[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

[[Page 61744]]

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

[[Page 61745]]

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

[[Page 61764]]

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.
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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

[[Page 61788]]

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

[[Page 61789]]

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.

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    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

[[Page 61872]]

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.
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    \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.
BILLING CODE 4120-01-P

[[Page 61910]]

[GRAPHIC] [TIFF OMITTED] TR25NO09.197


[[Page 61911]]


[GRAPHIC] [TIFF OMITTED] TR25NO09.198

BILLING CODE 4120-01-C
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

[[Page 61946]]

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.
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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 
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[[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.
BILLING CODE 4120-01-P

[[Page 61963]]

[GRAPHIC] [TIFF OMITTED] TR25NO09.208

BILLING CODE 4120-01-C

[[Page 61964]]

    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:
[GRAPHIC] [TIFF OMITTED] TR25NO09.209

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.
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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.
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[[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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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

[[Page 61992]]

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

[[Page 61993]]

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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[[Page 61999]]

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

[[Page 62017]]

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