerator and denominator data on PQRI measures have been taken into
consideration and excluded. Our impact analysis is limited to the
incremental cost of participating in PQRI.
b. Incentive Payments for the 2010 PQRI
For 2010, section 1848(m)(1)(B) of the Act authorizes the Secretary
to provide an incentive payment equal to 2.0 percent of the estimated
total Medicare Part B PFS allowed charges (based on claims submitted
not later than 2 months after the end of the reporting period) for all
covered professional services furnished during the reporting period for
2010. Although PQRI incentive payments are only authorized through 2010
under section 1848(m)(1)(A) of the Act, section 1848(k)(2)(C) of the
Act provides for the use of consensus-based quality measures for the
PQRI for 2010 and subsequent years.
The PQRI incentive payment amount is calculated using estimated
Medicare Part B PFS allowed charges for all covered professional
services, not just those charges associated with the reported quality
measures. ``Allowed charges'' refers to total charges, including the
beneficiary deductible and coinsurance, and is not limited to the 80
percent paid by Medicare or the portion covered by Medicare where
Medicare is secondary payer. Amounts billed above the PFS amounts for
assigned and non-assigned claims will not be included in the
calculation of the incentive payment amount. In addition, since, by
definition under section 1848(k)(3)(A) of the Act, ``covered
professional services'' are limited to services for which payment is
made under, or is based on, the PFS and which are furnished by an
eligible professional, other Part B services and items that may be
billed by eligible professionals but are not paid under or based upon
the Medicare Part B PFS are not included in the calculation of the
incentive payment amount.
Under section 1848(m)(6)(C) of the Act, the ``reporting period''
for the 2008 through 2011 PQRI is defined to be the entire year, but
the Secretary is authorized to revise the reporting period for years
after 2009 if the Secretary determines such ``revision is appropriate,
produces valid results on measures reported, and is consistent with the
goals of maximizing scientific validity and reducing administrative
burden.''
We are also required by section 1848(m)(5)(F) of the Act to
establish alternative criteria for satisfactorily reporting and
alternative reporting periods for registry-based reporting and for
reporting measures groups. Therefore, eligible professionals who meet
the alternative criteria for satisfactorily reporting for registry-
based reporting and for reporting measures groups for the 2010
alternative reporting periods for registry-based reporting and for
reporting measures groups will also be eligible to earn an incentive
payment equal to 2.0 percent of the estimated total Medicare Part B PFS
allowed charges for all covered professional services furnished by the
eligible professional during the alternative reporting periods for 2010
PQRI registry-based reporting or for reporting measures groups.
Prior to 2010, the PQRI was an incentive program in which
determination of whether an eligible professional satisfactorily
reported quality data was made only at the individual professional
level, based on the NPI. Although the incentive payments were made to
the practice(s) represented by the Tax Identification Number (TIN) to
which payments are made for the individual professional's services,
there were no incentive payments made to the group practice based on a
determination that the group practice, as a whole, satisfactorily
reported PQRI quality measures data. To the extent individuals (based
on the individuals' NPIs) satisfactorily reported data on PQRI quality
measures that were associated with more than one practice or TIN, the
determination of whether an eligible professional satisfactorily
reported PQRI quality measures data was made for each unique TIN/NPI
combination. Therefore, the incentive payment amount was calculated for
each unique TIN/NPI combination and payment was made to the holder of
the applicable TIN.
However, section 1848(m)(3)(C)(i) of the Act requires that by
January 1, 2010, the Secretary establish and have in place a process
under which eligible professionals in a group practice (as defined by
the Secretary) shall be treated as satisfactorily submitting data on
quality measures for the PQRI for covered professional services for a
reporting period, if, in lieu of reporting measures under subsection
(k)(2)(C), the group practice reports measures determined appropriate
by the Secretary, such as measures that target high-cost chronic
conditions and preventive care, in a form and manner, and at a time,
specified by the Secretary. Therefore, beginning with the 2010 PQRI,
group practices that satisfactorily submit data on quality measures
also would be eligible to earn an incentive payment equal to 2.0
percent of the estimated total Medicare Part B PFS allowed charges for
all covered professional services furnished by the group practice
during the applicable reporting period. As required by section
1848(m)(3)(C)(iii) of the Act, payments to a group practice by reason
of the process described above would be in lieu of the PQRI incentive
payments that would otherwise be made to eligible professionals in the
group practice for satisfactorily submitting data on quality measures.
Therefore, an individual eligible professional who is participating in
the group practice reporting option as a member of a group practice
would not be able to separately earn a PQRI incentive payment as an
individual eligible professional under that same TIN (that is, for the
same TIN/NPI combination).
The following is summary of the comments we received regarding the
2010 PQRI incentive payment amount.
Comment: One commenter expressed support of the proposed extension
of the PQRI incentive related to the group practice reporting option.
Response: We appreciate the commenter's support of the extension of
the PQRI incentive to group practices.
Commenter: One commenter expressed a concern that the PQRI
incentive payment is calculated as a percentage of the total Medicare
billing of the individual eligible professional. The commenter
expressed concern that for an equal amount of relative value unit work,
eligible professionals in lower GPCI localities will receive as

[[Page 61793]]

much as 38 percent less PQRI payment for the same work, time, and
effort used in providing quality care than eligible professionals in
higher GPCI localities. The commenter suggested that PQRI incentive
payment calculations should not be geographically adjusted and
recommended that we change the basis of the incentive to RVUs rather
than dollars billed to Medicare.
Response: While we acknowledge the effect of the GPCI on the
calculation of the PQRI incentive amount, we do not have authority to
change the basis for the calculation of the incentive amount, which is
defined by section 1848(m)(1) of the Act.
Comment: A commenter requested clarification on whether
radiopharmaceuticals are included in the PQRI and electronic
prescribing incentive payments (see section II.G.5. of this final rule
with comment period for further discussion of the E-Prescribing
Incentive Program).
Response: Medicare Part B PFS allowed charges for
radiopharmaceuticals have been included for determining the PQRI and
electronic prescribing incentive payments. Radiopharmaceuticals are
included as part of section 1861(s)(4) of the Act, which is
incorporated into the list of PFS services cited in section 1848(j)(3)
of the Act, and therefore, are part of the PQRI and electronic
prescribing incentive calculations.
The relevant radiopharmaceutical codes are paid on the basis of
invoices submitted by physicians. Such invoices are considered similar
to contractor priced items or services. In addition,
radiopharmaceuticals are classified as A codes (A9500-A9699) which
inadvertently have not previously been included in Addendum B.
Commencing with CY 2010, radiopharmaceuticals will be included in
Addendum B as MPFSDB covered charges.
Furthermore, FAQ 8545, which can be accessed via the PQRI section
of the CMS Web site, states that for ``PQRI participants who report
satisfactorily, radiopharmaceuticals furnished as part of a covered
professional service will be included in the basis of total Medicare
Part B PFS allowed charges on which the incentive is calculated.''
No changes in radiopharmaceutical payment will be necessary.
Payment will continue to be contractor-priced on the basis of invoices
under the physician fee schedule.
c. 2010 Reporting Periods for Individual Eligible Professionals
As we indicated above, section 1848(m)(6)(C) of the Act defines
``reporting period'' for 2010 to be the entire year. Section
1848(m)(6)(C)(ii) of the Act, however, authorizes the Secretary to
revise the reporting period for years after 2009, if the Secretary
determines such revision is appropriate, produces valid results on
measures reported, and is consistent with the goals of maximizing
scientific validity and reducing administrative burden. In addition,
section 1848(m)(5)(F) of the Act requires, for 2008 and subsequent
years, the Secretary to establish alternative reporting periods for
reporting groups of measures and for registry-based reporting.
In the CY 2010 PFS proposed rule (74 FR 33560), we proposed that
the 2010 PQRI reporting period for the reporting of individual PQRI
quality measures through claims or a qualified EHR would be the entire
year (that is, January 1, 2010 through December 31, 2010). We also
proposed to retain the 2 alternative reporting periods from the 2008
and 2009 PQRI for reporting measures groups and for registry-based
reporting: (1) the entire year; and (2) a 6-month reporting period
beginning July 1.
We solicited comments on these proposals and the decision not to
propose a 6-month reporting period for claims-based reporting of
individual PQRI quality measures. The following is a summary of the
comments received regarding the proposed reporting periods.
Comment: Although a majority of the commenters supported the
proposed reporting periods, we received several comments requesting
that CMS retain or add a 6-month reporting period for claims-based
reporting of individual measures. Many commenters requested this
additional reporting period because they believe that doing so would
encourage PQRI participation by allowing more time for eligible
professionals to implement PQRI into their practice workflows and
providing an opportunity for those who are hesitant to continue
participating in PQRI until they receive feedback from the previous
year to do so as well. Many commenters noted that reporting measures
groups or reporting through a registry is not an option for them. Other
commenters suggested that we maintain the 6-month reporting period for
claims-based reporting of individual measures to maintain flexibility
and uniformity in reporting periods for all PQRI reporting options to
reduce confusion since many eligible professionals already believe that
they can start claims-based reporting of individual measures in July.
Some commenters also requested that we have a 6-month reporting
period for claims-based reporting of individual measures for situations
in which an eligible professional who was planning to report through an
alternative reporting mechanism may have to revert to claims-based
reporting during the year, such as when an eligible professional's EHR
system requires re-installation or significant maintenance or upgrades
or when it takes longer for a practice to acquire a new EHR system than
anticipated.
Response: Although many commenters requested that we ``retain'' the
6-month reporting period for claims-based reporting of individual
measures, we would like to clarify there was no 6-month reporting
period for claims-based reporting of individual quality measures
available for either the 2008 or 2009 PQRI. In the 2008 and 2009 PQRI,
the 6-month reporting period beginning July 1 was only available to
eligible professionals who chose to report on measures groups or chose
registry-based reporting (of either individual measures or measures
groups). Prior to 2010 we did not have the authority to change the
reporting period for claims-based reporting of individual measures,
which is defined by section 1848(m)(6)(C)(i)(II) of the Act to be the
entire year for 2008, 2009, 2010, and 2011. The only program year in
which the reporting period was defined by statute to be the 6-month
period beginning July 1 was the 2007 PQRI.
However, as a result of the compelling arguments presented by
commenters, we will exercise our authority under section
1848(m)(6)(C)(ii) of the Act to revise the reporting period for the
2010 PQRI. Thus, in addition to the 12-month reporting period beginning
January 1, 2010, we are finalizing a 6-month reporting period beginning
July 1, 2010, available for claims-based reporting of individual
measures for the 2010 PQRI.
Comment: One commenter supported not adding a 6-month reporting
period for claims-based reporting of individual measures based on the
assumption that we would eliminate claims-based reporting after 2010.
Response: As we stated in the CY 2010 PFS proposed rule (74 FR
33561), our ability to reduce or eliminate our reliance on claims-based
reporting is contingent on there being an adequate number and variety
of registries available and/or EHR reporting options. Since it is
unlikely that there will be an adequate number of measures available
for EHR reporting in 2011 for us to solely rely on registry and EHR
reporting, we anticipate continuing to offer claims-based reporting
options for the PQRI beyond 2010. Therefore, for the reasons discussed
above, we believe that a 6-month reporting period for claims-based
reporting of individual

[[Page 61794]]

measures should be available to the extent that claims-based reporting
of individual measures continues to be an available option for eligible
professionals.
Comment: One commenter requested that we provide a ``clarifying
definition of the term `qualified' '' with respect to the proposed 2010
PQRI reporting periods. The commenter noted that there is a similar
term in industry use and a definition would help to avoid confusion.
Response: We are unclear as to how the term ``qualified'' relates
to the PQRI reporting periods and believe that the commenter may be
referring to our use of the term ``qualified'' with respect to registry
and EHR reporting. As proposed for the 2010 PQRI (74 FR 33563 through
33565), for purposes of the PQRI, a ``qualified'' registry is one that
has self-nominated to be able to submit PQRI quality measures results
and numerator and denominator data on PQRI quality measures or measures
groups on behalf of eligible professionals and that has been vetted by
CMS to ensure the registry's meets certain technical and other
requirements. Similarly, a ``qualified'' EHR vendor is one that has
self-nominated to have one or more of its EHR products vetted by CMS to
ensure that the product(s) meets certain technical and other
requirements. Eligible professionals who wish to submit PQRI measures
via an EHR may only use qualified EHR products to do so.
For the reasons discussed above and based on the comments, for
2010, we will retain a 12-month reporting period beginning January 1,
2010, which will be available for all reporting mechanisms and
regardless of whether an individual eligible professional chooses to
report on 2010 PQRI individual measures or measures groups. In
addition, we are adopting a 6-month reporting beginning July 1, 2010,
for claims-based and registry-based reporting of 2010 PQRI individual
measures or measures groups. This 6-month reporting period will not be
available for EHR-based reporting in 2010. Once we have additional
experience with EHR reporting in PQRI we may consider including a 6-
month reporting period for EHR reporting in future years.
In addition, an eligible professional who satisfactorily reports
2010 PQRI measures or measures groups through claims or a qualified
registry for the 6-month reporting period will qualify to earn a PQRI
incentive payment equal to 2.0 percent of his or her total estimated
Medicare Part B PFS allowed charges for covered professional services
furnished between July 1, 2010 and December 31, 2010 only. As required
by section 1848(m)(1)(A) of the Act, the incentive payment will be
calculated based on the eligible professional's charges for covered
professional services furnished during the applicable reporting period
only.
d. 2010 PQRI Reporting Mechanisms for Individual Eligible Professionals
When the PQRI was first implemented in 2007, there was only 1
reporting mechanism available to submit data on PQRI quality measures.
For the 2007 PQRI, the only way that eligible professionals could
submit data on PQRI quality measures was by reporting the appropriate
quality data codes on their Medicare Part B claims (claims-based
reporting). For the 2008 PQRI, we added a second reporting mechanism as
required by section 1848(k)(4) of the Act, so that eligible
professionals could submit data on PQRI quality measures to a qualified
PQRI registry and request the registry to submit PQRI quality measures
results and numerator and denominator data on the 2008 PQRI quality
measures or measures groups on their behalf (registry-based reporting).
For the 2009 PQRI, we retained the 2 reporting mechanisms used in the
2008 PQRI (that is, claims-based reporting and registry-based
reporting) for reporting individual PQRI quality measures and for
reporting measures groups.
To promote the adoption of EHRs, we also conducted limited testing
of a third reporting mechanism for the 2008 and 2009 PQRI, which was
the submission of clinical quality data extracted from an EHR, or the
EHR-based reporting mechanism. No incentive payment was available to
those eligible professionals who participated in testing the EHR-based
reporting mechanism.
For the 2010 PQRI, we proposed to retain the claims-based reporting
mechanism and the registry-based reporting mechanism. In addition, we
proposed to accept PQRI quality measure data extracted from a qualified
EHR product (that is, an EHR successfully completing the 2009 EHR
Testing Program) for a limited subset of the proposed 2010 PQRI quality
measures, as identified in Table 20 of the CY 2010 PFS proposed rule,
contingent upon the successful completion of our 2009 EHR data
submission testing process and a determination based on that testing
process that accepting data from EHRs on quality measures for the 2010
PQRI is practical and feasible. We solicited comments on the proposed
reporting mechanisms for the 2010 PQRI, including the proposal to add
an EHR-based reporting mechanism to the 2010 PQRI, contingent upon the
successful completion of our 2009 EHR data submission testing process
and a determination that accepting data from EHRs on quality measures
for the 2010 PQRI is practical and feasible.
We also discussed in the CY 2010 PFS proposed rule how we may
consider significantly limiting the claims-based mechanism of reporting
clinical quality measures for the PQRI after 2010. We solicited
comments on our intent to lessen our reliance on the claims-based
reporting mechanism for the PQRI beyond 2010.
The following is a summary of the comments received with regard to
the proposed 2010 PQRI reporting mechanisms and our intent to lessen
reliance on the claims-based reporting mechanism for the PQRI beyond
2010.
Comment: A majority of the commenters agreed with our reasons for
lessening our reliance of claims-based reporting, supported alternative
reporting mechanisms, or agreed that we should eventually transition
away from claims-based reporting. At the same time, however, many of
these same commenters urged us to reconsider limiting or eliminating
claims-based reporting in 2011. Many commenters noted that claims-based
reporting is currently the only option available for many eligible
professionals and is the only reporting mechanism that is available to
all eligible professionals. Other commenters cited claims-based
reporting as the most convenient and cost-effective reporting mechanism
available to eligible professionals, particularly solo practitioners
and those in small practices. Also, the commenters noted that the EHR-
based reporting mechanism initially will only be available on a limited
basis so we should wait until EHR-based reporting becomes well
established before transitioning away from claims-based reporting.
Response: We acknowledge the commenters' concerns that prematurely
eliminating the claims-based reporting mechanism could create barriers
to participation. While our goal continues to be to eventually phase-
out claims-based reporting, our ability to reduce or eliminate our
reliance on claims-based reporting is contingent on there being an
adequate number and variety of registries available and/or EHR
reporting options. As we stated previously, since it is unlikely that
there will be an adequate number of measures available for EHR
reporting in 2011 for us to completely eliminate the claims-based
reporting mechanism, we

[[Page 61795]]

anticipate continuing to offer claims-based reporting options for the
PQRI beyond 2010. We may, however, avoid introducing new claims-based
measures and increasingly limit the circumstances in which claims-based
reporting is an available reporting mechanism in order to encourage
wider adoption of registry or EHR-based reporting.
Comment: One commenter recommended that, as we move towards
reducing reliance on claims-based reporting for PQRI and increase
registry-based and EHR-based options, we require registries and EHR
vendors to seek and obtain a license to use the measures from the
measure developers.
Response: PQRI measure specifications are developed in consultation
with the measure developers and are made available to the public via
posting on the PQRI section of the CMS Web site. Registries must use
the PQRI measure specifications posted on the PQRI section of the CMS
Web site to calculate reporting or performance unless otherwise stated.
Similarly, eligible professionals who choose to participate in PQRI via
the EHR-based reporting mechanism must use PQRI measure specifications
to do so. We believe use of these measure specifications, regardless of
the method by which quality data is submitted to PQRI for analysis,
ensures consistent use and reporting of the measures.
Comment: One commenter expressed concern that registry and EHR-
based reporting may not account for changes in patient condition over
the course of the reporting period, and suggested reporting options be
restructured so that results submitted using any method for a given
patient population and a specific time period are identical.
Response: Regardless of the reporting mechanism an eligible
professional selects to participate in PQRI, measure specifications and
instructions for reporting a measure are consistent across mechanisms.
If the measure specifications are analyzed properly by a registry or
EHR vendor, the results should be very close or identical to the
results for claims-based reporting, as the commenter requested.
Comment: Several commenters recommended uniform data submission
deadlines be established across all reporting mechanisms. The commenter
noted specifically that the proposed deadline for submission of data on
PQRI quality measures for EHR-based reporting and for registry
reporting was March 31, 2011 while the proposed deadline for submission
of data on PQRI quality measures for other reporting mechanisms was
February 28, 2011.
Response: We agree that the deadline for submission of data on PQRI
quality measures for EHR-based reporting should be consistent with the
deadline for submission of data on PQRI quality measures for claims-
based reporting. Therefore, eligible professionals participating in the
2010 PQRI via EHR reporting or claims reporting will be required to
submit all data on 2010 PQRI quality measures by no later than February
28, 2011 in order for the data to be included in the 2010 PQRI data
analysis. Whereas CMS receives the raw data elements from eligible
professionals for EHR and claims-based reporting and calculates the
eligible professionals' reporting and performance results, registries
must calculate and submit eligible professionals' quality measure
reporting and performance results to us. In implementing registry-based
reporting for the 2008 PQRI, we determined that a February deadline for
submission of data on PQRI quality measures would be insufficient for
registries to collect the data from their participants, calculate PQRI
quality measure results, and submit the quality measure results and
numerator and denominator data to CMS. Thus, registries are given
additional time beyond February 28, 2011, to submit their data on
behalf of participating eligible professionals. Eligible professionals
participating in the 2010 PQRI via registry reporting should check with
their selected registry regarding the registry's deadline for
submission of data on PQRI quality measures from eligible
professionals.
For the reasons discussed above and based on the comments received,
as well as our experience with the EHR testing process to date, we are
finalizing the option for an eligible professional to be able to choose
to report data on 2010 PQRI quality measures through claims, through a
qualified registry, or through a qualified EHR product (contingent on
there being a qualified 2010 EHR product). Depending on which PQRI
individual quality measures or measures groups an eligible professional
selects, however, one or more of the 2010 reporting mechanisms may not
be available for reporting a particular 2010 PQRI individual quality
measure or measures group. The 2010 reporting mechanism(s) through
which each 2010 PQRI individual quality measure and measures group can
be reported is identified in Tables 11 through 27 of this final rule
with comment period.
Regardless of the reporting mechanism chosen by an eligible
professional, there is no requirement for the eligible professional to
sign up or register to participate in the PQRI. However, there may be
some requirements for participation through a specific reporting
mechanism that are unique to that particular reporting mechanism. In
addition to the criteria for satisfactory reporting of individual
measures and measures groups described in sections II.G.2.e. and
II.G.2.f. of this final rule with comment period, eligible
professionals must ensure that they meet all requirements for their
chosen reporting mechanism as described in sections II.G.2.d.1. through
II.G.2.d.3. of this final rule.
(1) Final Requirements for Individual Eligible Professionals Who Choose
the Claims-Based Reporting Mechanism
For eligible professionals who choose to participate in the 2010
PQRI by submitting data on individual quality measures or measures
groups through the claims-based reporting mechanism, we proposed that
the eligible professional would be required to submit the appropriate
PQRI quality data codes on the professionals' Medicare Part B claims.
As in previous years, an eligible professional would be permitted to
start submitting the quality data codes for the eligible professional's
selected individual PQRI quality measures or measures group at any time
during 2010. Please note, however, that as required by section
1848(m)(1)(A) of the Act, all claims for services furnished between
January 1, 2010 and December 31, 2010, would need to be processed by no
later than February 28, 2011, to be included in the 2010 PQRI analysis.
We did not receive any comments specific to the requirements for
individual eligible professionals who choose claims-based reporting.
Therefore, we are finalizing the requirements as proposed. Eligible
professionals should refer to the ``2010 PQRI Implementation Guide'' to
facilitate satisfactory reporting of quality data codes for 2010 PQRI
individual measures on claims and to the ``Getting Started with 2010
PQRI Reporting of Measures Groups'' to facilitate satisfactory
reporting of quality data codes for 2010 PQRI measures groups on
claims. By no later than December 31, 2009, both of these documents
will be posted on the PQRI section of the CMS Web site at http://
www.cms.hhs.gov/pqri.
(2) Final Requirements for Individual Eligible Professionals Who Choose
the Registry-Based Reporting Mechanism
In order to report quality measures results and numerator and
denominator data on the 2010 PQRI individual quality measures or
measures group through a qualified clinical registry, we

[[Page 61796]]

proposed that eligible professionals would need to enter into and
maintain an appropriate legal arrangement with a qualified 2010 PQRI
registry. Such arrangements would provide for the registry's receipt of
patient-specific data from the eligible professional and the registry's
disclosure of quality measures results and numerator and denominator
data on PQRI quality measures or measures groups on behalf of the
eligible professional to CMS. Thus, the registry would act as a Health
Insurance Portability and Accountability Act of 1996 (Pub. L. 104-191)
(HIPAA) Business Associate and agent of the eligible professional. Such
agents are referred to as ``data submission vendors.'' The ``data
submission vendors'' would have the requisite legal authority to
provide clinical quality measures results and numerator and denominator
data on individual quality measures or measures groups on behalf of the
eligible professional for the PQRI. The registry, acting as a data
submission vendor, would submit CMS-defined registry-derived measures
information to the CMS designated database for the PQRI, using a CMS-
specified record layout. The record layout will be provided to the
registry by CMS.
To maintain compliance with applicable statutes and regulations,
our program and its data system must maintain compliance with the HIPAA
requirements for requesting, processing, storing, and transmitting
data. Eligible professionals that conduct HIPAA covered transactions
also would need to maintain compliance with the HIPAA requirements.
We proposed that eligible professionals choosing to participate in
PQRI by submitting quality measures results and numerator and
denominator data on PQRI individual quality measures or measures groups
through the registry-based reporting mechanism for 2010 would be
required to select a qualified PQRI registry and submit information on
PQRI individual quality measures or measures groups to the selected
registry in the form and manner and by the deadline specified by the
registry (74 FR 33562).
In addition to meeting the above proposed requirements specific to
registry-based reporting, we proposed that eligible professionals who
choose to participate in PQRI through the registry-based reporting
mechanism would need to meet the relevant criteria proposed for
satisfactory reporting of individual measures or measures groups that
all eligible professionals must meet in order to qualify to earn a 2010
PQRI incentive payment (74 FR 33563).
The following is a summary of the comments we received regarding
the proposed requirements for individual eligible professionals who
choose the registry-based reporting mechanism for the 2010 PQRI.
Comment: We received multiple comments requesting that we not wait
until the qualified 2009 registries successfully submit their 2009 PQRI
data to publish the list of qualified registries for 2010 PQRI.
Commenters suggested that approved registries and the vetting of the
self-nominated registries must occur earlier in the reporting year to
allow eligible providers time to review and select an appropriate
registry for their needs. A few commenters suggested that the list of
eligible registries be made available prior to the start of the
reporting period and one commenter recommended these registries be
announced at least one month prior to the reporting period. Another
commenter suggested the delay in listing qualified registries for 2010
PQRI would penalize 2009 qualified registries and could lead to an
unintended consequence of decreasing the number of participating
eligible professionals in 2010.
Response: We understand the concern posed by the commenters. We
make every effort to increase the likelihood of successful data
submission to PQRI on behalf of eligible professionals from qualified
registries. While we cannot guarantee that a qualified registry will be
able to send the quality measure data on behalf of their eligible
professionals, a thorough vetting process has been established in order
to qualify new registries. Part of this process includes determining
the success of the 2009 PQRI registries with respect to their data
submission. As in 2009, we are again requiring a self-nomination
process for registries wishing to submit quality measures results and
numerator and denominator data on 2010 PQRI quality measures or measure
groups on behalf of eligible professionals for services furnished
during the applicable reporting periods in 2010. Similar to previous
years, the 2010 PQRI registry self-nomination process is based on a
registry meeting specific technical and other requirements. While we
strive to announce the qualified 2010 registries in advance of our
target date, the selection process to determine qualified registries
for 2010 PQRI is time-consuming. We anticipate posting the complete
list of qualified 2010 registries as soon as we have completed vetting
the registries interested in participating in the 2010 PQRI and
identified the qualified registries for the 2010 PQRI. We expect to
post the qualified registries no later than Summer 2010. In an attempt
to address the commenters' requests, however, we do intend to post the
names of the successful 2008 registries who intend to continue their
participation in the 2010 PQRI. As stated in the CY 2010 PFS proposed
rule (74 FR 33562 through 33563), this initial list of 2010 qualified
registries will be available on the Web site by no later than December
31, 2009.
Comment: One commenter suggested we consider implementing a
registry submission process that allows registries to demonstrate the
recording and feedback of quality information, rather than go through a
cumbersome method to transform the data for submission to CMS. The
commenter noted that the current registry requirements appear to be
designed in a way that would allow registry data to be transformed to
claims data.
Response: We believe the commenter is reacting to the fact that the
PQRI originated as a claims-based quality reporting program and he or
she believes that registry requirements are still being designed to
allow registry data to be transformed to claims data. We do not require
registries to transform the quality data that they collect into a
claims data format, as such a requirement would be overly prescriptive.
In accordance with the registry qualifications set forth in section
II.G.2.d.4. of this final rule with comment period, registries may
collect and analyze data on PQRI measures and measures groups on behalf
of eligible professionals pursuing incentive payment for the 2010 PQRI
in any manner they deem appropriate for successful business operations.
Therefore, an eligible professional who chooses registry-based
reporting must submit data on PQRI quality measures or measures groups
in whatever manner that is required by his or her selected qualified
registry.
Comment: A commenter suggested that individual eligible
professionals and small practices be offered a mechanism by which
registry data could be cross-referenced with claims data to see if any
other provider has supplied the appropriate care. The commenter
remarked that this would allow eligible professionals to participate in
registry-based reporting even if they do not have access to the quality
information needed to report.
Response: The PQRI does not allow for one eligible professional's
data to be ``cross-referenced'' with other eligible professional's data
at the individual eligible professional level. This is however,
consistent with one of the benefits of the physician group option

[[Page 61797]]

method of PQRI reporting, which will start in 2010 and is discussed in
further detail in section II.G.2.g. of this final rule with comment
period. Satisfactory participation in PQRI for individuals looks at
reporting rates at the individual TIN/NPI level.
As a result of the comments, we are finalizing the requirements for
individual eligible professionals who choose the registry-based
reporting mechanism as proposed (74 FR 33562 through 33563) and
discussed above.
We will post on the PQRI section of the CMS Web site at http://www.cms.hhs.gov a list of qualified registries for the 2010 PQRI,
including the registry name, contact information, and the 2010
measure(s) and/or measures group(s) for which the registry is qualified
and intends to report. As proposed in the CY 2010 PFS proposed rule (74
FR 33562 through 33563), we will post the names of 2010 PQRI qualified
registries in 2 phases. In either event, even though a registry is
listed as ``qualified,'' we cannot guarantee or assume responsibility
for the registry's successful submission of PQRI quality measures
results and numerator and denominator data on PQRI quality measures or
measures groups on behalf of eligible professionals.
In the first phase, we will post, by December 31, 2009, a list of
those registries qualified for the 2010 PQRI based on: (1) Being a
qualified registry for the 2008 and 2009 PQRI that successfully
submitted 2008 PQRI quality measures results and numerator and
denominator data on the quality measures; (2) having received a letter
indicating their continued interest in being a PQRI registry for 2010;
and (3) the registry's compliance with the 2010 PQRI registry
requirements. By posting this first list of qualified registries for
the 2010 PQRI, we seek to make available the names of registries that
can be qualified at the start of the 2010 reporting period.
In the second phase, we will complete posting of the list of
qualified 2010 registries as soon as we have completed vetting the
additional registries interested in participating in the 2010 PQRI and
identified the qualified registries for the 2010 PQRI, which we
anticipate will be completed by no later than Summer 2010. An eligible
professional's ability to report PQRI quality measures results and
numerator and denominator data on PQRI quality measures or measures
groups using the registry-based reporting mechanism should not be
impacted by the complete list of qualified registries for the 2010 PQRI
being made available after the start of the reporting period. First,
registries will not begin submitting eligible professionals' PQRI
quality measures results and numerator and denominator data on the
quality measures or measures groups to CMS until 2011. Second, if an
eligible professional decides that he or she is no longer interested in
submitting quality measures results and numerator and denominator data
on PQRI individual quality measures or measures group through the
registry-based reporting mechanism after the complete list of qualified
registries becomes available, this does not preclude the eligible
professional from attempting to meet the criteria for satisfactory
reporting through another 2010 PQRI reporting mechanism.
The process and requirements that will be used to determine whether
a registry is qualified to submit quality measures results and
numerator data on PQRI quality measures or measures groups on an
eligible professional's behalf in 2010 are described in section
II.G.2.d.4. of this final rule with comment period.
(3) Requirements for Individual Eligible Professionals Who Choose the
EHR-Based Reporting Mechanism
For eligible professionals who choose to participate in the 2010
PQRI by submitting data on individual quality measures through the EHR-
based reporting mechanism, the requirements we proposed associated with
EHR-based reporting other than meeting the criteria for satisfactory
reporting of individual measures were to: (1) select a qualified EHR
product and (2) submit clinical quality data extracted from the EHR to
a CMS clinical data warehouse (74 FR 33563). Provided that our 2009 EHR
data submission testing process is successful, we proposed to begin
accepting submission of clinical quality data extracted from
``qualified'' EHRs on January 1, 2010, or as soon thereafter as is
technically feasible. We proposed that eligible professionals will have
until March 31, 2011, to complete data submission through qualified
EHRs for services furnished during the 2010 PQRI reporting period.
We did not propose any option to report measures groups through
EHR-based reporting on services furnished during 2010. Because EHR-
based reporting to CMS of data on quality measures would be new to PQRI
for 2010, we proposed, for EHR-based reporting, to make available only
the criteria applicable to reporting of individual PQRI measures. The
criteria applicable to reporting of measures groups were not proposed
to be available for EHR-based reporting for 2010.
The following is a summary of the comments we received regarding
the proposed requirements for individual eligible professionals who
choose the EHR-based reporting mechanism.
Comment: Some commenters urged CMS to conduct extensive education
and outreach prior to implementation of EHR reporting for PQRI.
Response: We agree that it is necessary to educate eligible
professionals regarding this new reporting mechanism prior to
implementation. We anticipate doing so through PQRI National Provider
Calls, or other CMS-sponsored calls, and through educational materials
to be posted on the PQRI section of CMS Web site once qualified EHR
vendors have been identified for the 2010 PQRI.
Comment: One commenter noted his or her expectation that the 2009
EHR Testing Program would be a success. Another commenter suggested we
include a discussion of the 2009 EHR submission testing experience in
this final rule.
Response: We appreciate the positive comment and anticipate the
ongoing 2009 EHR data submission testing process will be a success.
However, we have not completed the final beta test as of the writing of
this final rule with comment period and therefore, we are unable to
discuss the results of the testing process in this final rule with
comment period.
Comment: Many commenters supported further expanding reporting
mechanisms and moving forward with accepting quality measures data
through EHRs for the PQRI program. Several commenters were pleased with
our proposal to accept PQRI quality measure data extracted from
qualified EHRs in 2010 and one commenter urged us to quickly finalize
testing for the EHR-based reporting mechanism and allow participation
in 2010 PQRI through the use of qualified EHRs. One commenter indicated
the use of EHR data submission will result in the reporting of more
robust quality measures.
Response: We encourage the adoption and use of EHRs and are
appreciative of the commenters' support. We believe EHR-based reporting
will enhance the quality of PQRI data reported by eligible
professionals participating in the PQRI program and, compared to
claims-based reporting, will relieve some of the reporting burden on
eligible professionals.
Comment: One commenter remarked that all eligible professionals
should have the option to report measures through an EHR. Similarly,
another

[[Page 61798]]

commenter indicated opposition to the decision to limit EHR based
reporting initially to a narrow subset of the universe of approved
quality measures.
Response: We have selected 10 measures which can be reported from
an EHR in this initial phase of quality data reporting from EHRs for
PQRI. As we gain experience accepting quality measures data
electronically, we will evaluate the feasibility of expanding the list
of measures for which we have this capability.
Comment: A commenter suggested we allow hospital EHR systems to
qualify as a reporting method for PQRI, as some eligible professionals
are employed in a hospital facility which may be using an EHR (for
example, Registered Dietitians).
Response: To the extent that a hospital utilizes an EHR system that
is ``qualified'' for the 2010 PQRI, eligible professionals employed by
the hospital can participate in the 2010 PQRI by submitting PQRI
quality measures data extracted from the hospital's EHR system. We do
not place restrictions on who can self-nominate to have one or more of
their EHR products become qualified PQRI EHR products as long as the
vendor successfully completes the self-nomination process described in
section II.G.2.d.5. of this final rule with comment period.
Comment: One commenter concurred that we cannot assume
responsibility for the successful submission of data from an eligible
professional's EHRs.
Response: As discussed in the proposed rule (74 FR 33563), we
cannot assume responsibility for the successful submission of data from
any eligible professional's EHR. It is each EHR vendor's responsibility
to ensure that it has updated its EHR product(s) to facilitate PQRI
quality measures data submission.
Comment: One commenter recommended a more streamlined approach to
simplify the reporting criteria and time-periods for EHR users, by
allowing EHR users to report on all their patients throughout the year.
Response: For satisfactory PQRI reporting via a qualified EHR, we
are requiring all PQRI quality data to be submitted at one time. This
will allow us to finish the infrastructure development and will also
allow CMS and eligible professionals to avoid redundant reporting by
inadvertently submitting data previously reported. Also, we believe
one-time reporting is more convenient for eligible professionals.
Comment: One commenter commended CMS for acknowledging the Health
Information Technology for Economic and Clinical Health (HITECH) Act
and its focus on EHR implementation for incentive payments, meaningful
use, and quality reporting. Some commenters suggested that we align
initiatives in response to the health information technology (HIT)
incentives and with applicable provisions in the HITECH Act regarding
EHR certification requirements (that is, HITECH requires eligible
professionals to use certified technology) so that eligible
professionals can follow similar qualification and/or certification
requirements as they prepare for quality reporting for both PQRI and
the HITECH Act incentive programs. Another commenter remarked that EHR
systems may require reinstallation or significant maintenance/upgrades
to meet ``meaningful use'' criteria, which could potentially take
months to achieve. Coordinating reporting standards may help minimize
preparation and reporting requirements for program participants.
Another commenter suggested we advocate to the Certification Commission
of Health Information Technology for the inclusion of PQRI reporting
capabilities in the certification criteria.
Response: Any EHR quality data submission will be required to
comply with all current regulations regarding security and privacy.
``Meaningful use'' criteria will be reviewed as they are finalized and
we will endeavor to align our work in the future, as appropriate.
However, since meaningful use criteria have not yet been finalized,
this comment is currently beyond the scope of this final rule with
comment period.
Comment: One commenter remarked that an EHR is a tool that allows
physicians to improve work flow and efficiency by electronically
documenting data, however it does not, in all cases, have a quality
feedback loop for providers. One commenter recommended that we provide
back to the submitter, feedback on the extracted data that is received
and then that feedback should be provided back to the eligible
professional. The commenter also suggested we require that this process
include return receipt for the data content prior to scoring for PQRI
participation and calculation of incentive payment.
Response: With regard to a ``feedback loop,'' we note that the EHR
data submission process is such that the eligible professional will
know if the file he or she sent to us has been successfully submitted
and accepted. A file which is not accepted will be returned with an
error code. We note, however, that successful submission of a data file
does not indicate that the eligible professional met the criteria for
satisfactory reporting; it just indicates that we received the data
file that was sent to us.
As is the case for other eligible professionals participating in
PQRI, eligible professionals submitting their quality data through an
EHR will receive a feedback report from us that will be accessible in
the same manner as other feedback reports we provide for other
reporting mechanisms.
As a result of the comments and our experience thus far with the
ongoing 2009 EHR Testing Program, eligible professionals who choose the
EHR-based reporting mechanism for the 2010 PQRI will be required to (in
addition to meeting the criteria for satisfactory reporting of
individual measures):
Have a qualified EHR product;
Have an active IACS user account that will be used to
submit clinical quality data extracted from the EHR to a CMS clinical
data warehouse;
Submit a test file containing real or dummy clinical
quality data extracted from the EHR to a CMS clinical data warehouse
via IACS between July 1, 2010 and September 30, 2010 (if technically
feasible); and
Submit a file containing the eligible professional's 2010
PQRI clinical quality data extracted from the EHR for the entire
reporting period (that is January 1, 2010 through December 31, 2010)
via IACS between January 1, 2011 through February 28, 2011.
As stated above, however, the 2009 EHR Testing Program is still
ongoing. Since only EHR vendors that self-nominated to participate in
the 2009 EHR Testing Program and successfully complete the 2009 EHR
Testing Program will be considered qualified EHR vendors for the 2010
PQRI, there is no guarantee that there will be any qualified EHR
vendors available for the 2010 PQRI. In addition, as we complete the
2009 EHR Testing Program and are better able to determine what is
technically feasible, the actual dates on which eligible professionals
are required to submit their test files and/or to begin submitting the
actual 2010 PQRI data are subject to change.
As stated above, we also cannot assume responsibility for the
successful submission of data from eligible professionals' EHRs. Any
eligible professional who chooses to submit PQRI data extracted from an
EHR should contact the EHR product's vendor to determine if the product
is qualified and has been updated to facilitate PQRI quality measures
data submission. Such professionals also should begin attempting
submission soon after the opening of the clinical

[[Page 61799]]

data warehouse in order to assure the professional has a reasonable
period of time to work with his or her EHR and/or its vendor to correct
any problems that may complicate or preclude successful quality
measures data submission through that EHR. As we indicated above, data
submission for the 2010 PQRI will need to be completed by February 28,
2011.
The specifications for the electronic transmission of the 2010 PQRI
measures identified in Table 14 of this final rule as being available
for EHR-based reporting in 2010 are posted on Alternative Reporting
Mechanisms page of the PQRI section of the CMS Web site.
(4) Qualification Requirements for Registries
For the 2010 PQRI, we proposed to require a self-nomination process
for registries wishing to submit 2010 PQRI quality measures or measures
groups on behalf of eligible professionals for services furnished
during the applicable reporting periods in 2010 (74 FR 33563). The
proposed registry self-nomination process for the 2010 PQRI would be
based on a registry meeting specific technical and other requirements.
To be considered a qualified registry for purposes of submitting
individual quality measures and measures groups on behalf of eligible
professionals who choose to report using this reporting mechanism under
the 2010 PQRI, we proposed that a registry would need to:
Be in existence as of January 1, 2009;
Be able to collect all needed data elements and calculate
results for at least 3 measures in the 2010 PQRI program (according to
the posted 2010 PQRI Measure Specifications);
Be able to calculate and submit measure-level reporting
rates by TIN/NPI;
Be able to calculate and submit, by TIN/NPI, a performance
rate (that is, the percentage of a defined population who receive a
particular process of care or achieve a particular outcome) for each
measure on which the TIN/NPI reports;
Be able to separate out and report on Medicare Part B FFS
patients;
Provide the name of the registry;
Provide the reporting period start date the registry will
cover;
Provide the reporting period end date the registry will
cover;
Provide the measure numbers for the PQRI quality measures
on which the registry is reporting;
Provide the measure title for the PQRI quality measures on
which the registry is reporting;
Report the number of eligible instances (reporting
denominator);
Report the number of instances of quality service
performed (numerator);
Report the number of performance exclusions;
Report the number of reported instances, performance not
met (eligible professional receives credit for reporting, not for
performance);
Be able to transmit this data in a CMS-approved XML
format. We expect that this CMS-specified record layout will be
substantially the same as for the 2008 and 2009 PQRI. This layout will
be provided to registries in 2010;
Comply with a CMS-specified secure method for data
submission, such as submitting its data in an XML file through an IACS
user account;
Submit an acceptable ``validation strategy'' to CMS by
March 31, 2010. A validation strategy ascertains whether eligible
professionals have submitted accurately and on at least the minimum
number (80 percent) of their eligible patients, visits, procedures, or
episodes for a given measure. Acceptable validation strategies often
include such provisions as the registry being able to conduct random
sampling of their participants' data, but may also be based on other
credible means of verifying the accuracy of data content and
completeness of reporting or adherence to a required sampling method;
Enter into and maintain with its participating
professionals an appropriate Business Associate agreement that provides
for the registry's receipt of patient-specific data from the eligible
professionals, as well as the registry's disclosure of quality measure
results and numerator and denominator data on behalf of eligible
professionals who wish to participate in the PQRI program;
Obtain and keep on file signed documentation that each
holder of an NPI whose data are submitted to the registry has
authorized the registry to submit quality measures results and
numerator and denominator data to CMS for the purpose of PQRI
participation. This documentation must be obtained at the time the
eligible professional signs up with the registry to submit PQRI quality
measures data to the registry and must meet any applicable laws,
regulations, and contractual business associate agreements;
Provide CMS access (if requested) to review the Medicare
beneficiary data on which 2010 PQRI registry-based submissions are
founded;
Provide the reporting option (reporting period and
reporting criteria) that the eligible professional has satisfied or
chosen; and
Provide CMS a signed, written attestation statement via
mail or e-mail which states that the quality measure results and
numerator and denominator data provided to CMS are accurate and
complete (74 FR 33563 through 33564).
With respect to the submission of 2010 measure results and
numerator and denominator data on measures groups, we proposed to
retain in 2010 the following registry requirements from the 2009 PQRI:
Indicate the reporting period chosen for each eligible
professional who chooses to submit data on measures groups;
Base reported information on measures groups only on
patients to whom services were furnished during the 12-month reporting
period of January through December 2010 or the 6-month reporting period
of July 2010 through December 2010;
Agree that the registry's data may be inspected by CMS
under our oversight authority if non-Medicare patients are included in
the patient sample;
Be able to report data on all of the measures in a given
measures group and on either 30 patients from January 1 through
December 31, 2010 (note this patient sample must include some Medicare
Part B FFS beneficiaries) or on 80 percent of applicable Medicare Part
B FFS patients for each eligible professional (with a minimum of 15
patients during the January 1, 2010 through December 31, 2010 reporting
period or a minimum of 8 patients during the July 1, 2010 through
December 31, 2010 reporting period); and
Be able to report the number of Medicare FFS patients and
the number of Medicare Advantage patients that are included in the
patient sample for a given measures group (74 FR 33564).
In addition to the above requirements, we proposed the following
new requirements for registries for the 2010 PQRI:
Registries must have at least 25 participants;
Registries must provide at least 1 feedback report per
year to participating eligible professionals;
Registries must not be owned and managed by an individual
locally-owned single-specialty group (in other words, single-specialty
practices with only 1 practice location or solo practitioner practices
would be prohibited from self-nominating to become a qualified PQRI
registry);
Registries must participate in ongoing 2010 PQRI mandatory
support conference calls hosted by CMS

[[Page 61800]]

(approximately 1 call per month), including an in-person registry kick-
off meeting to be held at CMS headquarters in Baltimore, MD;
Registries must provide a flow and XML of a measure's
calculation process for each measure type that the registry intends to
calculate; and
Registries must use PQRI measure specifications to
calculate reporting or performance unless otherwise stated (74 FR
33654).
The following is summary of the comments we received regarding the
proposed qualification requirements and self-nomination process for
registries for the 2010 PQRI.
Comment: We received several comments supporting many of the
proposed qualification requirements for registries. A number of
commenters agreed with the proposed requirement that registries must
have a minimum of 25 participants. Similarly, one commenter remarked
that the rationale for restricting a single practice site or solo
practitioners from becoming a qualified registry is unclear and
suggested that such entities should not be prohibited from becoming a
qualified registry if they otherwise meet the requirements.
Response: We appreciate the supportive comments and believe that
the additional requirements will improve registry based reporting. We
limited registry participation to registries with at least 25
participants to conserve both CMS and eligible professionals'
resources. Every registry goes through a vetting process which includes
providing a sample measure flow illustrating how that registry will
calculate an example of each type of measure it plans to submit to CMS.
Additionally, registries must send in a sample XML file per the CMS
specifications. This process occurs over a 2-3 month period and
requires resources on the part of CMS, as well as the potential
registry. Finally, a mandatory in-person registry kick-off meeting is
held each year at CMS headquarters in Baltimore, MD. We believe the
time and expense for a solo practitioner or single practice site to go
through these steps would be prohibitive for most practitioners or
practice sites. We do not believe that a majority of solo practitioners
or single practice sites do not have the information technology (IT)
staffing and resources needed to successfully complete the vetting
process. Furthermore, we do not have the resources to provide IT
support to such entities.
Comment: Numerous commenters strongly supported the requirement for
registries to provide at least one feedback report per year to
participating eligible professionals. Several commenters suggested the
feedback reports from registries be issued to eligible professionals at
some point during the reporting year so as to allow practices to assess
their performance both on reporting and on performance, which may
inform and promote internal quality improvement. One commenter stated
providing eligible professionals with access to feedback reports during
the reporting year would allow more accurate assessment of their
performance before the close of the reporting period.
Response: We agree that the requirement for registries to provide
at least one feedback report per year is an essential tool for quality
improvement and must be provided to participating eligible
professionals. The information contained within feedback reports will
allow the eligible professional to assess the quality of care they
provided to their patients during the specific reporting timeframe of
the report. Furthermore the report may provide information for the
promotion of internal quality improvement. While we will not require
registries to provide more than the minimum number of feedback reports
per year (one) to participating eligible professionals, we would be
supportive of such a decision by a registry.
Comment: One commenter recommended we develop an audit program for
registry vendors, as the PQRI program moves away from claims-based
reporting. The commenter suggested eligible professionals participating
in the PQRI look to CMS for assurance that registry vendors are
regularly inspected for quality.
Response: As we gain more experience with registry submission, we
would expect to further specify through rulemaking qualification
requirements for registries that may include more comprehensive
validation requirements. As we evaluate our policies, we plan to
continue a dialogue with stakeholders to discuss opportunities for
program efficiency and flexibility.
As a result of the comments, we are finalizing the 2010
qualification requirements for registries as proposed (74 FR 33563
through 33565).
We will post the 2010 PQRI registry requirements, including the
exact date by which registries that wish to qualify for 2010 must
submit a self-nomination letter and instructions for submitting the
self-nomination letter, on the PQRI section of the CMS Web site at
http://www.cms.hhs.gov/PQRI by November 15, 2009. We anticipate that
new registries that wish to self-nominate for 2010 will be required to
do so by January 31, 2010.
We are finalizing our proposal (74 FR 33563 through 33565) that
registries that were ``qualified'' for 2009 and wish to continue to
participate in 2010 will not need to be ``re-qualified'' for 2010
unless they are unsuccessful at submitting 2009 PQRI data (that is,
fail to submit 2009 PQRI data per the 2009 PQRI registry requirements).
Registries that are ``qualified'' for 2009 and wish to continue to
participate in 2010 were required to indicate their desire to continue
participation for 2010 by submitting a letter to CMS indicating their
continued interest in being a PQRI registry for 2010 and their
compliance with the 2010 PQRI registry requirements by no later than
October 31, 2009. Instructions regarding the procedures for submitting
this letter were provided to qualified 2009 PQRI registries on the 2009
PQRI registry support conference calls.
If a qualified 2009 PQRI registry fails to submit 2009 PQRI data
per the 2009 PQRI registry requirements, the registry will be
considered unsuccessful at submitting 2009 PQRI data and will need to
go through the full self-nomination process again to participate in the
2010 PQRI. By March 31, 2010, registries that are unsuccessful
submitting quality measures results and numerator and denominator data
for 2009 will need to be able to meet the 2010 PQRI registry
requirements and go through the full vetting process again.
As stated in the proposed rule, the above registry requirements
will apply not only for the purpose of a registry qualifying to report
2010 PQRI quality measure results and numerator and denominator data on
PQRI individual quality measures or measures groups, but also for the
purpose of a registry qualifying to submit the proposed electronic
prescribing measure for the 2010 E-Prescribing Incentive Program (see
section II.G.5. of this final rule with comment period.
(5) Qualification Requirements for EHR Vendors and Their Products
As stated in the proposed rule (74 FR 33565), we proposed that EHR
products listed on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI as a ``qualified'' EHR product (that is, the name
of the vendor software product and the version that is qualified),
would be available for the product's users to submit quality data to
CMS directly from their system for the 2010 PQRI. We also proposed that
we would post this list of qualified EHR vendors and products upon
completion of the 2009 EHR Testing Program. We

[[Page 61801]]

anticipate the 2009 EHR Testing Program will be complete in early 2010.
Vendors' EHR products that are listed as ``qualified'' products
were selected because the vendor self-nominated to participate in the
2009 EHR Testing Program and demonstrated that their products met the
``Requirements for Electronic Health Record (EHR) Vendors to
Participate in the 2009 PQRI EHR Testing Program'' that were posted on
the Alternative Reporting Mechanisms page of the PQRI section of the
CMS Web site at http://www.cms.hhs.gov/PQRI/20_Reporting.asp#TopOfPage
on December 31, 2008. Additionally, a vendor's EHR system must be
updated according to the Draft 2010 EHR specifications posted on the
Alternative Reporting Mechanisms page of the PQRI section of the CMS
Web site in order for an EHR vendor and its product to be qualified to
submit information on 2010 PQRI measures.
As stated in the proposed rule (74 FR 33565), we proposed that the
EHR vendor requirements described above would apply not only for the
purpose of a vendor's EHR product being qualified for the purpose of
the product's users being able to submit data extracted from the EHR
for the 2010 PQRI, but also for the purpose of a vendor's EHR product
being qualified for the purpose of the product's users being able to
electronically submit data extracted from the EHR for the electronic
prescribing measure for the 2010 E-Prescribing Incentive Program.
The following is a summary of the comments received regarding the
proposed 2010 EHR vendor qualification requirements and/or process.
Comment: One commenter recommended we implement an ongoing
qualification process for new vendors and systems to enable inclusion
of vendors that did not self-nominate or did not exist prior to the
reporting year.
Response: Currently there is an ongoing qualification process for
new EHR vendors and their products. EHR vendors interested in enabling
their customers to submit data on PQRI that is extracted from their
customers' EHRs must complete the EHR vendor quality data submission
qualification process to be considered. For the 2010 PQRI, we will
consider those EHR vendors who successfully completed the 2009 EHR
Testing Program to be qualified for purposes of the 2010 PQRI. We will
list the vendors qualified for the 2010 PQRI on the PQRI section of the
CMS Web site upon completion of the 2009 PQRI EHR Testing Process. We
anticipate completing the 2009 PQRI EHR Testing Process in early 2010.
During 2010, we expect to use a similar self-nomination process
described in the ``Requirements for Electronic Heath Record (EHR)
Vendors to Participate in the 2009 PQRI EHR Testing Program'' posted on
the PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI/20_Reporting.asp#TopOfPage to qualify additional vendors for the 2011
PQRI. This document is subject to modification for the 2011 EHR self-
nomination process. In any case, a vendor must self-nominate no later
than January 31, 2010 to be eligible to participate in the 2011 PQRI
Testing Process in 2010. Sometime in 2010, those EHR products that meet
all of the EHR vendor requirements will be listed on the PQRI section
page of the CMS Web site at http://www.cms.hhs.gov/PQRI as a
``qualified'' EHR product, which indicates that the vendor's product's
users may submit quality data to CMS for the 2011 PQRI or subsequent
years.
Comment: Some commenters commended the establishment of electronic
standards for EHR-based reporting.
Response: We appreciate the supportive comments regarding the
establishment of standard qualification requirements for EHR reporting.
Comment: A few of commenters expressed concern regarding the
criteria set forth to rigidly define ``qualified'' EHRs. These concerns
stem from the fact that some EHR products are developed for health care
professionals specific to their needs (such as physical therapists,
oncologists, etc.). Another commenter remarked that vendors for
specialty-specific EHR products, such as oncology-specific EHR
products, should not have to adjust their software to comply with
certification procedures designed for a general ambulatory system. This
commenter stated that the goal of EHRs should be to contain
comprehensive information relevant to each patient's condition, their
treatment plan and outcomes, but in some cases, specific terminology
and data collection to support the eligible professional.
Response: We recognize that some EHR products have been designed to
accommodate specific specialties, however, we are unclear how this
would prevent the EHR product from meeting the EHR qualification
requirements other than that there are no measures available for
reporting via EHR. As we analyze the EHR reporting mechanism for 2010,
we will consider expanding the measures available for electronic
submission in the future.
Comment: One commenter recommended that we develop an audit program
for EHR vendors, as the PQRI moves away from claims-based reporting.
The commenter suggested eligible professionals participating in the
PQRI look to CMS for assurance that vendors are regularly inspected for
quality.
Response: Ensuring that vendors meet and perform properly would
fall under the purview of their certifying body, which is currently
CCHIT (if the product is CCHIT certified). During the qualification
process (in which we conduct testing to ensure that the EHR can extract
and transmit the necessary quality data elements), we evaluate the
vendor and their program to see if the system is capable of performing
the necessary tasks required for quality reporting to us for PQRI.
Comment: One commenter noted that some practitioners do not have
authority under state law to prescribe medications, and thus products
developed to meet the needs of these eligible professionals need not
incorporate electronic prescribing functionality at this time.
Response: We recognize the concerns cited by the commenter and note
that PQRI does not require qualified EHRs to have an electronic
prescribing module in order for eligible professionals to participate
in the PQRI via a qualified EHR. We believe the commenter is referring
to the idea of ``meaningful use'' with respect to requiring an
electronic prescribing module in the EHR system for purposes of the
HITECH Act incentive programs. The issue of ``meaningful use'' is
beyond the scope of this rule.
As previously stated above, only EHR vendors that self-nominated to
participate in the 2009 EHR Testing Program and successfully complete
the 2009 EHR Testing Program will be considered qualified EHR vendors
for the 2010 PQRI. There is no guarantee that there will be any
qualified EHR vendors available for the 2010 PQRI since the 2009 EHR
Testing Program is still ongoing.
During 2010, we expect to use the self-nomination process described
in the ``Requirements for Electronic Health Record (EHR) Vendors to
Participate in the 2009 PQRI EHR Testing Program'' posted on the PQRI
section of the CMS Web site at http://www.cms.hhs.gov/PQRI/20_AlternativeReportingMechanisms.asp#TopOfPage, to qualify additional EHR
vendors and their EHR products to submit quality data extracted from
their EHR products to the CMS clinical quality data warehouse for
program years after 2010. We anticipate that the requirements will be
similar to those used to qualify EHR products for

[[Page 61802]]

the 2009 PQRI EHR Testing Program, but they may be modified based on
the results of our 2009 EHR testing. Any updates to the EHR vendor
requirements, which would be based on our experience with the 2009 EHR
Testing Program and would be non-substantive in nature, will be made
December 15, 2009, and will be posted on the PQRI section of CMS Web
site at http://www.cms.hhs.gov/PQRI. As stated previously, any EHR
vendor interested in having one or more of their EHR products
``qualified'' to submit quality data extracted from their EHR products
to the CMS clinical quality data warehouse for 2011 and subsequent
years must submit their self-nomination letter by January 31, 2010.
Instructions for submitting the self-nomination letter will be provided
in the 2011 EHR vendor requirements. At the conclusion of this process,
those EHR products that meet all of the EHR vendor requirements will be
listed on the PQRI section of the CMS Web site as a ``qualified'' EHR
product, which indicates that the product's users may submit quality
data to CMS for the 2011 PQRI or subsequent years.
e. Criteria for Satisfactory Reporting of Individual Quality Measures
for Individual Eligible Professionals
As discussed in the proposed rule (74 33565 through 33568), for
years after 2009, section 1848(m)(3)(D) of the Act authorizes the
Secretary, in consultation with stakeholders and experts, to revise the
criteria for satisfactorily reporting data on quality measures. Based
on this authority and the input we have received from stakeholders via
the invitation to submit suggestions for the 2010 PQRI reporting
options posted on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI in April 2009, we proposed 3 criteria for
satisfactory reporting of individual PQRI quality measures for 2010. In
an effort to continue to be consistent with the criteria of
satisfactory reporting used in prior PQRI program years, we proposed to
retain the following 2 criteria with respect to satisfactorily
reporting data on individual quality measures in circumstances where 3
or more individual quality measures apply to the services furnished by
an eligible professional:
Report on at least 3 2010 PQRI measures; and
Report each measure for at least 80 percent of the
eligible professional's Medicare Part B FFS patients for whom services
were furnished during the reporting period to which the measure
applies.
These criteria would apply to all 2010 PQRI reporting mechanisms
available for reporting individual PQRI quality measures.
If an eligible professional has fewer than 3 PQRI measures that
apply to the professional's services, then the professional would be
able to meet the criteria for satisfactorily reporting data on
individual quality measures by meeting the following 2 criteria:
Reporting on all measures that apply to the services
furnished by the professional (that is 1 to 2 measures); and
Reporting each measure for at least 80 percent of the
eligible professional's Medicare Part B FFS patients for whom services
were furnished during the reporting period to which the measure
applies.
We proposed that, as in previous years, these criteria for
satisfactorily reporting data on fewer than 3 individual quality
measures would be available for the claims-based reporting mechanism
only. An eligible professional who has fewer than 3 PQRI measures that
apply to the professional's services would not be able to meet the
criteria for satisfactory reporting by reporting on all applicable
measures (that is, 1 or 2 measures) through the registry-based or EHR-
based reporting mechanisms.
We also proposed that an eligible professional who reports on fewer
than 3 measures through the claims-based reporting mechanism in 2010
may be subject to the Measure Applicability Validation (MAV) process,
which allows us to determine whether an eligible professional should
have reported quality data codes for additional measures. When an
eligible professional reports on fewer than 3 measures, we proposed to
review whether there are other closely related measures (such as those
that share a common diagnosis or those that are representative of
services typically provided by a particular type of professional). If
an eligible professional who reports on fewer than 3 measures in 2010
reports on a measure that is part of an identified cluster of closely
related measures and did not report on any other measure that is part
of that identified cluster of closely related measures, then the
professional would not qualify to receive a 2010 PQRI incentive
payment. Additional information on the MAV process can be found on the
Analysis and Payment page of the PQRI section of the CMS Web site at
http://www.cms.hhs.gov/PQRI.
In addition to the above criteria related to the number of measures
on which an eligible professional would be required to report and the
frequency of reporting, we proposed a third criterion for satisfactory
reporting of individual measures. Based on our authority to revise the
criteria for satisfactory reporting under section 1848(m)(3)(D) of the
Act, we proposed (74 FR 33566) that an eligible professional also be
required to report data on at least one individual measure on a minimum
number of Medicare Part B FFS patients seen during the reporting
period, as detailed below.
Regardless of the reporting mechanism chosen by the eligible
professional, we proposed (74 FR 33567) that the minimum patient sample
size for reporting individual quality measures be 15 Medicare Part B
FFS patients for the 12-month reporting period. An eligible
professional would need to meet this minimum patient sample size
requirement for at least one measure on which the eligible professional
chooses to report. Similarly, for the 6-month reporting period (which
was proposed to be available for registry-based reporting only), we
proposed that the minimum patient sample size for reporting on
individual quality measures be 8 Medicare Part B FFS patients seen
during the 6-month reporting period. An eligible professional would
need to meet this minimum patient sample size requirement for at least
one measure on which the eligible professional chooses to report.
We solicited comments on the proposal to add a minimum patient
sample size criterion to the criteria for satisfactory reporting of
data on individual quality measures. In addition, we solicited comments
on the specific thresholds proposed for the 12-month reporting period
(which was proposed to be available for claims-based, registry-based,
and EHR-based reporting) and for the 6-month reporting period (which
was proposed to be available for registry-based reporting only) for
reporting individual quality measures.
The following is summary of the comments we received regarding the
criteria for satisfactory reporting of individual quality measures for
individual eligible professionals.
Comment: We received several comments supporting the proposed
minimum patient sample size requirement for PQRI reporting of
individual measures (that is, at least 15 patients for at least 1
measure for the 12-month reporting period and at least 8 patients for
at least 1 measure for the 6-month reporting period). A few commenters
supported the proposed minimum patient sample requirement

[[Page 61803]]

only if eligible professionals are required to meet the proposed
threshold(s) for only 1 measure on which they report. Many commenters
remarked that the minimum patient sample size requirement would
encourage eligible professionals to select more applicable measures
while discouraging eligible professionals from selectively reporting
measures that are not representative of the types of services they
normally provide in their practice. The commenters also remarked that
the minimum sample size requirements will enhance the scientific
validity of eligible professionals' performance results.
Response: We agree with the reasons cited by commenters for why the
minimum patient sample size requirement is important. However, analysis
of preliminary data from the 2008 PQRI indicates that a significant
number of eligible professionals who would otherwise meet the criteria
for satisfactory reporting would be adversely impacted by the addition
of a minimum patient sample size requirement to the criteria for
satisfactory reporting of individual measures by individual eligible
professionals. Therefore, we are not finalizing the proposed minimum
patient sample requirement. We will reconsider adding a minimum patient
sample requirement to the criteria for satisfactory reporting of
individual measures for future years upon further analysis of the PQRI
data.
Comment: We also received comments requesting that we withdraw the
proposed minimum patient sample requirement. The commenters were
concerned that this requirement would create a participation barrier
for certain eligible professionals, such as those who treat patients
with rare conditions, those with small practices, and/or those with
relatively few Medicare patients.
Response: For the reasons stated above and based on the commenters'
concerns that such a requirement would create participation barriers
for certain eligible professionals, we are not finalizing the proposed
minimum patient sample size requirement for the PQRI reporting options
for individual measures reporting. However, upon further analysis of
the PQRI data, we will reconsider adding a minimum patient sample
requirement to the criteria for satisfactory reporting of individual
measures and explore other means of enhancing the PQRI criteria for
satisfactory reporting for future years.
Comment: A majority of commenters believed that the proposed
minimum patient sample size thresholds were appropriate. Some
commenters, however, believed that the thresholds should be lowered to
10 or 15 for the 12-month reporting period and 6 for the 6-month
reporting period. Other commenters believed that the thresholds should
be higher, such as 25 or 30 for the 12-month reporting period.
Response: As stated previously, we are not finalizing the proposed
minimum patient sample size requirement for reporting of 2010 PQRI
individual measures. As we reassess this requirement for future years,
we anticipate that we will continue to monitor the PQRI data on an
ongoing basis and reassess the thresholds as needed for future years.
Comment: One commenter suggested that we reconsider allowing
registry-based reporting for fewer than 3 measures, primarily to
encourage eligible professionals to transition to registry-based
reporting, as the claims-based option becomes phased out. This option
may also allow greater flexibility for the program.
Response: We appreciate the intent of this comment, however, as in
previous years, satisfactorily reporting data on fewer than 3
individual quality measures will only be available for the claims-based
reporting mechanism. While we have received similar comments in the
past, we continue to believe that permitting an eligible professional
to report fewer than 3 measures through the registry-based reporting
mechanism, (if fewer than 3 measures apply to him or her) would be
inefficient at this time. Analytically it would be difficult to
implement in that if an eligible professional submits fewer than 3
measures via registries, we would not know whether the eligible
professional did so because only 2 measures applied to him or her or
because the registry only accepts data for 2 of the provider's measures
and he or she is reporting their third measure via claims. We also look
for the most favorable method of reporting (that is, did the eligible
professional report via a different method for a longer reporting
period as well as whether an eligible professional satisfactorily
reported under a different reporting option if he or she did not
satisfactorily report for a particular reporting option). Accepting
fewer than 3 measures from registries would increase the amount of
cross-checking already required and makes it impractical to implement
the commenter's suggestions at this time. Should the claims-based
reporting mechanism be removed entirely from the PQRI program at some
point in the future, we may revisit the issue of allowing registries to
submit data for eligible professionals on fewer than 3 measures.
Comment: One commenter remarked that limiting EHR-based reporting
to reporting on individual measures would limit the ability of some
eligible professionals to report on the measures most relevant to them
by eliminating one reporting mechanism (such as electronic reporting of
the back pain measures for spine care).
Response: The EHR reporting mechanism for PQRI is still in an early
development phase. This mechanism will be closely examined in the
future, and may be expanded as appropriate. We believe that the first
set of measures specified electronically have broad appeal in that they
deal with common conditions such as diabetes and prevention.
Comment: Some commenters recommended significant changes to the
criteria for satisfactory reporting that would not be consistent with
the criteria for satisfactory reporting for prior years. For example,
one commenter recommended that as the PQRI moves forward, the
definition of satisfactory reporting should not be determined by what
the commenter believed were somewhat arbitrary formulas but rather by
accurate data that is able to reflect the ways in which a provider
attempted to relay the quality of their patient care. Another commenter
recommended that CMS phase out the existing process by which
participating professionals select the measures on which they will be
report. Instead CMS should assign each participating individual
eligible professional with sets of measures for high volume conditions,
based on services provided to their patient population. Similarly,
another commenter recommended more criteria to guide measure selection
by eligible professionals and that we require eligible professionals to
report on 6 measures.
Response: We agree with commenters that as the PQRI matures, we
will need to reassess the criteria for satisfactory reporting so that
the information that we collect becomes more representative of the
quality of care provided by eligible professionals. We also generally
agree with the goals cited by the commenters, but have concerns that
the specific suggestions offered by the commenters are not
operationally practical and feasible when we take into account the vast
numbers of eligible professionals and the diversity of their practices.
In addition, we believe that such significant changes should occur
gradually. The criteria for satisfactory reporting are specifically
defined under section 1848(m)(3)(A) of the Act. With

[[Page 61804]]

the authority under section 1848(m)(3)(D) of the Act to revise the
criteria for satisfactory reporting for years after 2009, we have
started to move towards the direction recommended by commenters with
the introduction of the minimum patient sample size requirement for
individual measures reporting for the 2010 PQRI. In addition, the new
PQRI group practice reporting option also moves the PQRI towards the
direction recommended by commenters in that we assign participating
group practices both the measures and patients on which they are
required to report. We will consider additional changes to the criteria
for satisfactory reporting for 2011 and beyond and look forward to
receiving stakeholder input on how we can revise the criteria for
satisfactory reporting in an operationally practical and feasible
manner to achieve the goals cited by commenters.
Comment: One comment was received with respect to the MAV, which
allows us to determine whether an eligible professional should have
reported quality data codes for additional measures when an eligible
professional submits fewer than 3 individual PQRI measures. The
commenter requested that CMS provide updates on newly identified
clusters of closely related measures that will be employed in the MAV
for 2010.
Response: No changes are planned for the MAV process for 2010.
Additional information on the MAV process are listed on the Analysis
and Payment page of the PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI. However, we are contemplating some changes to the
clusters of closely related measures based on the addition or removal
of measures in the 2010 PQRI or the fact that certain measures included
in these clusters will become registry-only measures for 2010. For
example, if measures in an existing cluster are retired for the 2010
PQRI or are made registry-only then the cluster will be revised or
deleted as appropriate.
Based on the new 2010 PQRI measures, the only new clusters being
contemplated are a second preventive cluster, 2 new anesthesia care
clusters, an ear care cluster, and an Ischemic Vascular (IVD) cluster.
The second preventive cluster would consist of the following 2
measures: (1) Measure 114 Preventive Care and Screening:
Inquiry Regarding Tobacco Use and (2) Measure 115 Preventive
Care and Screening: Advising Smokers and Tobacco Users to Quit. The
first anesthesia care cluster would consist of 2 measures: (1) Measure
30 Perioperative Care: Timely Administration of Prophylactic
Parenteral Antibiotics and (2) Measure 76 Prevention of
Catheter-Related Bloodstream Infections (CRBI): Central Venous Catheter
(CVC) Insertion Protocol. The second anesthesia care cluster would
consist of Measure 76 and the new Perioperative Temperature
Management measure. For both of the anesthesia care clusters, however,
the MAV would not apply if an eligible professional reports only
Measure 76. Measure 76 is a broadly applicable
measure that encompasses services often provided by eligible
professionals for whom Measure 30 and the Perioperative
Temperature Management measure do not apply such as intensivists,
hospitalists, internists, and emergency physicians. The ear care
cluster would consist of the 3 new referral for otologic evaluation
measures listed in Table 13 of this final rule. The IVD cluster would
consist of the following 4 new PQRI measures:
Ischemic Vascular Disease (IVD): Blood Pressure Management
Control;
Ischemic Vascular Disease (IVD): Complete Lipid Profile;
Ischemic Vascular Disease (IVD): Low Density Lipoprotein
(LDL-C) Control; and
Ischemic Vascular Disease (IVD): Use of Aspirin or Another
Anti-Thrombotic.
By no later than December 31, 2009, we will post the final MAV
process for 2010 and the final 2010 MAV clusters on the Analysis and
Payment page of the PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI/25_AnalysisAndPayment.asp#TopOfPage.
After considering the comments and the new 6-month reporting period
for claims-based reporting of individual PQRI quality measures that we
are adding to the 2010 PQRI at the request of commenters, the final
2010 criteria for satisfactory reporting of data on individual PQRI
quality measures are summarized in Table 7 and are arranged by
reporting mechanism and reporting period. The criteria for satisfactory
reporting for claims-based reporting of individual PQRI quality
measures for the 6-month reporting period are consistent with the
criteria for satisfactory reporting of individual PQRI quality
measures.
For the 2010 PQRI, there are a total of 5 reporting options, or
ways, in which an eligible professional may meet the criteria for
satisfactory reporting on individual quality measures. Each reporting
option consists of the criteria for satisfactory reporting such data
and results on individual quality measures relevant to a given
reporting mechanism and reporting period. While eligible professionals
may potentially qualify as satisfactorily reporting individual quality
measures under more than one of the reporting criteria, reporting
mechanisms, and/or for more than one reporting period, only one
incentive payment will be made to an eligible professional based on the
longest reporting period for which the eligible professional
satisfactorily reports.

Table 7--2010 Criteria for Satisfactory Reporting of Data on Individual
PQRI Quality Measures, by Reporting Mechanism and Reporting Period
------------------------------------------------------------------------
Reporting mechanism Reporting criteria Reporting period
------------------------------------------------------------------------
Claims-based reporting........ Report at January 1, 2010-
least 3 PQRI December 31,
measures, or 1-2 2010.
measures if less
than 3 measures
apply to the
eligible
professional; and
Report each
measure for at least
80% of the eligible
professional's
Medicare Part B FFS
patients seen during
the reporting period
to whom the measure
applies.
Claims-based reporting........ Report at July 1, 2010-
least 3 PQRI December 31,
measures, or 1-2 2010.
measures if less
than 3 measures
apply to the
eligible
professional; and
Report each
measure for at least
80% of the eligible
professional's
Medicare Part B FFS
patients seen during
the reporting period
to whom the measure
applies.
Registry-based reporting...... Report at January 1, 2010-
least 3 PQRI December 31,
measures; and 2010.

[[Page 61805]]

Report each
measure for at least
80% of the eligible
professional's
Medicare Part B FFS
patients seen during
the reporting period
to whom the measure
applies.
Registry-based reporting...... Report at July 1, 2010-
least 3 PQRI December 31,
measures; and 2010.
Report each
measure for at least
80% of the eligible
professional's
Medicare Part B FFS
patients seen during
the reporting period
to whom the measure
applies.
EHR-based reporting........... Report at January 1, 2010-
least 3 PQRI December 31,
measures; and 2010.
Report each
measure for at least
80% of the eligible
professional's
Medicare Part B FFS
patients seen during
the reporting period
to whom the measure
applies.
------------------------------------------------------------------------

f. Proposed Criteria for Satisfactory Reporting Measures Groups for
Individual Eligible Professionals
For the 2010 PQRI, we proposed 2 basic sets of criteria for
satisfactory reporting on a measures group (74 FR 33568). Both sets of
criteria would apply to the claims-based and registry-based reporting
mechanism. We did not propose to make the EHR-based reporting mechanism
available for reporting on measures groups in 2010.
The first set of proposed criteria, which we proposed to make
available for either the 12-month or 6-month reporting period in 2010,
would be consistent with the 2009 criteria for satisfactory reporting
of measures groups through registry-based reporting, which require the
reporting of at least 1 measures group for at least 80 percent of
patients to whom the measures group applies during the applicable
reporting period (with reporting required on a minimum number of
Medicare Part B FFS patients commensurate with the reporting period
duration). In the 2009 PQRI, there was a requirement under these
criteria to report each measures group on at least 30 Medicare Part B
FFS patients for the 12-month reporting period and at least 15 Medicare
Part B FFS patients for the 6-month reporting period for registry-based
reporting of measures groups. For the 2010 PQRI, we proposed to revise
the requirement by making these criteria applicable to both registry-
based and claims-based reporting and to change the number of Medicare
Part B FFS patients on which an eligible professional would be required
to report a measures group. We proposed to require an eligible
professional who chooses to report on measures groups based on
reporting on 80 percent of applicable patients to report on a minimum
of 15 Medicare Part B FFS patients for the 12-month reporting period
and a minimum of 8 Medicare Part B FFS patients for the 6-month
reporting period, regardless of whether the eligible professional
chooses to report the measures group through claims-based reporting or
registry-based reporting.
The second set of proposed criteria, which we proposed to make
available for the 12-month reporting period only, would be based on
reporting on a measures group on a specified minimum number of patients
(74 FR 33568). The second set of criteria would require reporting on at
least 1 measures group for at least 30 patients seen between January 1,
2010 and December 31, 2010 to whom the measures group applies. Unlike
the 2009 PQRI, which required that eligible professionals report on
consecutive patients (that is, patients seen in order, by date of
service), the 30 patients on which an eligible professional would need
to report a measures group for 2010 would not need to be consecutive
patients. The eligible professional would be able to report on any 30
unique patients seen during the reporting period to which the measures
group applies. As in previous years, we proposed that for 2010, the
patients, for claims-based reporting, would be limited to Medicare Part
B FFS patients. For registry-based reporting, however, we proposed that
the patients could include some, but not be exclusively, non-Medicare
Part B FFS patients.
We solicited comments on our proposal to make the criteria for
satisfactory reporting of measures groups more consistent with those
proposed for reporting individual measures, including our proposal to
revise the minimum sample size requirement related to satisfactory
reporting on measures group through the registry-based reporting
mechanism so that the criteria for satisfactory reporting of measures
groups, regardless of reporting mechanism, would be identical to those
proposed for reporting individual measures. We also solicited comments
on our proposal to allow eligible professionals to report on measures
groups on any 30 patients rather than a consecutive patient sample.
The following is summary of the comments we received regarding the
criteria for satisfactory reporting measures groups for individual
eligible professionals.
Comment: A few commenters agreed with the proposal to make the
criteria for satisfactory reporting of measures groups more consistent
with those proposed for reporting individual measures. One commenter
cited that doing so makes the program more accessible and improves the
commenter's ability to educate their members.
Response: We agree that making the criteria for satisfactory
reporting of measures groups more consistent with those proposed for
reporting individual measures should facilitate participation and
enhance education efforts. For the reasons cited in section II.G.2.e.
of this final rule with comment period, we are not finalizing our
proposal to add a minimum patient sample requirement to the criteria
for satisfactory reporting of individual measures. For the 2010 PQRI
criteria for satisfactory reporting of measures groups, however, we
will retain the minimum patient sample size requirement for those
eligible professionals who choose to report on measures groups based on
reporting on 80 percent of applicable patients and will finalize the
lower thresholds for the minimum patient sample size requirement
proposed for 2010.
Comment: We received numerous comments in support of our proposal
to allow eligible professionals to report on measures groups on any 30
patients rather than a consecutive patient sample.
Response: We appreciate the commenters' positive feedback and hope
that this change will make measures group reporting a more

[[Page 61806]]

attractive option for eligible professionals.
Comment: A few commenters were opposed to removing the requirement
that the 30 patients be consecutive. A few commenters expressed that
reporting of measures groups on consecutive patients reduces
opportunities for selectively reporting patients or cases with more
favorable results or would result in reporting on non-representative
patient samples. Another commenter suggested the CMS eliminate the
option of reporting on 30 patients through claims altogether or allow
eligible professionals to report on non-consecutive patients but
require a reporting period within which the 30 patients must be
selected.
Response: We believe that retaining the option to report on 30
patients provides an incentive to eligible professionals to consider
reporting measures groups instead of individual PQRI measures. As we
have stated previously, we believe that measures groups enable a more
comprehensive assessment of patient care for a given clinical condition
or focus by addressing several aspects of care for that particular
clinical condition or focus. Because we believe that measures groups
may often provide more meaningful information about the care being
furnished to Medicare beneficiaries than individual measures reported
in isolation, we would like to encourage measures group reporting where
possible.
With respect to commenters' concerns that removing the requirement
that eligible professionals report on 30 patients, we reiterate that we
believe that it would be difficult for eligible professionals to
selectively choose which patients to report on since they must report
on multiple measures for a given clinical condition or focus. We will,
however, continue to monitor the PQRI data to determine whether this
needs to be reassessed in future years.
Comment: We received some comments supporting the proposed
revisions to the minimum patient sample size requirement for PQRI
reporting of measures group (that is, reducing the thresholds from
reporting at least 30 patients for at least 1 measures group for the
12-month reporting period and at least 15 patients for at least 1
measures group for the 6-month reporting period to 15 and 8 patients,
respectively). Some commenters also remarked that the proposed
thresholds were reasonable and appropriate. One commenter, however,
remarked that the proposed thresholds were not adequate.
Response: We are finalizing the thresholds as proposed to provide
eligible professionals with fewer than 30 patients an opportunity to
report on PQRI measures groups for 2010. As identified in Table 8, the
new minimum patient sample size thresholds for measures groups
reporting for the 2010 PQRI will be 15 patients for at least 1 measures
group for the 12-month reporting period and 8 patients for at least 1
measures group for the 6-month reporting period.
As suggested by another commenter, however, we will continue to
monitor the PQRI data on an ongoing basis to determine whether the
criteria for satisfactory reporting of measures groups, including the
minimum patient sample size requirements, need to be re-evaluated for
future years.
After considering the comments and for the reasons discussed
previously, the final 2010 criteria for satisfactory reporting of data
on measures groups are summarized in Table 8 and are arranged by
reporting mechanism and reporting period. Accordingly, there are a
total of 6 reporting options, or ways in which an eligible professional
may meet the criteria for satisfactory reporting of measures groups for
the 2010 PQRI. Each reporting option consists of the criteria for
satisfactory reporting relevant to a given reporting mechanism and
reporting period. As stated previously, while eligible professionals
may potentially qualify as satisfactorily reporting on measures groups
under more than one of the reporting criteria, reporting mechanisms,
and/or for more than one reporting period, only one incentive payment
will be made to an eligible professional based on the longest reporting
period for which the eligible professional satisfactorily reports.
Similarly, an eligible professional could also potentially qualify for
the PQRI incentive payment by satisfactorily reporting both individual
measures and measures groups. However, only one incentive payment will
be made to the eligible professional based on the longest reporting
period for which the professional satisfactorily reports.

Table 8--2010 Criteria for Satisfactory Reporting on Measures Groups, by
Reporting Mechanism and Reporting Period
------------------------------------------------------------------------
Reporting mechanism Reporting criteria Reporting period
------------------------------------------------------------------------
Claims-based reporting........ Report at January 1, 2010--
least 1 PQRI December 31,
measures group; 2010.
Report each
measures group for
at least 30 Medicare
Part B FFS patients.
Claims-based reporting........ Report at January 1, 2010--
least 1 PQRI December 31,
measures group; 2010.
Report each
measures group for
at least 80% of the
eligible
professional's
Medicare Part B FFS
patients seen during
the reporting period
to whom the measures
group applies; and
Report each
measures group on at
least 15 Medicare
Part B FFS patients
seen during the
reporting period to
which the measures
group applies.
Claims-based reporting........ Report at July 1, 2010-
least 1 PQRI December 31,
measures group; 2010.
Report each
measures group for
at least 80% of the
eligible
professional's
Medicare Part B FFS
patients seen during
the reporting period
to whom the measures
group applies; and
Report each
measures group on at
least 8 Medicare
Part B FFS patients
seen during the
reporting period to
which the measures
group applies.
Registry-based reporting...... Report at January 1, 2010-
least 1 PQRI December 31,
measures group; 2010.
Report each
measures group for
at least 30
patients. Patients
may include, but may
not be exclusively,
non-Medicare Part B
FFS patients.

[[Page 61807]]

Registry-based reporting...... Report at January 1, 2010-
least 1 PQRI December 31,
measures group; 2010.
Report each
measures group for
at least 80% of the
eligible
professional's
Medicare Part B FFS
patients seen during
the reporting period
to whom the measures
group applies; and
Report each
measures group on at
least 15 Medicare
Part B FFS patients
seen during the
reporting period to
which the measures
group applies.
Registry-based reporting...... Report at July 1, 2010-
least 1 PQRI December 31,
measures group; 2010.
Report each
measures group for
at least 80% of the
eligible
professional's
Medicare Part B FFS
patients seen during
the reporting period
to whom the measures
group applies; and
Report each
measures group on at
least 8 Medicare
Part B FFS patients
seen during the
reporting period to
which the measures
group applies.
------------------------------------------------------------------------

g. Reporting Option for Satisfactory Reporting on Quality Measures by
Group Practices
As discussed above, for 2010, incentive payments will be available
to group practices based on the determination that the group practice,
as a whole (that is, for the TIN), satisfactorily reports on PQRI
quality measures for 2010. If, however, an individual eligible
professional is affiliated with a group practice participating in the
group practice reporting option and the group practice satisfactorily
reports under the group practice reporting option, the eligible
professional will not be eligible to earn a separate PQRI incentive
payment for 2010 on the basis of his or her satisfactorily reporting
PQRI quality measures data at the individual level under that same TIN
(that is, for the same TIN/NPI combination).
(1) Definition of ``Group Practice''
As stated in the proposed rule (74 FR 33570), section
1848(m)(3)(C)(i) of the Act authorizes the Secretary to define ``group
practice.'' For purposes of determining whether a group practice
satisfactorily submits PQRI quality measures data, we proposed that a
``group practice'' would consist of a physician group practice, as
defined by a single TIN, with at least 200 or more individual eligible
professionals (as identified by Individual NPIs) who have reassigned
their billing rights to the TIN. We solicited comments on the proposed
definition of ``group practice'' and our proposal to limit initial
implementation of the PQRI group practice reporting option in 2010 to
practices with 200 or more individual eligible professionals.
We also proposed to require group practices to complete a self-
nomination process and to meet certain technical and other requirements
in order to participate in the 2010 PQRI through the group practice
reporting option (74 FR 33570). Group practices interested in
participating in the 2010 PQRI through the group practice reporting
option would be required to submit a self-nomination letter to CMS
requesting to participate in the 2010 PQRI group practice reporting
option. The following is a summary of the comments received regarding
the proposed definition of ``group practice'' and the proposed self-
nomination requirements.
Comment: Several commenters requested that we consider allowing
smaller group practices to participate in this reporting option.
Commenters were concerned that defining a group practice as 200 or more
eligible professionals will lead to inaccurate data and further bias.
Commenters encouraged us to look for ways to make the option more
accessible for most group practices, including those that are not large
group practices. Commenters requested that we consider whether in the
future smaller group practice sizes should be allowed to participate in
this option. Commenters also requested an alternative reporting option
that uses statistical sampling for primary care oriented group
practices that report measures only applicable to primary care
physicians.
Response: We are appreciative of the commenters' thoughtful and
constructive feedback and will take these concerns into consideration
as we further develop the group practice reporting option. However, the
group practice reporting option draws from the experiences of the
Physician Group Practice (PGP) demonstration and the Medicare Care
Management Performance (MCMP) demonstration. Each of these
demonstrations included physician groups, but of different sizes. The
PGP demonstration, which the group practice reporting option
statistical sampling method is primarily modeled after, has been
successful. We recognize that the group practice size of 200 or more
individual eligible professionals limits participation. The inclusion
of smaller group practices that is those with less than 200 individual
eligible professionals, in the group practice reporting option was not
proposed at this time because we believe it is unlikely that the
smaller groups would be able to achieve 411 assigned Medicare
beneficiaries per disease module or preventive care measure that we use
under the demonstration. We will use this initial implementation year
to further develop and refine aspects of the group practice reporting
option and anticipate adapting and expanding this option to group
practices less than 200 individual eligible professionals in future
program years.
Comment: Several commenters were supportive of the group practice
reporting option and thought that the group level data would be more
meaningful. Commenters expressed that they are pleased to see the group
practice reporting option which has many benefits and that CMS has
taken a logical step of initially basing the group reporting process on
the PGP and MCMP demonstrations. A commenter stated that group practice
reporting option encourages voluntary reporting and promotes better
care coordination and a team-based approach to care. One commenter
suggested that the group practice reporting option reduces the
significant resources which practices currently need to report
measures. Another commenter stated the group

[[Page 61808]]

practice reporting option allows for increased provider participation
and greater transparency in the healthcare provided to Medicare
beneficiaries and suggested that the group practice reporting option
will bring greater attention to a range of important therapeutic areas.
Response: The group practice reporting option is based on certain
aspects of the PGP and the MCMP demonstrations. As defined, the group
practice reporting option is intended for large physician groups to
report on the high-cost chronic care quality measures for the specific
disease modules and preventive care.
Comment: A few commenters supported the proposal for public
reporting of group practices' performance results. One commenter,
however, did so with the caveat that CMS monitors the results to ensure
that there are no unintended consequences.
Response: We appreciate the commenters' positive feedback. As we
have stated previously, it is our desire to be able to move towards
public reporting of performance results for physicians and other
eligible professionals. We believe that public reporting of group
practice performance results provides an opportunity to move towards
achieving that goal with PQRI data.
Comment: Several commenters were opposed to public reporting of the
group practices' PQRI performance results because they believe:
The reporting process for group practices needs to be
further tested to ensure that there are no problems when we implement
this process into PQRI, that validity and accuracy of the measures as a
reflection of performance, and that there are no unintended
consequences;
CMS does not have specific authority from the Congress to
post performance results;
Doing so would be premature and discourage groups from
participating in this option;
Many issues identified in the CMS Issue Paper: Development
of a Plan to Transition to a Medicare Value-Based Purchasing Program
for Physician and Other Professional Services should be addressed prior
to public reporting of performance results. Once addressed, public
reporting of performance results should be conducted for all PQRI
participants, not just group practices;
For similar reasons, other commenters requested that we delay
public reporting of the group practices' performance results for at
least 1 year or wait until we are fully satisfied with the reliability
and validity of the performance data collected from group practices.
Response: Section 1848(m)(3)(C) of the Act requires us to establish
a process under which eligible professionals in a group practice shall
be treated as satisfactorily submitting data on PQRI quality measures
and provides the Secretary with the discretion to determine how to set
up this process. For group practices that choose to participate in the
PQRI, participation in the group practice reporting option is
voluntary. Group practices have a choice as to whether they wish to
participate in PQRI with each eligible professional in the group
participating individually using one of the reporting options available
to individual eligible professionals or to participate as a group
through the group practice reporting option.
Furthermore, we believe that public reporting of performance
information at the group level does not present some of the same issues
that public reporting of performance information at the individual
eligible professional would. For example, as we stated in the CY 2010
PFS proposed rule, no performance results would be calculated based on
small denominator sizes due to the reporting criteria for the group
practice reporting option, which require that group practices report
each disease module or preventive care measure under the group practice
reporting option for 411 patients. Nevertheless, we take note of the
importance of working through the concerns raised by commenters about
publicly posting groups' performance results, especially commenters'
concerns about doing so in the first year of implementation of the
group practice reporting option and the importance of giving
participating group practices an opportunity to review their results
from the first year of the group practice reporting option before any
information is publicly reported. Therefore, we are not finalizing our
proposal to require group practices that wish to utilize the group
practice reporting option in 2010 to agree to have their PQRI
performance results publicly reported. In addition, we will not report
any 2010 group practice performance results publicly except as
otherwise required by law and will limit public reporting of
information on the PQRI group practice reporting for 2010 to the
information required by section 1848(m)(5)(G)(i) of the Act (that is,
the names of group practices that satisfactorily submitted data on 2010
PQRI quality measures). Instead, we will consider implementing public
reporting of group practices' performance results in the 2011 PQRI
program year.
For the reasons discussed above and based on these comments, a
group practice, for purposes of finalizing the 2010 PQRI group practice
reporting option, a group practice will consist of a single TIN with at
least 200 or more individual eligible professionals (as identified by
Individual NPIs) who have reassigned their billing rights to the TIN.
Additionally, the TIN and all Individual NPIs must be established
Medicare providers.
To participate in the 2010 PQRI group practice reporting option, a
group practice will be required to submit a self-nomination letter
indicating the group practice's interest in participating in the 2010
PQRI group practice reporting option. Also, the letter must be
accompanied by an electronic file submitted in a format specified by
CMS (such as, a Microsoft Excel file) that includes the group
practice's TIN and the Individual NPI numbers, name of the group
practice, and names of all eligible professionals who will be
participating as part of the group practice (that is, all Individual
NPI numbers, which are established Medicare providers and associated
with the group practice's TIN), a single point of contact for handling
administrative issues as well as a single point of contact for
technical support purposes. In addition, the self-nomination letter
must also indicate the group practice's compliance with the following
requirements:
Have an active IACS user account;
Agree to attend and participate in all mandatory training
sessions; and
Have billed Medicare Part A and Part B on or after January
1, 2009 and prior to October 29, 2009.
The final participation requirements listed above for group
practices, including instructions for submitting the self-nomination
letter and other requested information, will be posted on the PQRI
section of the CMS Web site at http://www.cms.hhs.gov/PQRI by November
15, 2009. Group practices that wish to self-nominate for 2010 will be
required to do so by January 31, 2010. Upon receipt of the self-
nomination letters we will assess whether the participation
requirements were met by each self-nominated group practice using 2009
Medicare claims data.
As discussed further in section II.G.5. of this final rule,
participation in the E-Prescribing Incentive Program is voluntary for
group practices selected to participate in the PQRI group practice
reporting option. However, we are requiring group practices to
participate in the PQRI group practice reporting option in order to be
eligible to

[[Page 61809]]

participate in the electronic prescribing group practice reporting
option. Therefore, a group practice that wishes to participate in both
the PQRI group practice reporting option and the electronic prescribing
group practice reporting must notify CMS of its desire to do so at the
time that it self-nominates to participate in the PQRI group practice
reporting option.
(2) Process for Physician Group Practices to Participate as Group
Practices and Criteria for Satisfactory Reporting Data on Quality
Measures by Group Practices
For physician groups selected to participate in the PQRI group
practice reporting option for 2010, we proposed (74 FR 33570) the
reporting period would be the 12-month reporting period beginning
January 1, 2010. We proposed that group practices would be required to
submit information on these measures using a data collection tool based
on the data collection tool used in CMS' MCMP demonstration and the
quality measurement and reporting methods used in CMS' PGP
demonstration. We proposed that physician groups selected to
participate in the 2010 PQRI through the group practice reporting
option would be required to report on a common set of 26 NQF-endorsed
quality measures that are based on measures currently used in the MCMP
and/or PGP demonstration and that target high-cost chronic conditions
and preventive care.
As part of the data submission process, we proposed that, beginning
in 2011, each group practice would be required to report quality
measures with respect to services furnished during the 2010 reporting
period (that is, January 1, 2010 through December 31, 2010) on an
assigned sample of Medicare beneficiaries. We proposed to analyze the
January 1, 2010 through October 29, 2010 (that is, the last business
day of October 2010) National Claims History (NCH) file to assign
Medicare beneficiaries to each physician group practice using the same
patient assignment methodology used in the PGP demonstration.
We solicited comments on our proposal to adopt the PGP
demonstration's quality measurement and reporting methods for the PQRI
group practice reporting option. We specifically requested comments on
the proposed patient assignment methodology and our proposal to use a
data collection tool based on the one used in the MCMP demonstration as
the reporting mechanism for physician groups selected to participate in
the PQRI group practice reporting option.
We also proposed 2 criteria for satisfactory reporting of quality
measures by a physician group (74 FR 33571). First, the physician group
would be required to report completely on all of the proposed modules
and measures listed in Table 34 of the proposed rule (74 FR 33588).
Second, the physician group would be required to report completely on
the first 411 consecutively assigned and ranked Medicare beneficiaries
per disease module or preventive care measure.
The following is a summary of the comments we received regarding
the proposed reporting option for satisfactory reporting on quality
measures by group practices under PQRI.
Comment: One commenter was troubled by our proposal to model the
PQRI group practice reporting option on the PGP demonstration since
only half of PGP participants earned the incentive payment in the 3rd
year of the demonstration. Another commenter noted that transitioning
from individual eligible professional reporting to group practice
reporting and from pay-for-reporting to pay-for-performance are major
and challenging steps.
Response: Although we are planning to model the data collection and
sampling process for the PQRI group practice reporting option after the
PGP demonstration, we reiterate that the PQRI group practice reporting
option is distinct from the PGP demonstration. The requirements to
qualify for the incentive for PQRI are different from the requirements
to qualify for an incentive payment under the demonstration. Whereas
the PGP demonstration is a pay-for-performance demonstration, the PQRI
group practice reporting option, like the remainder of the PQRI
program, is solely a pay-for-reporting program. Group practices will
qualify for a PQRI incentive payment based on meeting the reporting
criteria. The PQRI incentive is not based on the group practice's
performance on the measures nor on cost savings.
Comment: Several Commenters were concerned with the proposed
patient assignment methodology. A few commenters asked CMS to
reconsider requirements in order to refine the attribution methodology.
One commenter opposed the retrospective attribution. One commenter
suggested that we limit the E/M visits to primary care physicians
selected other specialists, such as endocrinologists and cardiologists,
who frequently provide and coordinate care for Medicare beneficiaries.
Another commenter recommended the following refinements: (1) Use claims
that have the CPT code for ``established'' patients only; (2) use
claims that show the place of service code 11 (the code for office
visits); and (3) require that the patients have had at least two office
visits during the year in order to get into the sample.
Response: For the group practice reporting option, the patient
sample will be based on Medicare Part B claims submitted by the group
practices' TIN for services provided from January 1, 2010 through
October 29, 2010. Only claims appearing in CMS NCH by October 29, 2010,
will be considered in the patient sampling and assignment processes.
Patients will be assigned to the group practice if they receive the
plurality of their Office or Other Outpatient E/M services from the
practice. The assigned patients who are selected for quality reporting
must have received Office or Other Outpatient E/M services from the
practice at least two times in the 10-month period. Furthermore, part-
year and managed care patients will not be considered since we have
incomplete claims for these individuals and groups may not have had
sufficient time to impact the quality of their care. The retrospective
attribution will allow CMS to more accurately assign patients using
Medicare Part B claims that have been submitted by the group practices'
TIN and processed into the NCH.
Comment: One commenter stated that the eligible professionals'
affiliation with a group practice will dictate participation. A
commenter asked us to allow group practices the flexibility to decide
at any stage in the reporting process whether they want to continue
with the group reporting process.
Response: The group practice reporting option provides an
additional method of participating in PQRI. We do not dictate
participation in PQRI, nor do we dictate whether an eligible
professional participates in PQRI as an individual or as part of a
group. PQRI is a voluntary program. The decision to participate in PQRI
is at the discretion of the eligible professional. The eligible
professional may participate in PQRI under multiple unique TIN/NPI
combinations. An eligible professional may also report via more than
one reporting option. The eligible professional cannot, however,
receive a duplicate incentive payment for the same TIN/NPI combination.
The eligible professional can receive separate incentive payments
by participating and qualifying under one or more unique TIN/NPI
combinations. For example, if an eligible professional with TIN/NPI
003/001 participates in the group practice reporting option for one
practice and also participates as an

[[Page 61810]]

individual using TIN/NPI 005/001 the eligible professional can qualify
and earn a separate incentive payment for both TIN/NPI combinations
because this is under a different TIN/NPI combination. In the event
that a group practice is unsuccessful with the group practice reporting
option, we will not conduct analysis to determine if the TIN/NPI
qualified and is incentive eligible for other methods of PQRI
participation. There is no appeals process for PQRI.
Comment: One commenter asked that we provide a mechanism for
allowing group practices to deselect patients who have been assigned to
the group practice.
Response: We understand that due to circumstances out of the
groups' control (that is, death, unable to locate a medical record,
etc.) that the group practice may not be able to report completely on
100 percent of the first 411 consecutively ranked assigned patient
sample. The reporting tool allows for exclusions in certain instances
and the group will not be required to populate the tool when these
circumstances arise. In order to accommodate for such issues, each
group practice will be assigned an over sample of patients, which will
assure that the group practice reports completely on 411 consecutively
assigned patients per disease module and preventive care measure to
report on. The experience from the PGP demonstration has shown that
this sampling method provides a sufficient number of assigned patients
in the event that the deselection of assigned patients is warranted.
Comment: One commenter specifically supported using the Performance
Assessment Tool (PAT), which is the data collection tool used in the
PGP and MCMP demonstrations and proposed for use in PQRI group practice
reporting option. Another commenter supports using the PAT and applauds
quick turnaround time we anticipate for providing pre-populated results
to practices.
Response: We appreciate the commenters' support for the data
collection tool. We anticipate providing the selected group practices
with a pre-populated data collection tool. Data fields will be pre-
populated based on Medicare claims and demographic information for
dates of service between January 1, 2010 and October 29, 2010. This
tool will be modeled after the PAT currently in use for the MCMP
program, with some modifications. The tool will require, at a minimum,
standard PC image with Microsoft Office and Microsoft Access software
installed and minimum software configurations for the group practices
to successfully complete the data collection tool. The data collection
tool may potentially provide a high level feedback (submission) report
to the group practice, including such information as percentage of
patients that have been completed in the sample and percentage of
positive measure results. These features will allow the group practices
to verify data prior to submitting it to us. We reserve the right to
audit the data submitted by the group practices.
Comment: One commenter stated that only those group practices that
have participated in the PGP demonstration will be successful in
completing the tool and participating in the group practice reporting
option.
Response: Group practices participating in the PGP demonstration
will not be allowed to participate in the PQRI group practice reporting
option in 2010. We acknowledge that there will be a learning period
needed to become familiar with and to complete the tool. Group
practices that are selected to participate in the PQRI group practice
reporting option will be required to attend mandatory training
sessions. Prior to these mandatory training sessions, we anticipate
providing the group practices with a sample tool to become familiar
with its functionality and reporting process. Additionally, we may
establish periodic conference calls with the group practices, with most
calls being held during the tool data entry period, to provide
technical support to practices. The group practices will be required to
designate administrative and technical points of contact to streamline
and assist with communication.
Comment: One commenter stated that it would be challenging for
group practices to report on 26 measures.
Response: We disagree that it would be challenging for group
practices to report on 26 measures. We will be prepopulating the data
collection tool that will be used for the PQRI group practice reporting
option with claims and other demographic information on the group
practices' assigned Medicare beneficiaries prior to sending the data
collection tool to the groups to complete. Furthermore, we believe the
burden of reporting the 26 measures is outweighed by the potential
incentive payment. Completion of this data collection tool on all 26
measures for the required number of patients essentially qualifies the
group practice for an incentive payment equal to 2.0 percent of the
group practice's estimated total Medicare Part B PFS allowed charges
for services furnished during the reporting period.
For the reasons discussed above and after taking into consideration
the comments, we are finalizing the process group practices will be
required to use to report data on quality measures for the 2010 PQRI as
a group practice and the associated criteria for satisfactory reporting
of data on quality measures by group practices, which are summarized in
Table 9. Group practices participating in PQRI as a group practice will
be required to report on all of the measures listed in Table 28 of this
final rule with comment period. These quality measures are grouped into
preventive care measures and four disease modules: diabetes; heart
failure; coronary artery disease; and hypertension.
Although the process for physician groups to participate in PQRI as
a group practice incorporates some characteristics and methods from the
PGP demonstration and the MCMP demonstration, the PQRI group practice
reporting option is a separate program with its own specifications and
methodology from the PGP and MCMP demonstration programs. The reporting
process for the group practice reporting option, including the use of a
data collection tool as the reporting mechanism, will not be available
to individual eligible professionals participating in the 2010 PQRI.
As stated in the proposed rule (74 FR 33570 through 33571), we will
analyze the January 1, 2010 through October 29, 2010, NCH file to
assign Medicare beneficiaries to each physician group practice using
the same patient assignment methodology used in the PGP demonstration.
Assigned beneficiaries will be limited to those Medicare FFS
beneficiaries with Medicare Parts A and B for whom Medicare is the
primary payer. Assigned beneficiaries will not include Medicare
Advantage enrollees. A beneficiary will be assigned to the physician
group that provides the plurality of a beneficiary's office or other
outpatient E/M allowed charges (based on Medicare Part B claims
submitted for the beneficiary for dates of services between January 1,
2010 and October 29, 2010). Beneficiaries with only 1 visit to the
group practice between January 1, 2010 and October 29, 2010, will be
eliminated from the group practice's assigned patient sample. For
inclusion in the sample, beneficiaries will be required to have at
least 2 visits to the group practice between January 1, 2010 and
October 29, 2010.
Once the beneficiary assignment has been made for each physician
group

[[Page 61811]]

during the fourth quarter of 2010, we will provide each physician group
selected to participate in the group practice reporting option with
access to a database (that is, a data collection tool) that will
include the group's assigned beneficiary samples and the quality
measures listed in Table 28. We will prepopulate the data collection
tool with the assigned beneficiaries' demographic and utilization
information based on all of their Medicare claims data. We intend to
provide the selected physician groups with access to this prepopulated
database by no later than the first quarter of 2011. The physician
group will be required to populate the remaining data fields necessary
for capturing quality measure information on each of the assigned
beneficiaries. Numerators for each of the quality measures will include
all beneficiaries in the denominator population who also satisfy the
quality performance criteria for that measure. Denominators for each
quality measure will include a sample of the assigned beneficiaries who
meet the eligibility criteria for that disease module or each
preventive care quality measure. All of the assigned patients'
inpatient, outpatient, and physician claims will be used in determining
clinical eligibility for each module. Identical to the sampling method
used in the PGP demonstration, the random sample must consist of at
least 411 assigned beneficiaries. If the pool of eligible assigned
beneficiaries is less than 411, then the group practice must report on
100 percent, or all, of the assigned beneficiaries to satisfactorily
participate in the group practice reporting option. For each disease
module or preventive care measure, the physician group will be required
to report information on the assigned patients in the order in which
they appear in the group's sample (that is, consecutively).

Table 9--2010 Process for Physician Group Practices To Participate as
Group Practices and Criteria for Satisfactory Reporting of Data on
Quality Measures by Group Practices
------------------------------------------------------------------------
Reporting mechanism Reporting criteria Reporting period
------------------------------------------------------------------------
A pre-populated data Report on all January 1, 2010-
collection tool provided by measures included in December 31,
CMS. the data collection 2010.
tool (26 measures);
and
Complete the
tool for the first
411 consecutively
ranked and assigned
beneficiaries in the
order in which they
appear in the group's
sample for each
disease module or
preventive care
measure. If the pool
of eligible assigned
beneficiaries is less
than 411, then report
on 100% of assigned
beneficiaries.
------------------------------------------------------------------------

h. Statutory Requirements and Other Considerations for 2010 PQRI
Measures
(1) Statutory Requirements for 2010 PQRI Measures
As discussed in the proposed rule (74 FR 33571 through 33572), the
statutory requirements with respect to the use of quality measures for
the 2010 PQRI are different from the statutory requirements for
previous program years. For purposes of reporting data on quality
measures for covered professional services furnished during 2010 and
subsequent years for the PQRI, subject to the exception noted below,
section 1848(k)(2)(C)(i) of the Act, as added by MIPPA, requires that
the quality measures shall be such measures selected by the Secretary
from measures that have been endorsed by the entity with a contract
with the Secretary under subsection 1890(a) of the Act (that is, the
National Quality Forum, or NQF). In the case of a specified area or
medical topic determined appropriate by the Secretary for which a
feasible and practical measure has not been endorsed by the NQF,
however, section 1848(k)(2)(C)(ii) of the Act authorizes the Secretary
to specify a measure that is not so endorsed as long as due
consideration is given to measures that have been endorsed or adopted
by a consensus organization identified by the Secretary, such as the
AQA alliance.
Finally, section 1848(k)(2)(D) of the Act requires that for each
2010 PQRI quality measure, ``the Secretary shall ensure that eligible
professionals have the opportunity to provide input during the
development, endorsement, or selection of measures applicable to
services they furnish.''
(2) Other Considerations for Measures Selected for Inclusion in the
2010 PQRI
Based on the statutory requirements described above, we stated in
the CY 2010 PFS proposed rule (74 FR 33572 through 33573) that we
proposed to apply the following considerations with respect to the
selection of 2009 PQRI quality measures for inclusion in the 2010 PQRI
quality measure set:
Where some 2009 PQRI quality measures have been endorsed
by the NQF and others have not, those 2009 PQRI quality measures that
have been specifically considered by NQF for possible endorsement, but
NQF has declined to endorse it, will not be included in the 2010 PQRI
quality measure set (that is, we will retire the measure for 2010).
In circumstances where no NQF-endorsed measure is
available, we will exercise the exception under section 1848
(k)(2)(C)(ii) of the Act. Under these circumstances, a 2009 PQRI
quality measure that previously (that is, prior to January 31, 2009)
has been adopted by the AQA will meet the requirements under the Act
and it would be appropriate for eligible professionals to use the
measure to submit quality measures data and/or quality measures results
and numerator and denominator data on quality measures, as appropriate.
Although we are not including any 2009 PQRI measures that
have not been endorsed by the NQF or adopted by the AQA in the final
2010 PQRI quality measure set, we acknowledge that section
1848(k)(C)(ii) of the Act provides an exception to the requirement that
the Secretary select measures that have been endorsed by the entity
with a contract under section 1890(a) of the Act (that is, the NQF) as
long as an area or medical topic for which a feasible and practical
NQF-endorsed measure is not available has been identified and due
consideration has been given to measures that have been endorsed by the
NQF and/or, prior to January 31, 2009, adopted by the AQA.
The statutory requirements under section 1848(k)(2)(C) of
the Act, subject to the exception noted above, require only that the
measures be selected from measures that have been endorsed by the
entity with a contract with the Secretary under section 1890(a) (that
is, the NQF) and are silent with respect to how the measures that are
submitted to the NQF for endorsement were developed. The basic steps
for

[[Page 61812]]

developing measures applicable to physicians and other eligible
professionals prior to submission of the measures for endorsement may
be carried out by a variety of different organizations. We do not
believe there needs to be any 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 quality measures and the scope and
utility of measures that may be considered for endorsement as voluntary
consensus standards.
2009 PQRI measures that were part of the 2007 and/or 2008
PQRI in which the 2007 and 2008 PQRI analytics indicate a lack of
significant reporting and usage were not considered for inclusion in
the 2010 PQRI.
In addition to reviewing the 2009 PQRI measures and previously
retired measures, for purposes of developing the proposed 2010 PQRI
measures, we reviewed and considered measure suggestions including
comments received in response to the CY 2009 PFS proposed rule and
final rule with comment period. Additionally, suggestions and input
received through other venues, such as an invitation for measures
suggestions posted on the PQRI section of the CMS Web site in February
2009 were also reviewed and considered for purposes of our development
of the list of proposed 2010 PQRI quality measures. All measures and
measures groups reviewed for potential inclusion in the 2010 PQRI
measure set are listed in the ``Table of 2010 Measure Suggestions''
posted on the Statute/Regulations/Program Instructions page of the PQRI
section of the CMS Web site at http://www.cms.hhs.gov/PQRI/05_StatuteRegulationsProgramInstructions.asp#TopOfPage.
With respect to the selection of new measures (that is, measures
that have never been selected as part of a PQRI quality measure set for
2009 or any prior year), we stated in the CY 2010 PFS proposed rule (74
FR 33572 through 33573) that we would apply the following
considerations, which include many of the same considerations applied
to the selection of 2009 PQRI quality measures for inclusion in the
2010 PQRI quality measure set described above:
High Impact on Healthcare.
+ Measures that are high impact and support CMS and HHS priorities
for improved quality and efficiency of care for Medicare beneficiaries.
These current and long term priority topics include: prevention;
chronic conditions; high cost and high volume conditions; elimination
of health disparities; healthcare-associated infections and other
conditions; improved care coordination; improved efficiency; improved
patient and family experience of care; improved end-of-life/palliative
care; effective management of acute and chronic episodes of care;
reduced unwarranted geographic variation in quality and efficiency; and
adoption and use of interoperable HIT.
+ Measures that are included in, or facilitate alignment with,
other Medicare, Medicaid, and CHIP programs in furtherance of
overarching healthcare goals.
NQF Endorsement.
+ Measures must be NQF-endorsed by July 1, 2009, in order to be
considered for inclusion in the 2010 PQRI quality measure set.
+ Although we did not propose to include any new measures that were
not endorsed by the NQF by July 1, 2009 in the final 2010 PQRI quality
measure set, we acknowledge that section(k)(2)(C)(ii) of the Act
provides an exception to the requirement that the Secretary select
measures that have been endorsed by the entity with a contract under
section 1890(a) of the Act (that is, the NQF). As long as an area or
medical topic for which a feasible and practical NQF-endorsed measure
is not available has been identified and due consideration has been
given to measures that have been adopted by the AQA or other consensus
organization identified by the Secretary.
+ The statutory requirements under section 1848(k)(2)(C) of the
Act, subject to the exception noted above, require only that the
measures be selected from measures that have been endorsed by the
entity with a contract with the Secretary under section 1890(a) (that
is, the NQF) and are silent with respect to how the measures that are
submitted to the NQF for endorsement were developed. The basic steps
for developing measures applicable to physicians and other eligible
professionals prior to submission of the measures for endorsement may
be carried out by a variety of different organizations. We do not
believe there needs to be any 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 quality measures and the scope and
utility of measures that may be considered for endorsement as voluntary
consensus standards. The requirements under section 1848(k)(2)(C) of
the Act pertain only to the selection of measures and not to the
development of measures.
Address Gaps in PQRI Measure Set.
+ Measures that increase the scope of applicability of the PQRI
measures to services furnished to Medicare beneficiaries and expand
opportunities for eligible professionals to participate in PQRI. We
seek to achieve broad ability to assess the quality of care furnished
to Medicare beneficiaries, and ultimately to compare performance among
professionals. We seek to increase the circumstances where eligible
professionals have at least three measures applicable to their practice
and measures that help expand the number of measures groups with at
least four measures in a group.
+ Measures of various aspects of clinical quality including outcome
measures, where appropriate and feasible, process measures, structural
measures, efficiency measures, and measures of patient experience of
care.
Other considerations that we proposed to apply to the selection of
measures for 2010, regardless of whether the measure is a 2009 PQRI
measure or not, were:
Measures that are functional, which is to say measures
that can be technically implemented within the capacity of the CMS
infrastructure for data collection, analysis, and calculation of
reporting and performance rates. This leads to preference for measures
that reflect readiness for implementation, such as those that are
currently in the 2009 PQRI program or have been through testing. The
purpose of measure testing is to reveal the measure's strengths and
weaknesses so that the limitations can be addressed and the measure
refined and strengthened prior to implementation. For new measures,
preference is given to those that can be most efficiently implemented
for data collection and submission. Therefore, any measures that have
been found to be technically impractical to report because they are
analytically challenging due to any number of factors, including those
that are claims-based, have not been included in the 2010 PQRI. For
example, in some cases, we are replacing existing 2009 PQRI measures
with updated and improved measures that are less technically
challenging to report.
For some measures that are useful, but where data
submission is not feasible through all otherwise available PQRI
reporting mechanisms, a measure may be included for reporting solely
through specific reporting mechanism(s)

[[Page 61813]]

in which its submission is feasible. For example, we proposed to limit
reporting of some measures that previously were available for claims-
based reporting and registry-based reporting to registry-based
reporting only because they were technically challenging to report and/
or analyze through the claims-based reporting mechanism (74 FR 33579
through 33580).
We also reviewed 33 measures that have been retired from the PQRI
in previous years using the considerations for selecting measures for
the 2010 PQRI discussed above (74 FR 33573). None were found to be
eligible for inclusion in the 2010 PQRI quality measure set because
they did not meet the criteria described above.
We solicited comments on the implication of including or excluding
any given measure or measures in the final 2010 PQRI quality measure
set and to our approach in selecting measures. As we stated in the
proposed rule, we recognize that some commenters may also wish to
recommend additional measures for inclusion in the 2010 PQRI measures
that we did not propose (74 FR 33573). While we may consider such
recommended measures for inclusion in future measure sets for PQRI and/
or other programs to which such measures may be relevant, we will not
be able to consider such additional measures for inclusion in the 2010
measure set.
(3) Summary of Comments and Responses
The following is a summary of the comments we received regarding
the statutory requirements and other considerations for the selection
of 2010 PQRI measures.
Comment: Some commenters appreciated our continued efforts to
expand the PQRI quality measure set with measures that are
scientifically valid and minimize eligible professional burden. In
order to promote the provisions that reflect up-to-date care for
beneficiaries as the program matures, these commenters urged us to
revise its quality measures regularly to reflect current guidelines.
Response: We appreciate these supportive comments regarding our
continued efforts to expand the PQRI quality measure set. As the
program evolves, we will continue to consider more effective processes
to update and/or revise the PQRI quality measure set to reflect the
most current guidelines of care.
Comment: Several commenters supported our proposal to only use
quality measures that have been endorsed by the NQF, thereby ensuring a
rigorous evaluation of the measures by multiple stakeholders and
providing an opportunity for public comment from those various
stakeholders. These commenters suggested the utilization of NQF
endorsed measures reflect areas that are common to providers, allow for
appropriate measurement of services provided in Medicare, and provide a
thorough standardized review framework. One commenter, however, was
unclear whether NQF or consensus organization endorsement or adoption
is required for all suggested measures for 2010 or 2011 or whether the
Secretary can suggest measures of her own accord when measures do not
already exist with this endorsement.
Response: We appreciate the commenters' supportive feedback and
agree with the points raised by the commenters with respect to the
benefits of NQF endorsement. As we stated above, subject to the
exception under section 1848(k)(2)(C)(ii) of the Act, measures selected
for the 2010 PQRI are required by section 1848(k)(2)(C)(i) of the Act
to be endorsed by Secretary. Section 1848(k)(2)(C)(ii) of the Act
authorizes us to select measures for the 2010 PQRI and subsequent years
that have not been endorsed by the NQF in a specified area or medical
topic for which a feasible and practical measure has not been so
endorsed as long as we give due to consideration to measures that have
been endorsed or adopted by other consensus organizations identified by
the Secretary.
Comment: One commenter notes that the proposed rule makes allowance
for measures used in the 2009 PQRI that have not been endorsed by the
NQF but were previously approved by the AQA. The commenter believes
that for new measures, NQF endorsement should be a requirement not only
for the PQRI measures but also for measures for the hospital outpatient
quality data reporting program, or HOP QDRP. While the underlying
statutes for both reporting programs differ, the commenter believes CMS
has the discretion to adopt a consistent policy with respect to NQF
endorsement.
Response: As discussed previously, the requirements for measures
selected for the PQRI are defined in statute. The requirements for
other quality data reporting programs are beyond the scope of this
rule.
Comment: Some commenters recommended that we require NQF
endorsement not only of individual measures, but also NQF endorsement
of measures groups.
Response: When we create measures groups, we only utilize
individual measures that meet statutory requirements. All measures in
current measures groups meet the statutory requirements. We are unaware
of any efforts by NQF to review groups of measures for separate
endorsement. Section 1848(m)(5)(F) of the Act required us to establish
alternative criteria for satisfactorily reporting and alternative
reporting periods for reporting groups of measures for 2008 and
subsequent years but did not establish any additional limitations on
the discretion of the Secretary.
Comment: Some commenters urged us to recognize additional consensus
organizations to endorse quality measures for the PQRI. The commenters
suggested we recognize measure development organizations such as the
American Medical Association's Physician Consortium for Performance
Improvement (AMA-PCPI) or the National Committee for Quality Assurance
(NCQA) as consensus endorsement organizations.
Response: MIPPA modified the requirements for measure selection by
the Secretary for PQRI as previously described. Further, as we stated
in response to similar comments in previous years, 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
National Institute of Standards and Technology Act (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 Act.
Comment: One commenter suggested that the measure development
process should not be restricted to physician-controlled organizations
but that the measure development process must include relevant
physician input due to their expertise in the subject areas.
Response: We are in agreement that while physician expertise is an
important ingredient in measure development and in the consensus
process, physicians should not be in complete control of the process of
measure development. Any such restriction would unduly limit the basic
development of physician quality measures.
Comment: A few commenters did not believe that endorsement or
adoption by the NQF or the AQA, respectively, was a necessary condition
for inclusion of a measure in the PQRI for 2010 or subsequent years.
One commenter urged us to use measures from other nationally recognized
sources in areas for which NQF-endorsed measures are not available on
the condition that the

[[Page 61814]]

measures are expedited through the NQF endorsement process.
Response: We agree that NQF endorsement or AQA adoption is not a
necessary condition for all measures included in the PQRI quality
measure set. As stated previously, section 1848(k)(2)(C)(ii) of the Act
does permit us to select measures for the 2010 PQRI and subsequent
years that have not been endorsed by the NQF in a specified area or
medical topic for which a feasible and practical measure has not been
so endorsed as long as we give due consideration to measures that have
been endorsed or adopted by other consensus organizations identified by
the Secretary.
We proposed to exercise this authority for 2010 in the CY 2010 PFS
proposed rule (74 FR 33576 through 33579) by proposing to include in
the 2010 PQRI several 2009 PQRI measures that had not yet achieved NQF
endorsement but that were AQA adopted. As we stated in the proposed
rule, we would include such measures in the 2010 PQRI as long as a
measure had not been reviewed by the NQF prior to July 1, 2009 and
specifically declined for endorsement.
We are also exercising this authority with respect to our decision
to finalize 3 proposed new measures (that is, Referral for Otologic
Evaluation for Patients with Congenital or Traumatic Deformity of the
Ear; Referral for Otologic Evaluation for Patients with History of
Active Drainage from the Ear within the Previous 90 days; and Referral
for Otologic Evaluation for Patients with History of Sudden or Rapidly
Progressive Hearing Loss) that were neither NQF endorsed prior to July
1, 2009 nor AQA adopted prior to January 31, 2009. We decided to
finalize these 3 measures despite the lack of consensus endorsement or
adoption due to the lack of measures available for audiologists to
report on. Audiologists are a new a category of eligible professionals
that were added to the list of professionals eligible to participate in
the PQRI beginning with the 2009 PQRI.
We stress, however, that inclusion of measures that are not NQF
endorsed or AQA adopted is an exception to the requirement under
section 1848(k)(2)(C)(i) of the Act that measures be endorsed by the
NQF. Therefore, we do believe that this exception authority should be
exercised in very limited circumstances, such as when few or no
measures are available for a particular specialty or category of
eligible professionals to report.
Comment: Several commenters suggested what the PQRI quality measure
set should focus on and how the PQRI quality measure set should evolve.
One commenter believes the PQRI quality measure set should evolve with
the development of better clinical evidence and a greater understanding
of the benefit-cost tradeoffs of particular services and treatments.
Another commenter urged us to adopt quality measures that would address
the existing gaps in quality and that focus on services with the
potential to deliver high value to Medicare beneficiaries and to avoid
services that may have little or no value to beneficiaries, such as
high-cost or high-volume services. One commenter suggested additional
criteria that should be utilized in the selection of measures, which
include selecting: (1) More outcome and resource use measures; (2) care
coordination measures; (3) measures addressing appropriateness of care
which deliver high value to Medicare patients; (4) measures that allow
for assessing and reporting on disparities of care. Some commenters
also believe the measures selected for PQRI should not reward eligible
professionals for providing marginally effective care or care that is
already routinely furnished.
Response: In the 2010 PFS proposed rule, we listed the
considerations that we applied for the selection of proposed 2010 PQRI
quality measures. As described above, many of these considerations
reflect the commenters' suggestions, particularly our focus on:
Measures with high impact on healthcare.
Measures that support CMS and HHS priorities for improved
quality and efficiency of care for Medicare beneficiaries (such as,
prevention; chronic conditions; high cost and high volume conditions;
elimination of health disparities; healthcare-associated infections and
other conditions; improved care coordination; improved efficiency;
improved patient and family experience of care; improved end-of-life/
palliative care; effective management of acute and chronic episodes of
care; reduced unwarranted geographic variation in quality and
efficiency; and adoption and use of interoperable HIT).
Measures that are included in, or facilitate alignment
with, other Medicare, Medicaid, and CHIP programs in furtherance of
overarching healthcare goals.
Measures that address gaps in the PQRI measure set in
order to increase the scope of applicability of the PQRI measures to
services furnished to Medicare beneficiaries and expand opportunities
for eligible professionals to participate in PQRI.
Comment: Some commenters encouraged us to identify and add more
quality measures and to develop interim opportunities for eligible
professionals that have a dearth of available measures to participate
in PQRI. One commenter specifically recommended that we expand the
number of measures to reflect all types of services provided to all
beneficiaries.
Response: Despite our efforts to expand the PQRI quality measure
set to increase the scope of applicability of the PQRI measures to
services furnished to Medicare beneficiaries and expand opportunities
for eligible professionals to participate in PQRI, we are aware that
there remains some gaps in the PQRI quality measure set. However, we
largely depend on the development of measures by professional
organizations and other measure developers. Although we had significant
involvement in the development of measures applicable to eligible
professionals at the start of the PQRI, ideally we would not need to be
closely involved in the development of clinician-level quality measures
but would select from measures that meet the statutory requirements.
Thus, we encourage professional organizations and other measure
developers to fund and develop measures that address some of the gaps
identified by the commenters.
Comment: Some commenters recommended we utilize data from previous
reporting periods to determine the appropriateness and effectiveness of
the measures. The commenters recommended that we continually evaluate
and revise the criteria for measure selection to ensure measures align
with clinical practice and can be reported with minimal administrative
burden.
Response: We will continue to evaluate data from previous reporting
periods to assess the appropriateness and effectiveness of the PQRI
measures. We will also continue to work with measure developers to urge
alignment of the PQRI measures with clinical practice as the program
evolves and matures.
i. The Final 2010 PQRI Quality Measures for Individual Eligible
Professionals
For 2010, we proposed that final PQRI quality measures would be
selected from 153 of the 2009 PQRI measures and the measures listed in
the ``Table of 2010 Measure Suggestions'' posted on the Statute/
Regulations/Program Instructions page of the PQRI section of the CMS
Web site at http://www.cms.hhs.gov/PQRI/05_
StatuteRegulationsProgramInstructions.asp#

[[Page 61815]]

TopOfPage. We proposed to include a total of 176 measures (this
includes both individual measures and measures that are part of a
proposed 2010 measures group) on which individual eligible
professionals can report for the 2010 PQRI (74 FR 33574 through 33587,
and 39032). In addition, we proposed to retire 7 measures because they
did not meet one or more of the considerations for selection of
proposed 2010 measures (74 FR 33574). In addition we proposed 13
measures groups for the 2010 PQRI (74 FR 33582 through 33587).
The following is a summary of the comments received on the 2010
PQRI measures in general and comments on the measures from the 2009
PQRI not proposed for inclusion in the 2010 PQRI, which are addressed
below. Comments specific to measures proposed for inclusion in the 2010
PQRI are addressed in sections II.G.2.i.1. through II.G.2.i.5. below.
Comment: Several commenters requested or recommended that we make
readily available on an ongoing basis more detailed information on the
measure development process and on measures in development.
Response: We agree that it is desirable for the public to have
information on the measures development process and measures in
development. To this end, we have developed a standardized process to
be used for CMS contracted measures development. This standardized
process is detailed in the ``Measures Management System Blueprint''
found on the CMS Web site at http://www.cms.hhs.gov/apps/QMIS/mmsBlueprint.asp.
As stated previously, however, we largely depend on the development
of measures by professional organizations and other measure developers
for the PQRI. Many major measures developers follow a similar process
for the measures that they develop, in that they publish measures and
specifications during development and seek public comment. Both the NQF
and AQA also publish measures and specifications during their consensus
processes and seek public comment.
Comment: Numerous commenters requested final measure specifications
for the 2010 PQRI 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 at
the same time as or in advance of future rulemaking.
Response: 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.
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. Our intent is to provide the
final list of 2010 PQRI measures and the detailed measures
specifications on the PQRI section of the CMS Web site by November 15,
2009, but no later than December 31, 2009. These detailed
specifications will include instructions for reporting and identifying
the circumstances in which each measure is applicable. The detailed
technical specifications for measures in the final listing for the 2010
PQRI remain potentially subject to corrections until the start of the
2010 reporting period, as we stated in the proposed rule.
Comment: One commenter supported removal from the PQRI quality
measure set for 2010 and 2009 PQRI measure that was part of the 2007
and/or 2008 PQRI for which the 2007 and 2008 PQRI analytics indicate a
lack of significant reporting and usage. The commenter remarked that
continued review and revision of the measures list will help to refine
the process and validity of the program and reduce undue burden on
participants, increasing meaningful participation.
Response: We appreciate the commenter's constructive feedback and
agree that it is necessary to review and revise the PQRI quality
measure set on an ongoing basis as we gain more experience with
particular measures and/or new measures become available to replace
existing measures.
We are unclear, however, with respect to the commenter's remark
that continued revision of the PQRI quality measure set will reduce
undue burden on participants. Although there are several measures
available in the PQRI quality measure set, participants are not
required, nor are they expected to, report on all measures included in
the PQRI quality measure set. As discussed further in sections
II.G.2.e. and II.G.2.f. above, an individual eligible professional
generally needs to report on only 3 individual 2010 PQRI quality
measures or 1 2010 PQRI measures group in order to meet the criteria
for satisfactory reporting for 2010.
Comment: Some commenters specifically suggested that Measure
143 Oncology: Medical and Radiation--Pain Intensity Quantified
and Measure 144 Oncology: Medical and Radiation Plan of Care
for Pain be retained for the 2010 PQRI because they believe the
measures address quality of life issue for patients with cancer. One
commenter requested that if the measures are analytically challenging
as claims-based measures, we retain the measures as registry-only
measures instead.
Response: We only proposed to retire these measures because they
were too complex to calculate via claims. Based on the commenter's
suggestion to retain these measures as registry-only measures for the
2010 PQRI, we are finalizing and including them in the measures listed
in ``Table 11: 2010 Measures Selected From the 2009 PQRI Quality
Measure Set Available for Registry-based Reporting Only.''
Comment: One commenter requested that Measure 94 Otitis
Media with Effusion (OME): Diagnostic Evaluation--Assessment of
Tympanic Membrane Mobility and Measure 95 Otitis Media with
Effusion (OME) Hearing Testing not be retired since audiologists were
just added to the list of eligible professionals with the 2009 PQRI and
there are few measures on which they can report. The commenter
requested that we retain both measures for at least an additional year
to reassess the level of use since PQRI reporting, for audiologists, is
a new process that requires extensive training.
Response: We agree that in order to provide audiologists with
opportunities to participate in the PQRI, it is necessary to retain at
least one of these measures for at least another year. Thus, we have
decided to retain Measure 94 Otitits Media with Effusion
(OME): Diagnostic Evaluation--Assessment of Tympanic Membrane Mobility
and retire only Measure 95 Otitis Media with Effusion (OME)
Hearing Testing for 2010. Measure 94, in conjunction with the
3 new measures developed by the Audiology Quality Consortium (AQC)
listed in Table 13, will provide audiologists with at least 4 measures
on which they can report for the 2010 PQRI.
Comment: One commenter was not clear on which measure was being
proposed to replace Measure 34 Stroke and Stroke
Rehabilitation: Tissue Plasminogen Activator (tPA) Considered and
requested that CMS not retire Measure 34 until clarification
is provided. Another commenter,

[[Page 61816]]

however, supported the retirement of Measure 34 and CMS'
decision to replace this measure with the proposed new Stroke and
Stroke Rehabilitation: Thrombolytic Therapy measure (see Table 19 of
the CY 2010 PFS proposed rule).
Response: As indicated by the commenter, we are replacing Measure
34 with the Stroke and Stroke Rehabilitation: Thrombolytic
Therapy measure listed in Table 13 of this final rule with comment
period.
Comment: One commenter expressed support for a proposed revision of
Measure 11 for 2010 PQRI that expands the eligible denominator
patient population.
Response: We wish to clarify that at the request of the measure
developer, we are retiring Measure 11 and replacing it with
the proposed new NQF-endorsed measure: Stenosis Management in Cardiac
Imaging Studies (see Table 13 of this final rule with comment period).
Based on the criteria discussed above and our review of these
comments, we are retiring the 4 measures listed in Table 10 and are
including the 175 individual measures listed in Tables 11 through 13 in
the final 2010 PQRI individual quality measure set. We are also
including 13 measures groups in the final 2010 PQRI quality measure
set, which are listed in Tables 15 through 27. The individual measures
selected for the 2010 PQRI can be categorized as follows:
(1) 2010 Individual Quality Measures Selected From the 2009 PQRI
Quality Measures Set Available for Claims-based Reporting and Registry-
Based Reporting;
(2) 2010 Individual Quality Measures Selected From the 2009 PQRI
Quality Measures Set Available for Registry-based Reporting Only;
(3) New Individual Quality Measures Selected for 2010; and
(4) 2010 Measures Available for EHR-based Reporting.

Table 10--2009 PQRI Quality Measures Not Included in the 2010 PQRI
------------------------------------------------------------------------
Measure No. Measure title
------------------------------------------------------------------------
11..................................... Stroke and Stroke
Rehabilitation: Carotid
Imaging Reporting.
34..................................... Stroke and Stroke
Rehabilitation: Tissue
Plasminogen Activator (tPA)
Considered.
95..................................... Otitis Media with Effusion
(OME): Hearing Testing.
152.................................... Coronary Artery Disease (CAD):
Lipid Profile in Patients with
CAD.
------------------------------------------------------------------------

(1) 2010 Individual Quality Measures Selected From the 2009 PQRI
Quality Measures Set Available for Claims-based Reporting and Registry-
based Reporting
We proposed to include in the 2010 PQRI quality measure set 116 of
the 2009 PQRI measures, which would be available for either claims-
based reporting or registry-based reporting as individual quality
measures (74 FR 33574 through 33579). We also noted that one of the
proposed measures, Measure 46 Medication Reconciliation:
Reconciliation After Discharge from an Inpatient Facility, is
reportable through the registry-based reporting mechanism only in the
2009 PQRI. However, for the 2010 PQRI, we proposed to make this measure
available for either claims-based reporting or registry-based
reporting.
These 116 proposed measures did not include any measures that were
proposed to be included as part of the 2010 Back Pain measures group.
Similar to the 2009 PQRI, we proposed that any 2010 PQRI measure that
is included in the Back Pain measures group would not be reportable as
individual measures through claims-based reporting or registry-based
reporting.
The following is a summary of the comments received on the 116
proposed measures selected from the 2009 PQRI quality measure set.
Comment: We received numerous comments in support of the 2009 PQRI
quality measures proposed for inclusion in the 2010 PQRI. Several
commenters supported the retention of all the 2009 PQRI measures
proposed for 2010. Other commenters supported inclusion of specific
2009 PQRI measures in the 2010 PQRI. Measures on which we received
specific support include:
Measure 1 Diabetes Mellitus: Hemoglobin A1c Poor
Control in Diabetes Mellitus;
Measure 2 Diabetes Mellitus: Low Density
Lipoprotein (LDL-C) Control in Diabetes Mellitus;
Measure 3 Diabetes Mellitus: High Blood Pressure
Control in Diabetes Mellitus;
Measure 9 Major Depressive Disorder (MDD):
Antidepressant Medication During Acute Phase for Patients with MDD;
Measure 18 Diabetic Retinopathy: Documentation of
Presence or Absence of Macular Edema and Level of Severity of
Retinopathy;
Measure 19 Diabetic Retinopathy: Communication
with the Physician Managing On-going Diabetes Care;
Measure 67 Myelodysplastic Syndrome (MDS) and
Acute Leukemias: Baseline Cytogenetic Testing Performed on Bone Marrow;
Measure 68 Myelodysplastic Syndrome (MDS):
Documentation of Iron Stores in Patients Receiving Erythopoietin
Therapy;
Measure 102 Prostate Cancer: Avoidance of Overuse
of Bone Scan for Staging Low-Risk Prostate Cancer Patients;
Measure 104 Prostate Cancer: Adjuvant Hormonal
Therapy for High-Risk Prostate Cancer Patients;
Measure 105 Prostate Cancer: Three-Dimensional
(3D) Radiotherapy;
Measure 106 Major Depressive Disorder (MDD):
Diagnostic Evaluation;
Measure 107 Major Depressive Disorder (MDD):
Suicide Risk Assessment;
Measure 110 Preventive Care and Screening:
Influenza Immunization for Patients >=50 Years Old;
Measure 111 Preventive Care and Screening:
Pneumonia Vaccination for Patients 65 Years and Older;
Measure 112 Preventive Care and Screening:
Screening Mammography;
Measure 113 Preventive Care and Screening:
Colorectal Cancer Screening;
Measure 114 Preventive Care and Screening:
Inquiry Regarding Tobacco Use;
Measure 115 Preventive Care and Screening:
Advising Smokers and Tobacco Users to Quit;
Measure 117 Diabetes Mellitus: Dilated Eye Exam
in Diabetic Patient;
Measure 119 Diabetes Mellitus: Urine Screening
for Microalbumin or Medical Attention for Nephropathy in Diabetic
Patients;
Measure 124 Health Information Technology (HIT):
Adoption/Use of Electronic Health Records (EHR);
Measure 126 Diabetes Mellitus: Diabetic Foot and
Ankle Care, Peripheral Neuropathy-Neurological Evaluation;
Measure 127 Diabetes Mellitus: Diabetic Foot and
Ankle Care, Ulcer Prevention--Evaluation of Footwear;
Measure 134 Screening for Clinical Depression and
Follow-Up Plan;
Measure 136 Melanoma: Follow-Up Aspects of Care;
Measure 137 Melanoma: Continuity of Care--Recall
System;
Measure 138 Melanoma: Coordination of Care;
Measure 156 Oncology: Radiation Dose Limits to
Normal Tissues; and
Measure 163 Diabetes Mellitus: Foot exam.
Response: All 116 of the proposed measures listed in Table 17 of
the proposed rule (74 FR 33575 through 33579), including all of the
measures specifically supported by commenters, have been finalized for
the 2010 PQRI, and are included in Table 11.

[[Page 61817]]

Comment: One commenter commended CMS on the format of Table 17 of
the proposed rule (74 FR 33575 through 33579) which clearly stated the
status of NQF endorsement, AQA adoption, and the measure developer for
each proposed measure. The commenter encouraged us to use this format
in future rules.
Response: We appreciate the positive feedback on the newly
formatted tables in the proposed rule.
Comment: One commenter urged us to finalize the proposed new
measures related to age-related macular degeneration, osteoporosis, and
cancer care and to work with the community to ensure these measures are
appropriately reported.
Response: We note that the measures referenced by the commenter are
existing 2009 PQRI measures that will be included for 2010 PQRI. As
noted previously, we have developed an education and outreach plan that
is continuously expanding in scope in our efforts to educate eligible
professionals on the nuances of the PQRI, including educating eligible
professionals and office staff on appropriate reporting of the PQRI
measures.
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 to
include specific professionals to whom the measure may be applicable
such as physical therapists, audiologists, and hospitalists.
Specifically, one commenter suggested that in order to maximize the
impact of Measure 1 Diabetes Mellitus: Hemoglobin A1c Poor
Control in Diabetes Mellitus, the PQRI specification should continue to
require a performance period of 12 months and reporting that identifies
whether A1c control is good (that is, A1c <= 7.0 percent), moderate
(that is, A1c <= 9.0 percent, but > 7.0 percent), or poor (that is, A1c
> 9.0 percent).
Another commenter suggested that audiologists should be included in
Measure 154 Falls: Risk Assessment. The commenter noted that
audiologists are consulted to provide vestibular rehabilitation that
results in improved quality of care for these patients and reduces
unnecessary and excessive cost.
Another commenter requested that Measure 52 Chronic
Obstructive Pulmonary Disease (COPD): Spirometry Evaluation needs to be
re-evaluated and CMS should consider modifying this measure or creating
a new one that addresses the appropriate use of LABA.
We received one comment regarding Measure 158 Carotid
Endarterectomy: Use of Patch During Conventional Carotid
Endarterectomy, expressing concern that there is no reliable data,
controlled or otherwise, that shows that use of patch graft results in
better outcomes.
Finally, one commenter suggested that the following proposed 2010
measures selected from the 2009 PQRI quality measure set available for
either claims-based reporting or registry-based reporting may not
promote quality care because they do not adequately address concerns of
patient groups that rely on plasma derived treatments such as those
with primary immune deficiency or alpha-1 antitrypsin deficiency:
Measure 51 Chronic Obstructive Pulmonary Disease
(COPD): Spirometry Evaluation;
Measure 64 Asthma: Asthma Assessment;
Measure 65 Treatment for Children with Upper
Respiratory Infection (URI): Avoidance of Inappropriate Use;
Measure 110 Preventive Care and Screening:
Influenza Immunization for Patients >= 50 Years Old; and
Measure 126 Diabetes Mellitus: Diabetic Foot and
Ankle Care, Peripheral Neuropathy--Neurological Evaluation.
The commenter suggested that we focus on aligning these measures
with accepted clinical practices for patients that rely on plasma-
derived treatments.
Response: Health care quality measures are currently developed by a
variety of organizations and used by a variety of governmental and
nongovernmental, and public-private initiatives which have various and
at times differing priorities and programmatic needs for quality
measures. As reflected by the considerations for identifying proposed
PQRI quality measures described above, we are committed to having a
broad and robust set of quality measures for the PQRI. However, we
largely depend on the development of measures by professional
organizations and other measure developers. Although we had significant
involvement in the development of measures applicable to eligible
professionals at the start of the PQRI, currently we are not directly
involved in the development of clinician-level quality measures for
PQRI, but do select from measures that meet the statutory requirements
and other considerations described above.
Quality measures that have completed the consensus processes of NQF
or AQA have a designated party (generally the measure 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 substantive changes to a measure, including any updates to the
measure to reflect the current clinical evidence such as the changes
suggested by the commenters above. The measure maintainer and/or the
developer/owner of a measure included in the final set of quality
measures selected for the 2010 PQRI is identified as the ``Measure
Developer'' in Tables 11 through 28. In addition, NQF has, for its
endorsed measures, an established maintenance process which may be
accessed. The Secretary is required to provide opportunities for public
comment on selected measures and do so through notice and comment
rulemaking. We do not, however, use notice and comment rulemaking as a
means to update or modify measure specifications. We retain the ability
to update or modify specifications to the measures until December 31,
2009.
After that date, there will be no changes to the measure for the
2010 reporting period(s).
Comment: One commenter was concerned about the potential retention
of claims-based reporting for Measure 124 Health Information
Technology (HIT): Adoption/Use of Electronic Health Records (EHR). The
commenter assumes that if an eligible professional had an EHR, he or
she would be able to submit this type of data directly from the EHR
rather through claims. This also appears to conflict with the statement
that Measure 124 is proposed to be an EHR measure. The
commenter requests further clarification.
Response: As reflected in Tables 11 and 14, Measure 124 is
available for reporting via claims, a qualified registry, or a
qualified EHR for the 2010 PQRI. We decided to continue to allow
eligible professionals to report Measure 124 via claims for
the 2010 PQRI because we do not anticipate that there will be a
sufficient number of qualified EHR vendors for the 2010 PQRI to permit
a majority of those who adopt and use an EHR to report this measure via
their EHR.
Comment: One commenter supported the proposal that Measure
46 Medication Reconciliation: Reconciliation After Discharge
from an Inpatient Facility would be available for claims and registry
reporting since registries reported difficulty capturing the required
information for the 2009 PQRI.

[[Page 61818]]

Response: We agree. As such, Measure 46 is listed in Table
11 as a measure that is available for claims and registry reporting in
the 2010 PQRI.
Comment: With respect to Measure 52 Chronic Obstructive
Pulmonary Disease (COPD): Bronchodilator Therapy, one commenter pointed
out that Medicare DMERC coverage criteria for LABA are not consistent
with clinical guidelines.
Response: Medicare coverage policy is beyond the scope of this
section of the final rule. Questions or concerns about Medicare
coverage policy should be directed to [email protected].
For the reasons discussed above and based on the comments received,
we are finalizing in the 2010 PQRI quality measure set the 116 2009
PQRI measures that were proposed to be available in the 2010 PQRI for
claims and registry reporting identified in Table 11. In addition,
Table 11 includes 1 2009 PQRI measure that was proposed for retirement
in 2010 and 2 2009 PQRI measures that were proposed to be available for
registry reporting only (see sections II.G.2.i. and II.G.2.i.2.,
respectively, of this final rule for further details). The 119
individual 2009 PQRI measures selected for inclusion in the 2010 PQRI
quality measure set as individual quality measures for either claims-
based reporting or registry-based reporting are listed by their Measure
Number and Title in Table 11, along with the name of the measure's
developer/owner. The PQRI Measure Number is a unique identifier
assigned by CMS to all measures in the PQRI measure set. Once a PQRI
Measure Number is assigned to a measure, it will not be used again to
identify a different measure, even if the original measure to which the
number was assigned is subsequently retired from the PQRI measure set.
A description of the measures listed in Table 11 can be found in the
``2009 PQRI Quality Measures List,'' which is available on the Measures
and Codes page of the PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI.
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Please note that detailed measure specifications, including the
measure's title, for 2009 individual PQRI quality measures may have
been updated or modified during the NQF endorsement process or for
other reasons prior to 2010. The 2010 PQRI quality measure
specifications for any given individual quality measure may, therefore,
be different from specifications for the same quality measure used for
2009. Specifications for all 2010 individual PQRI quality measures,
whether or not included in the 2009 PQRI program, must be obtained from
the specifications document for 2010 individual PQRI quality measures,
which will be available on the PQRI section of the CMS Web site on or
before December 31, 2009.
(2) 2010 Individual Quality Measures Selected From the 2009 PQRI
Quality Measures Set Available for Registry-Based Reporting Only
We proposed to select 26 registry-only individual measures from the
2009 PQRI for the 2010 PQRI (74 FR 33579 through 33580). Nine of the 26
proposed measures were previously available for either claims-based
reporting or registry-based reporting. We solicited comments on our
proposal to increase the number of registry-only measures for the 2010
PQRI.
The following is a summary of the comments received on the 26
proposed registry-only measures.
Comment: We received one comment in support of the following
registry-only measures:
Measure 136 Melanoma: Follow-Up Aspects of Care;
Measure 137 Melanoma: Continuity of Care--Recall
System; and
Measure 138 Melanoma: Coordination of Care.
Response: We appreciate the commenters' positive feedback. These
final measures are listed in Table 12 as 2009 PQRI measures selected
for the 2010 PQRI available for registry reporting only.
Comment: We received several comments regarding the proposed
reporting mechanism(s) available for proposed 2010 measures. There were
several recommendations that the following 2009 PQRI quality measures,
which were available for claims or registry reporting in the 2009 PQRI,
should not be limited to registry reporting for the 2010 PQRI:
Measure 83 Hepatitis C: Testing for Chronic
Hepatitis C--Confirmation of Hepatitis C Viremia;
Measure 136 Melanoma: Follow-Up Aspects of Care;
Measure 137 Melanoma: Continuity of Care--Recall
System;
Measure 138 Melanoma: Coordination of Care;
Measure 139 Cataracts: Comprehensive Preoperative
Assessment for Cataract Surgery with Intraocular Lens (IOL) Placement;
and
Measure 141 Primary Open-Angle Glaucoma (POAG):
Reduction of Intraocular Pressure (IOP) by 15 percent OR Documentation
of a Plan of Care.
The primary reason cited by commenters for opposing limiting
certain measures to registry reporting is the lack of an available
registry.
Response: With respect to the limited availability of registries
for certain eligible professionals, we reiterate that there are
qualified registries in our 2009 PQRI program that do report all of the
PQRI measures. These registries are accepting eligible professionals
who wish to sign up as new clients of the

[[Page 61827]]

registry. While we acknowledge that there may be costs associated with
participating through registries, we note that the decision to
participate via a registry is voluntary.
We do, however, agree with commenters' concerns about limiting
Measures 139 and 141 to registry reporting. These
measures were first introduced in the PQRI quality measure set for the
2009 PQRI and are currently available for claims and registry reporting
for 2009. Keeping these measures as measures available for claims and
registry reporting for 2010 will allow us to collect more data to
analyze the measures' feasibility via claims reporting. Therefore, the
measures are listed in Table 11 of this final rule with comment period
as 2009 PQRI measures selected for the 2010 PQRI that are available for
registry and claims reporting.
Comment: Some commenters were specifically opposed to continuing to
limit Measure 174 Pediatric End-Stage Renal Disease (ESRD):
Plan of Care for Inadequate Hemodialysis to registry reporting for the
2010 PQRI. Specifically, the commenters suggested that CMS permit
claims-based reporting of the measure for 2010 since there are only two
pediatric ESRD measures included in PQRI for 2010. One of the pediatric
ESRD measures, Measure 175 Pediatric ESRD Influenza
Immunization Measure, was proposed to be available for either claims or
registry reporting. Because eligible professionals must report on at
least 3 measures when using the registry-based reporting mechanism, the
commenter felt that making Measure 174 registry only will
exclude pediatric nephrologists from participating in the PQRI. In
addition, a registry is not available for pediatricians who participate
in small academic departments.
Response: The commenter is correct in that eligible professionals
who wish to have a qualified registry submit PQRI measure results and
numerator and denominator data on PQRI quality measures are required to
report at least 3 PQRI quality measures when reporting on individual
quality measures or to report all measures in at least 1 measure group
when reporting on measure groups. Measure 174 Pediatric End-
Stage Renal Disease (ESRD): Plan of Care for Inadequate Hemodialysis
was registry only for 2009 PQRI. Due to complexities surrounding the
timing of the expected quality action (once per month) this measure
will remain registry only for the 2010 PQRI.
However, in response to the commenters' concern that there are only
2 2010 PQRI measures that apply to pediatric nephrologists and only 1
of them (that is, Measure 175) is available for claims-based
reporting, eligible professionals who have fewer than 3 applicable
measures can still participate in the 2010 PQRI via claims. Such
eligible professionals would need to report on all applicable measures
that are available for claims-based reporting via claims and meet the
appropriate criteria for satisfactory reporting of individual measures
in order to qualify for a 2010 PQRI incentive payment.
For the reasons discussed above and based on the comments received,
we are finalizing in the 2010 PQRI quality measure set 24 of the 26
proposed 2009 PQRI measures identified in Table 18 of the proposed rule
for registry reporting only. As stated above, 2 of the 26 2009 PQRI
measures that were proposed to be available for registry reporting only
for the 2010 PQRI (that is, Measure 139 and Measure
141), will be available for both registry and claims reporting
in the 2010 PQRI and are listed in Table 11 of this final rule with
comment period. In addition, we are also retaining 2 2009 PQRI measures
that were proposed for retirement for 2010, but we are limiting
reporting of these measures to registry reporting for the 2010 PQRI.
The 26 2009 PQRI measures selected for the 2010 PQRI that are available
for registry reporting only are listed in Table 12 of this final rule
with comment period. The 26 individual 2009 PQRI measures selected for
inclusion in the 2010 PQRI quality measure set as individual quality
measures for registry-based reporting only are listed by their Measure
Number and Title in Table 12, along with the name of the measure's
developer/owner. A description of the measures listed in Table 12 can
be found in the ``2009 PQRI Quality Measures List,'' which is available
on the Measures and Codes page of the PQRI section of the CMS Web site
at http://www.cms.hhs.gov/PQRI. Measures that were available for either
claims-based reporting or registry-based reporting in the 2009 PQRI but
are available for registry-based reporting only in the 2010 PQRI are
identified by an asterisk (*) in Table 12.

Table 12--2010 Measures Selected From the 2009 PQRI Quality Measure Set
Available for Registry-based Reporting Only
------------------------------------------------------------------------
Measure Number Measure title Measure developer
------------------------------------------------------------------------
5............................. Heart Failure: AMA-PCPI
Angiotensin-
Converting Enzyme
(ACE) Inhibitor or
Angiotensin Receptor
Blocker (ARB)
Therapy for Left
Ventricular Systolic
Dysfunction (LVSD)*.
7............................. Coronary Artery AMA-PCPI
Disease (CAD): Beta-
Blocker Therapy for
CAD Patients with
Prior Myocardial
Infarction (MI).
8............................. Heart Failure: Beta- AMA-PCPI
Blocker Therapy for
Left Ventricular
Systolic Dysfunction
(LVSD)*.
33............................ Stroke and Stroke AMA-PCPI/NCQA
Rehabilitation:
Anticoagulant
Therapy Prescribed
for Atrial
Fibrillation at
Discharge.
81............................ End[dash]Stage Renal AMA-PCPI
Disease (ESRD): Plan
of Care for
Inadequate
Hemodialysis in ESRD
Patients.
82............................ End[dash]Stage Renal AMA-PCPI
Disease (ESRD): Plan
of Care for
Inadequate
Peritoneal Dialysis.
83............................ Hepatitis C: Testing AMA-PCPI
for Chronic
Hepatitis C--
Confirmation of
Hepatitis C Viremia*.
118........................... Coronary Artery AMA-PCPI
Disease (CAD):
Angiotensin-
Converting Enzyme
(ACE) Inhibitor or
Angiotensin Receptor
Blocker (ARB)
Therapy for Patients
with CAD and
Diabetes and/or Left
Ventricular Systolic
Dysfunction (LSVD)*.
136........................... Melanoma: Follow-Up AMA-PCPI/NCQA
Aspects of Care*.
137........................... Melanoma: Continuity AMA-PCPI/NCQA
of Care--Recall
System*.
138........................... Melanoma: AMA-PCPI/NCQA
Coordination of
Care*.

[[Page 61828]]

143........................... Oncology: Medical and AMA-PCPI
Radiation--Pain
Intensity
Quantified*.
144........................... Oncology: Medical and AMA-PCPI
Radiation--Plan of
Care for Pain*.
159........................... HIV/AIDS: CD4+ Cell AMA-PCPI/NCQA
Count or CD4+
Percentage.
160........................... HIV/AIDS: AMA-PCPI/NCQA
Pneumocystis
Jiroveci Pneumonia
(PCP) Prophylaxis.
161........................... HIV/AIDS: Adolescent AMA-PCPI/NCQA
and Adult Patients
with HIV/AIDS Who
Are Prescribed
Potent
Antiretroviral
Therapy.
162........................... HIV/AIDS: HIV RNA AMA-PCPI/NCQA
Control After Six
Months of Potent
Antiretroviral
Therapy.
164........................... Coronary Artery STS
Bypass Graft (CABG):
Prolonged Intubation
(Ventilation).
165........................... Coronary Artery STS
Bypass Graft (CABG):
Deep Sternal Wound
Infection Rate.
166........................... Coronary Artery STS
Bypass Graft (CABG):
Stroke/
Cerebrovascular
Accident (CVA).
167........................... Coronary Artery STS
Bypass Graft (CABG):
Postoperative Renal
Insufficiency.
168........................... Coronary Artery STS
Bypass Graft (CABG):
Surgical Re-
exploration.
169........................... Coronary Artery STS
Bypass Graft (CABG):
Antiplatelet
Medications at
Discharge.
170........................... Coronary Artery STS
Bypass Graft (CABG):
Beta-Blockers
Administered at
Discharge.
171........................... Coronary Artery STS
Bypass Graft (CABG):
Lipid Management and
Counseling.
174........................... Pediatric AMA-PCPI
End[dash]Stage Renal
Disease (ESRD): Plan
of Care for
Inadequate
Hemodialysis.
------------------------------------------------------------------------
* Individual 2009 PQRI measures that were available for both claims-
based and registry-based reporting but will be available for registry-
based reporting only for the 2010 PQRI.

Although we are designating certain measures as registry-only
measures, we cannot guarantee that there will be a registry qualified
to submit each registry-only measure for 2010. We rely on registries to
self-nominate and identify the types of measures for which they would
like to be qualified to submit quality measures results and numerator
and denominator data on quality measures. If no registry self-nominates
to submit measure results and numerator and denominator data on a
particular type of measure for 2010, then an eligible professional
would not be able to report that particular measure type.
We note also that detailed measure specifications, including a
measure's title, for 2009 PQRI quality measures may have been updated
or modified during the NQF endorsement process or for other reasons
prior to 2010. Therefore, the 2010 PQRI quality measure specifications
for any given quality measure may be different from specifications for
the same quality measure used for 2009. Specifications for all 2010
individual PQRI quality measures, whether or not included in the 2009
PQRI program, must be obtained from the specifications document for
2010 individual PQRI quality measures, which will be available on the
PQRI section of the CMS Web site on or before December 31, 2009.
(3) New Individual Quality Measures Selected for 2010
We proposed to include in the 2010 PQRI quality measure set 30
measures that were not included in the 2009 PQRI quality measures
provided that each measure obtains NQF endorsement by July 1, 2009 and
its detailed specifications are completed and ready for implementation
in PQRI by August 15, 2009. Besides having NQF endorsement, we proposed
that the development of a measure is considered complete for the
purposes of the 2010 PQRI if by August 15, 2009--(1) the final,
detailed specifications for use in data collection for PQRI have been
completed and are ready for implementation, and (2) all of the Category
II Current Procedural Terminology (CPT II) codes required for the
measure have been established and will be effective for CMS claims data
submission on or before January 1, 2010.
Due to the complexity of their measure specifications, we proposed
that 24 of these 30 measures would be available as registry-only
measures for the 2010 PQRI. The remaining 6 measures were proposed to
be available for reporting through either claims-based reporting or
registry-based reporting.
The following is a summary of the comments received on the 30 new
individual quality measures proposed for 2010.
Comment: We received numerous comments in support of the proposed
additional quality measures for 2010 PQRI. Several commenters stated
that these measures ``continue to build upon potential gaps that exist
in the prevention and management of chronic conditions.'' One commenter
was pleased to see the use of evidence-based clinical quality measures
in the 2010 PQRI proposed measures. Comments were received specifically
in support of the following measures:
Functional Communication--Spoken Language Comprehension;
Functional Communication--Attention;
Functional Communication--Memory;
Functional Communication--Motor Speech;
Functional Communication--Reading;
Functional Communication--Spoken Language Expression;
Functional Communication--Writing;

[[Page 61829]]

Functional Communication--Swallowing;
Perioperative Temperature Management;
Oncology: Cancer Stage Documented;
Cataracts: 20/40 or Better Visual Acuity within 90 days
following Cataract Surgery;
Cataracts: Complications within 30 days following Cataract
Surgery requiring Additional Surgical;
Ischemic Vascular Disease (IVD): Blood Pressure Management
Control;
Stenosis Management in Cardiac Imaging Studies;
Referral for Otologic Evaluation for Patients with
Congenital or Traumatic Deformity of the Ear;
Referral for Otologic Evaluation for Patients with History
of Active Drainage from the Ear within the Previous 90 days;
Referral for Otologic Evaluation for Patients with a
History of Sudden or Rapidly Progressive Hearing Loss;
Coronary Artery Disease (CAD): Symptom and Activity
Assessment;
Coronary Artery Disease (CAD): Drug Therapy for Lowering
LDL-Cholesterol;
Heart Failure: Left Ventricular Function (LVF) Assessment;
Heart Failure: Patient Education; and
Heart Failure: Warfarin Therapy for Patients with Atrial
Fibrillation.
Response: We appreciate the commenters' support and are finalizing
all of the 30 proposed new measures, which are identified in Table 13
of this final rule with comment period.
Comment: We received many comments opposed to limiting one or more
new measures proposed for the 2010 PQRI to registry reporting,
including the 2 new proposed cataract measures and the 11 new proposed
cardiology measures. The commenters suggested that the measures be
available for both claims-based and registry reporting for the 2010
PQRI so that practices may choose the best reporting option for them.
One commenter also remarked that we should resolve any analytic
reporting difficulties with claims-based reporting of these measures
internally and not place the burden on eligible professionals.
Response: While we proposed that 19 of the 30 proposed new measures
would be available for registry reporting only for 2010 PQRI, we agree,
after consideration of the comments received, that it would be feasible
to make some of these measures available for either claims or registry
reporting. Therefore, the following measures originally proposed for
registry only reporting will be available for either claims or registry
reporting for the 2010 PQRI:
Ischemic Vascular Disease (IVD): Blood Pressure Management
Control.
Ischemic Vascular Disease (IVD): Complete Lipid Profile.
Ischemic Vascular Disease (IVD): Low Density Lipoprotein
(LDL-C) Control.
Ischemic Vascular Disease (IVD): Use of Aspirin or Another
Anti-Thrombotic.
The measure specifications developed by the measure developer for
the remaining 15 measures are too complex for claims-based reporting.
Based on the reasons discussed above and comments received, we are
finalizing in the 2010 PQRI quality measure set all of 30 proposed 2010
PQRI measures identified in Table 19 of the proposed rule. Please note
that 4 measures that were proposed to be available for registry only
will be made available for either registry or claims reporting in the
2010 PQRI. These measures are:
Ischemic Vascular Disease (IVD): Blood Pressure Management
Control;
Ischemic Vascular Disease (IVD): Complete Lipid Profile;
Ischemic Vascular Disease (IVD): Low Density Lipoprotein
(LDL-C) Control; and
Ischemic Vascular Disease (IVD): Use of Aspirin or Another
Anti-Thrombotic.
The titles of the 30 additional, or new, PQRI measures for 2010 are
listed in Table 13 along with the name of the measure developer and the
reporting mechanism(s) available (that is, whether the measure will be
reportable using claims, registries, or both).

Table 13--New Individual Quality Measures Selected for 2010
----------------------------------------------------------------------------------------------------------------
NQF Endorsement AQA Adoption
Measure title status as of 5/1/ status as of 1/31/ Measure developer Reporting
09 09 mechanism(s)
----------------------------------------------------------------------------------------------------------------
Stroke and Stroke Yes............... No................ American Heart Registry.
Rehabilitation: Thrombolytic Association (AHA)/
Therapy. American Stroke
Association (ASA).
Referral for Otologic Evaluation Pending NQF review No................ Audiology Quality Claims, Registry.
for Patients with Congenital or Consortium (AQC).
Traumatic Deformity of the Ear.
Referral for Otologic Evaluation Pending NQF review No................ AQC............... Claims, Registry.
for Patients with History of
Active Drainage from the Ear
within the Previous 90 days.
Referral for Otologic Evaluation Pending NQF review No................ AQC............... Claims, Registry.
for Patients with a History of
Sudden or Rapidly Progressive
Hearing Loss.
Cataracts: 20/40 or Better Pending NQF review Yes............... AMA-PCPI/NCQA..... Registry.
Visual Acuity within 90 days
Following Cataract Surgery.
Cataracts: Complications within Pending NQF review Yes............... AMA-PCPI/NCQA..... Registry.
30 Days Following Cataract
Surgery Requiring Additional
Surgical Procedures.
Perioperative Temperature Yes............... Yes............... AMA-PCPI.......... Claims, Registry.
Management.
Oncology: Cancer Stage Yes............... Yes............... AMA-PCPI/ASCO..... Claims, Registry.
Documented.
Stenosis Measurement in Carotid Yes............... Yes............... AMA-PCPI/NCQA..... Claims, Registry.
Imaging Studies.
Coronary Artery Disease (CAD): Yes............... No................ AMA-PCPI.......... Registry.
Symptom and Activity Assessment.
Coronary Artery Disease (CAD): Yes............... No................ AMA-PCPI.......... Registry.
Drug Therapy for Lowering LDL-
Cholesterol.

[[Page 61830]]

Heart Failure: Left Ventricular Yes............... No................ AMA-PCPI.......... Registry.
Function (LVF) Assessment.
Heart Failure: Patient Education Yes............... No................ AMA-PCPI.......... Registry.
Heart Failure: Warfarin Therapy Yes............... No................ AMA-PCPI.......... Registry.
for Patients with Atrial
Fibrillation.
Ischemic Vascular Disease (IVD): Yes............... No................ NCQA.............. Claims, Registry.
Blood Pressure Management
Control.
Ischemic Vascular Disease (IVD): Yes............... No................ NCQA.............. Claims, Registry.
Complete Lipid Profile.
Ischemic Vascular Disease (IVD): Yes............... No................ NCQA.............. Claims, Registry.
Low Density Lipoprotein (LDL-C)
Control.
Ischemic Vascular Disease (IVD): Yes............... No................ NCQA.............. Claims,
Use of Aspirin or Another Anti- Registry.
thrombotic.
HIV/AIDS: Sexually Transmitted Yes............... No................ AMA-PCPI/NCQA..... Registry.
Disease Screening for Chlamydia
and Gonorrhea.
HIV/AIDS: Screening for High Yes............... No................ AMA-PCPI/NCQA..... Registry.
Risk Sexual Behaviors.
HIV/AIDS: Screening for Yes............... No................ AMA-PCPI/NCQA..... Registry.
Injection Drug Use.
HIV/AIDS: Sexually Transmitted Yes............... No................ AMA-PCPI/NCQA..... Registry.
Disease Screening for Syphilis.
Functional Communication Yes............... No................ American Speech Registry.
Measure--Spoken Language Language Hearing
Comprehension. Association
(ASHA).
Functional Communication Yes............... No................ ASHA.............. Registry.
Measure--Attention.
Functional Communication Yes............... No................ ASHA.............. Registry.
Measure--Memory.
Functional Communication Yes............... No................ ASHA.............. Registry.
Measure--Motor Speech.
Functional Communication Yes............... No................ ASHA.............. Registry.
Measure--Reading.
Functional Communication Yes............... No................ ASHA.............. Registry.
Measure--Spoken Language
Expression.
Functional Communication Yes............... No................ ASHA.............. Registry.
Measure--Writing.
Functional Communication Yes............... No................ ASHA.............. Registry.
Measure--Swallowing.
----------------------------------------------------------------------------------------------------------------

We note also that we are finalizing the following new measures for
the 2010 PQRI even though they are still pending NQF endorsement and
were not AQA adopted as of January 31, 2009:
Referral for Otologic Evaluation for Patients with
Congenital or Traumatic Deformity of the Ear;
Referral for Otologic Evaluation for Patients with History
of Active Drainage from the Ear within the Previous 90 days; and
Referral for Otologic Evaluation for Patients with a
History of Sudden or Rapidly Progressive Hearing Loss. As stated above,
we are exercising our exception authority under section
1848(k)(2)(C)(ii) of the Act due to the lack of available measures for
audiologists. Measures for audiologists represent a specific area for
which there are a dearth of measures that have been endorsed by the NQF
and/or adopted by the AQA.
(4) 2010 Individual Quality Measures Available for EHR-Based Reporting
We proposed to accept PQRI data from EHRs for a limited subset (10)
of the proposed 2010 PQRI quality measures, contingent upon the
successful completion of our 2009 EHR data submission testing process
and a determination that accepting data from EHRs on quality measures
for the 2010 PQRI is practical and feasible (74 FR 33582).
The following is a summary of the comments received on the proposed
electronic submission of these 10 measures.
Comment: One commenter requested that the 2010 EHR measure
specifications be released in an expedited fashion so that vendors may
properly configure their software in time for the 2010 PQRI.
Response: We agree with the commenter that vendors need sufficient
time to adapt their products to support EHR-based capture and
submission of data for PQRI measures. To that end, the specifications
for the electronic transmission of 2010 PQRI measures were posted on
the QualityNet Web site in April 2009 and were updated and reposted in
July and September 2009 on the Alternative Reporting Mechanisms page of
the PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI/20_AlternativeReportingMechanisms.asp#TopOfPage.
We should note that only eligible professionals using EHR systems
that have been ``qualified'' by CMS by virtue of passing our self-
nomination and testing process will be able to report their quality
data to CMS via their EHR.
Comment: Several comments voiced support for EHR-based reporting of
Measure 124, Measure 112, and Measure 113.
One commenter was disappointed that no measures relevant to oncology
were proposed to be available for 2010 PQRI EHR reporting. Another
commenter recommended that the new CAD and heart failure measures
proposed for 2010 PQRI registry only reporting also be available for
EHR reporting for 2010. One commenter recommended that any potential

[[Page 61831]]

retooling of measures for reporting through EHRs should not undermine
the scientific basis of the measure.
Response: We appreciate the commenters' support for EHR-based
reporting of measures. However, the number of measures available for
EHR reporting is limited because in order for measures to be available
for EHR-based reporting, measure specifications for the electronic
reporting of those measures must be available. We will consider adding
new measures for future PQRI program years as specifications become
available. The retooling of measures will not change the intent of the
measure. We believe that all PQRI measures are evidence-based and
consistent with standards of care.
Comment: One commenter suggested that increasing the number of PQRI
measures is discriminatory to those that cannot or have not
incorporated electronic prescribing due to expense of initiating EHRs
and electronic prescribing for small provider offices.
Response: With respect to practices that have not implemented
technology that would allow for participation in PQRI via an EHR, there
are other 2010 PQRI reporting options available for such practices.
There are a total of 125 individual quality measures available for
claims or registry reporting for the 2010 PQRI. In addition, 8 of the
13 2010 PQRI measures groups are available for claims or registry
reporting (see section II.G.2.i.5. of this final rule with comment
period for discussion of the final 2010 PQRI measures groups). The
remaining 50 individual PQRI quality measures and 4 measures groups are
available for registry reporting in 2010.
With respect to practices that have not implemented technology that
would allow for electronic prescribing, we reiterate that the E-
Prescribing Incentive Program is a separate and distinct incentive
program for eligible professionals. Participation in the E-Prescribing
Incentive Program is voluntary and is not required for participation in
the 2010 PQRI. Details of the 2010 E-Prescribing Incentive Program can
be found in section II.G.5. of this final rule with comment period.
Based on the reasons discussed above and the comments received, we
are finalizing the option of accepting clinical quality data extracted
from qualified EHRs on all 10 of the proposed 2010 PQRI quality
measures identified in Table 20 of the proposed rule. The final 2010
measures available for EHR-based reporting are identified in Table 14
of this final rule with comment period.

Table 14--2010 Measures Available for EHR-Based Reporting
----------------------------------------------------------------------------------------------------------------
NQF endorsement AQA adoption status
Measure No. Measure title status as of 5/1/09 as of 1/31/09 Measure developer
----------------------------------------------------------------------------------------------------------------
1.................... Diabetes Mellitus: Yes.................. Yes.................. NCQA
Hemoglobin A1c Poor
Control in Diabetes
Mellitus.
2.................... Diabetes Mellitus: Yes.................. Yes.................. NCQA
Low Density
Lipoprotein (LDL-C)
Control in Diabetes
Mellitus.
3.................... Diabetes Mellitus: Yes.................. No................... NCQA
High Blood Pressure
Control in Diabetes
Mellitus.
5.................... Heart Failure: Yes.................. Yes.................. AMA-PCPI
Angiotensin-
Converting Enzyme
(ACE) Inhibitor or
Angiotensin
Receptor Blocker
(ARB) Therapy for
Left Ventricular
Systolic
Dysfunction (LVSD).
7.................... Coronary Artery Yes.................. Yes.................. AMA-PCPI
Disease (CAD): Beta-
Blocker Therapy for
CAD Patients with
Prior Myocardial
Infarction (MI).
110.................. Preventive Care and Yes.................. No................... AMA-PCPI
Screening:
Influenza
Immunization for
Patients >= 50
Years Old.
111.................. Preventive Care and Yes.................. Yes.................. NCQA
Screening:
Pneumonia
Vaccination for
Patients 65 Years
and Older.
112.................. Preventive Care and Yes.................. Yes.................. NCQA
Screening:
Screening
Mammography.
113.................. Preventive Care and Yes.................. Yes.................. NCQA
Screening:
Colorectal Cancer
Screening.
124.................. Health Information Yes.................. Yes.................. CMS/QIP
Technology (HIT):
Adoption/Use of
Electronic Health
Records (EHR).
----------------------------------------------------------------------------------------------------------------

(5) Measures Selected for Inclusion in 2010 Measures Groups
We proposed to retain the 7 2009 PQRI measures groups for the 2010
PQRI: (1) Diabetes Mellitus; (2) CKD; (3) Preventive Care; (4) CABG;
(5) Rheumatoid Arthritis; (6) Perioperative Care; and (7) Back Pain (74
FR 33582 through 33587). As in 2009, we proposed the CABG measures
group would be reportable through the registry-based reporting
mechanism only for 2010 while the remaining 6 2009 PQRI measures groups
would be reportable through either claims-based reporting or registry-
based reporting for the 2010 PQRI.
In addition to the 7 measures groups that we proposed to retain
from the 2009 PQRI, we proposed 6 new measures groups for the 2010
PQRI, for a total of 13 CY 2010 measures groups. The 6 new measures
groups proposed for the 2010 PQRI were: (1) Coronary Artery Disease
(CAD); (2) Heart Failure; (3) Ischemic Vascular Disease (IVD); (4)
Hepatitis C; (5) Human Immunodeficiency Virus (HIV)/Acquired Immune
Deficiency Syndrome (AIDS); and (6) Community Acquired Pneumonia (CAP).
Since many of the 6 new measures groups proposed for 2010 contained
proposed new registry-only measures, only 8 proposed 2010 measures
groups would be reportable through either claims-based reporting or
registry-based reporting: Diabetes Mellitus; CKD; Preventive Care;
Perioperative Care; Rheumatoid Arthritis; Back Pain; Hepatitis C; and
Community Acquired Pneumonia. We solicited comments on our proposal to
limit claims-based reporting of measures groups in 2010.
Finally, we also proposed that except for the measures included in
the Back Pain measures group, the measures included in any proposed
2010 measures group would be reportable either as individual measures
or as part of a measures group. Similar to the 2009 PQRI, we proposed
that the measures proposed for inclusion in the Back Pain measures
group would be reportable only as part of a measures group and not as
individual measures in 2010.
The measures proposed for inclusion in each of the proposed 2010
measures groups were identified in Tables 21 through 33 of the CY 2010
PFS proposed rule (74 FR 33582 through 33587).

[[Page 61832]]

The following is a summary of the comments received on the proposed
2010 measures groups.
Comment: We received several comments in support of the proposed
2010 PQRI measures groups. Specifically, we received comments in
support of the Preventive Care, CAP, HIV/AIDS, Hepatitis C, Rheumatoid
Arthritis, IVD, and Heart Failure measures groups. Some commenters also
commended CMS for the inclusion of specific measures in certain
measures groups.
Response: We appreciate the commenters' feedback. As identified in
Tables 15 through 27 of this final rule with comment period, we are
finalizing all of the 13 proposed 2010 PQRI measures groups. No changes
were made to the measures included in the measures groups. However, as
a result of 4 measures proposed for inclusion in the IVD measures group
that were proposed to be registry only measures now being available for
either claims or registry reporting, the IVD measures group will also
be available for either claims or registry reporting.
Comment: Some commenters suggested changes to our definition of
``measures group.'' One commenter urged us to reduce the number of
measures required for reporting a measure group to a minimum of 3
measures. Another commenter requested that we define ``measures group''
to be any 3 measures. One commenter recommended that we implement
measures groups with complex denominators to allow for reporting on
measures that have an associated impact on patient care and positive
outcomes.
Response: As stated in the CY 2010 PFS proposed rule (74 FR 33568),
``measures group'' has been previously defined as a subset of 4 or more
PQRI measures that have a particular clinical condition or focus in
common. The denominator definition and coding of the measures groups
identifies the condition or focus that is shared across the measures
within a particular measures group. If we change this definition as
suggested by commenters, then there would be no difference in terms of
reporting measures groups and reporting PQRI individual quality
measures since eligible professionals who choose to report on
individual PQRI quality measures are already generally required to
report on 3 measures. The only exception that permits eligible
professionals to report on fewer than 3 measures is when an eligible
professional has fewer than 3 applicable measures. For eligible
professionals in this situation, the only option is to report
applicable measures via claims.
Comment: One commenter recommended that we monitor Measure
115 Preventive Care and Screening: Advising Smokers and
Tobacco Users to Quit for the CAD measures group for ``appropriate
conclusion as more evidence is released which will show whether
advising smokers to quit increases the chances that they actually will
quit.''
Response: We assume that that the commenter is requesting that we
monitor Measure 115 for appropriate inclusion in CAD the
measures groups. As with all measures and measures groups selected for
inclusion in the PQRI quality measure set, we will continue to monitor
the appropriateness of including Measure 115 in the CAD
measures group on an ongoing basis for future program years.
Comment: One commenter recommended that claims-based reporting be
available for all measures groups. Other commenters recommended that
claims-based reporting be available for specific measures groups, such
as the CAD, IVD, Heart Failure, HIV/AIDS measures groups.
Response: The following 2010 PQRI measures groups will be
reportable only via registry-based reporting: (1) CABG; (2) CAD; (3)
Heart Failure; and (4) HIV/AIDS. These measures groups will be
registry-only because they include individual 2010 PQRI registry-only
measures that cannot be feasibly specified for claims based reporting.
Although we proposed that the IVD measures group would also be
registry-only for 2010, we determined, based on comments that it is
feasible to make the proposed registry-only measures proposed for
inclusion in the IVD measures group available for either claims or
registry reporting for 2010. Therefore, the IVD measures group will be
available for either claims or registry reporting.
Comment: Some commenters recommended the addition of specific codes
to particular measures that were proposed for inclusion in a measures
group. Specifically, one commenter recommended the addition of 2
physical therapy codes to the back pain measures for the proposed Back
Pain measures group. Another commenter recommended the addition of
inpatient codes for the measures proposed for inclusion in the CAP
measures group.
Response: As stated previously, it is generally the role of the
measure owner, developer, or maintainer to make substantive changes to
a measure. The addition of physical therapy codes would mean that it is
appropriate to hold such professionals accountable for the measure,
which we believe constitutes such a substantive issue. The measure
maintainer and/or the developer/owner of a measure included in the
final set of 2010 PQRI measures groups is identified as the ``Measure
Developer'' in Tables 15 through 27 of this final rule with comment
period. In addition, NQF has, for its endorsed measures, an established
maintenance process which may be accessed. Both venues would be
available to seek such substantive changes to the measures. Although we
are required by section 1848(k)(2)(D) of the Act to give the public an
opportunity to provide input on the selection of PQRI measures and do
so via notice and comment rulemaking, we do not use notice and comment
rulemaking as a means to make substantive changes to measures nor to
update or modify measure specifications. We retain the ability to
update or modify specifications to the measures until December 31,
2009. After that date, there will be no changes to the measure for the
2010 reporting period(s).
Based on the reasons discussed above and comments received, we are
finalizing the following proposed 2010 measures groups: (1) Diabetes
Mellitus; (2) CKD; (3) Preventive Care; (4) CABG; (5) Rheumatoid
Arthritis; (6) Perioperative Care; (7) Back Pain; (8) CAD; (9) Heart
Failure; (10) IVD; (11) Hepatitis C; (12) HIV/AIDS; and (13) CAP. The
following 4 measures groups are reportable through the registry-based
reporting mechanism only: (1) CABG; (2) CAD; (3) Heart Failure; and (4)
HIV/AIDS. The IVD measures group is no longer limited to registry only
reporting since 4 measures included in the group that were proposed to
be registry-only measures are now available for either claims or
registry reporting for 2010 (see section II.G.2.i.2. above).
The measures selected for inclusion in each of the 2010 measures
groups are identified in Tables 15 through 27 of this final rule with
comment period. Some measures selected for inclusion in these 6
measures group are current 2009 individual PQRI measures. The title of
each such measure is preceded with its PQRI Measure Number in Tables 15
through 27. As stated previously, the PQRI Measure Number is a unique
identifier assigned by CMS to all measures in the PQRI measure set.
Once a PQRI Measure Number is assigned to a measure, it will not be
used again, even if the measure is subsequently retired from the PQRI
measure set. Measures that are not preceded by a number (in other
words, those preceded

[[Page 61833]]

by ``TBD'') in Tables 15 through 27 were never part of a PQRI measure
set prior to 2010. A number will be assigned to such measures for 2010.
In addition, some measures selected for inclusion in some of these
measures groups for 2010 were not included in the measures groups in
2009. The 2009 measures selected for inclusion in a 2010 measures group
that were not included in the measures group for 2009 are identified
with an asterisk (*).
We also note that the proposed 2010 Heart Failure measures group
included the measure Heart Failure: Warfarin Therapy for Patients with
Atrial Fibrillation, which is not included in the final 2010 Heart
Failure measures group. The measure does not meet the common
denominator criteria for the Heart Failure measures group because it
requires an additional denominator code for atrial fibrillation. This
additional code is not in the other 7 measures included in the Heart
Failure measures group. As stated previously, measures groups must have
a particular condition or focus in common, as identified by the
denominator definition and coding of the measures group.
As with measures group reporting in the 2008 and 2009 PQRI, each
eligible professional electing to report a group of measures for 2010
must report all measures in the group that are applicable to each
patient or encounter to which the measures group applies at least up to
the minimum number of patients required by the applicable reporting
criteria. The measures selected for the Back Pain measures group
continue to be reportable only as part of a measures group and not as
individual measures for the 2010 PQRI. Measures selected for inclusion
in all other 2010 PQRI measures groups are reportable either as
individual measures or as part of a measures group.
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We note that the specifications for measures groups do not
necessarily contain all the specification elements of each individual
measure making up the measures group. This is based on the need for a
common set of denominator specifications for all the measures making up
a measures group in order to define the applicability of the measures
group. Therefore, the specifications and instructions for measures
groups will be provided separately from the specifications and
instructions for the individual 2010 PQRI measures. We will post the
detailed specifications and specific instructions for reporting
measures groups on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI by no later than December 31, 2008.
Additionally, the detailed measure specifications and instructions
for submitting data on those 2010 measures groups that were also
included as 2009 PQRI measures groups may be updated or modified prior
to 2010. Therefore, the 2010 PQRI measure specifications for any given
measures group could be different from specifications and submission
instructions for the same measures group used for 2009. These measure
specification changes do not materially impact the intended meaning of
the measures or the strength of the measures.
(6) Request for Public Comment on Measure Suggestions for Future PQRI
Quality Measure Sets
In the CY 2010 PFS proposed rule (74 FR 33587), we invited
commenters to submit suggestions for individual quality measures and
measures groups (that is, suggestions for new measures groups and/or
suggestions for the composition of measures groups) for consideration
for possible inclusion in the proposed set of quality measures for use
in the 2011 PQRI. We asked individuals or organizations submitting
suggestions to provide us with the following information:
Requestor contact information, such as name and title,
organization/practice name, phone number and e-mail address;
Measure title;
Measure description;
Measure owner/developer;
NQF endorsement status, including the date of endorsement
or anticipated endorsement (if not NQF-endorsed) and type of
endorsement (for example, time-limited endorsement);
AQA adoption status, including date of AQA adoption or
anticipated AQA adoption;
Preferred PQRI reporting option for the suggested
measure(s) (that is, claims, registry, registry-only, measures group,
measures group only, EHRs); and
The measure specifications.
The following is summary of the comments we received regarding
suggestions for individual quality measures and measures groups (that
is, suggestions for new measures groups and/or suggestions) for the
2011 PQRI.
Comment: Several commenters suggested quality measures or measures
groups for the 2010 PQRI in addition to the quality measures and
measures groups for individual eligible professionals we had proposed
in Tables 19 through 33 of the CY 2010 PFS proposed rule (74 FR 33575
through 33587).
Response: We have not included in this final rule with comment
period for the 2010 PQRI any individual quality measures that were not
identified in the CY 2010 PFS proposed rule as proposed 2010 PQRI
measures. As discussed above in this final rule with comment period, we
are obligated by section 1848(k)(2)(D) of the Act to give eligible
professionals an opportunity to provide input during the selection of
measures for the 2010 PQRI and subsequent years. Eligible professionals
have not had an opportunity to provide input on measures recommended
for selection via comments on the proposed rule that were not
specifically included in the proposed rule. Thus, such additional
measures recommended via comments on the proposed rule cannot be
included in the 2010 PQRI quality measure set. 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.
Comment: As we requested in the CY 2010 PFS proposed rule (74 FR
33587), several commenters suggested quality measures or measures
groups for the 2011 PQRI.
Response: We have captured these recommendations. To the extent
information provided is complete (that is, includes the measure or
measure group details requested in the proposed rule), we will consider
the commenters' recommendations in identifying measure sets for future
years' PQRI and other initiatives to which those measures may be
pertinent. As we stated in the CY 2010 PFS proposed rule, suggesting
individual measures or measures for new or proposed measures groups
does not mean that the measure(s) or measures group(s) will be included
in the proposed or final sets of measures or measures groups of any
proposed or final rules that address the 2011 PQRI. We will determine
what individual measures and measures group to include in the proposed
set of quality measures, and after a period of public comment, we will
make the final determination with regard to the final set of quality
measures for the 2011 PQRI.
Comment: Some commenters urged us to expand the opportunities for
measures to be presented to CMS for potential inclusion in the PQRI.
One commenter elaborated that the process to develop and endorse
measures takes a considerable amount of time and measure developers
should have greater opportunities to bring measures forward. The
commenter also requested that we review the process by which PQRI
measures are selected to ensure transparency and greater communication
with measure developers. The commenter stated that currently the
process leaves little opportunity for the measure developer to dialogue
with CMS if the measure is denied. The commenter believes we should
provide feedback on suggested measures prior to publication of the
proposed rule.
Response: We understand the commenters' concerns. As stated
previously, we largely depend on the development of measures by
professional organizations and other measure developers. As such, we
depend on the measure developers and other stakeholders to bring forth
potential measures to our attention. We are continuing to look for ways
to improve the process for allowing stakeholders to bring forth
suggested measures and are considering some changes in the process
future years PQRI. For example, in addition to our invitation to submit
suggestions for measures and measures groups for potential inclusion in
the 2011 PQRI contained in CY 2010 PFS proposed rule (74 FR 33587), we
are considering a Call for 2011 Measures that will allow stakeholders
to submit additional measures and/or measures groups suggestions for
the 2011 PQRI after publication of this final rule followed by a
listening session in early 2010 to promote a dialogue with stakeholders
with respect to the measure or measures group suggestions we receive.
j. 2010 PQRI Quality Measures for Physician Groups Selected To
Participate in the Group Practice Reporting Option
We proposed that physician groups selected to participate in the
2010 PQRI group practice reporting option would be required to report
on 26 measures (74 FR 33587). These measures are NQF-endorsed measures
currently collected

[[Page 61841]]

as part of the PGP and/or MCMP demonstrations.
The following is summary of the comments we received regarding the
proposed 2010 PQRI Quality Measures for physician groups selected to
participate in the PQRI group practice reporting option.
Comment: Some commenters suggested that we broaden the scope of
measures so that the measures would be applicable to specialty care
such as emergency medicine, gastroenterology, and surgical specialties.
A few commenters felt that group practices are being required to report
on too many measures. Several commenters believe that it is appropriate
for CMS to first implement the group practice reporting option by
focusing on the high-cost chronic conditions and preventive care
reflected by the proposed measures.
Response: We recognize that the measures largely apply to primary
care. However, as required by statute, the measures shall target high-
cost chronic conditions and preventive care. This reporting option is
for group practices with 200 or more eligible professionals. On
average, these group practices typically have 20,000 patients assigned
to each group practice. Each group practice will be required to
complete the data collection tool on a total of no more than 3,699
consecutively assigned and ranked patients, which is 411 patients per
disease module and preventive care measure. Thus, the number of
measures is considered to be equitable for practices with this volume
of patients and eligible professionals. We will continue to evaluate
the number and types of measures and modules for future program years.
Comment: We received some comments in support of the proposed
measures for the group practice reporting option. A few commenters
expressed support for specific proposed measures, including:
Measure 1 Diabetes Mellitus: Hemoglobin A1c Poor
Control;
Measure 5 Heart Failure: Angiotensin-Converting
Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy
for Left Ventricular Systolic Dysfunction (LVSD);
Measure 6 Coronary Artery Disease (CAD): Oral
Antiplatelet Therapy Prescribed for Patients with CAD;
Measure 7 Coronary Artery Disease (CAD): Beta-
Blocker Therapy for CAD Patients with Prior Myocardial Infarction (MI);
Measure 8 Heart Failure: Beta-Blocker Therapy for
Left Ventricular Systolic Dysfunction (LVSD); Measure 118
Coronary Artery Disease (CAD): Angiotensin-Converting Enzyme (ACE)
Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Patients
with CAD and Diabetes and/or Left Ventricular Systolic Dysfunction
(LVSD);
Heart Failure: Left Ventricular Function (LVF) Testing;
Heart Failure: Left Ventricular Function (LVF) Assessment;
Heart Failure: Weight Measurement;
Heart Failure: Patient Education;
Heart Failure: Warfarin Therapy for Patients with Atrial
Fibrillation; and
Coronary Artery Disease (CAD): Drug Therapy for Lowering
LDL-Cholesterol.
Response: We appreciate the commenters support. The final measures
for physician groups participating in the 2010 PQRI group practice
reporting option are identified in Table 28.
Comment: One commenter noted that the 2 proposed hypertension
measures (Hypertension (HTN): Blood Pressure Control and Hypertension
(HTN): Plan of Care) are not included in the larger list of 2010 PQRI
measures for individual eligible professionals. The commenter
recommended that we include these 2 measures as 2010 PQRI individual
quality measures for individual eligible professionals.
Response: The commenter is correct; these 2 measures are not
available to individual eligible professionals to report for the 2010
PQRI. Since these measures were not proposed to be included in the 2010
PQRI quality measure set for individual eligible professionals,
however, we are unable to add them to the PQRI quality measure set for
individual quality measures for 2010. As stated previously, section
1848(k)(2)(D) of the Act requires us to give the public an opportunity
to provide input on the selection of measures for the PQRI, which we
accomplish through notice and comment rulemaking. Since these measures
have not been placed before the public as potential measures for
individual eligible professionals for the 2010 PQRI, eligible
professionals and other stakeholders have not had an opportunity to
provide input on the inclusion of these 2 measures in the 2010 PQRI
quality measure set for individual eligible professionals.
Comment: The measure developer/owner of the Heart Failure: Weight
measurement measure requested that we remove the measure from the group
reporting option since the measure owner's measure workgroup is
planning to retire the measure from its heart failure measure set in
the upcoming months.
Response: We value the input of the measure developer/owner.
Furthermore, we look to the measure developer/owner to maintain and
update measures based on the standards of care and evidence base. We
believe, however, that the Heart Failure: Weight Measurement measure
targets a high-cost chronic condition. The measure is a valuable
measure in the evaluation of patients with heart failure and continues
to have a significant impact on the care and improvement in outcomes.
Additionally, the measure has undergone the scientific rigor of
achieving consensus endorsement by the NQF. Therefore, we will retain
this measure, as proposed, in the group practice reporting option. The
final measure specifications for the group practice reporting option
will be posted on the CMS Web site http://www.cms.hhs.gov/pqri no later
than December 31, 2009.
Comment: One commenter noted that measure developer listed in the
proposed rule for the ``Preventive Care: Blood Pressure Management''
measure was incorrect and should be corrected in the final rule.
Response: The measure title was incorrectly listed as ``Preventive
Care: Blood Pressure Management.'' The correct title is ``Hypertension:
Blood Pressure Measurement.'' This correction is reflected in Table 28.
Based on the reasons discussed above and after considering the
comments, for the 2010 PQRI, group practices selected to participate in
the PQRI group practice reporting option will be required to report on
all measures listed in Table 28. To the extent that a measure is an
existing PQRI measure available for reporting by individual eligible
professionals, the Measure Title is preceded by the measure's PQRI
Measure Number. If there is no number in the PQRI Measure Number column
of the table, then the measure is not an existing PQRI measure and will
be added to the 2010 PQRI for purposes of the group practice reporting
option.
A separate measures specifications manual and other supporting
documents will be available for group practices participating in the
2010 PQRI group practice reporting option. We anticipate that the group
practice measures specifications manual will be available by November
15, 2009 on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI.

[[Page 61842]]

Table 28--Measures for Physician Groups Participating in the 2010 PQRI
Group Practice Reporting Option
------------------------------------------------------------------------
PQRI Measure No. Measure title Measure developer
------------------------------------------------------------------------
1...................... Diabetes Mellitus: NCQA
Hemoglobin A1c Poor
Control in Diabetes
Mellitus.
2...................... Diabetes Mellitus: Low NCQA
Density Lipoprotein
(LDL-C) Control.
3...................... Diabetes Mellitus: High NCQA
Blood Pressure Control
in Diabetes Mellitus.
5...................... Heart Failure: AMA-PCPI
Angiotensin-Converting
Enzyme (ACE) Inhibitor
or Angiotensin
Receptor Blocker (ARB)
Therapy for Left
Ventricular Systolic
Dysfunction (LVSD).
6...................... Coronary Artery Disease AMA-PCPI
(CAD): Oral
Antiplatelet Therapy
Prescribed for
Patients with CAD.
7...................... Coronary Artery Disease AMA-PCPI
(CAD): Beta-Blocker
Therapy for CAD
Patients with Prior
Myocardial Infarction
(MI).
8...................... Heart Failure: Beta- AMA-PCPI
Blocker Therapy for
Left Ventricular
Systolic Dysfunction
(LVSD).
110.................... Preventive Care and AMA-PCPI
Screening: Influenza
Immunization for
Patients >= 50 Years
Old.
111.................... Preventive Care and NCQA
Screening: Pneumonia
Vaccination for
Patients 65 Years and
Older.
112.................... Preventive Care and NCQA
Screening: Screening
Mammography.
113.................... Preventive Care and NCQA/AMA-PCPI
Screening: Colorectal
Cancer Screening.
117.................... Diabetes Mellitus: NCQA
Dilated Eye Exam in
Diabetic Patient.
118.................... Coronary Artery Disease AMA-PCPI
(CAD): Angiotensin-
Converting Enzyme
(ACE) Inhibitor or
Angiotensin Receptor
Blocker (ARB) for
Patients with CAD and
Diabetes and/or Left
Ventricular Systolic
Dysfunction (LVSD).
119.................... Diabetes Mellitus: NCQA
Urine Screening for
Microalbumin or
Medical Attention for
Nephropathy in
Diabetic Patients.
163.................... Diabetes Mellitus: Foot NCQA
Exam.
TBD.................... Diabetes Mellitus: NCQA
Hemoglobin A1c Testing.
TBD.................... Diabetes Mellitus: NCQA
Lipid Profile.
TBD.................... Heart Failure: Left CMS
Ventricular Function
(LVF) Testing.
TBD.................... Heart Failure: Left AMA-PCPI
Ventricular Function
(LVF) Assessment.
TBD.................... Heart Failure: Weight AMA-PCPI
Measurement.
TBD.................... Heart Failure: Patient AMA-PCPI
Education.
TBD.................... Heart Failure: Warfarin AMA-PCPI
Therapy for Patients
with Atrial
Fibrillation.
TBD.................... Coronary Artery Disease AMA-PCPI
(CAD): Drug Therapy
for Lowering LDL-
Cholesterol.
TBD.................... Hypertension: Blood AMA-PCPI
Pressure Measurement.
TBD.................... Hypertension (HTN): CMS/NCQA
Blood Pressure Control.
TBD.................... Hypertension (HTN): AMA-PCPI
Plan of Care.
------------------------------------------------------------------------

k. Public Reporting of PQRI Data
Section 1848(m)(5)(G) of the Act, as added by the MIPPA, requires
the Secretary to post on the CMS Web site, in an easily understandable
format, a list of the names of eligible professionals (or group
practices) who satisfactorily submitted data on quality measures for
the PQRI and the names of the eligible professionals (or group
practices) who are successful electronic prescribers. In accordance
with section 1848(m)(5)(G) of the Act, we stated in the CY 2010 PFS
proposed rule (74 FR 33588 through 33589) our intent to make public the
names of eligible professionals and group practices that satisfactorily
submit quality data for the 2010 PQRI on the Physician and Other Health
Care Professionals Directory. In addition to posting the information
required by section 1848(m)(5)(G) of the Act, for those group practices
that are selected to participate in PQRI under the group practice
reporting option, we also proposed to make the group practices' PQRI
performance rates publicly available, for each of the measures. We
solicited comments regarding our proposal to publicly report group
practices' PQRI performance results.
The following is summary of the comments we received regarding the
public reporting of PQRI data required under section 1848(m)(5)(G)(i)
of the Act and our proposal to publicly report group practices' PQRI
performance results.
Comment: We received some comments in support of public reporting
of either the information required by section 1848(m)(5)(G)(i) of the
Act or all PQRI measure results, including individual eligible
professionals' performance results. One commenter stated that CMS needs
to articulate a clear and aggressive path forward, with short-term
benchmarks and a goal of having publicly available, actionable
performance and cost information for all participating Medicare
clinicians.
Response: We appreciate the commenters' support. As we have stated
previously, we believe that public reporting of group practices' PQRI
performance results represents an opportunity to make strides towards
the goal of being able to make quality information about physicians and
other healthcare professionals publicly available.
Comment: One commenter encouraged the use of composite measures to
help increase the reliability of individual eligible professionals'
performance data.
Response: At this time we have no plans to publicly release
individual eligible professionals' performance data. Additional
refinements to the PQRI are likely needed as the program matures.
Comment: One commenter recommended that CMS also publicly report
the names of eligible professionals who choose not to participate in
the PQRI. The commenter stated that the willingness (or lack thereof)
of clinicians to participate in performance measurement and reporting
should be publicly recognized.
Response: We disagree that such information would be useful to
consumers since there are several valid reasons why an eligible
professional may choose to not participate in a voluntary initiative,
such as the PQRI. Consumers may potentially misinterpret the lack of
participation to mean that an eligible professional is not interested
in providing quality care.
Comment: Many commenters were opposed to releasing any other data
on PQRI until issues with the Physician and Other Health Care
Professional Directory are addressed and corrected.

[[Page 61843]]

Some of the issues cited by commenters include, the lack of accurate
provider listings, poor and difficult to find disclaimer information
regarding participation in PQRI, and poor user instructions. Many
comments, in particular, requested that the disclaimer that was
provided with the list of 2007 PQRI participants be updated and made
more prominent.
Response: We appreciate the comments and plan to make improvements
to the Directory with respect to reporting PQRI participation.
Comment: Many commenters were opposed to releasing any additional
PQRI information, including the information required under section
1848(m)(5)(G)(i) of the Act, because of issues with the PQRI itself.
Some of the concerns cited by commenters include the following:
The errors identified with the 2007 PQRI have compromised
the program's validity within the participant community;
The program's plans to transition away from claims-based
reporting may force eligible professionals who satisfactorily reported
in the past to stop doing so;
The potential for consumers to misunderstand the
significance of the information being publicly reported since there are
still many valid reasons why an eligible professional may not have
participated or may have participated but was not considered a
satisfactory reporter.
One commenter suggested that we consider alternative data sets for
public reporting such as Board certification, CAHPS data, and/or a
physician or other health care professional's participation in a
registry. Other commenters requested that a formal evaluation of the
2007 and 2008 PQRI be conducted before releasing any participation,
reporting, or performance rates.
Response: As required by section 1848(m)(5)(G)(i) of the Act, we
must, at a minimum, make public the names of eligible professionals and
group practices that satisfactorily submit quality data for the 2010
PQRI on the Physician and Other Health Care Professionals Directory. We
anticipate that the names of individual eligible professionals and
group practices that satisfactorily submit quality data for the 2010
PQRI will not be made available any earlier than in 2011 after the 2010
incentive payments are paid. In an attempt to address commenters'
concerns, we will make information about the intended uses and/or
limitations of the information being presented in the form of a
disclaimer available on the Web site as well. To the extent that
additional information derived from the PQRI, is made public we would
also take such concerns into account.
Comment: Several commenters provided recommendations for CMS to
consider with respect to publicly reporting PQRI information, including
the information required by section 1848(m)(5)(G)(i) of the Act. These
suggestions include the following:
Establishing a process that allows for prior review and
comment before data are made public and that allows for any comments
received to be included with the publicly reported data;
Establishing an appeals process with regard to any data
that is to be publicly reported;
Providing information outlining the data's potential uses
and limitations;
Providing information that clearly and specifically states
that information about whether an eligible professional is a
satisfactory reporter does not necessarily indicate that higher quality
care was or will be provided by those eligible professionals (or group
practices) who qualified to earn PQRI incentive payments;
Providing better access to and more timely feedback;
Avoiding characterization of the names of satisfactory
reporters as comparative quality information; and
Giving eligible professionals an opportunity to explain
why they are not participating.
Response: We appreciate the commenters' valuable input. We believe
that many of these suggestions have already been addressed. For
example, eligible professionals have an opportunity to review their
reporting and performance results via the feedback reports that are
made available to all participating eligible professionals at the time
that incentive payments are released for a particular program year. As
discussed previously, we have also created an alternate process to make
it easier for eligible professionals to obtain their feedback reports
and created a dedicated Help Desk that is available to assist eligible
professionals who have any concerns about the information contained in
their feedback reports. All information that is publicly reported will
also be accompanied by appropriate disclaimers that address the
information's potential uses and limitations, including the fact that
an eligible professional or group practice is listed as having
satisfactorily reported PQRI quality measures does not necessarily
indicate that he or she provides higher quality care than those who did
not participate or those who participated but did not do so
satisfactorily.
Comment: Several commenters provided recommendations for CMS to
consider specifically with respect to our proposal to publicly report
group practices' PQRI performance results. These suggestions include
the following:
Providing group practices the opportunity to suppress
their data;
Precisely defining what performance data CMS plans to
post; and
Conducting and publishing an evaluation of PQRI on its
impact on quality of care before selecting measures for public
reporting.
Response: As stated in the CY 2010 PFS proposed rule (74 FR 33589),
we proposed to make the group practices' performance rates for each of
the PQRI group practice reporting option measures public for each group
selected to participate in PQRI group practice reporting option. We
proposed to attribute the performance rates to the entire group and
will not post any information with respect to the performance of
individual eligible professionals other than, potentially, to identify
the individual eligible professionals that were associated with the
group during the reporting period.
As stated in section II.G.2.g.1. above, however, we have taken the
commenters' concerns about publicly reporting the group practices'
performance results in the first year of implementation of the PQRI
group practice reporting option into consideration. We are not
finalizing our proposal to require group practices that wish to utilize
the group practice reporting option in 2010 to agree to have their PQRI
performance results publicly reported. In addition, we will not report
any 2010 group practice performance results publicly at all except as
otherwise required by law and will limit public reporting of
information on the PQRI group practice reporting to the information
required by section 1848(m)(5)(G)(i) of the Act (that is, the names of
group practices that satisfactorily submitted data on PQRI quality
measures). Instead, we will consider implementing public reporting of
group practices' performance results in the 2011 PQRI program year.
Comment: Many commenters were opposed to the public reporting of
any PQRI information beyond what is specifically required by section
1848(m)(5)(G)(i) of the Act. These concerns include the following:
CMS only has the specific authority to publicly report the
information

[[Page 61844]]

required by section 1848(m)(5)(G)(i) of the Act;
There continue to be substantial gaps in the PQRI quality
measure set that may create a barrier to participation in PQRI;
The value of PQRI data is questionable since there has
been no formal evaluation of the PQRI to determine its impact on the
quality of care, whether it allows for fair and meaningful comparisons
of performance on eligible professionals, and whether it is valid; and
PQRI is not available to all specialties.
Response: Other than the information required by section
1848(m)(5)(G)(i) of the Act, the only PQRI information that we
contemplated making public is the PQRI performance results for group
practices selected to participate in the PQRI group practice reporting
option (that is, group practices that have agreed to have their PQRI
performance results publicly reported as a condition of utilizing the
group practice reporting option). As stated above, we have taken
commenters' concerns into consideration and have decided to defer
implementation of public reporting of group practices' performance
results until the 2011 PQRI program year.
Comment: One commenter requested clarification of the term
``satisfactorily submitted.'' The commenter recommended that we
exercise flexibility until there is a guarantee that we can accurately
collect and analyze the submission of quality data codes.
Response: We do not believe we have the authority to flexibly
define the term ``satisfactorily submitted.'' Section 1848(m) of the
Act clearly considers any eligible professional or group practice who
satisfies the criteria for satisfactory reporting, as defined in
sections II.G.2.e. through II.G.2.g. of this final rule with comment
period, to be an eligible professional or group practice who qualifies
for an incentive payment. Furthermore, section 1848(m)(5)(G) of the Act
clearly requires us to post the names of eligible professionals or
group practices that satisfactorily submitted data on PQRI quality
measures.
After considering the comments above, we intend to post the names
of eligible professionals who: (1) Submit data on the 2010 PQRI quality
measures through one of the reporting mechanisms available for the 2010
PQRI; (2) meet one of the proposed satisfactory reporting criteria of
individual measures or measures groups for the 2010 PQRI; and (3)
qualify to earn a PQRI incentive payment for covered professional
services furnished during the applicable 2010 PQRI reporting period for
purposes of satisfying the requirements under section 1848(m)(5)(G)(i)
of the Act, on the Physician and Other Health Care Professionals
Directory.
Similarly, for purposes of satisfying the requirements under
section 1848(m)(5)(G)(i) of the Act with respect to group practices, on
the Physician and Other Health Care Professionals Directory, we intend
to post the names of group practices that: (1) Submit data on the 2010
PQRI quality measures through the proposed group practice reporting
option; (2) meet the proposed criteria for satisfactory reporting under
the group practice reporting option; and (3) qualify to earn a PQRI
incentive payment for covered professional services furnished during
the applicable 2010 PQRI reporting period for group practices.
We do not intend to make performance rates for group practices
participating in the 2010 PQRI group practice reporting option publicly
available but anticipate publicly reporting group practices'
performance results for the 2011 PQRI program year.
We anticipate that information with respect to quality data
submitted for the 2010 PQRI (that is, the names of individual eligible
professionals and group practices that satisfactorily report in 2010)
will not be available until after the 2010 incentive payments are paid
in 2011.
3. Section 131(c): Physician Resource Use Measurement and Reporting
Program
a. Statutory Authority
As required under section 1848(n) of the Act, as added by section
131(c) of the MIPPA, we established and implemented by January 1, 2009,
the Physician Resource Use Measurement & Reporting Program for purposes
of providing confidential reports to physicians that measure the
resources involved in furnishing care Medicare beneficiaries. Section
1848(n) of the Act also authorizes CMS to include information on the
quality of care furnished to Medicare beneficiaries by a physician or
group of physicians.
b. Background
As stated in the CY 2009 PFS final rule with comment period (73 FR
69866), the Program would consist of multiple phases. We included a
summary of the activities of phase I of the Program in the CY 2009 PFS
final rule with comment period (73 FR 69866 through 69869). In addition
to discussing phase I of the Program, we also highlighted the
activities of several other initiatives, including Medicare Value-Based
Purchasing (VBP) programs and demonstrations and related activities
undertaken by the MedPAC and the Government Accountability Office
(GAO). We refer readers to the CY 2009 PFS final rule with comment
period (73 FR 69866 through 69869) for a detailed discussion of these
activities.
In the CY 2009 PFS final rule with comment period (73 FR 69866
through 69869), we finalized, on an interim basis, the following
parameters for phase I of the Program: (1) Use of both per capita and
episode of care methodologies for resource use measurement; (2) cost of
service category analysis (for example, imaging services or inpatient
admissions); (3) use of 4 calendar years of claims data; (4) focus on
high cost and/or high volume conditions; (5) reporting to physician
specialties relevant to the selected focal conditions; (6) focus on
physicians practicing in certain geographic areas, and (7) low, median,
and high cost benchmarks.
In the CY 2010 PFS proposed rule (74 FR 33589 through 33591), we
summarized the comments received from the CY 2009 PFS final rule with
comment period and our responses. Further, we made the following
proposals in the CY 2010 PFS proposed rule (74 FR 33591): (1) Reporting
on quality measures in addition to resource use measures, and (2)
reporting to groups of physicians in addition to individual physicians.
c. Phase I of the Program
As indicated above, the Program consists of multiple phases. Under
this approach, each phase of the Program will inform future phases of
the Program. We refer readers to the CY 2009 PFS final rule with
comment period (73 FR 69866 through 69869) for a description of phase I
Program activities. Using the parameters that were finalized on an
interim basis, we have disseminated approximately 310 resource use
reports (a sample report is available at http://rurinfo.mathematica-mpr.com/) to physicians in 13 geographic regions (74 FR 33590). In the
proposed rule, we solicited public comments on the interim final
Program parameters.
Commenters supported the Program parameters that were finalized on
an interim basis in the CY 2009 PFS final rule (73 FR 69866 through
69869). Our summary of those comments and our responses are contained
in the CY 2010 PFS proposed rule (74 FR 33589 through 33591).
Accordingly, we are finalizing the interim final Program parameters.

[[Page 61845]]

In addition to the eight conditions finalized on an interim basis
in the CY 2009 PFS final rule(74 FR 33590), we solicited public comment
on adding diabetes as an episode of care.
Comment: Commenters supported including diabetes as one of the
selected episodes of care for the Program.
Response: We are finalizing adding diabetes to the episode of care
analysis in the Program.
In the CY 2010 PFS proposed rule (74 FR 33591), we referred readers
to the following Web site to review a de-identified sample of the
resource use reports disseminated to physicians: http://rurinfo.mathematica-mpr.com/. We solicited public comment on the
resource use report used in phase I of the Program.
Comment: Commenters supported dissemination of feedback reports
both in hard copy and electronically.
Response: We intend to offer both hard copy and electronic delivery
of feedback reports in the Program.
Comment: Commenters supported electronic reports that allow user-
driven data drilldown capability to the claim level.
Response: We intend to explore the feasibility of such drill-down
capability.
Comment: A few commenters suggested that additional cost of service
categories (described on pages 30 and 34-35 at http://rurinfo.mathematica-mpr.com/) should be included in the feedback
reports. Additional categories mentioned included: prescribed drugs,
costs due to infections, and specific information on diagnostic tests
and services.
Response: We intend to explore the feasibility of these additional
cost of service categories in the future.
Comment: A few commenters suggested capturing hospital readmissions
as a measure in the feedback reports.
Response: We are committed to closely monitoring hospital
readmissions in the Medicare program. We intend to explore the
feasibility of capturing readmissions in the physician group feedback
reports in the future.
Comment: A few commenters stated that some of the benchmarks used
in the reports were too broad in order to make meaningful peer
comparisons.
Response: We are committed to refining the benchmarks used in the
Program to ensure meaningful peer comparisons. We note that there is a
trade-off between statistical precision and narrow benchmarks. For
additional discussion on this statistical topic, we refer readers to
the CY 2010 PFS proposed rule (74 FR 33590 through 33591). Further, we
note that the broad geographic benchmarks provide additional value to
CMS by informing policymakers of measurement variation across
geographic regions.
Comment: A few commenters mentioned that eligible professionals
would appreciate knowing each beneficiary that was assigned to them.
Further, physicians would appreciate knowing which other physicians
were also providing care to the beneficiaries assigned to them.
Response: To the extent it is practicable, we are committed to
providing physicians with information that targets specific performance
areas. We intend to explore the feasibility of providing this detailed
level of data.
Comment: One commenter requested that CMS pursue a robust
evaluation of the risk adjustment methodology (pages 29 and 32 at
http://rurinfo.mathematica-mpr.com/) used in the Program.
Response: We are committed to conducting further research to refine
the risk adjustment rules currently being applied in the Program.
Determining how to accurately adjust for patient risk factors is a
priority for CMS.
Comment: One commenter suggested that we make the minimum
thresholds for patients and episodes that are needed for statistical
accuracy used in the Program publicly available.
Response: We are committed to making the methodologies used in the
Program transparent. We are currently exploring the feasibility of
publicly posting the minimum thresholds for patients and episodes used
in the Program on our Web site.
Comment: A few commenters suggested that additional outreach and
education is needed to help eligible professionals understand the
reports. Further, commenters suggested including a task in the next
Quality Improvement Organization (QIO) scope of work to assist
physicians with interpreting their reports.
Response: We are committed to providing technical assistance to
eligible professionals to aide in the understanding of the reports. We
intend to explore the feasibility of including a task to provide
technical assistance in understanding the reports in the QIO 10th scope
of work.
Comment: One commenter questioned how E/M codes included in
surgical bundle payments are used to inform CMS' designated attribution
methodologies.
Response: We are committed to pursuing further research in order to
refine the designated attribution rules currently being applied in the
Program. Determining how to accurately attribute surgical bundles is a
priority for CMS.
Comment: One commenter requested that CMS raise the minimum of 10
percent of E/M costs used to assign a patient or episode to a
physician.
Response: In addition to setting the minimum threshold at 10
percent, we will test some higher minimum thresholds. We note that one
of the goals of this Program is to provide confidential feedback
reports to as many physicians as possible. One of the trade-offs to
raising the minimum threshold is that fewer physicians may qualify to
receive a feedback report.
Comment: Several commenters strongly supported CMS' use of the
multiple proportional attribution rule (pages 26-27 and 33 at http://rurinfo.mathematica-mpr.com/).
Response: We will continue to examine the utility of this
attribution rule and test others.
In the CY 2010 PFS proposed rule, we referred readers to two
publicly available Web sites for commercial episode grouper vendors
regarding transparency of their methodologies (74 FR 33591). We
solicited public comment on the use of proprietary products to measure
episodes of care in the Program.
Comment: Many commenters were in favor of CMS only using a
Medicare-specific public domain episode grouper in the Program.
Response: To the greatest extent practicable, we are committed to
ensuring all methodologies used in the Program are transparent. We
intend to explore the feasibility of using a Medicare-specific public
domain episode grouper in the Program. We refer readers to (74 FR 48979
through 48980) for an announcement regarding an upcoming public
listening session that CMS is hosting to discuss this topic.
d. Phase II of the Program
For phase II, we proposed to expand the Program in ways that that
targets specific performance areas for physicians. We proposed to add
reporting to groups of physicians, recognizing that many physicians
practice in arrangements other than solo practices. We noted that group
level reporting will be more likely to resolve the sample size issues
that arise when individual physicians have too few Medicare
beneficiaries with specific conditions to generate statistically
significant information. We solicited public comment on potential types
of groups including the following: (1) Formally-established single or
multi-specialty group practices; (2) physicians practicing in defined
geographic regions; and (3) physicians practicing

[[Page 61846]]

within facilities or larger systems of care.
Comment: Commenters supported reporting to groups of physicians,
including all categories listed above, in addition to individual
physicians. A few commenters questioned how CMS would define groups.
Commenters did not offer a definition of group reporting, however. One
commenter asked us to include accountable care organizations (ACOs) in
the definition of the ``group.''
Response: We are finalizing our proposal to include group
reporting. Since no explicit definition of group practice was suggested
through public comment, for purposes of this Program, we are finalizing
the following definition of group practice: more than one physician
practicing medicine together. We choose this definition because we want
to recognize groups of physicians as entities that are separate and
distinct from individual physicians. We are defining a group as two or
more physicians both to recognize groups as separate and distinct from
individual physicians and to ensure that we have the broadest possible
definition of a group so that all physicians could potentially be
provided with resource use reports. If groups were to be defined more
narrowly, it is possible that some physicians would not be subject to
the resource use reporting because they are neither working in solo
practice as an individual physician or part of a practice that meets
our definition of a group.
This definition applies to the following groups: (1) Formally-
established single or multi-specialty group practices; (2) physicians
practicing in defined geographic regions; and (3) physicians practicing
within facilities or larger systems of care. With respect to ACOs, the
term is not defined at this time in either the law or regulations but
to the extent that the ACO includes more than one physician, the
physicians in the ACO would constitute a group for resource use
reporting. We are therefore, finalizing the definition for group
practices and these three types of groups of physicians.
Phase I of the Program focused on providing confidential feedback
on resource use measures. Section 1848(n)(1)(A) of the Act states that
the Secretary may also include information on the quality of care
furnished to Medicare beneficiaries by physicians (or groups of
physicians) in the feedback reports. Providing physicians with feedback
on both quality and cost of care better captures the value of the care
provided. Including quality measures in the Program is consistent with
the direction for other CMS VBP initiatives. We solicited public
comments on the use of PQRI, GEM, and other aggregate quality measures
to be used in the Physician Resource Use Measurement and Reporting
Program.
Comment: Commenters were unanimously supportive of including
quality measures, in addition to resource use measures in the Program.
Response: We are finalizing our proposal to include quality
measures in the Program.
Comment: Commenters were in support of using both PQRI and GEM
measures to capture quality of care. Some commenters cited the new
nature of both PQRI and GEM measures as an area of concern and
recommended caution in using these quality measures until the measures
become more mature.
Response: Though we recognize that both the measures used in the
PQRI and claims-based measures calculated without submission of quality
data codes from physicians (such as GEM measures) will continue to
mature over time, we intend to include them in the Program. Including
these quality measures will allow us to gain more experience reporting
performance metrics to eligible professionals on a confidential basis.
Comment: In addition to the use of PQRI and GEM measures,
commenters also encouraged reporting of structure and outcome measures
(outside of those currently included in the PQRI Program). Commenters
stated that specialty societies and other measure developers should be
encouraged to speed the development of these types of measures.
Response: We are committed to capturing all aspects of performance,
including process, structure, and outcomes measures. As additional
measures become available, we will examine the utility of such measures
as an additional aspect of reporting in this Program.
Comment: A few commenters expressed that quality data should
closely relate to the episodes of care that are targeted in the
Program.
Response: We are committed to working collaboratively with measure
developers on pairing quality measures with episodes of care.
Comment: A few commenters recommended that the time period
represented by the quality and cost measures should overlap.
Response: To the greatest extent practicable, we are committed to
recognizing overlapping measurement time periods between quality and
cost measures in this Program.
Comment: A few commenters suggested capturing quality data from
registries.
Response: We are committed to allowing the collection of quality
measures from data contained within clinical registries. We refer
readers to section II.G.2. of this final rule with comment period that
discusses the PQRI for additional discussion on the use of registries
to collect quality data.
e. General Comments
In addition to the areas where we specifically solicited comments,
we also received several general comments.
Comment: Some commenters expressed concern about the use of the
data contained within the feedback reports for purposes beyond
confidential reporting. One commenter strongly encouraged CMS to
publicly report the data contained within the feedback reports.
Response: Section 1848(n) of the Act currently provides the
authority to use the information contained within the feedback reports
on a confidential basis only.
Comment: One commenter suggested integrating the reporting of
resource use measures into Maintenance of Certification programs.
Response: CMS is committed to working collaboratively with
stakeholders on various mechanisms and programs to increase the value
of care delivered to beneficiaries. We refer readers to section II.G.2.
of this final rule with comment period that discusses the PQRI for
additional discussion of this suggestion.
Comment: One commenter suggested that the feedback reports be used
to provide information on geographic variations in the delivery of
specific services.
Response: We are committed to monitoring and addressing geographic
variations in the delivery of services. As mentioned above, we plan to
explore group level reporting, which may include reporting to
physicians within a specified geographic group.
Comment: One commenter strongly encouraged CMS to expand the number
of reports delivered beyond the 310 delivered in Phase I of the
Program.
Response: We are committed to providing feedback to as many
physicians as our resources will allow. We intend to explore the
feasibility of providing more reports in the Program.

[[Page 61847]]

4. Section 131(d): Plan for Transition to Value-Based Purchasing
Program for Physicians and Other Practitioners
a. Background
Value-based purchasing uses payment incentives and transparency to
increase the value of care by rewarding providers for higher quality
and more efficient services and for publicly reporting performance
information. Section 131(d) of the MIPPA requires the Secretary to
develop a plan to transition to a value-based purchasing (VBP) program
for Medicare payment for covered professional services made under, or
based on, the PFS. Section 131(d) of the MIPPA also states that by May
1, 2010, the Secretary shall submit a report to the Congress,
containing the plan, together with recommendations for such legislation
and administrative action as the Secretary determines appropriate. The
Secretary, through the Physician and Other Health Professional VBP
(PVBP) Workgroup, submitted a progress letter to Congress on January 8,
2009 detailing the progress made on the PVBP plan for physicians and
other professionals.
Currently, Medicare health professional payments are based on
quantity of services and procedures provided, without recognition of
quality or efficiency. Under various authorities, we have pursued the
implementation of building blocks to support the establishment of a VBP
program for health professionals. These include initiatives in the
following major topic areas: quality and efficiency measurement and
reporting, approaches for aligning incentives with providing higher
quality care instead of higher volume of care, care coordination,
prevention, and health information technology (HIT). The following are
examples of the initiatives specifically relevant to physicians and
other health professionals:
Pay for reporting of quality measurement data instituted
under the Physician Quality Reporting Initiative (PQRI);
Resource use reports comparing overall costs, as well as
costs for treatment across episodes of care, as required by the
Physician Resource Use Measurement and Reporting Program; and
Demonstration projects including the Physician Group
Practice demonstration of a shared savings model, gainsharing
demonstrations, medical home and other care coordination and disease
management demonstrations, and the Acute Care Episodes demonstration of
a bundled payment model.
We are fully committed to implementing VBP incentives to drive
quality improvement and greater efficiency for services furnished to
Medicare beneficiaries.
b. Approach to Plan Development
We have created an internal cross-component team, the PVBP Steering
Committee (formerly referred to as PVBP Workgroup), to lead development
of the PVBP plan. Four Subgroups were established to address the major
sections of the Plan: measures; incentives; data strategy and
infrastructure; and public reporting. The PVBP Steering Committee was
tasked with reviewing the state-of-the-art in performance-based payment
for physicians, including relevant Medicare programs and demonstrations
and private sector initiatives; preparing an Issues Paper to present
program objectives and design principles; engaging stakeholders and
obtaining input on program design; and developing the PVBP Plan and
Report to Congress. A similar approach was used in the development of
the CMS Hospital VBP Plan.
To guide the planning process, the PVBP Steering Committee adopted
the following goal to improve Medicare beneficiary health outcomes and
experience of care by using payment incentives and transparency to
encourage higher quality, more efficient professional services. In
pursuit of this goal, the Workgroup has defined the following
objectives:
Promote evidence-based medicine through measurement,
payment incentives, and transparency.
Reduce fragmentation and duplication through
accountability across settings, alignment of measures and incentives
across settings, better care coordination for smoother transitions, and
attention to episodes of care.
Encourage effective management of chronic disease by
improving early detection and prevention, focusing on preventable
hospital readmissions, and emphasizing the importance of advanced care
planning and appropriate end-of-life care.
Accelerate the adoption of effective, interoperable HIT,
including clinical registries, e-prescribing, and electronic health
records.
Empower beneficiaries to make value-based health care
choices, and encourage health professionals to improve the value of
care they provide by disseminating information designed to help them
change their practice patterns to improve performance.
The goal and objectives were captured in an Issues Paper that was
posted on the CMS Web site on November 24, 2008, in preparation for the
December 9, 2008 Listening Session which was held at CMS headquarters.
The Issues Paper included questions seeking public input on key design
considerations. The Issues Paper is available on the CMS Web site at
http://www.cms.hhs.gov/PhysicianFeeSched/downloads/PhysicianVBP-Plan-Issues-Paper.pdf. Nearly 500 stakeholders participated in the day-long
Listening Session. We received both verbal and written comments that
are informing the design of the PVBP Plan. Stakeholder input from this
Listening Session is summarized in the proposed rule (74 FR 33592
through 33593).
c. Next Steps in Plan Development
Building on input from the Listening Session on the Issues Paper
topics, the PVBP Steering Committee has begun to develop potential
recommendations for inclusion in the Report to Congress. The first step
is to design various approaches for performance-based payment that will
address the planning goal and objectives for different practice
arrangements. This design process will include identifying appropriate
measures and incentive structures, considering the necessary data
infrastructure, and addressing public reporting options. Consideration
will be given to approaches that:
(1) Overlay the current PFS, such as differential fee schedule
payments based on measured performance;
(2) Address multiple levels of accountability, including individual
health professionals, as well as larger care teams or organizations
made up of a variety of health professionals and facilities; and
(3) Promote more integrated care through shared savings models and
bundled payment arrangements.
In the proposed rule, we solicited public comment on the
development of the PVBP plan and Report to Congress. We specifically
requested for comments on two topics: (1) the appropriate level at
which to hold practitioners accountable (for example, individuals or
groups); and (2) appropriate data submission mechanisms. We received
comments on these topics, as well as comments on other issues we should
consider when developing the PVBP Report to Congress. The following is
summary of the comments we received regarding section 131(d) of the
MIPPA.
Comment: Regarding the appropriate level at which to hold
practitioners accountable, commenters were supportive of our intention
for the PVBP

[[Page 61848]]

plan to recognize multiple levels of accountability ranging from
individual practitioners to larger organizations. Commenters recognized
that a ``one size fits all'' approach would not be appropriate. One
commenter suggested conducting a series of demonstrations and pilots to
help further explore this issue. Commenters also urged us to design the
program to allow participation by practitioners other than physicians.
Response: We plan to continue to explore ways to measure and
incentivize practitioners for higher value care at multiple levels of
accountability, including possible demonstrations and pilots to test
and analyze the effectiveness of certain practice arrangements and
payment systems. We recognize that the Congress intended the PVBP plan
to be broader than physicians, and the PVBP Steering Committee is
considering approaches that allow for participation by a wide variety
of health care practitioners.
Comment: Regarding the appropriate methods for data submission,
commenters overwhelmingly supported the adoption and use of
interoperable electronic health records. Commenters suggested that the
CMS PVBP Steering Committee coordinate with the Office of the National
Coordinator for Health IT (ONC) to align PVBP incentives for electronic
health records with the recently enacted HITECH incentives for health
IT adoption. Commenters also recognized the role of registries in data
submission. In addition, commenters urged us to carefully consider
procedural protections for practitioners, such as allowing their review
of their own data before submission to CMS.
Response: The CMS PVBP Steering Committee is exploring ways to
encourage the use of interoperable health IT systems, including
registries, as part of the PVBP plan. We have been actively engaged
with ONC on how to align any PVBP incentives for health IT with the
HITECH provisions and will continue to work closely with ONC. We
recognize the importance of the accuracy and validity of electronically
submitted data, and are exploring ways to incorporate data review
processes for practitioners into the PVBP plan recommendations.
Comment: Several commenters were concerned with the relationship
between the PVBP plan and the current Medicare payment system.
Commenters stated that the current Medicare payment system is flawed in
that it does not align incentives across providers and settings, and a
PVBP plan that simply overlays the existing system will not be
sufficient to re-align incentives to provide higher value care.
Response: In developing the PVBP plan, we are considering both
short-term and long-term recommendations. Short-term recommendations
may include changes within the current payment system. Such changes,
though, would be interim steps toward implementing a more long-term
approach for comprehensive payment reform.
Comment: Commenters urged us to not limit the Report to Congress to
recommendations for only performance-based incentive payments.
Commenters suggested the plan recommend a wide range of incentives for
activities such as improving beneficiary health outcomes, patient
experience of care, efficient performance of services, and use of
electronic health IT such as registries or e-prescribing. Commenters
also urged us to recommend using the PVBP plan to encourage high
quality care by being actionable on the part of all practitioners.
Response: We are considering recommending a variety of different
activities within the PVBP plan, taking into account what is more
feasible in the short-term versus the long-term. We are also
considering what program activities are likely to be the most
meaningful and actionable for practitioners, both in the short-term and
long-term.
Comment: Commenters urged CMS to gain experience with confidential
feedback reporting of quality and resource use before using the
information for either payment or public reporting. One commenter
suggested that any public reporting under the PVBP plan should be
geared toward consumer decision-making.
Response: We are considering a variety of program activities,
including confidential feedback reports, public reporting, and
incentive payments. The PVBP Steering Committee is carefully analyzing
the options for each of these activities.
Comment: Several commenters mentioned that encouraging successful
management of chronic disease is essential to any PVBP plan. Commenters
mentioned medical home care models and the important role they can play
in promoting integrated care and reducing costs.
Response: We recognize the importance of managing chronic disease,
and are currently conducting a demonstration of the medical home
concept. Findings from this demonstration may be used to inform plan
development.
Comment: Commenters urged us to use the PVBP plan to increase
efficiency and slow cost growth in the Medicare program. Commenters
specifically mentioned shared savings models and encouraged us to
further explore how to incorporate appropriate shared savings
principles into the plan. There was no consensus among the comments
regarding whether a PVBP plan should include shared savings or
gainsharing. However, some commenters cautioned that a PVBP plan should
not be viewed solely as a method to slow cost growth.
Response: We recognize the importance of both slowing cost growth
and maintaining beneficiary access to high quality care. The PVBP plan
will carefully explore program activities that accomplish both of these
goals.
Comment: We received input on several issues related to the
appropriate measurement of eligible professionals in a PVBP program.
Commenters suggested we recommend only transparent evidence-based
measures that are vetted by physician groups and endorsed by a national
consensus-based organization. Commenters also suggested we recommend
strategically selecting measures to address gaps in quality, or those
related to high-cost and/or high-volume services. Measures used in the
program should not be ``topped out,'' but still have significant room
for improvement collectively across the Medicare program. In addition,
commenters urged us to recommend the use of both quality and resource
use information, and to report both domains of measures together in
order to give a fuller picture of an eligible professional's
performance. Commenters urged us to consider incorporating a broad
range of quality measures into the PVBP program, including patient
experience, clinical outcomes, disparities, care coordination, and
structural measures such as the adoption of health IT.
Response: The PVBP Steering Committee is carefully considering what
measures to recommend for which program activities (that is, incentive
payment, confidential feedback, public reporting). We recognize the
potential for the PVBP plan to address gaps in quality and high-cost
and/or high volume services, and the importance of recommending the use
of both quality and resource use information and the value to eligible
professionals of providing this information together. We also recognize
the importance of recommending the use of a broad array of measures.
Many of the types of measures mentioned by commenters have not yet been
fully developed. Therefore, short-term recommendations for the PVBP
plan cannot include them, but long-term recommendations may encourage
their development and use.

[[Page 61849]]

Comment: Commenters supported tying a portion of payment to an
eligible professional's performance, and stated that participants
should not be rewarded simply for reporting data to CMS. Commenters
stated that the PVBP plan should reward both attainment of specified
levels of performance, and improvement over time. Commenters also
suggested that such incentive payments should be aimed toward breaking
down the payment silos that currently exist between Medicare Parts A
and B.
Response: Whether to reward eligible professionals for performance,
and not merely participation is a key design option that the PVBP
Steering Committee is considering for the PVBP plan. The Steering
Committee will also carefully discuss whether to recommend paying
incentives for attainment, improvement, or both.
Comment: Commenters stressed the importance of risk-adjustment,
especially if performance data is used to make incentive payments.
Response: We recognize that risk-adjustment is essential and we are
exploring methods for its incorporation into the PVBP plan.
Comment: Commenters commended CMS for involving stakeholders in
PVBP plan development, and encouraged CMS to continue to involve
stakeholders as plan development proceeds. Commenters urged CMS to
ensure that any PVBP plan does not impede the evolution of medical
practice, discourage innovation, or interfere with practitioner-patient
decision-making.
Response: We appreciate the opportunity to hear from stakeholders
regarding plan recommendations, and we value the input stakeholders
have provided thus far. We are carefully considering options and taking
an iterative approach to PVBP plan development to avoid the potential
pitfalls mentioned by commenters.
We received other comments that were outside the scope of the
proposed rule, and are therefore not discussed in this final rule with
comment period.
5. Section 132: Incentives for Electronic Prescribing (E-Prescribing)--
The E-Prescribing Incentive Program
a. Program Background and Statutory Authority
As described in the CY 2010 PFS proposed rule (74 FR 33593 through
33600), section 1848(m)(2) of the Act, as amended by section 132 of the
MIPPA, promotes the use of electronic prescribing by authorizing
incentive payments to eligible professionals or group practices who are
``successful electronic prescribers.'' This E-Prescribing Incentive
Program is expected to encourage significant expansion of the use of
electronic prescribing by authorizing a combination of financial
incentives and payment adjustment and is separate from, and in addition
to, any incentive payment that eligible professionals may earn through
the PQRI program. Individual eligible professionals do not have to
participate in PQRI in order to participate in the E-Prescribing
Incentive Program (and vice versa).
For 2010, which is the second year of the E-Prescribing Incentive
Program, the Secretary is authorized to provide successful electronic
prescribers, as defined in section 1848(m)(3)(B) of the Act and further
discussed below in this section, an incentive payment equal to 2.0
percent of the total estimated Medicare Part B PFS allowed charges
(based on claims submitted not later than 2 months after the end of the
reporting period) for all covered professional services furnished
during the 2010 reporting period. Covered professional services are
defined under the statute to be services for which payment is made
under, or is based on, the PFS and which are furnished by an eligible
professional. The applicable electronic prescribing percent (2.0
percent) authorized for the 2010 E-Prescribing Incentive Program is the
same as that authorized for the 2009 E-Prescribing Incentive Program.
We received several comments from the public on the CY 2010 PFS
proposed rule related to the E-Prescribing Incentive Program. General
comments about the E-Prescribing Incentive Program are addressed
immediately below.
Comment: One commenter was opposed to making any changes to the E-
Prescribing Incentive Program for 2010, but a majority of the comments
voiced their support for the changes proposed for the 2010 E-
Prescribing Incentive Program and discussed below.
Response: Although we understand the commenter's desire to keep the
program the same in 2010, we believe that this would defeat our
attempts to simplify the E-Prescribing Incentive Program and reduce the
reporting burden for eligible professionals.
Comment: Some comments recommended that we conduct significant
education and outreach activities, especially with respect to the
changes for 2010, and that we promote the program by making
participation information, as well as information about potential
incentive payment amounts available.
Response: We value the input received from stakeholders and
participants who have provided constructive feedback and have
collaborated with us to disseminate educational materials about the E-
Prescribing Incentive Program to eligible professionals in the health
care community. We anticipate that ongoing education and outreach
efforts will continue to evolve with the program. We will continue to
work with national and regional stakeholder organizations to educate
their members on program requirements for successful reporting,
especially the changes that will be implemented for 2010, as discussed
below. We also plan to continue to host monthly national provider calls
in which we expect to provide guidance on specific topics, including
having our E-Prescribing Incentive Program subject matter experts
available to answer questions. Information about upcoming calls can be
obtained from the CMS Sponsored Calls page of the PQRI section of the
CMS Web site at http://www.cms.hhs.gov/PQRI/04_CMSSponsoredCalls.asp#TopOfPage. We will also continue to make
educational materials and other resources available on the E-
Prescribing Incentive Program section of the CMS Web site at http://www.cms.hhs.gov/erxincentive. We encourage eligible professionals to
visit this Web site and to review the frequently asked questions found
on this Web site. Eligible professionals are also encouraged to join
our physician listserv to obtain periodic updates about the E-
Prescribing Incentive Program. Instructions for joining the listserv
can be found at https://list.nih.gov/archives/physicians-l.html.
Comment: One commenter recommended that we promote the program by
making participation information, as well as information about
potential incentive payment amounts available.
Response: Once the 2009 program year is complete, we anticipate
conducting an evaluation of the 2009 E-Prescribing Incentive Program
reporting experience at an aggregate level and posting a national
summary report similar to the ``PQRI 2007 Reporting Experience'' report
found at http://www.cms.hhs.gov/PQRI/Downloads/PQRI2007ReportFinal12032008CSG.pdf.
With respect to the suggestion to make information about potential
incentive payment amounts available, we are concerned that doing so may
be misleading since incentive payments will differ for each eligible
professional based on his or her Medicare Part B PFS allowed charges
for covered

[[Page 61850]]

professional services. We believe that information such as the mean
incentive payment amount released in the ``PQRI 2007 Reporting
Experience'' report could serve the same purpose.
Comment: Many commenters expressed a desire for the Drug
Enforcement Agency (DEA) to permit electronic prescribing of controlled
substances. Commenters noted that until electronic prescribing of
controlled substances is permitted, eligible professionals may be
reluctant to adopt electronic prescribing technology due to work flow
issues and the need to utilize two processes (electronic and written)
for generating prescriptions.
Response: We are aware of the current limitation for electronic
prescribing of controlled substances. Actions taken or that may be
taken by the DEA are beyond our purview. However, we have taken this
limitation into consideration in establishing the 2010 criteria for
determining a successful electronic prescriber.
Comment: Some commenters suggested that we obtain data on
electronic prescribing from pharmacies rather than eligible
professionals or that we should also be holding pharmacies or pharmacy
networks accountable for ensuring accurate, timely, and consistent
transmission of electronic prescribing data.
Response: As established by MIPPA, the E-Prescribing Incentive
Program is an incentive program specifically for eligible
professionals, as defined by section 1848(k)(3)(B) of the Act, based on
information submitted by eligible professionals. Additionally, section
1848(m)(3)(B)(iv) of the Act authorizes the use of Part D data, which
reflects information submitted by pharmacies to Part D plan sponsors.
As we explained in the CY 2010 PFS proposed rule (74 FR 33595),
however, the accuracy and completeness of the Part D data with respect
to whether a prescription was submitted electronically is unknown since
Part D plan sponsors will not be required to start submitting this
information until 2010. Should we rely on Part D data in the future, we
anticipate that we will no longer need eligible professionals to submit
data on their electronic prescribing activities to us.
Comment: One commenter was concerned that the E-Prescribing
Incentive Program will include a penalty, or payment adjustment, to
begin in 2012 and requested that we, in consultation with stakeholders,
define in a timely manner how we intend to use the case-by-case,
significant hardship penalty exemption authority.
Response: We believe the commenter is referring to section
1848(a)(5)(B) of the Act, which permits the Secretary, on a case-by-
case basis, to exempt an eligible professional from the application of
the payment differential if the Secretary ``determines, subject to
annual renewal that compliance with the requirement for being a
successful electronic prescriber would result in a significant
hardship.'' This hardship exemption is to be used at the discretion of
the Secretary.
As we stated in the CY 2009 PFS proposed rule (74 FR 33549), we
will discuss the application of the payment adjustment in future notice
and comment rulemaking. We will address the circumstances under which
the hardship exemption applies at that time.
Comment: One commenter recommended that we provide a participation
option for eligible professionals who predominately practice in skilled
nursing facilities. The commenter is concerned that many such
professionals are currently unable to participate in the E-Prescribing
Incentive Program because the facility's prescribing systems generate
orders to an internal pharmacy and, for reasons unspecified by the
commenter, do not meet the full definition of a qualified electronic
prescribing system.
Response: Since the commenter did not describe what aspects of the
definition of ``qualified'' electronic prescribing system a skilled
nursing facility's electronic prescribing system fails to meet, it is
not entirely clear how the fact that a facility's electronic
prescribing system generates orders to an internal pharmacy alone would
prevent the facility's system from meeting the definition of a
``qualified'' electronic prescribing system. In an attempt to provide
eligible professionals who predominately practice in skilled nursing
facilities with more opportunities to participate in the E-Prescribing
Incentive Program, however, we are expanding the scope of the
electronic prescribing measure's denominator codes to include
professional services outside the professional office and outpatient
setting. The expanded codes include professional services furnished in
skilled nursing facilities and in the home care setting. To be
considered a successful electronic prescriber, eligible professionals
need only to report 25 separate electronic prescribing events during
the reporting period. To qualify for the electronic prescribing
incentive payment, a successful electronic prescriber must have 10
percent of their Medicare Part B PFS allowed charges for covered
professional services be comprised of the codes in the denominator of
the measure. The electronic prescribing system used for these 25
electronic prescribing events must have all of the functionalities
listed in the measure's specifications and described in section
II.G.5.c.3. below.
Comment: One commenter was concerned that the incentive payment
favors prescribers who typically bill high-cost services since the
incentive payment is based on Medicare Part B PFS allowed charges. The
commenter suggested that the incentive payment should be a flat-rate
bonus or a bonus payment that rewards medication management.
Response: We appreciate the comment; however, we do not have the
authority to change the basis for the calculation of the incentive
payment amount, which is defined in section 1848(m)(2)(A) of the Act.
b. The 2010 Reporting Period for the E-Prescribing Incentive Program
Section 1848(m)(6)(C)(i)(II) of the Act defines ``reporting
period'' for the 2010 E-Prescribing Incentive Program to be the entire
year. Section 1848(m)(6)(C)(ii) of the Act, however, authorizes the
Secretary to revise the reporting period for years after 2009 if the
Secretary determines such revision is appropriate, produces valid
results on measures reported, and is consistent with the goals of
maximizing scientific validity and reducing administrative burden. In
the CY 2010 PFS proposed rule (74 FR 33594 through 33595), we proposed
that the 2010 E-Prescribing Incentive Program reporting period would be
the entire calendar year (January 1, 2010-December 31, 2010).
Comment: A majority of commenters supported the proposed reporting
period. One commenter, however, recommended two 6-month reporting
periods, because this would allow eligible professionals who are able
to implement electronic prescribing in their practice by the middle of
2010 to still benefit from the incentive for 2010.
Response: We do not believe that adoption and implementation of an
electronic prescribing system after the start of the 2010 reporting
period would necessarily preclude an individual eligible professional
from being able to qualify for the incentive payment. The 25 electronic
prescribing events required to meet the criteria for successful
electronic prescriber for 2010 (see section II.G.5.c. below) can be
reported at any time during the 2010 reporting period.
After considering these comments, we are finalizing the entire
calendar year as

[[Page 61851]]

the 2010 reporting period for the E-Prescribing Incentive Program.
Successful electronic prescribers will be eligible to receive an
incentive payment equal to 2.0 percent of the total estimated Medicare
Part B PFS allowed charges (based on claims submitted by no later than
February 28, 2011) for all covered professional services furnished
January 1, 2010 through December 31, 2010.
c. Criteria for Determination of Successful Electronic Prescriber for
Eligible Professionals
Under section 1848(m)(3)(B) of the Act, in order to qualify for the
incentive payment, an eligible professional must be a ``successful
electronic prescriber,'' which the Secretary is authorized to identify
using 1 of 2 possible criteria. One criterion, under section
1848(m)(3)(B)(ii) of the Act, is based on the eligible professional's
reporting, in at least 50 percent of the reportable cases, on any
electronic prescribing quality measures that have been established
under the physician reporting system, under subsection 1848(k) of the
Act (which, as noted previously, we have named ``PQRI'' for ease of
reference) and are applicable to services furnished by the eligible
professional during a reporting period. We applied this criterion in
2009. However, for years after 2009, section 1848(m)(3)(D) of the Act
permits the Secretary in consultation with stakeholders and experts to
revise the criteria for submitting data on electronic prescribing
measures under section 1848(3)(B)(ii) of the Act.
The second criterion, under section 1848(m)(3)(B)(iii) of the Act,
is based on the electronic submission by the eligible professional of a
sufficient number (as determined by the Secretary) of prescriptions
under Part D during the reporting period. If the Secretary decides to
use the latter standard, then, in accordance with section
1848(m)(3)(B)(iv) of the Act, the Secretary is authorized to use Part D
drug claims data to assess whether a ``sufficient'' number of
prescriptions have been submitted by eligible professionals. However,
under section 1848(m)(3)(B)(i) of the Act, if the standard based on a
sufficient number (as determined by the Secretary) of electronic Part D
prescriptions is applied for a particular reporting period, then the
standard based on the reporting on electronic prescribing measures
would no longer apply.
For 2010, we proposed to continue to require eligible professionals
to report on the electronic prescribing measure used in the 2009 E-
Prescribing Incentive Program to determine whether an eligible
professional is a successful electronic prescriber, but we proposed to
modify the measure's specifications and to use modified reporting
criteria based on the authority provided under section 1848(m)(3)(D) of
Act, as discussed below.
(1) Reporting the Electronic Prescribing Measure
For 2010, we proposed to make 3 reporting mechanisms available to
individual eligible professionals to report the electronic prescribing
measure. First, we proposed to retain the claims-based reporting
mechanism that is used in the 2009 E-Prescribing Incentive Program. In
addition, similar to the PQRI, for the E-Prescribing Incentive Program,
we proposed to implement a registry-based reporting mechanism and,
depending on whether we finalize the proposed EHR-based reporting
mechanism for PQRI, we also proposed that an EHR-based reporting
mechanism be available for the electronic prescribing measure.
We proposed that only registries qualified to submit quality
measure results and numerator and denominator data on quality measures
on behalf of eligible professionals for the 2010 PQRI would be
qualified to submit measure results and numerator and denominator data
on the electronic prescribing measure on behalf of eligible
professionals for the 2010 E-Prescribing Incentive Program. Similarly,
we proposed that only EHR products ``qualified'' to potentially be able
to submit clinical quality data extracted from the EHR to CMS for the
2010 PQRI would be considered ``qualified'' for the purpose of an
eligible professional potentially being able to submit data on the
electronic prescribing measure for the 2010 E-Prescribing Incentive
Program.
We solicited comments on our proposal to provide alternatives to
the claims-based reporting mechanism for reporting the electronic
prescribing measure, as well as on our proposal to limit the registries
and EHR products qualified to submit the electronic prescribing measure
for the 2010 E-Prescribing Incentive Program to those that are
qualified registries and EHR products, respectively, for the 2010 PQRI.
All commenters supported having alternatives to the claims-based
reporting mechanism for reporting the electronic prescribing measure.
All commenters were also in agreement that only registries qualified to
submit quality measure results and numerator and denominator data on
quality measures on behalf of eligible professionals for the 2010 PQRI
and EHR products ``qualified'' to submit clinical quality data
extracted from the EHR to CMS for the 2010 PQRI be considered
``qualified'' for the purpose of an eligible professional being able to
submit data on the electronic prescribing measure for the 2010 E-
Prescribing Incentive Program. Based on these comments, we are
finalizing our proposal that for the 2010 E-Prescribing Incentive
Program, eligible professionals will be able to choose whether to
submit data on the electronic prescribing measure through claims, a
qualified registry, or a qualified EHR product.
Only registries qualified to submit quality measure results and
numerator and denominator data on quality measures on behalf of
eligible professionals for the 2010 PQRI will be qualified to submit
measure results and numerator and denominator data on the electronic
prescribing measure on behalf of eligible professionals for the 2010 E-
Prescribing Incentive Program. We will post a list of qualified
registries for the 2010 E-Prescribing Incentive Program on the E-
Prescribing Incentive Program section of the CMS Web site at http://
www.cms.hhs.gov/ERXIncentive when we post the list of qualified
registries for the 2010 PQRI on the PQRI section of the CMS Web site
(see section II.G.2. of this final rule with comment period). Not all
registries qualified to submit quality measure results and numerator
and denominator data on quality measures on behalf of eligible
professionals for the 2010 PQRI will be qualified to submit quality
measure results and numerator and denominator data on the electronic
prescribing measure. That is to say that PQRI qualified registries may
not wish to be qualified to submit all measures. The electronic
prescribing measure is reportable by an eligible professional any time
he or she bills for one of the procedure codes for Part B covered
professional services included in the measure's denominator. Some
registries that self-nominate to become a qualified registry for PQRI
may not choose to self-nominate to become a qualified registry for
submitting measures that require reporting at each eligible visit, such
as the electronic prescribing measure. Therefore, we cannot guarantee
that there will be a registry willing to submit the electronic
prescribing measure on behalf of eligible professionals. Registries
will need to indicate their desire to qualify to submit measure results
and numerator and denominator data on the electronic prescribing
measure for the 2010 E-Prescribing

[[Page 61852]]

Incentive Program at the time that they submit their self-nomination
letter for the 2010 PQRI.
Similarly, only EHR products ``qualified'' to submit clinical
quality data extracted from the EHR to CMS for the 2010 PQRI will be
considered ``qualified'' for the purpose of an eligible professional
being able to submit data on the electronic prescribing measure for the
2010 E-Prescribing Incentive Program. As stated in section II.G.2.d.3.
of this final rule with comment period, 2009 EHR Testing Program is
underway. Therefore, we cannot guarantee that any of the EHR vendors
that self-nominated to have one or more of their EHR products
``qualified'' for the PQRI will successfully complete the testing
process and therefore, be eligible for participation as a qualified EHR
vendor the E-Prescribing Incentive Program. An EHR vendor will need to
indicate its intention to have one or more of their EHR products
qualified for the purpose of an eligible professional potentially being
able to submit data on the electronic prescribing measure for the 2010
E-Prescribing Incentive Program at the time that they are being vetted
for the 2010 PQRI. We will post a list of qualified EHR vendors and
products for the 2010 E-Prescribing Incentive Program on the E-
Prescribing Incentive Program section of the CMS Web site at http://
www.cms.hhs.gov/ERXIncentive when we post the list of qualified EHR
vendors and products for the 2010 PQRI on the PQRI section of the CMS
Web site (see section II.G.2. of this final rule with comment period).
We anticipate completing the 2009 PQRI EHR Testing Program in early
2010.
(2) The Reporting Denominator for the Electronic Prescribing Measure
The electronic prescribing measure, similar to the PQRI measures,
has 2 basic elements, which include: (1) a reporting denominator that
defines the circumstances when the measure is reportable; and (2) a
reporting numerator.
The denominator for the electronic prescribing measure consists of
specific billing codes for covered professional services. The measure
becomes reportable when any one of these procedure codes is billed by
an eligible professional for Part B covered professional services. As
initially required under section 1848(k)(2)(A)(ii) of the Act, and
further established through rulemaking and under section 1848(m)(2)(B)
of the Act, we may modify the codes making up the denominator of the
electronic prescribing measure. As such, we proposed to expand the
scope of the denominator codes for 2010 to covered professional
services outside the professional office and outpatient setting, such
as professional services furnished in skilled nursing facilities or the
home care setting. We proposed to add the following CPT codes to the
denominator of the electronic prescribing measure for 2010: 90862,
99304; 99305; 99306; 99307; 99308; 99309; 99310; 99315; 99316; 99341;
99342; 99343; 99344; 99345; 99347; 99348; 99349; and 99350. We
solicited comments on the proposed changes to codes identified for the
electronic prescribing measure denominator.
The following is a summary of the comments we received regarding
the proposed denominator codes for the 2010 electronic prescribing
measure.
Comment: Many commenters supported the proposed expansion of the
electronic prescribing measure's denominator codes. However, some
commenters noted that a subset of home care physicians will not be able
to participate in the E-Prescribing Incentive Program without the
addition of codes for domiciliary care visits in the measure's
denominator.
Response: We appreciate the commenters' support of the proposed
denominator codes. Based on comments indicating that some eligible
professionals exclusively make domiciliary care visits, we are adding
the following codes to the electronic prescribing measure's denominator
for 2010: 99324 through 99328; 99334 through 99337; and 99346.
Comment: Other commenters suggested additional codes for inclusion
in the measure's denominator, including an annual nursing facility
assessment code (CPT code 99318) in lieu of CPT codes 99307 through
99310, inpatient evaluation and management (E/M) codes, codes for
professional services furnished in renal dialysis facilities (CPT codes
90951 through 90970 for outpatient dialysis), and interactive
psychotherapy codes (CPT codes 90810 through 90815).
Response: With respect to commenters' suggestions to add other
denominator codes that were not proposed, we do not believe it is
necessary to expand the denominator codes to include the suggested
codes. As we stated previously, the electronic prescribing measure
becomes reportable when any one of the procedure codes included in the
measure's denominator is billed by an eligible professional for Part B
covered professional services. Eligible professionals only need to have
10 percent of their Medicare Part B PFS allowed charges for covered
professional services be comprised of the codes in the denominator of
the measure and meet the criteria for determining a successful
electronic prescriber to qualify to earn an electronic prescribing
incentive payment. The incentive payment amount, however, will be
calculated based on all of the eligible professional's total estimated
Medicare Part B PFS allowed charges for covered professional services,
including the services reflected in the suggested codes if such
services are Medicare Part B PFS covered professional services.
Accordingly, we are finalizing the following denominator codes for
the 2010 electronic prescribing measure: 90862; 99304; 99305; 99306;
99307; 99308; 99309; 99310; 99315; 99316; 99324; 99325; 99326; 99327;
99328; 99334; 99335; 99336; 99337; 99341; 99342; 99343; 99344; 99345;
99346; 99347; 99348; 99349; and 99350. There are no diagnosis codes in
the measure's denominator and there are no age/gender requirements in
order for a patient to be included in the measure's denominator (that
is, reporting of the electronic prescribing measure is not further
limited to certain ages or a specific gender). Eligible professionals
are not required to report this measure in all cases in which the
measure is reportable. Eligible professionals who do not bill for one
of the procedure codes for Part B covered professional services
included in the measure's denominator will have no occasion to report
the electronic prescribing measure.
By December 31, 2009, we will post the final specifications of the
measure on the ``E-Prescribing Measure'' page of the E-Prescribing
Incentive Program section of the CMS Web site at http://
www.cms.hhs.gov/ERXIncentive.
(3) Qualified Electronic Prescribing System--Required Functionalities
and Part D E-Prescribing Standards
To report the electronic prescribing measure in 2010, we proposed
that the eligible professional must report one of the measure's
numerator ``G'' codes (74 FR 33597). However, when reporting any of the
G-codes for purposes of qualifying for the incentive payment for
electronic prescribing in 2010, we proposed that the professional must
have and regularly use a ``qualified'' electronic prescribing system,
as defined in the electronic prescribing measure specifications.
Required Functionalities for a ``Qualified'' Electronic Prescriber
System. We proposed (74 FR 33596 through 33597) that what constitutes a
``qualified'' electronic prescribing

[[Page 61853]]

system is based upon certain required functionalities that the system
can perform (74 FR 33596 through 33597). As currently specified in the
electronic prescribing measure for 2009, a ``qualified'' electronic
prescribing system would be one that can:
(a) Generate a complete active medication list incorporating
electronic data received from applicable pharmacies and PBMs, if
available.
(b) Allow eligible professionals to select medications, print
prescriptions, electronically transmit prescriptions, and conduct
alerts (written or acoustic signals to warn the prescriber of possible
undesirable or unsafe situations including potentially inappropriate
dose or route of administration of a drug, drug-drug interactions,
allergy concerns, or warnings and cautions). This functionality must be
enabled.
(c) Provide information related to lower cost, therapeutically
appropriate alternatives (if any). The ability of an electronic
prescribing system to receive tiered formulary information, if
available, would suffice for this requirement for 2010 and until this
function is more widely available in the marketplace.
(d) Provide information on formulary or tiered formulary
medications, patient eligibility, and authorization requirements
received electronically from the patient's drug plan (if available).
Part D Electronic Prescribing Standards. Section 1848(m)(3)(B)(v)
of the Act specifies that to the extent practicable, in determining
whether an eligible professional is a successful electronic prescriber,
``the Secretary shall ensure that eligible professionals utilize
electronic prescribing systems in compliance with standards established
for such systems pursuant to the Part D Electronic Prescribing Program
under section 1860D-4(e)'' of the Act. The Part D standards for
electronic prescribing systems establish which electronic standards
Part D sponsors, providers, and dispensers must use when they
electronically transmit prescriptions and certain prescription related
information for Part D covered drugs that are prescribed for Part D
eligible individuals. To be a qualified electronic prescribing system
under the current E-Prescribing Incentive Program, electronic systems
must convey the information listed above under (a) through (d) using
the standards currently in effect for the Part D electronic prescribing
program. Additional Part D electronic prescribing standards were
implemented April 1, 2009. These latest Part D electronic prescribing
standards, and those that had previously been adopted, can be found on
the CMS Web site at http://www.cms.hhs.gov/eprescribing.
To ensure that eligible professionals utilize electronic
prescribing systems that meet these requirements, the electronic
prescribing measure requires that those functionalities required for a
``qualified'' electronic prescribing system utilize the adopted Part D
electronic prescribing standards. The Part D electronic prescribing
standards relevant to the four functionalities for a ``qualified''
system in the electronic prescribing measure, described above and
listed as (a), (b), (c), and (d), currently are:
(a) Generate medication list--Use the National Council for
Prescription Drug Programs (NCPDP) Prescriber/Pharmacist Interface
SCRIPT Standard, Implementation Guide, Version 8, Release 1, October
2005 (hereinafter ``NCPDP SCRIPT 8.1'') Medication History Standard;
(b) Transmit prescriptions electronically--Use the NCPDP SCRIPT 8.1
for the transactions listed at Sec. 423.160(b)(2);
(c) Provide information on lower cost alternatives--Use the NCPDP
Formulary and Benefits Standard, Implementation Guide, Version 1,
Release 0 (Version 1.0), October 2005 (hereinafter ``NCPDP Formulary
and Benefits 1.0'');
(d) Provide information on formulary or tiered formulary
medications, patient eligibility, and authorization requirements
received electronically from the patient's drug plan--use:
(1) NCPDP Formulary and Benefits 1.0 for communicating formulary
and benefits information between prescribers and plans;
(2) Accredited Standards Committee (ASC) X12N 270/271--Health Care
Eligibility Benefit Inquiry and Response, Version 4010, May 2000,
Washington Publishing Company, 004010X092 and Addenda to Health Care
Eligibility Benefit Inquiry and Response, Version 4010A1, October 2002,
Washington Publishing Company, 004010X092A1 for communicating
eligibility information between the plan and prescribers;
(3) NCPDP Telecommunication Standard Specification, Version 5,
Release 1 (Version 5.1), September 1999, and equivalent NCPDP Batch
Standard Batch Implementation Guide, Version 1, Release 1 (Version
1.1), January 2000 for communicating eligibility information between
the plan and dispensers.
There are, however, Part D electronic prescribing standards that
are in effect for functionalities that are not commonly utilized at
this time. Such functionalities are not currently required for a
``qualified'' system under the E-Prescribing Incentive Program. One
example is Rx Fill Notification, which is discussed in the Part D
electronic prescribing final rule (73 FR 18918, 18926). For purposes of
the 2010 Electronic Prescribing Program and incentive payments, we did
not propose to require that an electronic prescribing system contain
all functionalities for which there are available Part D electronic
prescribing standards. For those required functionalities described
above, we proposed that a ``qualified'' system must use the adopted
Part D electronic prescribing standards for electronic messaging.
The following is a summary of the comments we received regarding
the proposed required functionalities and Part D electronic prescribing
standards for a qualified electronic prescribing system for 2010.
Comment: Many commenters supported the list of required
functionalities for what constitutes a ``qualified'' system.
Response: We appreciate the commenters' positive feedback. We
believe the list of required functionalities leverage many of the
potential advantages to electronic prescribing, such as, but not
limited to, improving patient safety and quality of care, improving
formulary adherence, and providing access to patient's medication
history.
Comment: One commenter requested clarification with respect to
qualification (b) above, which requires that the functionality to allow
eligible professionals to select medications, print prescriptions,
electronically transmit prescriptions, and conduct alerts be enabled.
The commenter recommended that we clarify in the final rule that ``
`printing prescriptions' from a qualified electronic prescribing system
does not meet the criteria for `creating' or `generating' an e-
prescription.''
Response: All functionalities required of a ``qualified''
electronic prescribing system must be enabled. As noted by the
commenter, printed prescriptions, however, do not qualify as an
electronic prescribing event. In order for a prescription to be
considered an electronic prescribing event, the prescription must be
transmitted electronically using the applicable standards and the
prescriber's system must warn the prescriber of possible undesirable or
unsafe situations.
Comment: One commenter recommended that we clearly articulate how
we will align the definition of being a ``successful electronic

[[Page 61854]]

prescriber'' with the forthcoming ``meaningful use'' definition related
to health information technology. Particularly, commenter recommended
that the standards should come together in 2011 to promote the
objective that for BOTH sets of incentives clinicians:
Use computerized physician order entry (CPOE) for all
orders;
Implement drug/drug, drug/allergy, drug/formulary checks;
Generate and transmit permissible prescriptions
electronically;
Maintain active medication lists; and
Maintain active medication allergy lists.

The commenter is concerned that in the absence of greater alignment,
the electronic prescribing standard will be inconsistent with the
proposed meaningful use definition, and could undermine that definition
and confuse clinicians.
Response: CMS is actively working internally and with external
agencies, such as the Office of the National Coordinator (ONC) on
meaningful use and its implications relative to our PQRI and E-
prescribing Incentive Programs. Guidance on the definition of
``meaningful use'' is beyond the scope of this rule and will be
provided in separate notice and comment rulemaking specifically
addressing meaningful use.
Comment: One commenter recommended that CMS provide a list of
qualified systems in order to assist eligible professionals with
accurately selecting a system.
Response: We are unable to provide this information since we do not
vet electronic prescribing systems to ensure that the systems have all
of the required functionalities. Eligible professionals should be able
to assess whether a system is qualified by going through the list of
required functionalities and asking the system's vendor whether the
system is capable of doing all of the required functionalities.
After considering the comments, we are finalizing as the required
functionalities for a qualified electronic prescribing system for 2010
those outlined in the section above entitled ``Required Functionalities
for a `Qualified' Electronic Prescribing System.'' In addition, for
each required functionality of a qualified system, the system must use
the adopted Part D electronic prescribing standards for electronic
messaging listed above in the section entitled ``Part D Electronic
Prescribing Standards.''
There are other aspects of the functionalities for a ``qualified''
system that are not dependent on electronic messaging and are part of
the software of the electronic prescribing system, for which Part D
standards for electronic prescribing do not pertain and are not
required for purposes of the E-Prescribing Incentive Program. For
example, the requirements in qualification (b) listed above that
require the system to allow professionals to select medications, print
prescriptions, and conduct alerts are functions included in the
particular software, for which Part D standards for electronic
messaging do not apply.
We are aware that there are significant numbers of eligible
professionals who are interested in earning the incentive payment, but
currently do not have an electronic prescribing system. The electronic
prescribing measure does not require the use of any particular system
or transmission network; only that the system be a ``qualified'' system
having the functionalities described above based on Part D electronic
prescribing standards. If the professional does not have general access
to an electronic prescribing system in the practice setting, there is
nothing to report and the eligible professional would not be able to
participate in the E-Prescribing Incentive Program.
(4) The Reporting Numerator for the Electronic Prescribing Measure
Currently, to report for an applicable case where 1 of the
denominator codes is billed for Part B covered professional services,
an eligible professional must report 1 of 3 G-codes specified in the
electronic prescribing measure.
For 2010, we proposed to modify the first G-code (G8443) to
indicate that at least 1 prescription in connection with the visit
billed was electronically prescribed (74 FR 33597). In addition, we
proposed to eliminate the 2 remaining G-codes from the measure's
numerator: G8445: Qualified E-prescribing System Available, but no
Prescription(s) were Generated During the Encounter; and G8446: E-
prescribing System Available, but not Used for One or More
Prescriptions Due to Patient/System Reasons. We solicited comments on
the proposed modifications to the electronic prescribing measure
numerator.
The following is a summary of the comments we received regarding
the proposed reporting numerator for the electronic prescribing measure
for 2010.
Comment: A majority of commenters supported simplification of the
measure's numerator to only 1 G-code. However, one commenter was
opposed to the elimination of both the G8445 and G8446 codes, while
other commenters were specifically opposed to the elimination of the
G8446 code. The commenters believed that continued reporting is needed
for cases in which an eligible professional would have electronically
prescribed had electronic prescribing been possible, such as electronic
prescribing of controlled substances.
Response: We are finalizing our proposal to modify the G-codes for
the electronic prescribing measure. Since we are revising the criteria
for determining that an eligible professional is a successful
electronic prescriber to assess the actual number of electronic
prescribing events (with the minimum threshold of 25 events) during the
reporting period rather than assessing the percentage of eligible cases
on which an eligible professional reported the measure, we believe it
is no longer necessary to require eligible professionals to report the
measure to us for cases where an eligible professional would have
electronically prescribed but electronic prescribing was not possible
or that no prescriptions were generated.
Comment: One commenter requested clarification on whether the
revised G8443 code indicates at least one prescription ``generated'' by
a qualified system or indicates at least one prescription ``sent
electronically.''
Response: The new G-code for 2010 indicates that at least 1
prescription created during the encounter was generated and transmitted
electronically using a qualified electronic prescribing system.
Comment: Another commenter suggested that instead of modifying the
G-code to indicate that at least 1 prescription in connection with the
visit billed was electronically prescribed, we should modify the G-code
to indicate that ``at least 1 electronic prescription submitted for all
qualified prescriptions for this visit.'' This would allow eligible
professionals to report the G-code in all of the following
circumstances: (1) All prescriptions were transmitted electronically;
(2) some prescriptions were transmitted electronically; other
prescriptions did not qualify for electronic transmittal; and (3) no
prescriptions were submitted or qualified for electronic transmittal.
The commenter was concerned that the proposed single G-code approach
would not allow measure rates to be calculated as the numerator would
not include visits for which no qualified prescriptions were submitted.
The commenter further recommended that the measure rate calculations
exclude instances where there were qualified

[[Page 61855]]

prescriptions, but no prescriptions were transmitted electronically.
Response: We appreciate the commenter's feedback. However, before
eligible professionals can begin using electronic prescribing
technology, they must first adopt the technology. Since, as we
discussed in the CY 2010 PFS proposed rule (74 FR 33593), rates for the
adoption and use of electronic prescribing technology by eligible
professionals are still low and 2010 is only the second year of this
incentive program, our goal for the 2010 E-Prescribing Incentive
Program is to focus on increasing eligible professionals' adoption of
electronic prescribing technology. We believe that this will be
facilitated by administering the E-Prescribing Incentive Program in a
way that does not create an unnecessarily large reporting burden on
eligible professionals in order to qualify for the incentive.
The criteria for successful reporting we are finalizing for 2010
are designed to reward those eligible professionals who demonstrate
that they have adopted a qualified electronic prescribing system and
actually used the system in a substantial way to electronically
prescribe. In this context, the reporting of information as to
circumstances where a professional did not electronically prescribe is
not pertinent. Additionally, although it may be of interest to measure
the proportion of prescribing events that are electronic, we do not
believe such detail at the individual or group practice level is of
sufficient value to warrant the high burden of reporting such
information. We do note that in the future the use of Part D claims
data may allow this information to be collected without the necessity
for professionals to specifically report such details.
Accordingly, for the 2010 electronic prescribing measure, we are
finalizing the following numerator G-code: Gxxxx: At least 1
prescription created during the encounter was generated and transmitted
electronically using a qualified electronic prescribing system.
A new G-code will be assigned by CMS to the above code for 2010 and
will be included in the measure's specifications, which we will post on
the ``E-Prescribing Measure'' page of the E-Prescribing Incentive
Program section of the CMS Web site at http://www.cms.hhs.gov/
ERXIncentive. We will post by no later than December 31, 2009, the
final electronic prescribing measure specifications for 2010.
Because the electronic prescribing quality measure will apply only
when an eligible professional furnishes services indicated by one of
the codes included in the measure's denominator, for claims-based
reporting, for example, it will not be necessary for an eligible
professional to report G-codes for the electronic prescribing measure
on claims not containing one of the denominator codes. However, if
reporting a G-code, the G-code data submission will only be considered
valid if it appears on the same Medicare Part B claim containing one of
the electronic prescribing quality measure's denominator codes.
In addition, if the eligible professional submits a Medicare Part B
claim containing one of the electronic prescribing measure's
denominator codes, he or she can report the numerator G-code only when
the eligible professional furnishes services indicated by one of the G-
codes included in the measure's numerator. That is, only when at least
1 prescription created during the encounter was generated and
transmitted electronically using a qualified electronic prescribing
system.
(5) Criteria for Successful Reporting of the Electronic Prescribing
Measure
As discussed above, section 1848(m)(3)(B)(ii) of the Act specifies
that an eligible professional shall be treated as a successful
electronic prescriber for a reporting period based on the eligible
professional's reporting of the electronic prescribing measure in at
least 50 percent of applicable cases. For 2010, however, we proposed to
exercise our authority under section 1848(m)(3)(D) of the Act to revise
the criteria for submitting data on the electronic prescribing measure
(74 FR 33598). For 2010, rather than requiring that the electronic
prescribing measure be reported for a certain proportion of reportable
cases, we proposed to make the determination of whether an eligible
professional is a successful electronic prescriber based on a count of
the number of times (minimum threshold of 25) an eligible professional
reports that at least one prescription created during the encounter was
generated using a qualified electronic prescribing system. We solicited
comments on the proposed criteria for determination of successful
electronic prescriber.
The following is a summary of the comments we received regarding
the proposed criteria for determination of successful electronic
prescriber for the 2010 E-Prescribing Incentive Program.
Comment: A majority of commenters supported the changes proposed
for the criteria for the determination of successful electronic
prescriber for 2010 and the proposed threshold for reporting the
electronic prescribing measure at least 25 times during the reporting
period. Some commenters, however, expressed concern that the proposed
threshold may be insufficient to ensure that electronic prescribing is
fully adopted into the prescriber's clinical practice and workflow
since some eligible professionals may be able to meet this threshold in
a matter of a few days or weeks.
Some commenters suggested that in lieu of a fixed threshold, we
establish a percent threshold based upon the percent of eligible cases
in 2009. Another commenter suggested that if an eligible professional
has an electronic prescribing system, he or she should be using the
system for all prescriptions. Other commenters suggested a threshold of
250-500 electronic prescribing events during the reporting period.
Response: We appreciate the commenters' feedback, and believe that
lowering this requirement simplifies the reporting burden, which would
encourage more eligible professionals to participate in this incentive
program, and more importantly, to adopt an electronic prescribing
system.
We agree with commenters that some eligible professionals may be
able to meet the criteria for successful reporting in a matter of a few
days or weeks. However, in establishing the threshold of 25 electronic
prescribing events, we also took into account the many valid
circumstances that would prevent eligible professionals who have
adopted a qualified electronic prescribing system from having 25
electronic prescribing events during the calendar year and variations
in practice characteristics. In addition to the patient-related,
system-related, or legal reasons that were formerly addressed by
reporting the G8446 code for the measure, some eligible professionals
may have few opportunities to report the electronic prescribing measure
since they generate a low volume of prescriptions, have few Medicare
patients, infrequently provide the services included in the measure's
denominator, or a combination of these factors.
Comment: Other commenters were concerned that the proposed changes
to the criteria for determining a successful electronic prescriber,
while lower than the 2009 criteria, would make it more difficult to
qualify for the electronic prescribing incentive payment. The
commenters were concerned that the impact on eligible professionals
will vary depending on the percentage of Medicare patients in their
practice and the volume of prescriptions generated by the practice. For
some practices 25 electronic prescriptions could be achieved in a
matter of days but for

[[Page 61856]]

other practices it may be difficult or impossible to achieve this
threshold. One commenter suggested that lowering the reporting
threshold from 25 to 15 may be enough to get an eligible professional
to adopt and use an electronic prescribing system and to recognize its
superiority. Other commenters suggested that we retain the criteria to
report the electronic prescribing measure on 50 percent of applicable
cases instead.
Response: As we stated previously, we have taken the commenters'
concerns into consideration in establishing the proposed threshold of
25 electronic prescribing events. On average, we believe an eligible
professional would need to have 2 to 3 electronic prescribing events
per month to be considered a successful electronic prescriber. We
believe that this is achievable by a majority of eligible
professionals. However, we will monitor the 2010 E-Prescribing
Incentive Program results and take the commenters' recommendation into
consideration as we develop the criteria for future years.
Comment: Some commenters recommended that we allow for alternative
reporting to accommodate those who may not be able to electronically
prescribe at least 25 times due to state or federal laws and
regulations that do not allow electronic prescribing for narcotics or
other controlled substances.
Response: As stated previously, we have taken into account the many
valid circumstances that would prevent eligible professionals who have
adopted a qualified electronic prescribing system from having 25
electronic prescribing events during the calendar year, including state
or federal laws and regulations that do not allow electronic
prescribing for narcotics or other controlled substances, when we
established the proposed threshold of 25 electronic prescribing events.
Therefore, we do not believe that it is necessary to establish
alternative reporting criteria for such eligible professionals.
Comment: One commenter recommended that, for eligible professionals
who practice in a nursing facility and other institutional settings,
the determination of successful electronic prescriber should be made by
measuring the electronic management of prescription drugs instead of
measuring adoption and use of a qualified electronic prescribing
system. The commenter recommends that eligible professionals be
required to submit, with each eligible CPT code, a HCPCS code verifying
that all prescription medications for the patient were electronically
reviewed prior to the submission of the claims. This would continue to
incentivize eligible professionals, who are prescribing schedule drugs,
or working in a facility which does not provide access to electronic
prescribing or the internet, for electronically managing patients'
drugs.
Response: We are unclear as to how incentivizing eligible
professionals for electronically managing patients' drugs encourages
the adoption and use of electronic prescribing technology. In contrast,
the proposed criteria for determining a successful electronic
prescriber encourage the adoption and use of electronic prescribing
technology by requiring eligible professionals to report to us that
they have used a qualified electronic prescribing system during the
reporting period. Therefore, we are not adopting the commenter's
recommendation.
Comment: One commenter recommended that we institute a ``floor'' or
minimum number of prescriptions that must be prescribed in order to
even be assessed for the electronic prescribing incentive. This would
protect consultants or proceduralists who do not prescribe medications
from being assessed a payment adjustment in future years.
Response: We believe that such a floor is already addressed by the
limitation required under section 1848(m)(2)(B) of the Act. In order to
avoid being subject to the limitation for 2010 and qualify to earn an
electronic prescribing incentive payment, eligible professionals who
meet the criteria for successful electronic prescriber must have at
least 10 percent of their Medicare Part B PFS allowed charges for
covered professional services comprised of the codes in the denominator
of the electronic prescribing measure. In addition, we note that under
section 1848(m)(2)(B) of the Act, eligible professionals who are
subject to the limitation would not be subject to the payment
adjustment.
Comment: One commenter recommended that we apply the proposed
criteria for determining a successful electronic prescriber for 2010 to
the 2009 E-Prescribing Incentive Program so that those eligible
professionals who reported that they electronically prescribed at least
25 times in 2009 would also be eligible to receive a 2009 electronic
prescribing incentive payment.
Response: We do not have the authority to change the criteria for
determining a successful electronic prescriber for 2009. Section
1848(m)(3)(D) of the Act does not authorize us to revise the criteria
for submitting data on electronic prescribing measures specified under
subparagraph (B)(ii) until years after 2009. Additionally, even if we
had the authority to modify the criteria for determining a successful
electronic prescriber for 2009, we could not do so retrospectively.
Comment: Some commenters urged us to use our authority under
section 1848(m)(3)(B)(iv) of the Act to utilize Part D claims to
determine if eligible professionals are prescribing a sufficient number
of prescriptions electronically. The commenters noted that this would
be a more efficient means of capturing the information needed by us for
determining whether an eligible professional is a successful electronic
prescriber. One commenter stressed that it is necessary for us to
overcome our concerns about the use of a certain number of Part D
prescribing events as a basis for the incentive payment in time for
implementation of the meaningful use criteria in 2011.
Response: We agree that using Part D claims to determine if
eligible professionals are prescribing a sufficient number of
prescriptions electronically could potentially be a more efficient
means of capturing the information needed by us for determining whether
an eligible professional is a successful electronic prescriber and we
anticipate that we would do so as soon as it is practical to do so. As
we stated in the CY 2010 PFS proposed rule (74 FR 33595), however, the
accuracy and completeness of the Part D data with respect to whether a
prescription was submitted electronically by an individual eligible
professional is unknown since that information will not be collected on
the Part D claims, until 2010. During 2010 we anticipate evaluating the
adequacy of Part D data to determine the feasibility of its use for
determining whether an eligible professional qualifies as a successful
electronic prescriber. In the meantime, we are implementing alternative
reporting mechanisms (that is, registry and EHR reporting) for
reporting the electronic prescribing measure in 2010 in an effort to
provide more flexibility to eligible professionals.
After considering the comments, for 2010, an eligible professional
will be required to report the electronic prescribing measure at least
25 times during the reporting period for purposes of meeting the
criteria for successful electronic prescriber and qualifying to earn
the electronic prescribing incentive (subject to the limitation
required under section 1848(m)(2)(B) of the Act). In other words, an
eligible professional will be required to report that he or she

[[Page 61857]]

electronically prescribed at least 25 times during the reporting period
for services indicated by one of the codes included in the measure's
denominator.
As stated previously, by December 31, 2009, we will post the final
specifications of the measure on the ``E-Prescribing Measure'' page of
the E-Prescribing Incentive Program section of the CMS Web site at
http://www.cms.hhs.gov/ERXIncentive.
d. Determination of the 2010 Incentive Payment Amount for Individual
Eligible Professionals Who Are Successful Electronic Prescribers
Section 1848(m)(2)(B) of the Act imposes a limitation on the
electronic prescribing incentive payment. The Secretary is authorized
to choose 1 of 2 possible criteria for determining whether or not the
limitation applies to a successful electronic prescriber. The first
criterion, under section 1848(m)(2)(B)(i) of the Act, is based upon
whether the Medicare Part B allowed charges for covered professional
services to which the electronic prescribing quality measure applies
are less than 10 percent of the total Medicare Part B PFS allowed
charges for all covered professional services furnished by the eligible
professional during the reporting period. The second criterion, under
section 1848(m)(2)(B)(ii) of the Act, is based on whether the eligible
professional submits (both electronically and nonelectronically) a
sufficient number (as determined by the Secretary) of prescriptions
under Part D (which can, again, be assessed using Part D drug claims
data). If the Secretary decides to use the latter criterion, then, in
accordance with section 1848(m)(2)(B) of the Act, the criterion based
on the reporting on electronic prescribing measures would no longer
apply. The statutory limitation also applies with regard to the future
application of the payment adjustment.
Based on our proposal to make the determination of whether an
eligible professional is a ``successful electronic prescriber'' based
on submission of the electronic prescribing measure, we proposed to
apply the criterion under section 1848(m)(2)(B)(i) of the Act for the
limitation for the 2010 E-Prescribing Incentive Program.
The following is a summary of the comments we received regarding
the proposed criterion for the limitation.
Comment: Although the commenters acknowledged that the limitation
on the electronic prescribing incentive payment is required by law, a
few commenters were opposed to the 10 percent threshold because certain
types of eligible professionals would be unlikely to meet the 10
percent threshold.
Response: Unfortunately, we do not have the authority to change the
10 percent threshold, since the threshold is required by section
1848(m)(2)(B)(i) of the Act. In an effort to allow more eligible
professionals to potentially qualify for the incentive payment,
however, we have expanded the denominator of the electronic prescribing
measure. Despite the requirement that 10 percent or more of an eligible
professional's charges must be comprised of codes in the denominator,
preliminary information from the 2009 E-Prescribing Incentive Program
indicates that over 90 percent of eligible professionals who have
prescribing privileges do not appear to be affected by the limitation.
We believe that expanding the denominator of the measure will further
reduce the percentage of eligible professionals who will be subject to
the limitation.
Comment: One commenter requested that we make available to
individual eligible professionals the percentage of their prior year's
Medicare charges that resulted from the codes included in the
electronic prescribing measure's denominator specifications since many
eligible professionals may not have the time or analytic tools
necessary to make the determination of whether they are likely to meet
the 10 percent threshold prior to making the decision on whether to
electronically prescribe.
Response: Unfortunately, we do not have the resources to calculate
and provide feedback to eligible professionals regarding the
composition of their charges. Most electronic billing systems, however,
will have this functionality and should be able to provide eligible
professionals who use such billing systems with this information.
Since, as discussed above, we are finalizing for 2010 our proposal
to make the determination of whether an eligible professional is a
``successful electronic prescriber'' based on submission of the
electronic prescribing measure, we also are finalizing our proposal to
analyze the claims submitted by the eligible professional at the TIN/
NPI level to determine whether the 10 percent threshold is met in
determining the receipt of an electronic prescribing incentive payment
for 2010 by an eligible professional. This calculation is expected to
take place in the first quarter of 2011 and will be performed by
dividing the eligible professional's total 2010 Medicare Part B PFS
allowed charges for all such covered professional services submitted
for the measure's denominator codes by the eligible professional's
total Medicare Part B PFS allowed charges for all covered professional
services (as assessed at the TIN/NPI level). If the result is 10
percent or more, then the statutory limitation will not apply and a
successful electronic prescriber will qualify to earn the electronic
prescribing incentive payment. If the result is less than 10 percent,
then the statutory limitation will apply and the eligible professional
will not earn an electronic prescribing incentive payment--even if he
or she electronically prescribes and reports a G-code indicating that
he or she generated and transmitted a prescription electronically at
least 25 times for those eligible cases that occur during the 2010
reporting period. Although an individual eligible professional may
decide to conduct his or her own assessment of how likely this
statutory limitation is expected to apply to him or her before deciding
whether or not to report the electronic prescribing measure, an
individual eligible professional may report the electronic prescribing
measure without regard to the statutory limitation for the incentive
payment.
e. Reporting Option for Satisfactory Reporting of the Electronic
Prescribing Measure by Group Practices
In the CY 2010 PFS proposed rule (74 FR 33599 through 33600), we
discussed making incentive payments to group practices based on the
determination that the group practice, as a whole (that is, the TIN),
is a successful electronic prescriber for 2010, as required under
section 1848(m)(3)(C)(i) of the Act. In addition, we noted that section
1848(m)(3)(C)(iii) of the Act requires that payments to a group
practice by reason of the process established under section
1848(m)(3)(C)(i) of the Act shall be in lieu of the payments that would
otherwise be made under this subsection to eligible professionals in
the group practice for being a successful electronic prescriber.
(1) Definition of ``Group Practice''
Section 1848(m)(3)(C)(i) of the Act authorizes the Secretary to
define ``group practice.'' For purposes of determining whether a group
practice is a successful electronic prescriber, we proposed that a
``group practice'' would consist of a physician group practice, as
defined by a TIN, with at least 200 or more individual eligible
professionals (or, NPIs) who have reassigned their billing rights to
the TIN (74 FR 33599). In addition, we proposed to limit the group
practices eligible to participate in the 2010 E-Prescribing Incentive

[[Page 61858]]

Program through the group practice reporting option to those group
practices selected to participate in the PQRI group practice reporting
option.
The following is a summary of the comments received regarding our
proposed definition of ``group practice''.
Comment: Several commenters urged CMS to permit small and mid-sized
group practices with fewer than 200 eligible professionals to
participate in the group practice reporting option. One commenter
requested that we reconsider the 200 individual eligible professional
thresholds for the definition of a group practice or that we at least
offer an alternative reporting option that uses a statistical sampling
model for primary care oriented group practices.
Response: We recognize that the proposed required group practice
size of 200 or more individual eligible professionals limits
participation. As stated in the proposed rule (74 FR 33599), for 2010,
we would like to limit the number of groups participating in the group
practice reporting option until we get further experience with the
group practice reporting option. Therefore, we are not adopting the
commenters' suggestion to permit small and mid-sized group practices
with fewer than 200 eligible professionals to participate in the group
practice reporting option and are finalizing the definition of ``group
practice'' for the electronic prescribing group practice reporting
option as proposed.
In order for a group practice to participate in the electronic
prescribing group practice reporting option for 2010, the group
practice must be one that is selected to participate in the PQRI group
practice reporting option, which requires that group practices have 200
or more eligible professionals. Group practices cannot solely
participate in the electronic prescribing group practice reporting
option. A group practice can choose to participate in: (1) both the
PQRI group practice reporting option and the electronic prescribing
group practice reporting option; (2) the PQRI group practice reporting
option but participate in the E-Prescribing Incentive Program as
individual eligible professionals; or (3) the PQRI group practice
reporting option but not participate in the E-Prescribing Incentive
Program at all.
We will use this initial implementation year to explore and refine
the group practice reporting option and anticipate expanding this
option to group practices with less than 200 individual eligible
professionals in future program years.
Comment: A commenter urged us to keep PQRI and the E-Prescribing
Incentive programs separate and distinct for group practices wishing to
participate in the PQRI group practice reporting option.
Response: The PQRI and E-Prescribing Incentive Programs are
separate and distinct incentive programs with different program
requirements. However, in order for a group practice to participate in
the electronic prescribing group practice reporting option, one of the
participation requirements is that the group practice must be one that
is selected to participate in the PQRI group practice reporting option.
As stated previously, a group practice can choose to participate in:
(1) Both the PQRI group practice reporting option and the electronic
prescribing group practice reporting option; (2) the PQRI group
practice reporting option but participate in the E-Prescribing
Incentive Program as individual eligible professionals; or (3) the PQRI
group practice reporting option but not participate in the E-
Prescribing Incentive Program at all. Therefore, participation in the
E-Prescribing Incentive Program, whether as a group practice or at the
individual eligible professional level, is optional for those group
practices selected to participate in the PQRI group practice reporting
option.
For those group practices who choose to participate in both the
PQRI and electronic prescribing group practice reporting option, it is
important to note that the electronic prescribing measure is not
reportable using the PQRI group practice reporting option data
collection tool. The electronic prescribing measure is reportable via
the same reporting mechanisms that are available to individual eligible
professionals participating in the 2010 E-Prescribing Incentive Program
(that is claims, a qualified registry, or a qualified EHR).
Comment: A commenter had concerns that some group practices will
have difficulty ramping up for participation in both the PQRI and
electronic prescribing group practice reporting options between now and
January 1, 2010.
Response: As we stated previously, participation in the electronic
prescribing group practice reporting option by group practices selected
to participate in the PQRI group practice reporting option is optional.
To the extent that a group practice chooses to participate in both
programs' group practice reporting options, it does not need to be
ready to begin the PQRI and electronic prescribing group practice
reporting options between now and January 1, 2010. As stated in section
II.G.2. of this final rule with comment period, we are requiring
interested group practices that meet the criteria to self-nominate by
January 31, 2010 and indicate to us whether the practice wishes to
participate in just the PQRI group practice reporting option or both
the PQRI and electronic prescribing group practice reporting option.
The reporting periods for both programs are the same (that is, January
1, 2010 through December 31, 2010), the data submission timelines,
however, are different.
In an attempt to ensure the group practices have sufficient time to
become acclimated to the PQRI group practice reporting option, for the
2010 PQRI, the group practice will be notified of the selection
decision to participate in the PQRI group practice reporting option no
later than the second quarter of 2010. Training on the data collection
tool is projected to be provided in the third quarter of 2010. The
group practice will not be expected to complete and return the data
collection tool until the end of the first quarter of 2011.
For the 2010 E-Prescribing Incentive Program, we proposed requiring
that reporting of the electronic prescribing measure by group practices
would occur under the same data submission timeline as reporting of the
electronic prescribing measure by individual eligible professionals.
The proposed reporting mechanisms for the electronic prescribing
measure would be the same regardless of whether an eligible
professional is participating individually or as a group practice.
Furthermore, the electronic prescribing measure was not proposed to be
reportable via the PQRI group practice reporting option data collection
tool.
To summarize, based on these comments, for purposes of the 2010 E-
Prescribing Incentive Program, we are finalizing a group practice
reporting option that will consist of ``group practice'' being defined
as a TIN with at least 200 or more individual eligible professionals
(as identified by NPIs) who have reassigned their billing rights to the
TIN and who are participating in the 2010 PQRI group practice reporting
option. Therefore, unlike individual eligible professionals who are not
required to participate in the PQRI, to be eligible to earn an
electronic prescribing incentive in 2010, group practices that wish to
participate in the electronic prescribing group practice reporting
option will be required to participate in the PQRI group practice
reporting option. Participation in the E-Prescribing Incentive Program,
including participation in the electronic prescribing group practice
reporting option is, however, optional for group

[[Page 61859]]

practices that are participating in PQRI under the group practice
reporting option. If a group practice wishes to participate in the 2010
E-Prescribing Incentive Program under the group practice reporting
option, it must indicate its desire to do so at the time that the group
practice self-nominates to participate in the 2010 PQRI group practice
reporting option. There is no need for group practices to indicate
their intent to participate in the 2010 E-Prescribing Incentive Program
as individual eligible professionals when the group practice self-
nominates to participate in the 2010 PQRI group practice reporting
option.
Group practices interested in participating in the 2010 PQRI
through the group practice reporting option are required to submit a
self-nomination letter to CMS, requesting to participate in the 2010
PQRI group practice reporting option. Instructions for submitting the
self-nomination letter will be posted on the PQRI section of the CMS
Web site by November 15, 2009. A group practice that wishes to
participate in the E-Prescribing Incentive Program group practice
reporting option will be notified of the selection decision to
participate in the E-Prescribing Incentive Program at the same time
that it is notified of the selection decision for the PQRI group
practice reporting option.
In addition to meeting the eligibility requirements discussed in
section II.G.5.e.1. of this final rule with comment period, a group
practice that wishes to participate in the 2010 E-Prescribing Incentive
Program under the group practice reporting option will also have to
indicate how it intends to report the electronic prescribing measure.
That is, the group practice will need to indicate in its self-
nomination letter which reporting mechanism the group practice intends
to use for purposes of participating in the 2010 E-Prescribing
Incentive Program group practice reporting option.
(2) Process for Group Practices to Participate as Group Practices and
Criteria for Successful Reporting of the Electronic Prescribing Measure
by Group Practices
For group practices selected to participate in the electronic
prescribing group practice reporting option for 2010, we proposed the
reporting period would be January 1, 2010 to December 31, 2010 (74 FR
33599 through 33600).
We proposed that physician groups selected to participate in the
2010 E-Prescribing Incentive Program through the group practice
reporting option would be able to choose to report the electronic
prescribing measure through the claims-based, the registry-based, or,
contingent upon us finalizing this reporting mechanism for the 2010
PQRI, the EHR-based reporting mechanism.
In order for a group practice to be considered a successful
electronic prescriber, we proposed that the group practice would have
to report that at least 1 prescription during an encounter was
generated using a qualified electronic prescribing system in at least
2,500 instances during the reporting period. We solicited comments on
the proposed criteria for determining whether a group practice is a
successful electronic prescriber. We also invited feedback on our
underlying assumptions.
Section 1848(m)(2)(B) of the Act specifies that the limitation on
the applicability of the electronic prescribing incentive applies to
group practices as well as individual eligible professionals.
Therefore, in determining whether a group practice will receive an
electronic prescribing incentive payment for 2010 by meeting the
proposed reporting criteria described above, we would determine whether
the 10 percent threshold is met based on the claims submitted by the
group practice.
The following is a summary of the comments we received regarding
the proposed process for group practices to participate as group
practices and criteria for successful reporting of the electronic
prescribing measure by group practices.
Comment: One commenter agrees with CMS' assumptions and proposals
for group reporting and believed it is reasonable to set criteria for
successful electronic prescribing using the 2,500 threshold.
Conversely, one commenter believed that 2,500 electronic prescribing
events during the reporting period is too low a threshold for group
practices and suggested that the threshold should be 25,000 to 50,000
electronic prescribing instances during the reporting period per group
practice. One commenter believed that CMS should retain the 50 percent
rule and thinks that establishing a numerical target of 2,500
electronic prescribing instances during the reporting period creates an
unbalanced incentive depending on practice type, size, and percent
Medicare patient mix. Another commenter stated that the electronic
prescribing group practice reporting option should not be different for
a group practice versus an individual eligible professional.
Response: By establishing a reporting threshold of 2,500 electronic
prescribing events per reporting period per group practice, we desired
to implement a threshold that is obtainable and demonstrates that the
group practice has adopted and is using a qualified electronic
prescribing system. Also, by establishing this threshold, we sought to
reduce reporting burden. A numerical target of reporting 2,500
electronic prescribing events per reporting period will provide a
tangible goal for the group practices to achieve. As stated previously,
we are making every effort to promote the adoption of electronic
prescribing by making participation both practical and operational so
that group practices may achieve successful reporting. In establishing
the threshold of 2,500 electronic prescribing events, we had to take
into account not only all the circumstances that we discussed above
with respect to the threshold for individual eligible professionals
that could prevent a group practice who has adopted a qualified
electronic prescribing system from having 2,500 electronic prescribing
events during the calendar year but also the fact that the impact of
these circumstances will vary depending on the types of specialties
that are affiliated with each group practice.
Comment: A commenter expressed that the proposed method of
calculating whether the limitation applies to a group practice will
prevent most large multi-specialty group practices from being able to
use the electronic prescribing group practice reporting option.
Response: We do not have the authority to change the basis for
determining the applicability of the limitation. If we are making the
determination of successful electronic prescriber based on reporting
the electronic prescribing measure, section 1848(m)(2)(B) of the Act
specifies that the limitation will apply if the Medicare Part B PFS
allowed charges for all covered professional services furnished by the
group practice for the codes to which the electronic prescribing
quality measure applies are less than 10 percent of the total of the
Medicare Part B PFS allowed charges for all covered professional
services furnished by the group practice.
For the reasons mentioned above and after considering the comments,
we are finalizing for the 2010 E-Prescribing Incentive Program the
group practice reporting option discussed above. Specifically, group
practices will be required to report the 2010 electronic prescribing
measure at least 2,500 times during the reporting period in order for
the group practice to be considered a successful electronic prescriber.
Group practices will be able to choose to report the electronic
prescribing

[[Page 61860]]

measure through claims, a qualified registry, or qualified EHR product.
As discussed for individual eligible professionals, only registries and
EHR products qualified to participate in the 2010 PQRI will be
qualified for purposes of the 2010 electronic prescribing group
practice reporting option.
In addition, in determining whether a group practice will receive
an electronic prescribing incentive payment for 2010 by meeting the
reporting criteria described above, we will determine whether the 10
percent threshold is met based on our analysis of the claims submitted
by the group practice during the reporting period. This calculation is
expected to take place in the first quarter of 2011 and will be
determined by dividing the group practice's total 2010 Medicare Part B
PFS allowed charges for all covered professional services submitted for
the measure's denominator codes by the group practice's total Medicare
Part B PFS allowed charges for all covered professional services. If
the result is 10 percent or more, then the statutory limitation will
not apply and a group practice that is determined to be a successful
electronic prescriber will qualify to earn the electronic prescribing
incentive payment. If the result is less than 10 percent, then the
statutory limitation will apply and the group practice will not qualify
to earn the electronic prescribing incentive payment.
f. Public Reporting of Names of Successful Electronic Prescribers
Section 1848(m)(5)(G) of the Act requires the Secretary to post on
the CMS Web site, in an easily understandable format, a list of the
names of eligible professionals (or group practices) who satisfactorily
submit data on quality measures for the PQRI and the names of the
eligible professionals (or group practices) who are successful
electronic prescribers. As required by section 1848(m)(5)(G) of the
Act, we proposed to make public the names of eligible professionals and
group practices who are successful electronic prescribers for the 2010
E-Prescribing Incentive Program on the Physician and Other Health Care
Professionals Directory.
The following is summary of the comments we received regarding
requirements under section 1848(m)(5)(G) of the Act with respect to the
E-Prescribing Incentive Program.
Comment: Some commenters supported public reporting of the names of
successful electronic prescribers. One commenter, in particular, noted
that public reporting of the names of successful electronic prescribers
will assist health plans in identifying such entities for related
requirements in Medicare Advantage and Part D and help private health
plans identify those that may need to be encouraged or assisted with
electronic prescribing.
Response: We are pleased to have commenters' support for our
efforts to make information about eligible professionals' adoption and
use of electronic prescribing technology publicly available. We agree
that such information may be relevant and useful to a broad audience.
Comment: Many commenters urged us to post only the information
required by section 1848(m)(5)(G) of the Act, that is, the names of
individual eligible professionals and group practices who are
successful electronic prescribers.
Response: As we stated in the CY 2010 PFS proposed rule (74 FR
33600), we proposed to make public only the names of eligible
professionals and group practices who are successful electronic
prescribers. We do not anticipate posting any other information with
respect to the E-Prescribing Incentive Program at this time.
Comment: Other commenters recognized that we are statutorily
required to carry out public reporting of the names of successful
electronic prescribers but are, nevertheless, opposed to publicly
releasing the names of successful electronic prescribers or urged us to
delay releasing such information until the public has a better
understanding of the details of the E-Prescribing Incentive Program.
Some of the concerns specifically cited by commenters include the
following:
The E-Prescribing Incentive Program is voluntary and
excludes many eligible professionals;
A formal independent evaluation of the E-Prescribing
Incentive Program's processes and an analysis and validation of the
data gathered needs to be conducted prior to any information being
publicly released;
CMS needs to provide eligible professionals with better
access and feedback to the quality data they report (especially
feedback on why they failed to report successfully) before the release
of any information;
There is little to be gained from this effort since
eligible professionals and patients do not fully understand the details
of the program and are still learning about this program;
Patients may not understand the purpose for posting this
information since the program is still new; and
The criteria for becoming a successful electronic
prescriber are changing from 2009 to 2010.
Response: We are appreciative of the commenters' thoughtful and
constructive feedback and will take these concerns into consideration
as we further develop our plans for publicly reporting information from
the E-Prescribing Incentive Program. While we understand the
commenters' concerns, we note that section 1848(m)(5)(G) of the Act
requires us to list the names of individual eligible professionals and
group practices who are successful electronic prescribers in an easily
understandable format on our Web site. As such, it is our intent to
identify the eligible professionals and group practices who are
successful electronic prescribers for the 2010 E-Prescribing Incentive
Program for posting in 2011. We note that we anticipate conducting an
evaluation of the E-Prescribing Incentive Program and making the
national evaluation results public through an experience report similar
to the ``PQRI 2007 Reporting Experience'' report that we posted on the
PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI/Downloads/PQRI2007ReportFinal12032008CSG.pdf.
Comment: A few commenters stressed the importance of including
appropriate and prominent disclaimers or other statements on our Web
site that provides information about the E-Prescribing Incentive
Program and specifically state that there are valid reasons why an
eligible professional may not have been a successful electronic
prescriber for 2010.
Response: We agree with the commenters on the importance of
including disclaimers and other information on the Web site that
explains the E-Prescribing Incentive Program and its goals and the
limitations of the data being reported (such as the fact that there are
valid reasons why an eligible professional may not have been a
successful electronic prescriber). Thus, it is our intent to include
such language and disclaimers on the Web site similar to what was
displayed with the 2007 PQRI participation information that was
publicly released on the Physician and Other Health Care Professionals
Directory in December 2008. We also anticipate being able to update the
Physician and Other Health Care Professionals Directory to display the
relevant disclaimers more prominently.
Comment: Some commenters recommended that eligible professionals
and group practices have an opportunity to review their electronic
prescribing

[[Page 61861]]

results before those results are made public, including access to
information about why they were not able to successfully report this
data, and that we continue to work with eligible professionals on the
sensitive issues that surround this concept.
Response: Eligible professionals and group practices will have an
opportunity to review their electronic prescribing results via the
detailed, confidential feedback reports that will be made available to
all eligible professionals and group practices who participle in the E-
Prescribing Incentive Program. Eligible professionals and group
practices will have an opportunity to obtain their feedback reports
prior to any information about their success being publicly released.
Eligible professionals who have concerns about their results or any
other information included on their feedback reports are encouraged to
contact the QualityNet Help Desk at (866) 288-8912 or
[email protected] for assistance.
Comment: One commenter recommended that we also publicly report the
names of eligible professionals who choose to not participate in the E-
Prescribing Incentive Program.
Response: We do not believe it will be meaningful to the public to
know the names of those eligible professionals who choose not to
participate in the E-Prescribing Incentive Program. As some commenters
noted, the E-Prescribing Incentive Program is a voluntary incentive
program and many eligible professionals who have adopted and use a
qualified electronic system have valid reasons for not participating.
For example, some eligible professionals may not provide the services
included in the electronic prescribing measure's denominator and,
therefore, would not have an opportunity to report the measure. Other
professionals may know, based on the prior year's charges, that they
are unlikely to meet the statutory limitation under section
1848(m)(2)(B) of the Act that would allow them to be eligible to
qualify to earn the electronic prescribing incentive payment.
Therefore, such eligible professionals would most likely opt to not
participate in the E-Prescribing Incentive Program even if they are
electronically prescribing.
After considering the comments, we will publicly report the names
of eligible professionals and group practices who are successful
electronic prescribers for the 2010 E-Prescribing Incentive Program on
the Physician and Other Health Care Professionals Directory. We
anticipate that the names of individual eligible professionals and
group practices who are successful electronic prescribers for the 2010
E-Prescribing Incentive Program will be available in 2011 after the
2010 incentive payments are paid.
Although we stated in the CY 2009 PFS proposed rule (74 FR 33600)
and the CY 2008 PFS final rule with comment period (73 FR 69852) that
we intended to post the names of individual eligible professionals who
meet the criteria for successful electronic prescriber and for whom the
limitation does not apply (in other words, eligible professionals who
qualify to earn an incentive payment), we would like to clarify that
for purposes of publicly reporting the names of individual eligible
professionals on the Physician and Other Health Care Professionals
Directory, section 1848(m)(5)(G) of the Act requires only that the
Secretary post the names of eligible professionals (or group practices)
who are successful electronic prescribers. Therefore, with respect to
the 2010 E-Prescribing Incentive Program we intend to post the names of
individual eligible professionals who report the electronic prescribing
measure at least 25 times during the 2010 reporting period for patient
encounters included in the measure's denominator, without regard to
whether the limitation applied to the eligible professional and without
regard to whether the eligible professional actually qualified to earn
an incentive payment. In addition, since the PQRI and the E-Prescribing
Incentive Program are two separate incentive programs and individual
eligible professionals are not required to participate in both programs
to earn an incentive under either program, we point out that it is
possible for an eligible professional who participates in both
incentive programs to be listed both as an individual eligible
professional who satisfactorily submits data on quality measures for
the PQRI and is a successful electronic prescriber under the E-
Prescribing Incentive Program. Likewise, an individual eligible
professional may be listed as an individual eligible professional who
satisfactorily submits data on quality measures for the PQRI but not as
a successful electronic prescriber under the E-Prescribing Incentive
Program (or vice versa) even if he or she participated in both
incentive programs.
Similarly, for purposes of publicly reporting the names of group
practices, on the Physician and Other Health Care Professionals
Directory, we intend to post the names of group practices who report
the electronic prescribing measure at least 2,500 times during the 2010
reporting period for patient encounters included in the measure's
denominator without regard to whether the limitation applied to the
group practice or whether the group practice actually qualified to earn
an incentive payment. Although any group practice participating in the
E-Prescribing Incentive Program under the group practice reporting
option would have had to also participate in the PQRI group practice
reporting option, the criteria for satisfactory reporting of PQRI
measures for group practices are different from the criteria for
successful reporting of the electronic prescribing measure by group
practices. Therefore, it is possible for a group practice to be listed
as a group practice that satisfactorily submits data on quality
measures for the PQRI but not as a successful electronic prescriber
under the E-Prescribing Incentive Program, or vice versa.
6. Section 135: Implementation of Accreditation Standards for Suppliers
Furnishing the Technical Component (TC) of Advanced Diagnostic Imaging
Services
Section 1834(e) of the Act, as added by section 135(a) of the
MIPPA, requires that beginning January 1, 2012, Medicare payment may
only be made for the technical component (TC) of advanced diagnostic
imaging services for which payment is made under the fee schedule
established in section 1848(b) of the Act to a supplier who is
accredited by an accreditation organization (AO) designated by the
Secretary.
a. Accreditation Requirement
In the proposed rule, we proposed criteria for designating
organizations to accredit suppliers furnishing the TC of advanced
diagnostic imaging services as specified in section 1834(e) of the Act.
In addition, we proposed the required procedures to ensure that the
criteria used by an AO meets minimum standards for each imaging
modality in Sec. 414.68.
We did not propose any substantive standards that suppliers
furnishing the TC of advanced imaging would have to meet. We have
chosen to utilize clinical guidelines that are already accepted by the
experienced accreditation organizations already performing
accreditation. We believe that the suppliers should be able to
assimilate these new accreditation requirements very easily into their
medical practice.
We will be designating organizations based on, at minimum, their
ability to meet the requirements set forth in the statute. In addition,
in this rule we have

[[Page 61862]]

described the components that any organization must have in order to be
considered for designated status.
As proposed, the CMS-designated AO would apply standards that set
qualifications for medical personnel who are not physicians but who
furnish the TC. The standards would describe the qualifications and
responsibilities of medical directors and supervising physicians.
including the following: recognizing whether a particular medical
director or supervising physician received training in advanced imaging
services in a residency program; and has attained, through experience,
the necessary expertise to be a medical director or supervising
physician; has completed any continuing medical education courses
related to advanced imaging services; or has met such other standards
as the Secretary determines appropriate.
In addition, the standards would require suppliers to: (1)
Establish and maintain a quality control program to ensure the
technical quality of diagnostic images produced by the supplier; (2)
ensure the equipment used meets performance specifications; and (3)
ensure safety of personnel. While the statute authorizes the Secretary
to establish as criteria for accreditation any other standards or
procedures the Secretary determines appropriate, we did not propose to
establish other standards or procedures.
In the proposed rule, we also stated that we expect to publish a
notice to solicit applications from entities for the purposes of
becoming a designated AO the same day that this final rule with comment
period is issued. We still expect to meet the January 1, 2010 statutory
deadline in order to designate organizations to accredit suppliers
furnishing the TC of advanced diagnostic imaging services by waiving
the 60-day delay in the imaging accreditation provisions in the final
rule.
We believe that we have furnished enough detail in the proposed
rule, in addition to receiving extensive comments from prospective AOs,
so that AOs will find that 30 days is sufficient time to respond to the
solicitation.
b. Accreditation for Suppliers
Section 1834(e) of the Act requires the Secretary to designate and
approve AOs to accredit suppliers of the TC of advanced diagnostic
imaging services. To promote consistency in accrediting providers and
suppliers throughout the Medicare program, we proposed to review
existing procedures for the application, selection, and oversight of
AOs detailed at 42 CFR part 488, subparts A and D, and apply them (with
appropriate revisions) to organizations accrediting suppliers of the TC
of advanced diagnostic imaging services. We proposed modifications to
the existing part 488 requirements to meet the specialized needs of the
advanced imaging industry. These modifications would require an
independent AO applying for approval as a designated AO to include in
their application:
A detailed description of how the organization's
accreditation criteria satisfy the statutory standards at section
1834(e)(3) of the Act, specifically:
+ Qualifications of medical personnel who are not physicians and
who furnish the TC of advanced diagnostic imaging services;
+ Qualifications and responsibilities of medical directors and
supervising physicians, such as training in advanced diagnostic imaging
services in a residency program, expertise obtained through experience,
or continuing medical education courses;
+ Procedures to ensure the safety of persons who furnish the TC of
advanced diagnostic imaging services and individuals to whom such
services are furnished;
+ Procedures to ensure the reliability, clarity, and accuracy of
the technical quality of diagnostic images produced by the supplier.
An agreement to conform accreditation requirements to any
changes in Medicare statutory requirements in section 1834(e) of the
Act.
Information to demonstrate the AO's knowledge and
experience in the advanced diagnostic imaging arena.
The organization's proposed fees for accreditation for
each modality in which the organization intends to offer accreditation
and any plans for reducing the burden and cost of accreditation to
small and rural suppliers.
Any specific documentation requirements and attestations
requested by CMS as a condition of designation under this part.
If, after review of an AO's submission of information, we
determined that additional information was necessary to make a
determination for approval or denial of the AO's application to be
designated as an AO for suppliers of the TC of advanced diagnostic
imaging services, the organization would be notified and afforded an
opportunity to provide the additional information. We could visit the
organization's offices to verify representations made by the
organization in its application, including, but not limited to, review
of documents and interviews with the organization's staff. The AO would
receive a formal notice from CMS stating whether the request for
designation was approved or denied. If approval was denied, the notice
would include the basis for denial and outline the reconsideration
procedures. We would make every effort to issue a final decision no
more than 30 calendar days from the time the completed reapplication
was received by CMS. An AO could withdraw its application for
designation under section 1834(e) of the Act at any time before the
formal notice of approval is received. An AO that was notified that its
request for designation was denied could request reconsideration in
accordance with Sec. 488.201 through Sec. 488.211 in Subpart D. Any
AO whose request for designation was denied could resubmit its
application if the organization (1) Revised its accreditation program
to address the rationale for denial of its previous request; (2)
provided reasonable assurance that its accredited companies meet
applicable Medicare requirements; and (3) resubmitted the application
in its entirety. If an AO requested a reconsideration of a denial, it
could not submit a new application for the type of modality that is at
issue in the reconsideration until the reconsideration was final.
A panel would evaluate all proposals from AOs seeking designation
under section 1834(e) of the Act using existing CMS survey and
certification processes, similar to those established at Sec. 488.4.
c. Payment Rules for Suppliers of the TC of Advanced Diagnostic Imaging
Services (Sec. 414.68)
We would implement at Sec. 414.68 the statutory requirement of
section 1834(e) of the Act that all suppliers of the TC of advanced
diagnostic imaging services be accredited by a CMS-designated AO by
January 1, 2012 for payments made under the fee schedule established
under section 1848(b). In Sec. 414.68(a), we proposed to define the
following:
``Accredited supplier'' would mean a supplier that has
been accredited by a CMS-approved AO.
``Advanced Diagnostic Imaging Services'' would mean
diagnostic magnetic resonance imaging, computed tomography, nuclear
medicine, and positron emission tomography. We did not propose to
include other diagnostic imaging services in this definition under
section 1834(e)(1)(B)(ii) of the Act.
``CMS-approved accreditation organization'' would mean an
independent AO designated by CMS to perform the accreditation function
established in section 1834(e) of the Act.

[[Page 61863]]

d. Ongoing Responsibilities of CMS-Approved Accreditation Organizations
We proposed to require a CMS-approved AO to perform several
activities on an ongoing basis. The organization would provide to CMS
in written form and on an ongoing basis all of the following:
Copies of all accreditation surveys of specific suppliers
along with any survey-related information that we may require
(including corrective action plans and summaries of CMS requirements
that were not met).
Notice of all accreditation decisions.
Notice of all complaints related to suppliers of the TC of
advanced diagnostic imaging service.
Information about any suppliers of the TC of advanced
diagnostic imaging service for which the accrediting organization has
denied the supplier's accreditation status.
Notice of any proposed changes in its accreditation
standards or requirements or survey process. If the organization
implemented the changes before or without CMS approval, we could
withdraw approval of the AO.
Written notice of any deficiencies and adverse actions
implemented by the CMS-approved AO against an accredited supplier of
the TC of advanced diagnostic imaging within 2 days of identifying such
deficiencies, if the deficiencies pose immediate jeopardy to a
beneficiary or to the general public.
Written notice of the withdrawal to all accredited
suppliers within 10 days of CMS' notice to withdraw approval of the AO.
Summary data specified by CMS related to the past year's
accreditation activities and trends, on an annual basis.
In addition, the AO would permit its surveyors to serve as
witnesses if CMS takes an adverse action based on accreditation
findings.
e. Continuing CMS Oversight of CMS-Approved Accreditation Organizations
We proposed to add Sec. 414.68 to establish specific criteria and
procedures for continuing oversight and for withdrawing approval of an
approved AO.
(1) Validation Audits
We proposed to audit the accredited organizations in order to
validate the survey accreditation process of approved AOs in the TC of
advanced imaging. The audits would be conducted on a representative
sample of suppliers who have been accredited by a particular
accrediting organization or in response to allegations of supplier
noncompliance with the standards. When conducted on a representative
sample basis, we proposed that the audit would be comprehensive and
address all of the standards or would focus on a specific standard in
issue. When conducted in response to an allegation, we proposed to
specify that the CMS team or our contractor would audit for any
standard that we determined was related to the allegations. We also
proposed to require a supplier selected for a validation audit to
authorize the validation audit to occur and authorize the CMS team or
our contractor to monitor the correction of any deficiencies found
through the validation audit. If a supplier selected for a validation
audit failed to comply with the requirements at Sec. 414.68, the
supplier would no longer meet the Medicare requirements and, under this
proposal, the supplier's accreditation for the TC of the advanced
medical imaging would be revoked.
We proposed that a CMS team or our contractor would conduct an
audit of an accredited organization, examine the results of the AO's
own survey procedure onsite, or observe the AO's survey, in order to
validate the organization's accreditation process. At the conclusion of
the review, we would identify any accreditation programs for which
validation audit results indicated the following:
A 10 percent or greater rate of disparity between findings
by the AO and findings by CMS or our contractor on standards that did
not constitute immediate jeopardy to patient health and safety if not
met;
Any disparity between findings by the AO and findings by
CMS or our contractor on standards that constituted immediate jeopardy
to patient health and safety if not met; or
There were widespread or systemic problems in the
organization's accreditation process such that the accreditation no
longer provided assurance that suppliers met or exceeded the Medicare
requirements, irrespective of the rate of disparity.
(2) Notice of Intent To Withdraw Approval for Designating Authority
As proposed, if a validation audit, onsite observation, or our
concerns with the ethical conduct (that impacted the health and safety
of the beneficiary) of an AO suggest that the AO was not meeting the
requirements of Sec. 414.68, we would provide the organization written
notice of our intent to withdraw approval of the AO's designating
authority.
(3) Withdrawal of Approval for Designating Authority
We proposed to withdraw approval of an AO at any time if we
determined that:
Accreditation by the organization no longer provided
sufficient assurance that the suppliers of the TC of advanced imaging
meet the requirements of section 1834(e) of the Act and the failure to
meet those requirements could pose an immediate jeopardy to the health
and safety of Medicare beneficiaries;
Conditions at an imaging supplier accredited by an AO
constituted a significant hazard to the public health; or
The AO failed to meet its obligations for application and
reapplication procedures.
(4) Reconsideration
We proposed to implement requirements similar to those set out
under 42 CFR part 488 without substantive changes, as the requirements
have been utilized for the health care providers covered under 42 CFR
part 488 since 1992. We proposed that an AO dissatisfied with a
determination that its accreditation requirements did not provide or do
not continue to provide reasonable assurance that the suppliers
accredited by the AO met the applicable standards would be entitled to
a reconsideration. We also proposed to reconsider any determination to
deny, remove, or not renew the approval of the designating authority to
AOs if the AO filed a written request for reconsideration through its
authorized officials or through its legal representative.
We proposed to require the AO to file the request for
reconsideration within 30 calendar days after the issuance of CMS
notice of an adverse determination or non-renewal. We proposed to
require the request for reconsideration to specify the findings or
issues with which the AO disagreed and the reasons for the
disagreement. A requestor could withdraw its request for
reconsideration at any time before the issuance of a reconsideration
determination. In response to a request for reconsideration, we would
provide the accrediting organization the opportunity for an informal
hearing that would be conducted by a hearing officer appointed by the
CMS Administrator and provide the accrediting organization the
opportunity to present, in writing and in person, evidence or
documentation to refute the determination to deny approval, or to
withdraw or not renew its designating authority.

[[Page 61864]]

As proposed, we would provide written notice of the time and place
of the informal hearing at least 10 business days before the scheduled
date. The informal reconsideration hearing would be open to CMS and the
organization requesting the reconsideration, including authorized
representatives, technical advisors (individuals with knowledge of the
facts of the case or presenting interpretation of the facts), and legal
counsel. The hearing would be conducted by the hearing officer, who
would receive testimony and documents related to the proposed action.
Testimony and other evidence could be accepted by the hearing officer.
However, the normal evidentiary exclusions applicable in Federal courts
would not apply to these hearings. The hearing officer would not have
the authority to compel by subpoena the production of witnesses,
papers, or other evidence. Within 45 calendar days of the close of the
hearing, the hearing officer would present the findings and
recommendations to the accrediting organization that requested the
reconsideration. The written report of the hearing officer would
include separate numbered findings of fact and the legal conclusions of
the hearing officer. The hearing officer's decision would be final.
The following is a summary of the comments we received regarding
our proposals for implementation of section 135 of MIPPA.
Comment: One commenter requested that we consider medical directors
and supervising physicians to be equivalent positions, as they are
frequently the same.
Response: We agree and have revised the regulation text accordingly
at Sec. 414.68(c)(1)(ii) to reflect that the clinical responsibilities
of the medical director and/or supervising physician would be
identical.
Comment: Some commenters stated that the physician should be
qualified in the modality for which the supplier is applying. In order
to ensure this compliance, one commenter suggested requiring billing
under the NPI of that qualified physician and not another physician,
which is commonly done to avoid self-referral provisions. Another
commenter stated that we need to consider that any licensed physician,
not just a radiologist who can respond to a patient's possible contrast
reaction, be qualified as supervising medical directors and supervising
physicians. The commenter also suggested that there be a degree of
control over documented quarterly on-site interactions with
nonphysician staff, creation and review of all imaging protocols along
with developing quality performance guidelines as opposed to limiting
the number of sites that the physician may serve as the medical
director or supervising physician. The teleradiology area also needs to
be included supervision performance criteria.
Response: We will develop billing policies connected to the
provision of the TC of advanced subsequent to the issuance of this
rule, and will take the commenters' concerns under advisement. With
respect to performance measures for the Medical director and/or
supervising physician, we expect that all AOs will consider performance
measures in their credentialing and competency evaluations.
Comment: Some commenters stated that each designated AO should be
required to evaluate the image quality produced as part of the AO's
accreditation survey review process and that the accreditation
personnel should have 5 years of specific documented experience and
training in image acquisition and interpretation.
Response: We agree that experience in the advanced imaging area is
important. For example, we are aware that some organizations require
that accreditation personnel should have specific documented experience
and training in image acquisition and interpretation for 5 years. CMS
will review the standards for all potential accrediting organizations
to determine whether it is necessary for CMS to impose a similar
requirement. We intend to evaluate all accreditation organization
applications based on documented evidence of having a level of
experience in accrediting advanced imaging suppliers and the
requirements for their surveyors who are completing these surveys.
Comment: One commenter requested that since the timeframe before
the January 1, 2010 designation deadline was so near, the accompanying
request for proposals should be on review prior to the display date of
this final rule.
Response: Since the notice could have changed up to the display
date of the final rule, we did not believe publishing a draft notice
would have been helpful. We did, however, include all of the
requirements in the proposed rule that we intended for the solicitation
notice.
Comment: Some commenters believe that the proposed provision that
exists for equipment review is not specific enough to guarantee a
thorough evaluation of equipment performance and safety.
Response: We will revise our rule in Sec. 414.68 to require that
the equipment used by advanced imaging suppliers must meet the
manufacturer's performance specifications.
Comment: Some commenters stated the quality of the supplier cannot
adequately be assessed without a comprehensive evaluation of all
aspects of the imaging service's operation, including personnel, image
acquisition and quality, and the quality of the final report.
Response: We agree that all of these components are necessary in
the evaluation of a TC supplier. We will be evaluating AOs'
applications based on the performance standards that are used to make
certain that these assessments are comprehensive.
Comment: One commenter requested clarification as to whether the
proposed rules meant that advanced imaging standards could be lowered
by CMS. If CMS changes its standards, the AO's experts should be given
an opportunity to comment. The commenter also asked whether AOs could
maintain or adopt standards that were more stringent than those
required by CMS.
Response: Section 1834(e) of the Act, as added by section 135(a) of
the MIPPA, requires that the Secretary consult with physician
specialties and other stakeholders on provisions in this rule. We plan
to do this, as required by the statute. Accreditation organizations may
enforce the guidelines to be issued by CMS, or adopt standards that are
more stringent than those Medicare requires.
Comment: Some commenters asked about the fee structure of the
designated AOs. One commenter suggested that CMS assist small and rural
suppliers, and that the fees be based on the number of imaging
machines, number of testing modalities, and the number of testing
sites. Another commenter stated the AOs should be allowed to use their
differing methodologies for reducing accreditation costs for small and
rural suppliers. The commenter believed that CMS was going to mandate
the fee structure for the designated AO. One commenter suggested that
we clarify the $5,000 cost per 3-year review cycle as an estimate of
the cost per modality. One commenter stated that they were confused by
what CMS intended the difference to be between small and specialty
suppliers as compared to small and rural suppliers.
Response: We will be evaluating applications from all AOs that
apply, and make certain that all have provisions for small and rural
suppliers. Although we will not be prescribing the fee structure for
the designated AO, we want to see that each application has a policy
and procedure to determine cost and assistance that would take the

[[Page 61865]]

smallest supplier into consideration. As a clarification, note that
this rule only applies to those specialty suppliers furnishing the TC
of advance medical imaging.
Comment: Two commenters asked about unannounced site visits. There
was concern that the site may either not have the appropriate staff for
the modality, or in the case of a mobile unit, may not be present on
the day the surveyor arrives. It was suggested that either the site
visits were announced or that accrediting organizations utilize a
combination of announced and unannounced surveys.
Response: We believe that a supplier who ``gets ready'' for the
site survey is a supplier that is not providing quality care and
services throughout the year. The supplier knows that a surveyor will
be onsite every 3 years and thus would already be aware of an imminent
survey.
Comment: Two commenters strongly encouraged that we include other
diagnostic imaging services, such as ultrasound, to be eligible for
accreditation.
Response: Section 1834(e)(1)(B)(ii) of the Act, as added by section
135(a) of MIPPA, specifically excludes X-ray, ultrasound, and
fluoroscopy from those diagnostic imaging services subject to the
accreditation requirement. Therefore, we cannot implement this change
without Congressional action.
Comment: One comment discussed the transfer of individually
identifiable health information and other information not intended for
public disclosure. The commenter requested that we clarify under what
circumstances such information would need to be transmitted and how
that information would be safeguarded.
Response: Under normal circumstances, neither CMS or an AO would
need to transfer individually-identifiable personal health information
from one location to another. If, however, we need such information for
investigational purposes it would either be transmitted via securely or
de-identified prior to transmission.
Comment: One commenter requested clarification on the requirement
that the AO notify Medicare of accreditation decisions to be intended
for only those imaging suppliers that bill Medicare.
Response: We will provide that clarification. The requirement that
the AO notify Medicare is only required for those suppliers billing
Medicare.
Comment: Regarding the complaint reporting process, one suggested
that the rule was not clear if the complaints that were to be reported
were with respect to the AO or to the TC supplier being accredited.
Another commenter suggested that we specify the frequency with which we
expected accrediting organizations to report complaints about
suppliers. The commenter also suggested that we specify the types of
complaints about suppliers that would be subject to the reporting
requirement. The commenter suggested that such conditions include: poor
image quality, injury or harm from equipment, falsely claiming to be
accredited, unqualified personnel, submission of false or misleading
accreditation information. One commenter suggested that we change from
2 calendar days to 2 business days the proposed requirement that an AO
notify CMS when it finds deficiencies in a TC supplier that pose an
immediate jeopardy to the health and safety of patients receiving
services from such supplier. One commenter also requested clarification
of what was meant by ``appropriate licensing bodies,'' since there are
specific State departments that control these entities.
Response: We agree with the commenter that we needed to clarify the
applicability of the complaint reporting requirement. Therefore, we are
clarifying in this final rule that the complaint process is applicable
to any complaints that come from any source against an accredited
supplier. We also agree that the reporting of complaints about
conditions that pose immediate jeopardy to Medicare beneficiaries or
the general public should be reported to CMS within 2 business days,
because. Therefore, we are also amending Sec. 414.68(c)(12)(iii)(G) to
state that an approved AO will be required to notify CMS within 2
business days of such ``immediate jeopardy'' situations. Subsequent to
the issuance of this rule, we will issue subregulatory guidance with
respect to the frequency and types of other reporting that are
necessary. In response to the commenter's inquiry, we are also noting
that in the context of this final rule, ``Appropriate licensing body''
means any regulatory body, including State Radiation Control
departments and the Nuclear Regulatory Commission.
Comment: Regarding circumstances in which CMS might withdraw its
approval of an accrediting organization (thus requiring suppliers
accredited by such organization to obtain new accreditation), two
commenters suggested the final rule recognize that CMS and the
remaining AOs would need to collaborate in order to distribute such
affected suppliers among other accrediting organizations over a
reasonable time period.
Response: We agree. It certainly is our expectation that any
supplier transition process of this sort would be transparent, so that
no disruption in patient care would occur.
Comment: One commenter stated that the proposal included hospitals
in the summary data from the CMS' Services Tracking and Reporting
System. Since the hospitals are not included in this proposal, the
commenter requested reconfirmation that the provisions do not apply to
hospitals.
Response: In Sec. 414.68(a), in conformity with section 1834(e),
we state that the imaging accreditation requirement applies only to
suppliers of the TC of advanced diagnostic imaging services for which
payment is made under the physician fee schedule. Since hospitals
generally are not paid pursuant to such schedule, this accreditation
rule is inapplicable. Hospitals, including their inpatient radiology
departments, are accredited under 42 CFR part 488.
Comment: Two commenters suggested that instead of notifying CMS of
all revisions to their accreditation requirements, standards and
policies, as set out at proposed Sec. 414.68(c)(12)(iii)(E) and Sec.
414.68(d)(1)(v), accrediting organizations notify CMS only of major
revisions to their respective accreditation standards or requirements
or survey processes. In this context, ``major'' would be defined as
``changes having potential impact on the supplier's ability to maintain
compliance with the standards or application process.''
Response: We agree; we will clarify our language to indicate that
``major changes'' mean only significant changes from what CMS approved
in the AO's initial approved application.
Comment: Several commenters had questions about the proposed CMS
audits of AOs. The commenters would like to have more information about
the procedures that CMS surveyors would use. The commenters also stated
that the meaning of the ``10 percent disparity rate'' was not clear.
One commenter asked that we clarify who would bear the cost for a
validation survey, what specific information would be collected in such
surveys, and what percentage of sites would be surveyed.
Response: We will provide information on those specific procedures
and criteria as they are developed. The 10 percent disparity rate is
meant to be that of a single survey since it is important to CMS that
each supplier is furnishing all of the standards as intended in a
quality manner. CMS pays for these validation surveys.
Comment: One commenter requested clarification on how CMS would
determine whether an AO was capable

[[Page 61866]]

of making ``timely reviews'' under proposed Sec. 414.68(c)(6)(ii).
Response: We would consider an AO to be making timely reviews of
suppliers' applications if the accrediting organization presented
evidence that it could conduct such reviews in an orderly manner, and
that all suppliers' applications would be judged uniformly and fairly,
while still meeting the January 1, 2012 statutory deadline.
Comment: Two commenters asked about how AOs would prioritize
suppliers in order to meet the January 1, 2012 deadline. The commenters
believe that this practice would mean that some suppliers would have a
preferential priority. The commenter believes that application
processing order should instead be based upon the date the supplier
submits its application to the accrediting organization. The commenters
went on to state that CMS should inform suppliers of the application
requirements so that all suppliers can be accredited by the January 1,
2012 deadline.
Response: While we agree with the commenters regarding education of
all suppliers, we believe that the intent of the statute was that
beneficiary services not be affected by any supplier not having the
opportunity to meet all of the accreditation requirements. We will give
guidance to the designated AOs so that there is a timely review of all
existing suppliers.
Comment: Two commenters expressed concern over how new suppliers
after January 1, 2012 would be able to bill for the TC of advanced
imaging if they had not yet been accredited. One commenter wanted CMS
to continue to allow those new suppliers the ability to bill up to nine
months after January 1, 2012, as long as the new supplier was
undergoing part of the accreditation process or received a provisional
accreditation.
Response: We do not have the statutory authority to extend the
billing privileges past the statutory deadline of January 1, 2012. We
believe that there will not be any disruption to beneficiary services,
as there are sufficient existing suppliers to furnish the TC of
advanced diagnostic imaging services.
Comment: One commenter requested clarification regarding the
treatment of suppliers accredited prior to January 1, 2012 as meeting
the statutory requirements for accreditation. The commenter stated that
the proposed rule could be interpreted to mean that any supplier
accredited at any time prior to January 1, 2010 would be considered
accredited regardless of their current status which could include their
accreditation having previously expired, been revoked, or denied.
Response: Only those suppliers that have a current, unexpired
accreditation as of January 1, 2012 will be deemed grandfathered with
respect to the January 1, 2012 requirement.
Comment: One commenter requested that CMS require that AOs report
not only revoked, withdrawn or revised accreditation decisions, but
also include those accreditations that have expired, closed, or ceased
providing that modality. The commenter suggested that this report be in
an Excel file format and on a daily basis. The commenter also stated
that if CMS reviewed copies of all survey materials and corrective
action it would overwhelm the agency.
Response: We will require all accreditation decisions to be
reported, including revocation and expiration of accreditation. We will
require the accrediting organizations to include in their ongoing data
the accreditation status of all of their suppliers, which includes the
effective expiration dates and any changes to that accreditation
status. We generally will not review individual suppliers' survey
reports or corrective action plans unless there is a particular reason
for us to do so. We will consider the most effective method of data
collection.
Comment: One commenter suggested that CMS require a supplier to
inform its AO if it ceases providing advanced diagnostic imaging
services; to arrange transfer of each patient's medical record to a
subsequent receiving supplier; to provide information to patients on
how they can obtain their personal medical records; and to comply with
any State or local requirements for such a record transfer.
Response: We agree with the commenter and are taking the
suggestion. We will require a supplier to assist beneficiaries or their
legal representative, in obtaining their records if requested, and
notify the supplier's AO of any changes to the modalities being
furnished at the time the accreditation decision is made.
Comment: One commenter requested that CMS clarify whether the
orientation and in-service requirements in the proposed rule relate to
the supplier or the AO. The commenter suggested that CMS should require
AOs to direct the orientation and in-service programs toward image
quality reviewers and on site surveyors.
Response: We will be reviewing all proposals to make certain that
all approved AOs have robust orientation and in-service programs. Those
programs should standardize the supplier review process and produce
consistent quality surveys in both desk reviews and site surveys.
Comment: Regarding the annual summary data specified by CMS, one
commenter suggested the data include the total number of sites and
units applied and accredited; pass/fail rates by modality; results of
any appeals by modality; number and reasons for any suspensions/
revocations of accreditation overall and by modality; number and
summary results of on-site surveys over and by category (random,
scheduled, targeted and validation); surveyor resources available; any
new surveyor training and summary of all complaints overall and by
modality, including category and resolution.
Response: We will work with the designated AOs to develop annual
reports that meet the needs of our stakeholders and the general public.
Comment: One commenter stated that CMS needs to develop a system
for communicating the supplier's accreditation status to the Medicare
contractors so that there are no claims denial errors. The commenter
suggested the system to be updated on a daily basis. The commenter also
suggested CMS institute a vigorous training program for local
contractor staff.
Response: We will look into the necessity and feasibility of daily
feeds to the contractor. Since CMS already has a comprehensive
education program for our contractors, we will use the existing methods
for educating all of our contractor staffs.
Comment: One commenter requested clarification regarding what
format CMS is proposing to require when AOs provide information to CMS.
Response: We intend the written format to be via electronic
submission in most cases. In those cases where Protected Health
Information (PHI) needs to be transmitted by the AO, data files will be
encrypted.
Comment: One commenter suggested that, instead of CMS instituting a
formal re-application process for AOs, CMS could renew an AO's deeming
authority on the basis of good standing. CMS could consider the AO's
annual report, any validation survey findings, and other ongoing
compliance instead of requiring a formal reapplication process. If CMS
decided that a formal reapplication process were to be retained, the
commenter suggested that CMS follow the precedent set by the
Mammography Quality Standards Act (MQSA) for their approved accrediting
bodies and set a seven year interval.
Response: We may consider such a suggestion. We do not believe that
we would need to publish proposed

[[Page 61867]]

rulemaking in order to implement a formal re-application process.
Comment: One commenter asked CMS to clarify whether suppliers would
still need to renew their accreditations under the timeframes of their
designated AOs from January 1, 2010 to January 1, 2012.
Response: An accredited supplier would still need to renew its
accreditation pursuant to the timeframe of its designated AO between
January 1, 2010 and January 1, 2012. We believe it was the Congress'
intent under section 1834(e)(5) of the Act that all suppliers
accredited before January 1, 2010 by an accreditation organization
designated on that date, be ``grandfathered'' with respect to the
effectiveness of their accreditations. In other words, a supplier
accredited by a designated AO as of January 1, 2010 would not need to
be reaccredited subsequent to the AO's designation by CMS until the
supplier's term of accreditation expired. However, this does not mean
that a supplier can let its accreditation lapse between 2010 and 2012.
Once a reaccreditation deadline has passed without reaccreditation, the
supplier would no longer be considered accredited.
Comment: One commenter stated that CMS needs to consider the
administrative time involved in obtaining precertification for
Computerized Tomography (CT) of the head, ear, and maxilla facial area
when determining the cost of these services. The technician's time
involved in performing daily quality control testing to satisfy quality
assurance requirements for accreditation and the physician time spent
in quality assurance committee meetings to evaluate the images and
reports has greatly increased the cost of providing in-office CT
imaging. Another commenter stated that operating a certified imaging
laboratory with methodology and protocols to the highest standards
translates into increased costs for each study.
Response: Based on supplier interviews, maintaining the
accreditation requirement has resulted in suppliers having
opportunities to work more efficiently and effectively, thereby
reducing the overall administrative costs per hour.
Comment: One commenter stated that the anticipated impact of
implementation of accreditation standards for suppliers of the TC of
advanced diagnostic imaging on family physicians would be minimal. The
commenter supported the proposed accreditation requirements.
Response: We thank the commenters for the comment.
Comment: One commenter requested that CMS revise the supervision
level requirement for certain CPT codes when these services are
performed with assistance by the Registered Radiologist Assistant.
Response: We appreciate the information provided by the commenters
as it will assist in understanding the role these individuals play in
the provision of imaging services.
f. Other Issues for Consideration
In the proposed rule, we solicited information on the role of
radiology assistants (RA) and radiology practitioner assistants (RPA),
including the level of physician supervision that would be appropriate
when RAs and RPAs are involved in the performance of the TC of advanced
medical imaging, whether the role varies by State, and related
information.
Comment: Commenters provided information concerning information on
the role of radiology assistants and radiology practitioner assistants
in the performance of the TC of advanced medical imaging in response to
our request.
Response: We appreciate the information provided by the commenters
as it will assist in understanding the role these individuals play in
the provision of imaging services.
g. Provisions of the Final Rule
After reviewing the public comments, we are finalizing the
accreditation provisions of the CY 2010 PFS proposed rule as follows:
Clarifying that the--
++ Medical directors and supervising physicians are equivalent
positions;
++ Equipment used by the supplier must performance specifications;
++ AOs may maintain or adopt standards that are more stringent than
those of Medicare;
++ The AOs are required to notify Medicare of the accreditation
decision of those suppliers billing Medicare
++ Accreditation requirement does not apply to hospitals; and
++ AO only needs to notify CMS for significant changes from what
was approved on the AO's initial approved application.
Including a requirement that a supplier must assist the
beneficiary in obtaining his/her medical records if he/she requests.
Including a requirement that the supplier must notify the
AO of any subsequent changes to the modalities being offered since the
accreditation decision was made.
Clarifying that AOs must respond to complaints from any
source with respect to an accredited supplier.
Changing the regulations text to require that an AO notify
CMS of any supplier deficiency putting Medicare beneficiaries in
immediate jeopardy within 2 business days (previously 2 calendar days).
Confirming that when a designated accrediting organization
has its deeming authority withdrawn, CMS and the remaining AOs will
work together in a collaborative effort to distribute suppliers
affected by such withdrawal amongst other accreditations organizations
within a reasonable time period.
7. Section 139: Improvements for Medicare Anesthesia Teaching Programs
Section 139 of the MIPPA establishes a special payment rule for
teaching anesthesiologists and provides a directive to the Secretary
regarding payments for the services of teaching certified registered
nurse anesthetists (teaching CRNAs). It also specifies the periods when
the teaching anesthesiologist must be present during the procedure in
order to receive payment for the case at 100 percent of the fee
schedule amount (the regular fee schedule rate). These provisions are
effective for services furnished on or after January 1, 2010.
a. Teaching Anesthesiologists: Special Payment Rule
The criteria for the payment of teaching anesthesiology services
and the special rule for the teaching anesthesiologist are similar to
the current criteria for payment of teaching surgeon services and the
payment rule for the teaching surgeon involved in overlapping resident
cases. Thus, there is a similarity in the payment rules for these
physician specialties who work closely together.
(1) Payment for Anesthesia Services Furnished by a Physician
Currently, if the physician, usually an anesthesiologist, is
involved in furnishing anesthesia services to a patient, the services
can be furnished under one of three different scenarios. The
anesthesiologist may--
Personally perform the anesthesia services alone;
Be involved in the case as a teaching anesthesiologist
with an anesthesia resident; or
Provide medical direction of the performance of anesthesia
services for two, three or four concurrent cases involving a qualified
individual (who may be a CRNA, an anesthesiologist

[[Page 61868]]

assistant (AA), an anesthesia resident, or a student nurse anesthetist
under certain circumstances).
Under the statute and CMS policy, if the anesthesiologist
personally performs the anesthesia service alone or is involved in the
case as a teaching anesthesiologist with an anesthesia resident,
payment for the anesthesiologist's service is made at the regular fee
schedule rate.
If the anesthesiologist furnishes medical direction for two, three,
or four concurrent anesthesia procedures, then payment for the
anesthesiologist's service is made, in accordance with section
1848(a)(4)(B) of the Act, at 50 percent of the otherwise applicable fee
schedule amount.
(2) Methodology for Payment of Anesthesia Services
Payment for anesthesia services furnished by a physician is made
under the PFS under section 1848(b)(2)(B) of the Act. The methodology
for the calculation of the allowable amount is unique to anesthesia
services only. Payment is made on the basis of anesthesia base units
and time units, calculated from the actual anesthesia time of the case,
instead of on the basis of work, PE, and malpractice RVUs. The base
unit reflects all activities other than anesthesia time and includes
usual preoperative and postoperative visits, the administration of
fluids, and blood incident to anesthesia care and monitoring services.
Payment for anesthesia services is also based on the anesthesia CF
instead of the general PFS CF.
(3) Section 139(a) of the MIPPA
Section 139(a) of the MIPPA adds a new paragraph at section
1848(a)(6) of the Act to establish a ``special payment rule for
teaching anesthesiologists''. This provision allows payment to be made
at the regular fee schedule rate for the teaching anesthesiologist's
involvement in the training of residents in either a single anesthesia
case or in two concurrent anesthesia cases furnished on or after
January 1, 2010.
(4) Discussion
The Accreditation Council on Graduate Medical Education (ACGME) is
a branch of the AMA, and it accredits allopathic residency programs. In
order for a hospital to receive Medicare graduate medical education
payments for its training programs, the residents must be in an
``approved medical residency program'' Under Sec. 413.75(b), an
approved medical residency program is one approved by one of the
national organizations listed in Sec. 415.152. One of the national
organizations is the ACGME.
ACGME's policies and procedures require that each accredited
residency program comply with the institutional requirements and the
specialty program requirements. For approved anesthesia residency
programs, ACGME requirements for faculty supervision and training of
anesthesia residents specify that a faculty member not direct
anesthesia at more than two anesthetizing locations in the clinical
setting. (See the ACGME Web site at http://www.acgme.org.)
Consistent with this requirement, the American Society of
Anesthesiologists (ASA) has advised us that, when providing services in
two concurrent cases, a teaching anesthesiologist might be engaged in
two concurrent anesthesia resident cases, or in two mixed concurrent
cases, one a resident case and the other a CRNA or AA case.
The statute applies the special payment rule for teaching
anesthesiologists to the single resident case or two concurrent cases
involving anesthesia residents as long as the teaching anesthesiologist
meets the requirements in sections 1848(6)((A) and 1848(6)(B) of the
Act. However, the statute does not directly address a single resident
case that is concurrent to another case involving a CRNA, AA, or other
qualified individual who can be medically directed. The issue is
whether the medical direction payment rules apply to each of these
cases or whether an alternative payment policy may apply.
As an alternative to applying the medical direction payment rules
to the concurrent mixed cases, we proposed to apply the payment rule
for teaching anesthesiologists to the resident case that is concurrent
to another case which is paid under the medical direction payment
rules. While this represents a broader interpretation, it still limits
the applicability of the special payment rule for teaching
anesthesiologists to resident cases consistent with the terms of
section 139 of the MIPPA. (See 74 FR 33603 for a more detailed
discussion of this option.)
Accordingly, we proposed to delete the current regulatory language
at Sec. 414.46(e) (which is no longer relevant) and add new language
to specify that the special payment rule for teaching anesthesiologists
applies to resident cases under the following scenarios:
The teaching anesthesiologist is involved in one resident
case (which is not concurrent to any other anesthesia case);
The teaching anesthesiologist is involved in each of two
concurrent resident cases (which are not concurrent to any other
anesthesia case); or
The teaching anesthesiologist is involved in one resident
case that is concurrent to another case paid under medical direction
payment rules.
Other than the application of the special payment rule for teaching
anesthesiologists in the mixed concurrent case described above, we did
not propose any other revisions to our medical direction payment
policies.
Comment: Commenters supported our interpretation of section 139 of
the MIPPA that allows the special payment rule for teaching
anesthesiologist to apply if the teaching anesthesiologist is involved
in one resident physician case that is concurrent to another case paid
under the medical direction payment rules.
Response: We believe this interpretation is consistent with the
statute and the ACGMS requirements that allow no more than two
residents to be supervised concurrently. Our policy would allow the
special teaching rule to apply in mixed concurrent cases, that is, the
single resident case that is concurrent to another case not involving a
resident that is paid under our medical direction payment rules. We are
revising Sec. 414.46 in this final rule with comment period as
proposed.
Comment: Some commenters asked if there will be new claims service
modifiers created for the teaching anesthesiologist or whether teaching
anesthesiologists would continue to us the ``AA'' service modifier.
They also asked if the ``GC'' modifier would continue to be used for
physician supervision of resident cases.
Response: At this time, we are not creating a new claims service
modifier for teaching anesthesiologists, but will inform teaching
anesthesiologists to continue to use the ``AA'' modifier if they
qualify as the teaching anesthesiologist under the three specific
scenarios discussed above. The teaching anesthesiologist should also
continue to use the ``GC'' certification modifier. (See Internet Only
Manual (IOM) Medicare Claims Processing Manual Chapter 12, Section 50
K., titled Anesthesia Claims Modifiers. This can be found at
www.cms.hhs.gov/manuals.)
b. Teaching Anesthesiologists: Criteria for Payment
(1) Criteria for Payment of Teaching Anesthesiologists
As part of the special payment rule established for teaching
anesthesiologists, the statute requires that the teaching
anesthesiologist is present during all key or critical

[[Page 61869]]

portions of the anesthesia procedure involved. In addition, the
teaching anesthesiologist (or another anesthesiologist with whom the
teaching anesthesiologist has entered into an arrangement) must be
immediately available to furnish anesthesia services during the entire
procedure.
In the proposed rule, we discussed two options for implement this
provision. One option would allow different teaching anesthesiologists
in the same anesthesia group practice to be considered the ``teaching
physician'' for purposes of being present at the key or critical
portions of the anesthesia procedure. This option would permit a
teaching anesthesiologist to handoff a key or critical portion of the
anesthesia procedure to another teaching anesthesiologist as long as
the other anesthesiologist is a member of the same group. Another
option presented was to require that only one teaching anesthesiologist
must be present during all of the key or critical portions of the
procedure, which would effectively permit no handoffs. We proposed to
more narrowly interpret the law and require that only one individual
teaching anesthesiologist be present during all of the key or critical
portions of the anesthesia procedure.
Anesthesiologists, including the ASA, have advised us that it may
be common for different members of a teaching anesthesia group to
provide the anesthesia service instead of a single teaching
anesthesiologist. In the proposed rule, we solicited comments on how
continuity of care and the quality of anesthesia care are preserved
during handoffs, whether there is an accepted maximum number of
handoffs, any industry studies that have examined this issue, what
factors contribute to handoffs, and whether there are anesthesia
practices that do not use handoffs. A handoff refers to any transfer of
care for any period or a terminal transfer between two anesthesia
providers during a single anesthesia case.
Comment: The ASA and many of its members stated the reasons for
handoffs and their presumed benefits. In general, the commenters
remarked that handoffs can improve the efficiency of operating rooms,
permit teaching anesthesiologists to use their specialized skills to
teach anesthesia residents in certain cases, prevent physician fatigue
and error, and improve quality and patient safety.
Several medical organizations objected to our proposal and
recommended that we implement the alternative proposal in the proposed
rule to permit different anesthesiologists in the same anesthesia group
practice to be considered the teaching anesthesiologist for purposes of
being present at the key or critical periods of the anesthesia case.
Some commenters discussed handoffs in general and did not
specifically tie their comments regarding handoffs to a key or critical
period of the teaching anesthesia service.
Some commenters cited a 1982 study in the Journal of Anesthesiology
(56:456-461), titled ``Critical Incidents Associated with
Intraoperative Exchanges of Anesthesia Personnel''. This article
examined anesthesia practices from four hospitals in Boston, two of
which were teaching hospitals. The study examined 1,089 reports of
preventable errors and failures associated with anesthesia management.
In 28 incidents, the relief anesthesia provider in the handoff
discovered an error or cause of an error. Although 70 of the 1089 were
associated with substantive negative outcomes, none of these incidents
were caused by a relieving anesthetist related to a handoff.
The study noted that ``there is a strong implication that relief is
beneficial more often than not even aside from the presumed beneficial
effect on the vigilance of the primary anesthetists.'' The study
further noted that from the descriptions of the causes and discoveries
of errors in these relief-related incidents, guidance can be drawn for
the safe and effective conduct of the intraoperative exchange of
anesthesia personnel. This article referred to substitutions for short
breaks during long surgical procedures. It did not specify whether any
of these substitutions took place during key or critical periods of the
teaching case.
Based on its study of relief-associated events, the authors
suggested the adoption of specific handoff protocols and communication
processes to reduce errors. This protocol would address such factors as
familiarity with the status of the patient, progress of the surgical
procedure, trends in the anesthetic course, significant medical
history, anesthesia plan, and arrangement of equipment, apparatus,
drugs, and fluids. This is the only study on handoffs that commenters
presented.
In its comments, the ASA described the ``SBAR'' protocol, or a
variation of it, as the handoff procedure most widely taught and used
in anesthesia practices, both academic and private. The SBAR protocol
gives physicians a format to follow when initiating handoffs. SBAR is
an acronym used to describe four basic requirements for transfer of
patient care:
S = Situations: State what is going on with the patient, the type
of procedure and when it started
B = Background: Explain clinical background leading up to the
situation, including medical history, medications, allergies,
anesthetic management (including drugs, fluids, and blood loss, etc.)
A = Assessment: Provide an assessment of the current state of the
patient and describe what problems, if any, you think exist.
R = Recommendation: Recommend what you think needs to be done.
According to the ASA, some anesthesia departments have defined
written protocols that they follow for handoffs, but many do not
because the fundamentals of the handoff process are part of the skill
set that is believed to be taught and practiced by all teaching
anesthesiologists.
The ASA simply expressed the opinion that the appropriate timing of
a handoff is a decision best left to the physicians responsible for the
care of the patient. The ASA also stated that to raise the issue of
quality in anesthesia handoffs where no issue or evidence exists
exceeds CMS's authority in implementing section 139 of the MIPPA. The
ASA is supportive of an approach where its members use their judgment
to decide when to use handoffs and the necessary information exchanged.
The ASA recommended that we implement the payment provision only and
leave any issues involving handoffs unexamined.
Response: Despite the existence of the SBAR protocol, it is unclear
to what extent teaching hospitals have now developed standardized
tools, checklists, clinical practice guidelines, or other techniques to
ensure the appropriate exchange of information, including the
appropriate type and content of anesthesia information, and the
assurance that optimum care occurs during handoffs.
We identified two abstracts to be presented to the ASA later this
year that present limited information on handoffs. One study,
``Transfer of Anesthesia Care: Are We Hiding Bad Outcomes?'' by Vilma
A. Joseph, M.D., M.P.H., Charles E. Kamen, B.A., Rhonda D. Levine,
M.D., Alla Krayman, M.S., and Robert S. Lagasse, M.D. This study showed
that of 1740 anesthesia cases without a transfer of care, there were 12
recorded adverse outcomes, while there were zero adverse outcomes in
the 132 cases where there was a transfer of care. The other study is:
``Evaluating Safety of Handoffs between Anesthesia Care Providers'' by
Rhonda Leopold, M.D., Stuart Hart, M.D., Heather Scuderi

[[Page 61870]]

Porter, B.A., and Neil Giovanni, M.D.''. This study pointed out that
there are not many tools available for anesthesia care providers to
ensure that the transfer of care occurs without error. In 70 completed
surveys involving the transfer of care, 34 percent of anesthesia care
providers found the current handoff process to be inadequate. The
majority did believe that standardization of the process would improve
patient care.
There appears to be a limited amount of research on handoffs, and a
lack of a detailed, industry-defined process on their use. Commenters
did not report widespread use of written protocols by academic
facilities.
As noted previously, we think the teaching anesthesiologist payment
policy in section 139 of the MIPPA and the handoff issues are separate,
but related issues. The handoff issue is a quality of care issue not
directly addressed in section 139 of the MIPPA. Therefore, we are
implementing the payment provision of section 139 but not finalizing a
formal policy on handoffs in this final rule. For future rulemaking, we
may consider working with the industry to develop guidelines on
handoffs. These guidelines may, among other things, address the content
and type of information exchanged during handoffs and whether there
should be any limitations on the number of handoffs permitted.
In response to comments, we believe it is appropriate to implement
this payment provision consistent with current teaching anesthesia
practices and handoff arrangements. Thus, different anesthesiologists
in the same anesthesia group practice can be considered the teaching
physician for purposes of the statutory requirement that the teaching
anesthesiologist be present at the key or critical portions of the
anesthesia service. Of course, the criteria for the presence of the
teaching physician would also be met if only one teaching
anesthesiologist was present during the key or critical periods of the
anesthesia service.
We are revising Sec. 415.178 to incorporate our policy that allows
either a single teaching anesthesiologist or different teaching
anesthesiologists in the same anesthesia group practice to be
considered the teaching physician for purposes of being present at the
key or critical portions of the anesthesia service.
c. Teaching CRNAs
(1) Payment for Anesthesia Services Furnished by a CRNA
Currently, a CRNA who provides anesthesia services while under the
medical direction of an anesthesiologist is paid at 50 percent of the
regular fee schedule rate as specified in section 1833(l)(4)(B)(iii) of
the Act. A CRNA who provides anesthesia services without the medical
direction of a physician is paid the regular fee schedule rate as
specified in section 1833(l)(4)(A) of the Act.
(2) Payment for Anesthesia Services Furnished by a Teaching CRNA With a
Student Nurse Anesthetist
The legislation that initially directed CMS to establish the CRNA
fee schedule (that is, section 9320 of the Omnibus Budget
Reconciliation Act of 1986 (Pub. L. 99-509)) did not address payment
for services furnished by teaching CRNAs involved in the training of
student nurse anesthetists.
In the preamble to the CRNA fee schedule final rule published in
the July 31, 1992 Federal Register (57 FR 33888), we stated that we
would pay the teaching CRNA who is not medically directed by a
physician at the regular fee schedule rate for his or her involvement
in a single case with a student nurse anesthetist as long as he or she
was present with the student throughout the anesthesia case. No payment
would be made if the teaching CRNA divided his or her time between two
concurrent cases involving student nurse anesthetists.
In August 2002, based on the recommendations of the American
Association of Nurse Anesthetists (AANA), we modified our policy to
allow the teaching CRNA not medically directed by a physician to be
paid a portion of the regular fee schedule rate for each of two
concurrent cases involving student nurse anesthetists. If the teaching
CRNA is present with the student nurse anesthetist during the pre- and
post-anesthesia care for each of the cases involving student nurse
anesthetists, the teaching CRNA can bill the full base units (comprised
of pre- and post-anesthesia services not included in the anesthesia
time units) for each case and the actual amount of anesthesia time per
case. The resulting payment for each of these anesthesia cases is
greater than 50 percent, but less than 100 percent, of the regular fee
schedule amount because the full base units plus the actual anesthesia
time units spent by the teaching CRNA in each of the two cases yields a
payment that is greater than 50 percent of the regular fee schedule
amount.
(3) Comparison of Payment Policies for Teaching CRNAs and Teaching
Anesthesiologists
For several years, the ASA requested that we revise our payment
regulations to allow the teaching anesthesiologist to be paid the
regular fee schedule amount for each of two concurrent resident cases.
In the CY 2004 PFS final rule with comment period (68 FR 63224), we
finalized a policy to permit the teaching anesthesiologist to be paid
similarly to a teaching CRNA for each of two concurrent resident cases.
This policy took effect for services furnished on or after January 1,
2005.
Thus, the payment policy is the same for a teaching CRNA for each
of two concurrent student nurse anesthetist cases, and for a teaching
anesthesiologist for each of two concurrent resident cases. The policy
is that the anesthesia provider is paid the full base units plus time
units, based on the actual anesthesia time, relating to each of two
concurrent cases.
(4) Payment Policy for an Anesthesiologist, or an Anesthesiologist and
CRNA jointly, With a Student Nurse Anesthetist
Currently, there are circumstances where an anesthesiologist may be
involved in the training of student nurse anesthetists in two
concurrent anesthesia cases. These anesthesia cases are not paid under
the teaching anesthesiologist payment policy, but are paid under the
usual medical direction payment policy. Payment can be made for the
physician's medical direction (that is, 50 percent of the regular fee
schedule amount) for each of two concurrent cases.
If an anesthesiologist is medically directing two concurrent cases
involving student nurse anesthetists and a CRNA is also jointly
involved with the two student nurse anesthetist cases, then the
physician service, in each case, can be paid under the medical
direction rules at 50 percent of the regular fee schedule. Payment for
the CRNA services would also be made at the medically directed rate
(that is, 50 percent of the regular fee schedule) for CRNA services,
but the time units used to compute the anesthesia fee would be based on
the actual time the CRNA is involved in each case.
(5) Section 139(b) of the MIPPA
Section 139(b) of the MIPPA instructs the Secretary to make
appropriate adjustments to Medicare teaching CRNA payment policy so
that it--

[[Page 61871]]

Is consistent with the adjustments made by the special
payment rule for teaching anesthesiologists under section 139(a) of the
MIPPA; and
Maintains the existing payment differences between
teaching anesthesiologists and teaching CRNAs.
We proposed to implement the first directive (under section
139(b)(1) of the MIPPA) by establishing a new payment policy for
teaching CRNAs that is similar to the special payment rule for teaching
anesthesiologists, and to limit applicability of the rule to teaching
CRNAs who are not medically directed. We proposed to add a new
regulation at Sec. 414.61 to explain the conditions under which the
special payment rule will apply and the method for calculating the
amount of payment for anesthesia services furnished on or after January
1, 2010, by teaching CRNAs involved in the training of student nurse
anesthetists. As proposed, we would pay the teaching CRNA at the
regular fee schedule rate for each of two concurrent student nurse
anesthetist cases. Our medical direction payment policy would continue
to apply if both an anesthesiologist and a CRNA are involved in a
student nurse anesthetist case that is concurrent to another medically
directed anesthesia case.
We believe the second directive in section 139(b)(2) of the MIPPA
will be satisfied as a result of these proposals. Section 139(b)(1) of
the MIPPA instructs CMS to make appropriate adjustments to implement a
payment policy for teaching CRNAs that is consistent with the special
payment rule for teaching anesthesiologists. Section 139(b)(2) of the
MIPPA instructs CMS to maintain the existing payment differences
between teaching anesthesiologists and teaching CRNAs. There currently
are no substantive differences in payment between teaching
anesthesiologists and teaching CRNAs, and there would continue to be no
such differences under our proposed policies.
Payment for Teaching CRNAs Involved in Anesthesia Cases With Student
Nurse Anesthetists
Under current policy, when a CRNA is involved in a single student
nurse anesthetist case, the teaching CRNA can be paid at the regular
fee schedule rate if the teaching CRNA is present with the student for
the pre- and post anesthesia services included in the base units and is
continuously present during the anesthesia time of the case. We did not
propose any change to this policy.
When the teaching CRNA is involved in two concurrent student nurse
anesthetist cases, payment is based on the amount of anesthesia time
the teaching CRNA spends with the student in each case. For example, as
noted in the proposed rule, if the teaching CRNA spends 40 percent of
his or her time in concurrent case 1 and 60 percent of his or
her time in concurrent case 2, and the total anesthesia time
in both cases is 3 hours (or 180 minutes), then we would currently pay
as follows:
Case #1: (Base units + (0.4 x 180/15)) x Anesthesia CF
Case #2: (Base units + (0.6 x 180/15)) x Anesthesia CF
(The base units are explained earlier in section on general
anesthesiology payment methodology.)
The current payment policy has been predicated on paying the
teaching CRNA for his or her actual time spent in the student nurse
anesthetist case. In the CY 2010 PFS proposed rule, we proposed to pay
the teaching CRNA at the regular fee schedule rate for his or her
involvement in two concurrent cases. To bill the base units for each
concurrent case, the teaching CRNA must be present with the student
nurse anesthetist during the pre and post anesthesia services included
in the anesthesia base units.
If our goal is to minimize the effect of this change on teaching
CRNAs' practice arrangements and time devoted to cases, then, as
proposed, the teaching CRNA would continue to devote his or her time to
the two concurrent anesthesia cases and not be involved in other
services. The teaching CRNA would decide how to allocate his or her
time to optimize patient care in the two cases based on the complexity
of the anesthesia case, the experience and skills of the student nurse
anesthetist, the patient's health status, and other factors.
We note that the Congress did not amend the statutory provisions
relating to medical direction at section 1848(a)(4) of the Act. We do
not believe the directives at section 139(b) of the MIPPA extend to
other arrangements in which an anesthesiologist alone or both an
anesthesiologist and CRNA together jointly supervise student nurse
anesthetists during concurrent anesthesia cases. Therefore, we did not
propose any changes to our current payment policies for anesthesia
services furnished under other circumstances. We proposed that when an
anesthesia provider (physician or CRNA) furnishes anesthesia services
in concurrent cases under other circumstances, the current policies
regarding medical direction will continue to apply.
The following is summary of the comments we received regarding
section 139 of the MIPPA and teaching CRNAs.
Comment: Commenters supported the proposal to allow teaching CRNAs
who are concurrently teaching two student nurse anesthetists to be able
to bill the regular fee schedule rate for each anesthesia case
involving the student nurse anesthetist. The commenters indicated this
change is consistent with the adjustment made under section 139 of the
MIPPA for teaching anesthesiologists involved in two concurrent
resident cases.
Response: We are adopting our proposal that the teaching CRNA can
be paid the full fee for his or her involvement in each of two
concurrent cases involving student nurse anesthetists. While we are
adopting this policy, we are concerned that it did not specifically
address the availability of another anesthesia provider for the periods
of concurrency for student nurse anesthetists. (In the case of teaching
anesthesiologists and residents, section 139 specifically requires that
the teaching anesthesiologist or another anesthesiologist with whom the
teaching anesthesiologist has an arrangement is immediately available
to furnish anesthesia services during the entire procedure.)
Subsequent to issuing the proposed rule and receiving comments, we
learned more about the supervision requirements for student nurse
anesthetists. According to the AANA, the standards of the Council on
Accreditation of Nurse Anesthesia Programs address supervision of
student nurse anesthetists in anesthesia cases. These standards require
that in any case involving a student nurse anesthetist, including
concurrent cases, a qualified anesthesia provider (CRNA or
anesthesiologist) must be present and immediately available in the
anesthetizing locations.
Furthermore, according to these standards, the qualified individual
must be physically present in the area and immediately available for
the student to summon for clinical assistance should it be required. As
a result, if one teaching CRNA were temporarily occupied, another
qualified anesthetist would respond.
Based on information received and in response to comments, we are
requiring that the teaching CRNA be present during the case with the
student nurse anesthetist. For periods of concurrency for two student
nurse anesthetist cases, we are requiring that another anesthesia
provider is available and can fulfill the requirements of the AANA
standards.
Comment: Some commenters requested that we establish the same
policy specified in section 139(a) of the MIPPA for teaching
anesthesiologists

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involved in two concurrent resident cases for situations where an
anesthesiologist medically directs two concurrent student nurse
anesthetists cases. The commenters stated that this would establish
payment equity between teaching anesthesiologists and teaching CRNAs
and not encourage anesthesiologists to select residents over student
nurse anesthetists where the hospital has both types of anesthesia
providers.
Response: We understand the commenters' concern and agree that
their proposal would establish parity of payment in certain respects.
However, in the proposed rule, we noted that the Congress did not amend
the statutory provision relating to medical direction at section
1848(a)(4) of the Act. We do not believe the directives at section
139(b) of the MIPPA extend to arrangements in which anesthesiologists
supervise two student nurse anesthetists during concurrent cases. While
the anesthesiologist may engage in a teaching situation with a student
nurse anesthetist, this does not constitute a teaching anesthesiologist
relationship as conceived in the statute. The term ``teaching
anesthesiologist'' as used in the Medicare statute refers to a teaching
physician involved with a physician resident. Therefore, we will
maintain our current policy that when an anesthesiologist is involved
in two concurrent cases with student nurse anesthetists, the medical
direction rules will apply.
Additionally, if we were to consider paying each student nurse
anesthetist case at the regular fee schedule amount, it would be
unclear what payment criteria would apply for the physician service.
The teaching anesthesiologist criteria in section 139(a) of the MIPPA
apply only to physician resident cases and not to student nurse
anesthetist cases. It also does not seem appropriate to pay the regular
fee schedule rate if the services fall within the terms of the
statutory provision addressing medical direction under which the
anesthesiologist is paid at 50 percent of the regular fee schedule
rate. Therefore, we believe the most appropriate course is to maintain
our current policy.
Comment: Commenters also requested that, in medical direction cases
where there are two concurrent student nurse anesthetists directed by
the anesthesiologist and one CRNA covering both student nurse
anesthetist cases, that each medically directed CRNA service be paid at
the usual medically directed rate or 50 percent of the anesthesia fee
schedule.
Response: We make payment at 50 percent of the regular fee schedule
amount for the physician who is medically directing the CRNA. We also
make payment at 50 percent of the regular fee schedule amount for the
service of the CRNA who is involved continuously with the patient in
the administration of the anesthesia service. In the anesthesia
scenario described in the comment, the student nurse anesthetist can be
medically directed but payment cannot be made for the student nurse
anesthetist service because he or she is not a qualified CRNA. If the
CRNA is involved in two concurrent cases with the student nurse
anesthetist, then we do not believe it would be reasonable to pay the
usual medical direction fee for the CRNA service because the CRNA is
not with the student throughout the case. We are finalizing the policy
we proposed that the payment for the CRNA service would be made under
the medical direction rules at 50 percent of the regular fee schedule
amount, but that the time units used to compute the anesthesia fee
would be based on the actual time the CRNA is involved in the case.
Comment: One commenter requested that CMS provide parallel rules
for payment involving handoffs for all anesthesia providers, both
teaching anesthesiologists and teaching CRNAs. Specifically, the
commenter requested that CMS define anesthesia handoffs as the
responsibility for care clearly transferred from one qualified
anesthesia provider to the next; that handoffs are allowed for all
portions of an anesthesia case; and that CRNAs be treated equitably as
anesthesiologists.
Response: We addressed handoffs for teaching anesthesiologists in
conjunction with our interpretation of the specific provision in
section 139 of the MIPPA for coverage of teaching anesthesiologists
with residents. We did not address handoff rules for teaching CRNAs.
Because we made no proposal on this subject, we are not implementing
the commenters' suggestion at this time.
Comment: A commenter requested that we establish a different
payment modifier for teaching CRNAs to use for billing purposes when
teaching student nurse anesthetists in single or concurrent cases.
Currently, teaching CRNAs bill these services using the ``QZ'' modifier
which is the same modifier they would use if they furnished the service
alone. A new payment modifier would allow for differentiation in the
claims processing system between the non-medically directed CRNA cases
with student nurse anesthetists and those without the involvement of
student nurse anesthetists.
Response: For the present, we will continue to use the existing
claims modifier but will give consideration to whether a different
modifier is needed to distinguish teaching CRNA cases from cases
performed by a CRNA alone.
Comment: A commenter asked if the anesthesia teaching rules apply
to an anesthesiologist assistant (AA). The services of AAs can be paid
under the CRNA medical direction payment rules, but AAs must work under
the supervision of an anesthesiologist.
Response: Our proposal applies only to teaching CRNAs who supervise
student nurse anesthetists or to an anesthesiologist who provides
medical direction for two concurrent cases involving student nurse
anesthetists. It does not apply to AAs.
8. Section 144(a): Payment and Coverage Improvements for Patients with
Chronic Obstructive Pulmonary Disease and Other Conditions--Cardiac
Rehabilitation Services
Section 144(a) of the MIPPA amended Title XVIII of the Act, in
pertinent part, to establish the benefit of cardiac rehabilitation (CR)
and intensive cardiac rehabilitation (ICR) under Medicare Part B. The
statute specifies certain conditions for these programs, with an
effective date of January 1, 2010. The addition of the new CR and ICR
programs is designed to improve the health care of Medicare
beneficiaries with cardiovascular disease. This final rule with comment
period implements these MIPPA provisions in order to ensure CR and ICR
programs enhance the patient's clinical outcomes.
a. Background
Intensive cardiac rehabilitation (ICR) is a relatively new practice
that is also commonly referred to as a ``lifestyle modification''
program. These programs typically involve the same elements as CR
programs, but are furnished in highly structured environments in which
sessions of the various components may be combined for longer periods
of CR and may be more rigorous.
b. Cardiac Rehabilitation Coverage Under Medicare
One mechanism we use to establish coverage for certain items and
services is the national coverage determination (NCD) process. An NCD
is a determination by the Secretary with respect to whether or not a
particular item or service is covered nationally under Title XVIII.

[[Page 61873]]

Since 1982, Medicare has covered, under an NCD, cardiac
rehabilitation for patients who experience stable angina, have had
coronary artery bypass grafts, or have had an acute myocardial
infarction within the past 12 months. The NCD is located in the
Medicare NCD Manual (Pub. 100-03), section 20.10. Effective March 22,
2006, we modified the NCD language to cover comprehensive cardiac
rehabilitation programs for patients who experience one of the
following:
A documented diagnosis of acute myocardial infarction
within the preceding 12 months.
A coronary bypass surgery.
Stable angina pectoris.
A heart valve repair/replacement.
A percutaneous transluminal coronary angioplasty (PTCA) or
coronary stenting.
A heart or heart-lung transplant.
Comprehensive programs must include a medical evaluation, a program
to modify cardiac risk factors, prescribed exercise, education, and
counseling and may last for up to 36 sessions over 18 weeks or no more
than 72 sessions over 36 weeks if determined appropriate by the local
Medicare contractors. Facilities furnishing cardiac rehabilitation must
have immediately available necessary cardio-pulmonary, emergency,
diagnostic, and therapeutic life-saving equipment and be staffed with
personnel necessary to conduct the program safely and effectively who
are trained in advanced life support techniques and exercise therapy
for coronary disease. The program must also be under the direct
supervision of a physician. Until section 144(a) of the MIPPA is
effective on January 1, 2010. ICR programs are covered under this NCD
and are subject to the same coverage requirements.
c. Statutory Authority
Section 144(a) of the MIPPA amended the Medicare Part B program by
adding new sections 1861(s)(2)(CC) and 1861(s)(2)(DD) of the Act to
include items and services furnished under a new benefit referred to as
a ``cardiac rehabilitation program'' and an ``intensive cardiac
rehabilitation program,'' respectively. A cardiac rehabilitation
program is defined in new section 1861(eee)(1) of the Act and an
intensive cardiac rehabilitation program is defined in new section
1861(eee)(4)(A) of the Act.
A cardiac rehabilitation program is a physician-supervised program
that furnishes the following: physician-prescribed exercise; cardiac
risk factor modification, including education, counseling, and
behavioral intervention; psychosocial assessment; outcomes assessment;
and other items or services as determined by the Secretary under
certain conditions. These items and services must be furnished in a
physician's office, in a hospital on an outpatient basis, or in other
settings as determined appropriate by the Secretary. A physician must
be immediately available and accessible for medical consultation and
emergencies at all times items and services are being furnished in a CR
program except when provided in a hospital setting where such
availability is presumed. The items and services furnished by a CR
program are individualized and set forth in written treatment plans
that describe the patient's individual diagnosis; the type, amount,
frequency, and duration of items and services furnished under the plan;
and the goals set for the individual under the plan. These written
plans must be established, reviewed, and signed by a physician every 30
days.
An ICR program provides the same items and services under the same
conditions as CR programs but must demonstrate, as shown in peer-
reviewed published research, that they have accomplished one or more of
the following: positively affected the progression of coronary heart
disease, or reduced the need for coronary bypass surgery, or reduced
the need for percutaneous coronary interventions (PCIs). The peer-
reviewed published research must also show that the ICR program has
resulted in a statistically significant reduction in 5 or more measures
from their levels before ICR services to their levels after receipt of
such services. These measures include low density lipoprotein;
triglycerides; body mass index; systolic blood pressure; diastolic
blood pressure; or the need for cholesterol, blood pressure, and
diabetes medications. Beneficiaries eligible for ICR must have
experienced the following: an acute myocardial infarction within the
preceding 12 months; a coronary bypass surgery; current stable angina
pectoris; a heart valve repair or replacement; a percutaneous
transluminal coronary angioplasty (PTCA) or coronary stenting; or a
heart or heart-lung transplant. Section 1861(eee)(4)(C) of the Act, as
added by section 144(a)(1)(B) of the MIPPA, states that an ICR program
may be provided in a series of 72, 1-hour sessions (as defined in
section 1848(b)(5) of the Act), up to 6 sessions per day, over a period
of up to 18 weeks.
The statute authorizes the Secretary to establish standards for the
physician supervising the ICR and/or CR programs to ensure that the
physician has expertise in the management of individuals with cardiac
pathophysiology and is licensed by the State in which the CR program
(or ICR program) is offered. These standards ensure that the physician
is responsible for the program and, in consultation with appropriate
staff, is involved substantially in directing the progress of
individuals in the program.
d. Provisions of the Proposed Regulation
We proposed to add Sec. 410.49, ``Cardiac Rehabilitation Program
and Intensive Cardiac Rehabilitation Program: Conditions of Coverage''
to our regulations.
Below is a summary of what we proposed for the new ICR and CR
benefit in the proposed rule. (To read the proposed rule in its
entirety, see the CY 2010 PFS proposed rule (74 FR 33606 through 33610,
and 33675 through 33676.)
We proposed definitions with respect to the programs and services
related to CR and ICR programs.
We listed the cardiac-related conditions for which CR and ICR items
and services are eligible for coverage under this new benefit. We
received several comments to add other conditions unrelated to cardiac
conditions and will address those comments in section II.G.8.e. below.
We proposed that CR and ICR programs may only be provided in a
physician's office or a hospital on an outpatient basis. Any additional
settings will be added through future rulemaking.
We proposed that only a physician as defined in section 1861(r)(1)
of the Act may establish the written individualized treatment plan,
review the plan and update that plan. We received a few comments on
this provision, specifically requesting that staff other than the
physician should be able to update the plan. We address those comments
in the section II.G.8.e. of this rule.
We proposed components of the CR and ICR program. All of the items
and service related to the ICR and CR programs must be individualized
to the beneficiary and delivered as part of the CR and ICR program. Any
additional mandatory items and services will be added through future
rulemaking.
We defined outcomes assessment as an evaluation of the patient's
progress in the program using assessments from the commencement and
conclusion of CR and ICR programs that are based upon patient centered
outcomes. We also outlined the timing of when the patient centered
outcomes must be measured--at the beginning of the CR and ICR program,
prior to each 30-day review of

[[Page 61874]]

the individualized treatment plan, and at the end of the CR and ICR
program.
Based on the outcomes assessment, the beneficiaries' plan of care
should be updated as needed to ensure that the beneficiary continues to
receive appropriate items and services based on his or her clinical
needs.
We proposed the number of sessions that may be provided to a
beneficiary participating in a CR program. The number of sessions that
may be provided as part of an ICR program were specifically set forth
in the statute and were included in the proposed rule as well.
We requested comments for specific physician standards that should
be required to ensure that the physician is qualified to supervise the
CR and ICR program. In addition to requesting comments for physician
standards, we discussed two physician roles in the CR and ICR programs.
Medical director: The physician who oversees or supervises
the CR and ICR program at each site and who has expertise in the
management of patients with cardiac pathophysiology. This person must
be involved substantially in directing the progress of individuals in
the program.
Supervising physician: A physician that is immediately
available and accessible for medical consultations and medical
emergencies at all times items and services are being furnished under
the CR and ICR program. This physician must also have expertise in the
management of individuals with cardiac pathophysiolgy.
We have added definitions for the medical director and supervising
physician to the regulations text and discuss these additions in
section II.G.8.f. of this final rule with comment period.
We noted in the proposed rule that physician supervision of the
program is limited to a physician who is the program medical director
or a program staff physician serving as the supervising physician. This
person must be a physician as defined in section 1861(r)(1) of the Act
and not another CR or ICR staff member.
We proposed that the statutorily-required ongoing physician
availability for medical consultations and medical emergencies would be
met through existing definitions for direct physician supervision in
physicians' offices and hospital outpatient departments at Sec.
410.26(a)(2) (defined through cross references to Sec.
410.32(b)(3)(ii)) and Sec. 410.27(f), respectively. We stated that
direct supervision, as defined in the regulations, is consistent with
the language of the MIPPA because the physician must be present and
immediately available where the services are being furnished. The
physician must also be able to furnish assistance and direction
throughout the performance of the services, which would include medical
consultations and medical emergencies.
For CR and ICR services provided in physicians' offices and other
Part B settings paid under the PFS, we proposed that the physician must
be present in the office suite and immediately available to furnish
assistance and direction throughout the performance of the service or
procedure in accordance with the Sec. 410.26(b)(5) as described in
Sec. 410.26(a)(2) of this subpart (defined through cross references to
Sec. 410.32(b)(3)(ii) of this subpart). This does not mean that the
physician must be in the room when the service or procedure is
performed.
For CR and ICR services provided to hospital outpatients, direct
physician supervision is the standard set forth in the April 7, 2000
OPPS final rule with comment period (68 FR 18524 through 18526) for
supervision of hospital outpatient therapeutic services covered and
paid by Medicare in hospitals and provider-based departments of
hospitals. We stated that we currently define and specify the
requirement for direct supervision for services furnished in provider-
based departments of hospitals at Sec. 410.27(f). For this purpose,
the physician must be on the premises of the location (meaning the
provider-based department) and immediately available to furnish
assistance and direction throughout the performance of the procedure.
This does not mean that the physician must be present in the room when
the procedure is furnished. We also noted that if we were to propose
future changes to the physician office or hospital outpatient policies
for direct physician supervision, we would provide our assessment of
the implications of those proposals for the supervision of cardiac
rehabilitation services at that time. We note that in the CY 2010 OPPS/
ASC proposed rule (74 FR 35362 through 35370), we proposed changes to
the policy for direct physician supervision of hospital outpatient
therapeutic services. We have addressed the application of the proposed
and final hospital outpatient physician supervision policies in section
II.G.8.e. below.
The MIPPA provisions state that in the case of items and services
furnished under such a program in a hospital, physician availability
shall be presumed. As we have stated in the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68702 through 68704), the longstanding
presumption relating to direct physician supervision for hospital
outpatient services means that direct physician supervision is the
standard for supervision of hospital outpatient therapeutic services
covered and paid by Medicare in hospitals and provider-based
departments of hospitals, and we expect that hospitals are providing
services in accordance with this standard.
We received the majority of the comments on the above supervising
physician provision and have addressed those in section II.G.8.e. of
this final rule.
In our proposal, we noted that the program medical director may
fulfill both roles of medical director and supervising physician (of
individual CR and ICR services furnished to patients) provided that the
requirements for direct physician supervision as required in Sec.
410.26 and Sec. 410.27 are met when CR or ICR items and services are
furnished, as discussed above.
In addition to the CR requirements, section 1861(eee)(4) of the Act
requires ICR programs to meet several additional standards. To become
qualified, an ICR program must demonstrate through peer-reviewed,
published research that it has accomplished one or more of the
following: (1) Positively affected the progression of coronary heart
disease; (2) reduced the need for coronary bypass surgery; or (3)
reduced the need for percutaneous coronary interventions (PCIs). A
qualified ICR program must also demonstrate through peer-reviewed
published research that the ICR program accomplished a statistically
significant reduction for patients in 5 or more specific measures from
the individual's levels before ICR services to their levels after
receipt of such services. These measures include: (1) Low density
lipoproteins; (2) triglycerides; (3) body mass index; (4) systolic
blood pressure; (5) diastolic blood pressure; and (6) the need for
cholesterol, blood pressure, and diabetes medications. To ensure that
ICR programs meet these standards, we proposed that ICR programs apply
to CMS to receive approval as a qualified ICR programs. Only approved
programs would be eligible for Medicare coverage and would be required
to undergo regular re-evaluation to maintain such status. We did not
propose any specific approval process(es), but requested comments on
what process should be adopted by CMS. No comments were received
advocating for any specific process(es), but we did receive comments
requesting that any process adopted must allow public input and be open
and transparent. We have

[[Page 61875]]

addressed these comments and the ICR approval process in section
II.G.8.e. of this final rule.
e. Analysis of and Response to Public Comments
We received over 100 public comments. Many were supportive of our
proposals to establish CR and ICR rules. Most comments also addressed
several of the proposed provisions in the rule. The following is a
summary of the issues and our responses.
Comment: Regarding the application of the direct physician
supervision requirement to hospital outpatient services, many
commenters noted that the CY 2010 PFS proposed rule cited references to
the current regulations in Sec. 410.27(f), while the CY 2010 OPPS/ASC
proposed rule proposed several new policies for the direct supervision
of hospital outpatient therapeutic services. The commenters requested
that CMS clarify that for hospital outpatient services, the proposed
definitions and policies would apply.
Response: We understand the commenters' concerns and requests for
clarification and have attempted to clarify the direct physician
supervision requirement below. The proposed general policies for the
direct supervision of hospital outpatient therapeutic services would
apply to CR and ICR services furnished to hospital outpatients, with
the exception of the required credentials of the supervising
practitioner, as specifically discussed in the CY 2010 OPPS/ASC
proposed rule for CR and ICR services. Consistent with section
1861(eee)(2)(B) of the Act, a physician must be the supervising
practitioner for CR and ICR services in a hospital setting. The final
policies for payment and direct physician supervision of CR and ICR
services furnished to hospital outpatients are discussed in detail in
section XII.B.3. through 4. of the CY 2010 OPPS/ASC final rule with
comment period.
Comment: Several commenters requested that CMS allow NPPs to
satisfy the physician supervision requirements for CR and ICR services.
The commenters stated that the proposal in the CY 2010 OPPS/ASC
proposed rule would allow certain NPPs (nurse practitioners, physician
assistants, clinical nurse specialists and certified nurse-midwives) to
provide direct supervision of services which they may perform
themselves within their State scope of practice and hospital-granted
privileges and following all other requirements. The commenters
concluded that CMS should not exclude CR and ICR services from this new
policy.
Response: We understand the commenters' concern regarding allowing
NPPs to satisfy the physician supervision requirement. We cannot adopt
this request because the statutory language of the MIPPA defines both
cardiac rehabilitation and intensive cardiac rehabilitation as
``physician-supervised'' programs. A physician is defined in section
1861(r)(1) of the Act. The MIPPA also specifically requires that ``a
physician is immediately available and accessible for medical
consultation and medical emergencies at all times items and services
are being furnished under the program * * *;'' The text of the statute
uses the word ``physician'' and does not include NPPs. We believe,
based on the statutory language in MIPPA and the statutory definition
of physician, that the statute does not provide us the flexibility to
allow the supervising role to be filled by a non-physician
practitioner. In other words, for the purposes of the CR and ICR
programs, whether furnished in a physician's office, hospital
outpatient setting or other Part B setting, the direct physician
supervision definition applies only to a physician as defined in
section 1861(r)(1) of the Act.
Comment: Several commenters requested that CMS remove the
requirement from Sec. 410.49(f) for patients to participate in a
minimum of 2 CR sessions per week. The comments noted that such a
requirement is not supported by specific published evidence and that
many patients benefit from fewer than 2 sessions of CR per week. In
addition, patients who have difficulty attending CR (due to long
traveling distance, limited access to transportation, etc.) may not be
able to attend 2 sessions per week and should not be prohibited from
participating in CR because of transportation barriers.
Response: We understand and agree with these concerns and have
removed from Sec. 410.49(f) the requirement for patients to
participate in a minimum of 2 CR sessions per week, as improved
outcomes have been demonstrated in patients who participate in fewer
than 2 CR sessions each week.
Comment: Many commenters also recommended that CMS revise the time
period over which patients are eligible for CR services. The commenters
suggested that we allow coverage for CR services for up to 36 sessions
over 36 weeks. Additional commenters requested that we remove a
provision that enabled Medicare contractors to extend coverage to up to
72 sessions.
Response: We agree with the comments requesting coverage for 36
sessions over 36 weeks. We have removed the requirement for CR patients
to participate in a minimum of 2 CR sessions each week, and we have
revised proposed Sec. 410.49(f) to allow up to 36 sessions over 36
weeks. While the proposal to cover up to 36 CR sessions over up to 18
weeks was reasonable and consistent with the NCD, we agree that
improved outcomes have been demonstrated in patients who participate in
as little as one CR session per week.
We disagree with the suggestion that we remove contractor
discretion under section 1862(a)(1)(A) of the Act to approve additional
sessions of CR. As noted in the background, the statute required that
CR programs be highly individualized and structured to meet an
individual's needs. The programs are directed by physicians with
expertise in cardiac pathophysiology. Our experience has been that not
all patients require, and not all supervising physicians support,
additional sessions for all beneficiaries. While some patients may
continue to benefit from additional sessions, we believe that
beneficiaries and the Medicare program will be best served if the 36
additional CR sessions are approved by local Medicare contractors based
on each individual patient's specific circumstances. Therefore, we have
changed the final rule to allow coverage of up to 36 CR sessions for up
to 36 weeks and with the option for Medicare contractors to approve an
additional 36 sessions over an extended period of time. The amount of
additional time is determined by the Medicare contractor.
Comment: Various commenters requested that we use the term
``comprehensive cardiac rehabilitation'' rather than ``general cardiac
rehabilitation'' when referring to CR programs (as opposed to ICR
programs). Other commenters request that CMS not use the term
``intensive cardiac rehabilitation'' when referring to lifestyle
modification programs as such a term implies that these programs are
more effective than CR programs.
Response: We understand the confusion regarding the terminology
used to describe CR and ICR, but do not agree with the public comments
recommending that we use different terminology. We used the adjective
``general'' for ``cardiac rehabilitation'' in the preamble and some
sections of the proposed rule to try to distinguish CR programs from
ICR programs for the benefit of the reader. We accept the commenter's
premise that a different adjective could have been used for that
purpose. In the final regulation text in Sec. 410.49(a), we removed
the adjective ``general.'' We are not adopting the recommendation to
change the adjective

[[Page 61876]]

to ``comprehensive'' cardiac rehabilitation. We believe that term may
be even more confusing given the existence of the separate ``intensive
cardiac rehabilitation'' definition in Sec. 410.49(a). In order to
avoid any confusion caused by an adjective, we will describe the
benefit in section 1861(eee)(1) of the Act as ``cardiac
rehabilitation.'' We will amend the regulation in Sec. 410.49(f) to
eliminate the adjective ``general.'' We disagree with commenters that
suggested that the term ``intensive cardiac rehabilitation'' should not
be used. Intensive cardiac rehabilitation was the term specifically
used in the MIPPA and added in section 1861(eee)(4) of the Act. In
addition to the regulatory text changes, the preamble of the final rule
refers to ``cardiac rehabilitation'' and ``intensive cardiac
rehabilitation.''
Comment: Some commenters expressed confusion or suggested the need
for clarification regarding the process by which ICR programs become
approved by CMS and how individual sites wishing to furnish ICR items
and services are able to participate. Other commenters disagreed with
our proposal. Some commenters stated that establishing a process for
ICR program approval should include stakeholder involvement and should
not result in significant administrative costs. These commenters also
insisted that the process be clear and concise so that all stakeholders
know how to become approved as an ICR program or site.
Response: We agree with many of the points offered by the
commenters and are clarifying the process for the approval of ICR
programs and the specific sites furnishing these new part B services.
Based on the comments we received, we are using the NCD process to
determine whether an ICR program meets the statutory requirements set
forth in section 1861(eee)(4) of the Act. The NCD process, as
authorized by section 1862(l) of the Act, is open, transparent, and
provides an opportunity for public comments on a proposed national
coverage determination (NCD). The NCD process is a well known process;
therefore, stakeholders know what to expect when we open an NCD to
review an ICR program. In addition to using the NCD process to
determine whether ICR programs fall within the scope of the new Part B
benefit, this final rule with comment period clarifies the distinct
roles of an ICR approved program and the individual sites that would
provide the ICR items and services. An ICR program is a physician-
supervised program that furnishes cardiac rehabilitation and has shown,
in peer-reviewed published research, that it improves patients'
cardiovascular disease through specific outcome measurements. By
statute, an ICR program must demonstrate by peer-reviewed published
research that the program satisfies specific metrics. We typically
consider and review peer-reviewed published literature through the NCD
process. An ICR site, on the other hand, is a hospital outpatient
setting or physician's office that is providing intensive cardiac
rehabilitation utilizing an approved ICR program. For purposes of
appealing an adverse determination, an ICR site is considered a
supplier (or prospective supplier) as defined in Sec. 498.2.
In this final rule with comment period, we are requiring that all
ICR programs be approved through the NCD process. The NCD process will
review each ICR program based on peer-reviewed published research, to
ensure the program (or programs) under evaluation demonstrates that it
satisfies the specific standards set forth in section 1861(eee)(4) of
the Act. This process will involve at least one 30-day public comment
period at which time the public may comment on the proposed decision.
We believe this process allows for significant stakeholder involvement
and is open and transparent, consistent with the commenters' request.
Once we have approved an ICR program or programs through the NCD
process, individual sites wishing to furnish ICR items and services via
an approved ICR program may enroll with their local Medicare contractor
to become an ICR program supplier as outlined in Sec. 424.510.
We note that this enrollment process will ensure that specific
sites meet the remaining statutory and regulatory requirements needed
to furnish ICR services and provide a mechanism to appeal an adverse
determination. With regards to billing and payment of CR and ICR
services, physician office suppliers and hospital providers will
continue to use their CMS Certification Number (supplier or provider
number) and appeals related to the payment of claims will follow those
separate processes.
Comment: Several commenters expressed opposition to the proposed
requirement for all ICR programs to request and receive approval as a
CMS approved ICR program based on peer-reviewed published research
demonstrating that the program accomplishes specific outcomes.
Response: We do not agree with public commenters who oppose the
provision requiring approval of all ICR programs. We believe that the
statute requires ICR programs to be evaluated based on peer reviewed
published research. The only way we are able to ensure that ICR
programs are demonstrating these outcomes and that ICR sites are
eligible for payment as required by the MIPPA is by reviewing the
program using peer reviewed published research. We agree that the
process adopted by CMS to review ICR programs must include public input
and the NCD process will provide an opportunity for public
participation. The NCD process may be internally generated by CMS or
requested by an external party. ICR programs evaluated through an
internally generated NCD are not required to submit peer-reviewed
published research, as CMS identifies relevant research during the
evidence review process. ICR programs that submit an NCD request,
should submit the peer-reviewed published research upon which they are
requesting approval. Specific information on the NCD process is
available in the Federal Register notice (68 FR 55634).
Once ICR programs are approved through the NCD process, individual
sites wishing to furnish ICR services must enroll with their local
Medicare contractors. The ICR sites will be required to demonstrate
that they meet the remaining regulatory and statutory requirements
relating to state licensure, expertise in the management of individuals
with cardiac pathophysiology, cardiopulmonary training, and
certification in basic life support and advanced cardiac life support.
By requiring enrollment via a local Medicare contractor as a supplier,
a prospective ICR site would be entitled to appeal rights as outlined
in 42 CFR part 498 if a site is not approved as meeting those
standards. As noted above, this enrollment does not affect reporting
and payment of CR and ICR services furnished by the hospital provider
in the hospital outpatient setting. A hospital's enrollment as an ICR
site ensures a separate appeal right related to the ICR site approval.
Comment: Several commenters recommended that we remove the
requirement for ICR programs seeking approval to submit peer-reviewed
published research in order to achieve approval. The commenters stated
that most sites where ICR services are furnished do not publish their
own data and should not have to collect voluminous data in order to
become approved if the program is modeled after another program for
which research has been published.
Response: We agree that individual sites furnishing ICR services
are not required to submit data specific to the

[[Page 61877]]

site. It was not our intent to require each site where ICR items and
services were being furnished to submit peer-reviewed published
research specific to their site. Rather we intended, and have further
clarified in this final rule with comment, that we will evaluate peer-
reviewed published research to approve ICR programs through the NCD
process. The peer-reviewed published research required for CMS approval
as an ICR program is not a requirement of the individual ICR sites.
Peer-reviewed published research submission is only a requirement of
the ICR programs being reviewed for CMS approval via the NCD process.
We are amending Sec. 410.49(c)(3) to eliminate the need for reporting
site specific outcome data.
Comment: Several commenters requested that we include additional
indications for coverage of CR and ICR services. One commenter
requested coverage for patients diagnosed with diabetes, breast cancer,
prostate cancer, and metabolic syndrome. Another commenter requested
coverage for patients with heart failure, peripheral artery disease,
type 2 diabetes, high blood pressure, metabolic syndrome, post breast
cancer treatment, and watchful waiting for prostate cancer.
Response: We do not agree that CR and ICR services should be
covered for these non-cardiac patient populations. Extending ICR to
other illnesses would appear to require additional legislation. We do
not agree, based on currently available evidence, that coverage of CR
should be expanded to include heart failure patients. If we determine
based on supportive evidence that coverage for CR should be expanded to
additional cardiac patient populations, such a decision will be made
through an NCD.
Comment: Numerous commenters requested that CMS completely remove
the requirement for the CR medical director to ``review and sign the
plan prior to initiation of CR'' for all CR patients. The commenters
state that such a requirement requires the medical director to review
each patient's medical record to determine if the referring physician's
treatment plan is appropriate and such a review is ``completely
unrealistic, unnecessary, potentially costly and could prevent patients
from receiving their therapy in a timely manner.''
Response: We do not agree with the public comments requesting that
we remove the requirement for a physician to review and sign patients'
treatment plans. We have clarified at Sec. 410.49(b)(2)(v) that the
treatment plan must be signed by a physician. We also note the
importance of ensuring that the medical director and all CR and ICR
staff are familiar with the treatment plan and any changes to the
treatment plan. While the medical director is not required to
scrutinize each patient's medical record, he or she should be aware of
the patient's conditions and progress through the program. As the
medical director is responsible for the program as a whole, he or she
should at least be knowledgeable of each patient's progress through CR
or ICR.
Comment: Several commenters requested that we establish clear,
concise practice guidelines for practitioners to follow. We received
numerous comments addressing qualifications for CR and ICR program
medical directors, supervising physicians and support staff. Many
commenters referred to the American Heart Association (AHA)/American
Association of Cardiovascular and Pulmonary Rehabilitation (AACVPR)
description of medical director duties and levels of expertise as
preferred guidelines and other comments stressed the importance of
administration and management experience for the medical director.
Guidelines released by the AHA/AACVPR were also cited with respect to
standards for supervising physician(s) and support staff. Commenters
suggested that CR and ICR staff be certified in Basic Life support
(BLS) and meet performance measures identified by the AACVPR. Other
commenters recommended that all staff maintain current cardiopulmonary
resuscitation (CPR) certification and advanced cardiac life support
(ACLS) certification and automated external defibrillator (AED)
training. Commenters also requested that CMS stress the importance of
incorporating a multidisciplinary staff in CR and ICR programs.
Response: We understand the commenters' requests and
recommendations. In the proposed rule, we solicited comments on whether
we should adopt practice guidelines and if so what guidelines should be
adopted. We did not receive any comments on specific guidelines CMS
should adopt besides the AHA/AACVPR guidelines discussed in the
preamble of the proposed rule. While those guidelines are encouraged
for CR and ICR programs and sites, we are not mandating that those
guidelines be used in this final rule with comment period. Instead we
have required in Sec. 410.49(d) and (e) that in addition to the
statutory required qualifications, the medical director and supervising
physician(s) must have cardiopulmonary training in basic life support
or advanced cardiac life support.
Comment: Commenters requested that we recognize registered
dietitians and occupational therapists as part of the CR and ICR
multidisciplinary team.
Response: We agree that these professionals may be part of the
multidisciplinary team working with CR and ICR patients during CR and
ICR sessions. While they may comprise part of the CR and ICR support
staff, they may not supervise sessions or bill separately for services
furnished during CR or ICR sessions. For more information on payment
issues, see section II.G.8.g. of this final rule with comment period.
Comment: Some commenters requested that we remove the requirement
for CR and ICR patients to participate in aerobic exercise during every
CR or ICR session.
Response: We understand these commenters' concerns but believe
these commenters misunderstood the aerobic exercise requirement. In the
proposed rule, (Sec. 410.49(b)(2)(i)), we proposed to require patients
to participate in aerobic exercise each day CR and ICR services are
furnished. If patients participate in more than one CR or ICR session
in a single day, then they are required to exercise aerobically in one,
but not every, session.
Comment: Several commenters requested that we revise the language
addressing outcomes assessments to recognize that some patient-centered
outcomes will not demonstrate measurable changes within a 30-day period
and should not be measured as frequently as every 30 days.
Response: We agree with these commenters that certain outcomes
measures may not change significantly in a 30-day period and will allow
CR and ICR programs flexibility with respect to what outcomes must be
measured every 30 days. Measurement of outcomes that typically exhibit
no or minute changes during a 30-day period is not required.
f. Provisions of the Final Regulation
This final rule maintains and refines coverage for CR for
beneficiaries with the six conditions as originally established in Pub.
100-03, section 20.10 as this coverage was determined to be reasonable
and necessary under section 1862(a)(1)(A) of the Act due to a high
level of supporting clinical evidence. We may use the NCD process in
the future if necessary to identify additional medical indications for
cardiac patients who could obtain CR under Medicare Part B.
In Sec. 410.49(a), we provide definitions of key terms used in
this section. Most of the key terms received no comments

[[Page 61878]]

and our final rules are identical to the proposed definition terms for:
(1) Cardiac rehabilitation; (2) individualized treatment plan; (3)
outcomes assessment; (4) physician; (5) physician-prescribed exercise;
and (6) psychosocial assessment. We have changed the term intensive
cardiac rehabilitation to intensive cardiac rehabilitation program, but
maintained the original definition, in order to delineate between ICR
programs and ICR program sites in Sec. 410.49(a).
We have added the following terms and definitions to Sec.
410.49(a):
Intensive cardiac rehabilitation program site which means
a hospital outpatient setting or physician's office that is providing
intensive cardiac rehabilitation utilizing an approved ICR program.
Medical director which means a physician that oversees or
supervises the cardiac rehabilitation or intensive cardiac
rehabilitation program at a particular site.
Supervising physician which means a physician that is
immediately available and accessible for medical consultations and
medical emergencies at all times items and services are being furnished
to individuals under cardiac rehabilitation and intensive cardiac
rehabilitation programs.
In Sec. 410.49(b), we set forth the general rules for covered
beneficiary rehabilitation services and describe the required
components of the program. The covered patient populations remain
unchanged and include beneficiaries who have experienced one or more of
the following:
An acute myocardial infarction within the preceding 12
months.
A coronary artery bypass surgery.
Current stable angina pectoris.
Heart valve repair or replacement.
Percutaneous transluminal coronary angioplasty (PTCA) or
coronary stenting.
A heart or heart-lung transplant.
We are changing the final indication to include ``cardiac'' when
discussing other conditions that may be considered for coverage. The
final indication states, for cardiac rehabilitation only, other cardiac
conditions as specified through a national coverage determination.
The required components of cardiac rehabilitation programs remain
unchanged, but we have clarified that the individualized treatment plan
must be established, reviewed, and signed by a physician every 30 days.
In Sec. 410.49(c), we establish the specific standards that ICR
programs must meet. We have clarified how an ICR program will be
evaluated through the NCD process, and how specific ICR sites will be
evaluated to ensure those entities meet the regulatory requirements.
In order to utilize a clear and transparent process for approving
ICR programs, the programs will be evaluated through the NCD process to
determine if each program demonstrates through peer-reviewed published
research that it has accomplished one or more of the following for its
patients:
Positively affected the progression of coronary heart
disease.
Reduced the need for coronary bypass surgery.
Reduced the need for percutaneous coronary interventions.
ICR programs must also demonstrate through peer-reviewed published
research a statistically significant reduction in 5 or more of the
following measures for patients from their levels before CR services to
after CR services:
Low density lipoprotein.
Triglycerides.
Body mass index.
Systolic blood pressure.
Diastolic blood pressure.
The need for cholesterol, blood pressure, and diabetes
medications.
Individual sites wishing to furnish ICR items and services through
an approved ICR program must enroll with their local Medicare
contractor as an ICR program site. An ICR site will be considered a
supplier or putative supplier for purposes of the appeals process in 42
CFR part 498 related to the approval of the ICR site.
In Sec. 410.49(d), we list the specific standards that physicians
must meet to be a medical director or supervising physician. All
medical directors and supervising physicians must possess all of the
following:
Expertise in the management of individuals with cardiac
pathophysiology.
Cardiopulmonary training in basic life support or advanced
cardiac life support.
Be licensed to practice medicine in the State in which the
cardiac rehabilitation program is offered.
In Sec. 410.49(f), we list the specific limitations for the number
of and time period over which CR and ICR sessions may be provided. The
limitations for ICR coverage remain unchanged and allow for coverage of
up to 72, 1-hour sessions, up to 6 sessions per day, over a period of
up to 18 weeks. We have changed the limitations for CR coverage to
allow a maximum of 2, 1-hour sessions per day for up to 36 sessions
over up to 36 weeks with the option for an additional 36 sessions over
an extended period of time if approved by the Medicare contractor under
1862(a)(1)(A) of the Act.
In addition to the provisions above, we have made the following
revisions in the final rule:
To clarify that the proposed and final policies for the
direct supervision of hospital outpatient therapeutic services, as
discussed in the CY 2010 OPPS/ASC final rule with comment period, do
apply to CR and ICR services furnished to hospital outpatients. Due to
specific language in the MIPPA pertaining to a physician being
immediately available and accessible for medical consultation and
medical emergencies at all times items and services are being furnished
under the program, a physician as defined in section 1861(r)(1) of the
Act must supervise CR and ICR sessions, whether furnished in
physicians' offices, hospital outpatient settings, or other Part B
settings.
To remove the term ``general cardiac rehabilitation'' and
replace with ``cardiac rehabilitation.''
To clarify CR and ICR medical director and supervising
physician standards.
To clarify that CR and ICR patients must exercise
aerobically each day CR and/or ICR services are furnished and are not
required to exercise aerobically during every CR or ICR session. If
more than one session is furnished during 1 day, then patients are
required to exercise aerobically during only one of the sessions.
To allow flexibility in the 30-day patient centered
outcomes measurements in order to allow outcomes that may not exhibit
changes during a 30-day period of time to be measured less frequently,
but no fewer times than at the beginning and end of patients'
participation in a CR or ICR program.
g. Coding and Payment
(1) Cardiac Rehabilitation (CR) Payment
Currently, the following CPT codes are used for CR services
described in section 144(a) of the MIPPA: CPT code 93797, Physician
services for outpatient cardiac rehabilitation; without continuous ECG
monitoring (per session) and CPT code 93798, Physician services for
outpatient cardiac rehabilitation; with continuous ECG monitoring (per
session). We did not propose to revise these codes under the PFS
because the CR program authorized by the existing National Coverage
Determination (NCD) is essentially the same as what is included in the
MIPPA.
(2) Intensive Cardiac Rehabilitation Payment
The statute requires that the hospital Outpatient Prospective
Payment System

[[Page 61879]]

(OPPS) payment amount for CR services be substituted for ICR under the
PFS, specifically the payment for CPT codes 93797 and 93798 or any
succeeding HCPCS codes for CR. We proposed to create two new HCPCS
codes for ICR services. These codes may only be billed by ICR programs
that have been approved by CMS. The proposed codes are as follows:
GXX28, Intensive cardiac rehabilitation; with or without
continuous ECG monitoring with exercise, per session.
GXX29, Intensive cardiac rehabilitation; with or without
continuous ECG monitoring; without exercise, per session.
These HCPCS codes will be recognized under the PFS and the OPPS.
Under the OPPS, the existing CR HCPCS codes, CPT codes 93797 and 93798,
are assigned to APC 0095 (Cardiac Rehabilitation) for CY 2009. Because
the payment under the PFS for the two proposed ICR G-codes is required
to be the same as the payment for CR services under OPPS, we proposed
to pay the same amount as will be established through rulemaking for CY
2010 OPPS. We proposed that this amount will be adjusted for the
appropriate locality by applying the GPCI under the PFS. The CY 2010
proposed APC assignments and payment rates for these two ICR G-codes
were published in the CY 2010 OPPS/ASC proposed rule (74 FR 35361).
We note that when a CR/ICR service is furnished in a hospital
outpatient department, a physician cannot bill the Medicare contractor
for CR/ICR unless the physician personally performs the CR/ICR service.
To personally perform the CR/ICR service, the physician would provide
direct care to a single patient for the entire session of CR/ICR that
is being reported. In this case, the hospital would report the CR/ICR
service and be paid the OPPS payment amount for the facility services
associated with the CR/ICR session and the physician would report and
be paid the PFS amount for the CR/ICR service. A physician cannot bill
under the PFS for CR/ICR services furnished in a hospital for which the
physician furnishes only supervision or for services furnished in part
by others. If the physician furnishes no direct CR/ICR services for a
given session on a given day or provides direct CR/ICR services for
less than the full session, then only the hospital would report the CR/
ICR services and these services would be paid only under the OPPS.
The following is a summary of the comments we received regarding
the payment of CR services under section 144(a) of the MIPPA.

Note: We received comments concerning the role of physical
therapists, and occupational therapists in providing CR, ICR, and
pulmonary rehabilitation (PR). Those comments are addressed in the
PR section which follows this section.

Comment: One commenter stated that the physician work and staff
resources required to perform the mandatory outcomes assessment are not
valued in the physician work and PE RVUs established for CPT codes
93797 and 93798. The commenter recommends separate reporting and
payment for the outcomes assessment.
Response: We note that an outcomes assessment is part of the CR
benefit established by the Congress. While it may not have been
described specifically in the CR program authorized by the existing NCD
we believe an assessment of the patient's condition before initiating
treatment and at periodic intervals to measure the patient's progress
would be an expected part of treatment. In addition we note that the
language at Sec. 410.49 has been revised to allow more flexibility
with regard to the outcomes that must be measured every 30 days.
Section 410.49 requires that patient centered outcomes measurements
must be taken no fewer times than at the beginning and end of a
patient's participation in a CR or ICR program.
Comment: Some commenters requested an increase in the payment for
traditional CR. One commenter also stated concerns about the way
payment for ICR was established.
Response: The MIPPA made no substantive changes to the CR program
authorized by the existing NCD and reported using CPT codes 93797 and
93798. Therefore, we proposed no changes to payment for these codes
under the PFS. Under the statute, the payment for ICR under the PFS is
based on the OPPS payment amount for CR services. Please see section
XII.B.3 of the CY 2010 OPPS/ASC final rule for a discussion of how the
payment amounts for CR and ICR were established under the OPPS.
Payment for CR
After consideration of the public comments we received, we are
finalizing our CY 2010 proposal, without modification, to pay for CR
using CPT codes 93797 and 93798.
Payment for ICR
We also are also finalizing our CY 2010 proposal to adopt the new
2010 PFS HCPCS G-codes for ICR with the following descriptors:
G0422, Intensive cardiac rehabilitation; with or without
continuous ECG monitoring, with exercise, per hour, per session); and
G0423, Intensive cardiac rehabilitation; with or without
continuous ECG monitoring, without exercise, per hour, per session.
As required by statute, payment under PFS for these services will
be based on the OPPS payment amount for CR services. For more
information on how the OPPS payment amount for ICR was established, see
section XII.B.3 of the CY 2010 OPPS/ASC final rule. We have added the
phrase ``per hour'' to the descriptors of these codes because we
believe that CR services generally last one hour as documented by
existing claims data for CR services. Section 1861(eee)(4)(C) of the
Act provides for up to 72, 1-hour sessions of ICR and hence, adding
``per hour'' to the two new HCPCS code descriptors for ICR services
implements the statutory definition of an ICR session as being 1 hour
of service.
Moreover, we have established the payment for ICR services on the
presumption that one session represents 1 hour of care. Therefore, we
believe that it is appropriate to specify in the descriptors of the
HCPCS codes for ICR services that one unit of the code represents 1
hour of care. As discussed previously, CR is covered for up to 36 1-
hour sessions, with a minimum of 1 session per week and a maximum of 2
sessions per day, and Medicare contractors have authority to approve
additional sessions, up to 72 sessions, over an additional period of
time. Section 144(a)(1) of the MIPPA authorizes coverage of ICR
programs in a series of 72, 1-hour sessions, up to 6 sessions per day,
over a period of 18 weeks.
9. Section 144(a): Payment and Coverage Improvements for Patients With
Chronic Obstructive Pulmonary Disease and Other Conditions--Pulmonary
Rehabilitation Services
Section 144 of the MIPPA amended Title XVIII of the Act to provide
for coverage of pulmonary rehabilitation (PR) under Part B, under
certain conditions, for services furnished on or after January 1, 2010.
This final rule with comment period implements the new Medicare
standards for a pulmonary rehabilitation program and establishes the
requirements for furnishing such items and services to Medicare
beneficiaries with chronic obstructive pulmonary disease (COPD).
COPD is one of the more common and severely debilitating chronic
respiratory diseases, exemplified by chronic bronchitis and emphysema.
Other conditions in this category include

[[Page 61880]]

persistent asthma, bronchiectasis, primary pulmonary hypertension,
obesity-related respiratory disease, and ventilator dependency. This
rule implements section 144(a) of the MIPPA to permit coverage and
payment and to establish guidelines and standards as required by the
statute.
a. Background
A PR program is typically a multidisciplinary program, individually
tailored and designed to optimize physical and social performance and
autonomy of care for patients with chronic respiratory impairment. The
main goal is to empower and facilitate the individuals' ability to
exercise independently. Exercise is combined with other training and
support mechanisms to encourage long-term adherence to the treatment
plan. The appropriate PR program will train and motivate the patient to
attain his or her maximum potential in self-care and overall quality of
life.
Prior to the MIPPA, some components of a pulmonary rehabilitation
program were covered in office settings as individual services or as
services incident to physician services.
b. Statutory Provisions of Section 144 of the MIPPA
In pertinent part, section 144 of the MIPPA amended section
1861(s)(2) of the Act to add a new subparagraph (CC) establishing
coverage and payment of items and services furnished under a
``pulmonary rehabilitation program.'' A pulmonary rehabilitation
program is defined in new subsection (fff)(1) to mean a ``physician
supervised program'' that furnishes several specific items and
services. Pulmonary rehabilitation consists of certain mandatory
components including all of the following:
Physician-prescribed exercise.
Education or training (to the extent that the education
and training is closely and clearly related to the individual's care
and treatment and is tailored to such individual's needs).
Psychosocial assessment.
Outcomes assessment.
Other items and services determined by the Secretary to be
appropriate under certain conditions. These mandatory components are to
be provided in physicians' offices, hospital outpatient settings, and
other settings determined appropriate by the Secretary.
A physician must at all times be immediately available and
accessible for medical consultation and medical emergencies when PR
items and services are being furnished under the program. The
individual's treatment is furnished under a written treatment plan for
each beneficiary participating in a PR program. The plan is developed
by a physician in conjunction with the interdisciplinary team. A
physician, who is involved in the patient's care and has knowledge of
his or her condition, must establish and review the plan and it must be
signed by a physician every 30 days. This plan must include the
individual's diagnosis, the scope of services to be provided in terms
of type, amount, frequency and duration, and the goals set for the
individual. To be covered and receive payment from Medicare, the PR
program must provide all of the specified mandatory items and services.
The statute authorizes the Secretary to establish standards for the
physician supervising the PR program to ensure the physician has
expertise in the management of individuals with respiratory
pathophysiology and is licensed by the State in which the PR program is
offered. These standards ensure that the physician is responsible for
the program and, in consultation with appropriate staff, is involved
substantially in directing the progress of individuals in the program.
c. Provisions of the Proposed Regulation
We proposed to add Sec. 410.47, ``Pulmonary Rehabilitation
Program: Conditions of Coverage'' to our regulations. The following is
a summary of our proposals from the CY 2010 PFS proposed rule. For the
full text, please see the CY 2010 PFS proposed rule (74 FR 33610
through 33614, and 33673 through 33674).
We proposed several definitions with respect to the services
related to PR. These were for:
Pulmonary rehabilitation.
Individualized treatment plan.
Outcomes Assessment.
Physician.
Physician-prescribed exercise.
Psychosocial assessment.
We also proposed that Medicare would cover PR for beneficiaries
with moderate (Stage II) to severe COPD (Stage III) when referred by
the physician treating chronic respiratory diseases. Moderate and
severe COPD was defined using the GOLD classification II and III.
We proposed that any additional covered clinical indications for
the PR program would be added using the National Coverage Determination
process.
We proposed that all PR programs must have the following
components:
Physician-prescribed exercise;
Education or training;
Psychosocial assessment;
Outcomes assessment; and
An individualized treatment plan.

The individualized treatment plan must be established, reviewed, and
signed by a physician (as defined in section 1861(r)(1) of the Act)
every 30 days.
The MIPPA provisions also authorized the Secretary to include other
mandatory items and services within the scope of the PR program under
certain conditions. We did not propose any other items or services.
However, we stated that if we determine that the addition of any other
items or services is appropriate, additions will made and implemented
through future rulemaking.
We proposed that PR may be provided in a physician's office or in a
hospital outpatient setting. If we determine that additional settings
are appropriate, those settings will be added through future
rulemaking. All settings should have all equipment and staff necessary
to provide statutorily-mandated items and services.
We proposed that physicians furnishing PR items and services must
have expertise in the management of individuals with respiratory
pathophysiology and be licensed in the State in which the PR program is
offered.
In the CY 2010 PFS proposed rule with comment period (74 FR 33613),
we discussed that section 144 of the MIPPA includes requirements for
immediate and ongoing physician availability and accessibility at all
times for both medical consultations and medical emergencies when items
and services are being furnished under the program. We proposed to
define such availability in accordance with existing definitions for
direct physician supervision services furnished in physician offices
and hospital outpatient departments at Sec. 410.26(a)(2) (defined
through cross reference to Sec. 410.32(b)(3)(ii)) and Sec. 410.27(f),
respectively. We stated that direct supervision, as defined in the
regulations, is consistent with the language of the MIPPA because a
physician must be present and immediately available where and when the
items and services are being furnished. A physician must also be able
to furnish assistance and direction throughout the performance of the
services, which would include medical consultations and medical
emergencies.
For PR services furnished in physicians' offices and other Part B
settings paid under the PFS, we stated that this means that the
physician must be present in the office suite and immediately available
to furnish

[[Page 61881]]

assistance and direction throughout the performance of the service or
procedure in accordance with Sec. 410.26(a)(2) and (b)(5). It does not
mean that the physician must be in the same room when the service or
procedure is performed.
For PR services furnished in hospital outpatient settings, we
stated that direct physician supervision is the standard set forth in
the April 7, 2000 OPPS final rule with comment period (68 FR 18524
through 18526) for supervision of hospital outpatient therapeutic
services covered and paid by Medicare in hospitals and provider-based
departments of hospitals. We currently define and specify the
requirement for direct supervision for services provided in provider-
based departments of hospitals at Sec. 410.27(f). For this purpose,
the physician must be on the premises of the location (meaning the
provider-based department) and immediately available to furnish
assistance and direction throughout the performance of the procedure.
This does not mean that the physician must be present in the room when
the procedure is performed.
The MIPAA provisions state that in the case of items and services
furnished under such a program in a hospital, physician availability
shall be presumed. As we have stated in the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68702 through 68704), the longstanding
presumption of direct physician supervision for hospital outpatient
services means that direct physician supervision is the standard and we
expect that hospitals are providing services in accordance with this
standard.
We proposed that up to 36 sessions in the facility setting are
appropriate, no more than one session per day. Patients should
generally receive 2 to 3 1-hour sessions per week. We solicited
comments regarding the proposed number of sessions. We addressed these
comments in the response to public comment section of this final rule
with comment.
d. Analysis and Response to Public Comments
We received many public comments on various provisions of our
proposed rule. Comments were generally supportive of the new PR program
but requested some changes related to the sessions and covered
conditions. Commenters were in support of our definitions of pulmonary
rehabilitation, individual treatment plan, psychosocial assessment,
physician, and physician-prescribed exercise. The commenters also were
supportive of the physician standards but asked for clarification of
the direct supervision rules. The commenters suggested that we add
language acknowledging the role and use of the PR staff/
interdisciplinary team.
We also received comments related to NCDs but they were largely
focused on the effect of the rule on current local coverage
determinations (LCDs). Commenters did not request the addition of new
items and services. We received a few comments regarding the addition
of settings for PR, such as the CORF.
We received numerous comments noting that in the CY 2010 OPPS/ASC
proposed rule with comment period (74 FR 35362 through 35370), we
proposed that certain NPPs may supervise hospital outpatient
therapeutic services that are within their State scope of practice and
hospital granted privileges, provided that they also continue to meet
all other requirements. Commenters requested that we allow the use of
NPPs for PR services because NPPs may provide and supervise other
therapeutic services in the HOPD. We received several significant
comments and are providing our responses below.
Comment: We received comments requesting that we expand coverage to
another level of COPD, very severe COPD (Stage IV). The commenters
stated that very severe COPD should be included since the GOLD
guidelines recommend PR for patients with Very Severe COPD (Stage IV).
The commenters also cited the NETT trial in which they state that the
very severe COPD patients had significant improvement as a result of
the PR program.
Response: As a result of the comments, we are expanding the final
policy and adding very severe COPD (Stage IV) as a covered condition.
Based upon the evidence cited by the commenters and our own independent
evidence review. We believe it is appropriate to allow coverage for
COPD for the PR program. Commenters provided evidence from the National
Emphysema Treatment Trial (NETT) which included patients with very
severe COPD who were required to participate in pulmonary
rehabilitation; trial results showed this sample of patients had
significant improvement in exercise, dyspnea, and quality of life.
Commenters also provided 2008 GOLD guideline evidence which supports
the addition of very severe COPD. They cited GOLD guidelines which
identify PR as the standard of care for patients with COPD stages II-IV
and that all COPD stages benefit from an exercise program.
Specifically, included in this patient population, the GOLD guidelines
support PR for individuals with very severe COPD (Stage IV), while also
suggesting consideration of surgical treatments. To the extent this
patient group is able to engage in all of the mandatory components,
including aerobic exercise, we believe patients would experience a
clinical benefit. GOLD classification IV (Very Severe COPD) is defined
as FEV1/FVC 70 percent and FEV1 <30 percent of predicted or FEV1 <50
percent predicted plus chronic respiratory failure.
Comment: We received numerous comments requesting that we expand
coverage to a variety of other chronic respiratory conditions in
addition to the proposed ones, (moderate to severe COPD). Most of the
major respiratory care organizations submitted substantial comments
pertaining to this issue. The conditions for which expansion was
requested include cystic fibrosis, interstitial lung disease,
restrictive chest wall disease, pulmonary hypertension, respiratory
disorders associated with obesity, lung cancer, very severe COPD (stage
IV), and bronchiectasis. The commenters requested that we add all of
the requested conditions in the final rule, because the commenters
allege substantial clinical benefit for all of them from a PR program.
Response: We proposed to use the national coverage determination
process to consider expanding coverage of PR for other chronic
respiratory diseases should adequate evidence support these additional
uses. While the statute would permit expansion to other respiratory
conditions, the data reviewed thus far did not substantiate the
clinical benefit of PR for conditions beyond COPD. In making
determinations for national coverage, the Medicare program is an
evidence-based program. The chronic respiratory disease population is a
highly clinically diverse patient population. As such, determining the
appropriate conditions for coverage within the patient population
requires a thorough review of existing evidence to meet the
``reasonable and necessary standard'' in accordance with section
1862(a)(1)(A) of the Act.
In this final rule with comment period, we announce that we will
consider other conditions for which a PR program can be used through
the NCD process. The number of various respiratory diseases is
expansive and variance within the stages of each disease is broad. The
need for, and benefit of, a PR program may relate to the specific
respiratory function rather than a broad category of diseases. The NCD
process will enable us to evaluate

[[Page 61882]]

the medical and scientific evidence to properly ascertain the specific
conditions, and appropriate patients for whom a PR program is most
beneficial. However, in the interim, until the NCD process is complete,
the respiratory services previously allowed by local contractors for
other medical conditions under other part B benefit categories remain
in effect.
Comment: Some commenters requested that we add all of the requested
conditions in the final rule because the commenters believe the
proposed rule will supersede existing LCDs which currently allow some
respiratory/pulmonary type services for a variety of other chronic
respiratory lung diseases, including COPD.
Response: As explained above, we do not agree that the limitation
of PR programs to one covered condition (moderate to very severe COPD)
through the final rule will eliminate the ability of beneficiaries to
obtain other respiratory services that are available under local
coverage decisions based on other benefit categories. The individual
respiratory services currently covered do not constitute a
comprehensive PR program but individualized services that may also be
components of a program. Accordingly, to the extent these existing
individual respiratory services are reasonable and necessary, a local
contractor may still cover them. If the patient has COPD that qualifies
for coverage of pulmonary rehabilitation under this final rule with
comment period, we would expect to see services furnished under the PR
program and billed using the specific PR code. To the extent the
provider is billing for the comprehensive PR code, the PR program
implemented must meet all of the requirements outlined herein and be
the only PR service billed. To the extent we add other conditions
through the NCD process, some LCDs may become obsolete in the future.
Comment: We received a significant number of comments regarding the
number of sessions for the PR program. Some commenters stated that our
proposal of 36 sessions does not reflect the standard of care
nationally. Commenters recommended that we allow between 60 and 72
sessions and allow more than one session per day, based in part on the
experience of the Lung Volume Reduction Surgery patients in the NETT
trial. Under that trial, certain patients were allowed a total of 30
sessions, each required to be minimally 2 hours in duration. Other
commenters noted that the typical PR sessions may average 2 hours or
more. The major professional organizations requested 72 hours of
pulmonary rehabilitation, ``based on the individual's medical necessity
and reaching a level of optimal care''.
Response: We agree with commenters that additional sessions may be
appropriate in some circumstances. However, any PR program, due to the
broad spectrum of patients, inherently necessitates a very
individualized plan of treatment. Therefore, in this final rule with
comment period, we are authorizing our contractors to approve up to an
additional 36 sessions when medically necessary. This would provide
qualifying beneficiaries access of up to 72 sessions of PR when
appropriate.
Even within the population of patients with moderate to very severe
COPD, an individual's ability to participate in additional sessions
would require a specific review of evidence to determine whether an
additional 36 sessions are warranted under section 1862(a)(1)(A) of the
Act. This case-by-case expansion allows greatest flexibility for
individual needs. It also takes into account the short term nature of
the program based on lifestyle modification goals towards self
management of the disease. Since the programs are highly
individualized, we do not specify a duration by which sessions must be
completed; this allows the possibility of sessions, if necessary, up to
the maximum allowable of 72, over a longer period of time.
Comment: We received a number of comments regarding the number of
sessions per day for the PR program. Some commented that our proposed
sessions do not reflect the standard of care nationally. Commenters
recommended that we allow more than one session per day.
Response: We agree with commenters that some patients may be
capable of more than one PR session per day. The patient with very
severe COPD may not be able to participate in a prolonged aerobic
exercise session, and may benefit from 2 shorter periods of aerobic
exercise within each session. Also, two sessions will facilitate
greater logistical ease for those in rural areas who may want to do
multiple sessions in a day, for example, morning and afternoon, and/or
provide an opportunity for more compromised COPD patients to engage in
two shorter aerobic sessions in a day. Therefore, we will allow up to
two 1-hour sessions per day.
Comment: Some commenters asked that we include language in this
regulation which minimally refers to the use of, and role of, the
interdisciplinary team and/or PR staff.
Response: We agree that the disciplinary team/PR staff play an
important role under the direction of the physician. These team members
may include, but are not limited to, nurses, social workers,
respiratory therapists, and dietitians. (See regulations text,
``Physician standards''.) We have revised Sec. 410.47(e)(1) to
emphasize this point.
Comment: Several commenters requested that we allow NPPs to provide
the direct supervision, rather than requiring supervision by a
physician in accordance with the definition in section 1861(r)(1) of
the Act.
Response: The statutory language of the MIPPA defines pulmonary
rehabilitation as a ``physician-supervised'' program. A physician is
defined in section 1861(r)(1) of the Act. The MIPAA also specifically
requires that ``a physician is immediately available and accessible for
medical consultation and medical emergencies at all times items and
services are being furnished under the program, except that in the case
of items and services furnished under such a program in a hospital,
such availability shall be presumed.'' The text of the statute uses the
word ``physician'' and does not include NPPs. We believe, based on the
statutory language in MIPPA for pulmonary rehabilitation programs, that
the statute does not provide us the flexibility to allow the
supervising role to be filled by a non-physician practitioner. In other
words, for the purposes of PR programs, whether furnished in a
physician's office or hospital outpatient setting, the direct physician
supervision definition applies only to a physician as defined in
section 1861(r)(1) of the Act. As discussed previously, the supervision
requirement is satisfied if the physician meets the requirements for
direct supervision for physician office services at Sec. 410.26 and
for hospital outpatient services at Sec. 410.27. The final policies
for payment and direct physician supervision of PR services furnished
to hospital outpatients are discussed in detail in section XII.B.2 and
B.4 of the CY 2010 OPPS/ASC final rule with comment period.
Comment: A few commenters requested that we provide a session which
is ``no more than 1 hour''. The commenters believe that for some
individuals, an hour would be the maximum time they could physically
participate due to their compromised condition.
Response: We disagree. We believe that a maximum of 1 hour would
not afford sufficient time for most patients to receive both the
mandatory aerobic exercise and any other component services. Those in
rural areas may want

[[Page 61883]]

to participate in longer sessions due to travel logistics.
Comment: One commenter proposed that we require at least 30 minutes
of exercise.
Response: We disagree. Imposing a strict standard of minimal 30
minutes of exercise is not realistic; the programs are highly
individualized. Many patients may not, at least initially, be able to
participate in thirty minutes of aerobic exercise.
Comment: One commenter suggested we use the Silver Sneakers program
at the YMCA for PR in the Medicare program. The commenter remarked it
costs only $40 per month.
Response: While we generally encourage beneficiaries to exercise,
we do not agree that this particular suggestion would be feasible. We
do not expect that a typical YMCA would meet the statutory requirements
related to physician standards and supervision, or perhaps the facility
standards for safety and equipment. Further, YMCAs are not currently
recognized as Medicare suppliers or providers.
Comment: A few commenters requested that we include a CORF as a PR
setting.
Response: While the statute would allow the Secretary to cover PR
in additional settings, we are not expanding the settings in this final
rule. The CORF statutory definition, in section 1861(cc) of the Act,
provides requirements for all services provided in that facility type.
The CORF facility does not meet the supervision requirements imposed by
the MIPPA. In accordance with section 1861(cc)(1) of the Act, the term
``CORF'' provides, in part, ``comprehensive rehabilitation facility
means a facility which--(A) is primarily engaged in providing (by or
under the supervision of physicians) diagnostic, therapeutic, and
restorative service to outpatients for the rehabilitation of injured,
disabled, or sick persons.'' (Emphasis added)
``(B) provides at least the following comprehensive outpatient
following rehabilitative (i) physicians' services (rendered by
physicians, as defined in section 1861 (r) (1) who are available at the
facility on a full or part-time basis;'' (Emphasis added). The
definition of services and reference to the injured or disabled
population is consistent with the mandate for rehabilitative services,
which we maintain are not directed towards the chronically ill patients
with respiratory disease such as COPD. The CORF statutory provisions
allow a physician to be in the facility part-time. This conflicts with
the MIPPA provisions for the physician supervision, that is, being
immediately available and accessible at all times items services are
being furnished under the program. However, the MIPPA PR program does
not eliminate or affect the PT services provided in accordance with the
CORF regulations at Sec. 410.100. Initially, a COPD patient may be in
need of PT services (in or outside of a CORF) in order to strengthen
their muscles to prepare for the PR program. By clarifying the services
in a CORF, which are mandated to include a majority of physical
therapy, we sought to delineate these services from those provided in a
PR program focused on the condition of COPD.
Comment: Commenters support the requirement that a physician must
create an individualized plan of treatment for pulmonary
rehabilitation. However, some commenters requested that we clarify
whether we intend that physicians must personally create each plan of
care or whether physicians may review and approve a plan of care
created by pulmonary rehabilitation staff.
Response: A physician must establish the individualized treatment
plan; however, there can be input from the pulmonary rehabilitation
staff with respect to the plan.
The MIPPA provisions require that PR services be provided under
written individualized treatment plans ``established, reviewed, and
signed by a physician every 30 days.'' The individualized plan includes
the individual's diagnosis, the types of services appropriate, the
frequency and duration, and the treatment goals. This plan may
initially be developed by the referring physician or the PR physician.
If the plan is developed by the referring physician who is not the PR
physician, the PR physician must also review and sign the plan prior to
initiation of PR. The PR staff may make recommendations for
modifications to the program, but the physician will still modify the
plan as needed, and review and sign the plan every 30 days.
e. Provisions of the Final Rule
In the final rule we are adopting the provisions as set forth in
the July 2009 proposed rule with the following revisions:
Based on public comments and the GOLD guidelines we are
expanding coverage to include individuals with very severe COPD (Stage
IV) as a covered condition. We are modifying the final rule Sec.
410.47 (b)(1) ``Beneficiaries who may be covered'', to state the
addition. The GOLD standard evidence defines GOLD classification IV
(Very Severe COPD) as FEV1/FVC 70 percent and FEV1 <30 percent of
predicted or FEV1 <50 percent predicted plus chronic respiratory
failure.
We expanded section Sec. 410.47(f) to include additional
sessions by changing the total number of allowable sessions to 72
sessions; we did so by allowing an additional 36 at contractor
discretion when medically necessary. We also expanded the daily number
of the allowable sessions from one session to two sessions.
We added definitions in Sec. 410.47(a) for the ``Medical
director'' and the ``Supervising physician''.
In addition, we are making the following clarifying and technical
changes:
We clarified in Sec. 410.47(c)(5) that the physician
establishing the treatment plan needs to be one who is involved in the
patient's care and has knowledge of his or her condition.
We added language in Sec. 410.47(e)(1) to clarify the
physician interaction with PR staff.
We added the word ``medicine'' in Sec. 410.47(e)(4) to
conform the rule to the MIPPA statutory language.
We added language in Sec. 410.47(e)(3) for training
requirements related to the use of emergency equipment; this correlates
to the established requirements in the proposed rule for availability
of this equipment.
We added in Sec. 410.47(f) the words ``up to'' to clarify
the contractor is permitted to prescribe any additional amount lower
than, and up to, 36 sessions based on medical necessity. We also added
a reference to the pertinent statute.
f. Coding and Payment
We proposed to create one HCPCS code to describe and to bill for
the services of a PR program as specified in section 144(a) of the
MIPPA, GXX30 (now assigned code number G0424, Pulmonary rehabilitation,
including aerobic exercise (includes monitoring), per session, per
day). This G-code is to be billed when the patient performs physician-
prescribed aerobic exercises that are targeted to improve the patient's
physical functioning and may also include the other aspects of
pulmonary rehabilitation, such as education and training. Because the
physician's role in the PR program is defined in a similar manner to
that in the cardiac rehabilitation program, we stated that the
physician work component should be analogous to that of CPT code 93797,
cardiac rehab without telemetry. Therefore we proposed work RVUs of
0.18 RVUs for this new G-code. Using this same reference code, we
proposed

[[Page 61884]]

that the malpractice RVUs would be 0.01 RVUs.
To establish the PE RVU payment for the proposed new PR G-code, we
reviewed the PE inputs of similar services, particularly those of the
respiratory therapy HCPCS codes, G0237 and G0238, as well as the
cardiac rehabilitation codes, CPT codes 93797 and 93798 for non-
facility settings. Given that various individuals, acting under the
supervision of a physician, can make up the PR multidisciplinary team,
we proposed that the clinical labor for the PR G-code could be best
represented by the following labor types taken from the PE database:
the nurse ``blend'' (RN/LPN/MTA), the respiratory therapist (RT), the
social worker/psychologist and the medical/technical assistant--which
we selected to represent various specialists involved in furnishing
this service; these are valued at $0.37, $0.42, $0.45, and $0.26 per
minute, respectively. Using an average of these values, $0.375 per
minute, we proposed to use the nurse blend labor type found in the
cardiac rehabilitation CPT codes, at $0.37 per minute, as the typical
value for the PR clinical labor and assigning 28 minutes of clinical
labor time for the new PR G-code based on the various components of the
proposed PR program.
For the equipment PE inputs, we reviewed the direct PE inputs for
similar existing codes and proposed a pulse oximeter (with printer), a
1-channel ECG, and a treadmill. Since no typical supplies were listed
for similar existing codes in the PE database, we did not propose any
specific supplies for this proposed new G-code.
The following is a summary of the comments we received regarding
payment for pulmonary rehabilitation services under section 144(a) of
the MIPPA.
Comment: Some commenters asked that we confirm that the services of
physical therapists are not part of the PR, CR, or ICR benefits
authorized by section 144(a)(1) of the MIPPA and are always paid under
the physical therapy benefit and that, therefore, the therapy services
do not require physician supervision when furnished as part of a PR,
CR, or ICR program, including in the HOPD.
With regard to PR, some commenters stated that we have a
longstanding history of recognizing the services of a therapist as an
integral part of a PR program and requiring that these services be
reported and paid as PT services. Specifically, the commenters
indicated that in the CY 2002 PFS final rule (66 FR 55246) and in the
current Medicare Claims Processing Manual (Pub. 100-04, Chapter 5,
section 20.A), we specify that when physical therapists treat
respiratory conditions, they should report CPT codes for PT in the
97000 series and should not report HCPCS codes G0237, Therapeutic
procedures to increase strength or endurance of respiratory muscles,
one on one, face to face, per 15 minutes (includes monitoring); G0238,
Therapeutic procedures to improve respiratory function or increase
strength or endurance of respiratory muscles, one on one, face to face,
per 15 minutes (includes monitoring); or G0239, Therapeutic procedures
to improve respiratory function or increase strength or endurance of
respiratory muscles, two or more individuals (includes monitoring). The
commenters added that in the September 25, 2007 Decision Memo for
Pulmonary Rehabilitation (CAG-00356N), CMS recognized the importance of
PT to patients with pulmonary conditions and stated that these services
should be billed and paid under the PT benefit. The commenters stated
that a plan of care developed by a physical therapist to improve
pulmonary function for a patient with chronic obstructive pulmonary
disease (COPD), which meets the medical necessity criteria for PT
services, is covered and paid under the PT benefit. The commenters
explained that the therapy plan of care is separate from the benefits
authorized by section 144(a)(1) of the MIPPA. The commenters believe it
should continue to be reported under the CPT codes for PT services, and
should be paid under the PT benefit.
In addition, with regard to CR/ICR, the commenters requested that
CMS confirm that skilled PT services that are rendered in the CR
setting by a qualified physical therapist should be conducted,
reported, and paid as PT services, and that physician supervision is
not necessary in the CR setting when the physical therapist is
delivering treatment that clearly meets the criteria for a PT service.
The commenters explained that we have recognized and codified that PT
is a separate benefit and that physical therapists are qualified to
perform certain services independent of direct physician supervision.
Similar comments were received concerning occupational therapy
services.
Response: Section 144(a)(1) of the MIPPA authorized a new
comprehensive PR benefit, and also codified specific benefits for CR
and ICR. Therefore, we believe that outpatient Part B providers and
suppliers should furnish the full scope of the PR, CR, or ICR benefit
as comprehensive programs to those patients who qualify for coverage.
We would not expect the component services of PR, CR, and ICR programs
to be unbundled and billed separately by different providers or
practitioners under other benefit categories, such as the PT benefit.
In the outpatient physicians office setting, we expect that most
patients participating in PR, CR, or ICR programs authorized by section
144(a)(1) of the MIPPA and covered by Medicare will be debilitated
based on their underlying medical condition, age, or other factors. In
order to develop a PR, CR, or ICR treatment plan, some debilitated
patients may require evaluations by therapists on the multidisciplinary
team, in addition to assessments by other team members. In order to
participate successfully in the prescribed exercise component of the
PR, CR, or ICR program, we also expect that these patients may receive
individualized treatments by therapists on the multidisciplinary team
and others to promote the increased functionality that is a principle
goal of PR, CR, and ICR programs. As we stated in the CY 2010 PFS
proposed rule, the items and services furnished by a CR or PR program
are individualized and set forth in written treatment plans for each
beneficiary (74 FR 33607 and 33611). We believe these evaluations and
individualized treatments are a part of the PR, CR, or ICR program for
those beneficiaries who need them. As such, we believe they should be
conducted by one or more members of the multidisciplinary team of the
PR, CR, or ICR program with the appropriate expertise.
While we have not defined PR, CR, or ICR services as always
including therapists' services as part of the comprehensive benefit (74
FR 33608 and 33614), we have acknowledged in the CY 2010 PFS proposed
rule that written treatment plans are highly individualized and that
there should be flexibility in the type, amount, frequency, and
duration of services provided in each session (74 FR 33607).
We expect that physical therapists could conduct assessments and
individualized treatments as part of the PR, CR, or ICR program because
physical therapists have the knowledge and skills to assist in
addressing common problems that lead to physicians ordering PR, CR, or
ICR services for their patients, including poor aerobic capacity, poor
endurance, and shortness of breath, in the context of chronic pulmonary
or cardiovascular disease. In the context of PR, while we also stated
that individuals requiring PR services have a chronic respiratory

[[Page 61885]]

disease and are in need of supervised aerobic exercise, not PT, we
acknowledged that patients require assessments to address
individualized needs and the provision of a mix of services necessary
to address those needs (74 FR 33613).
Patients in PR, CR, or ICR programs must receive the full
complement of care as defined under these benefits as specified in
section 144(a)(1) of the MIPPA, in accordance with their individualized
treatment plan, including assessments and prescribed exercise.
Additionally, the standard HCPCS coding guidance instructs
practitioners and providers to report the code for the procedure or
service that most accurately describes the service performed. As stated
in Section 20.12.1.b. of Chapter 5 of the Medicare Contractor
Beneficiary and Provider Communications Manual, in instances where
several component services, which have different CPT/HCPCS codes, may
be described in one more comprehensive code, only the single code most
accurately describing the procedure performed or service rendered
should be reported. Therefore, we would expect that when physical
therapists provide evaluations and individualized treatment services
under a PR, CR, or ICR treatment plan, these services would be billed
as PR, CR, or ICR services under the PR, CR, or ICR CPT or Level II
HCPCS G-codes that apply. When these programs are provided in a
physician office setting and the physical therapist serves as a member
of a multidisciplinary team, the services may not be separately billed
as therapy services or as services incident to physician services and
they need not follow the requirements of those policies. Services must
be provided according to the policies for PR, CR, or ICR. For example,
for therapy services in physician offices, qualifications of
therapists, 90-day certification of plan of care, supervision by NPPs,
treatment notes, and progress reports do not apply unless required by
PR, CR, and ICR policies. As discussed in detail in sections II.G.8.e.
and II.G.9.d. above in this final rule with comment period, for
purposes of PR, CR, and ICR services, the required direct supervision
must be provided by a doctor of medicine or osteopathy as defined in
section 1861(r)(1) of the Act for all services furnished under the
plan. For services provided in physician's offices, direct supervision
is defined in accordance with existing requirements and the existing
definition of direct physician supervision for all therapeutic services
furnished in physician offices at Sec. 410.26.
We continue to believe that direct supervision, as defined in the
regulations, is consistent with the language of the MIPAA because a
physician must be present and immediately available where services are
being furnished. A physician must also be able to furnish assistance
and direction throughout the performance of the services, which would
include medical consultations and medical emergencies.
We expect that most patients who meet the diagnosis requirements
for coverage of PR, CR, or ICR would receive component services covered
under the PR, CR, or ICR benefit as part of a comprehensive PR, CR, or
ICR program, subject to the coverage and payment policies that we are
finalizing in this final rule with comment period and the CY 2010 OPPS/
ASC final rule with comment period. We understand that some component
services of PR, CR, or ICR have previously been furnished to
beneficiaries and paid by Medicare under other benefits, such as the
outpatient PT benefit.
As stated above, since section 144(a)(1) of the MIPPA authorized a
new comprehensive PR program and legislated the CR benefit to also
recognize ICR services, we believe that outpatient Part B providers and
suppliers should furnish the components of PR, CR, or ICR as
comprehensive programs to those patients who qualify for coverage. We
would not expect the component services of PR, CR, and ICR programs to
be unbundled and billed separately by different providers or
practitioners under other benefit categories, such as the PT benefit.
Therefore, we expect that it would be uncommon for a patient receiving
care under a PR, CR, or ICR treatment plan to also be receiving PT
services under a separate PT plan of care.
There may be patients with therapy needs that are outside the
treatment plan appropriate for PR, CR, or ICR and such patients should
receive medically necessary PT services specific to those other needs
under a PT plan of care and according to the policies for PT services.
However, we would not expect it to be the norm that PT services and PR,
CR, or ICR services are furnished to the same beneficiaries in the same
day. Clearly, a single period of care can only be billed as one type of
treatment service, so providers and suppliers could never bill both PT
and PR, CR, or ICR services for the same time period for the same
patient (for example, during an hour session from 10 to 11 a.m. on a
single date of service).
We plan to monitor claims data for PR, CR, and ICR services as well
as any additional claims for therapy services. If we detect patterns of
care that are inconsistent with our stated expectations for PR, CR, or
ICR services and therapy services, we may encourage Medicare
contractors to review cases in which a provider or supplier reports
both types of services for the same patient during the same span of
time (for example, over a several month period) or we may propose
changes to our payment methodologies for these services.
After considering the public comments received, we are clarifying
that we would expect component services that are furnished under a PR,
CR, or ICR treatment plan to beneficiaries who qualify for PR, CR, or
ICR services to be furnished as PR, CR, or ICR services, regardless of
whether they are furnished by a physical therapist or other healthcare
practitioner, and that all of the coverage and payment requirements,
including, but not limited to, the physician supervision requirements
for services incident to a physician in the physician office setting,
apply to those PR, CR, or ICR services. We expect that providers and
suppliers of Part B services will furnish the comprehensive set of
services that is described in the criteria for PR, CR, or ICR programs
to beneficiaries who qualify for the benefit.
Similar comments were expressed concerning the inclusion of
occupational therapy services in PR programs. The policies for
occupational therapy services are the same as for physical therapy
services.
Comment: Some commenters believed there were flaws in our method of
determining the payment rate. The commenters did not agree that the
physician work in pulmonary rehabilitation mirrors the physician work
in cardiac rehabilitation without telemetry (CPT 93797). The commenters
stated that CPT code 93797 has 11 minutes of physician time, but we
applied a similar payment for a minimum of 60 minutes of PR service.
Some commenters thought we should multiply the physician work RVUs of
CPT code 93797 by 4 for a 60-minute session. Some commenters also
stated that the respiratory therapy services paid by the G-codes
currently are valued at about $15-20 for each 15 minutes of service and
that we are proposing to pay $16 for a 1-hour session which is not
enough to cover and pay for the services required.

[[Page 61886]]

Response: We do not agree that the physician work is substantially
different in CR than in PR. We do not expect that the physician work
for a 60-minute PR session equals 60 minutes. We believe the work is
performed primarily by the multidisciplinary team, and not the
physician. The current G-codes were valued for respiratory therapy
services and not for a comprehensive pulmonary rehabilitation program.
Comment: Some commenters stated that our staffing and equipment
assumptions were not valid. For example, some commenters stated that
the list of individuals recommended by the guidelines for PR should be
reflected by those included in the PE for PR. Commenters stated that PR
includes review of data that is comparable to telemetry, such as EKG
and oximetry. The commenters indicated that the equipment needed for PR
should be included in the payment.
Response: We anticipate that a variety of team members will
contribute to PR during a session, and we have blended the values of
the types of staff that we believe would most commonly be used. In
response to the comments, we have increased the variety of team members
included in the mix. However, we have not included physical therapists
or occupational therapists in the PE because we anticipate that
beneficiaries who are eligible for the PR program will not typically
require physical therapy as part of their PR program. If a therapist
does participate as a member of the team, we believe that therapist
typically would be furnishing PR services to meet PR goals that do not
require the skills of a therapist. In addition, we have revised the PE
to include more equipment as requested.
Comment: Several commenters requested that the pulmonary
rehabilitation code exclude certain services that they would like to
bill separately, especially the 6 minute walk test, outcomes
assessments, 30 day reviews, physician E/M services, therapy codes, the
current G0237-9 codes, and related services such as 94620, 94667, and
94667. The commenters stated that bundling the services of the PR
program will result in reduced payment rates that could shut down PR
programs.
Response: The pulmonary rehabilitation therapy G-codes were
developed for a comprehensive pulmonary rehabilitation program as
described in the statutory benefit. All of the services of the program
are included in the payment. We would expect that an individual who is
receiving PR services would receive the full complement of services
within the PR program and that these services would be billed using the
PR HCPCS code G0424. We recognize that an individual may require
additional medically necessary services such as physician E/M or
physical therapy, outside of the PR plan of care. However, as we noted
above, we will monitor billing patterns to assess whether the full
scope of services is being furnished to patients under PR treatment
plans. If we detect patterns of care that are inconsistent with our
expectations, we may encourage Medicare contractors to review cases in
which a provider or supplier reports services for the same patient
during the same span of time that might be considered part of a PR
treatment plan, and as a result, we may propose changes to our payment
methodologies for these services.
Comment: Some commenters requested that the current HCPCS G-codes
for therapeutic procedures for respiratory function (G0237, G0238 and
G0239) continue to be used to bill for pulmonary rehabilitation, E/M,
and diagnostic services for pulmonary rehabilitation programs.
Response: The current HCPCS G-codes were developed for use in CORFs
and other settings to describe the provision of respiratory therapy
services. They continue to be appropriate for use in CORFs for this
purpose. Outside of the CORF setting those codes are not appropriate
for use in office settings to provide pulmonary rehabilitation services
under the new pulmonary rehabilitation program as defined by the MIPAA.
The pulmonary rehabilitation benefit was added by Congress for the
purpose of covering services for patients with certain pulmonary
conditions who require a coordinated program of treatment.
The existing HCPCS G-codes do not represent the full scope of
services in a comprehensive PR program now authorized by the new PR
benefit. We want to ensure that when a physician office bills and is
paid for PR services that it attests to meeting all of the requirements
of the comprehensive PR program by the reporting of a HCPCS G-code
specific to a PR session. We would expect beneficiaries who could
qualify for a PR program, where a program is available, to receive
services related to those conditions in such a program rather than
having services unbundled and provided separately outside a PR program.
Therefore, specific codes have been developed to identify and make
payment for services furnished as part of pulmonary rehabilitation
programs. However, a beneficiary who was receiving treatment in a CORF
and in need of respiratory therapy services could receive those
services and the CORF could bill using the existing G-codes, as they
would have prior to the MIPPA.
Comment: Many commenters expressed concern about the duration of
the PR session which we proposed as a minimum of 1 hour. The commenters
alleged the session is capped at 1 hour and requested longer sessions.
The commenters maintained that the typical PR session is a minimum
duration of 2 to 3 hours.
Response: We did not cap the length of the session at 1 hour, but
proposed to require a minimum of 1 hour of treatment. Implied in these
comments is justification for a higher payment rate, related to a
longer duration for a session. In response to comments requesting
longer treatments, we are adding the phrase ``per hour'' to the new
HCPCS code G0424 descriptor to conform the descriptor of the code to
the basis for the payment being made for one unit of the code and to
enable suppliers to determine when one session of PR ends and the
second session begins. The code descriptor is G0424, Pulmonary
rehabilitation, including exercise (includes monitoring), per hour, per
session.
In addition, we are modifying our final policy to cover up to 2
sessions of PR per day.
After reviewing the public comments, we will finalize our proposals
with modifications. In summary, we will:
Change the HCPCS code descriptor as follows: G0424,
Pulmonary rehabilitation, including aerobic exercise (includes
monitoring), per hour, per session.
As discussed above, we will also allow up to two sessions
of PR per day.
Modify PE inputs, as recommended by commenters, resulting
in increased PE RVUs. However, we continue to believe the physician
work for PR is comparable to CR and will make no changes to the work
RVUs.
10. Section 144(b): Repeal of Transfer of Title for Oxygen Equipment
a. Payment Rules for Oxygen and Oxygen Equipment
(i) Overview
The general Medicare payment rules for durable medical equipment
(DME) are set forth in section 1834(a) of the Act and 42 CFR part 414,
subpart D of our regulations. Section 1834(a)(1) of the Act and Sec.
414.210(a) of our regulations establish the Medicare payment for a DME
item as equal to 80 percent of either the lower of the actual charge or
the fee schedule amount for the item. The beneficiary coinsurance is
equal to

[[Page 61887]]

20 percent of either the lower of the actual charge or the fee schedule
amount for the item once the deductible is met.
Specific rules regarding payment for oxygen and oxygen equipment
are set forth in sections 1834(a)(5), (a)(9), (a)(14) and (a)(21) of
the Act and Sec. 414.226 of our regulations. Suppliers are paid a
monthly payment amount for furnishing medically necessary stationary
oxygen equipment under the class described in Sec. 414.226(c)(1)(i)
and oxygen contents (for both stationary and portable). Equipment in
the stationary class includes stationary oxygen concentrators, which
concentrate oxygen from room air; stationary liquid oxygen systems,
which use oxygen stored as a very cold liquid in cylinders and tanks;
and gaseous oxygen systems, which administer compressed oxygen directly
from cylinders.
We also pay a monthly add-on payment to suppliers furnishing
medically necessary portable oxygen equipment falling under one of two
classes described in Sec. 414.226(c)(1)(ii) and (iii). Equipment in
these classes includes traditional portable equipment that includes
portable liquid oxygen systems and portable gaseous oxygen systems and
oxygen generating portable equipment (OGPE) that includes portable
oxygen concentrators and oxygen transfilling equipment used to fill
portable tanks or cylinders in the home. Both the liquid and gaseous
oxygen systems (for stationary and portable) require on-going delivery
of oxygen contents.
(ii) Provisions of the Deficit Reduction Act of 2005 (DRA)
Section 5101(b) of the DRA amended section 1834(a)(5) of the Act by
limiting monthly rental payments to suppliers for oxygen equipment to
36 months of continuous use. At the end of this 36-month rental period,
suppliers were required to transfer title of the oxygen equipment to
the beneficiary. This requirement started for existing beneficiaries
using oxygen on January 1, 2006 and new beneficiaries using oxygen on
or after January 1, 2006. The provision also required payments for
oxygen contents continue after title to the equipment has been
transferred. In the November 9, 2006 Federal Register, we issued the
``Home Health Prospective Payment System Rate Update for CY 2007 and
Deficit Reduction Act of 2005 Changes to Medicare Payment for Oxygen
Equipment and Capped Rental Durable Medical Equipment'' final rule (71
FR 65884) to implement these DRA changes. We amended Sec. 414.226 to
clarify that the monthly rental payments for items falling under the
classes now described in Sec. 414.226(c)(1)(i) thru (iii) are made for
periods of continuous use not to exceed 36 months. We revised the rules
regarding a period of continuous use for the rental of DME in Sec.
414.230 of our regulations to clarify the continuous use determination.
We also added Sec. 414.226(f) requiring a supplier to transfer title
to the oxygen equipment to the beneficiary on the first day after the
36th continuous month in which payment is made for the equipment. In
addition, we revised Sec. 414.226 to allow monthly payments to
suppliers for furnishing gaseous or liquid oxygen contents for use with
either beneficiary-owned stationary equipment or beneficiary-owned
portable equipment.
Section 5101(b) of the DRA also authorized payments for maintenance
and servicing of beneficiary-owned oxygen equipment if the Secretary
determined such payments to be reasonable and necessary. We determined
that paying for necessary repairs and periodic maintenance and
servicing of beneficiary-owned oxygen equipment was reasonable and
necessary to ensure that oxygen equipment owned by beneficiaries
continued to function properly. Without these payments, we were
concerned that there was little incentive for suppliers to maintain
this equipment, because the equipment was no longer owned by the
supplier.
In the November 9, 2006 final rule, we established other safeguards
for beneficiaries receiving oxygen and oxygen equipment, which are set
forth at Sec. 414.210(e)(5) and Sec. 414.226(g). Section
414.210(e)(5) requires suppliers--after transferring title of the
oxygen equipment to the beneficiary--to furnish replacement equipment
at no cost to the beneficiary or the Medicare program if the item
furnished by the supplier does not last (that is, it breaks down and is
irreparable) for the entire reasonable useful lifetime established for
the equipment in accordance with Sec. 414.210(f)(1). Per Sec.
414.210(f), a beneficiary is allowed to elect to receive new oxygen
equipment if the original equipment has been in continuous use by the
beneficiary for the equipment's reasonable useful lifetime. Section
414.210(f)(1) states the reasonable useful lifetime for equipment is
determined through program instructions. In the absence of program
instructions, the carrier may determine the reasonable useful lifetime
for equipment, but in no case can it be less than 5 years. Computation
is based on when the equipment is delivered to the beneficiary, not the
age of the equipment. If the beneficiary elects to obtain new oxygen
equipment after the reasonable useful lifetime, the payment is made in
accordance with Sec. 414.226(a). Section 414.226(g)(2) prohibits
suppliers from replacing oxygen equipment prior to the expiration of
the 36-month rental period unless a specific exception applies. This
was intended to protect the beneficiary from the supplier changing the
beneficiary's equipment in order to maximize Medicare payments. For
example, the supplier may want to move a beneficiary from a portable
oxygen concentrator to portable gaseous equipment for which Medicare
makes additional payments after the 36-month rental period ends.
Section 414.226(g)(4) provides that, by no later than 2 months
before the date on which the supplier must transfer title to oxygen
equipment to the beneficiary, the supplier must disclose to the
beneficiary: (1) whether, in the case of oxygen transfilling equipment
and stationary or portable oxygen concentrators, it can maintain and
service the equipment after the beneficiary acquires title to it; and
(2) whether, in the case of stationary or portable gaseous or liquid
oxygen systems, it can continue to deliver oxygen contents to the
beneficiary after the beneficiary acquires title to the equipment.
(iii) Provisions of Medicare Improvements for Patients and Providers
Act (MIPPA) Section 144(b)--Repeal of Transfer of Ownership of Oxygen
Equipment
In the CY 2009 PFS final rule with comment period, we outlined the
provisions of section 144(b) of the MIPPA (73 FR 69875 through 69876).
Section 144(b) of the MIPPA repeals the requirement that the supplier
transfer title to oxygen equipment to the beneficiary after the 36-
month rental period. In its place, section 144(b) establishes a 36-
month rental cap and amends section 1834(a)(5)(F) of the Act by adding
three new payment rules and supplier requirements for furnishing oxygen
and oxygen equipment after the 36-month rental period. Each of these
provisions is discussed below.
(a) Furnishing Oxygen Equipment After the Rental Cap
Under this new provision, the supplier that furnishes oxygen
equipment during the 36-month rental period must continue to furnish
the oxygen equipment after the 36-month rental period. The supplier is
required to continue to furnish the equipment during any period of
medical need for the remainder of the reasonable useful

[[Page 61888]]

lifetime of the equipment. Section 144(b) does not provide any
exceptions to this requirement. For example, if the beneficiary
relocates outside the supplier's normal service area at some time after
the 36-month rental period but before the end of the reasonable useful
lifetime of the equipment, the supplier must make arrangements for the
beneficiary to continue receiving the equipment at his or her new place
of residence. This responsibility is not transferred to another
supplier. It is important to note that Sec. 414.226(g)(1)(ii) does not
apply this same requirement in situations where the beneficiary
relocates during the 36-month rental period. We received comments from
interested parties on whether this should be changed in light of the
repeal of transfer of ownership of oxygen equipment and other recently
enacted provisions of the MIPPA.
We revised Sec. 414.226(f) to conform our regulations to this new
requirement. We deleted the transfer of ownership requirement and added
the new requirement that the supplier must continue furnishing the
oxygen equipment after the 36-month rental period during any period of
medical need for the remainder of the reasonable useful lifetime of the
equipment.
In addition, we revised Sec. 414.230 to specify that under no
circumstance will a new period of continuous use begin following the
36-month rental period and before the end of the equipment's reasonable
useful lifetime since the supplier is responsible for furnishing the
equipment after the 36-month rental period for any period of medical
need for the remainder of the reasonable useful lifetime of the
equipment. Regardless of the length of any break in medical need that
occurs following the 36-month rental period, once the break ends and
medical need for the oxygen equipment resumes, the supplier is
obligated to continue furnishing the item for no additional rental
payments until the end of the equipment's reasonable useful lifetime.
If the equipment's reasonable useful lifetime ends during the break in
medical need, the supplier is under no obligation to continue
furnishing the equipment. However, in accordance with Sec. 414.210(f),
the beneficiary may elect to obtain new equipment in these situations.
If the beneficiary elects to obtain new equipment, a new 36-month
rental period begins. It is important to note that, in accordance with
section 5101(b)(2)(B) of the DRA, in the case of beneficiaries
receiving oxygen equipment on December 31, 2005, the 36-month rental
period begins on January 1, 2006. However, in accordance with Sec.
414.210(f)(1), the reasonable useful lifetime of durable medical
equipment, including oxygen equipment, begins on the date that the
equipment is first delivered to the beneficiary. The reasonable useful
lifetime of oxygen equipment furnished to beneficiaries on December 31,
2005, is not adjusted to begin anew on January 1, 2006, to correspond
with the start of the 36-month rental period. Therefore, in these
situations, the equipment's reasonable useful lifetime may end at any
point during or after the 36-month rental period depending on the first
day the equipment was delivered to the beneficiary. In these
situations, a new period of continuous use and a new 36-month rental
period would begin if the beneficiary elects to obtain new equipment.
We also revised Sec. 414.210(e)(2), (e)(4) and (e)(5) to delete
regulatory text which relates to beneficiary ownership of oxygen
equipment. In addition, we deleted Sec. 414.210(e)(3) because
beneficiaries will no longer own oxygen tanks and cylinders. Because
Sec. 414.210(e)(3) was deleted, we redesignated Sec. 414.210(e)(4)
and Sec. 414.210(e)(5) as Sec. 414.210(e)(3) and Sec. 414.210(e)(4),
respectively.
We also revised Sec. 414.226 to state that the protection against
supplier replacement of oxygen equipment, unless an exception applies,
continues to be in effect after the 36-month rental period ends.
Specifically, we revised Sec. 414.226(g)(2) to indicate that this
prohibition applies until the expiration of the reasonable useful
lifetime established for the equipment. As discussed in the November 9,
2006 final rule (71 FR 65894), we believe this is a necessary safeguard
for the beneficiary against changes in equipment made by the supplier
in order to maximize payments resulting from moving from one modality
to another. Finally, we deleted Sec. 414.226(g)(4) because the
transfer of ownership of oxygen equipment provision has been repealed,
rendering this provision inapplicable.
The following is a summary of the comments we received and our
responses.
Comment: Numerous commenters requested a delay in the
implementation of the 36-month rental cap on oxygen and oxygen
equipment. Many commenters expressed concerns about the impact of the
36-month cap on suppliers. Some commenters stated the amendments of
section 144(b) of the MIPPA are sparse and that more time is needed to
consider options for implementing these amendments to the statute.
Other commenters had concerns that the program has not issued adequate
guidance to implement these provisions.
Response: While we recognize that the regulatory changes
established new requirements for oxygen suppliers after the 36 month
payment cap, the statutory mandate for implementing the 36-month oxygen
payment cap does not provide any flexibility for a delay in the
implementation of this provision. In accordance with section 1834(a)(5)
of the Act, as amended by section 5101(b) of the DRA, we are required
to limit monthly payments to suppliers for oxygen equipment to 36
months of continuous use, effective January 1, 2006. Since
implementation of the 36-month rental cap is required by section
5101(b) of the DRA, it is outside the scope of this rulemaking effort,
which addresses implementation of section 144(b) of the MIPPA. Section
144(b) of the MIPPA amendments to section 1834(a)(5)(F) of the Act,
repealing the transfer of ownership of oxygen equipment after the 36-
month payment rental cap, were effective January 1, 2009. CMS was
committed to meeting this statutory mandate. We note that sub-
regulatory guidance was issued which provided additional details on
implementing the provisions of section 144(b) of the MIPPA.
Comment: Many commenters disagree that the 36-month rental cap on
oxygen and oxygen equipment applies to all equipment, accessories, and
supplies used in conjunction with the oxygen equipment (other than the
oxygen contents). They believe that separate payment should be allowed
after the cap for replacement supplies and accessories such as
cannulas, tubing, and regulators.
Response: As discussed in the above response, implementation of the
36-month rental payment cap for oxygen equipment was mandated by
section 5101(b) of the DRA. The cap applies to both the monthly payment
amount for oxygen and oxygen equipment and the portable equipment add-
on payments. Since 1989, suppliers have been paid, in accordance with
the rules set forth in section 1834(a)(5) of the Act and Sec. 414.226
of our regulations, a monthly payment amount that includes payment for
all equipment, accessories, supplies, and stationary and portable
oxygen contents. The November 9, 2006 final rule (71 FR 65885) to
implement section 5101(b) of the DRA provides additional discussion on
the implementation of the oxygen 36-month rental payment cap. Section
1834(a)(5)(F) of the Act only authorizes payment for oxygen contents
following the 36-month cap. These rules mandate continued payments for
furnishing oxygen contents for use with

[[Page 61889]]

gaseous or liquid oxygen equipment after the cap. The statute does not
authorize payment after the cap for accessories and supplies used with
the oxygen equipment.
Comment: Two commenters suggested that the Congress repealed the
provisions of the DRA requiring transfer of title for oxygen equipment
to the beneficiary because the Congress realized that oxygen recipients
need frequent services from suppliers. These commenters believe that
the new regulatory changes did not address the number of oxygen service
visits thereby permitting reductions in service visits and quality of
care.
Response: In accordance with section 1834(a)(5)(F) of the Act, we
have revised Sec. 414.226(f)(1) to require a supplier who furnished
oxygen equipment to a beneficiary during the 36th month of continuous
use to continue furnishing the equipment for any period of medical need
until the end of the reasonable useful lifetime established for the
equipment. Section 1834(a)(5)(F) of the Act authorizes payments
following the 36-month cap for oxygen contents. The statute does not
authorize payment after the cap for services related to furnishing
oxygen equipment other than maintenance and servicing of the equipment,
which is addressed in section II.G.10.c. below in this section.
Comment: A number of commenters noted that accreditation standards
require oxygen suppliers to have on-call availability 24 hours a day to
respond to patient respiratory issues. However, without additional
program reimbursement after the 36-month cap, these commenters believe
that suppliers may not adequately comply with the accreditation
requirement unless accreditation is addressed separately at Sec.
414.226.
Response: This comment is outside the scope of the rule. The
accreditation standards are required by Section 1834(a)(20) of the Act,
as amended by Section 302 of the Medicare Prescripton Drug,
Improvement, and Modernization Act of 2003 (MMA). Section 424.57(c)(22)
requires compliance with accreditation as part of the DMEPOS supplier
standards. Also, if a supplier is found to not meet a mandatory
supplier standard such as accreditation requirements, we may invoke
administrative remedies. In accordance with Sec. 424.57(d), failure to
meet a mandatory supplier standard may be addressed by revoking a
supplier's billing privileges.
Comment: Several commenters indicated that we did not amend our
regulations to include beneficiary safeguards to prevent oxygen
suppliers, who do not want to provide services after the 36 month cap,
from forcing more complex and costly oxygen patients into skilled
nursing facilities or forcing beneficiaries to pay out-of-pocket for
certain services.
Response: We appreciate the commenter's interest in the prevention
of abuse to oxygen beneficiaries. We believe beneficiary safeguards for
prevention of abuse when furnishing of oxygen and oxygen equipment are
encompassed in the DMEPOS supplier standards. The supplier standard at
Sec. 424.57(c)(1) requires the supplier to operate its business and
furnish Medicare-covered items in compliance with all applicable
Federal and State licensure and regulatory requirements. Also, Sec.
414.226(f) of our regulations requires that the supplier that furnishes
oxygen equipment for the 36th continuous month during which payment is
made must continue to furnish the equipment during any period of
medical need for the remainder of the equipment's reasonable useful
lifetime. The supplier may not charge the beneficiary or the program
for services associated with meeting these requirements. Thus, if it is
determined that the supplier is out of compliance with these
requirements, CMS sanctions may apply.
As we discussed above, if a supplier is found to not meet a
mandatory supplier standard, we may invoke administrative remedies. For
example, in accordance with Sec. 424.57(d), failure to meet a
mandatory supplier standard may be addressed by revoking a supplier's
billing privileges.
Comment: A number of commenters suggested amending our regulations
to provide additional reimbursement after the 36-month cap when the
oxygen supplier must assist beneficiaries due to power outages caused
by natural disasters and other emergencies. Another commenter explained
that an emergency could be defined as a beneficiary who is having
trouble breathing after facing an unexpected environmental emergency
situation.
Response: Section 1834(a)(5)(F) of the Act authorizes specific
types of payments following the 36-month cap. The statute mandates
continued payments for oxygen contents for use with gaseous or liquid
oxygen equipment after the cap. Other than maintenance and servicing of
the equipment, which is addressed in section II.G.10.c. below, the
statute does not authorize other payment for services related to
furnishing oxygen equipment. Thus, if a beneficiary's concentrator
cannot function due to a power outage, the supplier may meet the
beneficiary's oxygen needs by furnishing gaseous or liquid stationary
equipment until the power resumes at the beneficiary's home. If oxygen
equipment is lost or irreparably damaged due to an emergency situation
such as a fire or flood, Medicare payment can be made for replacement
of the oxygen equipment in accordance with Sec. 414.210(f)(2).
Comment: Numerous commenters opposed the provisions in Sec.
414.226(f)(1)(ii) and (f)(2)(ii) which requires the supplier to arrange
to furnish oxygen equipment and oxygen if the beneficiary relocates to
an area that is outside the normal service area of the supplier that
initially furnished the equipment. Many commenters emphasized small and
rural suppliers will have greater difficulty making arrangements
outside their service area because these suppliers do not have
expertise and resources to enter many arrangements outside their
service area. Several commenters were concerned that supplier licensing
and accreditation is not applicable outside their state or normal
service area and this would present problems when supervising the
furnishing of oxygen services for a beneficiary that relocates outside
their service area. A few commenters noted that the costs associated
with transferring a beneficiary to an out of area supplier were not
discussed and thus a reasonable basis for the provisions at Sec.
414.226(f)(1)(ii) and (f)(2)(ii) had not been established. One
commenter contended that Sec. 414.226(f)(2) is inconsistent with other
regulations for the DME competitive bidding program.
Response: We understand there may be challenges with furnishing
oxygen and oxygen equipment to traveling and relocating beneficiaries.
However, in the CY 2009 PFS final rule with comment period (73 FR
69876), we explained that the provisions of section 144(b) of the MIPPA
do not contain exceptions to the 36 month rental cap for situations
when a beneficiary travels or permanently relocates to another area. In
instances in which a beneficiary relocates outside of the normal
service area of a supplier, the current supplier must make arrangements
in the new service area with a Medicare-enrolled supplier who is
required to be compliant with all applicable Federal and State
licensure and regulatory requirements. Furthermore, we have worked with
our contractors who issued subregulatory guidance on billing for
situations when a beneficiary travels or permanently relocates because
these situations necessitate attention to the date of service and
location of the supplier. We

[[Page 61890]]

will continue to monitor this issue and if necessary, develop
additional subregulatory instructions. Concerns related to the
regulations for the DMEPOS competitive bidding program are not in the
scope of these regulatory changes.
Comment: Some commenters noted that beneficiaries that have not
reached the end of the 36-month cap may confront difficulties in
securing a new supplier in an area that is outside the normal service
area of the supplier that initially furnished the equipment since the
new supplier will receive a reduced number of payments before the end
of the 36-month rental period. Several commenters requested
confirmation that Sec. 414.226(g) does not require that the supplier
furnish or make arrangements to furnish oxygen to a beneficiary outside
of the service area during the 36-month rental period.
Response: Regulatory changes concerning the 36-month rental cap are
outside the scope of this rule which is intended to implement the
provisions of section 144(b) of the MIPPA. As a result, we are
finalizing Sec. 414.226(f)(1)(ii) and (f)(2)(ii) as proposed.
However, as discussed in our response above, we have worked with
our contractors who issued subregulatory guidance on billing for
situations when a beneficiary travels or permanently relocates because
these situations necessitate attention to the date of service and
location of the supplier. When a beneficiary travels or relocates
during the 36-month rental period, the existing supplier can aid the
beneficiary in locating a supplier in the new service area. In
addition, ombudsman staff at 1-800-Medicare has been trained to assist
beneficiaries in these situations to find a new supplier. We will
continue to monitor this issue closely and will take appropriate
actions to address these situations.
Comment: Several commenters requested clarification on how to apply
the Sec. 414.230 requirement of continuous use for durable medical
equipment to the 36-month rental cap for oxygen equipment.
Response: In the CY 2009 PFS final rule with comment period (73 FR
69937), we added Sec. 414.230(h) to our regulation on determining a
period of continuous use to clarify that after the 36-month rental
period, a new period of continuous use does not begin under any
circumstance in the case of oxygen equipment furnished between the end
of the 36-month rental cap and the end of the equipment's reasonable
useful lifetime. The statute and regulation require a supplier to
continue furnishing the oxygen equipment after the 36th continuous
month for any period of medical need for the remainder of the
equipment's reasonable useful lifetime. Additional details pertaining
to the definition of continuous use of oxygen and oxygen equipment both
before and after the 36-month rental cap have been issued through sub-
regulatory guidance as part of the implementation of the 36-month
rental cap mandated by the DRA. In addition to transmittal 421 (Change
Request 6297), we provided program guidance on January 26, 2009 to
contractors containing oxygen and oxygen equipment continuous use
policies. These policies have been posted on the contractors' Web
sites.
Comment: Several commenters requested clarification on supporting
documentation for replacement oxygen equipment after the expiration of
the 5-year useful lifetime.
Response: When oxygen equipment is replaced because the equipment
has been in continuous use by the patient for the equipment's
reasonable useful lifetime, a new Certificiate of Medical Necessity
(CMN) is required to establish a new 36-month rental period and new
reasonable useful lifetime. Suppliers must also furnish documentation
in order to verify that the equipment being replaced has been in use
for at least 5 years. Additional details pertaining to the
documentation required to support the replacement of oxygen equipment
after the expiration of the 5-year reasonable useful lifetime have been
issued through Medicare contractor subregulatory guidance which has
been posted on the contractor's Web sites.
Comment: Several commenters suggested that the requirements at
Sec. 414.226(f)(1)(i) and (f)(2)(i) for a supplier to continue
furnishing oxygen and oxygen equipment after the cap prevent a
beneficiary from changing suppliers if the supplier is performing
poorly. This potentially results in the beneficiary being forced to
utilize a low quality supplier for at least 5 years.
Response: Section 144(b) of the MIPPA requires that the supplier
furnishing equipment in the 36th continuous month continue furnishing
the equipment during any period of medical need for the remainder of
the reasonable useful lifetime of the equipment, as determined by the
Secretary. We believe the language of section 1834(a)(5)(F) of the Act,
as amended by 144(b) of the MIPPA, is clear. Since oxygen contents are
furnished as part of the continued furnishing of gaseous or liquid
oxygen equipment, this requirement extends to oxygen contents furnished
after the cap. This is explained in more detail in section II.G.10.b
below. Regarding the quality of items and services provided by
suppliers of oxygen and oxygen equipment, beneficiaries who encounter
such problems should report them by contacting 1-800-Medicare. A
beneficiary ombudsman will work to resolve the issue. Also, we note
that program requirements are now in place and require suppliers of
oxygen and oxygen equipment to have surety bonds and be accredited to
meet mandated quality standards. Failures to remain in compliance with
these quality standards will be reported to the supplier's
accreditation organization.
Comment: Several commenters requested clarification on changing
oxygen equipment systems during and after the oxygen rental period.
Response: During and after the 36-month rental period, if the
beneficiary's physician orders a change in modality (oxygen equipment
delivery system), the supplier must furnish that new modality without a
restart of the 36-month rental period per the continuous use
regulations at Sec. 414.230. Section 414.226(g)(2) prohibits a
supplier from changing a beneficiary's oxygen equipment/modality during
the 36 month payment period without a physician's order, unless the
equipment is lost, stolen, irreparably damaged, or in cases where the
beneficiary elects to upgrade to newer technology equipment. Also,
Sec. 414.226(g)(1) requires that the supplier that furnished oxygen
equipment for the first month during which payment is made must
continue to furnish the equipment for the entire 36-month period unless
certain specific exeptions apply.
After consideration of the public comments, we are finalizing these
provisions without modification.
b. Payment for Oxygen Contents After the Rental Cap
Section 144(b)(1) of the MIPPA amends section 1834(a)(5)(F)(ii)(II)
of the Act and requires us to continue to make payments to suppliers
for furnishing oxygen contents after the 36-month rental cap for oxygen
equipment ends. Under this provision, an oxygen supplier that furnished
liquid or gaseous oxygen equipment during the 36-month rental period,
and is required by section 1834(a)(5)(F)(ii)(I) of the Act to continue
furnishing the equipment after the 36-month rental period ends, will
receive payment for furnishing oxygen contents necessary for use with
liquid or gaseous oxygen equipment after the 36-month rental period.
Section 1834(a)(5)(F)(ii)(II) of the Act establishes the payment amount
for the

[[Page 61891]]

oxygen contents as that set forth in section 1834(a)(9) of the Act.
We revised Sec. 414.226(d) and (f) to specify that payment shall
be made for oxygen contents for use with supplier-owned liquid or
gaseous oxygen equipment furnished after the 36-month rental period. An
oxygen supplier that furnishes liquid or gaseous oxygen equipment
during the 36-month rental month must continue to furnish the oxygen
contents for any period of medical need for the remainder of the
reasonable useful lifetime of the liquid or gaseous oxygen equipment
established in accordance with Sec. 414.210(f)(1). This requirement is
necessary because liquid and gaseous oxygen systems (stationary and
portable) require on-going delivery of oxygen contents in tanks or
cylinders to furnish oxygen to the patient. We believe that the MIPPA
provisions when read together provide that the supplier that continues
to furnish liquid or gaseous oxygen equipment in accordance with
section 1834(a)(5)(F)(ii)(I) of the Act is also required to furnish the
oxygen contents housed in those tanks. This is based on the nature of
the benfit and the requirement in the statute that the supplier ``must
continue to furnish'' the equipment during any period of medical need.
Empty tanks furnished in accordance with section 1834(a)(5)(F)(ii)(I)
of the Act would provide no benefit to the patient, since the patient
would not be receiving oxygen through the equipment.
We revised Sec. 414.226(f) to specify that the supplier must make
arrangements for the beneficiary to continue receiving the equipment if
the beneficiary relocates at some time after the 36-month rental period
but before the end of the reasonable useful lifetime of the equipment.
Likewise, we revised Sec. 414.226(f) to specify that, in the case of
liquid or gaseous equipment (stationary and portable) the supplier must
make arrangements for the beneficiary to continue receiving oxygen
contents if the beneficiary relocates at some time after the 36-month
rental period but before the end of the reasonable useful lifetime of
the liquid or gaseous equipment (stationary and portable). The supplier
must make arrangements for the beneficiary to continue receiving the
oxygen contents and equipment at his or her new residence.
Comment: One commenter noted the rule does not specify if Medicare
pays for the delivery of oxygen contents when the beneficiary elects to
purchase their oxygen equipment.
Response: In accordance with Sec. 414.226(d)(3)(i) and Sec.
414.226(d)(4)(i), payment is made for the delivery of oxygen contents
used with beneficiary-owned equipment as long as such contents are
medically necessary.
Comment: Several commenters questioned the billing instructions for
oxygen contents with regards to HCPCS codes, supporting documentation,
and units of service.
Response: Since the publication of the CY 2009 PFS final rule with
comment period, we have released subregulatory instructions on these
issues for oxygen and oxygen equipment. The contents of these
instructions have been posted on the contractors' Web sites.
Comment: Some commenters requested increased payments for higher
contents usage. One commenter stated that after the 36 month cap,
individual patient usage may increase due to a change in patient
condition requiring more oxygen contents. The commenters suggested the
supplier should be permitted to issue an Advanced Beneficiary Notice
(ABN) and bill the beneficiary for nonassigned claims.
Response: Section 144(b)(1) of MIPPA, which amends section
1834(a)(5)(F)(ii) of the Act, does not provide for additional payments
for volume adjustments on content payments after the 36-month rental
cap. The monthly payments for oxygen contents include payment for
oxygen contents needed for the entire month. The payment amount does
not vary depending on the quantity (low or high) of oxygen needed. Use
of an ABN is therefore not appropriate in these situations.
Comment: One commenter requested clarification on whether a
nonparticipating DME supplier who has accepted assignment of claims for
oxygen and oxygen equipment during the 36-month rental cap period has
to continue to accept assignment of claims for oxygen contents
furnished after the 36-month cap.
Response: Since nonparticipating suppliers can elect to accept
assignment on a claim by claim basis, a non-participating supplier can
decide to provide oxygen contents on an unassigned basis after the 36-
month payment cap.
After consideration of the comments received, we are adopting these
provisions as final without modifications.
c. Maintenance and Servicing of Supplier-Owned Oxygen Equipment After
the Rental Cap
Section 1834(a)(5)(F)(ii)(III), as amended by section 144(b)(1) of
the MIPPA, authorizes payment for maintenance and servicing of
supplier-owned oxygen equipment furnished after the 36-month rental
period if we determine such payments are reasonable and necessary.
In the CY 2009 PFS final rule with comment period, we determined
that it is not reasonable and necessary to pay for servicing (repair)
and non-routine maintenance of supplier-owned oxygen equipment. Given
that the supplier owns the equipment, we believe the supplier should be
responsible for maintaining its equipment in working order as it did
during the 36-month rental period. In addition, warranties covering 5
years are generally available for the top selling brands of oxygen
equipment and as discussed in the November 9, 2006 final rule (71 FR
65917) and the CY 2009 PFS final rule with comment period (73 FR
69878), we understand from manufacturers that such products are
generally dependable. In a September 2006 report entitled ``Medicare
Home Oxygen Equipment: Cost and Servicing,'' (OEI-09-04-00420), the
Office of Inspector General (OIG) of the Department of Health and Human
Services found that only 22 percent of beneficiaries who began renting
oxygen equipment in 2001 rented the equipment for 36 months or longer.
Recent claims data analysis indicates that more than 75 percent of
Medicare beneficiaries do not rent oxygen equipment for longer than the
36 months (see Table 52 in section XIII. of this final rule with
comment period.) Therefore, oxygen equipment is returned to suppliers
before the end of the 36-month rental period in more than 75 percent of
cases, and suppliers are then able to furnish the equipment to other
beneficiaries, starting new 36-month periods of rental payments for the
same equipment. Given that equipment that is less than 5 years old
requires minimal maintenance and servicing, and in more than 75 percent
of oxygen equipment rental episodes, suppliers receive more than 36
rental payments for the same piece of equipment, we concluded that
suppliers should be responsible for maintaining their equipment in
working order after the 36-month rental period as they did during the
36-month rental period.
Although we determined as part of the CY 2009 PFS final rule with
comment period provisions that it is not reasonable and necessary to
make payments for repair or non-routine maintenance of the supplier-
owned oxygen equipment, we made an initial determination applicable to
CY 2009 only that it is reasonable and necessary for the safety of the
beneficiary to make

[[Page 61892]]

payments for periodic, in-home visits by suppliers to inspect oxygen
concentrators and transfilling equipment and provide routine
maintenance and servicing during these visits to ensure that the
equipment is functioning properly. Therefore, we revised Sec.
414.210(e)(2), to provide payment in 2009 for general maintenance and
servicing of supplier-owned oxygen concentrators and transfilling
equipment furnished after the 36-month rental period in accordance with
section 1834(a)(5)(F)(ii)(I) of the Act consistent with our authority
in section 1834(a)(5)(F)(ii)(III) of the Act. Payments are made in 2009
when the supplier performs routine maintenance and servicing as part of
a visit to the beneficiary's home, 6 months after the 36-month rental
period ends. Payments in 2009 for a maintenance and service visit may
be made when the beneficiary is at home or at a temporary residence
(for example, a vacation residence). For each visit, payment is equal
to the Medicare allowed payment amount for 30 minutes of labor
associated with repair of beneficiary-owned DME. As we indicated in the
November 9, 2006 final rule for implementing section 5101(b) of the DRA
(71 FR 65917), we believe that payment for 30 minutes of labor will
adequately compensate suppliers for general maintenance and servicing
visits based on findings by the OIG in their September 2006 report
(OEI-09-04-00420) that many routine maintenance activities performed by
suppliers on concentrators could be performed within that timeframe.
Separate payment is not made for parts replaced during the general
maintenance and servicing visit, as the primary purpose of the periodic
visit is to check the supplier-owned equipment to ensure that it is
functioning properly. If parts need to be replaced in order to make the
equipment serviceable, we concluded that the supplier should be
responsible for replacing the parts on equipment from their inventory
that they are furnishing to the beneficiary in order to meet the
beneficiary's medical need for oxygen.
We solicited comments from interested parties on whether these
payments should continue past CY 2009. The following is a summary of
the comments we received and our responses.
Comment: Numerous commenters were in favor of continuing payment
for maintenance and servicing visits past 2009. However, many
commenters stated that a biannual maintenance and servicing payment is
insufficient in frequency. Other commenters suggested that limiting
maintenance and servicing payments to visits every 6 months will result
in patients being hospitalized due to respiratory conditions. The
commenters suggested that more frequent maintenance and servicing
visits will prevent hospitalizations. Commenters also opposed basing
the payment amount for maintenance and servicing on 30 minutes of
labor. These commenters felt that the payment amount of two units of
labor was inadequate to cover travel, labor (average 2 to 4 hours for
travel and visit time), repairs, and supplies for a home visit. Several
commenters requested clarification on the specific timeframe for when a
maintenance and servicing visit may occur after the end of the 36-month
rental period. Several commenters requested that we provide more
specific data and the methodology used to compute the reimbursement for
a maintenance and servicing visit.
A number of commenters suggested that the maintenance and servicing
rules and payments for oxygen equipment should be similar to those
described at Sec. 414.229(e) for capped rental items furnished prior
to January 1, 2006. Under these rules, the maintenance and servicing
payment amounts are made every 6 months, beginning 6 months after the
end of the rental cap period and cover all maintenance, servicing, and
repair of the equipment that is needed after the rental cap. The
payment amounts are limited to one month's rental payment for the item.
Response: We appreciate the comments received and agree that
continuing maintenance and servicing payments for oxygen concentrators
and transfilling equipment past 2009 is reasonable and necessary for
the safety of the beneficiary. We are also clarifying that the supplier
that furnishes the equipment during the 36th continuous month during
which payment is made is responsible for continuing to furnish the
equipment after the 36th continuous month (after the cap) and is
responsible for furnishing equipment in good working order regardless
of the implementation of section 1834(a)(5)(F)(ii)(III) of the Act. We
would like to stress this point for commenters who suggest that
beneficiaries will be harmed unless these payments are sufficient to
cover specific costs incurred by the supplier for maintaining and
servicing supplier-owned equipment.
Nevertheless, we agree with commenters that it is reasonable and
necessary to increase the maintenance and servicing payment established
for 2009 to further ensure the equipment is maintained and serviced by
the supplier, thereby protecting beneficiaries who rely on oxygen
equipment to deliver a sufficient concentration and quantity of oxygen
on an uninterrupted basis. We also agree with commenters who believe
that it is reasonable and necessary to establish rules for maintenance
and servicing of certain oxygen equipment that are similar to the rules
described at Sec. 414.229(e) for capped rental items furnished to
beneficiaries beginning on or before December 31, 2005.
These rules allow payment every 6 months, beginning 6 months after
the end of the rental cap period, for all necessary maintenance and
servicing. In accordance with Sec. 414.229(e), a reasonable fee is
established for maintenance and servicing not to exceed 10 percent of
the purchase price of the item. Our experience and an OIG report from
June 2002 entitled ``Medicare Maintenance Payments for Capped Rental
Equipment'' (OEI-03-00-00410) indicates that such rules more than
adequately reimbursed suppliers for maintenance and servicing of capped
rental items. In addition, we believe it is necessary to continue
requiring that suppliers make visits every 6 months to the
beneficiary's home to inspect the oxygen equipment to ensure that all
of the equipment maintenance and servicing needs are being addressed.
Regarding the fee for maintenance and servicing, in order to model
the payment for maintenance and servicing of certain oxygen equipment
after the capped rental maintenance and servicing provision at Sec.
414.229(e), it is necessary to develop maintenance and servicing
payments for oxygen equipment in a way that ensures that the amount
does not exceed 10 percent of the purchase price of the equipment. The
monthly payment amount for oxygen and oxygen equipment includes payment
for oxygen contents in addition to equipment rental and is not
established based on a percentage of the purchase price of the
equipment, as is the case for capped rental items. In the September
2006 report on oxygen equipment, the OIG found that the average cost of
an oxygen concentrator was $587. Increasing this amount to a 2010 price
based on the percentage change in the Consumer Price Index for all
Urban Consumers (CPI-U) from 2006 to 2010 yields a purchase price of
$660. We note that the percentage change in the CPI-U from June 2008 to
June 2009, the factor used to inflate prices from 2009 to 2010, is a
negative 1.41 percent. Therefore, we use a factor of zero percent as
the indicator for inflation for this year. Establishing the maintenance

[[Page 61893]]

and servicing fee based on 10 percent of this average price would
result in a payment of $66 for CY 2010. For subsequent years, the
payment amount will be adjusted based on the covered item update for
DME as set forth in section 1834(a)(14) of the Act.
After careful consideration of comments on this issue, we are
adding Sec. 414.210(e)(5) to make ongoing maintenance and servicing
payments for oxygen concentrators and transfilling equipment (or
equipment other than stationary or portable gaseous or liquid oxygen
equipment) furnished on or after July 1, 2010 based on a reasonable fee
not to exceed 10 percent of the purchase price for a stationary oxygen
concentrator. We are making these changes effective for items furnished
on or after July 1, 2010, to allow time for necessary systems changes.
We are revising Sec. 414.210(e)(2) to continue the maintenance and
servicing policy established for certain oxygen equipment for 2009, for
items furnished from January 1, 2010 through June 30, 2010. For items
furnished on or after July 1, 2010, the maintenance and servicing
payments would be made following each subsequent 6-month period until
either medical necessity ends or the beneficiary elects to obtain new
equipment. Only one maintenance and servicing payment will be made
during each 6-month period for any combination of concentrator and
oxygen transfilling equipment used by the beneficiary in their home.
The maintenance and servicing payment includes payment for all
necessary maintenance and servicing of the beneficiary's oxygen
concentrator (stationary or portable) and transfilling equipment and a
minimum of one required visit to the beneficiary's home to inspect the
equipment. Consistent with our existing policy, no payment is made for
maintenance and servicing of gaseous or liquid oxygen equipment.
Finally, in response to comments, we are revising Sec. 414.210(e)(2),
and adding (e)(2)(iii) and (e)(5)(iv) to clarify that the visit to the
beneficiary's home must occur during the first month of the 6-month
period. This will ensure that the visits occur in 6-month intervals so
that maintenance and servicing necessary to keep the equipment in good
working order for the next 6 months is performed for each subsequent 6-
month period and avoids overlap of 6-month maintenance and servicing
episodes.
Comment: One commenter asked for clarification as to whether
suppliers can enter into a service contract with the beneficiary after
the 36-month cap for additional maintenance and service visits along
with any necessary on-call visits.
Response: In accordance with 1834(a)(5)(F)(ii)(I) of the Act and
regulations at Sec. 414.226(f)(1), the supplier is responsible for
furnishing, or making arrangements to furnish, the oxygen equipment in
good working order for any period of medical need after the 36-month
cap for the remainder of the reasonable useful lifetime of the
equipment. In addition, as indicated above, we are revising Sec.
414.210(e)(2) and Sec. 414.210(e)(5) to make payment for ongoing
maintenance and servicing of equipment other than gaseous or liquid
oxygen equipment after the cap. Therefore, we believe it would be
inconsistent with these provisions for suppliers to require that
beneficiaries enter into service contracts for maintenance and
servicing of rented oxygen equipment at any time or to charge the
beneficiary for maintenance and servicing of equipment beyond those
allowed by regulations at Sec. 414.210(e). As explained previously,
the supplier is required to furnish gaseous or liquid oxygen equipment
in good working order during the 36-month rental period and following
the 36-month rental period when payments continue for delivery of
oxygen contents. Therefore, it would be inconsistent with these
provisions for the supplier to charge the beneficiary for maintenance
and servicing of gaseous or liquid oxygen equipment.
After consideration of the comments received, we are adopting as
final Sec. 414.210 by revising Sec. 414.210(e)(2) and adding Sec.
414.210(e)(5).
d. Other Public Comments Received on the CY 2009 PFS Final Rule With
Comment Period
Comment: Several commenters noted that CMS did not discuss the
application of policies for Advanced Beneficiary Notices (ABN) on the
period following the 36-month oxygen payment cap.
Response: Using an ABN in the post 36-month period is only
applicable when upgrading to medically unnecessary equipment or
equipment with features that are not medically necessary. As a result,
we do not anticipate frequent application of an ABN during the post 36-
month period and did not incorporate this issue in our regulations at
Sec. 414.226(f) and (g).
Comment: Several commenters explained that currently respiratory
therapists are not separately reimbursed as licensed practitioners
under the PFS. As a result, they receive payment for their professional
services from suppliers receiving payment for furnishing oxygen
equipment. Thus, reductions in payment for home oxygen equipment will
adversely affect payments for respiratory therapists. The commenters
requested that payment should be established for respiratory therapists
under the PFS.
Response: This topic of Medicare coverage and payment for the
professional services of licensed respiratory therapists is not a
subject of the CY 2009 PFS final rule with comment period or this final
rule with comment period for implementation of section 144(b) of MIPPA
and therefore outside the scope of this rule.
Comment: Several commenters raised concern that our regulations do
not address situations where an oxygen supplier discontinues its
business or declares bankruptcy. The commenters believe a new supplier
will refrain from accepting patients from a terminating supplier
because the new supplier will receive fewer monthly rental payments and
upon reaching the payment cap, the new supplier must continue
furnishing the oxygen and oxygen equipment for the remainder of the
reasonable useful lifetime of the equipment.
Response: We will evaluate current regulations to determine if
oxygen equipment that is lost due to bankruptcy can be replaced. We are
not addressing bankruptcy in this rulemaking which is intended to
address the provisions of section 144(b) of the MIPPA.
Comment: Several commenters objected that our regulation at Sec.
414.210(f)(1) establishes that the reasonable useful lifetime of DME
cannot be less than 5 years and instead recommended that the regulation
be revised for oxygen equipment to 3 years. One commenter stated most
oxygen compressors expire after approximately 9,000 to 10,000 hours of
use of the equipment. Additionally, one commenter requested
clarification on whether the useful lifetime restarts if the oxygen
equipment has been changed or replaced after the equipment was
originally delivered to the patient but before the expiration of 5
years.
Response: The reasonable useful lifetime begins with the initial
delivery date of the equipment. Equipment can be changed for another
oxygen modality or replaced without affecting the duration of the
reasonable useful lifetime as long as there is not a break in the
medical necessity of oxygen (break in need) during the 36-month rental
period, for at least 60 days plus the days remaining in the last paid
rental month. It is important to note, however, that our regulations
did not propose an amendment to Sec. 414.210(f)(1) and as such,
revisions to

[[Page 61894]]

the length of the reasonable period are outside the scope of this
rulemaking effort.
11. Section 152(b): Coverage of Kidney Disease Patient Education
Services
Section 152(b) of the MIPPA provides for coverage of kidney disease
education (KDE) services for patients. The following is an outline of
our final rule to implement the statutory amendments.
a. Statutory Authority
Section 152(b) of the MIPPA amended section 1861(s)(2) of the Act
by adding a new subparagraph (EE) ``kidney disease education services''
as a Medicare-covered benefit under Part B. This new benefit is
available for Medicare beneficiaries diagnosed with Stage IV CKD, who
in accordance with accepted clinical guidelines identified by the
Secretary, will require dialysis or a kidney transplant. KDE services
will be designed to provide comprehensive information regarding:
The management of comorbidities, including delaying the
need for dialysis;
Prevention of uremic complications;
Options for renal replacement therapy (including
hemodialysis and peritoneal dialysis, at home and in-center, as well as
vascular access options and transplantation);
Ensuring that the beneficiary has the opportunity to
actively participate in his or her choice of therapy; and
Tailored to meet the needs of the beneficiary involved.
b. Public Meetings
Section 1861(ggg)(3), as added by section 152(b) of the MIPPA,
requires that the Secretary set standards for the content of the KDE
services after consulting with various stakeholders, who to the extent
possible, had not received industry funding from a drug or biological
manufacturer or dialysis facility. On November 6, 2008, and December
16, 2008, we held two feedback sessions to solicit stakeholder comments
regarding the implementation of section 152(b) of the MIPPA. Both
feedback sessions were open to the public. In addition to the feedback
sessions, we conducted an internal review of the available medical
evidence, literature, and currently available CKD patient education
programs. Transcripts from both events are available on the CMS Web
site at http://www.cms.hhs.gov/CoverageGenInfo/08_CKD.asp#TopOfPage. A
summary of the feedback sessions is available in the proposed rule (74
FR 33615 through 33616).
c. Summary of Proposed Rule and Comments
We proposed, consistent with section 1861(ggg) of the Act, to amend
42 CFR part 410 to add new Sec. 410.48 for KDE services as a Medicare
Part B benefit. The following is a summary of the provisions of the
proposed rule, and the comments we received on the proposed rule, and
the changes we are making in this final rule regarding coverage of KDE
under section 152(b) of the MIPPA. We received broad support from
commenters regarding the addition of KDE services as a Medicare Part B
covered benefit. Most were generally pleased with the proposed rule and
commended us for our expeditious implementation of the MIPPA
provisions. Commenters appreciated that CMS collected and incorporated
broad stakeholder feedback in the development of the proposed rule.
(1) Definitions (Sec. 410.48(a))
As related to the implementation of section 1861(ggg) of the Act,
we proposed the following definitions in Sec. 410.48:
Kidney Disease Patient Education Services: Consistent with
section 1861(ggg)(1) of the Act, we defined Kidney Disease Patient
Education Services as face-to-face educational services provided to
patients with stage IV CKD. We specified that KDE services are provided
in a face-to-face manner based on stakeholder feedback received during
the consultation meetings and our general rulemaking authority. Face-
to-face education is consistent with sections 1861(ggg)(C)(ii) and
(iii) of the Act, which provide that the services should be designed to
ensure that the beneficiary has the opportunity to actively participate
in the choice of therapy and be tailored to meet the needs of the
beneficiary involved.
Comment: One commenter agreed with our proposal to define KDE as
face-to-face educational services provided to patients with Stage IV
CKD. Several commenters asked us to consider allowing the services to
be provided via telehealth and in Federally qualified health centers
(FQHCs), since multiple education sessions may be difficult for some
patients due to transportation issues and recommended that KDE services
be added to the telehealth services at Sec. 410.78. One commenter
stated that we have recognized telehealth as a ``face-to-face''
encounter in the past.
Response: We appreciate the concerns raised by commenters regarding
access to services in rural areas. In the proposed rule, we specified
that KDE services be provided in a face-to-face manner based on
stakeholder feedback received during the consultation meetings and our
general rulemaking authority. Face-to-face education is consistent with
sections 1861(ggg)(C)(ii) and (iii) of the Act, which provide that the
services should be designed to ensure that the beneficiary has the
opportunity to actively participate in the choice of therapy and be
tailored to meet the needs of the beneficiary involved.
At this time, we believe that it would be more appropriate to
consider the addition of KDE services for telehealth through full
notice and comment procedures in the CY 2011 PFS proposed rule, based
on the experience we gain observing the KDE programs over 1 year. We
will accept requests for consideration to add KDE services to the list
of approved telehealth services in the CY 2011 PFS proposed rule if
received prior to December 31, 2009. For more information on submitting
a request for an addition to the list of Medicare telehealth services,
including where to mail these requests, visit our Web site at http://www.cms.hhs.gov/telehealth/.
Comment: One commenter stated that qualified persons should be
precluded from using videos as a method for providing KDE services
since patients need to ask questions and may fall asleep during a video
due to their illness and anemia levels.
Response: We received similar feedback from stakeholders during the
feedback sessions and understand the commenter's concerns about using
videos as a method for providing KDE services. We agree that a video is
not an appropriate modality for providing KDE services, which is why we
specify that KDE services are services provided in a face-to-face
manner.
We are retaining the definition of Kidney Disease Patient Education
Services as proposed in this final rule.
Physician: For purposes of KDE services, we proposed to
define physician using the definition in section 1861(r)(1) of the Act;
it defines ``physician'' as ``a doctor of medicine or osteopathy
legally authorized to practice medicine and surgery by the State in
which he or she performs such function or action (including a physician
within the meaning of section 1101(a)(7) [of the Act].'' We received no
comments regarding our proposed definition of physician and are
adopting this definition in this final rule.
Qualified Person: Consistent with section 1861(ggg)(2)(A)
of the Act, for purposes of KDE services, we proposed to define a
``qualified person'' as a

[[Page 61895]]

physician (as defined in section 1861(r)(1) of the Act); a physician
assistant (PA), nurse practitioner (NP), or clinical nurse specialist
(CNS) (as defined in section 1861(aa)(5) of the Act, and implemented in
Sec. 410.74, Sec. 410.75, and Sec. 410.76 of this subpart). A
provider of services located in a rural area is also included in the
statute's definition of a qualified person. Section 1861(u) of the Act
defines ``provider of services'' to be ``a hospital, critical access
hospital, skilled nursing facility, comprehensive outpatient
rehabilitation facility, home health agency, hospice program or, for
purposes of sections 1814(g)and section 1835(e) [of the Act], a fund''.
We define a ``qualified person'' to include a provider of services
located in a rural area and would include each of these healthcare
entities except for a ``fund.''
In order for a provider of services to be a ``qualified person,''
the entity must be located in a rural area. We include in the
definition of a ``qualified person'', only those hospitals, critical
access hospitals (CAHs), skilled nursing facilities (SNFs),
comprehensive outpatient rehabilitation facilities (CORFs), home health
agencies (HHAs), and hospice programs that are located in a rural area
under section 1886(d)(2)(D) of the Act (as defined in our regulations
at Sec. 412.64(b)(ii)(C)) and include hospitals and CAHs that are
reclassified from urban to rural status pursuant to section
1886(d)(8)(E) of the Act, as defined in Sec. 412.103. Specifically,
Sec. 412.64(b)(ii)(C) defines ``rural'' to mean any area outside an
urban area, which Sec. 412.64(b)(ii)(A) defines as a metropolitan
statistical area (MSA) as defined by the President's Office of
Management and Budget (OMB). Therefore, we believe that a hospital,
CAH, SNF, CORF, HHA, or hospice program that is not physically located
in an MSA should be considered ``rural'' for this benefit.
Section 1886(d)(8)(E) of the Act, implemented in Sec. 412.103,
requires us to treat hospitals that meet specified criteria as
geographically rural under section 1886(d)(2)(D) of the Act even though
they are physically located in an MSA. Because the statute identifies
these hospitals as rural, we believe that it is appropriate to consider
these hospitals as qualified persons for purposes of the KDE benefit.
Comment: Several commenters requested that we consider adding
various other healthcare professionals to the definition of a qualified
person including registered dietitians, renal dieticians, licensed
dieticians, nutrition support clinicians (nutrition support physician,
nurse, or pharmacist), medical nutrition therapists, nephrology social
workers, registered nurses, nephrology nurses, and/or transplant
coordinators as qualified persons or as members of a multi-disciplinary
team headed by the qualified person to provide KDE services. One
commenter was concerned that dietary advice provided by physicians,
nurses, and NPs, while well meaning, is often overly restrictive, and
could lead to malnutrition and lower quality of life. One commenter
requested that at least one of the sessions be designated for the
patient to meet with a registered dietitian. One commenter stated that
a dietitian who is board certified in renal adds additional competency
to his or her qualifications to provide KDE services.
Response: The Congress did not specifically authorize the Secretary
to approve additional healthcare professionals within this defined
term. Therefore, we are not accepting the comments to further expand
the definition to include other healthcare professionals.
Comment: Regarding providers of services located in rural areas,
one commenter recommended that we rely on facilities to schedule the
appropriate staff to teach KDE services in these facilities and not to
narrow the clinical practice activities beyond those permitted within
each state's clinical scope of practice laws.
Response: Providers of services are responsible for providing
proper staffing of KDE services. We encourage facilities to review the
standards for content of KDE services when determining who will be
providing such services, similar to how a facility would choose the
appropriate staff for other facility functions.
Comment: One commenter disagreed with our proposed definition of a
provider of services located in a rural area as a ``qualified person''
who may be paid for kidney disease education services. The commenter
believes that the definition of a provider of services in a rural area
should include rural hospital-based dialysis facilities. The commenter
stated that these types of facilities are the only dialysis facilities
that could be interpreted as a qualified person under section
1861(ggg)(2)(A)(i) of the Act and that renal dialysis facilities not
located within a hospital are not providers of services under
1861(ggg)(2)(B). Furthermore, the commenter indicated that, as a
practical matter, hospital-based dialysis facilities in rural areas are
the only providers of services that would be capable of providing
kidney disease education services as the Congress intended under the
provisions of MIPAA.
Response: We disagree with the commenter's request to include
dialysis facilities within the definition of a ``provider of services
located in a rural area.'' Section 1861 (ggg)(2)(B) of the Act
explicitly excludes renal dialysis facilities from being ``qualified
persons'' for purposes of the kidney disease education benefit. The
statute does not provide an exception for dialysis facilities located
within hospitals. We do not consider dialysis facilities located in a
hospital to be different from a freestanding dialysis facility for
purposes of the statutory exclusion.
In addition, section 1861(u) of the Act defines a provider of
services to be a hospital, critical access hospital, skilled nursing
facility, comprehensive outpatient rehabilitation facility, home health
agency, or hospice. The provisions of MIPAA require that the provider
of services must be located in a rural area in order to furnish KDE
services. In implementing the KDE benefit, to exclude these providers
of services located within a rural area would be contrary to the
statutory definition of the term ``provider of services.''
Therefore, in this final rule with comment period and as specified
in the statutory definition of a ``qualified person,'' we consider a
qualified person to be either a physician (as defined in section 1861
(r)(1) of the Act) or a PA, NP, or CNS; or a provider of services
located in a rural area, which includes a hospital, critical access
hospital, skilled nursing facility, comprehensive outpatient
rehabilitation facility, home health agency or hospice. A qualified
person under this benefit does not include a renal dialysis facility,
whether freestanding or hospital-based, regardless of whether the renal
dialysis facility is located in a rural area or not. While the
hospital-based renal dialysis facility located in a rural area is not a
``qualified person'' for purposes of payment for KDE services, we note
that the hospital of which the hospital-based renal dialysis facility
is a part would meet the definition of a ``qualified person'' because
it is in a rural area.
Renal Dialysis Facility: The Congress has provided in
section 1861(ggg)(2)(B) of the Act that a ``renal dialysis facility''
may not be a ``qualified person.'' We proposed to define this term,
consistent with Sec. 405.2102 of this title, as ``a unit which is
approved to furnish dialysis services(s) directly to ESRD patients.''
We received no comments on the definition and are adopting the proposed
definition in this final rule.

[[Page 61896]]

Stage IV Chronic Kidney Disease: Section 1861(ggg)(1)(A)
of the Act states that KDE services shall be furnished to beneficiaries
diagnosed with Stage IV CKD, who according to accepted clinical
guidelines identified by the Secretary, will require dialysis or a
kidney transplant. Based on stakeholder feedback, we proposed to define
Stage IV CKD as kidney damage with a severe decrease in GFR
quantitatively defined by a GFR value of 15-29 ml/min/1.73 m\2\, using
the Modification of Diet in Renal Disease (MDRD) Study formula.\1\
Because there are currently no agreed upon accepted clinical guidelines
that describe the stage IV patients who would eventually require
dialysis or a kidney transplant, we proposed to cover all stage IV
patients. We received no comments regarding our proposed definition of
Stage IV CKD or regarding clinical guidelines for identifying
beneficiaries with stage IV CKD that will require dialysis or a kidney
transplant. Therefore, we are adopting our proposed definition of Stage
IV CKD in this final rule.
---------------------------------------------------------------------------

\1\ Levey, A.S., Greene, T., Kusek, J, and Beck, G.A. J Am Soc
Nephrol. 2000. 11: p. 155A.; Levey, A.S., Bosch, J.P., Lewis, J.B.,
Greene, T., Rogers, N., and Roth, D. Ann Intern Med. 1999 Mar 16;
130(6):461-70.
---------------------------------------------------------------------------

(2) Covered Beneficiaries (Sec. 410.48(b))
Consistent with section 1861(ggg)(1)(A) of the Act, we proposed
that Medicare beneficiaries are eligible to receive KDE services if the
beneficiaries are diagnosed with Stage IV CKD (as defined in new Sec.
410.48(a)), and have been referred for such services by the physician
managing the beneficiary's kidney condition.
Comment: Some commenters recommended that we modify the provisions
regarding beneficiaries eligible to receive KDE services to indicate
that the beneficiary be diagnosed with at least stage IV CKD. Several
commenters held the opinion that the Congress envisioned that defining
stage IV CKD would not be a precise process by requiring that CMS rely
upon accepted clinical guidelines. Commenters were also of the opinion
that the Congress recognized that some beneficiaries should qualify for
the benefit because they were at a stage where RRT was imminent, but
had not commenced. Commenters believed that the Congress added a
limiting clause that precludes beneficiaries who are on dialysis or
have received a transplant, which would prevent more than the targeted
population from obtaining these services. Several commenters pointed
out that the KDOQI guidelines acknowledge that the GFR ranges/
measurements established in the guidelines should not be used as
definitive cut-offs between stages because using such cut-offs is
inherently arbitrary. Commenters requested that CMS not adopt a ridged
approach, but rather recognize that beneficiaries with stage IV and
those beneficiaries with stage V that have not yet started renal
replacement therapy should be treated similarly for purposes of
qualifying for the KDE services.
Response: We understand and appreciate that the staging criteria is
a classification system and understand the commenters' desire for
beneficiaries to have access to this important benefit. However, there
is no statutory authority to expand eligibility for individuals beyond
those noted in the proposed rule.
Comment: One commenter asked that we consider the needs of
adolescent/young adult renal transplant patients between 18 and 24
years old that are transitioning from pediatric to adult nephrology
care.
Response: We appreciate that adolescents and young adults with CKD
have unique needs that need to be addressed as part of their overall
plan of care. The standards for content allow for the KDE services to
be tailored to the needs of the beneficiary involved. We note that an
adolescent/young adult described by the commenter would need to be a
Medicare beneficiary and meet the eligibility provisions of this rule
in order to obtain services under this benefit.
Comment: One commenter requested that we use a standardized method
to screen qualifying beneficiaries to participate in the KDE services.
Response: We are defining stage IV CKD as ``kidney damage with a
severe decrease in glomerular filtration rate (GFR) quantitatively
defined by a GFR value of 15-29 ml/min/1.73m\2\, using the MDRD Study
formula,'' and required that the beneficiary obtain a referral from the
physician managing the beneficiary's kidney condition. These provisions
provide a standardized method for determining if a beneficiary is
eligible for KDE services.
Comment: Some commenters indicated that referrals for KDE services
should not be limited to just those obtained from the physician
managing the beneficiary's kidney condition. Commenters suggested that
we allow referrals from those that meet the definition of a qualified
person since many CKD patients are not under the care of a single
physician managing the beneficiary's kidney condition. Commenters were
concerned that a physician who diagnoses the beneficiary with CKD but
has not been managing the kidney condition for a period of time, would
be precluded from making a referral for KDE services. Commenters stated
that beneficiaries may be diagnosed late in the progression of their
CKD and may not have been managed by a physician up to that point.
Commenters recommended that we clarify the language in this provision
so that physicians or other healthcare professionals that diagnose the
beneficiary's kidney condition be able to refer the beneficiary for KDE
services.
Response: Beneficiary access to these new services is important and
we recognize the commenters' concerns about whether a beneficiary's
kidney disease is being managed by a physician. Section 1861(ggg)(1)(B)
of the Act expressly requires that KDE services are ``(B) furnished,
upon the referral of the physician managing the individual's kidney
condition, by a qualified person[[hellip]]'' We interpret the statute
to mean that referrals are made by physicians and KDE services are
furnished by qualified persons. Appropriate referral of a patient is
left to the discretion of the physician as described above. If a
physician diagnoses and discusses KDE services, we consider this to be
sufficient to be considered the physician managing the beneficiary's
kidney condition. Therefore, the physician, within his or her
discretion, can make a referral for KDE services.
Comment: One commenter requested that the physician managing the
beneficiary's kidney condition, as part of the KDE program, should
initiate a referral for Medical Nutrition Therapy (MNT). Commenters
also recommended that referrals for MNT be added to the KDE standards
for content.
Response: We recognize that MNT can be an important benefit
available to beneficiaries with chronic kidney disease. The MNT benefit
(42 CFR 410 Subpart G) has distinct eligibility criteria, though it
does overlap somewhat with the eligibility criteria for KDE services. A
qualified person that provides KDE services and a physician managing a
beneficiary's kidney condition may want to consider making patients
aware that MNT is a Medicare covered benefit that provides
beneficiaries with chronic kidney disease information about proper
nutrition. We encourage physicians, healthcare professionals, and
beneficiaries to discuss whether a referral for MNT services would be
appropriate. Referral of a patient for MNT services is left to the
discretion of the physician. Therefore, we do not believe it would be
appropriate to

[[Page 61897]]

include a requirement for referral to MNT services as part of the
referral process or the standards for content for KDE services.
Therefore, in this final rule, we are retaining our proposed
provisions for covered beneficiaries.
(3) Standards for Qualified Persons and Exclusions (Sec. 410.48(c))
We proposed requiring that a qualified person be able to properly
receive Medicare payment under 42 CFR part 424 (Conditions for Medicare
Payment). Consistent with section 1861(ggg)(2)(B) of the Act, we
proposed to specifically exclude a hospital, CAH, SNF, CORF, HHA, or
hospice that is physically located outside of a rural area under Sec.
412.64(b)(ii)(C), except for a hospital or CAH that is treated as being
located in a rural area under Sec. 412.103. In addition, consistent
with section 1861(ggg)(2)(B) of the Act, a renal dialysis facility is
not a qualified person.
While we did not propose specific education, experience, training,
and/or certification requirements in the proposed rule, we solicited
public comments on the appropriate level of education, experience,
training, and/or certification appropriate for a qualified person to
effectively provide KDE services. Factors to consider included specific
education and expertise regarding the topic and the ability to explain
these areas for the purpose of patient education.
Comment: Many commenters recommended that qualified persons either
be board certified in nephrology or have at least 2 years experience
working primarily with kidney disease patients. Commenters believed
that the suggested qualifications supported our objective that the
qualified person be able to explain the subjects enumerated in the
proposed rule.
Response: The recommended qualifications were popular among
commenters, but to our knowledge, the recommendations are not
universally agreed upon standards for educators in existing education
programs. Therefore, we are not adding specific education/experience
qualifications for qualified persons to this final rule with comment
period.
In this final rule with comment period, we are retaining the
proposed standards for the ``Qualified Persons and Exclusions''
provisions.
(4) Standards for Content of Kidney Disease Patient Education Services
(Sec. 410.48(d))
We believe that patient education needs vary by severity of the
disease, the age of the patient, the patient's comorbid conditions and
disabilities, the patient's primary language and culture, and desire to
learn more about the disease and treatment options. Education services
are more effective if the services are tailored to meet an individual
beneficiary's needs. We proposed that KDE services include the content
as specified in proposed new Sec. 410.48(d).
Commenters were overwhelmingly supportive of the proposed standards
for content and provided suggestions for improvement.
Comment: Some commenters requested that we provide more detailed
regulatory guidance regarding the minimum core curriculum to maintain
consistency and a balanced/comprehensive nature of the education
sessions. Specifically, the commenters requested:
Nature and treatment for co-morbidities that accompany CKD
such as anemia, mineral and bone disorders, diabetes, and high blood
pressure;
Separate vascular access into its own topic heading and
specify the benefits and risks of each option, the need to preserve
vasculature for creation of fistulas, and care of vascular access to
avoid infection and stenosis;
Transplantation including preparation for transplantation,
pre-emptive transplantation and differences between living donor and
deceased donor transplantation, immunosuppression, allocation policies,
and lifestyle post-transplant;
Smoking cessation;
Use of non-steroidal anti-inflammatory agents;
Impact of blood transfusions on transplant candidacy;
Nutrition, risk of malnutrition, impact of dietary
interventions on the progression to kidney failure, and pre-dialysis
and dialysis patient dietary prescriptions;
Conservative management without renal replacement therapy
and palliative care as a therapeutic option; and
Advanced directives education.
Response: We appreciate the suggestions provided. The intent of the
standards for content is that qualified persons provide a comprehensive
set of information, but allow qualified persons flexibility in specific
session design to meet the needs of the individual beneficiary(s)
involved. Anemia, mineral and bone disorders, diabetes, and high blood
pressure are addressed under Sec. 410.48(d)(1), management of
comorbidities including for the purpose of delaying the need for
dialysis. Vascular access options, impact of blood transfusions on
transplant candidacy, preparation for transplantation, pre-emptive
transplantation, differences between living donor and deceased donor
transplantation, immunosuppression, allocation policies, and lifestyle
post-transplant are addressed under Sec. 410.48(d)(3), therapeutic
options, where we specify that qualified persons discuss the advantages
and disadvantages of each therapeutic option. Regarding smoking
cessation, conservative management without renal replacement therapy,
palliative care as a therapeutic option, and advanced directives are
addressed in Sec. 410.48(d)(4), opportunities for beneficiaries to
actively participate in the choice of therapy and be tailored to meet
the needs of the individual beneficiary involved. Nutrition, risk of
malnutrition, impact of dietary interventions on the progression to
kidney failure, and pre-dialysis and dialysis patient dietary
prescriptions are addressed in Sec. 410.48(d)(2), prevention of uremic
complications, under diet and fluid restrictions; and medication
review, including how each medication works, possible side effects and
minimization of side effects, the importance of compliance, and
informed decision-making if the patient decides not to take a specific
drug. The topics we list in Sec. 410.48(d) do not constitute an all
inclusive list. Specifically, we are stating with this final rule that
the education provided to beneficiaries includes, but is not limited to
the content standards topics listed in new Sec. 410.48(d). We leave it
to the discretion of the qualified person to tailor the services to
individual needs.
Comment: One commenter requested that CMS include language stating
that KDE services include, but are not limited to, the content as
specified in Sec. 410.48(d) and permit qualified providers to include
additional reasonable and necessary content at their discretion.
Response: Under the standards for content, each content heading
specifies that education sessions include, but are not limited to, the
topics listed. We note that in the proposed rule Sec. 410.48(d)(3),
Therapeutic options, the ``not limited to'' language was inadvertently
omitted. In this final rule, we are correcting this omission and
clarifying that qualified persons discuss, but are not limited to, the
topics listed under this content heading.
Comment: Some commenters requested standardized content. One
commenter recommended the KDOQI guidelines as a source for
standardization criteria.
Response: We understand and appreciate the suggestion that the KDE

[[Page 61898]]

services content should be standardized. The intent of the standards
for content is consistent with the statutory provisions at section
1861(ggg)(1)(C)(iii) of the Act, which state that KDE services ``be
tailored to meet the needs of the individual involved.'' The intent of
the standards for content was to strike a balance between ensuring that
beneficiaries are provided comprehensive information, but also that the
services are tailored to individual needs. We outlined the major topics
in the content standards that need to be addressed during KDE sessions,
but also believe it is important to allow flexibility for qualified
persons to tailor the education sessions to meet the needs of the
beneficiaries involved, per the statutory requirements.
Comment: Commenters stated that the terminology ``vascular access''
does not encompass peritoneal dialysis access and recommended that we
change the terminology to ``dialysis access for both hemodialysis and
peritoneal dialysis.''
Response: We agree with the comments provided regarding vascular
access and we are changing ``all vascular access options'' to ``all
dialysis access options for hemodialysis and peritoneal dialysis.''
(5) Session Specifications (Sec. 410.48(e))
(a) Limitations on the number of sessions: Consistent with section
1861(ggg)(4) of the Act, we limit the number of KDE sessions to six
(6). We did not receive any comments on the session limitations.
Therefore, we are adopting the limits, as proposed, in this final rule.
(b) Session Length: In the proposed rule we defined the session
length as 60 minutes.
Comment: One commenter concurred that 6 hours was sufficient to
provide comprehensive KDE services, but recommended that we recognize a
partial/fraction of a session. For example, one session could be billed
in four 15-minute increments, to allow for variation in session length
based on beneficiary needs.
Response: Consistent with section 1861(ggg)(4) of the Act, we limit
the number of KDE sessions to six (6). As we discussed in the proposed
rule, stakeholders provided a variety of recommendations regarding
appropriate session length. In the absence of supporting evidence for
session length, we are defining the session length in this final rule
as one (1) hour, which coincides with the session length of some
programs in existence and is the approximate average of stakeholder
suggested session lengths.
(c) Individual and Group Session Format: Consistent with section
1861(ggg)(C)(iii) of the Act, we specify that the qualified person
tailor the design of the education services to meet the needs of the
beneficiary based on whether the beneficiary needs more individualized
education, would benefit more from a group environment, or a
combination; and consider any communication accessibility needs based
on disability, language and health literacy.
Generally speaking, medical services are provided to beneficiaries
on an individual basis. Beneficiaries can also benefit from the
interaction in a group setting. We believe that the beneficiary, in
consultation with the referring physician, will be able to best
determine the education services modality that most effectively meets
his or her needs.
Comment: One commenter recommended that we needed to build in
flexibility of group versus the individual setting since some patients
are more comfortable in the group setting. Other patients may be
traumatized by the prospect of dialysis and need more individualized
attention. One commenter suggested that the initial KDE education
should be standardized and then later sessions be customized to meet
patient specific needs. Another commenter requested that we mandate
that at least 2 or more of each of the beneficiary's 6 KDE sessions be
provided in a one-on-one format.
Response: We recognize that each individual, in consultation with
the physician managing their kidney condition, are best able to
determine the education services modality that most effectively meets
his or her needs, whether that be group sessions, individual sessions,
or a combination. The provisions of this rule allow for such
flexibility.
Comment: One commenter requested an equal level of intensity for
all sessions.
Response: In the final rule, we state that each KDE session is one
(1) hour long, which addresses the commenter's concerns regarding
session intensity.
Comment: One commenter requested that qualified persons should
provide material that is specific to the patient, taking into account
the patient's primary language, reading level, and comprehension level.
Response: We recognize the importance of providing beneficiaries
with information in a format that is easy to comprehend. The provisions
of the final rule allow that the KDE services be tailored to meet the
needs of the individual beneficiary involved. We also address the
commenter's concerns as part of the outcomes assessment process. This
final rule with comment period states that the outcomes assessments
will serve to assess KDE program effectiveness in meeting the
communication needs of underserved populations, persons with limited
English proficiency, and persons with health literacy.
Comment: One commenter recommended that we define a group session
as consisting of between 2 and 20 participants.
Response: In Sec. 410.48(e)(2) of this final rule, we specify that
a session is one (1) hour long and may be provided individually or in
group settings of 2 to 20 individuals who need not all be Medicare
beneficiaries. We believe that this provision addresses the commenter's
concerns about group size.
(6) Outcomes Assessment
The intent of the education services is for the beneficiary to take
the information he or she has learned during the educational sessions
in order to facilitate active participation by the beneficiary in the
healthcare decision-making process with the physician managing his or
her kidney condition. We believe that it is important that
beneficiaries be assessed at the conclusion of the education sessions
and that program assessments be used by the educators and CMS to assess
the effectiveness of the education services, to help improve the
programs for future participants, and better facilitate patient
understanding of the material.
Based on stakeholder feedback and our general rulemaking authority,
we proposed that qualified persons develop outcomes assessments and
that each beneficiary be assessed during one of the education sessions.
Section 410.48(d)(5) specifies that the outcomes assessment measures
beneficiary knowledge about CKD and its treatment for the purpose of,
and as a contributor to, the beneficiary's ability to make informed
decisions regarding their healthcare and treatment options.
After completing the KDE services, the beneficiary should be able
to take the information learned and use it to make informed choices
about their healthcare during future consultations with the physician
managing the beneficiary's kidney condition. It is important that the
assessments be tailored to the beneficiary's reading level and language
if the assessment is not administered by the qualified person that
provided the education services, and be made available to CMS in a
summarized format upon request. In the proposed rule, we specifically

[[Page 61899]]

solicited public comments regarding the development and administration
of the outcomes assessments.
Comment: Commenters recommended both pre- and post-assessments and
comparison studies of those beneficiaries that participated in KDE
versus individuals that did not obtain the KDE services. Commenters
recommended that the assessments cover topics specific to the content
discussed during the KDE sessions, suggested that we work with
stakeholders to develop standardized assessment tools, and provide a
flexible implementation schedule that accounts for the time necessary
for providers to adopt the new assessment instruments. Some commenters
stressed the importance of long term post-assessment and follow-up by
the physician managing the beneficiary's kidney condition, along with
adoption of incentives to encourage providers to undertake such
assessments. One commenter recommended that we re-evaluate the
assessments over time to ensure that they address the most relevant
topics and are administered effectively. One commenter requested
standardized curriculum, evaluation, and monitoring tools.
Response: We are encouraged by the support from commenters about
the development of outcomes assessments. After reviewing the feedback
received during the stakeholders meetings and from commenters, there
does not appear to be a standardized or agreed upon outcomes assessment
mechanism. While we are not making any changes in this final rule from
the proposed outcomes assessment provisions, we are considering working
with organizations that are developing outcomes assessments as they
work to develop a standardized assessment tool.
Comment: One commenter suggested that we develop an outcomes
measure for ``physician referral for medical nutrition therapy'' as one
of the monitoring tools.
Response: We appreciate the importance of proper nutritional
counseling services. Since the outcomes assessment is part of the KDE
services, it will not be paid separately and there is no need for a
separate reporting tracking code.
Comment: One commenter requested clarification about whether pre-
and/or post-assessments are included as part of the 6 sessions or in
addition to the 6 sessions and whether there would be a separate
reporting code and payment for the assessments.
Response: Outcomes assessments must be administered during a KDE
session, meaning that the assessments are included as part of the
sessions. Requests for separate reporting codes and payment for
assessments would require a benefit category determination to determine
if separate payment would fall within a Medicare benefit category.
Additional Issues
Comment: One commenter requested that we amend the ``Welcome to
Medicare'' physical exam regulations to incorporate KDE as part of the
preventive services checklist. Another commenter encouraged us to
coordinate with Medicaid to examine whether stage IV education should
be part of Medicaid case management services.
Response: We appreciate the attention being drawn to the importance
of coordination with other benefits and programs such as the ``Welcome
to Medicare'' physical exam and the Medicaid program. The commenter's
requests do not fall within the scope of this rule. However, we plan to
convey the commenter's suggestions to the appropriate components.
Comment: One commenter recommended that we promote the KDE program
and the MNT benefit to beneficiaries and physicians.
Response: Medicare will release appropriate manual and transmittal
instructions and information from our educational components for the
medical community, including an MLN Matters article (Medicare Learning
Network). The medical community can join this effort in educating
physicians and beneficiaries by distributing their own communications,
bulletins, or other publications. In addition, we have included
information on the KDE benefit in the 2010 version of the Medicare and
You Handbook. While we understand the importance of the MNT benefit,
the commenter's request for promotion of the MNT benefit does not fall
within the scope of this rule.
As a result of the comments received, we are making the following
changes in this final rule with comment period:
In the Standards for Content section, we are changing
``all vascular access options'' to ``all dialysis access options for
hemodialysis and peritoneal dialysis.''
In the standards for content section, we are clarifying
that qualified persons discuss, but not be limited to, the topics
listed under the `therapeutic options' content standard heading.
In the Limitations for Coverage of Kidney Disease
Education Services section, we are changing the description of session
length from ``60 minutes'' to ``one (1) hour.''
d. Payment for KDE Services
Section 152(b) of the MIPPA creates a new benefit category for KDE
services. The MIPPA amends section 1848(j)(3) of the Act, which allows
for payment of KDE services under the PFS. As we stated in the CY 2010
PFS proposed rule (74 FR 33619), KDE services are covered when they are
furnished by a qualified person as defined in Sec. 410.48(a) that
meets the requirements of Sec. 410.48(c) which means a physician, PA,
NP, CNS, or a provider of services located in a rural area including a
CAH, SNF, HHA, CORF, and hospice. We note that there is a possibility
that a beneficiary may receive services from more than one ``qualified
person''; however, payment should be made to only one qualified person
on the same day for the same beneficiary.
In the proposed rule, we noted that the ``incident to''
requirements for physician services at section 1861(s)(2)(A) of the Act
do not apply to KDE services. The MIPPA requirements are explicit, that
the education services must be provided by a qualified person. We noted
that rural health clinics (RHCs) do not meet the statutory definition
of a provider of services (as defined in 1861(u) of the Act) and cannot
be separately paid for furnishing KDE services.
In the proposed rule, we noted that the ``incident to'' provision
does not apply to the implementation of a new service with a distinct
benefit category under the PFS. We stated that the ``incident to''
requirements would not apply to KDE services.
Comment: Some commenters stated that CMS has the discretion and
flexibility to allow KDE services to be provided ``incident to'' unless
the statute explicitly precludes it. They also stated that section
152(b) of the MIPPA requires that KDE be furnished by a ``qualified
person'', which includes physicians and specified nonphysician
practitioners (NPPs) and that the statute does not prohibit KDE from
being performed ``incident to'' the services of a ``qualified person''.
Commenters also stated that CMS should allow a qualified person, as
defined in section 152(b) of the MIPPA, to bill an E/M code on the same
day as a KDE service.
Response: We do not agree that CMS has discretion to allow KDE
services to be furnished incident to because the MIPPA specifically
provides a benefit policy for KDE and that policy is different from
incident to policy. In the December 31, 2002 final rule (67 FR 79994),
we stated that ``Congress specifically provided for the many separate
benefit categories of medical

[[Page 61900]]

and health services in the Act. We believe that the Congress intended
for incident to services to be a catch-all category to allow payment
for certain services and supplies commonly furnished in a physician's
office and not having their own separate benefit category. The billing
of services with their own separate and independent coverage benefit
categories as incident to may circumvent the coverage and payment rules
applicable to those other categories. Therefore, only services that do
not have their own benefit category are appropriately billed as
incident to a physician service.'' KDE has a benefit category with its
own policies. For example, section 152(b) of the MIPPA requirements is
explicit, that the education services must be provided by a qualified
person, which is defined as a physician, NP, CNS or PA. A qualified
person may include a provider of services located in a rural area.
Therefore, the ``incident to'' requirements will not apply to KDE
services. A qualified person can bill an E/M service on the same day
they bill for a KDE service if the services being provided are not the
same services which are included in KDE under our regulations at Sec.
410.48.
Comment: A commenter stated that CMS has allowed separately and
independently listed services to be provided under the ``incident to''
benefit. They also stated that CMS clarified in the CY 2002 PFS final
rule that many services, even those that are separately and
independently listed, can be furnished as ``incident to'' and need not
meet the requirements of an ``incident to'' service.
Response: The commenter may be referring to policies prior to 2001.
We have previously stated, ``In the November 2001 final rule (66 FR
5238), we revised regulations on services and supplies furnished
incident to a physician's professional services. In the revised
regulations at Sec. 410.26(a)(7) we defined such services and supplies
that may be provided as incident to as `* * * any services and supplies
* * * that are included in section 1861(s)(2)(A) of the Act and are not
specifically listed in the Act as a separate benefit included in the
Medicare program.` '' (67 FR 79993) The commenter refers to one
response to a comment in that rule that caused confusion. We repeated
that comment at 67 FR 79994, column 1, and we clarified the intent of
the response in column 2 of the same page. (See the previous response
for the quotation that clarifies the intention of that response.) KDE
has a benefit category with its own policies and, those policies are
not the same as policies for services incident to physician services.
It is our policy that only services without a benefit category may
be provided ``incident to'' the services of physicians or NPPs.
Comment: One commenter stated that while the patient's physician
may know him or her, other members of the patient's multidisciplinary
team may know them as well. The commenter also stated that the patient
might receive better care if KDE services were provided by a team of
persons such as nurses, dieticians, social workers and physicians,
which could be done if we allow KDE to be provided incident to.
Response: The section 152(b) of the MIPPA requirements are
explicit, in that the education services must be delivered by a
qualified person, which is defined as a physician, NP, CNS, or PA, and
also includes a provider of services located in a rural area.
Comment: A commenter stated that CMS has established subregulatory
policy by which services furnished under the Medical Nutrition Therapy
(MNT) and Diabetes Self Management Training (DSMT) benefits may not be
provided ``incident to''. However, the commenter stated that there is
no statutory or regulatory provision preventing those services from
being performed ``incident to'' and that the services furnished under
those benefits are not performed by physicians or NPPs. The commenter
stated that the distinction is that the MNT and the DSMT benefits are
furnished by practitioners who were previously not able to bill the
Medicare program and who do not have an ``incident to'' benefit for
their service. In contrast, the KDE benefit will be provided by
practitioners who bill the Medicare program independently and who have
an ``incident to'' benefit attached to their services.
Response: For separately and independently listed services, a
physician and a NPP can bill using the ``incident to'' benefit.
However, KDE is not defined as a separately and independently listed
service, but as a separate and distinct benefit category and so the
``incident to'' benefit does not apply.
In summary we are finalizing our determination that the ``incident
to'' benefit does not apply to KDE.
Section 1861(ggg)(4) of the Act limits the number of KDE services
that a beneficiary may receive to up to six sessions in the NPRM. We
proposed to create two HCPCS codes GXX26 now assigned as G0420
(individual) and GXX27 now assigned as G0421 (group), to describe and
to bill for KDE services. The two G-codes consist of 1-hour face-to-
face KDE sessions for an individual or group. We proposed to pay both
G0420 and G0421 at the nonfacility rate. We also proposed that G0420
educational services related to the care of chronic kidney disease;
individual per session will be crossed-walked to CPT code 97802; and
that G0421, educational services related to the care of chronic kidney
disease; group, per session will be crosswalked to CPT code 97804. We
stated that the rationale for the proposed pricing of the G-codes is
based on the similarity of this service to MNT in the individual
(97802) and group (97804) setting.
In the CY 2010 OPPS/ASC proposed rule (74 FR 35358), we discussed
our proposed payment for KDE to qualified persons located in rural
areas who are hospitals, CAHs, SNFs, CORFs, HHAs, or hospices (74 FR
35358).
The following is a summary of the comments we received regarding
our proposals related to the MPFS payment for kidney disease education
under section 152(b) of the MIPPA.
Comment: One commenter suggested that CMS add the phrase
``furnished by a rural provider'' or similar language to the proposed
Level II HCPCS G-code descriptors for KDE, to clarify that these
services are intended for patients who solely meet the qualifications
for coverage under the KDE benefit.
Response: We do not agree that the HCPCS G-code descriptors for KDE
services should contain language that would limit their use to KDE
services furnished by rural providers of services. The purpose of a
HCPCS code is to describe a service furnished to a beneficiary.
Generally code descriptors do not describe the provider who is
furnishing these services. Adding a phrase to the G-code descriptors
indicating that these services are furnished by a rural provider would
exclude other qualified persons delineated in the Act from being able
to bill and be paid for the KDE services they furnish. These qualified
persons include a physician, PA, NP, or clinical nurse specialist, in
addition to providers of services located in a rural area. Moreover,
adding the language the commenter requests would not ensure that the
service would be provided to patients who meet the criteria for
coverage.
Comment: We received several comments stating that CMS accurately
matched individual KDE to individual MNT and group KDE to group MNT.
However, commenters stated that CMS did not take into account the
relative time of the KDE and MNT sessions. The new KDE codes were
cross-walked to

[[Page 61901]]

the MNT codes which are paid only for 15-minute individual sessions and
30-minute group sessions. We also received a comment concerning the
inputs for supplies and equipment. In addition, commenters stating the
proposed payment rates were too low to enable rural providers of
services to furnish KDE.
Response: As a result of the comments we received and our own
further analysis, we have adjusted the payment rates for G0420 and
G0421 to reflect the 1-hour time limit for a session. We have
multiplied the work RVUs for G0420 by four and the work RVUs for G0421
by two to account for the fact that we are crosswalking a 15 minute
code to a 60 minute code (CPT code 97802 to G0420) and a 30 minute code
to a 60 minute code (CPT code 97804 to G0421). We also adjusted the
inputs for supplies. However, we did not do a straight multiplication
of the actual inputs because we do not believe the required equipment
and supplies would increase in direct proportion to the time for the
codes. We did not increase the inputs for the body analysis machine and
the printer and scale for use during the session. However, we did
increase the inputs for equipment and supplies for the use of the
table, computer, paper and other printed materials because regardless
of how long the session is, it takes only 5 minutes to use the body/
mass index item, 2 minutes to weigh the individual, and 2 minutes to
use the printer (this time equals the number of pieces of paper).
Comment: A commenter stated that a significant portion of kidney
education is about nutrition and diet and that the MNT benefit includes
provisions of MNT to patients with kidney disease. Therefore, some
kidney education is already being provided to Stage IV kidney patients
through the MNT benefit and it would be inappropriate to pay four times
more for nutrition education when it is provided under the MNT benefit
than when the exact same education is provided under the kidney
education benefit. The commenter also stated that MNT is provided by
dieticians and KDE is provided by physicians and midlevel practitioners
and the new G-codes should be cross-walked to the ``all physicians'' PE
and not to the registered dieticians PE.
Response: As stated, we did adjust the inputs for supplies and
equipment to eliminate any duplication. We also cross-walked the ``all
physicians'' PE to HCPCS codes G0420 and G0421 at the mid-level office
visit.
In summary, we are finalizing the proposed HCPCS codes G0420, Face-
to-face educational services related to the care of chronic kidney
disease; individual, per session, per one hour, and G0421, Face-to-face
educational services related to the care of chronic kidney disease;
group, per session, per one hour, for KDE with the adjustments noted
above. Refer to the Addendum B for the specific RVUs for G0420 and
G0421.
12. Section 153: Renal Dialysis Provisions
Section 153 of the MIPPA requires changes to ESRD facilities for
ESRD services effective January 1, 2010. The following is a summary of
these changes.
Section 153(a)(1) of the MIPPA increases the current ESRD composite
rate by 1.0 percent for services furnished on or after January 1, 2010.
This also requires us to update the adjusted drug add-on. Since we
compute the drug add-on adjustment as a percentage of the composite
rate, the drug add-on percentage is decreased to account for the higher
CY 2010 composite payment rate and results in a 15.0 percent drug add-
on adjustment for CY 2010. As a result, the drug add-on amount of
$20.33 per treatment remains the same for CY 2010, which results in a
15.0 percent increase to the base composite payment rate of $135.15
(see section II.I of this final rule with comment).
The composite rate paid to hospital-based facilities will be the
same as the composite rate paid to independent renal dialysis
facilities for services furnished on or after January 1, 2010, as
required by section 153(a)(2) of the MIPPA. In addition, section
153(a)(2) of the MIPPA requires that in applying the geographic index
to hospital-based facilities, the labor share shall be based on the
labor share otherwise applied for renal dialysis facilities.
These MIPPA provisions are self-implementing and require no
substantive exercise of discretion on the part of the Secretary. A
detailed discussion of the MIPPA provisions can be found in section
III. of the CY 2009 PFS final rule with comment period (73 FR 69881).
The following is summary of the comments we received regarding
section 153 of the MIPPA.
Comment: One commenter supports the composite payment rates for
both independent and hospital-based facilities be site neutral, and
urges CMS to ensure that pediatric facilities are not adversely
impacted by this adjustment.
Response: Section 153(a)(2) of the MIPPA requires the composite
payment rate for both independent and hospital-based facilities to be
site neutral and does not negatively impact pediatric facilities
because, in addition to the composite payment rate, all pediatric
facilities including hospital-based facilities are paid the basic case-
mix adjustment of 1.62 for pediatric patients.
13. Section 182(b): Revision of Definition of Medically-Accepted
Indication for Drugs; Compendia for Determination of Medically-Accepted
Indications for Off-Label Uses of Drugs and Biologicals in an Anti-
cancer Chemotherapeutic Regimen
a. Background
(1) Process for Revising the List of Statutorily Named Compendia
Generally, compendia are ``pharmacopeia providing information on
drugs, their effectiveness, safety, toxicity, and dosing and are
frequently used to determine whether a medication has a role in the
treatment of a particular disease; these roles include both therapeutic
uses approved by the U.S. Food and Drug Administration (FDA) and off-
label indications'' (Agency of Healthcare Research and Quality (AHRQ),
Potential Conflict of Interest in the Production of Drug Compendia
White Paper).\2\ Compendia are published by various institutions and by
traditional reference book publishing houses.
---------------------------------------------------------------------------

\2\ Agency for Healthcare Research and Quality. White Paper:
Potential Conflict of Interest in the Production of Drug Compendia.
(2009, April 27). Available online at http://www.cms.hhs.gov/mcd/viewtechassess.asp?from2=viewtechassess.asp&where=index&tid=64&.
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Compendia publishers, including internal editorial staff and
external experts, review requests received for the inclusion of
recommendations regarding off-label uses of drugs or biologicals in
anticancer regimens. These requests may be internally generated by the
publisher or may be received as requests from external parties. The
publisher reviews evidence related to the request and reaches a
disposition of the request.
Section 1861(t)(2)(B)(ii)(I) of the Act lists the following
compendia as authoritative sources for use in the determination of a
``medically-accepted indication'' of drugs and biologicals used off-
label in an anti-cancer chemotherapeutic regimen: American Medical
Association Drug Evaluations (AMA-DE); United States Pharmacopoeia-Drug
Information (USP-DI) or its successor publication; American Hospital
Formulary Service-Drug Information (AHFS-DI); and other authoritative
compendia as identified by the Secretary. Due to changes in the
pharmaceutical reference industry, AHFS-DI was the only statutorily

[[Page 61902]]

named compendium in current publication in CY 2008.
Section 1861(t)(2)(B) of the Act provides the Secretary the
authority to revise the list of compendia in section
1861(t)(2)(B)(ii)(I) for determining medically-accepted indications for
off-label use of drugs and biologicals in an anti-cancer
chemotherapeutic regimen. Consequently, in Sec. 414.930, we
established an annual process to revise the list and a definition of
``compendium'' in the CY 2008 PFS final rule with comment period (72 FR
66222, 66303 through 66306, and 66404).
Currently, four compendia are recognized for purposes of section
1861(t)(2) of the Act: National Comprehensive Cancer Network
Compendium, Gold Standard Clinical Pharmacology, Thompson Micromedex
DrugDex, and AHFS-DI.
In addition to these compendia, the statute provides an alternative
method for identifying medically-accepted off-label uses of drugs and
biologicals in an anti-cancer chemotherapeutic regimen. Section
1861(t)(2)(B)(ii)(II) of the Act provides that local contractors may
use ``supportive clinical evidence in peerreviewed medical literature''
to make such determinations. Thus these medically-accepted uses could
be identified even if there were no compendia recognized for this
purpose. We discussed this in our response to comments in the CY 2008
PFS final rule with comment period (72 FR 66305).
(2) Statutory Amendment
Section 182(b) of the MIPPA amended section 1861(t)(2)(B) of the
Act (42 U.S.C. 1395x(t)(2)(B)) by adding the sentence, ``On and after
January 1, 2010, no compendia may be included on the list of compendia
under this subparagraph unless the compendia has a publicly transparent
process for evaluating therapies and for identifying potential
conflicts of interests.''
As discussed in the proposed rule, we proposed revisions to the
compendia standards to implement the MIPPA amendments. We note that the
publishers of the four compendia that are currently recognized for
purposes of section 1861(t)(2) of the Act have already adopted conflict
of interest disclosure policies that are similar to our proposal.
Though there are individual differences among the publishers, we note
that these policies commonly include publication on the compendia
publisher's Web site of the name of the individuals that participate in
the compendia recommendation and the entity with which there is a
significant relationship, the nature of the relationship (for example,
salary, ownership, grant support), and the value of the relationship.
Additional information with respect to the conflict of interest
policies of those compendia can be found on their Web sites.
In addition, there is a growing body of literature, including that
from the Institute of Medicine (IOM),\3\ that discusses the conflict of
interest between research funding and research results. We believe that
section 182(b) of the MIPPA is designed, in part, to address this issue
in the compendia review process. For a detailed discussion of our
proposals concerning conflict of interest, see the CY 2010 PFS proposed
rule (74 FR 33620 through 33623).
---------------------------------------------------------------------------

\3\ Institute of Medicine. Conflict of Interest in Medical
Research, Education, and Practice. Available online at http://www.nap.edu/catalog.php?record_id=12598.
---------------------------------------------------------------------------

b. Provisions of the Proposed Regulation
As discussed in the proposed rule, we believe that the
implementation of this statutory provision that compendia have a
``publicly transparent process for evaluating therapies and for
identifying potential conflicts of interests'' is best accomplished by
amending the current definition of a compendium at Sec. 414.930(a) to
include the MIPPA requirements and by defining the key components of
publicly transparent processes for evaluating therapies and for
identifying potential conflicts of interests.
In order to implement the MIPPA requirements concerning a publicly
transparent process for evaluating therapies, we proposed that a
compendium could meet this standard by publishing materials used in its
evaluation process on its Web site. This mode of publication provides
broad contemporaneous public access to relevant materials. We believe
that public access to such materials will increase transparency of the
process used by compendia publishers for evaluating therapies and
facilitate independent review of recommendations by interested parties.
In addition, as discussed in the CY 2008 PFS final rule with comment
period (72 FR 66305 through 66306), such disclosure may assist
beneficiaries and their physicians in choosing among treatment options.
In the CY 2010 PFS proposed rule (74 FR 33620 through 33623), we
proposed the following amendments to Sec. 414.930(a):
To revise the definition of ``compendium'' by adding an
additional requirement that a compendium have a publicly transparent
process for evaluating therapies and for identifying potential
conflicts of interests.
To add a definition of a ``publicly transparent process''
for evaluating therapies whereby a compendium publisher would publish
on its Web site the complete application for inclusion of a therapy
including criteria used to evaluate the request; disclosure of the
evidence considered; the names of the individuals who have
substantively participated in the development of the compendia
recommendations; and transcripts of meetings and records of votes for
disposition of the request. We requested comments on the requirement
for publication of the transcript and the suitability of other
alternatives such as minutes or other documents.
To add a definition of a ``publicly transparent process
for identifying potential conflicts of interests'' whereby a compendium
publisher would disclose by publication on its Web site information
regarding potential conflicts of interests associated with individuals
who are responsible for the compendium's recommendations, as well as
their immediate family members. We requested comments on the
suitability of this process or whether the compendia should prescribe
their own process. The specific details of the proposed process were
outlined in the proposed rule (74 FR 33621 through 33623). We received
the following comments on our proposed revisions.
c. Public Comment and Response
Comment: Commenters generally agreed with the principle that
conflicts of interest pose a risk to the integrity of compendia and
should be minimized.
Response: We appreciate the general support for the principle.
Comment: Some commenters were concerned with the technological
burden of maintaining disclosable information publicly on the compendia
Web sites for a 5-year period.
Response: Public interest in the review and disposition of a
request pertaining to a drug or biological may in some cases arise only
after a drug or biological has been in widespread use for several
years, during which its risks or adverse effects become apparent. In
order to balance the burden on the compendia publishers with the
public's interest in timely access to this information, we are revising
our proposal to require that the publicly transparent process provide
for disclosures to remain available on the compendium's Web site for
not less than 3 years. However, for the reasons discussed in the
proposed rule (see 74

[[Page 61903]]

FR 33622 through 33623), the compendia should retain custody of the
relevant information, enabling public access to the material upon
request for not less than 5 years.
Comment: Commenters suggested that the burden of disclosing
conflict of interest information regarding individuals who participate
substantively in the review and disposition of multiple requests could
be lessened if there were no requirement to separately disclose this
information for each and every request.
Response: We recognize that some individuals may participate
substantively in the review and disposition of more than one request.
However, we also recognize that a single relationship may present a
significant conflict of interest in some cases but not others.
Therefore, we are requiring compendia in establishing a publicly
transparent process for identification of potential conflicts of
interest, to list the names of those individuals who substantively
participated in the review or disposition of each request.
Comment: Some commenters were concerned that the immediate removal
of a compendium that fails to meet the statutorily-mandated January 1,
2010 implementation date as specified by section 182(b) of the MIPPA
would adversely impact a patient being treated with an off-label anti-
cancer chemotherapeutic regimen based on a recommendation from that
compendium. One commenter suggested grandfathering patients that began
an off-label anti-cancer chemotherapeutic regimen based the
recommendation of a compendium that is removed from the list of
statutorily recognized compendia based on noncompliance with section
182(b) of the MIPPA.
Response: The statute provides an alternative method for
identifying medically-accepted off-label uses of drugs and biologicals
in an anti-cancer chemotherapeutic regimen. In accordance with section
1861(t)(2)(B)(ii)(II) of the Act, local contractors have additional
authority to make determinations regarding medically-accepted
indications. We discussed this in our response to comments in the CY
2008 PFS final rule with comment period (72 FR 66305).
Comment: A few commenters were concerned that the proposed publicly
transparent process for evaluating therapies might be interpreted to
apply only to externally generated requests received by compendia.
Response: We appreciate this comment and have clarified this
provision, because in some instances, a compendium's determination is
internally generated. Therefore, we have added text to clarify that the
requirements pertain to an internally or externally generated request.
Comment: Some of the commenters were concerned that requiring
transcripts would inhibit discussion amongst compendia recommendation
decision makers and would be too burdensome to compendia publishers
because of the number or length of meetings, which may include
discussion of topics beyond the request. The commenters suggested
requiring minutes and voting records rather than transcripts. One
commenter suggested that we delay the implementation of this
requirement for up to 1 year.
Response: We agree that publication of minutes and voting records
would be sufficient because it would provide public transparency
regarding the evaluation of the therapy at issue. We also believe that
this requirement can be implemented much more readily than the proposed
requirement for transcripts.
Comment: A few commenters were concerned about the requirement for
compendia to publicly transcribe all meetings pertaining to compendium
recommendations. Specifically, some compendia publishers convene
telephone conferences rather than meetings or have processes that
isolate advisors from each others' recommendations.
Response: We have replaced the transcript requirement as noted
above. However, this comment remains relevant as we have been made
aware that some compendia publishers do not conduct actual meetings of
individuals substantively involved in reviewing and reaching
dispositions of requests and thus could not provide minutes of
meetings. We believe that minutes of telephone conferences, to the
extent that such conferences are used in the evaluation of the request,
could also be used to demonstrate the evaluation process used by the
compendia.
Comment: One commenter questioned the use of Sec. 411.354 to
define direct and indirect financial conflicts of interests.
Response: In the proposed rule, we stated that the process for
identifying potential conflicts of interest should include disclosure
of direct and indirect ``similar to those relationships identified in
42 CFR part 411.'' Compendia maintain discretion to develop their own
definitions for direct and indirect financial conflicts of interests,
however, the definitions included in 42 CFR part 411 are provided as a
resource for compendia to use in the development of these definitions.
Comment: One commenter suggested that we establish a specific
dollar value that would trigger disclosure of financial conflicts of
interests that exceed some minimum amount.
Response: We are not requiring compendia to disclose a specific
dollar amount. We have left it to the discretion of the compendia
publisher as to whether a specific dollar value would be publicly
disclosed.
Comment: Many commenters expressed support for the disclosure of
the conflicts of interests of individuals who are responsible for the
compendium's recommendations, as well as their immediate family
members. There was concern from some commenters that the definition of
immediate family member in Sec. 411.351 (which includes, in part,
relationships with a spouse, children, and grandparents) was too
extensive.
Response: We agree with this comment and are amending the provision
concerning the process for public disclosure of immediate family
members to be less extensive and more consistent with the current FDA
Guidance for the Public, FDA Advisory Committee Members, and FDA Staff
on Procedures for Determining Conflict of Interest and Eligibility for
Participation in FDA Advisory Committees released in August of 2008.
We have also amended the publicly transparent process for
identifying potential conflicts to include a provision that requires
compendia to have a process for collecting and maintaining conflict of
interest information and disclosure, if requested by the public in lieu
of publishing this information on their Web sites. We believe this
strikes a reasonable balance between the individual's personal privacy
and the public interest in transparency.
Comment: Some requestors asked if the regulatory requirements would
apply to past requests that were received or under review by compendia
publishers before January 1, 2010 that may have led to treatment
recommendations that are published after that date.
Response: These provisions would not apply retroactively. However,
the MIPPA provisions are effective on or after January 1, 2010. Thus,
compendia are responsible for complying with these provisions with
respect to requests received after the date.
d. Provisions of the Final Regulation
This final regulation amends Sec. 414.930(a) to revise the
definition of

[[Page 61904]]

compendium to add a requirement that a compendium have a publicly
transparent process for evaluating therapies and for identifying
conflicts of interests. We also define a publicly transparent process
for evaluating therapies and for identifying conflicts of interests.
The revised definitions read as follows:
Publicly transparent process for evaluating therapies
means that the process provides that the following information from an
internal or external request for inclusion of a therapy in a compendium
are available to the public for a period of not less than 5 years,
which includes availability on the compendium's Web site for a period
of not less than 3 years, coincident with the compendium's publication
of the related recommendation:
(i) The internal or external request for listing of a therapy
recommendation including criteria used to evaluate the request.
(ii) A listing of all the evidentiary materials reviewed or
considered by the compendium pursuant to the request.
(iii) A listing of all individuals who have substantively
participated in the review or disposition of the request.
(iv) Minutes and voting records of meetings for the review and
disposition of the request.
Publicly transparent process for identifying potential
conflicts of interests means that the process provides that the
following information is identified and made timely available in
response to a public request for a period of not less than 5 years,
coincident with the compendium's publication of the related
recommendation:
(i) Direct or indirect financial relationships that exist between
individuals or the spouse or minor child of individuals who have
substantively participated in the development or disposition of
compendia recommendations and the manufacturer or seller of the drug or
biological being reviewed by the compendium. This publicly transparent
process may include disclosure of, for example, compensation
arrangements such as salary, grant, contract, or collaboration
agreements between individuals or the spouse or minor child of
individuals who have substantively participated in the review and
disposition of the request and the manufacturer or seller of the drug
or biological being reviewed by the compendium.
(ii) Ownership or investment interests between individuals or the
spouse or minor child of individuals who have substantively
participated in the development or disposition of compendia
recommendations and the manufacturer or seller of the drug or
biological being reviewed by the compendium.

H. Part B Drug Payment

1. Average Sales Price (ASP) Issues
a. Immunosuppressive Drugs Period of Eligibility
Before enactment of section 9335(c) of the Omnibus Budget
Reconciliation Act of 1986 (Pub. L. 99-509) (OBRA '86), there was no
specific Medicare benefit that provided for Medicare Part B coverage of
prescription drugs used in immunosuppressive therapy. OBRA '86 added
subparagraph (J) to section 1861(s)(2) of the Act to provide Medicare
coverage for immunosuppressive drugs, furnished to an individual who
receives an organ transplant for which Medicare payment is made, for a
period not to exceed 1 year after the transplant procedure. Coverage of
these drugs under Medicare Part B began January 1, 1987.
Section 13565 of the Omnibus Budget Reconciliation Act of 1993
(Pub. L. 103-66) amended section 1861(s)(2)(J) of the Act to allow
eligible beneficiaries to receive additional Part B coverage within 18
months after the discharge date for immunosuppressive drugs furnished
in 1995; within 24 months for immunosuppressive drugs furnished in
1996; within 30 months for immunosuppressive drugs furnished in 1997;
and within 36 months for immunosuppressive drugs furnished after 1997.
Beginning January 1, 2000, section 227 of the Medicare, Medicaid and
SCHIP Balanced Budget Refinement Act of 1999 (Pub. L. 106-113) (BBRA)
extended coverage to eligible beneficiaries whose coverage for drugs
used in immunosuppressive therapy expires during the calendar year, an
additional 8 months beyond the 36-month period.
Section 113 of the Medicare, Medicaid and SCHIP Benefits
Improvement and Protection Act of 2000 (Pub. L. 106-554) (BIPA 2000)
revised section 1861(s)(2)(J) of the Act to eliminate the time limits
for coverage of prescription drugs used in immunosuppressive therapy
under the Medicare program. Effective with immunosuppressive drugs
furnished on or after December 21, 2000, there is no longer any time
limit for Medicare benefits. This policy applies to all Medicare
entitled beneficiaries who meet all of the other program requirements
for coverage under this benefit. Therefore, for example, entitled
beneficiaries who had been receiving benefits for immunosuppressive
drugs under section 1861(s)(2)(J) of the Act, but whose
immunosuppressive drug benefit was terminated solely because of the
time limit described above, resumed receiving that benefit for
immunosuppressive drugs furnished on or after December 21, 2000.
According to section 226A(b)(2) of the Act, ``ESRD only''
beneficiaries continue to lose their general Medicare coverage and, by
extension, Part B coverage for immunosuppressive drug therapy 36 months
after discharge from a hospital following a covered transplant.
Beneficiaries will have Part B coverage for immunosuppressive drug
therapy for as long as they remain eligible for Medicare.
Our proposal to codify the immunosuppressive drug coverage does not
cause a substantive programmatic change since the provisions in section
113 of the BIPA 2000 eliminating the time limit from section
1861(s)(2)(J) of the Act are self implementing for services on or after
December 21, 2000. We included this topic in the proposed rule in order
to make conforming changes to the regulatory text at Sec. 410.30. We
proposed to amend paragraph (b) to codify the changes to the
immunosuppressive drug coverage time limit as required by section 113
of the BIPA 2000.
The following is a summary of the comments we received and our
responses:
Comment: We received a few comments which supported our proposal.
Commenters noted that this technical change will reduce the potential
for confusion in the future about the scope of Medicare coverage of and
payment for immunosuppressive drug therapy.
Response: We appreciate the supportive comments and agree that any
steps which reduce confusion benefit Medicare and its stakeholders.
After reviewing the public comments, we are finalizing our proposed
revisions to Sec. 410.30.
b. WAMP/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--

[[Page 61905]]

The widely available market price (WAMP) for these drugs
and biologicals (if any); and
The average manufacturer price (AMP) (as determined under
section 1927(k)(1) of the Act for such drugs and biologicals).''
Section 1847A(d)(3)(A) of the Act states that, ``The Secretary may
disregard the ASP for a drug or biological that exceeds the WAMP or the
AMP for such drug or biological by the applicable threshold percentage
(as defined in subparagraph (B)).'' The applicable threshold is
specified as 5 percent for CY 2005. For CY 2006 and subsequent years,
section 1847A(d)(3)(B) of the Act establishes that the applicable
threshold is ``the percentage applied under this subparagraph subject
to such adjustment as the Secretary may specify for the WAMP or the
AMP, or both.'' In CY 2006 through CY 2009, 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 2010, we proposed to specify an applicable threshold
percentage of 5 percent for the WAMP and the AMP. At present, the OIG
is continuing its comparisons of both the WAMP and the AMP. In April
2008, we implemented a change in the weighting methodology for
calculating ASP. Information on how recent changes to the calculation
of the ASP may affect the comparison of ASP to WAMP or AMP is limited
at this time. In addition, due to the ongoing legal issues surrounding
the availability of AMP, we believe it is prudent not to change the
threshold at this time. Since we do not have sufficient data that
suggest another level is more appropriate, we believe that continuing
the 5 percent applicable threshold percentage for both the WAMP and AMP
is appropriate for CY 2010.
As we noted in the CY 2009 PFS final rule with comment period (73
FR 69752), we understand that there are complicated operational issues
associated with potential payment substitutions. We will continue to
proceed cautiously in this area and provide stakeholders, including
providers and 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.
The following is a summary of the comments we received and our
responses:
Comment: Most commenters supported maintaining the threshold at 5
percent. Other comments suggested that we exercise caution in the
determination of price substitutions and that we develop a formal
process and criteria to determine when substitutions are necessary.
Comments also recommended that we provide adequate notice prior to
making a price substitution. One commenter objected to the continuation
of the 5 percent threshold but did not provide an alternative solution.
Response: We appreciate the comments supporting the continuation of
the 5 percent threshold. As we noted in the CY 2009 PFS final rule with
comment period (73 FR 69753), we understand there are complex
operational issues associated with potential payment substitutions. As
we continue to proceed in this area, we will provide stakeholders,
including providers and manufacturers of drugs impacted by potential
price substitutions an 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.
After reviewing the public comments, we are finalizing our proposal
to continue the 5 percent WAMP/AMP threshold for CY 2010.
2. Competitive Acquisition Program (CAP) Issues
Section 303(d) of the MMA requires the implementation of a
competitive acquisition program (CAP) for certain Medicare Part B drugs
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 (March 4, 2005, 70 FR 10746) and the interim final rule (July 6,
2005, 70 FR 39022), and certain provisions were finalized in the CY
2006 PFS final rule with comment period (70 FR 70236). The CY 2007 PFS
final rule with comment period (72 FR 66260) then finalized portions of
the July 6, 2005 IFC that had not already been finalized.
The CAP is an alternative to the ASP (buy and bill) methodology of
obtaining certain Part B drugs used incident to physicians' services.
Physicians who choose to participate in the CAP obtain drugs from
vendors selected through a competitive bidding process and approved by
CMS. Under the CAP, participating physicians agree to obtain all of the
drugs on the CAP drug list from an approved CAP vendor. The approved
CAP vendor retains title to the drug until it is administered, bills
Medicare for the drug, and bills the beneficiary for cost sharing
amounts once the drug has been administered. The participating CAP
physician bills Medicare only for administering the drug to the
beneficiary. The initial implementation of the CAP operated with a
single CAP drug category from July 1, 2006 to December 31, 2008.
After the CAP was implemented, section 108 of the MIEA-TRHCA made
changes to the CAP payment methodology. 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 overpayments. This statutory change took effect on April 1, 2007.
Conforming changes were proposed in the CY 2008 PFS proposed rule (72
FR 38153) and finalized in the CY 2008 PFS final rule with comment
period (72 FR 66260).
In the CY 2009 PFS proposed rule, we proposed several refinements
to the CAP regarding the annual CAP payment amount update mechanism,
the definition of a CAP physician, the restriction on physician
transportation of CAP drugs, and the dispute resolution process (73 FR
38522). However, after the publication of the CY 2009 proposed rule, we
announced the postponement of the CAP for 2009 due to contractual
issues with the successful bidders. As a result, CAP physician election
for participation in the CAP in 2009 was put on hold, and CAP drugs
have not been available from an approved CAP vendor for dates of
service after December 31, 2008. Physicians who participated in the CAP
have transitioned back into the Average Sales Price (ASP) method of
acquiring part B drugs for dates of service after December 31, 2008.
After the postponement was announced, we solicited public feedback
on the CAP from participating physicians, potential vendors, and other
interested parties. We solicited public comments on several issues,
including, but not limited to the following: the categories of drugs
provided under the CAP; the distribution of areas that are served by
the CAP; and procedural changes that may increase the program's
flexibility and appeal to potential vendors and participating
physicians.

[[Page 61906]]

We also hosted a CAP Open Door Forum (ODF) on December 3, 2008, where
participants had an opportunity to discuss the postponement and suggest
changes to the program.
In the CY 2009 PFS final rule with comment period, we stated that
we would review the public comments and consider implementing changes
to the CAP before proceeding with another bid solicitation for approved
CAP vendor contracts. Based on this information, we addressed items
that were not finalized in the CY 2009 PFS final rule with comment
period, and made additional proposals for the CAP. Our approach seeks
to better define certain aspects of the program based on our
experience. We also seek to continue to increase participation by
minimizing the administrative burden for physicians and vendors who
choose to participate. We appreciate the additional comments that we
have received during the comment period.
a. Frequency of Drug Payment Amount Updates
As described in the July 6, 2005 IFC (70 FR 39070 through 39071)
and Sec. 414.906(c), payment amounts for drugs furnished under the CAP
are set through a competitive bidding process, and as described in
Sec. 414.908(b), bids that exceed a composite bid threshold of 106
percent of the weighted ASP for the drugs in the CAP category are not
accepted. The CAP payment amounts that are calculated from successful
bids are updated from the time of the bidding period to the payment
year. During the 2006 through 2008 CAP contract period, the initial
update calculation used the change in the Producer Price Index (PPI)
for prescription preparations to account for the time period between
the bidding and the period in which the payment amounts were to be in
effect, which was the middle of the first year of the three year CAP
contract period (70 FR 39074). Finally, as specified in Sec.
414.906(c), CAP payment amounts were updated again during the second
and third year of the contract period based on the approved CAP
vendor's reported reasonable net acquisition costs (RNAC). The annual
updates are limited by payment amounts described in section 1847A of
the Act and codified in Sec. 414.906(c).
Section 1847B(c)(7) of the Act gives the Secretary the discretion
to establish an appropriate schedule for the approved CAP vendor's
disclosure of RNAC information to us, provided that disclosure is not
required more frequently than quarterly. In the July 6, 2005 IFC (70 FR
39075 through 39076), we specified that each approved CAP vendor will
disclose its RNAC for the drugs covered under the contract annually
during the period of its contract and that we would calculate an annual
payment adjustment based on this information. We specified an annual
disclosure of RNAC because it imposes the minimal burden on approved
CAP vendors. In 2005, some commenters suggested that more frequent
updates would be desirable. Additional feedback about the CAP that was
obtained after the program's postponement in 2008, as well as comments
on previous rules, indicated that potential vendors would like the
frequency of price adjustments to increase. In the past, various
commenters have suggested a quarterly price adjustment in order to
parallel the ASP process, to better match payment amounts with
increases or decreases in drug costs, and to attract vendor interest.
We believe that quarterly adjustments also would lower approved CAP
vendors' financial risks because CAP payment amounts will be better
able to keep up with unanticipated drug cost increases and would
benefit the Medicare program by reacting to significant cost decreases
more promptly.
Quarterly price updates also will eliminate the PPI-based increase
that currently occurs between the time bids are submitted and the first
day of CAP claims processing. The application of the PPI-based payment
adjustment described in the July 6, 2005 IFC (70 FR 39074) has resulted
in situations where the ASP+6 percent payment amount was exceeded
during the first year of the 3-year approved CAP vendor contract. We do
not believe that CAP payment amounts should exceed ASP+6 percent. In
our discussion of bid ceilings in the July 6, 2005 IFC, we stated that
the bid ceiling ``ensures that the CAP will be no more costly to the
Medicare program than the alternative method of paying for drugs at 106
percent of ASP. This ceiling is thus consistent with the possibility of
realizing savings to the Medicare program. It would also serve to
maintain a level of parity between the two systems, preventing a
situation in which significant payment differentials might skew
incentives and choices (70 FR 39070).'' For this reason, and to remain
consistent with current regulation text at Sec. 414.906, we believe
that all payment amounts calculated under the update process should be
limited by the weighted payment amount established under section 1847A
of the Act. We also believe that this approach will continue to provide
for an ``appropriate price adjustment'' as required under section
1847B(c)(7) of the Act by improving responsiveness to unexpected price
changes, and continuing a prudent limitation on the magnitude of
payment amount adjustments.
Our approach for implementing quarterly updates is consistent with
the ASP+6 percent limit on payment amounts and is based on composite
bid price calculations, as described in the July 6, 2005 IFC (70 FR
39072 through 39073). Briefly stated, the ASP+6 percent limit would be
applied by comparing the (weighted) composite update payment amount,
calculated from participating approved CAP vendors' reasonable net
acquisition cost data, to the most recent available weighted ASP prices
for the same drugs. If the composite drug update payment amount exceeds
the weighted ASP+6 percent payment limit, the composite payment amount
for that group of drugs would be reduced to equal the ASP+6 percent
limit by applying an equal percent reduction to each drug in the group.
By way of example only, if a quarter's composite update payment was
calculated as +2.3 percent, based on the median of all participating
approved CAP vendors' data, but the calculated weighted ASP+6 percent
limit for that group of drugs was +2.1 percent, the payment amounts for
all HCPCS codes in the composite group would be increased by 2.1
percent in order to account for reported increases to the vendor's
acquisition cost, but not to exceed the ASP+6 percent limit. This means
that a 2.1 percent increase would be applied to CAP payment amounts for
all HCPCS codes that are in the composite drug list and are being
supplied under the CAP by one or more approved CAP vendors. For HCPCS
codes that are priced separately, each code available through the CAP
will be compared to the most recent ASP+6 percent limit for that code.
CAP payment amounts for codes that exceed the ASP+6 percent limit will
be reduced to ASP+6 percent. Each ``Not Otherwise Classified'' (NOC)
drug described in Sec. 414.906(f)(2)(iv), would also be updated on an
individual (rather than composite) basis.
We proposed to discontinue annual CAP payment amount updates and to
implement quarterly CAP payment amount updates at Sec. 414.906(c). We
also proposed to discontinue the special quarterly adjustments
described at Sec. 414.906(c)(2) (for the introduction of new drugs,
expiration of drug patents or availability of generic drugs, material
shortages, or withdrawal of a drug from the market) and instead to add
details about the payment amount update

[[Page 61907]]

process described in section II.J.2.f. of this final rule with comment
period (Annual CAP Payment Amount Update Mechanism). A quarterly RNAC
reporting and payment adjustment process would begin as soon as we
enter into contracts with the approved CAP vendor(s); that is,
beginning with the first quarter during which CAP claims are submitted
under the contract. Thus, we also proposed to eliminate the PPI-based
adjustment for the time period between the time bids are submitted and
the time claims processing begins under the contract, because that
adjustment would no longer be necessary. We believe that using one
payment update process will be easier to administer and will minimize
the potential for CAP payment amounts to exceed ASP+6 percent for the
first contract year. In order to provide sufficient time for the
calculation of payment amount updates, we proposed that approved CAP
vendors report quarterly RNAC data for drug purchased for use under the
CAP during the previous quarter within 30 days of the close of that
quarter. We made corresponding changes to regulation text at Sec.
414.906(c) and asked for comments on these proposed changes.
The following is summary of the comments we received regarding the
proposed revisions to the frequency of drug payment amount updates
under the CAP.
Comment: All commenters agreed with the proposal to implement
quarterly updates; however, some commenters were concerned that even
quarterly updates would not cover losses that began prior to an update.
The response to the ASP+6 percent limit was mixed. Several commenters
supported the limit, but several commenters were concerned that payment
at ASP+6 percent or less was a financial risk to vendors. Commenters
suggested several approaches to further minimize vendors financial
risks due to price increases, including a transaction fee to offset the
financial risk associated with certain drugs, especially low cost
items, the use of varying update percentages, including amounts greater
that 6 percent, and product specific (NDC level) adjustments.
Response: We agree with comments that support the quarterly update
process and agree that changing to a quarterly payment amount update
frequency will benefit approved CAP vendors by reducing financial risk,
even though the process is more burdensome than an annual process. The
quarterly process will eliminate the need for a PPI based payment
amount adjustment at the beginning of a contract period. We appreciate
the discussion of risk presented by commenters, but we also believe
that it is appropriate to maintain an ASP+6 percent limit for price
increases for the reasons stated in our proposal and we note that the
lag period between quarterly adjustments will apply to both price
increases and price decreases, including situations where generic
versions of a drug are introduced. As mentioned in the proposed rule
and in previous rules, we continue to believe that the ASP+6 percent
ceiling is consistent with our previous policies because it preserves
the potential for savings to the program, while providing parity
between the CAP and ASP payment systems.
We also believe that the elimination of many low cost items from
the drug list, as discussed in the next section, will decrease
financial risk and administrative burden for approved CAP vendors, and
therefore, we do not believe that transaction fees are necessary or are
consistent with the policy to maintain an ASP+6 percent ceiling.
Finally, we remind readers that although payment amount updates for the
core group of CAP drugs will be done as a group, payment amount updates
for drugs added by approved CAP vendor request will continue to be
calculated by individual HCPCS code, thereby further minimizing the
financial risk associated with the addition of new drugs to the
approved CAP vendor's CAP drug list.
Therefore, we are finalizing all of our proposals for this section
without change. This includes the discontinuation of the annual payment
amount adjustments, the discontinuation of PPI-based increases and the
discontinuation of special quarterly payment amount increases described
in Sec. 414.906(c). We are also finalizing the implementation of
quarterly payment amount increases that begin in the first quarter of
the CAP claims contract period, the ASP+6 percent limit on payment
amount increases, and all corresponding regulation text changes.
b. Changes to the CAP Drug List
(1) CAP Drug List
In the July 6, 2005 IFC, we responded to comments on our proposed
approach for determining the CAP drug categories and how we select the
specific drugs in the CAP drug list (70 FR 39026 through 39034). As
stated in the CY 2006 PFS final rule with comment period (70 FR 70237),
the CAP is intended to provide beneficiaries with access to Medicare
Part B drugs and maintain physician flexibility when prescribing
medications. Our approach incorporated drugs commonly administered by
the range of physician specialties that bill for Part B drugs (70 FR
39030) and resulted in a list of about 180 drugs that were available
through the CAP during the CY 2006 through CY 2008 contract period. We
also developed a number of methods by which an approved CAP vendor's
CAP drug list could be changed (see Table 26 at 70 FR 70242).
We believe that our general approach, to provide a wide variety of
drugs to a variety of physicians over a large portion of the United
States, is on target. Although we believe that the CAP is a means for
physicians to minimize their drug inventory costs, we acknowledge that
participation in the CAP cannot completely eliminate the need for
participating CAP physicians to maintain at least a minimal drug
inventory at the office. Many physicians who participate in Medicare
also provide services to non-Medicare patients, and even physicians
with a predominantly Medicare patient population may find it useful to
keep a small stock of drugs on hand for unforeseen situations, such as
emergencies and breakage.
During the CAP postponement, we became aware that both
participating CAP physicians and potential vendors supported narrowing
the CAP drug list. Both agreed that low cost drugs should be removed
from the CAP. Although these items were initially included in the CAP
so that an approved CAP vendor would be in a position to supply many of
the Part B drugs that an office might administer, CAP physicians and
the vendor community have stated that the inclusion of these items in
the CAP creates an accounting, tracking, and claims submission burden
for some participants. Based on these comments, we believe that low-
cost, frequently utilized items, such as corticosteroid injections,
could be removed from the list without significant impact on the CAP's
utility to participating CAP physicians. Furthermore, it appears that
physicians would be more interested in obtaining expensive products,
such as biologicals, through the CAP. However, we are also mindful that
narrowing the CAP drug list significantly also would decrease an
approved CAP vendor's overall purchase volume, and we believe that this
could limit the approved CAP vendor's ability to obtain volume-based
discounts from the manufacturers or distributors from which it obtains
drugs for use in the CAP. Creating a more tailored CAP drug category
also could limit physician participation to one or several specialties,
and may create a situation

[[Page 61908]]

where sudden supply interruptions and unexpected changes to
distribution channels could affect a greater proportion of drugs in the
program than would be the case with a broader CAP drug category.
We proposed to create a new CAP drug category for the next round of
CAP contracting. Our approach is intended to address comments about the
administrative burden of tracking and billing low cost/high volume
items while maintaining access to a variety of high cost items. We
proposed to identify the new CAP drug category using the existing CAP
drug category as a starting point. The 2008 CAP drug list was compiled
based on Part B drug claims data, the identification of specialties
that frequently administer drugs under Part B, and public comment
during rulemaking in 2005 (70 FR 39026 through 39033). We believe that
using the 2008 CAP drug list as a starting point would maintain
prescribing flexibility for a wide range of specialties and would also
maintain access to a wide spectrum of drugs that have been utilized
under the program previously. Furthermore, we do not believe it is
necessary to develop a new approach because the 2008 CAP drug list was
based on heavily utilized drugs in Medicare Part B physician practices;
we believe that this approach is on target.
We proposed to amend our list based on CAP physician participation,
claims data, and comments indicating that the list should be narrowed
to higher cost items. First, we ``filtered'' the original CAP drug
category (drugs furnished in 2006 through 2009) by the specialties that
most frequently prescribe drugs under the CAP, and the highest dollar
volume CAP drugs (top 20 percent of allowed charges) compiled from 2008
claims data. This filtered list is the starting point for the updated
CAP drug category. However, we acknowledged that a filtering process
based on frequency of claims from a subset of physicians who might
participate in the CAP cannot fully capture all drugs that may be used
by certain specialties. In other words, the filtering steps described
above narrow the CAP drug list based on physician specialties and
dollar volume and do not necessarily preserve groups of drugs that
certain prescribers may utilize, especially the less frequently
utilized items in such groups. Therefore, we also proposed to ``fill
in'' groups of drugs with related items that do not appear on our list.
We stated that we will consider ``filling in'' any drug or biological
product that is physician-administered, has a reasonably high
utilization in the Medicare population, is related to drugs already in
the CAP (for example, because of similar clinical uses), and is
otherwise appropriate for inclusion in the program. The concept of
``filling in'' drug groups is supported by feedback from former
participating CAP physicians who suggested that certain categories of
drugs, such as antibiotics, be more fully represented.
We solicited comments on specific drugs that should be added to the
29 item draft list presented in the proposed rule (Table 35 in the CY
2010 PFS proposed rule (74 FR 33627)), and we also sought comments on
the method to assess whether a particular drug should be ``filled in''
so that it is included in the new, narrowed CAP drug category,
especially drugs that did not pass the ``filtering'' step described
above. We proposed an approach using the 180 item 2009 through 2011 CAP
vendor bidding list (See the Downloads section at http://www.cms.hhs.gov/CompetitiveAcquisforBios/03a_vendorbackground.asp#TopOfPage) that was used during the approved CAP
vendor bidding for the 2009-11 contract. This list includes CMS
approved items added to the original contract's bid list, as well as
items approved for addition during the 2006-2008 contract period. This
list's weighting is based on claims volume data by HCPCS code units
rather than dollar volume and provides a different perspective than a
dollar volume sorting. We proposed adding drugs from the 2009-2011 CAP
Vendor bid list to the CAP drug category if the drug's weight is in the
top 25 percent of the 2009-11 CAP vendor bidding list, indicating
frequent claims submission, and if the drug's clinical uses are similar
to a drug on the 29 item proposed list. This method results in the
addition of 12 items, including several commonly used antibiotics, two
antiemetics and several chemotherapeutic agents. Although this method
helps ``fill in'' the proposed CAP drug list, we stated that this
method still does not fully capture less frequently used drugs, or
newly approved drugs, and we asked for comments on this method and
alternative methods of filling this proposed list.
In order to provide additional flexibility for participating CAP
physicians and approved CAP vendors, and to allow for participants to
further tailor the program to meet their needs, we also proposed to add
Sec. 414.906(f)(2)(v) to allow approved CAP vendors to submit a
request to CMS to add drugs (or biologicals) to the list of drugs
furnished by the requesting vendor if there is sufficient demand and if
the drug has therapeutic uses that are similar to other drugs already
available through the CAP. The request and approval process would
follow the existing regulations at Sec. 414.906(f), and HCPCS code
additions that are requested under this process would still be subject
to CMS approval. This process adds to the process for adding newly
issued HCPCS codes under Sec. 414.906(f)(2)(iii) and newly approved
drugs without HCPCS codes (NOC drugs) under Sec. 414.906(f)(2)(iv). It
is intended to facilitate more complete access to groups of drugs that
may be used by certain specialties, and drugs used to treat certain
disease states without having to rely on rigid definitions of classes
of drugs that may not apply well to actual clinical practice across a
large and diverse geographic area. We believe that this addition to the
methods for changing an approved CAP vendor's drug list (see Table 26
in the CY 2007 PFS final rule with comment period (70 FR 70242)) will
add to the flexibility of the program.
The following is summary of the comments we received regarding the
proposed revisions the CAP drug list.
Comment: Narrowing the CAP drug list as proposed, particularly
removing lower-cost items that are burdensome to track, was supported
by numerous commenters, although one commenter pointed out that our
revisions could affect participation by infectious disease physicians
because of the limited number of antimicrobials. One comment
specifically recommended using volume data to create the updated list.
Also, commenters supported the concept of filling in drugs based on
similar clinical uses. Several commenters requested that the following
specific drugs or groups of drugs be added to the final list:
Vectibix[reg] (panitumumab); Nplate[supreg] (romiplostim); LHRH
analogues-specifically leuprolide depot; orphan drugs; and more
antibiotics. Several commenters recommended that plasma protein derived
drugs and biologicals not be included in the CAP drug list. One
commenter recommended that stakeholders other than vendors be allowed
to request changes to the drug list.
Response: Based on overall support for a narrowed CAP drug list, we
are specifying a 41 item bid list that appears in Table 29. This list
includes both the list of drugs that we proposed to include as well as
all of the potential additions that we discussed in the proposed rule
and this list is the single drug category for the next bidding period.
No plasma protein therapies described in comments appear on this list.
Plasma protein therapies, including IVIG, clotting factors, and alpha-1
proteinase

[[Page 61909]]

inhibitors, have not been furnished under the CAP in the past and
therefore would not have been included in the list from which we
applied the ``filtering steps'' to develop this drug list. Also in the
July 2005 interim final rule with comment (70 FR 39029) we stated that
before adding clotting factors or IVIG to the CAP drug list, we would
publish a proposed rule and seek public comment. At this time, we are
not adding these items to the CAP drug list because we did not
specifically propose to do so in the proposed rule.
Although we did not receive any comments that presented a specific
and detailed method to further expand or fill in the drug list, the use
of volume based filtering and the concept of filling in the drug list
was supported by commenters. Thus, as noted above, we are including the
potential additions specified in the proposed rule. Further, we are
finalizing the proposed approach for approved CAP vendor-requested
additions of drugs that have similar uses to drugs on the bid list.
We believe that selecting the larger base drug list and providing a
process for approved CAP vendors to request to add drugs that can
further ``fill in'' this list strikes a balance between specifying a
minimum scope of drugs and biologicals that will be available under the
CAP and providing flexibility for the approved CAP vendor to manage the
risk associated with providing a broader array of drugs and
biologicals. For this reason, we are not adding any other drugs or
biologicals to the bid list or creating an addendum to the bid list at
this time. We believe that vendors will be interested in expanding
groups of drugs and biologicals available under the CAP in order to
maximize physician participation and order volume, and that this will
tend to increase the number of therapeutically similar items within the
drug list.
We disagree with the commenter who requested that parties other
than the approved CAP vendor, for example manufacturers, be permitted
to request that CMS add drugs to the CAP category. First, we believe
this rulemaking has provided an opportunity for the public to provide
input on the CAP drug category, so an additional process is
unnecessary. Second, we believe it would be imprudent to permit such a
process during the CAP contracting period, because we believe it would
be inappropriate to force an approved CAP vendor, mid-contract, to
supply drugs that it did not initially consider in its bid and that may
be financially risky, may require highly specialized handling, or may
necessitate participation in specialized purchasing arrangements.
We believe that requiring approved CAP vendors to add products that
they did not choose to bid on or subsequently provide may also limit
bidders' interest and could limit the number of approved CAP vendors
for physicians to choose from, thereby restricting all access to CAP
drugs. We will continue with our policy that allows only approved CAP
vendors to request changes to the CAP drug list; however, external
stakeholders may approach approved CAP vendors to discuss the potential
addition of products to an approved CAP vendor's drug list. As noted
above, we believe approved CAP vendors would have an incentive to be
responsive to such requests. The new mechanism for deleting drugs from
the CAP drug list is discussed in the following section.
With respect to the specific drug and biological products mentioned
in the comments, we believe that the addition of specific items
mentioned in the comments appears to be best suited for addition to the
CAP drug list through vendor requests. We have discussed issues
pertaining to orphan drugs, leuprolide and drugs similar to leuprolide
and in a previous rule (70 FR 70241 and 70 FR 70243, respectively).
While we appreciate these suggestions, we are not compelled to add
these drugs to the CAP drug list as required items based on these
comments. For the reasons stated in our previous rules, we continue to
believe it is prudent to continue to omit these drugs from the CAP.
Further, because we are not certain of the potential market volume for
these drugs in the CAP, we will not add them to the drug list at this
time. We are aware that leuprolide and other gonadotropin releasing
hormone agonists are commonly used to treat prostate cancer and are
highly utilized items in Medicare; however CAP participation by
providers that prescribe these drugs has been low. However, we note
that triptorelin (J3315), a gonadotropin releasing hormone agonist used
in the treatment of prostate cancer is on the CAP drug list, and
therefore, the addition of other gonadotropin releasing hormone
analogues though the approved CAP vendor process for adding drugs
described above and in new regulation text at Sec. 414.908 would be
feasible.
Similarly, new drugs such as Vetibix[supreg] and some antibiotics,
which were on the CAP drug list during the last contract period, but
were filtered out during the development of the new drug list, appear
to be good candidates for approved CAP vendor-requested additions
because agents with similar therapeutic uses are on the drug list. We
will not add these drugs to the drug list at this time because we are
not certain that these drugs will have sufficient market volume in the
CAP. We also note that one item, Nplate[supreg], an orphan drug only
available through a single specialty vendor, and with limited use
potential in the Medicare population, also appears to be a candidate
for addition upon approved CAP vendor request. As discussed above, we
are seeking to balance physician access and approved CAP vendor risk
related to the drug list. In light of the lack of widespread demand for
such drugs to be included in the CAP drug list (and thus available from
all approved CAP vendors), we believe that permitting approved CAP
vendors to request to supply those drugs, but not requiring them to do
so, strikes the appropriate balance.
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2. Removing Drugs From the CAP List
Although there are several methods under the CAP to add drugs to an
approved CAP vendor's drug list, the current regulations do not specify
a process for removing drugs from an approved CAP vendor's list. Our
experience has shown that interruptions in availability can affect an
approved CAP vendor's ability to supply CAP drugs during the course of
a 3-year contract. For example, during the first contract period, we
became aware of long-term and permanent drug unavailability, sometimes
at the HCPCS level, due to removal of drugs from the market, or
interruption of supply to an approved CAP vendor for reasons beyond the
approved CAP vendor's control, such as changes to drug distribution
methods, changes in agreements between manufacturers and distributors
and/or pharmacies regarding who may purchase certain drugs, and direct
distribution arrangements.
In order to better respond to sudden, long-term changes in drug
supply that are beyond the control of the approved CAP vendor, we
proposed to allow an approved CAP vendor to request the permanent
removal from its CAP drug list of a HCPCS code for which no NDCs are
available. Our proposal is intended to better manage situations where
all NDCs from an entire HCPCS code unexpectedly become unavailable to
an approved CAP vendor, and we would require the approved CAP vendor:
(1) to document the situation in writing, including the unavailability
of all NDC codes in a HCPCS code that is supplied under the CAP; (2) to
describe the reason for the unavailability and its anticipated
duration; and (3) to attest that the unavailability is beyond the
approved CAP vendor's control. Approval of the deletion would apply
only to the approved CAP vendor or vendors that requested the deletion.
Our proposal was not intended to be used frequently, or to permit an
approved CAP vendor to remove a HCPCS code from its CAP drug list
simply because it has become unprofitable to provide it--we believe the
payment amount adjustment proposals discussed in sections II.J.2.a. and
f. of this final rule addresses that concern. Furthermore, our proposal
was also not intended to be used for managing short-term
unavailability, or unavailability of a finite duration--we believe the
existing drug substitution policy described in Sec. 414.906(f) already
addresses those concerns. We proposed to add this process as Sec.
414.906(g) because those regulations currently provide for additions
and substitutions to the CAP drug list, and would therefore require a

[[Page 61912]]

written request to CMS, as well as CMS' approval.
Participating CAP physicians who are affected by the deletion of a
HCPCS code from an approved CAP vendor's drug list would have the
option of remaining with their selected approved CAP vendor and using
the ASP (buy and bill) methodology for obtaining the drug that has been
deleted, or selecting another approved CAP vendor under the exigent
circumstances provision at Sec. 414.908(a)(2). We believe that the
deletion of an expensive and highly utilized CAP drug by one approved
CAP vendor in the middle of a physician election period could cause
hardship for a practice if it had to revert to the ASP methodology of
acquiring and billing for that drug. Such a situation would constitute
an exigent circumstance. Given CAP's goal of improving access to drugs,
allowing the participating CAP physician to switch approved CAP vendors
outside of a regular election period in this instance would be prudent.
The following is summary of the comments we received regarding the
proposed method to remove items from an approved CAP vendor's drug
list.
Comment: Comments supported a mechanism to delete unavailable drugs
from vendors' lists and also supported allowing physicians affected by
the deletion of a HCPCS to have an opportunity to obtain the drug
through the ASP process or to select another vendor. One commenter
asked for well-defined standards for removing a drug from the list.
Response: Based on support for our proposal in the comments, we are
finalizing the proposed process where an approved CAP vendor may
request the permanent removal from its CAP drug list of a HCPCS code
for which no NDCs are available. Participating CAP physicians affected
by such a deletion will be able to obtain the deleted drug under the
ASP methodology, or will be able to switch approved CAP vendors outside
of the regular physician election process under the exigent
circumstance provision.
We believe that the preamble text provides sufficiently detailed
guidance about the process. Specifically, we require the approved CAP
vendor: (1) to document the situation in writing, including the
unavailability of all NDC codes in a HCPCS code that is supplied under
the CAP; (2) to describe the reason for the unavailability and its
anticipated duration; and (3) to attest that the unavailability is
beyond the approved CAP vendor's control. By way of example only,
situations that create unavailability beyond the vendor's control could
include: FDA action to remove a drug from the market, long-term
unavailability of specialized raw materials or long-term manufacturing
delays, and changes in distribution arrangements that prevent the
approved CAP vendor from buying or supplying the drug within CAP
requirements. CMS will assess the information provided by the vendor
and approve such requests as described in regulation text at Sec.
414.908(f)(3) and (4).
This process is intended to provide the approved CAP vendor with
flexibility to respond to long-term drug supply issues, however, this
process is not intended to be used frequently, or to permit an approved
CAP vendor to remove a HCPCS code from its CAP drug list simply because
it has become unprofitable to provide it, and this process is not
intended to be used for managing short-term unavailability, or
unavailability of a finite duration.
c. Geographic Area Served by the CAP
In the July 6, 2005 IFC (70 FR 39034 through 39036), we established
a single, national competitive acquisition area for the initial stage
of the CAP. This national distribution area included the 50 States, the
District of Columbia, Puerto Rico, and U.S. territories. We recognized
that designating a single national area might limit participation to
those vendors that could compete to bid and supply drugs nationally,
but we indicated this approach was a part of the phase-in plan for the
CAP. We also discussed potential phase-in options for the future,
stating that smaller areas might become a solution as the program
expanded.
According to the vendor community, certain areas of the United
States (especially Alaska, Hawaii, and the Territories) currently
present logistical challenges and are associated with high drug
shipping costs. Moreover, physician participation in these areas has
been low; in 2008, physicians from Alaska, Hawaii, and the Territories
represented less than 2 percent of total participating CAP physicians.
Temporarily limiting the geographic areas served by the CAP could help
limit costs and risks for approved CAP vendors associated with shipping
drugs to distant parts of the country. However, we believe that the CAP
is intended to provide services to all Medicare physicians (including
those in distant parts of the country), and therefore, we do not
believe that a limitation on the geographic area in which the CAP is
available should be permanent.
Section 1847B(a)(1)(B) of the Act specifically requires the
Secretary to phase-in the CAP with respect to the categories of drugs
and biologicals in the program, in such a manner as the Secretary
determines to be appropriate. We believe that this provision,
particularly in conjunction with the statutory definition of a
competitive acquisition area as ``an appropriate geographic region
established by the Secretary'' provides broad authority for the
Secretary to phase in the CAP with respect to the geographical areas in
which the program would be implemented. As stated in the July 6, 2005
IFC, we considered several factors when defining geographic areas for
the CAP, including aspects of vendors and their distribution systems,
such as current geographic service areas, the density of distribution
centers, the distances drugs and biologicals are typically shipped, and
costs associated with shipping and handling (70 FR 39035). Taking these
factors into consideration again, and considering entities who have bid
on, or expressed interest in bidding on approved CAP vendor contracts,
we believe that it is appropriate to use the authority granted under
the Statute to temporarily narrow the area served by the CAP during the
program's re-implementation. We appreciate the logistical issues
associated with shipping drugs to remote areas and the uncertainties
associated with transportation costs that have been described by the
potential vendor community; however, we are reluctant to significantly
reduce the area served by the CAP because at some point, the approved
CAP vendor's volume would be affected and the likelihood of obtaining
volume based discounts would decrease.
In the current proposed rule, we proposed to designate the CAP
competitive acquisition area as the 48 contiguous States and the
District of Columbia for the next round of CAP contracting. This change
in the geographic area that is served by the CAP is meant as an interim
measure under our phase-in authority and the statutory definition of a
competitive acquisition area. We believe that omitting Alaska, Hawaii,
and the Territories from the CAP competitive acquisition area at this
time will balance the need to revise the CAP to attract more vendors
with the need to offer the maximum number of physicians a meaningful
opportunity to participate. We believe that the proposal will encourage
potential vendors to participate in the CAP because it would
temporarily omit areas associated with low physician participation,
long shipping times, and high shipping costs. Furthermore, this measure
is unlikely to

[[Page 61913]]

significantly decrease CAP drug order volume relative to historical
physician participation in the CAP. However, we are aware that our
proposal temporarily eliminates the CAP option for physicians in the
areas not included in this CAP competitive acquisition area. Therefore,
we did not propose this definition of the CAP geographical area as a
permanent solution.
The following is summary of the comments we received regarding the
proposed to revisions the geographic area serviced by the CAP.
Comment: Commenters supported the proposal; one commenter
recommended a more limited approach using smaller areas and selected
physician specialties.
Response: Based on comments supporting our proposal, we are
finalizing the proposal to temporarily limit the CAP geographic area to
the 48 contiguous States and the District of Columbia for the next
bidding period. We do not believe that a smaller geographic area is
desirable or necessary. Overnight shipping is available over much of
the proposed area and we are concerned about further limiting access to
the CAP.
As suggested in comments and discussed in the proposed rule, we
will continue to assess the CAP and update plans for phase in activity
in future rulemaking efforts, including determining the circumstances
under which CAP participation will be offered to physicians in Alaska,
Hawaii, and the Territories. We will also continue to consider
modifying the definition of competitive acquisition area on the basis
of regions, States, or some smaller geographic area, which might expand
the number of vendors that could bid to participate in the program.
d. CAP Drug Stock at the Physician's Office
Our discussion about the CAP emergency restocking option in the
July 6, 2005 IFC indicated that a participating CAP physician could not
maintain a stock of an approved CAP vendor's drug in his or her
inventory. This was done because we had reservations about potential
program integrity and drug diversion issues (70 FR 39047).
Since that time, we have gained operational experience with the CAP
and a better understanding of the ordering and drug delivery process.
We have also received additional public feedback about the different
ways that the program could be refined, and we have not received any
negative feedback from the vendor community indicating a concern about
storing CAP drugs in physicians' offices. Therefore, we believe at this
time it is appropriate to consider allowing additional flexibility to
encourage CAP participation.
Our experience with the CAP, and our increased understanding about
the options approved CAP vendors might have for furnishing drugs to a
participating CAP physician's office also support considering
additional flexibility in this area. For example, we are aware of
electronic inventory control and charge capture devices that could be
utilized in ways that conform to CAP regulations and are compliant with
applicable State and Federal laws. Such devices utilize an electronic
transaction based on a physician's order to track the administration of
drugs from inventory to a specific patient and to document appropriate
charges for the drug. We believe that such systems could fit into the
current CAP framework when transactions in such systems are based on a
physician's order, because such systems can track inventory, and can be
used to capture patient charge data.
For these reasons, we proposed to allow approved CAP vendors to
utilize electronic transactions to furnish CAP drugs from nominal
quantities of approved CAP vendor-owned stock located at the
physician's office in response to specific prescription orders and to
capture charges related to such transactions. The proposal was also
intended to clarify that entities with alternative approaches to
supplying drugs that utilize an electronic transaction are welcome to
participate in the CAP bidding process. We believe that this will allow
for additional flexibility and efficiency in the ordering and delivery
of drugs within the program because it allows for more efficient
shipping of approved CAP vendor-owned stock and provides the option of
CAP participation for physicians who use or may choose to use such drug
inventory management platforms. The proposal did not change our
position that a participating CAP physician shall not take title to or
pay for CAP drugs, nor does it alter the requirements for information
that must be submitted with a prescription order under Sec. 414.908(a)
or the application of HIPAA to such data.
Furthermore, the proposal does not affect the applicability of
State licensing requirements for an approved CAP vendor. As stated in
the July 6, 2005 IFC (70 FR 39066), either the approved CAP vendor, its
subcontractor under the CAP, or both, must be licensed appropriately by
each State to conduct its operations under the CAP. Therefore, if a
State requires it, an approved CAP vendor would be required to be
licensed as a pharmacy, as well as a distributor. We did not propose to
revise the requirements at Sec. 414.908(c) and Sec. 414.914(f)(9),
and we noted that sections 1847B(b)(6) and 1847B(b)(2)(B) of the Act
continue to apply. In order to participate in the CAP successful
bidders must continue to submit proof of pharmacy licensure, consistent
with applicable State requirements.
Also, we stated that the proposal would not modify our definition
of ``emergency delivery'' or its corresponding requirements at Sec.
414.902. As we stated in our July 6, 2005 IFC, the intent of the 1-
business-day timeframe for emergency deliveries is to address the
participating CAP physician's need for more rapid delivery of drugs in
certain clinical situations with the approved CAP vendor's ability to
ship the drug and have it delivered promptly in a nationwide delivery
area (70 FR 39045). The emergency delivery timeframe still applies in
situations when CAP drugs are not available in the office for
electronic delivery.
Moreover, the proposal did not seek to change the CAP inventory
requirements. CAP drugs belong to the approved CAP vendor, and as
indicated in the July 6, 2005 IFC (70 FR 39048), participating CAP
physicians are required to maintain a separate electronic or paper
inventory for each CAP drug obtained. CAP drugs must be tracked
separately in some way (for example, an electronic spreadsheet). CAP
drugs do not have to be stored separately from a physician's own stock;
that is, co-mingling of CAP drug with drug from a participating CAP
physician's own private stock is acceptable as long as a record of
approved CAP vendor-owned drug is kept in a manner that is consistent
with Sec. 414.908(a)(3)(x) and the approved CAP vendor-owned drug can
be accounted for, as needed.
Also, the proposal did not affect the CAP emergency restocking
requirements. Section 1847B(b)(5) of the Act and Sec. 414.906(e)
provide criteria for the replacement of drugs taken from a
participating CAP physician's inventory in the event of an emergency
situation. When the emergency resupply criteria are met, a
participating CAP physician can replace the drugs that were used from
his or her own inventory by submitting a prescription order to the
approved CAP vendor.
The proposal sought to clarify the potential approaches that a
bidder may use (separately or in combination) to supply drugs under the
CAP and did not seek to specify a particular approach that bidders must
use in future responses to CAP bid solicitations or to strictly define
the types of entities that

[[Page 61914]]

could bid on CAP vendor contracts; for example, whether bidders must be
pharmacies, drug distributors, or a hybrid of the two; whether bidders
must utilize just in time shipping, or electronic inventory
transactions to supply CAP drugs. We stated that we will consider
approving bidders' approaches that are consistent with the statutory
framework, applicable laws, and regulations.
The following is a summary of the comments we received regarding
CAP drug stock at the participating CAP physician's office.
Comment: Most commenters supported the concept of electronic
transactions in the CAP drug supply process. However, a few commenters
appear to have misunderstood our proposal as authorizing a CAP vendor
to store unlimited amounts of stock in a physician's office. Some
commenters also requested details about the types of systems we will
accept, how these systems could work in smaller offices, and some
commenters were concerned about how appropriate or ``nominal'' stock
levels would be defined.
Response: The comments lead us to believe that we need to clarify
our proposal. We proposed to allow approved CAP vendors to utilize
electronic transactions to furnish CAP drugs from nominal quantities of
approved CAP vendor-owned stock located at the physician's office in
response to specific prescription orders and to capture charges related
to such transactions. This proposal is primarily intended to work with
automated cabinets that provide controlled access to drugs and was
intended to make clear that entities using electronic inventory devices
were welcome to participate in the CAP. However, we are not requiring
that these specific devices be used in conjunction with nominal amounts
of vendor owned office stock or requiring any specific types of
devices, hardware, or software.
Instead, we are providing a framework under which certain
quantities of vendor-owned CAP drug stock may be located in a
participating CAP physician's office and delivered in conjunction with
electronic transactions and charge capture. An electronic transaction
may be used to communicate the fact that participating CAP physician is
submitting a prescription order for a CAP drug and, on the basis of
that prescription order, the drug is being delivered to the
participating CAP physician from the nominal amount of vendor-owned
stock at the office for administration to a beneficiary. Once the
approved CAP vendor receives the prescription order it may bill for the
drug in accordance with existing rules. Corresponding documentation of
drug administration in the medical record is still required for meeting
post-payment review requirements to establish that the drug has been
administered to a beneficiary and is thus eligible for payment under
section 1847B(a)(3)(D) of the Act.
This process is intended to work with CAP inventory requirements in
Sec. 414.906(e) and Sec. 414.908(a), and can also work with office
stock models that utilize periodic shipment of stock to maintain
predetermined levels. In such systems, periodic shipments of regularly
used amounts of items are made, for example, weekly. The shipped
amounts are based on average amounts used over the time period between
shipments, but may be modified as necessary to accommodate for actual
use.
We agree with commenters that we should provide further information
about what we would consider to be a ``nominal'' level of vendor-owned
stock. Therefore, we are clarifying that that ``nominal quantities of
stock'' means quantities that do not exceed what is typically used by
the participating CAP physician's office between the approved CAP
vendor shipment periods. We are not specifying what the shipment
periods must be, however, we would like to point out that we do not
intend this process to mean that large quantities of CAP drug would be
kept at a physician's office.
We also remind readers that CAP drug stock remains the property of
the approved CAP vendor, and that participating CAP physicians do not
take title to CAP drug stock or make any payment for drugs that
furnished and administered under the CAP. CAP drugs must be stored in a
manner that is consistent with applicable law and regulations, as well
as product integrity and handling requirements.
Comment: One commenter understood the proposal to mean that
physician-owned stock supplied by entities other than the approved CAP
vendor may be used for the CAP. Another commenter encouraged a
mechanism to reassign physician-owned stock for the CAP.
Response: CAP drugs remain the property of the approved CAP vendor
until they are administered to a beneficiary, at which time billing for
the drug by the approved CAP vendor may take place. Under our emergency
restocking provisions (described in further detail below), drugs
purchased by the participating CAP physician's office for its own drug
inventory may be used instead of approved CAP vendor inventory in
certain situations, and then the approved CAP vendor may supply a
replacement.
However, we do not believe that the physician's office stock, that
is, drugs bought by the physician's office, should be used as a primary
source of drugs for the CAP because such a structure is inconsistent
with the CAP program as set forth in section 1847B of the Act, which
clearly contemplates that the approved CAP vendor supply CAP drugs to
the participating CAP physician rather than merely just bill for drugs
that the participating CAP physician already owns. Furthermore, the CAP
is an alternative to the ASP or buy and bill process of obtaining drugs
administered incident to a physicians' services, and under the CAP as
we have implemented it, participating CAP physicians do not take title
to or make any payment for drugs furnished under the CAP.
In situations where an approved CAP vendor maintains a certain
nominal amount of drugs in a participating CAP physician's office, as
discussed above, we anticipate that at certain times a prescription
order for an unusual drug or an unexpectedly great demand may result in
a situation where the approved CAP vendor's stock is not immediately
available in the participating CAP physician's office. In such
situations, the approved CAP vendor must ship the drug under the
timeframe definitions at Sec. 414.902.
In cases where the drug cannot be delivered in time to meet a
clinical need, a participating CAP physician is permitted to use the
practice's own inventory and obtain replacement inventory from the
approved CAP vendor under Sec. 414.906(e) if all of the following
requirements are met: (1) The drugs are required immediately; (2) The
participating CAP physician could not have anticipated the need for the
drugs; and (3) The approved CAP vendor could not have delivered the
drugs in a timely manner, as defined in Sec. 414.902.
This provision is intended for clinical emergencies if a CAP drug
is not available from the approved CAP vendor in time. Additional
information about the emergency restocking provision appears in the
July 6, 2005 interim final rule with comment (70 FR 39047). The
physician will be expected to maintain documentation in the patient's
medical record to verify that he or she complied with the criteria
governing the resupply provision.
Comment: Commenters also suggested periodic inventory
reconciliation between approved CAP vendors and participating CAP
physicians to accurately track the actual amount of

[[Page 61915]]

vendor-owned drug in a physician's inventory.
Response: We believe that the method and the frequency with which
an approved CAP vendor may want to account for nominal CAP drug stock
at the physician's office will vary based on the cost and handling
requirements of the drugs, quantities of drug at the offices, and the
approved CAP vendor's experience with the practice. The role of special
agreements between approved CAP vendors and participating CAP
physicians was discussed in the July 2005 IFC (70 FR 39050).
We believe that details associated with inventory reconciliation,
such as the frequency that the process is carried out, whether a
vendor's representative would visit the location, etc., could be
arranged under such an agreement. However, parties to such arrangements
must ensure that the arrangements do not violate the physician self-
referral (``Stark'') prohibition (section 1877 of the Act), the Federal
anti-kickback statute (section 1128B(b) of the Act), or any other
Federal or State law or regulation governing billing or claims
submission.
Comment: Commenters also requested clarification about whether CAP
is a pharmacy- or distribution-based program and recommended that CMS
specify one model in order to decrease vendor risk. One commenter
recommended that the CAP be a distribution model in order to capture
efficiencies.
Response: We appreciate the comments that suggested we consider our
overall approach to the CAP. We have not specified whether the CAP must
follow a distribution or a pharmacy model, or a combination, in
previous rules. We believe that leaving the option open will maximize
the number of bidders and will encourage a variety of approaches for
supplying CAP drugs. Given the wide geographic area that the program
covers and the diverse Medicare physician population, we also do not
want to discourage bidders from developing novel or combined approaches
to supplying CAP drugs. Although we acknowledge that vendor interest in
the program has been limited, we believe that leaving these options
open will benefit the program in the long run by allowing a variety of
approaches to supplying drugs under the CAP. Choices between approved
CAP vendors with different models will encourage physician interest and
are more likely to serve a varied physician population, including large
and small offices. We also do not want to unduly limit the types of
subcontracting relationships that a bidding entity may develop to
supply CAP drugs across a geographic area, particularly in light of the
diversity of State laws and regulations, which may change over time.
Comment: One commenter asked whether the bidding documents would
contain more detail about licensing requirements.
Response: We acknowledge the comment that suggested the licensing
expectations be more clearly described at the time bids are announced.
At this time, we will continue to require that an approved CAP vendor
must be appropriately licensed in all States.
Comment: One commenter asked about a limited bid involving
automation.
Response: This rule did not propose changes to the bidding process,
and therefore, we are not making any changes to the bidding process at
this time.
e. Exclusion of CAP Sales From ASP Calculations
In response to the March 4, 2005 proposed rule, many commenters
requested clarification about whether the prices determined under the
CAP will be taken into account in computing the ASP under section 1847A
of the Act. In the July 6, 2005 IFC, we responded that prices offered
under the CAP must be included in ASP calculations (70 FR 39077). This
was done because we initially believed that we did not have the
statutory authority to exclude prices determined under the CAP from the
computation of ASP under section 1847A of the Act. Section 1847A(c)(2)
of the Act contains a specific list of sales that are exempt from the
ASP calculation, and sales to approved CAP vendors operating under CAP
are not included on that list (70 FR 39077). Comments received in
response to the July 6, 2005 IFC opposed this policy (70 FR 70479).
Ultimately, as stated in the November 21, 2005 IFC, we recognized
commenters' concerns about the effect of including CAP prices in the
calculation of ASP and agreed that the best outcome for both the ASP
methodology and the CAP programs would be one in which prices under CAP
did not affect payment amounts under the ASP methodology. In
particular, we found compelling arguments from commenters about the
separation of the ASP and CAP programs and that the two programs are
intended to be alternatives to each other. Therefore, we excluded units
of CAP drugs that are administered to beneficiaries by participating
CAP physicians from the ASP calculation for the initial 3-year approved
CAP vendor contract period (70 FR 70479). Accordingly, the definition
of ``Unit'' at Sec. 414.802 was also revised to reflect this
exclusion.
In our August 18, 2006 interim final rule, we further addressed
concerns pertaining to our definition of Unit. We published a PRA
notice regarding a proposed modification of the OMB-approved ASP
information collection requirements (CMS Form 10110 (OMB 0938-
0921)) about the collection of the number of CAP units excluded from
the ASP calculation. In response, a commenter expressed concern over
manufacturers' reliance on approved CAP vendors for information about
the number of units of CAP drugs that are administered to beneficiaries
by participating CAP physicians (71 FR 48132). Since approved CAP
vendors are the only entities with direct information on CAP units
administered, the commenter believed that the requirement to exclude
units of CAP drugs administered to beneficiaries by participating CAP
physicians placed the manufacturer in the untenable position of
reporting ASP and certifying reports of ASP based on second-hand
information from approved CAP vendors. Further, the commenter noted
that manufacturers may not have timely access to this information and
that they could not independently confirm its accuracy (71 FR 48132).
Additional feedback received as part of our ongoing work with
manufacturers also indicated that they were concerned that they would
have difficulty obtaining information from approved CAP vendors that
would be necessary to accurately exclude administered CAP units from
the ASP calculation (71 FR 48132).
Therefore, we further revised the definition of unit to clarify
that for the initial 3-year contract period under the CAP units of CAP
drugs sold to an approved CAP vendor for use under the CAP would be
excluded from the calculation of ASP (70 FR 48132).
In the July 6, 2005 and August 18, 2006 IFCs, we stated that we
would examine the effect of this exclusion and, if necessary, revisit
our decision at the end of the initial 3-year period of the CAP (70 FR
70480 and 71 FR 48132, respectively).
Since then, operational experience has not indicated a reason for
changing our policy of excluding CAP units sold to approved CAP vendors
for use under the CAP from ASP calculations. Therefore, in the current
proposed rule, we proposed to permanently exclude drugs supplied under
the CAP from ASP calculations and make conforming

[[Page 61916]]

changes to the definition of unit at Sec. 414.802. We stated that we
believe that the proposal will continue to promote the separation and
independence of the two drug payment models.
The following is a summary of the comments we received regarding
the proposed revisions to the exclusion of CAP sales from ASP
calculations.
Comment: All comments supported permanent exclusion of CAP Sales
from ASP calculations.
Response: As a result of the comments, we are finalizing the
proposal to permanently exclude CAP Sales from ASP calculations.
f. Annual CAP Payment Amount Update Mechanism
In the July 6, 2005 IFC (70 FR 39076), we described a two-step
process to calculate RNAC-based price adjustment if there is a change
in the RNAC reported by a particular approved CAP vendor. We stated
that ``we would adjust the bid price that the vendor originally
submitted by the percentage change indicated in the cost information
that the vendor disclosed. Next, we would recompute the single price
for the drug as the median of all of these adjusted bid prices.'' The
two-step process contemplated that there would be more than one
approved CAP vendor at the time prices were to be adjusted and that all
successful bidders would participate in the CAP.
However, during the first round of CAP contracting, after offering
more than one contract, we entered into a contract with only one
successful bidder. Thus, during the 2008 price update calculation
process, we developed an approach to account for the lack of RNAC data
for bidders who chose not to participate in the CAP. In the CY 2009 PFS
proposed rule, we stated that the approach we used to adjust prices for
the 2008 contract year is consistent with Sec. 414.906(c) and with the
July 6, 2005 IFC because it retains a two-step calculation based on the
approved CAP vendor's RNAC, as well as the calculation of a median of
adjusted bid prices.
We also posted our approach on the Approved CAP Vendor page of the
CMS CAP Web site at http://www.cms.hhs.gov/CompetitiveAcquisforBios/15_Approved_Vendor.asp. The percent change in RNAC for 2008 was
calculated based on data supplied by the approved CAP vendor. This
percent change in RNAC was used as a proxy for the percent change in
RNAC for successful bidders that chose not to become approved CAP
vendors.
Then, in the CY 2009 PFS proposed rule (73 FR 38522 through 38523),
we proposed to continue using this approach for future CAP payment
amount updates where the number of approved CAP vendors is less than
the number of successful bidders. We proposed that the average of the
approved CAP vendor-supplied RNAC data would be used as a proxy for
data from vendors who bid successfully but are not participating in the
CAP. For example, if the payment amounts for the first year of a CAP
contract are based on five successful bidders, but only four have
signed contracts to supply drugs under the CAP (that is, there are four
approved CAP vendors), only RNAC data collected from the four approved
CAP vendors would be used to calculate the percent change in the RNAC.
The average of the four approved CAP vendors' adjusted payment amounts
would be used as a proxy for the RNAC of the successful bidder that is
not participating in the CAP. The updated CAP payment amount would then
be calculated as the median of the five data points (one data point for
each approved CAP vendor's updated payment amount, and one data point
calculated using the average of the approved CAP vendors' RNAC).
Similarly, if there were five successful bidders but only three chose
to become approved CAP vendors, the average of the three approved CAP
vendors' RNAC would be the proxy for the RNAC of the two bidders who
did not participate. The median of those five data points would become
the updated CAP payment amount.
Our approach in the CY 2009 PFS proposed rule was intended to
provide us with a flexible method for updating CAP prices, to be
consistent with our original policy as stated in the July 6, 2005 IFC,
and to account for bidders or approved CAP vendors who are not
participating in the program at the time the price updates are
calculated. However, our approach was limited in scope because it was
made during a contract period and during bidding for an upcoming
contract and we did not want to make any significant changes to the CAP
program which could affect contractual obligations. Furthermore, we
received a comment in response to the CY 2009 PFS proposed rule that
suggested the elimination of the proxy procedure so that payments would
be based on actual data from participating vendors and would better
reflect experience within the program.
After additional consideration, we believe that it would be prudent
to simplify and update our 2009 proposal in order to account for
successful bidders who choose not to participate in the CAP, possible
changes in the number of approved CAP vendors over the life of a 3-year
CAP contract, and to allow for flexibility in setting the frequency of
payment amount adjustments as described in section II.J.2.a. above. We
believe that our updated proposal is easier for the vendor community to
understand and for us to implement. Furthermore, our revised proposal
is not constrained by concerns about the impact of changes on an active
contract.
We proposed to clarify that the RNAC-based adjustment calculations
are intended to apply only to approved CAP vendors (not all bidders),
and that the most recent previous CAP payment amount (for example, the
previous year's or the previous quarter's payment amount) will be the
starting point for making the subsequent period's adjustment. Simply
put, we proposed to eliminate the use of proxy data for bidders that
are no longer participating in the program. Instead, we proposed to use
RNAC data only from approved CAP vendors that are participating in the
CAP at the time that an RNAC-based price update is being calculated. We
also proposed to clarify that the starting point for the payment amount
adjustment is the most recent payment amount. The percent change
calculated from each participating approved CAP vendor's RNAC data will
be applied to the most recent payment amount by recomputing the single
price using the median of all participating vendors' adjusted prices.
For example, if quarterly adjustments beginning at the start of
claims processing approved CAP vendor's contract as described in
section a. above are implemented, and the post bid period's CAP payment
amounts are calculated based on five successful bids, but only four
approved CAP vendors are participating when CAP claims processing
begins, the RNAC-based payment amount adjustment for the first quarter
of CAP claims would be based on RNAC data provided by the four approved
CAP vendors that will be furnishing drugs under the CAP. The four
approved CAP vendors would be required to submit a quarter of RNAC data
within thirty days of the close of the quarter to which the data
applied, prior to the beginning of CAP claims processing for the new
contract. We would apply the percentage change in RNAC reported by each
of the four approved CAP vendors to the CAP payment amounts calculated
from successful bids, and the adjusted payment amount would be the
median of those four adjusted amounts. Assuming that these four vendors
are

[[Page 61917]]

still furnishing drugs during the second quarter, calculations for the
second quarter would apply the RNAC-based adjustment calculated from
the four vendors' data to the first quarter's payment amount. That is,
the payment amounts for the second quarter would be calculated from the
first quarter's payment amounts, adjusted by RNAC data.
This process would apply to the composite bid drug list as amended
by rulemaking, meaning that a single weighted percent change in RNAC is
calculated for all drugs in the composite bid list (also referred to as
the single drug category) and that single percent change is applied to
all drugs in the list. For drugs that are bid as separate line items,
such as drugs that were included in addendum B of the 2006 bidding
period (see 70 FR 39072 and updated as addendum G in 70 FR 70238), or
for drugs that are added during a contract period, each HCPCS code will
be adjusted as a separate line item. Such codes will not be included in
the composite, weighted drug list. Our process will continue to assign
a single payment amount to all approved CAP vendors that supply a given
HCPCS code; we do not intend to have more than one payment amount for
any HCPCS code under the CAP or for individual ``NOC'' drugs described
in Sec. 414.906(f)(2)(iv).
This updated approach is flexible, and we believe it can
accommodate a variety of scenarios, including a changing number of
approved CAP vendors and changes to the frequency with which payment
amount updates are made. It provides a straightforward and accurate
clarification of the price adjustment mechanism described in regulation
text. We believe that this proposal remains consistent with our
original preamble language and with our CY 2009 PFS proposal, because
it retains the two-step calculation using the percent change in RNAC.
Finally, we believe that our approach will eliminate any perception
that nonparticipating vendors can significantly affect CAP payment
amount adjustments.
The following is summary of the comments we received regarding the
proposed to revisions to the annual CAP payment amount update
mechanism.
Comment: Comments about CAP price updates focused on the quarterly
update frequency. We did not receive any comments that specifically
discussed the proposed refinements to our approach, although one
commenter recommended caution when using a single update percentage
across a large group of drugs because this may increase vendors'
financial risk, and suggested product level updates.
Response: We are finalizing the proposal to simplify the update
calculation process. Although no comments directly mentioned this
proposal, we believe that the updated approach will simplify the
calculation process.
We appreciate the comment that suggested that price updates be done
at the product or NDC level. However, bidding and payment for drugs
furnished under the CAP is made at the HCPCS level. We believe that the
smaller single drug category list finalized in section II.J.2.b will
decrease the risk associated with applying a single percentage update
over a group of drugs, and we also note that drugs added during the CAP
contract period through a CMS approved vendor request and drugs that
are separately bid will continue to be updated at the individual HCPCS
level.
g. 2009 PFS Proposals
(1) Definition of a CAP Physician
In the July 6, 2005 IFC, we stated that section 1847B of the Act
most closely describes a system for the provision of and the payment
for drugs provided incident to a physician's service (70 FR 39026). In
the November 21, 2005 IFC (70 FR 70258), we stated that for the
purposes of the CAP, a physician includes all practitioners that meet
the definition of a ``physician'' in section 1861(r) of the Act. This
definition includes doctors of medicine, osteopathy, dental surgery,
dental medicine, podiatry, and optometry, as well as chiropractors.
However, this definition does not include other health care
professionals, such as nurse practitioners (NPs), clinical nurse
specialists (CNSs), and other professions such as physician assistants
(PAs) who may be able to legally prescribe medications and enroll in
Medicare.
In the CY 2009 PFS proposed rule (73 FR 38523), we proposed to
further clarify that, for the purposes of the CAP, the definition of a
physician included all practitioners that meet the definition of a
``physician'' in section 1861(r) of the Act, as well as practitioners
(such as NPs, CNSs and PAs) described in section 1861(s)(2)(K) of the
Act and other practitioners who legally prescribe drugs associated with
services under section 1861(s) of the Act if those services and the
associated drugs are covered when furnished incident to a physician's
service. While we believed that most practitioners described in section
1861(s)(2)(K) of the Act would bill under specific physician provider
numbers, it was not our intent to exclude practitioners who are able to
bill independently for drugs associated with services that are covered
when provided by a physician and legally authorized to be performed.
In response to our CY 2009 proposed rule, only a few commenters
were concerned about the inclusion of inadequately trained
practitioners and risks to patient safety under this expanded
definition. Another commenter stated that this definition goes beyond
the scope of the provisions in the MMA and the strict definition of
``physician'' in the statute. However, the majority of comments
supported this proposal.
We did not receive any feedback during the CAP postponement that
would lead for us to reconsider this proposal. Therefore, we again
proposed to further clarify that, for the purposes of the CAP, the
definition of a physician included all practitioners that meet the
definition of a ``physician'' in section 1861(r) of the Act, as well as
practitioners (such as NPs, CNSs and PAs) described in section
1861(s)(2)(K) of the Act and other practitioners who legally prescribe
drugs associated with services under section 1861(s) of the Act if
those services and the associated drugs are covered when furnished
incident to a physician's services.
Our proposal was specific to the Part B Drug CAP and was not
intended to affect the definition of physician in section 1861(r) of
the Act, or the definition of ``Medical and Other Health Services''
described in section 1861(s) of the Act. The proposal also did not seek
to expand the scope of the CAP beyond what has been described in
previous rules, other than to clarify that a small number of providers
who are enrolled in Medicare, and who legally prescribe drugs
associated with services under section 1861(s) of the Act and can be
paid by Medicare may elect to participate in the CAP if billing
independently. In short, the CAP remains a program that provides Part B
drugs furnished incident to a physician's services.
The following is summary of the comments we received regarding the
updated definition of a CAP physician.
Comment: The majority of commenters supported our proposal to
expand the definition of a physician for the purposes of the CAP.
Commenters indicated that this proposal could increase patient access
to drugs and treatment options, particularly in rural and underserved
areas. It could also increase physician participation in the CAP and
allow for greater program flexibility. However, some comments

[[Page 61918]]

expressed concerns about our approach. One commenter was concerned
about the inclusion of inadequately trained health professionals and
risks to patient safety under this expanded definition. This commenter
also urged us to limit what types of CAP drugs could be handled by
these additional health professionals included under our proposal.
Another comment indicated that CMS more thoroughly refine its
definition of ``physician'' through regulation since our proposed rule
language seemingly implied that health practitioners included in this
expanded definition who participate in the CAP could administer drugs
regardless of any state-level prescription and administration laws.
Another commenter indicated that we had exceeded our regulatory
authority by expanding the definition of physician to include health
professionals beyond those listed in section 1861(r) of the Act.
Response: We appreciate the comments that supported our proposal;
however, we have further considered the comments on the 2009 PFS rule
and the 2010 PFS proposed rule that cautioned us about potentially
exceeding the statutory definition of a physician under section 1861(r)
of the Act. Our proposal's intent was not to affect the definition of
physician as specified in section 1861(r) of the Act. Upon further
consideration in light of the comments, we agree that our proposal to
expand the definition of a CAP physician is problematic, because it can
be interpreted to be in conflict with section 1861(r) of the Act.
Section 1847B of the Act specifically uses the term ``physician''
rather than a more general term, like provider, to describe who may
select a CAP contractor to supply CAP drugs. Section 1861(r) of the Act
specifies that the term physician includes, in some cases subject to
certain limitations, the following types of practitioners: a doctor of
medicine or osteopathy, a doctor of dental surgery or of dental
medicine, a doctor of podiatric medicine, a doctor of optometry, or a
chiropractor.
Therefore, at this time, we will not be revising the definition of
a CAP physician beyond what was previously stated in the November 21,
2005 IFC (70 FR 70258), that is for the purposes of the CAP, a
physician includes all practitioners that meet the definition of a
``physician'' in section 1861(r) of the Act. Based on CAP physician
election data, we believe that the impact of not updating our
definition at this time will have minimal impact on access to CAP
drugs.
(2) Easing the Restriction on Physicians 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, in initially implementing
the CAP, we did not propose to implement the CAP in alternative
settings. We implemented the CAP with a restriction that CAP drugs be
shipped directly to the participating CAP physician, as stated in Sec.
414.906(a)(4), and that participating CAP physicians may not transport
CAP drugs from one location to another, as stated in Sec.
414.908(a)(3)(xii). However, we were aware that physicians may desire
to administer drugs in alternative settings. Therefore, in the July 6,
2005 IFC, we sought comment on how this could be accommodated under the
CAP in a way that addresses the potential vendors' concerns about
product integrity and damage to the approved CAP vendors' property (70
FR 39048). We discussed comments submitted in response to the July 6,
2005 IFC in the CY 2008 PFS proposed rule (72 FR 38158). We also
requested comments in the CY 2008 PFS proposed rule (72 FR 38157) on
the potential feasibility of easing the restriction on transporting CAP
drugs where this is permitted by State law and other applicable laws
and regulations. We responded to submitted comments in the CY 2008 PFS
final rule with comment period (72 FR 66268).
In the CY 2009 PFS proposed rule (70 FR 38523), we proposed to
permit the transportation of CAP drug between a participating CAP
physician's practice locations subject to voluntary agreements between
the approved CAP vendor and the participating CAP physician. Because of
the 2009 CAP postponement, we did not address this issue in the CY 2009
PFS final rule. However, we did receive the following comments in
response to our proposed rule on easing transportation restrictions in
the CAP:
Many commenters indicated that this change would increase
program flexibility and facilitate patient treatment.
Some commenters were supportive, but also raised concerns
about drug integrity and liability, and requested that appropriate
safeguards be in place before transportation restrictions were eased.
Generally, commenters wanted CMS to explicitly delineate
standards about voluntary agreements that address concerns about
product integrity, liability, transportation procedures, and
documentation. One commenter indicated that such standards should be
developed through a separate rulemaking period to allow for public
comment.
Several commenters cited State pedigree laws as possible
impediments to physician transport of drugs.
We also requested and received feedback about the program during
the 2009 postponement period. One member of the potential vendor
community urged us to be mindful of increased legal liability for an
approved CAP vendor if this policy were to be implemented, but also
acknowledged that the proposal might substantially increase physician
interest in the program.
We continue to be mindful of the concerns expressed by the
commenters, and have evaluated both the advantages and disadvantages of
easing the restriction on transportation of CAP drugs. Thus, we again
proposed to permit transport of CAP drug between a participating CAP
physician's practice locations subject to voluntary agreements between
the approved CAP vendor and the participating CAP physician. As
indicated in our CY 2009 PFS proposed rule, we continued to propose
that such agreements must comply with all applicable State and Federal
laws and regulations and product liability requirements, and be
documented in writing.
We would again like to reiterate the voluntary nature of these
proposed agreements. Approved CAP vendors would not be required to
offer and participating CAP physicians would not be required to accept
such agreements when selecting an approved CAP vendor. An approved CAP
vendor may not refuse to do business with a participating CAP physician
because the participating CAP physician has declined to enter into such
an agreement with the approved CAP vendor. Furthermore, we are not
seeking to define which CAP drugs may be subject to the proposed
voluntary agreements. In other words, each approved CAP vendor could
specify which CAP drug(s) could be transported.
However, our proposal continues to contain certain limitations. In
previous rulemaking, we have described requirements for voluntary
agreements between approved CAP vendors and participating CAP
physicians. In the July 6, 2005 IFC (70 FR 39050) and the CY 2006 PFS
final rule (70 FR 70251 through 70252), we stated that we will not
dictate the breadth of use or the specific obligations contained in
voluntary arrangements between approved CAP vendors and

[[Page 61919]]

participating CAP physicians, other than to note that they must comply
with applicable law and to prohibit approved CAP vendors from coercing
participating CAP physicians into entering any of these arrangements.
Parties to such arrangements must also ensure that the arrangements do
not violate the physician self-referral (``Stark'') prohibition
(section 1877 of the Act), the Federal anti-kickback statute (section
1128B(b) of the Act), or any other Federal or State law or regulation
governing billing or claims submission. We proposed to apply these
standards to any agreement for the transport of CAP drugs.
We remain concerned about opportunities for disruption in the
drug's chain of custody and appropriate storage and handling conditions
that may ultimately affect patient care or increase the risk of drug
theft or diversion. Therefore, in order to maintain safety and drug
integrity in the CAP and to protect against the fraudulent diversion of
CAP drugs, we reproposed that any voluntary agreements between an
approved CAP vendor and a participating CAP physician regarding the
transportation of CAP drug must include requirements that drugs are not
subjected to conditions that will jeopardize their integrity,
stability, and/or sterility while being transported. We solicited
comments on these issues, including the identification of who may
transport the drugs, how documentation of transportation activities
could be accomplished, and how the oversight of such agreements will be
carried out.
In conclusion, we believe that the proposal to ease the restriction
on transporting CAP drugs between a participating CAP physician's
practice locations--when agreed upon by the participating CAP physician
and the approved CAP vendor--will make the CAP more flexible and
ultimately more appealing to participating CAP physicians.
Additionally, we believe that this proposal will facilitate the
participation of CAP physicians who have office locations in rural
areas and/or have satellite offices with limited hours. Moreover, we
believe that this proposal will promote beneficiary care, particularly
for beneficiaries who live in rural locations. Since participating CAP
physicians would be able to transport CAP drugs to another office
location in accordance with a voluntary agreement with their approved
CAP vendor, beneficiaries would have more flexibility in scheduling the
location of their appointments. We solicited comments about this
proposal.
The following is summary of the comments we received regarding the
proposal to ease transport restrictions between participating CAP
physicians' offices.
Comment: The comments represented a variety of perspectives and
were very similar to the comments discussed in our previous proposal
and outlined in the bullet points above. Many comments were supportive,
but some also raised reservations pertaining to drug integrity and
liability. The commenters requested that appropriate safeguards be in
place before transportation restrictions were eased and that liability
should be clearly defined in these voluntary agreements. One commenter
supported our proposal, but indicated that concerns about drug
integrity and liability would prevent approved CAP vendors from
offering such voluntary agreements for transporting CAP drug. Another
commenter indicated that the approved CAP vendor must be responsible
for notifying physicians of handling or storage requirements for any
drug. Two commenters indicated that licensed practitioners are able to
take responsibility for transporting drugs because of their training
and knowledge. A commenter requested that we develop specific
transportation standards through a separate rulemaking period. Another
comment indicated that the approved CAP vendor should develop and
submit explicit drug transportation standards to CMS. One commenter
suggested that CMS require physicians to document drug transfers via a
standardized transport sheet.
A number of comments were supportive of our proposal and indicated
that this change would increase program flexibility, make the program
more desirable to physicians, and facilitate patient treatment. One
commenter understood our proposal to mean that we would ``ship'' CAP
drug directly to the site of service. Another commenter suggested that
approved CAP vendors should be required to offer such agreements.
Several commenters cited State pedigree laws as possible impediments to
physician transport of drugs.
Response: Overall, there was support for our proposal and we agree
that these agreements would provide flexibility for CAP providers. We
agree with commenters who expressed concerns about product integrity
and liability. However, we do not agree that additional CMS involvement
such as developing detailed and specific agreements now, or through
other means such as separate rulemaking, will contribute to the quality
or appropriateness of these agreements. We believe that the details of
these agreements can best be determined by the parties that participate
in the agreement rather than CMS. Detailed knowledge about applicable
State laws (including ``pedigree laws''), practice requirements and
specialized knowledge about drug handling are beyond CMS' expertise.
However, we believe that our proposal outlines a sufficient framework
of safeguards and provisions to mitigate risks associated with damage
to the product, drug diversion, and financial loss. We have stated that
agreements must be made in writing and must comply with all applicable
State and Federal laws and regulations and product liability
requirements and must include requirements that drugs are not subjected
to conditions that will jeopardize their integrity, stability, and/or
sterility while being transported.
We are not seeking to define specific items in these agreements,
such as which CAP drugs may be subject to the proposed voluntary
agreements regarding drug transport because the parties involved in the
agreement will have the greatest insight regarding such details and
will better understand the variables and practical applications
associated with these decisions. Drugs that may be furnished under the
CAP are subject to a broad range of storage requirements--some drugs
are especially temperature sensitive and some may be light sensitive.
Also, some CAP drugs are very expensive, and the loss of even a
single dose could create significant financial impact for an approved
CAP vendor. We believe that assessments and decisions about which drugs
may be transported must be made by the approved CAP vendor at the drug
level in order to allow the approved CAP vendor to better control the
risk associated with transporting vendor-owned product and to apply its
knowledge and expertise in product handling in order to either
facilitate, or to choose not to allow the transportation of certain
drugs that may require special handling, such as strict temperature
control or limits to light exposure. So long as they are consistent
with the standards we have set forth for these voluntary agreements, we
also believe such agreements can address issues of financial liability
for the drug, and we believe that the approved CAP vendor is in the
best position to assess the financial risk associated with the
transportation of specific drugs, and to make corresponding changes as
new drugs are added to the CAP, or information about drugs already
supplied under the CAP changes.

[[Page 61920]]

We are also concerned that additional CMS involvement regarding the
details of these agreements could cause negative consequences by
further delaying the implementation of this provision, or delays in
responding to changes as new drugs become available under the CAP.
Because the parties to the agreement have a better understanding of the
specific information that must be used to assess each drug, CMS
involvement could also result in the addition of requirements that may
not be necessary, or the exclusion of requirements that may be
beneficial. Providing a framework rather than specific requirements
also provides an adaptable and scalable solution that can accommodate
different drugs with different handling requirements, different
participating CAP physician populations, and individual approved CAP
vendors' financial risk assessments at the drug level.
We also note that shipment of drugs and biologicals often across
significant distances is being done routinely by pharmacies, drug
distributors, and home infusion providers. Therefore, we believe that
significant practical experience associated with safely transporting
drugs between various locations outside of standard shipping
arrangements exists, and this experience could be applied to the
transportation agreements. We encourage approved CAP vendors who enter
into agreements with participating CAP physicians to permit transport
of one or more CAP drugs between offices to assist with the
dissemination of details and practical applications of specialized
knowledge about drug handling and to either specify, or provide
mechanisms to track, drugs that are being transported between offices.
We also agree with the comments that stated that participating CAP
physicians and other CAP practitioners are able to follow the handling
requirements associated with the drugs that they administer and we
agree that they may be held responsible for adherence to those
requirements. We believe that the participating CAP physicians will
want to adhere to these requirements not only for the safety of the
beneficiary who will receive the drug, but also for the financial well
being of the approved CAP vendor--the entity that still owns the drug.
Based on the comments that we received, we are finalizing our
proposal to ease the transportation restriction between a participating
CAP physicians' offices as listed on the CAP physician election
agreement using voluntary agreements between the approved CAP vendors
and participating CAP physicians. The finalized proposal does not
affect the current requirement that drugs be shipped from the approved
CAP vendor only to a participating CAP physician.
We also remind readers that the change applies only to
transportation of CAP drugs between the offices of a group to which the
drug was shipped and does not include shipment to office locations not
listed on the physician's election agreement, or transportation to
sites other than the participating CAP physician's offices; these
issues are outside the scope of what we had proposed.
We also remind readers that at a minimum, voluntary agreements that
allow the transportation of CAP drugs between office locations must
comply with all applicable State and Federal laws and regulations and
product liability requirements, and be documented in writing and must
include requirements that drugs are not subjected to conditions that
will jeopardize their integrity, stability, and/or sterility while
being transported. While we are not dictating the breadth of use or the
specific obligations contained in voluntary arrangements between
approved CAP vendors and participating CAP physicians, including the
drugs covered by an agreement, the agreements must comply with
applicable law and prohibit approved CAP vendors from coercing
participating CAP physicians into entering any of these arrangements.
Parties to such arrangements must also ensure that the arrangements do
not violate the physician self-referral (``Stark'') prohibition
(section 1877 of the Act), the Federal anti-kickback statute (section
1128B(b) of the Act), or any other Federal or State law or regulation
governing billing or claims submission.
By way of example only, we believe that a voluntary agreement
between the participating CAP physician and approved CAP vendor could
also be used to address the following issues: assignment of financial
liability associated with product loss or damage, tracking and stock
reconciliation mechanisms, oversight and compliance mechanisms, who may
transport the drug, and specific handling requirements for the each of
the drugs that may be transported.
(3) Dispute Resolution Process
In the CY 2009 PFS proposed rule (73 FR 38524 through 38525), we
discussed two changes to the CAP dispute resolution process. Section
1847B(b)(2)(A)(ii)(II) of the Act requires an approved CAP vendor to
have a grievance and appeals process for the resolution of disputes. In
the July 6, 2005 IFC (70 FR 39054 through 39058), we described the
process for the resolution of participating CAP physicians' drug
quality and service complaints and approved CAP vendors' complaints
regarding noncompliant participating CAP physicians. We encouraged
participating CAP physicians, beneficiaries, and vendors 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.
(i) Approved CAP Vendor's Status During the Reconsideration Process
Section 414.917 outlines the dispute resolution process for
participating CAP physicians. As discussed in the July 6, 2005 IFC (70
FR 39057 through 39058), if a participating CAP physician finds an
approved CAP vendor's service or the quality of a CAP drug supplied by
the approved CAP vendor to be unsatisfactory, then the physician may
address the issues first through the approved CAP vendor's grievance
process, and second through an alternative dispute resolution process
administered by the designated carrier and CMS. In turn, the designated
carrier would gather information about the issue as outlined in Sec.
414.917(b)(2) and make a recommendation to CMS on whether the approved
CAP vendor has been meeting the service and quality obligations of its
CAP contract. We would then review and act on that recommendation after
gathering any necessary, additional information from the participating
CAP physician and approved CAP vendor. If we suspend an approved CAP
vendor's CAP contract for noncompliance or terminate the CAP contract
in accordance with Sec. 414.914(a), the approved CAP vendor may
request a reconsideration in accordance with Sec. 414.917(c).
In the July 6, 2005 IFC (70 FR 39058), we indicated that the
approved CAP vendor's participation in the CAP would be suspended while
the approved CAP vendor's appeal of our decision is pending. This
suspended status is also implied in Sec. 414.917(c)(9), which states
that the ``approved CAP vendor may resume participation in CAP'' if the
final reconsideration determination is favorable to the approved CAP
vendor. In order to improve the clarity of our regulations, we proposed
in the CY 2009 PFS proposed rule that the approved CAP vendor's
contract will remain suspended during the reconsideration

[[Page 61921]]

period in Sec. 414.917 (73 FR 38525). We believed that this proposed
technical change is consistent with basic contracting concepts and with
our current practices for the CAP. This proposal was not finalized due
to the 2009 CAP postponement.
Comments submitted in response to our CY 2009 PFS proposed rule
supported this proposed clarification and we did not receive additional
feedback about this issue after the CAP was postponed. Based on this
and our continued need to improve the clarity of our regulations, we
reproposed that the approved CAP vendor's contract will remain
suspended during the reconsideration period in Sec. 414.917. We
solicited additional comments on our proposal.
Comment: One commenter supported our proposal regarding the CAP's
dispute resolution process.
Response: We are finalizing our proposal that the approved CAP
vendor's contract will remain suspended during the reconsideration
period in Sec. 414.917. We believe that this technical change is
consistent with basic contracting concepts and with our current
practices for the CAP.
(ii) Termination of CAP Drug Shipments to Suspended CAP Physicians
Section 414.916 provides a mechanism for approved CAP vendors to
address noncompliance problems with participating CAP physicians. As
stated at Sec. 414.916(a), ``Cases of an approved CAP vendor's
dissatisfaction with denied drug claims are resolved through a
voluntary alternative dispute resolution process delivered by the
designated carrier, and a reconsideration process provided by CMS.''
Once the decision is made to suspend a participating CAP physician's
CAP election agreement, the participating CAP physician will be
suspended from the CAP as described in Sec. 414.916(b)(3).
Physicians whose participation in the CAP has been suspended are
not eligible to receive CAP drugs. This is implied in Sec.
414.906(a)(4), which speaks of approved CAP vendors providing CAP drugs
directly to ``[a] participating CAP physician.'' However, we believe
that the clarity of our dispute resolution regulations would be
improved if this drug delivery issue were stated explicitly. Therefore,
in the CY 2009 PFS proposed rule, we proposed to revise Sec. 414.916
to specify that approved CAP vendors shall not deliver CAP drugs to
participating CAP physicians whose participation in the CAP has been
suspended after an initial determination by CMS. The proposal also
applied to physicians engaged in the reconsideration process outlined
in Sec. 414.916(c) and included a conforming change at Sec.
414.914(f)(12). We believed that these changes were in accord with the
underlying intent of Sec. 414.916, namely to provide a mechanism for
approved CAP vendors to address noncompliance problems with
participating CAP physicians, and we believe that these changes will
increase the clarity of our regulations. We also noted that the
participating CAP physicians who are suspended from participation in
the CAP will be able to obtain drugs and bill for them under the ASP
payment system provided they have not been excluded from participation
in Medicare and/or their billing privileges have not been revoked.
Comments submitted in response to the CY 2009 PFS proposed rule
agreed with our proposal. Though we did not finalize this proposal due
to the 2009 CAP postponement, we received no comments from the public
in response to our request for feedback during the CAP 2009
postponement. Based on positive public feedback and our continued
belief that the clarity of our dispute resolution regulations would be
improved by being explicit about this issue, we reproposed to revise
Sec. 414.916 to specify that approved CAP vendors shall not deliver
CAP drugs to participating CAP physicians whose participation in the
CAP has been suspended after an initial determination by CMS. This
suspension in drug shipment would also apply to physicians engaged in
the reconsideration process outlined in Sec. 414.916(c). We have also
proposed a conforming change to Sec. 414.914(f)(12). Physicians who
are suspended from participation in the CAP will be able to obtain
drugs and bill for them under the ASP payment system provided they have
not been excluded from participation in Medicare and/or their billing
privileges have not been revoked.
Comment: We received comments that both supported and opposed this
proposal. One commenter supported this approach. Another commenter
questioned the sufficiency of our procedures and indicated that the
suspension of CAP drug shipments to a physician should not be
implemented after an initial determination by CMS, but rather only
after a final decision on reconsideration has been made.
Response: We disagree with the comment about the sufficiency of our
dispute resolution procedures. We believe that in light of the very
limited grounds for which a participating CAP physician may be
suspended, the protections afforded under Sec. 414.916(b)(3) prior to
CMS's initial decision to suspend the physician from the CAP are
sufficient. Indeed, a participating CAP physician may be suspended from
the CAP only upon CMS approval after: information is collected and
analyzed by the carrier on the issue of whether the participating CAP
physician has been filing his or her CAP drug administration claims in
accordance with the requirements of Sec. 414.908(a)(3), the designated
carrier provides numbered findings of fact to CMS, and CMS reviews the
carrier's information and gathers relevant additional information from
the participating CAP physician. These procedures allow a participating
CAP physician to be actively involved in the dispute resolution process
prior to CMS's decision to suspend the CAP election agreement. For
these reasons, we believe that appropriate initial mechanisms are in
place to protect the physician's access to drugs under the CAP.
Furthermore, physicians who are suspended from participation in the
CAP and to whom the approved CAP vendor has ceased shipments of CAP
drugs are able to obtain drugs and bill for them under the ASP payment
system. Thus, these physicians will have continuous access to Part B
drugs. Finally, because a participating CAP physician's failure to
comply with regulations at Sec. 414.908(a)(2) can negatively affect
the approved CAP vendor's ability to receive payment for CAP drugs that
it shipped to the physician, we believe that suspending shipment of CAP
drugs upon CMS's initial determination of suspension of the CAP
physician election agreement appropriately balances the needs of the
participating CAP physician and those of the approved CAP vendor. For
the foregoing reasons, at this time, we are finalizing our proposal
that approved CAP vendors shall not ship CAP drugs to physicians whose
participation in the CAP has been suspended after an initial
determination by CMS.

I. Provisions Related to Payment for Renal Dialysis Services Furnished
by End-Stage Renal Disease (ESRD) Facilities

In the CY 2010 PFS proposed rule (74 FR 33634 through 33639), we
outlined the proposed updates to the case-mix adjusted composite rate
payment system established under section 1881(b)(12) of the Act, as
added by section 623 of the Medicare Modernization Act (MMA), which
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

[[Page 61922]]

the composite rate. Specifically, as described in more detail below in
this section, we proposed the following:
A zero growth update to the proposed 15.0 add-on
adjustment to the composite rates for 2010 required by section
1881(b)(12)(F) of the Act (resulting in a $20.33 per treatment drug
add-on amount).
An update to the wage index adjustment to reflect the
latest available wage data, including a revised BN adjustment factor of
1.057888.
A reduction to the ESRD wage index floor from 0.7000 to
0.6500.
We received few public comments on our proposals. The ESRD payment
related comments are discussed in detail below in this section. In
addition, as discussed in section II.G.12. of this rule, section
1881(b)(12)(G)(iv) of the Act, as added by section 153(a)(1) of the
MIPPA, increases the composite rate by 1.0 percent for ESRD services
furnished on or after January 1, 2010. Therefore, the 1.0 percent
increases the current composite rate of $133.81 to $135.15 for services
furnished on or after January 1, 2010.
1. Update to the Drug Add-on Adjustment to the Composite Rate
Section 1881(b)(12)(B)(ii) of the Act, as added by section 623(d)
of the MMA, requires an add-on to the composite rate to account for
changes in the drug payment methodology. 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 Average Wholesale Price (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
Average Sales Price (ASP) pricing for ESRD drugs, we recalculated the
difference from AWP pricing using ASP prices.
In addition, section 1881(b)(12)(F) of the Act requires that,
beginning in CY 2006, we establish an annual increase to the drug add-
on to reflect 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 2009 drug add-on adjustment to the composite
rate was 15.2 percent. The drug add-on adjustment for CY 2009 reflected
a zero increase. This computation is explained in detail below and in
the CY 2009 PFS final rule with comment period (73 FR 69755 through
69757).
a. Estimating Growth in Expenditures for Drugs and Biologicals for CY
2010
Section 1881(b)(12)(F) of the Act specifies that the drug add-on
increase must reflect ``the estimated growth in expenditures for drugs
and biologicals (including erythropoietin) that are separately billable
* * *'' By referring to ``expenditures'', we believe the statute
contemplates that the update would account for both increases in drug
prices, as well as increases in utilization of those drugs.
In the CY 2007 PFS final rule with comment period (71 FR 69682), we
established an interim methodology for annually estimating the growth
in ESRD drugs and biological expenditures that used 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. We indicated that this interim methodology would be
used to update the drug add-on to the composite rate until such time
that we had sufficient ASP drug expenditure data to project the growth
in ESRD drug expenditures.
However, for CY 2008, due to declining ASP prices, we no longer
believed that using the PPI as a proxy for pricing growth was
appropriate. Accordingly, for CY 2009, we revised the interim
methodology for estimating the growth in ESRD drug expenditures by
using ASP pricing to estimate the price component of the update
calculation. Due to the declining trend in ASP pricing and utilization,
we calculated a decrease in the drug add-on adjustment, and applied a
zero update to the drug add-on adjustment (73 FR 69755 through 69757).
b. Estimating Growth in Expenditures for Drugs and Biologicals in CY
2010
Since we now have 3 years of drug expenditure data based on ASP
pricing, we have reevaluated our methodology for estimating growth in
drug expenditures. We believe that 3 years of drug expenditure data
based on ASP pricing is sufficient to project drug expenditure growth
based on trend analysis. Therefore, for CY 2010, we proposed to use
trend analysis from ASP drug expenditure data to update the per
treatment drug add-on adjustment (74 FR 33636).
In addition, we proposed to estimate per patient growth in drug
expenditures by removing growth in ESRD enrollment from growth in total
drug expenditures. To estimate drug expenditure growth using trend
analysis, we looked at the average annual growth in total drug
expenditures between 2006 and 2008. First we had to estimate the total
drug expenditures for all ESRD facilities in CY 2008. For the CY 2010
PFS proposed rule, we used the final CY 2006, the final CY 2007 ESRD
claims data, and the latest available CY 2008 ESRD facility claims,
updated through December 31, 2008 (that is, claims with dates of
service from January 1 through December 31, 2008, that were received,
processed, paid, and passed to the National Claims History File as of
December 31, 2008). For the CY 2010 PFS proposed rule, we adjusted the
December 2008 file to reflect our estimate of what total drug
expenditures would be using the final June 30, 2009 bill file for CY
2008 (74 FR 33636). The net adjustment we applied to the CY 2008 claims
data was an increase of 11.1 percent to the December 2008 claims file.
In this final rule with comment period, we are using additional updated
CY 2008 claims with dates of service for the same timeframe. This
updated CY 2008 data file will include claims received, processed,
paid, and passed to the National Claims History File as of June 30,
2009.
Using the full-year 2008 drug expenditure figure, we calculated the
average annual change in drug expenditures from 2006 through 2008. This
average annual change showed a decrease of 1.7 percent for this
timeframe. We are using this 1.7 percent decrease to project drug
expenditures for both 2009 and 2010.
c. Estimating per Patient Growth
Once we determined the projected growth in drug expenditures from
2009 to 2010, we then removed growth in enrollment for the same time
period from the expenditure growth, so that the residual reflects per
patient expenditure growth (which includes price and utilization
combined). We believe that this approach is consistent with section
1881(b)(12)(F) of the Act, which requires us to annually update the
drug add-on adjustment. To calculate the per patient growth in drug
expenditures between CYs 2009 and 2010, we removed the enrollment
component which represents the estimated growth in enrollment between
CY 2009 and CY 2010. This was approximately 1.9 percent. To determine
the growth in per patient expenditures, we divided the total drug
expenditure decrease between 2009 and 2010 of 1.7 percent (1.000-0.017
= 0.983) by enrollment growth of 1.9 percent (1.019) for the same
timeframe. The result is a per patient expenditure growth factor equal
to 0.965 (0.983/1.019 = 0.965). Thus, we

[[Page 61923]]

are projecting a 3.5 percent decrease in per patient growth in drug
expenditures between 2009 and 2010 (0.965 = 1.000-0.035).
d. Applying the Growth Update to the Drug Add-On Adjustment
In the CY 2006 PFS final rule (71 FR 69683), we applied the
projected growth update percentage to the total amount of drug add-on
dollars established for CY 2005 to establish a dollar amount for the CY
2006 growth update. In addition, we projected the growth in dialysis
treatments for CY 2006 based on the projected growth in ESRD
enrollment. We divided the projected total dollar amount of the CY 2006
growth by the projected growth in total dialysis treatments to develop
the per treatment growth update amount. This growth update amount,
combined with the CY 2005 per treatment drug add-on amount, resulted in
an average drug add-on amount per treatment of $18.88 (or a 14.5
percent adjustment to the composite rate) for CY 2006.
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.
In the CY 2008 PFS final rule with comment period (72 FR 66282), we
revised our update methodology by applying the growth update to the per
treatment drug add-on amount. That is, for CY 2008, we applied the
growth update factor of 3.5 percent to the $19.64 per treatment drug
add-on amount for an updated amount of $20.33 per treatment.
In the CY 2009 PFS final rule with comment period (73 FR 69755
through 69757), we applied a zero update to the per treatment drug add-
on amount which left it at $20.33. As discussed in detail below, for CY
2010, we again will apply a zero update to the per treatment drug add-
on amount of $20.33 established in CY 2008.
e. Update to the Drug Add-on Adjustment
As discussed previously in this section, we estimate a 1.7 percent
decrease in total drug expenditures between CY 2009 and CY 2010. Growth
in per patient drug expenditures is computed by dividing growth in
total drug expenditures by growth in enrollment for the same time
period. Therefore, to calculate growth in per patient drug
expenditures, we remove the enrollment component, which is an estimated
increase of 1.9 percent (1.019) from growth in total drug expenditures,
which is an estimated decrease of 1.7 percent (1.000-1.017 = 0.983). As
described above, the removal of the enrollment component from total
drug expenditures is computed as follows: 0.983/1.019 = 0.965.
Therefore, we are projecting a 3.5 percent decrease in per patient
growth of drug expenditures between CY 2009 and CY 2010. However,
similar to last year and as indicated above, we are finalizing a zero
update to the drug add-on adjustment.
We believe this approach is consistent with the language under
section 1881(b)(12)(F) of the Act which states in part that ``the
Secretary shall annually increase'' the basic case-mix adjusted payment
amounts by an amount determined by applying the estimated growth in
expenditures for separately billed ESRD drugs for the drug add-on
amount. Our understanding of the statute contemplates ``annually
increase'' to mean a positive or zero update to the drug add-on.
Therefore, we will apply a zero update to maintain the $20.33 per
treatment drug add-on amount for CY 2010. The current $20.33 per
treatment drug add-on reflected a 15.2 percent drug add-on adjustment
to the composite rate in effect for CY 2009. However, given that the
MIPPA mandates a 1 percent increase to the composite rate (effective
January 1, 2010), this 1 percent increase results in a decrease in the
CY 2009 drug add-on adjustment from 15.2 percent to 15.0 percent to
keep the drug add-on amount at $20.33 per treatment.
Comment: Many commenters agreed with our decision to continue to
use the ASP+6 percent methodology for separately billable drugs. The
commenters indicated that the ASP+6 percent methodology is appropriate
since the drugs will be reimbursed at the same amount as they would
when furnished in a physician office.
Response: Although we did not propose any changes to reimbursement
for separately billiable ESRD drugs and biologicals, we appreciate the
commenters' support of our use of the ASP+6 percent methodology.
Comment: The commenters also agreed with our decision to continue
with a zero update to the drug add-on adjustment. MedPAC stated that
although it recognizes the elimination of the drug add-on payment will
occur beginning January 1, 2011, MedPAC believes that the composite
payment rate and the drug add-on should be combined because the add-on
payment is complex and may not be the most appropriate way to pay for
dialysis services
Response: We appreciate the commenter's support that we continue
with a zero update to the drug add-on adjustment. As we explained
above, we are finalizing our proposal to provide a zero update to the
drug add-on adjustment for CY 2010. With regard to MedPAC's
suggestions, under the proposed bundled ESRD prospective payment system
(PPS) effective in CY 2011, the drug add-on adjustment will be
eliminated for ESRD providers and facilities that opt to be paid under
the proposed ESRD PPS system beginning in CY 2011 (and not go through
the 4-year transition). However, we note that under the proposed ESRD
PPS, we will continue to update the drug add-on adjustment during the
transition period. For further details regarding the proposed ESRD PPS,
please refer to the Medicare End-State Renal Disease Prospective
Payment System Proposed Rule (74 FR 50003 to 50005).
f. Update to the Geographic Adjustments to the Composite Rate
Section 1881(b)(12)(D) of the Act, as amended by section 623(d) of
the MMA, gives the Secretary the authority to revise the wage indexes
previously applied to the ESRD composite rate. 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. The wage
indexes are calculated for each urban and rural area. In the CY 2006
PFS final rule with comment period (70 FR 70167), we announced our
adoption of the OMB CBSA-based geographic area designations to develop
revised urban/rural definitions and corresponding wage index values for
purposes of calculating ESRD composite rates. In addition, we generally
have followed wage index policies related to these definitions used
under the inpatient hospital prospective payment system (IPPS), but
without regard to any approved geographic reclassification authorized
under sections 1886(d)(8) and (d)(10) of the Act or other provisions
that only apply to hospitals paid under the IPPS (70 FR 70167). For
purposes of the ESRD wage index methodology, the hospital wage data we
use is pre-classified, pre-floor hospital data and unadjusted for
occupational mix.
g. Updates to Core-Based Statistical Area (CBSA) Definitions
In the CY 2006 PFS final rule with comment period (70 FR 70167), we
announced our adoption of the OMB's CBSA-based geographic area

[[Page 61924]]

designations to develop revised urban/rural definitions and
corresponding wage index values for purposes of calculating ESRD
composite rates. The CBSA-based geographic area designations are
described in OMB Bulletin 03-04, originally issued June 6, 2003, and is
available online at http://www.whitehouse.gov/omb/bulletins/b03-04.html. In addition, OMB has published subsequent bulletins regarding
CBSA changes, including changes in CBSA numbers and titles. We wish to
point out 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 index used to determine
the current ESRD wage index. The OMB bulletins may be accessed online
at http://www.whitehouse.gov/omb/bulletins/index.html.
h. Updated Wage Index Values
In the CY 2007 PFS final rule with comment period (71 FR 69685), we
stated that we intended to update the ESRD wage index values annually.
The ESRD final wage index values for CY 2010 were developed from FY
2006 wage and employment data obtained from the Medicare hospital cost
reports. As we indicated above, the ESRD wage index values are
calculated without regard to geographic classifications 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 2010, using FY 2006 hospital data to
develop the CY 2010 ESRD wage index values. For a detailed description
of the development of the CY 2010 wage index values based on FY 2006
hospital data, see the FY 2010 IPPS final rule with comment period (74
FR 43834). Section III.G. of the preamble to the FY 2010 IPPS final
rule with comment period, ``Method for Computing the Proposed FY 2010
Unadjusted Wage Index'', describes the cost report schedules, line
items, data elements, adjustments, and wage index computations. The
wage index data affecting the ESRD composite rate 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 2010 Final Rule Occupational Mix
Adjusted and Unadjusted Average Hourly Wage and Pre-reclassified Wage
Index by CBSA.''
In the CY 2009 final rule with comment period (73 FR 69758 and
69759), we indicated that CY 2009 was the final year of the transition
period and each ESRD facility's composite payment rate would be based
entirely on its applicable CBSA-based wage index value.
i. Reduction to the ESRD Wage Index Floor
In the CY 2009 PFS final rule with comment period, we stated our
intention to continue to reassess the need for a wage index floor (73
FR 63758). We also stated that a gradual reduction in the floor is
needed to support continuing patient access to dialysis in areas that
have low wage index values, especially in Puerto Rico where the wage
index values are below the current wage index floor. For CY 2010, we
proposed to reduce the wage index floor from 0.70 to 0.65. We also
anticipate that we may reduce the floor gradually until full
implementation of the ESRD PPS required by section 1881(b)(14) of the
Act.
Comment: We received comments from commenters in both Puerto Rico
and Wheeling, WV-OH CBSA expressing concern about the reduction to the
wage index floor.
Response: The majority of facilities located in Puerto Rico have
wage indices significantly below the 0.65 floor. The steady reduction
in the proposed ESRD wage index floor of 0.65 still remains higher than
the actual wage index values which range from 0.3348 to 0.4740 for
facilities located in Puerto Rico. Although a reduction in the wage
index floor may negatively impact these providers, these facilities
still benefit from a 0.65 floor rather than their actual wage index
value.
There are 2 facilities located in Wheeling, WV-OH CBSA, which have
an actual wage index value of 0.6869 and is above the proposed 0.65
floor, but not significantly below the CY 2009 0.70 floor. We note that
the CY 2010 wage index value of 0.6869 for the Wheeling, WV-OH CBSA is
prior to application of the wage index BN factor. After application of
the wage index BN factor of 1.057735, the wage index value for
Wheeling, WV-OH CBSA is 0.7266.
Comment: One commenter noted that the ESRD facilities in the
Wheeling WV-OH CBSA have a wage index value that is less than the wage
index value for rural WV. The commenter requested that CMS apply the
rural floor policy that is applicable under the Hospital IPPS.
Response: Under the ESRD basic case-mix adjusted composite payment
system, currently there is no mechanism for allowing providers to seek
geographic reclassification. We reviewed the MedPAC's wage index
recommendations as discussed in MedPAC's June 2007 report entitled
``Report to Congress: Promoting Greater Efficiency in Medicare.'' We
note that MedPAC's June 2007 Report to Congress recommends that the
Congress ``repeal the existing hospital wage index statute, including
reclassification and exceptions, and give the Secretary authority to
establish new wage index systems.'' We believe that adopting the IPPS
wage index policies (such as the rural floor) for the ESRD wage index
would not be prudent at this time, because MedPAC suggests that the
reclassification and exception policies in the IPPS wage index alters
the wage index values for one-third of IPPS hospitals. In addition,
MedPAC found that the exceptions may lead to anomalies in the wage
index. By adopting the IPPS rural floor at this time, the ESRD basic
case-mix adjusted composite payment system wage index could become
vulnerable to problems similar to those that MedPAC identified in their
June 2007 Report to Congress. We will continue to review and consider
MedPAC's recommendations on a refined or alternative wage index
methodology for the IPPS and how it could potentially apply to the ESRD
basic case-mix adjusted composite rate system in future years.
We also note that section 106(b)(2) of the Medicare Improvements
and Extension Act (MIEA) of 2006 (which is Division B of the Tax Relief
and Health Care Act (TRCHA) of 2006, Pub. L. 109-432, collectively
referred to as ``MIEA-TRHCA'') required the Secretary of Health and
Human Services, taking into account MedPAC's recommendations on the
Medicare wage index classification system, to include in the FY 2009
IPPS proposed rule one or more proposals to revise the wage index
adjustment applied under section 1886(d)(3)(E) of the Act for purposes
of the IPPS. To assist CMS in meeting the requirements of section
106(b)(2) of MIEA-TRHCA, in February 2008, we awarded a Task Order
under its Expedited Research and Demonstration Contract, to Acumen,
LLC. Acumen, LLC conducted a study of both the current methodology used
to construct the Medicare wage index and the recommendations reported
to the Congress by MedPAC. Part One of Acumen's final report, which
analyzes the strengths and weaknesses of the data sources used to
construct the CMS and MedPAC indexes, is available online at http://www.acumenllc.com/reports/cms. MedPAC's recommendations are presented
in the FY 2009 IPPS final rule (73 FR 48745). We plan to continue
monitoring IPPS wage index research efforts and the impact or influence
these

[[Page 61925]]

efforts may have for the ESRD basic case-mix adjusted composite payment
rate system wage index.
Moreover, in light of all of the pending research and review of
wage index issues in general, we believe that it would be premature at
this time to adopt the IPPS rural floor policy to the ESRD wage index.
j. 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 are no hospital wage data from which to calculate
ESRD wage index values. The affected areas were rural Puerto Rico, and
the urban area of Hinesville, GA (CBSA 25980), and rural Massachusetts.
For CY 2006, CY 2007, CY 2008, and CY 2009, we calculated the ESRD wage
index values for those areas as follows:
For the urban area of Hinesville, GA, we calculated the CY
2006 through CY 2009 wage index value based on the average wage index
value for all urban areas within the State of Georgia.
For rural Massachusetts, because we had not determined a
reasonable wage proxy, we used the FY 2005 wage index value in CY 2006
and CY 2007. As discussed below, we adopted an alternative methodology
for CYs 2008 and 2009.
For rural Puerto Rico, because all geographic areas in
Puerto Rico were subject to the wage index floor in CYs 2006 through
2009, we applied the ESRD wage index floor to rural Puerto Rico as
well. We note that there are currently no ESRD facilities located in
rural Puerto Rico.
For CY 2008, we adopted an alternative methodology for establishing
a wage index value for rural Massachusetts and continued to apply this
methodology in CY 2009. Because we used the same wage index value for 2
years with no update, we believed it was appropriate to establish a
methodology which employed reasonable proxy data for rural areas
(including rural Massachusetts) and also permitted annual updates to
the wage index based on that proxy data. For rural areas without
hospital wage data, we used the average wage index values from all
contiguous CBSAs as a reasonable proxy for that rural area.
In determining the imputed rural wage index, we interpreted 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 CBSA 12700, Barnstable Town, MA, and CBSA
39300, Providence-New Bedford-Fall River, RI-MA. We proposed to use the
same methodology for CY 2010. Under this methodology, the CY 2010 final
wage index values for CBSA 12700 (Barnstable Town, MA--1.2618) and CBSA
39300 (Providence-New Bedford-Fall River, RI-MA--1.0782) averages
results in an imputed wage index value of 1.1700 for rural
Massachusetts in CY 2010.
For rural Puerto Rico, for CY 2010, all areas in Puerto Rico that
have a wage index are eligible for the proposed ESRD wage index floor
of 0.65. Therefore, we proposed to apply the proposed ESRD wage index
floor of 0.65 to facilities that are located in rural Puerto Rico.
For Hinesville-Fort Stewart, GA (CBSA 25980), which is an urban
area without specific hospital wage data, we proposed to apply the same
methodology used to impute a wage index value that we used in CY 2009.
Specifically, we proposed to utilize the average wage index value for
all urban areas within the State of Georgia. That would result in a CY
2010 final wage index value of 0.9028 for the Hinesville-Fort Stewart
GA CBSA.
We received no comments on our proposals for wage areas with no
hospital data. Therefore, we are finalizing our policies for wage areas
with no hospital data as proposed.
In the CY 2009 PFS final rule with comment period (73 FR 69759
through 69760), we stated 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
might be appropriate for imputing wage index values for areas without
hospital wage data for CY 2010 and subsequent years. To date, no data
from other sources, superior to that currently used in connection with
the IPPS wage index has emerged. Therefore, for ESRD purposes, we
continue to believe this is an appropriate policy.
k. Budget Neutrality Adjustment
Section 1881(b)(12)(E)(i) of the Act, as added by section 623(d) of
the MMA, required 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. Given our application
of the ESRD wage index, this means that aggregate payments to ESRD
facilities in CY 2010 would 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 required by the MMA. As we did
not propose any changes to the case-mix measures for CY 2010, the
current case-mix BN adjustment of 0.9116 would remain in effect for CY
2010. As in CY 2009, for CY 2010, we proposed to apply the proposed
wage-index BN adjustment factor of 1.057888 directly to the ESRD wage
index values. Because the ESRD wage index is only applied to the labor-
related portion of the composite rate, we computed the BN adjustment
factor based on that proportion (53.711 percent).
To compute the proposed CY 2010 wage index BN adjustment factor
(1.057888), we used the FY 2006 pre-floor, pre-reclassified, non-
occupational mix-adjusted hospital data to compute the wage index
values, 2008 outpatient claims (paid and processed as of December 31,
2008), and geographic location information for each facility which may
be found through Dialysis Facility Compare Web page on the CMS Web site
at http://www.cms.hhs.gov/DialysisFacilityCompare/. The FY 2006
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 2010 Final Rule Occupational Mix Adjusted and
Unadjusted Average Hourly Wage and Pre-Reclassified Wage Index by
CBSA.''
Using treatment counts from the 2008 claims and facility-specific
CY 2009 composite rates, we computed the estimated total dollar amount
each ESRD provider would have received in CY 2009. The total of these
payments became the target amount of expenditures for all ESRD
facilities for CY 2010. Next, we computed the estimated dollar amount
that would have been paid for the same ESRD facilities using the ESRD
wage index for CY 2010. The total of these payments became the new CY
2010 amount of wage-adjusted composite rate expenditures for all ESRD
facilities. Section 153(a) of the MIPPA revised section 1881(b)(12)(G)
of the Act to provide for an update of 1 percent to the composite rate
component of the payment system effective January 1, 2010. We note that
when computing the new CY 2010 amount, we did not include this 1
percent increase because the BN adjustment would negate the increase.
After comparing these two dollar amounts (target amount divided by
the new CY 2010 amount), we calculated an

[[Page 61926]]

adjustment factor that, when multiplied by the applicable CY 2010 ESRD
wage index value, would result in aggregate payments to ESRD facilities
that would remain within the target amount of composite rate
expenditures. When making this calculation, the final ESRD wage index
floor value of 0.6500 is applied whenever appropriate. The final wage
BN adjustment factor is 1.057735 for CY 2010.
To ensure BN, we also must apply the wage index BN adjustment
factor to the wage index floor of 0.6500 which results in an adjusted
wage index floor of 0.6875 (0.6500 x 1.057735) for CY 2010.
General Comments
Comment: One commenter supports our proposal to maintain the
existing case-mix adjusters and believes it will be important to
maintain consistency in the current composite rate by preserving the
current case-mix adjustors, given the anticipated shift to a bundled
payment system.
Response: As explained earlier in this section, we did not propose
any changes to the current basic case-mix composite rate payment
system. We have maintained the current basic case-mix adjusters for CY
2010. We have proposed a number of patient-level adjusters in the new
bundled ESRD PPS system, which are explained in detail in the ESRD PPS
proposed rule (74 FR 49925 and 49926).
l. ESRD Wage Index Tables
The CY 2010 ESRD wage index tables are located in Addenda F and G
of this final rule with comment period.

J. Discussion of Chiropractic Services Demonstration

1. Background
Section 651 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173) requires the
Secretary to conduct a 2-year demonstration to evaluate the feasibility
and advisability of expanding coverage for chiropractic services under
Medicare. Medicare coverage for chiropractic services is limited to
manual manipulation of the spine to correct a subluxation described in
section 1861(r)(5) of the Act. The demonstration expanded current
Medicare coverage to include ``care for neuromusculoskeletal conditions
typical among eligible beneficiaries and diagnostic and other services
that a chiropractor is legally authorized to perform by the State or
jurisdiction in which such treatment is provided'' and was conducted in
four geographically diverse sites, two rural and two urban regions,
with each type including a Health Professional Shortage Area (HPSA).
The two urban sites were 26 counties in Illinois and Scott County,
Iowa, and 17 counties in Virginia. The two rural sites were the States
of Maine and New Mexico. The demonstration, which ended on March 31,
2007, was required to be budget neutral as section 651(f)(1)(B) of the
MMA mandates the Secretary to ensure that ``the aggregate payments made
by the Secretary under the Medicare program do not exceed the amount
which the Secretary would have paid under the Medicare program if the
demonstration projects under this section were not implemented.''
In the CY 2006, 2007, and 2008 PFS final rules with comment period
(70 FR 70266, 71 FR 69707, 72 FR 66325, respectively), we included a
discussion of the strategy that would be used to assess BN and the
method for adjusting chiropractor fees in the event the demonstration
results in costs higher than those that would occur in the absence of
the demonstration. We stated BN would be assessed by determining the
change in costs based on a pre-post comparison of Medicare costs for
beneficiaries in the demonstration and their counterparts in the
control groups and the rate of change for specific diagnoses that are
treated by chiropractors and physicians in the demonstration sites and
control sites. We also stated that our analysis would not be limited to
only review of chiropractor claims because the costs of the expanded
chiropractor services may have an impact on other Medicare costs. If
the demonstration was not budget neutral, we anticipated making
reductions in the CY 2010 and CY 2011 physician fee schedules. We
indicated that if we determined that the adjustment for BN was greater
than 2 percent of spending for the chiropractor fee schedule codes, we
would implement the adjustment over a 2-year period. However, if the
adjustment was less than 2 percent of spending under the chiropractor
fee schedule codes, we would implement the adjustment over a 1-year
period.
2. Analysis of Demonstration
Brandeis University, the demonstration evaluator, used two
approaches in examining BN. The ``All Neuromusculoskeletal Analysis
(NMS)'' reflects an intent-to-treat approach whereby the utilization of
all beneficiaries who received any Medicare covered services for
neuromusculoskeletal conditions in the demonstration areas was
examined. This method is potentially subject to large external forces
because of its inclusion of all beneficiaries including those who did
not use chiropractic services and who would not become users of
chiropractic services, even with expanded coverage for them. Therefore,
a second analysis, termed the ``Chiropractic User Analysis'' was
conducted to examine only the subset of beneficiaries who used
chiropractic services for the treatment of their neuromusculoskeletal
conditions. Both approaches use hierarchical linear modeling of costs
over 3 years--1 year prior to the demonstration and the 2 years of the
demonstration. We posted a report describing these analyses on CMS Web
site at http://www.cms.hhs.gov/reports/downloads/MMA651_BudgetNeutrality.pdf.
The results of both analyses indicate that the demonstration was
not budget neutral. In the ``All NMS Analysis,'' which compared the
Medicare costs associated with NMS conditions for all beneficiaries in
the demonstration areas with those of beneficiaries with similar
characteristics from similar geographic areas that did not participate
in the demonstration, the total effect of the demonstration to Medicare
was $114 million. In the ``Chiropractic User Analysis,'' which compared
the Medicare costs associated with NMS conditions for beneficiaries who
used expanded chiropractic services in the demonstration areas, with
those of beneficiaries with similar characteristics who used
chiropractic services as currently covered by Medicare to treat a
neuromusculoskeletal condition from similar geographic areas that did
not participate in the demonstration, the total effect of the
demonstration to Medicare was $50 million.
Both approaches to assessing BN have strengths and limitations. The
``All NMS Analysis'' provides the broadest view of the Medicare
population that would have been eligible for the demonstration's
expanded coverage of chiropractic services. Its inclusion of all
beneficiaries with neuromusculoskeletal conditions guards against
validity threats of selection. However, this approach creates a large
heterogeneous group which may only include a small proportion of
chiropractic service users. Basing estimates of BN on such a large
heterogeneous group increases the potential for changes in the use of
services seldom affected by chiropractors to be falsely attributed to
the demonstration, which could result in the costs of the demonstration
to appear larger than actual.
Consistent with the CY 2010 PFS proposed rule (74 FR 33520, 33639
through 33640), for this final rule with comment period, we continue to
believe

[[Page 61927]]

that the BN estimate should be based on the ``Chiropractic User
Analysis'' because of its focus on users of chiropractic services
rather than all Medicare beneficiaries with neuromusculoskeletal
conditions, including those who did not use chiropractic services and
who would not have become users of chiropractic services even with
expanded coverage for them. Users of chiropractic services are most
likely to have been affected by the expanded coverage provided by this
demonstration. Cost increases and offsets, such as reductions in
hospitalizations or other types of ambulatory care, are more likely to
be observed in this group. Therefore, as proposed, we are adjusting the
Medicare PFS for all chiropractors using the estimate provided in the
``Chiropractic User Analysis.''
The CMS Office of the Actuary (OACT) estimates chiropractic
expenditures in CY 2010 to be approximately $487 million based on
actual Medicare spending for chiropractic services for the most recent
available year. Because the costs of this demonstration were higher
than expected and we did not anticipate a reduction to the PFS of
greater than 2 percent per year, we are finalizing our proposal (74 FR
33639 through 33640) to recoup the $50 million in expenditures from
this demonstration over a 5-year period rather than over a 2-year
period. As proposed, we are recouping $10 million each year through
adjustments to the PFS for chiropractic codes in calendar years 2010
through 2014. This approach reflects a change from our BN discussion in
the CY 2006, 2007, and 2008 PFS rules, which was described previously
in this section. In those rules, we had proposed that if the adjustment
for BN was greater than 2 percent of spending for the chiropractor fee
schedule codes, the adjustment would be implemented over a 2-year
period. Under this final rule, we are recouping costs by reducing
payment under the PFS for chiropractic fee codes by $10 million each
year starting CY 2010 through CY 2014. We note that in the proposed
rule, we proposed a 2 percent reduction in the chiropractic fee codes
in order to achieve the $10 million yearly recoupment. We note that 2
percent was an approximation. Because of rounding, the $10 million
recoupment in each of CYs 2010 through 2014 will amount to
approximately a 2 percent reduction since the reduction in the
chiropractic fee codes may be slightly higher or lower than 2 percent,
depending on OACT's estimate of chiropractic expenditures for that
calendar year. In order to reflect this fact, we are refining the
language in this final rule to indicate that the chiropractic fee codes
will be reduced by approximately 2 percent for CYs 2010 through 2014.
Additionally, we believe that spreading this adjustment over a longer
period of time will minimize its potential negative impact on
chiropractic practices.
3. Payment Adjustment
To implement the required BN adjustment, as was proposed (74 FR
33640), we are reducing the payment amount under the PFS for the
chiropractic CPT codes (that is, CPT codes 98940, 98941, and 98942). As
explained previously, we are finalizing our plans to recoup $10 million
each year through adjustments to chiropractic CPT codes for calendar
years 2010 through 2014. In order to achieve the $10 million recoupment
during such years, payment under the PFS for these codes will be
reduced by approximately 2 percent. As stated in prior PFS rules,
application of the BN adjustment would be specific to these three codes
which represent the ``chiropractic fee schedule'' because they are the
only chiropractic codes recognized under the PFS. This methodology also
appropriately impacts the chiropractic profession that is directly
affected by the demonstration. Consistent with the proposed rule, for
this final rule with comment period, we are reflecting this reduction
only in the payment files used by the Medicare contractors to process
Medicare claims rather than through adjusting the RVUs. Avoiding an
adjustment to the RVUs would preserve the integrity of the PFS,
particularly since many private payers also base payment on the RVUs.
The RVUs published in Addendum B and posted on our Web site will not
show this reduction but will be annotated to state that the reduction
resulting from the chiropractic demonstration is not reflected in the
RVUs.
We received the following comments regarding the methodology used
to evaluate BN in the chiropractic services demonstration.
Comment: Instead of the application of an adjustment to the
national chiropractor fee schedule, the commenter believes the
Congressional intent was for CMS to make an adjustment to the totality
of services payable under the Part B Trust Fund because of the language
in section 651(f)(A) of the MMA, which directs the Secretary to
``provide for the transfer from the Federal Supplementary Insurance
Trust Fund * * * of such funds as are necessary for the costs of
carrying out the demonstration projects under this section.''
Response: We disagree that the intent of section 651 of the MMA
requires the application of a BN adjustment to the totality of services
payable under the Part B Trust Fund. Specifically, section 651(f)(1)(B)
of the MMA requires the Secretary to ``ensure that the aggregate
payments made by the Secretary under the medicare program do not exceed
the amount which the Secretary would have paid under the medicare
program if the demonstration projects under this section were not
implemented.'' This statutory provision does not specify a particular
methodology for ensuring BN, but leaves that decision to the Secretary.
Additionally, section 651(f)(1)(A) of the MMA, in pertinent part,
provides that ``the Secretary shall provide for the transfer from the
Federal Supplementary Insurance Trust Fund * * * of such funds as are
necessary for the costs of carrying out the demonstration projects
under this section.'' This provision merely indicates that payment for
the demonstration is to be made from Part B Trust Fund dollars. Section
651(f)(1)(A) of the MMA does not specify in any manner the methodology
by which the Secretary is to ensure BN. Consequently, we do not believe
it is a mandate requiring the application of an adjustment to the
totality of services payable under the Part B Trust Fund.
Comment: The commenter states that more information is necessary to
fully understand the findings provided by the evaluator, Brandeis
University. The commenter noted that the increase in costs from the
demonstration was completely due to the Illinois site, and not the
other sites, and that it is ``premature to use demonstration findings
to estimate the cost of a national roll out * * * without further
investigation of why the Chicago area is such an outlier.'' The
commenter also asks how the increase in costs for all
neuromusculoskeletal conditions could be causally related to the
demonstration project.
Response: Regardless of the differences in the demonstration areas,
the evaluation conducted by Brandeis University found that expanding
coverage for chiropractic services under the demonstration resulted in
increased Medicare expenditures, and the Secretary must recoup these
costs in order to meet the BN requirement of the law. The decision to
recoup funds is related to the results of the demonstration and the
requirement in the law and not to the discussion in the

[[Page 61928]]

evaluation report of the costs of a national expansion of coverage.
With respect to the comment questioning how the increase in costs
for all NMS conditions could be causally related to the demonstration,
we are unsure of what the commenter is asking. If the commenter is
asking if Medicare costs associated with all neuromusculoskeletal
conditions were used in the evaluation, the response is no, only costs
for specific NMS diagnoses that can be treated by chiropractors were
included in the evaluation. If the commenter is asking for the
rationale for the ``All NMS'' analysis, the response is that this
analysis provides a broader view of all of the beneficiaries who would
have been eligible for the expanded coverage under the demonstration.
This analysis includes beneficiaries with the appropriate
neuromusculoskeletal conditions who could have been treated by either a
chiropractic physician or other medical physician. The intent-to-treat
approach of the ``All NMS'' analysis guards against selection threats
to validity. As mentioned previously in this section, we did not base
the BN estimate on the ``All NMS'' analysis because it included
Medicare beneficiaries who did not use chiropractic services and who
would not have become users of chiropractic services even with expanded
coverage for them.

K. Comprehensive Outpatient Rehabilitation Facilities (CORF) and
Rehabilitation Agency Issues

A Comprehensive Outpatient Rehabilitation Facility (CORF) is a
Medicare provider that furnishes respiratory therapy services among
other services. In Sec. 485.70, we set forth the personnel
qualifications that must be satisfied by a CORF as a condition of
participation under Sec. 485.58 and as a condition of coverage of CORF
services, including personnel qualifications for respiratory therapists
providing CORF respiratory therapy services.
In the CY 2009 PFS proposed rule (73 FR 38502) and subsequent final
rule with comment period (73 FR 69942), we revised the definition of a
respiratory therapist under Sec. 485.70(j). The change in the
definition of respiratory therapist was intended to ensure accuracy in
reference to persons who are qualified to perform respiratory therapy
and to ensure that language regarding these professionals is consistent
with current industry requirements for education, training, and
practice.
Prior to its modification by the CY 2009 PFS final rule with
comment period, Sec. 485.70(j) reflected the qualifications for
Certified Respiratory Therapists (CRTs)'' and ``Registered Respiratory
Therapists (RRTs)'' as terms commonly used by the professional industry
to identify persons furnishing respiratory therapy services.
Since publication of the CY 2009 PFS final rule with comment, we
have been informed by the industry that the changes made in the
definition of respiratory therapist exclude a category of professional
that has completed the requirements of a CRT, has completed a
nationally accredited educational program that confers eligibility for
the National Board for Respiratory Care (NBRC) registry exam for
respiratory therapists (RTs), and is eligible to sit for the national
registry examination administered by the NBRC, but has not yet passed
the examination. These persons are referred to in the industry as CRTs.
Because it is our policy that Medicare payment is available for
respiratory services provided to Medicare beneficiaries in a CORF only
if provided by a respiratory therapist meeting the qualifications set
forth in Sec. 485.70(j), payment is not available for respiratory
services provided by CRTs in the CORF setting. We note that personnel
qualifications for respiratory therapists previously set forth at Sec.
485.70(j) prior to its modification by the CY 2009 PFS final rule with
comment period did not exclude this category of personnel from the
definition of respiratory therapist. We have also heard from CRTs and
from CORFs that this change has limited the availability of respiratory
therapy services to Medicare beneficiaries in certified CORFs, as many
of these services are provided by CRTs. Thus, in modifying the
definition of respiratory therapist in the CY 2009 PFS final rule with
comment period, we may have inadvertently impacted access to
respiratory therapy services for some Medicare beneficiaries.
Thus, we proposed to modify the definition of respiratory therapist
and to clarify the terms that are used to identify those persons who
furnish respiratory services in CORFs in Sec. 485.70(j) to include
CRTs, that is those individuals who have completed a nationally
accredited educational program for respiratory therapists and are
eligible to sit for the national registry examination administered by
the National Board for Respiratory Care (NBRC), but who have not yet
passed the examination. The change in the definition we proposed would
permit CRTs to furnish respiratory therapy services to Medicare
beneficiaries in the CORF setting.
As proposed, our intent was to assure that persons who were
qualified to furnish respiratory therapy services to patients in CORFs
prior to the finalization of CY 2009 PFS final rule with comment period
(73 FR 69942), will continue to qualify to furnish RT services to CORF
patients under this proposed rule.
We solicited public comment on the proposed change to Sec.
485.70(j). We also solicited comments from the industry regarding the
difference in services furnished by the different levels of
professionals who provide RT services in CORFs.
The following is summary of the comments we received regarding the
discussion of the proposed changes to Sec. 485.70(j).
Comment: Commenters expressed strong support for the regulatory
changes that we proposed, specifically the clarification of the
professional qualifications for respiratory therapists (RTs) in the
CORFs setting.
Response: We appreciate support for this regulatory change as we
believe it is in the best interest of Medicare and Medicaid
beneficiaries. As a result of the comments, we are finalizing these
regulatory requirements as proposed.

L. Ambulance Fee Schedule: Technical Correction to the Rural Adjustment
Factor Regulations (Sec. 414.610)

Section 1834(l)(9) of the Act provides that for ``ground ambulance
services furnished on or after July 1, 2001, and before January 1,
2004, for which transportation originates in a rural area * * * or in a
rural census tract of a metropolitan statistical area * * * the fee
schedule established under this subsection shall provide that, with
respect to the payment rate for mileage for a trip above 17 miles, and
up to 50 miles, the rate otherwise established shall be increased by
not less than \1/2\ of the additional payment per mile established for
the first 17 miles of such a trip originating in a rural area.'' Thus,
the statute authorized a rural mileage bonus for miles 18 through 50
for ground ambulance services furnished on or after July 1, 2001 and
prior to January 1, 2004. This provision was implemented in Sec.
414.610(c)(5)(i), but the regulation text does not currently specify
the statutory time period during which this rural mileage bonus was
effective. In the ``Medicare Program; Coverage and Payment of Ambulance
Services; Inflation Update for CY 2004'' final rule with comment period
(68 FR 67960, 67961), we acknowledged that we inadvertently omitted
from the regulation text the time period during which this statutory
adjustment was

[[Page 61929]]

applicable, and stated we were ``revising Sec. 414.610(c) to reflect
that this bonus payment applies only for services furnished during the
statutory period.'' Thus, in the ``Medicare Program; Coverage and
Payment of Ambulance Services; Inflation Update for CY 2004'' final
rule with comment period, we revised the regulation to include the time
period during which the adjustment is applicable (68 FR 67963).
However, the revised language specifying the statutory time period was
dropped inadvertently from the regulation text when Sec. 414.610(c)(5)
was later republished in the ``Medicare Program; Medicare Ambulance MMA
Temporary Rate Increases Beginning July 1, 2004'' interim final rule
(69 FR 40288, 40292).
In this final rule with comment period, we are finalizing our
proposal to reinstate the language that was originally finalized in
``Medicare Program; Coverage and Payment of Ambulance Services;
Inflation Update for CY 2004'' final rule with comment period (68 FR
67963), but then inadvertently omitted again when Sec. 414.610(c)(5)
was later republished, so that Sec. 414.610(c)(5)(i) correctly sets
forth the statutory time period during which this rural mileage bonus
was applicable. This revision to the regulation is a technical
correction to conform the regulation to the statute. For further
information, see program instruction, Transmittal AB-03-110; Date
August 1, 2003; Change Request 2767 which was issued to inform
contractors to discontinue paying such bonuses effective January 1,
2004 in accordance with the statute.

M. Clinical Laboratory Fee Schedule: Signature on Requisition

In the March 10, 2000 Federal Register, we published the ``Medicare
Program; Negotiated Rulemaking: Coverage and Administrative Policies
for Clinical Diagnostic Laboratory Services'' proposed rule (65 FR
13082) announcing and soliciting comments on the results of our
negotiated rulemaking committee tasked to establish national coverage
and administrative policies for clinical diagnostic laboratory tests
under Part B of Medicare. In our final rule published in the November
23, 2001 Federal Register (66 FR 58788), we explained our policy on
ordering clinical diagnostic laboratory services and amended Sec.
410.32 to make our policy more explicit. Our regulation at Sec.
410.32(a) included the requirement that ``[a]ll diagnostic x-ray tests,
diagnostic laboratory tests, and other diagnostic tests must be ordered
by the physician who is treating the beneficiary.'' In the November 23,
2001 final rule, we added paragraph (d)(2) to Sec. 410.32 to require
that the physician or qualified nonphysician practitioner (NPP) (that
is, clinical nurse specialists, clinical psychologists, clinical social
workers, nurse-midwives, nurse practitioners (NPs), and physician
assistants (PAs)) who orders the service must maintain documentation of
medical necessity in the beneficiary's medical record (66 FR 58809). In
the preamble discussions to the March 10, 2000 proposed rule and
November 23, 2001 final rule (65 FR 13089 and 66 FR 58802,
respectively), we noted that ``[w]hile the signature of a physician on
a requisition is one way of documenting that the treating physician
ordered the test, it is not the only permissible way of documenting
that the test has been ordered.'' In those preambles, we described the
policy of not requiring physician signatures on requisitions for
clinical diagnostic laboratory tests, but implicitly left in place the
existing requirements for a written order to be signed by the ordering
physician or NPP for clinical diagnostic laboratory tests, as well as
other types of diagnostic tests. We further stated in the preambles of
the proposed and final rules that we would publish an instruction to
Medicare contractors clarifying that the signature of the ordering
physician is not required for Medicare purposes on a requisition for a
clinical diagnostic laboratory test (65 FR 13089 and 66 FR 58802).
On March 5, 2002, we published a program transmittal implementing
the administrative policies set forth in the final rule, including the
following instruction: ``Medicare does not require the signature of the
ordering physician on a laboratory service requisition. While the
signature of a physician on a requisition is one way of documenting
that the treating physician ordered the service, it is not the only
permissible way of documenting that the service has been ordered. For
example, the physician may document the ordering of specific services
in the patient's medical record.'' (Transmittal AB-02-030, Change
Request 1998, dated March 5, 2002).
On January 24, 2003, we published a program transmittal in order to
manualize the March 5, 2002 Transmittal. (Transmittal 1787, Change
Request 2410, dated January 24, 2003). The cover note to the
transmittal states, ``Section 15021, Ordering Diagnostic Tests,
manualizes Transmittal AB-02-030, dated March 5, 2002. In accordance
with negotiated rulemaking for outpatient clinical diagnostic
laboratory services, no signature is required for the ordering of such
services or for physician pathology services.'' In the manual
instructions in that transmittal in a note, we stated: ``No signature
is required on orders for clinical diagnostic services paid on the
basis of the physician fee schedule or for physician pathology
services.'' The manual instructions did not explicitly reference
clinical diagnostic laboratory tests as the cover note did. Rather, the
transmittal seemed to extend the policy set forth in the Federal
Register (that no signature is required on requisitions for clinical
diagnostic laboratory tests paid under the Clinical Laboratory Fee
Schedule) to also apply to clinical diagnostic tests paid on the basis
of the PFS and physician pathology services. In addition, the manual
instructions used the term ``order'' instead of ``requisition,'' which
some members of the industry have asserted caused confusion.
When we transitioned from paper manuals to the current electronic
Internet Only Manual system, these manual instructions were
inadvertently omitted from the new Benefit Policy Manual (BPM).
In August 2008, we issued a program transmittal (Transmittal 94,
Change Request 6100, dated August 29, 2008) to update the BPM to
incorporate language that was previously contained in section 15021 of
the Medicare Carriers Manual. The reissued language states, ``No
signature is required on orders for clinical diagnostic tests paid on
the basis of the clinical laboratory fee schedule, the physician fee
schedule, or for physician pathology services.'' Based on further
review, we have determined that there are no clinical diagnostic
laboratory tests paid under the PFS. After Transmittal 94 was
published, we received numerous inquiries from laboratory, diagnostic
testing, and hospital representatives who had questions about whether
the provision applied to all diagnostic services, including x-rays,
MRIs, and other nonclinical laboratory fee schedule diagnostic
services.
To resolve any existing confusion surrounding the implementation of
the policy in 2001 and subsequent transmittals, we restated and
solicited public comments on our policy in the CY 2010 PFS proposed
rule (74 FR 33641). Our current policy is that a physician's signature
is not required on a requisition for clinical diagnostic laboratory
tests paid on the basis of the Clinical Laboratory Fee Schedule (CLFS);
however, it must be evident, in accordance with our regulations at
Sec. 410.32(d)(2) and (3), that the physician ordered the services.
The policy that

[[Page 61930]]

signatures are not required on requisitions applies to requisitions for
clinical diagnostic laboratory tests paid under the CLFS.
We note that we solicited and received comments on this signature
requirement during the notice and comment period for the March 10, 2000
proposed rule in the context of our proposal to add paragraph (d)(2)(i)
to Sec. 410.32 to require that the practitioner who orders a
diagnostic laboratory test must maintain documentation of medical
necessity in the beneficiary's medical record. The majority of comments
supported the adoption of a policy that the signature of the
practitioner on a requisition for a clinical diagnostic laboratory test
paid under the CLFS is not the only way of documenting that the test
has been ordered and, thus, should not be required provided such
documentation exists in an alternate form.
This policy regarding requisitions for clinical diagnostic
laboratory tests does not supersede other applicable Medicare
requirements (such as those related to hospital Conditions of
Participation (CoPs)) which require the medical record to include an
order signed by the physician who is treating the beneficiary. Nor do
we believe that anything in our policy regarding signatures on
requisitions for clinical diagnostic lab tests supersedes other
requirements mandated by professional standards of practice or
obligations regarding orders and medical records promulgated by
Medicare, the Joint Commission, or State law; nor do we believe the
policy would require providers to change their business practices.
We also restated and solicited public comment on our long-standing
policy consistent with the principle in Sec. 410.32(a) that a written
order for diagnostic tests including those paid under the CLFS and
those that are not paid under the CLFS (for example, that are paid
under the PFS or under the OPPS), such as X-rays, MRIs, and the TC of
physician pathology services, must be signed by the ordering physician
or NPP. That is, the policy that signatures are not required on
requisitions for clinical diagnostic laboratory tests paid based on the
CLFS applies only to requisitions (as opposed to written orders) (74 FR
33642).
Additionally, we solicited public comments about the distinction
between an order and a requisition (74 FR 33642). We note that an
``order'' as defined in our IOM, 100-02, Chapter 15, Section 80.6.1, is
a communication from the treating physician/practitioner requesting
that a diagnostic test be performed for a beneficiary. The order may
conditionally request an additional diagnostic test for a particular
beneficiary if the result of the initial diagnostic test ordered yields
to a certain value determined by the treating physician/practitioner
(for example, if test X is negative, then perform test Y). An order may
be delivered via the following forms of communication:
A written document signed by the treating physician/
practitioner, which is hand-delivered, mailed, or faxed to the testing
facility.
A telephone call by the treating physician/practitioner or
his or her office to the testing facility; or
An electronic mail, or other electronic means, by the
treating physician/practitioner or his or her office to the testing
facility.
If the order is communicated via telephone, both the treating
physician/practitioner, or his or her office, and the testing facility
must document the telephone call in their respective copies of the
beneficiary's medical records.
In the proposed rule (74 FR 33642), we defined a ``requisition'' as
the actual paperwork, such as a form, which is provided to a clinical
diagnostic laboratory that identifies the test or tests to be performed
for a patient. It may contain patient information, ordering physician
information, referring institution information, information about where
to send reports, billing information, specimen information, shipping
addresses for specimens or tissue samples, and checkboxes for test
selection. We believe it is ministerial in nature, assisting labs with
billing and handling of results, and serves as an administrative
convenience to providers and patients. We believe that a written order,
which may be part of the medical record, and the requisition are two
different documents, although a requisition that is signed may serve as
an order. We welcomed comments from the public about the distinction
between requisitions and orders.
The following is summary of the comments we received regarding the
discussion of the physician signature on requisitions issue.
Comment: We received several comments concerning the fact that a
diagnostic test, such as an x-ray, continues to require the signature
of the ordering physician or NPP on the written order whether or not
the diagnostic test is paid under the CLFS.
Response: We are appreciative that the general public recognized a
clear distinction in the proposed rule between clinical diagnostic
laboratory tests paid under the CLFS and diagnostic tests that may also
be paid under the PFS or OPPS. The discussion in the proposed and final
rules this year concerns our current policy that a physician's
signature is not required on a requisition for clinical diagnostic
laboratory tests paid on the basis of the CLFS. This policy was the
result of Negotiated Rulemaking and was outlined in proposed and final
rules published during 2000 and 2001, respectively (65 FR 13089 and 66
FR 58790, 58801, and 58802). This policy does not include diagnostic
tests such as x-rays.
Comment: One commenter was supportive of both policies on which we
solicited comments. Specifically, this commenter supported our policy
that a written order for diagnostic tests (including those paid under
the CLFS and those that are not paid under the CLFS) must be signed by
the ordering physician or NPP. The commenter further stated that the
request for a diagnostic test represents part of the physician's plan
for the patient, which is part of the patient's medical record. As
such, when the request is in writing, a physician signature would be
appropriate and likely easily generated. The commenter also supported
our policy that a physician's signature is not required on a
requisition for clinical diagnostic laboratory tests paid on the basis
of the CLFS. The commenter stated that, to the extent a requisition is
simply a paper mechanism for transmitting an order and more
administrative in nature, it is less likely to be generated or handled
by the physician. Thus, to require a physician's signature on a
requisition for clinical diagnostic laboratory tests paid on the basis
of the CLFS would be an added and unnecessary burden on physicians.
Response: We appreciate the commenter's support of our policies and
the commenter's input on these issues.
Comment: Several commenters suggested that we should not require a
physician's signature on a medical request, whether that request be an
order or a requisition, for any type of test, paid under the CLFS or
not, within or outside the hospital setting.
Response: To do as commenters suggest would be a departure from
long-standing Medicare policy requiring the physician's signature on
written orders in other settings. This procedure serves to document
that the physician or NPP ordered the test and documented the medical
necessity of the test. The exception of not requiring a physician's
signature on the requisition for a clinical diagnostic laboratory test
paid under the CLFS only is very narrow and does not include other
types of tests paid in other types of settings.

[[Page 61931]]

Comment: Several commenters raised concerns about issues relating
to electronic medical records. Specifically, commenters were concerned
whether or not an electronic signature would be acceptable and had
questions about what constitutes a medical record in a paperless
environment. One commenter stated that, generally, electronic systems
that are used to request laboratory testing can be used by physicians
with authorized access only and that as a result, a physician's
signature should not be expected or required.
Response: We appreciate the commenters' concerns about these
issues. CMS is in the process of developing guidelines concerning
electronic records and electronic signatures for use in CMS programs.
These guidelines will be finalized at a later date. The general public
will be kept apprised of our progress on this issue through future
official issuances.
Comment: One commenter urged us to establish a ``rule of reason''
with regard to what is required to be in the medical record, while two
other commenters provided detailed suggestions on how to improve our
manual language in this regard. These commenters were concerned about
the fact that physicians sometimes make shorthand notes or indicate
that there was an office visit only without further details in the
medical record concerning the specific laboratory tests that are
ordered.
Response: We believe that, whenever a physician orders services,
including laboratory tests, for a patient in order to assist in
diagnosing or treating the patient's conditions, the ordering of those
services should be documented in the patient's medical record.
Nonetheless, we do appreciate the commenters' concerns about the scope
of the medical record and efforts to make detailed suggestions about
how to improve the direction provided in our manuals. We will carefully
consider these issues and if we decide that further clarification is
warranted, will issue such clarification.
Comment: Several commenters were concerned that, while
documentation to support an unsigned requisition would be required to
be maintained in the medical record, employees at the clinical
diagnostic laboratory do not have access to the medical record to
verify whether or not this documentation exists. Commenters stated
that, once a laboratory receives an order or requisition, it is
obligated to perform the test as quickly as possible because it is in
the best interest of the Medicare beneficiary, regardless of whether or
not a physician signature is present. Commenters also raised the issue
of fragility of the specimen and that it is essential to complete
testing as soon as possible before the specimen begins to degrade.
Commenters were concerned about being obligated to ensure that orders
maintained in the physician's office were signed prior to being able to
perform the test in the laboratory. The commenters do not believe that
this obligation is fair to them or the Medicare patient as access to
essential information could be delayed or compromised. Conversely,
another commenter recommended that, in addition to the affirmation by
the physician in the medical record that the laboratory test had been
ordered, the laboratory should be required to close the loop and
provide documentation that the test had been performed for inclusion in
the medical record as well.
Response: We recognize that, without the physician's signature on
the requisition, some clinical diagnostic laboratories believe it is
burdensome to verify that the request for services is valid. However,
our regulations at Sec. 410.32(d)(2)(iii) provide the entity
submitting the claim (that is, the clinical diagnostic laboratory) with
the option to request additional diagnostic and other medical
information to document that the services it bills are reasonable and
necessary.
Comment: Several commenters believe that the signature issue is
burdensome because multiple physician services can be requested on the
same form, and, in such cases, one service might require the
physician's signature while another might not. For example, it is
possible that both the Technical Component (TC) of physician pathology
services and clinical laboratory services may appear on the same
requisition and that it would be confusing to have one set of
requirements for clinical diagnostic laboratory tests and a different
set of requirements for physician pathology services. Physicians may
not know whether a particular laboratory or pathology test is paid
under the CLFS or the PFS. The commenters suggested that we further
clarify our policy to address this particular issue. We received a
number of comments specifically requesting that we develop a single
policy for all outpatient laboratory services, without distinction for
those paid under the CLFS or the PFS.
Response: We appreciate the commenters' concerns. We will examine
options for creating a fair and consistent policy regarding signatures
that will address situational needs.
Comment: Several commenters stated that we needed to draw a clearer
distinction between a requisition and an order, as they did not
understand the difference between them. Commenters also suggested that,
as medical records move to an electronic format, this distinction
becomes more difficult to describe.
Response: We agree with the commenters' interest in having clear
and concise distinctions between ``requisition'' and ``order''
especially as we move toward electronic means of record keeping and
communication. We asked for comments about how to define a requisition,
and we did receive some helpful suggestions. At this time, we are not
addressing the specific comments on the distinction between orders and
requisitions. We will continue to develop clearer direction on this
issue, taking into consideration the suggestions submitted by
commenters.
Comment: One commenter was concerned that physicians are signing
stacks of laboratory requisition forms in advance of their use, or
using a pre-signed hand stamp to make a requisition form official. The
commenter stated that we did not draw a distinction between
requisitions signed in advance and requisitions signed at the point of
service for a specific purpose in the presence of the patient.
Response: We appreciate that the commenter brought these real world
procedures to our attention. We will review this issue and consider it
in the future as we consider all the issues that were brought to our
attention through the proposed rulemaking effort this year.
Comment: We received several comments concerning the date of
service (DOS) rule in reference to performing clinical diagnostic
laboratory tests on stored specimens which were collected from the
patient during the time that he/she was an inpatient at a hospital.
Response: We thank the commenters for their concerns on this issue.
However, since we have not proposed any changes to the DOS rule at this
time, we will not be addressing this comment in this final rule as
these comments are outside the scope of our proposals for CY 2010.
In light of the issues and concerns raised during the comment
period, and our desire to create policy that will address the concerns
in a meaningful, clear, and thoughtful way, we will continue to
carefully consider the issues of physician signatures on requisitions
and orders. We plan to revisit these issues in the future paying
particular attention to the definition of order and requisition.

[[Page 61932]]

N. Physician Self-Referral

1. General Background
Section 1877 of the Act, also known as the physician self-referral
law, prohibits the following: (1) a physician from making referrals for
certain designated health services (``DHS'') payable by Medicare to an
entity with which he or she (or an immediate family member) has a
direct or indirect financial relationship (an ownership/investment
interest or a compensation arrangement), unless an exception applies;
and (2) the entity from presenting or causing a claim to be presented
to Medicare (or billing another individual, entity, or third party
payor) for those referred services. The statute establishes a number of
exceptions and grants the Secretary the authority to create regulatory
exceptions for financial relationships that pose no risk of program or
patient abuse.
In the proposed rule, we proposed to clarify Sec. 411.354(c)(3)(i)
regarding the application of certain exceptions to arrangements in
which a physician stands in the shoes of his or her physician
organization. In section II.N.2. of this final rule with comment
period, we respond to public comments on this proposal and finalize it
without change.
In the FY 2009 IPPS final rule (73 FR 48721), we revised the
definition of ``entity'' to include any person or entity that has
``performed services that are billed as DHS.'' In section II.N.3 of
this final rule with comment period, we solicit comments regarding
whether we should issue further guidance on what constitutes performing
services billed as DHS and if so, the nature or content of such
guidance.
2. Physician Stand in the Shoes
Determining whether an entity furnishing DHS and a physician have a
direct or indirect compensation arrangement is a key step in applying
the statute because it affects which compensation exceptions may apply
to the arrangement. Section 411.354(c) governs when a physician
``stands in the shoes'' of his or her physician organization and may
therefore, depending on the circumstances, have a direct, rather than
an indirect, compensation arrangement with an entity furnishing DHS.
Our proposal (74 FR 33643) sought to clarify one aspect of the
physician stand in the shoes provisions at Sec. 411.354(c).
Specifically, we proposed to clarify the second sentence of Sec.
411.354(c)(3)(i) to provide that, ``[w]hen applying the exceptions in
Sec. 411.355 and Sec. 411.357 of this part to arrangements in which a
physician stands in the shoes of his or her physician organization, the
relevant referrals and other business generated `between the parties'
are referrals and other business generated between the entity
furnishing DHS and the physician organization (including all members,
employees, and independent contractor physicians).''
Section 411.354(c)(3)(i) addresses the application of the general
exceptions to the referral prohibition related to both ownership/
investment and compensation (Sec. 411.355) and the exceptions to the
referral prohibition related to compensation arrangements (Sec.
411.357), to arrangements in which a physician stands in the shoes of
his or her physician organization. Many of these exceptions require the
arrangement to be in writing and signed by the parties and prohibit the
compensation from taking into account the volume or value of referrals
or other business generated by the referring physician.
Under Sec. 411.354(c)(3)(i), a physician who stands in the shoes
of his or her physician organization is deemed to have the same
compensation arrangements with the same parties and on the same terms
as the physician organization. The second sentence of Sec.
411.354(c)(3)(i) provides that ``[f]or purposes of applying the
exceptions in Sec. 411.355 and Sec. 411.357 to arrangements in which
a physician stands in the shoes of his or her physician organization,
the `parties' to the arrangements are considered to be the entity
furnishing DHS and the physician organization (including all members,
employees, or independent contractor physicians).''
After the publication of Phase III, some members of the industry
questioned whether the second sentence of Sec. 411.354(c)(3)(i)
defined the term ``parties'' everywhere it appears in the physician
self-referral regulations, including the requirement in many exceptions
that a compensation arrangement be in writing and ``signed by the
parties.'' Consequently, these members believed it was necessary for
everyone within a physician organization (that is, all members,
employees, and independent contractor physicians) to sign a myriad of
different arrangements with an entity furnishing DHS. This was not our
intent. In January 2008, we posted a frequently asked question (FAQ) on
our Web site to explain that ``we consider a physician who is standing
in the shoes of his or her physician organization to have signed the
written agreement when the authorized signatory of the physician
organization has signed the agreement.'' After the FY 2009 IPPS final
rule, under which only physician owners are deemed to stand in the
shoes of their physician organizations, some industry representatives
questioned whether physicians who did not stand in the shoes remained
``parties'' under Sec. 411.354(c)(3)(i) and, would therefore, need to
become signatories to any compensation arrangement that was required to
be in writing and ``signed by the parties.''
We proposed to clarify the second sentence of Sec.
411.354(c)(3)(i) to provide that, ``[w]hen applying the exceptions in
Sec. 411.355 and Sec. 411.357 of this part to arrangements in which a
physician stands in the shoes of his or her physician organization, the
relevant referrals and other business generated `between the parties'
are referrals and other business generated between the entity
furnishing DHS and the physician organization (including all members,
employees, and independent contractor physicians).''
Our proposed change clarifies that we are not defining the term
``parties'' and should eliminate any possible public misconception that
all physicians in a physician organization (whether or not they stand
in the shoes of the physician organization) must sign the writing(s)
memorializing a compensation arrangement between their physician
organization and an entity furnishing DHS. Furthermore, we note that
some members of the industry have erroneously applied the second
sentence of Sec. 411.354(c)(3)(i) by analyzing whether the
compensation takes into account the referrals between the entity
furnishing DHS and the physician who stands in the shoes of the
physician organization only, not the referrals of all members,
employees, and independent contractor physicians in the physician
organization. The revised regulation reiterates that the relevant
referrals and other business generated between the physician
organization and the entity furnishing DHS are the referrals of all
physicians in the physician organization (including all members,
employees, and independent contractors), not simply the referrals made
by each physician who stands in the shoes of the physician
organization.
We solicited public comments regarding our proposal and alternative
approaches to address this issue. We received five public comments that
related to our proposal which supported our proposal. After
consideration of the public comments received, we are adopting our
proposal unchanged. We are revising the second sentence of Sec.
411.354(c)(3)(i) to provide that, ``[w]hen applying the exceptions in
Sec. 411.355 and Sec. 411.357 of this part to arrangements in which a
physician

[[Page 61933]]

stands in the shoes of his or her physician organization, the relevant
referrals and other business generated `between the parties' are
referrals and other business generated between the entity furnishing
DHS and the physician organization (including all members, employees,
and independent contractor physicians).'' We believe the finalized
language clarifies the regulation text and is consistent with our
intent to minimize the potential for abuse without imposing undue
burden on the provider community. We address below the specific
comments that we received in response to our proposal in the CY 2010
proposed rule.
Comment: The commenters supported the clarification to the
physician stand in the shoes provision. Several commenters appreciated
that we clarified that not all physicians in a physician organization
must sign documents memorializing a compensation arrangement between
their organization and a DHS entity. One commenter stated that it is
beneficial to consider a physician to have signed the written agreement
if the agreement is signed by the organization's authorized signatory.
Response: The commenters' responses supported the approach we took
in the proposed rule. Thus, as stated above, we are revising Sec.
411.354(c)(3)(i) to state that when applying the exceptions in Sec.
411.355 and Sec. 411.357 to arrangements in which a physician stands
in the shoes of his or her physician organization, the relevant
referrals and other business generated ``between the parties'' are
referrals and other business generated between the entity furnishing
DHS and the physician organization (including all members, employees,
and independent contractor physicians). With regards to deeming a
physician to have signed the written agreement, our revision of the
regulation text to avoid the appearance of defining the word
``parties,'' eliminates the need to consider any particular physician
to have signed an agreement that he or she did not actually sign.
3. Services Provided ``Under Arrangements'' (Services Performed by an
Entity Other Than the Entity That Submits the Claim): Solicitation of
Comments
Under section 1877(a)(1)(A) of the Act, if a physician (or an
immediate family member) has a financial relationship with an
``entity,'' it may not make a referral to the entity for the
``furnishing'' of DHS, unless the financial relationship meets an
exception. In the Phase I final rule, we defined the term ``entity'' at
Sec. 411.351 and specified that ``a person or entity is considered to
be furnishing DHS if it is the person or entity to which [Medicare]
makes payment.'' Thus, under the Phase I rule, only the person or
entity that billed Medicare for the DHS was considered the DHS
``entity,'' and not the person or entity that actually performed the
DHS (where that person or entity was not the person or entity billing
for it) (66 FR 953). In the CY 2008 PFS proposed rule (72 FR 38186
through 38187, 38219, and 38224), we expressed concern that the Phase I
definition of ``entity'' might permit certain abusive agreements for
services provided under arrangements with hospitals and other
providers. Based upon our concerns about overutilization, corruption of
medical judgment and other abuse, we proposed to revise the definition
of ``entity'' at Sec. 411.351 to include ``the person or entity that
has performed the DHS''.
In the FY 2009 IPPS final rule (73 FR 48434 and 48729), we stated
our belief that, in some instances, hospitals would prefer to furnish
services directly but have been concerned about losing referral streams
if they compete with physician service providers. Very few comments
submitted by hospitals objected to our proposed revision to the
definition of entity, and, instead, two major hospital associations
were generally supportive of it. Some physician commenters asserted
that hospitals are risk averse to bringing services to communities. We
questioned whether physicians are less risk averse because they can
control the referral stream. We stated that hospitals may be more
concerned about risk because they fear that referrals will go to their
competitors if they do not enter into contractual arrangements with
physician groups. Finally, we stated that ``our proposal as finalized
will create a more level playing field between hospitals and physicians
and also among hospital competitors.''
In that rule, we finalized the proposal by amending the definition
of entity at Sec. 411.351 to specify that an entity furnishing DHS
includes the person or entity that has presented a claim to Medicare
for the DHS as well as any person or entity that has ``performed
services that are billed as DHS,'' notwithstanding that another person
or entity actually billed the services as DHS.
Commenters to the proposed rule expressed concern regarding the
potential ambiguity of the meaning of ``performs.'' We declined to
provide a specific definition of ``performed services that are billed
as DHS,'' but stated the following in response to one of the
commenters:

By way of example only, we consider a service to have been
``performed'' by a physician or physician organization if the
physician or physician organization does the medical work for the
service and could bill for the service, but the physician or
physician organization has contracted with the hospital and the
hospital bills for the service instead * * *. We do not consider an
entity that leases or sells space or equipment used for the
performance of the service, or furnishes supplies that are not
separately billable but used in the performance of the medical
service, or that provides management, billing services, or personnel
to the entity performing the service, to perform DHS. (73 FR 48726,
emphasis added).

We delayed the effective date of the amendment to the definition of
``entity'' until October 1, 2009, in order to afford parties an
adequate time to restructure arrangements (73 FR 48723).
We assume that health care providers have restructured their
arrangements to come into compliance with the new rule by the October
1, 2009 effective date. We have received numerous inquiries regarding
whether we plan to issue additional guidance on the revised definition
of entity, including the meaning of ``performed services that are
billed as DHS.'' We continue to believe that the changes set forth in
the FY 2009 IPPS final rule effectuated our intent to minimize
overutilization and anti-competitive behavior and, as such, we decline
to issue a specific proposal concerning the definition of entity at
this time. In order to keep abreast of the views of industry
stakeholders, we are soliciting comments to determine if further
guidance is necessary and, if so, what clarification(s) may be
beneficial to the industry in interpreting and applying the changes
finalized in the FY 2009 IPPS final rule. Therefore, we are interested
in receiving comments on the following:
Whether we should define or clarify ``performed services
that are billed as DHS,'' and, if so, how.
Whether ``performed services that are billed as DHS''
should be analyzed in the same manner for inpatient and outpatient
services provided under arrangements.
Whether performance of a service billed as DHS should be
determined based on how many of the following elements are provided:
(1) Lease of space used for performance of the service; (2) lease of
equipment used for the performance of the service; (3) supplies that
are not separately billable but used in the performance of the service;
(4) management services; (5) billing services, and (6) nonphysician
services that are not separately billable.

[[Page 61934]]

If so, whether certain of these elements should be weighed more heavily
than others in determining whether DHS are performed.
Whether an interpretation of ``medical work'' was relied
upon in restructuring arrangements and, if so, how.
The degree to which the amount and nature of services
provided by physician and nonphysician personnel (for example,
technicians) should influence the determination of whether a person or
organization has performed services billed as DHS.
The degree to which the ability to bill separately for the
service should influence the determination regarding whether a person
or organization has ``performed services that are billed as DHS.''
Whether there are other comments or alternative approaches
or criteria that would address our policy concerns about
overutilization and other abuse while minimizing the impact on
legitimate non-abusive arrangements.
We welcome any information concerning how the industry interpreted
and applied the definition of entity and how under arrangement
agreements may have been restructured in order to comply with the new
definition of entity at Sec. 411.351.

O. Durable Medical Equipment-Related Issues

1. Damages to Suppliers Awarded a Contract Under the Acquisition of
Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(Medicare DMEPOS Competitive Bidding Program) Caused by the Delay of
the Program
Section 1847 of the Act, as amended by section 302(b)(1) of the
MMA, requires the Secretary to establish and implement a Medicare
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
Competitive Bidding Program (DMEPOS CBP). On July 15, 2008, the MIPPA
was enacted. Section 154 of the MIPPA amended section 1847 of the Act
to make certain limited changes to the competitive bidding program,
including adding a new subsection (a)(1)(D) to section 1847 of the Act.
Section 1847(a)(1)(D) terminates retroactively the competitive bidding
contracts that were awarded to suppliers in 2008 for the Round 1 of
competitive bidding and prohibits payment based on such contracts.
Section 154 of the MIPPA effectively reinstated payment for
competitively bid items and services to the Medicare fee schedule
amounts, as set forth in section 1834 of the Act and 42 CFR part 414,
subpart D of our regulations.
Section 1847(a)(1)(D)(i)(I) of the Act, as amended by the MIPPA,
stipulates that to the extent any damages may be applicable as a result
of the termination of contracts, payment is to be made from the Federal
Supplementary Medical Insurance Trust Fund under section 1841 of the
Act. Section 1847(a)(1)(D) of the Act also states that nothing in
section 1847(a)(1)(D)(i)(I) of the Act, which includes the reference to
damages, shall be construed to provide an independent cause of action
or right to administrative or judicial review with the regard to the
termination of the Round 1 contracts.
For further discussion of the Competitive Bidding Program and the
bid evaluation process, see the Medicare Program; Competitive
Acquisition for Certain Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies (DMEPOS) and Other Issues final rule published
in the April 10, 2007 Federal Register (72 FR 17992) and the Medicare
Program; Changes to the Competitive Acquisition of Certain Durable
Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) by
Certain Provisions of the Medicare Improvements for Patients and
Providers Act of 2008 (MIPPA) interim final rule with comment period
(IFC) published on January 16, 2009 Federal Register (74 FR 2873).
We proposed to add new Sec. 414.425 to establish a process to
evaluate any claims for damages caused by the termination of contracts
awarded in early 2008 under the DMEPOS CBP that were terminated as a
result of section 154(a)(1)(A)(iv) of the MIPPA.
We offered contracts in March 2008 to selected suppliers for the
first round of the DMEPOS CBP. The contracts that were accepted were
terminated by the MIPPA retroactive to June 30, 2008. We considered the
terms of the contracts and other processes of the DMEPOS CBP as we
developed this proposed process to determine, on a case-by-case basis,
whether to award damages and, where applicable, the amount of damages
to be awarded for the termination of these contracts.
When considering whether to submit a claim for damages, suppliers
may consider the following factors:
Each contract stipulated that the contract is subject to
any changes to the statute or regulations that affect the Medicare
program.
Each contract indicated CMS does not guarantee any amount
of business or profits.
Each contract stipulated that CMS shall not pay for any
expenses incurred by the supplier for the work performed under the
contract other than for payment of Medicare claims authorized under the
contract.
Upon termination of the contracts by the MIPPA, payments
reverted to the CY 2008 fee schedule amount, which was on average 26
percent higher than payment amounts under the DMEPOS CBP.
We will review a supplier's estimated and historic
capacity and any expansion plans that were submitted as part of a
supplier's bid.
We will review a supplier's action to meet its obligation
to mitigate its damages.
We listed the winning suppliers on the Medicare.gov Web
site in the supplier locator tool; a supplier is allowed to keep any
new customers they may have obtained because of being listed on the
supplier locator tool.
This list is not intended to suggest that there are not
legitimate claims for damages. However, these are factors that a
supplier may consider when deciding whether to submit a claim for
damages.
The proposed provisions outline the information that suppliers
would need to provide when submitting claims for damages and the
process that we would follow to review these claims. The information we
proposed to collect from suppliers is necessary for us to make a
reasonable decision on whether damages are warranted and how much in
damages should be awarded. We believe that the process is not overly
burdensome to those suppliers choosing to participate in this review
process and would ensure a thorough review of a supplier's claim for
damages.
We proposed the following process to file a claim for damage
claims:
a. Eligibility To File a Claim
Any aggrieved supplier that was awarded a contract in March 2008
for the Round 1 DMEPOS CBP and believes it has suffered damages is
eligible to submit a claim. The supplier must be able to demonstrate
how its company was damaged. These damages must be substantiated and be
as a direct result of the termination by MIPPA of their Round 1 DMEPOS
CBP contract. Only a contract supplier, and not a subcontractor of a
contract supplier, is eligible to submit a claim for damages.
Comment: One commenter stated that although CMS has no direct
obligation to subcontractors, CMS should allow contract suppliers to
include in their claims the damages incurred by their subcontractors.
Response: We disagree with the commenter's statement that we should
consider the damages incurred by

[[Page 61935]]

subcontractors because the contract is between CMS and the contract
supplier. We believe the extent of our obligation should only consider
damages realized by the contract supplier. However, should a contract
supplier realize damages due to their arrangement with a subcontractor
those damages may be included if they are directly attributable to the
Round 1 terminations. We do not believe that the language of MIPPA
extends beyond the original contract arrangements between CMS and
contract suppliers, as required by the MMA.
After consideration of the public comments we received, we are not
making any changes to the proposed process for awarding damages for
contracts terminated under the MIPPA.
b. Timeframes for Filing a Claim
A completed claim, including all documentation described below in
section II.O.1.c., must be filed within 90 days of January 1, 2010,
which is the effective date of these damages provisions, unless the
90th day is a weekend or Federal holiday. In that case, the last date
to file a claim will be the day following the weekend or Federal
holiday. The date of filing is the actual date of receipt by the
Competitive Bidding Implementation Contractor (CBIC) of a completed
claim from the supplier that includes all of the information required
by this rule. We strongly urge claimants to use a tracking method such
as with the United States Postal Service or a carrier that requires a
return receipt that indicates the date on which the claim was
delivered.
We did not receive any comments on this section of the proposed
process for awarding damages for contracts terminated under the MIPPA.
Therefore, we are finalizing these provisions as proposed with a minor
change by adding the effective date of these damages provisions.
c. Information That Must Be Included in a Claim
At a minimum, a claim should include all of the following:
Supplier's name and bidding number.
Supplier's current contact information (Name of authorized
official, U.S. Post Office mailing address, phone number and e-mail
address).
A copy of the DMEPOS CBP Round 1 contract(s) the supplier
signed with CMS.
A detailed explanation of the damages incurred by the
supplier. The explanation must document the supplier's damages through
receipts and records that establish the claimant's damages directly
related to meeting the terms of the DMEPOS CBP Round 1 contract.
The supplier must also explain how it would be damaged if
not reimbursed.
A detailed explanation of the steps of all attempts to use
for other purposes, return, or dispose of equipment or other assets
purchased or rented for use in the Round 1 DMEPOS CBP contract
performance.
Damages claimed must be specifically related to carrying out the
terms of the contract, and may include, but are not limited to, the
following:
Items or equipment purchased or rented and dates of such
rental or purchases.
Additional employee costs.
Additional inventory costs.
Additional facility costs.
The supplier must include a separate justification for any of these
items for which it is claiming damages and explain how they were
necessary to meet the deadline of July 14, 2008 of the Round 1 DMEPOS
CBP contract. This does not include expenses that would have occurred
if the supplier had not been awarded a contract but only those expenses
that were incurred for the Round 1 DMEPOS CBP contract performance. The
claim must also detail steps taken by the supplier to mitigate damages
that they may have incurred due to the contract termination.
In addition, we are not considering claims for expenses incurred
prior to March 20, 2008, including the purchase or rental of items or
equipment before that date, because a supplier would not have known
that it was going to be offered a contract. We are not considering
claims for most expenses incurred after July 14, 2008, including the
purchase or rental of items or equipment, because this is the date on
which MIPPA terminated all of the Round 1 contracts. The only exception
to this requirement would be for expenses incurred to mitigate damages
associated with the termination of the Round 1 contracts.
Comment: One commenter suggested that CMS should not exclude costs
incurred prior to March 20, 2008 and after July 14, 2008.
Response: We disagree with the commenter. We first notified
suppliers on March 20, 2008, that they were being offered a contract.
We are not considering claims for expenses incurred prior to March 20,
2008, because a supplier would not have known that it was going to be
offered a contract before that date. We are also not considering claims
for most expenses incurred after July 14, 2008, including the purchase
or rental of items or equipment, because this is the date on which
MIPPA terminated all of the Round 1 contracts.
Comment: One commenter suggested that CMS should include costs
incurred in preparing or submitting a claim for damages.
Response: We disagree with the commenter. Any damages awarded under
this contract only include costs incurred in carrying out the terms of
the contract. The cost of submitting a claim for damages is not a cost
that is incurred in carrying out the terms of the contract. Suppliers
must weigh the cost of filing a claim for damages against damages they
believe they incurred.
Comment: One commenter suggested that CMS should include consulting
and legal expenses required to submit a bid in the competitive bidding
program.
Response: We disagree. Suppliers could have incurred these costs
even if they were not awarded a contract. The MIPPA provision pertains
to damages that were the result of the termination of the contract and
not the cost of applying for the contract. This does not include
expenses that would have occurred if the supplier had not been awarded
a contract but only those expenses that were incurred for the Round 1
DMEPOS CBP contract performance. Damages claimed must be specifically
related to carrying out the terms of the contract.
Comment: One commenter suggested that CMS should allow suppliers to
amend a claim deemed incomplete by the CBIC.
Response: We disagree with the commenter. The proposed rule
describes what constitutes, at a minimum, a complete claim. While all
claims for damages will be considered, there is certain minimum
information that has to be submitted with the claim in order for the
claim to be processed. Without this information we will not be able to
process the claim. We believe that 90 days is sufficient time for the
supplier to submit a completed claim. This provides an equal amount of
time for all suppliers filing a claim for damages to submit their
claim.
Comment: One commenter suggested that CMS should not exclude from
damages ``costs that the supplier has recouped by any means''.
Response: We disagree with the commenter. We believe that all
parties to a contract are obligated to take action to mitigate any
damages and to describe the steps they have taken to meet this
obligation. For example, if a supplier purchases inventory to carry out
the terms of the contract and later uses this inventory for other
Medicare

[[Page 61936]]

beneficiaries, in effect the Medicare program would be charged twice
for the same item, if it were to include these costs in an award for
damages. Each supplier has an obligation to mitigate, as far as
possible, damages associated with the termination of its Round 1
contract(s).
After consideration of the public comments we received, we are not
making any changes to this section of the proposed process for awarding
damages for contracts terminated under the MIPPA.
e. Filing a Claim
Suppliers should submit claims, with all supporting documentation,
with the CMS CBIC at the following address: CBIC; Bldg 200, Suite 400;
2743 Perimeter Parkway; Augusta, Georgia 30909. The authorized official
for the supplier must certify the accuracy of the information on the
claim and all supporting documentation. The authorized official is
appointed by the supplier and has the legal authority granted by the
supplier to submit the claim for damages. This person may be the
supplier's general partner, chairman of the board, chief financial
officer, chief executive officer, president, direct owner of the
supplier organization, or must hold a position of similar status and
authority within the supplier's organization. The CBIC will not accept
electronic submissions of claims for damages.
Comment: Several commenters recommended that CMS allow suppliers
who are dissatisfied with CMS' decision to obtain an independent
administrative review of the determination for damages under this
process.
Response: We disagree with the commenter. The statute does not
provide for review of such determinations. Section 1847(a)(1)(D) of the
Act, as amended by section 154(a)(1)of MIPPA does not provide for
administrative or judicial review of the Determining Authority's
decision. Section 1847(a)(1) of the Act, as revised by section 154(a)
of the MIPPA, terminated the contracts that were awarded under the
competitive acquisition program, and provided that such termination and
award of damages should not be construed to provide an independent
cause of action or right to administrative or judicial review.
Therefore, the Determining Authority's final decision is not subject to
administrative or judicial review.
Comment: One commenter recommended that CMS should identify who
within CMS will be tasked with the reviews and the standards that will
apply to requests for claims.
Response: We will utilize the necessary resources within the agency
to make these decisions. We will be utilizing the expertise from
various components within CMS, such as the Office of Acquisition and
Grants Management, Office of Financial Management and the Office of the
General Counsel in the Department of HHS as necessary. An Agency
official who is a senior executive and who has responsibility for the
competitive bidding program will be designated as the Determining
Authority.
After consideration of the public comments, we are not making any
changes to this section of the proposed process for awarding damages
for contracts terminated under the MIPPA.
f. Review of Claim
(1) Role of the CBIC
The CBIC will conduct the first level of review and make
recommendations to CMS, hereafter referred to as the Determining
Authority regarding:
Whether the claim is complete and was filed in a timely
manner. The CBIC may seek further information from the claimant when
making its recommendation. The CBIC may set a deadline for receipt of
additional information.
When the claim is incomplete or was not filed in a timely
manner, the CBIC will make a recommendation to the Determining
Authority not to process the claim further.
Whether the government owes damages because of the MIPPA.
The CBIC will include an explanation supporting its recommendation. The
CBIC will recommend a reasonable amount of damages, if any, based on
the claim submitted, including all accompanying documentation. The CBIC
will consider the language of the contract, as well as both costs
incurred and the contract supplier's attempts and actions to limit the
damages.
(2) CMS' Role as the Determining Authority
CMS is the Determining Authority because we are responsible for the
final review and final determination regarding claims for damages.
The Determining Authority shall review the recommendation
of the CBIC.
The Determining Authority may seek further information
from the claimant or the CBIC in making a concurrence or non-
concurrence determination.
The Determining Authority may set a deadline for receipt
of additional information. A claimant's failure to respond timely may
result in a denial of the claim.
If the Determining Authority concurs with the CBIC
recommendation, the Determining Authority shall submit a final signed
decision to the CBIC and direct the CBIC to notify the claimant of the
determination and the reasons for the final determination.
If the Determining Authority nonconcurs with the CBIC
recommendation, the Determining Authority may:
+ Write a determination granting (in whole or in part) a claim for
damages or denying a claim in its entirety; or direct the CBIC to write
said determination for the Determining Authority's signature.
+ Return the claim to the CBIC with further instructions.
The Determining Authority's determination is final and
binding; it is not subject to administrative or judicial review under
section 1847(a)(1)(D) of the Act, as amended by section 154(a)(1) of
the MIPPA.
Comment: Several commenters suggested that an additional step be
included to permit affected suppliers to cure technical and other
deficiencies in their claim.
Response: We do not agree with the commenters. Claimants are
required to submit a complete claim in a timely manner. CMS stated in
the rule that either the CBIC or CMS as the Determining Authority may
seek further information from the claimant concerning the claim. This
does not mean that claimants will have an opportunity to provide
additional information after the deadline for filing has ended, unless
requested to do so by the CBIC or CMS.
After consideration of the public comments, we are not making any
changes to this section of the proposed process for awarding damages
for contracts terminated under the MIPPA.
g. Timeframe for Final Determinations
Every effort will be made to make a final determination within 120
days of initial receipt of the claim for damages by the CBIC or the
receipt of additional information that was requested by the CBIC,
whichever is later. In the case of more complex cases, or in the event
of a large workload, a decision will be issued as soon as practicable.
We did not receive any comments on this section of the proposed
process for awarding damages for contracts terminated under the MIPPA.
Therefore, we are finalizing the provisions as proposed.
h. Notification to Claimant of Damage Determination
The CBIC shall mail the final determination to the claimant by

[[Page 61937]]

certified mail return receipt requested. If CMS determines that money
is due to a claimant, this notification will indicate when and how the
money will be transmitted. If a monetary award is due, the supplier
will be required to provide banking information for electronic deposit.
We did not receive any comments on this section of the proposed
process for awarding damages for contracts terminated under the MIPPA.
Therefore, we are finalizing these provisions as proposed.
We are finalizing the provisions concerning damages as proposed in
the CY 2010 PFS proposed rule (74 FR 33644).
2. Notification to Beneficiaries for Suppliers Regarding Grandfathering
Section 1847(a)(4) of the Act requires that in the case of covered
durable medical equipment (DME) items for which payment is made on a
rental basis under section 1834(a) of the Act, and in the case of
oxygen for which payment is made under section 1834(a)(5) of the Act,
the Secretary shall establish a ``grandfathering'' process under which
rented DME items that were furnished prior to the start of the
Competitive Bidding Program (CBP) may be continued to be rented to the
beneficiary by a noncontract supplier. Agreements for those covered
items and supplies that were rented by the supplier to the beneficiary
before the start of a CBP may be continued, regardless of whether the
existing supplier participates in the CBP.
In the April 10, 2007 final rule (72 FR 17992), in Sec.
414.408(j), we established the grandfathering process described below
for rented DME and oxygen and oxygen equipment when these items are
included under the Medicare DMEPOS CBP. A supplier that is furnishing
DME or is furnishing oxygen or oxygen equipment on a rental basis to a
beneficiary prior to the implementation of a CBP in the competitive
bidding area (CBA) where the beneficiary maintains a permanent
residence may elect to continue furnishing the item as a grandfathered
supplier. This process only applies to suppliers that began furnishing
the competitive bid items described above before the start of the CBP
to beneficiaries who maintain a permanent residence in a CBA.
In the case of the rented DME and oxygen and oxygen equipment
identified in this section, we established in Sec. 414.408(j)(4) that
Medicare beneficiaries have the choice of deciding whether they would
like to continue receiving the rented item from a grandfathered
supplier or if they would like to receive the item from a contract
supplier.
Suppliers that agree to be a grandfathered supplier for an item
must agree to be a grandfathered supplier for all current beneficiaries
who request to continue to rent that item from them. The beneficiary's
decision to use a grandfathered supplier depends on the decision of the
noncontract supplier that is currently renting the competitive bidding
item to continue renting the item as a grandfathered supplier after the
start of the CBP in accordance with the terms we have specified. The
payment rules for grandfathered suppliers are specified in existing
Sec. 414.408(j)(2).
In addition, the beneficiary may elect, at any time, to transition
from a noncontract supplier to a contract supplier. The contract
supplier would be required to accept the beneficiary as a customer
regardless of how many rental months had already been paid for the
beneficiary to receive this item. If the grandfathered supplier is not
willing to continue furnishing the item, a beneficiary must select a
contract supplier to furnish the item in order to receive Medicare
payment for that item. The grandfathered supplier is paid based on the
payment rules outlined in the final rule on Competitive Bidding at
Sec. 414.408(j).
As a result of what we learned from Round 1 of the CBP, we proposed
changes to the ``grandfathering'' rules by establishing notification
requirements for noncontract suppliers that are furnishing rented DME
competitive bid items at the time of implementation of the CBP in the
CBA in which the beneficiary resides. We also proposed a new definition
for a grandfathered item to include all rented item(s) in a competitive
bidding product category that a supplier currently provides to its
beneficiaries. Under the current regulation, suppliers may choose the
items within a product category for which they want to become a
grandfathered supplier.
As proposed, a noncontract supplier would have to choose to be
either a grandfathered supplier for all or for none of the rented DME
items within a product category that the supplier currently provides.
For further discussion of the CBP and the bid evaluation process,
see the April 10, 2007 final rule and the January 16, 2009 interim
final rule with comment period.
We proposed to revise the definition of ``grandfathered item'' in
Sec. 414.402 so that the term would refer to all rented items within a
competitive bid product category that the supplier currently rents to
beneficiaries. In addition, we proposed to redesignate the current
Sec. 414.408(j)(5) as Sec. 414.408(j)(7) and add new Sec.
414.408(j)(5) and (j)(6). The new Sec. 414.408(j)(5) and (j)(6) will
specify the notification requirements that apply to noncontract
suppliers that are renting DME competitive bid items in a CBA at the
time of implementation of the CBP.
a. Definition of a Grandfathered Item
We proposed to revise the definition of a ``grandfathered item'' in
Sec. 414.402 to avoid confusion, on the part of beneficiaries,
regarding rented DME items for which a noncontract supplier is willing
or not willing to be a grandfathered supplier. Under the current
regulations, a supplier may make separate choices regarding
grandfathering for each individual HCPCS code. For example, a supplier
may choose to be a grandfathered supplier for a particular type of
walker within the product category instead of all of the walkers
included in that product category that are furnished on rental basis.
Under the revised definition, a noncontract supplier would have to
choose to be either a grandfathered supplier for all or for none of the
DME rented items within a product category that the supplier currently
provides. We believe that it would be easier for beneficiaries to
recognize which items a supplier is grandfathering or not
grandfathering if the supplier's election concerning grandfathering was
made by product category rather than making separate choices for each
individual HCPCS code. In addition, this proposed revision would
prevent suppliers from choosing to be a grandfathered supplier for only
the more profitable items, which could disadvantage certain
beneficiaries.
Comment: One commenter stated that CMS should allow noncontract
suppliers to furnish and bill for supplies, such as CPAP masks, for
``capped'' rental equipment, as well as, supplies for rental equipment
that they have chosen to grandfather.
Response: Section 1847(a)(4) of the Act only refers to DME items
for which payment is made on a rental basis under section 1834(a) of
the Act. Therefore, grandfathering can only apply to those items and
necessary accessories and supplies provided during the rental period.
Once the rental period ends additional accessories and supplies must be
provided by the contract supplier.
Comment: Several commenters suggested that CMS should expand the
grandfathering provisions to all

[[Page 61938]]

products including diabetic testing supplies subject to the CBP.
Response: Section 1847(a)(4) of the Act only refers to DME items
for which payment is made on a rental basis under section 1834(a) of
the Act. Therefore, we cannot extend grandfathering provisions to items
that are not DME or not paid on a rental basis.
After consideration of the public comments we received, we are not
making any changes to this section of the proposed rule.
b. Notification of Beneficiaries and CMS by Suppliers That Choose To
Become Grandfathered Suppliers
We proposed to add a new Sec. 414.408(j)(5)to require suppliers
furnishing items to be included in a CBP that are eligible for
grandfathering to notify beneficiaries in the CBA and CMS regarding
their decision whether to become grandfathered suppliers.
The notification requirements we proposed will prohibit certain
inappropriate practices of noncontract suppliers. These inappropriate
practices include: (1) suppliers attempting to receive additional
monthly rental payments from Medicare by circumventing the
grandfathering requirements; and (2) suppliers not formally notifying
beneficiaries before picking up the rented item from the beneficiary's
home. We also proposed to require a notification process to protect
beneficiaries and to ensure less confusion during the transition period
prior to implementation of the CBP. The proposed requirements will help
ensure that beneficiaries are contacted and informed about the
grandfathering process and what choices they have concerning their
choice of supplier. Moreover, the notice will help to ensure that
beneficiaries do not have medically necessary DME equipment taken from
them unexpectedly by a noncontract supplier.
(1) Notification of Beneficiaries by Suppliers That Choose To Become
Grandfathered Suppliers
We proposed to add Sec. 414.408(j)(5)(i) which requires a
noncontract supplier that elects to become a grandfathered supplier in
a CBA to provide a written notification to each Medicare beneficiary in
that CBA who is currently renting a grandfathered item from that
supplier. The notification must state that the supplier is willing to
continue to rent the grandfathered item(s) to the beneficiary as a
grandfathered supplier. The notice must identify the DME grandfathered
rented items for which the supplier will be a grandfathered supplier.
To ensure that beneficiaries are sufficiently informed and prepared
for competitive bidding changes that affect rented DME, we proposed in
Sec. 414.408(j)(5) to require that the notification of the beneficiary
must meet the following requirements. The notification must:
Be sent by the supplier to the beneficiary at least 30
business days before the start date of the implementation of the CBP in
the CBA in which the beneficiary resides. The 30-day notice is
necessary to give the beneficiary sufficient time before the start of
the CBP to consider whether to continue to use their current supplier.
Suppliers will be given sufficient time to meet the 30-day notification
requirement.
Identify the grandfathered items that the supplier is
willing to continue to rent to the beneficiary.
Be in writing (for example, by letter or postcard) and the
supplier must maintain proof of delivery.
State that the supplier is offering to continue to furnish
certain rented DME, oxygen and oxygen equipment, and supplies that the
supplier is currently furnishing to the beneficiary (that is, before
the start of the CBP) and is willing to continue to provide these items
to the beneficiary for the remaining rental months.
State that the beneficiary has the choice to continue to
receive a grandfathered item(s) from the grandfathered supplier or may
elect to receive the item(s) from a contract supplier after the end of
the last month for which a rental payment is made to the noncontract
supplier.
Provide the supplier's telephone number and instruct the
beneficiaries to call the supplier with questions regarding
grandfathering and to notify the supplier of his or her election.
State that the beneficiary can obtain information about
the CBP by calling 1-800-MEDICARE or accessing http://www.medicare.gov
on the internet.
In Sec. 414.408(j)(i)(B), we proposed that the supplier should
obtain an election from the beneficiary and maintain a record of its
attempts to communicate with the beneficiary to obtain the
beneficiary's election regarding grandfathering. We also proposed that
the supplier maintain a record of the beneficiary's choice, the date on
which the choice was made, and how the beneficiary communicated his or
her choice to the supplier. The 30-day notice to the beneficiary must
be in writing to ensure that there is a record that the notification
was made.
Comment: One commenter stated there may be difficulty contacting
the beneficiary within the 30-business day requirement.
Response: We disagree. The suppliers should have an ongoing
relationship with beneficiaries and be aware of how to contact them. In
addition, suppliers are responsible for keeping themselves informed
about the CBP and the notification requirements. When a supplier begins
providing rented items to a beneficiary just prior to the start of the
CBP and there are less than 30 days remaining before the start of the
CBP, the supplier is required to provide the 30-day notification to the
beneficiary at the time the supplier agrees to provide the items to the
beneficiary. If the supplier decides not to be a grandfathered the
supplier would still be required to provide the 10-day and 2-day
notifications prior to picking up the equipment.
Comment: One commenter recommended that the supplier send out the
initial notification letter to the beneficiary notifying them of the
grandfathering option. The commenter also suggested that the
beneficiary should not be required to take any additional steps if they
would like to continue with their current supplier. The beneficiary
would only be required to provide their current supplier with
documentation if they wish to make a change to an alternate supplier.
Response: Beneficiaries are responsible for notifying their current
supplier of their decision. We believe that this is the only way to
ensure that the beneficiary has made an informed decision. The supplier
must obtain an election from the beneficiary and document this in their
records; however, this may be a verbal election.
Comment: Another commenter stated that CMS should limit the
notification by noncontract supplier to a 30-day notice as to whether
they will be a grandfathered supplier.
Response: We believe the notification process as outlined in the
proposed rule is a necessary beneficiary protection to ensure that
beneficiaries do not have medically necessary equipment taken from them
unexpectedly by a noncontract supplier.
Comment: One commenter stated the notice should include information
for the beneficiary on how to contact the supplier to notify them as to
their decision.
Response: We agree. The proposed rule states it is a requirement to
provide a 30-day written notification that should include the
supplier's telephone number and instructions for the beneficiary to
call the supplier to notify them of his or her election and provide the
opportunity for them to ask any

[[Page 61939]]

questions they may have regarding grandfathering.
Comment: One commenter recommended that the two suppliers should
then be required to coordinate the pickup and delivery of equipment.
Response: We agree. The proposed rule states when a beneficiary
chooses to switch to a new contract supplier, the current noncontract
supplier, and the new contract supplier are responsible for making
arrangements that are suitable to the beneficiary.
Comment: One commenter stated that multiple notification
requirements impose a burden on suppliers who have lost competitive
bids and will have little or no incentive to comply with these
requirements.
Response: We disagree. The noncontract supplier has been paid for
furnishing the equipment up to the first anniversary date after the
start of the CBP. Therefore, they have already received compensation
for this time period. In addition, the suppliers should have an ongoing
relationship with the beneficiary, be aware of how to contact them, and
know about any changes in their circumstances. We believe the
notification process is necessary to protect the beneficiaries.
Comment: Another commenter believes that CMS has underestimated the
paperwork burden requiring the beneficiary sign another document and
for suppliers to track that documentation.
Response: There is no requirement for the beneficiary to sign an
additional document. The supplier must obtain an election from the
beneficiary; however, this may be a verbal election. We also believe
suppliers should have an ongoing relationship with the beneficiaries
for which they are providing items and services and billing Medicare.
We do not believe this is an additional paperwork burden but rather
good business practices.
After consideration of the public comments, we are finalizing this
section of the proposed rule as proposed.
We proposed to add paragraphs Sec. 414.408(j)(5)(i)(C)(1) through
(3) which state if the beneficiary chooses not to continue to receive a
grandfathered item(s) from the noncontract supplier, the supplier must
provide the beneficiary with 2 additional notices prior to picking up
its equipment. These notices are described below as the 10-Day
Notification and the 2-Day Notification.
(i) 10-Day Notification
Ten business days prior to picking up the item, the supplier should
have direct contact (for example, a phone call) with the beneficiary or
the beneficiary's caregiver and receive acknowledgement that the
beneficiary understands their equipment will be picked up and that this
should occur on the first anniversary date after the start of the CBP
or another date agreed to by the beneficiary. The noncontract supplier
must bill and will be paid for the furnishing of the equipment up to
the first anniversary date after the start of the CBP and the new
supplier cannot bill for furnishing the equipment prior to this
anniversary date. This requirement still applies if a date other than
the anniversary date is chosen.
The beneficiary's anniversary date occurs every month on the date
of the month on which the item was first delivered to the beneficiary
by the current supplier. The anniversary date marks the date of every
month on which a new monthly rental period begins. For example, using
July 1 as the beginning date of the Medicare DMEPOS CBP:
If a beneficiary's last anniversary date before the
beginning of the CBP is June 29, the noncontract supplier must submit a
claim for the rental month beginning June 29 and ending July 28. The
noncontract supplier should not pick up the equipment prior to July 29.
In this case, the noncontract supplier has been paid up to July 29 and
therefore should pick up its equipment on July 29, and the contract
supplier would deliver its equipment on July 29 and begin billing for
the next month's rental as of that date.
If a beneficiary's anniversary date is July 1, also the
beginning date for the CBP, the noncontract supplier should not pick up
the equipment before July 1 and should not submit a claim for the July
rental period. The contract supplier should deliver the equipment to
the beneficiary on July 1 and submit a claim for this month.
When a DME supplier submits a monthly bill for capped rental DME
items, the date of delivery (``from'' date) on the first claim must be
the ``from'' or anniversary date on all subsequent claims for the item.
For example, if the first claim for a wheelchair is dated September 15,
all subsequent bills must be dated for the 15th of the following months
(October 15, November 15, etc.). In cases where the anniversary date
falls at the end of the month (for example, January 31) and a
subsequent month does not have a day with the same date (for example,
February), the final date in the calendar month (for example, February
28) will be used.
Comment: One commenter stated that the burden of the coordination
for the equipment pickup and replacement of an item should be placed
upon the winning bidder and the losing bidder, in coordination with the
beneficiary, rather than requiring the beneficiary to be in contact
with both suppliers.
Response: We agree. In the proposed rule, we stated that when a
beneficiary chooses to switch to a new contract supplier, the current
noncontract supplier and the new contract supplier must make
arrangements that are suitable to the beneficiary. We believe that such
arrangements need to be coordinated between the noncontract and
contract supplier to ensure that the beneficiary has continued access
to medically necessary equipment.
Comment: One commenter stated that the beneficiary and the new
contract supplier must assume the primary responsibility for the
transition. Any other allocation of responsibility between contract and
noncontract supplier is impractical.
Response: We disagree. The noncontract supplier has been paid for
furnishing the equipment up to the first anniversary date after the
start of the CBP. Therefore, they have already received compensation
for this time period. The notification process is for beneficiary
protection to ensure less confusion during the transition period.
Therefore, we believe the noncontract supplier must play a role in this
transition.
After consideration of the public comments we received, we are
finalizing this section of the proposed rule as proposed.
(ii) 2-Day Notification
Two business days prior to picking up the item, the supplier must
contact the beneficiary by phone to remind the beneficiary of the date
the supplier will pick up the item. This supplier should not pick up
the item before the beneficiary's first anniversary date that occurs
after the start of the CBP.
There may be unusual circumstances that make it difficult to
contact certain beneficiaries. However, we do not expect this to occur
often because these suppliers have been submitting monthly rental
claims for providing services to these beneficiaries. Therefore, the
supplier should have an ongoing relationship with the beneficiary and
be aware of how to contact them and any changes in their circumstances.
However, under no circumstance should a supplier pick up a rented item
prior to the supplier's receiving acknowledgement from the beneficiary
that they are aware of the date on which the supplier is picking up the
item and that arrangements have been made to have the item replaced on
that date by a contract supplier. The pickup of the

[[Page 61940]]

noncontract supplier's equipment and the delivery of the new contract
supplier's equipment should occur on the same date. The pick up by the
noncontract supplier and the delivery by the contract supplier should
occur on the first rental anniversary date of the equipment that occurs
after the start of the CBP. When a beneficiary chooses to switch to a
new contract supplier, the current noncontract supplier and the new
contract supplier must make arrangements that are suitable to the
beneficiary. This provides some latitude, for the pickup and the
delivery date but not in terms of billing. The new equipment cannot be
billed for until the anniversary date and the old equipment cannot be
taken from the beneficiary before the anniversary date.
Comment: One commenter stated that if a supplier decides it does
not want to grandfather a product category, it should be sufficient if
the supplier provides notice one time in writing and follows up by
phone as the deadline for transitioning approaches.
Response: We agree. The initial 30-day notification must be in
writing to ensure there is a record that the notification was made. The
supplier must maintain a record of its attempts to communicate with the
beneficiary to obtain the beneficiary's election regarding
grandfathering. The supplier must maintain a record of the
beneficiary's choice, the date on which the choice was made, and how
the beneficiary communicated his or her choice to the supplier. The 10
and 2-day notices can be done by phone. We proposed the 10 and 2-day
notification process as a safeguard to protect Medicare beneficiaries
and ensure that the beneficiary has continued access to medically
necessary equipment. We do not believe this process is too burdensome
because these suppliers have been submitting monthly rental claims for
providing services to these beneficiaries and this notice can be
satisfied by a phone call to the beneficiary.
After consideration of the public comments we received, we are not
making any changes to this section of the proposed rule and finalizing
it as proposed.
c. Notification to CMS for Suppliers That Choose To Become
Grandfathered
We proposed to add Sec. 414.408(j)(5)(ii) to state that suppliers
that have chosen to become grandfathered suppliers must also notify CMS
of their decision at least 30 business days before the start of the
CBP. We believe that 30 business days is a reasonable period to allow
CMS to compile a list of grandfathered suppliers and to answer
questions about the availability of these suppliers. Unless the
supplier notifies CMS consistent with this subsection, the supplier
will not be considered a grandfathered supplier. Having a list of
grandfathered suppliers is important to assist CMS in administering the
grandfathering process. The list will be used to answer questions from
beneficiaries concerning which suppliers have chosen the grandfathering
option. The notification requirement will also help us to ensure that
suppliers are not offering the grandfathering option to only a select
number of beneficiaries. Also, having a list of suppliers that have
chosen to be grandfathered suppliers will assist us in reviewing
whether only noncontract suppliers that have elected to be
grandfathered suppliers have received Medicare payment for rented
competitive bid items in a CBA.
The notice that a noncontract supplier must provide to CMS if it
elects to become a grandfathered supplier must meet the following
requirements:
State that the supplier agrees to continue to furnish
certain rented DME, oxygen and oxygen equipment that it is currently
furnishing to beneficiaries (that is, before the start of the CBP) in a
CBA and will continue to provide these grandfathered items to these
beneficiaries for the remaining months of the rental period.
Include all of the following: Name and address of the
supplier; 6-digit NSC number of the supplier; and product category(s)
by CBA for which the supplier is willing to be a grandfathered
supplier.
Suppliers with multiple locations must submit one
notification for the company rather than for each individual location.
State that the supplier agrees to meet all the terms and
conditions applicable to grandfathered suppliers.
Be provided by the supplier to CMS in writing at least 30
business days before the start date of the implementation of a CBP.
d. Notifications of Beneficiaries by Suppliers That Choose Not To
Become Grandfathered Suppliers
We propose to clarify under Sec. 414.408(j)(6) that a noncontract
supplier that elects not to become a grandfathered supplier is required
to pick up the item it is currently renting to the beneficiary from the
beneficiary's home after proper notice to the beneficiary. A
noncontract supplier that decides not to become a grandfathered
supplier does not have the option of leaving its equipment in the
beneficiary's home. The noncontract supplier is responsible for picking
up the item from the beneficiary.
Proper notification by a supplier who chooses not to become a
grandfathered supplier must include a 30-day, a 10-day, and a 2-day
notice of its decision not to be a grandfathered supplier. These
notifications must meet all of the requirements listed above for the
30-day, 10-day and 2-day notices that must be sent by suppliers who
decide to be grandfathered suppliers, except for the following
differences for the 30-day notice.
The 30-day notice must indicate the items for which the
supplier has decided not to become a grandfathered supplier and
indicate the date upon which the equipment will be picked up.
It must state that the supplier will only continue to rent
these competitively bid item(s) up to the beneficiary's first
anniversary date, as defined in Sec. 414.408(j)(5), that occurs after
the start of the Medicare DMEPOS CBP.
It must also state that the beneficiary must select a
contract supplier for Medicare to continue to pay for these items.
It must state that the beneficiary can obtain information about the
CBP by calling 1-800-MEDICARE or accessing http://www.medicare.gov on
the internet.
It must also refer him or her to the supplier locator tool
on http://www.medicare.gov.
The supplier must also provide the beneficiary with the 10-day and
the 2-day notices prior to picking up their equipment.
When a beneficiary chooses to switch to a new contract supplier,
the current noncontract supplier and the new contract supplier must
make arrangements that are suitable to the beneficiary. This provides
some latitude, but the new equipment may not be billed by the contract
supplier until the first anniversary date following the start of the
CBP. Also, the old equipment may not be taken from the beneficiary
before proper arrangements are made and the date of service cannot
occur before the anniversary date.
As discussed above, under no circumstance should a supplier pick up
the rented item prior to the supplier making an arrangement with the
new contract supplier for the delivery of the new equipment at a time
suitable to meet the beneficiary's medical needs. The noncontract
supplier has been furnishing services to the beneficiary and receiving
payments from the program. To ensure that the beneficiary has continued
access to medically necessary equipment, the noncontract

[[Page 61941]]

supplier is expected to assist the beneficiary in locating a contract
supplier. The noncontract supplier should communicate with the
beneficiary the urgency of arranging to have the new equipment
delivered as soon as possible.
e. Other Comments
Comment: Several commenters stated that the current accreditation
and surety bond requirements were too burdensome.
Response: All comments concerning accreditation and surety bond
requirements are considered beyond the scope of this rulemaking.
We are finalizing the provisions concerning grandfathering as
proposed in the CY 2010 PFS proposed rule (74 FR 33644).

P. Five-Year Refinement of Relative Value Units

1. Background
Section 1848(c)(2)(C)(i) of the statute states that the Secretary
shall determine a number of work RVUs for the service based on the
relative resources incorporating physician time and intensity required
in furnishing the service. Section 1848(c)(2)(B)(i) of the Act requires
that we review all RVUs no less than every 5 years.
We initiated the first Five-Year Review of work RVUs in 1994 and
refinements went into effect beginning in 1997 (59 FR 63410 and 61 FR
59490). The scope of the Five-Year Review was limited to work values,
since at that time, the statute required that PE and malpractice RVUs
be calculated based on 1991 allowed charges and PE and malpractice
expense shares for the specialties performing the services.
The second Five-Year Review of physician work RVUs began in 1999
and refinements went into effect beginning in CY 2002 (64 FR 59380 and
66 FR 55246). The third Five-Year Review of the physician work RVUs
began in CY 2004 with the resulting changes being effective beginning
in 2007 (69 FR 66236 and 71 FR 69624).
While the statute requires the Secretary to review the relative
values for services no less than every 5 years, the work RVUs for many
services, have never been specifically reviewed since the inception of
the PFS. Since we approach our review with the underlying assumption
that services are appropriately valued, the focus of the Five-Year
Reviews has been on potentially misvalued services that are identified
by us or commenters.
2. Codes Reviewed Outside the Usual Five-Year Review Process
Although it was our practice for many years to wait for the next
Five-Year Review to review and revise any potentially misvalued
services, we remained concerned that it was inappropriate to wait 5
years (or until the next Five-Year Review of work RVUs) when we had
some evidence that certain services were not valued correctly. MedPAC,
the Congress, and other stakeholders have expressed similar concerns.
Subsequent to the completion of the third Five-Year Review, in
collaboration with the AMA RUC, based on the additional concern that
some services had not been reviewed since the inception of the PFS we
have undertaken to review certain potentially misvalued codes. This
effort is discussed elsewhere in this final rule with comment period
(see section II.F.). The fourth Five-year Review will be conducted
independently of the review of codes under the potentially misvalued
code initiative.
3. Fourth Five-Year Review of Work RVUs
We are initiating the fourth Five-Year Review of work RVUs with the
resulting changes being effective beginning in 2012. As with the
previous Five-Year Reviews, we are soliciting comments only on services
for which the currently assigned work RVUs may be inappropriate. To the
extent that there are changes in physician time or in the number or
level of post procedure visits as a result of the Five-Year Review of
work, the PE inputs, and we could be impacted and we would them
accordingly.
Under the Five-Year Review process, we solicit comments from the
public on codes that are potentially misvalued. We then review the
public comments and forward codes identified in those comments, as well
as codes that we have identified as potentially misvalued, to the AMA
RUC. The AMA RUC then follows a process, similar to that used for new
CPT codes (see description below). The AMA RUC:
Surveys its members to assess their level of interest in
reviewing relative values for certain services (and to identify
services for which the code descriptors may no longer be appropriate);
Develops survey instruments for the specialty societies to
use to assess the work or level of effort involved with the service;
Asks specialty committees to conduct the surveys, review
the results and prepare their recommendations for the AMA RUC; and
Reviews the specialty committee recommendations and may
either adopt them, refer them back to the specialty society or modify
them prior to submitting its recommendations to CMS.
We then review the AMA RUC recommendations, decide whether we agree
or disagree, and propose to accept or reject/revise the AMA RUC
recommendations. Our responses to the AMA RUC recommendations are
presented, and any changes in valuations are established through notice
and comment rulemaking.
Consistent with the format for the previous Five-Year Reviews, in
addition to the codes submitted by the commenters, we will also
identify codes and submit them to the AMA RUC. Our focus will be on
codes (especially high-volume codes across specialties) that:
Are valued as being performed in the inpatient setting,
but that are now predominantly performed on an outpatient basis, and
Were not previously reviewed by the AMA RUC, (for example,
Harvard-based codes).
In prior years, we solicited comments on codes for which there is a
rank order anomaly within the family of codes, and accepted the
possible existence of a rank order anomaly as a primary reason for
specialty societies to submit codes for review. An anomalous
relationship may exist between the code being valued and other codes.
For example, code A describes a service that requires more work than
codes B, C, and D, but code A is valued lower. For the fourth Five-Year
Review of work RVUs, we will no longer consider the existence of a
possible rank order anomaly to be the primary basis for undertaking the
review of a code. However, rank order anomalies will continue to be
used as a way to screen for potential problem areas.
In addition, when we submit codes to the RUC for review, we note
that in order to maintain relativity, we may decide to submit the
entire family of codes (including the base code) for review. The base
code is the most important code to review because it is the basis for
the valuation of other codes within the family and allows for all
related codes to be reviewed at the same time. We believe that
reviewing the entire family of codes can assist in ensuring relativity
between services and consistent valuation of services.
We also note that codes that have been reviewed/revised under the
potentially misvalued code initiative may also be considered for review
under

[[Page 61942]]

the Five-Year Review of work RVUs. We believe this will allow for the
most systematic review possible to ensure the appropriateness of values
under the PFS.
The AMA RUC has developed detailed ``Compelling Evidence
Standards'' which are used by the RUC as part of its process to
determine if a recommendation to change the work RVU is warranted for a
given code. We are including these standards in section II.P.4. of this
final rule with comment period solely for informational purposes so
that commenters are aware of the kind of information that has been used
in the past to make a successful argument to the RUC for changing work
RVUs.
We typically publish a proposed notice for the Five-Year Review
separate from the annual notice of proposed rulemaking that is
published for the PFS. Publishing the Five-Year Review notice separate
from the annual PFS rule allows time for the potential establishment of
refinement panels to address comments received on proposed work RVU
changes resulting from the Five-Year Review.
The fourth Five-Year Review of Work RVUs will be addressed in a
proposed notice that we intend to publish in the spring of 2011. In
that proposed notice, we will discuss: the codes considered for review
under this fourth Five-Year Review; the AMA RUC recommended work RVUs;
and our proposed valuation of the services, including the rationale for
the work valuation. We will solicit comments on our proposed valuation
of the codes. We will then review and analyze the comments received in
response to the proposed notice and publish our decisions as part of
the CY 2012 PFS final rule with comment period. (As previously
mentioned, in past years we have addressed comments on the proposed
notice through the use of refinement panels, similar to those used to
address comments received on interim values for new or revised codes.)
The changes would be effective January 1, 2012.
In the last Five-Year Review of work RVUs, some specialty societies
used methods other than the AMA RUC-developed survey instrument to
arrive at recommended work RVUs. These methods included reliance on
other data sources (for example, Department of Veteran Affairs (VA)
National Surgical Quality Improvement Program (NSQIP) and the Society
for Thoracic Surgeons (STS) databases).
The NSQIP was initiated by the VA for quality improvement
purposes in 1991 with 128 VA medical centers. It currently includes a
large volume of surgical procedures from non-VA medical centers as
well. The total number of cases for VA and non-VA medical centers is
greater than one million. The NSQIP database contains pre-, intra-, and
post-operative data, including intra-service times and length of stay
data.
The STS National database is a voluntary reporting system
for the collection of outcomes data related to cardiothoracic surgical
services. This database currently contains over two million patient
records collected from more than 450 practices (from 1995 through
2004). Over 70 percent of the hospitals currently performing heart
surgeries in the U.S. reportedly participate in this database.
As discussed earlier in this section, specialty societies usually
rely on the AMA RUC survey process to arrive at work values for their
services, often referencing the median work value (50th percentile)
resulting from the survey as a recommendation for a proposed work RVU.
However, for the last Five-Year Review, a few specialty societies used
other data sources, such as those mentioned above, to establish
recommended work values. We are concerned that reliance solely on these
other data sources could result in an inconsistent assignment of work
RVUs, eroding the relativity of the PFS.
We would like to emphasize that the most common approach used by
the AMA RUC for valuation of the work of a service is the building
block approach. In constructing the building blocks, a service is
divided into pre-, intra-, and post-service components. For a surgical
procedure, the pre-service component consists of all services furnished
before the physician makes the skin incision (for example, pre-
operative evaluation and scrubbing); the intra-service component
consists of the ``skin-to-skin'' time (that is the operative time
between surgical opening and closing); and the post-service component
includes immediate post-surgery services and subsequent hospital and
office visits. Each component (or building block) is then assigned work
RVUs. Pre-service and intra-service work RVUs are based on time and the
intensity of the activities. Post-service work is based on the
specified E/M service for each post-operative visit. These three
component work values are then summed to compute ``building-block''
work RVUs.
For purposes of the fourth Five-Year Review of work RVUs and in
order to gain a better understanding of the distribution of data from
surveys and other data sources submitted in support of work RVU
refinements, we will require that the minimum/maximum values, the 5th,
25th, 50th (median), 75th, and 95th percentiles be reported. In
addition, we will require reporting of the geometric mean. This is
similar to information currently reported for the specialty surveys,
with some additional percentiles and the geometric mean being included.
However if the AMA RUC recommendation does not include the information
discussed above we may reject the recommendation.
To the extent the PQRI databases may include information similar to
that previously described in the physician surveys, these databases
might serve as an additional source for establishing or validating work
RVUs.
4. RUC Compelling Evidence Standards
The AMA RUC operates with the initial presumption that the current
values assigned to the codes under review are correct. This presumption
can be challenged by a society or other organization presenting a
compelling argument that the existing values are no longer rational or
appropriate for the codes in question. The justification for a change
must be substantial and meet the RUC's compelling evidence standards.
The argument in support of a change in work RVUs must be provided
in a comment letter to us, and then later to the AMA RUC in writing on
the Summary of Recommendation form. The following guidelines may be
used to develop a ``compelling argument'' that the published relative
value units assigned for a service are inappropriate:
Documentation in the peer reviewed medical literature or
other reliable data that there have been changes in physician work due
to one or more of the following:
++ Technique.
++ Knowledge and technology.
++ Patient population.
++ Site-of-service.
++ Length of hospital stay.
++ Physician time.
An anomalous relationship between the code being proposed
for review and other codes. For example, if code A describes a service
that requires more work than codes B, C, and D, but is nevertheless
valued lower. The specialty would need to assemble evidence on service
time, technical skill, patient severity, complexity, length of stay and
other factors for the code being consideredand the codes to which it is
compared. These reference services may be both inter- and intra-
specialty. (Note: The AMA RUC may wish to continue to use this as part
of its method for determination of compelling evidence. However, if it
is

[[Page 61943]]

not used according to the parameters we have discussed earlier in this
section we may reject the AMA RUC recommendation.)
Evidence that technology has changed physician work, that
is, diffusion of technology.
Analysis of other data on time and effort measures, such
as operating room logs or national and other representative databases.
Evidence that incorrect assumptions were made in the
previous valuation of the service, as documented, such as:
++ A misleading vignette, survey, or flawed crosswalk assumptions
in a previous evaluation;
++ A flawed mechanism or methodology used in the previous
valuation, for example, evidence that no pediatricians were consulted
in assigning pediatric values; and
++ A previous survey was conducted by one specialty to obtain a
value, but in actuality that service is currently provided primarily by
physicians from a different specialty according to utilization data.
5. Five-Year Review of Other PFS Components
a. Malpractice RVUs
From 1992 to 1999, malpractice RVUs were charge-based, using
weighted specialty-specific malpractice expense percentages and 1991
average allowed charges. Malpractice RVUs for new codes after 1991 were
extrapolated from similar existing codes or as a percentage of the
corresponding work RVU. Section 4505(f) of the BBA required us to
implement resource-based malpractice RVUs for services furnished
beginning in 2000. Initial implementation of resource-based malpractice
RVUs occurred in 2000. The statute also requires that we review, and if
necessary adjust, RVUs no less often than every 5 years. The first
review and update of resource based malpractice RVUs was addressed in
the CY 2005 PFS final rule (69 FR 66263). Minor modifications to the
methodology were addressed in the CY 2006 PFS final rule (70 FR 70153).
In this rule, we are implementing the second review and update of
malpractice RVUs (see section II.C. of this final rule with comment
period).
b. Practice Expense RVUs
The resource-based PE RVUs were effective January 1, 1999. To
assist in the refinement of the direct PE inputs (developed by the
specialty-specific Clinical Practice Expense Panels conducted in the
late 1990s), the AMA RUC created the Practice Expense Advisory
Committee (PEAC) in CY 1999. The PEAC refined the PE inputs for nearly
all of the CPT codes in the PFS by the time it sunsetted 5 years later
in March 2004. (The remainder of the codes, approximately 200, were
refined at the September 2004 and February 2005 AMA RUC meetings.)
These PEAC (and subsequent AMA RUC) refinements of the PE inputs were
provided as recommendations to CMS.
A comprehensive review of PE was undertaken prior to the 4-year
transition period for the PE methodology from the top-down to the
bottom-up methodology which will be complete in 2010. In this final
rule with comment period we are incorporating new Physician Practice
Information Survey (PPIS) data. (These data are used to update the
specialty-specific PE/HR data used to develop PE RVUs.)
The next Five-Year Review of PE RVUs will be addressed in CY 2014
and we are soliciting comments on approaches to take for this next
Five-Year Review of PE RVUs. However, to the extent that there are
changes in physician time or in the number or level of post procedure
visits as a result of the fourth Five-Year Review of work, there will
be a potential impact on the practice expense inputs, and we will
revise the inputs accordingly.
In the interim, we will continue with our efforts as part of the
misvalued code initiative to develop a process to ensure that prices
for certain high cost supplies that are used to determine PE RVUs are
accurate and reflect current information.
Q. Other Issues: 2010 Therapy Caps
Section 1833(g) of the Act applies an annual, per beneficiary
combined cap on expenses incurred for outpatient physical therapy and
speech-language pathology services under Medicare Part B. A similar
separate cap for outpatient occupational therapy services under
Medicare Part B also applies. (The caps do not apply to expenses
incurred for therapy services furnished in an outpatient hospital
setting.) The caps were in effect during 1999, from September 1, 2003
through December 7, 2003 and beginning January 1, 2006. Also beginning
January 1, 2006, the Deficit Reduction Act (Pub. L. 109-171) (DRA)
provided for an exception process to the therapy cap until December 31,
2006. Subsequent legislation (MIEA-TRHCA and the MMSEA) extended the
exception process for therapy caps until December 31, 2007 and June 30,
2008, respectively. Section 141 of the MIPPA extended the exception
process through December 31, 2009. Several therapy associations have
requested that we announce the amount of the therapy cap for CY 2010 in
the PFS final rule.
The annual, per beneficiary therapy cap for CY 2010 is computed by
multiplying the cap amount for CY 2009, which is $1840, by the Medicare
Economic Index, which is 1.2 percent, and rounding to the nearest $10.
Therefore, each cap for CY 2010 will be $1860. The agency's authority
to provide for exceptions to therapy caps will expire on December 31,
2009, unless the Congress acts to extend it. If the current exception
process expires, the only exceptions to therapy caps will be for
services billed by the outpatient hospitals.

III. Refinement of Relative Value Units for Calendar Year 2010 and
Response to Public Comments on Interim Relative Value Units for 2009

A. Summary of Issues Discussed Related to the Adjustment of Relative
Value Units

Sections III.B. and III.C. of this final rule with comment describe
the methodology used to review the comments received on the RVUs for
physician work and the process used to establish RVUs for new and
revised CPT codes. Changes to the RVUs and billing status codes
reflected in Addendum B are effective for services furnished beginning
January 1, 2010.

B. Process for Establishing Work Relative Value Units for the Physician
Fee Schedule

The CY 2009 PFS final rule with comment period (73 FR 69726)
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, 2009. We considered the RVUs for the interim codes
to be subject to public comment under the annual refinement process. In
this section, we address comments on the interim work RVUs published in
the CY 2009 PFS final rule with comment period, and our establishment
of the work RVUs for new and revised codes for the CY 2010 PFS.

C. Work Relative Value Unit Refinements of Interim Relative Value Units

1. Methodology (Includes Table titled ``Work Relative Value Unit
Refinements of the 2009 Interim and Related Relative Value Units'')
Although the RVUs in the CY 2009 PFS final rule with comment period
were used to calculate 2009 payment amounts, we considered the RVUs for
the new or revised codes to be interim.

[[Page 61944]]

We accepted comments for a period of 60 days. We received substantive
comments on approximately 12 CPT codes with interim work RVUs.
To evaluate these comments we used a process similar to the process
used since 1997. (See the October 31, 1997 final rule (62 FR 59084) for
the discussion of refinement of CPT codes with interim work RVUs.) We
convened a multispecialty panel of physicians to assist us in the
review of the comments. We invited representatives from the
organizations from which we received substantive comments to attend a
panel for discussion of the code on which they had commented. The panel
was moderated by our medical staff, and consisted of the following
voting members:
One or two clinicians representing the commenting
organization.
Two primary care clinicians nominated by the American
Academy of Family Physicians and the American College of Physicians.
Four carrier medical directors.
Clinicians with practices in related specialties who were
expected to 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 300 reference services and asked the panel
members to compare the clinical aspects of the work of the service a
commenter believed was incorrectly valued to one or more of the
reference services. In compiling the set, we attempted to include: (1)
Services that are commonly performed whose work RVUs are not
controversial; (2) services that span the entire spectrum from the
easiest to the most difficult; and (3) at least three services
performed by each of the major specialties so that each specialty would
be represented. The intent of the panel process was to capture each
participant's independent judgment based on the discussion and his or
her clinical experience. Following the discussion, each participant
rated the work for the procedure. Ratings were individual and
confidential, and there was no attempt to achieve consensus among the
panel members.
We then analyzed the ratings based on a presumption that the
interim RVUs were correct. To overcome this presumption, the inaccuracy
of the interim RVUs had to be apparent to the broad range of physicians
participating in each panel.
Ratings of work were analyzed for consistency among the groups
represented on each panel. In addition, we used statistical tests to
determine whether there was enough agreement among the groups of the
panel and whether the agreed-upon RVUs were significantly different
from the interim RVUs published in Addendum C of the final rule. We did
not modify the RVUs unless there was a clear indication for a change.
If there was agreement across groups for change, but the groups did not
agree on what the new RVUs should be, we eliminated the outlier group
and looked for agreement among the remaining groups as the basis for
new RVUs. We used the same methodology in analyzing the ratings that we
first used in the refinement process for the 1993 PFS. The statistical
tests were described in detail in the November 25, 1992 final rule (57
FR 55938).
Our decision to convene multispecialty panels of physicians and to
apply the statistical tests described above was based on our need to
balance the interests of those who commented on the work RVUs against
the redistributive effects that would occur in other specialties.
The following table lists those interim codes reviewed under the
refinement panel process described in this section. This table includes
the following information:
CPT Code. This is the CPT code for a service.
Description. This is an abbreviated version of the
narrative description of the code.
2009 Work RVU. The work RVUs that appeared in the November
2008 rule are shown for each reviewed code.
Requested Work RVU. This column identifies the work RVUs
requested by commenters.
2010 Work RVU. This column contains the final RVUs for
physician work.
[GRAPHIC] [TIFF OMITTED] TR25NO09.199

D. Interim 2009 Codes

1. Destruction of Skin Lesions Codes
CPT codes 17106, Destruction of cutaneous vascular proliferative
lesions (e.g., laser technique); less than 10 sq cm, 17107, Destruction
of cutaneous vascular proliferative lesions (e.g., laser technique);
10.0 to 50.0 sq cm, and 17108, Destruction of cutaneous vascular
proliferative lesions (e.g., laser technique); over 50.0 sq cm were
identified by the AMA RUC's Five-Year Review Identification Workgroup
through the high intra-service work per unit of time (IWPUT) screen.
The AMA RUC recommended 3.61 work RVUs for CPT code 17106, 4.68 work
RVUs for

[[Page 61945]]

CPT code 17107, and 6.37 work RVUs for CPT code 17108, which we
accepted in the CY 2009 PFS final rule with comment (73 FR 69884).
Comment: Commenters disagreed with the AMA RUC-recommended work
values for these services, which we had accepted. The commenters
expressed concerns about the AMA RUC's use of IWPUT to not only
identify potentially misvalued services but also to revalue them.
Commenters were also concerned that a ranking system (that is, IWPUT)
not formally recognized by CMS had been used inappropriately to
identify and value these services. Many commenters encouraged CMS to
conduct a Refinement Panel Review of the valuation of these codes.
Response: Based on these concerns, we referred these codes to the
Multi-Specialty Validation Panel for review. As a result of the
statistical analysis of the 2009 Multi-Specialty Validation Panel
ratings, we have assigned 3.61 work RVUs to CPT code 17106, 4.68 work
RVUs to CPT code 17107, and 7.35 work RVUs to CPT code 17108.
2. Hemorrhoidectomy Code
For CPT code 46930, Destruction of internal hemorrhoid(s) by
thermal energy (eg, infrared coagulation, cautery, radiofrequency), the
AMA RUC recommended 1.56 work RVUs and a global period assignment of
090 (major surgery with a 1-day preoperative period and 90-day
postoperative period included in the fee schedule amount), which we
accepted in the CY 2009 PFS final rule with comment (73 FR 69892).
Comment: We received comments from independent providers, one
manufacturer, and specialty societies representing gastroenterologists
who disagreed with the 90-day global period assignment and requested
that we assign a 10-day (minor procedure with preoperative relative
values on the day of the procedure and postoperative relative values
during a 10-day postoperative period included in the fee schedule
amount) global period instead. The commenters believe this procedure is
a minor procedure and a 10-day global period assignment would be
appropriate. The commenters also believe that the work RVUs assigned to
this procedure are more in line with a 10-day global period. We did not
receive any comments from the colon and rectal surgeons and general
surgeons who participated in the survey of this code and predominately
perform this procedure.
Response: Prior to the creation of CPT code 46930, this procedure
was performed using deleted CPT code 46934, Destruction of hemorrhoids,
any method; internal which was assigned a 90-day global period. We
believe the valuation and assignment of a 90-day global period is
appropriate for this procedure. The post-operative care and potential
clinical problems remain the same despite having a new technology to
address this clinical condition. We will plan to review the clinical
experience with this technology in the future to learn how patients
fared who underwent destruction of hemorrhoids with this new
technology. In the meantime, we will maintain a 90-day global period
for this procedure.
3. Stereotactic Radiosurgery Codes
For CPT codes 61796, Stereotactic radiosurgery (particle beam,
gamma ray, or linear accelerator); 1 simple cranial lesion, 61797,
Stereotactic radiosurgery (particle beam, gamma ray, or linear
accelerator); each additional cranial lesion, simple, and 63620,
Stereotactic radiosurgery (particle beam, gamma ray, or linear
accelerator); 1 spinal lesion the AMA RUC recommended 15.50 work RVUs
for CPT code 61796, 19.75 work RVUs for CPT code 61798, and 15.50 work
RVUs for CPT code 63620. We disagreed with the AMA RUC recommendations
and assigned 10.79 work RVUs to all three of these codes in the CY 2009
PFS final rule with comment (73 FR 69892). We believed the specialty
societies and the AMA RUC, in general, used open surgical codes as
comparators during the AMA RUC process instead of a more equivalent
stereotactic radiation treatment code.
Comment: The commenters disagreed with the interim work RVUs
assigned by CMS and urged CMS to accept the AMA RUC-recommended values
for these codes. The commenters believed CMS erred in basing the
interim values on the work RVUs of two radiation oncology services
instead of surgical codes. The commenters expressed that sterotactic
radiosurgey is much more intense than radiation therapy. Commenters
were also confused as to why CMS valued CPT codes 61796, 61798, and
63620 identically since CPT code 61796 describes treatment of a
``simple'' cranial lesion and CPT code 61798 describes treatment of a
``complex'' cranial lesion. The commenters believed the work required
to treat complex lesions is much greater than the work required to
treat simple lesions. Based on these concerns, we referred these codes
to the Multi-Specialty Validation Panel for review.
Response: As a result of the statistical analysis of the 2009
Multi-Specialty Validation Panel ratings, we have assigned 13.83 work
RVUs to CPT code 61796, 19.75 work RVUs to CPT code 61798, and 15.50
work RVUs to CPT code 63620.
4. Cardiac Monitoring Codes
For CPT codes 92382, Programming device evaluation with iterative
adjustment of the implantable device to test the function of the device
and select optimal permanent programmed values with physician analysis,
review and report; single lead implantable cardioverter-defibrillator
system, 93283, Programming device evaluation with iterative adjustment
of the implantable device to test the function of the device and select
optimal permanent programmed values with physician analysis, review and
report; dual lead implantable cardioverter-defibrillator system, 92389,
Interrogation device evaluation (in person) with physician analysis,
review and report, includes connection, recording and disconnection per
patient encounter; single, dual, or multiple lead implantable
cardioverter-defibrillator system, including analysis of heart rhythm
derived data elements, and 93295, Interrogation device evaluation(s)
(remote), up to 90 days; single, dual, or multiple lead implantable
cardioverter-defibrillator system with interim physician analysis,
review(s) and report(s), the AMA RUC recommended 0.85 work RVUs for CPT
code 93282, 1.18 work RVUs for CPT code 93283, 0.92 work RVUs for CPT
code 93289, and 1.38 work RVUs for CPT code 93295. We agreed with the
AMA RUC-recommended value for CPT code 93282, but disagreed with the
AMA RUC-recommended value for CPT codes 93283, 93289, 93295 in the CY
2009 PFS final rule with comment (73 FR 69892). We questioned the
recommended values for the increments between some codes within
families and across families of pacemakers, implantable cardioverter
defibrillators (ICDs), implantable loop recorders, and implantable
cardiovascular monitoring systems and the methodology used to determine
the AMA RUC recommended values. The AMA RUC primarily used a comparison
methodology to determine the value of the pacemaker codes and the
surveyed 25th percentile to determine the value of the implantable ICD
codes. Even though different methodologies were utilized to develop the
recommended values, we did not understand why the increments between
various levels of the pacemaker programming codes were not also the
appropriate increment between the various levels of ICD programming
codes. Therefore, we did not accept the AMA RUC recommendations for CPT

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codes 93283, 93289, and 93295. Instead, we established work RVUs that
maintained the same incremental difference between levels of
programming codes. We assigned 1.05 work RVUs to CPT code 93283, 0.78
work RVUs to CPT code 93289, and 1.17 work RVUs to CPT code 93295.
Comment: Commenters were disappointed that CMS did not accept the
AMA RUC-recommended work RVUs and disagreed with CMS' assumption that
there is a constant increment of work added to the programming
evaluation of an ICD as it progresses from a single lead to dual lead
device and from a dual lead to a multiple lead device. Commenters also
disagreed with the comparison codes we used to value these codes.
Although we agreed with the AMA RUC-recommended value for CPT code
93282, one commenter requested that we increase the work RVU. Based on
these concerns, we referred these codes to the Multi-Specialty
Validation Panel for review.
Response: As a result of the statistical analysis of the 2009
Multi-Specialty Validation Panel ratings, we have assigned 0.85 work
RVUs to CPT code 93282, 1.15 work RVUs to CPT code 93283, 0.92 work
RVUs to CPT code 93289, and 1.29 work RVUs to CPT code 93295.
6. Medical Nutrition Therapy
For CPT codes 97802, Medical nutrition therapy; initial assessment
and intervention, individual, face-to-face with the patient, each 15
minutes and 97803, Medical nutrition therapy; re-assessment and
intervention, individual, face-to-face with the patient, each 15
minutes, the AMA RUC-recommended 0.53 work RVUs for CPT code 97802 and
0.45 work RVUs for CPT Code 97803, to which we agreed in the CY 2009
PFS final rule with comment (73 FR 69890).
Comment: We received a comment from a provider who disagreed with
CMS' acceptance of the AMA RUC-recommended work RVUs. The commenter
believed the values were flawed as a result of a methodological error
dating back to the 2000 Health Care Professional Advisory Committee
(HCPAC) recommendations. The commenter requested that we establish
accurate work RVUs (an RVU value of 0.65 for both codes) or that we ask
the AMA RUC to revisit its recommendation. Based on these concerns, we
referred these codes to the Multi-Specialty Validation Panel for
review.
Response: As a result of the statistical analysis of the 2009
Multi-Specialty Validation Panel ratings, we have assigned 0.53 work
RVUs to CPT code 97802 and 0.45 work RVUs to CPT code 97803.
In the CY 2009 PFS final rule with comment period we also responded
to the RUC recommendations on the PE inputs for new and revised CPT
codes for CY 2009. In addition to the PE comments discussed in section
II.B.2. of this final rule with comment period we received the
following comments concerning PE inputs.
CPT Codes 46606, 46608, 46610, 46612, and 46930: CPT code
46930, Destruction of internal hemorrhoid(s) by thermal energy (e.g.,
infrared coagulation, cautery, radiofrequency), was a new CPT code for
2009. In the CY 2009 PFS final rule (73 FR 69897), we asked for
comments on whether a light guide is typical for this code and any of
the other existing codes. Specifically, we did not accept the AMA RUC-
recommended sheath to cover the light guide that the specialty proposed
to add to the PE database for this service and 4 other procedures as we
do not believe it to be typically used in furnishing these services.
Because the light guide was not a component of the infrared coagulator
item at the time we re-priced our entire equipment file for CY 2005,
and because this same equipment item is used for 4 other endoscopy
procedures, including CPT codes 46606, 46608, 46610, and 46612, we
asked commenters to provide us with information and documentation as to
whether the light guide is typical to any of these 5 procedures.
Additionally, we invited comments about the typical use of the sheath
in relationship to the light guide. In the interim, we assigned the new
equipment price including the light guide to the new CPT code 46930 as
well as the four other procedures that employ this infrared coagulator
for CY 2009.
Comment: We received one comment stating that the sheath for the
light guide is required for CPT code 46930 given the potential for
contamination of the light guide if a sheath is not used, as well as
the difficulty of cleaning the light guide if it is contaminated.
Commenters also stated that the infrared equipment (EQ136) used with
the sheath is not required for CPT codes 46606, Anoscopy; with biopsy,
single or multiple, 46608, Anoscopy; with removal of foreign body,
46610, Anoscopy; with removal of single tumor, polyp, or other lesion
by hot biopsy forceps or bipolar cautery, and 46612, Anoscopy; with
removal of multiple tumors, polyps, or other lesions by hot biopsy
forceps, bipolar cautery or snare technique, as these procedures are
typically performed using electrocautery for which PE inputs are
already associated with these codes.
Response: We thank the commenters for their input. We are leaving
the PE inputs as is while we conduct additional research on what is
typical in furnishing these procedures.
CPT Codes 93306, 93307, 93320, 93325, and 93351: In the CY
2009 PFS final rule (73 FR 69898), we discussed the AMA RUC PE
recommendations for CPT codes 93306, Echocardiography, transthoracic,
real-time with image documentation (2D), includes M-mode recording,
when performed, complete, with spectral Doppler echocardiography, and
with color flow Doppler echocardiography, and 93351, Echocardiography,
transthoracic, real-time with image documentation (2D), includes M-mode
recording, when performed, during rest and cardiovascular stress test
using treadmill, bicycle exercise and/or pharmacologically induced
stress, with interpretation and report; including performance of
continuous electrocardiographic monitoring, with physician supervision.
For CPT code 93306, we stated that the AMA RUC did not recommend
any changes to the PE direct inputs for the related echocardiography
codes 93307, Echocardiography, transthoracic, real-time with image
documentation (2D), includes M-mode recording, when performed,
complete, without spectral or color Doppler echocardiography, 93320,
Doppler echocardiography, pulsed wave and/or continuous wave with
spectral display (List separately in addition to codes for
echocardiographic imaging); complete, and 93325, Doppler
echocardiography color flow velocity mapping (List separately in
addition to codes for echocardiography). We asked the AMA RUC to review
the PE inputs for CPT codes 93307, 93320, and 93325 to ensure that they
are consistent with the recommended direct inputs for CPT code 93306.
For CPT code 93351, we stated that the AMA RUC-recommended PE
inputs included three new equipment items. These items included an
ultrasound machine, an echocardiography exam table, and a dual image
viewing and reporting system. We did not accept the recommended
ultrasound machine valued at $325,000 but used a model in a similar
procedure priced at $248,000 in the PE database. We also did not accept
the echocardiography exam table ($11,095) because we did not believe it
was a typical equipment item found in the physician's office. Instead,
we assigned the PE input typical for a similar service--a $1,915
stretcher. We

[[Page 61947]]

included the ``dual'' echocardiography image viewing and reporting
system but we accepted the base unit price of $85,000 in place of the
$173,000 price provided by the specialty.
We asked commenters to provide us with documentation as to the type
and cost of equipment that is used in furnishing the procedure in the
physician office along with a rationale for suggested changes from the
existing inputs. We also asked commenters to provide us with the
typical scenario as to whether one, two, or three ultrasound units will
be connected to the third equipment item, the ``dual'' echocardiography
image viewing, and reporting system. We asked for information as to the
amount of time that the dual image management system is in use for this
procedure.
Comment: Several commenters requested that CMS revise the PE inputs
associated with CPT codes 93306 and 93351. Specifically, for CPT code
93306, commenters stated that there are increased equipment costs, that
an echocardiography room should be included, and that the equipment
times should be revised from 42 minutes to 63 minutes to reflect their
intra-service use by the sonographer. For 93351, commenters requested
that a higher priced echocardiography machine, an echocardiography
table, and a cardiac ultrasound room be added to the equipment list.
Commenters also requested that we update the price of the dual
echocardiography image viewing and reporting system to reflect the more
common purchase of this equipment with additional features compared to
the base model.
Response: For CPT code 93306, we do not agree that use of an
echocardiography room is typical, nor do we believe higher equipment
costs are justified at this time. However, we do agree with commenters
that equipment times should be increased to 63 minutes from 42 minutes
to accurately reflect the use of this equipment during the procedure
and have adjusted the PE database to reflect this. For CPT code 93351,
the AMA RUC did not recommend these higher cost PE inputs and we agreed
with them. We believe we valued the PE inputs for these CPT codes
appropriately in the CY 2009 final rule. Therefore, we will assign the
PE inputs from the PE database for similar services--$248,000 for the
ultrasound machine and $1,915 for the stretcher--to these codes. We
will also continue to use the accepted base unit price of $85,000 for
the ``dual'' echocardiography image viewing and reporting system. In
addition, we were advised by the AMA RUC that only one ultrasound unit
is typically connected to this management system, which is used for 7
minutes during the procedure. We agree with the AMA RUC's advice.
CPT Codes 93293 and 93296: In the CY 2009 final rule (73
FR 69897), we discussed CPT codes 93293, Transtelephonic rhythm strip
pacemaker evaluation(s) single, dual, or multiple lead pacemaker
system, includes recording with and without magnet application with
physician analysis, review and report(s), up to 90 days, and 93296,
Interrogation device evaluation(s) (remote), up to 90 days; single,
dual, or multiple lead pacemaker system or implantable cardioverter-
defibrillator system, remote data acquisition(s), receipt of
transmissions and technician review, technical support and distribution
of results (73 FR 69897). The AMA RUC recommended that a ``pacemaker
interrogation system'' be used for the two CPT codes 93293 and 93296.
However, the PE database does not contain an equipment item with this
description. Because we noted a 100 percent crosswalk from existing CPT
code 93733 that utilizes the pacemaker follow-up system to the new CPT
code 93293, we assigned, on an interim basis, the pacemaker follow-up
system to CPT codes 93293 and 93296 (a ``new'' service without a
crosswalk). We asked commenters to provide documentation as to the type
and cost of equipment that is used in furnishing these services in the
physician office and other information to support any changes from the
prior inputs.
Comment: Several commenters agreed with our use of the ``pacemaker
interrogation system'' as well as its interim $123,250 price point for
CPT codes 93293 and 93296. Only one commenter provided CMS with pricing
information for a comparable ``pacemaker monitoring system'' based on
three different price quotes, two of which were lower than the interim
pricing information.
Response: Based on the information available, we will continue to
assign the ``pacemaker interrogation system'' with a price of $123,250
to CPT codes 93293 and 93296. We will continue to review the price of
the appropriate cardiac equipment used in both of these codes.
CPT Codes 97802 and 97803: 97802, Medical nutrition
therapy; initial assessment and intervention, individual, face-to-face
with the patient, each 15 minutes; and 97803, Medical nutrition
therapy; re-assessment and intervention, individual, face-to-face with
the patient, each 15 minutes.
The above codes were revalued in the CY 2009 PFS final rule with
comment period as a result of the AMA RUC Recommendations for
Potentially Misvalued Codes (73 FR 69890).
Comment: One commenter stated that inappropriate PE inputs were
used for calculating the PE RVUs for Medical Nutrition Therapy codes
(CPT codes 97802 and 97803), and requested a revision of the pre-,
intra-, and post-service times listed in the PE database. The commenter
believes that the pre-service and post-service times for these CPT
codes should be increased to 3 minutes pre and 5 minutes post to
accurately reflect the time spent.
Response: We agreed with the AMA RUC recommendations for CPT codes
97802 and 97803 in the CY 2009 final rule with comment period (73 FR
69890). We believe that the pre- and post-service times are accurate.
If the commenter is concerned about the allocated times for these CPT
codes, the commenter should request that the specialty society submit
these codes to the AMA RUC for reconsideration.

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 2010
(Includes Table 30 Titled ``AMA RUC Recommendations and CMS' Decisions
for New and Revised 2010 CPT Codes'')

One aspect of establishing RVUs for 2009 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 RUC, for establishing
interim work RVUs for new and revised codes.
We received work RVU recommendations for 161 new and revised CPT
codes from the AMA RUC for 2010. We reviewed the AMA 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 AMA RUC recommendations and agreed
with the majority of the relative relationships reflected in the AMA
RUC values. Table 30: AMA RUC Recommendations and CMS' Decisions for
New and Revised 2010 CPT Codes lists the new or revised CPT codes, and
their associated work RVUs, that will be interim in CY 2010. Table 30
includes the following information:

[[Page 61948]]

A ``'' identifies a new code for CY 2010.
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.
AMA RUC recommendations. This column identifies the work
RVUs recommended by the AMA RUC.
CMS decision. This column indicates whether we agreed or
we disagreed with the AMA RUC recommendation. Codes for which we did
not accept the AMA RUC recommendation are discussed in greater detail
following this table.
2010 Work RVUs. This column establishes the interim 2010
work RVUs for physician work.
BILLING CODE 4120-01-P

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[GRAPHIC] [TIFF OMITTED] TR25NO09.200

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[GRAPHIC] [TIFF OMITTED] TR25NO09.201

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[GRAPHIC] [TIFF OMITTED] TR25NO09.202

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[GRAPHIC] [TIFF OMITTED] TR25NO09.203

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[GRAPHIC] [TIFF OMITTED] TR25NO09.204

BILLING CODE 4120-01-C

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F. Discussion of Codes and AMA RUC Recommendations

The following is an explanation of our rationale for not accepting
particular AMA RUC-recommended work RVUs. It is arranged by type of
service in CPT order and refers only to work RVUs.
1. Excision of Soft Tissue and Bone Excision of Soft Tissue and Bone
Tumors
In February 2009, the CPT Editorial Panel approved the coding
proposal submitted by the Soft Tissue Tumor and Bone Workgroup, which
revised and expanded the soft tissue tumor and bone tumor section codes
to more accurately describe the services being provided and to address
the concerns raised by the AMA RUC during the Third Five-Year Review.
For CY 2010, the CPT Editorial Panel split 31 codes into 62 codes
differentiated by the size of the excised lesion, 18 codes were
revised, and 12 additional codes were created. These codes were created
to fill in anatomic gaps in the coding convention for excision of soft
tissue tumors.
The survey results for these codes reflected that the majority of
these services, while previously performed as outpatient services
(based on 2007 Medicare claims data), had now been valued as inpatient
services by the AMA RUC. We believe the Medicare claims data are
accurate and do not agree with the inclusion of inpatient services in
these codes, particularly, the smaller sized tumors. We have concerns
about the additional minutes added to the pre-service time for
positioning of the patient. We believe the additional minutes are
excessive and request that the AMA RUC re-examine the minutes allocated
for positioning of the patient. We also have concerns about the
projected utilization for these codes. We understand that the specialty
society had difficulty in estimating the frequency split for current
codes and frequency estimates for new codes and for the majority of the
codes, estimated that the smaller sized tumors would be reported 90
percent of the time, while the larger tumors would be reported only 10
percent of the time. The AMA RUC recommended that these services should
be re-reviewed to determine the accuracy of these utilization
assumptions once 2 years of frequency data from Medicare have been
obtained. We agree with the AMA RUC and plan to monitor the frequency
data for these codes and may propose further changes to the work RVUs
in the future based upon this data.
Although we have serious concerns with the valuation of these codes
for 2010, and due to the comments received on the site of service
anomaly codes, we have agreed to accept the AMA RUC-recommended values
for these codes on an interim basis. However, we will work with the AMA
RUC to address our concerns about the valuation of these codes and will
consider whether it would be appropriate to propose further changes in
future rulemaking.
We note that the CPT 2010 instructions regarding the use of the
excision and resection of soft tissue and bone tumor codes advise that
a complex repair may be separately reported. Longstanding Medicare
policy generally includes payment for all simple, intermediate, and
complex repairs of procedural incisions. Therefore, Medicare will not
separately pay for complex repairs for these codes.
2. Fistula Plug
For CY 2010, the AMA RUC-recommended 6.30 work RVUs for CPT code
46707, Repair of anorectal fistula with plug (eg, porcine small
intestine submucosa [SIS]). We disagree with the AMA RUC-recommended
value and believe it should be valued the same as the reference code,
CPT code 46280, Surgical treatment of anal fistula (fistulectomy/
fistulotomy); complex or multiple, with or without placement of seton,
which is assigned 6.28 work RVUs. Although CPT code 46707 has 2 minutes
less pre-service time and 5 minutes less intra- and post-service time
than the reference code, we believe these two codes are similar and
should be valued the same. While the AMA RUC noted that the intra-
service time intensity is greater in CPT code 46707 than in the
reference code, we do not believe this rationale justifies a higher
recommended work RVU for CPT code 46707. Therefore, we have assigned
6.28 work RVUs to CPT code 46707.
3. Computed Tomography Colongraphy
For CY 2010 the AMA RUC recommended 2.40 work RVUs for CPT code
74261, Computed tomographic (CT), colonography, diagnostic, including
image postprocessing; without contrast material. We disagree with the
AMA RUC-recommended value and believe this code is comparable to CPT
code 74263, Computed tomographic (CT) colonography, screening,
including image postprocessing, which virtually has the same
description of work, pre-, intra-, and post-service time for which the
AMA RUC recommended 2.28 work RVUs. Therefore we have assigned 2.28
work RVUs to CPT code 74261.
CPT code 74263 was previously reported using Category III code
0066T, Computed tomographic (CT) colonography (ie, virtual
colonoscopy); screening, which has been deleted and was a non-covered
code. Based on the descriptors, these CPT codes describe services that
include screening services. In general, screening services under
Medicare are considered to be those services provided to beneficiaries
in the absence of signs or symptoms of illness or injury; therefore, to
the extent that the services described by CPT code 74263 have a
screening element, the screening component would not meet the statutory
requirements for coverage under section 1862(a)(1)(A) of the Act.
Screening services are not covered by Medicare without specific
statutory authority, such as has been provided for mammography,
diabetes, and colorectal cancer screening. Accordingly, we will not
recognize this CPT codes that incorporates screening for payment under
the PFS.
Although we have accepted the AMA RUC recommendation for this
service, we have assigned a status indicator of ``N'' (Non-covered) to
CPT code 74263 since the code descriptor describe services that include
screening services.
4. Myocardial Perfusion Imaging
For CY 2010 the AMA RUC recommended 1.40 work RVUs for CPT code
78451, Myocardial perfusion imaging; tomographic (SPECT) (including
attenuation correction, qualitative or quantitative wall motion,
ejection fraction by first pass or gated technique, additional
quantification, when performed); single study, at rest or stress
(exercise or pharmacologic) and 1.75 work RVUs for CPT code 78452,
Myocardial perfusion imaging; tomographic (SPECT) (including
attenuation correction, qualitative or quantitative wall motion,
ejection fraction by first pass or gated technique, additional
quantification, when performed); multiple studies, at rest and/or
stress (exercise or pharmacologic) and/or redistribution and/or rest
reinjection.
For CPT code 78451, it was unclear what methodology the AMA RUC
used to calculate the recommended RVU and, therefore, we disagree with
the AMA RUC-recommended value. We believe the work RVU for the 25th
percentile is more appropriate and have assigned 1.38 work RVUs to CPT
code 78451.
For CPT code 78452, we disagree with the reference code used, CPT
code 70496, Computed tomographic angiography, head, with contrast
material(s), including noncontrast images, if performed, and image
postprocessing, which is assigned 1.75. We believe CPT code 78452 is
comparable to CPT code 73219,

[[Page 61955]]

Magnetic resonance (e.g., proton) imaging, upper extremity, other than
joint; with contrast material(s), which is assigned 1.62 work RVUs and
the same pre-, intra-, and post-service time. Therefore, we have
assigned 1.62 work RVUs to CPT code 78452.
5. Comments Received on New CPT Codes for CY 2010
We received comments on new CPT codes for CY 2010. Since these are
new codes for CY 2010, they are subject to comment as part of this
final rule. To the extent that commenters have additional concerns, we
would encourage them to submit comments in response to this rule.
6. Other AMA RUC Recommendations Received: H1N1 Immunization
Administration
The CPT Editorial Panel created CPT code 90470, Immunization
administration (intramuscular, intranasal), including counseling when
performed to assist the public health effort to vaccinate for H1N1. The
AMA RUC reviewed this service and recommended 0.20 work RVUs. However,
for Medicare payment purposes, we will not recognize this code since we
created a specific HCPCS code (G9141, Influenza A (H1N1) immunization
administration (includes the physician counseling the patient/family))
for this service that was effective September 1, 2009. We have assigned
a status indicator of ``N'' (Non-covered) to this service and will
publish the AMA RUC-recommended value in accordance with our practice
for non-covered CPT codes.

G. Additional Coding Issues

1. Reduction in the Technical Component (TC) Payment for Imaging
Services Paid Under the PFS to the Outpatient Department (OPD) Amount
Effective January 1, 2007, section 5102(b)(1) of the Deficit
Reduction Act of 2005 (Pub. L. 109-171) (DRA) capped the TC of most
imaging services paid under the PFS at the amount paid under the
Outpatient Prospective Payment System (OPPS) (71 FR 69659).
The list of codes subject to the OPPS cap has been revised to
reflect new and deleted CPT codes for 2010. The complete list of codes
subject to the OPPS cap is in Addendum H.

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 2010

We have developed a process for establishing interim PE RVUs for
new and revised codes that is similar to that used for work RVUs. Under
this process, the AMA RUC recommends the PE direct inputs (the staff
time, supplies and equipment) associated with each new code. CMS
reviews the recommendations in a manner similar to our evaluation of
the RUC-recommended work RVUs. The AMA RUC recommendations on the PE
inputs for the new and revised CY 2010 codes were submitted to CMS as
interim recommendations.
We have accepted, in the interim, the PE recommendations submitted
by the RUC for the codes listed in Table 30: AMA RUC Recommendations
and CMS' Decisions for New and Revised 2010 CPT Codes.

IV. Physician Self-Referral Prohibition: Annual Update to the List of
CPT/HCPCS Codes

A. General

Section 1877 of the Act prohibits a physician from referring a
Medicare beneficiary for certain designated health services (DHS) to a
health care entity with which the physician (or a member of the
physician's immediate family) has a financial relationship, unless an
exception applies. Section 1877 of the Act also prohibits the DHS
entity from submitting claims to Medicare or billing the beneficiary or
any other entity for Medicare DHS that are furnished as a result of a
prohibited referral.
Section 1877(h)(6) of the Act and Sec. 411.351 of our regulations
specify that the following services are DHS:
Clinical laboratory services.
Physical therapy services.
Occupational therapy services.
Outpatient speech-language pathology services.
Radiology services.
Radiation therapy services and supplies.
Durable medical equipment and supplies.
Parenteral and enteral nutrients, equipment, and supplies.
Prosthetics, orthotics, and prosthetic devices and
supplies.
Home health services.
Outpatient prescription drugs.
Inpatient and outpatient hospital services.

B. Annual Update to the Code List

1. Background
In Sec. 411.351, we specify that the entire scope of four DHS
categories is defined in a list of CPT/HCPCS codes (the Code List),
which is updated annually to account for changes in the most recent CPT
and HCPCS publications. The DHS categories defined and updated in this
manner are:
Clinical laboratory services.
Physical therapy, occupational therapy, and outpatient
speech-language pathology services.
Radiology and certain other imaging services.
Radiation therapy services and supplies.
The Code List also identifies those items and services that may
qualify for either of the following two exceptions to the physician
self-referral prohibition:
EPO and other dialysis-related drugs furnished in or by an
ESRD facility (Sec. 411.355(g)).
Preventive screening tests, immunizations, or vaccines
(Sec. 411.355(h)).
The Code List was last updated in the CY 2009 PFS final rule with
comment period (73 FR 69726) and in a subsequent correction notice (73
FR 80302).
2. Response to Comments
We received one public comment relating to the Code List that
became effective January 1, 2009. The comment involved CPT code 0019T,
Extracorporeal shock wave involving musculosketal system, not otherwise
specified, low energy.
Comment: A commenter wrote concerning the classification of CPT
code 0019T as ``physical therapy.'' The commenter stated that the use
of extracorporeal shock wave generators is restricted by Federal law to
sale by or on the order of a physician. The commenter stated that ``the
practice of extracorporeal shock wave therapy by non qualified
providers poses a considerable risk to the safety of the patient and a
likely reduction in the effectiveness in the treatment * * *''
(emphasis added by commenter).
Response: The commenter seemed to be objecting to the
classification of CPT code 0019T as physical therapy, not only for the
purpose of the physician self-referral Code List, but also for broader
Medicare payment purposes. We believe that the commenter also has
concerns about physical therapists ordering extracorporeal shock wave
therapy even though a physician must sign the plan of care. While we
appreciate the commenter's concerns,

[[Page 61956]]

the concerns encompass issues that are outside the scope of this rule
and cannot be addressed here. The purpose of our update is to announce
changes to the Code List to account for changes in the most recent CPT
and HCPCS publications or Medicare policies. We added CPT 0019T to the
physician self-referral Code List effective January 1, 2006 (see 70 FR
70297 and 70472) under the category of ``Physical Therapy, Occupational
Therapy, and Speech-language Pathology'' because it was added to the CY
2006 PFS for payment purposes, was included as a ``therapy'' code in
Medicare Transmittal 805, ``Annual Update to the Therapy Code List''
that was effective January 1, 2006, and meets the definition of
physical therapy services that is set forth in Sec. 411.351. Thus, we
believe the code is properly included as a physical therapy service on
our Code List.
3. Revisions Effective for 2010
The updated, comprehensive Code List effective January 1, 2010
appears as Addendum I in this final rule with comment period and is
available on our Web site at http://www.cms.hhs.gov/PhysicianSelfReferral/11_List_of_Codes.asp#TopOfPage. Additions and
deletions to the Code List conform the Code List to the most recent
publications of CPT and HCPCS and to changes in Medicare coverage
policy and payment status.
Tables 31 and 32 identify the additions and deletions,
respectively, to the comprehensive Code List that was published in
Addendum J of the CY 2009 PFS final rule (73 FR 70214 through 70237)
and revised in a subsequent correction notice (73 FR 80302). Tables 31
and 32 also identify the additions and deletions to the lists of codes
used to identify the items and services that may qualify for the
exceptions in Sec. 411.355(g) (regarding EPO and other dialysis-
related outpatient prescription drugs furnished in or by an ESRD
facility) and in Sec. 411.355(h) (regarding preventive screening
tests, immunizations, and vaccines).
In Table 31, we specify additions that generally reflect new CPT
and HCPCS codes that become effective January 1, 2010, or that became
effective since our last update. We also are adding HCPCS codes G0416
through G0419 that represent pathology codes for prostate needle
saturation biopsy sampling to the ``Clinical Laboratory Services''
category of the Code List. These codes became effective January 1,
2009, and were discussed in the preamble of the CY 2009 PFS final rule
(73 FR 69751). We inadvertently failed to add them to the Code List
update that was published in that rule.
Table 32 reflects the deletions necessary to conform the Code List
to the most recent publications of the CPT and HCPCS. In addition, we
are making other deletions based on changes in Medicare coverage and
payment status. We are deleting CPT code 0085T, representing a breath
test for heart transplant rejection, since this code is no longer
payable by Medicare. We also are deleting CPT code 95992, a code for
canalith repositioning procedures, as it will be designated as
``invalid'' for Medicare purposes as discussed in section II.E.1 of
this preamble.
We will consider comments regarding the codes listed in Tables 31
and 32. Comments will be considered if we receive them by the date
specified in the ``DATES'' section of this final rule with comment
period. We will not consider any comment that advocates a substantive
change to any of the DHS defined in Sec. 411.351.
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V. Physician Fee Schedule Update for CY 2010

A. Physician Fee Schedule Update

The PFS update is determined using a formula specified in section
1848(d)(4) of the Act. Section 101 of the MIEA-TRHCA provided a 1-year
increase in the CY 2007 conversion factor (CF) and specified that the
CF for CY 2008 must be computed as if the 1-year increase had never
applied. Section 101 of the MMSEA provided a 6-month increase in the CY
2008 CF, from January 1, 2008, through June 30, 2008, and specified
that the CF for the remaining portion of 2008 and the CFs for CY 2009
and subsequent years must be computed as if the 6-month increase had
never applied. Section 131 of the MIPPA extended the 6-month increase
that was applicable to the CF for the first half of CY 2008 to the
entire year, provided for a 1.1 percent increase to the CY 2009 CF, and
specified that the CFs for CY 2010 and subsequent years must be
computed as if the increases for CYs 2007, 2008, and 2009 had never
applied.
If section 101 of the MIEA-TRHCA had not been enacted, the CY 2007
CF update would have been -5.0 percent (0.94953), as published in the
CY 2007 PFS final rule with comment period (71 FR 69760). If section
101 of the MMSEA had not been enacted, the CY 2008 CF update would have
been -10.1 percent (0.89896), as published in the CY 2008 PFS final
rule with comment period (72 FR 66383).
If section 131 of the MIPPA had not been enacted, the CY 2009 CF
update would have been -15.1 percent (0.84941), as discussed in the CY
2009 PFS final rule with comment period (73 FR 69900).
For CY 2010, the Medicare Economic Index (MEI) is equal to 1.2
percent (1.012). The update adjustment factor (UAF) is -7.0 percent.
Our calculations of these figures are explained below in this section.
In order to determine the 2010 PFS CF update, the CFs for 2007,
2008, and 2009 must be calculated as if the various legislative changes
to the CFs for those years had not occurred. Consistent with the
formula specified by the statute, the CY 2010 CF update is -21.2
percent (0.78760). Our calculations are explained below in this
section.

B. The Percentage Change in the Medicare Economic Index (MEI)

The Medicare Economic Index (MEI) is authorized by section
1842(b)(3) of the Act, which states that prevailing charge levels
beginning after June 30, 1973 may not exceed the level from the
previous year except to the extent that the Secretary finds, on the
basis of appropriate economic index data, that the higher level is
justified by year-to-year economic changes.
The MEI measures the weighted-average annual price change for
various inputs needed to produce physicians' services. The MEI is a
fixed-weight input price index, with an adjustment for the change in
economy-wide multifactor productivity. This index, which has CY 2000
base year weights, is comprised of two broad categories: (1)
physician's own time; and (2) physician's practice expense (PE).
The physician's own time component represents the net income
portion of business receipts and primarily reflects the input of the
physician's own time into the production of physicians' services in
physicians' offices. This category consists of two subcomponents: (1)
wages and salaries; and (2) fringe benefits.
The physician's PE category represents nonphysician inputs used in
the production of services in physicians' offices. This category
consists of wages and salaries and fringe benefits for nonphysician
staff and other nonlabor inputs. The physician's PE component also
includes the following categories of nonlabor inputs: office expense;
medical materials and supplies; professional liability insurance;
medical equipment; prescription drugs; and other expenses. The
components are adjusted to reflect productivity growth in physicians'
offices by the 10-year moving average of productivity in the private
nonfarm business sector.
Table 33 presents a listing of the MEI cost categories with
associated weights and percent changes for price proxies for the 2010
update. For CY 2010, the increase in the MEI is 1.2 percent, which
includes a 1.3 percent productivity offset based on the 10-year moving
average of multifactor productivity. This is the result of a 3.2
percent increase in physician's own time and a 1.8 percent increase in
physician's PE. Within the physician's PE, the largest increase
occurred in prescription drugs, which increased 7.1 percent.
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C. The Update Adjustment Factor (UAF)

Section 1848(d) of the Act provides that the PFS update is equal to
the product of the MEI and the UAF. The UAF is applied to make actual
and target expenditures (referred to in the statute as ``allowed
expenditures'') equal. Allowed expenditures are equal to actual
expenditures in a base period updated each year by the sustainable
growth rate (SGR). The SGR sets the annual rate of growth in allowed
expenditures and is determined by a formula specified in section
1848(f) of the Act.
1. Calculation under Current Law
Under section 1848(d)(4)(B) of the Act, the UAF for a year
beginning with CY 2001 is equal to the sum of the following--
Prior Year Adjustment Component. An amount determined by--
+ Computing the difference (which may be positive or negative)
between the amount of the allowed expenditures for physicians' services
for the prior year (the year prior to the year for which the update is
being determined) and the amount of the actual expenditures for those
services for that year;
+ Dividing that difference by the amount of the actual expenditures
for those services for that year; and
+ Multiplying that quotient by 0.75.
Cumulative Adjustment Component. An amount determined by--
+ Computing the difference (which may be positive or negative)
between the amount of the allowed expenditures for physicians' services
from April 1, 1996, through the end of the prior year and the amount of
the actual expenditures for those services during that period;
+ Dividing that difference by actual expenditures for those
services for the prior year as increased by the SGR for the year for
which the UAF is to be determined; and
+ Multiplying that quotient by 0.33.
Section 1848(d)(4)(E) of the Act requires the Secretary to
recalculate allowed expenditures consistent with section 1848(f)(3) of
the Act. Section 1848(f)(3) specifies that the SGR (and, in turn,
allowed expenditures) for the upcoming CY (CY 2010 in this case), the
current CY (that is, CY 2009) and the preceding CY (that is, CY 2008)
are to be determined on the basis of the best data available as of
September 1 of the current year. Allowed expenditures for a year
generally are estimated initially and subsequently revised twice. The
second revision occurs after the CY has ended (that is, we are making
the second revision to 2008 allowed expenditures in this final rule
with comment).
In the CY 2010 PFS proposed rule (74 FR 33650), we noted that
section 1848(f)(4)(A) of the Act provides the Secretary with clear
discretion to determine what items and services should be included in
the definition of ``physicians' services'' for purposes of determining
allowed expenditures and the SGR. As the statute affords the Secretary
clear discretion to revise the definition of ``physicians' services'',
we proposed to remove physician-administered drugs from the definition
of ``physicians' services'' in section 1848(f)(4)(A) of the Act for
purposes of computing the SGR and levels of allowed expenditures and
actual expenditures in all future years. Furthermore, given the past
effect of spending growth for physician-administered drugs on future
PFS updates, in order to effectuate fully the Secretary's policy
decision to remove drugs from the definition of ``physicians'
services'', we also indicated that we believed it was reasonable to
remove drugs from the calculation of allowed and actual expenditures
for all prior years.
In the proposed rule (74 FR 33651), we noted that the term ``actual
expenditures'' is not defined in the statute, nor are there any
statutory limitations on the Secretary's ability to recompute actual
expenditures to reflect changes in the amount of actual expenditures.
On several occasions, we have made revisions to the amount of actual
expenditures to reflect new information regarding spending on
physicians' services. In order to eliminate the disproportionate impact
that the large past increases in the costs attributable to physician-
administered drugs would otherwise have upon future PFS updates, we
proposed to remove drugs from the calculation of allowed and actual
expenditures under sections 1848(d)(3)(C) and 1848(d)(4) of the Act
retrospectively to the 1996/1997 base year. Further, we proposed to
remove drugs from the calculation of the SGR beginning with 2010.
Comment: Commenters strongly supported our proposal to remove drugs
from the calculation of allowed and actual expenditures retrospectively
to the 1996/1997 base year and our proposal to remove drugs from the
calculation of the SGR beginning with 2010. Many noted that they have
been requesting this change for years. However, all commenters
expressed concerns about the estimated negative update for CY 2010 of
approximately -21 percent, followed by multiple years of negative
physician updates of approximately -5 percent. Commenters described how
they believe the SGR and update formulas are flawed, and they stated
their belief that the magnitude of the 1-year reduction, followed by
multiple years of continued reductions, will impair beneficiary access
to quality care. Many commenters urged us to work with Congress to
revise or replace the physician update and SGR formulas. Some of these
commenters suggested alternative methodologies for updating physician
payments, and a number of them specifically expressed their support for
the SGR-related provisions of H.R. 3200. A few commenters suggested
using our administrative authority to implement additional changes that
would further lessen the negative impact. The AMA requested that we
publish in our final rule estimates of the annual updates for 2011
through 2014.
Response: As discussed in the proposed rule (74 FR 33650), the
magnitude of the estimated 1-year reduction led us to reexamine
administrative actions that the Secretary could take to lessen the
potential for repeated further reductions in the PFS update. We
explored the breadth of options available under current authority
including an assessment of whether the cost of physician-administered
drugs should continue to be included in actual expenditures, allowed
expenditures and the SGR. As the statute affords the Secretary clear
discretion to define ``physicians' services'' for purposes of
determining allowed expenditures and the SGR (section 1848(f)(4)(A) of
the Act), we proposed to remove physician-administered drugs from the
definition of ``physicians' services'' in section 1848(f)(4)(A) of the
Act for purposes of computing the SGR and the levels of allowed
expenditures and actual expenditures in all future years. Moreover,
given the past effect of spending growth for physician-administered
drugs on future PFS updates, in order to effectuate fully the
Secretary's policy decision to remove drugs from the definition of
physicians' services in section 1848(f)(4)(A) of the Act, we proposed
to remove drugs from the calculation of allowed and actual expenditures
under section 1848(d)(3)(C) and 1848(d)(4) of the Act retrospectively
to the 1996 base year in order to eliminate the disproportionate impact
that the large past increases in the costs attributable to physician-
administered drugs would otherwise have upon future PFS updates. (See
74 FR 33651 for a more detailed

[[Page 61962]]

explanation of our legal authority for this proposal). We received no
public comments that disagreed with these proposals.
Accordingly, we are removing physician-administered drugs from the
calculation of allowed and actual expenditures under sections
1848(d)(3)(C) and 1848(d)(4) of the Act for CY 2010 and retrospectively
to the 1996/1997 base year in this final rule. We are also finalizing
our proposal to remove drugs from the calculation of the SGR beginning
with 2010.
With respect to the many suggestions we received in the public
comments asking the Secretary and the Congress to do more to avert the
reduction in PFS payments for 2010 and future years, all other options
suggested in the comments would require a change to the statute. We
also received a comment requesting that we include estimates of the
updates from 2010 through 2014 in this final rule. We are providing the
2010 update in the final rule, but are not providing estimates of the
updates for later years as future updates will vary depending on the
baseline used and will also change as additional information becomes
available.
Our decision to remove drugs from the allowed and actual
expenditures and the SGR will have no effect on the 2010 PFS update of
-21.3 percent because removing drugs from allowed and actual
expenditures retroactively to the base year changes the UAF for CY 2010
from -30.9 percent to -8.8 percent. As the statute limits the UAF for a
year to -7.0 percentage points, the UAF would be -7.0 percent
irrespective of whether drugs are included or excluded from allowed and
actual expenditures retroactive to the base year. Although the
magnitude of future updates remains uncertain, as the following
analysis demonstrates, it is clear that our proposal to remove drugs
from allowed expenditures, actual expenditures, and the SGR will make a
positive PFS update far more likely. Removing drugs from allowed and
actual expenditures for all years and from future SGRs reduces the
difference between cumulative allowed and actual expenditures from
$71.8 billion to $19.4 billion or by over $50 billion. Future PFS
updates will only have to be reduced by $19.4 billion rather than $71.8
billion to equate actual and allowed expenditures. The UAF for 2010
changes from -30.9 percent to -8.8 percent, but is limited to -7.0
percent under either scenario. If physician-administered drugs were to
remain included in allowed and actual expenditures, the UAF would be
expected to be at the maximum reduction of -7.0 percent for several
years beyond 2010. By excluding these drugs, far fewer negative UAFs
are expected in future years.
Table 34 shows annual and cumulative allowed and actual
expenditures for physicians' services from April 1, 1996, through the
end of the current CY, including the short periods in 1999 when we
transitioned to a CY system. As discussed in the CY 2010 PFS proposed
rule (74 FR 33651), once the Secretary has revised the level of allowed
expenditures during the base year (as is authorized under the statute),
it is reasonable to carry this revision through into all subsequent
years. Thus, Table 34 also reflects recomputed allowed and actual
expenditures from the base year and subsequent years to remove the
costs associated with physician-administered drugs.
Table 34 also shows the SGR corresponding with each period. The
calculation of the SGR is discussed in detail below in this section.
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Consistent with section 1848(d)(4)(E) of the Act, Table 34 includes
our second revision of allowed expenditures for CY 2008, a
recalculation of allowed expenditures for CY 2009, and our initial
estimate of allowed expenditures for CY 2010. To determine the UAF for
CY 2010, the statute requires that we use allowed and actual
expenditures from April 1, 1996 through December 31, 2009 and the CY
2010 SGR. Consistent with section 1848(d)(4)(E) of the Act, we will be
making revisions to the CY 2009 and CY 2010 SGRs and CY 2009 and CY
2010 allowed expenditures. Because we have incomplete actual
expenditure data for CY 2009, we are using an estimate for this period.
Any difference between current estimates and final figures will be
taken into account in determining the UAF for future years. In
addition, as discussed above, in order to effectuate fully the
Secretary's policy decision to remove drugs from the definition of
``physicians' services,'' we are removing drugs from the calculation of
allowed expenditures for CY 2010, CY 2009, CY 2008, and all prior
years.
We are using figures from Table 34 in the following statutory
formula:
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UAF10 = Update Adjustment Factor for CY 2010 = -8.8 percent
Target09 = Allowed Expenditures for CY 2009 = $89.3 billion
Actual09 = Estimated Actual Expenditures for CY 2009 = $90.5
billion
Target 4/96-12/09 = Allowed Expenditures from 4/1/1996-12/
31/2009 = $917.5 billion
Actual 4/96-12/09 = Estimated Actual Expenditures from 4/1/
1996--12/31/2009 = $936.9 billion
SGR10 = -8.8 percent (0.912)
[GRAPHIC] [TIFF OMITTED] TR25NO09.210

If we had not removed the costs associated with physician-
administered drugs from the calculation of allowed and actual
expenditures retrospectively to the 1996/1997 base year and from the
calculation of the SGR beginning with 2010 SGR, the UAF determined
using the statutory formula would have been -30.9 percent.
[GRAPHIC] [TIFF OMITTED] TR25NO09.211

The increase in the UAF reflects the reduced discrepancy between
actual and target expenditures resulting from removing the costs of
physician-administered drugs from our calculations.
Section 1848(d)(4)(D) of the Act indicates that the UAF determined
under section 1848(d)(4)(B) of the Act for a year may not be less than
-0.07 or greater than 0.03. Since -0.088 is less than -0.07, the UAF
for CY 2010 will be -0.07. Moreover, because -0.088 and -0.309 are both
less than -0.07, removing the costs of physician-administered drugs
from our calculations did not change the effective UAF for CY 2010.
Section 1848(d)(4)(A)(ii) of the Act indicates that 1.0 should be
added to the UAF determined under section 1848(d)(4)(B) of the Act.
Thus, adding 1.0 to -0.07 makes the UAF equal to 0.93.
Section 1848(d) of the Act provides that the PFS update is equal to
the product of the MEI and the UAF. Because the effective UAF for CY
2010 is -0.07 whether or not the costs of physician-administered drugs
are included in the levels of allowed and actual expenditures, removing
these costs from our calculation did not change the physician payment
update for services furnished on or after January 1, 2010.

VI. Allowed Expenditures for Physicians' Services and the Sustainable
Growth Rate

A. Medicare Sustainable Growth Rate

The SGR is an annual growth rate that applies to physicians'
services paid by Medicare. The use of the SGR is intended to control
growth in aggregate Medicare expenditures for physicians' services.
Payments for services are not withheld if the percentage increase in
actual expenditures exceeds the SGR. Rather, the PFS update, as
specified in section 1848(d)(4) of the Act, is adjusted based on a
comparison of allowed expenditures (determined using the SGR) and
actual expenditures. If actual expenditures exceed allowed
expenditures, the update is reduced. If actual expenditures are less
than allowed expenditures, the update is increased.
Section 1848(f)(2) of the Act specifies that the SGR for a year
(beginning with CY 2001) is equal to the product of the following four
factors:
(1) The estimated change in fees for physicians' services;
(2) The estimated change in the average number of Medicare fee-for-
service beneficiaries;
(3) The estimated projected growth in real GDP per capita; and
(4) The estimated change in expenditures due to changes in statute
or regulations.
In general, section 1848(f)(3) of the Act requires us to publish
SGRs for 3 different time periods, no later than November 1 of each
year, using the best data available as of September 1 of each year.
Under section 1848(f)(3)(C)(i) of the Act, the SGR is estimated and
subsequently revised twice (beginning with the FY and CY 2000 SGRs)
based on later data. (The Act also provides for adjustments to be made
to the SGRs for FY 1998 and FY 1999. See the February 28, 2003 Federal
Register (68 FR 9567)

[[Page 61965]]

for a discussion of these SGRs). Under section 1848(f)(3)(C)(ii) of the
Act, there are no further revisions to the SGR once it has been
estimated and subsequently revised in each of the 2 years following the
preliminary estimate. In this final rule with comment, we are making
our preliminary estimate of the CY 2010 SGR, a revision to the CY 2009
SGR, and our final revision to the CY 2008 SGR. Although we are
removing drugs from the calculation of allowed and actual expenditures
under sections 1848(d)(3)(C) and 1848(d)(4) of the Act retrospectively
to the 1996/1997 base year, we determined that we are only authorized
to remove drugs from the calculation of the SGR beginning with 2010.
Therefore, we will not be removing drugs from previous years' SGR
calculations, and the revisions to our estimates of the CY 2009 and CY
2008 SGRs will be limited to revisions to reflect later data available
as of September 1, 2009, that were not available when we published our
previous estimates.

B. Physicians' Services

Section 1848(f)(4)(A) of the Act defines the scope of physicians'
services covered by the SGR. The statute indicates that ``the term
physicians' services includes other items and services (such as
clinical diagnostic laboratory tests and radiology services), specified
by the Secretary, that are commonly performed or furnished by a
physician or in a physician's office, but does not include services
furnished to a Medicare+Choice plan enrollee.''
We published a definition of physicians' services for use in the
SGR in the November 1, 2001 Federal Register (66 FR 55316). We defined
physicians' services to include many of the medical and other health
services listed in section 1861(s) of the Act. As discussed in section
VII.C. of this final rule with comment period, the statute provides the
Secretary with clear discretion to decide whether physician-
administered drugs should be included or excluded from the definition
of ``physicians' services.'' Accordingly, we are finalizing our
proposal to remove physician-administered drugs from the definition of
``physicians' services'' in section 1848(f)(4)(A) of the Act for
purposes of computing the SGR and the levels of allowed expenditures
and actual expenditures CY 2010 and all future years. Furthermore, in
order to effectuate fully the Secretary's policy decision to remove
drugs from the definition of ``physicians' services,'' we are removing
physician-administered drugs from the calculation of allowed and actual
expenditures for all prior years.
Thus, for purposes of determining allowed expenditures, actual
expenditures for all years, and SGRs for CY 2010 and subsequent years,
we are specifying that physicians' services include the following
medical and other health services if bills for the items and services
are processed and paid by Medicare carriers (and those paid through
intermediaries where specified) or the equivalent services processed by
the Medicare Administrative Contractors:
Physicians' services.
Services and supplies furnished incident to physicians'
services, except for the expenditures for drugs and biologicals which
are not usually self-administered by the patient.
Outpatient physical therapy services and outpatient
occupational therapy services.
Services of PAs, certified registered nurse anesthetists,
certified nurse midwives, clinical psychologists, clinical social
workers, NPs, and certified nurse specialists.
Screening tests for prostate cancer, colorectal cancer,
and glaucoma.
Screening mammography, screening pap smears, and screening
pelvic exams.
Diabetes outpatient self-management training (DSMT)
services.
MNT services.
Diagnostic x-ray tests, diagnostic laboratory tests, and
other diagnostic tests (including outpatient diagnostic laboratory
tests paid through intermediaries).
X-ray, radium, and radioactive isotope therapy.
Surgical dressings, splints, casts, and other devices used
for the reduction of fractures and dislocations.
Bone mass measurements.
An initial preventive physical exam.
Cardiovascular screening blood tests.
Diabetes screening tests.
Telehealth services.
Physician work and resources to establish and document the
need for a power mobility device.

C. Preliminary Estimate of the SGR for 2010

Our preliminary estimate of the CY 2010 SGR is -8.8 percent. We
first estimated the CY 2010 SGR in March 2009, and we made the estimate
available to the MedPAC and on our Web site. Table 35 shows the March
2009 estimate and our current estimates of the factors included in the
CY 2010 SGR.

Table 35--2010 SGR Calculation
----------------------------------------------------------------------------------------------------------------
Statutory factors March estimate Current estimate
----------------------------------------------------------------------------------------------------------------
Fees..................................... 1.2 percent (1.012)........ 0.9 percent (1.009)
Enrollment............................... -0.3 percent (0.997)....... 1.2 percent (1.012)
Real Per Capita GDP...................... 0.8 percent (1.008)........ 0.7 percent (1.007)
Law and Regulation....................... -9.7 percent (0.903)....... -11.3 percent (0.887)
----------------------------------------------------------------------
Total................................ -8.2 percent (0.918)....... -8.8 percent (0.912)
----------------------------------------------------------------------------------------------------------------
Note: Consistent with section 1848(f)(2) of the Act, the statutory factors are multiplied, not added, to produce
the total (that is, 1.009 x 1.012 x 1.007 x 0.887 = 0.912). A more detailed explanation of each figure is
provided in section VIII.F.1 of this preamble.

D. Revised Sustainable Growth Rate for 2009

Our current estimate of the CY 2009 SGR is 6.1 percent. Table 36
shows our preliminary estimate of the CY 2009 SGR that was published in
the CY 2009 PFS final rule with comment period (73 FR 69904) and our
current estimate.

[[Page 61966]]

Table 36--2009 SGR Calculation
----------------------------------------------------------------------------------------------------------------
Estimate from CY 2009 final
Statutory factors rule Current estimate
----------------------------------------------------------------------------------------------------------------
Fees..................................... 2.1 percent (1.021)......... 1.8 percent (1.018)
Enrollment............................... -0.2 percent (0.998)........ -0.8 percent (0.992)
Real Per Capita GDP...................... 1.2 percent (1.012)......... 0.9 percent (1.009)
Law and Regulation....................... 4.2 percent (1.042)......... 4.1 percent (1.041)
----------------------------------------------------------------------
Total................................ 7.4 percent (1.074)......... 6.1 percent (1.061)
----------------------------------------------------------------------------------------------------------------
A more detailed explanation of each figure is provided in section VIII.F.2 of this preamble.

E. Final Sustainable Growth Rate for 2008

The SGR for 2008 is 4.5 percent. Table 37 shows our preliminary
estimate of the 2008 SGR from the CY 2008 PFS final rule with comment
period (72 FR 66379), our revised estimate from the CY 2009 PFS final
rule with comment period (73 FR 69904) and the final figures determined
using the best available data as of September 1, 2009.

Table 37--2008 SGR Calculation
----------------------------------------------------------------------------------------------------------------
Estimate from CY Estimate from CY
Statutory factors 2008 final rule 2009 final rule Final
----------------------------------------------------------------------------------------------------------------
Fees.............................. 1.9 percent (1.019). 1.4 percent (1.014). 1.4 percent (1.014).
Enrollment........................ -0.7 percent (0.993) -3.2 percent (0.968) -2.0 percent (0.980).
Real Per Capita GDP............... 1.7 percent (1.017). 1.6 percent (1.016). 1.6 percent (1.016).
Law and Regulation................ -2.9 percent (0.971) 3.5 percent (1.035). 3.5 percent (1.035).
-----------------------------------------------------------------------------
Total......................... -0.1 percent (0.999) 3.2 percent (1.032). 4.5 percent (1.045).
----------------------------------------------------------------------------------------------------------------

A more detailed explanation of each figure is provided in section
VIII.F.3. of this final rule.

F. Calculation of 2010, 2009, and 2008 Sustainable Growth Rates

1. Detail on the CY 2010 SGR
All of the figures used to determine the CY 2010 SGR are estimates
that will be revised based on subsequent data. Any differences between
these estimates and the actual measurement of these figures will be
included in future revisions of the SGR and allowed expenditures and
incorporated into subsequent PFS updates.
Factor 1--Changes in Fees for Physicians' Services (Before
Applying Legislative Adjustments) for CY 2010
This factor is calculated as a weighted-average of the CY 2010
changes in fees for the different types of services included in the
definition of physicians' services for the SGR. Medical and other
health services paid using the PFS are estimated to account for
approximately 90.8 percent of total allowed charges included in the SGR
in CY 2010 and are updated using the MEI. The MEI for CY 2010 is 1.2
percent. Diagnostic laboratory tests are estimated to represent
approximately 9.2 percent of Medicare allowed charges included in the
SGR for CY 2010. Medicare payments for these tests are updated by the
Consumer Price Index for Urban Areas (CPI-U), which is -1.4 percent for
CY 2010. However, section 145 of the MIPPA reduces the update applied
to clinical laboratory tests by 0.5 percent for CY 2009 through CY
2013. Therefore, for CY 2010, diagnostic laboratory tests will receive
an update of -1.9 percent. As noted in Section VII.C. of this final
rule with comment period, we are finalizing our proposal to remove
physician-administered drugs from the allowed charges included in the
SGR in CY 2010 and in all future years. Therefore, drugs represent 0.0
percent of Medicare allowed charges included in the SGR in CY 2010.
Table 38 shows the weighted-average of the MEI and laboratory price
changes for CY 2010.

Table 38--Weighted-Average of the MEI and Laboratory Price Changes for
CY 2010
------------------------------------------------------------------------
Weight Update
------------------------------------------------------------------------
Physician........................................... 0.908 1.2
Laboratory.......................................... 0.092 -1.9
Weighted-average.................................... 1.000 0.9
------------------------------------------------------------------------

We estimate that the weighted-average increase in fees for
physicians' services in CY 2010 under the SGR (before applying any
legislative adjustments) will be 0.9 percent.
Factor 2--The Percentage Change in the Average Number of
Part B Enrollees from CY 2009 to CY 2010
This factor is our estimate of the percent change in the average
number of fee-for-service enrollees from CY 2009 to CY 2010. Services
provided to Medicare Advantage (MA) plan enrollees are outside the
scope of the SGR and are excluded from this estimate. We estimate that
the average number of Medicare Part B fee-for-service enrollees will
increase by 1.2 percent from CY 2009 to CY 2010. Table 39 illustrates
how this figure was determined.

Table 39--Average Number of Medicare Part B Fee-for-Service Enrollees
From CY 2009 to CY 2010
[Excluding beneficiaries enrolled in MA plans]
------------------------------------------------------------------------
2009 2010
------------------------------------------------------------------------
Overall....................... 42.431 million... 43.164 million.
Medicare Advantage (MA)....... 10.926 million... 11.271 million.
Net........................... 31.506 million... 31.893 million.

[[Page 61967]]

Percent Increase.......... ................. 1.2 percent.
------------------------------------------------------------------------

An important factor affecting fee-for-service enrollment is
beneficiary enrollment in MA plans. Because it is difficult to estimate
the size of the MA enrollee population before the start of a CY, at
this time we do not know how actual enrollment in MA plans will compare
to current estimates. For this reason, the estimate may change
substantially as actual Medicare fee-for-service enrollment for CY 2010
becomes known.
Factor 3--Estimated Real Gross Domestic Product Per Capita
Growth in 2010
We estimate that the growth in real GDP per capita from CY 2009 to
CY 2010 will be 0.7 percent (based on the 10-year average GDP over the
10 years of 2001 through 2010). Our past experience indicates that
there have also been changes in estimates of real per capita GDP growth
made before the year begins and the actual change in GDP computed after
the year is complete. Thus, it is possible that this figure will change
as actual information on economic performance becomes available to us
in 2010.
Factor 4--Percentage Change in Expenditures for
Physicians' Services Resulting From Changes in Statute or Regulations
in CY 2010 Compared With CY 2009
The statutory and regulatory provisions that will affect
expenditures in CY 2010 relative to CY 2009 are estimated to have an
impact on expenditures of -11.3 percent. These include the MIPPA
provisions regarding the physician update, e-prescribing bonuses, the
expiration of the work GPCI floor, and the expiration of payment
provisions related to certain pathology services.
2. Detail on the 2009 SGR
A more detailed discussion of our revised estimates of the four
elements of the 2009 SGR follows.
Factor 1--Changes in Fees for Physicians' Services (Before
Applying Legislative Adjustments) for 2009
This factor was calculated as a weighted-average of the 2009
changes in fees that apply for the different types of services included
in the definition of physicians' services for the SGR in 2009.
We estimate that services paid using the PFS account for
approximately 82.4 percent of total allowed charges included in the SGR
in CY 2009. These services were updated using the CY 2009 MEI of 1.6
percent. We estimate that diagnostic laboratory tests represent
approximately 8.0 percent of total allowed charges included in the SGR
in CY 2009. Medicare payments for these tests are updated by the CPI-U,
which is 5.0 percent for CY 2009. However, section 145 of the MIPPA
reduces the update applied to clinical laboratory tests by 0.5 percent
for CY 2009 through CY 2013. Therefore, for CY 2009, diagnostic
laboratory tests will receive an update of 4.5 percent. We estimate
that drugs represent 9.7 percent of Medicare-allowed charges included
in the SGR in CY 2009. We estimate a weighted-average change in fees
for drugs included in the SGR (using the ASP+6 percent pricing method)
of 1.6 percent for CY 2009.
Table 40 shows the weighted-average of the MEI, laboratory, and
drug price changes for CY 2009.

Table 40--Weighted-Average of the MEI, Laboratory, and Drug Price
Changes for CY 2009
------------------------------------------------------------------------
Weight Update
------------------------------------------------------------------------
Physician........................................... 0.824 1.6
Laboratory.......................................... 0.080 4.5
Drugs............................................... 0.097 1.6
Weighted-average.................................... 1.000 1.8
------------------------------------------------------------------------

After considering the elements described in Table 40, we estimate
that the weighted-average increase in fees for physicians' services in
2009 under the SGR (before applying any legislative adjustments) will
be 1.8 percent. Our estimate of this factor in the CY 2009 PFS final
rule with comment period was 2.1 percent (73 FR 69905). The decrease in
the estimate is due to the availability of some actual data.
Factor 2--The Percentage Change in the Average Number of
Part B Enrollees from CY 2008 to CY 2009
We estimate that the average number of Medicare Part B fee-for-
service enrollees (excluding beneficiaries enrolled in Medicare
Advantage plans) decreased by 0.8 percent in CY 2009. Table 41
illustrates how we determined this figure.

Table 41--Average Number of Medicare Part B Fee-for-Service Enrollees
From CY 2008 to CY 2009
[Excluding beneficiaries enrolled in MA plans]
------------------------------------------------------------------------
2008 2009
------------------------------------------------------------------------
Overall..................... 41.747 million...... 42.431 million.
Medicare Advantage (MA)..... 9.999 million....... 10.926 million.
Net......................... 31.748 million...... 31.506 million.
Percent Increase........ .................... - 0.8 percent.
------------------------------------------------------------------------

Our estimate of the - 0.8 percent change in the number of fee-for-
service enrollees, net of Medicare Advantage enrollment for CY 2009
compared to CY 2008, is a larger change than our original estimate of -
0.2 percent in the CY 2009 PFS final rule with comment period (73 FR
69905). While our current projection based on data from 8 months of
2009 differs from our original estimate of - 0.2 percent when we had no
actual data, it is still possible that our final estimate of this
figure will be different once we have complete information on CY 2009
fee-for-service enrollment.
Factor 3--Estimated Real Gross Domestic Product Per Capita
Growth in CY 2009
We estimate that the growth in real GDP per capita will be 0.9
percent for

[[Page 61968]]

CY 2009 (based on the 10-year average GDP over the 10 years of CY 2000
through CY 2009). Our past experience indicates that there have also
been differences between our estimates of real per capita GDP growth
made prior to the year's end and the actual change in this factor.
Thus, it is possible that this figure will change further as complete
actual information on CY 2009 economic performance becomes available to
us in 2010.
Factor 4--Percentage Change in Expenditures for
Physicians' Services Resulting From Changes in Statute or Regulations
in CY 2009 Compared With CY 2008
The statutory and regulatory provisions that will affect
expenditures in CY 2009 relative to CY 2008 are estimated to have an
impact on expenditures of 4.1 percent. These include the DRA provision
reducing payments for imaging services, the MMSEA provision regarding
the PQRI bonuses payable in 2009, and the MIPPA provisions regarding
the change in cost sharing for mental health services, the physician
update, and the change in application of BN to the CF.
3. Detail on the CY 2008 SGR
A more detailed discussion of our final revised estimates of the
four elements of the CY 2008 SGR follows.
Factor 1--Changes in Fees for Physicians' Services (Before
Applying Legislative Adjustments) for 2008
This factor was calculated as a weighted-average of the CY 2008
changes in fees that apply for the different types of services included
in the definition of physicians' services for the SGR in 2008.
Services paid using the PFS accounted for approximately 82.7
percent of total Medicare-allowed charges included in the SGR for CY
2008 and are updated using the MEI. The MEI for CY 2008 was 1.8
percent. Diagnostic laboratory tests represented approximately 7.7
percent of total CY 2008 Medicare allowed charges included in the SGR
and are updated by the CPI-U. However, section 628 of the MMA specifies
that diagnostic laboratory tests will receive an update of 0.0 percent
from CY 2004 through CY 2008. Drugs represented approximately 9.7
percent of total Medicare-allowed charges included in the SGR for CY
2008. We estimate a weighted-average change in fees for drugs included
in the SGR of - 0.7 percent for 2007. Table 42 shows the weighted-
average of the MEI, laboratory, and drug price changes for CY 2008.

Table 42--Weighted-Average of the MEI, Laboratory, and Drug Price
Changes for CY 2008
------------------------------------------------------------------------
Weight Update
------------------------------------------------------------------------
Physician........................................... 0.827 1.8
Laboratory.......................................... 0.077 0.0
Drugs............................................... 0.097 - 0.7
Weighted-average.................................... 1.000 1.4
------------------------------------------------------------------------

After considering the elements described in Table 42, we estimate
that the weighted-average increase in fees for physicians' services in
CY 2008 under the SGR (before applying any legislative adjustments) was
1.4 percent. This figure is a final one based on complete data for CY
2008.
Factor 2--The Percentage Change in the Average Number of
Part B Enrollees from CY 2008 to CY 2007
We estimate the decrease in the number of fee-for-service enrollees
(excluding beneficiaries enrolled in MA plans) from CY 2007 to CY 2008
was - 2.0 percent. Our calculation of this factor is based on complete
data from CY 2008. Table 43 illustrates the calculation of this factor.

Table 43--Average Number of Medicare Part B From CY 2007 to CY 2008
[Excluding beneficiaries enrolled in MA plans]
------------------------------------------------------------------------
2007 2008
------------------------------------------------------------------------
Overall....................... 41.055 million... 41.747 million.
Medicare Advantage (MA)....... 8.661 million.... 9.999 million.
Net........................... 32.394 million... 31.748 million.
Percent Increase.......... ................. - 2.0 percent.
------------------------------------------------------------------------

Factor 3--Estimated Real Gross Domestic Product Per Capita
Growth in 2008
We estimate that the growth in real per capita GDP was 1.6 percent
in 2008 (based on the 10-year average GDP over the 10 years of CY 1999
through CY 2008). This figure is a final one based on complete data for
CY 2008.
Factor 4--Percentage Change in Expenditures for
Physicians' Services Resulting From Changes in Statute or Regulations
in CY 2008 Compared With CY 2007
Our final estimate for the net impact on expenditures from the
statutory and regulatory provisions that affect expenditures in CY 2008
relative to CY 2007 is 3.5 percent. These include the DRA provision
reducing payments for imaging services, the MIEA TRHCA provisions
regarding the 2007 PQRI reporting bonuses payable in 2008, and the
MIPPA provisions regarding the physician update and bonus payments for
mental health services.

VII. Anesthesia and Physician Fee Schedule Conversion Factors for CY
2010

The CY 2010 PFS CF is $28.4061. The CY 2010 national average
anesthesia CF is $16.6191.

A. Physician Fee Schedule Conversion Factor

The PFS CF for a year is calculated in accordance with section
1848(d)(1)(A) of the Act by multiplying the previous year's CF by the
PFS update. The formula for calculating the PFS update is set forth in
section 1848(d)(4)(A) of the Act. In general, the PFS update is
determined by multiplying the CF for the previous year by the
percentage increase in the MEI times the UAF, which is calculated as
specified under section 1848(d)(4)(B) of the Act. However, Section 101
of the MIEA-TRHCA provided a 1-year increase in the CY 2007 CF and
specified that the CF for CY 2008 must be computed as if the 1-year
increase had never applied. Section 101 of the MMSEA provided a 6-month
increase in the CY 2008 CF, from January 1, 2008, through June 30,
2008, and specified that the CF for the remaining portion of 2008 and
the CFs for CY 2009 and subsequent years must be computed as if the 6-
month increase had never applied. Section 131 of the MIPPA extended the
increase in the CY 2008 CF that applied during the first half of the
year to the entire year, provided for a 1.1 percent increase to the CY
2009 CF, and specified that the CFs for CY 2010 and subsequent years
must be computed as if the increases for

[[Page 61969]]

CYs 2007, 2008, and 2009 had never applied.
In order to determine the 2010 PFS CF update, the CFs for 2007,
2008, and 2009 must be calculated as if the various legislative changes
to the CFs for those years had not occurred.
Section 1848(c)(2)(B)(ii)(II) of the Act requires that increases or
decreases in RVUs may not cause the amount of expenditures for the year
to differ more than $20 million from what would have been in the
absence of these changes. If this threshold is exceeded, we must make
adjustments to preserve BN. We estimate that CY 2010 RVU changes would
result in a decrease in Medicare physician expenditures of more than
$20 million. Therefore, we are increasing the CF by 1.00103 to offset
this estimated decrease in Medicare physician expenditures due to the
CY 2010 RVU changes.
We illustrate the calculation of the CY 2010 PFS CF in Table 44.
[GRAPHIC] [TIFF OMITTED] TR25NO09.212

Payment for services under the PFS will be calculated as follows:

Payment = [(RVU work x GPCI work) + (RVU PE x GPCI PE) + (RVU
malpractice x GPCI malpractice)] x CF.

B. Anesthesia Conversion Factor

We calculate the anesthesia CF as indicated in Table 45. Anesthesia
services do not have RVUs like other PFS services. Therefore, we
account for any necessay RVU adjustments through an adjustment tothe
anesthesia CF to simulate changes to RVUs. More specifically, if there
is an adjustment to thework, PE, or malpractice RVUs, these adjustments
are applied to the respective shares of the anesthesia CF as these
shares are proxies for the work, PE, and malpractice RVUs for
anesthesia services.
As explained above, section 101 of the MIEA-TRHCA provided a 1-year
increase in the CY 2007 CF and specified that the CF for CY 2008 must
be computed as if the 1-year increase had never applied. Section 101 of
the MMSEA provided a 6-month increase in the CY 2008 CF, from January
1, 2008, through June 30, 2008, and specified that the CF for the
remaining portion of 2008 and the CFs for CY 2009 and subsequent years
must be computed as if the 6-month increase had never applied. Section
131 of the MIPPA extended the increase in the CY 2008 CF from the first
half of the year to the entire year, provided for a 1.1 percent
increase to the CY 2009 CF, and specified that the CFs for CY 2010 and
subsequent years must be computed as if the increases for CYs 2007,
2008, and 2009 had never applied.
In order to determine the 2010 PFS CF update, the CFs for 2007,
2008, and 2009 must be calculated as if the various legislative changes
to the CFs for those years had not occurred. Also, section 133(b) of
the MIPPA provided for the application of the 2007-2008 5-Year work
review BN adjuster to the CF for years beginning with 2009. To make
this change for the anesthesia CF, we recalculated the adjustments to
the anesthesia CF for CY 2007 and CY 2008 by removing the BN adjuster
for work which had been applied to calculate the CF for each of these
years. (See the CY 2009 PFS final rule with comment period (73 FR
69909) for more information on this calculation.) Table 45 also
includes the CY 2010 adjustment to the anesthesia CF due to changes in
CY 2010 payment polices for PE and malpractice RVUs.

[[Page 61970]]

[GRAPHIC] [TIFF OMITTED] TR25NO09.213

VIII. Telehealth Originating Site Facility Fee Payment Amount Update

Section 1834(m) of the Act establishes the payment amount for the
Medicare telehealth originating site facility fee for telehealth
services provided from October 1, 2001, through December 31 2002, at
$20. For telehealth services provided on or after January 1 of each
subsequent calendar year, the telehealth originating site facility fee
is increased by the percentage increase in the MEI as defined in
section 1842(i)(3) of the Act. The MEI increase for 2010 is 1.2
percent.
Therefore, for CY 2010, the payment amount for HCPCS code Q3014,
Telehealth originating site facility fee, is 80 percent of the lesser
of the actual charge or $24.00. The Medicare telehealth originating
site facility fee and MEI increase by the applicable time period is
shown in Table 46.
[GRAPHIC] [TIFF OMITTED] TR25NO09.214

IX. Provisions of the Final Rule

The provisions of this final rule with comment period restate the
provisions of the CY 2010 PFS proposed rule, except as noted elsewhere
in the preamble.

X. Waiver of Proposed Rulemaking and Delay in Effective Date

We ordinarily publish a notice of proposed rulemaking in the
Federal Register and invite public comment on

[[Page 61971]]

the proposed rule. The notice of proposed rulemaking includes a
reference to the legal authority under which the rule is proposed, and
the terms and substance of the proposed rule or a description of the
subjects and issues involved. This procedure can be waived, however, if
an agency finds good cause that a notice-and-comment procedure is
impracticable, unnecessary, or contrary to the public interest and
incorporates a statement of the finding and its reasons in the rule
issued.
We utilize HCPCS codes for Medicare payment purposes. The HCPCS is
a national drug coding system comprised of Level I (CPT) codes and
Level II (HCPCS National Codes) that are intended to provide uniformity
to coding procedures, services, and supplies across all types of
medical providers and suppliers. Level I (CPT) codes are copyrighted by
the AMA and consist of several categories, including Category I codes
which are 5-digit numeric codes, and Category III codes which are
temporary codes to track emerging technology, services, and procedures.
The AMA issues an annual update of the CPT code set each Fall, with
January 1 as the effective date for implementing the updated CPT codes.
The HCPCS, including both Level I and Level II codes, is similarly
updated annually on a CY basis. Annual coding changes are not available
to the public until the Fall immediately preceding the annual January
update of the PFS. Because of the timing of the release of these new
codes, it is impracticable for CMS to provide prior notice and solicit
comment on these codes and the RVUs assigned to them in advance of
publication of the final rule that implements the PFS. Yet, it is
imperative that these coding changes be accounted for and recognized
timely under the PFS for payment because services represented by these
codes will be provided to Medicare beneficiaries by physicians during
the CY in which they become effective. Moreover, regulations
implementing HIPAA (42 CFR parts 160 and 162) require that the HCPCS be
used to report health care services, including services paid under the
PFS. We also assign interim RVUs to any new codes based on a review of
the RUC recommendations for valuing these services. By reviewing these
RUC recommendations for the new codes, we are able to assign RVUs to
services based on input from the medical community and to establish
payment for them, on an interim basis, that corresponds to the relative
resources associated with furnishing the services. If we did not assign
RVUs to new codes on an interim basis, the alternative would be to
either not pay for these services during the initial CY or have each
carrier establish a payment rate for these new codes. We believe both
of these alternatives are contrary to the public interest, particularly
since the RUC process allows for an assessment of the valuation of
these services by the medical community prior to our establishing
payment for these codes on an interim basis. Therefore, we believe it
would be contrary to the public interest to delay establishment of fee
schedule payment amounts for these codes.
For the reasons outlined above in this section, we find good cause
to waive the notice of proposed rulemaking for the interim RVUs for
selected procedure codes identified in Addendum C and to establish RVUs
for these codes on an interim final basis. We are providing a 60-day
public comment period.
Section II.F. of this final rule with comment period discusses the
identification and review of potentially misvalued codes by a workgroup
of the AMA RUC, as well as our review and decisions regarding the AMA
RUC workgroup's recommendations. Similar to the AMA RUC recommendations
for new and revised codes discussed above, due to the timing of the AMA
RUC workgroup's recommendations for the potentially misvalued codes, it
was impracticable for CMS to solicit public comment regarding specific
proposals for revision prior to this final rule with comment period. We
believe it is in the public interest to implement the revised RVUs for
the codes that were identified as misvalued, and that have been
reviewed and re-evaluated by the AMA RUC workgroup, on an interim final
basis for CY 2010. The revisions of RVUs for these codes will establish
a more appropriate payment that better corresponds to the relative
resources associated with furnishing these services. A delay in
implementing revised values for these misvalued codes would not only
perpetuate the known misvaluation for these services, it would also
perpetuate a distortion in the payment for other services under the
PFS. Implementing the changes now allows for a more equitable
distribution of payments across all PFS services. We believe a delay in
implementation of these revisions would be contrary to the public
interest, particularly since the AMA RUC process allows for an
assessment of the valuation of these services by the medical community
prior to the AMA RUC's recommendation to CMS. For the reasons described
above, we find good cause to waive notice and comment procedures with
respect to the misvalued codes identified in Table 5, and to revise
RVUs for these codes on an interim final basis. We are providing a 60-
day public comment period.
We ordinarily provide a 60-day delay in the effective date of the
provisions of a rule in accordance with the Administrative Procedure
Act (APA) (5 U.S.C. 553(d)), which requires a 30-day delayed effective
date, and the Congressional Review Act (5 U.S.C. 801(a)(3)), which
requires a 60-day delayed effective date for major rules. However, we
can waive the delay in the effective date if the Secretary finds, for
good cause, that the delay is impracticable, unnecessary, or contrary
to the public interest, and incorporates a statement of the finding and
the reasons in the rule issued (5 U.S.C. 553(d)(3); 5 U.S.C. 808(2)).
In section II. G. 6 of this final rule with comment period, we are
finalizing our proposed criteria for designating organizations to
accredit suppliers furnishing the TC of advanced diagnostic imaging
services as specified in section 1834(e) of the Act. We also discuss
our expectation to publish a notice the same day that this final rule
is issued to solicit applications from entities for the purpose of
becoming a designated accreditation organization. We note that section
1834(e) of the Act requires us to designate organizations to accredit
suppliers furnishing the TC of advanced diagnostic imaging services by
January 1, 2010. Given the statutory deadline to designate
organizations and the timing of the publication of this final rule with
comment period, we believe it is impracticable to delay the effective
date of these criteria for designating organizations to accredit
suppliers furnishing the TC of advanced diagnostic imaging services.
Therefore, we believe that we have good cause for making the imaging
accreditation provisions effective upon publication.

XI. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995, we are required to
provide 60-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 an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:

[[Page 61972]]

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):

A. ICRs Regarding Pulmonary Rehabilitation Program: Conditions for
Coverage (Sec. 410.47)

Section 410.47(c) lists the components of a pulmonary
rehabilitation program. Specifically, Sec. 410.47(c)(3) through (c)(5)
discuss psychosocial assessments, outcome assessments and
individualized treatment plans, respectively, and the role of these
tools in pulmonary rehabilitation programs. The burden associated with
meeting the requirements for conducting psychosocial assessments,
outcome assessments, and individualized treatment plans is the time and
effort necessary for providers to document the necessary information in
the patient record. While these requirements are subject the PRA, we
believe the associated burden is exempt as stated under 5 CFR
1320.3(b)(2). Psychosocial assessments, outcome assessments and
individualized treatment plans are routine tools used in pulmonary
rehabilitation programs and the practice of using these tools is
generally recognized as an industry standard as part of usual and
customary business practices.

B. ICRs Regarding Kidney Disease Education Services (Sec. 410.48)

Section 410.48(f) states qualified persons will develop outcomes
assessments designed to:
Measure beneficiary knowledge about chronic kidney disease
(CKD) and its treatment;
Assess program effectiveness of preparing the beneficiary
to make informed decisions about their healthcare options related to
CKD; and
Assess program effectiveness in meeting the communication
needs of underserved populations, including persons with disabilities,
persons with limited English proficiency, and persons with health
literacy needs.
The assessment will be administered to the beneficiary during one
of the kidney disease education (KDE) sessions prescribed by the
referring physician. The assessments will be made available to CMS upon
request.
The burden associated with these requirements is the time and
effort necessary to conduct an outcomes assessment, maintain record of
the assessment, and to make the documentation available to CMS upon
request. At this time, we are not able to accurately quantify the
burden because we cannot estimate the number of entities that must
comply with these requirements. Additionally, we are trying to
determine if the use and maintenance of outcome assessments in KDE
services is a standard industry business practice. Our preliminary
research gathered during a CMS Open Door Forum held on November 6, 2008
and a stakeholders meeting hosted by the Agency for Healthcare Research
and Quality (AHRQ) on December 16, 2008 indicates that outcome
assessments are used by most but not all of the entities bound by the
requirements in Sec. 410.48. We solicited comments pertaining to this
issue in the proposed rule that published July 13, 2009 (74 FR 33520);
however, we did not receive any information to assist us in accurately
quantifying the number of entities that must comply with this
requirement. We will continue to evaluate the issue. If we find that
the number of affected entities approaches the threshold of 10 as
specified in 5 CFR 1320.3(c)(4), we will submit an information
collection request to OMB for review and approval.

C. ICRs Regarding Cardiac Rehabilitation Program and Intensive Cardiac
Rehabilitation Program: Conditions of Coverage (Sec. 410.49)

Section 410.49(b)(2) lists the required components of a cardiac
rehabilitation program. Four of the five required components, including
cardiac risk factor modification, psychosocial assessments, outcomes
assessments and individualized treatment plans, impose information
collection burdens. The burden associated with these requirements is
the time and effort necessary to providers to customize each patient's
cardiac risk modification program. Additionally, there is burden
associated with conducting psychosocial assessments and outcome
assessments and drafting individualized treatment plans. Although
section 144(a) of the MIPPA sets forth these information collection
requirements, we believe the associated information collection burden
is exempt as stated under 5 CFR 1320.3(b)(2). Performing cardiac risk
modification, psychosocial assessments, outcome assessments, and
individualized treatment plans are routine tools used in cardiac
rehabilitation programs. As stated earlier in the preamble of this
final rule with comment period, intensive cardiac rehabilitation
programs typically involve the same elements as general cardiac
rehabilitation programs, but are furnished in highly structured
environments in which sessions of the various components may be
combined for longer periods of cardiac rehabilitation and also may be
more rigorous. The ICRs and associated burden are generally recognized
as an industry standard as part of usual and customary business
practices.
Section 410.49(c)(1) states that to be approved as an intensive
cardiac rehabilitation program, a program in an approved setting must
be approved through the national coverage determination (NCD) process
which may be generated internally by CMS or requested by a non-CMS
entity. To be approved as an intensive cardiac rehabilitation program,
the program must demonstrate through peer-reviewed, published research
that it accomplishes one or more of the requirements listed in Sec.
410.49(c)(1)(i) through (iii), as well as statistically significant
reductions in 5 or more of the measures listed in Sec. 410.49(c)(2)(i)
through (vi). As described in Sec. 410.49(c)(4), all prospective
intensive cardiac rehabilitation sites must apply to enroll as an
intensive cardiac rehabilitation program site using the designated
forms as specified at Sec. 424.510.
The burden associated with the requirements in Sec. 410.49(c) is
the time and effort necessary for a program to demonstrate through
peer-reviewed, published research that it accomplishes one or more of
the requirements listed in Sec. 410.49(c)(1)(i) through (iii), as well
as statistically significant reductions in 5 or more of the measures
listed in Sec. 410.49(c)(2)(i) through (vi) and the time and effort
necessary for intensive cardiac rehabilitation sites to apply to enroll
using the designated forms as specified at 424.510. At this time, we
are not able to accurately quantify the burden because we cannot
estimate the number of entities that will seek approval as intensive
cardiac rehabilitation programs. We solicited comments pertaining to
this issue in the CY 2010 PFS proposed rule (74 FR 33520); however, we
did not receive any information to assist us in accurately quantifying
the number of entities that must comply with this requirement. We will
continue to evaluate the issue. If we find that the number of affected
entities

[[Page 61973]]

approaches the threshold of 10 as specified in 5 CFR 1320.3(c)(4), we
will submit an information collection request to OMB for review and
approval.

D. ICRs Regarding Imaging Accreditation (Sec. 414.68)

Section 414.68(b) contains the application and reapplication
procedures for accreditation organizations. Specifically, an
independent accreditation organization applying for approval or
reapproval of authority to survey suppliers for purposes of accrediting
suppliers furnishing the technical component (TC) of advanced
diagnostic imaging services must furnish CMS with all of the
information listed in Sec. 414.68(b)(1) through (14). The requirements
include but are not limited to reporting, notification, documentation,
and survey requirements.
The burden associated with the collection requirements in Sec.
414.68(b) is the time and effort necessary to develop, compile and
submit the information listed in Sec. 414.68(b)(1) through (14). We
believe that 3 entities will choose to comply with these requirements.
We estimate that it will take each of the 3 entities, 80 hours to
submit a complete application for approval or reapproval authority to
become an accrediting organization approved by CMS.
Section 414.68(c) contains the information collection requirements
pertaining to CMS approved accrediting organizations. An accrediting
organization approved by CMS must undertake all of the activities
listed in Sec. 414.68(c)(1) through (6). The burden associated with
the collection requirements in Sec. 414.68(c) is the time and effort
necessary to develop, compile and submit the information listed in
Sec. 414.68(c)(1) through (6). We believe that 3 entities will choose
to comply with these requirements. We estimate that it will take each
of the 3 entities, 80 hours to submit the required information on an
ongoing basis.
For the aforementioned requirements in Sec. 414.68(b) and Sec.
414.68(c), we are aware that the potential respondent universe is
greater than 10 entities; however, at this time, there are only three
entities committed to the program. If the number of respondents
approaches the threshold of 10 or more persons as defined in 5 CFR
1320.3(c)(4), we will develop and submit an information collection
request to OMB for review and approval.
Section 414.68(d)(1) states that CMS or our contractor may conduct
an audit of an accredited supplier, examine the results of a CMS-
approved accreditation organization's survey of a supplier, or observe
a CMS-approved accreditation organization's onsite survey of a
supplier, in order to validate the CMS-approved accreditation
organizations accreditation process. The burden associated with this
requirement is the time and effort necessary for an accrediting
organization to comply with the components of the validation audit.
While this requirement is subject to the PRA, we believe the associated
burden is exempt as stated in 5 CFR 1320.3(h)(6). The burden associated
with a request for facts addressed to a single person, as defined in 5
CFR 1320.3(j), is not subject to the PRA.
As stated in Sec. 414.68(e)(1), an accreditation organization
dissatisfied with a determination that its accreditation requirements
do not provide or do not continue to provide reasonable assurance that
the suppliers accredited by the organization meet the applicable
quality standards is entitled to a reconsideration. CMS reconsiders any
determination to deny, remove, or not to renew the approval of deeming
authority to an accreditation organization if the accrediting
organization files a written request for reconsideration by our
authorized officials or through its legal representative. The written
request must be filed within 30 calendar days of the receipt of CMS'
notice of an adverse determination or nonrenewal. In addition, the
request must also specify the findings or issues with which the
accreditation organization disagrees and the reasons for the
disagreement.
The burden associated with this requirement is the time and effort
necessary for an accrediting organization to develop and file a written
request for reconsideration. While this requirement is subject to the
PRA, the associated burden is exempt under 5 CFR 1320.4. The
information in question is being collected as a result of an
administrative action; accrediting organizations are submitting
requests for reconsideration after receiving a notice of an adverse
determination or nonrenewal.

E. ICRs Regarding Payment Rules (Sec. 414.408)

Section 414.408(j)(5) contains the notification requirements for
suppliers electing to become grandfathered suppliers. Specifically,
Sec. 414.408(j)(5)(i) states that a noncontract supplier that elects
to become a grandfathered supplier must provide a 30-day written
notification to each Medicare beneficiary that resides in a competitive
bidding area and is currently renting a competitively bid item from
that supplier. The 30-day notification to the beneficiary must meet the
requirements as listed in Sec. 414.408(j)(5)(i)(A) through (G).
Subsequent to the initial 30-day notice to the beneficiary, as
required by Sec. 414.408(j)(5)(ii), suppliers must also obtain and
maintain a record of the beneficiary's election choice, the date the
choice was made, and the manner through which the beneficiary
communicated his or her choice. Additionally, Sec. 414.408(j)(5)(iii)
states that if a beneficiary chooses not to continue to receive a
grandfathered item(s) from his or her current supplier, the supplier
must provide the beneficiary with two more notices prior to the
supplier picking up its equipment. The supplier must provide a 10-day
notification and a 2-day notification. These notification requirements
must meet the criteria listed in Sec. 414.408(j)(5)(iii)(A) though
(C).
Section Sec. 414.408(j)(5)(iv) requires suppliers that elect to
become grandfathered suppliers to provide a written notification to CMS
of its election decision. The notification must meet the requirements
as specified in Sec. 414.408(j)(5)(iv)(A) through (D).
The burden associated with the information collection requirements
contained in Sec. 414.408(j)(5) is the time and effort necessary for a
noncontract supplier to make the aforementioned notifications to both
beneficiaries and CMS. We estimate that 1,305 suppliers will elect to
become grandfathered suppliers. Similarly, we estimate that each
grandfathered supplier will need to make an average of 53 notifications
based on an average of 52 beneficiaries per supplier and one notice to
CMS. We estimate that it will take 2 hours to develop the notification
to the beneficiary and 2 hours to develop the notification to CMS.
Similarly, we estimate that each notification will take 15 minutes to
send. The total estimated burden associated with each of the 1305
suppliers complying with the requirements in Sec. 414.408(j)(5) is
17.25 hours per supplier for a total of 22,511 hours.
Section 414.408(j)(6) contains the information collection
requirements pertaining to suppliers that choose not to become
grandfathered suppliers. A noncontract supplier that elects not to
become a grandfathered supplier is required to pick up the item it is
currently renting to the beneficiary from the beneficiary's home after
proper notification. Proper notification includes a 30-day, a 10-day,
and a 2-day notice of the supplier's decision not to

[[Page 61974]]

become a grandfathered supplier to its Medicare beneficiaries who are
currently renting certain DME competitively bid item(s) and who reside
in a CBA. These notifications must meet all of the requirements listed
in Sec. 414.408(j)(5)(i) and (ii) for the 30-day, 10-day and 2-day
notices that must be sent by suppliers who decide to be grandfathered
suppliers. However, there are exceptions regarding the 30-day notice
for noncontract suppliers electing not to become grandfathered
suppliers. The exceptions are listed in Sec. 414.408(j)(6)(iii)(A)
through (C). In addition, suppliers must also comply with the criteria
listed in Sec. 414.408(j)(6)(iv).
The burden associated with the information collection requirements
in Sec. 414.408(j)(6) is the time and effort necessary for a supplier
to make the required notifications to beneficiaries. We estimate that
145 suppliers will not elect to become grandfathered suppliers.
Similarly, we estimate that each nongrandfathered supplier will need to
make an average of 156 notifications based on an average of 52
beneficiaries per supplier. We estimate that it will take 2 hours to
develop the 30-day notification to the beneficiary and 15 minutes to
send out each notification. The 10-day notification will take
approximately 15 minutes and the 2-day will take approximately 15
minutes. We estimate to send out all 3 notifications it will take a
total of approximately 45 minutes. The total burden associated with the
requirements in Sec. 414.408(j)(6) is approximately 5,945 hours.

F. ICRs Regarding Claims for Damages (Sec. 414.425)

Section 414.425(a) states that any aggrieved supplier, including a
member of a network that was awarded a contract for the Round 1 Durable
Medical Prosthetics, Orthotics, and Supplies Competitive Bidding
Program (DMEPOS CBP), may file a claim under this section for certain
alleged damages arising out of MIPPA's termination of the Round 1
DMEPOS CBP contracts. Section 414.425(b) states that a completed claim,
including all documentation, must be filed within 90 days of the
effective date of the final rule on damages, unless that day is a
holiday or Sunday in which case it will revert to the next business
day. Section 414.425(c) lists the required documentation for submitting
a claim.
The burden associated with this requirement is the time and effort
necessary to gather required documentation as specified in Sec.
414.425(c) and submit a claim for damages. This requirement is for a
one-time process that will only impact those suppliers who were awarded
a contract and were potentially damaged by the termination of their
contracts by MIPPA. We awarded contracts to 329 suppliers. We expect
that it will take approximately 3 hours for a supplier to gather the
necessary documents and to file a claim. We anticipate that anywhere
between 5 and 250 suppliers may submit a claim for damages.
While this requirement is subject to the PRA, we believe the
associated burden is exempt under 5 CFR 1320.4. The information in
question is being collected as a result of an administrative action;
suppliers are submitting claims for damages caused by the termination
of contracts awarded in 2008 under the DMEPOS CBP that were terminated
as a result of section 154(a)(1)(A)(iv) of the MIPPA.

G. ICRs Dispute Resolution and Process for Suspension or Termination of
Approved CAP Contract and Termination of Physician Participation Under
Exigent Circumstances (Sec. 414.917)

As stated in Sec. 414.97, an approved CAP vendor may appeal that
termination by requesting a reconsideration. A determination must be
made as to whether the approved CAP vendor has been meeting the service
and quality obligations of its CAP contract. The approved CAP vendor's
contract will remain suspended during the reconsideration process.
The burden associated with this requirement is the time and effort
necessary for a CAP vendor to request a reconsideration of the
termination. While this requirement is subject to the PRA, we believe
the associated burden is exempt under 5 CFR 1320.4. The burden
associated with collecting information subsequent to an administrative
action is not subject to the PRA.

H. ICRs Regarding Compendia for Determination of Medically-accepted
Indications for Off-label Uses of Drugs and Biologicals in an Anti-
cancer Chemotherapeutic Regimen (Sec. 414.930)

As stated in the definition for a publicly transparent process for
evaluating therapies in Sec. 414.930(a), a compendium must make the
following materials available to the public on its Web site, coincident
with the compendium's publication of the related recommendation:
(i) The internal or external request for listing of a therapy
recommendation including criteria used to evaluate the request.
(ii) A listing of all the evidentiary materials reviewed or
considered by the compendium pursuant to the request.
(iii) A listing of all individuals who have substantively
participated in the review or disposition of the request.
(iv) Minutes and voting records of meetings for the review and
disposition of the request.
The definition for a publicly transparent process for identifying
conflicts of interests in Sec. 414.930(a), states that a compendium
must make the following materials available to the public, coincident
with the compendium's publication of the related recommendation:
(i) Direct or indirect financial relationships that exist between
individuals or the spouse or minor child of individuals who have
substantively participated in the development or disposition of
compendia recommendations and the manufacturer or seller of the drug or
biological being reviewed by the compendium. This may include, for
example, compensation arrangements such as salary, grant, contract, or
collaboration agreements between individuals or the spouse or minor
child of individuals who have substantively participated in the review
and disposition of the request and the manufacturer or seller of the
drug or biological being reviewed by the compendium.
(ii) Ownership or investment interests between individuals or the
spouse or minor child of individuals who have substantively
participated in the development or disposition of compendia
recommendations and the manufacturer or seller of the drug or
biological being reviewed by the compendium.
Based on our estimate, the burden we derived for all our conflict
of interest and transparency provisions above, the total burden would
range from 1950 hours per compendium with 75 responses to 2600 hours
per compendium with 100 responses. The variation in responses is due to
the varying size of compendia publications and different processes used
by compendia publishers to generate a recommendation. In our estimate
we also found that the total burden from respondents would range from
30 hours per compendium with 10 respondents to 2535 hours per
compendium with 845 respondents. The variation in respondents depends
on a compendium's use of internal or external staff to generate
compendia recommendations. Therefore, based on these burden totals, the
total burden hours per compendium to comply with our conflict of
interest and transparency

[[Page 61975]]

provisions ranges from 1980 hours (a compendium with 75 responses and
10 respondents) to 5135 hours (a compendium with 100 responses and 845
respondents). In order to capture the maximum burden for an individual
compendium, we are using the highest total hour estimate, 5135 hours,
per compendium to comply with our conflict of interest and transparency
provisions. In addition, all these provisions could be managed by a
qualified administrative assistant at an hourly rate of $33.51 per hour
based on the average salary of $69,500 obtained from the Department of
Labor.
We are soliciting public comments on the aforementioned
requirements and the associated burden estimates in an emergency PRA
notice published elsewhere in this Federal Register.

TABLE 47--Estimated Annual Reporting and Recordkeeping Burden
----------------------------------------------------------------------------------------------------------------
Burden per Total annual
Regulation section(s) OMB Control No. Respondents Responses response burden
(hours) (hours)
----------------------------------------------------------------------------------------------------------------
Sec. 414.408(j)(5).......... 0938-New........ 1305 69,165 17.25 22,511
Sec. 414.408(j)(6).......... 0938-New........ 145 22,620 41 5,945
Sec. 414.930................ 0938-New........ 845 900 * 1.83 5,135
---------------------------------------------------------------
Total..................... ................ .............. .............. .............. 33,591
----------------------------------------------------------------------------------------------------------------
* The average burden for the six tasks associated with the requirements in Sec. 414.930.

If you comment on these information collection and recordkeeping
requirements, please do either of the following:
1. Submit your comments electronically as specified in the
ADDRESSES section of this final rule with comment period; or
2. Submit your comments to the Office of Information and Regulatory
Affairs, Office of Management and Budget, Attention: CMS Desk Officer,
[CMS-1413-P]. Fax: (202) 395-6974; or E-mail: [email protected].
Additional Information Collection Requirements
This final rule with comment period imposes collection of
information requirements as outlined in the regulation text and
specified above. However, this final rule with comment period also
makes reference to several associated information collections that are
not discussed in the regulation text contained in this document. The
following is a discussion of these information collections, some of
which have already received OMB approval.
Part B Drug Payment
The discussion of average sales price (ASP) issues in section
II.H.1 of this final rule with comment period does not contain any new
information collection requirements with respect to payment for
Medicare Part B drugs and biologicals under the ASP methodology. Drug
manufacturers are required to submit ASP data to us on a quarterly
basis. The ASP reporting requirements are set forth in section 1927(b)
of the Act. The burden associated with this requirement is the time and
effort required by manufacturers of Medicare Part B drugs and
biologicals to calculate, record, and submit the required data to CMS.
While the burden associated with this requirement is subject to the
PRA, it is currently approved under OMB control number 0938-0921.
Competitive Acquisition Program (CAP)
Section II.H.2. of this final rule with comment period discusses
issues related to the competitive acquisition program for Part B drug
payment. There are no new information collection requirements
associated with the CAP; however, there are several previously approved
information collection requests (ICR) associated with the CAP.

TABLE 48--OMB Control Numbers
------------------------------------------------------------------------
OMB Control Expiration
Program component No. date
------------------------------------------------------------------------
Medicare Part B Drug and Biological CAP....... 0938-0954 06/30/2011
Medicare Part B Drug and Biological 0938-0955 08/31/2012
Competitive Acquisition Program Applications
\1\..........................................
Competitive Acquisition Program (CAP) for 0938-0987 12/31/2011
Medicare Part B Drugs: CAP Physician Election
Agreement....................................
------------------------------------------------------------------------
\1\ An extension of the currently approved ICR is currently in the
middle of the mandatory 60-day Federal Register notice and comment
period. The ICR will be submitted to OMB for review and approval prior
to the expiration date.

Physician Quality Reporting Initiative (PQRI)
Section II.G.2. of this final rule with comment period discusses
the background of the PQRI, provides information about the measures to
be available to eligible professionals who choose to participate in the
2010 PQRI, and the criteria for satisfactory reporting in 2010.
Beginning on January 1, 2010, the Secretary is also required by section
1848(m)(3)(C) of the Act, to establish and have in place a process
under which eligible professionals in a group practice (as defined by
the Secretary) shall be treated as satisfactorily submitting data on
quality measures under the PQRI.
With respect to satisfactory submission of data on quality measures
by eligible professionals, eligible professionals include physicians,
other practitioners as described in section 1842(b)(18)(c) of the Act,
physical and occupational therapists, qualified speech-language
pathologists, and qualified audiologists. Eligible professionals may
choose whether to participate and, to the extent they satisfactorily
submit data on quality measures for covered professional services, they
can qualify to receive an incentive payment. To qualify to receive an
incentive payment for 2010, the eligible professional must meet one of
the criteria for satisfactory reporting described in sections II.G.2.e.
and II.G.2.f. of this final rule with comment period.
For individual eligible professionals, the burden associated with
the requirements of this voluntary reporting

[[Page 61976]]

initiative is the time and effort associated with eligible
professionals identifying applicable PQRI quality measures for which
they can report the necessary information and the time and effort
associated with eligible professionals selecting a reporting option. We
believe it is difficult to accurately quantify the burden because it
would vary with each eligible professional by the number of measures
applicable to the eligible professional, the eligible professional's
familiarity and understanding of the PQRI, and experience with
participating in the PQRI. In addition, eligible professionals may
employ different methods for incorporating quality measures reporting
into the office work flows and are given flexibility for determining
which reporting option best fits their needs.
We believe the burden associated with participating in PQRI has
declined for those familiar with the program and who have
satisfactorily participated in the 2007 PQRI and/or the 2008 PQRI.
However, because we anticipate even greater participation in the 2010
PQRI, including participation by eligible professionals who are
participating in PQRI for the first time in 2010, we will assign 5
hours as the amount of time needed for eligible professionals to review
the list of PQRI quality measures, identify the applicable measures for
which they can report the necessary information, review the measure
specifications for those measures applicable to the eligible
professional, incorporate reporting of the measures selected by the
eligible professional into the office work flows, and select a 2010
PQRI reporting option. Information from the Physician Voluntary
Reporting Program (PVRP), which was a predecessor to the PQRI,
indicated an average labor cost of $50 per hour per practice. To
account for salary increases over time, we will use an average practice
labor cost of $55 per hour in our estimates based on an assumption of
an average annual increase of approximately 3 percent. Thus, we
estimate the cost for an eligible professional to review the list of
PQRI quality measures, identify the applicable measures for which they
can report the necessary information, review the measure specifications
for those measures applicable to the eligible professional, incorporate
reporting of the selected measures into the office work flows, and
select a 2010 PQRI reporting option to be approximately $275 per
eligible professional ($55 per hour x 5 hours).
We continue to expect the ongoing costs associated with PQRI
participation to decline based on an eligible professional's
familiarity with and understanding of the PQRI, experience with
participating in the PQRI, and increased efforts by CMS and
stakeholders to disseminate useful educational resources and best
practices.
In addition, for claims-based reporting, eligible professionals
must gather the required information, select the appropriate quality
data codes, and include the appropriate quality data codes on the
claims they submit for payment. The PQRI will collect quality data
codes as additional (optional) line items on the existing HIPAA
transaction 837-P and/or CMS Form 1500. We do not anticipate any new
forms or modifications to the existing transaction or form. We also do
not anticipate changes to the 837-P or CMS Form 1500 for CY 2010.
Because this is a voluntary program, it is difficult to accurately
estimate how many eligible professionals will opt to participate in the
PQRI in CY 2010. Information from the ``PQRI 2007 Reporting Experience
Report,'' which is available on the PQRI section of the CMS Web site at
http://www.cms.hhs.gov/PQRI, indicates that nearly 110,000 unique TIN/
NPI combinations attempted to submit PQRI quality measures data via
claims for the 2007 PQRI. Therefore, for purposes of conducting a
burden analysis for the 2010 PQRI, we will assume that all eligible
professionals who attempted to participate in the 2007 PQRI will also
attempt to participate in the 2010 PQRI.
Moreover, the time needed for an eligible professional to review
the quality measures and other information, select measures applicable
to his or her patients and the services he or she furnishes to them,
incorporate reporting of the selected measures into the office work
flows, and select a 2010 PQRI reporting option is expected to vary
along with the number of measures that are potentially applicable to a
given professional's practice. Since eligible professionals are
generally required to report on at least 3 measures to earn a PQRI
incentive, we will assume that each eligible professional who attempts
to submit PQRI quality measures data is attempting to earn a PQRI
incentive payment and that each eligible professional reports on an
average of 3 measures for this burden analysis.
Based on our experience with the PVRP, we continue to estimate that
the time needed to perform all the steps necessary to report each
measure (that is, reporting the relevant quality data code(s) for a
measure) on claims ranges from 15 seconds (0.25 minutes) to over 12
minutes for complicated cases and/or measures, with the median time
being 1.75 minutes. With an average practice labor cost of $55 per
hour, the cost associated with this burden ranges from $0.23 in labor
time to about $11.00 in labor time for more complicated cases and/or
measures, with the cost for the median practice being $1.44.
The total estimated annual burden for this requirement will also
vary along with the volume of claims on which quality data is reported.
Results from the 2007 PQRI indicate that eligible professionals
reported on 1 to 3,331 eligible instances per measure. For all 2007
PQRI measures, the median number of eligible instances reported on per
measure was less than 60. On average the median number of eligible
instances reported on per measure was about 9. Therefore, for this
burden analysis we estimate that for each measure, an eligible
professional reports the quality data on 9 cases. The actual number of
cases on which an eligible professional will be required to report
quality measures data will vary, however, with the eligible
professional's patient population and the types of measures on which
the eligible professional chooses to report (each measure's
specifications includes a required reporting frequency).
Based on the assumptions discussed above, we estimate the total
annual burden per eligible professional associated with claims-based
reporting to range from 306.75 minutes, or 5.1125 hours [(0.25 minutes
per measure x 3 measures x 9 cases per measure) + 5 hours] to 624
minutes, or 10.4 hours [(12 minutes per measure x 3 measures x 9 cases
per measure) + 5 hours]. We estimate the total annual cost per eligible
professional associated with claims-based reporting to range from
$281.21 [($0.23 per measure x 3 measures x 9 cases per measure) + $275]
to $572 [($11.00 per measure x 3 measures x 9 cases per measure) +
$275].
For registry-based reporting, we are estimating that it would cost
an eligible professional approximately $1,000 to participate in a
registry based on input we received from commenters (these comments are
addressed in the section II.G.2.a. of the preamble). This takes into
account the participation fee charged by registries and the fact that
this fee often includes services above and beyond what is required for
PQRI. However, registries vary in their participation fees as some
registries do not charge a participation fee at all or charge only
nominal fees. Eligible professionals also need to authorize or instruct
the registry to submit quality measures results and

[[Page 61977]]

numerator and denominator data on quality measures to CMS on their
behalf. We estimate that the time and effort associated with this would
be approximately 5 minutes for each eligible professional that wishes
to authorize or instruct the registry to submit quality measures
results and numerator and denominator data on quality measures to CMS
on their behalf.
Registries interested in submitting quality measure results and
numerator and denominator data on quality measures to CMS on their
participants' behalf in 2010 will need to complete a self-nomination
process in order to be considered ``qualified'' to submit on behalf of
eligible professionals unless the registry was qualified to submit on
behalf of eligible professionals for the 2009 PQRI and does so
successfully. We estimate that the self-nomination process for
qualifying additional registries to submit on behalf of eligible
professionals for the 2010 PQRI involves approximately 1 hour per
registry to draft the letter of intent for self-nomination. It is
estimated that each self-nominated entity will also spend 2 hours for
the interview with CMS officials and 2 hours for the development of a
measure flow. However, the time it takes to complete the measure flow
could vary depending on the registry's experience. Additionally, part
of the self-nomination process involves the completion of an XML
submission by the registry, which is estimated to take approximately 5
hours, but may vary depending on the registry's experience. We estimate
that the registry staff involved in the registry self-nomination
process have an average labor cost of $50 per hour. Therefore, assuming
the total burden hours per registry associated with the registry self-
nomination process is 10 hours, we estimate the total cost to a
registry associated with the registry self-nomination process to be
approximately $500 ($50 per hour x 10 hours per registry).
The burden associated with the registry-based reporting
requirements of this voluntary reporting initiative is the time and
effort associated with the registry calculating quality measure results
from the data submitted to the registry by its participants and
submitting the quality measure results and numerator and denominator
data on quality measures to CMS on behalf of their participants. The
time needed for a registry to review the quality measures and other
information, calculate the measure results, and submit the measure
results and numerator and denominator data on the quality measures on
their participants' behalf is expected to vary along with the number of
eligible professionals reporting data to the registry and the number of
applicable measures. However, since it is customary for most registries
to provide their participants with information that can be used for the
participants' internal quality improvement efforts, we believe that
registries already perform many of these activities for their
participants. The number of measures that the registry intends to
report to CMS and how similar the registry's measures are to CMS' PQRI
measures will determine the time burden to the registry.
For EHR-based reporting, the eligible professional must review the
quality measures on which we will be accepting PQRI data extracted from
EHRs, select the appropriate quality measures, extract the necessary
clinical data from his or her EHR, and submit the necessary data to the
CMS-designated clinical data warehouse. Because this manner of
reporting quality data to CMS will be new to PQRI for 2010 and
participation in this reporting initiative is voluntary, we believe it
is difficult to estimate with any degree of accuracy how many eligible
professionals will opt to participate in the PQRI through the EHR
mechanism in CY 2010. The time needed for an eligible professional to
review the quality measures and other information, select measures
applicable to his or her patients and the services he or she furnishes
to them is expected to be similar for EHR-based reporting and claims-
based reporting. Once the EHR is programmed by the vendor to allow data
submission to CMS, the burden to the eligible professional associated
with submission of data on PQRI quality measures should be minimal.
An EHR vendor interested in having their product(s) be used by
eligible professionals to submit PQRI quality measures data to CMS were
required to complete a self-nomination process in order for the
vendor's product(s) to be considered ``qualified'' for 2010. It is
difficult for us to accurately quantify the burden associated with the
EHR self-nomination process as there is variation regarding the
technical capabilities and experience among vendors. For purposes of
this burden analysis, however, we estimate that the time required for
an EHR vendor to complete the self-nomination process will be similar
to the time required for registries to self-nominate, that is,
approximately 10 hours at $50 per hour for a total of $500 per EHR
vendor ($50 per hour x 10 hours per EHR vendor).
The burden associated with the EHR-based reporting requirements of
this voluntary reporting initiative is the time and effort associated
with the EHR vendor programming its EHR product(s) to extract the
clinical data that the eligible professional needs to submit to CMS for
purposes of reporting 2010 PQRI quality measures. The time needed for
an EHR vendor to review the quality measures and other information and
program each qualified EHR product to enable eligible professionals to
submit PQRI quality measures data to the CMS-designated clinical data
warehouse will be dependent on the EHR vendor's familiarity with PQRI,
the vendor's system capabilities, as well as the vendor's programming
capabilities. Some vendors already have these necessary capabilities
and for such vendors, we estimate the total burden hours to be 40 hours
at a rate of $50 per hour for a total burden estimate of $2,000 ($50
per hour x 40 hours per vendor). However, given the variability in the
capabilities of the vendors, we believe a more conservative estimate
for those vendors with minimal experience would be approximately 200
hours at $50 per hour, for a total estimate of $10,000 per vendor ($50
per hour x 200 hours per EHR vendor).
With respect to the process for group practices to be treated as
satisfactorily submitting quality measures data under the 2010 PQRI
discussed in section II.G.2. of this final rule with comment period,
group practices interested in participating in the 2010 PQRI through
the group practice reporting option must complete a self-nomination
process similar to the self-nomination process required of registries
and EHR vendors. Therefore, we estimate that the self-nomination
process for the group practices for the 2010 PQRI involves
approximately 2 hours per group practice to review the 2010 PQRI
reporting option and make the decision to participate as a group rather
than individually and an additional 2 hours per group practice to draft
the letter of intent for self-nomination, gather the requested TIN and
NPI information, and provide this requested information. It is
estimated that each self-nominated entity will also spend 2 hours
undergoing the vetting process with CMS officials. We assume that the
group practice staff involved in the group practice self-nomination
process have an average practice labor cost of $55 per hour. Therefore,
assuming the total burden hours per group practice associated with the
group practice self-nomination process is 6 hours, we estimate the
total cost to a group

[[Page 61978]]

practice associated with the group practice self-nomination process to
be approximately $330 ($55 per hour x 6 hours per group practice).
The burden associated with the group practice reporting
requirements of this voluntary reporting initiative is the time and
effort associated with the group practice submitting the quality
measures data. For group practices, this would be the time associated
with the group practice completing the data collection tool. The
information collection components of this data collection tool have
been reviewed by OMB and are currently approved under OMB control
number 0938-0941, with an expiration date of December 31, 2011, for use
in the Physician Group Practice, Medicare Care Management Performance
(MCMP), and EHR demonstrations. Based on burden estimates for the PGP
demonstration, which uses the same data submission methods as what we
will be using for PQRI, we estimate the burden associated with a group
practice completing the data collection tool will be approximately 79
hours per physician group. Therefore, we estimate the total annual
burden hours per physician group would be approximately 85 hours (2
hours for decision-making + 4 hours for self-nomination + 79 hours for
data submission). Based on an average labor cost of $55 per physician
group, we estimate the cost per physician group associated with
participating in the PQRI group practice reporting option would be
$4,675 ($55 per hour x 85 hours per group practice).
The Electronic Prescribing (E-Prescribing) Incentive Program
We believe it is difficult to accurately estimate how many eligible
professionals will opt to participate in the E-Prescribing Incentive
Program in CY 2010. Information from the ``PQRI 2007 Reporting
Experience Report,'' which is available on the PQRI section of the CMS
Web site at http://www.cms.hhs.gov/PQRI, indicates that nearly 110,000
unique TIN/NPI combinations attempted to submit PQRI quality measures
data via claims for the 2007 PQRI. Therefore, for purposes of
conducting a burden analysis for the 2010 E-Prescribing Incentive
Program, we will assume that as many eligible professionals who
attempted to participate in the 2007 PQRI will attempt to participate
in the 2010 E-Prescribing Incentive Program. As such, we can estimate
that nearly 110,000 unique TIN/NPI combinations will participate in the
2010 E-Prescribing Incentive Program.
Section II.G.5. of the preamble discusses the background of the E-
Prescribing Incentive Program. Section II.G.5.c. of the preamble
provides information on how eligible professionals can qualify to be
considered a successful electronic prescriber in 2010 in order to earn
an incentive payment. Similar to the PQRI, the E-Prescribing Incentive
Program is a voluntary initiative. Eligible professionals may choose
whether to participate and, to the extent they meet (1) certain
thresholds with respect to the volume of covered professional services
furnished and (2) the criteria to be considered a successful electronic
prescriber described in section II.G.5.c. of this final rule with
comment period, they can qualify to receive an incentive payment for
2010.
For the 2010 E-Prescribing Incentive Program, as discussed in
section II.G.5. of the preamble, each eligible professional will need
to report the 2010 electronic prescribing measure, which indicates that
at least 1 prescription created during an eligible encounter was
generated and transmitted electronically using a qualified electronic
prescribing system. Similar to PQRI, this measure will be reportable
through claims, a qualified registry, or a qualified EHR.
Similar to claims-based reporting for the PQRI, we estimate that
the burden associated with the requirements of this incentive program
is the time and effort associated with eligible professionals
determining whether the electronic prescribing quality measure applies
to them, gathering the required information, selecting the appropriate
quality data codes, and including the appropriate quality data codes on
the claims they submit for payment. We expect the ongoing costs
associated with participation in the E-Prescribing Incentive Program to
decline based on an eligible professional's familiarity with and
understanding of the E-Prescribing Incentive Program, experience with
participating in the E-Prescribing Incentive Program, and increased
efforts by CMS and stakeholders to disseminate useful educational
resources and best practices. Since the E-Prescribing Incentive Program
consists of only 1 quality measure, we will assign 1 hour as the amount
of time needed for eligible professionals to review the electronic
prescribing measure and incorporate reporting of the measure into their
office work flows and an additional hour as the amount of time needed
for eligible professionals to select an appropriate reporting mechanism
for them. At an average cost of approximately $55 per hour (see section
XIII.E.2. above for a discussion of how we arrived at this figure), we
estimate the total cost to eligible professionals for reviewing the e-
prescribing measure, incorporating the reporting of the measure into
the office work flows, and selecting an appropriate reporting mechanism
to be approximately $110 ($55 per hour x 2 hours).
For claims-based reporting, the quality data codes will be
collected as additional (optional) line items on the existing HIPAA
transaction 837-P and/or CMS Form 1500. We do not anticipate any new
forms or modifications to the existing transaction or form. We also do
not anticipate changes to the 837-P or CMS Form 1500 for CY 2010.
Based on our experience with the PVRP described in section II.G.5.,
we estimate that the time needed to perform all the steps necessary to
report the electronic prescribing measure via claims to be 1.75
minutes. We also estimate the cost to perform all the steps necessary
to report the electronic prescribing measure to be $1.44 based on the
experience with the PVRP described above.
Based on the 2010 criteria for determination of whether an eligible
professional is a successful electronic prescriber, we estimate that
each eligible professional will report the electronic prescribing
measure in 25 instances during the reporting period.
Therefore, we estimate the total annual burden per eligible
professional who chooses to participate in the 2010 E-Prescribing
Incentive Program through claims-based reporting of the electronic
prescribing measure to be 163.75 minutes, or 2.73 hours [(1.75 minutes
per measure x 1 measure x 25 cases per measure) + 2 hours]. The total
estimated cost per eligible professional to report the electronic
prescribing measure is estimated to be $146 [($1.44 per measure x 1
measure x 25 cases per measure) + $110].
Because registry-based reporting of the electronic prescribing
measure to CMS will be new for 2010 and participation in this reporting
initiative is voluntary, it is impossible to estimate with any degree
of accuracy how many eligible professionals will opt to participate in
the E-Prescribing Incentive Program through the registry-based
reporting mechanism in CY 2010. We do not anticipate, however, any
additional burden for eligible professionals to report data to a
registry as eligible professionals opting for registry-based reporting
would more than likely already be reporting data to the registry for
other purposes

[[Page 61979]]

(particularly eligible professionals who are already participating in
PQRI via the registry-based reporting mechanism). Little, if any,
additional data would need to be reported to the registry for purposes
of participation in the 2010 E-Prescribing Incentive Program. However,
in addition to the 2 hours estimated for the time needed by eligible
professionals to review the applicability of the electronic prescribing
measure, incorporate reporting of the measure in their practice work
flows, and review the available reporting mechanisms to select the
registry reporting mechanism, eligible professionals will need to
authorize or instruct the registry to submit quality measures results
and numerator and denominator data on the electronic prescribing
measure to CMS on their behalf. We estimate that the time and effort
associated with this would be approximately 5 minutes for each eligible
professional that wishes to authorize or instruct the registry to
submit quality measures results and numerator and denominator data on
the electronic prescribing measure to CMS on their behalf.
Based on our policy to consider only registries qualified to submit
quality measures results and numerator and denominator data on quality
measures to CMS on their participants' behalf for the 2010 PQRI to be
qualified to submit results and numerator and denominator data on the
electronic prescribing measure for the 2010 E-Prescribing Incentive
Program, there will be no need for a registry to undergo a separate
self-nomination process for the E-Prescribing Incentive Program other
than to indicate to us its desire to become a qualified registry for
the E-Prescribing Incentive Program at the time that it does so for
PQRI. Therefore, we estimate that any additional associated with the
registry self-nomination process would be minimal.
The burden associated with the registry-based reporting
requirements of this voluntary reporting initiative is the time and
effort associated with the registry calculating results for the
electronic prescribing measure from the data submitted to the registry
by its participants and submitting the quality measure results and
numerator and denominator data on the electronic prescribing quality
measure to CMS on behalf of their participants. The time needed for a
registry to review the electronic prescribing measure and other
information, calculate the measure's results, and submit the measure's
results and numerator and denominator data on the measure on their
participants' behalf is expected to vary along with the number of
eligible professionals reporting data to the registry. However, we
believe that registries already perform many of these activities for
their participants. Since the E-Prescribing Incentive Program consists
of only one measure, we believe that the burden associated with the
registry reporting the measure's results and numerator and denominator
to CMS on behalf of their participants would be minimal.
For EHR-based reporting, the eligible professional must review the
electronic prescribing measure, extract the necessary clinical data
from his or her EHR, and submit the necessary data to the CMS-
designated clinical data warehouse. Because this manner of reporting
quality data to CMS will be new for 2010 and participation in this
reporting initiative is voluntary, it is difficult to accurately
estimate how many eligible professionals will opt to participate in the
E-Prescribing Incentive Program through the EHR-based reporting
mechanism in CY 2010. The time needed for an eligible professional to
review the electronic prescribing measure and other information to
determine whether the measure is applicable to his or her patients and
the services he or she furnishes to them and to review the available
reporting mechanisms to select the EHR reporting mechanism is expected
to be similar for EHR-based reporting and claims-based reporting. Once
the EHR is programmed by the vendor to allow data submission to CMS,
the burden to the eligible professional associated with submission of
data on the electronic prescribing measure should be minimal.
Based on our policy to consider only EHR products qualified for the
2010 PQRI to be qualified for the 2010 E-Prescribing Incentive Program,
there will be no need for EHR vendors to undergo a separate self-
nomination process for the E-Prescribing Incentive Program and
therefore, no additional burden associated with the self-nomination
process.
The burden associated with the EHR-based reporting requirements of
this voluntary reporting initiative is the time and effort associated
with the EHR vendor programming its EHR product(s) to extract the
clinical data that the eligible professional needs to submit to CMS for
purposes of reporting the 2010 electronic prescribing measure. The time
needed for an EHR vendor to review the measure and other information
and program each qualified EHR product to enable eligible professionals
to submit data on the measure to the CMS-designated clinical data
warehouse will be dependent on the EHR vendor's familiarity with the
electronic prescribing measure, the vendor's system capabilities, as
well as the vendor's programming capabilities. Since only EHR products
qualified for the 2010 PQRI will be qualified for the 2010 E-
Prescribing Incentive Program and the E-Prescribing Incentive Program
consists of only one measure, we believe that any burden associated
with the EHR vendor to program its product(s) to enable eligible
professionals to submit data on the electronic prescribing measure to
the CMS-designated clinical data warehouse would be minimal.
Finally, with respect to the process for group practices to be
treated as successful electronic prescribers under the 2010 E-
Prescribing Incentive Program discussed in section II.G.5., a group
practice will be required to report the electronic prescribing measure
in at least 2,500 instances. Group practices have the same options as
individual eligible professionals in terms of the form and manner for
reporting the electronic prescribing measure (that is, group practices
have the option of reporting the measure through claims, a qualified
registry, or a qualified EHR product). The only difference between an
individual eligible professional and group practice reporting of the
electronic prescribing measure is the number of times that a group
practice is required to report the electronic prescribing measure.
Reporting of the electronic prescribing measure can continue to occur
at the individual eligible professional level under the electronic
prescribing group practice reporting option. In our analysis of the
information, however, we will aggregate all of the information reported
by the eligible professionals within the group practice to determine
whether the group practice reported the measure a sufficient number of
times. For group practices that are selected to participate in the 2010
E-Prescribing Incentive Program group practice reporting option and
choose to do so through claims-based reporting of the electronic
prescribing measure, we estimate the total annual burden to be 74.92
hours [(1.75 minutes per measure x 1 measure x 2,500 cases per measure)
+ 2 hours]. The total estimated cost per group practice to report the
electronic prescribing measure through claims-based reporting is
estimated to be $3,710 [($1.44 per measure x 1 measure x 2,500 cases
per measure) + $110].
For group practices that are selected to participate in the 2010 E-
Prescribing Incentive Program group practice reporting option and
choose to do so through registry-based reporting of the

[[Page 61980]]

electronic prescribing measure, we do not anticipate any additional
burden to report data to a registry as group practices opting for
registry-based reporting would more than likely already be reporting
data to the registry for other purposes, such as for the PQRI. Little,
if any, additional data would need to be reported to the registry for
purposes of participation in the 2010 E-Prescribing Incentive Program.
However, in addition to the 2 hours estimated for the time needed by
group practices to review the electronic prescribing measure to
determine its applicability to the practice, incorporate reporting of
the electronic prescribing measure into the practice's work flows, and
review available reporting mechanisms to select group practice
reporting of the measure through a qualified registry, the group
practices will need to authorize or instruct the registry to submit the
measure results and numerator and denominator data on the electronic
prescribing measure to CMS on their behalf. We estimate that the time
and effort associated with this would be approximately 5 minutes for
each group practice that wishes to authorize or instruct the registry
to submit quality measure results and numerator and denominator data on
the electronic prescribing measure to CMS on its behalf.
For group practices that are selected to participate in the 2010 E-
Prescribing Incentive Program group practice reporting option and
choose to do so through EHR-based reporting of the electronic
prescribing measure, once the EHR is programmed by the vendor to allow
data submission to CMS, the burden to the group practice associated
with submission of data on the electronic prescribing measure should be
minimal.
In addition to the burden associated with group practices reporting
the electronic prescribing measure, group practices will also be
required to self-nominate in order to participate in the 2010 E-
Prescribing Incentive Program under the group practice reporting
option. Since we are limiting participation in the electronic
prescribing group practice reporting option to those group practices
selected to participate in the PQRI group practice reporting option,
there will not be a separate group practice self-nomination process for
the E-Prescribing Incentive Program and, thus, no additional burden.
We invite comments on this burden analysis, including the
underlying assumptions used in developing our burden estimates.

XII. Response to Comments

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

XIII. Regulatory Impact Analysis

A. Overall Impact

We have examined the impacts of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993), the
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, section 202 of the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4), Executive Order 13132 on
Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C.
804(2)).
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). We estimate,
as discussed below in this section, that the PFS provisions included in
this final rule with comment period will redistribute more than $100
million in 1 year. Therefore, we estimate that this rulemaking is
``economically significant'' as measured by the $100 million threshold,
and hence also a major rule under the Congressional Review Act.
Accordingly, we have prepared a Regulatory Impact Analysis that to the
best of our ability presents the costs and benefits of the rulemaking.
The RFA requires agencies to analyze options for regulatory relief
of small businesses, if a rule has a significant impact on a
substantial number of small entities. For purposes of the RFA, we
estimate that most hospitals and most other providers are small
entities as that term is used in the RFA (including small businesses,
nonprofit organizations, and small governmental jurisdictions). The
great majority of hospitals and most other health care providers and
suppliers are small entities, either by being nonprofit organizations
or by meeting the Small Business Administration (SBA) definition of a
small business (having revenues of less than $7.0 million to $34.5
million in any 1 year) (for details see the SBA's Web site at http://sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf (refer to the 620000 series). Individuals and States are
not included in the definition of a small entity.
The RFA requires that we analyze regulatory options for small
businesses and other entities. We prepare a regulatory flexibility
analysis unless we certify that a rule would not have a significant
economic impact on a substantial number of small entities. The analysis
must include a justification concerning the reason action is being
taken, the kinds and number of small entities the rule affects, and an
explanation of any meaningful options that achieve the objectives with
less significant adverse economic impact on the small entities.
For purposes of the RFA, physicians, NPPs, and suppliers including
IDTFs are considered small businesses if they generate revenues of $7
million or less based on SBA size standards. Approximately 95 percent
of physicians are considered to be small entities. There are over 1
million physicians, other practitioners, and medical suppliers that
receive Medicare payment under the PFS.
For purposes of the RFA, approximately 85 percent of suppliers of
durable medical equipment, prosthetics, orthotics, and supplies
(DMEPOS) are considered small businesses according to the SBA size
standards. We estimate that approximately 105,000 DMEPOS suppliers are
enrolled in Medicare currently and bill Medicare for DMEPOS each year.
Total annual estimated Medicare revenues for DMEPOS suppliers are
approximately $11.7 billion in 2008 for which $8.7 billion was for fee-
for-service (FFS) and $3.0 billion was for managed care.
For purposes of the RFA, approximately 80 percent of clinical
diagnostic laboratories are considered small businesses according to
the SBA size standards.
Ambulance providers and suppliers for purposes of the RFA are also
considered to be small entities.
In addition, most ESRD facilities are considered small entities for
purposes of the RFA, either based on nonprofit status or by having
revenues of $7 million to $34.5 million or less in any year. We note
that a considerable number of ESRD facilities are owned and operated by
large dialysis organizations (LDOs) or regional chains,

[[Page 61981]]

which would have total revenues more than $34.5 million in any year if
revenues from all locations are combined. However, the claims data we
use to estimate payments for this RFA and RIA does not identify which
dialysis facilities are parts of an LDO, regional chain, or other type
of ownership. Each individual dialysis facility has its own provider
number and bills Medicare using this number. Therefore, we consider
each ESRD to be a small entity for purposes of the RFA. We consider a
substantial number of entities to be significantly affected if the
final rule with comment period has an annual average impact on small
entities of 3 to 5 percent or more. The majority of ESRD facilities
will experience impacts of less than 2 percent of total revenues. There
are 946 nonprofit ESRD facilities with a combined increase of 0.9
percent in overall payments relative to current overall payments. We
note that although the overall effect of the wage index changes is
budget neutral, there are increases and decreases based on the location
of individual facilities. The analysis and discussion provided in this
section and elsewhere in this final rule with comment period complies
with the RFA requirements.
Because we acknowledge that many of the affected entities are small
entities, the analysis discussed throughout the preamble of this final
rule with comment period constitutes our regulatory flexibility
analysis for the remaining provisions and addresses comments received
on these issues.
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. Any
such regulatory impact 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 do not
believe this final rule with comment period has impact on significant
operations of a substantial number of small rural hospitals because
most dialysis facilities are freestanding. While there are 176 rural
hospital-based dialysis facilities, we do not know how many of them are
based at hospitals with fewer than 100 beds. However, overall, the 176
rural hospital-based dialysis facilities will experience an estimated
1.1 percent increase in payments. As a result, this rule will not have
a significant impact on small rural hospitals. Therefore, the Secretary
has determined that this final rule with comment period 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 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2009, that
threshold is approximately $133 million. This final rule with comment
period will not mandate any requirements for State, local, or tribal
governments. Medicare beneficiaries are considered to be part of the
private sector and as a result a more detailed discussion is presented
on the Impact of Beneficiaries in section V. of this regulatory impact
analysis. Rather, it focuses on certain categories of cost, mainly
those ``Federal mandate'' costs resulting from (A) imposing enforceable
duties on State, local, or tribal governments, or on the private
sector, or (B) increasing the stringency of conditions in, or
decreasing the funding of, State, local, or tribal governments under
entitlement programs.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. We have examined this final rule with comment period in
accordance with Executive Order 13132 and have determined that this
regulation would not have any substantial direct effect on State or
local governments, would not preempt States, or otherwise have a
Federalism implication.
We have prepared the following analysis, which together with the
information provided in the rest of this preamble, meets all assessment
requirements. The analysis explains the rationale for and purposes of
this final rule with comment period; details the costs and benefits of
the rule; analyzes alternatives; and presents the measures we will use
to minimize the burden on small entities. As indicated elsewhere in
this rule, we are implementing a variety of changes to our regulations,
payments, or payment policies to ensure that our payment systems
reflect changes in medical practice and the relative value of services.
We provide information for each of the policy changes in the relevant
sections of this final rule with comment period. We are unaware of any
relevant Federal rules that duplicate, overlap, or conflict with this
final rule with comment period. The relevant sections of this rule
contain a description of significant alternatives if applicable.
Comment: We received comments on the CY 2010 PFS proposed rule
stating that we failed to address the impact of the changes on small
businesses and did not propose any measures for mitigating the negative
impact the proposals might have on such businesses. One commenter
stated that most portable x-ray suppliers are small businesses and that
the policy changes will adversely affect them. Another commenter,
representing providers of integrated cancer care, also expressed
concern about the negative impact the proposed changes would have on
small businesses that furnish radiation therapy services. The
commenters outlined specific concerns with respect to the proposals
concerning practice expense, including the change with respect to
assumption for equipment utilization, the changes to malpractice RVUs,
as well as application of the projected -21.5 update adjustment under
the SGR.
Response: In Addendum B of the CY 2010 PFS proposed rule, we
provided the proposed payment rates for the HCPCS codes paid under the
PFS. Any physician or supplier of PFS services can determine the impact
of the proposed Medicare payment rates using their own mix of services.
In addition, we publish average impacts by Medicare specialty to assist
the public in commenting on the proposed rule. The methodology that we
use to develop the RVUs is publicly available as are the data files
that we use in the calculations and impact analyses.
We did review the potential impact of our revised policies in the
regulatory impact analysis. In light of the comments received on the
proposed rule, we have revised many of the proposals made in the
proposed rule such that we estimate that the impact on portable x-ray
suppliers and providers of radiation therapy services in this final
rule with comment period will be significantly different than in the
proposed rule, as shown in Table 49. However, the PFS update, which is
based in part on the SGR, is required by law, affects all PFS services,
and we have no discretion to waive this provision for small businesses.

B. RVU Impacts

1. Resource-Based Work, PE, and MP RVUs
Section 1848(c)(2)(B)(ii) of the Act requires that increases or
decreases in RVUs may not cause the amount of expenditures for the year
to differ by

[[Page 61982]]

more than $20 million from what expenditures would have been in the
absence of these changes. If this threshold is exceeded, we make
adjustments to preserve BN.
Our estimates of changes in Medicare revenues for PFS services
compare payment rates for CY 2009 with payment rates for CY 2010 using
CY 2008 Medicare utilization for all years. To the extent that there
are year-to-year changes in the volume and mix of services provided by
physicians, the actual impact on total Medicare revenues will be
different than those shown in Table 49. The payment impacts reflect
averages for each specialty based on Medicare utilization. The payment
impact for an individual physician would be different from the average,
based on the mix of services the physician provides. The average change
in total revenues would be less than the impact displayed here because
physicians furnish services to both Medicare and non-Medicare patients
and specialties may receive substantial Medicare revenues for services
that are not paid under the PFS. For instance, independent laboratories
receive approximately 80 percent of their Medicare revenues from
clinical laboratory services that are not paid under the PFS.
Table 49 shows only the payment impact on PFS services. The
following is an explanation of the information represented in Table 49:
Specialty: The physician specialty or type of
practitioner/supplier.
Allowed charges: Allowed charges are the PFS amounts for
covered services and include coinsurance and deductibles (which are the
financial responsibility of the beneficiary). These amounts have been
summed across all services furnished by physicians, practitioners, or
suppliers within a specialty to arrive at the total allowed charges for
the specialty.
Impact of Work RVU changes for the CY 2010 PFS.
Impact of PE RVU changes (Full) if these changes were
fully implemented in CY 2010 PFS. These are not the estimated CY 2010
impacts since we have implemented a 4-year transition to the new PE
RVUs for existing codes.
Impact of the CY 2010 PE RVU changes under the 4-year
transition (Tran) adopted in this final rule with comment period. These
are the estimated CY 2010 impacts. Note that the transition does not
apply to new and significantly revised codes.
Impact of MP RVU changes for the CY 2010 PFS.
Combined impact of all RVU changes (Full) if these changes
were fully implemented in CY 2010 PFS. These are not the estimated CY
2010 impacts since we have implemented a 4-year transition to the new
PE RVUs for existing codes. These impacts are prior to the application
of the CY 2010 negative PFS CF update under the current statute.
Combined impact of all of the estimated CY 2010 RVU
changes under the 4-year transition (Tran) adopted in this final rule
with comment period for the PE changes. These are the estimated CY 2010
impacts, prior to the application of the CY 2010 negative PFS CF update
under the current statute.
BILLING CODE 4120-01-P

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[GRAPHIC] [TIFF OMITTED] TR25NO09.215

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[GRAPHIC] [TIFF OMITTED] TR25NO09.216

BILLING CODE 4120-01-C
2. Resource-Based Work, PE, and MP RVUs Impacts
a. Work RVU Impacts
The average work RVU impacts are primarily attributable to the
changes for consultation services. As described earlier in this final
rule with comment period, we are proposing to no longer recognize the
billing codes for consultation services so we are budget neutrally
eliminating the use of all consultation codes (except for telehealth)
and have allocated the work RVUs that were allotted to these services
to the work RVUs for new and established office visit services, initial
hospital visits, and initial nursing facility visits to reflect this
change.
In addition, the impacts reflect the work done by the AMA RUC
related to the Five-Year Review Identification Workgroup's Codes
Reported Together screen. Based upon the AMA RUCs review of the
myocardial perfusion imaging family of services, it was determined that
some of the existing codes for these services are performed together
more than 95 percent of the time and were thus referred to CPT for
creation of new bundled services. In recognition of the efficiencies
associated with the services being performed together, there are less
aggregate RVUs under the new bundled 2010 CPT coding structure and
pricing than there are under the current 2009 CPT coding structure and
pricing. These fewer aggregate RVUs will be offset by an adjustment to
the CF in order to maintain overall BN. For further information on the
myocardial perfusion imaging family coding changes, see section
III.F.4. of this final rule with comment period.
b. PE RVUs Impacts
The PE RVU impacts are primarily attributable to the incorporation
of PE data from the Physician Practice Information Survey (PPIS). For a
discussion of the use of this updated survey data, see section II.A.2.
of this final rule with comment period. The impacts are shown both as
if they were fully implemented in CY 2010 and under our 4-year
transition policy to the new PE RVUs for existing codes that have not
been substantially revised.
For IDTFs, the impact of our change in the utilization rate for
expensive diagnostic equipment is also significant. We estimate that
for IDTFs, the utilization rate change will result in a fully
implemented impact of approximately -2 percent after taking into
account the OPPS payment cap. This -2 percent impact is included in the
-29 percent fully implemented PE RVU impact shown in Table 49 for
IDTFs. The change in the utilization rate for expensive diagnostic
imaging equipment does not significantly impact overall payments for
other specialties after taking into account the OPPS payment cap.
The impacts also reflect the reduced utilization for the myocardial
perfusion imaging family of services stemming from the AMA RUC's review
of these services as described above.
The payment impact for an individual physician may be different
from the average, based on the mix of services the physician provides.
Using the RVU information contained in Appendix B, an impact can be
calculated for any particular mix of services either under the fully
implemented RVUs or the 4-year transition RVUs.
c. Malpractice RVU Impacts
The average MP RVU impacts are attributable to the changes adopted
for the Five-Year Review of MP RVUs described earlier in this final
rule with comment period. Of particular note are the impacts on the
specialties of Audiology (-7 percent), and IDTFs (-4 percent). These
impacts are primarily driven by the expansion of the MP premium data
collection and the changes to the methodology for TC services.
d. Combined Impact
Column E of Table 49 displays the combined average impact of all
RVU changes by specialty. The impacts are shown both as if the new PE
RVUs were fully implemented in CY 2010 and under our 4-year transition
policy to the new PE RVUs for existing codes that have not been
significantly revised.
The estimated CY 2010 transition impacts range from increases of +5
percent for ophthalmology to decreases of -18 percent for nuclear
medicine. The effect of our policies on primary care specialties such
as General Practice, Family Practice, Internal Medicine, and Geriatrics
are positive with CY 2010 transition increases ranging from +2 percent
to +4 percent. Again, these impacts are prior to the application of the
negative CY 2010 CF update under the current statute.
Table 49 shows the estimated transition impact on total payments
for selected high-volume procedures of all of the changes discussed
previously, including the effect of the CY 2010 negative PFS CF update.
We selected

[[Page 61985]]

these procedures because they are the most commonly furnished by a
broad spectrum of physician specialties. There are separate columns
that show the change in the facility rates and the non-facility rates.
For an explanation of facility and non-facility PE, refer to Addendum A
of this final rule with comment period.
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C

[[Page 61987]]

C. Geographic Practice Cost Indices (GPCIs)

As discussed in section II.B. of this final rule with comment
period, the application of the 1.000 work GPCI floor, as extended by
section 134(a) of the MIPPA, expires effective January 1, 2010. As a
result, 54 (out of 89) PFS localities will receive a decrease in their
work GPCI. Puerto Rico receives the largest decrease (-9.6 percent),
followed by South Dakota (-5.8 percent), North Dakota (-5.3 percent),
Rest of Missouri (-5.1 percent), and Montana (-5.0 percent).

D. Medicare Telehealth Services

In section II.D. of this final rule with comment period, we are
adding individual health behavior and assessment services (as described
by HCPCS codes 96150 through 96152) to the list of telehealth services.
We are also revising Sec. 410.78 to specify that the G-codes for
follow-up inpatient telehealth consultations (as described by HCPCS
codes G0406 through G0408) include follow-up telehealth consultations
furnished to beneficiaries in hospitals and skilled nursing facilities.
The total annual Medicare payment amount for telehealth services
(including the originating site facility fee) is approximately $2
million. Previous additions to the list of telehealth services have not
resulted in a significant increase in Medicare program expenditures.
While we believe that these proposals will provide more beneficiaries
with access to these services, we do not anticipate that these changes
will have a significant budgetary impact on the Medicare program.

E. MIPPA Provisions

1. Section 102: Elimination of Discriminatory Copayment Rates for
Medicare Outpatient Psychiatric Services
This section of the MIPPA will have a positive impact on Medicare
patients because coinsurance payment percentages for outpatient mental
health services will be gradually reduced from January 1, 2010 through
January 1, 2014. At the conclusion of this 5-year period, Medicare
patients will pay the same coinsurance payment percentage for
outpatient mental health services as they currently pay for most other
health services under the Medicare Part B program.
Since the inception of the Medicare Part B program, Medicare
patients have been required to pay for a greater percentage of the cost
of outpatient mental health treatment services than for other health
services because of the Medicare payment limitation (the outpatient
mental health treatment limitation). While a dollar cap that previously
applied to mental health services was eliminated January 1, 1991, the
statute maintained the 62\1/2\ percent limitation on the recognition of
incurred expenses for these services. This limitation of 62\1/2\
percent effectively reduces the program's payment for mental health
services to 50 percent, leaving a Medicare patient responsible for
paying the other half of these expenses through coinsurance. The 62\1/
2\ percent limitation will remain in effect until December 31, 2009.
During the transition, the Medicare Part B program will incur
increased expenditures as Medicare patients pay less out-of-pocket for
outpatient mental health services until, in 2014, patients will pay
only the deductible (if applicable) and 20 percent coinsurance. Section
102 of the MIPPA will shift cost-sharing for mental health services
from Medicare patients to the program. This provision will result in a
cost impact to the Medicare program of approximately $100 million for
CY 2010. As section 102 of the MIPPA is implemented, the impact of the
changes to the coinsurance payment percentages (that is, recognized
incurred expenses) for Medicare patients and the program is as shown in
Table 51.
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[[Page 61988]]

2. Section 131(b): Physician Payment, Efficiency, and Quality
Improvements--Physician Quality Reporting Initiative (PQRI)
As discussed in section II.G.2. of this final rule with comment
period, the 2010 PQRI measures satisfy the requirement of section
1848(k)(2)(D) of the Act that the Secretary shall ensure that eligible
professionals have the opportunity to provide input during the
development, endorsement, or selection of measures applicable to
services they furnish. As discussed in section II.G.2.d. of this final
rule with comment period, we are also offering options in 2010 for
reporting the 2010 PQRI measures via submission of data to a qualified
clinical registry, options for reporting some of the 2010 PQRI measures
via submission of data extracted from a qualified EHR, options for
reporting on measures groups rather than individual measures, and
options for group practices to be treated as satisfactorily submitting
quality data under the PQRI. We received some comments regarding the
cost estimates for PQRI included in the CY 2010 PFS proposed rule (74
FR 33655 through 33657). These comments have been addressed in section
II.G.2. of this final rule with comment period or by revisions to our
cost estimates below, where appropriate.
Although there may be some cost incurred for maintaining the
measures used in the PQRI and their associated code sets, and for
expanding an existing clinical data warehouse to accommodate registry-
based reporting and EHR-based reporting for the PQRI, we do not
anticipate a significant cost impact on the Medicare program.
Participation in the PQRI by eligible professionals is voluntary
and eligible professionals and group practices may have different
processes for integrating the PQRI into their practices' work flows.
Therefore, it is difficult to accurately estimate the impact of the
PQRI on providers. We note also that for eligible professionals who
satisfactorily submit PQRI quality measures, some (if not all) of the
costs incurred by the professional to participate in PQRI may be offset
by the PQRI incentive payment amount earned.
With respect to satisfactory submission of data on quality measures
by eligible professionals, one factor that influences the cost to
eligible professionals is the time and effort associated with eligible
professionals identifying applicable PQRI quality measures for which
they can report the necessary information. We have no way to accurately
quantify the burden because it would vary with each eligible
professional by the number of measures applicable to the eligible
professional, the eligible professional's familiarity, understanding of
the PQRI, and experience with participating in the PQRI, and the
reporting option selected by the eligible professional. In addition,
eligible professionals may employ different methods for incorporating
reporting of their selected measures into the office work flows.
Therefore, based on an assumption that eligible professionals will
select 3 measures on average and our own estimates that it takes at
least 1 hour to read and understand each measure, we will assign 3
hours as the amount of time needed for eligible professionals to review
the PQRI quality measures, identify the applicable measures for which
they can report the necessary information, and incorporate reporting of
the selected measures into the office work flows. After considering the
comments received, that indicated that we need to include time for
eligible professionals to review all of the reporting options, and our
own estimates of the amount of time it takes to read and digest the
reporting options, we will also assign an additional 2 hours as the
amount of time needed for eligible professionals to review the 2010
PQRI reporting options and select the option most appropriate for their
practice. Information from the Physician Voluntary Reporting Program
(PVRP), which was a predecessor to the PQRI, indicated an average
practice labor cost of approximately $50 per hour. To account for
salary increases over time, we will use an average practice labor cost
of $55 per hour for our estimates based on an assumption of an average
annual increase of approximately 3 percent. Thus, we estimate the cost
for an eligible professional to review the PQRI quality measures,
identify the applicable measures for which they can report the
necessary information, incorporate reporting of the selected measures
into the office work flows, review, and select an appropriate reporting
option to be approximately $275 per eligible professional ($55 per hour
x 5 hours).
For claims-based PQRI reporting, one factor in the cost to eligible
professionals is the time and effort associated with gathering the
required information, selecting the appropriate quality data codes, and
including the appropriate quality data codes on the Medicare Part B
claims an eligible professional submits for payment. Information from
the PVRP estimates that the time needed to perform all the steps
necessary to report each measure 1 time (that is, reporting the
relevant quality data code(s) for a measure on 1 case) on claims ranges
from 15 seconds (0.25 minutes) to over 12 minutes for complicated cases
and/or measures, with the median time being 1.75 minutes. With an
average practice labor cost of $55 per hour, the cost to eligible
professionals to perform all the steps necessary to report 1 quality
measure 1 time ranges from $0.23 in labor time to about $11.00 in labor
time for more complicated cases and/or measures. For the median
practice, the cost is about $1.44 in labor time per measure per
reporting instance. Eligible professionals generally are required to
report at least 3 measures to satisfactorily report PQRI quality
measures data. Therefore, for purposes of this impact analysis we will
assume that eligible professionals participating in the 2010 PQRI will
report an average of 3 measures each.
The cost of implementing claims-based reporting of PQRI quality
measures data will vary with the volume of claims on which quality data
is reported. Results from the 2007 PQRI indicate that eligible
professionals reported on 1 to 3,331 eligible instances per measure.
For all 2007 PQRI measures, the median number of eligible instances
reported on per measure was less than 60. On average the median number
of eligible instances reported on per measure was about 9. Therefore,
for this analysis we estimate that for each measure, an eligible
professional reports the quality data on 9 cases. The actual number of
cases on which an eligible professional will be required to report
quality measures data will vary, however, with the eligible
professional's patient population and the types of measures on which
the eligible professional chooses to report (each measure's
specifications include a required reporting frequency).
Based on the assumptions discussed above, we estimate the total
annual cost per eligible professional associated with claims-based
reporting to range from $281.21 [($0.23 per measure x 3 measures x 9
cases per measure) + $275] to $572.00 [($11.00 per measure x 3 measures
x 9 cases per measure) + $275].
For registry-based reporting, eligible professionals must generally
incur a cost to submit data to registries. Estimated fees for using a
qualified registry range from no charge, or a nominal charge, for an
eligible professional to use the registry to costing eligible
professionals several thousand dollars, with a majority of registries
charging fees ranging from $500-$1,000. Registries also often

[[Page 61989]]

provide services above and beyond what is required for PQRI though and
our impact analysis is limited to the incremental costs associated with
participation in PQRI. Nevertheless, after considering the information
above with respect to the qualified registries and the comments
received, which offered anecdotal information that the annual cost to
one practice of participating in a specific registry is approximately
$3,000, we will estimate the cost incurred by an eligible professional
to participate in PQRI via registry-based reporting to be approximately
$1,000 per eligible professional.
In addition, an eligible professional who chooses to submit PQRI
quality measures results and numerator and denominator data on quality
measures through a registry more than likely is already reporting data
to the registry for other purposes. Little, if any, additional data
needs to be reported to the registry for purposes of participation in
the 2010 PQRI. Therefore, there should be little additional cost to the
eligible professional associated with submitting data to the registry.
Registries interested in submitting quality measures results and
numerator and denominator data on quality measures to CMS on their
participants' behalf must complete a self-nomination process in order
to be considered ``qualified'' to submit on behalf of eligible
professionals. We estimate the registry self-nomination process to cost
approximately $500 per registry ($50 per hour x 10 hours per registry).
This cost estimate includes the cost of submitting the self-nomination
letter to CMS and completing the CMS vetting process. Our estimate of a
$50 per hour average labor cost for registries is based on the
assumption that registry staff include IT professionals whose average
hourly rates range from $36 to $84 per hour depending on experience,
with an average rate of nearly $50 per hour for a mid-level programmer.
The cost to the registry associated with the registry-based
reporting requirements of this voluntary reporting initiative is the
time and effort associated with the registry calculating quality
measure results from the data submitted to the registry by its
participants and submitting the quality measures results and numerator
and denominator data on quality measures to CMS on behalf of their
participants. The time needed for a registry to review the quality
measures and other information, calculate the measures results, and
submit the measures results and numerator and denominator data on the
quality measures on their participants' behalf is expected to vary
along with the number of eligible professionals reporting data to the
registry and the number of applicable measures. However, since it is
customary for most registries to provide their participants with
information that can be used for the participants' internal quality
improvement efforts, we believe that registries already perform many of
these activities for their participants.
For EHR-based reporting, an eligible professional generally would
incur a cost associated with purchasing an EHR product. The cost of
purchasing an EHR product can range anywhere from as low as $500 to
well over $50,000. After considering the information above and the
comments received, we estimate that, on average, it costs between
$15,000 and $25,000 to purchase an EHR product. An EHR vendor
interested in having their product(s) be used by eligible professionals
to submit PQRI quality measures data to CMS were required to complete a
self-nomination process in order for the vendor's product(s) to be
considered ``qualified'' for 2010. Therefore, one factor in the cost to
EHR vendors is the cost associated with completing the self-nomination
process in order for the vendor's EHR product(s) to be considered
``qualified.'' Similar to the estimated cost to the registry associated
with the registry self-nomination process, the estimated cost for an
EHR vendor to complete the self-nomination process, including the
vetting process with CMS officials, is conservatively estimated to be
$500 ($50 per hour x 10 hours per EHR vendor). Our estimate of a $50
per hour average labor cost for EHR vendors is based on the assumption
that EHR vendor staff include IT professionals whose average hourly
rates range from $36 to $84 per hour depending on experience, with an
average rate of nearly $50 per hour for a mid-level programmer.
Another factor in the cost to EHR vendors is the time and effort
associated with the EHR vendor programming its EHR product(s) to
extract the clinical data that the eligible professional needs to
submit to CMS for purposes of reporting 2010 PQRI quality measures. The
cost associated with the time and effort needed for an EHR vendor to
review the quality measures and other information and program each
qualified EHR product to enable eligible professionals to submit PQRI
quality measures data to the CMS-designated clinical warehouse will be
dependent on the EHR vendor's familiarity with PQRI, the vendor's
system capabilities, as well as the vendor's programming capabilities.
Some vendors already have these necessary capabilities and for such
vendors, we estimate the total cost to be approximately $2,000 ($50 per
hour x 40 hours per vendor). However, given the variability in the
capabilities of the vendors, we believe a more conservative estimate
for those vendors with minimal experience would be approximately
$10,000 per vendor ($50 per hour x 200 hours per EHR vendor).
With respect to the process for group practices to be treated as
satisfactorily submitting quality measures data under the 2010 PQRI
discussed in section II.G.2.g. of this final rule with comment period,
group practices interested in participating in the 2010 PQRI through
the group practice reporting option must complete a self-nomination
process similar to the self-nomination process required of registries
and EHR vendors. We estimate that the group practice staff involved in
the group practice self-nomination process have an average labor cost
of $55 per hour. Therefore, assuming the total burden hours per group
practice associated with the group practice self-nomination process is
4 hours, we estimate the total cost to a group practice associated with
the group practice self-nomination process to be approximately $220
($55 per hour x 4 hours per group practice). After considering the
comments received, we will also assign an additional 2 hours as the
time needed by group practices to review the 2010 PQRI reporting
options and make the decision to participate as a group rather than
individually. The total costs associated with the decision-making
process is estimated to be $110 ($55 per hour x 2 hours per group
practice)
The cost associated with the group practice reporting requirements
of this voluntary reporting initiative is the time and effort
associated with the group practice submitting the quality measures
data. For physician group practices, this would be the time associated
with the physician group completing the data collection tool. The
information collection components of this data collection tool have
been reviewed by OMB and are currently approved under OMB control
number 0938-0941, with an expiration date of December 31, 2011. Based
on cost estimates for the Physician Group Practice (PGP) demonstration,
we estimate the cost associated with a physician group completing the
data collection tool will be approximately 79 hours per physician
group. Therefore, we estimate the total annual burden hours per
physician group to be approximately 85 hours (2 hours for decision-
making process + 4 hours for self-nomination + 79 hours for data
submission). Based on

[[Page 61990]]

an average labor cost of $55 per physician group, we estimate the cost
per physician group associated with participating in the PQRI group
practice reporting option would be $4,675 ($55 per hour x 85 hours per
group practice).
3. Section 131(c): Physician Resource Use Measurement and Reporting
Program
As discussed in section II.G.3. of this final rule with comment
period, section 131(c) of the MIPPA amends section 1848 of the Act by
adding subsection (n), which requires the Secretary to establish and
implement by January 1, 2009, a Physician Feedback Program using
Medicare claims data and other data to provide confidential feedback
reports to physicians (and as determined appropriate by the Secretary,
to groups of physicians) that measure the resources involved in
furnishing care to Medicare beneficiaries. If determined appropriate by
the Secretary, the Secretary may also include information on quality of
care furnished to Medicare beneficiaries by the physician (or group of
physicians) in the reports. We anticipate the impact of this section to
be negligible for the work completed in the Program to date.
4. Section 132: Incentives for Electronic Prescribing (E-Prescribing)--
The E-Prescribing Incentive Program
Section II.G.5. of this final rule with comment period describes
the 2010 E-Prescribing Incentive Program. To be considered a successful
electronic prescriber in 2010, an eligible professional must meet the
requirements in section II.G.5.c. of this final rule with comment
period.
We anticipate that the cost impact of the E-Prescribing Incentive
Program on the Medicare program will be the cost incurred for
maintaining the electronic prescribing measure and its associated code
set, and for expanding an existing clinical data warehouse to
accommodate registry-based reporting and, potentially, EHR-based
reporting for the electronic prescribing measure. We, however, do not
anticipate a significant cost impact on the Medicare program since much
of this infrastructure had already been established for the PQRI.
Participation in the E-Prescribing Incentive Program by eligible
professionals is voluntary and eligible professionals may have
different processes for integrating the E-Prescribing Incentive Program
into their practices' work flows. Therefore, it is difficult to
accurately estimate the impact of the E-Prescribing Incentive Program
on eligible professionals. In addition, for eligible professionals who
are successful electronic prescribers, some (if not all) of the cost of
participating in the E-Prescribing Incentive Program may be offset by
the incentive payment earned.
Similar to claims-based reporting for PQRI, one factor in the cost
to eligible professionals, for those eligible professionals who choose
to report the electronic prescribing measure through claims, is the
time and effort associated with eligible professionals determining
whether the quality measure is applicable to them, gathering the
required information, selecting the appropriate quality data codes, and
including the appropriate quality data codes on the claims they submit
for payment. Since the E-Prescribing Incentive Program consists of only
1 quality measure, we will assign 1 hour as the amount of time needed
for eligible professionals to review the electronic prescribing measure
and incorporate reporting of the selected measures into their office
work flows and an additional hour as the amount of time needed for
eligible professionals to select an appropriate reporting mechanism for
them. At an average cost of approximately $55 per hour (see section
XIII.E.2. above for a discussion of how we arrived at this figure), we
estimate the total cost to eligible professionals for reviewing the
electronic prescribing measure, incorporating reporting of the selected
measures into the office work flows, and selecting an appropriate
reporting mechanism to be approximately $110 ($55 per hour x 2 hours).
Another factor in the cost to eligible professionals is the time
and effort associated with gathering the required information,
selecting the appropriate quality data codes, and including the
appropriate quality data codes on the claims an eligible professional
submits for payment. Information from the PVRP estimates that the time
needed to perform all the steps necessary to report 1 measure 1 time
(that is, reporting the relevant quality data code(s) for the measure
for 1 case) on claims ranges from 15 seconds (0.25 minutes) to over 12
minutes for complicated cases and/or measures, with the median time
being 1.75 minutes. With an average practice labor cost of $55 per
hour, the cost to eligible professionals to perform all of the steps
necessary to report 1 quality measure 1 time on claims ranges from
$0.23 in labor time to about $11.00 in labor time for more complicated
cases and/or measures. For the median practice, the cost is about $1.44
in labor time per measure. Therefore, we estimate the costs to eligible
professionals to perform all the steps necessary to report the
electronic prescribing measure once on a claim to be approximately
$1.44.
The cost for this requirement will also vary along with the volume
of claims on which quality data is reported. Based on our proposal to
require an eligible professional to report the electronic prescribing
measure for at least 25 instances, we estimate the total annual
estimated cost per eligible professional to report the electronic
prescribing measure to be $146.00 [($1.44 per measure x 1 measure x 25
cases per measure) + $110].
Because registry-based reporting of the electronic prescribing
measure to CMS will be new for 2010 and participation in this reporting
initiative is voluntary, it is difficult to accurately estimate how
many eligible professionals will opt to participate in the E-
Prescribing Incentive Program through the registry-based reporting
mechanism in CY 2010. We do not anticipate, however, any additional
cost for eligible professionals to report data to a registry as we
believe that most eligible professionals opting for registry-based
reporting would more than likely already be reporting data to the
registry for other purposes, such reporting data to the registry for
the PQRI. Little, if any, additional data would need to be reported to
the registry for purposes of participation in the 2010 E-Prescribing
Incentive Program. Furthermore, the same information has to be reported
for the E-Prescribing Incentive Program and for the same number of
instances regardless of the reporting mechanism selected by the
eligible professional. That is, the eligible professional must report
that he or she generated and transmitted at least one prescription
electronically for at least 25 eligible patient encounters during the
reporting period.
One potential cost to some eligible professionals associated with
either claims-based reporting or registry-based reporting would be the
cost of purchasing and using an electronic prescribing system. There
are currently many commercial packages available for electronic
prescribing. The cost to an eligible professional of obtaining and
utilizing an electronic prescribing system varies not only by the
commercial software package selected but also by the level at which the
professional currently employs information technology in his or her
practice and the level of training needed. One study indicated that a
mid-range complete electronic medical record with electronic
prescribing functionality costs $2500 per license with an annual fee of
$90 per license for

[[Page 61991]]

quarterly updates of the drug database after setup costs while a
standalone prescribing, messaging, and problem list system costs $1200
per physician per year after setup costs. Hardware costs and setup fees
substantially add to the final cost of any software package. (Corley,
S.T. (2003). ``Electronic prescribing: a review of costs and
benefits.'' Topics in Health Information Management 24(1): 29-38.).
Thus, for the purpose of this impact analysis, we estimate that
eligible professionals who opt to purchase a standalone electronic
prescribing system would incur an average cost of $1200 per physician
per year. Eligible professionals who opt to purchase an EHR with
electronic prescribing functionality would incur an average cost of
$2500 per license with an annual fee of $90 per license for quarterly
updates of the drug database.
Based on our policy to consider only registries qualified to submit
quality measures results and numerator and denominator data on quality
measures to CMS on their participants' behalf for the 2010 PQRI to be
qualified to submit results and numerator and denominator data on the
electronic prescribing measure for the 2010 E-Prescribing Incentive
Program, we do not anticipate any cost to the registry associated with
becoming a registry qualified to submit the electronic prescribing
measure for 2010.
The cost associated with the registry-based reporting requirements
of this voluntary reporting initiative for the registry will be the
time and effort associated with the registry calculating results for
the electronic prescribing measure from the data submitted to the
registry by its participants and submitting the quality measures
results and numerator and denominator data on the electronic
prescribing quality measure to CMS on behalf of their participants. The
time needed for a registry to review the electronic prescribing measure
and other information, calculate the measure's results, and submit the
measure's results and numerator and denominator data on the measure on
their participants' behalf is expected to vary along with the number of
eligible professionals reporting data to whom the measure applies.
However, we believe that registries already perform many of these
activities for their participants since the registries are already
required to perform these activities for the PQRI. Since the E-
Prescribing Incentive Program consists of only one measure, we believe
that the cost associated with the registry reporting the measure's
results and numerator and denominator to CMS on behalf of their
participants would be minimal.
For EHR-based reporting, the eligible professional must review the
electronic prescribing measure, extract the necessary clinical data
from his or her qualified EHR, and submit the necessary data to the
CMS-designated clinical data warehouse. Because this manner of
reporting quality data to CMS will be new for 2010 and participation in
this reporting initiative is voluntary, it is difficult to accurately
estimate how many eligible professionals will opt to participate in the
E-Prescribing Incentive Program through the EHR-based reporting
mechanism in CY 2010. The cost associated with an eligible professional
reviewing the electronic prescribing measure and other information to
determine whether the measure is applicable to his or her patients and
the services he or she furnishes to them and to review the available
reporting mechanisms to select the EHR reporting mechanism is expected
to be similar for EHR-based reporting and claims-based reporting (that
is, $110 at a rate of $55 per hour). Once the EHR is programmed by the
vendor to allow data submission to CMS, the cost to the eligible
professional associated with the time and effort to submit data on the
electronic prescribing measure should be minimal.
Based on our policy to consider only EHR products qualified for the
2010 PQRI to be qualified to submit results and numerator and
denominator data on the electronic prescribing measure for the 2010 E-
Prescribing Incentive Program, there will be no need for EHR vendors to
undergo a separate self-nomination process for the E-Prescribing
Incentive Program and therefore, no additional cost associated with the
self-nomination process.
The cost to the EHR vendor associated with the EHR-based reporting
requirements of this voluntary reporting initiative is the time and
effort associated with the EHR vendor programming its EHR product(s) to
extract the clinical data that the eligible professional needs to
submit to CMS for purposes of reporting the 2010 electronic prescribing
measure. The time needed for an EHR vendor to review the measure and
other information and program each qualified EHR product to enable
eligible professionals to submit data on the measure to the CMS-
designated clinical data warehouse will be dependent on the EHR
vendor's familiarity with the electronic prescribing measure, the
vendor's system capabilities, as well as the vendor's programming
capabilities. Since only EHR products qualified for the 2010 PQRI will
be qualified for the 2010 E-Prescribing Incentive Program and the E-
Prescribing Incentive Program consists of only one measure, we believe
that any burden associated with the EHR vendor to program its
product(s) to enable eligible professionals to submit data on the
electronic prescribing measure to the CMS-designated clinical data
warehouse would be minimal.
With respect to the process for group practices to be treated as
successful electronic prescribers under the 2010 E-Prescribing
Incentive Program discussed in section II.G.5.e. of this final rule
with comment period, a group practice will be required to report the
electronic prescribing measure in at least 2,500 instances. Group
practices have the same options as individual eligible professionals in
terms of the form and manner for reporting the electronic prescribing
measure (that is, group practices have the option of reporting the
measure through claims, a qualified registry, or a qualified EHR
product). The only difference between an individual eligible
professional and group practice reporting of the electronic prescribing
measure is the number of times a group practice is required to report
the electronic prescribing measure. Reporting of the electronic
prescribing measure can continue to occur at the individual eligible
professional level under the electronic prescribing group practice
reporting option. In our analysis of the information, however, we will
aggregate all of the information reported by the eligible professionals
within the group practice to determine whether the group practice
reported the measure a sufficient number of times. For group practices
that are selected to participate in the 2010 E-Prescribing Incentive
Program group practice reporting option and choose to do so through
claims-based reporting of the electronic prescribing measure, we
estimate the total annual estimated cost per group practice to be
$3,710 [($1.44 per measure x 1 measure x 2,500 cases per measure) +
$110].
For group practices that are selected to participate in the 2010 E-
Prescribing Incentive Program group practice reporting option and
choose to do so through registry-based reporting of the electronic
prescribing measure, we do not anticipate any additional burden to
report data to a registry as group practices opting for registry-based
reporting would more than likely already be reporting data to the
registry for other purposes, such as the PQRI. Little, if any,
additional data would need to be reported to the registry for

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purposes of participation in the 2010 E-Prescribing Incentive Program.
However, in addition to the 2 hours estimated for the group practice to
review the electronic prescribing measure to determine whether it is
applicable to their practice and to review the available reporting
mechanisms to select the group practice reporting option, group
practices will need to authorize or instruct the registry to submit
quality measures results and numerator and denominator data on the
electronic prescribing measure to CMS on their behalf. We estimate that
the time and effort associated with this would be approximately 5
minutes for each group practice that wishes to authorize or instruct
the registry to submit quality measures results and numerator and
denominator data on the electronic prescribing measure to CMS on their
behalf.
For group practices that are selected to participate in the 2010 E-
Prescribing Incentive Program group practice reporting option and
choose to do so through EHR-based reporting of the electronic
prescribing measure, once the EHR is programmed by the vendor to allow
data submission to CMS, the burden to the group practice associated
with submission of data on the electronic prescribing measure should be
minimal.
In addition to the burden associated with group practices reporting
the electronic prescribing measure, group practices will also be
required to self-nominate in order to participate in the 2010 E-
Prescribing Incentive Program under the group practice reporting
option. Since we are limiting participation in the E-Prescribing
Incentive Program group practice reporting option to those group
practices selected to participate in the PQRI group practice reporting
option, there will be no additional burden associated with the group
practice self-nomination process for the E-Prescribing Incentive
Program.
5. Section 135: Implementation of Accreditation Standards for Suppliers
Furnishing the Technical Component (TC) of Advanced Diagnostic Imaging
Services.
As discussed in section II.G.6. of this final rule with comment
period, suppliers that provide the TC of advanced diagnostic imaging
services will have to be accredited by an approved accreditation
organization in order to receive Medicare payment for advanced
diagnostic imaging services described in section 1848(b)(4)(B)
furnished to beneficiaries. This section of the rule will impact the
suppliers that provide the TC of advanced diagnostic imaging services
and the organizations that accredit suppliers of such services.
Suppliers that provide the TC of advanced diagnostic imaging services
will incur costs for becoming accredited. Accreditation organizations
will incur costs to accredit suppliers. To estimate the impact on
suppliers, we calculate the total cost of accreditation as the sum of
accreditation fees and other accreditation costs, and we multiply this
cost by the number of providers of care requiring accreditation.
a. Factors Affecting the Cost Impact
According to our Services Tracking and Reporting System (STARS)
database for 2008, there are a total of 1,131,115 physicians, IDTFs,
and others billing Part B for the TC of advanced diagnostic imaging.
This total includes both suppliers and providers that furnish items
under Medicare Part B as suppliers.
Currently, there are suppliers accredited by one of three of the
nationally recognized accreditation. We anticipate that the following
accreditation organizations will seek approval from CMS to accredit
suppliers that provide the TC of advanced diagnostic imaging services:
American College of Radiology;
Intersocietal Accreditation Commission; and
The Joint Commission.
b. Accreditation Fees
Fees vary between accreditation organizations and, in general,
currently cover all of the following items: application fee, manuals,
initial accreditation fee, onsite surveys or other auditing (generally
once every 3 years), and travel, when necessary for survey personnel.
Accreditation costs also vary by the size of the supplier seeking
accreditation, its number of locations, and the number of services it
provides. Because of these factors, it is sometimes difficult to
compare fees across accreditation organizations. We obtained
information on total accreditation fees from the three accreditation
organizations that currently accredit suppliers who provide the TC of
advanced diagnostic imaging services. Based on all information we
obtained, we estimate accreditation fees for each review cycle and
modality will be approximately $5,000 for an advanced diagnostic
imaging supplier. Because accreditation is for a 3-year period, the
estimated average cost per year would be approximately $1,666 per
modality.
We recognize that becoming accredited may impose a burden on
suppliers that provide the TC of advanced diagnostic imaging services,
especially small suppliers. We have attempted to minimize that burden.
We have implemented the following options to minimize the burden of
accreditation on suppliers, including small businesses:
Multiple accreditation organizations: We expect that more
than one accrediting organization will apply to become and be
designated as an advanced diagnostic imaging accrediting organization.
We believe that selection of more than one accreditation organization
will introduce competition resulting in reductions in accreditation
costs.
Required plan for small businesses: During the application
process we will require accreditation organizations to include a plan
that details their methodology to reduce accreditation fees and burden
for small or specialty suppliers. This will need to include that the
accreditation organization's fees are based on the size of the
organization.
Reasonable quality standards: The quality standards that
will be used to evaluate the services rendered for each imaging
modality are industry standards. Many suppliers that provide the TC of
advanced diagnostic imaging services already comply with the standards
and have incorporated these practices into their daily operations. We
have been told that that those suppliers with private insurance
contracts must be accredited, thus our requirements would not be
duplicative. It is our belief and has been stated by those suppliers
already accredited that compliance with the quality standards will
result in more efficient and effective business practices and will
assist suppliers in reducing overall costs.
c. Other Accreditation Costs
It is difficult to precisely estimate the costs of preparing for
accreditation. We do recognize there is cost to the supplier in order
to come into compliance initially and thus prepare for the
accreditation survey. This should result in minimal preparation and
cost.
d. Additional Considerations
There are at least two important sources of uncertainty in
estimating the impact of accreditation on suppliers that provide the TC
of advanced diagnostic imaging services. First, our estimates assume
that all current suppliers with positive Medicare payments will seek
accreditation. We assume that suppliers who currently receive no
Medicare allowed charges will choose not to seek

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accreditation. It is also possible that many of the suppliers with
allowed charges between $1 and $10,000 may decide not to incur the
costs of accreditation.
Second, it is unclear what accreditation fees will be in the
future. However, we are requiring the accreditation organization to
submit their fees that are based on the size of the supplier, or on the
amount billed. Our experience with another accreditation program has
lead us to believe that the accreditation rates will go up, although
minimally, if travel costs continue to rise.
In summary, suppliers of the TC of advanced diagnostic imaging
services for which payment is made under the fee schedule established
under section 1848(b) of the Act must become accredited by an
accreditation organization designated by the Secretary beginning
January 1, 2012. In these options, we have attempted to minimize the
burden of accreditation on suppliers, which include approving multiple
accreditation organizations that consider the small suppliers. Also,
the fact that the surveys will be either performed as a desk review or
unannounced deletes the time and cost for the accreditation
organization in travel, if required.
6. Section 139: Improvements for Medicare Anesthesia Teaching Programs
As discussed in section II.G.7., this final rule with comment
period would provide for increased payments under the Medicare PFS for
certain cases involving teaching anesthesiologists with anesthesia
residents or for teaching CRNAs with student nurse anesthetists. This
provision of the MIPPA is anticipated to have a minimal budgetary
impact.
7. Section 144(a): Payment and Coverage Improvements for Patients With
Chronic Obstructive Pulmonary Disease and Other Conditions: Cardiac
Rehabilitation Services
As described in section II.G.8. of this final rule with comment
period, current levels of coverage for CR programs are expected to
continue under this rule, and new ICR programs will likely develop and
request approval by CMS to receive Medicare payments. Because the
payment amount for ICR services under section 144(a) of the MIPPA is
higher than for CR services, this expansion of coverage will result in
greater costs to the Medicare program. The requirements for ICR
programs, also specified in section 144(a) of the MIPPA, are extensive
and will likely limit the number of individual ICR program sites that
request approval. As a result, significantly fewer ICR programs and ICR
program sites than CR programs will function throughout the country;
however, we currently do not know how many ICR programs may request
approval or how many individual sites may furnish ICR services under an
approved program.
We believe that the expansion of coverage for ICR programs will
enable beneficiaries to take advantage of more focused and rigorous
programs that will more quickly lead to improved cardiovascular health.
Having the choice of CR and ICR programs, beneficiaries eligible for
coverage will be able to determine the best manner in which to achieve
improved cardiovascular health, through traditional CR or more rigorous
ICR program. We also expect this expansion of coverage to bring more
attention to the importance of cardiac rehabilitation and the extensive
benefits these programs provide to beneficiaries. As a result, the
number of beneficiaries participating in CR programs may increase. We
estimate that the provisions for establishing coverage of cardiac
rehabilitation and intensive cardiac rehabilitation programs, as
discussed in section II.G.8. of this final rule with comment period,
will have a minimal budgetary impact on the Medicare program.
8. Section 144(a): Payment and Coverage Improvements for Patients With
Chronic Obstructive Pulmonary Disease and Other Conditions: Pulmonary
Rehabilitation Services
As discussed in section II.G.9. of this final rule with comment
period, the implementation of the Medicare pulmonary rehabilitation
program will allow Medicare, for the first time, to provide for payment
for exercise and other services as part of a comprehensive treatment
plan for beneficiaries with moderate to very severe COPD. We believe
this program has the potential of not only improving the quality of
life for beneficiaries who engage in it, but also reducing Medicare
costs in the long range by decreasing the chances of exacerbations and
further rehabilitation related to their chronic respiratory disease. We
estimate this provision will have a minimal budgetary impact on the
Medicare program.
9. Section 144(b): Repeal of Transfer of Title for Oxygen Equipment--
Repeal of Transfer of Title for Oxygen Equipment
The revisions pertaining to oxygen and oxygen equipment in section
II.G.10. of this final rule reflect changes made by the MIPPA of 2008.
Section 1834(a)(5)(F) of the Act limited monthly payments to suppliers
furnishing oxygen equipment to 36 months of continuous use. Prior to
the MIPPA, at the end of this 36-month period, suppliers were required
to transfer title to oxygen equipment to the beneficiary. Section
144(b) of the MIPPA repealed the transfer of title requirement. In its
place, section 144(b) amends section 1834(a)(5)(F) of the Act by adding
additional payment rules and supplier responsibilities discussed
previously in this preamble that apply after the 36 month rental cap.
Based on data from the Small Business Administration (SBA), we
estimate that 85 percent of suppliers of the items and services
affected by this rule would be defined as small entities with total
revenues of $7 million or less in any 1 year. In the case of oxygen and
oxygen equipment, it is difficult to estimate the impact of section
144(b) of the MIPPA on small entities and oxygen and oxygen equipment
suppliers in general. Nevertheless, we do believe that the net impact
on small entities and other suppliers of oxygen and oxygen equipment
will be positive rather than negative. This is based on the fact that
this change allows suppliers to retain ownership of oxygen equipment in
all cases when it is no longer needed by the beneficiary. Prior to this
change, suppliers were required to relinquish ownership of oxygen
equipment after 36 continuous rental months. While suppliers will be
required to continue furnishing the equipment after the 36 month rental
period for up to 2 additional years in some cases until the 5 year
reasonable useful lifetime of the equipment ends, they will retain
ownership of equipment when it is no longer needed and can furnish the
equipment to other patients. As explained in more detail below, we
estimate that suppliers could potentially receive approximately $58
million per year in payments for furnishing oxygen equipment that is
returned to them after the 36 month cap and before the end of the 5
year reasonable useful lifetime. Suppliers in these situations are able
to forgo the expense of purchasing new equipment from manufacturers to
replace equipment they would have transferred to beneficiaries had the
transfer of title requirement not been repealed.
Our data indicates that most beneficiaries who receive stationary
oxygen equipment are furnished with a stationary oxygen concentrator.
As we have indicated previously, oxygen concentrators require very
minimal maintenance and servicing if less than

[[Page 61994]]

5 years old, and, as described in more detail below, suppliers will
receive an annual payment, beginning 6 months after the end of the 36
month rental cap, for maintenance and servicing of the oxygen
concentrator. Therefore, suppliers' costs for maintaining this
equipment after the cap should be minimal unless they are furnishing
equipment that is older than 5 years, in which case they will probably
have received significantly more than 36 monthly rental payments from
Medicare or other payers for rental of the equipment. In addition,
since approximately 76 percent of Medicare beneficiaries that need
oxygen do not use the oxygen equipment for more than 36 months, the
changes mandated by section 144(b) of the MIPPA will have no impact on
suppliers or beneficiaries in the majority of cases. The 76 percent
figure is based on the most recent Medicare data available (see Table
52).
Again, if a beneficiary discontinues use of oxygen after the 36-
month rental cap but before the end of the reasonable useful lifetime
of the equipment (currently 5 years), the supplier will be able to
retrieve the equipment and rent it to another Medicare beneficiary or
other customer and receive additional rental payments for the remainder
of the equipment's reasonable useful lifetime. It is difficult to
estimate the magnitude of this positive impact on suppliers. If the
equipment is older than 5 years at the time the 36-month rental cap is
reached, the supplier may have already received 24 monthly payments or
more from Medicare or other payers for rental of the equipment prior to
the start of the most recent 36 month rental payment period for the
equipment. Combined with the 36 monthly payments made by Medicare in
situations where the cap is reached (24 percent of cases based on
current data), this would equal or exceed 60 monthly payments for the
equipment. On the other hand, assuming the equipment is brand new at
the time it is initially furnished in the 24 percent of cases where the
cap is reached, the supplier will only have received 36 monthly
payments for the new equipment before the rental cap is reached.
However, since the equipment will only be 3 years old at this point,
depending on when the beneficiary's medical need for or use of the
equipment ends, the supplier will be able to furnish the equipment to
other patients for any months remaining in the equipment's 5 year or 60
month reasonable useful lifetime. Table 52 illustrates earnings that
the supplier could realize from furnishing oxygen equipment that they
would have been required to transfer to the beneficiary prior to the
enactment of MIPPA.
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Again, we understand that oxygen equipment is very durable and
should need few repairs in the first 5 years. Therefore, we have
determined that any costs suppliers may incur in repairs and service
visits would be more than offset by the gains they achieve by retaining
ownership of the equipment they can then reuse and by payments received
for maintenance and servicing after the cap that are established as a
result of this final rule with comment period.
Finally, Medicare program expenditures will increase slightly as a
result of the payments for maintenance and servicing after the 36 month
rental cap for oxygen concentrators and transfilling equipment.
Medicare will make maintenance and servicing payments at 6 month
intervals following the 36th month payment rental cap. Through June 30,
2010, the payment for these visits is based on 30 minutes of labor.
After June 30, 2010, the payment rate is a reasonable fee not to exceed
10 percent of the purchase price for a stationary oxygen concentrator.
The total cost in terms of allowed charges per year is calculated to be
about $8 million.
10. Section 152(b): Coverage of Kidney Disease Patient Education
Services
The implementation of Medicare coverage of kidney disease patient
education services as discussed in section II.G.11. of this final rule
with comment period will allow Medicare to provide for payment for
kidney disease education services for beneficiaries with Stage IV
chronic kidney disease. We believe this program can help patients
achieve better understanding of their illness, dialysis modality
options, and may help delay the need for dialysis. We believe this
program has the potential of improving the quality of life for
beneficiaries since they will be better equipped to make informed
decisions. We estimate a cost to the Medicare program of approximately
$10 million for CY 2010, because the statute limits the number of
kidney disease education sessions to 6, as a lifetime maximum.
11. Section 153: Renal Dialysis Provisions
A discussion of the impact of section 153 of the MIPPA is addressed
in section V.H. of this regulatory impact analysis in conjunction with
the other ESRD provisions of this rule.
12. Section 182(b): Revision of Definition of Medically-Accepted
Indication for Drugs; Compendia for Determination of Medically-Accepted
Indications for Off-Label Uses of Drugs and Biologicals in an Anti-
cancer Chemotherapeutic Regimen
We anticipate that the proposals related to the compendia discussed
in section II.G.13. of this final rule with comment period will have a
negligible cost to the Medicare program and to the public. The
information that is required to be collected and published on the
compendia Web sites is information that is already collected in the
normal course of business by the compendia publishers, which all have
Web sites. The changes will enable CMS to efficiently implement the
provisions of section 182(b) of the MIPPA that require transparent
evaluative and conflict of interest policies and practices for current
and future listed compendia on and after January 1, 2010.

G. Payment for Covered Outpatient Drugs and Biologicals

1. Average Sales Price (ASP) Issues
The changes discussed in section II.H.1. of this final rule with
comment period with respect to payment for covered outpatient drugs and
biologicals, are estimated to have no impact on Medicare expenditures
as we are not making any change to the AMP/WAMP threshold and the
change concerning the immunosuppressive drug period of eligibility is a
conforming change to reflect the statute.
2. Competitive Acquisition Program (CAP) Issues
As discussed in section II.H.2., this final rule with comment
period finalizes several CAP proposals and updates to regulations,
specifically the frequency of drug payment amount updates, changes to
the CAP drug list, the geographic area served by the CAP, CAP drug
stock at the physician's office, exclusion of CAP sales from ASP
calculations, the annual CAP payment amount update mechanism, and
updates to proposals made in the 2009 PFS rule. Our changes and
refinements may improve compliance, promote program flexibility,
improve the quality, and maintain the availability of services for
participating CAP physicians. We anticipate that these changes
associated with the CAP will not result in significant additional cost
savings or increases relative to the ASP payment system for two
reasons. First, in 2006 through 2008, the dollar volume of claims paid
under the CAP was small compared to the volume of claims paid under
section 1847A of the Act, and although we anticipate that the CAP will
continue to grow, we do not anticipate a significant change in the
proportion of claims paid under these payment systems. Second, because
CAP payment amounts are limited to prices calculated under section
1847A of the Act, we expect payment rates for the two programs to
remain very similar.

H. Provisions Related to Payment for Renal Dialysis Services Furnished
by End-Stage Renal Disease (ESRD) Facilities

The ESRD-related provisions are discussed in sections II.G.11 and
II.I. of this final rule with comment period. To understand the impact
of the changes affecting payments to different categories of ESRD
facilities, it is necessary to compare estimated payments under the
current year (CY 2009 payments) to estimated payments under the
revisions to the composite rate payment system (CY 2010 payments) as
discussed in section II.I. of this final rule with comment period. To
estimate the impact among various classes of ESRD facilities, it is
imperative that the estimates of current payments and estimates of
payments contain similar inputs. Therefore, we simulated payments only
for those ESRD facilities that we are able to calculate both current
2009 payments and 2010 payments.
ESRD providers were grouped into the categories based on
characteristics provided in the Online Survey and Certification and
Reporting (OSCAR) file and the most recent cost report data from the
Healthcare Cost Report Information System (HCRIS). We also used the
June 2009 update of CY 2008 National Claims History file as a basis for
Medicare dialysis treatments and separately billable drugs and
biologicals. Due to data limitations, we are unable to estimate current
and payments for 42 of the 5186 ESRD facilities that bill for ESRD
dialysis treatments.
Table 53 shows the impact of this year's changes to CY 2010
payments to hospital-based and independent ESRD facilities. The first
column of Table 53 identifies the type of ESRD provider, the second
column indicates the number of ESRD facilities for each type, and the
third column indicates the number of dialysis treatments.
The fourth column shows the effect of all changes to the ESRD wage
index for CY 2010 as it affects the composite rate payments to ESRD
facilities. The fourth column compares aggregate ESRD wage adjusted
composite rate payments in CY 2010 to aggregate ESRD wage adjusted

[[Page 61997]]

composite rate payments in CY 2009. In CY 2009, ESRD facilities receive
100 percent of the CBSA wage adjusted composite rate and 0 percent of
the MSA wage adjusted composite rate, ending a 4-year transition period
in which they had received an increasing percent of payments based on
the CBSA wage adjusted composite rate. The overall effect to all ESRD
providers in aggregate is zero because the CY 2010 ESRD wage index has
been multiplied by a wage index BN adjustment factor to comply with the
statutory requirement that any wage index revisions be done in a manner
that results in the same aggregate amount of expenditures as would have
been made without any changes in the wage index.
The fifth column shows the effect of changes to the ESRD wage index
in CY 2010 and the effect of the MIPPA provisions on ESRD facilities.
Section 153(a) of MIPPA amended section 1881(b)(12)(G) of the Act to
revise payments to ESRD facilities. For services furnished on or after
January 1, 2010, MIPPA provides a 1 percent increase to the composite
rate component of the payment system. The fifth column also reflects
the changes in payment based on changes to the wage index from CY 2009
to CY 2010.
The sixth column shows the overall effect of the changes in
composite rate payments to ESRD providers including the drug add-on.
The overall effect is measured as the percent change between the CY
2010 payments to ESRD facilities with all changes as finalized in this
rule and CY 2009 payments to ESRD facilities under current payment
policies. These payment amounts are computed by multiplying the wage
adjusted composite rate including the drug add-on for each provider
times the number of dialysis treatments from the CY 2008 claims. The CY
2010 payments are the wage adjusted composite rate for each provider
(with the 15.0 percent drug add-on) times dialysis treatments from CY
2008 claims. The CY 2009 current payments are the wage adjusted
composite rate for each provider (with the current 15.2 percent drug
add-on) times dialysis treatments from CY 2008 claims.
The overall impact to ESRD providers in aggregate is 0.8 percent as
shown in Table 53. Most ESRD facilities will see an increase in
payments as a result of the MIPPA provision. While the MIPPA provision
includes a 1 percent increase to the ESRD composite rate for services
provided on or after January 1, 2009, this 1 percent increase does not
apply to the drug add-on to the composite rate. For this reason, the
impact of all changes in this final rule with comment period is a 0.8
percent increase for all ESRD providers. Overall, payments to
independent ESRD facilities will increase by 0.8 percent and payments
to hospital-based ESRD facilities will increase by 1.0 percent.
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I. Chiropractic Demonstration--Application of Budget Neutrality

As discussed in section II.J. of this final rule with comment
period, we are going to recoup the $50 million in expenditures from
this demonstration over a 5-year period rather than over a 2-year
period. We will recoup $10 million each year through adjustments to the
PFS for all chiropractors in CYs 2010 through 2014.
To implement this required BN adjustment, we will reduce the
payment amount under the PFS for the chiropractic CPT codes (that is,
CPT codes 98940, 98941, and 98942) by approximately 2 percent.

J. Comprehensive Outpatient Rehabilitation Facilities (CORF) and
Rehabilitation Agency Issues

The revisions to the conditions of participation (CoP) discussed in
section II.K. of this final rule with comment period make technical
corrections and update the regulations to reflect current industry
standards for respiratory therapists. The revisions to the regulations
will clarify the qualifications necessary for respiratory therapists'
to continue to qualify to furnish respiratory therapy services to CORF
patients. These changes are similar to prior rules and will have no
impact on CORFs cost.

K. Physician Self-Referral Provisions

In section II N.1. of this final rule with comment period, we
discuss our clarification of the physician stand in the shoes
provisions at Sec. 411.354(c)(3)(i). This revision will assist
designated health services entities in structuring legitimate
compensation arrangements by clarifying that the standard for
determining compensation between the parties will be dictated by the
language of the exceptions within Sec. 411.355 and Sec. 411.357.
Furthermore, like other physician self-referral policies, we anticipate
that this clarification will result in savings to the Medicare program
by reducing overutilization and anti-competitive business arrangements.
However, we cannot gauge with any degree of certainty the extent of
these savings to the Medicare program.

L. Durable Medical Equipment Related Issues

1. Damages Process
In section II.O.1. of this final rule with comment period, we
establish a one-time process that will only impact those suppliers who
were awarded a contract and were potentially damaged by the termination
of their supplier contracts by MIPPA. The DMEPOS Competitive Bidding
Program that was implemented on July 1st, 2008, awarded contracts to
329 suppliers. The following factors may be considered by a contract
supplier before deciding to submit a claim:
The contract itself stipulated that the contract is
subject to any changes to the statute or regulations that affect the
Medicare program;
The contract does not guarantee any amount of business or
profits, therefore, an efficient business would not be expected to
incur large expenses without any guaranteed increase in business and
profits;
The contract stipulates that CMS shall not pay for any
expenses incurred by the supplier for the work performed under the
contract other than for payment of Medicare claims authorized pursuant
to the contract;
Upon termination of the contracts by MIPPA, payments
reverted back to the fee schedule amount, which was on average 26
percent higher than under the DMEPOS Competitive Bidding Program.
There is a required responsibility under contract law for
a company to take action to mitigate expenses to any stop work order.
CMS listed the winning suppliers on the Medicare Web site
at http://www.Medicare.gov in the supplier locator tool, a supplier is
allowed to keep any new customers they may have obtained as a result of
being listed on the supplier locator tool.
By mentioning the list above, we are not suggesting that there
would not be legitimate claims for damages. However, these are factors
that a supplier may consider when deciding whether to submit a claim
for damages.
Based on these reasons and because there have been so few inquiries
or responses to the reference in the MIPPA to damages (fewer than 7
suppliers), we believe that as few as 1 percent of the 329 winning
suppliers may make a claim for damages. However, as a high estimate, we
would estimate that approximately 76 percent of the suppliers (250) may
submit a claim. We anticipate that it will take approximately 3 hours
at $34/hour (3 x $34 = $102) for an accountant and a company official
to review and gather the necessary documents to file a claim for a
total of $25,500 (250 x $102). The hourly accountant rate was based on
the Bureau of Labor Statistics data collected for June 2006 which was
then adjusted to account for inflation. We estimate that this
regulation will not have a large budgetary impact. The total cost range
of $408 to $25,500 for potential claims from contract suppliers will
not result in expenditures of $133 million or more annually. An
analysis of the damage payments that may result would be dependent upon
an evaluation of the actual claims once they are received.
2. Grandfathering Process
In section II.O.2. of this final rule with comment period, we are
revising the definition of a grandfathered item to refer to all rented
items within a competitively bid product category that the supplier
currently rents. The definition of a grandfathered item would avoid
confusion, on the part of beneficiaries, regarding rented DME items for
which a noncontract supplier may choose to be a grandfathered supplier.
Under the revised definition, a noncontract supplier will have to
choose to be either a grandfathered supplier for all or for none of the
DME rented items within a product category that the supplier currently
provides. We believe that it will be easier for beneficiaries to
recognize which items a supplier is grandfathering or not
grandfathering if the supplier's election concerning grandfathering was
made by product category rather than making separate choices for each
individual HCPCS code.
We also believe the revision of this definition will have a
negligible impact on suppliers as product categories consist of related
items routinely provided by suppliers. We are only requiring a supplier
to provide those rented items within a product category that the
supplier was currently furnishing at the start of the competitive
bidding program.
While difficult to estimate, we believe that based on 2008 data,
there were approximately 1,850 suppliers in the 9 CBAs, for which we
will be doing the Round 1 rebid that rented competitively bid items, on
average at different points in time during 2008. Therefore, we are
using this number to indicate how many suppliers would be renting a DME
competitively bid item at the start of the competitive bid program. We
believe some suppliers may decide not to bid because of the cost of
bidding and accreditation requirements while other suppliers may not
qualify for a contract. Since not all suppliers will be awarded
contracts and some may not choose to submit a bid, we estimate that in
the worst case scenario there will be 1,450 suppliers that will not be
awarded contracts, would be renting DME competitive bid items at the
time the program is implemented.
Based on our experience from the competitive bidding
demonstrations, of the 1,450 suppliers who are not

[[Page 62000]]

awarded a contract, we expect 90 percent or 1,305 of these noncontract
suppliers will offer to be grandfathered suppliers (0.90 x 1,450 =
1,305) and 10 percent or 145 (0.10 x 1,450 = 145) of the suppliers will
choose not to grandfather. We believe most suppliers will not want to
pick up their items before the end of the full rental period.
Based on 2008 data, we estimate that there will be 96,000
beneficiaries who reside in a CBA and are renting competitively bid
items from suppliers at the start of the round 1 rebid. Based on the
2007 round 1 of the competitive bidding program, we estimate that there
would be 74,880 (96,000 x 0.78 = 74,880) beneficiaries who would be
renting items from a noncontract supplier.
a. Notification Requirement for Suppliers That Choose To Grandfather
(1) Notification to CMS
For those suppliers that choose to grandfather (1,305), we estimate
that it would take the supplier on average 2 hours to develop the 30-
day notification that it is required to send to CMS. We estimate that
the cost to the supplier to develop the 30-day notification to CMS
would be $89.60 for skilled administrative staff (2 hours x $44.80 per
hour). The $44.80 is based on 2009 data from the Bureau of Labor
Statistics plus an increase for overhead of 40 percent. We estimate
that the cost to the supplier to send the notification to CMS would be
$5.51 for clerical staff (0.25 hour to send the notification x $22.02
per hour = $5.51). The $22.02 is based on 2009 data from the Bureau of
Labor Statistics plus an increase for overhead of 40 percent. We
estimate the cost of supplies necessary to send the notification would
be $2.00. The total cost for sending the notification would be $7.51
which includes the cost of clerical staff ($5.51) and supplies ($2.00).
The individual costs for all suppliers to notify CMS would be $97.11
($89.60 for development of the letter + $7.51 for preparing and sending
each notification = $97.11). The overall cost for suppliers to notify
CMS would be approximately $126,728.55 ($97.11 per supplier x 1,305
suppliers = $126,728.55).
(2) Notification to the Beneficiary
We estimate based on 2008 data, we expect that there will be 74,880
beneficiaries who will have been renting competitive bid items from a
noncontract supplier at the start of the round 1 rebid of the CBP. Of
the 74,880, we believe that approximately 100 percent of these
beneficiaries will accept the offer to continue to rent competitively
bid items from the noncontract supplier that offers to be a
grandfathered supplier. We believe that the beneficiaries will choose
to continue to rent from a grandfathered supplier if given the choice
because it would be more convenient, assure continuity of care, and
eliminate the need to have equipment taken from their home.
Based upon the number of suppliers and beneficiaries, we estimate
that there will be an average of 52 beneficiaries per supplier that was
not awarded a contract (74,880 beneficiaries/1,450 suppliers = 52).
Therefore, we estimate that each noncontract supplier that chooses to
grandfather would send the 30-day notification on average to 52
beneficiaries.
We expect that the cost of developing the 30-day notification to a
beneficiary will be equivalent to the cost of developing the 30-day
notification to CMS ($89.60 per notification). We also expect the cost
of sending the 30-day notification per beneficiary to be equivalent to
sending the 30-day notification to CMS ($7.51 per notification). The
total costs for the 30-day notification to beneficiaries for suppliers
that choose the grandfathering option would be $89.60 for development
of the letter, and $7.51 for preparing and sending each notification.
To calculate the total cost we multiplied $7.51 x 52 beneficiaries and
added the development cost for the letter of $89.60 for a total of
$480.12 per supplier. The overall cost for these suppliers to provide
the 30-day notification to their beneficiaries will be approximately
$626,556.60 ($480.12 per supplier x 1,305 suppliers = $626,556.60).
b. Notification Requirement for Suppliers That Choose Not To
Grandfather
(1) 30-day Notification to the Beneficiary
We expect that suppliers who choose not to grandfather will incur
costs equivalent to the cost of developing and sending the 30-day
notification to a beneficiary by those suppliers that choose to
grandfather. The overall cost for all suppliers who choose not to
grandfather to provide the 30-day notification to the beneficiary is
approximately $69,617.40 ($480.12 total cost per supplier x 145 non-
grandfathered suppliers = $69,617.40). The estimate of 145 suppliers
not choosing to be grandfathered suppliers represents 10 percent of the
total number of noncontract suppliers.
While the cost for the 30-day notification to beneficiaries will be
exactly the same for all suppliers, those who choose not to become a
grandfathered supplier will also incur the cost of the 10-day and 2-day
notification.
(2) 10-day and 2-day Notification
For the 10-day notification to a beneficiary, we estimate the
supplier will make at least 1 phone call that would take an average of
15 minutes to discuss that the beneficiary must switch to a contract
supplier, the schedule for picking up the current equipment by the
noncontract supplier, and the delivery of new equipment by the contract
supplier. For the 2-day notification to the beneficiary, we estimate
that the supplier will make at least 1 phone call that would take an
average of 15 minutes to ensure that all of the arrangements are
finalized and to answer any last minute questions. We anticipate that
clerical staff will perform both of these tasks.
The estimated cost of the 10-day notification totals $5.51 (.25 of
an hour x $22.02 per hour for clerical staff based on the 2009 Bureau
of Labor Statistics including overhead = $5.51). The estimated cost of
the 2-day notification totals $5.51 (.25 of an hour x $22.02 per hour
for clerical staff based on the 2009 Bureau of Labor Statistics
including overhead = $5.51). Therefore, the 10-day and 2-day
notifications for each supplier will cost approximately $11.02. The
total cost for each supplier would be approximately $573.04 ($11.02 x
52 beneficiaries = $573.04). The overall impact for all suppliers to
make the 10-day and 2-day notifications will be approximately
$83,090.80 (145 suppliers x $573.04 per supplier = $83,090.80).
We anticipate that this process will not place a greater burden on
the overall small supplier community. This process is only going to
affect those small suppliers that were renting items when the
competitive bidding program begins and who did not win a contract. The
burden on these suppliers will generally be less because small
suppliers will have fewer beneficiaries to furnish notifications to.
As an alternative, we considered relying on suppliers to develop
their own schedule for informing beneficiaries regarding
grandfathering. This alternative would have left the beneficiaries
vulnerable to having equipment removed from the home before new
equipment was delivered. The process finalized in this regulation
ensures the beneficiaries can make an informed decision about the
transition policy that works best for them. The alternative we selected
ensures the

[[Page 62001]]

beneficiaries will have continued access to medically necessary items
and be properly informed about the steps they must take so that their
services will not be interrupted.

M. Changes to Allowed and Actual Expenditures for Calculating the
Physician Fee Schedule Update

In sections V. and VI. of this final rule with comment period, we
described our decision to remove drugs from the calculation of allowed
and actual expenditures since the 1996/1997 base year and the SGR rate
of increase for future years. While removing physician-administered
drugs from allowed and actual expenditures will not change the -21.3
percent physician payment rate update (the -21.2 percent change to the
CF accounts for an additional 0.1 percent BN adjustment for changes to
the RVUs) for services furnished on or after January 1, 2010, this
change reduces the discrepancy between actual and target expenditures.
Based on the President's budget, we estimate this proposal will cost
$45.4 billion from 2010 to 2014 and $122 billion for 2010 to 2019.

N. Alternatives Considered

This final rule with comment period contains a range of policies,
including some provisions related to specific MIPPA provisions. The
preceding preamble provides descriptions of the statutory provisions
that are addressed, identifies those policies when discretion has been
exercised, responds to comments on our proposals, presents rationale
for our decisions and, where relevant, alternatives that were
considered.

O. Impact on Beneficiaries

There are a number of changes in this final rule with comment
period that would have an effect on beneficiaries. In general, we
believe these changes, including the refinements of the PQRI with its
focus on measuring, submitting, and analyzing quality data, the coding
provisions related to the IPPE and consultation services, the changes
with respect to telehealth services, the kidney disease patient
education, pulmonary rehabilitation and intensive cardiac
rehabilitation proposals will have a positive impact and improve the
quality and value of care provided to Medicare beneficiaries.
Additionally, the grandfathering process for DME suppliers will help
ensure that beneficiaries are contacted and informed about this process
and the choices they have concerning whether or not to use a
grandfathered supplier. Moreover, the notice will help to ensure that
beneficiaries do not have necessary DME equipment taken from them
unexpectedly by a noncontact supplier.
As explained in more detail subsequently in this section, the
regulatory provisions may affect beneficiary liability in some cases.
Most changes aggregate in beneficiary liability due to a particular
provision would be a function of the coinsurance (20 percent if
applicable for the particular provision after the beneficiary has met
the deductible). Beneficiary liability would also be impacted by the
effect of the aggregate cost (savings) of the provision on the standard
calculation of the Medicare Part B premium rate (generally 25 percent
of the provision's cost or savings). In 2010, total cost sharing
(coinsurance and deductible) per Part B enrollee associated with PFS
services is estimated to be $399. In addition, the portion of the 2010
standard monthly Part B premium attributable to PFS services is
estimated to be $25.70.
To illustrate this point, as shown in Table 50, the 2009 national
payment amount in the non-facility setting for CPT code 99203 (Office/
outpatient visit, new), is $91.97 which means that in 2009 a
beneficiary is responsible for 20 percent of this amount, or $18.39.
Based on this rule, the 2010 national payment amount in the non-
facility setting for CPT code 99203, as shown in Table 49, is $76.98
which means that, in 2010, the beneficiary coinsurance for this service
would be $15.40.
Policies discussed in this rule, such as the coding changes with
respect to the RVUs for IPPE and the changes to consultation services,
would similarly impact beneficiaries' coinsurance.

P. Accounting Statement

As required by OMB Circular A-4, in Table 54, we have prepared an
accounting statement showing the classification of the expenditures
associated with this final rule with comment period. This estimate
includes the incurred benefit impact associated with the estimated CY
2010 PFS update based on the 2009 Trustees Report baseline, as well as
certain MIPPA provisions. All estimated impacts are classified as
transfers.

Table 54--Accounting Statement: Classification of Estimated Expenditures
CY 2010
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Estimated decrease in expenditures (from
Transfers. CY 2009 to CY 2010) of $13.3 Billion.
From Whom to Whom?........... Federal Government to physicians, other
practitioners and providers and
suppliers who receive payment under
Medicare.
Annualized Monetized Estimated increase in expenditures of
Transfers. $110 Million for MIPPA Provisions
(sections 102 and 152(b)).
From Whom to Whom?........... Federal Government to providers.
------------------------------------------------------------------------

In accordance with the provisions of Executive Order 12866, this
final rule with comment period was reviewed by the Office of Management
and Budget.

List of Subjects

42 CFR Part 410

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

42 CFR Part 411

Kidney diseases, Medicare, Physician Referral, Reporting and record
keeping requirements.

42 CFR Part 414

Administrative practice and procedure, Health facilities, Health
professions, Kidney diseases, Medicare, Reporting and recordkeeping.

42 CFR Part 415

Health facilities, Health professions, Medicare, Reporting and
recordkeeping requirements.

42 CFR Part 485

Grant programs-health, Health facilities, Medicaid, Medicare,
Reporting and recordkeeping requirements.

[[Page 62002]]

42 CFR Part 498

Administrative practice and procedure, Health facilities, Health
professions, Medicare, Reporting and recordkeeping requirements.

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

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

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

Authority: Secs. 1102, 1834, 1871, and 1893 of the Social
Security Act (42 U.S.C. 1302, 1395m, 1395hh, and 1395ddd).

Subpart B--Medical and Other Health Services

0
2. Section 410.30 is amended by revising paragraph (b) to read as
follows:

Sec. 410.30 Prescription drugs used in immunosuppressive therapy.

* * * * *
(b) Eligibility. For drugs furnished on or after December 21, 2000,
coverage is available only for prescription drugs used in
immunosuppressive therapy, furnished to an individual who received an
organ or tissue transplant for which Medicare payment is made, provided
the individual is eligible to receive Medicare Part B benefits.
* * * * *

0
3. Section 410.47 is added to read as follows:

Sec. 410.47 Pulmonary rehabilitation program: Conditions for
coverage.

(a) Definitions. As used in this section:
Individualized treatment plan means a written plan established,
reviewed, and signed by a physician every 30 days, that describes all
of the following:
(i) The individual's diagnosis.
(ii) The type, amount, frequency, and duration of the items and
services under the plan.
(iii) The goals set for the individual under the plan.
Medical director means the physician who oversees or supervises the
PR program.
Outcomes assessment means a written evaluation of the patient's
progress as it relates to the individual's rehabilitation which
includes the following:
(i) Beginning and end evaluations, based on patient-centered
outcomes, which are conducted by the physician at the start and end of
the program.
(ii) Objective clinical measures of effectiveness of the PR program
for the individual patient, including exercise performance and self-
reported measures of shortness of breath and behavior.
Physician means a doctor of medicine or osteopathy as defined in
section 1861(r)(1) of the Act.
Physician-prescribed exercise means physical activity, including
aerobic exercise, prescribed and supervised by a physician that
improves or maintains an individual's pulmonary functional level.
Psychosocial assessment means a written evaluation of an
individual's mental and emotional functioning as it relates to the
individual's rehabilitation or respiratory condition.
Pulmonary rehabilitation means a physician-supervised program for
COPD and certain other chronic respiratory diseases designed to
optimize physical and social performance and autonomy.
Supervising physician means a physician that is immediately
available and accessible for medical consultations and medical
emergencies at all times items and services are being furnished under
the PR program.
(b) Beneficiaries who may be covered. (1) Medicare covers pulmonary
rehabilitation for beneficiaries with moderate to very severe COPD
(defined as GOLD classification II, III and IV), when referred by the
physician treating the chronic respiratory disease.
(2) Additional medical indications for coverage for pulmonary
rehabilitation program services may be established through a national
coverage determination (NCD).
(c) Components. Pulmonary rehabilitation includes all of the
following components:
(1) Physician-prescribed exercise. This physical activity includes
techniques such as exercise conditioning, breathing retraining, step,
and strengthening exercises. Some aerobic exercise must be included in
each pulmonary rehabilitation session.
(2) Education or training. (i) Education or training closely and
clearly related to the individual's care and treatment which is
tailored to the individual's needs.
(ii) Education includes information on respiratory problem
management and, if appropriate, brief smoking cessation counseling.
(iii) Any education or training prescribed must assist in
achievement of individual goals towards independence in activities of
daily living, adaptation to limitations and improved quality of life.
(3) Psychosocial assessment. The psychosocial assessment must meet
the criteria as defined in paragraph (a) of this section and includes:
(i) An assessment of those aspects of an individual's family and
home situation that affects the individual's rehabilitation treatment.
(ii) A psychosocial evaluation of the individual's response to and
rate of progress under the treatment plan.
(4) Outcomes assessment. The outcomes assessment must meet the
criteria as defined in paragraph (a) of this section.
(5) Individualized treatment plan. The individualized treatment
plan must be established, reviewed, and signed by a physician, who is
involved in the patient's care and has knowledge related to his or her
condition, every 30 days.
(d) Settings. (1) Medicare Part B pays for a pulmonary
rehabilitation in the following settings:
(i) Physician's offices.
(ii) Hospital outpatient settings.
(2) All settings must have the following available for immediate
use and accessible at all times:
(i) The necessary cardio-pulmonary, emergency, diagnostic, and
therapeutic life-saving equipment accepted by the medical community as
medically necessary (for example, oxygen, cardiopulmonary resuscitation
equipment, and defibrillator) to treat chronic respiratory disease.
(ii) A physician must be immediately available and accessible for
medical consultations and emergencies at all times when services are
being provided under the program. This provision is satisfied if the
physician meets the requirements for direct supervision for physician
office services at Sec. 410.26 of this subpart and for hospital
outpatient services at Sec. 410.27 of this subpart.
(e) Physician standards. Medicare Part B pays for pulmonary
rehabilitation services for PR programs supervised by a physician who
meets the following requirements--
(1) Is responsible and accountable for the pulmonary rehabilitation
program, including oversight of the PR staff.
(2) Is involved substantially, in consultation with staff, in
directing the progress of the individual in the program including
direct patient contact related to the periodic review of his or her
treatment plan.
(3) Has expertise in the management of individuals with respiratory
pathophysiology, and cardiopulmonary training and/or certification
including basic life support.
(4) Is licensed to practice medicine in the State in which the
pulmonary rehabilitation program is offered.
(f) Limitations on coverage: Sessions. Medicare Part B pays for
services provided in connection with a pulmonary rehabilitation
exercise

[[Page 62003]]

program for up to 36 sessions, no more than two sessions per day. Up to
an additional 36 sessions may be approved by the Medicare contractor,
based on medical necessity in accordance with section 1862(a)(1)(A) of
the Act.
(g) Effective date. Coverage for pulmonary rehabilitation program
services is effective January 1, 2010.

0
4. Section 410.48 is added to read as follows:

Sec. 410.48 Kidney disease education services.

(a) Definitions. As used in this section:
Kidney disease patient education services means face-to-face
educational services provided to patients with Stage IV chronic kidney
disease.
Physician means a physician as defined in section 1861(r)(1) of the
Act.
Qualified person means either of the following healthcare entities
that meets the qualifications and requirements specified in this
section to provide kidney disease patient education services--
(i) One of the following healthcare professionals who furnishes
services for which payment may be made under the physician fee
schedule:
(A) Physician (as defined in section 1861(r)(1) of the Act).
(B) Physician assistant as defined in section 1861(aa)(5) of the
Act and Sec. 410.74 of this subpart).
(C) Nurse practitioner as defined in section 1861(aa)(5) of the Act
and Sec. 410.75 of this subpart).
(D) Clinical nurse specialist (as defined in section 1861(aa)(5) of
the Act and Sec. 410.76 of this subpart),
(ii)(A) A hospital, critical access hospital, skilled nursing
facility, comprehensive outpatient rehabilitation facility, home health
agency, or hospice that is located in a rural area as defined in Sec.
412.64(b)(ii)(C) of this chapter; or
(B) A hospital or critical access hospital that is treated as being
rural under Sec. 412.103 of this chapter.
Renal dialysis facility means a unit, which is approved to furnish
dialysis service(s) directly to end-stage renal disease (ESRD)
patients, as defined in Sec. 405.2102 of this chapter.
Stage IV chronic kidney disease means kidney damage with a severe
decrease in glomerular filtration rate (GFR) quantitatively defined by
a GFR value of 15-29 ml/min/1.73m\2\, using the Modification of Diet in
Renal Disease (MDRD) Study formula.
(b) Covered beneficiaries. Medicare Part B covers outpatient kidney
disease patient education services if the beneficiary meets all of the
conditions and requirements of this subpart, including all of the
following:
(1) Is diagnosed with Stage IV chronic kidney disease.
(2) Obtains a referral from the physician (as defined in section
1861(r)(1) of the Act) managing the beneficiary's kidney condition.
(c) Qualified person. (1) Medicare Part B covers outpatient kidney
disease patient education services provided by a qualified person as
defined in paragraph (a) of this section and must be able to properly
receive Medicare payment under part 424 of this chapter.
(2) A qualified person does not include either of the following:
(i) A hospital, critical access hospital, skilled nursing facility,
comprehensive outpatient rehabilitation facility, home health agency or
hospice if kidney disease patient education services are provided
outside of a rural area as defined in Sec. 412.64(b)(ii)(C) of this
chapter unless the services are furnished in a hospital or critical
access hospital that is treated as being in a rural area under Sec.
412.103 of this chapter.
(ii) A renal dialysis facility, as defined in Sec. 405.2102 of
this chapter.
(d) Standards for content of kidney disease patient education
services. The content of the kidney disease patient education services
includes the following:
(1) The management of comorbidities including for the purpose of
delaying the need for dialysis which includes, but not limited to, the
following topics:
(i) Prevention and treatment of cardiovascular disease.
(ii) Prevention and treatment of diabetes.
(iii) Hypertension management.
(iv) Anemia management.
(v) Bone disease and disorders of calcium and phosphorus metabolism
management.
(vi) Symptomatic neuropathy management.
(vii) Impairments in functioning and well-being.
(2) The prevention of uremic complications which includes, but not
limited to, the following topics:
(i) Information on how the kidneys work and what happens when the
kidneys fail.
(ii) Understanding if remaining kidney function can be protected,
preventing disease progression, and realistic chances of survival.
(iii) Diet and fluid restrictions.
(iv) Medication review, including how each medication works,
possible side effects and minimization of side effects, the importance
of compliance, and informed decision-making if the patient decides not
to take a specific drug.
(3) Therapeutic options, treatment modalities, and settings,
including a discussion of the advantages and disadvantages of each
treatment option and how the treatments replace the kidney, which
includes, but not limited to, the following topics:
(i) Hemodialysis, both at home and in-facility.
(ii) Peritoneal dialysis (PD), including intermittent PD,
continuous ambulatory PD, and continuous cycling PD, both at home and
in-facility.
(iii) All dialysis access options for hemodialysis and peritoneal
dialysis.
(iv) Transplantation.
(4) Opportunities for beneficiaries to actively participate in the
choice of therapy and be tailored to meet the needs of the individual
beneficiary involved which includes, but not limited to, the following
topics:
(i) Physical symptoms.
(ii) Impact on family and social life.
(iii) Exercise.
(iv) The right to refuse treatment.
(v) Impact on work and finances.
(vi) The meaning of test results.
(vii) Psychological impact.
(5) Qualified persons must develop outcomes assessments designed to
measure beneficiary knowledge about chronic kidney disease and its
treatment.
(i) The outcomes assessments serve to assess program effectiveness
of preparing the beneficiary to make informed decisions about their
healthcare options related to chronic kidney disease.
(ii) The outcomes assessments serve to assess the program's
effectiveness in meeting the communication needs of underserved
populations, including persons with disabilities, persons with limited
English proficiency, and persons with health literacy needs.
(iii) The assessment must be administered to the beneficiary during
a kidney disease education session.
(iv) The outcomes assessments must be made available to CMS upon
request.
(e) Limitations for coverage of kidney disease education services.
(1) Medicare Part B makes payment for up to 6 sessions of kidney
disease patient education services.
(2) A session is 1 hour long and may be provided individually or in
group settings of 2 to 20 individuals who need not all be Medicare
beneficiaries.
(f) Effective date. Medicare Part B covers kidney disease patient
education services for dates of service on or after January 1, 2010.

0
5. Section 410.49 is added to read as follows:

[[Page 62004]]

Sec. 410.49 Cardiac rehabilitation program and intensive cardiac
rehabilitation program: Conditions of coverage.

(a) Definitions. As used in this section:
Cardiac rehabilitation (CR) means a physician-supervised program
that furnishes physician prescribed exercise, cardiac risk factor
modification, psychosocial assessment, and outcomes assessment.
Individualized treatment plan means a written plan tailored to each
individual patient that includes all of the following:
(i) A description of the individual's diagnosis.
(ii) The type, amount, frequency, and duration of the items and
services furnished under the plan.
(iii) The goals set for the individual under the plan.
Intensive cardiac rehabilitation (ICR) program means a physician-
supervised program that furnishes cardiac rehabilitation and has shown,
in peer-reviewed published research, that it improves patients'
cardiovascular disease through specific outcome measurements described
in paragraph (c) of this section.
Intensive cardiac rehabilitation site means a hospital outpatient
setting or physician's office that is providing intensive cardiac
rehabilitation utilizing an approved ICR program.
Medical director means a physician that oversees or supervises the
cardiac rehabilitation or intensive cardiac rehabilitation program at a
particular site.
Outcomes assessment means an evaluation of progress as it relates
to the individual's rehabilitation which includes all of the following:
(i) Minimally, assessments from the commencement and conclusion of
cardiac rehabilitation and intensive cardiac rehabilitation, based on
patient-centered outcomes which must be measured by the physician
immediately at the beginning of the program and at the end of the
program.
(ii) Objective clinical measures of exercise performance and self-
reported measures of exertion and behavior.
Physician means a doctor of medicine or osteopathy as defined in
section 1861(r)(1) of the Act.
Physician-prescribed exercise means aerobic exercise combined with
other types of exercise (that is, strengthening, stretching) as
determined to be appropriate for individual patients by a physician.
Psychosocial assessment means an evaluation of an individual's
mental and emotional functioning as it relates to the individual's
rehabilitation which includes an assessment of those aspects of an
individual's family and home situation that affects the individual's
rehabilitation treatment, and psychosocial evaluation of the
individual's response to and rate of progress under the treatment plan.
Supervising physician means a physician that is immediately
available and accessible for medical consultations and medical
emergencies at all times items and services are being furnished to
individuals under cardiac rehabilitation and intensive cardiac
rehabilitation programs.
(b) General rule. (1) Covered beneficiary rehabilitation services.
Medicare part B covers cardiac rehabilitation and intensive cardiac
rehabilitation program services for beneficiaries who have experienced
one or more of the following:
(i) An acute myocardial infarction within the preceding 12 months;
(ii) A coronary artery bypass surgery;
(iii) Current stable angina pectoris;
(iv) Heart valve repair or replacement;
(v) Percutaneous transluminal coronary angioplasty (PTCA) or
coronary stenting;
(vi) A heart or heart-lung transplant.
(vii) For cardiac rehabilitation only, other cardiac conditions as
specified through a national coverage determination.
(2) Components of a cardiac rehabilitation program and an intensive
cardiac rehabilitation program. Cardiac rehabilitation programs and
intensive cardiac rehabilitation programs must include all of the
following:
(i) Physician-prescribed exercise each day cardiac rehabilitation
items and services are furnished.
(ii) Cardiac risk factor modification, including education,
counseling, and behavioral intervention, tailored to the patients'
individual needs.
(iii) Psychosocial assessment.
(iv) Outcomes assessment.
(v) An individualized treatment plan detailing how components are
utilized for each patient. The individualized treatment plan must be
established, reviewed, and signed by a physician every 30 days.
(3) Settings. (i) Medicare Part B pays for cardiac rehabilitation
and intensive cardiac rehabilitation in one of the following settings:
(A) A physician's office.
(B) A hospital outpatient setting.
(ii) All settings must have a physician immediately available and
accessible for medical consultations and emergencies at all times when
items and services are being furnished under the program. This
provision is satisfied if the physician meets the requirements for
direct supervision for physician office services, at Sec. 410.26 of
this subpart; and for hospital outpatient services at Sec. 410.27 of
this subpart.
(c) Standards for an intensive cardiac rehabilitation program. (1)
To be approved as an intensive cardiac rehabilitation program, a
program must demonstrate through peer-reviewed, published research that
it has accomplished one or more of the following for its patients:
(i) Positively affected the progression of coronary heart disease.
(ii) Reduced the need for coronary bypass surgery.
(iii) Reduced the need for percutaneous coronary interventions;
(2) An intensive cardiac rehabilitation program must also
demonstrate through peer-reviewed published research that it
accomplished a statistically significant reduction in 5 or more of the
following measures for patients from their levels before cardiac
rehabilitation services to after cardiac rehabilitation services:
(i) Low density lipoprotein.
(ii) Triglycerides.
(iii) Body mass index.
(iv) Systolic blood pressure.
(v) Diastolic blood pressure.
(vi) The need for cholesterol, blood pressure, and diabetes
medications.
(3) A list of approved intensive cardiac rehabilitation programs,
identified through the national coverage determination process, will be
posted to the CMS Web site and listed in the Federal Register.
(4) All prospective intensive cardiac rehabilitation sites must
apply to enroll as an intensive cardiac rehabilitation program site
using the designated forms as specified at Sec. 424.510 of this
chapter. For purposes of appealing an adverse determination concerning
site approval, an intensive cardiac rehabilitation site is considered a
supplier (or prospective supplier) as defined in Sec. 498.2 of this
chapter.
(d) Standards for the physician responsible for cardiac
rehabilitation program. A physician responsible for a cardiac
rehabilitation program or intensive cardiac rehabilitation programs is
identified as the medical directors. The medical director, in
consultation with staff, are involved in directing the progress of
individuals in the program, must possess all of the following:
(1) Expertise in the management of individuals with cardiac
pathophysiology.
(2) Cardiopulmonary training in basic life support or advanced
cardiac life support.
(3) Be licensed to practice medicine in the State in which the
cardiac rehabilitation program is offered.

[[Page 62005]]

(e) Standards for supervising-physicians. Physicians acting as the
supervising-physician must possess all of the following:
(1) Expertise in the management of individuals with cardiac
pathophysiology.
(2) Cardiopulmonary training in basic life support or advanced
cardiac life support.
(3) Be licensed to practice medicine in the State in which the
cardiac rehabilitation program is offered.
(f) Limitations for coverage of cardiac rehabilitation programs.
(1) Cardiac Rehabilitation: The number of cardiac rehabilitation
program sessions are limited to a maximum of 2 1-hour sessions per day
for up to 36 sessions over up to 36 weeks with the option for an
additional 36 sessions over an extended period of time if approved by
the Medicare contractor under section 1862(a)(1)(A) of the Act.
(2) Intensive Cardiac Rehabilitation: Intensive cardiac
rehabilitation program sessions are limited to 72 1-hour sessions (as
defined in section 1848(b)(5) of the Act), up to 6 sessions per day,
over a period of up to 18 weeks.

0
6. Section 410.78 is amended by--
0
A. Revising the introductory text of paragraph (b).
0
B. Revising paragraph (e).
The revisions read as follows:

Sec. 410.78 Telehealth services.

* * * * *
(b) General rule. Medicare Part B pays for office and other
outpatient visits, professional consultation, psychiatric diagnostic
interview examination, individual psychotherapy, pharmacologic
management, end-stage renal disease-related services included in the
monthly capitation payment (except for one visit per month to examine
the access site), individual medical nutrition therapy, the
neurobehavioral status exam, initial and follow-up inpatient telehealth
consultations furnished to beneficiaries in hospitals and SNFs, and
individual health and behavior assessment and intervention services
furnished by an interactive telecommunications system if the following
conditions are met:
* * * * *
(e) Limitations. (1) A clinical psychologist and a clinical social
worker may bill and receive payment for individual psychotherapy via a
telecommunications system, but may not seek payment for medical
evaluation and management services.
(2) The physician visits required under Sec. 483.40(c) of this
title may not be furnished as telehealth services.
* * * * *

Subpart I--Payment of SMI Benefits

0
7. Section 410.155 is amended by--
0
A. Revising paragraphs (a), (b)(2)(i), (b)(2)(ii), (b)(2)(iv),
(b)(2)(v), and (c).
0
B. Adding paragraph (b)(3).
The revisions and addition read as follows:

Sec. 410.155 Outpatient mental health treatment limitation.

(a) Limitation. For services subject to the limitation as specified
in paragraph (b) of this section, the percentage of the expenses
incurred for such services during a calendar year that is considered
incurred expenses under Medicare Part B when determining the amount of
payment and deductible under Sec. 410.152 and Sec. 410.160 of this
part, respectively, is as follows:
(1) For expenses incurred in years before 2010, 62\1/2\ percent.
(2) For expenses incurred in 2010 and 2011, 68\3/4\ percent.
(3) For expenses incurred in 2012, 75 percent.
(4) For expenses incurred in 2013, 81\1/4\ percent.
(5) For expenses incurred in CY 2014 and subsequent years, 100
percent.
(b) * * *
(2) * * *
(i) Services furnished to a hospital inpatient.
(ii) Brief office visits for the sole purpose of monitoring or
changing drug prescriptions used in the treatment of mental,
psychoneurotic, or personality disorders billed under HCPCS code M0064
(or its successor).
* * * * *
(iv) Psychiatric diagnostic services billed under CPT codes 90801
and 90802 (or successor codes) and diagnostic psychological and
neuropsychological tests billed under CPT code range 96101 through
96125 (or successor codes) that are performed to establish a diagnosis.
(v) Medical management such as that furnished under CPT code 90862
(or its successor code), as opposed to psychotherapy, furnished to a
patient diagnosed with Alzheimer's disease or a related disorder.
(3) Payment amounts. The Medicare payment amount and the patient
liability amounts for outpatient mental health services subject to the
limitation for each year during which the limitation is phased out are
as follows:

------------------------------------------------------------------------
Recognized
Calendar year incurred Patient Medicare
expenses pays pays
------------------------------------------------------------------------
CY 2009 and prior calendar years..... 62.50% 50% 50%
CYs 2010 and 2011.................... 68.75% 45% 55%
CY 2012.............................. 75.00% 40% 60%
CY 2013.............................. 81.25% 35% 65%
CY 2014.............................. 100.00% 20% 80%
------------------------------------------------------------------------

(c) General formula. A general formula for calculating the amount
of Medicare payment and the patient liability for outpatient mental
health services subject to the limitation is as follows:
(1) Multiply the Medicare approved amount by the percentage of
incurred expenses that is recognized as incurred expenses for Medicare
payment purposes for the year involved;
(2) Subtract from this amount the amount of any remaining Part B
deductible for the patient and year involved; and,
(3) Multiply this amount by 0.80 (80 percent) to obtain the
Medicare payment amount.
(4) Subtract the Medicare payment amount from the Medicare-approved
amount to obtain the patient liability amount.

PART 411--EXCLUSIONS FROM MEDICARE AND LIMITATIONS ON MEDICARE
PAYMENT

0
8. The authority citation for part 411 continues to read as follows:

Authority: Secs. 1102, 1860D-1 through 1860D-42, 1871, and 1877
of the Social Security Act (42 U.S.C. 1302, 1395w-101 through 1395w-
152, 1395hh, and 1395nn).

[[Page 62006]]

Subpart J--Financial Relationships Between Physicians and Entities
Furnishing Designated Health Services

0
9. Section 411.354 is amended by revising paragraph (c)(3)(i) to read
as follows:

Sec. 411.354 Financial relationship, compensation, and ownership or
investment interest.

* * * * *
(c) * * *
(3)(i) For purposes of paragraphs (c)(1)(ii) and (c)(2)(iv) of this
section, a physician who ``stands in the shoes'' of his or her
physician organization is deemed to have the same compensation
arrangements (with the same parties and on the same terms) as the
physician organization. When applying the exceptions in Sec. 411.355
and Sec. 411.357 of this part to arrangements in which a physician
stands in the shoes of his or her physician organization, the relevant
referrals and other business generated ``between the parties'' are
referrals and other business generated between the entity furnishing
DHS and the physician organization (including all members, employees,
and independent contractor physicians).
* * * * *

PART 414--PAYMENT FOR PART B MEDICAL AND OTHER HEALTH SERVICES

0
10. The authority citation for part 414 continues to read as follows:

Authority: Secs. 1102, 1871, and 1881(b)(l) of the Social
Security Act (42 U.S.C. 1302, 1395hh, and 1395rr(b)(l)).

Subpart B--Physicians and Other Practitioners

0
11. Section 414.46 is amended by revising paragraphs (d)(2) and (e) to
read as follows:

Sec. 414.46 Additional rules for payment of anesthesia services.

* * * * *
(d) * * *
(2) The rules for medical direction differ for certain time periods
depending on the nature of the qualified individual who is directed by
the physician.
(i) If more than two procedures are directed on or after January 1,
1994, the qualified individuals could be AAs, CRNAs, interns, or
residents. The medical direction rules apply to student nurse
anesthetists only if the physician directs two concurrent cases, each
of which involves a student nurse anesthetist or the physician directs
one case involving a student nurse anesthetist and the other involving
a CRNA, AA, intern, or resident.
(ii) For services furnished on or after January 1, 2010, the
medical direction rules do not apply to a single anesthesia resident
case that is concurrent to another case which is paid under the medical
direction payment rules as specified in paragraph (e) of this section.
* * * * *
(e) Special payment rule for teaching anesthesiologist involved in
a single resident case or two concurrent cases. For physicians'
services furnished on or after January 1, 2010, if the teaching
anesthesiologist is involved in the training of physician residents in
a single anesthesia case or two concurrent anesthesia cases, the fee
schedule amount must be 100 percent of the fee schedule amount
otherwise applicable if the anesthesia services were personally
performed by the teaching anesthesiologist and the teaching
anesthesiologist fulfilled the criteria in Sec. 415.178 of this
chapter. This special payment rule also applies if the teaching
anesthesiologist is involved in one resident case that is concurrent to
another case paid under the medical direction payment rules.
* * * * *

0
12. Section 414.61 is added to read as follows:

Sec. 414.61 Payment for anesthesia services furnished by a teaching
CRNA.

(a) Basis for payment. Beginning January 1, 2010, anesthesia
services furnished by a teaching CRNA may be paid under one of the
following conditions:
(1) The teaching CRNA, who is not under medical direction of a
physician, is present with the student nurse anesthetist for the pre
and post anesthesia services included in the anesthesia base units
payment and is continuously present during anesthesia time in a single
case with a student nurse anesthetist.
(2) The teaching CRNA, who is not under the medical direction of a
physician, is involved with two concurrent anesthesia cases with
student nurse anesthetists. The teaching CRNA must be present with the
student nurse anesthetist for the pre and post anesthesia services
included in the anesthesia base unit. For the anesthesia time of the
two concurrent cases, the teaching CRNA can only be involved with those
two concurrent cases and may not perform services for other patients.
(b) Level of payment. The allowance for the service of the teaching
CRNA, furnished under paragraph (a) of this section, is determined in
the same way as for a physician who personally performs the anesthesia
service alone as specified in Sec. 414.46(c) of this subpart.

0
13. Section 414.65 is amended by revising paragraph (a)(1) to read as
follows:

Sec. 414.65 Payment for telehealth services.

(a) * * *
(1) The Medicare payment amount for office or other outpatient
visits, consultation, individual psychotherapy, psychiatric diagnostic
interview examination, pharmacologic management, end-stage renal
disease related services included in the monthly capitation payment
(except for one visit per month to examine the access site), individual
medical nutrition therapy, and individual health and behavior
assessment and intervention services furnished via an interactive
telecommunications system is equal to the current fee schedule amount
applicable for the service of the physician or practitioner.
(i) Initial inpatient telehealth consultations. The Medicare
payment amount for initial inpatient telehealth consultations furnished
via an interactive telecommunications system is equal to the current
fee schedule amount applicable to initial hospital care provided by a
physician or practitioner.
(ii) Follow-up inpatient telehealth consultations. The Medicare
payment amount for follow-up inpatient telehealth consultations
furnished via an interactive telecommunications system is equal to the
current fee schedule amount applicable to subsequent hospital care
provided by a physician or practitioner.
* * * * *

0
14. Section 414.68 is added to subpart B to read as follows:

Sec. 414.68 Imaging accreditation.

(a) Scope and purpose. Section 1834(e) of the Act requires the
Secretary to designate and approve independent accreditation
organizations for purposes of accrediting suppliers furnishing the
technical component (TC) of advanced diagnostic imaging services and
establish procedures to ensure that the criteria used by an
accreditation organization is specific to each imaging modality.
Suppliers of the TC of advanced diagnostic imaging services for which
payment is made under the fee schedule established in section 1848(b)
of the Act must become accredited by an accreditation organization
designated by the Secretary beginning January 1, 2012.

[[Page 62007]]

(b) Definitions. As used in this section, the following definitions
are applicable:
Accredited supplier means a supplier that has been accredited by a
CMS-designated accreditation organization as specified in this part.
Advanced diagnostic imaging service means any of the following
diagnostic services:
(i) Magnetic resonance imaging.
(ii) Computed tomography.
(iii) Nuclear medicine.
(iv) Positron emission tomography.
CMS-approved accreditation organization means an accreditation
organization designated by CMS to perform the accreditation functions
specified in section 1834(e) of the Act.
(c) Application and reapplication procedures for accreditation
organizations. An independent accreditation organization applying for
approval or reapproval of authority to survey suppliers for purposes of
accrediting suppliers furnishing the TC of advanced diagnostic imaging
services is required to furnish CMS with all of the following:
(1) A detailed description of how the organization's accreditation
criteria satisfy the statutory standards authorized by section
1834(e)(3) of the Act, specifically--
(i) Qualifications of medical personnel who are not physicians and
who furnish the TC of advanced diagnostic imaging services;
(ii) Qualifications and responsibilities of medical directors and
supervising physicians (who may be the same person), such as their
training in advanced diagnostic imaging services in a residency
program, expertise obtained through experience, or continuing medical
education courses;
(iii) Procedures to ensure the reliability, clarity, and accuracy
of the technical quality of diagnostic images produced by the supplier,
including a thorough evaluation of equipment performance and safety;
(iv) Procedures to ensure the safety of persons who furnish the TC
of advanced diagnostic imaging services and individuals to whom such
services are furnished;
(v) Procedures to assist the beneficiary in obtaining the
beneficiary's imaging records on request; and
(vi) Procedures to notify the accreditation organization of any
changes to the modalities subsequent to the organization's
accreditation decision.
(2) An agreement to conform accreditation requirements to any
changes in Medicare statutory requirements authorized by section
1834(e) of the Act. The accreditation organization must maintain or
adopt standards that are equal to, or more stringent than, those of
Medicare.
(3) Information that demonstrates the accreditation organization's
knowledge and experience in the advanced diagnostic imaging arena.
(4) The organization's proposed fees for accreditation for each
modality in which the organization intends to offer accreditation,
including any plans for reducing the burden and cost of accreditation
to small and rural suppliers.
(5) Any specific documentation requirements and attestations
requested by CMS as a condition of designation under this part.
(6) A detailed description of the organization's survey process,
including the following:
(i) Type and frequency of the surveys performed.
(ii) The ability of the organization to conduct timely reviews of
accreditation applications, to include the organizations national
capacity.
(iii) Description of the organization's audit procedures, including
random site visits, site audits, or other strategies for ensuring
suppliers maintain compliance for the duration of accreditation.
(iv) Procedures for performing unannounced site surveys.
(v) Copies of the organization's survey forms.
(vi) A description of the accreditation survey review process and
the accreditation status decision-making process, including the process
for addressing deficiencies identified with the accreditation
requirements, and the procedures used to monitor the correction of
deficiencies found during an accreditation survey.
(vii) Procedures for coordinating surveys with another accrediting
organization if the organization does not accredit all products the
supplier provides.
(viii) Detailed information about the individuals who perform
evaluations for the accreditation organization, including all of the
following information:
(A) The number of professional and technical staff that are
available for surveys.
(B) The education, employment, and experience requirements
surveyors must meet.
(C) The content and length of the orientation program.
(ix) The frequency and types of in-service training provided to
survey personnel.
(x) The evaluation systems used to monitor the performance of
individual surveyors and survey teams.
(xi) The policies and procedures regarding an individual's
participation in the survey or accreditation decision process of any
organization with which the individual is professionally or financially
affiliated.
(xii) The policies and procedures used when an organization has a
dispute regarding survey findings or an adverse decision.
(7) Detailed information about the size and composition of survey
teams for each category of advanced medical imaging service supplier
accredited.
(8) A description of the organization's data management and
analysis system for its surveys and accreditation decisions, including
the kinds of reports, tables, and other displays generated by that
system.
(9) The organization's procedures for responding to and for the
investigation of complaints against accredited facilities, including
policies and procedures regarding coordination of these activities with
appropriate licensing bodies and CMS.
(10) The organization's policies and procedures for the withholding
or removal of accreditation status for facilities that fail to meet the
accreditation organization's standards or requirements, and other
actions taken by the organization in response to noncompliance with its
standards and requirements. These policies and procedures must include
notifying CMS of Medicare facilities that fail to meet the requirements
of the accrediting organization.
(11) A list of all currently accredited suppliers, the type and
category of accreditation currently held by each supplier, and the
expiration date of each supplier's current accreditation.
(12) A written presentation that demonstrates the organization's
ability to furnish CMS with electronic data in ASCII comparable code.
(13) A resource analysis that demonstrates that the organization's
staffing, funding, and other resources are adequate to perform the
required surveys and related activities.
(14) A statement acknowledging that, as a condition for approval of
designation, the organization agrees to carry out the following
activities:
(i) Prioritize surveys for those suppliers needing to be accredited
by January 1, 2012.
(ii) Notify CMS, in writing, of any Medicare supplier that had its
accreditation revoked, withdrawn, revised, or any other remedial or
adverse action taken against it by the accreditation organization
within 30 calendar days of any such action taken.

[[Page 62008]]

(iii) Notify all accredited suppliers within 10 calendar days of
the organization's removal from the list of designated accreditation
organizations.
(iv) Notify CMS, in writing, at least 30 calendar days in advance
of the effective date of any significant proposed changes in its
accreditation requirements.
(v) Permit its surveyors to serve as witnesses if CMS takes an
adverse action based on accreditation findings.
(vi) Notify CMS, in writing (electronically or hard copy), within 2
business days of a deficiency identified in any accreditation supplier
from any source where the deficiency poses an immediate jeopardy to the
supplier's beneficiaries or a hazard to the general public.
(vii) Provide, on an annual basis, summary data specified by CMS
that relates to the past year's accreditations and trends.
(viii) Attest that the organization will not perform any
accreditation surveys of Medicare-participating suppliers with which it
has a financial relationship in which it has an interest.
(ix) Conform accreditation requirements to changes in Medicare
requirements.
(x) If CMS withdraws an accreditation organization's approved
status, work collaboratively with CMS to direct suppliers to the
remaining accreditation organizations within a reasonable period of
time.
(d) Determination of whether additional information is needed. If
CMS determines that additional information is necessary to make a
determination for approval or denial of the accreditation
organization's application for designation, the organization must be
notified and afforded an opportunity to provide the additional
information.
(e) Visits to the organization's office. CMS may visit the
organization's offices to verify representations made by the
organization in its application, including, but not limited to,
reviewing documents and interviewing the organization's staff.
(f) Formal notice from CMS. The accreditation organization will
receive a formal notice from CMS stating whether the request for
designation has been approved or denied. If approval was denied the
notice includes the basis for denial and reconsideration and
reapplication procedures.
(g) Ongoing responsibilities of a CMS-approved accreditation
organization. An accreditation organization approved by CMS must carry
out the following activities on an ongoing basis:
(1) Provide CMS with all of the following in written format (either
electronic or hard copy):
(i) Copies of all accreditation surveys, together with any survey-
related information that CMS may require (including corrective action
plans and summaries of findings with respect to unmet CMS
requirements).
(ii) Notice of all accreditation decisions.
(iii) Notice of all complaints related to suppliers.
(iv) Information about all accredited suppliers against which the
accreditation organization has taken remedial or adverse action,
including revocation, withdrawal, or revision of the supplier's
accreditation.
(v) Notice of any proposed changes in its accreditation standards
or requirements or survey process. If the organization implements the
changes before or without CMS' approval, CMS may withdraw its approval
of the accreditation organization.
(2) Within 30 calendar days after a change in CMS requirements, the
accreditation organization must submit an acknowledgment of receipt of
CMS' notification to CMS.
(3) The accreditation organization must permit its surveyors to
serve as witnesses if CMS takes an adverse action based on
accreditation findings.
(4) Within 2 business days of identifying a deficiency of an
accredited supplier that poses immediate jeopardy to a beneficiary or
to the general public, the accreditation organization must provide CMS
with written notice of the deficiency and any adverse action
implemented by the accreditation organization.
(5) Within 10 calendar days after CMS' notice to a CMS-approved
accreditation organization that CMS intends to withdraw approval of the
accreditation organization, the accreditation organization must provide
written notice of the withdrawal to all of the organization's
accredited suppliers.
(6) The organization must provide, on an annual basis, summary data
specified by CMS that relate to the past year's accreditation
activities and trends.
(h) Continuing Federal oversight of approved accreditation
organizations. This paragraph establishes specific criteria and
procedures for continuing oversight and for withdrawing approval of a
CMS-approved accreditation organization.
(1) Validation audits. (i) CMS or its contractor may conduct an
audit of an accredited supplier to validate the survey accreditation
process of approved accreditation organizations for the TC of advanced
diagnostic imaging services.
(ii) The audits must be conducted on a representative sample of
suppliers who have been accredited by a particular accrediting
organization or in response to allegations of supplier noncompliance
with the standards.
(A) When conducted on a representative sample basis, the audit is
comprehensive and addresses all of the standards, or may focus on a
specific standard in issue.
(B) When conducted in response to an allegation, CMS audits any
standards that CMS determines are related to the allegations.
(2) Notice of intent to withdraw approval. (i) If, during the audit
specified in paragraph (h)(1) of this section, CMS identifies any
accreditation programs for which validation audit results indicate--
(A) A 10 percent or greater rate of disparity between findings by
the accreditation organization and findings by CMS on standards that do
not constitute immediate jeopardy to patient health and safety if
unmet; or
(B) Any disparity between findings by the accreditation
organization and findings by CMS on standards that constitute immediate
jeopardy to patient health and safety if unmet; or,
(C) Irrespective of the rate of disparity, widespread or systemic
problems in an organization's accreditation process such that
accreditation by that accreditation organization no longer provides CMS
with adequate assurance that suppliers meet or exceed the Medicare
requirements; then CMS will give the organization written notice of its
intent to withdraw approval as specified in paragraph (h)(3) of this
section.
(ii) CMS may also provide the organization written notice of its
intent to withdraw approval if an equivalency review, onsite
observation, or CMS' daily experience with the accreditation
organization suggests that the accreditation organization is not
meeting the requirements of this section.
(3) Withdrawal of approval. CMS may withdraw its approval of an
accreditation organization at any time if CMS determines that--
(i) Accreditation by the organization no longer adequately assures
that the suppliers furnishing the technical component of advanced
diagnostic imaging service are meeting the established industry
standards for each modality and that failure to meet those requirements
could jeopardize the health or safety of Medicare beneficiaries and
could constitute a

[[Page 62009]]

significant hazard to the public health; or
(ii) The accreditation organization has failed to meet its
obligations with respect to application or reapplication procedures.
(i) Reconsideration. An accreditation organization dissatisfied
with a determination that its accreditation requirements do not provide
or do not continue to provide reasonable assurance that the suppliers
accredited by the accreditation organization meet the applicable
quality standards is entitled to a reconsideration. CMS reconsiders any
determination to deny, remove, or not renew the approval of designation
to accreditation organizations if the accreditation organization files
a written request for reconsideration by its authorized officials or
through its legal representative.
(1) Filing requirements. (i) The request must be filed within 30
calendar days of the receipt of CMS notice of an adverse determination
or non-renewal.
(ii) The request for reconsideration must specify the findings or
issues with which the accreditation organization disagrees and the
reasons for the disagreement.
(iii) A requestor may withdraw its request for reconsideration at
any time before the issuance of a reconsideration determination.
(2) CMS response to a filing request. In response to a request for
reconsideration, CMS provides the accreditation organization with--
(i) The opportunity for an informal hearing to be conducted by a
hearing officer appointed by the Administrator of CMS and provide the
accreditation organization the opportunity to present, in writing and
in person, evidence or documentation to refute the determination to
deny approval, or to withdraw or not renew designation; and
(ii) Written notice of the time and place of the informal hearing
at least 10 business days before the scheduled date.
(3) Hearing requirements and rules. (i) The informal
reconsideration hearing is open to all of the following:
(A) CMS.
(B) The organization requesting the reconsideration including--
(1) Authorized representatives;
(2) Technical advisors (individuals with knowledge of the facts of
the case or presenting interpretation of the facts); and
(3) Legal counsel.
(ii) The hearing is conducted by the hearing officer who receives
testimony and documents related to the proposed action.
(iii) Testimony and other evidence may be accepted by the hearing
officer even though such evidence may be inadmissible under the Federal
Rules of Civil Procedure.
(iv) The hearing officer does not have the authority to compel by
subpoena the production of witnesses, papers, or other evidence.
(v) Within 45 calendar days of the close of the hearing, the
hearing officer presents the findings and recommendations to the
accreditation organization that requested the reconsideration.
(vi) The written report of the hearing officer includes separate
numbered findings of fact and the legal conclusions of the hearing
officer.
(vii) The hearing officer's decision is final.

Subpart D--Payment for Durable Medical Equipment and Prosthetic and
Orthotic Devices

0
15. Section 414.210 is amended by--
0
A. Revising paragraph (e)(2).
0
B. Adding paragraph (e)(5).
The revision and addition read as follows:

Sec. 414.210 General payment rules.

* * * * *
(e) * * *
(2) Maintenance and servicing payment for certain oxygen equipment
furnished after the 36-month rental period from January 1, 2009 through
June 30, 2010. The carrier makes a maintenance and servicing payment
for oxygen equipment other than liquid and gaseous equipment
(stationary and portable) as follows:
(i) For the first 6-month period following the date on which the
36-month rental period ends in accordance with Sec. 414.226(a)(1) of
this subpart, no payments are made.
(ii) For each succeeding 6-month period, payment may be made during
the first month of that period for 30 minutes of labor for routine
maintenance and servicing of the equipment in the beneficiary's home
(including an institution used as the beneficiary's home).
(iii) The supplier must visit the beneficiary's home (including an
institution used as the beneficiary's home) to inspect the equipment
during the first month of the 6-month period.
* * * * *
(5) Maintenance and servicing payment for certain oxygen equipment
furnished after the 36-month rental period and on or after July 1,
2010. For oxygen equipment other than liquid and gaseous equipment
(stationary and portable), the carrier makes payment as follows:
(i) For the first 6-month period following the date on which the
36-month rental period ends in accordance with Sec. 414.226(a)(1) of
this subpart, no payments are made.
(ii) For each succeeding 6-month period, payment may be made during
the first month of that period for routine maintenance and servicing of
the equipment in the beneficiary's home (including an institution used
as the beneficiary's home).
(iii) Payment for maintenance and servicing is made based on a
reasonable fee not to exceed 10 percent of the purchase price for a
stationary oxygen concentrator. This payment includes payment for
maintenance and servicing of all oxygen equipment other than liquid or
gaseous equipment (stationary or portable).
(iv) The supplier must visit the beneficiary's home (including an
institution used as the beneficiary's home) to inspect the equipment
during the first month of the 6-month period.
* * * * *

Subpart F--Competitive Bidding for Certain Durable Medical
Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)

0
16. Section 414.402 is amended by revising the definition
``Grandfathered item'' to read as follows:

Sec. 414.402 Definitions.

* * * * *
Grandfathered item means all rented items within a product category
for which payment was made prior to the implementation of a competitive
bidding program to a grandfathered supplier that chooses to continue to
furnish the items in accordance with Sec. 414.408(j) of this subpart
and that fall within the following payment categories for competitive
bidding:
(1) An inexpensive or routinely purchased item described in Sec.
414.220 of this part.
(2) An item requiring frequent and substantial servicing, as
described in Sec. 414.222 of this part.
(3) Oxygen and oxygen equipment described in Sec. 414.226 of this
part.
(4) Other DME described in Sec. 414.229 of this part.
* * * * *

0
17. Section 414.408 is amended by--
0
A. Redesignating paragraph (j)(5) as (j)(7).
0
B. Adding new paragraphs (j)(5) and (j)(6).
0
C. Revising paragraph (k)(2).
The additions and revision read as follows:

[[Page 62010]]

Sec. 414.408 Payment rules.

* * * * *
(j) * * *
(5) Notification of beneficiaries and CMS by suppliers that choose
to become grandfathered suppliers. (i) Notification of beneficiaries by
suppliers. (A) Requirements of notification. A noncontract supplier
that elects to become a grandfathered supplier must provide a 30-day
written notification to each Medicare beneficiary that resides in a
competitive bidding area and is currently renting a competitively bid
item from that supplier. The 30-day notification to the beneficiary
must meet the following requirements:
(1) Be sent by the supplier to the beneficiary at least 30 business
days before the start date of the implementation of the competitive
bidding program for the CBA in which the beneficiary resides.
(2) Identify the grandfathered items that the supplier is willing
to continue to rent to the beneficiary.
(3) Be in writing (for example, by letter or postcard) and the
supplier must maintain proof of delivery.
(4) State that the supplier is willing to continue to furnish
certain rented Durable Medical Equipment (DME), oxygen and oxygen
equipment, and supplies that the supplier is currently furnishing to
the beneficiary (that is, before the start of the competitive bidding
program) and is willing to continue to provide these items to the
beneficiary for the remaining rental months.
(5) State that the beneficiary has the choice to continue to
receive a grandfathered item(s) from the grandfathered supplier or may
elect to receive the item(s) from a contract supplier after the end of
the last month for which a rental payment is made to the noncontract
supplier.
(6) Provide the supplier's telephone number and instruct the
beneficiary to call the supplier with any questions and to notify the
supplier of his or her decision to use or not use the supplier as a
grandfathered supplier.
(7) State that the beneficiary can obtain information about the
competitive bidding program by calling 1-800-MEDICARE or on the
Internet at http://www.Medicare.gov.
(B) Record of beneficiary's choice. The supplier should obtain an
election from the beneficiary regarding whether to use or not use the
supplier as a grandfathered supplier. The supplier must maintain a
record of its attempts to communicate with the beneficiary to obtain
the beneficiary's election regarding grandfathering. When the supplier
obtains such an election, the supplier must maintain a record of the
beneficiary decision including the date the choice was made, and how
the beneficiary communicated his or her choice to the supplier.
(C) Notification. If the beneficiary chooses not to continue to
receive a grandfathered item(s) from their current supplier, the
supplier must provide the beneficiary with 2 more notices in addition
to the 30-day notice prior to the supplier picking up its equipment.
(1) 10-day notification: Ten business days prior to picking up the
item, the supplier should have direct contact (for example, a phone
call) with the beneficiary or the beneficiary's caregiver and receive
acknowledgement that the beneficiary understands their equipment will
be picked up. This should occur on the first anniversary date after the
start of the CBP or on another date agreed to by the beneficiary or the
beneficiary's caregiver. The beneficiary's anniversary date occurs
every month and is the date of the month on which the item was first
delivered to the beneficiary by the current supplier. When a date other
than the anniversary date is chosen by the beneficiary or the
beneficiary's caregiver, the noncontract supplier will still receive
payment up to the anniversary date after the start of the CBP, and the
new contract supplier may not bill for any period of time before the
anniversary date.
(2) 2-day notification: Two business days prior to picking up the
item the supplier should contact the beneficiary or the beneficiary's
caregiver by phone to notify the beneficiary of the date the supplier
will pick up the item. This date should not be before the beneficiary's
first anniversary date that occurs after the start of the competitive
bidding program unless an alternative arrangement has been made with
the beneficiary and the new contract supplier.
(D) Pickup procedures. (1) The pickup of the noncontract supplier's
equipment and the delivery of the new contract supplier's equipment
should occur on the same date, that is, the first rental anniversary
date of the equipment that occurs after the start of the competitive
bidding program unless an alternative arrangement has been made with
the beneficiary and the new contract supplier.
(2) Under no circumstance should a supplier pick up a rented item
prior to the supplier's receiving acknowledgement from the beneficiary
that the beneficiary is aware of the date on which the supplier is
picking up the item and the beneficiary has made arrangements to have
the item replaced on that date by a contract supplier.
(3) When a beneficiary chooses to switch to a new contract
supplier, the current noncontract supplier and the new contract
supplier must make arrangements that are suitable to the beneficiary.
(4) The contract supplier may not submit a claim with a date of
delivery for the new equipment that is prior to the first anniversary
date that occurs after the beginning of the CBP, and the contract
supplier may not begin billing until the first anniversary date that
occurs after the beginning of the CBP.
(5) The noncontract supplier must submit a claim to be paid up to
the first anniversary date that occurs after the beginning of the CBP.
Therefore, they should not pick up the equipment before that date
unless an alternative arrangement has been made with the beneficiary
and the new contract supplier.
(ii) Notification to CMS by suppliers. A noncontract supplier that
elects to become a grandfathered supplier must provide a written
notification to CMS of this decision. This notification must meet the
following requirements:
(A) State that the supplier agrees to continue to furnish certain
rented DME, oxygen and oxygen equipment that it is currently furnishing
to beneficiaries (that is, before the start of the competitive bidding
program) in a CBA and will continue to provide these items to these
beneficiaries for the remaining months of the rental period.
(B) Include the following information:
(1) Name and address of the supplier.
(2) The 6-digit NSC number of the supplier.
(3) Product category(s) by CBA for which the supplier is willing to
be a grandfathered supplier.
(C) State that the supplier agrees to meet all the terms and
conditions pertaining to grandfathered suppliers.
(D) Be provided by the supplier to CMS in writing at least 30
business days before the start date of the implementation of the
Medicare DMEPOS Competitive Bidding Program.
(6) Suppliers that choose not to become grandfathered suppliers.
(i) Requirement for non-grandfathered supplier. A noncontract supplier
that elects not to become a grandfathered supplier is required to pick
up the item it is currently renting to the beneficiary from the
beneficiary's home after proper notification.
(ii) Notification. Proper notification includes a 30-day, a 10-day,
and a 2-day notice of the supplier's decision not to become a
grandfathered supplier to its Medicare beneficiaries who are

[[Page 62011]]

currently renting certain DME competitively bid item(s) and who reside
in a CBA.
(iii) Requirements of notification. These notifications must meet
all of the requirements listed in paragraph (j)(5)(i) of this section
for the 30-day, 10-day and 2-day notices that must be sent by suppliers
who decide to be grandfathered suppliers, with the following exceptions
for the 30-day notice.
(A) State that, for those items for which the supplier has decided
not to be a grandfathered supplier, the supplier will only continue to
rent these competitively bid item(s) to its beneficiaries up to the
first anniversary date that occurs after the start of the Medicare
DMEPOS Competitive Bidding Program.
(B) State that the beneficiary must select a contract supplier for
Medicare to continue to pay for these items.
(C) Refer the beneficiary to the contract supplier locator tool on
and to 1-800-MEDICARE to obtain information about the availability of
contract suppliers for the beneficiary's area.
(iv) Pickup procedures. (A) The pick-up of the noncontract
supplier's equipment and the delivery of the new contract supplier's
equipment should occur on the same date, that is, the first rental
anniversary date of the equipment that occurs after the start of the
competitive bidding program unless an alternative arrangement has been
made with the beneficiary and the new contract supplier.
(B) Under no circumstance should a supplier pick up a rented item
prior to the supplier's receiving acknowledgement from the beneficiary
that the beneficiary is aware of the date on which the supplier is
picking up the item and the beneficiary has made arrangements to have
the item replaced on that date by a contract supplier.
(C) When a beneficiary chooses to switch to a new contract
supplier, the current noncontract supplier and the new contract
supplier must make arrangements that are agreeable to the beneficiary.
(D) The contract supplier cannot submit a claim with a date of
delivery for the new equipment that is prior to the first anniversary
date that occurs after the beginning of the CBP.
* * * * *
(k) * * *
(2) Additional payments are made in accordance with Sec.
414.210(e)(2), (e)(3) and (e)(5) of this part for the maintenance and
servicing of oxygen equipment if performed by a contract supplier or a
noncontract supplier having a valid Medicare billing number.
* * * * *

0
18. Section 414.425 is added to read as follows:

Sec. 414.425 Claims for damages.

(a) Eligibility for filing a claim for damages as a result of the
termination of supplier contracts by the Medicare Improvements for
Patients and Providers Act of 2008 (MIPPA).
(1) Any aggrieved supplier, including a member of a network that
was awarded a contract for the Round 1 Durable Medical Prosthetics,
Orthotics, and Supplies Competitive Bidding Program (DMEPOS CBP) that
believes it has been damaged by the termination of its competitive bid
contract, may file a claim under this section.
(2) A subcontractor of a contract supplier is not eligible to
submit a claim under this section.
(b) Timeframe for filing a claim. (1) A completed claim, including
all documentation, must be filed within 90 days of January 1, 2010 (the
effective date of these damages provisions), unless that day is a
Federal holiday or Sunday in which case it will fall to the next
business day.
(2) The date of filing is the actual date of receipt by the CBIC of
a completed claim that includes all the information required by this
rule.
(c) Information that must be included in a claim. (1) Supplier's
name, name of authorized official, U.S. Post Office mailing address,
phone number, email address and bidding number, and National Supplier
Clearinghouse Number;
(2) A copy of the signed contract entered into with CMS for the
Round 1 DMEPOS Competitive Bidding Program;
(3) A detailed explanation of the damages incurred by this supplier
as a direct result of the termination of the Round 1 competitive bid
contract by MIPPA. The explanation must include all of the following:
(i) Documentation of the supplier's damages through receipts.
(ii) Records that substantiate the supplier's damages and
demonstrate that the damages are directly related to performance of the
Round 1 contract and are consistent with information the supplier
provided as part of their bid.
(4) The supplier must explain how it would be damaged if not
reimbursed.
(5) The claim must document steps the supplier took to mitigate any
damages they may have incurred due to the contract termination,
including a detailed explanation of the steps of all attempts to use
for other purposes, return or dispose of equipment or other assets
purchased or rented for the use in the Round 1 DMEPOS CBP contract
performance.
(d) Items that will not be considered in a claim. The following
items will not be considered in a claim:
(1) The cost of submitting a bid.
(2) Any fees or costs incurred for consulting or marketing.
(3) Costs associated with accreditation or licensure.
(4) Costs incurred before March 20, 2008.
(5) Costs incurred for contract performance after July 14, 2008
except for costs incurred to mitigate damages.
(6) Any profits a supplier may have expected from the contract.
(7) Costs that would have occurred without a contract having been
awarded.
(8) Costs for items such as inventory, delivery vehicles, office
space and equipment, personnel, which the supplier did not purchase
specifically to perform the contract.
(9) Costs that the supplier has recouped by any means, and may
include use of personnel, material, suppliers, or equipment in the
supplier's business operations.
(e) Filing a claim. (1) A claim, with all supporting documentation,
must be filed with the CMS Competitive Bidding Implementation
Contractor (CBIC).
(2) Claims must include a statement from a supplier's authorized
official certifying the accuracy of the information provided on the
claim and all supporting documentation.
(3) The CBIC does not accept electronic submissions of claims for
damages.
(f) Review of claim. (1) Role of the CBIC. (i) The CBIC will review
the claim to ensure it is submitted timely, complete, and by an
eligible claimant. When the CBIC identifies that a claim is incomplete
or not filed timely, it will make a recommendation to the Determining
Authority not to process the claim further. Incomplete or untimely
claims may be dismissed by the Determining Authority without further
processing.
(ii) For complete, timely claims, the CBIC will review the claim on
its merits to determine if damages are warranted and may seek further
information from the claimant when making its recommendation to the
Determining Authority. The CBIC may set a deadline for receipt of
additional information. A claimant's failure to respond timely may
result in a denial of the claim.
(iii) The CBIC will make a recommendation to the Determining
Authority for each claim filed and

[[Page 62012]]

include an explanation that supports its recommendation.
(iv) The recommendation must be either to award damages for a
particular amount (which may not be the same amount requested by the
claimant) or that no damages should be awarded.
(A) If the CBIC recommends that damages are warranted, the CBIC
will calculate a recommended reasonable amount of damages based on the
claim submitted.
(B) The reasonable amount will consider both costs incurred and the
contractor's attempts and action to limit the damages;
(v) The recommendation will be sent to the Determining Authority
for a final determination.
(2) CMS' role as the Determining Authority. (i) The Determining
Authority shall review the recommendation of the CBIC.
(ii) The Determining Authority may seek further information from
the claimant or the CBIC in making a concurrence or non-concurrence
determination.
(iii) The Determining Authority may set a deadline for receipt of
additional information. A claimant's failure to respond timely may
result in a denial of the claim.
(iv) If the Determining Authority concurs with the CBIC
recommendation, the Determining Authority shall submit a final signed
decision to the CBIC and direct the CBIC to notify the claimant of the
decision and the reasons for the final decision.
(v) If the Determining Authority non-concurs with the CBIC
recommendation, the Determining Authority may return the claim for
further processing or the Determining Authority may:
(A) Write a determination granting (in whole or in part) a claim
for damages or denying a claim in its entirety;
(B) Direct the CBIC to write said determination for the Determining
Authority's signature; or
(C) Return the claim to the CBIC with further instructions.
(vi) The Determining Authority's determination is final and not
subject to administrative or judicial review.
(g) Timeframe for determinations. (1) Every effort will be made to
make a determination within 120 days of initial receipt of the claim
for damages by the CBIC or the receipt of additional information that
was requested by the CBIC, whichever is later.
(2) In the case of more complex cases, or in the event of a large
workload, a decision will be issued as soon as practicable.
(h) Notification to claimant of damage determination. The CBIC must
mail the Determining Authority's determination to the claimant by
certified mail return receipt requested, at the address provided in the
claim.

Subpart H--Fee Schedule for Ambulance Services

0
19. Section 414.610 is amended by revising paragraph (c)(5)(i) to read
as follows:

Sec. 414.610 Basis of payment.

* * * * *
(c) * * *
(5) * * *
(i) For ground ambulance services where the point of pickup is in a
rural area, the mileage rate is increased by 50 percent for each of the
first 17 miles and, for services furnished before January 1, 2004, by
25 percent for miles 18 through 50. The standard mileage rate applies
to every mile over 50 miles and, for services furnished after December
31, 2003, to every mile over 17 miles. For air ambulance services where
the point of pickup is in a rural area, the total payment is increased
by 50 percent; that is, the rural adjustment factor applies to the sum
of the base rate and the mileage rate.
* * * * *

Subpart J--Submission of Manufacturer's Average Sales Price Data

0
20. Section 414.802 is amended by revising the definition of ``unit''
to read as follows:

Sec. 414.802 Definitions.

* * * * *
Unit means the product represented by the 11-digit National Drug
Code. The method of counting units excludes units of CAP drugs (as
defined in Sec. 414.902 of this part) sold to an approved CAP vendor
(as defined in Sec. 414.902 of this part) for use under the CAP (as
defined in Sec. 414.902 of this part).

Subpart K--Payment for Drugs and Biologicals Under Part B

Sec. 414.904 [Amended]

0
21. Amend Sec. 414.904(d)(3) by removing the phrase ``and 2009'' and
adding in its place the phrase ``2009, and 2010.''

0
22. Section 414.906 is amended by--
0
A. Adding the introductory text to paragraph (c).
0
B. Revising paragraph (c)(1).
0
C. Redesignating paragraph (c)(2) as (c)(3).
0
D. Adding new paragraph (c)(2).
0
E. Adding a paragraph heading to newly designated paragraph (c)(3).
0
F. Adding paragraphs (f)(2)(v), (f)(3)(iv), and (g).
The revision and additions read as follows:

Sec. 414.906 Competitive acquisition program as the basis for
payment.

* * * * *
(c) Computation of payment amount. Except as specified in paragraph
(c)(2) of this section, payment for CAP drugs is based on bids
submitted as a result of the bidding process as described in Sec.
414.910 of this subpart.
(1) Single payment amount. (i) A single payment amount for each CAP
drug in the competitive acquisition area is determined on the basis of
the bids submitted and accepted and updated from the bidding period to
the beginning of the payment year.
(ii) The single payment amount is then updated quarterly based on
the approved CAP vendor's reasonable net acquisition costs for that
category as determined by CMS, and 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.
(iii) The payment amount for each other drug for which the approved
CAP vendor submits a bid in accordance with Sec. 414.910 of this
subpart and each other drug that is approved by CMS for the approved
CAP vendor to furnish under the CAP is also updated quarterly based on
the approved CAP vendor's reasonable net acquisition costs for each
HCPCS code and limited by the payment amount established under section
1847A of the Act.
(2) Updates to payment amount. (i) The first update is effective on
the first day of claims processing for the first quarter of an approved
CAP vendor's contract. The first quarterly contract update is based on
the reasonable net acquisition cost (RNAC) data reported to CMS or its
designee for any purchases of drug before the beginning of CAP claims
processing for the contract period and reported to CMS no later than 30
days before the beginning of CAP claims processing.
(ii) For subsequent quarters, each approved CAP vendor must report
to CMS or its designee RNAC data for a quarter of CAP drug purchases
within 30 days of the close of that quarter.
(iii) For all quarters, only RNAC data from approved CAP vendors
that are supplying CAP drugs under their CAP contract at the time
updates are being calculated must be used to calculate updated CAP
payment amounts.
(iv) CMS excludes such RNAC data submitted by an approved CAP
vendor if, during the time calculations are being

[[Page 62013]]

done, CMS knows that the approved CAP vendor will not be under contract
for the applicable quarterly update.
(v) The payment amount weights must be calculated based on the more
recent of the following:
(A) Contract bidding weights.
(B) CAP claims data.
(vi) The payment limit must be determined using the most recent
payment limits available to CMS under section 1847A of the Act.
(vii) The following payment amount update calculation must be
applied for the group of all drugs for which a composite bid is
required.
(A) The most recent previous composite payment amount for the group
is updated by--
(1) Calculating the percent change in reasonable net acquisition
costs for each approved CAP vendor;
(2) Calculating the median of all participating approved CAP
vendors' adjusted CAP payment amounts; and
(3) Limiting the payment as described in paragraph (c)(1) of this
section.
(B) The median percent change, subject to the limit described in
paragraph (c)(1) of this section, must be the update percentage for
that quarter.
(C) The single update percentage must be applied to the payment
amount for each drug in the group of drugs for which a composite bid is
required in the category.
(viii) The following payment amount update calculation must be
applied for each of the following items: Each HCPCS code not included
in the composite bid list; Each HCPCS code added to the drug list
during the contract period; and each drug that has not yet been
assigned a HCPCS code, but for which a HCPCS code will be established.
(A) The most recent previous payment amount for each drug must be
updated by calculating the percent change in reasonable net acquisition
costs for each approved CAP vendor, then calculating the median of all
participating approved CAP vendors' adjusted CAP payment amounts.
(B) The median percent change calculated for each drug, subject to
the limit described in paragraph (c)(1) of this section, must be
applied to the payment amount for each drug.
(3) Alternative payment amount. * * *
* * * * *
(f) * * *
(2) * * *
(v) On or after January 1, 2010, the proposed addition of drugs
with similar therapeutic uses to drugs already supplied under the CAP
by the approved CAP vendor(s).
(3) * * *
(iv) In the case of additions requested under paragraph (f)(2)(v)
of this section, address and document the need for such an expansion
based on demand for the product(s).
* * * * *
(g) Deletion of drugs on an approved CAP vendor's CAP drug list.
Deletion of drugs on an approved CAP vendor's CAP drug list due to
unavailability requires a written request and approval as described in
paragraphs (f)(3)(i) through (iii) and (f)(4) of this section.

0
23. Section 414.908 is amended by revising paragraph (a)(3)(xii) to
read as follows:

Sec. 414.908 Competitive acquisition program.

(a) * * *
(3) * * *
(xii) Agrees not to transport CAP drugs from one practice location
or place of service to another location except in accordance with a
written agreement between the participating CAP physician and the
approved CAP vendor that requires that drugs are not subjected to
conditions that will jeopardize their integrity, stability, and/or
sterility while being transported.
* * * * *

0
24. Section 414.914 is amended by revising paragraph (f)(12) to read as
follows:

Sec. 414.914 Terms of contract.

* * * * *
(f) * * *
(12) Supply CAP drugs upon receipt of a prescription order to all
participating CAP physicians who have selected the approved CAP vendor,
except when the conditions of paragraph (h) of this section or Sec.
414.916(b) of this subpart are met;
* * * * *

0
25. Section 414.916 is amended by--
0
A. Redesignating paragraph (b)(4) as (b)(5).
0
B. Adding new paragraph (b)(4).
The addition reads as follows:

Sec. 414.916 Dispute resolution for vendors and beneficiaries.

* * * * *
(b) * * *
(4) Upon notification from CMS of a participating CAP physician's
suspension from the program, the approved CAP vendor must cease
delivery of CAP drugs to the suspended participating CAP physician
until the suspension has been lifted.
* * * * *

0
26. Section 414.917 is amended by revising paragraph (b)(4) to read as
follows:

Sec. 414.917 Dispute resolution and process for suspension or
termination of approved CAP contract and termination of physician
participation under exigent circumstances.

* * * * *
(b) * * *
(4) The approved CAP vendor may appeal that termination by
requesting a reconsideration. A determination must be made as to
whether the approved CAP vendor has been meeting the service and
quality obligations of its CAP contract. The approved CAP vendor's
contract will remain suspended during the reconsideration process.
* * * * *

0
27. Section 414.930 is amended by--
0
A. Revising paragraph (a).
0
B. Redesignating paragraph (b)(1)(v) as paragraph (b)(1)(vi).
0
C. Adding new paragraph (b)(1)(v).
The revision and addition read as follows:

Sec. 414.930 Compendia for determination of medically-accepted
indications for off-label uses of drugs and biologicals in an anti-
cancer chemotherapeutic regimen.

(a) Definitions. For the purposes of this section:
Compendium means 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--
(i) 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.
(ii) Is indexed by drug or biological.
(iii) Has a publicly transparent process for evaluating therapies
and for identifying potential conflicts of interests.
Publicly transparent process for evaluating therapies means that
the process provides that the following information from an internal or
external request for inclusion of a therapy in a compendium are
available to the public for a period of not less than 5 years, which
includes availability on the compendium's Web site for a period of not
less than 3 years, coincident with the compendium's publication of the
related recommendation:
(i) The internal or external request for listing of a therapy
recommendation including criteria used to evaluate the request.
(ii) A listing of all the evidentiary materials reviewed or
considered by the compendium pursuant to the request.

[[Page 62014]]

(iii) A listing of all individuals who have substantively
participated in the review or disposition of the request.
(iv) Minutes and voting records of meetings for the review and
disposition of the request.
Publicly transparent process for identifying potential conflicts of
interests means that process provides that the following information is
identified and made timely available in response to a public request
for a period of not less than 5 years, coincident with the compendium's
publication of the related recommendation:
(i) Direct or indirect financial relationships that exist between
individuals or the spouse or minor child of individuals who have
substantively participated in the development or disposition of
compendia recommendations and the manufacturer or seller of the drug or
biological being reviewed by the compendium. This may include, for
example, compensation arrangements such as salary, grant, contract, or
collaboration agreements between individuals or the spouse or minor
child of individuals who have substantively participated in the review
and disposition of the request and the manufacturer or seller of the
drug or biological being reviewed by the compendium.
(ii) Ownership or investment interests between individuals or the
spouse or minor child of individuals who have substantively
participated in the development or disposition of compendia
recommendations and the manufacturer or seller of the drug or
biological being reviewed by the compendium.
(b) * * *
(1) * * *
(v) Considers whether the publication that is the subject of the
request meets the definition of a compendium in this section.
* * * * *

PART 415--SERVICES FURNISHED BY PHYSICIANS IN PROVIDERS,
SUPERVISING PHYSICIANS IN TEACHING SETTINGS, AND RESIDENTS IN
CERTAIN SETTINGS

0
28. The authority citation for part 415 continues to read as follows:

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

Subpart D--Physician Services in Teaching Settings

0
29. Section 415.178 is revised to read as follows:

Sec. 415.178 Anesthesia services.

(a) General rule. (1) For services furnished prior to January 1,
2010, an unreduced physician fee schedule payment may be made if a
physician is involved in a single anesthesia procedure involving an
anesthesia resident. In the case of anesthesia services, the teaching
physician must be present during all critical portions of the procedure
and immediately available to furnish services during the entire service
or procedure. The teaching physician cannot receive an unreduced fee if
he or she performs services involving other patients during the period
the anesthesia resident is furnishing services in a single case.
Additional rules for payment of anesthesia services involving residents
are specified in Sec. 414.46(c)(1)(iii) of this chapter.
(2) For services furnished on or after January 1, 2010, payment
made under Sec. 414.46(e) of this chapter if the teaching
anesthesiologist (or different teaching anesthesiologists in the same
anesthesia group practice) is present during all critical or key
portions of the anesthesia service or procedure involved; and the
teaching anesthesiologist (or another anesthesiologist with whom the
teaching anesthesiologist has entered into an arrangement) is
immediately available to furnish anesthesia services during the entire
procedure.
(b) Documentation. Documentation must indicate the teaching
physician's presence during all critical or key portions of the
anesthesia procedure and the immediate availability of another teaching
anesthesiologist.

PART 485--CONDITIONS OF PARTICIPATION: SPECIALIZED PROVIDERS

0
30. The authority citation for part 485 continues to read as follows:

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

Subpart B--Conditions of Participation: Comprehensive Outpatient
Rehabilitation Facilities

0
31. Section 485.70 is amended by revising paragraph (j) to read as
follows:

Sec. 485.70 Personnel qualifications.

* * * * *
(j) A respiratory therapist must complete one the following
criteria:
(1) Criterion 1. All of the following must be completed:
(i) Be licensed by the State in which practicing, if applicable.
(ii) Have successfully completed a nationally-accredited
educational program for respiratory therapists.
(iii)(A) Be eligible to take the registry examination administered
by the National Board for Respiratory Care for respiratory therapists;
or
(B) Have passed the registry examination administered by the
National Board for Respiratory Care for respiratory therapists.
(2) Criterion 2: All of the following must be completed:
(i) Be licensed by the State in which practicing, if applicable.
(ii) Have equivalent training and experience as determined by the
National Board for Respiratory Care.
* * * * *

PART 498--APPEALS PROCEDURES FOR DETERMINATIONS THAT AFFECT
PARTICIPATION IN THE MEDICARE PROGRAM AND FOR DETERMINATIONS THAT
AFFECT THE PARTICIPATION OF ICFs/MR AND CERTAIN NFs IN THE MEDICAID
PROGRAM

0
32. The authority citation for part 498 continues to read as follows:

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

Subpart A--General Provisions

0
33. Section 498.2 is amended by adding paragraph (13) to the definition
of ``supplier'' to read as follows:

Sec. 498.2 Definitions.

* * * * *
Supplier * * *
(13) A site approved by CMS to furnish intensive cardiac
rehabilitation services.

Authority: Catalog of Federal Domestic Assistance Program No.
93.773, Medicare--Hospital Insurance; and Program No. 93.774,
Medicare--Supplementary Medical Insurance Program.

Dated: October 26, 2009.
Charlene Frizzera,
Acting Administrator, Centers for Medicare & Medicaid Services.

Approved: October 29, 2009.
Kathleen Sebelius,
Secretary.

Note: These addenda will not appear in the Code of Federal
Regulations.

Addendum A: Explanation and Use of Addendum B

The addenda on the following pages provide various data pertaining
to the Medicare fee schedule for physicians' services furnished in
2010. Addendum

[[Page 62015]]

B contains the RVUs for work, non-facility practice expense (PE),
facility PE, and malpractice expense, and other information for all
services included in the PFS.
In previous years, we have listed many services in Addendum B that
are not paid under the PFS. To avoid publishing as many pages of codes
for these services, we are not including clinical laboratory codes or
the alphanumeric codes (Healthcare Common Procedure Coding System
(HCPCS) codes not included in CPT) not paid under the PFS in Addendum
B.
Addendum B contains the following information for each CPT code and
alphanumeric HCPCS code, except for: alphanumeric codes beginning with
B (enteral and parenteral therapy), E (durable medical equipment), K
(temporary codes for nonphysicians' services or items), or L
(orthotics); and codes for anesthesiology. Please also note the
following:
An ``NA'' in the ``Non-facility PE RVUs'' column of
Addendum B means that CMS has not developed a PE RVU in the non-
facility setting for the service because it is typically performed in
the hospital (for example, an open heart surgery is generally performed
in the hospital setting and not a physician's office). If there is an
``NA'' in the non-facility PE RVU column, and the contractor determines
that this service can be performed in the non-facility setting, the
service will be paid at the facility PE RVU rate.
Services that have an ``NA'' in the ``Facility PE RVUs''
column of Addendum B are typically not paid using the PFS when provided
in a facility setting. These services (which include ``incident to''
services and the technical portion of diagnostic tests) are generally
paid under either the outpatient hospital prospective payment system or
bundled into the hospital inpatient prospective payment system payment.
1. CPT/HCPCS code. This is the CPT or alphanumeric HCPCS number for
the service. Alphanumeric HCPCS codes are included at the end of this
addendum.
2. Modifier. A modifier is shown if there is a technical component
(modifier TC) and a professional component (PC) (modifier-26) for the
service. If there is a PC and a TC for the service, Addendum B contains
three entries for the code. A code for: the global values (both
professional and technical); modifier-26 (PC); and, modifier TC. The
global service is not designated by a modifier, and physicians must
bill using the code without a modifier if the physician furnishes both
the PC and the TC of the service.
Modifier-53 is shown for a discontinued procedure, for example a
colonoscopy that is not completed. There will be RVUs for a code with
this modifier.
3. Status indicator. This indicator shows whether the CPT/HCPCS
code is in the PFS and whether it is separately payable if the service
is covered.
A = Active code. These codes are separately payable under the PFS
if covered. There will be RVUs for codes with this status. The presence
of an ``A'' indicator does not mean that Medicare has made a national
coverage determination regarding the service. Carriers remain
responsible for coverage decisions in the absence of a national
Medicare policy.
B = Bundled code. Payments for covered services are always bundled
into payment for other services not specified. If RVUs are shown, they
are not used for Medicare payment. If these services are covered,
payment for them is subsumed by the payment for the services to which
they are incident (an example is a telephone call from a hospital nurse
regarding care of a patient).
C = Carriers price the code. Carriers will establish RVUs and
payment amounts for these services, generally on an individual case
basis following review of documentation, such as an operative report.
D \*\ = Deleted/discontinued code.
E = Excluded from the PFS by regulation. These codes are for items
and services that CMS chose to exclude from the fee schedule payment by
regulation. No RVUs are shown, and no payment may be made under the PFS
for these codes. Payment for them, when covered, continues under
reasonable charge procedures.
F = Deleted/discontinued codes. (Code not subject to a 90-day grace
period.) These codes are deleted effective with the beginning of the
year and are never subject to a grace period. This indicator is no
longer effective beginning with the 2005 fee schedule as of January 1,
2005.
G = Code not valid for Medicare purposes. Medicare uses another
code for reporting of, and payment for, these services. (Codes subject
to a 90-day grace period.) This indicator is no longer effective with
the 2005 PFS as of January 1, 2005.
H \*\ = Deleted modifier. For 2000 and later years, either the TC
or PC component shown for the code has been deleted and the deleted
component is shown in the database with the H status indicator.
---------------------------------------------------------------------------

\*\ Codes with these indicators had a 90-day grace period before
January 1, 2005.
---------------------------------------------------------------------------

I = Not valid for Medicare purposes. Medicare uses another code for
the reporting of, and the payment for these services. (Codes not
subject to a 90-day grace period.)
L = Local codes. Carriers will apply this status to all local codes
in effect on January 1, 1998 or subsequently approved by central office
for use. Carriers will complete the RVUs and payment amounts for these
codes.
M = Measurement codes, used for reporting purposes only. There are
no RVUs and no payment amounts for these codes. Medicare uses them to
aid with performance measurement. No separate payment is made. These
codes should be billed with a zero (($0.00) charge and are denied) on
the MPFSDB.
N = Non-covered service. These codes are noncovered services.
Medicare payment may not be made for these codes. If RVUs are shown,
they are not used for Medicare payment.
R = Restricted coverage. Special coverage instructions apply. If
the service is covered and no RVUs are shown, it is carrier-priced.
T = There are RVUs for these services, but they are only paid if
there are no other services payable under the PFS billed on the same
date by the same provider. If any other services payable under the PFS
are billed on the same date by the same provider, these services are
bundled into the service(s) for which payment is made.
X = Statutory exclusion. These codes represent an item or service
that is not within the statutory definition of ``physicians' services''
for PFS payment purposes. No RVUs are shown for these codes, and no
payment may be made under the PFS. (Examples are ambulance services and
clinical diagnostic laboratory services.)
4. Description of code. This is an abbreviated version of the
narrative description of the code.
5. Physician work RVUs. These are the RVUs for the physician work
for this service in 2010.
6. Fully implemented non-facility PE RVUs. These are the fully
implemented resource-based practice PE RVUs for non-facility settings.
7. 2010 Transitional non-facility PE RVUs. These are the 2010
resource-based PE RVUs for non-facility settings.
8. Fully implemented facility PE RVUs. These are the fully
implemented resource-based practice PE RVUs for facility settings.
9. 2010 Transitional facility PE RVUs. These are the 2010 resource-
based PE RVUs for facility settings.

[[Page 62016]]

10. Malpractice expense RVUs. These are the RVUs for the
malpractice expense for the service for 2010.

Note: The BN reduction resulting from the chiropractic
demonstration is not reflected in the RVUs for CPT codes 98940,
98941 and 98942. The required reduction will only be reflected in
the files used for Medicare payment.

9. Global period. This indicator shows the number of days in the
global period for the code (0, 10, or 90 days). An explanation of the
alpha codes follows:
MMM = Code describes a service furnished in uncomplicated maternity
cases including antepartum care, delivery, and postpartum care. The
usual global surgical concept does not apply. See the 1999 Physicians'
Current Procedural Terminology for specific definitions.
XXX = The global concept does not apply.
YYY = The global period is to be set by the carrier (for example,
unlisted surgery codes).
ZZZ = Code related to another service that is always included in
the global period of the other service. (Note: Physician work and PE
are associated with intra service time and in some instances in the
post service time.
BILLING CODE 4120-01-P

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[FR Doc. E9-26502 Filed 10-30-09; 4:15 pm]
BILLING CODE 4120-01-C