[Federal Register Volume 80, Number 220 (Monday, November 16, 2015)]
[Rules and Regulations]
[Pages 70886-71386]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-28005]



[[Page 70885]]

Vol. 80

Monday,

No. 220

November 16, 2015

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Part 405, 410, 411, et al.





Medicare Program; Revisions to Payment Policies Under the Physician Fee 
Schedule and Other Revisions to Part B for CY 2016; Final Rule

  Federal Register / Vol. 80 , No. 220 / Monday, November 16, 2015 / 
Rules and Regulations  

[[Page 70886]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 410, 411, 414, 425, and 495

[CMS-1631-FC]
RIN 0938-AS40


Medicare Program; Revisions to Payment Policies Under the 
Physician Fee Schedule and Other Revisions to Part B for CY 2016

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

ACTION: Final rule with comment period.

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SUMMARY: This major final rule with comment period addresses 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, as well as changes 
in the statute.

DATES: Effective date: The provisions of this final rule with comment 
period are effective on January 1, 2016, except the definition of 
``ownership or investment interest'' in Sec.  411.362(a), which has an 
effective date of January 1, 2017.
    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, 2015. (See the SUPPLEMENTARY INFORMATION section of 
this final rule with comment period for a list of provisions open for 
comment.)

ADDRESSES: In commenting, please refer to file code CMS-1631-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 www.regulations.gov. Follow the instructions for 
``submitting a comment.''
    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-1631-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-1631-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) 786-7195 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: 
    Donta Henson, (410) 786-1947 for issues related to pathology and 
ophthalmology services or any physician payment issues not identified 
below.
    Abdihakin Abdi, (410) 786-4735, for issues related to portable X-
ray transportation fees.
    Gail Addis, (410) 786-4522, for issues related to the refinement 
panel.
    Lindsey Baldwin, (410) 786-1694, for issues related to valuation of 
moderate sedation and colonoscopy services.
    Jessica Bruton, (410) 786-5991, for issues related to potentially 
misvalued code lists.
    Roberta Epps, (410) 786-4503, for issues related to PAMA section 
218(a) policy.
    Ken Marsalek, (410) 786-4502, for issues related to telehealth 
services.
    Ann Marshall, (410) 786-3059, for issues related to advance care 
planning, and for primary care and care management services.
    Geri Mondowney, (410) 786-4584, for issues related to geographic 
practice cost indices, malpractice RVUs, target, and phase-in 
provisions.
    Chava Sheffield, (410) 786-2298, for issues related to the practice 
expense methodology, impacts, and conversion factor.
    Michael Soracoe, (410) 786-6312, for issues related to the practice 
expense methodology and the valuation and coding of the global surgical 
packages.
    Regina Walker-Wren, (410) 786-9160, for issues related to the 
``incident to'' proposals.
    Pamela West, (410) 786-2302, for issues related to therapy caps.
    Emily Yoder, (410) 786-1804, for issues related to valuation of 
radiation treatment services.
    Amy Gruber, (410) 786-1542, for issues related to ambulance payment 
policy.
    Corinne Axelrod, (410) 786-5620, for issues related to rural health 
clinics or federally qualified health centers and payment to 
grandfathered tribal FQHCs.
    Simone Dennis, (410) 786-8409, for issues related to rural health 
clinics HCPCS reporting.
    Edmund Kasaitis (410) 786-0477, for issues related to Part B drugs, 
biologicals, and biosimilars.
    Alesia Hovatter, (410) 786-6861, for issues related to Physician 
Compare.
    Deborah Krauss, (410) 786-5264 and Alexandra Mugge, (410) 786-4457, 
for issues related to the physician quality reporting system and the 
merit-based incentive payment system.
    Alexandra Mugge, (410) 786-4457, for issues related to EHR 
Incentive Program.
    Sarah Arceo, (410) 786-2356 or Patrice Holtz, (410786-5663 for 
issues related to EHR Incentive Program-Comprehensive Primary Care 
(CPC) initiative and Medicare EHR Incentive Program aligned reporting.
    Rabia Khan or Terri Postma, (410) 786-8084 or [email protected], for 
issues related to Medicare Shared Savings Program.
    Kimberly Spalding Bush, (410) 786-3232, or Sabrina Ahmed (410) 786-
7499, for issues related to value-based Payment Modifier and Physician 
Feedback Program.
    Frederick Grabau, (410) 786-0206, for issues related to changes to 
opt-out regulations.
    Lisa Ohrin Wilson (410) 786-8852, or Matthew Edgar (410) 786-0698, 
for issues related to physician self-referral updates.
    Christiane LaBonte, (410) 786-7234, for issues related to 
Comprehensive Primary Care (CPC) initiative.
    JoAnna Baldwin (410) 786-7205, or Sarah Fulton (410) 786-2749, for 
issues

[[Page 70887]]

related to appropriate use criteria for advanced diagnostic imaging 
services.

SUPPLEMENTARY INFORMATION:
    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.
    Provisions open for comment: We will consider comments that are 
submitted as indicated above in the DATES and ADDRESSES sections on the 
following subject areas discussed in this final rule with comment 
period: Interim final work, practice expense (PE), and malpractice (MP) 
RVUs (including applicable work time, direct PE inputs, and MP 
crosswalks) for CY 2016; interim final new, revised, potentially 
misvalued HCPCS codes as indicated in the Preamble text and listed in 
Addendum C to this final rule with comment period; and the additions 
and deletions to the physician self-referral list of HCPCS/CPT codes 
found on tables 50 and 51.

Table of Contents

I. Executive Summary and Background
    A. Executive Summary
    B. Background
II. Provisions of the Final Rule With Comment Period for PFS
    A. Determination of Practice Expense (PE) Relative Value Units 
(RVUs)
    B. Determination of Malpractice Relative Value Units (RVUs)
    1. Overview
    2. Proposed Annual Update of MP RVUs
    3. MP RVU Update for Anesthesia Services
    4. MP RVU Methodology Refinements
    5. CY 2016 Identification of Potentially Misvalued Services for 
Review
    6. Valuing Services That Include Moderate Sedation as an 
Inherent Part of Furnishing the Procedure
    7. Improving the Valuation and Coding of the Global Package
    C. Elimination of the Refinement Panel
    D. Improving Payment Accuracy for Primary Care and Care 
Management Services
    E. Target for Relative Value Adjustments for Misvalued Services
    F. Phase-In of Significant RVU Reductions
    G. Changes for Computed Tomography (CT) Under the Protecting 
Access to Medicare Act of 2014 (PAMA)
    H. Valuation of Specific Codes
    1. Background
    2. Process for Valuing New, Revised, and Potentially Misvalued 
Codes
    3. Methodology for Establishing Work RVUs
    4. Methodology for Establishing the Direct PE Inputs Used To 
Develop PE RVUs
    5. Methodology for Establishing Malpractice RVUs
    6. CY 2016 Valuation of Specific Codes
    a. Lower GI Endoscopy Services
    b. Radiation Treatment and Related Image Guidance Services
    c. Advance Care Planning Services
    d. Valuation of Other Codes for CY 2016
    7. Direct PE Input-Only Recommendations
    8. CY 2015 Interim Final Codes
    9. CY 2016 Interim Final Codes
    I. Medicare Telehealth Services
    J. Incident to Proposals: Billing Physician as the Supervising 
Physician and Ancillary Personnel Requirements
    K. Portable X-Ray: Billing of the Transportation Fee
    L. Technical Correction: Waiver of Deductible for Anesthesia 
Services Furnished on the Same Date as a Planned Screening 
Colorectal Cancer Test
    M. Therapy Caps
III. Other Provisions of the Final Rule With Comment Period
    A. Provisions Associated With the Ambulance Fee Schedule
    B. Chronic Care Management (CCM) Services for Rural Health 
Clinics (RHCs) and Federally Qualified Health Centers (FQHCs)
    C. Healthcare Common Procedure Coding System (HCPCS) Coding for 
Rural Health Clinics (RHCs)
    D. Payment to Grandfathered Tribal FQHCs That Were Provider-
Based Clinics on or Before April 7, 2000
    E. Part B Drugs--Biosimilars
    F. Productivity Adjustment for the Ambulance, Clinical 
Laboratory, and DMEPOS Fee Schedules
    G. Appropriate Use Criteria for Advanced Diagnostic Imaging 
Services
    H. Physician Compare Web site
    I. Physician Payment, Efficiency, and Quality Improvements--
Physician Quality Reporting System
    J. Electronic Clinical Quality Measures (eCQM) and Certification 
Criteria and Electronic Health Record (EHR) Incentive Program-- 
Comprehensive Primary Care (CPC) Initiative and Medicare Meaningful 
Use Aligned Reporting
    K. Discussion and Acknowledgement of Public Comments Received on 
the Potential Expansion of the Comprehensive Primary Care (CPC) 
Initiative
    L. Medicare Shared Savings Program
    M. Value-Based Payment Modifier and Physician Feedback Program
    N. Physician Self-Referral Updates
    O. Private Contracting/Opt-Out
    P. Physician Self-Referral Prohibition: Annual Update to the 
List of CPT/HCPCS Codes
IV. Collection of Information Requirements
V. Response to Comments
VI. Waiver of Proposed Rulemaking and Waiver of Delay in Effective 
Date
VII. Regulatory Impact Analysis

Acronyms

    In addition, because of the many organizations and terms to which 
we refer by acronym in this final rule with comment period, we are 
listing these acronyms and their corresponding terms in alphabetical 
order below:

AAA Abdominal aortic aneurysms
ACO Accountable care organization
AMA American Medical Association
ASC Ambulatory surgical center
ATA American Telehealth Association
ATRA American Taxpayer Relief Act (Pub. L. 112-240)
AWV Annual wellness visit
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)
CAD Coronary artery disease
CAH Critical access hospital
CBSA Core-Based Statistical Area
CCM Chronic care management
CEHRT Certified EHR technology
CF Conversion factor
CG-CAHPS Clinician and Group Consumer Assessment of Healthcare 
Providers and Systems
CLFS Clinical Laboratory Fee Schedule
CNM Certified nurse-midwife
CP Clinical psychologist
CPC Comprehensive Primary Care
CPEP Clinical Practice Expert Panel
CPT [Physicians] Current Procedural Terminology (CPT codes, 
descriptions and other data only are copyright 2014 American Medical 
Association. All rights reserved.)
CQM Clinical quality measure
CSW Clinical social worker
CT Computed tomography
CY Calendar year
DFAR Defense Federal Acquisition Regulations
DHS Designated health services
DM Diabetes mellitus
DSMT Diabetes self-management training
eCQM Electronic clinical quality measures
EHR Electronic health record
E/M Evaluation and management
EP Eligible professional
eRx Electronic prescribing
ESRD End-stage renal disease
FAR Federal Acquisition Regulations
FFS Fee-for-service
FQHC Federally qualified health center
FR Federal Register
GAF Geographic adjustment factor
GAO Government Accountability Office

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GPCI Geographic practice cost index
GPO Group purchasing organization
GPRO Group practice reporting option
GTR Genetic Testing Registry
HCPCS Healthcare Common Procedure Coding System
HHS [Department of] Health and Human Services
HOPD Hospital outpatient department
HPSA Health professional shortage area
IDTF Independent diagnostic testing facility
IPPE Initial preventive physical exam
IPPS Inpatient Prospective Payment System
IQR Inpatient Quality Reporting
ISO Insurance service office
IT Information technology
IWPUT Intensity of work per unit of time
LCD Local coverage determination
MA Medicare Advantage
MAC Medicare Administrative Contractor
MAP Measure Applications Partnership
MAPCP Multi-payer Advanced Primary Care Practice
MAV Measure application validity [process]
MCP Monthly capitation payment
MedPAC Medicare Payment Advisory Commission
MEI Medicare Economic Index
MFP Multi-Factor Productivity
MIPPA Medicare Improvements for Patients and Providers Act (Pub. L. 
110-275)
MMA Medicare Prescription Drug, Improvement and Modernization Act of 
2003 (Pub. L. 108-173, enacted on December 8, 2003)
MP Malpractice
MPPR Multiple procedure payment reduction
MRA Magnetic resonance angiography
MRI Magnetic resonance imaging
MSA Metropolitan Statistical Areas
MSPB Medicare Spending per Beneficiary
MU Meaningful use
NCD National coverage determination
NCQDIS National Coalition of Quality Diagnostic Imaging Services
NP Nurse practitioner
NPI National Provider Identifier
NPP Nonphysician practitioner
NQS National Quality Strategy
OACT CMS's Office of the Actuary
OBRA '89 Omnibus Budget Reconciliation Act of 1989 (Pub. L. 101-239)
OBRA '90 Omnibus Budget Reconciliation Act of 1990 (Pub. L. 101-508)
OES Occupational Employment Statistics
OMB Office of Management and Budget
OPPS Outpatient prospective payment system
OT Occupational therapy
PA Physician assistant
PAMA Protecting Access to Medicare Act of 2014 (Pub. L. 113-93)
PC Professional component
PCIP Primary Care Incentive Payment
PE Practice expense
PE/HR Practice expense per hour
PEAC Practice Expense Advisory Committee
PECOS Provider Enrollment, Chain, and Ownership System
PFS Physician Fee Schedule
PLI Professional Liability Insurance
PMA Premarket approval
PQRS Physician Quality Reporting System
PPIS Physician Practice Expense Information Survey
PT Physical therapy
PY Performance year
QCDR Qualified clinical data registry
QRUR Quality and Resources Use Report
RBRVS Resource-based relative value scale
RFA Regulatory Flexibility Act
RHC Rural health clinic
RIA Regulatory impact analysis
RUC American Medical Association/Specialty Society Relative (Value) 
Update Committee
RUCA Rural Urban Commuting Area
RVU Relative value unit
SBA Small Business Administration
SGR Sustainable growth rate
SIM State Innovation Model
SLP Speech-language pathology
SMS Socioeconomic Monitoring System
SNF Skilled nursing facility
TAP Technical Advisory Panel
TC Technical component
TIN Tax identification number
UAF Update adjustment factor
UPIN Unique Physician Identification Number
USPSTF United States Preventive Services Task Force
VBP Value-based purchasing
VM Value-Based Payment Modifier

Addenda Available Only Through the Internet on the CMS Web Site

    The PFS Addenda along with other supporting documents and tables 
referenced in this final rule with comment period are available through 
the Internet on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html. Click on the link on the left side of the 
screen titled, ``PFS Federal Regulations Notices'' for a chronological 
list of PFS Federal Register and other related documents. For the CY 
2016 PFS Final Rule with Comment Period, refer to item CMS-1631-FC. 
Readers who experience any problems accessing any of the Addenda or 
other documents referenced in this rule and posted on the CMS Web site 
identified above should contact Donta Henson at (410) 786-1947.

CPT (Current Procedural Terminology) Copyright Notice

    Throughout this final rule with comment period, we use CPT codes 
and descriptions to refer to a variety of services. We note that CPT 
codes and descriptions are copyright 2015 American Medical Association. 
All Rights Reserved. CPT is a registered trademark of the American 
Medical Association (AMA). Applicable Federal Acquisition Regulations 
(FAR) and Defense Federal Acquisition Regulations (DFAR) apply.

I. Executive Summary and Background

A. Executive Summary

1. Purpose
    This major final rule with comment period revises payment polices 
under the Medicare Physician Fee Schedule (PFS) and makes other policy 
changes related to Medicare Part B payment. These changes are 
applicable to services furnished in CY 2016.
2. Summary of the Major Provisions
    The Social Security Act (the Act) requires us to establish payments 
under the PFS based on national uniform relative value units (RVUs) 
that account for the relative resources used in furnishing a service. 
The Act requires that RVUs be established for three categories of 
resources: Work, practice expense (PE); and malpractice (MP) expense; 
and, that we establish by regulation each year's payment amounts for 
all physicians' services paid under the PFS, incorporating geographic 
adjustments to reflect the variations in the costs of furnishing 
services in different geographic areas. In this major final rule with 
comment period, we establish RVUs for CY 2016 for the PFS, 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, as well as changes in the statute. In addition, this 
final rule with comment period includes discussions and proposals 
regarding:
     Potentially Misvalued PFS Codes.
     Telehealth Services.
     Advance Care Planning.
     Establishing Values for New, Revised, and Misvalued Codes.
     Target for Relative Value Adjustments for Misvalued 
Services.
     Phase-in of Significant RVU Reductions.
     ``Incident to'' policy.
     Portable X-ray Transportation Fee.
     Updating the Ambulance Fee Schedule regulations.
     Changes in Geographic Area Delineations for Ambulance 
Payment.
     Chronic Care Management Services for RHCs and FQHCs.
     HCPCS Coding for RHCs.
     Payment to Grandfathered Tribal FQHCs that were Provider-
Based Clinics on or before April 7, 2000.
     Payment for Biosimilars under Medicare Part B.
     Physician Compare Web site.
     Physician Quality Reporting System.
     Medicare Shared Savings Program.
     Electronic Health Record (EHR) Incentive Program.

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     Value-Based Payment Modifier and the Physician Feedback 
Program.
3. Summary of Costs and Benefits
    The Act requires that annual adjustments to PFS RVUs may not cause 
annual estimated expenditures to differ by more than $20 million from 
what they would have been had the adjustments not been made. If 
adjustments to RVUs would cause expenditures to change by more than $20 
million, we must make adjustments to preserve budget neutrality. These 
adjustments can affect the distribution of Medicare expenditures across 
specialties. In addition, several changes in this final rule with 
comment period will affect the specialty distribution of Medicare 
expenditures. When considering the combined impact of work, PE, and MP 
RVU changes, the projected payment impacts are small for most 
specialties; however, the impact is larger for a few specialties.
    We have determined that this major final rule with comment period 
is economically significant. For a detailed discussion of the economic 
impacts, see section VII. of this final rule with comment period.

B. Background

    Since January 1, 1992, Medicare has paid for physicians' services 
under section 1848 of the Act, ``Payment for Physicians' Services.'' 
The system relies on national relative values that are established for 
work, PE, and MP, which are adjusted for geographic cost variations. 
These values are multiplied by a conversion factor (CF) to convert the 
RVUs into payment rates. The concepts and methodology underlying the 
PFS were enacted as part of the Omnibus Budget Reconciliation Act of 
1989 (Pub. L. 101-239, enacted on December 19, 1989) (OBRA '89), and 
the Omnibus Budget Reconciliation Act of 1990 (Pub. L. 101-508, enacted 
on November 5, 1990) (OBRA '90). The final rule published on November 
25, 1991 (56 FR 59502) set forth the first fee schedule used for 
payment for physicians' services.
    We note that throughout this major final rule with comment period, 
unless otherwise noted, the term ``practitioner'' is used to describe 
both physicians and nonphysician practitioners (NPPs) who are permitted 
to bill Medicare under the PFS for services furnished to Medicare 
beneficiaries.
1. Development of the Relative Values
a. Work RVUs
    The work RVUs established for the initial fee schedule, which was 
implemented on January 1, 1992, were developed with extensive input 
from the physician community. A research team at the Harvard School of 
Public Health developed the original work RVUs for most codes under a 
cooperative agreement with the Department of Health and Human Services 
(HHS). In constructing the code-specific vignettes used in determining 
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.
    As specified in section 1848(c)(1)(A) of the Act, the work 
component of physicians' services means the portion of the resources 
used in furnishing the service that reflects physician time and 
intensity. We establish work RVUs for new, revised and potentially 
misvalued codes based on our review of information that generally 
includes, but is not limited to, recommendations received from the 
American Medical Association/Specialty Society Relative Value Update 
Committee (RUC), the Health Care Professionals Advisory Committee 
(HCPAC), the Medicare Payment Advisory Commission (MedPAC), and other 
public commenters; medical literature and comparative databases; as 
well as a comparison of the work for other codes within the Medicare 
PFS, and consultation with other physicians and health care 
professionals within CMS and the federal government. We also assess the 
methodology and data used to develop the recommendations submitted to 
us by the RUC and other public commenters, and the rationale for their 
recommendations.
b. Practice Expense RVUs
    Initially, only the work RVUs were resource-based, and the PE and 
MP RVUs were based on average allowable charges. 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 physicians' 
service beginning in 1998. We were required to consider general 
categories of expenses (such as office rent and wages of personnel, but 
excluding malpractice expenses) comprising PEs. The PE RVUs continue to 
represent the portion of these resources involved in furnishing PFS 
services.
    Originally, the resource-based method was to be used beginning in 
1998, but section 4505(a) of the Balanced Budget Act of 1997 (Pub. L. 
105-33, enacted on August 5, 1997) (BBA) delayed 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 
the charge-based PE RVUs to the resource-based PE RVUs.
    We established the resource-based PE RVUs for each physicians' 
service in a final rule, published on November 2, 1998 (63 FR 58814), 
effective for services furnished in CY 1999. Based on the requirement 
to transition to a resource-based system for PE over a 4-year period, 
payment rates were not fully based upon resource-based PE RVUs until CY 
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. (These data 
sources are described in greater detail in the CY 2012 final rule with 
comment period (76 FR 73033).)
    Separate PE RVUs are established for services furnished in facility 
settings, such as a hospital outpatient department (HOPD) or an 
ambulatory surgical center (ASC), and in nonfacility settings, such as 
a physician's office. The nonfacility RVUs reflect all of the direct 
and indirect PEs involved in furnishing a service described by a 
particular HCPCS code. The difference, if any, in these PE RVUs 
generally results in a higher payment in the nonfacility setting 
because in the facility settings some costs are borne by the facility. 
Medicare's payment to the facility (such as the outpatient prospective 
payment system (OPPS) payment to the HOPD) would reflect costs 
typically incurred by the facility. Thus, payment associated with those 
facility resources is not made under the PFS.
    Section 212 of the Balanced Budget Refinement Act of 1999 (Pub. L. 
106-113, enacted on November 29, 1999) (BBRA) 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

[[Page 70890]]

period during which we would accept these supplemental data through 
March 1, 2005.
    In the CY 2007 PFS final rule with comment period (71 FR 69624), we 
revised the methodology for calculating direct PE RVUs from the top-
down to the bottom-up methodology beginning in CY 2007. We adopted a 4-
year transition to the new PE RVUs. This transition was completed for 
CY 2010. In the CY 2010 PFS final rule with comment period, we updated 
the practice expense per hour (PE/HR) data that are used in the 
calculation of PE RVUs for most specialties (74 FR 61749). In CY 2010, 
we began a 4-year transition to the new PE RVUs using the updated PE/HR 
data, which was completed for CY 2013.
c. Malpractice RVUs
    Section 4505(f) of the BBA amended section 1848(c) of the Act to 
require that we implement resource-based MP RVUs for services furnished 
on or after CY 2000. The resource-based MP RVUs were implemented in the 
PFS final rule with comment period published November 2, 1999 (64 FR 
59380). The MP RVUs are based on commercial and physician-owned 
insurers' malpractice insurance premium data from all the states, the 
District of Columbia, and Puerto Rico. For more information on MP RVUs, 
see section II.B.2. of this final rule with comment period.
d. Refinements to the RVUs
    Section 1848(c)(2)(B)(i) of the Act requires that we review RVUs no 
less often than every 5 years. Prior to CY 2013, we conducted periodic 
reviews of work RVUs and PE RVUs independently. We completed five-year 
reviews of work RVUs that were effective for calendar years 1997, 2002, 
2007, and 2012.
    Although refinements to the direct PE inputs initially relied 
heavily on input from the RUC Practice Expense Advisory Committee 
(PEAC), the shifts to the bottom-up PE methodology in CY 2007 and to 
the use of the updated PE/HR data in CY 2010 have resulted in 
significant refinements to the PE RVUs in recent years.
    In the CY 2012 PFS final rule with comment period (76 FR 73057), we 
finalized a proposal to consolidate reviews of work and PE RVUs under 
section 1848(c)(2)(B) of the Act and reviews of potentially misvalued 
codes under section 1848(c)(2)(K) of the Act into one annual process.
    In addition to the five-year reviews, beginning for CY 2009, CMS, 
and the RUC have identified and reviewed a number of potentially 
misvalued codes on an annual basis based on various identification 
screens. This annual review of work and PE RVUs for potentially 
misvalued codes was supplemented by the amendments to section 1848 of 
the Act, as enacted by section 3134 of the Affordable Care Act, which 
requires the agency to periodically identify, review and adjust values 
for potentially misvalued codes.
e. Application of Budget Neutrality to Adjustments of RVUs
    As described in section VI.C. of this final rule with comment 
period, in accordance with section 1848(c)(2)(B)(ii)(II) of the Act, if 
revisions to the RVUs cause expenditures for the year to change by more 
than $20 million, we make adjustments to ensure that expenditures did 
not increase or decrease by more than $20 million.
2. Calculation of Payments Based on RVUs
    To calculate the payment for each service, the components of the 
fee schedule (work, PE, and MP RVUs) are adjusted by geographic 
practice cost indices (GPCIs) to reflect the variations in the costs of 
furnishing the services. The GPCIs reflect the relative costs of work, 
PE, and MP in an area compared to the national average costs for each 
component.
    We received several comments regarding GPCIs that are not within 
the scope of proposals in the CY 2016 PFS proposed rule. Many of these 
commenters requested adjustments to GPCI values for the Puerto Rico 
payment locality. These commenters contend that the data used to 
calculate GPCIs do not accurately reflect the cost of medical practice 
in Puerto Rico. We have addressed some of these issues in response to 
specific comments in prior rulemaking, such as the CY 2014 PFS final 
rule with comment period (78 FR 74380 through 74391), and will further 
take comments into account when we next propose to update GPCIs. 
However, we also note that we anticipate proposing updated GPCIs during 
CY 2017 rulemaking, and in the context of that update, we will consider 
the concerns expressed by commenters and others regarding the GPCIs for 
the Puerto Rico locality.
    RVUs are converted to dollar amounts through the application of a 
CF, which is calculated based on a statutory formula by CMS's 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 MP x GPCI 
MP)] x CF.
3. Separate Fee Schedule Methodology for Anesthesia Services
    Section 1848(b)(2)(B) of the Act specifies that the fee schedule 
amounts for anesthesia services are to be based on a uniform relative 
value guide, with appropriate adjustment of an anesthesia conversion 
factor, in a manner to assure that fee schedule amounts for anesthesia 
services are consistent with those for other services of comparable 
value. Therefore, there is a separate fee schedule methodology for 
anesthesia services. Specifically, we establish a separate conversion 
factor for anesthesia services and we utilize the uniform relative 
value guide, or base units, as well as time units, to calculate the fee 
schedule amounts for anesthesia services. Since anesthesia services are 
not valued using RVUs, a separate methodology for locality adjustments 
is also necessary. This involves an adjustment to the national 
anesthesia CF for each payment locality.
4. Most Recent Changes to the Fee Schedule
    Section 220(d) of the Protecting Access to Medicare Act of 2014 
(PAMA) (Pub. L. 113-93, enacted on April 1, 2014) added a new 
subparagraph (O) to section 1848(c)(2) of the Act to establish an 
annual target for reductions in PFS expenditures resulting from 
adjustments to relative values of misvalued codes. If the estimated net 
reduction in expenditures for a year is equal to or greater than the 
target for that year, the provision specifies that reduced expenditures 
attributable to such adjustments shall be redistributed in a budget-
neutral manner within the PFS. The provision specifies that the amount 
by which such reduced expenditures exceed the target for a given year 
shall be treated as a reduction in expenditures for the subsequent year 
for purposes of determining whether the target for the subsequent year 
has been met. The provision also specifies that an amount equal to the 
difference between the target and the estimated net reduction in 
expenditures, called the target recapture amount, shall not be taken 
into account when applying the budget neutrality requirements specified 
in section 1848(c)(2)(B)(ii)(II) of the Act. The PAMA amendments 
originally made the target provisions applicable for CYs 2017 through 
2020 and set the target for reduced expenditures at 0.5 percent of 
estimated expenditures under the PFS for each of those 4 years.

[[Page 70891]]

    Subsequently, section 202 of the Achieving a Better Life Experience 
Act of 2014 (ABLE) (Division B of Pub. L. 113-295, enacted December 19, 
2014) accelerated the application of the target, amending section 
1848(c)(2)(O) of the Act to specify that target provisions apply for 
CYs 2016, 2017, and 2018; and setting a 1 percent target for reduced 
expenditures for CY 2016 and a 0.5 percent target for CYs 2017 and 
2018. The implementation of the target legislation is discussed in 
section II.E. of this final rule with comment period.
    Section 1848(c)(7) of the Act, as added by section 220(e) of the 
PAMA, specified that for services that are not new or revised codes, if 
the total RVUs for a service for a year would otherwise be decreased by 
an estimated 20 percent or more as compared to the total RVUs for the 
previous year, the applicable adjustments in work, PE, and MP RVUs 
shall be phased in over a 2-year period. Section 220(e) of the PAMA 
required the phase-in of RVU reductions of 20 percent or more to begin 
for 2017. Section 1848(c)(7) of the Act was later amended by section 
202 of the ABLE Act to require instead that the phase-in must begin in 
CY 2016. The implementation of the phase-in legislation is discussed in 
section II.F. of this final rule with comment period.
    Section 218(a) of the PAMA added a new section 1834(p) of the Act. 
Section 1834(p) of the Act requires for certain computed tomography 
(CT) services reductions in payment for the technical component (TC) 
(and the TC of the global fee) of the PFS service and in the hospital 
OPPS payment (5 percent in 2016, and 15 percent in 2017 and subsequent 
years). The CT services that are subject to the payment reduction are 
services identified as of January 1, 2014 by HCPCS codes 70450-70498, 
71250-71275, 72125-72133, 72191-72194, 73200-73206, 73700-73706, 74150-
74178, 74261-74263, and 75571-75574, and succeeding codes, that are 
furnished using equipment that does not meet each of the attributes of 
the National Electrical Manufacturers Association (NEMA) Standard XR-
29-2013, entitled ``Standard Attributes on CT Equipment Related to Dose 
Optimization and Management.'' The implementation of the amendments 
made by section 218(a) of the PAMA is discussed in section II.G. of 
this final rule with comment period.
    The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) 
(Pub. L. 114-10, enacted on April 16, 2015) makes several changes to 
the statute, including but not limited to:
    (1) Repealing the sustainable growth rate (SGR) update methodology 
for physicians' services.
    (2) Revising the PFS update for 2015 and subsequent years.
    (3) Requiring that we establish a Merit-based Incentive Payment 
System (MIPS) under which MIPS eligible professionals (initially 
including physicians, physician assistants, nurse practitioners, 
clinical nurse specialists, and certified registered nurse 
anesthetists) receive annual payment adjustments (increases or 
decreases) based on their performance in a prior period. These and 
other MACRA provisions are discussions in various sections of this 
final rule with comment period. Please refer to the table of contents 
for the location of the various MACRA provision discussions.

II. Provisions of the Final Rule with Comment Period for PFS

A. Determination of Practice Expense (PE) Relative Value Units (RVUs)

1. Overview
    Practice expense (PE) is the portion of the resources used in 
furnishing a 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. As required by section 1848(c)(2)(C)(ii) of the Act, we use 
a resource-based system for determining PE RVUs for each physicians' 
service. We develop PE RVUs by considering the direct and indirect 
practice resources involved in furnishing each service. Direct expense 
categories include clinical labor, medical supplies, and medical 
equipment. Indirect expenses include administrative labor, office 
expense, and all other expenses. The sections that follow provide more 
detailed information about the methodology for translating the 
resources involved in furnishing each service into service-specific PE 
RVUs. We refer readers to the CY 2010 PFS final rule with comment 
period (74 FR 61743 through 61748) for a more detailed explanation of 
the PE methodology.
2. Practice Expense Methodology
a. Direct Practice Expense
    We determine the direct PE for a specific service by adding the 
costs of the direct resources (that is, the clinical staff, medical 
supplies, and medical equipment) typically involved with furnishing 
that 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 generally based on our review of recommendations received 
from the RUC and those provided in response to public comment periods. 
For a detailed explanation of the direct PE methodology, including 
examples, we refer readers to 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).
    Comment: Several commenters requested that CMS include pharmacists 
as active qualified health care providers for purposes of calculating 
physician PE direct costs. The commenters stated that there are a 
number of ongoing Center for Medicare and Medicaid Innovation (CMMI) 
initiatives in which pharmacists are making substantial contributions 
to redesigning healthcare delivery and financing. The commenters 
insisted that pharmacists need to be included in the calculation of 
direct PE expenses as an element of the clinical labor variable 
relating to physician services, to ensure optimal medication therapy 
outcomes for beneficiaries, and the absence of these pharmacists 
negatively impacts the health care system.
    Response: The direct PE input database contains the service-level 
costs in clinical labor based on the typical service furnished to 
Medicare beneficiaries. Commenters did not suggest that the labor costs 
of pharmacists are a typical resource cost in furnishing any particular 
physicians' service. When such costs are typically incurred in 
furnishing such services, we do not have any standing policies that 
would prohibit the inclusion of the costs in the direct PE input 
database used to develop PE RVUs for individual services, to the extent 
that inclusion of such costs would not lead to duplicative payments. 
Therefore, we welcome more detailed information regarding the typical 
clinical labor costs involving pharmacists for particular PFS services. 
We note, however, that in many of the CMMI initiatives, payment is 
provided for care management and care coordination services, including 
services provided by pharmacists. As such, we encourage commenters to 
provide information about the inclusion of additional clinical labor 
costs for specific services described by HCPCS codes for which payment 
is made under the PFS, as opposed to clinical labor costs that may be 
typical only under certain initiatives.

[[Page 70892]]

b. Indirect Practice Expense per Hour Data
    We use survey data on indirect PEs incurred per hour worked in 
developing the indirect portion of the PE RVUs. Prior to CY 2010, we 
primarily used the practice expense per hour (PE/HR) by specialty that 
was obtained from the AMA's Socioeconomic Monitoring Surveys (SMS). The 
AMA administered a new survey in CY 2007 and CY 2008, the Physician 
Practice Expense Information Survey (PPIS). The PPIS is a 
multispecialty, nationally representative, PE survey of both physicians 
and nonphysician practitioners (NPPs) paid under the PFS using a survey 
instrument and methods highly consistent with those used for the SMS 
and the supplemental surveys. The PPIS 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. We used the PPIS data to update the PE/HR 
data for the CY 2010 PFS for almost all of the Medicare-recognized 
specialties that participated in the survey.
    When we began using the PPIS data in CY 2010, we did not change the 
PE RVU methodology itself or the manner in which the PE/HR data are 
used in that methodology. We only updated the PE/HR data based on the 
new survey. Furthermore, as we explained in the CY 2010 PFS final rule 
with comment period (74 FR 61751), because of the magnitude of payment 
reductions for some specialties resulting from the use of the PPIS 
data, we transitioned its use over a 4-year period from the previous PE 
RVUs to the PE RVUs developed using the new PPIS data. As provided in 
the CY 2010 PFS final rule with comment period (74 FR 61751), the 
transition to the PPIS data was complete for CY 2013. Therefore, PE 
RVUs from CY 2013 forward are developed based entirely on the PPIS 
data, except as noted in this section.
    Section 1848(c)(2)(H)(i) of the Act requires us to use the medical 
oncology supplemental survey data submitted in 2003 for oncology drug 
administration services. Therefore, the PE/HR for medical oncology, 
hematology, and hematology/oncology reflects the continued use of these 
supplemental survey data.
    Supplemental survey data on independent labs from the College of 
American Pathologists were implemented for payments beginning in CY 
2005. Supplemental survey data from the National Coalition of Quality 
Diagnostic Imaging Services (NCQDIS), representing independent 
diagnostic testing facilities (IDTFs), were blended with supplementary 
survey data from the American College of Radiology (ACR) and 
implemented for payments beginning in CY 2007. Neither IDTFs, nor 
independent labs, participated in the PPIS. Therefore, we continue to 
use the PE/HR that was developed from their supplemental survey data.
    Consistent with our past practice, the previous indirect PE/HR 
values from the supplemental surveys for these specialties were updated 
to CY 2006 using the MEI to put them on a comparable basis with the 
PPIS data.
    We also do not use the PPIS data for reproductive endocrinology and 
spine surgery since these specialties currently are not separately 
recognized by Medicare, nor do we have a method to blend the PPIS data 
with Medicare-recognized specialty data.
    Previously, we established PE/HR values for various specialties 
without SMS or supplemental survey data by crosswalking them to other 
similar specialties to estimate a proxy PE/HR. For specialties that 
were part of the PPIS for which we previously used a crosswalked PE/HR, 
we instead used the PPIS-based PE/HR. We continue previous crosswalks 
for specialties that did not participate in the PPIS. However, 
beginning in CY 2010 we changed the PE/HR crosswalk for portable X-ray 
suppliers from radiology to IDTF, a more appropriate crosswalk because 
these specialties are more similar to each other for work time.
    For registered dietician services, the resource-based PE RVUs have 
been calculated in accordance with the final policy that crosswalks the 
specialty to the ``All Physicians'' PE/HR data, as adopted in the CY 
2010 PFS final rule with comment period (74 FR 61752) and discussed in 
more detail in the CY 2011 PFS final rule with comment period (75 FR 
73183).
    For CY 2016, we have incorporated the available utilization data 
for interventional cardiology, which became a recognized Medicare 
specialty during 2014. We proposed to use a proxy PE/HR value for 
interventional cardiology, as there are no PPIS data for this 
specialty, by crosswalking the PE/HR from Cardiology, since the 
specialties furnish similar services in the Medicare claims data. The 
change is reflected in the ``PE/HR'' file available on the CMS Web site 
under the supporting data files for the CY 2016 PFS proposed rule at 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html.
    Comment: One commenter expressed support for the new proposal to 
use a proxy PE per hour for interventional cardiology by crosswalking 
to the PE/HR for cardiology.
    Response: We appreciate the commenter's support and are finalizing 
the crosswalk as proposed.
c. Allocation of PE to Services
    To establish PE RVUs for specific services, it is necessary to 
establish the direct and indirect PE associated with each service.
(1) Direct Costs
    The relative relationship between the direct cost portions of the 
PE RVUs for any two services is determined by the relative relationship 
between the sum of the direct cost resources (that is, the clinical 
staff, medical supplies, and medical equipment) typically involved with 
furnishing each of the services. The costs of these resources are 
calculated from the refined direct PE inputs in our PE database. For 
example, if one service has a direct cost sum of $400 from our PE 
database and another service has a direct cost sum of $200, the direct 
portion of the PE RVUs of the first service would be twice as much as 
the direct portion of the PE RVUs for the second service.
(2) Indirect Costs
    Section II.A.2.b. of this final rule with comment period describes 
the current data sources for specialty-specific indirect costs used in 
our PE calculations. We allocated 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 work RVUs. We 
also incorporated the survey data described earlier in the PE/HR 
discussion. The general approach to developing the indirect portion of 
the PE RVUs is as follows:
     For a given service, we used the direct portion of the PE 
RVUs calculated as previously described and the average percentage that 
direct costs represent of total costs (based on survey data) across the 
specialties that furnish the service to determine an initial indirect 
allocator. That is, the initial indirect allocator is calculated so 
that the direct costs equal the average percentage of direct costs of 
those specialties furnishing the service. For example, if the direct 
portion of the PE RVUs for a given service is 2.00 and direct costs, on 
average, represented 25 percent of total costs for the specialties that 
furnished the service, the initial indirect allocator would be 
calculated so that it equals 75 percent of the total PE RVUs. Thus, in 
this example, the

[[Page 70893]]

initial indirect allocator would equal 6.00, resulting in a total PE 
RVUs of 8.00 (2.00 is 25 percent of 8.00 and 6.00 is 75 percent of 
8.00).
     Next, we added the greater of the work RVUs or clinical 
labor portion of the direct portion of the PE RVUs to this initial 
indirect allocator. In our example, if this service had work RVUs of 
4.00 and the clinical labor portion of the direct PE RVUs was 1.50, we 
would add 4.00 (since the 4.00 work RVUs are greater than the 1.50 
clinical labor portion) to the initial indirect allocator of 6.00 to 
get an indirect allocator of 10.00. In the absence of any further use 
of the survey data, the relative relationship between the indirect cost 
portions of the PE RVUs for any two services would be determined by the 
relative relationship between these indirect cost allocators. For 
example, if one service had an indirect cost allocator of 10.00 and 
another service had an indirect cost allocator of 5.00, the indirect 
portion of the PE RVUs of the first service would be twice as great as 
the indirect portion of the PE RVUs for the second service.
     Next, we incorporated the specialty-specific indirect PE/
HR data into the calculation. In our example, if, based on the survey 
data, the average indirect cost of the specialties furnishing the first 
service with an allocator of 10.00 was half of the average indirect 
cost of the specialties furnishing the second service with an indirect 
allocator of 5.00, the indirect portion of the PE RVUs of the first 
service would be equal to that of the second service.
(4) Facility and Nonfacility Costs
    For procedures that can be furnished in a physician's office, as 
well as in a hospital or other facility setting, we establish two PE 
RVUs: facility; and nonfacility. The methodology for calculating PE 
RVUs is the same for both the facility and nonfacility RVUs, but is 
applied independently to yield two separate PE RVUs. Because in 
calculating the PE RVUs for services furnished in a facility, we do not 
include resources that would generally not be provided by physicians 
when furnishing the service in a facility, the facility PE RVUs are 
generally lower than the nonfacility PE RVUs. Medicare makes a separate 
payment to the facility for its costs of furnishing a service.
(5) 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). The PC and 
TC may be furnished independently or by different providers, or they 
may be furnished together as a ``global'' service. When services have 
separately billable PC and TC components, the payment for the global 
service equals the sum of the payment for the TC and PC. To achieve 
this we use a weighted average of the ratio of indirect to direct costs 
across all the specialties that furnish the global service, TCs, and 
PCs; that is, we apply the same weighted average indirect percentage 
factor to allocate indirect expenses to the global service, PCs, and 
TCs for a service. (The direct PE RVUs for the TC and PC sum to the 
global.)
(6) PE RVU Methodology
    For a more detailed description of the PE RVU methodology, we refer 
readers to the CY 2010 PFS final rule with comment period (74 FR 61745 
through 61746).
(a) Setup File
    First, we create a setup file for the PE methodology. The setup 
file contains the direct cost inputs, the utilization for each 
procedure code at the specialty and facility/nonfacility place of 
service level, and the specialty-specific PE/HR data calculated from 
the surveys.
(b) 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. Apply 
a scaling adjustment to the direct inputs.
    Step 2: Calculate the aggregate pool of direct PE costs for the 
current year. Under our current methodology, we first multiply the 
current year's conversion factor by the product of the current year's 
PE RVUs and utilization for each service to arrive at the aggregate 
pool of total PE costs (Step 2a). We then calculate the average direct 
percentage of the current pool of PE RVUs (using a weighted average of 
the survey data for the specialties that furnish each service (Step 
2b).) We then multiply the result of 2a by the result of 2b to arrive 
at the aggregate pool of direct PE costs for the current year. For CY 
2016, we proposed a technical improvement to step 2a of this 
calculation. In place of the step 2a calculation described above, we 
proposed to set the aggregate pool of PE costs equal to the product of 
the ratio of the current aggregate PE RVUs to current aggregate work 
RVUs and the proposed aggregate work RVUs. Historically, in allowing 
the current PE RVUs to determine the size of the base PE pool in the PE 
methodology, we have assumed that the relationship of PE RVUs to work 
RVUs is constant from year to year. Since this is not ordinarily the 
case, by not considering the proposed aggregate work RVUs in 
determining the size of the base PE pool, we have introduced some minor 
instability from year to year in the relative shares of work, PE, and 
MP RVUs. Although this modification would result in greater stability 
in the relationship among the work and PE RVU components in the 
aggregate, we do not anticipate it will affect the distribution of PE 
RVUs across specialties. The PE RVUs in addendum B of this final rule 
with comment period reflect this refinement to the PE methodology.
    We did not receive any comments on this proposed refinement of the 
methodology. Therefore, we are finalizing this refinement as proposed.
    Step 3: Calculate the aggregate pool of direct PE costs for use in 
ratesetting. This is the product of the aggregate direct costs for all 
services 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 scaling adjustment to ensure that the aggregate pool of direct PE 
costs calculated in Step 3 does not vary from the aggregate pool of 
direct PE costs for the current year. Apply the scaling factor to the 
direct costs for each service (as calculated in Step 1).
    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 CF. Note that 
the actual value of the CF used in this calculation does not influence 
the final direct cost PE RVUs, as long as the same CF is used in Step 2 
and Step 5. Different CFs will result in different direct PE scaling 
factors, but this has no effect on the final direct cost PE RVUs since 
changes in the CFs and changes in the associated direct scaling factors 
offset one another.
(c) Create the Indirect Cost PE RVUs
    Create indirect allocators.
    Step 6: Based on the survey data, calculate direct and indirect PE 
percentages for each physician specialty.
    Step 7: Calculate direct and indirect PE percentages at the service 
level by taking a weighted average of the results of Step 6 for the 
specialties that furnish the service. Note that for services with TCs 
and PCs, the direct and indirect percentages for a given service do not 
vary by the PC, TC, and global service.
    Historically, we have used the specialties that furnish the service 
in the most recent full year of Medicare claims data (crosswalked to 
the current year set of codes) to determine which specialties furnish 
individual procedures. For example, for CY 2015 ratesetting, we used 
the mix of specialties that

[[Page 70894]]

furnished the services in the CY 2013 claims data to determine the 
specialty mix assigned to each code. Although we believe that there are 
clear advantages to using the most recent available data in making 
these determinations, we have also found that using a single year of 
data contributes to greater year-to-year instability in PE RVUs for 
individual codes and often creates extreme, annual fluctuations for 
low-volume services, as well as delayed fluctuations for some services 
described by new codes once claims data for those codes becomes 
available. We believe that using an average of the three most recent 
years of available data may increase stability of PE RVUs and mitigate 
code-level fluctuations for both the full range of PFS codes, and for 
new and low-volume codes in particular. Therefore, we proposed to 
refine this step of the PE methodology to use an average of the 3 most 
recent years of available Medicare claims data to determine the 
specialty mix assigned to each code. The PE RVUs in Addendum B of the 
CMS Web site reflect this refinement to the PE methodology.
    Comment: We received several comments supporting this proposed 
refinement of the methodology. Several commenters also urged us to 
override the utilization data for low-volume codes using a recommended 
list of expected specialty or dominant specialty, consistent with our 
previous approach.
    Response: We appreciate the support for the use of the 3-year 
average of claims utilization for purposes of determining the specialty 
mix for individual service. As we stated in our proposal, we believe 
that the 3-year average will mitigate the need to use dominant or 
expected specialty instead of the claims data. However, we also 
understand that the hypothesis will be tested as soon as a new year of 
claims data is incorporated into the PFS ratesetting methodology. 
Because we anticipate incorporating CY 2015 claims data for use in CY 
2017 ratesetting, we believe that the proposed PE RVUs associated with 
the CY 2017 PFS proposed rule will provide the best opportunity to 
determine whether service-level overrides of claims data are necessary. 
Therefore, we are finalizing the policy as proposed for CY 2016 but 
will seek comment on the proposed CY 2017 PFS rates and whether or not 
the incorporation a new year of utilization data mitigates the need for 
service-level overrides. At that time, we would reconsider whether or 
not to use a claims-based approach (dominant specialty) or stakeholder-
recommended approach (expected specialty) in the development of PE RVUs 
for low-volume codes.
    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 RVUs; the 
clinical labor PE RVUs; and the work RVUs.
    For most services the indirect allocator is: indirect PE percentage 
* (direct PE RVUs/direct percentage) + work RVUs.
    There are two situations where this formula is modified:
     If the service is a global service (that is, a service 
with global, professional, and technical components), then the indirect 
PE allocator is: indirect percentage (direct PE RVUs/direct percentage) 
+ clinical labor PE RVUs + work RVUs.
     If the clinical labor PE RVUs exceed the work RVUs (and 
the service is not a global service), then the indirect allocator is: 
indirect PE percentage (direct PE RVUs/direct percentage) + clinical 
labor PE RVUs.
    (Note: For global services, the indirect PE allocator is based on 
both the work RVUs and the clinical labor PE RVUs. We do this to 
recognize that, for the PC service, indirect PEs will be allocated 
using the work RVUs, and for the TC service, indirect PEs will be 
allocated using the direct PE RVUs and the clinical labor PE RVUs. This 
also allows the global component RVUs to equal the sum of the PC and TC 
RVUs.) For presentation purposes in the examples in Table 1, the 
formulas were divided into two parts for each service.
     The first part does not vary by service and is the 
indirect percentage (direct PE RVUs/direct percentage).
     The second part is either the work RVU, clinical labor PE 
RVU, or both depending on whether the service is a global service and 
whether the clinical PE RVUs exceed the work RVUs (as described earlier 
in this step).
    Apply a scaling adjustment to the indirect allocators.
    Step 9: Calculate the current aggregate pool of indirect PE RVUs by 
multiplying the result of step 2a (as calculated with the proposed 
change) by the average indirect PE percentage from the survey data.
    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.
    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.
    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 work time for the service, and the specialty's 
utilization for the service across all services furnished by the 
specialty.
    Step 14: Using the results of Step 12 and Step 13, calculate the 
specialty-specific indirect PE scaling factors.
    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 service, 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 service.)
    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 RVUs.
(d) Calculate the Final PE RVUs
    Step 18: Add the direct PE RVUs from Step 6 to the indirect PE RVUs 
from Step 17 and apply the final PE budget neutrality (BN) adjustment. 
The final PE BN adjustment is calculated by comparing the results of 
Step 18 to the proposed aggregate work RVUs scaled by the ratio of 
current aggregate PE and work RVUs, consistent with the proposed 
changes in Steps 2 and 9. This final BN adjustment is required to 
redistribute RVUs from step 18 to all PE RVUs in the PFS, and because 
certain specialties are excluded from the PE RVU calculation for 
ratesetting purposes, but we note that all specialties are included for 
purposes of calculating the final BN adjustment. (See ``Specialties 
excluded from

[[Page 70895]]

ratesetting calculation'' later in this section.)
(e) Setup File Information
     Specialties excluded from ratesetting calculation: For the 
purposes of calculating the PE RVUs, we exclude certain specialties, 
such as certain nonphysician practitioners paid at a percentage of the 
PFS and low-volume specialties, from the calculation. These specialties 
are included for the purposes of calculating the BN adjustment. They 
are displayed in Table 1.

       Table 1--Specialties Excluded From Ratesetting Calculation
------------------------------------------------------------------------
    Specialty code                    Specialty description
------------------------------------------------------------------------
49....................  Ambulatory surgical center.
50....................  Nurse practitioner.
51....................  Medical supply company with certified orthotist.
52....................  Medical supply company with certified
                         prosthetist.
53....................  Medical supply company with certified
                         prosthetist[dash]orthotist.
54....................  Medical supply company not included in 51, 52,
                         or 53.
55....................  Individual certified orthotist.
56....................  Individual certified prosthetist.
57....................  Individual certified prosthetist[dash]orthotist.
58....................  Medical supply company with registered
                         pharmacist.
59....................  Ambulance service supplier, e.g., private
                         ambulance companies, funeral homes, etc.
60....................  Public health or welfare agencies.
61....................  Voluntary health or charitable agencies.
73....................  Mass immunization roster biller.
74....................  Radiation therapy centers.
87....................  All other suppliers (e.g., drug and department
                         stores).
88....................  Unknown supplier/provider specialty.
89....................  Certified clinical nurse specialist.
96....................  Optician.
97....................  Physician assistant.
A0....................  Hospital.
A1....................  SNF.
A2....................  Intermediate care nursing facility.
A3....................  Nursing facility, other.
A4....................  HHA.
A5....................  Pharmacy.
A6....................  Medical supply company with respiratory
                         therapist.
A7....................  Department store.
B2....................  Pedorthic personnel.
B3....................  Medical supply company with pedorthic personnel.
------------------------------------------------------------------------

     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 RVUs. For 
example, the professional service, CPT code 93010 (Electrocardiogram, 
routine ECG with at least 12 leads; interpretation and report only), is 
associated with the global service, CPT code 93000 (Electrocardiogram, 
routine ECG with at least 12 leads; with interpretation and report).
     Payment modifiers: Payment modifiers are accounted for in 
the creation of the file consistent with current payment policy as 
implemented in claims processing. 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. Similarly, for those services to which volume 
adjustments are made to account for the payment modifiers, time 
adjustments are applied as well. For time adjustments to surgical 
services, the intraoperative portion in the work time file is used; 
where it is not present, the intraoperative percentage from the payment 
files used by contractors to process Medicare claims is used instead. 
Where neither is available, we use the payment adjustment ratio to 
adjust the time accordingly. Table 2 details the manner in which the 
modifiers are applied.

                         Table 2--Application of Payment Modifiers to Utilization Files
----------------------------------------------------------------------------------------------------------------
           Modifier                    Description              Volume adjustment            Time adjustment
----------------------------------------------------------------------------------------------------------------
80,81,82......................  Assistant at Surgery....  16%..........................  Intraoperative portion.
AS............................  Assistant at Surgery--    14% (85% * 16%)..............  Intraoperative portion.
                                 Physician Assistant.
50 or LT and RT...............  Bilateral Surgery.......  150%.........................  150% of work time.
51............................  Multiple Procedure......  50%..........................  Intraoperative portion.
52............................  Reduced Services........  50%..........................  50%.

[[Page 70896]]

 
53............................  Discontinued Procedure..  50%..........................  50%.
54............................  Intraoperative Care only  Preoperative + Intraoperative  Preoperative +
                                                           Percentages on the payment     Intraoperative
                                                           files used by Medicare         portion.
                                                           contractors to process
                                                           Medicare claims.
55............................  Postoperative Care only.  Postoperative Percentage on    Postoperative portion.
                                                           the payment files used by
                                                           Medicare contractors to
                                                           process Medicare claims.
62............................  Co-surgeons.............  62.5%........................  50%.
66............................  Team Surgeons...........  33%..........................  33%.
----------------------------------------------------------------------------------------------------------------

    We also make adjustments to volume and time that correspond to 
other payment rules, including special multiple procedure endoscopy 
rules and multiple procedure payment reductions (MPPRs). We note that 
section 1848(c)(2)(B)(v) of the Act exempts certain reduced payments 
for multiple imaging procedures and multiple therapy services from the 
BN calculation under section 1848(c)(2)(B)(ii)(II) of the Act. These 
MPPRs are not included in the development of the RVUs.
    For anesthesia services, we do not apply adjustments to volume 
since we use the average allowed charge when simulating RVUs; 
therefore, the RVUs as calculated already reflect the payments as 
adjusted by modifiers, and no volume adjustments are necessary. 
However, a time adjustment of 33 percent is made only for medical 
direction of two to four cases since that is the only situation where a 
single practitioner is involved with multiple beneficiaries 
concurrently, so that counting each service without regard to the 
overlap with other services would overstate the amount of time spent by 
the practitioner furnishing these services.
     Work RVUs: The setup file contains the work RVUs from this 
final rule with comment period.
    The following is a summary of the comments we received regarding PE 
RVU methodology.
    Comment: We received several comments in response to our proposal 
to use the 3 most recent years of Medicare claims data to determine the 
specialty mix assigned to each code. All commenters broadly supported 
the proposal to use a 3-year average to increase stability of PE RVUs 
and mitigate code-level fluctuations. Some commenters, including the 
RUC, also stated that for codes which are very low volume in the 
Medicare population, the dominant specialty(ies) should be assigned. 
These commenters stressed that CMS should continue to utilize the 
expertise of the RUC when making these assignments.
    Response: For services that are newly created or very low volume, 
we will continue to explore different methods to ensure the utilization 
of the most accurate specialty mix.
(7) 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); generally 150,000 minutes.
usage = variable, see discussion below.
price = price of the particular piece of equipment.
life of equipment = useful life of the particular piece of 
equipment.
maintenance = factor for maintenance; 0.05.
interest rate = variable, see discussion below.

    Usage: We currently use an equipment utilization rate assumption of 
50 percent for most equipment, with the exception of expensive 
diagnostic imaging equipment, for which we use a 90 percent assumption 
as required by section 1848(b)(4)(C) of the Act. We also direct the 
reader to section II.H.6.b of this final rule with comment period for a 
discussion of our change in the utilization rate assumption for the 
linear accelerator used in furnishing radiation treatment services.
    Maintenance: This factor for maintenance was proposed and finalized 
during rulemaking for CY 1998 PFS (62 FR 33164). Several stakeholders 
have suggested that this maintenance factor assumption should be 
variable, similar to other assumptions in the equipment cost per minute 
calculation. In CY 2015 rulemaking, we solicited comments regarding the 
availability of reliable data on maintenance costs that vary for 
particular equipment items. We received several comments about variable 
maintenance costs, and in reviewing the information offered in those 
comments, it is clear that the relationship between maintenance costs 
and the price of equipment is not necessarily uniform across equipment. 
After reviewing the comments received, we have been unable to identify 
a systematic way of varying the maintenance cost assumption relative to 
the price or useful life of equipment. Therefore, to accommodate a 
variable, as opposed to a standard, maintenance rate within the 
equipment cost per minute calculation, we believe we would have to 
gather and maintain valid data on the maintenance costs for each 
equipment item in the direct PE input database, much like we do for 
price and useful life.
    Given our longstanding difficulties in acquiring accurate pricing 
information for equipment items, we solicited comments on whether 
adding another item-specific financial variable for equipment costs 
will be likely to increase the accuracy of PE RVUs across the PFS. We 
noted that most of the information for maintenance costs we have 
received is for capital equipment, and for the most part, this 
information has been limited to single invoices. Like the invoices for 
the equipment items themselves, we do not believe that very small 
numbers of voluntarily submitted invoices are likely to reflect typical 
costs for all of the same reasons we have discussed in previous 
rulemaking. We noted that some commenters submitted high-level summary 
data from informal surveys but we currently have no means to validate 
that data. Therefore, we continue to seek a source of publicly 
available data on actual maintenance costs for medical equipment to 
improve the accuracy of the equipment costs used in developing PE RVUs.
    Comment: Many commenters stated that the current 5 percent 
equipment maintenance factor does not account for expensive maintenance 
contracts on pieces of highly technical equipment. Most commenters were 
supportive of the idea of adding an item-specific maintenance variable 
for equipment costs, which they stated would likely increase the 
accuracy of the PE RVUs across the PFS. These commenters stated that 
specialty societies and other stakeholders should be allowed to provide 
documentation to CMS, as they

[[Page 70897]]

currently do for pricing new supplies and equipment, to apply for an 
increase in maintenance costs. Other commenters requested that if a 
fixed maintenance factor remains in place, it should be increased from 
5 percent to 10 percent. One commenter expressed concern that CMS would 
entertain making a change in this aspect of the equipment cost per 
minute formula based on a few invoices when a change would impact every 
service in the fee schedule. The commenter expressed concerns with the 
possibility that CMS might adopt a variable maintenance factor based on 
the submission of individual invoices. Another commenter stated that 
without a systematic data collection methodology for determining 
maintenance factors, they had concerns that any invoices CMS received 
might not accurately capture the true costs of equipment maintenance.
    Although most commenters were supportive of adopting a variable 
maintenance factor for equipment items, commenters also stated that 
they were unaware of any publicly available data source containing this 
information. One commenter agreed that there is no comprehensive data 
source for the maintenance information and therefore it would be 
difficult to implement a variable maintenance formula. Multiple other 
commenters concurred that they were unaware of any such public dataset. 
Several commenters encouraged CMS to work with stakeholders to define 
service contracts/maintenance contracts, collect data on their 
associated costs and update the equipment maintenance adjustment factor 
as necessary.
    Response: We appreciate the submission of extensive comments 
regarding the subject of equipment maintenance factor. We agree with 
commenters that we do not believe the annual maintenance factor for all 
equipment is exactly 5 percent, and we concur that the current rate 
likely understates the true cost of maintaining some equipment. We also 
believe it likely overstates the maintenance costs for other equipment. 
However, in the absence of publicly available datasets regarding 
equipment maintenance costs or another systematic data collection 
methodology for determining maintenance factor, we do not believe that 
we have sufficient information at present to adopt a variable 
maintenance factor for equipment cost per minute pricing. While we 
believe that these costs ideally should be incorporated into the PE 
methodology, we also have serious concerns about the problems that 
result from incorporating anecdotal data based solely on voluntarily 
submitted pricing information. In establishing prices for equipment and 
supplies, in many cases we have found that the submitted invoices often 
overstate the costs for individual items relative to publically 
available prices. We believe that the incentives related to voluntarily 
submitted limited invoices for maintenance costs would likely produce 
information subject to similar limitations. However, in contrast to 
prices, where we have identified no feasible alternative, our 
alternative for determining maintenance rates is a long-established 
default maintenance rate. We also note that the amount of costs for 
maintenance under the current methodology is directly proportional to 
the equipment prices, largely determined by the voluntarily submitted 
invoices for particular equipment items. Therefore, we believe that 
absent an auditable, robust data source, using anecdotal data for 
maintenance costs is likely to compound the current problems of pricing 
equipment costs accurately, not increase accuracy.
    We will continue to investigate potential avenues for determining 
equipment maintenance costs across a broad range of equipment items.
    Interest Rate: In the CY 2013 final rule with comment period (77 FR 
68902), we updated the interest rates used in developing an equipment 
cost per minute calculation. The interest rate was based on the Small 
Business Administration (SBA) maximum interest rates for different 
categories of loan size (equipment cost) and maturity (useful life). 
The interest rates are listed in Table 3. (See 77 FR 68902 for a 
thorough discussion of this issue.) We did not propose any changes to 
these interest rates for CY 2016.

                  Table 3A--SBA Maximum Interest Rates
------------------------------------------------------------------------
                                                                Interest
                Price                        Useful life        rate (%)
------------------------------------------------------------------------
<$25K................................  <7 Years                     7.50
$25K to $50K.........................  <7 Years                     6.50
>$50K................................  <7 Years                     5.50
<$25K................................  7+ Years                     8.00
$25K to $50K.........................  7+ Years                     7.00
>$50K................................  7+ Years                     6.00
------------------------------------------------------------------------


[[Page 70898]]


                                                              Table 4--Calculation of PE RVUs Under Methodology for Selected Codes
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           33533
                                                                                               99213       CABG,    71020 Chest    71020-TC     71020-26    93000 ECG,   93005 ECG,   93010 ECG,
                                        Step               Source             Formula          Office    arterial,     x-ray       Chest x-     Chest x-    complete,     tracing       report
                                                                                             visit, est    single   nonfacility      ray,         ray,     nonfacility  nonfacility  nonfacility
                                                                                            nonfacility   facility               nonfacility  nonfacility
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(1) Labor cost (Lab)...........  Step 1............  AMA...............  .................       13.32       77.52        5.74         5.74            0          5.1          5.1            0
(2) Supply cost (Sup)..........  Step 1............  AMA...............  .................        2.98        7.34        0.53         0.53            0         1.19         1.19            0
(3) Equipment cost (Eqp).......  Step 1............  AMA...............  .................        0.17        0.58        7.08         7.08            0         0.09         0.09            0
(4) Direct cost (Dir)..........  Step 1............  ..................       =(1)+(2)+(3)       16.48       85.45       13.36        13.36            0         6.38         6.38            0
(5) Direct adjustment (Dir.      Steps 2-4.........  See Footnote*.....  .................      0.5957      0.5957      0.5957       0.5957       0.5957       0.5957       0.5957       0.5957
 Adj.).
(6) Adjusted Labor.............  Steps 2-4.........  ..................           =(1)*(5)        7.93       46.18        3.42         3.42            0         3.04         3.04            0
(7) Adjusted Supplies..........  Steps 2-4.........  =Eqp * Dir Adj....           =(2)*(5)        1.78        4.37        0.32         0.32            0         0.71         0.71            0
(8) Adjusted Equipment.........  Steps 2-4.........  =Sup * Dir Adj....           =(3)*(5)         0.1        0.35        4.22         4.22            0         0.05         0.05            0
(9) Adjusted Direct............  Steps 2-4.........  ..................       =(6)+(7)+(8)        9.82        50.9        7.96         7.96            0          3.8          3.8            0
(10) Conversion Factor (CF)....  Step 5............  PFS...............  .................     35.9335     35.9335     35.9335      35.9335      35.9335      35.9335      35.9335      35.9335
(11) Adj. labor cost converted.  Step 5............  =(Lab * Dir Adj)/           =(6)/(10)        0.22        1.29         0.1          0.1            0         0.08         0.08            0
                                                      CF.
(12) Adj. supply cost converted  Step 5............  =(Sup * Dir Adj)/           =(7)/(10)        0.05        0.12        0.01         0.01            0         0.02         0.02            0
                                                      CF.
(13) Adj. equipment cost         Step 5............  =(Eqp * Dir Adj)/           =(8)/(10)           0        0.01        0.12         0.12            0            0            0            0
 converted.                                           CF.
(14) Adj. direct cost converted  Step 5............  ..................    =(11)+(12)+(13)        0.27        1.42        0.22         0.22            0         0.11         0.11            0
(15) Work RVU..................  Setup File........  PFS...............  .................        0.97       33.75        0.22            0         0.22         0.17            0         0.17
(16) Dir_pct...................  Steps 6,7.........  Surveys...........  .................        0.25        0.17        0.29         0.29         0.29         0.29         0.29         0.29
(17) Ind_pct...................  Steps 6,7.........  Surveys...........  .................        0.75        0.83        0.71         0.71         0.71         0.71         0.71         0.71
(18) Ind. Alloc. Formula (1st    Step 8............  See Step 8........  .................         14/         14/         14/          14/          14/          14/          14/          14/
 part).                                                                                      (16)*(17)   (16)*(17)   (16)*(17)    (16)*(17)    (16)*(17)    (16)*(17)    (16)*(17)    (16)*(17)
(19) Ind. Alloc.(1st part).....  Step 8............  ..................             See 18        0.83         6.7        0.54         0.54            0         0.26         0.26            0
(20) Ind. Alloc. Formula (2nd    Step 8............  See Step 8........  .................        (15)        (15)     (15+11)         (11)         (15)      (15+11)         (11)         (15)
 pt).
(21) Ind. Alloc.(2nd part).....  Step 8............  ..................             See 20        0.97       33.75        0.32          0.1         0.22         0.25         0.08         0.17
(22) Indirect Allocator (1st +   Step 8............  ..................         =(19)+(21)         1.8       40.45        0.85         0.63         0.22         0.52         0.35         0.17
 2nd).
(23) Indirect Adjustment (Ind    Steps 9-11........  See Footnote**....  .................      0.3816      0.3816      0.3816       0.3816       0.3816       0.3816       0.3816       0.3816
 Adj).
(24) Adjusted Indirect           Steps 9-11........  =Ind Alloc * Ind    .................        0.69       15.44        0.33         0.24         0.08          0.2         0.13         0.06
 Allocator.                                           Adj.
(25) Ind. Practice Cost Index    Steps 12-16.......  ..................  .................        1.07        0.76        0.98         0.98         0.98          0.9          0.9          0.9
 (IPCI).
(26) Adjusted Indirect.........  Step 17...........  = Adj.Ind Alloc *          =(24)*(25)        0.73       11.71        0.32         0.24         0.08         0.18         0.12         0.06
                                                      PCI.
(27) Final PE RVU..............  Step 18...........  =(Adj Dir + Adj          =((14)+(26))        1.01       13.16        0.54         0.46         0.08         0.28         0.23         0.06
                                                      Ind) * Other Adj.       * Other Adj)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CPT codes and descriptions are copyright 2015 American Medical Association. All Rights Reserved. Applicable FARS/DFARS apply.
Notes: PE RVUs above (row 27), may not match Addendum B due to rounding.
The use of any particular conversion factor (CF) in the table to illustrate the PE Calculation has no effect on the resulting RVUs.
*The direct adj = [current pe rvus * CF * avg dir pct]/[sum direct inputs] = [step2]/[step3]; **The indirect adj =[current pe rvus * avg ind pct]/[sum of ind allocators]=[step9]/[step10].


[[Page 70899]]

c. Changes to Direct PE Inputs for Specific Services
    This section focusses on specific PE inputs that we addressed in 
the proposed rule. The direct PE inputs are included in the CY 2016 
direct PE input database, which is available on the CMS Web site under 
downloads for the CY 2016 PFS final rule with comment period at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.
(1) PE Inputs for Digital Imaging Services
    Prior to CY 2015 rulemaking, the RUC provided a recommendation 
regarding the PE inputs for digital imaging services. Specifically, the 
RUC recommended that we remove supply and equipment items associated 
with film technology from a list of codes since these items are no 
longer typical resource inputs. The RUC also recommended that the 
Picture Archiving and Communication System (PACS) equipment be included 
for these imaging services since these items are now typically used in 
furnishing imaging services. However, since we did not receive any 
invoices for the PACS system, we were unable to determine the 
appropriate pricing to use for the inputs. For CY 2015, we proposed, 
and finalized our proposal, to remove the film supply and equipment 
items, and to create a new equipment item as a proxy for the PACS 
workstation as a direct expense. We used the current price associated 
with ED021 (computer, desktop, w-monitor) to price the new item, ED050 
(PACS Workstation Proxy), pending receipt of invoices to facilitate 
pricing specific to the PACS workstation.
    Subsequent to establishing payment rates for CY 2015, we received 
information from several stakeholders regarding pricing for items 
related to the digital acquisition and storage of images. Some of these 
stakeholders submitted information that included prices for items 
clearly categorized as indirect costs within the established PE 
methodology and equivalent to the storage mechanisms for film. 
Additionally, some of the invoices we received included other products 
(like training and maintenance costs) in addition to the equipment 
items, and there was no distinction on these invoices between the 
prices for the equipment items themselves and the related services. 
However, we did receive invoices from one stakeholder that facilitated 
a proposed price update for the PACS workstation. Therefore, we 
proposed to update the price for the PACS workstation to $5,557 from 
the current price of $2,501 since the latter price was based on the 
proxy item and the former based on submitted invoices. The PE RVUs in 
Addendum B on the CMS Web site reflect the updated price.
    In addition to the workstation used by the clinical staff acquiring 
the images and furnishing the TC of the services, a stakeholder also 
submitted more detailed information regarding a workstation used by the 
practitioner interpreting the image in furnishing the PC of many of 
these services.
    As we stated in the CY 2015 final rule with comment period (79 FR 
67563), we generally believe that workstations used by these 
practitioners are more accurately considered indirect costs associated 
with the PC of the service. However, we understand that the 
professional workstations for interpretation of digital images are 
similar in principle to some of the previous film inputs incorporated 
into the global and technical components of the codes. Given that many 
of these services are reported globally in the nonfacility setting, we 
believe it may be appropriate to include these costs as direct inputs 
for the associated HCPCS codes. Based on our established methodology, 
these costs would be incorporated into the PE RVUs of the global and 
technical component of the HCPCS code.
    We solicited comments on whether including the professional 
workstation as a direct PE input for these codes would be appropriate, 
given that the resulting PE RVUs would be assigned to the global and 
technical components of the codes.
    Comment: Many commenters supported the equipment price increase to 
$5,557 for the PACS workstation. Commenters stated that this is a more 
accurate amount than the current price of $2,501. However, many 
commenters, including the RUC, stated that this price did not capture 
the appropriate pricing for the PC of the PACS workstation. One 
commenter expressed concerns with the method that CMS employed to 
establish the proposed price for the PACS workstation, disregarded the 
invoices and accompanying explanations submitted by several 
stakeholders and instead relying on the information submitted by a 
single group.
    Response: We acknowledge and appreciate that several stakeholders 
provided information intended to facilitate our pricing of the 
equipment related to PACS. However, much of that submitted information 
included costs that are considered indirect PE under the established 
methodology. We considered all of the submitted information and used 
the submitted prices that were consistent with the principles 
established under the PE methodology.
    Comment: Many commenters, including the RUC, stated that the 
proposed price did not capture the appropriate pricing for the PC of 
the PACS workstation. Several commenters indicated that the 
professional workstation was a direct PE item due to the fact that it 
is used for individual studies (one at a time) in the non-facility 
setting, and its use involves a bi-directional exchange between a 
technologist and a radiologist while the TC is being provided. These 
commenters also suggested that the professional PACS workstation was a 
direct proxy for the film alternators, film processors, and view-boxes 
previously considered direct PE inputs for many of these services prior 
to the film to digital conversion. Several commenters suggested that 
the true cost of the PACS workstation was significantly higher than the 
proposed $5,557 due to these professional expenses.
    Response: We appreciate the extensive feedback regarding the 
potential addition of a PC to the PACS workstation. We agree that the 
costs of the professional workstation may be analogous to costs 
previously incorporated as direct PE inputs for these services. 
Therefore, we are seeking comments and recommendations from 
stakeholders, including the RUC, regarding which codes would require 
the professional PACS workstation and for how many minutes the 
professional equipment workstation would be used relative to the work 
time or clinical labor tasks associated with individual codes. We would 
address any such recommendations in future rulemaking.
    Comment: One commenter stated that the CMS' attempt to analogize 
elements of a PACS workstation to the historic inputs associated with 
film technology was inherently flawed. This commenter stated that CMS 
should not characterize critical elements of the PACS workstation as 
indirect costs because film technology is fundamentally distinct from 
digital technology. The commenter indicated that the PACS workstation 
requires specific software to function, and the costs associated with 
training, maintenance, and warranties for the PACS workstation have not 
been factored into the cost of the equipment. The commenter suggested 
that not including these as direct costs reflects a mistaken assumption 
that a PACS workstation has functionality for non-imaging services, 
such as patient

[[Page 70900]]

scheduling, billing, or electronic medical records capability.
    Response: We believe that maintaining consistent treatment of PE 
costs is of central importance in the resource-based relative value 
system. Since the PE RVUs for individual services are relative to all 
other PFS services, we believe that we must categorize typical costs 
for individual services into the direct and indirect categories using 
the same definitions that apply to all PFS services. We believe it 
would be inconsistent with cost-based relative value principles to 
change the definition of those categories for particular procedures or 
tests, even when technology changes. Centralized record keeping 
systems, containing clinical or billing information are considered 
indirect expenses across the PFS. Due to technological changes, some of 
these systems are well-integrated into equipment items with clinical 
functionality, while others remain completely distinct. In pricing and 
categorizing these costs, we have aimed to separate these costs where 
possible and believe we have maintained relativity among PFS services 
to the greatest extent possible. We remind commenters that indirect PE 
RVUs are included for every nationally priced PFS service and that 
these RVUs contribute to payment for each and every service. We also 
note that over time, indirect costs change as direct costs change. For 
example, changes in technology might result in particular items using 
more or less office space, or using more or less electricity. We do not 
believe it would be appropriate to redefine indirect costs as direct 
costs whenever we have reason to believe that indirect costs have 
changed due to changes in technology. Instead, we acknowledge that 
indirect costs change over time for all those who are paid through the 
Medicare PFS, making it even more important to follow the established 
principles of relativity in establishing direct PE inputs.
    After consideration of comments received, we are finalizing our 
proposal to update the price for the PACS workstation to $5,557 from 
the current price of $2,501.
    As we noted in the proposed rule, one commenter expressed concern 
about the changes in direct PE inputs for CPT code 76377, (3D 
radiographic procedure with computerized image post-processing), that 
were proposed and finalized in CY 2015 rulemaking as part of the film 
to digital change. Based on a recommendation from the RUC, we removed 
the input called ``computer workstation, 3D reconstruction CT-MR'' from 
the direct PE input database and assigned the associated minutes to the 
proxy for the PACS workstation. Therefore, we sought comment from 
stakeholders, including the RUC, about whether or not the PACS 
workstation used in imaging codes is the same workstation that is used 
in the post-processing described by CPT code 76377, or if a more 
specific workstation should be incorporated in the direct PE input 
database.
    Comment: Multiple commenters indicated that CPT code 76377 requires 
image post-processing on an independent workstation. Commenters stated 
that the ``computer workstation, 3D reconstruction CT-MR'' equipment 
(ED014), which was removed by the RUC from the equipment list for this 
procedure, is separate from the PACS workstation and performs a 
different function. The commenters requested that ED014 be restored to 
the equipment inputs for CPT code 76377 and assigned 38 minutes of 
equipment time. The commenters also suggested that the PACS workstation 
should remain as a separate direct PE expense as well, since there are 
additional PACS related activities specific to the 3-D images after 
they have been created on the computer workstation.
    Response: We appreciate the additional information regarding the 
use of the 3D reconstruction computer workstation for CPT code 76377. 
After consideration of comments received, we agree that the ``computer 
workstation, 3D reconstruction CT-MR'' equipment (ED014) should be 
restored to the equipment list and assigned to CPT code 76377 with an 
equipment time of 38 minutes. However, we do not believe that the 
typical service for CPT code 76377 would also use the PACS workstation. 
Therefore, we substituted ED014 in place of the PACS workstation.
(2) Standardization of Clinical Labor Tasks
    As we noted in PFS rulemaking for CY 2015, we continue to work on 
revisions to the direct PE input database to provide the number of 
clinical labor minutes assigned for each task for every code in the 
database instead of only including the number of clinical labor minutes 
for the pre-service, service, and post-service periods for each code. 
In addition to increasing the transparency of the information used to 
set PE RVUs, this improvement would allow us to compare clinical labor 
times for activities associated with services across the PFS, which we 
believe is important to maintaining the relativity of the direct PE 
inputs. This information will facilitate the identification of the 
usual numbers of minutes for clinical labor tasks and the 
identification of exceptions to the usual values. It will also allow 
for greater transparency and consistency in the assignment of equipment 
minutes based on clinical labor times. Finally, we believe that the 
information can be useful in maintaining standard times for particular 
clinical labor tasks that can be applied consistently to many codes as 
they are valued over several years, similar in principle to the use of 
physician pre-service time packages. We believe such standards will 
provide greater consistency among codes that share the same clinical 
labor tasks and could improve relativity of values among codes. For 
example, as medical practice and technologies change over time, changes 
in the standards could be updated at once for all codes with the 
applicable clinical labor tasks, instead of waiting for individual 
codes to be reviewed.
    Although this work is not yet complete, we anticipate completing it 
in the near future. In the following paragraphs, we address a series of 
issues related to clinical labor tasks, particularly relevant to 
services currently being reviewed under the misvalued code initiative.
(a) Clinical Labor Tasks Associated With Digital Imaging
    In PFS rulemaking for CY 2015, we noted that the RUC recommendation 
regarding inputs for digital imaging services indicated that, as each 
code is reviewed under the misvalued code initiative, the clinical 
labor tasks associated with digital technology (instead of film) would 
need to be addressed. When we reviewed that recommendation, we did not 
have the capability of assigning standard clinical labor times for the 
hundreds of individual codes since the direct PE input database did not 
previously allow for comprehensive adjustments for clinical labor times 
based on particular clinical labor tasks. Therefore, consistent with 
the recommendation, we proposed to remove film-based supply and 
equipment items but maintain clinical labor minutes that were assigned 
based on film technology.
    As noted in the paragraphs above, we continue to improve the direct 
PE input database by specifying the minutes for each code associated 
with each clinical labor task. Once completed, this work would allow 
adjustments to be made to minutes assigned to particular clinical labor 
tasks related to digital technology, consistent with the changes that 
were made to individual supply and equipment items. In the meantime, we

[[Page 70901]]

believe it would be appropriate to establish standard times for 
clinical labor tasks associated with all digital imaging for purposes 
of reviewing individual services at present, and for possible broad-
based standardization once the changes to the database facilitate our 
ability to adjust time for existing services. Therefore, we solicited 
comments on the appropriate standard minutes for the clinical labor 
tasks associated with services that use digital technology, which are 
listed in Table 5. We note that the application of any standardized 
times we adopt for clinical labor tasks to codes that are not being 
reviewed in this final rule would be considered for possible inclusion 
in future notice and comment rulemaking.

    Table 5--Clinical Labor Tasks Associated With Digital Technology
------------------------------------------------------------------------
                                                              Typical
                   Clinical labor task                        minutes
------------------------------------------------------------------------
Availability of prior images confirmed..................               2
Patient clinical information and questionnaire reviewed                2
 by technologist, order from physician confirmed and
 exam protocoled by radiologist.........................
Technologist QC's* images in PACS, checking for all                    2
 images, reformats, and dose page.......................
Review examination with interpreting MD.................               2
Exam documents scanned into PACS. Exam completed in RIS                1
 system to generate billing process and to populate
 images into Radiologist work queue.....................
------------------------------------------------------------------------
* This clinical labor task is listed as it appears on the ``PE
  worksheets.'' QC refers to quality control, which we understand to
  mean the verification of the image using the PACS workstation.

    The following is a summary of the comments we received regarding 
whether these standard times accurately reflect the typical time it 
takes to perform these clinical labor tasks associated with digital 
imaging.
    Comment: Many commenters supported CMS' efforts to recognize the 
advances in digital technology and take them into account through 
updated RVUs. Several commenters agreed that the clinical labor tasks 
outlined in Table 5 reflected the PE Subcommittee's film to digital 
workgroup recommendations. The commenters suggested that the staff 
types in the tasks should be made more generalized and less specific 
(such as technologist to clinical staff or radiologist to physician), 
and stated that specialty societies should be afforded the opportunity 
to request deviations (that is, increases) from the standard times.
    Response: We believe that providing specific guidelines for the 
staff types associated with these tasks will aid in determining the 
most accurate value for each service. We also agree that specialties 
should be afforded the opportunity to request deviations from the 
standard times for unusual situations, when supported with the 
presentation of additional justification for the added time.
    Comment: The RUC commented that it had not supported standard times 
for clinical staff activities related to digital imaging in the past, 
as the RUC had recommended that the specialties should have an 
opportunity to determine the appropriate inputs at the individual 
distinct service level and there was too much variability across 
imaging modalities to propose standards. While the RUC continued to 
hold to its previous position on this subject, it also agreed that four 
of the five clinical labor activities proposed by CMS in Table 5 are 
representative across imaging and could appropriately be used as 
standard times. The one exception was the clinical labor task 
``Technologist QC's images in PACS, checking for all images, reformats, 
and dose page'', in which the RUC stated the number of minutes would 
vary significantly depending on the procedure in question. For example, 
a cardiac MR with hundreds of images would require more quality control 
time than a single view X-ray of the chest. The RUC recommended that 
this line item remain nonstandard, and that specialties should continue 
to have the opportunity to make a recommendation on the appropriate 
number of minutes based on clinical judgment.
    Another commenter also supported standard clinical labor times for 
four out of the five tasks associated with digital technology, again 
excepting the activity ``Technologist QC's images in PACS, checking for 
all images, reformats, and dose page.'' This commenter stated that a 
survey of imaging providers had been conducted which suggested that the 
median time required to perform this clinical labor task was 10 
minutes. The commenter stated that CMS did not have any data to support 
its belief in the standard time of 2 minutes, and recommended 
considering the commenter's data and information from other 
stakeholders regarding the appropriate standard minutes for the 
clinical labor tasks associated digital imaging.
    Response: With regard to the activity ``Technologist QC's images in 
PACS, checking for all images, reformats, and dose page'', we agree 
that this task may require a variable length of time depending on the 
number of images to be reviewed. We believe that it may be appropriate 
to establish several different standard times for this clinical labor 
task for a low/medium/high quantity of images to be reviewed, in the 
same fashion that the clinical labor assigned to clean a surgical 
instrument package has two different standard times depending on the 
use of a basic pack (10 minutes) or a medium pack (30 minutes). We are 
interested in soliciting public comment and feedback on this subject, 
with the anticipation of including a proposal in next year's proposed 
rule.
    After consideration of comments received, we are finalizing 
standard times for clinical labor tasks associated with digital imaging 
at 2 minutes for ``Availability of prior images confirmed'', 2 minutes 
for ``Patient clinical information and questionnaire reviewed by 
technologist, order from physician confirmed and exam protocoled by 
radiologist'', 2 minutes for ``Review examination with interpreting 
MD'', and 1 minute for ``Exam documents scanned into PACS. Exam 
completed in RIS system to generate billing process and to populate 
images into Radiologist work queue.'' We are not finalizing a standard 
time for clinical labor task ``Technologist QC's images in PACS, 
checking for all images, reformats, and dose page'' at this time, 
pending consideration of any additional public comment and future 
rulemaking, as described above.
(b) Pathology Clinical Labor Tasks
    As with the clinical labor tasks associated with digital imaging, 
many of the specialized clinical labor tasks associated with pathology 
services do not have consistent times across those

[[Page 70902]]

codes. In reviewing the recommendations for pathology services, we have 
not identified information that supports the judgment that the same 
tasks take significantly more or less time depending on the individual 
service for which they are performed, especially given the specificity 
with which they are described.
    Therefore, we developed standard times that we have used in 
finalizing direct PE inputs. These times are based on our review and 
assessment of the current times included for these clinical labor tasks 
in the direct PE input database. We have listed these standard times in 
Table 6. For services reviewed for CY 2016, in cases where the RUC-
recommended times differed from these standards, we have refined the 
time for those tasks to align with the values in Table 6. We solicited 
comments on whether these standard times accurately reflect the typical 
time it takes to perform these clinical labor tasks when furnishing 
pathology services.

    Table 6--Standard Times for Clinical Labor Tasks Associated With
                           Pathology Services
------------------------------------------------------------------------
                                                             Standard
                   Clinical labor task                    clinical labor
                                                          time (minutes)
------------------------------------------------------------------------
Accession specimen/prepare for examination..............               4
Assemble and deliver slides with paperwork to                        0.5
 pathologists...........................................
Assemble other light microscopy slides, open nerve                   0.5
 biopsy slides, and clinical history, and present to
 pathologist to prepare clinical pathologic
 interpretation.........................................
Assist pathologist with gross specimen examination......               3
Clean room/equipment following procedure (including any                1
 equipment maintenance that must be done after the
 procedure).............................................
Dispose of remaining specimens, spent chemicals/other                  1
 consumables, and hazardous waste.......................
Enter patient data, computational prep for antibody                    1
 testing, generate and apply bar codes to slides, and
 enter data for automated slide stainer.................
Instrument start-up, quality control functions,                       13
 calibration, centrifugation, maintaining specimen
 tracking, logs and labeling............................
Load specimen into flow cytometer, run specimen, monitor               7
 data acquisition and data modeling, and unload flow
 cytometer..............................................
Preparation: Labeling of blocks and containers and                   0.5
 document location and processor used...................
Prepare automated stainer with solutions and load                      4
 microscopic slides.....................................
Prepare specimen containers/preload fixative/label                   0.5
 containers/distribute requisition form(s) to physician.
Prepare, pack and transport specimens and records for in-              1
 house storage and external storage (where applicable)..
Print out histograms, assemble materials with paperwork                2
 to pathologists. Review histograms and gating with
 pathologist............................................
Receive phone call from referring laboratory/facility                  5
 with scheduled procedure to arrange special delivery of
 specimen procurement kit, including muscle biopsy clamp
 as needed. Review with sender instructions for
 preservation of specimen integrity and return
 arrangements. Contact courier and arrange delivery to
 referring laboratory/facility..........................
Register the patient in the information system,                        4
 including all demographic and billing information......
Stain air dried slides with modified Wright stain.                     3
 Review slides for malignancy/high cellularity (cross
 contamination).........................................
------------------------------------------------------------------------

    Comment: Many commenters stated that they did not support the 
standardization of clinical labor activities across pathology services. 
Commenters stated that a single standard time for each clinical labor 
task was infeasible due to the differences in batch size or number of 
blocks across different pathology procedures. Several commenters 
indicated that it may be possible to standardize across codes with the 
same batch sizes, and urged CMS to consider pathology-specific details, 
such as batch size and block number, in the creation of any future 
standard times for clinical labor tasks. One commenter stated that the 
CMS clinical labor times were uniformly too low, and that CMS did not 
provide enough information about how it arrived at these revised 
standard times. The commenter provided five examples of inadequate 
labor times, and stated that CMS should provide stakeholders with 
information about the source of its data and why it rejected the RUC 
recommendations for these clinical labor tasks.
    Response: We appreciate the extensive feedback provided by 
commenters on the standard times for clinical labor tasks associated 
with pathology services. As we stated in the CY 2016 PFS proposed rule, 
we developed the proposed standard times based on our review and 
assessment of the current times included for these clinical labor tasks 
in the direct PE input database. We believe that clinical labor tasks 
with the same work description are comparable across different 
pathology procedures. We concur with commenters that accurate clinical 
labor times for pathology codes may be dependent on the number of 
blocks or batch size typically used for each individual service. 
However, we believe that it is possible to establish ``per block'' 
standards or standards varied by batch size assumptions for many 
clinical labor activities that will be comparable across a wide range 
of individual services. We have received detailed information regarding 
batch size and number of blocks during review of individual pathology 
services on an intermittent basis in the past. We request regular 
submission of these details on the PE worksheets as part of the review 
process for pathology procedures, as a means to assist in the 
determination of the most accurate direct PE inputs. Were we to receive 
this information as part of standard recommendations, we would include 
these assumptions as part of the information open for comment in 
proposed revaluations. We are also seeking comment regarding how to 
best establish clinical labor standards for pathology services on a 
``per block'' or ``per batch size'' basis.
    We also believe that many of the clinical labor activities that we 
discussed in Table 6 are tasks that do not depend on number of blocks 
or batch size. Clinical labor activities such as ``Clean room/equipment 
following procedure'' and ``Dispose of remaining specimens'' would 
typically remain standard across different services without varying by 
block number or batch size, with the understanding of occasional 
allowance for additional time for clinical labor tasks of unusual 
difficulty.
    After consideration of comments received, we are finalizing 
standard times for clinical labor tasks associated with pathology 
services at 4 minutes for

[[Page 70903]]

``Accession specimen/prepare for examination'', 0.5 minutes for 
``Assemble and deliver slides with paperwork to pathologists'', 0.5 
minutes for ``Assemble other light microscopy slides, open nerve biopsy 
slides, and clinical history, and present to pathologist to prepare 
clinical pathologic interpretation'', 1 minute for ``Clean room/
equipment following procedure'', 1 minute for ``Dispose of remaining 
specimens, spent chemicals/other consumables, and hazardous waste'', 
and 1 minute for ``Prepare, pack and transport specimens and records 
for in-house storage and external storage (where applicable).'' We do 
not believe these activities would be dependent on number of blocks or 
batch size, and we believe that these values accurately reflect the 
typical time it takes to perform these clinical labor tasks. For the 
rest of the clinical labor tasks associated with pathology services, we 
are interested in soliciting further public comment and feedback on 
this subject as part of this final rule with comment period, with the 
anticipation of including a proposal in next year's proposed rule.
(c) Clinical Labor Task: ``Complete Botox Log''
    In the process of improving the level of detail in the direct PE 
input database by including the minutes assigned for each clinical 
labor task, we noticed that there are several codes with minutes 
assigned for the clinical labor task called ``complete botox log.'' We 
do not believe the completion of such a log is a direct resource cost 
of furnishing a medically reasonable and necessary physician's service 
for a Medicare beneficiary. Therefore, we proposed to eliminate the 
minutes assigned for the task ``complete botox log'' from the direct PE 
input database. The PE RVUs displayed in Addendum B on the CMS Web site 
were calculated with the modified inputs displayed in the CY 2016 
direct PE input database.
    The following is a summary of the comments we received regarding 
the clinical labor task ``complete botox log.''
    Comment: Several commenters, including the RUC, did not agree with 
the proposal to eliminate the minutes associated with this clinical 
labor task. Commenters maintained that the clinical labor task of 
completing the botox log was a medically reasonable direct resource 
cost. One commenter stated that it was critical for clinical staff to 
maintain accurate bookkeeping of split botox vials, and that 
documentation must reflect the exact dosage of the drug given to 
patients and a statement that the unused portion of the drug was 
discarded.
    Response: We continue to believe that the clinical labor assigned 
for the task ``complete botox log'' is a form of indirect PE that is 
not allocated to individual services. We believe that this is a quality 
control issue for clinical staff. Maintaining accurate administrative 
records, even for public safety, is not a task we generally allocate to 
individual services, instead we consider these costs as attributable 
across a range of services, and therefore, as an indirect PE. After 
consideration of comments received, we are finalizing the proposal to 
eliminate the minutes assigned for the task ``complete botox log'' from 
the direct PE input database.
(3) Clinical Labor Input Inconsistencies
    Subsequent to the publication of the CY 2015 PFS final rule with 
comment period, stakeholders alerted us to several clerical 
inconsistencies in the clinical labor nonfacility intraservice time for 
several vertebroplasty codes with interim final values for CY 2015, 
based on our understanding of RUC recommended values. We proposed to 
correct these inconsistencies in the CY 2016 proposed direct PE input 
database to reflect the RUC recommended values, without refinement, as 
stated in the CY 2015 PFS final rule with comment period. The CY 2015 
interim final direct PE inputs for these codes are displayed on the CMS 
Web site under downloads for the CY 2015 PFS final rule with comment 
period at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.
    For CY 2016, we proposed the following adjustments:
     For CPT codes 22510 (percutaneous vertebroplasty (bone 
biopsy included when performed), 1 vertebral body, unilateral or 
bilateral injection, inclusive of all imaging guidance; 
cervicothoracic) and 22511 (percutaneous vertebroplasty (bone biopsy 
included when performed), 1 vertebral body, unilateral or bilateral 
injection, inclusive of all imaging guidance; lumbosacral), a value of 
45 minutes for labor code L041B (``Radiologic Technologist'') we 
proposed to assign for the ``assist physician'' task and a value of 5 
minutes for labor code L037D (``RN/LPN/MTA'') for the ``Check dressings 
& wound/home care instructions/coordinate office visits/prescriptions'' 
task.
     For CPT code 22514 (percutaneous vertebral augmentation, 
including cavity creation (fracture reduction and bone biopsy included 
when performed) using mechanical device (e.g., kyphoplasty), 1 
vertebral body, unilateral or bilateral cannulation, inclusive of all 
imaging guidance; lumbar), we proposed to adjust the nonfacility 
intraservice time to 50 minutes for L041B, 50 minutes for L051A 
(``RN''), 38 minutes for a second L041B, and 12 minutes for L037D.
    The PE RVUs displayed in Addendum B on the CMS Web site were 
calculated with the inputs displayed in the CY 2016 direct PE input 
database.
    The following is a summary of the comments we received regarding 
clinical labor input inconsistencies.
    Comment: Two commenters indicated that although they appreciated 
CMS' efforts to clean up errors in the direct PE database, they had 
specific concerns regarding the proposed changes. The commenters stated 
that for CPT code 22510, it appeared that the direct PE clinical time 
file had the second technologist listed at 90 minutes for the ``Assist 
physician'' task, not 45 minutes as recommended. The commenters 
indicated that CMS stated an intention to include 5 minutes for ``Check 
dressings & wound'' but this time did not appear to be included in the 
direct PE input labor file. The commenters also noted that the 
postoperative E/M visit for CPT code 22510 was also not listed in the 
CMS file.
    The commenters stated that for CPT code 22511, the CMS direct PE 
labor file correctly included the 45 minutes of ``Assist physician'' 
time for the second technologist, however, the 5 minutes for the RN/
LPN/MTA blend (L037D) to ``Check dressings & wound'' was still not 
included in the CMS file. The commenter indicated that the 
postoperative E/M visit was also not included for this code. The 
commenters also stated that for CPT code 22514, CMS was proposing to 
include the 5 minutes for ``Check dressings & wound'' in the 
intraservice time for this service. The commenters indicated that this 
did not appear to be consistent with how CMS was proposing to handle 
the same clinical labor task in the prior two codes discussed. The 
commenters requested that CMS outline specifically which line items 
(from the PE spreadsheet) it proposed to change and the effects these 
changes would have on the direct inputs for these three codes.
    Response: We appreciate the detailed feedback from the commenters 
on the clinical labor inconsistencies in these three codes. We agree 
with the commenters that there were remaining clinical labor errors in 
these procedures beyond those detailed in the CY 2016 PFS proposed 
rule, and appreciate the opportunity to clarify the discrepancies

[[Page 70904]]

in clinical labor for these three procedures.
    For CPT code 22510, we agree with the commenters that the clinical 
labor assigned to the RadTech (L041B) for ``Assist Physician'' was 
incorrectly listed twice in our direct PE input database. The clinical 
labor staff type was also incorrectly entered as L041C, which is priced 
at the same rate but refers to a second Radiologic Technologist for 
Vertebroplasty. We will remove the duplicative clinical labor and 
assign type L041B to the ``Assist Physician'' activity. We do not agree 
with the commenters that the time for clinical labor task ``Check 
dressings & wound'' was missing, as it is present in the database. We 
agree with the commenters that the clinical labor time for the office 
visit was missing from CPT code 22510, and we will add it to the direct 
PE database.
    For CPT code 22511, the commenters are correct that the time for 
clinical labor task ``Assist physician'' was entered at the correct 
value of 45 minutes, and the 5 minutes of clinical labor for ``Check 
dressings & wound'' does not appear in the non-facility setting. This 
clinical labor time appears to have been incorrectly entered for the 
facility setting instead; we will remove this time and add it to its 
proper non-facility setting. We agree with the commenters that the 
clinical labor time for the office visit was again missing from CPT 
code 22511, and we will add it to the direct PE input database.
    For CPT code 22514, the time for clinical labor task ``Assist 
physician'' has been refined to 50 minutes as detailed in the CY 2016 
PFS proposed rule. We agree with the commenters that the 5 minutes of 
clinical labor time for ``Check dressings & wound'' is missing from the 
direct PE input database. We agree that the clinical labor for this 
activity should not be treated differently from the rest of the codes 
in the family, and therefore these 5 minutes are included in the direct 
PE input database. The postoperative office visit is included in the 
direct PE input database for CPT code 22514.
    After consideration of comments received, we are finalizing our 
proposed changes to clinical labor along with the additional 
corrections described above.
(4) Freezer
    We identified several pathology codes for which equipment minutes 
are assigned to the item EP110 ``Freezer.'' Minutes are only allocated 
to particular equipment items when those items cannot be used in 
conjunction with furnishing services to another patient at the same 
time. We do not believe that minutes should be allocated to items such 
as freezers since the storage of any particular specimen or item in a 
freezer for any given period of time would be unlikely to make the 
freezer unavailable for storing other specimens or items. Instead, we 
proposed to classify the freezer as an indirect cost because we believe 
that would be most consistent with the principles underlying the PE 
methodology since freezers can be used for many specimens at once. The 
PE RVUs displayed in Addendum B on the CMS Web site were calculated 
with the modified inputs displayed in the CY 2016 direct PE input 
database.
    We did not receive comments on this proposal, and therefore, we are 
finalizing as proposed.
(5) Updates to Price for Existing Direct Inputs
    In the CY 2011 PFS final rule with comment period (75 FR 73205), we 
finalized a process to act on public requests to update equipment and 
supply price and equipment useful life inputs through annual rulemaking 
beginning with the CY 2012 PFS proposed rule. During 2014, we received 
a request to update the price of supply item ``antigen, mite'' (SH006) 
from $4.10 per test to $59. In reviewing the request, it is evident 
that the requested price update does not apply to the SH006 item but 
instead represents a different item than the one currently included as 
an input in CPT code 86490 (skin test, coccidioidomycosis). Therefore, 
rather than changing the price for SH006 that is included in several 
codes, we proposed to create a new supply code for Spherusol, valued at 
$590 per 1 ml vial and $59 per test, and to include this new item as a 
supply for 86490 instead of the current input, SH006.
    Comment: Several commenters strongly supported the CMS proposal to 
create a new supply code for Spherusol that reflects the current price 
for the antigen and to update the direct inputs for CPT code 86490 to 
include this item. However, commenters noted that the public use files 
included in the CY 2016 PFS proposed rule continue to reflect the prior 
supply code SH006 with a price of $4.10. Commenters asked whether this 
was a technical error and urged CMS to correct the input files to be 
consistent with the proposal described in the regulation preamble.
    Response: We appreciate support for our proposal and acknowledge 
our inadvertent omission of this change in the proposed direct PE input 
database. After consideration of comments received, we are finalizing 
our proposal to create a supply item for Spherusol and it is included 
as a direct PE input for CPT code 86490.
    We also received a request to update the price for EQ340 (Patient 
Worn Telemetry System) used only in CPT code 93229 (External mobile 
cardiovascular telemetry with electrocardiographic recording, 
concurrent computerized real time data analysis and greater than 24 
hours of accessible ECG data storage (retrievable with query) with ECG 
triggered and patient selected events transmitted to a remote attended 
surveillance center for up to 30 days; technical support for connection 
and patient instructions for use, attended surveillance, analysis and 
transmission of daily and emergent data reports as prescribed by a 
physician or other qualified health care.) The requestor noted that we 
had previously proposed and finalized a policy to remove wireless 
communication and delivery costs related to the equipment item that had 
previously been included in the direct PE input database as supply 
items. The requestor asked that we alter the price of the equipment 
from $21,575 to $23,537 to account for the equipment costs specific to 
the patient-worn telemetry system.
    In the proposed rule, we stated that we considered this request in 
the context of the unique nature of this particular equipment item. 
This equipment item is unique in several ways, including that it is 
used continuously 24 hours per day and 7 days per week for an 
individual patient over several weeks. It is also unique in that the 
equipment is primarily used outside of a healthcare setting. Within our 
current methodology, we currently account for these unique properties 
by calculating the per minute costs with different assumptions than 
those used for most other equipment by increasing the number of hours 
the equipment is available for use. Therefore, we also believe it would 
be appropriate to incorporate other unique aspects of the operating 
costs of this item in our calculation of the equipment cost per minute. 
We believe the requestor's suggestion to do so by increasing the price 
of the equipment is practicable and appropriate. Therefore, we proposed 
to change the price for EQ340 (Patient Worn Telemetry System) to 
$23,537. The PE RVUs displayed in Addendum B on the CMS Web site were 
calculated with the modified inputs displayed in the CY 2016 direct PE 
input database.
    Comment: One commenter supported the CMS proposal regarding the 
Patient Worn Telemetry System (EQ340). The commenter agreed with the 
proposed increase in the price of the equipment

[[Page 70905]]

from $21,757 to $23,537, and the reason for this increase. We did not 
receive any comments opposing the proposal.
    Response: After consideration of comments received, we are 
finalizing our proposal regarding the Patient Worn Telemetry System 
equipment.
    For CY 2015, we received a request to update the price for supply 
item ``kit, HER-2/neu DNA Probe'' (SL196) from $105 to $144.50. 
Accordingly, in the CY 2015 proposed rule, we proposed to update the 
price to $144.50. In the CY 2015 final rule with comment period, we 
indicated that we obtained new information suggesting that further 
study of the price of this item was necessary before proceeding to 
update the input price. We obtained pricing information readily 
available on the Internet that indicated a price of $94 for this item 
for a particular hospital. Subsequent to the CY 2015 final rule with 
comment period, stakeholders requested that we use the updated price of 
$144.50. One stakeholder suggested that the price of $94 likely 
reflected discounts for volume purchases not received by the typical 
laboratory. We solicited comments on how to consider the higher-priced 
invoice, which is 53 percent higher than the price listed, relative to 
the price currently in the direct PE database. Specifically, we 
solicited information on the price of the disposable supply in the 
typical case of the service furnished to a Medicare beneficiary, 
including, based on data, whether the typical Medicare case is 
furnished by an entity likely to receive a volume discount.
    Comment: Several commenters disagreed with the CMS proposal 
regarding the updated price for the supply item ``kit, HER-2/neu DNA 
Probe'' (SL196). One commenter stated that the price of $94 reflected a 
volume discount that could not be obtained by the typical provider. The 
lowered price referenced in the CY 2016 PFS proposed rule indicated 
that the purchaser may be receiving a competitive contractually 
arranged price. The commenter stated that the lowered price referenced 
is what might be expected to be acquired by the largest hospitals, 
which would be expected to buy supplies in greater volume than a small 
community hospital or mid-sized laboratory, and the price indicated 
does not reflect the prices for a laboratory of typical size.
    Other commenters stated that they were unable to find this pricing 
information through publicly available sources, suggesting that it may 
not reflect typical transactions. The commenters also stated that it 
was unclear as to whether the proposed price referred to FDA-approved 
kits, which are more expensive than non-approved kits. The commenters 
further indicated that a number of new morphometric analysis, multiplex 
quantitative/semi-quantitative ISH tests are in use today with probe 
kit costs that are higher than those of HER-2/neu probe kits. The 
commenters suggested that CMS should adopt a weighted-average of the 
probe kit prices for the probe kits currently used to perform these 
procedures.
    Response: Without robust, auditable information regarding the 
actual prices paid by a range of practitioners that would allow us to 
reasonably determine a recommended price to be typical, we believe that 
we should assume that the best publicly available price is typical. 
Generally speaking, we do not believe vendors are likely to allow 
public display of pricing that is not broadly available to potential 
customers since that would present significant competitive 
disadvantages in the market. Therefore, given the options between the 
best publicly available price or prices on invoices selected for the 
distinct purpose of pricing individual services, we believe the best 
publicly available price is more likely to be typical. Therefore, we 
are not making any changes to the price of this supply item at this 
time.
    Comment: The RUC commented that in the CMS direct PE database the 
unit of measure for SL196 is listed as ``kit'', while on the submitted 
PE spreadsheet the unit is listed as ``kit assay.'' The RUC recommended 
that the unit of measure be changed to ``kit assay'' to correlate 
correctly with the cost shown in the database.
    Response: We appreciate this additional information, and will 
change the unit of measure of SL196 to ``kit assay'' in the direct PE 
database.
    Comment: Several commenters stated CMS's estimated per-minute labor 
cost inputs are too low for laboratory technicians (L033A), 
cytotechnologists (L045A) and histotechnologists (L037B). The 
commenters stated that the complexity of many laboratory services 
demands highly-skilled, highly-trained, certified, and experienced 
personnel who typically must be paid higher wages than the current 
rates provided by CMS. Commenters stated that CMS has underestimated 
the actual labor costs associated with the work that these more 
specialized laboratory personnel perform by 20 to 30 percent, after 
accounting for costs related to benefits, taxes, and training.
    Response: The clinical labor costs per minute are based on data 
from the Bureau of Labor Statistics. We believe that it is important to 
update that information uniformly among clinical labor types and will 
consider updating the clinical labor costs per minute in the direct PE 
database in future rulemaking.
(6) Typical Supply and Equipment Inputs for Pathology Services
    In reviewing public comments in response to the CY 2015 PFS final 
rule with comment period, we re-examined issues around the typical 
number of pathology tests furnished at once. In the CY 2013 final rule 
with comment period (77 FR 69074), we noted that the number of blocks 
assumed for a particular code significantly impacts the assumed 
clinical labor, supplies, and equipment for that service. We indicated 
that we had concerns that the assumed number of blocks was inaccurate, 
and that we sought corroborating, independent evidence that the number 
of blocks assumed in the current direct PE input recommendations is 
typical. We note that, given the high volume of many pathology 
services, these assumptions have a significant impact on the PE RVUs 
for all other PFS services. We refer readers to section II.H. where we 
detail our concerns about the lack of information regarding typical 
batch size and typical block size for many pathology services and 
solicit stakeholder input on approaches to obtaining accurate 
information that can facilitate our establishing payment rates that 
best reflect the relative resources involved in furnishing the typical 
service, for both pathology services in particular and more broadly for 
services across the PFS.
    Comment: Several commenters addressed the number of blocks and 
batch size for prostate biopsies in particular. We direct readers to 
section II.H. of this final rule with comment period for a more 
detailed discussion of the resource costs for these services. We 
continue to seek stakeholder input regarding the best sources of 
information for typical number of blocks and batch sizes for pathology 
services.
d. Developing Nonfacility Rates
    We noted that not all PFS services are priced in the nonfacility 
setting, but as medical practice changes, we routinely develop 
nonfacility prices for particular services when they can be furnished 
outside of a facility setting. We noted that the valuation of a service 
under the PFS in particular settings does not address whether those 
services are medically reasonable and necessary in the case of 
individual patients, including being furnished in a setting appropriate 
to the patient's medical needs and condition.

[[Page 70906]]

(1) Request for Information on Nonfacility Cataract Surgery
    Cataract surgery generally has been performed in an ambulatory 
surgery center (ASC) or a hospital outpatient department (HOPD). We 
have not assigned nonfacility PE RVUs under the PFS for cataract 
surgery. According to Medicare claims data, there are a relatively 
small number of these services furnished in nonfacility settings. 
Except in unusual circumstances, anesthesia for cataract surgery is 
either local or topical/intracameral. Advancements in technology have 
significantly reduced operating time and improved both the safety of 
the procedure and patient outcomes. As discussed in the proposed rule, 
we believe that it now may be possible for cataract surgery to be 
furnished in an in-office surgical suite, especially for routine cases. 
Cataract surgery patients require a sterile surgical suite with certain 
equipment and supplies that we believe could be a part of a 
nonfacility-based setting that is properly constructed and maintained 
for appropriate infection prevention and control.
    We also noted in the proposed rule that we believe there are 
potential advantages for all parties to furnishing appropriate cataract 
surgery cases in the nonfacility setting. Cataract surgery has been for 
many years the highest volume surgical procedure performed on Medicare 
beneficiaries. For beneficiaries, cataract surgery in the office 
setting might provide the additional convenience of receiving the 
preoperative, operative, and post-operative care in one location. It 
might also reduce delays associated with registration, processing, and 
discharge protocols associated with some facilities. Similarly, it 
might provide surgeons with greater flexibility in scheduling patients 
at an appropriate site of service depending on the individual patient's 
needs. For example, routine cases in patients with no comorbidities 
could be performed in the nonfacility surgical suite, while more 
complicated cases (for example, pseudoexfoliation) could be scheduled 
in the ASC or HOPD. In addition, furnishing cataract surgery in the 
nonfacility setting could result in lower Medicare expenditures for 
cataract surgery if the nonfacility payment rate were lower than the 
sum of the PFS facility payment rate and the payment to either the ASC 
or HOPD.
    We solicited comments from ophthalmologists and other stakeholders 
on office-based surgical suite cataract surgery. In addition, we 
solicited comments from the RUC and other stakeholders on the direct PE 
inputs involved in furnishing cataract surgery in the nonfacility 
setting in conjunction with our consideration of information regarding 
the possibility of development of nonfacility cataract surgery PE RVUs.
    We received 138 comments from stakeholders including professional 
medical societies, the RUC, ambulatory surgical centers (ASCs), 
practitioners, and the general public. The RUC deferred to the 
specialty societies regarding the appropriateness of performing these 
services in the nonfacility setting.
    Comment: A few commenters suggested that development of PE RVUs 
would allow for greater flexibility regarding scheduling and location 
where services are performed. Commenters provided information about 
clinical considerations related to furnishing these services in a 
nonfacility setting, with many commenters citing safety concerns 
involved in furnishing cataract surgery in the office setting.
    Response: We will use this information as we consider whether to 
proceed with development of nonfacility PE RVUs for cataract surgery.
(2) Direct PE Inputs for Functional Endoscopic Sinus Surgery Services
    A stakeholder indicated that due to changes in technology and 
technique, several codes that describe endoscopic sinus surgeries can 
now be furnished in the nonfacility setting. According to Medicare 
claims data, there are a relatively small number of these services 
furnished in nonfacility settings. These CPT codes are 31254 (Nasal/
sinus endoscopy, surgical; with ethmoidectomy, partial (anterior)), 
31255 (Nasal/sinus endoscopy, surgical; with ethmoidectomy, total 
(anterior and posterior)), 31256 (Nasal/sinus endoscopy, surgical, with 
maxillary antrostomy), 31267 (Nasal/sinus endoscopy, surgical, with 
maxillary antrostomy; with removal of tissue from maxillary sinus), 
31276 (Nasal/sinus endoscopy, surgical with frontal sinus exploration, 
with or without removal of tissue from frontal sinus), 31287 (Nasal/
sinus endoscopy, surgical, with sphenoidotomy), and 31288 (Nasal/sinus 
endoscopy, surgical, with sphenoidotomy; with removal of tissue from 
the sphenoid sinus). We solicited input from stakeholders, including 
the RUC, about the appropriate direct PE inputs for these services.
    We received 53 comments from stakeholders including specialty 
societies, device manufacturers, medical centers, and physician 
practices (otolaryngology, allergy, facial, and plastics specialists).
    Comment: The RUC indicated an intention to review direct PE inputs 
at the January 2016 RUC meeting. One specialty society representing 
otolaryngology head and neck surgeons indicated that endoscopic sinus 
surgery services have been identified by the CPT/RUC workgroup for 
development of bundled codes for this code family and inputs will 
likely be reviewed as part of this process. Some commenters submitted 
information about their respective PEs related to CPT codes 31254, 
31255, 31267, 31276, 31287, and 31288. Other commenters limited their 
comments to CPT codes 31254 and 31255, noting clinical concerns about 
performance of other sinus surgery procedures in the nonfacility 
setting. A few commenters did not support development of nonfacility 
direct PE RVUs for endoscopic sinus surgery due to clinical 
considerations such as patient safety, possible complications, use of 
anesthesia, and need for establishment of standards and oversight of 
in-office surgical suites.
    Response: We appreciate the feedback we received from all 
commenters. We will use this information as we consider whether to 
proceed with development of nonfacility PE RVUs or functional 
endoscopic sinus surgery services.

B. Determination of Malpractice Relative Value Units (RVUs)

1. Overview
    Section 1848(c) of the Act requires that each service paid under 
the PFS be composed of three components: Work, PE, and malpractice (MP) 
expense. As required by section 1848(c)(2)(C)(iii) of the Act, 
beginning in CY 2000, MP RVUs are resource based. Malpractice RVUs for 
new codes after 1991 were extrapolated from similar existing codes or 
as a percentage of the corresponding work RVU. Section 1848(c)(2)(B)(i) 
of the Act also requires that we review, and if necessary adjust, RVUs 
no less often than every 5 years. In the CY 2015 PFS final rule with 
comment period, we implemented the third review and update of MP RVUs. 
For a discussion of the third review and update of MP RVUs see the CY 
2015 proposed rule (79 FR 40349 through 40355) and final rule with 
comment period (79 FR 67591 through 67596).
    As explained in the CY 2011 PFS final rule with comment period (75 
FR 73208), MP RVUs for new and revised codes effective before the next 
five-year review of MP RVUs were determined either by a direct 
crosswalk from a similar source code or by a modified

[[Page 70907]]

crosswalk to account for differences in work RVUs between the new/
revised code and the source code. For the modified crosswalk approach, 
we adjust (or ``scale'') the MP RVU for the new/revised code to reflect 
the difference in work RVU between the source code and the new/revised 
work RVU (or, if greater, the clinical labor portion of the fully 
implemented PE RVU) for the new code. For example, if the proposed work 
RVU for a revised code is 10 percent higher than the work RVU for its 
source code, the MP RVU for the revised code would be increased by 10 
percent over the source code MP RVU. Under this approach the same risk 
factor is applied for the new/revised code and source code, but the 
work RVU for the new/revised code is used to adjust the MP RVUs for 
risk.
    For CY 2016, we proposed to continue our current approach for 
determining MP RVUs for new/revised codes. For the new and revised 
codes for which we proposed work RVUs and PE inputs, we also published 
the proposed MP crosswalks used to determine their MP RVUs. The MP 
crosswalks for those new and revised codes were subject to public 
comment and we are responding to comments and finalizing them in 
section II.H. of this CY 2016 PFS final rule with comment period. The 
MP crosswalks for new and revised codes with interim final values 
established in this CY 2016 final rule with comment period will be 
implemented for CY 2016 and subject to public comment. We will then 
respond to comments and finalize them in the CY 2017 PFS final rule 
with comment period.
2. Proposed Annual Update of MP RVUs
    In the CY 2012 PFS final rule with comment period (76 FR 73057), we 
finalized a process to consolidate the five-year reviews of work and PE 
RVUs with our annual review of potentially misvalued codes. We 
discussed the exclusion of MP RVUs from this process at the time, and 
we stated that, since it is not feasible to obtain updated specialty 
level MP insurance premium data on an annual basis, we believe the 
comprehensive review of MP RVUs should continue to occur at 5-year 
intervals. In the CY 2015 PFS proposed rule (79 FR 40349 through 
40355), we stated that there are two main aspects to the update of MP 
RVUs: (1) Recalculation of specialty risk factors based upon updated 
premium data; and (2) recalculation of service level RVUs based upon 
the mix of practitioners providing the service. In the CY 2015 PFS 
final rule with comment period (79 FR 67596), in response to several 
stakeholders' comments, we stated that we would address potential 
changes regarding the frequency of MP RVU updates in a future proposed 
rule. For CY 2016, we proposed to begin conducting annual MP RVU 
updates to reflect changes in the mix of practitioners providing 
services, and to adjust MP RVUs for risk. Under this approach, the 
specialty-specific risk factors would continue to be updated every 5 
years using updated premium data, but would remain unchanged between 
the 5-year reviews. However, in an effort to ensure that MP RVUs are as 
current as possible, our proposal would involve recalibrating all MP 
RVUs on an annual basis to reflect the specialty mix based on updated 
Medicare claims data. Since under this proposal, we would be 
recalculating the MP RVUs annually, we also proposed to maintain the 
relative pool of MP RVUs from year to year; this will preserve the 
relative weight of MP RVUs to work and PE RVUs. We proposed to 
calculate the current pool of MP RVUs by using a process parallel to 
the one we use in calculating the pool of PE RVUs. (We direct the 
reader to section II.2.b.(6) for detailed description of that process, 
including a proposed technical revision that we are finalizing for 
2016.) To determine the specialty mix assigned to each code, we also 
proposed to use the same process used in the PE methodology, described 
in section II.2.b.(6) of this final rule with comment period. We note 
that for CY 2016, we proposed and are finalizing a policy to modify the 
specialty mix assignment methodology to use an average of the 3 most 
recent years of available data instead of a single year of data. We 
anticipate that this change will increase the stability of PE and MP 
RVUs and mitigate code-level fluctuations for all services paid under 
the PFS, and for new and low-volume codes in particular. We also 
proposed to no longer apply the dominant specialty for low volume 
services, because the primary rationale for the policy has been 
mitigated by this proposed change in methodology. However, we did not 
propose to adjust the code-specific overrides established in prior 
rulemaking for codes where the claims data are inconsistent with a 
specialty that could be reasonably expected to furnish the service. We 
believe that these proposed changes serve to balance the advantages of 
using annually updated information with the need for year-to-year 
stability in values. We solicited comments on both aspects of the 
proposal: Updating the specialty mix for MP RVUs annually (while 
continuing to update specialty-specific risk factors every 5 years 
using updated premium data); and using the same process to determine 
the specialty mix assigned to each code as is used in the PE 
methodology, including the proposed modification to use the most recent 
3 years of claims data. We also solicited comments on whether this 
approach will be helpful in addressing some of the concerns regarding 
the calculation of MP RVUs for services with low volume in the Medicare 
population, including the possibility of limiting our use of code-
specific overrides of the claims data.
    The following is a summary of the comments we received regarding 
our current approach for determining malpractice RVUs for new/revised 
codes.
    Comment: Several commenters, including the RUC, generally supported 
CMS' proposal to update the MP RVUs on an annual basis. Commenters, 
including the RUC, stated a preference for the annual collection of 
professional liability insurance (PLI) premium data to insure the MP 
RVUs for every service is accurate, as opposed to only collecting these 
data every five years.
    Response: We appreciate commenters' support of our proposal to 
update the MP RVUs on an annual basis. We also appreciate the comments 
from stakeholders regarding the frequency that we currently collect 
premium data. We will continue to consider the appropriate frequency 
for doing so, and we would address any potential changes in future 
rulemaking.
    Comment: Commenters, including the RUC, support CMS's proposal to 
use the 3 most recent years of available data for the specialty mix 
assignment.
    Response: We appreciate the commenters' support.
    Comment: Commenters supported CMS' proposal to maintain the code-
specific overrides established in previous rulemaking for codes where 
the claims data are inconsistent with a specialty that could be 
reasonably expected to furnish the service. Commenters also requested 
that CMS publish the list of overrides annually to receive stakeholder 
feedback related to necessary modification to the list, and in an 
effort to be as transparent as possible.
    Response: We appreciate the comments and agree that we should 
increase the transparency regarding the list of services with MP RVU 
overrides. Publication of this list will also allow commenters to alert 
us to any discrepancies between MP RVUs developed annually under the 
new methodology and previously established overrides. Therefore, we 
have posted a public use file containing the overrides.

[[Page 70908]]

The file is available on the CMS Web site under the supporting data 
files for the CY 2016 PFS final rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html.
    Comment: One commenter stated that CMS should be particularly 
mindful of using the specialty mix in the Medicare claims data for 
services with low Medicare volume but high volume in the United States 
health care system more generally, such as pediatric procedures; and 
that CMS' MP RVU methodology needs to differentiate between services 
that are truly low volume and those that occur frequently, but not 
among Medicare beneficiaries.
    Response: We believe that the list of overrides we are making 
available as a public use file on the CMS Web site will help address 
the commenter's concern since the purpose of the code-specific 
overrides is to address circumstances where the claims data are 
inconsistent with the specialty that could be reasonably expected to 
furnish the service. We have previously accepted comment on services 
like those identified by the commenter and will continue to consider 
comments regarding the need to use overrides for particular services, 
especially for high volume services outside the Medicare population.
    Comment: One commenter requested that CMS continue to use the 
dominant specialty for low volume codes.
    Response: We acknowledge the concern about using the dominant 
specialty for low volume codes, and will continue to monitor the 
resulting RVUs to determine if adjustments become necessary. In 
general, we believe the 3-year average mitigates the need to apply the 
dominant specialty for low volume services. However, we have a long 
history of applying the dominant specialty for low volume services in 
instances where the specialty indicated by the claims data is 
inconsistent with the specialty that could be reasonably expected to 
furnish the service, and we are maintaining that practice.
    Comment: Some commenters requested more information on how 
specialty impacts were determined. Two commenters expressed concerns 
about the estimated impact of the several proposed changes in the MP 
methodology on some specialties--particularly gastroenterology, colon 
and rectal surgery, and neurosurgery. Those commenters state that they 
appreciate the assertion that it may be difficult to obtain premium 
data for some specialties, such as neurosurgery, and state that CMS 
must thoroughly vet the methodology used by its contractor to determine 
MP premiums for such specialties. The commenters urge CMS to review the 
data, continue to try to obtain premium data in as many states as 
possible, and to share the data with the public for the agency and 
specialties to determine its accuracy.
    Response: Specialty impacts are determined by comparing the 
estimated overall payment for each specialty that would result from the 
proposed RVUs and policies to the estimated overall payment for each 
specialty under the current year RVUs and policies, using the most 
recent year of available claims data as a constant. We note that for MP 
RVUs, there were several refinements that resulted in minor impacts to 
particular specialties, especially those at the higher end of specialty 
risk factors. We believe that these impacts are consistent with the 
general tendency of greater change in MP RVUs for specialties with risk 
factors of greater magnitude. We agree with the commenters regarding of 
the importance of making certain that the collection of premium data 
and the methodology of calculating MP RVUs are as accurate as possible. 
This is the reason we continue to examine the methodology and develop 
technical improvements such as the ones described in this section of 
the final rule. Additionally, we believe that annual calibration of MP 
RVUs will be likely to reduce the risk of irregularities, since we will 
regularly compare MP RVUs for individual codes and for specialties 
between consecutive years instead of only comparing MP RVUs update 
years.
    After consideration of the public comments received, we are 
finalizing the policies as proposed. That is, we are finalizing the 
proposal to conduct annual MP RVU updates to reflect changes in the mix 
of practitioners providing services and to adjust MP RVUs for risk, and 
to modify the specialty mix assignment methodology to use an average of 
the 3 most recent years of available data instead of a single year. We 
note that we will continue to maintain the code-specific overrides 
where the claims data are inconsistent with a specialty that would 
reasonable be expected to furnish the services.
    We also proposed an additional refinement in our process for 
assigning MP RVUs to individual codes. Historically, we have used a 
floor of 0.01 MP RVUs for all nationally-priced PFS codes. This means 
that even when the code-level calculation for the MP RVU falls below 
0.005, we have rounded to 0.01. In general, we believe this approach 
accounts for the minimum MP costs associated with each service 
furnished to a Medicare beneficiary. However, in examining the 
calculation of MP RVUs, we do not believe that this floor should apply 
to add-on codes. Since add-on codes must be reported with another code, 
there is already an MP floor of 0.01 that applies to the base code, and 
therefore, to each individual service. By applying the floor to add-on 
codes, the current methodology practically creates a 0.02 floor for any 
service reported with one add-on code, and 0.03 for those with 2 add-on 
codes, etc. Therefore, we proposed to maintain the 0.01 MP RVU floor 
for all nationally-priced PFS services that are described by base 
codes, but not for add-on codes. We will continue to calculate, 
display, and make payments that include MP RVUs for add-on codes that 
are calculated to 0.01 or greater, including those that round to 0.01. 
We only proposed to allow the MP RVUs for add-on codes to round to 0.00 
where the calculated MP RVU is less than 0.005.
    Comment: Several commenters, including the RUC, opposed CMS' 
proposal to remove the MP RVU floor of 0.01 for add-on services. These 
commenters suggested that the incremental risk associated with 
performing an additional procedure is not mitigated by the risk 
inherent in the base procedure. Another commenter stated that each 
service should be considered separately for the purposes of calculating 
MP RVUs, and therefore, each service should be given the 0.01 floor 
regardless of base or add-on status.
    Response: We appreciate commenters' feedback, but note that we do 
not believe the comments respond to the rationale for the proposed 
refinement. We agree that the incremental risk in procedures described 
by add-on codes is not mitigated by the risk inherent in the base 
procedure. That is why we did not propose to eliminate MP RVUs for add-
on codes generally. Instead, we believe that when the incremental risk 
is calculated to be a number closer to 0.00 than 0.01, we do not 
believe that rounding such a number to 0.01 accurately reflects the 
risk of the service that is described by two codes (base code and add-
on) relative to the risks associated with other PFS services. We 
continue to believe that this refinement is the most appropriate 
approach, since we would continue to account for the incremental risk 
associated with add-on codes without overestimating the risk in 
circumstances where the MP RVU falls below 0.005. Therefore, we are 
finalizing the policy as proposed.

[[Page 70909]]

3. MP RVU Update for Anesthesia Services
    In the CY 2015 PFS proposed rule (79 FR 40354 through 40355), we 
did not include an adjustment under the anesthesia fee schedule to 
reflect updated MP premium information, and stated that we intended to 
propose an anesthesia adjustment for MP in the CY 2016 PFS proposed 
rule. We also solicited comments regarding how to best reflect updated 
MP premium amounts under the anesthesiology fee schedule.
    As we previously explained, anesthesia services under the PFS are 
paid based upon a separate fee schedule, so routine updates must be 
calculated in a different way than those for services for which payment 
is calculated based upon work, PE, and MP RVUs. To apply budget 
neutrality and relativity updates to the anesthesiology fee schedule, 
we typically develop proxy RVUs for individual anesthesia services that 
are derived from the total portion of PFS payments made through the 
anesthesia fee schedule. We then update the proxy RVUs as we would the 
RVUs for other PFS services and adjust the anesthesia fee schedule 
conversion factor based on the differences between the original proxy 
RVUs and those adjusted for relativity and budget neutrality.
    We believe that taking the same approach to update the anesthesia 
fee schedule based on new MP premium data is appropriate. However, 
because work RVUs are integral to the MP RVU methodology and anesthesia 
services do not have work RVUs, we decided to seek potential 
alternatives prior to implementing our approach in conjunction with the 
proposed CY 2015 MP RVUs based on updated premium data. One commenter 
supported the delay in proposing to update the MP for anesthesia at the 
same time as updating the rest of the PFS, and another commenter 
suggested using mean anesthesia MP premiums per provider over a 4- or 
5-year period prorated by Medicare utilization to yield the MP expense 
for anesthesia services; no commenters offered alternatives to 
calculating updated MP for anesthesia services. The latter suggestion 
might apply more broadly to the MP methodology for the PFS and does not 
address the methodology as much as the data source.
    We continue to believe that payment rates for anesthesia should 
reflect MP resource costs relative to the rest of the PFS, including 
updates to reflect changes over time. Therefore, for CY 2016, to 
appropriately update the MP resource costs for anesthesia, we proposed 
to make adjustments to the anesthesia conversion factor to reflect the 
updated premium information collected for the 5 year review. To 
determine the appropriate adjustment, we calculated imputed work RVUs 
and MP RVUs for the anesthesiology fee schedule services using the 
work, PE, and MP shares of the anesthesia fee schedule. Again, this is 
consistent with our longstanding approach to making annual adjustments 
to the PE and work RVU portions of the anesthesiology fee schedule. To 
reflect differences in the complexity and risk among the anesthesia fee 
schedule services, we multiplied the service-specific risk factor for 
each anesthesia fee schedule service by the CY 2016 imputed proxy work 
RVUs and used the product as the updated raw proxy MP RVUs for each 
anesthesia service for CY 2016. We then applied the same scaling 
adjustments to these raw proxy MP RVUs that we apply to the remainder 
of the PFS MP RVUs. Finally, we calculated the aggregate difference 
between the 2015 proxy MP RVUs and the proxy MP RVUs calculated for CY 
2016. We then adjusted the portion of the anesthesia conversion factor 
attributable to MP proportionately; we refer the reader to section 
VI.C. of this final rule with comment period for the Anesthesia Fee 
Schedule Conversion Factors for CY 2016. We invited public comments 
regarding this proposal.
    The following is a summary of the comments we received regarding 
this proposal.
    Comment: We received few comments with regard to our proposal; 
commenters expressed appreciation that CMS recognized the unique 
aspects involved in updating the MP component associated with 
anesthesia services, and therefore, delayed the anesthesia MP update 
until the CY 2016 PFS.
    Response: We appreciate the commenters' feedback, and we are 
finalizing the policy as proposed.
4. MP RVU Methodology Refinements
    In the CY 2015 PFS final rule with comment period (79 FR 67591 
through 67596), we finalized updated MP RVUs that were calculated based 
on updated MP premium data obtained from state insurance rate filings. 
The methodology used in calculating the finalized CY 2015 review and 
update of resource-based MP RVUs largely paralleled the process used in 
the CY 2010 update. We posted our contractor's report, ``Final Report 
on the CY 2015 Update of Malpractice RVUs'' on the CMS Web site. It is 
also located under the supporting documents section of the CY 2015 PFS 
final rule with comment period located at http://www.cms.gov/PhysicianFeeSched/. A more detailed explanation of the 2015 MP RVU 
update can be found in the CY 2015 PFS proposed rule (79 FR 40349 
through 40355).
    In the CY 2015 PFS proposed rule, we outlined the steps for 
calculating MP RVUs. In the process of calculating MP RVUs for purposes 
of the CY 2016 PFS proposed rule, we identified a necessary refinement 
to way we calculated Step 1, which involves computing a preliminary 
national average premium for each specialty, to align the calculations 
within the methodology to the calculations described within the 
aforementioned contractor's report. Specifically, in the calculation of 
the national premium for each specialty (refer to equations 2.3, 2.4, 
2.5 in the aforementioned contractor's report), we calculate a weighted 
sum of premiums across areas and divide it by a weighted sum of MP 
GPCIs across areas. The calculation currently takes the ratio of sums, 
rather than the weighted average of the local premiums to the MP GPCI 
in that area. Instead, we proposed to update the calculation to use a 
price-adjusted premium (that is, the premium divided by the GPCI) in 
each area, and then taking a weighted average of those adjusted 
premiums. The CY 2016 PFS proposed rule MP RVUs were calculated in this 
manner.
    Additionally, in the calculation of the national average premium 
for each specialty as discussed above, our current methodology used the 
total RVUs in each area as the weight in the numerator (that is, for 
premiums), and total MP RVUs as the weights in the denominator (that 
is, for the MP GPCIs). After further consideration, we believe that the 
use of these RVU weights is problematic. Use of weights that are 
central to the process at hand presents potential circularity since 
both weights incorporate MP RVUs as part of the computation to 
calculate MP RVUs. The use of different weights for the numerator and 
denominator introduces potential inconsistency. Instead, we believe 
that it would be better to use a different measure that is independent 
of MP RVUs and better represents the reason for weighting. 
Specifically, we proposed to use area population as a share of total 
U.S. population as the weight. The premium data are for all MP premium 
costs, not just those associated with Medicare patients, so we believe 
that the distribution of the population does a better job of capturing 
the role of each area's premium in the ``national'' premium for each 
specialty than our previous Medicare-specific measure.

[[Page 70910]]

Use of population weights also avoids the potential problems of 
circularity and inconsistency.
    The CY 2016 PFS final MP RVUs, as displayed in Addendum B of this 
final rule with comment period, reflect MP RVUs calculated following 
our established methodology, with the inclusion of the proposals and 
refinements described above.
    Comment: Commenters generally supported the technical changes to 
the MP RVU methodology and found them reasonable. One commenter stated 
that such refinements will increase stability of MP RVUs and does a 
better role of capturing the role of each local area's premium in the 
``national'' premium for each specialty.
    Response: We appreciate the commenters' support, and we are 
finalizing the policy as proposed.
    Comment: One commenter stated that the MP RVU for cataract and 
other ophthalmic surgeries is deflated significantly because CMS 
assumes that optometry is providing the actual surgical portion of the 
procedure, when there is no state that allows optometrists to perform 
cataract surgery or any other major ophthalmic procedure. The commenter 
states that the clinical reality is that optometry is involved only 
during the pre- or post- procedure time period, and CMS should not 
allow optometric utilization of those codes with co-management 
modifiers to be included in the calculations for any major ophthalmic 
surgical procedures. The commenter suggested that if CMS does not agree 
to remove optometry from the calculation of MP RVUs for ophthalmic 
surgery, that CMS should use a much lower percentage of utilization to 
accurately reflect the true risk that optometrists encounter during 
this limited portion of the service. The commenter also disagreed that 
all providers who pay for malpractice insurance should have their 
premiums taken into consideration, and stated that when CMS looks at 
the dominant specialty for a given service, it must ensure that the 
claims reported--particularly by non-physician providers such as 
optometrists, are for the surgical portion of the procedure for which 
the MP RVU is being considered.
    Response: We would clarify for the commenter that we apply the risk 
factor(s) of all specialties involved with furnishing services to 
calculate the service level risk factors for all PFS codes. Our 
methodology already accounts for codes with longer global periods or 
codes where two different practitioners report different parts of the 
service, weighing the volume differentially among the kinds of 
practitioners that report the service depending on which portion of the 
service each reports. We also remind commenters that, to determine the 
raw MP RVU for a given service, we consider the greater of the work RVU 
or clinical labor RVU for the service. Since the time and intensity of 
the pre-service and post-service period are incorporated into the work 
RVUs for these services and the work RVUs are used in the development 
of MP RVUs, we believe it is methodologically consistent to incorporate 
the portion of the overall services that is furnished by practitioners 
other than those that furnish the procedure itself in the calculation 
of MP RVUs. If we were to exclude the risk factors of some specialties 
that bill a specific code from the calculation of the service level 
risk factor, the resulting MP RVU would not reflect all utilization. 
Likewise, we also disagree with the suggestion that the pre- and post- 
utilization should be removed from determining MP RVUs for ophthalmic 
surgical services. The resources associated with pre- and post-
operative periods for ophthalmic surgery are included in the total RVUs 
for the global surgical package. Accordingly, if we did not include the 
portion of utilization attributed to pre- and post-operative visits in 
the calculation of service level risk factors, the MP RVUs for global 
surgery would overstate the relative MP costs.
    Comment: One commenter identified three low volume codes typically 
performed by cardiac surgery or thoracic surgery that have anomalous MP 
RVU values: CPT code 31766 (carinal reconstruction), the commenter 
requested that the MP risk factor associated with Thoracic surgery be 
assigned; CPT Code 33420 (valvotomy, mitral valve; closed heart), the 
commenter requests that the MP risk factor associated with Cardiac 
Surgery be assigned; and for 32654 (thorascoscopy, surgical; with 
control of traumatic hemorrhage), the commenter requests that the MP 
risk factor associated with Thoracic surgery be assigned.
    Response: We agree with the commenters and have added these 
services to the list of those with specialty overrides for CY 2016. We 
hope to identify such anomalies more regularly in the future now that 
the public use file listing the overrides is available on the CMS Web 
site as indicated above.
5. CY 2016 Identification of Potentially Misvalued Services for Review
a. Public Nomination of Potentially Misvalued Codes
    In the CY 2012 PFS final rule with comment period, we finalized a 
process for the public to nominate potentially misvalued codes (76 FR 
73058). Members of the public including direct stakeholders may 
nominate potentially misvalued codes for review by submitting the code 
with supporting documentation during the 60-day public comment period 
following the release of the annual PFS final rule with comment period. 
Supporting documentation for codes nominated for the annual review of 
potentially misvalued codes may include, but is not limited to, the 
following:
     Documentation in the peer reviewed medical literature or 
other reliable data that there have been changes in work due to one or 
more of the following: Technique; knowledge and technology; patient 
population; site-of-service; length of hospital stay; and work time.
     An anomalous relationship between the code being proposed 
for review and other codes.
     Evidence that technology has changed 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, such as a misleading vignette, 
survey, or flawed crosswalk assumptions in a previous evaluation.
     Prices for certain high cost supplies or other direct PE 
inputs that are used to determine PE RVUs are inaccurate and do not 
reflect current information.
     Analyses of work time, work RVU, or direct PE inputs using 
other data sources (for example, Department of Veteran Affairs (VA) 
National Surgical Quality Improvement Program (NSQIP), the Society for 
Thoracic Surgeons (STS) National Database, and the Physician Quality 
Reporting System (PQRS) databases).
     National surveys of work time and intensity from 
professional and management societies and organizations, such as 
hospital associations.
    After we receive the nominated codes during the 60-day comment 
period following the release of the annual PFS final rule with comment 
period, we evaluate the supporting documentation and assess whether the 
nominated codes

[[Page 70911]]

appear to be potentially misvalued codes appropriate for review under 
the annual process. In the following year's PFS proposed rule, we 
publish the list of nominated codes and indicate whether we are 
proposing each nominated code as a potentially misvalued code.
    During the comment periods for the CY 2015 proposed rule and final 
rule with comment period, we received nominations and supporting 
documentation for three codes to be considered as potentially misvalued 
codes. We evaluated the supporting documentation for each nominated 
code to ascertain whether the submitted information demonstrated that 
the code should be proposed as potentially misvalued.
    CPT code 36516 (Therapeutic apheresis; with extracorporeal 
selective adsorption or selective filtration and plasma reinfusion) was 
nominated for review as potentially misvalued. The nominator stated 
that CPT code 36516 is misvalued because of incorrect direct and 
indirect PE inputs and an incorrect work RVU. Specifically, the 
nominator stated that the direct supply costs failed to include an $18 
disposable bag and the $37 cost for biohazard waste disposal of the 
post-treatment bag, and that the labor costs for nursing staff were 
inaccurate. The nominator also stated that the overhead expenses 
associated with this service were unrealistic and that the current work 
RVU undervalues a physician's time and expertise. Based on the 
requestor's comment, we proposed this code as a potentially misvalued 
code. We also noted that we established a policy in CY 2011 to consider 
biohazard bags as an indirect expense, and not as a direct PE input (75 
FR 73192).
    Comment: Several commenters stated that they do not believe CPT 
code 36516 is potentially misvalued because they found no indication 
that the clinical staff time, indirect expenses, or work was misvalued. 
All commenters requested that this code be removed from the potentially 
misvalued list.
    Response: We appreciate the comments, but we believe that the 
nominator presented some concerns that may have merit, and review of 
the code is the best way to determine the validity of the concerns 
articulated by the original requestor. Therefore, we are adding CPT 
code 36516 to the list of potentially misvalued codes and anticipate 
reviewing recommendations from the RUC and other stakeholders.
    CPT Codes 52441 (Cystourethroscopy with insertion of permanent 
adjustable transprostatic implant; single implant) and 52442 
(Cystourethroscopy with insertion of permanent adjustable 
transprostatic implant; each additional permanent adjustable 
transprostatic implant) were nominated for review as potentially 
misvalued. The nominator stated that the costs of the direct PE inputs 
were inaccurate, including the cost of the implant. We proposed these 
services as potentially misvalued codes.
    Comment: Some commenters disagreed that the commenter intended to 
nominate CPT codes 52441 and 52442 as potentially misvalued.
    Response: After reviewing the original comment, we agree with these 
commenters' perspective that the intention was not to nominate the 
codes as potentially misvalued. Therefore, we are not finalizing our 
proposal to review these codes under the potentially misvalued code 
initiative.
b. Electronic Analysis of Implanted Neurostimulator (CPT Codes 95970-
95982)
    In the CY 2015 final rule with comment period (79 FR 67670), we 
reviewed and valued all of the inputs for the following CPT codes: 
95971 (Electronic analysis of implanted neurostimulator pulse generator 
system (e.g., rate, pulse amplitude, pulse duration, configuration of 
wave form, battery status, electrode selectability, output modulation, 
cycling, impedance and patient compliance measurements); simple spinal 
cord, or peripheral (i.e., peripheral nerve, sacral nerve, 
neuromuscular) neurostimulator pulse generator/transmitter, with 
intraoperative or subsequent programming); 95972 (Electronic analysis 
of implanted neurostimulator pulse generator system (e.g., rate, pulse 
amplitude, pulse duration, configuration of wave form, battery status, 
electrode selectability, output modulation, cycling, impedance and 
patient compliance measurements); complex spinal cord, or peripheral 
(i.e., peripheral nerve, sacral nerve, neuromuscular) (except cranial 
nerve) neurostimulator pulse generator/transmitter, with intraoperative 
or subsequent programming, up to one hour); and 95973 (Electronic 
analysis of implanted neurostimulator pulse generator system (e.g., 
rate, pulse amplitude, pulse duration, configuration of wave form, 
battery status, electrode selectability, output modulation, cycling, 
impedance and patient compliance measurements); complex spinal cord, or 
peripheral (i.e., peripheral nerve, sacral nerve, neuromuscular) 
(except cranial nerve) neurostimulator pulse generator/transmitter, 
with intraoperative or subsequent programming, each additional 30 
minutes after first hour (List separately in addition to code for 
primary procedure)). Due to significant time changes in the base codes, 
we believe the entire family detailed in Table 7 is potentially 
misvalued and should be reviewed in a manner consistent with our review 
of CPT codes 95971, 95972 and 95973.

    Table 7--Potentially Misvalued Codes Identified in the Electronic
              Analysis of Implanted Neurostimulator Family
------------------------------------------------------------------------
               HCPCS                           Short descriptor
------------------------------------------------------------------------
95970..............................  Analyze neurostim no prog.
95974..............................  Cranial neurostim complex.
95975..............................  Cranial neurostim complex.
95978..............................  Analyze neurostim brain/1h.
95979..............................  Analyz neurostim brain addon.
95980..............................  Io anal gast n-stim init.
95981..............................  Io anal gast n-stim subsq.
95982..............................  Io ga n-stim subsq w/reprog.
------------------------------------------------------------------------

    Comment: One commenter agreed with the review of CPT codes 95970-
95982 as potentially misvalued services.
    Response: We are adding CPT codes 95970-95982 to the list of 
potentially misvalued codes and anticipate reviewing recommendations 
from the AMA RUC and other stakeholders.

[[Page 70912]]

c. Review of High Expenditure Services Across Specialties With Medicare 
Allowed Charges of $10,000,000 or More
    In the CY 2015 PFS rule, we proposed and finalized the high 
expenditure screen as a tool to identify potentially misvalued codes in 
the statutory category of ``codes that account for the majority of 
spending under the PFS.'' We also identified codes through this screen 
and proposed them as potentially misvalued in the CY 2015 PFS proposed 
rule (79 FR 40337-40338). However, given the resources required for the 
revaluation of codes with 10- and 90-day global periods, we did not 
finalize those codes as potentially misvalued codes in the CY 2015 PFS 
final rule with comment period. We stated that we would re-run the high 
expenditure screen at a future date, and subsequently propose the 
specific set of codes that meet the high expenditure criteria as 
potentially misvalued codes (79 FR 67578).
    As detailed in the CY 2016 PFS proposed rule (80 FR 41706), we 
believed that our current resources will not necessitate further delay 
in proceeding with the high expenditure screen for CY 2016. Therefore, 
we re-ran the screen with the same criteria finalized in last year's 
final rule. However, in developing this CY 2016 proposed list, we also 
excluded all codes with 10- and 90-day global periods since we believe 
these codes should be reviewed as part of the global surgery 
revaluation described in section II.B.6. of this final rule with 
comment period.
    We proposed 118 codes as potentially misvalued codes, identified 
using the high expenditure screen under the statutory category, ``codes 
that account for the majority of spending under the PFS.'' To develop 
the list, we followed the same approach taken last year except we 
excluded codes with 10- and 90-day global periods. Specifically, we 
identified the top 20 codes by specialty (using the specialties used in 
Table 64 in terms of allowed charges. As we did last year, we excluded 
codes that we have reviewed since CY 2010, those with fewer than $10 
million in allowed charges, and those that described anesthesia or E/M 
services. We excluded E/M services from the list of proposed 
potentially misvalued codes for the same reasons that we excluded them 
in a similar review in CY 2012. These reasons were explained in the CY 
2012 final rule with comment period (76 FR 73062 through 73065).
    Comment: Some commenters did not believe that high expenditure/high 
volume was an appropriate criterion for us to use to identify the codes 
for the potentially misvalued codes initiative. These commenters stated 
that high expenditure is not an objective gauge of potential 
misvaluation. Additionally, commenters believed that selecting codes 
that have not been reviewed in the past 5 years insinuates that the 
delivery of these services and procedures has changed radically over 
that time span, which many doubted. Other commenters believed CMS 
should provide justification for the revaluation by providing evidence 
and/or data to show how the delivery of a service or procedure has 
changed within 5 years. While many disagreed with our use of the high 
expenditure screen, some commenters specifically suggested use of 
different types of screens; some of which would screen for services for 
which volume has increased a certain percentage over a set period or 
screen for changes in the predominate site of service.
    Response: We appreciate commenters' perspective on the proposed 
list of potentially misvalued codes based on the high expenditure 
screen. It is clear that over time the resources involved in furnishing 
particular services can often change and, therefore, many services that 
have not recently been evaluated may become potentially misvalued. 
Under section 1848(c)(2)(B) of the Act, we are mandated to review 
relative values for codes for all physicians' services at least every 5 
years. The purpose of specifically identifying potentially misvalued 
codes through particular screens established through rulemaking is to 
prioritize the review of individual codes since comprehensive, annual 
review of all codes for physicians' services is not practical and, due 
to the need to maintain relativity, changes in values for individual 
services can have an impact across the PFS. We identify potentially 
misvalued codes in order to prioritize review of subsets of PFS 
services. We prioritize review of individual services based on 
indications that a particular code is likely to be misvalued and on the 
impact that the potential misvaluation of the code would have on the 
valuation of PFS services broadly. Our high expenditure screen is 
largely intended to address the latter situation where improved 
valuation would have the most significant impact on the valuation of 
PFS services more broadly. This approach is also consistent with 
another category of codes identified for screening by statute: Codes 
with high PE relative value units. In proposing to prioritize this list 
of high expenditure codes, we stated that the reason we identified 
these codes is because they have significant impact on PFS payment on a 
specialty level and have not been recently reviewed.
    Comment: A few commenters suggested that E/M services should not be 
exempt from review as potentially misvalued codes.
    Response: In the CY 2012 final rule (76 FR 73063), we explained the 
concerns expressed by commenters that informed our decision to refrain 
from finalizing our proposal to review 91 E/M codes as potentially 
misvalued. We believe that those concerns remain valid. We also believe 
that it is best to exempt E/M codes from our review of potentially 
misvalued codes since we are continuously exploring valuations of E/M 
services, potential refinements to the PFS, and other options for 
policies that may contribute to improved valuation of E/M services.
    Comment: Many commenters also stated that the review of codes over 
such a short time span puts significant burden on the specialty 
societies. Many commenters agreed that high expenditure codes should be 
reviewed on a periodic basis over multiple years. Some commenters 
specifically suggested that the periodic basis should be 10 years while 
others suggested delaying any review of the codes until after the 
misvalued code target has been met.
    Response: Because of the concerns expressed by commenters about the 
burden associated with code reviews, we continue to believe that it is 
appropriate to prioritize review of codes to a manageable subset that 
also have a high impact on the PFS and work with the specialty society 
to spread review of the remaining codes identified as potentially 
misvalued over a reasonable timeframe. Therefore, we do not believe it 
would be appropriate to remove codes from the high expenditure list 
unless we find that we have reviewed both the work RVUs and direct PE 
inputs for the code during the specified time period.
    Also, we believe that the resources involved in furnishing a 
service can evolve over time, including the time and technology used to 
furnish the service, and such efficiencies could easily develop in a 
time span as short as 5 years. As a result, we continue to believe that 
the review of these high expenditure codes is necessary to ensure that 
the services are appropriately valued. Additionally, not only do we 
believe that regular monitoring of codes with high impact on the PFS 
will produce a more accurate and equitable payment system, but we have 
a statutory obligation under

[[Page 70913]]

section 1848(c)(2)(B) of the Act to review code values at least every 5 
years (although we do not always conduct a review that involves the AMA 
RUC). Therefore, we do not agree with the commenter that suggested that 
changes in technology and practice can be effectively accounted for 
through review of code values every 10 years.
    Comment: Commenters stated that the following codes were reviewed 
since CY 2010 and, as a result, do not fit the criteria for the high 
expenditure screen and should be removed: CPT codes 51728 (Insertion of 
electronic device into bladder with voiding pressure studies), 51729 
(Insertion of electronic device into bladder with voiding and bladder 
canal (urethra) pressure studies), 76536 (Ultrasound of head and neck), 
78452 (Nuclear medicine study of vessels of heart using drugs or 
exercise multiple studies), 92557 (Air and bone conduction assessment 
of hearing loss and speech recognition), 92567 (Eardrum testing using 
ear probe), 93350 (Ultrasound examination of the heart performed during 
rest, exercise, and/or drug-induced stress with interpretation and 
report) and 94010 (Measurement and graphic recording of total and timed 
exhaled air capacity).
    Response: We agree with commenters that the codes identified do not 
fit the criteria for review based on the high expenditure screen. 
Therefore, we are not proposing to review CPT codes 51728, 51729, 
76536, 78452, 92557, 92567, 93350, and 94010 under the potentially 
misvalued code initiative.
    Comment: Commenters believed that services that are add-ons to the 
excluded 10- and 90-day global services should be removed from the list 
of codes identified through the high expenditure screen in order to 
maintain relativity. The specific codes suggested for removal were: CPT 
codes 22614 (Fusion of spine bones, posterior or posterolateral 
approach); 22840 (Insertion of posterior spinal instrumentation at base 
of neck for stabilization, 1 interspace); 22842 (Insertion of posterior 
spinal instrumentation for spinal stabilization, 3 to 6 vertebral 
segments); 22845 (Insertion of anterior spinal instrumentation for 
spinal stabilization, 2 to 3 vertebral segments); and 33518 (Combined 
multiple vein and artery heart artery bypasses).
    Response: We agree with the commenters that the codes identified 
should be removed from the list of codes identified for review through 
the high expenditure screen due to their relationship to the 10- and 
90-day global services that were excluded from our screen. Although we 
agree that these codes should be removed from this screen, we think it 
is worthwhile to note that for similar reasons, we believe we should 
consider these and similar add-on codes in conjunction with efforts to 
improve the valuation and the global surgery packages as described in 
section II.B.6. of this final rule with comment period. Therefore, we 
are not including CPT codes 22614, 22840, 22842, 22845 on the list of 
codes identified for review through the high expenditure screen.
    Comment: Commenters believed that CPT code 92002 (Eye and medical 
examination for diagnosis and treatment, new patient) is considered an 
ophthalmological evaluation and management (E/M) service and as a 
result, should be excluded for all the same reasons we excluded other 
E/M codes.
    Response: We agree with commenters that CPT code 92002 is 
considered an E/M and, as a result, should be excluded from the screen 
as were other E/Ms. Therefore, we are not including CPT code 92002 on 
the list of codes identified for review through the high expenditure 
screen.
    Comment: A few commenters requested that codes with a work RVU 
equal to 0.00 (CPT codes 51798 (Ultrasound measurement of bladder 
capacity after voiding), 88185 (Flow cytometry technique for DNA or 
cell analysis), 93296 (Remote evaluations of single, dual, or multiple 
lead pacemaker or cardioverter-defibrillator transmissions, technician 
review, support, and distribution of results up to 90 days), 96567 
(Application of light to aid destruction of premalignant and/or 
malignant skin growths, each session), and 96910 (Skin application of 
tar and ultraviolet B or petrolatum and ultraviolet B)) or equal to 
0.01 (CPT codes 95004 (Injection of allergenic extracts into skin, 
accessed through the skin)) be removed from the list of codes 
identified for review through the high expenditure screen. Commenters 
stated that historically, services with 0.00 work RVUs were excluded 
from screens and that re-reviewing a service with a 0.01 work RVU would 
most likely not lower the work component unless work was completely 
removed from the code.
    Response: We continue to believe that codes with 0.00 work RVUs or 
very low work RVUs of 0.01, should still be reviewed and can still be 
considered potentially misvalued. As stated earlier, we do not believe 
it would be appropriate to remove codes from the high expenditure list 
unless we find that we have reviewed both the work RVUs and direct PE 
inputs. Therefore, we are maintaining CPT codes 51798, 88185, 93296, 
96567, 96910 and 95004 as potentially misvalued codes and anticipate 
reviewing recommendations from the AMA RUC and other stakeholders.
    Comment: Various commenters objected to the presence of individual 
codes that met the high expenditure screen criteria based on absence of 
clinical evidence that the individual services are misvalued.
    Response: We reviewed each of these comments, and believe that 
these kinds of assessments are best addressed through the misvalued 
code review process. As we describe in this section, the criteria for 
many misvalued code screens, including this one, are designed to 
prioritize codes that may be misvalued not to identify codes that are 
misvalued. Therefore, we believe that supporting evidence for the 
accuracy of current values for particular codes is best considered as 
part of the review of individual codes through the misvalued code 
process.
    Comment: Several commenters believed that codes that are currently 
scheduled to be considered by either the CPT Editorial Panel for new 
coding or the RUC for revised valuations (for work RVUs and/or PE 
inputs) at an upcoming meeting should be removed from the screen. 
Commenters also believed that it was best to allow these codes to go 
through the RUC code review process rather than identifying the codes 
as potentially misvalued through this screen.
    Response: Although a number of codes have been or will be 
considered through the RUC review process, until we receive 
recommendations and review the codes for both work and direct PE 
inputs, we will continue to include these codes on the high expenditure 
list. We reiterate that we do not believe that the presence of a code 
on a misvalued code list signals that a particular code necessarily is 
misvalued. Instead, the lists are intended to prioritize codes to be 
reviewed under the misvalued code initiative. If any code on the list 
finalized here is already being reviewed by the RUC through its 
process, we will receive a recommendation regarding valuation for the 
code, and the presence or absence of the code in this particular list 
is immaterial. However, if subsequent to the removal of a code from the 
high expenditure code list, the RUC decides not to review the code, we 
would still want to consider the code as potentially misvalued based on 
its meeting the criteria established for the screen. Therefore, we do 
not agree that we should remove individual codes from a potentially 
misvalued code list because the RUC already anticipates

[[Page 70914]]

reviewing the code. However, we want to be clear that when we receive 
RUC recommendations regarding a code, we generally remove that code 
from misvalued code lists, regardless of whether or not the RUC 
reviewed the code on the basis of that particular screen.
    Accordingly, we are finalizing the 103 codes in Table 8 as 
potentially misvalued services under the high expenditure screen and 
seek recommended values for these codes from the RUC and other 
interested stakeholders.

  Table 8--List of Potentially Misvalued Codes Identified Through High
                     Expenditure by Specialty Screen
------------------------------------------------------------------------
                   HCPCS                          Short descriptor
------------------------------------------------------------------------
10022.....................................  Fna w/image.
11100.....................................  Biopsy skin lesion.
11101.....................................  Biopsy skin add-on.
11730.....................................  Removal of nail plate.
20550.....................................  Inj tendon sheath/ligament.
20552.....................................  Inj trigger point 1/2 muscl.
20553.....................................  Inject trigger points 3/>.
27370.....................................  Injection for knee x-ray.
29580.....................................  Application of paste boot.
31500.....................................  Insert emergency airway.
31575.....................................  Diagnostic laryngoscopy.
31579.....................................  Diagnostic laryngoscopy.
31600.....................................  Incision of windpipe.
36215.....................................  Place catheter in artery.
36556.....................................  Insert non-tunnel cv cath.
36569.....................................  Insert picc cath.
36620.....................................  Insertion catheter artery.
38221.....................................  Bone marrow biopsy.
51700.....................................  Irrigation of bladder.
51702.....................................  Insert temp bladder cath.
51720.....................................  Treatment of bladder lesion.
51784.....................................  Anal/urinary muscle study.
51798.....................................  Us urine capacity measure.
52000.....................................  Cystoscopy.
55700.....................................  Biopsy of prostate.
58558.....................................  Hysteroscopy biopsy.
67820.....................................  Revise eyelashes.
70491.....................................  Ct soft tissue neck w/dye.
70543.....................................  Mri orbt/fac/nck w/o & w/
                                             dye.
70544.....................................  Mr angiography head w/o dye.
70549.....................................  Mr angiograph neck w/o & w/
                                             dye.
71010.....................................  Chest x-ray 1 view frontal.
71020.....................................  Chest x-ray 2vw
                                             frontal&latl.
71260.....................................  Ct thorax w/dye.
71270.....................................  Ct thorax w/o & w/dye.
72195.....................................  Mri pelvis w/o dye.
72197.....................................  Mri pelvis w/o & w/dye.
73110.....................................  X-ray exam of wrist.
73130.....................................  X-ray exam of hand.
73718.....................................  Mri lower extremity w/o dye.
73720.....................................  Mri lwr extremity w/o & w/
                                             dye.
74000.....................................  X-ray exam of abdomen.
74022.....................................  X-ray exam series abdomen.
74181.....................................  Mri abdomen w/o dye.
74183.....................................  Mri abdomen w/o & w/dye.
75635.....................................  Ct angio abdominal arteries.
75710.....................................  Artery x-rays arm/leg.
75978.....................................  Repair venous blockage.
76512.....................................  Ophth us b w/non-quant a.
76519.....................................  Echo exam of eye.
77059.....................................  Mri both breasts.
77263.....................................  Radiation therapy planning.
77334.....................................  Radiation treatment aid(s).
77470.....................................  Special radiation treatment.
78306.....................................  Bone imaging whole body.
88185.....................................  Flowcytometry/tc add-on.
88189.....................................  Flowcytometry/read 16 & >.
88321.....................................  Microslide consultation.
88360.....................................  Tumor immunohistochem/
                                             manual.
88361.....................................  Tumor immunohistochem/
                                             comput.
91110.....................................  Gi tract capsule endoscopy.
92136.....................................  Ophthalmic biometry.
92240.....................................  Icg angiography.
92250.....................................  Eye exam with photos.
92275.....................................  Electroretinography.
93280.....................................  Pm device progr eval dual.
93288.....................................  Pm device eval in person.
93293.....................................  Pm phone r-strip device
                                             eval.
93294.....................................  Pm device interrogate
                                             remote.
93295.....................................  Dev interrog remote 1/2/mlt.
93296.....................................  Pm/icd remote tech serv.
93306.....................................  Tte w/doppler complete.
93351.....................................  Stress tte complete.
93503.....................................  Insert/place heart catheter.
93613.....................................  Electrophys map 3d add-on.
93965.....................................  Extremity study.
94620.....................................  Pulmonary stress test/
                                             simple.
95004.....................................  Percut allergy skin tests.
95165.....................................  Antigen therapy services.
95957.....................................  Eeg digital analysis.
96101.....................................  Psycho testing by psych/
                                             phys.
96116.....................................  Neurobehavioral status exam.
96118.....................................  Neuropsych tst by psych/
                                             phys.
96360.....................................  Hydration iv infusion init.
96372.....................................  Ther/proph/diag inj sc/im.
96374.....................................  Ther/proph/diag inj iv push.
96375.....................................  Tx/pro/dx inj new drug
                                             addon.
96401.....................................  Chemo anti-neopl sq/im.
96402.....................................  Chemo hormon antineopl sq/
                                             im.
96409.....................................  Chemo iv push sngl drug.
96411.....................................  Chemo iv push addl drug.
96567.....................................  Photodynamic tx skin.
96910.....................................  Photochemotherapy with uv-b.
97032.....................................  Electrical stimulation.
97035.....................................  Ultrasound therapy.
97110.....................................  Therapeutic exercises.
97112.....................................  Neuromuscular reeducation.
97113.....................................  Aquatic therapy/exercises.
97116.....................................  Gait training therapy.
97140.....................................  Manual therapy 1/regions.
97530.....................................  Therapeutic activities.
97535.....................................  Self care mngment training.
G0283.....................................  Elec stim other than wound.
------------------------------------------------------------------------

6. Valuing Services That Include Moderate Sedation as an Inherent Part 
of Furnishing the Procedure
    The CPT manual includes more than 400 diagnostic and therapeutic 
procedures, listed in Appendix G, for which the CPT Editorial Committee 
has determined that moderate sedation is an inherent part of furnishing 
the procedure. For these diagnostic and therapeutic procedures, only 
the procedure code is reported by the practitioner who conducts the 
procedure, without separate billing by the same practitioner for 
anesthesia services, and, in developing RVUs for these services, we 
include the resource costs associated with moderate sedation in the 
valuation. To the extent that moderate sedation is inherent in the 
diagnostic or therapeutic service, we believe that the inclusion of 
moderate sedation in the valuation of the procedure is appropriate. In 
the CY 2015 PFS proposed rule (79 FR 40349), we noted that it appeared 
practice patterns for endoscopic procedures were changing, with 
anesthesia increasingly being separately reported for these procedures. 
Due to the changing nature of medical practice, we noted that we were 
considering establishing a uniform approach to valuation for all 
Appendix G services. We continue to seek an approach that is based on 
using the best available objective, broad-based information about the 
provision of moderate sedation, rather than merely addressing this 
issue on a code-by-code basis using RUC survey data when individual 
procedures are revalued. We sought public comment on approaches to 
address the appropriate valuation of these services given that moderate 
sedation is no longer inherent for many of these services. To the 
extent that Appendix G procedure code values are adjusted to no longer 
include moderate sedation, we requested suggestions as to how moderate 
sedation should be reported and valued, and how to remove from existing 
valuations the RVUs and inputs related to moderate sedation.
    To establish an approach to valuation for all Appendix G services 
based on the best data about the provision of moderate sedation, we 
need to determine the extent to which each code may be misvalued. We 
know that there are standard packages for the direct PE inputs 
associated with moderate sedation, and we began to develop approaches 
to estimate how much of the work involved in these services is 
attributable to moderate sedation. However, we believe that we should 
seek input from the medical community prior to proposing changes in 
values for these services, given the different methodologies used to 
develop work RVUs for the hundreds of services in Appendix G. 
Therefore, in the CY 2016 PFS proposed rule, we solicited 
recommendations from the RUC and other interested stakeholders on the 
appropriate valuation of the work associated with moderate sedation 
before formally proposing an approach that allows Medicare to adjust 
payments based on the resource costs associated with the moderate 
sedation or anesthesia services that are being furnished.
    The anesthesia procedure codes 00740 (Anesthesia for procedure on 
gastrointestinal tract using an endoscope) and 00810 (Anesthesia for 
procedure on lower intestine using an endoscope) are used for 
anesthesia furnished in conjunction with lower GI

[[Page 70915]]

procedures. In reviewing Medicare claims data, we noted that a separate 
anesthesia service is now reported more than 50 percent of the time 
that several types of colonoscopy procedures are reported. Given the 
significant change in the relative frequency with which anesthesia 
codes are reported with colonoscopy services, we believe the relative 
values of the anesthesia services should be re-examined. Therefore, in 
the CY 2016 PFS proposed rule, we proposed to identify CPT codes 00740 
and 00810 as potentially misvalued. We welcomed comments on both of 
these issues.
    Comment: Several commenters noted that they support CMS' decision 
to seek input from the medical community prior to proposing a method 
for reporting and valuing moderate sedation as well as adjusting 
existing valuations to remove these services. One commenter also 
encouraged CMS to seek and consider recommendations from societies that 
represent members who provide dialysis vascular access interventional 
care, such as the American Society of Diagnostic and Interventional 
Nephrology.
    Response: We thank the commenters for their support. Through notice 
and comment rulemaking, we will review and consider any recommendations 
from the public, including those from any interested specialty 
societies.
    Comment: In response to CMS' proposal to identify anesthesia 
procedure codes 00740 and 00810 as potentially misvalued, the RUC 
stated that the committee anticipated reviewing CPT codes 00740 and 
00810 as potentially misvalued codes.
    Response: We appreciate the RUC's responsiveness to the proposal.
    Comment: One commenter disagreed that the increase in utilization 
of anesthesia is indicative of potential misvaluation of the codes in 
Appendix G. This commenter noted that the policy adopted by CMS in the 
CY 2015 final rule to eliminate cost-sharing for anesthesia furnished 
in conjunction with screening colonoscopies encourages patients to 
undergo these screenings. The commenter also noted that use of 
anesthesia with upper endoscopy procedures not only decreases patient 
discomfort, but also decreases complications and creates more optimal 
conditions for efficiency during the procedure as well as reduced 
recovery time as compared to the use of narcotics and sedative hypnotic 
agents. The commenter believes that this results in savings that offset 
the costs of anesthesia services. The commenter also expressed the view 
that the work involved in these services has not changed.
    Response: We thank the commenters for their input. Since the pool 
of beneficiaries that receive anesthesia in conjunction with these 
Appendix G services has grown, we believe it is possible that the 
typical circumstances under which patients receive these services have 
changed since the services were last reviewed. Therefore, we continue 
to seek recommendations regarding appropriate approaches to valuation 
for these services.
    Comment: A few commenters noted that there are a variety of 
services in Appendix G and stated their view that practitioners who 
furnish services for which there are claims data supporting the 
inherent nature of moderate sedation should not have to report moderate 
sedation separately, as they believe they would be faced with 
administrative burden and costs. They recommended that CMS conduct 
ongoing analysis of claims data to determine which codes may require 
unbundling of moderate sedation and to refer only those codes as 
potentially misvalued. One commenter noted that they opposed the use of 
any ``blanket approach'' to valuing moderate sedation such as removing 
the standard packages for the direct PE inputs associated with moderate 
sedation. The commenter recommended instead that we look at codes by 
family or specialty in order to ensure that reimbursements are fair and 
accurate. One commenter also noted the difference in the work involved 
with moderate sedation when it is furnished by the same physician who 
is furnishing the procedure compared with when it is furnished by 
another clinician, and requested that this be considered when valuing 
the moderate sedation services. Another commenter suggested that CMS 
create a modifier to be used by surgeons providing moderate sedation. 
They also suggested that CMS consider the expenses involved with using 
a registered nurse or CRNA, the medications and delivery systems, 
patient monitoring equipment, and lengthened postoperative recovery 
period when valuing moderate sedation services.
    Response: We thank the commenters for their input. We will consider 
input from the medical community on this issue through evaluation of 
CPT coding changes and associated RUC recommendations, as well as 
feedback received through public comments, as we value these services 
through future notice and comment rulemaking.
7. Improving the Valuation and Coding of the Global Package
a. Proposed Transition of 10-Day and 90-Day Global Packages Into 0-Day 
Global Packages
    In the CY 2015 PFS final rule (79 FR 67582 through 67591) we 
finalized a policy to transition all 10-day and 90-day global codes to 
0-day global periods in order to improve the accuracy of valuation and 
payment for the various components of global surgical packages, 
including pre- and postoperative visits and the surgical procedure 
itself. Although in previous rulemaking we have marginally addressed 
some of the concerns we identified with global packages, we believe 
there is still a need to address other fundamental issues with the 10- 
and 90-day postoperative global packages. We believe it is critical 
that the RVUs we use to develop PFS payment rates reflect the most 
accurate resource costs associated with PFS services. We believe that 
valuing global codes that package services together without objective, 
auditable data on the resource costs associated with the components of 
the services contained in the packages may significantly skew 
relativity and create unwarranted payment disparities within PFS fee-
for-service payment. We also believe that the resource-based valuation 
of individual physicians' services will continue to serve as a critical 
foundation for Medicare payment to physicians. Therefore, we believe it 
is critical that the RVUs under the PFS be based as closely and 
accurately as possible on the actual resources involved in furnishing 
the typical occurrence of specific services.
    In the rulemaking for CY 2015, we stated our belief that 
transforming all 10- and 90-day global codes to 0-day global codes 
would:
     Increase the accuracy of PFS payment by setting payment 
rates for individual services based more closely upon the typical 
resources used in furnishing the procedures;
     Avoid potentially duplicative or unwarranted payments when 
a beneficiary receives postoperative care from a different practitioner 
during the global period;
     Eliminate disparities between the payment for E/M services 
in global periods and those furnished individually;
     Maintain the same-day packaging of pre- and postoperative 
physicians' services in the 0-day global code; and
     Facilitate availability of more accurate data for new 
payment models and quality research.

[[Page 70916]]

b. Impact of the Medicare Access and CHIP Reauthorization Act of 2015
    The MACRA was enacted into law on April 16, 2015. Section 523 of 
the MACRA addresses payment for global surgical packages. Section 
523(a) adds a new paragraph at section 1848(c)(8) of the Act. Section 
1848(c)(8)(A)(i) of the Act prohibits the Secretary from implementing 
the policy established in the CY 2015 PFS final rule with comment 
period that would have transitioned all 10-day and 90-day global 
surgery packages to 0-day global periods. Section 1848(c)(8)(A)(ii) of 
the Act provides that nothing in the previous clause shall be construed 
to prevent the Secretary from revaluing misvalued codes for specific 
surgical services or assigning values to new or revised codes for 
surgical services.
    Section 1848(c)(8)(B)(i) of the Act requires CMS to develop, 
through rulemaking, a process to gather information needed to value 
surgical services from a representative sample of physicians, and 
requires that the data collection shall begin no later than January 1, 
2017. The collected information must include the number and level of 
medical visits furnished during the global period and other items and 
services related to the surgery, as appropriate. This information must 
be reported on claims at the end of the global period or in another 
manner specified by the Secretary. Section 1848(c)(8)(B)(ii) of the Act 
requires that, every 4 years, we must reassess the value of this 
collected information; and allows us to discontinue the collection if 
the Secretary determines that we have adequate information from other 
sources in order to accurately value global surgical services. Section 
1848(c)(8)(B)(iii) of the Act specifies that the Inspector General will 
audit a sample of the collected information to verify its accuracy. 
Section 1848(c)(8)(C) of the Act requires that, beginning in CY 2019, 
we must use the information collected as appropriate, along with other 
available data, to improve the accuracy of valuation of surgical 
services under the PFS. Section 523(b) of the MACRA adds a new 
paragraph at section 1848(c)(9) of the Act that authorizes the 
Secretary, through rulemaking, to delay up to 5 percent of the PFS 
payment for services for which a physician is required to report 
information under section 1848(c)(8)(B)(i) of the Act until the 
required information is reported.
    Since section 1848(c)(8)(B)(i) of the Act, as added by section 
523(a) of the MACRA, requires us to use rulemaking to develop and 
implement the process to gather information needed to value surgical 
services no later than January 1, 2017, we sought input from 
stakeholders on various aspects of this task. We solicited comments 
from the public regarding the kinds of auditable, objective data 
(including the number and type of visits and other services furnished 
by the practitioner reporting the procedure code during the current 
postoperative periods) needed to increase the accuracy of the values 
for surgical services. We also solicited comment on the most efficient 
means of acquiring these data as accurately and efficiently as 
possible. For example, we sought information on the extent to which 
individual practitioners or practices may currently maintain their own 
data on services, including those furnished during the postoperative 
period, and how we might collect and objectively evaluate those data 
for use in increasing the accuracy of the values beginning in CY 2019.
    We received many comments regarding the kinds of auditable, 
objective data needed to increase the accuracy of the values for 
surgical services and the most efficient means of acquiring these data. 
Commenters had several suggestions for the approach that CMS should 
take, including the following:
     Collect and examine large group practice data for CPT code 
99024 (postoperative follow-up visit).
     Review Medicare Part A claims data to determine the length 
of stay of surgical services performed in the hospital facility 
setting.
     Prioritize services that the Agency has identified as high 
concern subjects.
     Review postoperative visit and length of stay data for 
outliers.
    In general, commenters were supportive of the need to identify 
auditable, objective, representative data, but many were not able to 
identify a specific source for such data. We appreciate the comments we 
received and we will consider these suggestions for purposes of future 
rulemaking.
    As noted above, section 1848(c)(8)(C) of the Act mandates that we 
use the collected data to improve the accuracy of valuation of surgery 
services beginning in 2019. We described in previous rulemaking (79 FR 
67582 through 67591) the limitations and difficulties involved in the 
appropriate valuation of the global packages, especially when the 
values of the component services are not clear. We sought public 
comment on potential methods of valuing the individual components of 
the global surgical package, including the procedure itself, and the 
pre- and postoperative care, including the follow-up care during 
postoperative days. We were also interested in stakeholder input on 
what other items and services related to the surgery, aside from 
postoperative visits, are furnished to beneficiaries during 
postoperative care.
    We received many comments regarding potential methods of valuing 
the individual components of the global surgical package, including the 
following:
     Use a measured approach to valuing the individual 
components of the global surgical package rather than implementing a 
blanket data collection policy.
     Examine and consider the level of the postoperative E/M 
visits, including differences between specialties.
     Consider the interaction between the valuing the global 
surgery package and the multiple procedure payment reduction (MPPR) 
policy.
    We will consider these comments regarding the best means to develop 
and implement the process to gather information needed to value 
surgical services and will provide further opportunity for public 
comment through future rulemaking.
    Comment: We received many comments expressing strong support for 
the CMS proposal to hold an open door forum or town hall meetings with 
the public.
    Response: We appreciate the extensive comments we received from the 
public regarding the global surgical package. We have noted the 
positive feedback from commenters about holding potential open forums 
or town hall meetings to discuss this process. We will consider these 
comments regarding the best means to develop and implement the process 
to gather information needed to value surgical services as we develop 
proposals for inclusion in next year's PFS proposed rule.

C. Elimination of the Refinement Panel

1. Background
    As discussed in the CY 1993 PFS final rule with comment period (57 
FR 55938), we adopted a refinement panel process to assist us in 
reviewing the public comments on CPT codes with interim final work RVUs 
for a year and in developing final work RVUs for the subsequent year. 
We decided the panel would be composed of a multispecialty group of 
physicians who would review and discuss the work involved in each 
procedure under review, and then each panel member would individually 
rate the work of the procedure. We believed establishing the panel with 
a

[[Page 70917]]

multispecialty group would balance the interests of the specialty 
societies who commented on the work RVUs with the budgetary and 
redistributive effects that could occur if we accepted extensive 
increases in work RVUs across a broad range of services.
    Following enactment of section 1848(c)(2)(K) of the Act, which 
required the Secretary periodically to identify and review potentially 
misvalued codes and make appropriate adjustments to the RVUs, we 
reassessed the refinement panel process. As detailed in the CY 2011 PFS 
final rule with comment period (75 FR 73306), we continued using the 
established refinement panel process with some modifications.
    For CY 2015, in light of the changes we made to the process for 
valuing new, revised, and potentially misvalued codes (79 FR 67606), we 
reassessed the role that the refinement panel process plays in the code 
valuation process. We noted that the current refinement panel process 
is tied to the review of interim final values. It provides an 
opportunity for stakeholders to provide new clinical information that 
was not available at the time of the RUC valuation that might affect 
work RVU values that are adopted in the interim final value process. 
For CY 2015 interim final rates, we stated in the CY 2015 PFS final 
rule with comment period that we will use the refinement panel process 
as usual for these codes (79 FR 67609).
2. CY 2016 Refinement Panel Proposal
    We proposed to permanently eliminate the refinement panel beginning 
in CY 2016, and instead, publish the proposed rates for all interim 
final codes in the PFS proposed rule for the subsequent year. For 
example, we would publish the proposed rates for all CY 2016 interim 
final codes in the CY 2017 PFS proposed rule. With the change in the 
process for valuing codes adopted in the CY 2015 final rule with 
comment period (79 FR 67606), proposed values for most codes that are 
being valued for CY 2016 were published in the CY 2016 PFS proposed 
rule. As explained in the CY 2015 final rule with comment period, a 
smaller number of codes being valued for CY 2016 will be published as 
interim final in the 2016 PFS final rule with comment period and be 
subject to comment. Under our proposal, we will evaluate the comments 
we receive on these code values, and both respond to these comments and 
propose values for these codes for CY 2017 in the CY 2017 PFS proposed 
rule. Therefore, stakeholders will have two opportunities to comment 
and to provide any new clinical information that was not available at 
the time of the RUC valuation that might affect work RVU values that 
are adopted on an interim final basis. We believe that this proposed 
process, which includes two opportunities for public notice and 
comment, offers stakeholders a better mechanism and ample opportunity 
for providing any additional data for our consideration, and discussing 
any concerns with our interim final values, than the current refinement 
process. It also provides greater transparency because comments on our 
rules are made available to the public at http://www.regulations.gov. 
We welcomed comments on this proposed change to eliminate the use of 
refinement panels in our process for establishing final values for 
interim final codes.
    The following is a summary of the comments we received on this 
proposed change to eliminate the use of refinement panels in our 
process for establishing final values for interim final codes.
    Comment: The majority of commenters, including the American Medical 
Association/Specialty Society Relative (Value) Update Committee, 
opposed the proposal to eliminate the refinement panel. Commenters 
expressed concern that the complete elimination of the refinement 
process decreases CMS's accountability to its stakeholders who do not 
agree with the Agency's decisions. They urged CMS to provide detailed 
guidance on how to seek a change in previously finalized RVUs including 
the process to initiate a meeting with CMS staff to share and discuss 
new information or clarify previously shared information, as well as 
any key timelines or dates that may impact CMS's ability to initiate a 
change in previously finalized RVUs. Commenters also urged CMS to 
maintain a transparent appeal process. Another stated that, as CY 2017 
will be the first full year using the new process for establishing 
final values for interim final codes, it is possible that unforeseen 
needs for the continuation of the refinement panel could arise.
    Several commenters agreed with the proposal to eliminate the 
refinement panel. One commenter supported the permanent elimination of 
the refinement panel since CMS's display of interim final values in the 
subsequent year's proposed rule will provide another opportunity for 
public input. Another believed the new process will provide more timely 
input on the codes and stated that publishing interim final values for 
these in the proposed rule versus the final rule should allow adequate 
time for public comment and for physicians to prepare for changes that 
would have an impact on their practices and patients. Another commenter 
welcomed the increased opportunity to review and comment on interim 
values, especially given that CMS has not been obligated to accept 
recommendations of the refinement panels and has frequently rejected 
those recommendations.
    Response: We appreciate all of the comments on the proposal. We 
understand that commenters have an interest in a transparent process to 
review CMS's assignment of RVUs to individual PFS services. We also 
understand that some commenters believe that the purpose of the 
refinement panel process is to provide for reconsideration of the 
agency's previous decisions. However, the refinement panel was 
established to assist us in reviewing the public comments on CPT codes 
with interim final work RVUs and in balancing the interests of the 
specialty societies who commented on the work RVUs with the budgetary 
and redistributive effects that could occur if we accepted extensive 
increases in work RVUs across a broad range of services. Therefore, we 
do not believe that the refinement panel has generally served as the 
kind of ``appeals'' or reconsideration process that some stakeholders 
envision in their comments. We also have come to believe that the 
refinement panel is not achieving its intended purpose. Rather than 
providing us with additional information, balanced across specialty 
interests, to assist us in establishing work RVUs, the refinement panel 
process generally serves to rehash the issues raised and information 
already discussed at the RUC meetings and considered by CMS.
    We also appreciate commenters' interest in CMS maintaining a 
transparent process with public accountability in establishing values 
for physicians' services. In contrast to the prior process of 
establishing interim final values and using a refinement panel process 
that generally is not observed by members of the public, we believe 
that the new process of proposing the majority of code values in the 
proposed rule and making sure that those proposed values are open for 
comment prior to their taking effect for payment inherently represents 
greater transparency and accountability. We will also continue to work 
towards greater transparency in describing in rulemaking how we develop 
our proposed values for individual codes. We believe that focusing our 
resources on notice and comment rulemaking would facilitate greater 
transparency.

[[Page 70918]]

    Given that the timing for valuation of PFS services under the new 
process will in large part mitigate the need to establish values on an 
interim final basis and will provide two opportunities for notice and 
public comment, we do not believe that the refinement panel would 
necessarily provide value as an avenue for input, for either CMS or 
stakeholders, beyond that intrinsic in the notice and comment 
rulemaking process. However, we appreciate commenters' concerns that 
the new process has not been fully implemented and there may be 
unanticipated needs for additional input like the kind made available 
through the refinement panels. We agree that it may be advisable to 
preserve existing avenues for public input beyond the rulemaking 
process, like the refinement panel.
    Therefore, after consideration of all of the comments and the 
issues described in this section, we are not finalizing our proposal to 
eliminate the refinement panel process at this time. Instead, we will 
retain the ability to convene refinement panels for codes with interim 
final values under circumstances where additional input provided by the 
panel is likely to add value as a supplement to notice and comment 
rulemaking. We will make the determination on whether to convene 
refinement panels on an annual basis, based on review of comments 
received on interim final values. We remind stakeholders that CY 2016 
is the final year for which we anticipate establishing interim final 
values for existing services.
    We also want to remind stakeholders that we have established an 
annual process for the public nomination of potentially misvalued 
codes. This process, described in the CY 2012 PFS final rule (76 FR 
73058), provides an annual means for those who believe that values for 
individual services are inaccurate and should be readdressed through 
notice and comment rulemaking to bring those codes to our attention.

D. Improving Payment Accuracy for Primary Care and Care Management 
Services

    In the CY 2016 PFS proposed rule, we sought public comment on a 
number of issues regarding payment for primary care and care 
coordination under the PFS. We are committed to supporting primary 
care, and we have increasingly recognized care management as one of the 
critical components of primary care that contributes to better health 
for individuals and reduced expenditure growth (77 FR 68978). 
Accordingly, we have prioritized the development and implementation of 
a series of initiatives designed to improve the accuracy of payment 
for, and encourage long-term investment in, care management services.
    In addition to the Medicare Shared Savings Program, various 
demonstration initiatives including the Pioneer Accountable Care 
Organization (ACO) model, the patient-centered medical home model in 
the Multi-payer Advanced Primary Care Practice (MAPCP), the Federally 
Qualified Health Center (FQHC) Advanced Primary Care Practice 
demonstration and the Comprehensive Primary Care (CPC) initiative, 
among others (see the CY 2015 PFS final rule (79 FR 67715) for a 
discussion of these), we also have continued to explore potential 
refinements to the PFS that would appropriately value care management 
within Medicare's statutory structure for fee-for-service physician 
payment and quality reporting. The payment for some non-face-to-face 
care management services is bundled into the payment for face-to-face 
evaluation and management (E/M) visits. However, because the current E/
M office/outpatient visit CPT codes were designed with an overall 
orientation toward episodic treatment, we have recognized that these E/
M codes may not reflect all the services and resources involved with 
furnishing certain kinds of care, particularly comprehensive, 
coordinated care management for certain categories of beneficiaries.
    Over several years, we have developed proposals and sought 
stakeholder input regarding potential PFS refinements to improve the 
accuracy of payment for care management services. For example, in the 
CY 2013 PFS final rule with comment period, we adopted a policy to pay 
separately for transitional care management (TCM) involving the 
transition of a beneficiary from care furnished by a treating physician 
during an inpatient stay to care furnished by the beneficiary's primary 
physician in the community (77 FR 68978 through 68993). In the CY 2014 
PFS final rule with comment period, we finalized a policy, beginning in 
CY 2015 (78 FR 74414), to pay separately for chronic care management 
(CCM) services furnished to Medicare beneficiaries with two or more 
qualifying chronic conditions. We believe that these new separately 
billable codes more accurately describe, recognize, and make payment 
for non-face-to-face care management services furnished by 
practitioners and clinical staff to particular patient populations.
    We view ongoing refinements to payment for care management services 
as part of a broader strategy to incorporate input and information 
gathered from research, initiatives, and demonstrations conducted by 
CMS and other public and private stakeholders, the work of all parties 
involved in the potentially misvalued code initiative, and, more 
generally, from the public at large. Based on input and information 
gathered from these sources, we are considering several potential 
refinements that would continue our efforts to improve the accuracy of 
PFS payments. In this section, we discuss our comment solicitation and 
the public comments we received regarding these potential refinements.
1. Improved Payment for the Professional Work of Care Management 
Services
    Although both the TCM and CCM services describe certain aspects of 
professional work, some stakeholders have suggested that neither of 
these new sets of codes nor the inputs used in their valuations 
explicitly account for all of the services and resources associated 
with the more extensive cognitive work that primary care physicians and 
other practitioners perform in planning and thinking critically about 
the individual chronic care needs of particular subsets of Medicare 
beneficiaries. Commenters stated that the time and intensity of the 
cognitive efforts associated with such planning are in addition to the 
work typically required to supervise and manage the clinical staff 
associated with the current TCM and CCM codes. Similarly, we continue 
to receive requests from a few stakeholders for CMS to lead efforts to 
revise the current CPT E/M codes or construct a new set of E/M codes. 
The goal of such efforts would be to better describe and value the work 
(time and intensity) specific to primary care and other cognitive 
specialties in the context of complex care of patients relative to the 
time and intensity of the procedure-oriented care physicians and 
practitioners, who use the same codes to report E/M services. Some of 
these stakeholders have suggested that in current medical practice, 
many physicians, in addition to the time spent treating acute 
illnesses, spend substantial time working toward optimal outcomes for 
patients with chronic conditions and patients they treat episodically, 
which can involve additional work not reflected in the codes that 
describe E/M services since that work is not typical across the wide 
range of practitioners that report the same codes. According to these 
groups, this work involves

[[Page 70919]]

medication reconciliation, the assessment and integration of numerous 
data points, effective coordination of care among multiple other 
clinicians, collaboration with team members, continuous development and 
modification of care plans, patient or caregiver education, and the 
communication of test results.
    We agree with stakeholders that it is important for Medicare to use 
codes that accurately describe the services furnished to Medicare 
beneficiaries and to accurately reflect the relative resources involved 
with furnishing those services. Therefore, in the CY 2016 PFS proposed 
rule we solicited public comments on ways to recognize the different 
resources (particularly in cognitive work) involved in delivering 
broad-based, ongoing treatment, beyond those resources already 
incorporated in the codes that describe the broader range of E/M 
services. The resource costs of this work may include the time and 
intensity related to the management of both long-term and, in some 
cases, episodic conditions. To appropriately recognize the different 
resource costs for this additional cognitive work within the structure 
of PFS resource-based payments, we were particularly interested in 
codes that could be used in addition to, not instead of, the current E/
M codes.
    In our comment solicitation, we stated that, in principle, these 
codes could be similar to the hundreds of existing add-on codes that 
describe additional resource costs, such as additional blocks or slides 
in pathology services, additional units of repair in dermatologic 
procedures, or additional complexity in psychotherapy services. For 
example, these codes might allow for the reporting of the additional 
time and intensity of the cognitive work often undertaken by primary 
care and other cognitive specialties in conjunction with an E/M 
service, much like add-on codes for certain procedures or diagnostic 
test describe the additional resources sometimes involved in furnishing 
those services. Similar to the CCM code, the codes might describe the 
increased resources used over a longer period of time than during one 
patient visit. For example, the add-on codes could describe the 
professional time in excess of 30 minutes and/or a certain set of 
furnished services, per one calendar month, for a single patient to 
coordinate care, provide patient or caregiver education, reconcile and 
manage medications, assess and integrate data, or develop and modify 
care plans. Such activity may be particularly relevant for the care of 
patients with multiple or complicated chronic or acute conditions, and 
should contribute to optimal patient outcomes including more 
coordinated, safer care.
    Like CCM, we would require that the patient have an established 
relationship with the billing professional; and additionally, the use 
of an add-on code would require the extended professional resources to 
be reported with another separately payable service. However, in 
contrast to the CCM code, the new codes might be reported based on the 
resources involved in professional work, instead of the resource costs 
in terms of clinical staff time. The codes might also apply broadly to 
patients in a number of different circumstances, and would not 
necessarily make reporting the code(s) contingent on particular 
business models or technologies for medical practices. We stated that 
we were interested in stakeholder comments on the kinds of services 
that involve the type of cognitive work described above and whether or 
not the creation of particular codes might improve the accuracy of the 
relative values used for such services on the PFS. Finally, we were 
interested in receiving information from stakeholders on the overlap 
between the kinds of cognitive resource costs discussed above and those 
already accounted for through the currently payable codes that describe 
CCM and other care management services.
    We strongly encouraged stakeholders to comment on this topic to 
assist us in developing potential proposals to address these issues 
through rulemaking in CY 2016 for implementation in CY 2017. We 
anticipated using an approach similar to our multi-year approach for 
implementing CCM and TCM services, to facilitate broader input from 
stakeholders regarding details of implementing such codes, including 
their structure and description, valuation, and any requirements for 
reporting.
    Comment: We received many comments on these potential policy and 
coding refinements that will be useful in the development of potential 
future policy proposals. We note that the American Medical Association 
and others urged us to make separate Medicare payment for existing CPT 
codes that are not separately paid under the PFS, but that describe 
similar services and for which we have RUC-recommended values. These 
codes describe a broad range of services, some of which involve non 
face-to-face care management over a period of time.
    Response: We will take the comments into consideration in 
developing any potential policy proposals in future PFS rulemaking.
2. Establishing Separate Payment for Collaborative Care
    We believe that the care and management for Medicare beneficiaries 
with multiple chronic conditions, a particularly complicated disease or 
acute condition, or common behavioral health conditions often requires 
extensive discussion, information-sharing and planning between a 
primary care physician and a specialist (for example, with a 
neurologist for a patient with Alzheimer's disease plus other chronic 
diseases). We note that for CY 2014, CPT created four codes that 
describe interprofessional telephone/internet consultative services 
(CPT codes 99446-99449). Because Medicare includes payment for 
telephone consultations with or about a beneficiary as a part of other 
services furnished to the beneficiary, we currently do not make 
separate payment for these services. We note that such 
interprofessional consultative services are distinct from the face-to-
face visits previously reported to Medicare using the consultation 
codes, and we refer the reader to the CY 2010 PFS final rule for 
information regarding Medicare payment policies for those services (74 
FR 61767).
    However, in considering how to improve the accuracy of our payments 
for care coordination, particularly for patients requiring more 
extensive care, in the CY 2016 PFS proposed rule we also sought comment 
on how Medicare might accurately account for the resource costs of a 
more robust interprofessional consultation within the current structure 
of PFS payment. For example, we were interested in stakeholders' 
perspectives regarding whether there are conditions under which it 
might be appropriate to make separate payment for services like those 
described by these CPT codes. We expressed interest in stakeholder 
input regarding the parameters of, and resources involved in, these 
collaborations between a specialist and primary care practitioner, 
especially in the context of the structure and valuation of current E/M 
services. In particular, we were interested in comments about how these 
collaborations could be distinguished from the kind of services 
included in other E/M services, how these services could be described 
if stakeholders believe the current CPT codes are not adequate, and how 
these services should be valued under the PFS. We also expressed 
interest in comments on whether we should tie those interprofessional 
consultations to a beneficiary encounter, and on

[[Page 70920]]

developing appropriate beneficiary protections to ensure that 
beneficiaries are fully aware of the involvement of the specialist in 
the beneficiary's care and the associated benefits of the collaboration 
between the primary care physician and the specialist physician prior 
to being billed for such services.
    Additionally, we solicited comments on whether this kind of care 
might benefit from inclusion in a CMMI model that would allow Medicare 
to test its effectiveness with a waiver of beneficiary financial 
liability and/or variation of payment amounts for the consulting and 
the primary care practitioners. Without such protections, beneficiaries 
could be responsible for coinsurance for services of physicians whose 
role in the beneficiary's care is not necessarily understood by the 
beneficiary. Finally, we also solicited comments on key technology 
supports needed to support collaboration between specialist and primary 
care practitioners in support of high quality care management services, 
on whether we should consider including technology requirements as part 
of any proposed services, and on how such requirements could be 
implemented in a way that minimizes burden on providers. We encouraged 
stakeholders to comment on this topic to assist us in developing 
potential proposals to address these issues through rulemaking in CY 
2016 for implementation in CY 2017. We anticipated using an approach 
similar to our multi-year approach for implementing CCM and TCM 
services, to facilitate broader input from stakeholders regarding 
details of implementing such codes, including their structure and 
description, valuation, and any requirements for reporting.
    Comment: We received many comments on these potential policy and 
coding refinements that will be useful in the development of potential 
future policy proposals.
    Response: We will take the comments into consideration in 
developing any potential policy proposals in future PFS rulemaking.
a. Collaborative Care Models for Beneficiaries With Common Behavioral 
Health Conditions
    In recent years, many randomized controlled trials have established 
an evidence base for an approach to caring for patients with common 
behavioral health conditions called ``Collaborative Care.'' 
Collaborative care typically is provided by a primary care team, 
consisting of a primary care provider and a care manager, who works in 
collaboration with a psychiatric consultant, such as a psychiatrist. 
Care is directed by the primary care team and includes structured care 
management with regular assessments of clinical status using validated 
tools and modification of treatment as appropriate. The psychiatric 
consultant provides regular consultations to the primary care team to 
review the clinical status and care of patients and to make 
recommendations. Several resources have been published that describe 
collaborative care models in greater detail and assess their impact, 
including pieces from the University of Washington (http://aims.uw.edu/
), the Institute for Clinical and Economic Review (http://ctaf.org/reports/integration-behavioral-health-primary-care), and the Cochrane 
Collaboration (http://www.cochrane.org/CD006525/DEPRESSN_collaborative-care-for-people-with-depression-and-anxiety).
    Because this particular kind of collaborative care model has been 
tested and documented in medical literature, in the proposed rule, we 
were particularly interested in comments on how coding under the PFS 
might facilitate appropriate valuation of the services furnished under 
such a collaborative care model. As these kinds of collaborative models 
of care become more prevalent, we would evaluate potential refinements 
to the PFS to account for the provision of services through such a 
model. We solicited information to assist us in considering refinements 
to coding and payment to address this model in particular. We also 
sought comments on the potential application of the collaborative care 
model for other diagnoses and treatment modalities. For example, we 
solicited comments on how a code similar to the CCM code applicable to 
multiple diagnoses and treatment plans could be used to describe 
collaborative care services, as well as other interprofessional 
services, and could be appropriately valued and reported within the 
resource-based relative value PFS system, and how the resources 
involved in furnishing such services could be incorporated into the 
current set of PFS codes without overlap. We also requested input on 
whether requirements similar to those used for CCM services should 
apply to a new collaborative care code, and whether such a code could 
be reported in conjunction with CCM or other E/M services. For example, 
we might consider whether the code should describe a minimum amount of 
time spent by the psychiatric consultant for a particular patient per 
one calendar month and be complemented by either the CCM or other care 
management code to support the care management and primary care 
elements of the collaborative care model. As with our comment 
solicitation on interprofessional consultation, since the patient may 
not have direct contact with the psychiatric consultant we solicited 
comments on whether and, if so, how written consent for the non-face-
to-face services should be required prior to practitioners reporting 
any new interprofessional consultation code or the care management 
code.
    We also solicited comments on appropriate care delivery 
requirements for billing, the appropriateness of CCM technology 
requirements or other technology requirements for these services, 
necessary qualifications for psychiatric consultants, and whether or 
not there are particular conditions for which payment would be more 
appropriate than others; as well as how these services may interact 
with quality reporting, the resource inputs we might use to value the 
services under the PFS (specifically, work RVUs, time, and direct PE 
inputs), and whether or not separate codes should be developed for the 
psychiatric consultant and the care management components of the 
service.
    In addition, we solicited comments on whether this kind of care 
model should be implemented through a CMMI model that would allow 
Medicare to test its effectiveness with a waiver of beneficiary 
financial liability and/or variation of payment methodology and amounts 
for the psychiatric consultant and the primary care physician. Again, 
we encouraged stakeholders to comment on this topic to assist us in 
developing potential proposals to address these issues through 
rulemaking in CY 2016 for implementation in CY 2017.
    Comment: We received many positive comments regarding the 
possibility of implementing new payment codes that would allow more 
accurate reporting and payment when these services are furnished to 
Medicare beneficiaries.
    Response: We appreciate commenters' interest in appropriate coding 
and payment for these services. We will take all comments into 
consideration as we consider the development of proposals in future 
rulemaking.
    We took particular note that several commenters identified resource 
inputs CMS might use to value these services under the PFS, including 
defined time elements. As we consider those comments, we encourage 
stakeholders to consider whether there are alternatives to time 
elements that would account for the range in intensity of services 
delivered in accordance with beneficiary need. In addition, since the

[[Page 70921]]

collaborative care models described in the proposed rule include 
primary care-based care management, as well as psychiatric consulting, 
we encourage further input including comments on this final rule with 
comment period, from a broad group of stakeholders, including the 
community of primary care providers, who are critical in the successful 
provision of these Services.
3. CCM and TCM Services
a. Reducing Administrative Burden for CCM and TCM Services
    In CY 2013, we implemented separate payment for TCM services under 
CPT codes 99495 and 99496, and in CY 2015, we implemented separate 
payment for CCM services under CPT code 99490. We established many 
service elements and billing requirements that the physician or 
nonphysician practitioner must satisfy to fully furnish these services 
and to report these codes (77 FR 68989, 79 FR 67728). Particularly 
because of the significant amount of non face-to-face work involved in 
CCM and TCM services, these elements and requirements were relatively 
extensive and generally exceeded those for other E/M and similar 
services. Since the implementation of these services, some 
practitioners have stated that the service elements and billing 
requirements are too burdensome, and suggested that they interfere with 
their ability to provide these care management services to their 
patients who could benefit from them. In light of this feedback from 
the physician and practitioner community, we solicited comments on 
steps that we could take to further improve beneficiary access to TCM 
and CCM services. Our aims in implementing separate payment for these 
services are that Medicare practitioners are paid appropriately for the 
services they furnish, and that beneficiaries receive comprehensive 
care management that benefits their long term health outcomes. However, 
we understand that excessive requirements on practitioners could 
possibly undermine the overall goals of the payment policies. In the CY 
2016 PFS proposed rule, we solicited stakeholder input on how we could 
best balance access to these services and practitioner burdens such 
that Medicare beneficiaries may obtain the full benefit of these 
services.
b. Payment for CPT Codes Related to CCM Services
    As we stated in the CY 2015 PFS final rule (79 FR 67719), we 
believe that Medicare beneficiaries with two or more chronic conditions 
as defined under the CCM code can benefit from the care management 
services described by that code, and we want to make this service 
available to all such beneficiaries. As with most services paid under 
the PFS, we recognized that furnishing CCM services to some 
beneficiaries will require more resources and some less; but we value 
and make payment based upon the typical service. Because CY 2015 is the 
first year for which we are making separate payment for CCM services, 
we sought information regarding the circumstances under which CCM 
services are furnished. This information would include the clinical 
status of the beneficiaries receiving the service and the resources 
involved in furnishing the service, such as the number of documented 
non-face-to-face minutes furnished by clinical staff in the months the 
code is reported. We were interested in examining such information to 
identify the range of minutes furnished over those months as well as 
the distribution of the number of minutes within the total volume of 
services. We also solicited objective data regarding the resource costs 
associated with furnishing the services described by this code. We 
stated that as we review that information, in addition to our own 
claims data, we would consider any changes in payment and coding that 
may be warranted in the coming years, including the possibility of 
establishing separate payment amounts and making Medicare payment for 
the related CPT codes, such as the complex care coordination codes, CPT 
codes 99487 and 99489.
    Comment: We received several comments recommending various changes 
in the billing requirements for CCM and TCM services. Some commenters 
sought significant changes to the CCM scope of service elements, such 
as eliminating the requirement to use certified electronic health 
record technology (CEHRT); suspending the electronic care plan sharing 
requirement until such time that electronic health records (EHRs) have 
the ability to support such capabilities; or having CMS provide a model 
patient consent form. Other commenters recommended more minor changes 
such as clarifying the application of CCM rules regarding fax 
transmission from certified EHRs, and changing the reporting rules for 
TCM services (required date of service and when the claim can be 
submitted). Many commenters stated the current payment amounts are not 
adequate to cover the resources required to furnish CCM or TCM services 
and urged CMS to increase payments, for example by creating an add-on 
code to CPT code 99490, increasing the clinical labor PE input for CPT 
code 99490 to the RUC recommended 60 minutes, and/or paying separately 
for the complex CCM codes (CPT codes 99487 and 99489). Commenters also 
noted that since CY 2015 is the first year of separate payment for CCM, 
there is little utilization data available to assess average time spent 
in furnishing CCM services and similar issues. One commenter planned to 
share data with CMS next spring upon completion of a study on the cost 
and value associated with care management.
    Response: We will take these comments into consideration in the 
development of potential proposals for future PFS rulemaking. We will 
develop subregulatory guidance clarifying the intersection of fax 
transmission and CEHRT for purposes of CCM billing. Regarding TCM 
services, we are adopting the commenters' suggestions that the required 
date of service reported on the claim be the date of the face-to-face 
visit, and to allow (but not require) submission of the claim when the 
face-to-face visit is completed, consistent with current policy 
governing the reporting of global surgery and other bundles of services 
under the PFS. We will revise the existing subregulatory guidance for 
TCM services accordingly.

E. Target for Relative Value Adjustments for Misvalued Services

    Section 220(d) of the Protecting Access to Medicare Act of 2014 
(PAMA) (Pub. L. 113-93, enacted on April 1, 2014) added a new 
subparagraph at section 1848(c)(2)(O) of the Act to establish an annual 
target for reductions in PFS expenditures resulting from adjustments to 
relative values of misvalued codes. Under section 1848(c)(2)(O)(ii) of 
the Act, if the estimated net reduction in expenditures for a year as a 
result of adjustments to the relative values for misvalued codes is 
equal to or greater than the target for that year, reduced expenditures 
attributable to such adjustments shall be redistributed in a budget-
neutral manner within the PFS in accordance with the existing budget 
neutrality requirement under section 1848(c)(2)(B)(ii)(II) of the Act. 
The provision also specifies that the amount by which such reduced 
expenditures exceeds the target for a given year shall be treated as a 
net reduction in expenditures for the succeeding year, for purposes of 
determining whether the target has been met for that subsequent year. 
Section 1848(c)(2)(O)(iv) of the Act defines a target recapture amount 
as the difference between the target for the year and the estimated net 
reduction in expenditures under the PFS resulting

[[Page 70922]]

from adjustments to RVUs for misvalued codes. Section 
1848(c)(2)(O)(iii) of the Act specifies that, if the estimated net 
reduction in PFS expenditures for the year is less than the target for 
the year, an amount equal to the target recapture amount shall not be 
taken into account when applying the budget neutrality requirements 
specified in section 1848(c)(2)(B)(ii)(II) of the Act. Section 220(d) 
of the PAMA applies to calendar years (CYs) 2017 through 2020 and sets 
the target under section 1848(c)(2)(O)(v) of the Act at 0.5 percent of 
the estimated amount of expenditures under the PFS for each of those 4 
years.
    Section 202 of the Achieving a Better Life Experience Act of 2014 
(ABLE) (Division B of Pub. L. 113-295, enacted December 19, 2014) 
amended section 1848(c)(2)(O) of the Act to accelerate the application 
of the PFS expenditure reduction target to CYs 2016, 2017, and 2018, 
and to set a 1 percent target for CY 2016 and 0.5 percent for CYs 2017 
and 2018. As a result of these provisions, if the estimated net 
reduction for a given year is less than the target for that year, 
payments under the fee schedule will be reduced.
    In the CY 2016 PFS proposed rule, we proposed a methodology to 
implement this statutory provision in a manner consistent with the 
broader statutory construct of the PFS. In developing this proposed 
methodology, we identified several aspects of our approach for which we 
specifically solicited comments. We organized this discussion by 
identifying and explaining these aspects in particular but we solicited 
comments on all aspects of our proposal.
1. Distinguishing ``Misvalued Code'' Adjustments From Other RVU 
Adjustments
    The potentially misvalued code initiative has resulted in changes 
in PFS payments in several ways. First, potentially misvalued codes 
have been identified, reviewed, and revalued through notice and comment 
rulemaking. However, in many cases, the identification of particular 
codes as potentially misvalued has led to the review and revaluation of 
related codes, and frequently, to revisions to the underlying coding 
for large sets of related services. Similarly, the review of individual 
codes has initiated reviews and proposals to make broader adjustments 
to values for codes across the PFS, such as when the review of a series 
of imaging codes prompted a RUC recommendation and CMS updated the 
direct PE inputs for imaging services to assume digital instead of film 
costs. This change, originating through the misvalued code initiative, 
resulted in a significant reduction in RVUs for a large set of PFS 
services, even though the majority of affected codes were not initially 
identified through potentially misvalued code screens. Finally, due to 
both the relativity inherent in the PFS ratesetting process and the 
budget neutrality requirements specified in section 
1848(c)(2)(B)(ii)(II) of the Act, adjustments to the RVUs for 
individual services necessarily result in the shifting of RVUs to broad 
sets of other services across the PFS.
    To implement the PFS expenditure reduction target provisions under 
section 1848(c)(2)(O) of the Act, we must identify a subset of the 
adjustments in RVUs for a year to reflect an estimated ``net 
reduction'' in expenditures. Therefore, we dismissed the possibility of 
including all changes in RVUs for a year in calculating the estimated 
net reduction in PFS expenditures, even though we believe that the 
redistributions in RVUs to other services are an important aspect of 
the potentially misvalued code initiative. Conversely, we considered 
the possibility of limiting the calculation of the estimated net 
reduction in expenditures to reflect RVU adjustments made to the codes 
formally identified as ``potentially misvalued.'' We do not believe 
that calculation would reflect the significant changes in payments that 
have directly resulted from the review and revaluation of misvalued 
codes under section 1848(c)(2) of the Act. We further considered 
whether to include only those codes that underwent a comprehensive 
review (work and PE). As we previously have stated (76 FR 73057), we 
believe that a comprehensive review of the work and PE for each code 
leads to the more accurate assignment of RVUs and appropriate payments 
under the PFS than do fragmentary adjustments for only one component. 
However, if we calculated the net reduction in expenditures using 
revisions to RVUs only from comprehensive reviews, the calculation 
would not include changes in PE RVUs that result from proposals like 
the film-to-digital change for imaging services, which not only 
originated from the review of potentially misvalued codes, but 
substantially improved the accuracy of PFS payments faster and more 
efficiently than could have been done through the multiple-year process 
required to complete a comprehensive review of all imaging codes.
    After considering these options, we believe that the best approach 
is to define the reduction in expenditures as a result of adjustments 
to RVUs for misvalued codes to include the estimated pool of all 
services with revised input values. This would limit the pool of RVU 
adjustments used to calculate the net reduction in expenditures to 
those for the services for which individual, comprehensive review or 
broader proposed adjustments have resulted in changes to service-level 
inputs of work RVUs, direct PE inputs, or MP RVUs, as well as services 
directly affected by changes to coding for related services. For 
example, coding changes in certain codes can sometimes necessitate 
revaluations for related codes that have not been reviewed as misvalued 
codes, because the coding changes have also affected the scope of the 
related services. This definition would incorporate all reduced 
expenditures from revaluations for services that are deliberately 
addressed as potentially misvalued codes, as well as those for services 
with broad-based adjustments like film-to-digital and services that are 
redefined through coding changes as a result of the review of misvalued 
codes.
    Because the annual target is calculated by measuring changes from 
one year to the next, we also considered how to account for changes in 
values that are best measured over 3 years, instead of 2 years. Under 
our current process, the overall change in valuation for many misvalued 
codes is measured across values for 3 years: the original value in the 
first year, the interim final value in the second year, and the 
finalized value in the third year. As we describe in section II.H.2. of 
this final rule with comment period, our misvalued code process has 
been to establish interim final RVUs for the potentially misvalued, 
new, and revised codes in the final rule with comment period for a 
year. Then, during the 60-day period following the publication of the 
final rule with comment period, we accept public comment about those 
valuations. For the final rule with comment period for the subsequent 
year, we consider and respond to public comments received on the 
interim final values, and make any appropriate adjustments to values 
based on those comments. However, the calculation of the target would 
only compare changes between 2 years and not among 3 years, so the 
contribution of a particular change towards the target for any single 
year would be measured against only the preceding year without regard 
to the overall change that takes place over 3 years.
    For recent years, interim final values for misvalued codes (year 2) 
have generally reflected reductions relative to original values (year 
1), and for most codes, the interim final values (year 2)

[[Page 70923]]

are maintained and finalized (year 3). However, when values for 
particular codes have changed between the interim final (year 2) and 
final values (year 3) based on public comment, the general tendency has 
been that codes increase in the final value (year 3) relative to the 
interim final value (year 2), even in cases where the final value (year 
3) represents a decrease from the original value (year 1). Therefore, 
for these codes, the year 2 changes compared to year 1 would risk over-
representing the overall reduction, while the year 3 to year 2 changes 
would represent an increase in value. If there were similar targets in 
every PFS year, and a similar number of misvalued code changes made on 
an interim final basis, the incongruence in measuring what is really a 
3-year change in 2-year increments might not be particularly 
problematic since each year's calculation would presumably include a 
similar number of codes measured between years 1 and 2 and years 2 and 
3.
    However, including changes that take place over 3 years generates 
challenges in calculating the target for CY 2016 for two reasons. 
First, CY 2015 was the final full year of establishing interim final 
values for all new, revised, and potentially misvalued codes. Starting 
with this final rule with comment period, we are finalizing values for 
a significant portion of misvalued codes during one calendar year. 
Therefore, CY 2015 will include a significant number of services that 
would be measured between years 2 and 3 relative to the services 
measured between 1 and 2 years. Second, because there was no target for 
CY 2015, any reductions that occurred on an interim final basis for CY 
2015 were not counted toward achievement of a target. If we were to 
include any upward adjustments made to these codes based on public 
comment as ``misvalued code'' changes for CY 2016, we would effectively 
be counting the service-level increases for 2016 (year 3) relative to 
2015 (year 2) against achievement of the target without any 
consideration to the service-level changes relative to 2014 (year 1), 
even in cases where the overall change in valuation was negative.
    Therefore, we proposed to exclude code-level input changes for CY 
2015 interim final values from the calculation of the CY 2016 misvalued 
code target since the misvalued change occurred over multiple years, 
including years not applicable to the misvalued code target provision.
    We note that the impact of interim final values in the calculation 
of targets for future years will be diminished as we transition to 
proposing values for almost all new, revised, and potentially misvalued 
codes in the proposed rule. We anticipate a smaller number of interim 
final values for CY 2016 relative to CY 2015. For calculation of the CY 
2018 target, we anticipate almost no impact based on misvalued code 
adjustments that occur over multiple years.
    The list of codes with changes for CY 2016 included under this 
definition of ``adjustments to RVUs for misvalued codes'' is available 
on the CMS Web site under downloads for the CY 2016 PFS final rule with 
comment period at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.
    The following is a summary of the comments we received regarding 
this aspect of the proposal to implement the statutory provision:
    Comment: Several commenters, including the RUC, supported CMS' 
proposal to include all services that receive revised input values even 
if the specific codes were not identified on a misvalued services list 
for review; the commenters' stated that this is a reasonable and fair 
approach.
    Response: We appreciate the commenters' feedback and support.
    Comment: A few commenters stated that the selection of codes to be 
included for review beyond the codes identified by the screens should 
be determined by the pertinent specialty societies as they are the best 
determiners of which codes make up a family of codes. Another commenter 
stated that CMS should include the E/M services in the list of codes 
that are potentially misvalued.
    Response: We note that the process for selection of codes to be 
reviewed as potentially misvalued is addressed in section II.H. of this 
final rule with comment period and has also been addressed in prior 
rulemaking. Our proposal to implement section 1848(c)(2)(O) of the Act 
does not address how codes are identified to be reviewed under the 
misvalued code initiative. Instead, it addresses how to identify the 
changes in expenditures that result from such reviews in the 
calculation of the target amount.
    Comment: Several commenters, including the RUC, also supported CMS' 
proposal to exclude code level input changes for CY 2015 interim final 
values from the calculation of the target. The commenters concur that 
the year 2 and year 3 changes in values represent an incomplete picture 
of the redistributive effects for a particular year resulting from the 
review of the misvalued services, and the vast majority of 
redistribution happens between year 1 and year 2.
    Response: We appreciate the commenters' support and feedback.
    Comment: One commenter disagreed with CMS' proposal to exclude 
code-level input changes for 2015 interim final values stating that it 
means organized medicine does not get credit for any net decreases 
associated with such codes and is therefore being penalized. The 
commenter requested that CMS consider including 2015 interim final 
values in the calculation of the 2016 misvalued code target even though 
the misvalued change occurred over multiple years. Another commenter 
stated that the proposed net reduction in expenditures of 0.25 percent, 
as opposed to 1.00, means that the 0.75 percent difference will come 
from the conversion factor, and doing so would more than negate the 0.5 
percent increase physicians were promised under MACRA, and therefore 
the commenter requested that CMS help mitigate this result by including 
2015 interim final values in the calculation of the target.
    Response: With regard to the commenters who disagreed with the 
exclusion of code-level input changes for 2015 interim final values, we 
cannot determine if the commenters intended to suggest that CMS was not 
including decreases that would help towards the achievement of the 
misvalued code target by excluding changes for 2015 interim final 
values, or that CMS should include the changes between years 1 and 3. 
As stated in the CY 2016 proposed rule (80 FR 41712 through 41713), 
when values for particular codes have changed between the interim final 
(year 2) and final values (year 3) based on public comment, the general 
tendency has been that code values increase in the final value (year 3) 
relative to the interim final value (year 2), even in cases where the 
final value (year 3) represents a decrease from the original value 
(year 1). Additionally, the statute requires comparison between 2 
years, and therefore, we do not believe we have the authority to 
include changes between year 1 and year 3. Since our remaining options 
were to include changes between year 2 and year 3 which, as indicated 
above, generally results in an increase, or to exclude code-level input 
changes for CY 2015 interim final values, and the commenters express 
interest in moving closer to achievement of the target, we do not 
believe it would be in the commenters' interest to include the changes 
between years 2 and 3.

[[Page 70924]]

    With regard to the commenter who stated that the net reduction in 
expenditures under the PFS if CMS does not achieve the target reduction 
would negate the 0.5 percent increase physicians were promised under 
MACRA, we note that both of these provisions continue to apply under 
current law.
    Comment: Some commenters, including the RUC, suggested that CMS 
should be sure to include existing codes that are either being deleted 
or will have utilization changes as a result of the misvalued code 
project and/or the CPT Editorial Panel process. Another commenter 
stated that CMS was excluding existing codes with large volume changes, 
and recommended that such codes be included in the calculation of the 
target. Some commenters recommended that CMS conduct a procedure-to-
procedure comparison and then calculate the net reduction in RVUs, 
including the values of new and deleted CPT codes prompted by the 
misvalued code initiative. The commenters stated that this is an area 
where the specialty societies and CMS need to work together to 
determine the comparisons for calculating the net reduction.
    Response: We agree that changes in coding often contribute to 
improved valuation of PFS services. We note that we included these 
changes in our methodology in the proposed rule and explained that we 
would include services directly affected by changes to coding for 
related services. We did not propose to exclude existing codes with 
large volume changes; changes for such codes have been included. To 
clarify, we are including changes in values for any codes for which 
changes in coding or policies may result in differences in how a given 
service is reported from one year to the next. Under our current 
ratesetting methodologies, we already consider how coding revisions 
change the way services are reported from one year to the next. The 
crosswalk we use to incorporate such changes in our methodology is 
based on RUC and specialty society recommendations that explicitly 
address the kinds of procedure-to-procedure comparisons suggested by 
the commenter. This file is available in the ``downloads'' section of 
the PFS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html 
under ``Analytic Crosswalk from CY 2015 to CY 2016.'' Since it reflects 
the best information available, we used the same crosswalk to account 
for coding changes in the calculation of the target. We also refer 
readers to the list of HCPCS defined as misvalued for purposes of the 
target which is available on the CMS Web site under downloads for the 
CY 2016 PFS final rule with comment period.
    Comment: One commenter recommended that CMS include the review of 
all individual codes and broader adjustments across the PFS, as this 
would more accurately represent the total revaluations.
    Response: As we explained in the proposed rule, our goal is to 
include the review of all individual codes and changes to inputs for 
additional codes where changes can be measured between two years. 
Because PFS payments are developed under the statutory requirements of 
relativity and budget neutrality, including all adjustments to all 
codes would necessarily result in a net of zero.
    Comment: A few commenters raised objections to the statutory 
provision. For example, one commenter stated that the legislation is 
penalizing physicians and other healthcare professionals for already 
having taken on the task of identifying and revaluating potentially 
misvalued codes over the past 10 years. Other commenters stated that 
since the RUC and specialty societies have been addressing potentially 
misvalued codes since 2006, there should be a way to include 
revaluations made back to 2006 in the calculation of the target. 
Another commenter stated that CMS should hold primary care and E/M 
services harmless in this process, since these services are not over-
valued but rather under-valued. One commenter requested more time to 
evaluate the proposed process to identify yearly targets, and 
encouraged CMS to work with the AMA to discuss this issue at future RUC 
Panel meetings prior to implementing the provision. One commenter 
requested that CMS review its approach to determine if there are other 
methods that will come closer to reaching the target. One commenter 
stated that this new requirement creates a potential incentive to 
target codes that offer the greatest likelihood of savings, not those 
that are actually misvalued.
    Response: We appreciate the commenters' feedback and have 
considered these concerns to the extent possible in light of the 
requirements of section 1848(c)(2)(O) of the Act.
    After consideration of the public comments received, we are 
finalizing the approach of defining the reduction in expenditures as a 
result of adjustments to RVUs for misvalued codes to include the 
estimated pool of all services with revised input values, including any 
codes for which changes in coding or policies might result in 
differences in how a given service is reported from one year to the 
next. We are also finalizing our proposal to exclude code-level input 
changes for CY 2015 interim final values from the calculation of the CY 
2016 misvalued code target. After considering all comments, we continue 
to believe this approach is appropriate and compliant with statutory 
directives.
2. Calculating ``Net Reduction''
    Once the RVU adjustments attributable to misvalued codes are 
identified, estimated net reductions in PFS expenditures resulting from 
those adjustments would be calculated by determining the sum of all 
decreases and offsetting them against any applicable increases in 
valuation within the changes that we defined as misvalued, as described 
above. Because section 1848(c)(2)(O)(i) of the Act only explicitly 
addresses reductions in expenditures, and we recognize that many 
stakeholders will want to maximize the overall magnitude of the 
measured reductions in order to prevent an overall reduction to the PFS 
conversion factor, we considered the possibility of ignoring the 
applicable increases in valuation in the calculation of net reduction. 
However, we believe that the requirement to calculate ``net'' 
reductions implies that we are to take into consideration both 
decreases and increases. Additionally, we believe this approach may be 
the only practical one due to the presence of new and deleted codes on 
an annual basis.
    For example, a service that is described by a single code in a 
given year, like intensity-modulated radiation therapy (IMRT) treatment 
delivery, could be addressed as a misvalued service in a subsequent 
year through a coding revision that splits the service into two codes, 
``simple'' and ``complex.'' If we counted only the reductions in RVUs, 
we would count only the change in value between the single code and the 
new code that describes the ``simple'' treatment delivery code. In this 
scenario, the change in value from the single code to the new 
``complex'' treatment delivery code would be ignored, so that even if 
there were an increase in the payment for IMRT treatment delivery 
service(s) overall, the mere change in coding would contribute 
inappropriately to a ``net reduction in expenditures.'' Therefore, we 
proposed to net the increases and decreases in values for services, 
including those for which there are coding revisions, in calculating 
the estimated net reduction in expenditures as a result of adjustments 
to RVUs for misvalued codes.

[[Page 70925]]

    The following is a summary of the comments we received regarding 
our proposal.
    Comment: One commenter stated that the proposal for calculating net 
reduction is consistent with the plain reading of the statute.
    Response: We appreciate the commenter's feedback and support.
    Comment: Several commenters, including the RUC, requested that CMS 
use a more transparent process for calculation of the target, 
suggesting that the discussion in the CY 2016 PFS proposed rule was not 
sufficiently detailed to allow for replication by external 
stakeholders. Commenters requested that CMS provide a comprehensive 
methodological description of how CMS will calculate the target, 
including publication of dollar figure estimates, and information about 
individual service level estimated impacts on the net reduction. 
Commenters further requested that we provide the impact on the net 
reduction either per CPT code, or that we identify a family of services 
and publish a combined impact for that family. Another commenter 
expressed concern with how CMS will operationalize this policy, noting 
that the language in the CY 2016 PFS proposed rule did not outline 
where the adjustments would be made. The commenter further questioned 
how CMS planned to track the ``savings'' from the revaluation of 
services, and requested that CMS clarify how new technology will be 
handled, as well as new codes that are a restructuring of existing 
codes.
    Response: We appreciate the commenters' feedback. In response to 
the request for greater transparency, we have posted a public use file 
that provides a comprehensive description of how the target is 
calculated as well as the estimated impact by code family on the CMS 
Web site under the supporting data files for the CY 2016 PFS final rule 
at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html.
    In response to the commenter who asked for clarification on how new 
technology will be handled, we assume the commenter intends to ask 
about how new codes for new services would be addressed under our 
proposed methodology. Under our proposal, we would include adjustments 
to values for all deleted, new, and revised codes under our 
calculations of changes from one year to the next. We would also weight 
the changes in the values for those codes by the utilization for those 
services in order to calculate the net reduction in expenditures. If a 
new code describes a new service (new technology as opposed to recoding 
of an existing service), then there would be no utilization for that 
code in the calculation. Without utilization, the value for a new 
service would have no impact on the calculation of the target. In 
response to the commenter who expressed concern about how CMS would 
operationalize this policy, and stated that CMS did not explain where 
the adjustments would be, we note that if the estimated net reduction 
in expenditures is less than the target for the year, then there would 
be an overall reduction to the PFS conversion factor as described in 
section VI. of this final rule with comment period.
    Comment: One commenter disagreed that all increases should be 
incorporated into the net reduction calculation and requested that CMS 
consider an approach that would maximize the overall magnitude of the 
measured reductions in order to prevent an overall reduction to the PFS 
conversion factor as a result of failure to achieve the target for 
reductions. Specifically, the commenter stated that codes identified as 
potentially misvalued for which there is compelling evidence based on 
the RUC recommendations to support an increase in RVUs based on a 
change in work should not be defined as misvalued for the purposes of 
calculating the target.
    Response: We believe the requirement that we calculate the net 
reduction in expenditures indicates that we must account for 
adjustments in values including both increases and decreases and 
therefore, believe our proposal comports with the plain reading of the 
statute. We recognize that the RUC internal deliberations include rules 
that govern under what circumstances individual specialties can request 
that the RUC recommend CMS increase values for particular services. As 
observers to the RUC process, we appreciate having an understanding of 
these rules in the context of our review of RUC-recommended values. 
However, we do not believe that the internal RUC standards for 
developing recommendations are relevant in determining whether the 
statutory provision applies to adjustments to values for individual 
codes.
    Comment: Some commenters requested that CMS review its 
administrative authority to achieve a target recapture amount in a 
selective manner, rather than by an across-the-board adjustment to the 
conversion factor. A commenter stated that codes already sustaining 
reductions in 2016, and consequently contributing to the target, should 
not be subjected to additional across-the-board cuts to achieve the 
statutory target.
    Response: We do not believe that section 1848(c)(2)(O)(iii) of the 
Act provides us authority to insulate particular services from the 
effects of the budget neutrality adjustment for the target recapture 
amount that is required if the estimated net reduction in expenditures 
is less than the target for the year. The statute specifies that an 
amount equal to the target recapture amount is not to be taken into 
account in applying the PFS budget neutrality requirement under section 
1848(c)(2)(B)(ii)(II) of the Act. This PFS budget neutrality adjustment 
has been in place since the outset of the PFS, and we have consistently 
interpreted and implemented it as an adjustment that is made across the 
entire PFS. Therefore, we do not believe we can apply the budget 
neutrality adjustments in a selective manner.
    Comment: Several commenters, including the RUC, stated that when 
considering the net impact of service-level input changes in a given 
year, it is important for CMS to understand specific scenarios in which 
codes under review should not be included in the net reduction target 
calculation. The commenters requested that CMS not include particular 
payment initiatives, such as Advance Care Planning (ACP), in the target 
definition. Instead, since the payment rates for these services require 
budget neutrality and relativity adjustments to all other PFS services 
and these reductions are not otherwise accounted for in the target 
calculation, CMS should count the payments for ACP services as 
``redistribution'' (or, in other words, reductions) from other services 
for CY 2016. Commenters urged CMS to use the same approach for care 
management services valued under the PFS in the future. Generally, the 
commenters stated that these and similar new codes could not possibly 
be misvalued and therefore, should not only be excluded from the 
target, but the reductions to other services due to separate payment 
for these services should be counted as net reductions toward 
achievement of the misvalued code target.
    Response: Because we believe that all of our intended revaluations 
of services under the PFS are intended to improve the accuracy of the 
relative value units for PFS services, we do not believe we should 
exclude increases and decreases to particular services in the target 
calculation. Therefore, we do not agree with commenters' suggestions 
that codes describing one kind of service (e.g. care management) as 
opposed to another (for example, procedures or

[[Page 70926]]

diagnostic tests) should be excluded from the target under the 
statutory provision. Similarly, we do not agree that counting the 
relativity and budget neutrality redistributions that result from care 
management services as part of the net ``reduction'' would be 
consistent with a reasonable understanding of ``net reduction'' in 
allowed expenditures as a result of changes to misvalued codes.
    However, in considering the points raised by commenters, we do 
agree that the increases in value for new codes like ACP or Chronic 
Care Management (CCM) are not the same as increases to other services. 
In general, new codes describe new services that would not have been 
reported with particular codes in the previous years or new codes 
describe existing services that were reported using other codes in the 
prior year. In other cases, however, new codes describe services that 
were previously included in the payment for other codes. When those 
services become separately payable through new codes, we generally make 
adjustments to other relevant codes to adjust for the value of the 
services that will be separately reported. In general, new codes 
describing care management services fall into this latter category, 
since the associated resource costs for these services were previously 
bundled into payment for other services. However, unlike many other PFS 
services, the resource costs for these kinds of services were bundled 
into a set of broadly reported E/M codes and services that include E/M 
visits. Since these codes are so broadly reported across nearly all PFS 
specialties, to the extent that it would be impracticable to make 
adjustments to individual codes, we have not made corresponding 
adjustments to E/M visits to account for the status of the new codes as 
separately billable. Instead, when unbundling new separately reported 
services such as these, we have allowed our general budget neutrality 
adjustment to account for these types of changes, since budget 
neutrality adjustments apply broadly to the full range of PFS services, 
including both codes that specifically describe E/M visits and those 
with E/M services as components of the service, such as all codes with 
global periods. In terms of calculating the net reduction in 
expenditures for purposes of section 1848(c)(2)(O)(i) of the Act, this 
means that the shift in payment to these new separately reportable 
services, unlike the adjustments to values for other new services, is 
not offset by adjustments to any other individual codes. Therefore, 
under the methodology we proposed, the increase in payment for these 
new separately reportable services would be counted in the net 
reduction calculations since the adjustments to values for these 
services are reflected in values for individual codes, but the 
corresponding decreases would not be counted, since the corresponding 
decreases are not attributable to any particular codes. Under the 
methodology we proposed, the change to make these types of codes 
separately reported would be counted against achievement of the target 
even though the increases in value for these codes are fully offset by 
budget-neutrality adjustments to all other PFS services.
    As we have reflected on the comments and on this particular 
circumstance, we do not believe that the change to separate payment for 
these kinds of services should be counted as increases that are 
included in calculating the ``net reductions'' in expenditures 
attributable to adjustments for misvalued codes. Instead, we think that 
the adjustments to value these services should be considered in the 
context of the budget neutrality adjustments that are applied broadly 
to PFS services. This would be consistent with our treatment of the 
increase in values for other new codes since the reductions or deletion 
of predecessor codes are counted as offsets in our calculation. Since, 
under the established ratesetting methodology, the increases in new 
separately reportable services and the corresponding budget neutrality 
decreases fully offset one another and net to zero, we believe that the 
easiest way to account for the adjustments associated with valuing 
these services is to exclude altogether the changes for these types of 
codes from the list of codes included in the target. This will 
effectively make the creation and valuation of such codes neutral in 
the calculation of the misvalued code target.
    After considering public comments, we are finalizing our policy as 
proposed with a modification to exclude from the calculation of the 
``net reduction'' in expenditures changes in coding and valuation for 
services, such as ACP for CY 2016, that are newly reportable, but for 
which no corresponding reduction is made to existing codes and instead 
reductions are taken exclusively through a budget neutrality 
adjustment.
3. Measuring the Adjustments
    The most straightforward method to estimating the net reduction in 
expenditures due to adjustments to RVUs for misvalued codes is to 
compare the total RVUs of the relevant set of codes (by volume) in the 
current year to the update year, and divide that by the total RVUs for 
all codes (by volume) for the current year. This approach had the 
advantage of being intuitive and readily replicable.
    However, there are several issues related to the potential 
imprecision of this method. First, and most significantly, the code-
level PE RVUs in the update year include either increases due to the 
redistribution of RVUs from other services or reductions due to 
increases in PE for other services. Second, because relativity for work 
RVUs is maintained through annual adjustments to the CF, the precise 
value of a work RVU in any given year is adjusted based on the total 
number of work RVUs in that year. Finally, relativity for the MP RVUs 
is maintained by both redistribution of MP RVUs and adjustments to the 
CF, when necessary (under our proposed methodology this is true 
annually; based on our established methodology the redistribution of 
the MP RVUs only takes place once every 5 years and the CF is adjusted 
otherwise). Therefore, to make a more precise assessment of the net 
reduction in expenditures that are the result of adjustments to the 
RVUs for misvalued codes, we would need to compare, for the included 
codes, the update year's total work RVUs (by volume), direct PE RVUs 
(by volume), indirect PE RVUs (by volume), and MP RVUs (by volume) to 
the same RVUs in the current year, prior to the application of any 
scaling factors or adjustments. This would make for a direct comparison 
between years.
    However, this approach would mean that the calculation of the net 
reduction in expenditures would occur within various steps of the PFS 
ratesetting methodology. Although we believe that this approach would 
be transparent and external stakeholders could replicate this method, 
it might be difficult and time-consuming for stakeholders to do so. We 
also noted that when we modeled the interaction of the statutory phase-
in requirement under section 220(e) of the PAMA and the calculation of 
the target using this approach during the development of this proposal, 
there were methodological challenges in making these calculations. When 
we simulated the two approaches using information from prior years, we 
found that both approaches generally resulted in similar estimated net 
reductions. After considering these options, we proposed to use the 
simpler approach of comparing the total RVUs (by volume) for the 
relevant set of codes in the current year to the update year, and 
divide that result by the total RVUs (by volume) for the current year. 
We solicited comments on whether

[[Page 70927]]

comparing the update year's work RVUs, direct PE RVUs, indirect PE 
RVUs, and MP RVUs for the relevant set of codes (by volume) prior to 
the application of any scaling factors or adjustments to those of the 
current year would be a preferable methodology for determining the 
estimated net reduction.
    The following is a summary of the comments we received regarding 
our proposal.
    Comment: A few commenters supported CMS' selection of the simpler 
formula to calculate the target over the more precise but more complex 
formula since it is simpler and easier to understand. One commenter 
stated that CMS did not indicate exactly how similar the two proposals 
are or which method estimated the larger reduction, and stated that CMS 
should make this information available in the final rule and consider 
revising the approach in CY 2017 rulemaking and use the method that 
results in the larger reduction.
    Response: We do not agree that CMS should do both calculations and 
determine which to use based solely on which results in the higher 
amount. We note that the target for net reductions in expenditures from 
adjustments to values for misvalued codes is a multi-year provision and 
we believe neither of the two methodologies is assured to produce a 
consistently higher result from year to year. Since the majority of 
commenters agree that the more intuitive approach to estimating the net 
reduction in expenditures is preferable to the more precisely accurate 
approach, we are finalizing our approach as proposed.
    Comment: One commenter requested that CMS count the full reduction 
in payment for codes subject to the phase-in required under section 
1848(c)(7) of the Act as discussed in section II.F. of this final rule 
with comment period, toward the target in the first year. Another 
commenter stated that CMS used the fully reduced RVUs in calculating 
the target, not the first year phase-in RVUs, and therefore, CMS should 
include the full impact of the change in the equipment utilization rate 
for linear accelerators toward the target calculation. Similarly, the 
commenter requested that any future multi-year phase-in proposals 
should similarly be counted toward the target in the first year.
    Response: The target provision requires the calculation of an 
estimated net reduction measure between 2 years of PFS expenditures. As 
we have detailed in the above paragraphs, we believe that under certain 
specific circumstances, changes should be excluded from that estimate; 
but we do not believe we can include changes that would occur in future 
years based solely on the rulemaking cycle during which policies are 
established. Therefore we will not count the full reduction in payment 
for codes that are subject to the phase-in toward the calculation of 
the net reduction in expenditures for the first year. With regard to 
the commenter that stated that CMS used the fully reduced RVUs in 
calculating the target, we note that we only used the first year phase-
in RVUs and, for the reasons stated above, believe that we are limited 
to including only the changes in the immediate year in the calculation 
of the target.
    After consideration of the public comments received, we are 
finalizing the policy to calculate the net reduction using the simpler 
method as proposed.
4. Target Achievement for CY 2016
    We refer readers to the regulatory impact analysis section of this 
final rule with comment period for our final estimate of the net 
reduction in expenditures relative to the 1 percent target for CY 2016, 
and the resulting adjustment required to be made to the conversion 
factor. Additionally, we refer readers to the public use file that 
provides a comprehensive description of how the target is calculated as 
well as the estimated impact by code family on the CMS Web site under 
the supporting data files for the CY 2016 PFS final rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html.

F. Phase-In of Significant RVU Reductions

    Section 1848(c)(7) of the Act, as added by section 220(e) of the 
PAMA, also specifies that for services that are not new or revised 
codes, if the total RVUs for a service for a year would otherwise be 
decreased by an estimated 20 percent or more as compared to the total 
RVUs for the previous year, the applicable adjustments in work, PE, and 
MP RVUs shall be phased-in over a 2-year period. Although section 
220(e) of the PAMA required the phase-in to begin for 2017, section 202 
of the ABLE Act amended section 1848(c)(7) of the Act to require that 
the phase-in begin for CY 2016.
    In the CY 2016 PFS proposed rule, we proposed a methodology to 
implement this statutory provision. In developing this methodology, we 
identified several aspects of our approach for which we specifically 
solicited comments, given the challenges inherent in implementing this 
provision in a manner consistent with the broader statutory construct 
of the PFS. We organized this discussion by identifying and explaining 
these aspects in particular but we solicited comments on all aspects of 
our proposal.
1. Identifying Services That Are Not New or Revised Codes
    As described in this final rule with comment period, the statute 
specifies that services described by new or revised codes are not 
subject to the phase-in of RVUs. We believe this exclusion recognizes 
the reality that there is no practical way to phase-in changes to RVUs 
that occur as a result of a coding change for a particular service over 
2 years because there is no relevant reference code or value on which 
to base the transition. To determine which services are described by 
new or revised codes for purposes of the phase-in provision, we 
proposed to apply the phase-in to all services that are described by 
the same, unrevised code in both the current and update year, and to 
exclude codes that describe different services in the current and 
update year. This approach excludes services described by new codes or 
existing codes for which the descriptors were altered substantially for 
the update year to change the services that are reported using the 
code. We also are excluding as new and revised codes those codes that 
describe a different set of services in the update year when compared 
to the current year by virtue of changes in other, related codes, or 
codes that are part of a family with significant coding revisions. For 
example, significant coding revisions within a family of codes can 
change the relationships among codes to the extent that it changes the 
way that all services in the group are reported, even if some 
individual codes retain the same number or, in some cases, the same 
descriptor. Excluding codes from the phase-in when there are 
significant revisions to the code family would also help to maintain 
the appropriate rank order among codes in the family, avoiding years 
for which RVU changes for some codes in a family are in transition 
while others were fully implemented. This application of the phase-in 
is also consistent with previous RVU transitions, especially for PE 
RVUs, for which we only applied transition values to those codes that 
described the same service in both the current and the update years. We 
also excluded from the phase-in as new and revised codes those codes 
with changes to the global period, since the code in the current year 
would not describe the

[[Page 70928]]

same units of service as the code in the update year.
    We received few comments regarding this aspect of our proposal, and 
some of the comments suggested changes that would require changes to 
the statutory provision that requires the phase-in of significant 
changes in RVUs. The following is a summary of the comments that we 
received.
    Comment: One commenter agreed with CMS' broad definition of new or 
revised.
    Response: We appreciate the commenter's feedback and support.
    Comment: One commenter did not agree that new and revised services 
should be excluded from the phase-in, and suggested that the phase-in 
be applied more broadly.
    Response: Section 1848(c)(7) of the Act specifies that services 
described by new or revised codes are not subject to the phase-in of 
significant reductions in RVUs. Additionally, because RVUs are assigned 
to individual codes, we do not believe there would be a straightforward 
or transparent way to phase in reductions for services that are 
described by new or revised codes between the years for which a phase-
in would apply.
    Comment: One commenter urged CMS to include in the phase-in codes 
that had interim Final values for CY 2015 and have substantial 
reductions of 20 percent or greater as compared to the 2014 values.
    Response: We do not believe it would be consistent with the 
statutory provision to phase in changes in values between 2015 and 2016 
based on 2014 values. Section 1848(c)(7) of the Act, as amended, 
specifies that the phase-in of significant reductions in values begins 
for fee schedules established beginning with 2016.
    Comment: One commenter stated that any code that has a decrease in 
value of over 20 percent due to repricing of expensive supplies (for 
example, over $500) should be excluded from the phase-in provision.
    Response: We appreciate the commenter's feedback and understand the 
rationale for the request; however, we do not believe that we have the 
discretion to exempt codes from the phase-in, regardless of the reason 
for the reduction.
    After consideration of the public comments received on this aspect 
of our proposal to implement the phase-in of significant changes in 
RVUs, we are finalizing the implementation of the phase-in for 
significant (20 percent or greater) reductions in RVUs as proposed.
2. Estimating the 20 Percent Threshold
    Because the phase-in of significant reductions in RVUs falls within 
the budget neutrality requirements specified in section 
1848(c)(2)(B)(ii)(II) of the Act, we proposed to estimate total RVUs 
for a service prior to the budget-neutrality redistributions that 
result from implementing phase-in values. We recognize that the result 
of this approach could mean that some codes may not qualify for the 
phase-in despite a reduction in RVUs that is ultimately slightly 
greater than 20 percent due to budget neutrality adjustments that are 
made after identifying the codes that meet the threshold in order to 
reflect the phase-in values for other codes. We believe the only 
alternative to this approach is not practicable, since it would be 
circular, resulting in cyclical iteration.
    The following is a summary of the comments we received regarding 
this proposal.
    Comment: One commenter supported CMS' proposal for estimating the 
20 percent threshold.
    Response: We appreciate the commenter's support.
    Comment: Another commenter did not agree with the proposal to 
estimate total RVUs for a service prior to the budget-neutrality 
redistributions that result from implementing phase-in values. The 
commenter stated that the methodology should not give inequitable 
treatment to any particular specialty, and instead it should apply to 
all codes that are cut greater than 20 percent in the final analysis.
    Response: We appreciate that our proposed methodology could, in the 
end, result in no phase-in for some codes that ultimately do have a 20 
percent or greater reduction in value after application of required 
budget neutrality adjustment. However, we have no reason to believe 
that this situation, resulting from using initial unadjusted RVUs to 
identify significant RVU reductions, would disadvantage one specialty 
more than the next. Therefore, we also do not believe that our proposed 
approach is likely to result in unequitable treatment to any one 
specialty over another.
    After consideration of the public comments received on this aspect 
of our proposal, we are finalizing without modification our proposal to 
identify significant reductions in RVUs based on a comparison of RVUs 
before application of budget neutrality adjustment.
3. RVUs in the First Year of the Phase-In
    Section 1848(c)(7) of the Act states that the applicable 
adjustments in work, PE, and MP RVUs shall be phased-in over a 2-year 
period when the RVU reduction for a code is estimated to be equal to or 
greater than 20 percent. We believe that there are two reasonable ways 
to determine the portion of the reduction to be phase-in for the first 
year. Most recent RVU transitions have distributed the values evenly 
across several years. For example, for a 2-year transition we would 
estimate the fully implemented value and set a rate approximately 50 
percent between the value for the current year and the value for the 
update year. We believe that this is the most intuitive approach to the 
phase-in and is likely the expectation for many stakeholders. However, 
we believe that the 50 percent phase-in in the first year has a 
significant drawback. For instance, since the statute establishes a 20 
percent threshold as the trigger for phasing in the change in RVUs, 
under the 50 percent phase-in approach, a service that is estimated to 
be reduced by a total of 19 percent for an update year would be reduced 
by a full 19 percent in that update year, while a service that is 
estimated to be reduced by 20 percent in an update year would only be 
reduced 10 percent in that update year.
    The logical alternative approach is to consider a 19 percent 
reduction as the maximum 1-year reduction for any service not described 
by a new or revised code. This approach would be to reduce the service 
by the maximum allowed amount (that is, 19 percent) in the first year, 
and then phase in the remainder of the reduction in the second year. 
Under this approach, the code that is reduced by 19 percent in a year 
and the code that would otherwise have been reduced by 20 percent would 
both be reduced by 19 percent in the first year, and the latter code 
would see an additional 1 percent reduction in the second year of the 
phase-in. For most services, this would likely mean that the majority 
of the reduction would take place in the first year of the phase-in. 
However, for services with the most drastic reductions (greater than 40 
percent), the majority of the reduction would not take place in the 
first year of the phase-in.
    After considering both of these options, we proposed to consider 
the 19 percent reduction as the maximum 1-year reduction and to phase-
in any remaining reduction greater than 19 percent in the second year 
of the phase-in. We believe that this approach is

[[Page 70929]]

more equitable for codes with significant reductions but that are less 
than 20 percent. We solicited comments on this proposal.
    The following is a summary of the comments we received regarding 
this proposal.
    Comment: Several commenters supported CMS' proposal to consider the 
19 percent reduction as the maximum 1-year reduction and to phase in 
any remaining reduction greater than 19 percent in the second year of 
the phase-in.
    Response: We appreciate the commenters' feedback and support.
    Comment: Several commenters did not support CMS' proposal, and 
instead stated that CMS should spread the transition evenly over both 
years--meaning a 50 percent phase-in for year one and year two. One 
commenter stated that this would lead to a more equitable payment 
system and allow physicians more time to make changes in their 
practices to accommodate for reductions. Another commenter acknowledged 
that codes with reductions that are less than 20 percent and not 
phased-in may experience greater reductions in the first year, however 
the commenter stated that a more gradual phase-in for practices facing 
steeper cuts should be the paramount principle for any policy to 
transition cuts at or greater than 20 percent.
    Response: We have considered the comments and understand the 
commenters' concerns. We acknowledge some commenters' views that the 
gradual phase-in of reductions for services that would experience 
reductions above the threshold (20 percent) is an important principle 
in determining the best way to implement the phase-in provision. 
However, we note that the 19 percent reduction maximum also has the 
advantage of applying the most gradual reduction to services with the 
greatest reductions (greater than 40 percent). Furthermore, we remain 
concerned about several practical problems that could arise from 
utilizing the 50 percent approach. The first of these problems would 
occur whenever some codes within the same family of services would meet 
threshold reductions while others do not. For example if two codes in a 
four code family would be reduced by an estimated 20 percent while the 
other two were estimated to be reduced by 19 percent, then the first 
two would be reduced by 10 percent while the remaining two would be 
reduced by 19 percent. Such a scenario could easily create rank order 
anomalies within families of codes. The risks of such anomalies is 
associated with the financial incentives toward inaccurate downward 
coding that could not only jeopardize Medicare claims data as an 
accurate source of information, but more directly could have serious 
consequences within our ratesetting methodologies for both purposes of 
budget neutrality and for allocation of PE and MP RVUs. The second 
practical issue with the 50 percent approach would be that the impact 
of using the estimated reduction instead of the final reduction to 
determine whether or not particular codes qualify for the phase-in 
would be significant. Under the 19 percent approach, values for codes 
with reductions estimated to be very close to 19 percent would be 
similar regardless of whether or not we engage in various iterations of 
budget neutrality adjustments to determine whether or not the phase-in 
applies. Under the 50 percent approach, determinations that result from 
repeated iterations of ratesetting calculations and budget neutrality 
adjustments could decide significant changes in the rates for 
individual codes (up to 10 percent of the total payment.)
    In order to avoid these circumstances and apply the most gradual 
phase-in possible to codes with the most significant reductions, we 
continue to believe that a 19 percent reduction as the maximum 1-year 
reduction is the better approach to determining the phase-in amount.
    Comment: One commenter requested that the phase-in period be 
extended to a greater number of years when entire code groupings are 
impacted, and when multiple codes are identified within a code grouping 
and they significantly impact revenue to a specialist or specific 
provider.
    Response: The statute specifies a 2-year phase-in period and does 
not provide authority to extend the phase-in period as described by the 
commenter.
    After consideration of the comments, we are finalizing the policy 
to phase in 19 percent of the reduction in value in the first year, and 
the remainder of the reduction in the second year, as proposed.
4. Applicable Adjustments to RVUs
    Section 1848(c)(7) of the Act provides that the applicable 
adjustments in work, PE, and MP RVUs be phased-in over 2 years for any 
service for which total RVUs would otherwise be decreased by an 
estimated amount equal to or greater than 20 percent as compared to the 
total RVUs for the previous year. However, for several thousand 
services, we develop separate RVUs for facility and nonfacility sites 
of service. For nearly one thousand other services, we develop separate 
RVUs for the professional and technical components of the service, and 
sum those RVUs for global billing. Therefore, for individual 
practitioners furnishing particular services to Medicare beneficiaries, 
the relevant changes in RVUs for a particular code are based on the 
total RVUs for a code for a particular setting (facility/nonfacility) 
or for a particular professional/technical (PC/TC) component. We 
believe the most straightforward and fair approach to addressing both 
the site of service differential and the codes with professional and 
technical components is to consider the RVUs for the different sites of 
service and components independently for purposes of identifying when 
and how the phase-in applies. We proposed, therefore, to estimate 
whether a particular code met the 20 percent threshold for change in 
total RVUs by taking into account the total RVUs that apply to a 
particular setting, or to a particular professional or technical 
component. This would mean that if the change in total facility RVUs 
for a code met the threshold, then that change would be phased in over 
2 years, even if the change for the total nonfacility RVUs for the same 
code would not be phased in over 2 years. Similarly, if the change in 
the total RVUs for the technical component of a service meets the 20 
percent threshold, then that change would be phased in over 2 years, 
even if the change for the professional component did not meet the 
threshold. (Because the global is the sum of the professional and 
technical components, the portion of the global attributable to the 
technical component would then be phased-in, while the portion 
attributable to the professional component would not be.)
    However, we note that we create the site of service differential 
exclusively by developing independent PE RVUs for each service in the 
nonfacility and facility settings. That is, for these codes, we use the 
same work RVUs and MP RVUs in both settings and vary only the PE RVUs 
to implement the difference in resources depending on the setting. 
Similarly, we use the work RVUs assigned to the professional component 
codes as the work RVUs for the service when billed globally. Like the 
codes with the site of service differential, the PE RVUs for each 
component are developed independently. The resulting PE RVUs are then 
summed for use as the PE RVUs for the code, billed globally. Since 
variation of PE RVUs is the only constant across all individual codes,

[[Page 70930]]

codes with site of service differentials, and codes with professional 
and technical components, we are proposing to apply all adjustments for 
the phase-in to the PE RVUs.
    We considered alternatives to this approach. For example, for codes 
with a site of service differential, we considered applying a phase-in 
for codes in both settings (and all components) whenever the total RVUs 
in either setting reached the 20 percent threshold. However, there are 
cases where the total RVUs for a code in one setting (or one component) 
may reach the 20 percent reduction threshold, while the total RVUs for 
the other setting (or other component) are increasing. In those cases, 
applying phase-in values for work or MP RVUs would mean applying an 
additional increase in total RVUs for particular services. We also 
considered implementing the phase-in of the RVUs for the component 
codes billed globally by comparing the global value in the prior year 
versus the global value in the current year and applying the phase-in 
to the global value for the current year and letting the results flow 
through to the PC and TC for each code, irrespective of their 
respective changes in value. Similarly, for the codes with site of 
service differentials, we considered developing an overall, blended set 
of overall PE RVUs using a weighted average of site of service volume 
in the Medicare claims data and then comparing that blended value in 
the prior year versus the blended value in the current year and 
applying the phase-in to the value for the current year before re-
allocating the blended value to the respective PE RVUs in each setting, 
regardless of the changes in value for nonfacility or facility values. 
We did not pursue this approach for several reasons. First, the 
resulting phase-in amounts would not relate logically to the values 
paid to any individual practitioner, except those who bill the PC/TC 
codes globally. Second, the approach would be so administratively 
complicated that it would likely be difficult to replicate or predict.
    Therefore, we have concluded that applying the adjustments to the 
PE RVUs for all individual codes in order to effect the appropriate 
phase-in amount is the most straightforward and fair approach to 
implementing the 2-year phase-in of significant reductions of total 
RVUs.
    The following is a summary of the comments we received regarding 
this proposal.
    Comment: One commenter requested that CMS confirm that it would 
apply all adjustments for the phase-in to the PE RVUs only in 
situations in which just one site of service, or just one component is 
subject to the phase-in. That is, if both sites of service or both 
components of a code were subject to the phase-in, then any adjustments 
would be applied to work and malpractice RVUs as well.
    Response: As discussed in the proposal, all adjustments for the 
phase-in, including for codes with facility and nonfacility RVUs and 
PC/TC splits, will be applied to the PE RVUs only. We acknowledge that 
for some codes it would be hypothetically possible to phase in the 
reductions proportionally across all three RVU components. As we 
explained in the proposed rule, it would not be practical to do so for 
services with site of service differentials since each of the three RVU 
components represent a different proportion of overall nonfacility or 
facility RVUs. Therefore, we believe this alternative approach could 
only work for codes without site of service differentials and those 
without PC/TC splits, which represents a minority of PFS services. We 
believe that applying the phase-in for these large categories of codes 
differently than for the rest of PFS codes would be confusing to the 
public and make adjustments unpredictable since they would be based on 
whether or not the service priced in the opposite setting met the 
phase-in threshold. Furthermore, we remind commenters that because the 
work RVU is an important allocator of indirect PE in the established 
methodology, the overall payment impact of any changes in work RVUs is 
also automatically reflected in corresponding changes to the PE RVUs, 
whereas changes to direct PE inputs do not have a parallel impact on 
work RVUs. Therefore, even for individual codes for which it might be 
possible to establish phase-in values for work RVUs, the necessary 
adjustments would necessarily be weighted more heavily in PE RVUs.
    Comment: With regard to CMS' proposal to consider the RVUs for 
different sites of service and components independently for the 
purposes of identifying when and how the phase-in applies, one 
commenter expressed concerns that the proposed approach ignores the 
spirit of section 220(e) of the PAMA to benefit physician practices by 
dampening the year to year impact of large payment reductions. The 
commenter stated that if CMS adjusts only the PE RVUs, then a large 
number of codes with greater than 20 percent work RVU reductions could 
be excluded. The commenter urged CMS to clarify its intent to dampen 
the effects of year to year reductions to both work RVUs and PE RVUs 
independently, even for codes with separate facility and non-facility 
PE RVUs.
    Response: We appreciate the commenter's feedback and we acknowledge 
that our proposed approach would not dampen the year to year reductions 
in work RVUs. However, our approach would dampen the effect of any 
payment reductions for all codes, including those reductions that would 
result from reductions to work RVUs when such reductions contributed to 
an overall reduction of 20 percent or greater, consistent with the 
statutory provision. As a practical matter, we believe that 
practitioners reporting services furnished to Medicare beneficiaries 
and paid through the PFS would be paid very similar amounts regardless 
of which approach we implemented. We also note that the commenter did 
not provide any information that would help us to understand how the 
suggested phase-in could be applied to services with site of service 
differentials.
    After consideration of the comments received, we are finalizing 
this aspect of the phase-in methodology as proposed.
    The list of codes subject to the phase-in and the associated RVUs 
that result from this methodology are available on the CMS Web site 
under downloads for the CY 2016 PFS final rule with comment period at 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.

G. Changes for Computed Tomography (CT) Under the Protecting Access to 
Medicare Act of 2014 (PAMA)

    Section 218(a)(1) of the Protecting Access to Medicare Act of 2014 
(PAMA) (Pub. L. 113-93) amended section 1834 of the Act by establishing 
a new subsection 1834(p). Effective for services furnished on or after 
January 1, 2016, new section 1834(p) of the Act reduces payment for the 
technical component (TC) of applicable CT services paid under the 
Medicare PFS and applicable CT services paid under the OPPS (a 5-
percent reduction in 2016 and a 15-percent reduction in 2017 and 
subsequent years). The applicable CT services are identified by HCPCS 
codes 70450 through 70498; 71250 through 71275; 72125 through 72133; 
72191 through 72194; 73200 through 73206; 73700 through 73706; 74150 
through 74178; 74261 through 74263; and 75571 through 75574 (and any 
succeeding codes). As specified in section 1834(p)(4) of the Act, the 
reduction applies for applicable services furnished using equipment 
that does not meet

[[Page 70931]]

each of the attributes of the National Electrical Manufacturers 
Association (NEMA) Standard XR-29-2013, entitled ``Standard Attributes 
on CT Equipment Related to Dose Optimization and Management.'' Section 
1834(p)(4) of the Act also specifies that the Secretary may apply 
successor standards through rulemaking.
    Section 1834(p)(6)(A) of the Act requires that information be 
provided and attested to by a supplier and a hospital outpatient 
department that indicates whether an applicable CT service was 
furnished that was not consistent with the standard set forth in 
section 1834(p)(4) of the Act (currently the NEMA CT equipment 
standard) and that such information may be included on a claim and may 
be a modifier. Section 1834(p)(6)(A) of the Act also provides that such 
information must be verified, as appropriate, as part of the periodic 
accreditation of suppliers under section 1834(e) of the Act and 
hospitals under section 1865(a) of the Act. Section 218(a)(2) of the 
PAMA made a conforming amendment to section 1848 (c)(2)(B)(v) of the 
Act by adding a new subclause (VIII), which provides that, effective 
for fee schedules established beginning with 2016, reduced expenditures 
attributable to the application of the quality incentives for computed 
tomography under section 1834(p) of the Act shall not be taken into 
account for purposes of the budget neutrality calculation under the 
PFS.
    To implement this provision, in the CY 2016 PFS proposed rule (80 
FR 41716), we proposed to establish a new modifier to be used on claims 
that describes CT services furnished using equipment that does not meet 
each of the attributes of the NEMA Standard XR-29-2013. We proposed 
that, beginning January 1, 2016, hospitals and suppliers would be 
required to use this modifier on claims for CT scans described by any 
of the CPT codes identified in this section (and any successor codes) 
that are furnished on non-NEMA Standard XR-29-2013-compliant CT scans. 
We stated that the use of this proposed modifier would result in the 
applicable payment reduction for the CT service, as specified under 
section 1834(p) of the Act. We received the following comments on our 
proposal to require the modifier to be used on claims:
    Many commenters endorsed the use of quality incentives to improve 
patient safety and optimize the use of radiation when providing CT 
diagnostic imaging services. Several commenters were supportive of the 
proposal to establish the modifier to identify CT services furnished 
using equipment that does not meet each of the attributes of the NEMA 
Standard XR-29-2013.
    Comment: Several commenters requested that we delay implementation 
of section 1834(p) of the Act so that they have additional time to 
comply before the payment reduction becomes effective.
    Response: The statute requires that we apply the payment adjustment 
for computed tomography services furnished on or after January 1, 2016. 
Given this language, we believe that we must implement this provision 
beginning January 1, 2016. Therefore, we are not delaying 
implementation of this provision. We note that the payment reduction 
for 2016 is 5 percent, and it then increases to 15 percent in 
subsequent years. Hospitals and suppliers that furnish services that do 
not meet the equipment standard as of January 1, 2016, will receive 
this 5 percent payment reduction during 2016, but will have an 
opportunity to upgrade their CT scanners before the larger payment 
adjustment that takes effect beginning in CY 2017.
    Comment: One commenter cited section 1834 (p)(4) of the Act, which 
specifies that through rulemaking, the Secretary may apply successor 
standards for CT equipment. The commenter indicated that CMS should 
develop successor standards that exempt CT scans performed on cone beam 
CT (CBCT) scanners that are FDA cleared only for imaging of the head 
from the requirement for Automatic Exposure Control (AEC) capability. 
This request was based on the AEC capability being unavailable on CBCT 
scanners.
    Response: Although we agree with the commenter that the Secretary 
has authority to apply successor standards for CT equipment through 
notice and comment rulemaking, we would like to gain some experience 
with the NEMA Standard XR-29-2013 before adopting a successor standard. 
Therefore, we are not adopting a successor standard to the NEMA 
Standard XR-29-2013 in this final rule with comment period, but may 
consider doing so in future rulemaking.
    After consideration of the public comments we received, we are 
finalizing the establishment of new modifier, ``CT.'' This 2-digit 
modifier will be added to the HCPCS annual file as of January 1, 2016, 
with the label ``CT,'' and the long descriptor ``Computed tomography 
services furnished using equipment that does not meet each of the 
attributes of the National Electrical Manufacturers Association (NEMA) 
XR-29-2013 standard''.
    Beginning January 1, 2016, hospitals and suppliers will be required 
to report the modifier ``CT'' on claims for CT scans described by any 
of the CPT codes identified in this section (and any successor codes) 
that are furnished on non-NEMA Standard XR-29-2013-compliant CT 
scanners. The use of this modifier will result in the applicable 
payment reduction for the CT service, as specified under section 
1834(p) of the Act.

H. Valuation of Specific Codes

1. Background
    Establishing valuations for newly created and revised CPT codes is 
a routine part of maintaining the PFS. Since inception of the PFS, it 
has also been a priority to revalue services regularly to assure that 
the payment rates reflect the changing trends in the practice of 
medicine and current prices for inputs used in the PE calculations. 
Initially, this was accomplished primarily through the five-year review 
process, which resulted in revised work RVUs for CY 1997, CY 2002, CY 
2007, and CY 2012, and revised PE RVUs in CY 2001, CY 2006, and CY 
2011. Under the five-year review process, revisions in RVUs were 
proposed in a proposed rule and finalized in a final rule. In addition 
to the five-year reviews, in each year beginning with CY 2009, CMS and 
the RUC have identified a number of potentially misvalued codes using 
various identification screens, as discussed in section II.B.5. of this 
final rule with comment period. Each year, when we received RUC 
recommendations, our process has been to establish interim final RVUs 
for the potentially misvalued codes, new codes, and any other codes for 
which there were coding changes in the final rule with comment period 
for a year. Then, during the 60-day period following the publication of 
the final rule with comment period, we accept public comment about 
those valuations.
    For services furnished during the calendar year following the 
publication of interim final rates, we pay for services based upon the 
interim final values established in the final rule with comment period. 
In the final rule with comment period for the subsequent year, we 
consider and respond to public comments received on the interim final 
values, and make any appropriate adjustments to values based on those 
comments. We then typically finalize the values for the codes.

[[Page 70932]]

2. Process for Valuing New, Revised, and Potentially Misvalued Codes
    In the CY 2015 PFS final rule with comment period, we finalized a 
new process for establishing values for new, revised and potentially 
misvalued codes. Under the new process, we include proposed values for 
these services in the proposed rule, rather than establishing them as 
interim final in the final rule with comment period. CY 2016 represents 
a transition year for this new process. For CY 2016, we proposed new 
values in the CY 2016 proposed rule for the codes for which we received 
complete RUC recommendations by February 10, 2015. For recommendations 
regarding any new or revised codes received after the February 10, 2015 
deadline, including updated recommendations for codes included in the 
CY 2016 proposed rule, we are establishing interim final values in this 
final rule with comment period, consistent with previous practice. In 
this final rule with comment period, we considered all comments 
received in response to proposed values for codes in our proposed rule, 
including alternative recommendations to those used in developing the 
proposed rule.
    Beginning with valuations for CY 2017, the new process will be 
applicable to all codes. That is, beginning with rulemaking for CY 
2017, we will propose values for the vast majority of new, revised, and 
potentially misvalued codes and consider public comments before 
establishing final values for the codes; use G-codes as necessary to 
facilitate continued payment for certain services for which we do not 
receive recommendations in time to propose values; and adopt interim 
final values in the case of wholly new services for which there are no 
predecessor codes or values and for which we do not receive 
recommendations in time to propose values.
    For CY 2016, we received RUC recommendations prior to February 10, 
2015 for many new, revised and potentially misvalued codes and are 
establishing final values for those codes in this final rule with 
comment period. However, the RUC recommendations included CPT tracking 
codes instead of the actual 2016 CPT codes, which were first made 
available to the public subsequent to the publication of the CY 2016 
proposed rule with comment period. Because CPT procedure codes are 5 
alpha-numeric characters but CPT tracking codes typically have 6 or 7 
alpha-numeric characters and CMS systems only utilize 5-character HCPCS 
codes, we developed and used alternative 5-character placeholder codes 
for use in the proposed rule. The final CPT codes are included and used 
for purposes of discussion in this final rule with comment period. 
Table 9 lists the CPT tracking codes, the CMS placeholder codes, and 
the final CPT codes for all new CPT codes included in the CY 2016 PFS 
proposed rule.

                         Table 9--2016 Final Rule HCPCS Placeholder to CPT Code Numbers
----------------------------------------------------------------------------------------------------------------
                                                      CMS
               CPT Tracking code                  Placeholder      CPT 2016             Short descriptor
                                                     code
----------------------------------------------------------------------------------------------------------------
3160X1........................................           3160A           31652  Bronch ebus samplng 1/2 node.
3160X2........................................           3160B           31653  Bronch ebus samplng 3/> node.
3160X3........................................           3160C           31654  Bronch ebus ivntj perph les.
3347X1........................................           3347A           33477  Implant tcat pulm vlv perq.
3725X1........................................           3725A           37252  Intrvasc us noncoronary 1st.
3725X2........................................           3725B           37253  Intrvasc us noncoronary addl.
3940X1........................................           3940A           39401  Mediastinoscpy w/medstnl bx.
3940X2........................................           3940B           39402  Mediastinoscpy w/lmph nod bx.
5039X1........................................           5039A           50430  Njx px nfrosgrm &/urtrgrm.
5039X2........................................           5039B           50431  Njx px nfrosgrm &/urtrgrm.
5039X3........................................           5039C           50432  Plmt nephrostomy catheter.
5039X4........................................           5039D           50433  Plmt nephroureteral catheter.
5039X13.......................................           5039M           50434  Convert nephrostomy catheter.
5039X5........................................           5039E           50435  Exchange nephrostomy cath.
5069X7........................................           5069G           50693  Plmt ureteral stent prq.
5069X8........................................           5069H           50694  Plmt ureteral stent prq.
5069X9........................................           5069I           50695  Plmt ureteral stent prq.
5443X1........................................           5443A           54437  Repair corporeal tear.
5443X2........................................           5443B           54438  Replantation of penis.
657XX7........................................           657XG           65785  Impltj ntrstrml crnl rng seg.
692XXX........................................           692XX           69209  Remove impacted ear wax uni.
7208X1........................................           7208A           72081  X-ray exam entire spi 1 vw.
7208X2........................................           7208B           72082  X-ray exam entire spi 2/3 vw.
7208X3........................................           7208C           72083  X-ray exam entire spi 4/5 vw.
7208X4........................................           7208D           72084  X-ray exam entire spi 6/> vw.
7778X1........................................           7778A           77767  Hdr rdncl skn surf brachytx.
7778X2........................................           7778B           77768  Hdr rdncl skn surf brachytx.
7778X3........................................           7778C           77770  Hdr rdncl ntrstl/icav brchtx.
7778X4........................................           7778D           77771  Hdr rdncl ntrstl/icav brchtx.
7778X5........................................           7778E           77772  Hdr rdncl ntrstl/icav brchtx.
8835X0........................................           8835X           88350  Immunofluor antb addl stain.
9254X1........................................           9254A           92537  Caloric vstblr test w/rec.
9254X2........................................           9254B           92538  Caloric vstblr test w/rec.
99176X........................................           9917X           99177  Ocular instrumnt screen bil.
9935XX1.......................................           9935A           99415  Prolong clincl staff svc.
9935XX2.......................................           9935B           99416  Prolong clincl staff svc add.
GXXX1.........................................           GXXX1           G0296  Visit to determ ldct elig.
GXXX2.........................................           GXXX2           G0297  Ldct for lung ca screen.
----------------------------------------------------------------------------------------------------------------


[[Page 70933]]

3. Methodology for Establishing Work RVUs
    We conducted a review of each code identified in this section and 
reviewed the current work RVU (if any), RUC-recommended work RVU, 
intensity, time to furnish the preservice, intraservice, and 
postservice activities, as well as other components of the service that 
contribute to the value. Our review of recommended work RVUs and time 
generally includes, but is not limited to, a review of information 
provided by the RUC, HCPAC, and other public commenters, medical 
literature, and comparative databases, as well as a comparison with 
other codes within the Medicare PFS, consultation with other physicians 
and health care professionals within CMS and the federal government, as 
well as Medicare claims data. We also assessed the methodology and data 
used to develop the recommendations submitted to us by the RUC and 
other public commenters and the rationale for the recommendations. In 
the CY 2011 PFS final rule with comment period (75 FR 73328 through 
73329), we discussed a variety of methodologies and approaches used to 
develop work RVUs, including survey data, building blocks, crosswalk to 
key reference or similar codes, and magnitude estimation. More 
information on these issues is available in that rule. When referring 
to a survey, unless otherwise noted, we mean the surveys conducted by 
specialty societies as part of the formal RUC process. The building 
block methodology is used to construct, or deconstruct, the work RVU 
for a CPT code based on component pieces of the code.
    Components used in the building block approach may include 
preservice, intraservice, or postservice time and post-procedure 
visits. When referring to a bundled CPT code, the building block 
components could be the CPT codes that make up the bundled code and the 
inputs associated with those codes. Magnitude estimation refers to a 
methodology for valuing work that determines the appropriate work RVU 
for a service by gauging the total amount of work for that service 
relative to the work for a similar service across the PFS without 
explicitly valuing the components of that work. In addition to these 
methodologies, CMS has frequently utilized an incremental methodology 
in which we value a code based upon its incremental difference between 
another code or another family of codes. Since the statute specifically 
defines the work component as the resources in time and intensity 
required in furnishing the service and the published literature on 
valuing work has recognized the key role of time in overall work, we 
have also refined the work RVUs for particular codes in direct 
proportion to the changes in the best information regarding the time 
resources involved in furnishing particular services, either 
considering the total time or the intra-service time.
    Comment: Several commenters objected to CMS' use of these 
methodologies as unprecedented and invalid in the context of the 
development of PFS RVUs.
    Response: We appreciate that many commenters, including the RUC, 
have maintained that magnitude estimation, informed by survey results, 
is the only appropriate method for valuation of PFS services. However, 
we have observed that the approaches used by the RUC in developing 
recommended work RVUs have resulted in recommended values that do not 
adequately address significant changes in assumptions regarding the 
amount of time required to furnish particular PFS services. Since 
section 1848(c)(1)(A) of the Act explicitly identifies time as one of 
the two kinds of resources that comprise the work component of PFS 
payment, we do not believe that our use of the above methodologies is 
inconsistent with the statutory requirements related to the maintenance 
of work RVUs, and we have regularly used these and other methodologies 
in developing values for PFS services. The PFS incorporates cross-
specialty and cross-organ system relativity. Valuing services requires 
an assessment of relative value and takes into account the clinical 
intensity and time required to furnish a service. In selecting which 
methodological approach will best determine the appropriate value for a 
service, we consider the current and recommended work and time values, 
as well as the intensity of the service, all relative to other 
services. In our review of RUC-recommended values, we have noted that 
the RUC also uses a variety of methodologies to develop work RVUs for 
individual services, and subsequently validates the results of these 
approaches through magnitude estimation. We believe that our discrete 
use of methodologies that compare the time resources among PFS codes is 
fundamentally similar to that approach, but better facilitates our 
ability to identify the most accurate work RVU for individual services 
by explicitly considering the significance of time in the estimate of 
total work.
    Several years ago, to aid in the development of preservice time 
recommendations for new and revised CPT codes, the RUC created 
standardized preservice time packages. The packages include preservice 
evaluation time, preservice positioning time, and preservice scrub, 
dress and wait time. Currently there are six preservice time packages 
for services typically furnished in the facility setting, reflecting 
the different combinations of straightforward or difficult procedure, 
straightforward or difficult patient, and without or with sedation/
anesthesia. Currently, there are three preservice time packages for 
services typically furnished in the nonfacility setting, reflecting 
procedures without and with sedation/anesthesia care.
    We have developed several standard building block methodologies to 
value services appropriately when they have common billing patterns. In 
cases where a service is typically furnished to a beneficiary on the 
same day as an E/M service, we believe that there is overlap between 
the two services in some of the activities furnished during the 
preservice evaluation and postservice time. We believe that at least 
one-third of the work time in both the preservice evaluation and 
postservice period is duplicative of work furnished during the E/M 
visit.
    Accordingly, in cases where we believe that the RUC has not 
adequately accounted for the overlapping activities in the recommended 
work RVU and/or times, we adjust the work RVU and/or times to account 
for the overlap. The work RVU for a service is the product of the time 
involved in furnishing the service multiplied by the intensity of the 
work. Preservice evaluation time and postservice time both have a long-
established intensity of work per unit of time (IWPUT) of 0.0224, which 
means that 1 minute of preservice evaluation or postservice time 
equates to 0.0224 of a work RVU.
    Therefore, in many cases when we remove 2 minutes of preservice 
time and 2 minutes of postservice time from a procedure to account for 
the overlap with the same day E/M service, we also remove a work RVU of 
0.09 (4 minutes x 0.0224 IWPUT) if we do not believe the overlap in 
time has already been accounted for in the work RVU. The RUC has 
recognized this valuation policy and, in many cases, now addresses the 
overlap in time and work when a service is typically provided on the 
same day as an E/M service.
    Table 13 contains a list of codes for which we proposed work RVUs; 
this includes all RUC recommendations received by February 10, 2015. 
When the proposed work RVUs varied from those recommended by the RUC or 
for which we do not have RUC

[[Page 70934]]

recommendations, we address those codes in the portions of this section 
that are dedicated to particular codes. The work RVUs and other payment 
information for all CY 2016 payable codes are available in Addendum B. 
Addendum B is available on the CMS Web site under downloads for the CY 
2016 PFS final rule with comment period at http://www.cms.gov/physicianfeesched/downloads/. The time values for all CY 2016 codes are 
listed in a file called ``CY 2016 PFS Work Time,'' available on the CMS 
Web site under downloads for the CY 2016 PFS final rule with comment 
period at http://www.cms.gov/physicianfeesched/downloads/.
4. Methodology for Establishing the Direct PE Inputs Used To Develop PE 
RVUs
a. Background
    On an annual basis, the RUC provides CMS with recommendations 
regarding PE inputs for new, revised, and potentially misvalued codes. 
We review the RUC-recommended direct PE inputs on a code-by-code basis. 
Like our review of recommended work RVUs, our review of recommended 
direct PE inputs generally includes, but is not limited to, a review of 
information provided by the RUC, HCPAC, and other public commenters, 
medical literature, and comparative databases, as well as a comparison 
with other codes within the Medicare PFS, consultation with other 
physicians and health care professionals within CMS and the federal 
government, as well as Medicare claims data. We also assess the 
methodology and data used to develop the recommendations submitted to 
us by the RUC and other public commenters and the rationale for the 
recommendations. When we determine that the RUC recommendations 
appropriately estimate the direct PE inputs (clinical labor, disposable 
supplies, and medical equipment) required for the typical service, 
consistent with the principles of relativity, and reflect our payment 
policies, we use those direct PE inputs to value a service. If not, we 
refine the recommended PE inputs to better reflect our estimate of the 
PE resources required for the service. We also confirm whether CPT 
codes should have facility and/or nonfacility direct PE inputs and 
refine the inputs accordingly.
    Our review and refinement of RUC-recommended direct PE inputs 
includes many refinements that are common across codes as well as 
refinements that are specific to particular services. Table 16 details 
our refinements of the RUC's direct PE recommendations at the code-
specific level. In this final rule with comment period, we address 
several refinements that are common across codes, and refinements to 
particular codes are addressed in the portions of this section that are 
dedicated to particular codes. We note that for each refinement, we 
indicate the impact on direct costs for that service. We note that, on 
average, in any case where the impact on the direct cost for a 
particular refinement is $0.32 or less, the refinement has no impact on 
the interim final PE RVUs. This calculation considers both the impact 
on the direct portion of the PE RVU, as well as the impact on the 
indirect allocator for the average service. We also note that nearly 
half of the refinements listed in Table 14 result in changes under the 
$0.32 threshold and are unlikely to result in a change to the final 
RVUs.
    We also note that the final direct PE inputs for CY 2016 are 
displayed in the final CY 2016 direct PE input database, available on 
the CMS Web site under the downloads for the CY 2016 final rule at 
www.cms.gov/PhysicianFeeSched/. The inputs displayed there have also 
been used in developing the CY 2016 PE RVUs as displayed in Addendum B 
of this final rule.
b. Common Refinements
(1) Changes in Work Time
    Some direct PE inputs are directly affected by revisions in work 
time. Specifically, changes in the intraservice portions of the work 
time and changes in the number or level of postoperative visits 
associated with the global periods result in corresponding changes to 
direct PE inputs. Although the direct PE input recommendations 
generally correspond to the work time values associated with services, 
we believe that in some cases inadvertent discrepancies between work 
time values and direct PE inputs should be refined in the establishment 
of interim final direct PE inputs. In other cases, CMS refinement of 
RUC-recommended work times prompts necessary adjustments in the direct 
PE inputs.
    We proposed to remove the 6 minutes of clinical labor time allotted 
to ``discharge management, same day (0.5 x 99238)'' in the facility 
setting from a number of procedures under review. We proposed to align 
the clinical labor for discharge day management to align the work time 
assigned in the work time file. We made these proposed refinements 
under the belief that we should not allocate clinical labor staff time 
for discharge day management if there is no discharge visit included in 
the procedure's global period.
    Comment: Several commenters, including the RUC, disagreed with CMS 
and suggested that the clinical staff time in the facility setting may 
not conform with work time for discharge day management in a given 
code. Commenters stated that the work discharge time reflects the work 
involved in discharging from a facility setting. Therefore, if the 
service is typically performed in the nonfacility setting, the post-
service time for a CPT code 99238 discharge visit would not be 
included. However, since the inputs for PE are differentiated by site 
of service, the time for discharge day might be included in the 
facility inputs, even if the service is infrequently provided in the 
facility setting overall. Although the commenters agreed that there 
should not be clinical staff time for discharge management assigned to 
0-day global procedures, the commenters requested that this clinical 
staff time be restored for the nine 10-day global procedures under 
review. Commenters stressed that clinical staff must instruct the 
patient regarding home care prior to the post-operative visit and call 
in any necessary prescriptions. Commenters also requested that this 
clinical labor time be included as two, 3-minute phone calls under the 
task ``Conduct phone calls/call in prescriptions.''
    Response: We understand and agree that when cases typically 
performed in the non-facility setting are performed in the facility 
setting, discharge day management may not be typical for the code 
overall even if discharge day management activities may be typical when 
the service is furnished in the facility setting. However, we also 
believe that if a patient's conditions are serious enough to warrant 
treatment in the facility setting, then it is likely that the patient 
will also be receiving additional services that already include the 
resource costs involved with clinical labor tasks associated with 
discharge day management. Therefore, we do not believe that it is 
appropriate to include the additional time for staff phone calls for 
these services generally furnished in the office setting.
    We have thus far been addressing the subject of discharge day 
management on a code-by-code basis. Based on the comments received, we 
believe there is a need for a broader policy concerning the proper 
treatment of this issue. We will consider this subject for future 
rulemaking.
    After consideration of the comments received, we are finalizing our 
current

[[Page 70935]]

refinements to discharge day management clinical labor time.
(2) Equipment Time
    Prior to CY 2010, the RUC did not generally provide CMS with 
recommendations regarding equipment time inputs. In CY 2010, in the 
interest of ensuring the greatest possible degree of accuracy in 
allocating equipment minutes, we requested that the RUC provide 
equipment times along with the other direct PE recommendations, and we 
provided the RUC with general guidelines regarding appropriate 
equipment time inputs. We continue to appreciate the RUC's willingness 
to provide us with these additional inputs as part of its PE 
recommendations.
    In general, the equipment time inputs correspond to the service 
period portion of the clinical labor times. We have clarified this 
principle, indicating that we consider equipment time as the time 
within the intraservice period when a clinician is using the piece of 
equipment plus any additional time that the piece of equipment is not 
available for use for another patient due to its use during the 
designated procedure. For those services for which we allocate cleaning 
time to portable equipment items, because the portable equipment does 
not need to be cleaned in the room where the service is furnished, we 
do not include that cleaning time for the remaining equipment items as 
those items and the room are both available for use for other patients 
during that time. In addition, when a piece of equipment is typically 
used during follow-up post-operative visits included in the global 
period for a service, the equipment time would also reflect that use.
    We believe that certain highly technical pieces of equipment and 
equipment rooms are less likely to be used during all of the pre-
service or post-service tasks performed by clinical labor staff on the 
day of the procedure (the clinical labor service period) and are 
typically available for other patients even when one member of the 
clinical staff may be occupied with a pre- service or post-service task 
related to the procedure. We also note that we believe these same 
assumptions would apply to inexpensive equipment items that are used in 
conjunction with and located in a room with non-portable highly 
technical equipment items. Some stakeholders have objected to this 
rationale for our refinement of equipment minutes on this basis and 
have reiterated these objections in comments regarding the proposed 
direct PE inputs. We are responding to these comments by referring the 
commenters to our extensive discussion in response to the same 
objections in the CY 2012 PFS final rule with comment period (76 FR 
73182) and the CY 2015 PFS final rule with comment period (79 FR 
67639).
(3) Standard Tasks and Minutes for Clinical Labor Tasks
    In general, the preservice, intraservice period, and postservice 
clinical labor minutes associated with clinical labor inputs in the 
direct PE input database reflect the sum of particular tasks described 
in the information that accompanies the RUC-recommended direct PE 
inputs, commonly called the ``PE worksheets.'' For most of these 
described tasks, there are a standardized number of minutes, depending 
on the type of procedure, its typical setting, its global period, and 
the other procedures with which it is typically reported. The RUC 
sometimes recommends a number of minutes either greater than or less 
than the time typically allotted for certain tasks. In those cases, CMS 
staff reviews the deviations from the standards and any rationale 
provided for the deviations. When we do not accept the RUC-recommended 
exceptions, we refine the proposed direct PE inputs to conform to the 
standard times for those tasks. In addition, in cases when a service is 
typically billed with an E/M service, we remove the pre-service 
clinical labor tasks to avoid duplicative inputs and to reflect the 
resource costs of furnishing the typical service.
    In general, clinical labor tasks fall into one of the categories on 
the PE worksheets. In cases where tasks cannot be attributed to an 
existing category, the tasks are labeled ``other clinical activity.'' 
We believe that continual addition of new and distinct clinical labor 
tasks each time a code is reviewed under the misvalued code initiative 
is likely to degrade relativity between newly reviewed services and 
those with already existing inputs. To mitigate the potential negative 
impact of these additions, we review these tasks to determine whether 
they are fully distinct from existing clinical labor tasks, typically 
included for other clinically similar services under the PFS, and 
thoroughly explained in the recommendation. For those tasks that do not 
meet these criteria, we do not accept these newly recommended clinical 
labor tasks; two examples of such tasks encountered during our review 
of the recommendations include ``Enter data into laboratory information 
system, multiparameter analyses and field data entry, complete quality 
assurance documentation'' and ``Consult with pathologist regarding 
representation needed, block selection and appropriate technique.''
    In conducting our review of the RUC recommendations for CY 2016, we 
noted that several of the recommended times for clinical labor tasks 
associated with pathology services differed across codes, both within 
the CY 2016 recommendations and in comparison to codes currently in the 
direct PE database. We refer readers to Table 16 in section II.A.3. of 
this final rule with comment period for a discussion of these 
standards.
    Comment: Several commenters stated that our standard clinical labor 
inputs for digital imaging inputs for many different codes do not 
reflect the accurate number of minutes associated with clinical labor 
tasks for individual services.
    Response: In the CY 2015 PFS final rule with comment period (79 FR 
67561), we finalized the transition from film-based to digital direct 
PE inputs for imaging services. In the CY 2016 PFS proposed rule, we 
sought comment on the appropriate values for the clinical labor tasks 
associated with digital imaging. Please see section II.B. of this rule 
for a discussion of those policies. We believe that adherence to these 
standards produces the most accurate estimate of the resource costs for 
these kinds of tasks and supports relativity within the development of 
PE RVUs. For these reasons, absent extenuating factors for specific 
codes, we are finalizing interim final direct PE inputs that adhere to 
these standards.
(4) Recommended Items That Are Not Direct PE Inputs
    In some cases, the PE worksheets included with the RUC 
recommendations include items that are not clinical labor, disposable 
supplies, or medical equipment that cannot be allocated to individual 
services or patients. Two examples of such items are ``emergency 
service container/safety kit'' and ``service contract.'' We have 
addressed these kinds of recommendations in previous rulemaking (78 FR 
74242), and we do not use these recommended items as direct PE inputs 
in the calculation of PE RVUs.
(5) Moderate Sedation Inputs
    Over several rulemaking cycles, we have proposed and finalized a 
standard package of direct PE inputs for services where moderate 
sedation is considered inherent in the procedure (76 FR 73043 through 
73049). Our CY 2016 proposed direct PE inputs conform to these 
policies. This includes not

[[Page 70936]]

incorporating the recommended power table (EF031) where it was included 
during the intraservice period, since a stretcher is the standard item 
in the moderate sedation package. These refinements are reflected in 
the final CY 2016 PFS direct PE input database and detailed in Table 
16.
    Comment: One commenter agreed with CMS' proposal to include the use 
of a stretcher in the standard moderate sedation package, and that the 
time allocated for the stretcher should be the entire post procedure 
recovery period. The commenter recommended that CMS work with the RUC 
and specialty groups before removing the power table input from the 
service period of any codes.
    Response: We appreciate the commenter's support for the standard 
moderate sedation package, but we do not believe we should consult with 
the RUC prior to implementing the standards in developing or finalizing 
direct PE inputs. However, will consider the appropriate direct PE 
inputs for each code under review.
(6) New Supply and Equipment Items
    The RUC generally recommends the use of supply and equipment items 
that already exist in the direct PE input database for new, revised, 
and potentially misvalued codes. Some recommendations include supply or 
equipment items that are not currently in the direct PE input database. 
In these cases, the RUC has historically recommended that a new item be 
created and has facilitated our pricing of that item by working with 
the specialty societies to provide us copies of sales invoices. For CY 
2016, we received invoices for several new supply and equipment items. 
We have accepted the majority of these items and added them to the 
direct PE input database. Tables 18 and 19 detail the invoices received 
for new and existing items in the direct PE database. As discussed in 
section II.A. of this final rule with comment period, we encourage 
stakeholders to review the prices associated with these new and 
existing items to determine whether these prices appear to be accurate. 
Where prices appear inaccurate, we encourage stakeholders to provide 
invoices or other information to improve the accuracy of pricing for 
these items in the direct PE database. We remind stakeholders that due 
to the relativity inherent in the development of RVUs, reductions in 
existing prices for any items in the direct PE database increase the 
pool of direct PE RVUs available to all other PFS services. Tables 18 
and 19 also include the number of invoices received as well as the 
number of nonfacility allowed services for procedures that use these 
equipment items. We provide the nonfacility allowed services so that 
stakeholders will note the impact the particular price might have on PE 
relativity, as well as to identify items that are used frequently, 
since we believe that stakeholders are more likely to have better 
pricing information for items used more frequently. We are concerned 
that a single invoice may not be reflective of typical costs and 
encourage stakeholders to provide additional invoices so that we might 
identify and use accurate prices in the development of PE RVUs.
    In some cases, we do not use the price listed on the invoice that 
accompanies the recommendation because we identify publicly available 
alternative prices or information that suggests a different price is 
more accurate. In these cases, we include this in the discussion of 
these codes. In other cases, we cannot adequately price a newly 
recommended item due to inadequate information. Sometimes, no 
supporting information regarding the price of the item has been 
included in the recommendation. In other cases, the supporting 
information does not demonstrate that the item has been purchased at 
the listed price (for example, vendor price quotes instead of paid 
invoices). In cases where the information provided on the item allows 
us to identify clinically appropriate proxy items, we might use 
existing items as proxies for the newly recommended items. In other 
cases, we have included the item in the direct PE input database 
without any associated price. Although including the item without an 
associated price means that the item does not contribute to the 
calculation of the proposed PE RVU for particular services, it 
facilitates our ability to incorporate a price once we obtain 
information and are able to do so.
    The following is a summary of the comments we received regarding 
new supply and equipment items.
    Comment: Several commenters stated that they had concerns regarding 
the process of pricing new supply and equipment items for the PFS. The 
current process requires the submission of recently paid invoices for 
CMS to consider pricing a new direct PE item. The commenters asked CMS 
to develop a new pathway to submit pricing information that will 
protect physicians and vendors, since publishing copies of paid 
invoices, even when redacted, does not sufficiently protect private 
identities.
    Response: We share commenters' concerns about protecting the 
privacy of practitioners and vendors during invoice submission. We 
welcome and will consider additional feedback and suggestions submitted 
by stakeholders regarding alternate avenues to provide updated pricing 
information for individual supplies and equipment.
    Comment: A commenter stated that although the commenter understands 
that CMS cannot accurately value the typical cost of a supply or 
equipment if the agency is not provided with sufficient pricing 
information, they disagreed with CMS' decision to list the item in 
question in the direct PE database without assigning any value to it, 
as this can significantly affect the overall PE value for that service. 
The commenter requested that CMS highlight those cases where the price 
of a supply or equipment item is not being finalized due to inadequate 
documentation, so that there is an opportunity to provide additional 
resources that might assist in assigning an accurate value.
    Response: We agree with the commenter that a lack of sufficient 
pricing information can often be problematic in assigning an accurate 
value to new supplies and equipment. Although we do not specifically 
identify all such items in the preamble to PFS rules, we note that 
stakeholders can easily identify items without prices in the direct PE 
input database files that are included as downloads with each PFS rule. 
We urge the public to submit a comment alerting us to items without a 
price that appear to be errors in the database. As detailed above, we 
also encourage the submission of invoices to help provide up-to-date, 
accurate pricing information for medical supplies and equipment.
    Comment: A commenter wrote to express concern with the pricing of 
three supplies: Probe, radiofrequency, three array (StarBurstSDE) 
(SD109) from $1995 to $353.44; gas, helium (SD079) from 25 cents per 
cubic foot to one cent per cubic foot; and gas, argon (SD227) from 25 
cents per cubic foot to less than one cent per cubic foot. The 
commenter added that there was no evidence that supported lower prices 
for these supplies, and urged CMS to retain the existing pricing for 
these supply items. The commenter stated that CMS' concerns regarding 
the price of these supplies were not addressed in the proposed rule, 
which did not allow opportunity for public comment.
    Response: The prices of these three supplies were updated in 
response to invoices received during the previous calendar year. We 
appreciate the commenters' feedback and we recognize that it would have 
been easier for stakeholders to identify the prices had they been 
included on the Invoices

[[Page 70937]]

Received for Existing Direct PE Inputs table in the proposed rule. We 
believe that the commenter may have been mistaken about the pricing of 
supplies SD079 and SD227. Both of these supplies have increased in 
price, from 25 cents per cubic foot to 57 cents and 32 cents per cubic 
foot, respectively. Neither supply has been lowered in price to one 
cent per cubic foot. Absent better data sources, we continue to believe 
that the supply prices listed in the public use files for the CY 2016 
PFS proposed rule are the most accurate values for these items.
    Comment: Many commenters wrote to express their concern over the 
pricing of the radiofrequency generator (NEURO) (EQ214) equipment 
affecting CPT codes 41530, 43228, 43229, 43270, 64633, 64634, 64635 and 
64636. Commenters indicated that the invoice for this new equipment 
item was submitted in relation to CPT code 41530, and the equipment is 
not the same radiofrequency generator used to perform the services 
described by CPT codes 64633, 64634, 64635 and 64636. Commenters 
requested that the equipment input represented in the invoice be 
assigned an equipment code separate from existing code EQ214 and that 
CMS maintain the current price of $32,900 for EQ214.
    Response: We appreciate the additional information provided by 
commenters regarding the pricing of the radiofrequency generator 
equipment. After consideration of comments received, we will create a 
new equipment code for the radiofrequency generator described in the 
submitted invoice, and assign this equipment to CPT codes 41530, 43228, 
43229, and 43270. For CPT codes 64633, 64634, 64635, and 64636, we will 
maintain the current price of $32,900 for EQ214 and maintain this 
equipment.
    Comment: One commenter submitted additional invoices regarding the 
pricing of the PrePen (SH103) supply. The commenter requested that CMS 
update the price of the PrePen to $92 based on an average of the four 
invoices submitted.
    Response: We appreciate the commenter's submission of additional 
pricing information regarding the PrePen supply. We note that three of 
the four submitted invoices reported a price of $86 for supply item 
``PrePen'' (SH103); we believe that this represents the typical price 
of this supply.
    Therefore, after consideration of the comments received, we are 
increasing the price of supply SH103 from $83 to $86.
(7) Service Period Clinical Labor Time in the Facility Setting
    Several of the PE worksheets included in RUC recommendations 
contained clinical labor minutes assigned to the service period in the 
facility setting. Our proposed inputs did not include these minutes 
because the cost of clinical labor during the service period for a 
procedure in the facility setting is not considered a resource cost to 
the practitioner since Medicare makes separate payment to the facility 
for these costs. We received no general comments that addressed this 
issue; we will address code-specific refinements to clinical labor in 
the individual code sections.
(8) Duplicative Inputs
    Several of the PE worksheets included in the RUC recommendations 
contained time for the equipment item ``xenon light source'' (EQ167). 
Because there appear to be two special light sources already present 
(the fiberoptic headlight and the endoscope itself) in the services for 
which this equipment item was recommended by the RUC, we did not 
propose to include the time for this equipment item from these 
services. In the proposed rule, we solicited comments on whether there 
is a rationale for including this additional light source as a direct 
PE input for these procedures.
    The following is a summary of the comments we received.
    Comment: One commenter stated that if CMS believes two light 
sources are duplicative for these procedures, the commenter recommended 
retaining input EQ167 and removing input EQ170 (the fiberoptic 
headlight), as the xenon light source is compatible with various items 
and can serve as the light source throughout the procedures.
    Response: We appreciate the additional information from the 
commenter regarding the appropriate use of these two light sources.
    After consideration of comments received, we are restoring input 
EQ167 and removing input EQ170 with the same number of equipment 
minutes for CPT codes 30300, 31295, 31296, 31297, and 92511.
(9) Identification of Database Errors
    Several commenters identified possible errors in the direct PE 
database that did not apply to CPT codes under review. The following is 
a summary of the comments we received regarding potential database 
entry errors.
    Comment: A commenter located a potential error for CPT code 33262 
(Removal of implantable defibrillator pulse generator with replacement 
of implantable defibrillator pulse generator; single lead system) where 
the PE RVU dropped from 3.68 in 2015 to 2.35 in the CY 2016 PFS 
proposed rule. The commenter pointed out that no changes were made to 
the direct PE inputs for the code, and similar codes within the same 
family retained the same PE value. The commenter recommended that CMS 
review this PE RVU and make a correction in the final rule.
    Response: For CPT code 33262, the pre-existing direct PE inputs for 
this code were inadvertently not included in the development of the CY 
2016 PFS proposed direct PE input database . We believe this was the 
result of a data error, and therefore, we are restoring the direct PE 
inputs to this service.
    Comment: One commenter indicated that the underlying line item 
direct inputs for a series of CPT codes were missing from the 
individual labor, equipment, and supply public use files. The commenter 
provided a list of the ten codes affected by this issue, and asked 
whether this was the result of a technical error.
    Response: The ten codes in question were all procedures that the 
CPT Editorial Panel has assigned for deletion in CY 2016. These codes 
appeared in error in our public use files for the CY 2016 PFS proposed 
rule. We have identified the technical issue that was causing this 
error and corrected it in the CY 2016 final direct PE input database.
    Comment: One commenter identified a group of codes where the 
calculated clinical labor costs (based on the underlying direct input 
labor file) differed from the CMS summary labor findings. The commenter 
asked if there were instances where CMS was applying different labor 
inputs from those published in the files released with the rule.
    Response: We appreciate the commenter bringing this issue regarding 
conflicting information in the CY 2016 PFS proposed rule public use 
files to our attention. This discrepancy was caused by an error in the 
creation of the public use files that undercounted the number of 
clinical labor minutes assigned to the postoperative E/M visits 
assigned to codes with 10-day and 90-day global periods. This error did 
not affect the proposed rates in the proposed rule, only the displayed 
values in the ``labor task detail'' public use file. We have corrected 
this issue in the public use files for the CY 2016 final direct PE 
input database.
    Comment: A commenter indicated that for several codes, the CMS file 
for work times did not appear to be updated

[[Page 70938]]

with the RUC-approved times. In particular, the pre-evaluation time and 
immediate post-service time appeared to be missing from the CMS file.
    Response: These incorrect work times have been corrected in the CY 
2016 final direct PE input database.
(10) Procedures Subject to the Multiple Procedure Payment Reduction 
(MPPR) and the OPPS Cap
    We note that services subject to the MPPR lists on diagnostic 
cardiovascular services, diagnostic imaging services, diagnostic 
ophthalmology services and therapy services, and the list of procedures 
that meet the definition of imaging under section 5102(b) of the DRA 
and are therefore subject to the OPPS cap for the upcoming calendar 
year are displayed in the public use files for the PFS proposed and 
final rules for each year. The public use files for CY 2016 are 
available on the CMS Web site under downloads for the CY 2016 PFS final 
rule with comment period at http://www.cms.gov/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFSFederal-Regulation-Notices.html.
5. Methodology for Establishing Malpractice RVUs
    As discussed in section II.B. of this final rule with comment 
period, our malpractice methodology uses a crosswalk to establish risk 
factors for new services until utilization data becomes available. 
Table 10 lists the CY 2016 HCPCS codes and their respective source 
codes used to set the CY 2016 MP RVUs. The MP RVUs for these services 
are reflected in Addendum B on the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/ PhysicianFeeSched/.

                                     TABLE 10--CY 2016 Malpractice Crosswalk
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
CY 2016 new, revised or misvalued coMalpractice risk factor crosswalk code
----------------------------------------------------------------------------------------------------------------
10035....................  Perq Dev Soft Tiss 1St Imag..  19285...................  Perq dev breast 1st us imag
10036....................  Perq Dev Soft Tiss Add Imag..  19286...................  Perq dev breast add us imag
26356....................  Repair finger/hand tendon....  26356...................  Repair finger/hand tendon
26357....................  Repair finger/hand tendon....  26357...................  Repair finger/hand tendon
26358....................  Repair/graft hand tendon.....  26358...................  Repair/graft hand tendon
41530....................  Tongue base vol reduction....  41530...................  Tongue base vol reduction
43210....................  Egd esophagogastrc fndoplsty.  43276...................  Ercp stent exchange w/dilate
47531....................  Injection For Cholangiogram..  49450...................  Replace g/c tube perc
47540....................  Perq Plmt Bile Duct Stent....  47556...................  Biliary endoscopy thru skin
47541....................  Plmt Access Bil Tree Sm Bwl..  47500...................  Injection for liver x-rays
47542....................  Dilate Biliary Duct/Ampulla..  47550...................  Bile duct endoscopy add-on
47543....................  Endoluminal Bx Biliary Tree..  47550...................  Bile duct endoscopy add-on
47544....................  Removal Duct Glbldr Calculi..  47630...................  Remove bile duct stone
47532....................  Injection For Cholangiogram..  49407...................  Image cath fluid trns/vgnl
47533....................  Plmt Biliary Drainage Cath...  47510...................  Insert catheter bile duct
47534....................  Plmt Biliary Drainage Cath...  47511...................  Insert bile duct drain
47535....................  Conversion Ext Bil Drg Cath..  47505...................  Injection for liver x-rays
47536....................  Exchange Biliary Drg Cath....  49452...................  Replace g-j tube perc
47537....................  Removal Biliary Drg Cath.....  47505...................  Injection for liver x-rays
47538....................  Perq Plmt Bile Duct Stent....  47556...................  Biliary endoscopy thru skin
47539....................  Perq Plmt Bile Duct Stent....  47556...................  Biliary endoscopy thru skin
49185....................  Sclerotx Fluid Collection....  49407...................  Image cath fluid trns/vgnl
50606....................  Endoluminal Bx Urtr Rnl Plvs.  50955...................  Ureter endoscopy & biopsy
50705....................  Ureteral Embolization/Occl...  50393...................  Insert ureteral tube
50706....................  Balloon Dilate Urtrl Strix...  50395...................  Create passage to kidney
55866....................  Laparo radical prostatectomy.  55866...................  Laparo radical prostatectomy
61645....................  Perq Art M-Thrombect &/Nfs...  37218...................  Stent placemt ante carotid
61650....................  Evasc Prlng Admn Rx Agnt 1St.  37202...................  Transcatheter therapy infuse
61651....................  Evasc Prlng Admn Rx Agnt Add.  37202...................  Transcatheter therapy infuse
64461....................  Pvb Thoracic Single Inj Site.  64490...................  Inj paravert f jnt c/t 1 lev
64462....................  Pvb Thoracic 2Nd+ Inj Site...  64480...................  Inj foramen epidural add-on
64463....................  Pvb Thoracic Cont Infusion...  64446...................  N blk inj sciatic cont inf
64553....................  Implant neuroelectrodes......  64553...................  Implant neuroelectrodes
64555....................  Implant neuroelectrodes......  64555...................  Implant neuroelectrodes
64566....................  Neuroeltrd stim post tibial..  64566...................  Neuroeltrd stim post tibial
65778....................  Cover eye w/membrane.........  65778...................  Cover eye w/membrane
65779....................  Cover eye w/membrane suture..  65779...................  Cover eye w/membrane suture
65780....................  Ocular reconst transplant....  65780...................  Ocular reconst transplant
65855....................  Trabeculoplasty Laser Surg...  65855...................  Laser surgery of eye
66170....................  Glaucoma surgery.............  66170...................  Glaucoma surgery
66172....................  Incision of eye..............  66172...................  Incision of eye
67107....................  Repair Detached Retina.......  67107...................  Repair detached retina
67108....................  Repair Detached Retina.......  67108...................  Repair detached retina
67110....................  Repair detached retina.......  67110...................  Repair detached retina
67113....................  Repair Retinal Detach Cplx...  67113...................  Repair retinal detach cplx
67227....................  Dstrj Extensive Retinopathy..  67227...................  Treatment of retinal lesion
67228....................  Treatment X10Sv Retinopathy..  67228...................  Treatment of retinal lesion
72170....................  X-ray exam of pelvis.........  72170...................  X-ray exam of pelvis
73501....................  X-Ray Exam Hip Uni 1 View....  72170...................  X-ray exam of pelvis
73502....................  X-Ray Exam Hip Uni 2-3 Views.  72170...................  X-ray exam of pelvis
73503....................  X-Ray Exam Hip Uni 4/> Views.  72170...................  X-ray exam of pelvis
73521....................  X-Ray Exam Hips Bi 2 Views...  72170...................  X-ray exam of pelvis
73522....................  X-Ray Exam Hips Bi 3-4 Views.  72170...................  X-ray exam of pelvis
73523....................  X-Ray Exam Hips Bi 5/> Views.  72170...................  X-ray exam of pelvis
73551....................  X-Ray Exam Of Femur 1........  72170...................  X-ray exam of pelvis
73552....................  X-Ray Exam Of Femur 2/>......  72170...................  X-ray exam of pelvis
74712....................  Mri Fetal Sngl/1St Gestation.  72195...................  Mri pelvis w/o dye
----------------------------------------------------------------------------------------------------------------

[[Page 70939]]

 
CY 2016 new, revised or misvalued coMalpractice risk factor crosswalk code
----------------------------------------------------------------------------------------------------------------
74713....................  Mri Fetal Ea Addl Gestation..  72195...................  Mri pelvis w/o dye
77778....................  Apply Interstit Radiat Compl.  77778...................  Apply interstit radiat compl
77790....................  Radiation handling...........  77790...................  Radiation handling
78264....................  Gastric Emptying Imag Study..  78264...................  Gastric emptying study
78265....................  Gastric Emptying Imag Study..  78264...................  Gastric emptying study
78266....................  Gastric Emptying Imag Study..  78264...................  Gastric emptying study
91200....................  Liver elastography...........  91133...................  Electrogastrography w/test
93050....................  Art pressure waveform analys.  93784...................  Ambulatory bp monitoring
95971....................  Analyze neurostim simple.....  95971...................  Analyze neurostim simple
95972....................  Analyze Neurostim Complex....  95972...................  Analyze neurostim complex
----------------------------------------------------------------------------------------------------------------

6. CY 2016 Valuation of Specific Codes

Table 11--CY 2016 Work RVUs for New, Revised and Potentially Misvalued Codes With Proposed Values in the CY 2016
                                                PFS Proposed Rule
----------------------------------------------------------------------------------------------------------------
                                                                                    Proposed CY    Final CY 2016
          HCPCS Code                    Long descriptor            CY 2015 WRVU    2016 work RVU     work RVU
----------------------------------------------------------------------------------------------------------------
11750........................  Excision of nail and nail matrix,            2.50            1.58            1.58
                                partial or complete (eg, ingrown
                                or deformed nail), for permanent
                                removal;.
20240........................  Biopsy, bone, open; superficial              3.28            2.61            2.61
                                (eg, ilium, sternum, spinous
                                process, ribs, trochanter of
                                femur).
27280........................  Arthrodesis, open, sacroiliac               14.64           20.00           20.00
                                joint, including obtaining bone
                                graft, including
                                instrumentation, when performed.
31652........................  Bronchoscopy, rigid or flexible,              NEW            4.71            4.71
                                including fluoroscopic guidance,
                                when performed; with
                                endobronchial ultrasound (EBUS)
                                guided transtracheal and/or
                                transbronchial sampling (eg,
                                aspiration[s]/biopsy[ies]), one
                                or two mediastinal and/or hilar
                                lymph node stat.
31653........................  Bronchoscopy, rigid or flexible,              NEW            5.21            5.21
                                including fluoroscopic guidance,
                                when performed; with
                                endobronchial ultrasound (EBUS)
                                guided transtracheal and/or
                                transbronchial sampling (eg,
                                aspiration[s]/biopsy[ies]), 3 or
                                more mediastinal and/or hilar
                                lymph node stati.
31654........................  Bronchoscopy, rigid or flexible,              NEW            1.40            1.40
                                including fluoroscopic guidance,
                                when performed; with
                                transendoscopic endobronchial
                                ultrasound (EBUS) during
                                bronchoscopic diagnostic or
                                therapeutic intervention(s) for
                                peripheral lesion(s) (List
                                separately in addition to.
31622........................  Bronchoscopy, rigid or flexible,             2.78            2.78            2.78
                                including fluoroscopic guidance,
                                when performed; diagnostic, with
                                cell washing, when performed
                                (separate procedure).
31625........................  Bronchoscopy, rigid or flexible,             3.36            3.36            3.36
                                including fluoroscopic guidance,
                                when performed; with bronchial
                                or endobronchial biopsy(s),
                                single or multiple sites.
31626........................  Bronchoscopy, rigid or flexible,             4.16            4.16            4.16
                                including fluoroscopic guidance,
                                when performed; with placement
                                of fiducial markers, single or
                                multiple.
31628........................  Bronchoscopy, rigid or flexible,             3.80            3.80            3.80
                                including fluoroscopic guidance,
                                when performed; with
                                transbronchial lung biopsy(s),
                                single lobe.
31629........................  Bronchoscopy, rigid or flexible,             4.09            4.00            4.00
                                including fluoroscopic guidance,
                                when performed; with
                                transbronchial needle aspiration
                                biopsy(s), trachea, main stem
                                and/or lobar bronchus(i).
31632........................  Bronchoscopy, rigid or flexible,             1.03            1.03            1.03
                                including fluoroscopic guidance,
                                when performed; with
                                transbronchial lung biopsy(s),
                                each additional lobe (List
                                separately in addition to code
                                for primary procedure).
31633........................  Bronchoscopy, rigid or flexible,             1.32            1.32            1.32
                                including fluoroscopic guidance,
                                when performed; with
                                transbronchial needle aspiration
                                biopsy(s), each additional lobe
                                (List separately in addition to
                                code for primary procedure).
33477........................  Transcatheter pulmonary valve                 NEW           25.00           25.00
                                implantation, percutaneous
                                approach, including pre-stenting
                                of the valve delivery site, when
                                performed.
37215........................  Transcatheter placement of                  19.68           18.00           18.00
                                intravascular stent(s), cervical
                                carotid artery, open or
                                percutaneous, including
                                angioplasty, when performed, and
                                radiological supervision and
                                interpretation; with distal
                                embolic protection.
37252........................  Intravascular ultrasound                      NEW            1.80            1.80
                                (noncoronary vessel) during
                                diagnostic evaluation and/or
                                therapeutic intervention,
                                including radiological
                                supervision and interpretation;
                                initial non-coronary vessel
                                (List separately in addition to
                                code for primary procedure).
37253........................  Intravascular ultrasound                      NEW            1.44            1.44
                                (noncoronary vessel) during
                                diagnostic evaluation and/or
                                therapeutic intervention,
                                including radiological
                                supervision and interpretation;
                                each additional noncoronary
                                vessel (List separately in
                                addition to code for primary
                                procedure.
38570........................  Laparoscopy, surgical; with                  9.34            8.49            8.49
                                retroperitoneal lymph node
                                sampling (biopsy), single or
                                multiple.

[[Page 70940]]

 
38571........................  Laparoscopy, surgical; with                 14.76           12.00           12.00
                                bilateral total pelvic
                                lymphadenectomy.
38572........................  Laparoscopy, surgical; with                 16.94           15.60           15.60
                                bilateral total pelvic
                                lymphadenectomy and peri-aortic
                                lymph node sampling (biopsy),
                                single or multiple.
39401........................  Mediastinoscopy; includes                     NEW            5.44            5.44
                                biopsy(ies) of mediastinal mass
                                (eg, lymphoma), when performed.
39402........................  Mediastinoscopy; with lymph node              NEW            7.25            7.25
                                biopsy(ies) (eg, lung cancer
                                staging).
43775........................  Laparoscopy, surgical, gastric                  C           20.38           20.38
                                restrictive procedure;
                                longitudinal gastrectomy (ie,
                                sleeve gastrectomy).
44380........................  Ileoscopy, through stoma;                    1.05            0.90            0.97
                                diagnostic, including collection
                                of specimen(s) by brushing or
                                washing, when performed
                                (separate procedure).
44381........................  Ileoscopy, through stoma; with                  I            1.48            1.48
                                transendoscopic balloon dilation.
44382........................  Ileoscopy, through stoma; with               1.27            1.20            1.27
                                biopsy, single or multiple.
44384........................  Ileoscopy, through stoma; with                  I            2.88            2.95
                                placement of endoscopic stent
                                (includes pre- and post-dilation
                                and guide wire passage, when
                                performed).
44385........................  Endoscopic evaluation of small               1.82            1.23            1.30
                                intestinal pouch (e.g., Kock
                                pouch, ileal reservoir [S or
                                J]); diagnostic, including
                                collection of specimen(s) by
                                brushing or washing, when
                                performed (separate procedure).
44386........................  Endoscopic evaluation of small               2.12            1.53            1.60
                                intestinal pouch (eg, Kock
                                pouch, ileal reservoir [S or
                                J]); with biopsy, single or
                                multiple.
44388........................  Colonoscopy through stoma;                   2.82            2.75            2.82
                                diagnostic, including collection
                                of specimen(s) by brushing or
                                washing, when performed
                                (separate procedure).
44389........................  Colonoscopy through stoma; with              3.13            3.05            3.12
                                biopsy, single or multiple.
44390........................  Colonoscopy through stoma; with              3.82            3.77            3.84
                                removal of foreign body(s).
44391........................  Colonoscopy through stoma; with              4.31            4.22            4.22
                                control of bleeding, any method.
44392........................  Colonoscopy through stoma; with              3.81            3.63            3.63
                                removal of tumor(s), polyp(s),
                                or other lesion(s) by hot biopsy
                                forceps.
44394........................  Colonoscopy through stoma; with              4.42            4.13            4.13
                                removal of tumor(s), polyp(s),
                                or other lesion(s) by snare
                                technique.
44401........................  Colonoscopy through stoma; with                 I            4.44            4.44
                                ablation of tumor(s), polyp(s),
                                or other lesion(s) (includes pre-
                                and post-dilation and guide wire
                                passage, when performed).
44402........................  Colonoscopy through stoma; with                 I            4.73            4.80
                                endoscopic stent placement
                                (including pre- and post-
                                dilation and guide wire passage,
                                when performed).
44403........................  Colonoscopy through stoma; with                 I            5.53            5.60
                                endoscopic mucosal resection.
44404........................  Colonoscopy through stoma; with                 I            3.05            3.12
                                directed submucosal
                                injection(s), any substance.
44405........................  Colonoscopy through stoma; with                 I            3.33            3.33
                                transendoscopic balloon dilation.
44406........................  Colonoscopy through stoma; with                 I            4.13            4.20
                                endoscopic ultrasound
                                examination, limited to the
                                sigmoid, descending, transverse,
                                or ascending colon and cecum and
                                adjacent structures.
44407........................  Colonoscopy through stoma; with                 I            5.06            5.06
                                transendoscopic ultrasound
                                guided intramural or transmural
                                fine needle aspiration/
                                biopsy(s), includes endoscopic
                                ultrasound examination limited
                                to the sigmoid, descending,
                                transverse, or ascending colon
                                and cecum and adjacent
                                structures.
44408........................  Colonoscopy through stoma; with                 I            4.24            4.24
                                decompression (for pathologic
                                distention) (eg, volvulus,
                                megacolon), including placement
                                of decompression tube, when
                                performed.
45330........................  Sigmoidoscopy, flexible;                     0.96            0.77            0.84
                                diagnostic, including collection
                                of specimen(s) by brushing or
                                washing, when performed
                                (separate procedure).
45331........................  Sigmoidoscopy, flexible; with                1.15            1.07            1.14
                                biopsy, single or multiple.
45332........................  Sigmoidoscopy, flexible; with                1.79            1.79            1.86
                                removal of foreign body(s).
45333........................  Sigmoidoscopy, flexible; with                1.79            1.65            1.65
                                removal of tumor(s), polyp(s),
                                or other lesion(s) by hot biopsy
                                forceps.
45334........................  Sigmoidoscopy, flexible; with                2.73            2.10            2.10
                                control of bleeding, any method.
45335........................  Sigmoidoscopy, flexible; with                1.46            1.07            1.14
                                directed submucosal
                                injection(s), any substance.
45337........................  Sigmoidoscopy, flexible; with                2.36            2.20            2.20
                                decompression (for pathologic
                                distention) (e.g., volvulus,
                                megacolon), including placement
                                of decompression tube, when
                                performed.
45338........................  Sigmoidoscopy, flexible; with                2.34            2.15            2.15
                                removal of tumor(s), polyp(s),
                                or other lesion(s) by snare
                                technique.
45340........................  Sigmoidoscopy, flexible; with                1.89            1.35            1.35
                                transendoscopic balloon dilation.
45341........................  Sigmoidoscopy, flexible; with                2.60            2.15            2.22
                                endoscopic ultrasound
                                examination.
45342........................  Sigmoidoscopy, flexible; with                4.05            3.08            3.08
                                transendoscopic ultrasound
                                guided intramural or transmural
                                fine needle aspiration/biopsy(s).
45346........................  Sigmoidoscopy, flexible; with                   I            2.84            2.91
                                ablation of tumor(s), polyp(s),
                                or other lesion(s) (includes pre-
                                 and post-dilation and guide
                                wire passage, when performed).
45347........................  Sigmoidoscopy, flexible; with                   I            2.75            2.82
                                placement of endoscopic stent
                                (includes pre- and post-dilation
                                and guide wire passage, when
                                performed).

[[Page 70941]]

 
45349........................  Sigmoidoscopy, flexible; with                   I            3.55            3.62
                                endoscopic mucosal resection.
45350........................  Sigmoidoscopy, flexible; with                   I            1.78            1.78
                                band ligation(s) (e.g.,
                                hemorrhoids).
45378........................  Colonoscopy, flexible;                       3.69            3.29            3.36
                                diagnostic, including collection
                                of specimen(s) by brushing or
                                washing, when performed
                                (separate procedure).
45379........................  Colonoscopy, flexible; with                  4.68            4.31            4.38
                                removal of foreign body(s).
45380........................  Colonoscopy, flexible; with                  4.43            3.59            3.66
                                biopsy, single or multiple.
45381........................  Colonoscopy, flexible; with                  4.19            3.59            3.66
                                directed submucosal
                                injection(s), any substance.
45382........................  Colonoscopy, flexible; with                  5.68            4.76            4.76
                                control of bleeding, any method.
45384........................  Colonoscopy, flexible; with                  4.69            4.17            4.17
                                removal of tumor(s), polyp(s),
                                or other lesion(s) by hot biopsy
                                forceps.
45385........................  Colonoscopy, flexible; with                  5.30            4.67            4.67
                                removal of tumor(s), polyp(s),
                                or other lesion(s) by snare
                                technique.
45386........................  Colonoscopy, flexible; with                  4.57            3.87            3.87
                                transendoscopic balloon dilation.
45388........................  Colonoscopy, flexible; with                     I            4.98            4.98
                                ablation of tumor(s), polyp(s),
                                or other lesion(s) (includes pre-
                                 and post-dilation and guide
                                wire passage, when performed).
45389........................  Colonoscopy, flexible; with                     I            5.27            5.34
                                endoscopic stent placement
                                (includes pre- and post-dilation
                                and guide wire passage, when
                                performed).
45390........................  Colonoscopy, flexible; with                     I            6.07            6.14
                                endoscopic mucosal resection.
45391........................  Colonoscopy, flexible; with                  5.09            4.67            4.74
                                endoscopic ultrasound
                                examination limited to the
                                rectum, sigmoid, descending,
                                transverse, or ascending colon
                                and cecum, and adjacent
                                structures.
45392........................  Colonoscopy, flexible; with                  6.54            5.60            5.60
                                transendoscopic ultrasound
                                guided intramural or transmural
                                fine needle aspiration/
                                biopsy(s), includes endoscopic
                                ultrasound examination limited
                                to the rectum, sigmoid,
                                descending, transverse, or
                                ascending colon and cecum, and
                                adjacent structures.
45393........................  Colonoscopy, flexible; with                     I            4.78            4.78
                                decompression (for pathologic
                                distention) (e.g., volvulus,
                                megacolon), including placement
                                of decompression tube, when
                                performed.
45398........................  Colonoscopy, flexible; with band                I            4.30            4.30
                                ligation(s) (e.g., hemorrhoids).
46500........................  Injection of sclerosing solution,            1.69            1.42            1.42
                                hemorrhoids.
46601........................  Anoscopy; diagnostic, with high-                I            1.60            1.60
                                resolution magnification (HRA)
                                (e.g., colposcope, operating
                                microscope) and chemical agent
                                enhancement, including
                                collection of specimen(s) by
                                brushing or washing, when
                                performed.
46607........................  Anoscopy; with high-resolution                  I            2.20            2.20
                                magnification (HRA) (e.g.,
                                colposcope, operating
                                microscope) and chemical agent
                                enhancement, with biopsy, single
                                or multiple.
47135........................  Liver allotransplantation;                  83.64           90.00           90.00
                                orthotopic, partial or whole,
                                from cadaver or living donor,
                                any age.
50430........................  Injection procedure for antegrade             NEW            3.15            3.15
                                nephrostogram and/or
                                ureterogram, complete diagnostic
                                procedure including imaging
                                guidance (e.g., ultrasound and
                                fluoroscopy) and all associated
                                radiological supervision and
                                interpretation; new access.
50431........................  Injection procedure for antegrade             NEW            1.10            1.10
                                nephrostogram and/or
                                ureterogram, complete diagnostic
                                procedure including imaging
                                guidance (e.g., ultrasound and
                                fluoroscopy) and all associated
                                radiological supervision and
                                interpretation; existing access.
50432........................  Placement of nephrostomy                      NEW            4.25            4.25
                                catheter, percutaneous,
                                including diagnostic
                                nephrostogram and/or ureterogram
                                when performed, imaging guidance
                                (e.g., ultrasound and/or
                                fluoroscopy) and all associated
                                radiological supervision and
                                interpretation.
50433........................  Placement of nephroureteral                   NEW            5.30            5.30
                                catheter, percutaneous,
                                including diagnostic
                                nephrostogram and/or ureterogram
                                when performed, imaging guidance
                                (e.g., ultrasound and/or
                                fluoroscopy) and all associated
                                radiological supervision and
                                interpretation, new access.
50435........................  Exchange nephrostomy catheter,                NEW            1.82            1.82
                                percutaneous, including
                                diagnostic nephrostogram and/or
                                ureterogram when performed,
                                imaging guidance (e.g.,
                                ultrasound and/or fluoroscopy)
                                and all associated radiological
                                supervision and interpretation.
50434........................  Convert nephrostomy catheter to               NEW            4.00            4.00
                                nephroureteral catheter,
                                percutaneous, including
                                diagnostic nephrostogram and/or
                                ureterogram when performed,
                                imaging guidance (e.g.,
                                ultrasound and/or fluoroscopy)
                                and all associated radiological
                                supervision and interpretation.
50693........................  Placement of ureteral stent,                  NEW            4.21            4.21
                                percutaneous, including
                                diagnostic nephrostogram and/or
                                ureterogram when performed,
                                imaging guidance (e.g.,
                                ultrasound and/or fluoroscopy)
                                and all associated radiological
                                supervision and interpretation;
                                pre-existing nephrostomy.

[[Page 70942]]

 
50694........................  Placement of ureteral stent,                  NEW            5.50            5.50
                                percutaneous, including
                                diagnostic nephrostogram and/or
                                ureterogram when performed,
                                imaging guidance (e.g.,
                                ultrasound and/or fluoroscopy)
                                and all associated radiological
                                supervision and interpretation;
                                new access, without separ.
50695........................  Placement of ureteral stent,                  NEW            7.05            7.05
                                percutaneous, including
                                diagnostic nephrostogram and/or
                                ureterogram when performed,
                                imaging guidance (e.g.,
                                ultrasound and/or fluoroscopy)
                                and all associated radiological
                                supervision and interpretation;
                                new access, with separate.
54437........................  Repair of traumatic corporeal                 NEW           11.50           11.50
                                tear(s).
54438........................  Replantation, penis, complete                 NEW           22.10           24.50
                                amputation including urethral
                                repair.
63045........................  Laminectomy, facetectomy and                17.95           17.95           17.95
                                foraminotomy (unilateral or
                                bilateral with decompression of
                                spinal cord, cauda equina and/or
                                nerve root[s], [eg, spinal or
                                lateral recess stenosis]),
                                single vertebral segment;
                                cervical.
63046........................  Laminectomy, facetectomy and                17.25           17.25           17.25
                                foraminotomy (unilateral or
                                bilateral with decompression of
                                spinal cord, cauda equina and/or
                                nerve root[s], [eg, spinal or
                                lateral recess stenosis]),
                                single vertebral segment;
                                thoracic.
65785........................  Implantation of intrastromal                  NEW            5.39            5.39
                                corneal ring segments.
68801........................  Dilation of lacrimal punctum,                1.00            0.82            0.82
                                with or without irrigation.
68810........................  Probing of nasolacrimal duct,                2.15            1.54            1.54
                                with or without irrigation.
68811........................  Probing of nasolacrimal duct,                2.45            1.74            1.74
                                with or without irrigation;
                                requiring general anesthesia.
68815........................  Probing of nasolacrimal duct,                3.30            2.70            2.70
                                with or without irrigation; with
                                insertion of tube or stent.
68816........................  Probing of nasolacrimal duct,                3.06            2.10            2.10
                                with or without irrigation; with
                                transluminal balloon catheter
                                dilation.
71100........................  Radiologic examination, ribs,                0.22            0.22            0.22
                                unilateral; 2 views.
72070........................  Radiologic examination, spine;               0.22            0.22            0.22
                                thoracic, 2 views.
72081........................  Entire spine x ray, one view.....             NEW            0.26            0.26
72082........................  Entire spine x-ray; 2 or 3 views.             NEW            0.31            0.31
72083........................  Entire spine x-ray; 4 or 5 views.             NEW            0.35            0.35
72084........................  Entire spine x-ray; min 6 views..             NEW            0.41            0.41
73060........................  Radiologic examination; humerus,             0.17            0.16            0.16
                                minimum of 2 views.
73560........................  Radiologic examination, knee; 1              0.17            0.16            0.16
                                or 2 views.
73562........................  Radiologic examination, knee; 3              0.18            0.18            0.18
                                views.
73564........................  Radiologic examination, knee;                0.22            0.22            0.22
                                complete, 4 or more views.
73565........................  Radiologic examination, knee;                0.17            0.16            0.16
                                both knees, standing,
                                anteroposterior.
73590........................  Radiologic examination; tibia and            0.17            0.16            0.16
                                fibula, 2 views.
73600........................  Radiologic examination, ankle; 2             0.16            0.16            0.16
                                views.
76999........................  Unlisted ultrasound procedure                   C               C               C
                                (e.g., diagnostic,
                                interventional).
77385........................  Intensity modulated radiation                   I            0.00               I
                                treatment delivery (IMRT),
                                includes guidance and tracking,
                                when performed; simple.
77386........................  Intensity modulated radiation                   I            0.00               I
                                treatment delivery (IMRT),
                                includes guidance and tracking,
                                when performed; complex.
77387........................  Guidance for localization of                    I            0.58               I
                                target volume for delivery of
                                radiation treatment delivery,
                                includes intrafraction tracking,
                                when performed.
77402........................  Radiation treatment delivery, >=                I            0.00               I
                                1 MeV; simple.
77407........................  Radiation treatment delivery, >=                I            0.00               I
                                1 MeV; intermediate.
77412........................  Radiation treatment delivery, >=                I            0.00               I
                                1 MeV; complex.
77767........................  Remote afterloading high dose                 NEW            1.05            1.05
                                rate radionuclide skin surface
                                brachytherapy, includes basic
                                dosimetry, when performed;
                                lesion diameter up to 2.0 cm or
                                1 channel.
77768........................  Remote afterloading high dose                 NEW            1.40            1.40
                                rate radionuclide skin surface
                                brachytherapy, includes basic
                                dosimetry, when performed;
                                lesion diameter over 2.0 cm and
                                2 or more channels, or multiple
                                lesions.
77770........................  Remote afterloading high dose                 NEW            1.95            1.95
                                rate radionuclide interstitial
                                or intracavitary brachytherapy,
                                includes basic dosimetry, when
                                performed; 1 channel.
77771........................  Remote afterloading high dose                 NEW            3.80            3.80
                                rate radionuclide interstitial
                                or intracavitary brachytherapy,
                                includes basic dosimetry, when
                                performed; 2-12 channels.
77772........................  Remote afterloading high dose                 NEW            5.40            5.40
                                rate radionuclide interstitial
                                or intracavitary brachytherapy,
                                includes basic dosimetry, when
                                performed; over 12 channels.
88346........................  Immunofluorescent study, each                0.86            0.74            0.74
                                antibody; direct method.
88350........................  Immunofluorescence, per specimen;             NEW            0.56            0.56
                                each additional single antibody
                                stain procedure (List separately
                                in addition to code for primary
                                procedure).
88367........................  Morphometric analysis, in situ               0.73            0.73            0.73
                                hybridization (quantitative or
                                semi-quantitative), using
                                computer-assisted technology,
                                per specimen; initial single
                                probe stain procedure.
88368........................  Morphometric analysis, in situ               0.88            0.88            0.88
                                hybridization (quantitative or
                                semi-quantitative), manual, per
                                specimen; initial single probe
                                stain procedure.

[[Page 70943]]

 
91299........................  Unlisted diagnostic                             C               C               C
                                gastroenterology procedure.
92537........................  Caloric vestibular test with                  NEW            0.60            0.60
                                recording, bilateral; bithermal
                                (ie, one warm and one cool
                                irrigation in each ear for a
                                total of four irrigations).
92538........................  Caloric vestibular test with                  NEW            0.30            0.30
                                recording, bilateral;
                                monothermal (ie, one irrigation
                                in each ear for a total of two
                                irrigations).
99174........................  Instrument-based ocular screening               N               N               N
                                (e.g., photoscreening, automated-
                                refraction), bilateral.
99177........................  Instrument-based ocular screening             NEW               N               N
                                (e.g., photoscreening, automated-
                                refraction), bilateral; with on-
                                site analysis.
99497........................  Advance care planning including                 I            1.50            1.50
                                the explanation and discussion
                                of advance directives such as
                                standard forms (with completion
                                of such forms, when performed),
                                by the physician or other
                                qualified health care
                                professional; first 30 minutes,
                                face-to-face with the patient,
                                family member(s), and/or
                                surrogate.
99498........................  Advance care planning including                 I            1.40            1.40
                                the explanation and discussion
                                of advance directives such as
                                standard forms (with completion
                                of such forms, when performed),
                                by the physician or other
                                qualified health care
                                professional; each additional 30
                                minutes (List separately in
                                addition to code for primary
                                procedure).
G0104........................  Colorectal cancer screening;                 0.96            0.77            0.84
                                flexible sigmoidoscopy.
G0105........................  Colorectal cancer screening;                 3.69            3.29            3.36
                                colonoscopy on individual at
                                high risk.
G0121........................  Colorectal cancer screening;                 3.69            3.29            3.36
                                colonoscopy on individual not
                                meeting criteria for high risk.
----------------------------------------------------------------------------------------------------------------

a. Lower GI Endoscopy Services
    CPT revised the lower gastrointestinal endoscopy code set for CY 
2015 following identification of some of the codes as potentially 
misvalued and the affected specialty society's contention that this 
code set did not allow for accurate reporting of services based upon 
current medical practice. The RUC subsequently provided recommendations 
to us for valuing these services. In the CY 2015 PFS final rule with 
comment period, we delayed valuing the lower GI codes and indicated 
that we would propose values for these codes in the CY 2016 proposed 
rule, citing the new process for including proposed values for new, 
revised and potentially misvalued codes in the proposed rule as one of 
the reasons for the delay.
(1) Gastrointestinal (GI) Endoscopy (CPT Codes 43775, 44380-46607 and 
HCPCS Codes G0104, G0105, and G0121)
    In the CY 2014 PFS final rule with comment period, we indicated 
that we used what we called an ``incremental difference methodology'' 
in valuing the upper GI codes for that year. We explained that the RUC 
made extensive use of a methodology that uses the incremental 
difference in codes to determine values for many of these services. 
This methodology uses a base code or other comparable code and 
considers what the difference should be between that code and another 
code by comparing the differentials to those for other sets of similar 
codes. As with the esophagoscopy subfamily, many of the procedures 
described within the colonoscopy subfamily have identical counterparts 
in the esophagogastroduodenoscopy (EGD) subfamily. For instance, the 
base colonoscopy CPT code 45378 is described as ``Colonoscopy, 
flexible; diagnostic, including collection of specimen(s) by brushing 
or washing when performed, (separate procedure).'' The base EGD CPT 
code 43235 is described as ``Esophagogastroduodenoscopy, flexible, 
transoral; diagnostic, with collection of specimen(s) by brushing or 
washing, when performed.'' In valuing other codes within both 
subfamilies, the RUC frequently used the difference between these two 
base codes as an increment for measuring the difference in work 
involved in doing a similar procedure utilizing colonoscopy versus 
utilizing EGD. For example, the EGD CPT code 43239 includes a biopsy in 
addition to the base diagnostic EGD CPT code 43235. The RUC valued this 
by adding the incremental difference in the base colonoscopy code over 
the base EGD CPT code to the value it recommended for the esophagoscopy 
biopsy, CPT code 43202. With some variations, the RUC used this 
incremental difference methodology extensively in valuing subfamilies 
of codes. In the CY 2016 PFS proposed rule, we made use of similar 
methodologies in establishing the proposed work RVUs for codes in this 
family.
    We agreed with several of the RUC recommendations for codes in this 
family. Where we did not agree, we consistently applied the incremental 
difference methodology. Table 12 reflects how we applied this 
methodology and the values we proposed. To calculate the base RVU for 
the colonoscopy subfamily, we looked at the current intraservice time 
for CPT code 45378, which is 30 minutes, and the current work RVU, 
which is 3.69. The RUC recommended an intraservice time of 25 minutes 
and 3.36 RVUs. We then compared that service to the base EGD CPT code 
43235 for which the RUC recommended a work RVU of 2.26, giving an 
increment between EGD and colonoscopy of 1.10 RVUs. We added that 
increment to our proposed work RVU for CPT code 43235 of 2.19 to arrive 
at our proposed work RVU for the base colonoscopy CPT code 45378 of 
3.29. We used this value as the base code in the incremental 
methodology for establishing the proposed work RVU for the other base 
codes in the colonoscopy subfamilies which were then used to value the 
other codes in that subfamily.
    Comment: Many commenters expressed concerns that the proposed 
values for the lower GI code set will hinder efforts to reduce the 
incidence of colorectal cancer through detection and treatment by 
limiting access to screenings. Comments stated,

[[Page 70944]]

``According to a poll of more than 550 gastroenterologists, more than 
half of the respondents plan to limit new Medicare patients if the 
proposed cuts are implemented; 55 percent plan to limit procedures to 
Medicare patients; and 15 percent are considering opting out of 
Medicare entirely. These findings suggest that GI physicians may not be 
able to maintain the current mix of Medicare patients and protect the 
financial viability of their practices.'' Some commenters specifically 
disagreed with CMS' methodology of applying an incremental difference 
between the base procedure for upper GI and lower GI, stating they 
believe that is a misapplication of the incremental approach and some 
noted that they believe that the upper and lower GI services are 
clinically distinct. Additionally, many commenters expressed 
disappointment that CMS did not consider the survey results, which they 
believe are the most reliable indicator of the work involved in 
colonoscopy. These commenters suggested that CMS adopt the RUC-
recommended values for the lower GI code set. Additionally, the 
affected specialty societies suggested that we accept their original 
recommendations (a work RVU of 3.51 for the base colonoscopy code, CPT 
code 45378). Some commenters stated that new colorectal cancer 
screening protocols have resulted in increased work due to the 
attention required to identify and remove precancerous lesions.
    Response: In developing the proposed work RVUs, we did consider the 
survey data. However, we considered the survey data in the context of 
the work RVUs for services within the broader endoscopy family. While 
we continue to believe that relativity among families of codes is 
important and view the upper and lower endoscopy codes as one code 
family, in the context of receiving many comments urging us to accept 
the RUC-recommended value for diagnostic colonoscopy (and thus the 
screening colonoscopy), we reconsidered the differences between the 
RUC-recommended value and our proposed RVUs. We do not believe the 
relatively small difference between these two values is itself likely 
to present significant issues in PFS relativity. Therefore, we agree 
with commenters that the RUC-recommended values generally reflect the 
work resources involved in furnishing the service and we are finalizing 
the RUC-recommended value of 3.36 RVUs for the base colonoscopy code, 
CPT code 45378, and are adjusting the valuation of all the other codes 
in the lower GI code set using that base with the incremental 
difference methodology. We also note that while we appreciate and share 
commenters' interest in maintaining beneficiaries' access to screening 
colonoscopies where appropriate under the current benefit, we believe 
that establishing RVUs that most accurately reflect the relative 
resource costs involved in furnishing services paid under the PFS is 
not only required by the statute, but also important to preserve and 
promote beneficiary access to all PFS services.
    Comment: A few commenters requested that CMS delay finalizing 
values for the lower GI codes until codes that are used to report 
moderate sedation are separately valued, since implementation of those 
codes will require a methodology for removing the work RVUs for 
moderate sedation from the endoscopy codes.
    Response: We will review and consider recommendations from the 
medical community about the work RVUs associated with moderate sedation 
and will address the valuation of moderation sedation separately. Since 
moderate sedation is a broad, cross-cutting issue that affects many 
specialties and code families, we do not believe that it is appropriate 
to delay finalizing values for all codes with moderate sedation, and 
therefore, will not do so for the GI codes.
    Comment: A few commenters stated disagreement with CMS' proposed PE 
refinement to remove the mobile instrument table (EF027) from codes 
45330 and 45331on the basis that the procedures do not include moderate 
sedation. The commenter noted that, ``while the mobile instrument table 
is part of the moderate sedation standard package and moderate sedation 
is not inherent in the procedure, it is still a necessary part of 
flexible sigmoidoscopy codes 45330 and 45331.''
    Response: We agree with the commenter that the mobile instrument 
table is typically involved in furnishing these services, even though 
moderate sedation may not be inherent in the procedure. Therefore, we 
have included the mobile instrument table (EF027) in the direct PE 
input database for codes 45330 and 45331.
    Comment: We received a comment on the proposed PE refinements made 
to CPT code 45330, stating that the RUC approved sterile water for CPT 
code 43450 instead of distilled water due to the risk of infections and 
potential for contamination. The commenter stated an expectation that 
all GI endoscopy codes that currently contain distilled water should be 
revised to include sterile water instead.
    Response: We have considered the comment; however, we re-examined 
the RUC-recommended direct PE inputs, and we did not identify the 
sterile water as part of that recommendation. Additionally, the 
commenter did not provide a detailed rationale for the use of sterile 
water over distilled water. Therefore, for CY 2016, we are finalizing 
the inputs for code 45330 as proposed. However, we are seeking 
additional information regarding these inputs (including rationale and 
explanation for the use of the commenter's recommended inputs) and we 
will consider this issue for future rulemaking.

                                                                 Table 12--Application of the Incremental Difference Methodology
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                      Finalized
                                                                                                                                                                                     WRVU (using
                HCPCS                        Descriptor          Current      RUC WRVU        Base procedure         Base RVU            Increment          Increment     Proposed    3.36 RVUs
                                                                   WRVU                                                                                       value         WRVU       for the
                                                                                                                                                                                        base)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
44380...............................  Ileoscopy, through              1.05         0.97  Colonoscopy............            3.29  Colonoscopy to                 -2.39          0.9         0.97
                                       stoma; diagnostic,                                                                          Ileoscopy.
                                       including collection
                                       of specimen(s) by
                                       brushing or washing,
                                       when performed.
44382...............................  Ileoscopy, through              1.27         1.27  Ileoscopy..............             0.9  Biopsy.................          0.3          1.2         1.27
                                       stoma; with biopsy,
                                       single or multiple.

[[Page 70945]]

 
44384...............................  Ileoscopy, through                NA         3.11  Ileoscopy..............             0.9  Stent..................         1.98         2.88         2.95
                                       stoma; with placement
                                       of endoscopic stent
                                       (includes pre- and
                                       post-dilation and
                                       guide wire passage,
                                       when performed).
44385...............................  Endoscopic evaluation           1.82          1.3  Colonoscopy............            3.29  Colonoscopy to endo.           -2.06         1.23          1.3
                                       of small intestinal                                                                         eval..
                                       pouch (e.g., Kock
                                       pouch, ileal reservoir
                                       [S or J]); diagnostic,
                                       including collection
                                       of specimen(s) by
                                       brushing or washing,
                                       when performed.
44386...............................  Endoscopic evaluation           2.12          1.6  Endo. Eval.............            1.23  Biopsy.................          0.3         1.53          1.6
                                       of small intestinal
                                       pouch (eg, Kock pouch,
                                       ileal reservoir [S or
                                       J]); with biopsy,
                                       single or multiple.
44388...............................  Colonoscopy through             2.82         2.82  Colonoscopy............            3.29  Colonoscopy to                 -0.54         2.75         2.82
                                       stoma; diagnostic,                                                                          Colonoscopy through
                                       including collection                                                                        stoma.
                                       of specimen(s) by
                                       brushing or washing,
                                       when performed
                                       (separate procedure).
44389...............................  Colonoscopy through             3.13         3.12  Colonoscopy through                2.75  Biopsy.................          0.3         3.05         3.12
                                       stoma; with biopsy,                                stoma.
                                       single or multiple.
44390...............................  Colonoscopy through             3.82         3.82  Colonoscopy through                2.75  Foreign body...........         1.02         3.77         3.84
                                       stoma; with removal of                             stoma.
                                       foreign body.
44402...............................  Colonoscopy through              4.7         4.96  Colonoscopy through                2.75  Stent..................         1.98         4.73          4.8
                                       stoma; with endoscopic                             stoma.
                                       stent placement
                                       (including pre- and
                                       post-dilation and
                                       guidewire passage,
                                       when performed).
44403...............................  Colonoscopy through               NA         5.81  Colonoscopy through                2.75  Endoscopic mucosal              2.78         5.53          5.6
                                       stoma; with endoscopic                             stoma.                                   resection.
                                       mucosal resection.
44404...............................  Colonoscopy through               NA         3.13  Colonoscopy through                2.75  Submucosal injection...          0.3         3.05         3.12
                                       stoma; with directed                               stoma.
                                       submucosal
                                       injection(s), any
                                       substance.
44406...............................  Colonoscopy through               NA         4.41  Colonoscopy through                2.75  Endoscopic ultrasound..         1.38         4.13          4.2
                                       stoma; with endoscopic                             stoma.
                                       ultrasound
                                       examination, limited
                                       to the sigmoid,
                                       descending,
                                       transverse, or
                                       ascending colon and
                                       cecum and adjacent
                                       structures.
45330...............................  Sigmoidoscopy,                  0.96         0.84  Colonoscopy............            3.29  Colonoscopy to                 -2.52         0.77         0.84
                                       flexible; diagnostic,                                                                       Sigmoidoscopy.
                                       including collection
                                       of specimen(s) by
                                       brushing or washing
                                       when performed.
45331...............................  Sigmoidoscopy,                  1.15         1.14  Sigmoidoscopy..........            0.77  Biopsy.................          0.3         1.07         1.14
                                       flexible; with biopsy,
                                       single or multiple.
45332...............................  Sigmoidoscopy,                  1.79         1.85  Sigmoidoscopy..........            0.77  Foreign body...........         1.02         1.79         1.86
                                       flexible; with removal
                                       of foreign body.

[[Page 70946]]

 
45335...............................  Sigmoidoscopy,                  1.46         1.15  Sigmoidoscopy..........            0.77  Submucosal injection...          0.3         1.07         1.14
                                       flexible; with
                                       directed submucosal
                                       injection(s), any
                                       substance.
45341...............................  Sigmoidoscopy,                   2.6         2.43  Sigmoidoscopy..........            0.77  Endoscopic ultrasound..         1.38         2.15         2.22
                                       flexible; with
                                       endoscopic ultrasound
                                       examination.
45346...............................  Sigmoidoscopy,                    NA         2.97  Sigmoidoscopy..........            0.77  Ablation...............         2.07         2.84         2.91
                                       flexible; with
                                       ablation of tumor(s),
                                       polyp(s), or other
                                       lesion(s) (includes
                                       pre- and post-dilation
                                       and guide wire
                                       passage, when
                                       performed).
45347...............................  Sigmoidoscopy,                    NA         2.98  Sigmoidoscopy..........            0.77  Stent..................         1.98         2.75         2.82
                                       flexible; with
                                       placement of
                                       endoscopic stent
                                       (includes pre- and
                                       post-dilation and
                                       guide wire passage,
                                       when performed).
45349...............................  Sigmoidoscopy,                    NA         3.83  Sigmoidoscopy..........            0.77  Endoscopic mucosal              2.78         3.55         3.62
                                       flexible; with                                                                              resection.
                                       endoscopic mucosal
                                       resection.
45378...............................  Colonoscopy, flexible;          3.69         3.36  Colonoscopy............            3.29                                                            3.36
                                       diagnostic, including
                                       collection of
                                       specimen(s) by
                                       brushing or washing,
                                       when performed,
                                       (separate procedure).
45379...............................  Colonoscopy, flexible;          4.68         4.37  Colonoscopy............            3.29  Foreign body...........         1.02         4.31         4.38
                                       with removal of
                                       foreign body.
45380...............................  Colonoscopy, flexible,          4.43         3.66  Colonoscopy............            3.29  Biopsy.................          0.3         3.59         3.66
                                       proximal to splenic
                                       flexure; with biopsy,
                                       single or multiple.
45381...............................  Colonoscopy, flexible;          4.19         3.67  Colonoscopy............            3.29  Submucosal injection...          0.3         3.59         3.66
                                       with directed
                                       submucosal
                                       injection(s), any
                                       substance.
45389...............................  Colonoscopy, flexible;            NA          5.5  Colonoscopy............            3.29  Stent..................         1.98         5.27         5.34
                                       with endoscopic stent
                                       placement (includes
                                       pre- and post-dilation
                                       and guide wire
                                       passage, when
                                       performed).
45390...............................  Colonoscopy, flexible;            NA         6.35  Colonoscopy............            3.29  Endoscopic mucosal              2.78         6.07         6.14
                                       with endoscopic                                                                             resection.
                                       mucosal resection.
45391...............................  Colonoscopy, flexible;          5.09         4.95  Colonoscopy............            3.29  Endoscopic ultrasound..         1.38         4.67         4.74
                                       with endoscopic
                                       ultrasound examination
                                       limited to the rectum,
                                       sigmoid, descending,
                                       transverse, or
                                       ascending colon and
                                       cecum, and adjacent
                                       structures.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(2) Laparoscopic Sleeve Gastrectomy (CPT Code 43775)
    Prior to CY 2013, CPT code 43775 described a non-covered service. 
For CY 2013, this service was covered as part of the bariatric surgery 
National Coverage Determination (NCD) and has been contractor-priced 
since 2013. In the CY 2016 PFS proposed rule, we proposed to establish 
national pricing for CPT code 43775. To establish a work RVU, we 
crosswalked the work RVUs for this code from CPT code 37217 
(Transcatheter placement of an intravascular stent(s), intrathoracic 
common carotid artery or innominate artery by retrograde treatment, via 
open ipsilateral cervical carotid artery

[[Page 70947]]

exposure, including angioplasty, when performed, and radiological 
supervision and interpretation), due to their identical intraservice 
times, similar total times, and similar levels of intensity. Therefore, 
we proposed a work RVU of 20.38 for CPT code 43775.
    Comment: Some commenters noted that CPT code 43775 was reviewed at 
the April 2009 RUC meeting and that the RUC submitted recommendations 
to CMS for CY 2010, including a recommendation of 21.40 work RVUs for 
CPT code 43775. The commenters stated that those recommendations are 
still valid and requested that CMS accept the RUC recommended work RVU 
of 21.40 for CPT code 43775.
    Response: We thank the commenters for pointing out the previous RUC 
recommendations from April 2009. We continue to believe that the 
proposed work RVU is appropriate based on the reasons stated in the 
proposed rule, and therefore, for CY 2016, we are finalizing a work RVU 
of 20.38 for CPT code 43775.
    Comment: A few commenters noted that they believe the crosswalk 
code used by CMS (CPT code 37217) does encourage relativity, but 
because it is an endovascular procedural code, does not accurately 
capture all aspects of a bariatric surgical patient in the pre-service, 
intra-service, or post-service periods. Commenters stated that they 
believed a comparison within the code family would provide an 
assessment that is more accurate. The commenters urged CMS to accept 
the previous valuation of 21.56.
    Response: After consideration of the comments, we continue to 
believe that the proposed work RVU is appropriate based on the reasons 
stated in the proposed rule, and that it maintains relativity within 
its family of codes. Therefore, for CY 2016, we are finalizing a work 
RVU of 20.38 for CPT code 43775.
(3) Incomplete Colonoscopy (CPT codes 44388, 45378, G0105, and G0121)
    Prior to CY 2015, according to CPT instruction, an incomplete 
colonoscopy was defined as a colonoscopy that did not evaluate the 
colon past the splenic flexure (the distal third of the colon). In 
accordance with that definition, the Medicare Claims Processing Manual 
(pub. 100-04, chapter 12, section 30.1.B., available at http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs-Items) states that physicians should report an incomplete 
colonoscopy with 45378 and append modifier -53, which is paid at the 
same rate as a sigmoidoscopy.
    In CY 2015, the CPT instruction changed the definition of an 
incomplete colonoscopy to a colonoscopy that does not evaluate the 
entire colon. The 2015 CPT Manual states when performing a diagnostic 
or screening endoscopic procedure on a patient who is scheduled and 
prepared for a total colonoscopy, if the physician is unable to advance 
the colonoscope to the cecum or colon-small intestine anastomosis due 
to unforeseen circumstances, report 45378 (colonoscopy) or 44388 
(colonoscopy through stoma) with modifier -53 and provide appropriate 
documentation.
    Given that the new definition of an incomplete colonoscopy also 
includes colonoscopies where the colonoscope is advanced past the 
splenic flexure but not to the cecum, we proposed to establish new 
values for the incomplete colonoscopies, reported with the -53 
modifier. At present, we crosswalk the RVUs for the incomplete 
colonoscopies from the values of the corresponding sigmoidoscopy. Given 
that the new CPT instructions will reduce the number of reported 
complete colonoscopies and increase the number of colonoscopies that 
proceeded further toward completion reported with the -53 modifier, we 
believe CPT code 45378 reported with the -53 modifier will now describe 
a more resource-intensive group of services than were previously 
reported. Therefore, we proposed to develop RVUs for these codes 
reported with the -53 modifier by using one-half the value of the 
inputs for the corresponding codes reported without the -53 modifier.
    In addition to this change in input values, we also solicited 
comments on how to address the disparity of resource costs among the 
broader range of services now described by the colonoscopy codes billed 
with the -53 modifier. We believe that it may be appropriate for 
practitioners to report the sigmoidoscopy CPT code 45330 under 
circumstances when a beneficiary is scheduled and prepared for a total 
colonoscopy (diagnostic colonoscopy, screening colonoscopy or 
colonoscopy through stoma), but the practitioner is unable to advance 
the colonoscope beyond the splenic flexure. We solicited comments and 
recommendations on that possibility, as well as more generally, the 
typical resource costs of these incomplete colonoscopy services under 
CPT's new definition. Finally, we solicited information regarding the 
number of colonoscopies that will be considered incomplete under CPT's 
new definition relative to the old definition, as well as the number of 
incomplete colonoscopies where the practitioner is unable to advance 
the colonoscope beyond the splenic flexure. This information will help 
us determine whether or not differential payment is required, and if it 
is, how to make the appropriate utilization assumptions within our 
ratesetting process.
    Comment: Some commenters agreed with the proposed policy of using 
the-53 modifier to identify the reduced work involved with an 
incomplete colonoscopy and a reimbursement that is 50 percent of the 
full procedure. However, some noted that instances where the cecum is 
not reached immediately would be associated with greater PE than 
sigmoidoscopy, noting that the endoscopist will have utilized a 
colonoscope for the procedure requiring greater work for staff to clean 
and also noted that the endoscopist will commonly obtain a pediatric 
endoscope to navigate the narrowed sigmoid. Commenters also stated that 
sigmoidoscopy is a procedure commonly performed without moderate 
sedation. One commenter recommended that CMS establish a new modifier 
for instances in which the colonoscope has passed beyond the splenic 
flexure but has not reached the cecum or small bowel--large bowel 
anastomosis due to inadequate preparation precluding high-quality 
examination of the lumen of the bowel or technical limitations that 
preclude the ability of the physician to safely complete the 
examination of the colon. The commenter also recommended that payment 
for the professional services for colonoscopy in these circumstances be 
adjusted to 75 percent of the payment for the colonoscopy procedure, 
noting that appending this new modifier to the professional services 
for the procedure would allow the same or other physician to bring the 
patient back for another colonoscopy examination within 2 months 
without triggering the frequency limitation under the Act, and that 
facility payment for the procedure would not be adjusted when this 
modifier is reported with codes 45378, G0105 or G0121.
    Response: We appreciate the commenters' support for the proposed 
policy of using the-53 modifier. We also appreciate the additional 
feedback regarding the resource costs of incomplete colonoscopies and 
will consider whether further changes to valuation or the coding 
structure are necessary in future rulemaking.
(4) Malpractice (MP) Crosswalk
    We examined the RUC-recommended MP crosswalk for this family of 
codes. The MP crosswalks are used to identify the presumed mix of 
specialties that

[[Page 70948]]

furnish particular services until there is Medicare claims data for the 
new codes. We direct the reader to section II.B.1. of this final rule 
with comment period for further explanation regarding these crosswalks. 
In reviewing the recommended MP crosswalks for CPT codes 43775, 44407, 
44408, 46601, and 46607, we noted that the RUC-recommended MP crosswalk 
codes are inconsistent with our analysis of the specialties likely to 
furnish the service based on the description of the services and our 
review of the RUC-recommended utilization crosswalk. The inconsistency 
between the RUC-recommended MP and utilization crosswalks is not 
altogether unusual. However when there are discrepancies between the MP 
and utilization crosswalk recommendations, they generally reflect the 
RUC's expectation that due to changes in coding, there will be a 
different mix of specialties reporting a new code than might be 
reflected in the claims data for the code previously used to report 
that service. This often occurs when the new coding structure for a 
particular family of services is either more or less specific than the 
old set of codes. In most of these cases, we could identify a rationale 
for why the RUC-recommended MP crosswalks for these codes were likely 
to be more accurate than the RUC-recommended utilization crosswalk. But 
in the case of these codes, the reason for the discrepancies were 
neither apparent nor explained as part of the recommendation. Since the 
specialty mix in the claims data is used to determine the specialty mix 
for each HCPCS code for the purposes of calculating MP RVUs, and those 
data will be used to set the MP RVUs once it is available, we believe 
using a specialty mix derived from the claims data of the predecessor 
codes is more likely to be accurate than the RUC-recommended MP 
crosswalk as well as more likely to result in stable MP RVUs for these 
services over several years. Therefore, until claims data under the new 
set of codes are available, we proposed to use the specialty mix of the 
source code(s) in the RUC-recommended utilization crosswalk to 
calculate the malpractice risk factor for these services instead of the 
RUC-recommended MP crosswalk. Once claims data are available, those 
data will be incorporated into the calculation of MP RVUs for these 
services under the MP RVU methodology.
    Comment: The RUC commented that they support CMS' decision to use 
the utilization crosswalk in determining the malpractice crosswalk for 
CPT code 43775 given that there are newer data since the RUC last 
reviewed this code in 2009. However, the RUC commented that it did not 
agree with this proposed decision for the other four services, CPT 
codes 44407, 44408, 46601, and 46607, stating that its MP crosswalks 
for these codes were based on the intended specialty mix.
    Response: We continue to believe that the RUC-recommended MP 
crosswalk codes are inconsistent with our analysis of the specialties 
likely to furnish the service based on the description of the services 
and our review of the RUC recommended utilization crosswalk. Therefore, 
for CY 2016, we are finalizing these malpractice crosswalk codes as 
proposed.
b. Radiation Treatment and Related Image Guidance Services
    For CY 2015, the CPT Editorial Panel revised the set of codes that 
describe radiation treatment delivery services based in part on the CMS 
identification of these services as potentially misvalued in CY 2012. 
We identified these codes as potentially misvalued under a screen 
called ``Services with Stand-Alone PE Procedure Time.'' We proposed 
this screen following our discovery of significant discrepancies 
between the RUC-recommended 60 minute procedure time assumptions for 
intensity modulated radiation therapy (IMRT) and information available 
to the public suggesting that the procedure typically took between 5 
and 30 minutes per treatment.
    The CPT Editorial Panel's revisions included the addition and 
deletion of several codes and the development of new guidelines and 
coding instructions. Four treatment delivery codes (77402, 77403, 
77404, and 77406) were condensed into 77402 (Radiation Treatment 
Delivery, Simple), three treatment delivery codes (77407, 77408, 77409) 
were condensed into 77407 (Radiation treatment delivery, intermediate), 
and four treatment codes (77412, 77413, 77414, 77416) were condensed 
into 77412 (Radiation treatment delivery, complex). Intensity Modulated 
Radiation Therapy (IMRT) treatment delivery, previously reported under 
a single code, was split into two codes, 77385 (IMRT treatment 
delivery, simple) and 77386 (IMRT treatment delivery, complex). The CPT 
Editorial Panel also created a new image guidance code, 77387 (Guidance 
for localization of target volume for delivery of treatment, includes 
intrafraction tracking when performed) to replace 77014 (computed 
tomography guidance for placement of radiation therapy fields), 77421 
(stereoscopic X-ray guidance for localization of target volume for the 
delivery of radiation therapy,) and 76950 (ultrasonic guidance for 
placement of radiation therapy fields) when any of these services were 
furnished in conjunction with radiation treatment delivery.
    In response to stakeholder concerns regarding the magnitude of the 
coding changes and in light of the process changes we adopted for 
valuing new and revised codes, we did not implement interim final 
values for the new codes and delayed implementing the new code set 
until 2016. To address the valuation of the new code set through 
proposed rulemaking, and continue making payment based on the previous 
valuations even though CPT deleted the prior radiation treatment 
delivery codes for CY 2015, we created G-codes that mimic the 
predecessor CPT codes (79 FR 67667).
    We proposed to establish values for the new codes based on RUC 
recommendations, subject to standard CMS refinements. We also note that 
because the invoices used to price the capital equipment included ``on-
board imaging,'' and based on our review of the information used to 
price the equipment, we considered the costs of that equipment already 
to be reflected in the price per minute associated with the capital 
equipment. Therefore, we did not propose to include it as a separate 
item in the direct PE inputs for these codes, even though it appeared 
as a separate item on the PE worksheet included with the RUC 
recommendations for these codes. The proposed direct PE inputs for 
those codes were displayed the proposed direct PE input database 
available on the CMS Web site under the supporting data files for the 
CY 2016 PFS proposed rule with comment period at http://www.cms.gov/PhysicianFeeSched/. The RVUs that result from the use of these direct 
PE inputs (and work RVUs and work time, as applicable) were displayed 
in proposed rule Addendum B on the CMS Web site.
    We received many comments regarding various aspects of our proposal 
to implement the new CPT codes for radiation treatment services based 
on our refinement of RUC-recommended input values. Some commenters 
addressed issues for which we explicitly sought comment, while several 
commenters brought other issues to our attention. We address these 
comments in the following paragraphs.
(1) Image Guidance Services
    Under the previous CPT coding structure, image guidance was 
separately billable when furnished in

[[Page 70949]]

conjunction with the radiation treatment delivery services. The image 
guidance was reported using different CPT codes, depending on which 
image guidance modality was used. These codes were split into 
professional and/or technical components that allowed practitioners to 
report a single component or the global service. The professional 
component of each of these codes included the work of the physician 
furnishing the image guidance. CPT code 77014, used to report CT 
guidance, had a work RVU of 0.85; CPT code 77421, used to report 
stereotactic guidance, had a work RVU of 0.39, and CPT code 76950, used 
to report ultrasonic guidance, had a work RVU of 0.58. The technical 
component of these codes incorporated the resource costs of the image 
guidance capital equipment (such as CT, ultrasound, or stereotactic) 
and the clinical staff involved in furnishing the image guidance 
associated with the radiation treatment. When billed globally, the RVUs 
reflected the sum of the professional and technical components. In the 
revised coding structure, one new image guidance code is to be reported 
regardless of the modality used, and in developing its recommended 
values, the RUC assumed that CT guidance would be typical.
    However, the 2013 Medicare claims data for separately reported 
image guidance indicated that stereotactic guidance for radiation 
treatment services was furnished more frequently than CT guidance. The 
RUC recommended a work RVU of 0.58 and associated work times of three 
pre-service minutes, 10 intraservice minutes, and three post-service 
minutes for image guidance CPT code 77387. We reviewed this 
recommendation considering the discrepancy between the modality the RUC 
assumed to be typical in the vignette and the modality typically 
reported in the Medicare claims data. Given that the recommended work 
RVU for the new single code is similar to the work RVUs of the 
predecessor codes, roughly prorated based on their distribution in 
Medicare claims data, we agree with the RUC-recommended work RVU for 
the service. However, the RUC also recommended an increase in overall 
work time associated with image guidance consistent with the survey 
data used to value the new services. If accurate, this increase in time 
and maintenance of total work would suggest a decrease in the overall 
intensity for image guidance relative to the current codes. We 
solicited comments as to the appropriate work time associated with CPT 
code 77387.
    Comment: Commenters provided feedback that work time of 16 minutes 
is accurate for 77387, consistent with the RUC recommendation without 
explaining why the work time associated with image guidance has changed 
significantly.
    Response: We appreciate that commenters responded to our 
solicitation but the commenters did not provide a rationale for why the 
recommended work time for the new code would be significantly different 
than the current work time for the most frequently reported predecessor 
code. Absent an explanation, we remain concerned that the aspects of 
the recommended values for the new single modality code were developed 
based on erroneous assumptions regarding what imaging modality is most 
frequently used to provide guidance for radiation treatment services.
    Although CPT codes 77421 (stereotactic guidance) and 76950 
(ultrasonic guidance) have been deleted, we note that CPT maintained 
CPT code 77014 (Computed tomography guidance for placement of radiation 
therapy fields). The RUC recommendation stated that the CPT editorial 
panel maintained CPT code 77014 based on concerns that without this 
option, some practitioners might have no valid CPT alternative than to 
use higher valued diagnostic CT codes when they used this CT guidance. 
The RUC recommendation also included a statement that utilization of 
this code was expected to drop to negligible levels in 2015, assuming 
that practitioners would use the new codes that are not differentiated 
based on imaging modality. Once all the new codes are implemented for 
Medicare, we anticipate that CPT and/or the RUC will address the 
continued use of 77014 and, if it continues to be part of the code set, 
provide recommendations as to the appropriate values given changes in 
utilization.
    Comment: Several commenters stated that, while they believe that 
the volume for 77014 will fall to negligible levels, they support CMS' 
adoption of the decision to continue to monitor and review this code.
    Response: We appreciate commenters support and the stakeholder 
interest in making certain that the codes accurately describe the 
services furnished to Medicare beneficiaries.
    Regarding the reporting of the new image guidance codes, CPT 
guidance instructs that the technical portion of image guidance is now 
bundled into the IMRT and stereotactic radiation treatment delivery 
codes, but it is not bundled into the simple, intermediate, and complex 
radiation treatment delivery codes. CPT guidance states that the 
technical component of the image guidance code can be reported with CPT 
codes 77402, 77407, and 77412 (simple, intermediate, and complex 
radiation treatment) when furnished, which means that the technical 
component of the image guidance code should not be reported with the 
IMRT, stereotactic radiosurgery (SRS) or stereotactic body radiation 
therapy (SBRT) treatment delivery codes. The RUC recommendation, 
however, incorporated the same capital cost of image guidance equipment 
(a linear accelerator, or linac), for the conventional radiation 
treatment delivery codes and the the codes that describe IMRT treatment 
delivery services. The RUC explained that the older lower-dose external 
beam radiation machines are no longer manufactured and the image 
guidance technology is integrated into the single kind of linear 
accelerator used for all the radiation treatment services.
    In reviewing the new code structure and the RUC recommendations for 
the proposed rule, we assumed that the CPT editorial panel did not 
foresee that the RUC would recommend that we develop PE RVUs for all 
the radiation treatment delivery codes based on the assumption that the 
same capital equipment is typically used in furnishing this range of 
external beam radiation treatments. Because the RUC recommendations 
incorporate the more extensive capital equipment in the lower dose 
treatment codes as well, a portion of the resource costs of the 
technical portion of imaging guidance are already allocated into the PE 
RVUs for all of the treatment delivery codes, not just the IMRT, SRS, 
and SBRT treatment delivery codes as CPT guidance would suggest.
    In order to avoid incorporating the cost of this equipment into 
both the treatment delivery codes (CPT codes 77402, 77407, and 77412) 
and the technical component of the new imaging guidance code (CPT code 
77387-TC), we considered valuing CPT code 77387 as a professional 
service only and not creating the professional/technical component 
splits envisioned by CPT. In the proposed rule we stated that in the 
context of the budget neutral PFS, incorporating a duplicative direct 
input with a cost of more than six dollars per minute would have 
significant impacts on the PE RVUs for all other services. However, we 
also noted that the RUC did not address this issue in its 
recommendation and proposed that not all of the recommended direct PE 
inputs for the

[[Page 70950]]

technical component of CPT code 77387 are capital equipment costs. 
Therefore, we proposed to allow for professional and technical 
component billing for these services, as reflected in CPT guidance, and 
to use the RUC-recommended direct PE inputs for these services (refined 
as described in Table 13 of the proposed rule (80 FR 41725-41764). We 
solicited comments on the technical component billing for image 
guidance in the context of the inclusion of a single linac and the RUC-
recommended integration of imaging guidance technology for all external 
beam treatment codes.
    Comment: Many commenters stated that it was necessary for CPT code 
77387 to include both a technical and professional component because 
the current price of the linear accelerator used in radiation treatment 
delivery services does not include the additional costs of an 
integrated image guidance system. These commenters urged CMS to retain 
the technical and professional components for CPT code 77387 on the 
basis that there are equipment and labor costs associated with image 
guidance that are not reflected in a professional-only code.
    Some other commenters were concerned that the new coding structure 
for image guidance did not accurately reflect the way that image 
guidance is typically furnished. These commenters stated that multiple 
modalities of image guidance can be used in a single procedure, and 
that this heterogeneity is not reflected through a single image 
guidance code.
    Response: We appreciate that many commenters addressed the bundling 
in the new CPT codes of the technical component of image guidance for 
IMRT, SRS, and SBRT, but not for conventional radiation treatment 
delivery codes. However, in reviewing the comments, we did not identify 
any that address the fundamental issues we identified in the proposed 
rule. We understand that commenters generally agreed that image 
guidance was not necessarily typically used for conventional radiation 
treatment delivery services, so the related costs should not be 
embedded in the RVUs for the treatment delivery codes. We also 
understand that commenters recommended that we assume that image 
guidance costs, while integrated into the functionality of the linear 
accelerator, represent additional capital costs and should be used in 
the development of PE RVUs for these services. Despite these comments, 
we were unable to reconcile the inconsistencies and potential rank 
order anomalies associated with including the image guidance costs in 
the IMRT treatment delivery codes but not including the image guidance 
costs in the conventional radiation treatment delivery codes even 
though both use the same capital equipment. Based on the RUC 
recommendations and the information from the commenters, we understand 
that the same linear accelerator is typically used for all of these 
services, and that the image guidance is integrated into the only 
linear accelerator that is currently being manufactured and that, 
therefore, the image guidance costs should always be included in the 
RVUs for the IMRT treatment delivery codes. Based on these comments and 
the RUC-recommended values, it appears that when the same machine (with 
integrated image guidance) is used for intermediate and complex 
conventional treatment, the combination of the treatment costs and 
image guidance costs is significantly higher than the technical costs 
associated with IMRT treatment delivery furnished with image guidance. 
As a result, the PE RVUs for these services include higher overall 
payment for intermediate and complex conventional radiation treatment 
with imaging guidance than for simple IMRT treatment delivery with 
imaging guidance. After review of the comments, we continue to believe 
that this creates problematic rank order anomalies, both relative to 
the accuracy of the assumed costs and the financial incentives 
associated with Medicare paying more overall for conventional radiation 
treatment than for IMRT services.
    Comment: Many commenters, including equipment manufacturers, 
suggested that linacs that include integrated image guidance are 
significantly more expensive than the $2.6 million CMS proposed in the 
direct practice expense input database. One commenter, a manufacturer 
of linear accelerators, submitted several invoices intended to indicate 
that the price of a new linear accelerator is significantly higher than 
the current price in the direct PE input database. This commenter 
suggested that this higher price was due in part to the integrated 
image guidance, inherent in all new linear accelerators. The commenter 
also submitted invoices intended to illustrate the price of upgrading 
an older linear accelerator with image guidance capability.
    Response: We appreciate the submission of invoices that indicate 
prices for linear accelerators with image guidance and the price 
associated with updating existing linacs with image guidance. In our 
analysis of these documents, however, we identified several aspects 
that make us hesitant to use the documents to change the price of the 
equipment in the direct PE input database. First, many of the invoices 
listed a total contract value that was distinct from the sum of total 
prices listed on the invoice. The documents themselves did not include 
any explanation regarding the significant differences in value between 
these two prices and whether or not the differences in value represent 
costs related to other direct PE input equipment items, factors already 
incorporated into the equipment cost per minute calculation, or items 
included in the allocation of indirect PE. For example, some line items 
included the description of items such as ``travel and lodging,'' 
``education,'' and treatment planning software or software upgrades 
that are already accounted for in the allocation of indirect PE. In 
many cases line-item prices were not included, making it difficult to 
identify the portion of the total invoice price attributable to direct 
equipment costs, which is necessary under the established PE 
methodology. Therefore, we will maintain the current equipment price 
for CY 2016 while we seek accurate information regarding the price of 
this capital equipment.
(2) Equipment Utilization Rate for Linear Accelerators
    The cost of the capital equipment is the primary determining factor 
in the payment rates for these services. For each CPT code, the 
equipment costs are estimated based on multiplying the assumed number 
of minutes the equipment is used for that procedure by the per minute 
cost of the particular equipment item. Under our PE methodology, we 
currently use two default equipment usage assumptions in allocating 
capital equipment costs to calculate PE RVUs. The first is that each 
equipment item is only available to be used during what are assumed to 
be regular business hours for a physician's office: 10 hours per day, 5 
days per week (50 hours per week) and 50 weeks per year. The second 
assumption is that the equipment is in use only 50 percent of the time 
that it is available for use. The current default 50 percent 
utilization rate assumption translates into 25 hours per week out of a 
50-hour work week.
    We have previously addressed the accuracy of these default 
assumptions as they apply to particular equipment resources and 
particular services. In the CY 2008 PFS proposed rule (72 FR 38132), we 
discussed the 50 percent utilization assumption and acknowledged that 
the default 50

[[Page 70951]]

percent usage assumption is unlikely to capture the actual usage rates 
for all equipment. However, we stated that we did not believe that we 
had strong empirical evidence to justify any alternative approaches. 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.
    Subsequently, a 2009 report on equipment utilization by MedPAC 
included studies that suggested a higher utilization rate for 
diagnostic imaging equipment costing more than $1 million. These 
studies cited by MedPAC suggested that for Magnetic Resonance Imaging 
equipment, a utilization rate of 92 percent on a 50-hour week would be 
most accurate. Similarly, another MedPAC-cited study suggested that for 
computed tomography scanners, 45 hours was more accurate, and would be 
equivalent to a 90 percent utilization rate on a 50-hour work week. For 
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 (74 FR 33532).
    In response to comments to that proposal, we finalized a 90 percent 
utilization rate assumption for MRI and CT to be transitioned over a 4-
year period. Regarding the utilization assumptions for other equipment 
priced over $1 million, we stated that we would continue to explore 
data sources regarding use of the most accurate utilization rates 
possible (74 FR 61755). Congress subsequently specified the utilization 
rate to be assumed for MRI and CT by successive amendments to section 
1848(b)(4)(C) of the Act. Section 3135(a) of the Affordable Care Act 
(Pub. L. 111-148) set the assumed utilization rate for expensive 
diagnostic imaging equipment to 75 percent, effective for 2011 and 
subsequent years. Section 635 of the American Taxpayer Relief Act 
(ATRA) (Pub. L. 112-240) set the assumed equipment utilization rate to 
90 percent, effective for 2014 and subsequent years. Both of these 
changes were exempted from the budget neutrality requirements described 
in section 1848(c)(2)(B)(ii)(II) of the Act.
    We have also made other adjustments to the default assumptions 
regarding the number of hours for which the equipment is available to 
be used. For example, some equipment used in furnishing services to 
Medicare beneficiaries is available to be used on a 24-hour/day, 7 
days/per week basis. For these items, we develop the rate per minute by 
amortizing the cost over the extended period of time the equipment is 
in use.
    Based on the RUC recommendations for the new codes that describe 
radiation treatment services, we do not believe our default assumptions 
regarding equipment usage are accurate for the capital equipment used 
in radiation treatment services. As we noted above, the RUC 
recommendations assume that the same type of linear accelerator is now 
typically used to furnish all levels and types of external beam 
radiation treatment services because the machines previously used to 
furnish these services are no longer manufactured. In valuing the 
previous code set and making procedure time assumptions, different 
equipment items were assumed to be used to furnish the different levels 
and types of radiation treatment. With the current RUC-recommended 
inputs, we can then assume that the same equipment item is used to 
furnish more services. If we assume the RUC recommendation to include 
the same kind of capital equipment for all of these codes is accurate, 
we believe that it is illogical to continue to assume that the 
equipment is only used for 25 out of a possible 50 hours per week. In 
order to estimate the difference between the previous number of minutes 
the linear accelerator was assumed to be in use under the previous 
valuation and the number of minutes now being recommended by the RUC, 
we applied the change in assumptions to the services reported in the 
most recent year of Medicare claims data. Under the assumptions 
reflected in the previous direct PE inputs, the kind of linear 
accelerator used for IMRT made up a total of 44.8 million out of 65 
million minutes of external beam treatments furnished to Medicare 
beneficiaries. Under the new code set, however, we suggested in the 
proposed rule that a single kind of linear accelerator would be used 
for all of the 65 million minutes furnished to Medicare beneficiaries. 
This represents a 45 percent increase in the aggregate amount of time 
that this kind of linac is in use. As we noted in the proposed rule, 
the utilization rate that corresponds with that increase in minutes is 
not necessarily precise since the current utilization rate only 
reflects the default assumption and is not itself rooted in empirical 
data. Additionally, in some cases, individual practices that already 
use linear accelerators for IMRT may have replaced the now-obsolete 
capital equipment with new, additional linear accelerators instead of 
increasing the use of capital equipment already owned. However, we do 
not believe that the latter scenario is likely to be common in cases 
where the linear accelerators had previously been used only 25 hours 
per week.
    Therefore, we proposed to adjust the equipment utilization rate 
assumption for the linear accelerator to account for the significant 
increase in usage. Instead of applying our default 50 percent 
assumption, we proposed to use a 70 percent assumption based on the 
recognition that the item is now being typically used in a 
significantly broader range of services, and that would increase how 
often the equipment is used in comparison to the previous assumption. 
In the proposed rule, we noted that we developed the 70 percent rate 
based on a rough reconciliation between the number of minutes the 
equipment is being used according to the new recommendations versus the 
current number of minutes based on an analysis of claims data.
    Comment: Several commenters objected to our analysis specifically 
because we described it as a ``rough reconciliation.''
    Response: We appreciate commenters' interest in our use of the best 
data available in determining what values to assign to necessary 
assumptions. We regret the use of the term ``rough reconciliation'' and 
clarify that our analysis relied on two somewhat imprecise data points: 
The RUC procedure time assumptions for individual services and the 
current 50 percent utilization assumption. Because both of these 
assumptions directly determine how capital equipment costs are 
translated into PE RVUs, they were essential to our analysis. However, 
we recognize that these assumptions are round figures, reflecting 
assumptions about what is typical. Therefore, when we combined these 
numbers with precise Medicare claims data in order to develop a more 
accurate assumption, we arrived at a very specific number that might 
have appeared to be very precise. Recognizing that the calculation was 
based on assumptions as noted above, we subsequently proposed to round 
the number to 70 percent instead of using the fractional result of the 
calculation. We continue to believe rounding to 70 percent is 
appropriate for the reasons stated above.
    Given the best available information, we believe that the 70 
percent utilization assumption based on the changes in direct PE input 
recommendations and Medicare claims

[[Page 70952]]

data is more accurate than the default utilization assumption of 50 
percent. However, we have reviewed other information that suggests this 
utilization rate may be higher than 70 percent and that the number of 
available hours per week is greater than 50.
    For example, as part of the 2014 RUC recommendations for the 
Radiation Treatment Delivery codes, the RUC submitted a 2011 staffing 
survey conducted by the American Society for Radiology Technicians 
(ASRT). Using the 2014 version of the same study, we noted that there 
are an average of 2.3 linacs per radiation treatment facility and 52.7 
patients per day treated per radiation treatment facility. These data 
suggest that an average of 22.9 patients are treated on each linac per 
day. Using an average of the RUC-recommended procedure times for CPT 
codes 77385, 77386, 77402, 77407, and 77412 weighted by the annual 
volume of procedures derived from Medicare claims data yielded a total 
of 670.39 minutes or 11.2 hours that a single linac is in use per day. 
This is in contrast to both the number of hours of use reflected in our 
default assumptions (5 of the 10 available business hours per day) and 
in our proposed revision to the equipment utilization rate assumptions 
(7 hours out of 10 available business hours per day).
    For advanced diagnostic imaging services, we finalized a policy for 
CY 2010 to change the equipment utilization assumption only by 10 
percent per year, in response to suggestions from commenters. Because 
capital equipment costs are amortized over several years, we believe it 
is reasonable to transition changes to the default assumptions for 
particular items over several years. We noted in the proposed rule that 
the change from one kind of capital equipment to another is likely to 
occur over a number of years, roughly equivalent to the useful life of 
particular items as they become obsolete. In the case of most of these 
items, we have assumed a 7-year useful life, and therefore, we assumed 
that the transition to use of a single kind of capital equipment would 
likely take place over seven years as individual pieces of equipment 
age into obsolescence. However, in the case of this transition in 
capital equipment, we have reason to believe that the transition to the 
new capital equipment has already occurred. First, we note that the 
specialty societies concluded that the single linear accelerator was 
typical for these services at the time that the current recommendations 
were developed in 2013. Therefore, we believe it is logical to assume 
that, at a minimum, the first several years of the transition to new 
capital equipment had already taken place by 2013. This would not be 
surprising, given that prior to the 2013 review by the RUC, the codes 
describing the non-IMRT external beam radiation treatments had last 
been reviewed in 2002. Second, because we proposed to use the 2013 
recommendations for the CY 2016 PFS payment rates, we believed it would 
be reasonable to assume that in the years between 2013 and 2016, the 
majority of the rest of the obsolete machines would have been replaced 
with the single linear accelerator.
    Nonetheless, we recognized that there would be value in following 
precedent to transition changes in utilization assumptions over several 
years.
    Given the fact that it is likely that the transition to the linear 
accelerator began prior to the 2013 revaluation of the radiation 
treatment delivery codes by the RUC and that the useful life of the 
newest generation of linear accelerator is seven years, we believe a 2-
year transition to the 70 percent utilization rate assumption would 
account for any remaining time to transition to the new equipment. 
Therefore, in developing PE RVUs for these services, we proposed to use 
a 60 percent utilization rate assumption for CY 2016 and a 70 percent 
utilization rate assumption for CY 2017. The proposed PE RVUs displayed 
in Addendum B on the CMS Web site were calculated using the proposed 60 
percent equipment utilization rate for the linac as displayed in the 
proposed direct PE input database.
    Additionally, we continue to seek empirical data on the capital 
equipment costs, including equipment utilization rates, for the linac 
and other capital-intensive machines, and seek comment on how to most 
accurately address issues surrounding those costs within the PE 
methodology.
    Comment: Most commenters were opposed to changing the default 
utilization assumption for linear accelerators. Many of these 
commenters stated that the rationale CMS used to support the change in 
default utilization assumption was inadequate and anecdotal. Several 
commenters performed and submitted their own data analyses.
    Response: We continue to believe a reconciliation of Medicare 
claims data with the RUC-recommended procedure times results in the 
most accurate equipment utilization rate assumption. We also believe 
that whenever possible we should use the Medicare claims data to test 
the validity and internal consistency of our ratesetting assumptions. 
We do not agree with the commenters that such an approach is anecdotal. 
While CMS appreciates the analyses performed by some commenters, no 
additional data were submitted to substantiate these analyses.
    Comment: One commenter conducted an analysis somewhat similar to 
ours, but used three data sets: Medicare claims data, the ASRT staffing 
survey CMS referenced in the proposed rule, and data from the CMS 
physician billing public use database. Based on this analysis, the 
commenter suggested that 50 percent is a more accurate utilization 
assumption.
    Response: We appreciate the commenter's analysis, and found it to 
be very useful in considering whether or not to finalize our proposal. 
However, the commenter's conclusion of a 50 percent utilization rate is 
entirely dependent on what we believe is an overestimate of the number 
of linacs used to deliver radiation treatment. In order to determine 
the number of linacs overall, the commenter multiplied the 2.3 linacs 
per center statistic cited in the ASRT staffing survey by the number of 
individual billing entities reporting treatment services in the 
Medicare claims data as a proxy for the number of freestanding centers. 
That approach would count two radiation oncologists reporting services 
in the same center as if they were practicing in two centers, not one, 
and therefore overestimate the number of machines. Were the same 
analysis conducted using the number of centers included in the same 
ASRT staffing survey, the result of the analysis would be an 
approximately 70 percent equipment utilization rate. Therefore, we did 
not find the commenter's analysis persuasive.
    Comment: Many commenters stated that a 70 percent utilization rate 
assumption did not take into account events beyond the control of the 
facility that could impact how long any given linear accelerator might 
be used over the course of time. These commenters suggested that issues 
such as time necessary to warm up the treatment machine, maintenance, 
patient preferences, missed appointments, and multiple treatment 
devices contributed to a lower utilization rate that CMS proposed to 
assume.
    Response: We understand that the day-to-day operation and 
utilization of capital equipment will vary, and that is precisely why 
the equipment cost per minute calculation does not assume that the 
equipment is used for the full amount of time possible (100 percent 
rate). Instead, the utilization rate assumption is used to allocate the 
total cost of the equipment relative to other

[[Page 70953]]

direct PE costs on a per-minute basis. Therefore, the assumptions are 
intended to reflect the percentage of total time (assuming a 50-hour 
work week) payment is made for services on the machine. In assigning 
minutes to individual codes, we generally assign minutes for preparing 
and cleaning the equipment; therefore, these minutes would contribute 
to the 70 percent portion, or 35 hours per week. In contrast, minutes 
for a missed appointment would count toward the 30 percent of the 50 
hours, or 15 hours per week, that the equipment is not being used.
    Comment: Many commenters were concerned that a higher utilization 
rate assumption would have a negative effect on rural treatment centers 
and treatment centers in medically disadvantaged areas.
    Response: We believe it is important to preserve access to care for 
all Medicare beneficiaries. However, we believe we are obligated under 
the statute to use accurate assumptions in developing RVUs for 
individual services under the PFS. Under the statutory construct of the 
PFS, we believe that accurate valuation for all PFS services is 
important in maintaining access to care for all Medicare beneficiaries.
    Comment: A few commenters suggested that CMS should phase in the 
utilization rate change over four years or delay implementing the 
change until 2017.
    Response: We appreciate the commenters' suggestions. We did 
consider these suggested alternatives as part of our rulemaking 
process. Although both a longer phase-in and a delay would temporarily 
mitigate the payment reductions for these services, especially in the 
context of other proposed payment reductions, we did not identify any 
persuasive rationale for delaying implementation or phasing in 
implementation over more than 2 years.
    Comment: Many commenters were concerned that the change in 
utilization rate assumption was affecting all equipment items in the 
radiation treatment delivery codes, and argued that it should only 
apply to the linac. Commenters urged CMS to use a 50 percent 
utilization rate assumption for the other equipment items. Some 
commenters argued that this was contradictory to the utilization 
assumption for advanced diagnostic imaging.
    Response: We applied the increased utilization rate assumption 
across all equipment items under the assumption that items generally 
located in the same room as the linear accelerator could not be used to 
furnish other services while the linear accelerator was in use, and 
therefore, would be subject to the same utilization assumptions. This 
approach is consistent with the application of the equipment 
utilization assumption for advanced diagnostic imaging.
    Comment: MedPAC expressed support for CMS' proposal to change the 
equipment utilization rate assumption for linear accelerators. MedPAC 
agreed that CMS should develop a normative standard based on the 
assumption that those who purchase an expensive piece of capital 
equipment would use it at a higher utilization rate.
    Response: We appreciate MedPAC's support for the proposal.
(3) Other Equipment Cost Variables
    Comment: A few commenters suggested that CMS update the price for 
the radiation treatment vault to approximately $800,000 and reduce the 
useful life assumption from 15 to 7 years. Several other commenters 
suggested that CMS update the variable maintenance rate from the 
default five percent assumption to between 10 and 15 percent.
    Response: We appreciate the commenter's feedback, and acknowledge 
our longstanding concerns regarding obtaining accurate, objective 
information regarding the pricing of direct PE inputs, particularly the 
prices for expensive equipment. In the case of the radiation treatment 
vault, we believe that at least some portions of the costs associated 
with the vault construction are indirect PE under the established 
methodology. We will continue to consider this issue, including these 
commenters' suggestion to use increased pricing for the item.
    Comment: Many commenters disagreed with the classification of 
``intercom'' as an indirect PE. These commenters stated that the 
intercom is specifically for the practitioner to communicate directly 
with the patient and, as such, it constitutes a direct PE.
    Response: We remind the commenter that under the established 
methodology, direct PE inputs are defined as clinical labor, disposable 
supplies, and medical equipment. Other items are incorporated as 
indirect costs, regardless of how the items are used.
    Comment: Several commenters, including the AMA RUC, stated that CMS 
should include 2 minutes for the clinical labor task ``dose output and 
verification'' as it is performed on the equipment items associated 
with these codes.
    Response: ``Dose output and verification'' occurs during the ``pre-
service'' period and pre-service minutes are generally not allocated to 
the equipment items, under our established methodology.
(4) Specialty Impacts
    Comment: One commenter stated that CMS should no longer display 
specialty level impacts for ``radiation therapy centers'' in the 
proposed and final rule. The commenter argued that since the PFS 
allowed charges associated with ``Radiation Therapy Centers'' represent 
only a small portion of radiation oncology services overall, displaying 
the impacts separately is misleading to the interested public.
    Response: We appreciate the commenter's concerns and agree with 
commenters that the PFS allowed charges associated with ``radiation 
therapy centers'' is only a small portion of overall payments for 
radiation oncology services, including the total amount of those 
furnished outside of the hospital setting. Because we think it is 
important to maintain a consistent display of specialty-level impacts 
between a proposed and final rule, we are not making a change for this 
year's final rule. However, we are seeking additional comment regarding 
how the impacts for these services should be displayed in future 
rulemaking.
(5) Implementation of New Coding
    Comment: Several commenters expressed concerns about the two new 
treatment delivery codes describing simple and complex IMRT treatment 
delivery in contrast to the current single code. Specifically, these 
commenters were concerned that that the CPT instruction that requires 
treatment for prostate and breast cancer to be reported using the 
simple IMRT treatment delivery code would have a negative impact on 
overall treatment for patients with prostate and breast cancer. These 
commenters suggested that that the new coding structure did not allow 
radiation therapy providers to accurately report prostate and breast 
cancer treatment services that are more resource intensive than those 
described in the simple IMRT code. These commenters also stated that 
the coding change including CMS' proposed valuations would have a 
widespread negative impact on access to care, including reduction in 
the number of freestanding centers offering radiation treatment for 
breast and prostate cancer, and therefore limit patients' access to 
care outside of the higher cost hospital setting.
    Response: We believe that increased specificity in coding for such 
a resource-intensive, high-volume group of services is a significant 
improvement compared to the use of a single code to describe all IMRT 
treatment services, regardless

[[Page 70954]]

of their relative resource costs. However, we understand the 
commenters' concerns about the potential negative impact of 
implementing the new code set for payment of treatment for breast and 
prostate cancers. The primary resource cost for these services is 
represented by the capital equipment, so we believe that for purposes 
of most accurate payment, the optimal coding for these services would 
group them based on how long the capital equipment is being used per 
service, so that payment is linked to the resource costs of furnishing 
particular services. Under the current set of codes, payment would be 
made based on the assumptions regarding the typical resource costs for 
the treatment of particular diseases, instead of the resource costs 
based on the length of treatment time.
    Comment: Several commenters pointed out a rank order anomaly in the 
PE RVUs among codes CPT codes 77402, 77407, and 77412 that describe 
simple, intermediate, and complex radiation treatment codes, 
respectively. The commenters stated that it was illogical for the 
intermediate radiation treatment delivery code to have higher PE RVUs 
and overall payment compared to the complex radiation treatment 
delivery. Commenters suggested that this anomaly may be the result of 
the allocation of indirect PE because the specialty reporting the 
utilization for the intermediate code is more frequently dermatology 
than radiation oncology and dermatology is allocated more indirect PE 
within the PE methodology.
    Response: We agree with commenters that this rank order anomaly is 
due to the difference in the mix of specialties in the utilization for 
these services. We also agree with the commenters that such rank order 
anomalies within families should be avoided when possible. We believe 
these kinds of rank order anomalies generally suggest inaccurate 
valuations and present risks to accurate billing and overall 
ratesetting. The risks are associated with incentives toward inaccurate 
downward coding. For example, in this case, individual practitioners 
would have the financial incentive to report radiation treatment 
delivery services using the intermediate code, even when the complex 
code would be more accurate. If practitioners acted on such an 
incentive, there would be serious consequences within our ratesetting 
methodologies for both purposes of budget neutrality and for allocation 
of PE RVUs. The increased utilization of the higher paying intermediate 
code would result in inappropriately low budge neutrality adjustment 
across the PFS. The rank order anomaly might also result in cyclical 
fluctuations in the year-to-year allocation of PE. This would happen if 
the inappropriate reporting of the intermediate code itself resulted in 
a concentration of most of the overall volume (including radiation 
oncology at a greater volume than dermatology) in the intermediate 
code. Then, once the claims data reflecting this concentration were 
incorporated into PFS ratesetting, the rank order anomaly would recur 
and the cycle would begin again. In considering these comments in the 
context of our proposal to implement these codes, we considered how we 
might eliminate this anomaly. We concluded that the best approach would 
be to maintain the total number of PE RVUs for these services overall, 
but to redistribute them among the three codes in order to eliminate 
the rank order anomaly. In order to do this, we would calculate the PE 
RVUs for these services under the established methodology and multiply 
these RVUs by the volume associated with each code. We would then 
reallocate the total number of PE RVUs among the three codes based on 
the weights of their direct costs included in the direct PE input 
database, since the total direct costs for these codes reflect 
appropriate valuation. We are seeking comment on this approach or other 
possible ways to mitigate the impact of the rank order anomaly among 
these codes.
    Comment: One commenter stated that, in light of the significant 
negative impact of the coding changes and the proposed change in the 
default utilization rate assumption, CMS should delay implementation of 
the new codes for another year and work with stakeholders to gather 
information on the appropriate pricing of equipment items, utilization 
of equipment, and coding structure. A few commenters also stated that 
CMS should consider pricing radiation treatment delivery through the 
OPPS. And finally, several commenters noted that the proliferation of 
TC-only codes had a negative impact on the overall allocation of PE 
RVUs for radiation oncology services.
    Response: We agree with commenters regarding the magnitude of 
changes that would result from the new code set. In general, we believe 
that significant changes in coding can improve the valuation and 
payment for PFS services. In the case of this set of new codes, we 
believe increased granularity in IMRT treatment delivery codes would 
benefit payment accuracy. We also believe that it is generally 
preferable for CMS to use CPT codes to describe physicians' services 
paid under the PFS and that, when possible, we should use consistent 
coding between the PFS and OPPS.
    In consideration of comments from stakeholders and our concerns as 
described above, however, we do not believe that, on balance, we should 
finalize the new code set for CY 2016. Therefore, for CY 2016, we are 
not finalizing our proposal to implement the new set of codes. We will 
continue the use of the current G-codes and values for CY 2016 while we 
seek more information, including public comments and recommendations 
regarding new codes to be developed either through the CPT process or 
through future PFS rulemaking. We believe that significant changes to 
the codes need to be made before we can develop accurate payment rates 
under the PFS for these services. These changes would include: 
developing a code set that recognizes the difference in costs between 
kinds of imaging guidance modalities; making sure that this code set 
facilitates valuation that incorporates the cost of imaging based on 
how frequently it is actually provided; and developing treatment 
delivery codes that are structured to differentiate payment based on 
the equipment resources used.
    While we are not finalizing the new code set for these services, we 
are finalizing our proposals to include the single linear accelerator 
for radiation treatment delivery services as recommended by the RUC, 
and to update the default utilization rate assumption for linear 
accelerators used in radiation treatment services from 50 to 70 
percent, phased in over 2 years. Under either set of codes, it is clear 
that the 50 percent utilization assumption is incompatible with the 
times used to develop payment rates for individual procedures, given 
that the same linear accelerator is used for the services.
    Finally, because the costs of capital equipment are the primary 
drivers of RVUs and payment amounts for these services, and we 
acknowledge significant difficult in obtaining quality information 
regarding the actual costs of such equipment across the wide range of 
practitioners and suppliers that furnish these services, we will be 
engaging in market research to develop independent estimates of 
utilization and pricing for linear accelerators and image guidance used 
in furnishing radiation treatment services. We will also consider ways 
in which data collected from hospitals under the OPPS may be helpful in 
establishing rates for these and other technical component services. We 
will consider this information, including public comment, as we develop 
proposals for inclusion in future notice and comment rulemaking.

[[Page 70955]]

(6) Superficial Radiation Treatment Delivery
    In the CY 2015 PFS final rule with comment period, we noted that 
changes to the CPT prefatory language modified the services that are 
appropriately billed using CPT code 77401 (radiation treatment 
delivery, superficial and/or ortho voltage, per day). The changes 
effectively meant that many other procedures supporting superficial 
radiation therapy were bundled with CPT code 77401. The RUC, however, 
did not review the inputs for superficial radiation therapy procedures, 
and therefore, did not assess whether changes in its valuation were 
appropriate in light of this bundling. Some stakeholders suggested that 
the change in the prefatory language precluded them from billing for 
codes that were previously frequently billed in addition to this code 
and expressed concern that as a result there would be significant 
reduction in their overall payments. In the CY 2015 PFS final rule with 
comment period, we requested information on whether the new radiation 
therapy code set, combined with modifications in prefatory text, 
allowed for appropriate reporting of the services associated with 
superficial radiation and whether the payment continued to reflect the 
relative resources required to furnish superficial radiation therapy 
services.
    In response to our request, we received a recommendation from a 
stakeholder to make adjustments to both the work and PE components for 
CPT code 77401. The stakeholder suggested that since crucial aspects of 
the service, such as treatment planning and device design and 
construction, were not currently reflected in CPT code 77401, and 
practitioners were precluded from reporting these activities 
separately, additional work should be included for CPT code 77401. 
Additionally, the stakeholders suggested that the current inputs used 
to value the code are not accurate because the inputs include zero work 
and minutes for a radiation therapist to provide the service directly 
to the patient. The stakeholders suggested, alternatively, that 
physicians, not radiation therapists, typically provide superficial 
radiation services directly. Finally, stakeholders also suggested that 
we amend the direct PE inputs by including nurse time and updating the 
price of the capital equipment used in furnishing the service.
    In response, we solicited recommendations from stakeholders, 
including the RUC, regarding whether or not it would be appropriate to 
add physician work for this service and remove minutes for the 
radiation therapists, even though physician work is not included in 
other radiation treatment services. We believe it would be appropriate 
to address the clinical labor assigned to the code in the context of 
the information regarding the work that might be associated with the 
service. We also solicited information on the possible inclusion of 
nurse time for this service as part of the comments and/or 
recommendations regarding work for the service. Lastly, we reviewed the 
invoices submitted in response to our request to update the capital 
equipment for the service.
    We proposed to update the equipment item ER045 ``orthovoltage 
radiotherapy system'' by renaming it ``SRT-100 superficial radiation 
therapy system'' and update the price from $140,000 to $216,000, on the 
basis of the submitted invoices. The proposed PE RVUs displayed in 
Addendum B on the CMS Web site were calculated with this proposed 
modification that was displayed in the CY 2016 direct PE input 
database.
    Comment: Multiple commenters from various specialty societies 
responded to our request for comment. Several stated that there was 
work in 77401, while other commenters stated that there was not. One 
commenter suggested that CMS create a G-code to account for work, while 
another commenter stated that 77401 should be resurveyed by the RUC.
    Response: Given the disagreement among commenters on the work 
involved in furnishing CPT code 77401, we are considering the 
possibility of creating a code to describe total work associated with 
the course of treatment for these services and are seeking additional 
information on alternatives descriptions and valuations for a code 
describing this work for consideration in future rulemaking.
    Comment: A few commenters pointed out that the description of 
equipment item ER045 as proposed, ``SRT-100 superficial radiation 
therapy system,'' is a particular item that might better be identified 
generically as ``superficial radiation therapy system.''
    Response: We agree with the commenter's suggestion and have updated 
the direct PE input database accordingly.
    Comment: A few commenters thanked CMS for updating the price of the 
superficial radiation therapy system.
    Response: We appreciate the support for our proposal.
    After considering the comments, we are finalizing the update to 
ER045 as proposed.
c. Advance Care Planning Services
    For CY 2015, the CPT Editorial Panel created two new codes 
describing advance care planning (ACP) services: CPT code 99497 
(Advance care planning including the explanation and discussion of 
advance directives such as standard forms (with completion of such 
forms, when performed), by the physician or other qualified health 
professional; first 30 minutes, face-to-face with the patient, family 
member(s) and/or surrogate); and an add-on CPT code 99498 (Advance care 
planning including the explanation and discussion of advance directives 
such as standard forms (with completion of such forms, when performed), 
by the physician or other qualified health professional; each 
additional 30 minutes (List separately in addition to code for primary 
procedure)). In the CY 2015 PFS final rule with comment period (79 FR 
67670-71), we assigned a PFS interim final status indicator of ``I'' 
(Not valid for Medicare purposes. Medicare uses another code for the 
reporting and payment of these services) to CPT codes 99497 and 99498 
for CY 2015. We said that we would consider whether to pay for CPT 
codes 99497 and 99498 after we had the opportunity to go through notice 
and comment rulemaking.
    In the CY 2016 PFS proposed rule, for CY 2016 we proposed to assign 
CPT codes 99497 and 99498 PFS status indicator ``A,'' which is defined 
as: ``Active code. These codes are separately payable under the PFS. 
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. Contractors remain responsible for 
local coverage decisions in the absence of a national Medicare 
policy.'' We proposed to adopt the RUC-recommended values (work RVUs, 
time, and direct PE inputs) for CPT codes 99497 and 99498 beginning in 
CY 2016. The services could be paid on the same day or a different day 
as other E/M services. Physicians' services are covered and paid by 
Medicare in accordance with section 1862(a)(1)(A) of the Act. 
Therefore, under our proposal CPT code 99497 (and CPT code 99498 when 
applicable) would be reported when the described service is reasonable 
and necessary for the diagnosis or treatment of illness or injury. For 
example, this could occur in conjunction with the management or 
treatment of a patient's current condition, such as a 68 year old male 
with heart failure and diabetes on multiple medications seen by his 
physician for the E/M of these two

[[Page 70956]]

diseases, including adjusting medications as appropriate. In addition 
to discussing the patient's short-term treatment options, the patient 
may express interest in discussing long-term treatment options and 
planning, such as the possibility of a heart transplant if his 
congestive heart failure worsens and advance care planning including 
the patient's desire for care and treatment if he suffers a health 
event that adversely affects his decision-making capacity. In this case 
the physician would report a standard E/M code for the E/M service and 
one or both of the ACP codes depending upon the duration of the ACP 
service. However the ACP service as described in this example would not 
necessarily have to occur on the same day as the E/M service.
    We solicited comment on this proposal, including whether payment is 
needed and what type of incentives the proposal might create. In 
addition, we solicited comment on whether payment for advance care 
planning is appropriate in other circumstances such as an optional 
element, at the beneficiary's discretion, of the annual wellness visit 
(AWV) under section 1861(hhh)(2)(G) of the Act.
    We received approximately 725 public comments to the proposed rule 
regarding payment for ACP services. We received comments from 
individual citizens; several coalitions; professional associations; 
professional and community-based organizations focusing on end-of-life 
health care; healthcare systems; major employers; and many individual 
healthcare professionals working in primary care, geriatrics, hospice/
palliative medicine, critical care, emergency medicine and other 
settings. We also received comments from chaplains, ethicists, advanced 
illness counseling companies and other interested parties. The majority 
of commenters expressed support for the proposal, providing 
recommendations on valuation, the types of professionals who should 
able to furnish or bill for the services and the appropriate setting of 
care, intersection with existing codes, the establishment of standards 
or specialized training, and beneficiary cost sharing and education. 
Some commenters opposed or expressed provisional support for the 
proposal because they believed it might create perverse financial 
incentives relating to termination of patient care. We summarize all of 
the comments below.

Valuation

    Comment: Many commenters supported the separate identification and 
payment for ACP, either by adopting CPT codes 99497 and 99498 or other 
unique code(s). Many commenters supported the proposal broadly, 
advocating for improved Medicare coverage and payment of ACP. Several 
commenters supported our proposal to adopt the RUC-recommended payment 
inputs. Several other commenters stated the proposed payment amount was 
insufficient, and one of these commenters recommended a payment rate 
equal to the payment for CPT code 99215 (Office or other outpatient 
visit for the E/M of an established patient) in order to appropriately 
account for the physician's time.
    Response: We appreciate the commenters' support for separate 
identification and payment for voluntary ACP services. We believe the 
RUC-recommended inputs accurately reflect the resource costs involved 
in furnishing the services described by CPT codes 99497 and 99498, and 
therefore, are finalizing our proposal to adopt the RUC-recommended 
values for both codes.
    Comment: Regarding the time required to furnish ACP services, the 
commenters cited times ranging from 10 minutes to several hours over 
multiple encounters, depending on the setting and the patient's 
condition. Several commenters requested payment for increments of time 
of less than 30 minutes (for example, 10-15 minutes). One said the 
services typically require 30-45 minutes of face-to-face time with the 
patient and family. Several commenters recommended payment for services 
lasting less than 30 minutes, for example, by pro-rating the add-on 
code.
    Response: We believe the CPT codes describe time increments that 
are appropriate for furnishing ACP services in various settings. 
Therefore we are finalizing our proposal to adopt the CPT codes and CPT 
provisions regarding the reporting of timed services.
    Comment: Many commenters recommended that CMS issue a national 
coverage decision to avoid any local variation in coverage.
    Response: We believe it may be advantageous to allow time for 
implementation and experience with ACP services, including 
identification of any variation in utilization, prior to considering a 
controlling national coverage policy through the National Coverage 
Determination process (see 78 FR 48164, August 7, 2013). By including 
ACP services as an optional element of the AWV (for both the first 
visit and subsequent visits), as discussed below, this rule creates an 
annual opportunity for beneficiaries to access ACP services should they 
elect to do so.
    Comment: Many commenters recommended limits on utilization to 
prevent abuse, while others recommended no utilization limits in order 
to increase access and ensure periodic updates to advance care plans. 
Several commenters were concerned that the lack of utilization limits 
would lead to practitioners harassing patients.
    Response: In general, we do not agree with the commenters who 
suggested that this service is more likely to be subject to 
overutilization or abuse than other PFS services without our adoption 
of explicit frequency limitations. We believe the CPT codes describe 
time increments that are appropriate for furnishing ACP services in 
various settings. Therefore, we are finalizing our proposal to adopt 
the CPT codes and CPT provisions regarding the reporting of timed 
services. Since the services are by definition voluntary, Medicare 
beneficiaries may decline to receive them. When a beneficiary elects to 
receive ACP services, we encourage practitioners to notify the 
beneficiary that Part B cost sharing will apply as it does for other 
physicians' services (except when ACP is furnished as part of the AWV, 
see the discussion below). We plan to monitor utilization of the new 
CPT codes over time to ensure that they are used appropriately.

Intersection With Other Services

    Comment: Many commenters supported our proposal to pay for ACP 
services when furnished either on the same day or a different day than 
other E/M services. Several commenters asked CMS to specify whether and 
how the ACP codes could be billed in conjunction with E/M visits or 
services that span a given time period, such as 10- or 90-day global 
codes or Transitional Care Management (TCM) and Chronic Care Management 
(CCM) services. One commenter recommended that CMS unbundle ACP 
services from critical care services and pay at a higher rate, but did 
not suggest an alternative payment amount.
    Response: We believe that CPT guidance for these codes is 
consistent with the description and recommended valuation of the 
described services. When adopting CPT codes for payment, we generally 
also adopt CPT coding guidance. In this case, CPT instructs that CPT 
codes 99497 and 99498 may be billed on the same day or a different day 
as other E/M services, and during the same service period as TCM or CCM 
services and within global surgical periods. We are also are adopting 
the CPT guidance prohibiting the reporting of CPT codes 99497 and 99498 
on the same date of service as certain critical care services including 
neonatal and pediatric critical care.

[[Page 70957]]

Who Can Furnish/Setting of Care

    Comment: Many commenters who supported the proposal provided 
recommendations regarding which practitioners and support staff should 
be able to provide or be paid for ACP services. Many commenters sought 
clarification regarding who would qualify as the ``other health care 
professionals'' described by or able to bill the CPT codes. Many 
commenters described ACP services as being routinely provided by a 
multidisciplinary team under physician supervision. For example, they 
stated that ACP is routinely provided by physicians, non-physician 
practitioners and other staff under the order and medical management of 
the beneficiary's treating provider. They stated that often a team 
approach is used, involving coordination between the beneficiary's 
physicians, non-physician practitioners (such as licensed clinical 
social workers or clinical nurse specialists) and other licensed and 
credentialed hospital staff such as registered nurses.
    Similarly, other commenters described social workers, clinical 
psychologists, registered nurses, chaplains and other individuals as 
appropriate providers of ACP services, either alone or together with a 
physician, and recommended payment for the services of these 
individuals. For example, one commenter stated that a significant 
portion of ACP discussions occur between patients and registered nurses 
or allied health professionals functioning as care coordinators, care 
navigators or similar roles; that a growing proportion are performed at 
home; and that CMS should enable care coordinators and navigators to 
bill the ACP codes either by defining them as ``other qualified health 
professionals'' or under ``incident to'' provisions.
    Some commenters specifically recommended allowing social workers 
and chaplains qualified under the hospice benefit to bill the ACP 
codes. One community oncologist association stated that best practices 
have evolved to include a multi-disciplinary approach utilizing trained 
physician, advanced practice provider and social worker skill sets, and 
that nearly half of their oncology network's ACP is performed by 
licensed clinical social workers. This commenter stated that while it 
is typical for a physician to initiate the ACP discussion with 
patients, ACP usually occurs with a mid-level provider or social worker 
and therefore the association requested that CMS allow clinical social 
workers to bill for these services. Another national association stated 
that it was working towards the development of new CPT codes for 
practitioners such as social workers who the commenter believed would 
not be able to directly bill the proposed codes.
    Some commenters argued that such non-medically trained individuals 
are qualified and have special training and expertise (whether 
psychosocial, spiritual or legal) that are needed on ACP care teams. 
Some believed that ACP is sometimes appropriate for physicians to 
perform, but that physicians do not have enough time to supply all of 
the demand for ACP services. Some commenters similarly argued that 
inclusion of social workers and other non-medically trained individuals 
including Spiritual Directors, Chaplains, Clinical Pastoral Counselors 
and others would alleviate concerns about undue influence over patient 
decisions. These commenters stated that part of the ACP conversation is 
emotional and spiritual and not merely clinical, so it is important to 
include individuals who can address the non-clinical aspect of ACP. 
Some commenters argued that widening the field of professionals who can 
initiate these conversations within their scope of practice will 
further encourage appropriate and frequent ACP. Several commenters 
stated that physicians should not be paid for ACP services due to an 
ethical or financial conflict of interest, and that communities should 
take more responsibility for these services.
    In contrast, several commenters were concerned that allowing ACP to 
be paid to certain trained facilitators would undermine physician 
authority in treating patients. These commenters described the use of 
trained facilitators in certain community models that offer group 
discussions by trained lay and health professionals. These commenters 
were concerned that such facilitators would qualify as ``other 
qualified professionals'' under the CPT code descriptor and be given 
control over ACP, shaping physician behavior. One commenter stated that 
to prevent coercion of patients, it would be better if payment was 
limited to non-employees of hospitals.
    Response: We appreciate the many comments we received on existing 
or recommended practice patterns for the provision of ACP services. We 
acknowledge the broad range of commenters that stated that the services 
described by CPT codes 99497 and 99498 are appropriately provided by 
physicians or using a team-based approach provided by physicians, non-
physician practitioners and other staff under the order and medical 
management of the beneficiary's treating physician. We note that the 
CPT code descriptors describe the services as furnished by physicians 
or other qualified health professionals, which for Medicare purposes is 
consistent with allowing these codes to be billed by the physicians and 
NPPs whose scope of practice and Medicare benefit category include the 
services described by the CPT codes and who are authorized to 
independently bill Medicare for those services. Therefore only these 
practitioners may report CPT codes 99497 or 99498. We note that as a 
physicians' service, ``incident to'' rules apply when these services 
are furnished incident to the services of the billing practitioner, 
including a minimum of direct supervision. We agree with commenters 
that advance care planning as described by the proposed CPT codes is 
primarily the provenance of patients and physicians. Accordingly we 
expect the billing physician or NPP to manage, participate and 
meaningfully contribute to the provision of the services, in addition 
to providing a minimum of direct supervision. We also note that the 
usual PFS payment rules regarding ``incident to'' services apply, so 
that all applicable state law and scope of practice requirements must 
be met in order to bill ACP services.
    Comment: Several commenters recommended that CMS not require direct 
supervision for ACP services or allow it to be furnished ``incident 
to'' under general supervision.
    Response: As discussed above, we understand that the services 
described by CPT codes 99497 and 99498 can be provided by physicians or 
using a team-based approach where, in addition to providing a minimum 
of direct supervision, the billing physician or NPP manages, 
participates and meaningfully contributes to the provision of the 
services. We note that the ``incident to'' rules apply when these 
services are provided incident to the billing practitioner, including 
direct supervision. We do not believe it would be appropriate to create 
an exception to allow these services to be furnished incident to a 
physician or NPP's professional services under less than direct 
supervision because the billing practitioner must participate and 
meaningfully contribute to the provision of these face-to-face 
services.
    Comment: Many commenters made recommendations regarding the 
settings of care that would be appropriate for payment of ACP services. 
Some of these commenters specified that payment should be made in both 
ambulatory and inpatient settings. Many commenters stated that ACP is 
ideally performed in

[[Page 70958]]

a primary care setting, where the patient has a longstanding 
relationship with a physician and can engage in planning prior to 
illness, at which time they may be most receptive and most likely to 
have full decision making capacity. However many commenters believed 
payment was also appropriate in inpatient and other acute care 
settings. A few commenters recommended payment for an outpatient code 
or a code that would not be payable in the intensive care setting. Some 
commenters recommended that ACP should only be payable in clinical 
settings and that CMS should explicitly exclude group information 
sessions and similar offerings. Commenters stated that patients should 
be able to choose any location for ACP services including at home; in 
community-based settings; or via telehealth, telephone or other remote 
technologies. A few commenters were concerned that CMS might limit 
payment to certain specialists and recommended against such a policy.
    Response: We agree with commenters that ACP services are 
appropriately furnished in a variety of settings, depending on the 
condition of the patient. These codes will be separately payable to the 
billing physician or practitioner in both facility and non-facility 
settings and are not limited to particular physician specialties. We 
refer commenters to the CY 2016 hospital outpatient prospective payment 
system final rule with comment period for a discussion of how payment 
will be made to hospitals for ACP services furnished in hospital 
outpatient departments.
    Comment: Many commenters supported payment for ACP along the entire 
health continuum, in advance of acute illness, and revisiting the 
advance care plan with changes in the patient's condition. These 
commenters stated ACP is a routine service that should be regularly 
performed like preventive services. These commenters responded 
affirmatively to our solicitation as to whether or not ACP services 
should be included as an optional element, at the beneficiary's 
discretion, of the annual wellness visit (AWV) under section 
1861(hhh)(2)(G) of the Act. Several of these commenters specified that 
ACP should remain separately paid even if included as an optional 
element of the AWV.
    Response: We appreciate the response of commenters regarding our 
request for comment on whether or not we should include ACP as an 
optional element, at the beneficiary's discretion, of the annual 
wellness visit (AWV) under section 1861(hhh)(2)(G) of the Act. Based on 
the commenters' positive response to this solicitation, we are adding 
ACP as a voluntary, separately payable element of the AWV. We are 
instructing that when ACP is furnished as an optional element of AWV as 
part of the same visit with the same date of service, CPT codes 99497 
and 99498 should be reported and will be payable in full in addition to 
payment that is made for the AWV under HCPCS code G0438 or G0439, when 
the parameters for billing those CPT codes are separately met, 
including requirements for the duration of the ACP services. Under 
these circumstances, ACP should be reported with modifier -33 and there 
will be no Part B coinsurance or deductible, consistent with the AWV.
    Regarding who can furnish ACP when it is furnished as an optional 
element of the AWV, we note that AWV cannot be furnished as an 
``incident to'' service since the AWV has a separate, distinct benefit 
category from ``incident to'' services. However, the current 
regulations for the AWV allow the AWV to be furnished under a team 
approach by physicians or other health professionals under direct 
supervision. Therefore, the rules that apply to the AWV will also apply 
to ACP services when furnished as an optional element of the AWV, 
including the requirement for direct supervision.
    Comment: We received several comments requesting that ACP be added 
as a billable visit for FQHCs, and several comments requesting that we 
ensure that Medicare Administrative Contractors (MACs) are aware that a 
standalone ACP counseling session with an FQHC billable provider 
qualifies as a ``billable visit'' under Medicare's Prospective Payment 
System (PPS) for FQHCs.
    Response: RHCs and FQHCs furnish Medicare Part B services and are 
paid in accordance with the RHC all-inclusive rate system or the FQHC 
PPS. Beginning on January 1, 2016, ACP will be a stand-alone billable 
visit in a RHC or FQHC, when furnished by a RHC or FQHC practitioner 
and all other program requirements are met. If furnished on the same 
day as another billable visit, only one visit will be paid. Coinsurance 
will be applied for ACP when furnished in an FQHC, and coinsurance and 
deductibles will be applied for ACP when furnished in an RHC. 
Coinsurance and deductibles will be waived when ACP is furnished as 
part of an AWV. Additional information on RHC and FQHC billing of ACP 
will be available in sub-regulatory guidance.

Standards/Training

    Comment: Many commenters recommended that CMS establish standards 
or require specialized training as a condition of payment for ACP 
services. Many commenters recommended standards or special training in 
relevant state law and advance planning documents; content and time; 
communication, representation, counseling, shared decision making and 
skills outside the scope of physician training. Several commenters 
recommended standards regarding the use of certified electronic health 
record technology; contractual or employment relationships with nurses, 
social workers and other clinical staff working as part of an ACP team; 
use of written protocols and workflows to make ACP part of routine 
care; and working with professional societies and other organizations 
including the National Quality Forum and the Agency for Healthcare 
Research & Quality to establish quality standards for clinician-patient 
communication and ACP that would be tied to payment. Many commenters 
recommended policies to ensure documentation and transmission of the 
results of ACP among health care providers. Some of these commenters 
encouraged CMS to use technology to enhance the use and portability of 
advance directives across care settings and state lines, or recommended 
a universal registry.
    Several commenters were concerned about the nature of the services 
that would be payable under the proposed codes, noting that ACP should 
extend beyond education about advance directives and completing forms. 
Several recommended the development of content criteria or quality 
measures to ensure that ACP services are meaningful and of value to 
patients. Some commenters expressed concern about ensuring appropriate 
services were furnished as part of ACP. For example, they expressed 
concern that payable services would include mere group information 
sessions, filling out forms or similar offerings. One commenter 
recommended that CMS require some minimal element like one personal 
real-time encounter, whether face-to-face or by phone or telemedicine.
    Response: Since CPT codes 99497 and 99498 describe face-to-face 
services, we do not believe it would be appropriate at this time to 
apply additional payment standards as we have for certain non-face-to-
face services such as CCM services. We will continue to consider 
whether additional standards, special training or quality measures may 
be appropriate in the future as a condition of Medicare payment for ACP 
services. We note that we did not propose to add ACP services to the 
list of Medicare telehealth services, so the face-to-face

[[Page 70959]]

services described by the codes need to be furnished in-person in order 
to be reported to Medicare.
    Comment: Several commenters supported advance care planning between 
patients and clinicians, but expressed concern about the potential for 
bias against choosing treatment options involving living with 
disability, requiring physicians to discuss questionable treatment 
options (such as physician assisted suicide or other patient choices 
that might violate individual physician ethics) and similar issues. 
Some commenters were concerned that patients might change their 
decisions once care was actually needed and be unable to override 
previous advance directives; or that the government would be making 
healthcare decisions instead of patients, physicians, and families.
    Response: As discussed above, based on public comments we received, 
we believe the services described by CPT codes 99497 and 99498 are 
appropriately provided by physicians or using a team-based approach 
where ACP is provided by physicians, non-physician practitioners and 
other staff under the order and medical management of the beneficiary's 
treating physician. We also note that the CPT code descriptors describe 
the services as furnished by physicians or other qualified health 
professionals, which for Medicare purposes, is consistent with allowing 
these codes to be billed by the physicians and NPPs whose scope of 
practice and Medicare benefit category include the services described 
by the CPT codes and who are authorized to independently bill Medicare 
for those services. Therefore only these practitioners may report CPT 
codes 99497 or 99498, and ``incident to'' rules apply when these 
services are provided incident to the services of the billing 
practitioner under a minimum of direct supervision. We agree with 
commenters that advance care planning as described by the new CPT codes 
is primarily the provenance of patients and physicians. Accordingly we 
expect the billing physician or NPP, in addition to providing a minimum 
of direct supervision, to manage, participate and meaningfully 
contribute to the provision of the services. Also, we note that PFS 
payment rules apply when ACP is furnished incident to other physicians' 
services, including where applicable, that state law and scope of 
practice must be met. Since the ACP services are by definition 
voluntary, we believe Medicare beneficiaries should be given a clear 
opportunity to decline to receive them. We note that beneficiaries may 
receive assistance for completing legal documents from other non-
clinical assisters outside the scope of the Medicare program. Nothing 
in this final rule with comment period prohibits beneficiaries from 
seeking independent counseling from other individuals outside the 
Medicare program--either in addition to, or separately from, their 
physician or NPP.

Beneficiary Considerations

    Comment: Several commenters suggested that CMS pursue waivers of 
cost sharing for ACP services or that cost sharing should vary by the 
condition of the patient.
    Response: We lack statutory authority to waive beneficiary cost 
sharing for ACP services generally because they are not preventive 
services assigned a grade of A or B by the United States Preventive 
Services Task Force (USPSTF); nor may CMS vary cost sharing according 
to the patient's diagnosis. Under current law, the Part B cost sharing 
(deductible and coinsurance) will be waived when ACP is provided as 
part of the AWV, but we lack authority to waive cost sharing in other 
circumstances. We would recommend that practitioners inform 
beneficiaries that the ACP service will be subject to separate cost 
sharing.
    Comment: One commenter recommended beneficiary education through 
Medicare & You, partnerships with senior advocacy groups and other 
means.
    Response: We agree that beneficiary education about ACP services, 
especially the voluntary nature of the services, is important. We 
welcome such efforts by beneficiary advocacy and community-based 
organizations and will consider whether additional material should be 
added to the Medicare & You handbook to highlight new payment 
provisions for these voluntary services.
    In summary, we are finalizing our proposal to assign CPT codes 
99497 and 99498 PFS status indicator ``A'' with RVUs developed based on 
the RUC-recommended values. We are also adding ACP as an optional 
element, at the beneficiary's discretion, of the AWV. We are also 
making the conforming changes to our regulations at Sec.  410.15 that 
describe the conditions for and limitations on coverage for the AWV.
    We note that while some public commenters were opposed to Medicare 
paying for ACP services, the vast majority of comments indicate that 
most patients desire access to ACP services as they prepare for 
important medical decisions.
d. Valuation of Other Codes for CY 2016
(1) Excision of Nail Bed (CPT Code 11750)
    CPT code 11750 appeared on the RUC's misvalued code screen of 10-
day global services with greater than 1.5 office visits and utilization 
over 1,000. The Health Care Professional Advisory Committee (HCPAC) 
reviewed the survey results for valuing this code and determined that 
1.99 work RVUs, corresponding to the 25th percentile survey result, was 
the appropriate value for this service. As discussed in the proposed 
rule, we indicated that we believed the recommendation for this service 
overstated the work involved in performing this procedure, 
specifically, given the decrease in post-operative visits. Due to 
similarity in service and time, we indicated that we believed a direct 
crosswalk from the work RVU for CPT code 10140 (Drainage of blood or 
fluid accumulation), which is also a 10-day global service with one 
post-operative visit, more accurately reflects the time and intensity 
of furnishing the service. Therefore, for CY 2016 we proposed a work 
RVU of 1.58 for CPT code 11750.
    The following is a summary of the comments we received on our 
proposal.
    Comment: One commenter disagreed with CMS' direct crosswalk of the 
work RVU from CPT code 10140 to CPT code 11750. The commenters 
suggested that CMS establish the RVU for this procedure consistent with 
the recommendation. Additionally, the commenter stated that the HCPAC 
recommendation accounted for the removal of one post-operative visit 
from the global period. The commenter also stated that CMS' proposed 
work RVU would have an intraservice work intensity similar to a level 
one E/M visit (99211), which suggests that the value is too low.
    Response: In developing our proposed RVUs for this service, we 
reviewed codes with similar intra-service and total times, and 
identified CPT code 11760 (Repair of nail bed) and CPT code 11765 
(Excision of nail fold toe). Since we believe that the crosswalk for 
CPT code 11750 has similar intensity, and our proposed RVU is 
consistent with these similar services, we do not agree with the 
commenter who states that the proposed work RVU is inaccurate.
    After consideration of comments received, we are finalizing a work 
RVU of 1.58 for CPT code 11750, as proposed.

[[Page 70960]]

(2) Bone Biopsy Excisional (CPT Code 20240)
    In its review of 10-day global services, the RUC identified CPT 
code 20240 as potentially misvalued. Subsequent to this identification, 
the RUC requested that CMS change this code from a 10-day global period 
to a 0-day global period for this procedure. Based on survey data, the 
RUC recommended a decrease in the intraservice time from 39 to 30 
minutes, removal of two postoperative visits (one 99238 and one 99212), 
and an increase in the work RVUs for CPT code 20240 from 3.28 to 3.73. 
In the proposed rule, we stated that we did not believe the RUC 
recommendation accurately reflected the work involved in this 
procedure, especially given the decrease in intraservice time and post-
operative visits relative to the previous assumptions used in valuing 
the service. Therefore, for CY 2016, we proposed a work RVU of 2.61 for 
CPT code 20240 based on the reductions in time for the service.
    The following is a summary of the comments we received on our 
proposal.
    Comment: Several commenters, including the RUC, recommended that 
CMS reconsider its decision not to accept the RUC's recommendation for 
CPT code 20240. The commenters noted that the service was last valued 
by the Harvard study over 20 years ago and the assumptions made at the 
time no longer reflect current practice as the survey respondents 
included fewer than 10 non-orthopedic surgeons. Commenters stated that 
podiatry is currently the dominant provider of the service. Commenters 
also stated that deriving a new proposed work RVU based on existing 
work RVUs would be misguided in this case.
    The commenters also suggested that using a reverse building block 
methodology to convert a 10-day global code to 0-day global code by 
removing the bundled E/M services is inappropriate since magnitude 
estimation was used initially when establishing the work RVUs for 
surgical codes. Several commenters indicated that CMS' proposed work 
RVU has inappropriately low work intensity and expressed concern about 
CMS' approach to global code conversion.
    Additionally, the RUC expressed disagreement with CMS' decision to 
remove 6 minutes of clinical labor minutes for discharge management 
time from 0-day global services stating there is clinical staff time 
that needs to be accounted for; the commenter requested we include the 
6 minutes of clinical labor time based on the standard clinical labor 
task ``conduct phone calls/call in prescriptions.''
    Response: In proposing what we believed to be a more accurate value 
for CPT code 20240, we considered applying the intra-service ratio, 
which yielded a value of 2.52 RVUs; however we believed that value 
would have inadequately reflected the work involved in furnishing the 
service. Instead, we opted to use the reverse building block 
methodology to remove the post-operative visits, acknowledging the 
transition from a 10-day to a 0-day global period. We removed the RVUs 
associated with the visits (1.12 RVUs) from the RUC-recommended value 
of 3.73 RVUs and arrived at an RVU of 2.61, which we continue to 
believe accurately accounts for work involved in furnishing the 
service. While we generally understand that the work RVUs may not have 
been developed using a building-block methodology, and that the reverse 
building block methodology may not always be the best approach to 
valuing services, we do not agree that significant changes in the post-
operative period should be ignored, especially since we note that the 
RUC uses magnitude estimation to develop recommended work RVUs in the 
context of survey data regarding the number and level of visits in the 
post-operative periods.
    In terms of the clinical labor minutes associated with the 
discharge day management, we do not agree that the typical discharge 
work associated for this service or for others without work time for 
discharge day management would typically involve clinical staff 
conducting phone calls regarding prescriptions. We are aware that some 
codes include the clinical labor minutes for discharge management even 
though the work time for these codes do not include time for discharge 
management. We are seeking comment on how we might address this 
discrepancy in future rulemaking.
    After consideration of comments received, we are finalizing the 
proposed work RVU of 2.61 for CPT code 20240.
(3) Endobronchial Ultrasound (CPT Codes 31622, 31652, 31653, 31625, 
31626, 31628, 31629, 31654, 31632 and 31633)
    For CY 2016, the CPT Editorial Panel deleted one code, CPT code 
31620 (Ultrasound of lung airways using an endoscope), and created 
three new codes, CPT codes 31652-31654, to describe bronchoscopic 
procedures that are inherently performed with endobronchial ultrasound 
(EBUS).
    In their review of the newly revised EBUS family, the RUC 
recommended a change in the work RVUs for CPT code 31629 from 4.09 to 
4.00. The RUC also recommended maintaining the current work RVUs for 
CPT codes 31622, 31625, 31626, 31628, 31632 and 31633. We proposed to 
use those work RVUs for CY 2016.
    For the newly created codes, the RUC recommended work RVUs of 5.00 
for CPT code 31652, 5.50 for CPT code 31653 and 1.70 for CPT code 
31654. In the proposed rule, we stated that we believe the RUC-
recommended work RVUs for these services overstate the work involved in 
furnishing the procedures. In order to develop proposed work RVUs for 
CPT code 31652, we compared the service described by the code 
descriptor to deleted CPT codes 31620 and 31629, because this new code 
describes a service that combines services described by CPT code 31620 
and 31629. Specifically, we took the sum of the current work RVU of CPT 
code 31629 (WRVU = 4.09) and the CY 2015 work RVU of CPT code 31620 
(WRVU = 1.40) and multiplied it by the quotient of CPT code 31652's 
RUC-recommended intraservice time (INTRA = 60 minutes) and the sum of 
CPT codes 31620 and 31629's current and CY 2015 intraservice times 
(INTRA = 70 minutes), respectively. This resulted in a proposed work 
RVU of 4.71. To value CPT code 31653, we used the RUC-recommended 
increment of 0.5 work RVUs between this service and CPT code 31652 to 
calculate for CPT code 31653 our proposed work RVUs of 5.21. Lastly, 
because the service described by new CPT code 31654 is very similar to 
deleted CPT code 31620, we stated that we believed a direct crosswalk 
of the previous values for CPT code 31620 accurately reflected the time 
and intensity of furnishing the service described by CPT code 31654. 
Therefore, we proposed a work RVU of 1.40 for CPT code 31654.
    The following is a summary of the comments we received on our 
proposals.
    Comment: Several commenters, including the RUC, stated they did not 
agree with CMS' calculations or methodology utilized in valuing these 
services. The commenters suggested that CMS' calculations were based on 
inconsistent data. One commenter stated the methodology outlined in the 
proposed rule had several flaws in the understanding of the new and 
deleted bronchoscopy codes and questioned what purpose the creation of 
the new bundled codes were designed to address.
    Response: As we have addressed more broadly, when we do not believe 
that

[[Page 70961]]

the RUC-recommended values adequately address changes in the time 
resources required to furnish particular services, we have used several 
methodologies to identify potential work RVUs. We examine the results 
of such approaches and consider whether or not these results 
appropriately account for the total work of the service. We continue to 
believe that the methodology used to calculate the proposed work RVU is 
the most appropriate methodology to use for these procedures.
    Specifically, in considering CPT code 31652 in the context of 
similar codes, including CPT code 31638 (Bronchoscopy, rigid or 
flexible, including fluoroscopic guidance, when performed; with 
revision of tracheal or bronchial stent inserted at previous session 
(includes tracheal/bronchial dilation as required)) and CPT code 
31661(Bronchoscopy, rigid or flexible, including fluoroscopic guidance, 
when performed; with bronchial thermoplasty, 2 or more lobes) both of 
which have 60 minutes of intraservice time and RVUs of 4.88 and 4.50, 
we continue to believe that a work RVU of 4.71 is the most accurate 
valuation. For CPT code 31653, we continue to believe that maintaining 
the RUC-recommended 0.5 work RVU increment between 31652 and 31653 
yields the most accurate value for CPT code 31653. For CPT code 31654, 
we note the direct crosswalk preserves the work RVU of 1.40 from the 
previous CPT code 31620, which was also an add-on code, and had more 
intraservice time. Therefore, after consideration of comments received, 
we are finalizing the work RVUs for CPT codes 31622, 31652, 31653, 
31625, 31626, 31628, 31629, 31654, 31632 and 31633 for CY 2016 as 
proposed.
    Comment: One commenter also expressed appreciation of CMS' 
acceptance of the RUC's PE recommendation for several codes in this 
family.
    Response: We appreciate the support of the commenter.
    Comment: In its comment, the RUC indicated that equipment items 
ES045 and ES016 were incorrectly included for 31652, 31653, and 31654 
and that these items were replaced with new equipment codes. In the CY 
2015 Technical Correction Notice (CMS-1612-F2), equipment item ES015 
was included in 31654, and the clinical labor direct PE inputs for 
31654 were omitted from the direct PE input database. Similarly, for 
CPT code 31629, the RUC indicated that CMS proposed 30 minutes for 
clinical labor tasks ``assist physician in performing procedure'' and 
``assist physician for moderate sedation'', as included in the CY 2016 
proposed direct PE input database, while the RUC had recommended 35 
minutes. The RUC opined that since the 30 minutes displayed for CPT 
code 31629 was incorrect, all of the corresponding equipment times 
included discrepancies of 5 minutes. The RUC suggested that all 
equipment times should increase by 5 minutes, excluding the stretcher, 
which should remain 89 minutes as that equipment is not needed during 
the intraservice portion of the procedure. In addition, the RUC 
suggested that the calculation of supply item ``gas, oxygen'' (SD084) 
would also be affected by the ``assist physician'' time and should be 
105 liters, rather than 90 liters as currently indicated in the supply 
direct PE input CMS file.
    Response: We agree with the RUC's comments regarding the proposed 
direct PE inputs for these procedures; the resulting changes appear in 
the final direct PE input database for CY 2016.
(4) Intravascular Ultrasound (CPT Codes 37252 and 37253)
    In the CY 2015 PFS proposed rule, a stakeholder requested that CMS 
establish non-facility PE RVUs for CPT codes 37250 and 37251. CMS 
sought comment regarding the setting and valuation of these services. 
In September 2014, these codes were referred to the CPT Editorial 
Panel. The CPT Editorial Panel deleted CPT codes 37250 and 37251 and 
created new bundled codes 37252 and 37253 to describe intravascular 
ultrasound (IVUS). The RUC recommended 1.80 RVUs for CPT code 37252 and 
1.44 RVUs for CPT code 37253. The RUC also recommended new direct PE 
inputs for an IVUS catheter and IVUS system. CMS proposed to accept the 
RUC-recommended work RVUs for intravascular ultrasound.
    Comment: Commenters expressed support for CMS' proposed work and 
time values, as well as for updating the direct PE inputs.
    Response: We appreciate commenters' support, and we are finalizing 
these values as proposed.
(5) Laparoscopic Lymphadenectomy (CPT Codes 38570, 38571 and 38572).
    The RUC identified three laparoscopic lymphadenectomy codes as 
potentially misvalued: CPT code 38570 (Laparoscopy, surgical; with 
retroperitoneal lymph node sampling (biopsy), single or multiple); CPT 
code 38571 (Laparoscopy, surgical; with retroperitoneal lymph node 
sampling (biopsy), single or multiple with bilateral total pelvic 
lymphadenectomy); and CPT code 38572 (Laparoscopy, surgical; with 
retroperitoneal lymph node sampling (biopsy), single or multiple with 
bilateral total pelvic lymphadenectomy and periaortic lymph node 
sampling (biopsy), single or multiple). Accordingly, the specialty 
society surveyed these 10-day global codes, and the survey results 
indicated decreases in intraservice and total work times. After 
reviewing the survey responses, the RUC recommended that CMS maintain 
the current work RVU for CPT code 38570 of 9.34; reduce the work RVU 
for CPT code 38571 from 14.76 to 12.00; and reduce the work RVU for CPT 
code 38572 from 16.94 to 15.60. We used the RUC recommendations to 
propose values for CPT codes 38571 and 38572, since the RUC recommended 
reductions in the work RVUs that correspond with marked decreases in 
intraservice time and decreases in total time. As discussed in the 
proposed rule, we did not agree with the RUC's recommendation to 
maintain the current work RVU for CPT code 38570 in spite of similar 
changes in intraservice and total times as were shown in the RUC 
recommendations for CPT codes 38571 and 38572. Therefore, we proposed a 
work RVU for CPT code 38570 of 8.49, which reflects the proportional 
reduction in total time for this code and maintains the rank order 
among the three codes.
    The following is a summary of the comments we received on our 
proposals.
    Comment: Several commenters, including the RUC, indicated that CMS 
should use the recommended work RVU of 9.34 for CPT code 38570. 
Commenters stated that CMS used an erroneous calculation to derive the 
proposed work RVU of 8.49, with the use of time ratios being 
methodologically flawed due to an assumption that the existing time is 
correct, that physician intensity would remain constant for a service 
over a period of many years, and that different components of total 
time consisting of differing levels of physician intensity cannot be 
measured together. Commenters stated that using this rationale as the 
basis for not accepting the RUC recommendation was unprecedented and 
misguided.
    Commenters also stated that the recommended work RVU of 9.34 was 
based on work time and a comparison to CPT codes 31239 (Nasal/sinus 
endoscopy, surgical; with dacryocystorhinostomy) and 50590 
(Lithotripsy, extracorporeal shock wave). Commenters indicated that the 
comparison to these codes confirmed

[[Page 70962]]

that maintaining the current value for CPT code 38570 would be 
appropriate. A different commenter stated that the survey time for this 
procedure had increased to 280 minutes and included a hospital 
inpatient visit. This commenter also urged CMS to maintain the current 
work RVUs of 9.34 for CPT code 38570.
    Response: We refer the reader to our earlier discussion about time 
ratios. We continue to believe that the use of time ratios is one of 
several reasonable methods for identifying potential work RVUs for 
particular PFS services, particularly when the alternative values do 
not account for information that suggests the amount of time involved 
in furnishing the procedure has changed significantly. In the case of 
CPT code 38570, we noted that the intraservice time was reduced by 50 
percent, from 120 minutes to 60 minutes, and the total time was also 
reduced from 242 minutes to 220 minutes. We also noted that the other 
codes in the same family, CPT codes 38571 and 38572, reflected similar 
time reductions and consequently had reduced recommended work RVUs. We 
believe that in order to maintain relativity, it is appropriate to 
apply a similar reduction to the work RVUs of CPT code 38570.
    We were unable to find mention of CPT code 31239 in the RUC 
recommendations for 38570. Therefore, we considered the values for the 
code as a potential rationale for using the RUC-recommended value for 
CPT code 38570. We concluded that CPT code 31239 has limited utility as 
a comparison, since its values appear to be an outlier among codes with 
similar characteristics. For example, all 25 of the other 10-day global 
codes with 60 minutes of intraservice time have a lower work RVU than 
CPT code 38570, most of them substantially lower, with CPT code 49429 
(Removal of peritoneal-venous shunt) having the next highest work RVU 
of 7.44. We also do not agree with the comparison to CPT code 50590, 
since that code describes all of the work within a 90-day global 
period, and we do not believe that relativity between services would be 
preserved if we were to make direct work RVU comparisons between 10-day 
and 90-day global codes.
    After consideration of comments received, we are finalizing our 
proposed work RVUs of 8.49 for CPT code 38570, 12.00 for CPT code 
38571, and 15.60 for CPT code 38572.
(6) Mediastinoscopy With Biopsy (CPT Codes 39401 and 39402)
    The RUC identified CPT code 39400 (Mediastinoscopy, including 
biopsy(ies) when performed) as a potentially misvalued code due to an 
unusually high preservice time and Medicare utilization over 10,000. In 
reviewing the code's history, = the CPT Editorial Panel concluded that 
the code had been used to report two distinct procedural variations 
although the code was valued using a vignette for only one of them. As 
a result, CPT code 39400 is being deleted and replaced with CPT codes 
39401 and 39402 to describe each of the two mediastinoscopy procedures.
    We proposed to accept the RUC-recommended work RVU of 5.44 for code 
39401 and to use the RUC-recommended crosswalk from CPT code 52235 
(Cystourethroscopy, with fulguration), which accurately estimates the 
overall work for CPT code 39401. In the proposed rule, we disagreed 
with the RUC-recommended work RVU of 7.50 for CPT code 39402. We stated 
that the work RVU for CPT code 39401 establishes an accurate baseline 
for this family of codes, so we proposed to scale the work RVU of CPT 
code 39402 in accordance with the change in the intraservice times 
between CPT codes 39401 and 39402. We indicated that applying this 
ratio in the intraservice time to the work RVU of CPT code 39401 
yielded a total work RVU of 7.25 for CPT code 39402. We also noted that 
the RUC recommendation for CPT code 39401 represented a decrease in 
value by 0.64 work RVUs, which is roughly proportionate to the 
reduction from a full hospital discharge visit (99238) to a half 
discharge visit assumed to be typical in the post-operative period. The 
RUC recommendation for CPT code 39402 had the same reduction in the 
post-operative work without a corresponding decrease in its recommended 
work RVU. In order to reflect the reduction in post-operative work and 
to maintain relativity between the two codes in the family, we proposed 
a work RVU of 7.25 for CPT code 39402.
    The following is a summary of the comments we received on our 
proposals.
    Comment: Several commenters stated that the use of intraservice 
time ratios was inappropriate for valuation of CPT codes. They 
indicated that CMS should instead use the RUC's recommended work RVU of 
7.50, due to the difference in technical skill, physical/mental effort, 
and additional stress involved in the performance of CPT code 39402 
relative to CPT code 39401. Commenters expressed the importance of 
using physician survey data and magnitude estimation to arrive at work 
RVUs.
    Response: We refer the reader to our earlier discussions about the 
utility of time ratios in identifying potential work RVUs for PFS 
services. We note that when comparing the work RVUs for CPT codes 39401 
and 39402, the work RVU for CPT code 39402 was higher than would be 
expected based on the difference in time between these two procedures, 
even considering the more difficult clinical nature of CPT code 39402. 
We continue to believe that the use of intraservice time ratios is one 
of several different methods that can be effectively employed for 
valuation of CPT codes. For this particular mediastinoscopy family, CPT 
codes 39401 and 39402 share identical preservice time, postservice 
time, and office visits. Based on this information, we continue to 
believe that the intraservice time ratio between the two codes is the 
most accurate method for determining the work RVU for this procedure.
    Comment: Several commenters suggested that CMS should use the RUC-
recommended work RVU of 7.50 for CPT code 39402 based on the use of a 
building block methodology. Commenters stated that the RUC arrived at 
this value by adding the work RVU of CPT code 39401 (5.44 RVUs) to one 
half of the work RVU of CPT code 32674 (4.12 RVUs). The resulting 
calculation of 5.44 plus 2.06 equaled 7.50 RVUs, exactly the same value 
recommended by the RUC and a proof of the accuracy of magnitude 
estimation.
    Response: We believe that the use of the reverse building block 
methodology would result in a significantly lower valuation for CPT 
code 39402. The current CPT code used for a mediastinoscopy with lymph 
node biopsy is 39400, which has a work RVU of 8.05, and includes three 
postoperative visits in its global period (a 99231 hospital inpatient 
visit, a 99238 hospital discharge visit, and a 99213 office visit). CPT 
code 39402 does not include the hospital inpatient visit (0.76 RVUs) or 
the office visit (0.97 RVUs), and includes only half of the discharge 
visit (0.64 RVUs). If the work of these visits were removed from CPT 
code 39400, the result would be a work RVU of 8.05 - 2.37 = 5.68. We 
believe that this work RVU understates the work of CPT code 39402, 
which is why we believe that a building block methodology would be less 
accurate than the use of the intraservice time ratio for this code 
family.
    After consideration of comments received, we are finalizing our 
proposed work RVU of 5.44 for CPT code 39401 and 7.25 for 39402.

[[Page 70963]]

(7) Hemorrhoid(s) Injection (CPT Code 46500)
    The RUC identified CPT code 46500 (Injection of sclerosing 
solution, hemorrhoids) as potentially misvalued, and the specialty 
society resurveyed this 10-day global code. The survey showed a 
significant decrease in the reported intraservice and total work times. 
After reviewing the survey responses, the RUC recommended that CMS 
maintain the current work RVU of 1.69 in spite of the reductions in 
intraservice and total times. We proposed to reduce the work RVU to 
1.42, which reduces the work RVU by the same ratio as the reduction in 
total time.
    We also proposed to refine the RUC-recommended direct PE inputs by 
removing the inputs associated with cleaning the scope.
    The following is a summary of the comments we received on our 
proposals.
    Comment: The RUC disagreed with the methodology CMS used to develop 
the proposed work RVUs stating that CMS' proposed methodology did not 
account for differences in pre-service or post-service time. The RUC 
also stated that different components of total time (preservice time, 
intra-service time, post-service time, and post-operative visits) 
consist of differing levels of physician intensity and CMS' 
calculations did not appear to have been based on any clinical 
information or any measure of physician intensity.
    Another commenter supported our efforts to identify and address 
such incongruities between work times and work RVUs, stating that when 
work time decreases, work RVUs should decrease comparatively, absent a 
compelling argument that the intensity of the service has increased 
sufficiently to offset the decrease in work time.
    One commenter disagreed with CMS' proposed PE refinements for CPT 
code 46500 regarding the pre-service clinical labor time for the 
facility setting, clinical labor time related to setting up endoscopy 
equipment, clinical labor time and supplies related to cleaning 
endoscopy equipment, equipment time for item ES002, and clinical labor 
time associated with clinical labor task ``follow-up phone calls and 
prescriptions''. The commenter also disagreed with CMS' refinement of 
not including setup and clean-up time for the scope at the post-
operative visit.
    Response: We believe the total time ratio produces an RVU that is 
comparable with other 10-day global services. We note that CPT code 
41825 (Excision of lesion or tumor (except listed above), dentoalveolar 
structures; without repair) and CPT code 10160 (Puncture aspiration of 
abscess, hematoma, bulla, or cyst) are similar 10-day global services 
that have comparable work RVUs. For CY 2016, we are finalizing our 
proposed value of 1.42 RVUs for CPT code 46500.
    After reviewing the public comments that were submitted regarding 
direct PE inputs, we recognize that we mistakenly believed that a 
disposable scope was included as a direct PE input, when a reusable 
equipment item was actually included. As a result, we removed the 
clinical labor time associated with setting up and cleaning the scope. 
Since we made this refinement in error, we will restore the clinical 
labor time associated with setting up and cleaning the scope. We also 
agree with commenters regarding the time for clinical labor task 
``follow-up phone calls and prescriptions''. Therefore, we are 
restoring the RUC-recommended clinical labor times for ``follow-up 
phone calls & prescriptions'', ``setup scope (non-facility setting 
only)'', and ``clean scope''. As a result of including the previously 
removed clinical labor time associated with the equipment input ES002 
(anoscope with light source), we are increasing the equipment time for 
this code from 60 minutes to 70 minutes. We did not add the set-up and 
clean scope time to the post-operative visits, however, since the 
clinical labor time for post-operative visits across PFS services match 
the clinical labor for the associated E/M visits. We are seeking 
comment regarding whether or not we should reconsider that practice 
broadly before making an exception in this particular case.
(8) Liver Allotransplantation (CPT Code 47135)
    The RUC identified CPT code 47135 (Liver allotransplantation; 
orthotopic, partial or whole, from cadaver or living donor, any age) as 
potentially misvalued, and the specialty society resurveyed this 90-day 
global code. The survey results showed a significant decrease in 
reported intraservice work time, but a significant increase in total 
work time (the number of post-operative visits significantly declined 
while the level of visits increased). After reviewing the survey 
responses, the RUC recommended an increase in the work RVU from 83.64 
to 91.78, which corresponds to the survey median result, as well as the 
exact work RVU for CPT code 33935 (Heart-lung transplant with recipient 
cardiectomy-pneumonectomy). In the proposed rule, we stated that we did 
not believe the RUC-recommended crosswalk was the most accurate from 
among the group of transplant codes. We noted that CPT code 32854 (Lung 
transplant, double (bilateral sequential or en bloc); with 
cardiopulmonary bypass) has intraservice and total times that are 
closer to those the RUC recommended for CPT code 47135, and CPT code 
32854 has a work RVU of 90.00 which corresponds to the 25th percentile 
survey result for CPT code 47135. Therefore, we proposed to increase 
the work RVU of CPT code 47135 to 90.00.
    The following is a summary of the comments we received on our 
proposal.
    Comment: The RUC stated that its original reference code is the 
most appropriate comparator for this service and revising the work RVU 
for CPT code 47135 to 1.9 percent below the RUC's recommendation would 
be arbitrary and punitive. Another commenter stated that while they 
believed the RUC proposed valuation more accurately reflected the work 
involved, they appreciated the proposal to increase the work RVUs 
associated with liver transplants, and suggested that CMS accept the 
RUC-recommended direct PE valuations.
    Response: As we stated in the proposed rule, CPT code 32854(Lung 
transplant, double (bilateral sequential or en bloc); with 
cardiopulmonary bypass) has very similar intra-service and total times, 
in addition to an identical work RVU (90.00) to the 25th percentile 
survey result. We continue to believe the proposed direct crosswalk 
from CPT code 32854 (Lung transplant, double (bilateral sequential or 
en bloc); with cardiopulmonary bypass) to CPT code 47135 results in the 
most accurate valuation. Therefore, for CY 2016 we are finalizing 
without modification our proposed work RVU of 90.00 for CPT code 47135.
(9) Genitourinary Catheter Procedures (CPT Codes 50430, 50431, 50432, 
50433, 50434, 50435, 50693, 50694, and 50695)
    For CY 2016, the CPT Editorial Panel deleted six CPT codes (50392, 
50393, 50394, 50398, 74475, and 74480) that were commonly reported 
together, and created 12 new CPT codes, both to describe these 
genitourinary catheter procedures more accurately and to bundle 
inherent imaging guidance. Three of these CPT codes (506XF, 507XK, and 
507XL) were referred back to CPT to be resurveyed as add-on codes. The 
other nine codes were reviewed at the January 2015 RUC meeting and 
assigned recommended work RVUs and direct PE inputs.
    We proposed to use the RUC-recommended work RVU of 3.15 for CPT 
code 50430. We agreed that this is

[[Page 70964]]

an appropriate value and that the code should be used as a basis for 
establishing relativity with the rest of the family. We began by making 
comparisons between the service times of CPT code 50430 and the other 
codes in the family in order to determine the appropriate proposed work 
RVU of each procedure.
    In our proposal for CPT code 50431, we stated that we disagreed 
with the RUC-recommended work RVU of 1.42; we instead proposed a work 
RVU of 1.10, based on three separate data points. First, the RUC 
recommendation stated that CPT code 50431 describes work previously 
described by a combination of CPT codes 50394 and 74425. These two 
codes have work RVUs of 0.76 and 0.36, respectively, which sum together 
to 1.12. Second, we noted that the work of CPT code 49460 (Mechanical 
removal of obstructive material from gastrostomy) is similar, with the 
same intraservice time of 15 minutes and same total time of 55 minutes 
but a work RVU of 0.96. Finally, we observed that the minimum survey 
result had a work RVU of 1.10, and we suggested that this value 
reflected the total work for the service. Accordingly, we proposed 1.10 
as the work RVU for CPT code 50431.
    We employed a similar methodology to develop a proposed work RVU of 
4.25 for CPT code 50432. The three previously established codes were 
combined in CPT code 50432; these had respective work RVUs of 3.37 (CPT 
code 50392), 0.54 (CPT code 74475), and 0.36 (CPT code 74425); together 
these sum to 4.27 work RVUs. We also examined the valuation of this 
service relative to other codes in the family. The ratio of the 
intraservice time of 35 minutes for CPT code 50430 and the intraservice 
time of 48 minutes for CPT code 50432, applied to the work RVU of base 
code 50430 (3.15), results in a potential work RVU of 4.32. The total 
time for CPT code 50432 is higher than CPT code 50430 (107 minutes 
relative to 91 minutes); applying this ratio to the base work RVU 
results in a work RVU of 3.70. We utilized these data to inform our 
proposed crosswalk. In valuing CPT code 50432, we considered CPT code 
31660 (Bronchoscopy, rigid or flexible, including fluoroscopic 
guidance), which has an intraservice time of 50 minutes, total time of 
105 minutes, and a work RVU of 4.25. Therefore, we proposed to 
establish the work RVU for CPT code 50432 at the crosswalked value of 
4.25 work RVUs.
    In the proposed rule, we stated that according to the RUC 
recommendations, CPT codes 50432 and 50433 are very similar procedures, 
with CPT code 50433 making use of a nephroureteral catheter instead of 
a nephrostomy catheter. The RUC valued the added difficulty of CPT code 
50433 at 1.05 work RVUs compared to CPT code 50432. We proposed to 
maintain the relative difference in work between these two codes by 
proposing a work RVU of 5.30 for CPT code 50433 (4.25 + 1.05). 
Additionally, we considered CPT code 57155 (Insertion of uterine tandem 
and/or vaginal ovoids for clinical brachytherapy), which has a work RVU 
of 5.40 and an identical intraservice time of 60 minutes, but 14 
additional minutes of total time (133 minutes compared to 119 minutes 
for CPT code 50433), which supported the difference of 0.10 RVUs. For 
these reasons, we proposed a work RVU of 5.30 for CPT code 50433.
    As with the other genitourinary codes, we developed the proposed 
work RVU of CPT code 50434 in order to preserve relativity within the 
family. In the proposed rule, we stated that CPT code 50434 has 15 
fewer minutes of intraservice time compared to CPT code 50433 (45 
minutes compared to 60 minutes). We proposed to apply this ratio of 
0.75 to the base work RVU of CPT code 50433 (5.30), which resulted in a 
potential work RVU of 3.98. We also considered CPT code 50432 as 
another similar service within this family of services, with three more 
minutes of intraservice time compared to CPT code 50434 (48 minutes of 
intraservice time instead of 45 minutes). We noted that applying this 
ratio (0.94) to the base work RVU of CPT code 50432 (4.25) resulted in 
a potential work RVU of 3.98. Based on this information, we identified 
CPT code 31634 (Bronchoscopy, rigid or flexible, with balloon 
occlusion) as an appropriate direct crosswalk, and proposed a work RVU 
of 4.00 for CPT code 50434. The two codes share an identical 
intraservice time of 45 minutes, though the latter possesses a lower 
total time of 90 minutes.
    For CPT code 50435, we considered how the code and work RVU would 
fit within the family in comparison to our proposed values for CPT 
codes 50430 and 50432. CPT code 50430 serves as the base code for this 
group; it has 35 minutes of intraservice time in comparison to 20 
minutes for CPT code 50435. This intraservice time ratio of 0.57 (20/
35) resulted in a potential work RVU of 1.80 for CPT code 50435 when 
applied to the work RVU of CPT code 50430 (3.15). Similarly, CPT code 
50432 is the most clinically similar procedure to CPT code 50435. CPT 
code 50432 has 48 minutes of intraservice time compared to 20 minutes 
of intraservice time for CPT code 50435. This ratio of 0.42 (20/48) 
applied to the base work RVU of CPT code 50432 (4.25) results in a 
potential work RVU of 1.77. We also considered two additional 
procedures to determine a proposed value for CPT code 50435. CPT code 
64416 (Injection, anesthetic agent; brachial plexus) also includes 20 
minutes of intraservice time and has a work RVU of 1.81. CPT code 36569 
(Insertion of peripherally inserted central venous catheter) has the 
same intraservice and total time as CPT code 50435, with a work RVU of 
1.82. Accordingly, we proposed a work RVU of 1.82, a direct crosswalk 
from CPT code 36569.
    The remaining three codes all utilize ureteral stents and form 
their own small subfamily within the larger group of genitourinary 
catheter procedures. For CPT code 50693, we proposed a work RVU of 
4.21, which corresponds to the 25th percentile survey result. We stated 
in the proposed rule that we believed that the work RVU corresponding 
to the 25th percentile survey result provided a more accurate value for 
CPT code 50693 based on the work involved in the procedure and within 
the context of other codes in the family. We also indicated that CPT 
code 31648 (Bronchoscopy, rigid or flexible, with removal of bronchial 
valve), which shares 45 minutes of intraservice time and has a work RVU 
of 4.20, was an accurate crosswalk for CPT code 50693.
    For CPT code 50694, we compared its intraservice time to the code 
within the family that had the most similar duration, CPT code 50433. 
This code has 60 minutes of intraservice time compared to 62 minutes 
for CPT code 50694. This is a ratio of 1.03; when applied to the base 
work RVU of CPT code 50433 (5.30), we arrived at a potential work RVU 
of 5.48. We also looked to procedures with similar times, in particular 
CPT code 50382 (Removal and replacement of internally dwelling ureteral 
stent), which has 60 minutes of intraservice time, 125 minutes of total 
time, and a work RVU of 5.50. We proposed a work RVU of 5.50, a direct 
crosswalk from CPT code 50382.
    Finally, we developed the proposed work RVU for CPT code 50695 
using three related methods. In the proposed rule, we stated that CPT 
codes 50694 and 50695 describe very similar procedures, with 50695 
adding the use of a nephrostomy tube. The RUC addressed the additional 
difficulty of this procedure by recommending 1.55 more work RVUs for 
CPT code 50695 than for CPT code 50694. Maintaining the 1.55 work RVUs 
increment, we noted that adding 1.55 to our proposed work RVU for CPT 
code 50694 (5.50)

[[Page 70965]]

would produce a work RVU of 7.05 for CPT code 50695. We also examined 
the ratio of intraservice times for CPT code 50695 (75 minutes) and the 
base code in the subfamily, CPT code 50693 (45 minutes). The 
intraservice time ratio between these two codes is 1.67; when applied 
to the base work RVU of CPT code 50693 (4.21), we calculated a 
potential work RVU of 7.02. We also noted that CPT code 36481 
(Percutaneous portal vein catheterization by any method) shares the 
same intraservice time as CPT code 50695 and has a work RVU of 6.98. 
Accordingly, to maintain relativity among this subfamily of codes, we 
proposed a work RVU of 7.05 for CPT code 50695 based on an incremental 
increase of 1.55 RVUs from CPT code 50694.
    In reviewing the direct PE inputs for this family of codes, we 
refined a series of the RUC- recommended direct PE inputs in order to 
maintain relativity with other codes in the direct PE database. All of 
the following refinements refer to the non-facility setting for this 
family of codes. Under the clinical labor inputs, we proposed to remove 
the RN/LPN/MTA (L037D) (intraservice time for assisting physician in 
performing procedure) for CPT codes 50431 and 50435. This amounts to 15 
minutes for CPT code 50431 and 20 minutes for CPT code 50435. Moderate 
sedation is not inherent in these procedures and, therefore, we 
indicated that we did not believe that this clinical labor task would 
typically be completed in the course of this procedure. We also reduced 
the RadTech (L041B) intraservice time for acquiring images from 47 
minutes to 46 minutes for CPT code 50694. This procedure contains 62 
minutes of intraservice time, with clinical labor assigned for 
acquiring images (75 percent) and a circulator (25 percent). The time 
for these clinical labor tasks is 46.5 minutes and 15.5 minutes, 
respectively. The RUC recommendation for CPT code 50694 rounded both of 
these values upwards, assigning 47 minutes for acquiring images and 16 
minutes for the circulator, which together sum to 63 minutes. We 
reduced the time for clinical labor tasks ``acquire images'' to 46 
minutes to preserve the 62 minutes of total intraservice time for CPT 
code 50694.
    With respect to the post-service portion of the clinical labor 
service period, we proposed to change the labor type for the task 
``patient monitoring following service/check tubes, monitors, drains 
(not related to moderate sedation)''. There are 45 minutes of clinical 
labor time assigned under this category to CPT codes 50430, 50432, 
50433, 50434, 50693, 50694, and 50695. Although we agreed that the 45 
minutes are accurate for these procedures as part of moderate sedation, 
we proposed to change the clinical labor type from the RUC-recommended 
RN (L051A) to RN/LPN/MTA (L037D) to reflect the staff that would 
typically be doing the monitoring for these procedures. Even though the 
CPT Editorial Committee's description of post-service work for CPT code 
50435 included a recovery period for sedation, we recognized in our 
proposal that according to the RUC recommendation, CPT codes 50431 and 
50435 did not use moderate sedation; therefore, we did not propose to 
include moderate sedation inputs for these codes.
    The RUC recommendation for CPT code 50433 included a nephroureteral 
catheter as a new supply input with an included invoice. However, the 
RUC recommendation did not discuss the use of a nephroureteral catheter 
in the intraservice work description. CPT code 50433 did mention the 
use of a nephroureteral stent in this description, but there is no 
request for a nephroureteral stent supply item on the PE worksheet for 
this code. We asked for feedback from stakeholders regarding the use of 
the nephroureteral catheter for CPT code 50433, but did not propose to 
add the nephroureteral catheter as a supply item for CPT code 50433 
pending this information. We also requested stakeholder feedback 
regarding the intraservice work description in for this code to explain 
the use, if any, of the nephroureteral catheter in this procedure.
    The RUC recommended the inclusion of ``room, angiography'' (EL011) 
for this family of codes. In our proposal we stated that we did not 
agree with the RUC that an angiography room would be used in the 
typical case for these procedures, as there are other rooms available 
which can provide fluoroscopic guidance. Most of the codes that make 
use of an angiography room are cardiovascular codes, and much of the 
equipment listed for this room would not be used for non-cardiovascular 
procedures. We therefore proposed to replace equipment item ``room, 
angiography'' (EL011) with equipment item ``room, radiographic-
fluoroscopic'' (EL014) for the same number of minutes. We requested 
public comment regarding the typical room type used to furnish the 
services described by these CPT codes, as well as the more general 
question of the typical room type used for GU and GI procedures. In the 
past, the RUC has developed broad recommendations regarding the typical 
uses of rooms for particular procedures, including the radiographic-
fluoroscopy room. In the proposed rule, we stated that we believed that 
such a recommendation from the RUC concerning all of these codes could 
be useful in ensuring relativity across the PFS.
    The following is a summary of the comments we received on our 
proposals.
    Comment: Several commenters, including the RUC, stated that the CMS 
proposed work RVUs were based on a flawed methodology. Commenters 
stated that CMS ignored intensity measures, differences in patient 
population, and risk profile considerations between the genitourinary 
codes. These commenters indicated that they did not agree with the use 
of intraservice time ratios as a methodology for establishing work 
RVUs.
    Response: We refer the reader to our earlier discussion about the 
utility of time ratios in identifying potential work RVUs. For this 
particular group of codes, we believe that establishing CPT code 50430 
as the baseline value and then using intraservice time ratios to 
maintain relativity of work RVUs results in accurate work RVUs for 
these services. We note that these refined work RVUs were supported in 
all cases by the use of crosswalks to existing CPT codes which we 
believe reflect similar intensity, which further supported the refined 
work RVUs
    Comment: Several commenters indicated that the compelling evidence 
standard applied by the RUC for requiring an increase in valuation had 
been met for this code family, and therefore increased work RVUs were 
acceptable when compared to the previous group of genitourinary 
catheter procedures.
    Response: We recognize that the RUC internal deliberations include 
rules that govern under what circumstances individual specialties can 
request that the RUC recommend CMS increase values for particular 
services. As observers to the RUC process, we appreciate having an 
understanding of these rules in the context of our review of RUC-
recommended values. However, we remind the commenters that we are aware 
of such rules when we initially consider RUC recommendations. We are 
committed to preserving relativity between services across the entirety 
of the PFS, and believe that our proposed values best achieve that aim.
    Comment: Several commenters disagreed with the use of crosswalks to 
other CPT codes provided by CMS. Commenters stated that the work

[[Page 70966]]

between the codes was not comparable due to clinical differences 
between the genitourinary catheter codes and the procedures described 
in the crosswalk codes. Commenters specifically referenced the 
crosswalk that CMS selected for CPT code 50431 and stated that the CMS 
chosen crosswalk code does not have the same infectious considerations 
(bacteremia) or the magnitude of diagnostic considerations as CPT code 
50431.
    Response: In the resource-based relative value system, services do 
not have to be clinically similar in order to be comparable. Relative 
value units (RVUs) are comparable across services furnished by 
different medical specialties. We note as well that the crosswalk codes 
referenced by the RUC in its recommendations are frequently not 
clinically similar to the CPT code under review. In the case of 50431, 
we note that our crosswalk to CPT code 49460 has identical intraservice 
time and total time with CPT code 50431, along with similar clinical 
intensity, suggesting that it has value as a point of comparison for 
this code. Furthermore, we did not establish a direct crosswalk between 
the work of these two codes, only using CPT code 49460 (which has a 
work RVU of 0.96 RVUs) as one of three separate data points. For our 
second data point, we wrote that the recommendation for CPT code 50431 
stated that the new code described work previously performed by a 
combination of CPT codes 50394 and 74425. These two codes have work 
RVUs of 0.76 and 0.36, respectively, which sum together to 1.12. For 
our third data point, we observed that the minimum survey result had a 
work RVU of 1.10, which we believe accurately reflects the total work 
for this service. The survey minimum value of 1.10 RVUs was the method 
used to establish our proposed work RVU for this code. We refer readers 
to the discussion above in the Methodology for Establishing Work RVUs 
section for more information regarding the crosswalks used in 
developing values for this procedure.
    After consideration of comments received, we are finalizing our 
proposed work RVU of 1.10 for CPT code 50431.
    Comment: Several commenters disagreed with the CMS proposed work 
RVU of 4.25 for CPT code 50432 and suggested that CMS accept the RUC-
recommended RVU of 4.70. They indicated that CMS used a clinically 
dissimilar crosswalk, CPT code 31660, which consists of very different 
work, patient populations, and potential complications. Commenters also 
stated that CMS used a different combination of existing CPT codes in 
its building block valuation of the new code 50432, leaving out CPT 
code 50390. Commenters indicated that this was a mistake and the use of 
CPT code 50390 would be typical.
    Response: As we mentioned previously, in the resource-based 
relative value system, services do not have to be clinically similar to 
be comparable. CPT code 31660 shares intraservice time and total time 
values that are nearly identical to CPT code 50432, along with similar 
clinical intensity, so we continue to believe that it is an accurate 
crosswalk. We also do not believe that the use of CPT code 50390 would 
be typical in constructing a building block methodology for CPT code 
50432. The new code is assembled through a combination of genitourinary 
catheter CPT code 50392 with injection CPT codes 74425 and 74475. We do 
not believe that CPT code 50390 would typically be included in this 
group as well, since the code descriptors for both 50390 and 50392 also 
include drainage and this service would not be performed twice. We 
believe that the new CPT code 50432 would be used for either the 
previously reported CPT codes 50390 or 50392 service, but not for both 
of them at once. In addition, the RUC has recommended that we assume 
that most of the procedures previously reported using CPT code 50392 
would be reported using new CPT code 50432.
    We note as well that our proposed work RVU for CPT code 50432 was 
supported by the use of two time ratios with CPT code 50430. Both the 
intraservice time ratio and the total time ratio suggested that a value 
below the RUC recommendation of 4.70 RVUs would be more accurate. After 
consideration of comments received, we are finalizing our proposed work 
RVU of 4.25 for CPT code 50432.
    Comment: Several commenters stated that CMS should accept the RUC-
recommended work RVU of 5.75 for CPT code 50433. While they agreed with 
CMS' use of the RUC-recommended increment of 1.05 RVUs relative to CPT 
code 50432, they did not agree with the CMS refined work RVU of CPT 
code 50432 itself. Some commenters also did not support the CMS 
crosswalk to CPT code 57155, which they stated had very different work, 
patient population, and potential complications.
    Response: We agree that CPT code 50433 is accurately valued at 1.05 
RVUs greater than CPT code 50432, which describes the additional work 
performed by placing a nephroureteral catheter relative to the work of 
placing a nephrostomy catheter. However, we continue to believe that 
our proposed work RVU for CPT code 50432 is an accurate value for the 
reasons detailed above. With regard to our crosswalk, we maintain that 
relative value units are comparable across different medical 
specialties. CPT code 57155 (Insertion of uterine tandem and/or vaginal 
ovoids for clinical brachytherapy) has an identical intraservice time 
of 60 minutes and 14 additional minutes of total time, along with 
similar clinical intensity, which support the difference of 0.10 RVUs 
when compared to CPT code 50433. After consideration of the comments 
received, we are finalizing a work RVU of 5.30 for CPT code 50433.
    Comment: Several commenters requested that CMS adopt the RUC-
recommended work RVU of 4.20 for CPT code 50434. Commenters disagreed 
with the methodology that CMS used to arrive at the proposed value of 
4.00 RVUs, in particular the use of intraservice time ratios, and 
stated that the CMS crosswalk to CPT code 31634 (Bronchoscopy, rigid or 
flexible, with balloon occlusion) was inappropriate due to clinical 
dissimilarity.
    Response: We refer the reader to our earlier discussion about 
intraservice time ratios. We found the identical result of 3.98 work 
RVUs for CPT code 50434 when we applied the intraservice time ratio to 
CPT codes 50432 and 50433. This lent further support to our proposed 
work RVU. With regard to our crosswalk, we note that in the resource-
based relative value system, CPT codes do not have to be clinically 
similar to be comparable. CPT code 31634 shares the identical 
intraservice time with CPT code 50434 and serves as a direct crosswalk. 
After consideration of comments received, we are finalizing our 
proposed work RVU of 4.00 for CPT code 50434.
    Comment: Several commenters made similar statements regarding the 
proposed work RVU for CPT code 50435, criticizing the use of 
intraservice time ratios with other codes in the genitourinary catheter 
family and disagreeing with the crosswalked CPT codes for being 
medically dissimilar.
    Response: We refer the reader to our earlier discussion about 
intraservice time ratios and continue to believe that their use results 
in accurate work RVUs for this family of codes. We made use of an 
intraservice time ratio with both CPT code 50430 (the base code for the 
family) and CPT code 50432 (the most clinically similar code), which 
produced results of 1.80 and 1.77 RVUs, respectively. We also found two 
different crosswalks with identical intraservice time and very similar 
work RVUs, including CPT code 36569, with identical intraservice time, 
identical

[[Page 70967]]

total time, and a work RVU of 1.82 RVUs. Although we maintain that 
relative value units are comparable across different medical 
specialties, CPT code 36569 does in fact describe a medically related 
procedure, with the insertion of a central venous catheter. After 
consideration of comments received, we are finalizing our proposed work 
RVU of 1.82 for CPT code 50435.
    Comment: Commenters urged CMS to adopt the RUC-recommended work 
RVU, corresponding to the median survey work RVU of 4.60 RVUs for CPT 
code 50693. They stated that the placement of a ureteral stent requires 
more work than the placement of a nephroureteral catheter, and the 0.21 
RVU differential proposed by CMS is insufficient to reflect the 
additional work difficulty of CPT code 50693.
    Response: We are uncertain about which codes are being compared by 
the commenters, since the 0.21 RVU differential referenced by the 
commenters does not exist in the codes that appear to be discussed in 
the comment (50433). Since the commenters did not include the five 
digit CPT designation in their comparison, we are uncertain which code 
the commenters intended to discuss.
    We continue to believe that a work RVU of 4.21, corresponding to 
the 25th percentile survey result, is the most accurate value for CPT 
code 50693. We believe that the ureteral stent procedures are 
clinically similar to the rest of the genitourinary catheter family, 
and the use of intraservice time ratios with these procedures provides 
an accurate method for determining relative values. We continue to 
believe that the work RVU of 4.21, corresponding to the 25th percentile 
survey result, is further supported through our crosswalk to CPT code 
31648 (Bronchoscopy, rigid or flexible, with removal of bronchial 
valve) which has similar times and a work RVU of 4.20. After 
consideration of comments received, we are finalizing our proposed work 
RVU of 4.21 for CPT code 50693.
    Comment: Several commenters made statements similar to those 
mentioned previously regarding the work RVU for CPT code 50694, 
criticizing the use of intraservice time ratios with other codes in the 
genitourinary catheter family and disagreeing with the crosswalked CPT 
codes for being medically dissimilar.
    Response: We refer the reader to our earlier discussion about 
intraservice time ratios and continue to believe that their use results 
in accurate work RVUs for this family of codes. We compared CPT code 
50694 with 50433, the code within the family with the most similar 
intraservice time, which resulted in a potential work RVU of 5.48. We 
also found that CPT code 50382 had nearly identical intraservice time 
and total time, and a work RVU of 5.50. While we maintain that relative 
value units are comparable across different medical specialties, we do 
not agree with the commenters that CPT code 50382 is medically 
dissimilar from CPT code 50694. The former refers to the removal and 
replacement of a ureteral stent, while the latter refers to the 
placement of a ureteral stent. We believe that these codes describe 
very similar procedures, share the same patient population, and can 
serve as a direct crosswalk for the work RVU of each other. After 
consideration of comments received, we are finalizing our proposed work 
RVU of 5.50 for CPT code 50694.
    Comment: A few commenters stated that their comments on CPT code 
50695 are similar to those they had made previously about CPT code 
50433. While they agreed that CMS was correct to maintain the RUC-
recommended increment of 1.55 RVUs greater than the value of CPT code 
50694, they did not agree with the CMS refined work RVU of 50694 
itself. Commenters also did not support the CMS crosswalk to CPT code 
36481, which they stated had very different work, patient population, 
and potential complications.
    Response: We agree that CPT code 50695 is accurately valued at 1.55 
RVUs greater than CPT code 50694, which describes the additional work 
performed by the use of a nephrostomy tube. However, we continue to 
believe that the proposed work RVU for CPT code 50694 is an accurate 
value for the reasons detailed above. With regard to our crosswalk, we 
continue to believe that relative value units are comparable across 
services furnished by different medical specialties. CPT code 36481 
(Percutaneous portal vein catheterization by any method) has an 
identical intraservice time of 75 minutes and 18 additional minutes of 
total time, but a lower work RVU (6.98 RVUs) than the one suggested by 
our incremental method. Commenters also did not discuss our use of an 
intraservice time ratio with the base code in this subfamily, CPT code 
50693, which suggested a work RVU of 7.02. After consideration of 
comments received, we are finalizing our proposed work RVU of 7.05 for 
CPT code 50695.
    Comment: Several commenters disagreed with the CMS proposal to 
eliminate the RN/LPN/MTA blend (L037D) of clinical labor for assisting 
the physician during procedures 50431 and 50435. The CMS rationale was 
based on the lack of moderate sedation taking place in these two 
procedures. However, commenters argued that these procedures do require 
monitoring for patient stability that the attending physician cannot 
provide. They urged that the RN/LPN/MTA blend would be most appropriate 
for these procedures.
    Response: We are not aware of any other procedures in which there 
is a third assistant in the procedure room when moderate sedation is 
not being provided. We believe that the standard use of clinical labor 
staff would be typical when performing these procedures.
    Comment: Commenters also disagreed with the CMS proposal to change 
the labor type for patient monitoring following service (not related to 
moderate sedation) from the RUC-recommended RN (L051A) to the RN/LPN/
MTA blend (L037D). Commenters stated that although use of the RN/LPN/
MTA blend is standard for this clinical labor task, the RUC allows 
specialty groups to use an RN with justification, and that was the case 
here for these procedures since they involve invasive percutaneous 
solid organ interventions.
    Response: After consideration of comments, we agree that the use of 
the RN (L051A) clinical labor is typical for patient monitoring 
following service (not related to moderate sedation) for these 
particular specialty groups. We will restore the recommended L051A 
labor type for this clinical labor task for CPT codes 50430, 50432, 
50433, 50434, 50693, 50694, and 50695. We will also consider making a 
formal proposal regarding the most suitable type of clinical labor 
staff for this monitoring in future rulemaking.
    Comment: CMS sought clarification regarding the use of the 
nephroureteral catheter (SD306) for CPT code 50433. CMS removed this 
supply from CPT code 50433 since it was not mentioned in the 
information about the survey included in the RUC recommendation. 
Commenters wrote to explain that the phrase ``An 8 Fr nephroureteral 
stent is inserted with the distal pigtail in the bladder'' is included 
in the description of work for CPT code 50433, and in the context of 
genitourinary and biliary procedures, the historic term ``stent'' has 
been used interchangeably with the term ``catheter''. Commenters 
suggested that the nephroureteral catheter should be maintained as a 
supply item for this code and for CPT code 50434.
    Response: We agree that the nephroureteral catheter should be 
maintained as a supply item for CPT codes 50433 and 50434, based on the 
presentation of this additional information. However, based on our 
analysis of the comments, we believe

[[Page 70968]]

that our review of the RUC recommendations would be facilitated by 
consistent use of terminology throughout the information included in 
the recommendations.
    Comment: Several commenters, including the RUC, disagreed with the 
CMS decision to replace the angiography room (EL011) with a 
fluoroscopic room (EL014) for the genitourinary catheter family of 
codes. Commenters stressed that the fluoroscopic room was incapable of 
3-axis rotational imaging, that it would require dangerous movement of 
the patient, and that it presented sterility concerns. Commenters 
further disagreed that use of the angiography room was typically 
limited to cardiovascular procedures. They suggested that looking at 
service utilization, rather than number of CPT codes, indicates that 
non-vascular interventional procedures together comprise more than 50 
percent of utilization of a typical angiography room. Commenters also 
provided a list of the equipment found in an angiography room, and 
stated that everything other than the ``Injector, Provis'' would be 
typically utilized for the genitourinary catheter procedures. As a 
result, the commenters urged CMS to reverse the proposed refinement and 
restore the use of the angiography room for these codes.
    Response: We continue to believe that the use of an angiography 
room would not be typical for these genitourinary catheter procedures. 
The new genitourinary catheter codes in this family are being 
constructed through the bundling of imaging guidance with previously 
existing genitourinary catheter procedures. With the exception of CPT 
code 50398, the direct PE inputs for the predecessor codes do not 
include the use of an angiography room. We do not have reason to 
believe the coding changes related to these procedures would 
necessitate the use of different technology in furnishing the services. 
While it is true that the angiography room was included as a direct PE 
input for some of the predecessor imaging services, such as CPT codes 
77475, 77480, and 77485, the equipment times for these services were 
significantly shorter than the time included for the base procedures, 
where use of the room was not considered to be typical. Given the six 
fold increase in recommended time and the significantly higher expenses 
of the newly recommended equipment versus the equipment costs 
associated with the predecessor codes, we are seeking not only a 
rationale for the use of the angiography room, but also evidence that 
this room is typically used when these services are reported in the 
nonfacility setting.
    Comment: One commenter disagreed with the CMS decision to refine 
the time for clinical labor task ``Clean room/equipment by physician 
staff'' (L041B) from 6 minutes to 3 minutes. The commenter stated that 
there had been a robust discussion of this topic at the RUC meeting, 
and the additional minutes are needed to clean fluids/equipment/etc.
    Response: We continue to believe that the standard time of 3 
minutes for this clinical labor task is more accurate for the 
genitourinary catheter family of codes. We do not believe that these 
procedures typically produce enough external fluids to justify 6 
minutes for room cleaning.
    Comment: Several commenters disagreed with the CMS refinement of 
supplies to remove those that were duplicative of the same supplies 
found in visit packs (SA048) and sedation packs (SA044). Commenters 
stated that the IV starter kit (SA019), endoscope cleaning and 
disinfecting pack (SA042), non-sterile gloves (SB022), sterile gloves 
(SB024), sterile surgical gown (SB028), and three-way stop cock (SC049) 
were not duplicative supplies, as they were used in addition to the 
supplies included in the packs. Commenters requested that these 
supplies be restored to the direct PE inputs for the genitourinary 
catheter codes.
    Response: We agree with the commenters that three sets of sterile 
garments would typically be used for the three medical professionals 
performing the procedure. We are therefore restoring one pair of 
sterile gloves, one sterile surgical gown, one IV starter kit, and one 
three-way stop cock to these codes, consistent with the RUC 
recommendation. We do not believe that the use of two more pairs of 
non-sterile gloves (beyond the two pairs already included in the visit 
pack) would be typical for these procedures. With regards to the 
``endoscope cleaning and disinfecting pack'', our rationale was not 
that this supply was duplicative, but rather that its use would not be 
typical because the genitourinary catheter codes do not make use of an 
endoscope. We did not receive comments that suggested that supply item 
``endoscope cleaning and disinfecting pack'' would typically be used.
    After consideration of comments received, we are finalizing the 
direct PE inputs as proposed, with the addition of the nephroureteral 
catheter for CPT code 50433, the change in clinical labor type from 
L037D to L051A for patient monitoring following service (not related to 
moderate sedation), and the additional four supplies detailed in the 
previous paragraph for CPT codes 50430, 50432, 50433, 50434, 50693, 
50694, and 50695.
(10) Penile Trauma Repair (CPT Codes 54437 and 54438)
    The CPT Editorial Panel created these two new codes because there 
are no existing codes to capture penile traumatic injury that includes 
penile fracture, also known as traumatic corporal tear, and complete 
penile amputation. CPT code 54437 describes a repair of traumatic 
corporeal tear(s), while CPT code 54438 describes a replantation, 
penis, complete amputation.
    In the proposed rule, we stated that we disagreed with the RUC 
recommendation of 24.50 work RVUs for CPT code 54438. We indicated that 
a work RVU of 22.10, corresponding to the 25th percentile survey 
result, was a more accurate value based on the work involved in the 
procedure and within the context of other codes in the same family, 
since CPT code 54437 was also valued using the 25th percentile. We 
found further support for this valuation through a crosswalk to CPT 
code 43334 (Repair, paraesophageal hiatal hernia via thoracotomy, 
except neonatal), which has an identical intraservice time and a work 
RVU of 22.12. Therefore, we proposed a work RVU of 22.10 for CPT code 
54438.
    Because CPT codes 54437 and 54438 are typically performed on an 
emergency basis, in the proposed rule, we questioned the accuracy of 
the standard 60 minutes of preservice clinical labor in the facility 
setting, as we suggested that the typical procedure would not make use 
of office-based clinical labor. We suggested, for example, the typical 
case would require 8 minutes to schedule space in the facility for an 
emergency procedure, or 20 minutes to obtain consent. We solicited 
further public comment on this issue from the RUC and other 
stakeholders.
    The following is a summary of the comments we received on our 
proposals.
    Comment: One commenter urged CMS to accept the RUC-recommended 
value for CPT code 54438 at 24.50 RVUs. This commenter argued that the 
RUC regularly accepts the median survey work RVU for one service and 
the 25th percentile survey result work RVU for another when both are in 
the same code family, particularly when they diverge in length of time. 
The commenter also suggested that reducing the intensity of CPT code 
54438 below its RUC-recommended value of 0.071

[[Page 70969]]

was inappropriate for such a complex and difficult procedure, with an 
unusual patient population that is often schizophrenic and prone to 
self-injury. This commenter emphasized using the RUC-supplied reference 
of CPT code 53448 as justification for the RUC-recommended work RVU.
    Response: We appreciate the presentation of this additional 
information concerning the complexity and intensity of CPT code 54438. 
We agree that the unusual patient population for this procedure 
justifies a higher work RVU than the proposed value. After 
consideration of comments received, we are finalizing our proposed work 
RVU of 11.50 for CPT code 54437, and assigning the RUC-recommended work 
RVU of 24.50 for CPT code 54438.
(11) Intrastromal Corneal Ring Implantation (CPT Code 65785)
    CPT code 65785 is a new code describing insertion of prosthetic 
ring segments into the corneal stroma for treatment of keratoconus in 
patients whose disease has progressed to a degree that they no longer 
tolerate contact lens wear for visual rehabilitation.
    In the proposed rule, we stated that we disagreed with the RUC 
recommendation of a work RVU of 5.93 for CPT code 65785. Although we 
appreciated the extensive list of other codes the RUC provided as 
references, we expressed concern that the recommended value for CPT 
code 65785 overestimated the work involved in furnishing this service 
relative to other PFS services. We did not find any codes with 
comparable intraservice and total time that had a higher work RVU. The 
recommended crosswalk, CPT code 67917 (Repair of ectropion; extensive), 
appears to have the highest work RVU of any 90-day global surgery 
service in this range of work time values. It also has longer 
intraservice time and total time than the code in question, making a 
direct crosswalk unlikely to be accurate.
    As a result, we proposed a work RVU for CPT code 65785 based on the 
intraservice time ratio in relation to the recommended crosswalk. We 
compared the 33 minutes of intraservice time in CPT code 67917 to the 
30 minutes of intraservice time in CPT code 65785. The intraservice 
time ratio between these two codes is 0.91, and when multiplied by the 
work RVU of CPT code 67917 (5.93) resulted in a potential work RVU of 
5.39. We also considered CPT code 58605 (Ligation or transection of 
fallopian tube(s)), which has the same intraservice time, 7 additional 
minutes of total time, and a work RVU of 5.28. In the proposed rule, we 
stated that we believed that CPT code 58605 was a more accurate direct 
crosswalk because it shares the same intraservice time of 30 minutes 
with CPT code 65785. Accordingly, we proposed a work RVU of 5.39 for 
CPT code 65785.
    The RUC recommendation for CPT code 65785 included a series of 
invoices for several new supplies and equipment items. One of these was 
the 10-0 nylon suture with two submitted invoice prices of $245.62 per 
box of 12, or $20.47 per suture, and another was priced at $350.62 per 
box of 12, or $29.22 per suture. Given the range of prices between 
these two invoices, we sought publicly available information and 
identified numerous sutures that appear to be consistent with those 
recommended by the specialty society, at lower prices, which we 
believed were more likely to be typical since we assumed that the 
typical practitioner would seek the best price. One example is 
``Surgical Suture, Black Monofilament, Nylon, Size: 10-0, 12''/30cm, 
Needle: DSL6, 12/bx'' for $146. Therefore, we proposed to establish a 
new supply code for ``suture, nylon 10-0'' and price that item at 
$12.17 each. We welcomed comments from stakeholders regarding this 
supply item.
    The following is a summary of the comments we received on our 
proposals.
    Comment: Several commenters indicated that CMS should reconsider 
its decision and accept the RUC-recommended work RVU of 5.93. These 
commenters stated that the intraservice time ratio used by CMS did not 
account for differences in preservice time, postservice time, or levels 
of physician intensity. Commenters also disagreed with CMS' statement 
that there were no services with a comparable intraservice and total 
time that had a higher work RVU than the RUC-recommended value of 5.93 
for CPT code 65785. The commenters supplied a list of seven CPT codes 
that have a work RVU higher than 5.93 RVUs.
    Response: We continue to believe that the use of intraservice time 
ratios is one of several different methods that can be used to identify 
potential work RVUs. For this particular code, the RUC used a direct 
crosswalk to CPT code 67917 (Repair of ectropion; extensive) to set 
their recommended work RVU at 5.93 RVUs. We do not believe that that 
direct crosswalk was the most accurate way to value CPT code 65785, 
since code 67917 has an intraservice time that is 10 percent longer 
than the intraservice time of CPT code 65785 (33 minutes to 30 
minutes). CPT code 67917 is a clinically similar code which the RUC 
used for its own valuation of CPT code 65785, making it an especially 
good choice for comparative purposes after applying a ratio to 
normalize the intraservice times. We continue to believe that the use 
of an intraservice time ratio resulted in the most accurate value, 
given the difference in time between the two codes.
    As discussed in the proposed rule, all CPT codes with comparable 
time values and the same global period had lower work RVUs than the 
RUC-recommended work RVU of 5.93. While it is true that the seven codes 
provided by the commenters have work RVUs higher than 5.93 RVUs, we do 
not agree that these CPT codes are appropriate for comparative purposes 
with code 65785. CPT code 33768 is an add-on code (global ZZZ) that 
cannot be compared to a code with a 90-day global period such as 65785. 
CPT code 59830 is a Harvard-valued code that has not been subject to 
RUC review, has low utilization (2013 = 7 reported services), and 20 
minutes fewer total time than CPT code 65785. CPT codes 66770 and 67145 
are also Harvard codes which have not been RUC reviewed, and both have 
different intraservice times than 65785, 5 minutes and 10 minutes, 
respectively. CPT codes 67210 and 67220 are the only codes supplied by 
the commenters to be recently reviewed by the RUC, but both of them 
have only 15 minutes intraservice time, limiting their utility for 
comparative purposes with the 30 minutes intraservice time assumed for 
CPT code 65785. Although we accept the commenters' point that other 
codes with work RVUs above 5.93 RVUs do exist, we do not agree that 
codes referenced by commenters have ``comparable intraservice and total 
time'' with CPT code 65785. We continue to believe that scaling the 
RUC's key reference code of 67917 by the intraservice time ratio 
between the two codes provides the most accurate value for CPT code 
65785.
    After consideration of comments received, we are finalizing the 
work RVU and the direct PE inputs for CPT code 65785 as proposed.
(12) Dilation and Probing of Lacrimal and Nasolacrimal Duct (CPT Codes 
66801, 68810, 68811, 68815 and 68816)
    The RUC reviewed 10-day global services and identified 18 services 
with greater than 1.5 office visits and 2012 Medicare utilization data 
over 1,000, including CPT codes 66801, 68810, 68811, 68815, and 68816. 
The RUC requested surveys and reviews of these services for CY 2016.
    As discussed in the proposed rule, the RUC recommended a work RVU 
of 1.00

[[Page 70970]]

for CPT code 68801 and a work RVU of 1.54 for CPT code 68810. Although 
we proposed to use the RUC-recommended work RVU for CPT code 68810, we 
stated that the recommendation for CPT code 68801 did not best reflect 
the work involved in the procedure because of a discrepancy between the 
post-operative work time and work RVU. Specifically, the RUC 
recommendation for the procedure included the removal of a 99211 visit, 
but the RUC-recommended work RVU did not reflect any corresponding 
adjustment. We proposed to accept the RUC's recommendation to remove 
the 99211 visit from the service but proposed to further reduce the 
work RVU for CPT code 68801 by removing the RVUs associated with CPT 
code 99211. Therefore, for CY 2016, we proposed a work RVUs of 0.82 to 
CPT code 68801 and 1.54 to CPT code 68810.
    The RUC recommended a work RVU of 2.03, 3.00, and 2.35 for CPT 
codes 68811, 68815 and 68816, respectively. In the proposed rule, we 
stated that the RUC recommendations for these services do not appear to 
best reflect the work involved in performing these procedures. To value 
these services for the proposed rule, we calculated a total time ratio 
by dividing the code's current total time by the RUC-recommended total 
time, and then applying that ratio to the current work RVU. This 
produced the proposed work RVUs of 1.74, 2.70, and 2.10 for CPT codes 
68811, 68815, and 68816, respectively.
    The following is a summary of the comments we received on our 
proposals.
    Comment: Several commenters, including the RUC, suggested that CMS 
reconsider its decision to not accept the RUC recommendations. The 
commenters believe that using a reverse building block methodology to 
reduce a work RVU for this service is inappropriate since magnitude 
estimation was used to establish the recommended work RVUs for this 
series of codes. Commenters also believe that CMS did not provide 
detailed rationale for the rejection of the RUC-recommended work RVUs 
for CPT codes 68811, 68815 and 68816. Finally, commenters noted that 
the existing IWPUT for each of these three surgical services is below 
0.03, which the commenters believe calls into question the accuracy of 
the existing work time and its usage in deriving a new work RVU.
    Response: We appreciate the commenters' perspectives, but reiterate 
that our proposed values accounted for the changes in the time 
resources assumed to be involved in furnishing these services since 
they were previously valued. We note that the validity of the IWPUT 
alone as a measure of intensity is reliant on the accuracy of the 
assumption regarding the number and level of visits for services in the 
global period for individual services. Therefore, we do not generally 
agree that a low IWPUT itself indicates misvaluation, particularly for 
services with global periods. After considering the comments received, 
we continue to believe that the work RVUs proposed for these codes 
accurately reflect the work involved in furnishing these services.
    Therefore, for CY 2016 we are finalizing work RVUs for CPT codes 
68801, 68810, 68811, 68815, and 68816, as proposed.
(13) Spinal Instability (CPT Codes 72081, 72082, 72083, and 72084)
    For CY 2015, the CPT Editorial Panel deleted codes 72010 
(radiologic examination, spine, entire, survey study, anteroposterior 
and lateral), 72069 (radiologic examination, spine, thoracolumbar, 
standing (scoliosis)), and 72090 (radiological examination, spine; 
scoliosis study, including supine and erect studies), revised one code, 
72080 (Radiologic examination, spine; thoracolumbar junction, minimum 
of 2 views) and created four new codes which cover radiologic 
examination of the entire thoracic and lumbar spine, including the 
skull, cervical and sacral spine if performed. The new codes were 
organized by number of views, ranging from one view in 72081, two to 
three views in 72082, four to five views in 72083, and minimum of six 
views in 72084.
    In the proposed rule, we stated that we did not agree with the 
RUC's recommended work RVUs for the four new codes. For 72081, we noted 
that the one minute increase in time resulted in a larger work RVU than 
would be expected when taking the ratio between time and RVUs in the 
source code and comparing that to the time and work RVU ratio in the 
new code. Using the relationship between time and RVUs from deleted CPT 
code 72069, we proposed a work RVU of 0.26 for CPT code 72081, which 
differs from the RUC-recommended value of 0.30. Using an incremental 
methodology based on the relationship between work and time in the 
first code we proposed to adjust the RUC-recommended work RVUs for CPT 
codes 72082, 72083 and 72084 to 0.31, 0.35, and 0.41, respectively.
    The following is a summary of the comments we received on our 
proposals.
    Comment: Many commenters, including the RUC, disagreed with CMS' 
proposed crosswalk for 72081 and urged CMS to use the RUC 
recommendation. The commenters stated that since CPT code 72069 is 
being deleted due to changes in technology and patient population, it 
is a poor comparison. Other commenters pointed out that CPT code 72081 
typically includes an X-ray of skull, cervical spine, and pelvis and 
therefore is by definition more work than CPT code 72069. CPT code 
72069 is also noted as ``CMS/other'' code in the RUC's time file and 
the times in that file are not divided into time periods as CPT code 
72081 is. One commenter suggested that a more accurate crosswalk was 
CPT code 74020 (Radiologic examination, abdomen; complete, including 
decubitus and/or erect views,) which has a work RVU of 0.30. Using the 
same increments, the commenter suggested that the CMS proposed change 
for CPT code 72081 to 0.26 RVUs would result in an accurate increase in 
work across the family.
    Response: We continue to believe that CPT code 72069 is an accurate 
crosswalk. While CPT code 72069 may not be divided into time periods, 
the ratio between the total time and the RVU adequately reflects the 
relationship between time and intensity in CPT code 72081. Although we 
used CPT code 72069 as a comparison to CPT code 72081, we note that CPT 
code 72081 has a higher work RVU, which accounts for the extra work 
associated with imaging the skull, cervical spine, and pelvis. We do 
not believe that CPT code 74020 would be an accurate crosswalk because 
it describes a radiological examination of the abdomen whereas CPT code 
72069 refers to the same anatomical region as CPT code 72081.
    Therefore, after considering the comments received, we are 
finalizing these work RVUs for 72081, 72082, 72083, and 72084 as 
proposed.
(14) Echo Guidance for Ova Aspiration (CPT Code 76948)
    In the CY 2014 PFS final rule with comment period, we requested 
additional information to assist us in the valuation of ultrasound 
guidance codes. We nominated these codes as potentially misvalued based 
on the extent to which standalone ultrasound guidance codes were billed 
separately from services where ultrasound guidance was an integral part 
of the procedure. CPT code 76948 was among the codes considered 
potentially misvalued. CPT code 76948 was surveyed by the specialty 
societies and the RUC issued a recommendation for CY 2016. In the 
proposed rule, we stated that we had concerns about valuation of this 
code since it is a guidance code

[[Page 70971]]

used only for a single procedure, CPT code 58970 (aspiration of ova), 
and that these two codes are typically billed concurrently. We believe 
CPT codes 76948 and 58970 should be bundled to accurately reflect how 
the service is furnished.
    We proposed to use work times based on refinements of the RUC-
recommended values by removing the 3 minutes of pre and post service 
time since these times are reflected in CPT code 58970. We proposed 
work and time values for 76948 based on a crosswalk from 76945 
(Ultrasonic guidance for chorionic villus sampling, imaging supervision 
and interpretation) which has a work time of 30 minutes and an RVU of 
0.56. Therefore we proposed to maintain 25 minutes of intraservice time 
for CPT code 76948 and proposed a work RVU of 0.56.
    The following is a summary of the comments we received on our 
proposals.
    Comment: Commenters stated that CMS should not have removed the 
work from the pre and post service portions of the service period and 
should restore the RUC-recommended work RVU of 0.85. The commenters 
stated that in the pre service period the physician reviews clinical 
history as well as prior imaging studies, and in the post service 
period the physician reviews and signs final report. The RUC commented 
that CPT codes 58970 and 76945 were billed less than 10 times each in 
2014, and were not billed together in any of those instances. The RUC 
acknowledged that these codes may be billed together under private 
payers and stated they would continue to review codes billed together 
75 percent of the time and bundle them when appropriate.
    Response: We appreciate the commenters' feedback. However, given 
the definition of the codes, we continue to believe that CPT code 76945 
is the image guidance code for CPT code 58970, and that these codes 
would not typically be billed separately. We acknowledge the anomalies 
in the low volume of Medicare claims data but do not believe that data 
likely reflects the way the services are intended to be reported. 
Therefore, any pre- or post-service work would be accounted for in CPT 
code 58970. After considering the comments received, we are finalizing 
a work RVU of 0.56 for CPT code 76945 as proposed.
(15) Surface Radionuclide High Dose Radiation Brachytherapy (CPT Codes 
77767, 77768, 77770, 77771, and 77772)
    In October 2014 the CPT Editorial Panel created five new codes to 
describe high dose radiation (HDR) brachytherapy. We proposed the RUC-
recommended work RVUs of 1.05, 1.40, 1.95, 3.80, and 5.40 respectively, 
for CPT codes 77767, 77768, 77770, 77771, and 77772. The RUC also 
recommended a new PE input, a brachytherapy treatment vault, which we 
proposed to include without modification.
    Comment: Commenters expressed support for CMS' proposed work and 
time values for this family of codes, and for CMS' proposal to add the 
brachytherapy vault as a PE input. Many commenters expressed concern 
for the overall downward trend in reimbursement for brachytherapy 
services, citing a sustained decrease in office-based brachytherapy 
procedures since 2009. The commenters encouraged CMS to enact measures 
to improve this.
    Response: We appreciate commenters' concerns regarding accurate 
payment for brachytherapy services. The revaluation of services under 
the Potentially Misvalued Code Initiative is aimed at achieving the 
most appropriate relative values under the PFS. There is not an 
intentional ``downward trend'' for any particular family of services. 
We remind commenters and stakeholders that disagree with CMS values, 
including those based on RUC recommendations, that in addition to 
submitting comments on our proposed rules, they may also nominate codes 
as potentially misvalued through the public nomination process. We are 
finalizing the values for HDR brachytherapy as proposed.
(16) Immunohistochemistry (CPT Codes 88341, 88342, and 88344)
    As discussed in the proposed rule, in establishing CY 2015 interim 
final direct PE inputs for CPT codes 88341, 88342, and 88344, we 
replaced the RUC-recommended supply item ``UltraView Universal DAB 
Detection Kit'' (SL488) with ``Universal Detection Kit'' (SA117), since 
the RUC recommendation did not provide an explanation for the required 
use of a more expensive kit. We also adjusted the equipment time for 
equipment item ``microscope, compound'' (EP024). We reexamined these 
codes when valuing the immunofluorescence family of codes for CY 2016, 
and reviewed information received by commenters that explained the need 
for these supply items. Specifically, commenters explained that the 
universal detection kit that CMS included in place of the RUC-
recommended kit was not typically used in these services as it was not 
clinically appropriate. We proposed to include the RUC-recommended 
supply item SL488 for CPT codes 88341, 88342, and 88344, as well as the 
RUC-recommended equipment time for ``microscope, compound'' for CY 
2016.
    In establishing interim final work RVUs for this family of codes, 
we refined the RUC recommendation for CPT code 88341 to 0.42, such that 
the work RVU for this add-on code was 60 percent of that of the base 
code 88342 (0.70 work RVUs). We noted that for similar procedures in 
this family, the RUC had recommended work RVUs for add-on codes that 
were 60 percent of the base codes, and that we believed this 
methodology would appropriately value this add-on code. In the proposed 
rule, we reexamined the work RVU for this service in the context of 
reviewing the immunoflurescent studies procedures. In doing so, we 
increased the work RVU of this add-on code to 0.53, which reflected 76 
percent of 0.70, the base code for this service. We discuss our 
rationale for this adjustment in the immunofluorescent studies section 
below. However, we inadvertently omitted the rationale for this 
revision to the work RVU in the proposed rule.
    The following is a summary of the comments we received on our 
proposals.
    Comment: Several commenters, including the RUC, stated their 
appreciation of CMS' reconsideration when reexamining the RUC-
recommended direct PE inputs, ``UltraView Universal DAB Detection Kit'' 
(SL488) and equipment time for the supply item ``microscope, compound'' 
(EP024) for CPT codes 88341, 88342, and 88344 following feedback from 
the public.
    A few commenters also noted that the work RVU for CPT code 88341 
(Immunohistochemistry or immunocytochemistry, per specimen; each 
additional single antibody stain procedure (List separately in addition 
to code for primary procedure) as displayed in Addendum B of the 
proposed rule was inconsistent with the CY 2015 work RVU but was not 
discussed elsewhere in the proposed rule.
    Response: The discussion about the rationale for the increased work 
RVU for CPT code 88341 was inadvertently omitted from the proposed 
rule. Since the proposed rule did not include this discussion, we will 
maintain the interim final status of the CY 2015 work RVU of 0.53 for 
CY 2016 and we are seeking comment on this work RVU during the comment 
period for this final rule with comment period.
(17) Immunofluorescent Studies (CPT Codes 88346 and 88350)
    For CY 2016, the CPT Editorial Panel deleted one code, CPT code 
88347

[[Page 70972]]

(Antibody evaluation), created a new add-on service, CPT code 88350, 
and revised CPT code 88346 to describe immunofluorescent studies. The 
RUC recommended a work RVU of 0.74 for CPT code 88346 and 0.70 for CPT 
code 88350. In the proposed rule, we stated that although we proposed 
to use the RUC recommendation for CPT code 88346, we did not believe 
the recommendation for CPT code 88350 best reflects the work involved 
in the procedure due to our concerns with the relationship between the 
RUC-recommended intraservice times for the base code and the newly 
created add-on code. We examined intraservice time relationships 
between other base codes and add-on codes and found that two codes in 
the Intravascular ultrasound family, CPT code 37250 (Ultrasound 
evaluation of blood vessel during diagnosis or treatment) and CPT code 
37251 (Ultrasound evaluation of blood vessel during diagnosis or 
treatment), share a similar base code/add-on code intraservice time 
relationship, and are also diagnostic in nature, as are CPT codes 88346 
and 88350. Due to these similarities, we believed it was appropriate to 
apply the relationship, which is a 24 percent difference, between CPT 
codes 37250 and 37251 in calculating work RVUs for CPT codes 88346 and 
88350. In the proposed rule, we explained that we multiplied the RVU of 
CPT code 88346, 0.74, by 24 percent, and then subtracted the product 
from 0.74, resulting in a work RVU of 0.56 for CPT code 88350. 
Therefore, for CY 2016, we proposed a work RVU of 0.74 for CPT code 
88346 and 0.56 for CPT code 88350.
    The following is a summary of the comments we received on our 
proposals.
    Comment: Several commenters stated their disagreement with the 
comparison of immunofluorescent studies (CPT codes 88346 and 88350) to 
ultrasound evaluation of blood vessels (CPT Codes 37250 and 37251). 
Commenters specifically stated the ultrasound services are add-on 
services involving initial and additional vessels, whereas CPT codes 
88346 and 88350 involve work related to initial and additional single 
antibody stain procedures. Commenters maintain that the level of work 
required to evaluate the initial stain is nearly identical to the 
second and that no efficiency is gained from the initial to the next 
and, therefore, a reduction in work RVUs for the additional slide would 
be inappropriate.
    Response: We continue to believe that the RVUs should reflect a 
reduction of overall work in each additional antibody stain slide. We 
also note that for CY 2015, we established as interim final a 40 
percent reduction for add-on codes, which we subsequently refined to a 
24 percent reduction in the CY 2016 proposed rule. We have not received 
any alternative recommendations as to the appropriate value for CPT 
code 88350. Therefore, we are finalizing our proposed valuation for CPT 
codes 88346 and 88350.
(18) Morphometric Analysis (CPT Codes 88364, 88365, 88366, 88367, 
88373, 88374, 88377, 88368, and 88369)
    The RUC reviewed and developed recommendations regarding CPT codes 
88367 and 88368. We reviewed and proposed values based on those 
recommended values as discussed in the proposed rule. Subsequently, the 
RUC re-reviewed these services for CY 2016 due to the specialty 
society's initially low survey response rate. In our review of these 
codes, we noticed that the latest RUC recommendation was identical to 
the RUC recommendation provided for CY 2015. Therefore, we proposed to 
retain the CY 2015 work RVUs and work time for CPT codes 88367 and 
88368 for CY 2016.
    For CPT codes 88364 and 88369, we refined the RUC recommendations 
to 0.67 for both procedures, such that the work RVUs for these add-on 
codes was 60 percent of the base codes. We noted that for similar 
procedures in this family, the RUC had previously recommended work RVUs 
for add-on codes that were 60 percent of the base codes, and that we 
believed this methodology would appropriately value these add-on codes. 
In the proposed rule, we reexamined the work RVUs for these services in 
the context of reviewing the immunofluorescent studies procedures. In 
doing so, we increased the work RVUs of these add-on codes to 0.67, 
which reflected 76 percent of 0.88, the work RVUs of the base codes for 
these services. We discuss our rationale for this adjustment in the 
immunofluorescent studies section above. However, we inadvertently 
omitted the rationale for this revision to the work RVU in the proposed 
rule.
    As discussed in the proposed rule, in establishing interim final 
direct PE inputs for CY 2015 for CPT codes 88364, 88365, 88366, 88367, 
88373, 88374, 88377, 88368, and 88369, we refined the RUC-recommended 
direct PE inputs as follows. We refined the units of several supply 
items, including ``ethanol, 100%'' (SL189), ``ethanol, 70%'' (SL190), 
``ethanol, 85%'' (SL191), ``ethanol, 95%'' (SL248), ``kit, FISH 
paraffin pretreatment'' (SL195), ``kit, HER-2/neu DNA Probe'' (SL196), 
positive and negative control slides (SL112, SL118, SL119, SL184, 
SL185, SL508, SL509, SL510, SL511), ``(EBER) DNA Probe Cocktail'' 
(SL497),''Kappa probe cocktails'' (SL498) and ``Lambda probe 
cocktails'' (SL499), to maintain consistency within the codes in the 
family, and adjusted the quantities included in these codes to align 
with the code descriptors and better reflect the typical resources used 
in furnishing these services. We also adjusted the equipment time for 
equipment items ``water bath, FISH procedures (lab)'' (EP054), 
``chamber, Hybridization'' (EP045), ``microscope, compound'' (EP024), 
``instrument, microdissection (Veritas)'' (EP087), and ``ThermoBrite'' 
(EP088), to reflect the typical time the equipment is used, among other 
common refinements.
    For CY 2016, we reexamined these codes when valuing the 
immunofluorescence family of codes, and reviewed information received 
from commenters during the CY 2015 final rule's comment period that 
described the typical batch size for each of these services, which 
identified apparent inconsistencies and discrepancies in the quantity 
of units among the codes in the family. For CY 2016, we proposed to 
include the RUC-recommended quantities for each of these supply items 
for the CPT codes 88364, 88365, 88366, 88367, 88373, 88374, 88377, 
88368, and 88369. With regard to the equipment items, we received 
information explaining that the recommended equipment times already 
accounted for the typical batch size, and thus, the recommended times 
were already reflective of the typical case. Therefore, we proposed to 
adjust the equipment time for equipment items EP054, EP045, and EP087 
to align with the RUC-recommended times. We also received comments 
explaining the need for equipment item EP088. Therefore, we proposed to 
include this equipment item consistent with the RUC recommendations for 
CPT code 88366.
    In the proposed rule, we noted that the information we received 
regarding the typical batch size was critical in determining the 
appropriate direct PE inputs for these pathology services. We also 
noted that we usually do not have information regarding the typical 
batch size or block size when we are reviewing the direct PE inputs for 
pathology services. The supply quantity and equipment minutes are often 
a direct function of the number of tests processed at once. Given the 
importance of the typical number of tests being processed by a 
laboratory in determining the direct PE inputs, which often include 
expensive supplies, we

[[Page 70973]]

expressed concern that the direct PE inputs included in many pathology 
services may not reflect the typical resource costs involved in 
furnishing the typical service.
    In particular, we noted in the proposed rule that since 
laboratories of various sizes furnish pathology tests and that, 
depending on the test, a large laboratory may be at least as likely to 
have furnished a test to a Medicare beneficiary compared to a small 
laboratory, we noted that an equipment item involved in furnishing a 
service that is commercially available to a small laboratory may not be 
the same equipment item that is used in the typical case. If the 
majority of services billed under the PFS for a particular CPT code are 
furnished by laboratories that run many of these tests each day, then 
assumptions informed by commercially available products may 
significantly underestimate the typical number of tests processed 
together, and thus the assumptions underlying current valuations for 
per-test cost of supplies and equipment may be much higher than the 
typical resources used in furnishing the service. We invited 
stakeholders to provide us with information about the equipment and 
supply inputs used in the typical case for particular pathology 
services.
    The following is a summary of the comments we received on our 
proposals.
    Comment: Several commenters, including the RUC, stated their 
disagreement with the methodology utilized in valuing CPT code 88367 
and urged CMS to use survey data and magnitude estimation when 
proposing a work RVU. Commenters also suggested that there should be no 
comparison of intravascular ultrasound services to morphometric 
analysis, immunohistochemistry, immunofluorescence or any pathology 
service. One commenter noted that for CPT code 88374 (Morphometric 
analysis, in situ hybridization (quantitative or semi-quantitative), 
using computer-assisted technology, per specimen; each multiplex probe 
stain procedure), using computer-assisted technology does not replace 
the pathologist's work; it merely refers to computer-aided selection of 
images for the pathologist to review and that the computer does not 
establish the distinction between cancer and non-cancer cells.
    Response: As discussed in the CY 2015 final rule with comment 
period (79 FR 67669), we do not believe the RUC-recommended work RVU of 
0.86 for 88367 (intraservice time = 25 minute) adequately reflects the 
difference in time relative to 88368 (RVU = .88, intraservice time = 30 
minutes). Commenters did not address our concerns about this change in 
time not being reflected in the work RVU for 88367. Therefore, we 
continue to believe 0.73 RVUs accurately reflects the work for CPT code 
88367. With regard to CPT code 88374, while we acknowledge using 
computer-assisted technology does not replace the pathologist's work, 
we continue to believe there are some efficiencies gained with the 
computer assistance. After considering the comments received, for CY 
2016, we are finalizing the values for CPT codes 88367 and 88374 as 
proposed.
    Comment: A commenter noted that the work RVUs for CPT codes 88364 
and 88369 as displayed in Addendum B of the proposed rule were 
inconsistent with the CY 2015 work RVUs, but were not discussed 
elsewhere in the proposed rule.
    Response: As noted above, the discussion about the rationale for 
the increased work RVU was inadvertently omitted from the proposed 
rule. Since the proposed rule did not include this discussion, we will 
maintain the interim final status of the work RVU of 0.76 for CPT codes 
88464 and 88369 for CY 2016 and we are seeking comment on these work 
RVUs during the comment period for this final rule with comment period.
(19) Vestibular Caloric Irrigation (CPT Codes 92537 and 92538)
    For CY 2016, the CPT Editorial Panel deleted CPT code 92543 
(Assessment and recording of balance system during irrigation of both 
ears) and created two new CPT codes, 92537 and 92538, to report caloric 
vestibular testing for bithermal and monothermal testing procedures, 
respectively. The RUC recommended a work RVU of 0.80 for CPT code 92537 
and a work RVU of 0.55 for CPT code 92538. In the proposed rule, we 
stated that we believed that the recommendations for these services 
overstate the work involved in performing these procedures. Due to 
similarity in service and time, we proposed that a direct crosswalk of 
CPT code 97606 (Negative pressure wound therapy, surface area greater 
than 50 square centimeters, per session) to CPT code 92537 accurately 
reflects the total work involved in furnishing the service. To 
establish a proposed value for CPT code 92538, we divided the proposed 
work RVU for 92537 in half since the code descriptor for this procedure 
describes the service as having two irrigations as opposed to the four 
involved in CPT code 92537. Therefore, for CY 2016, we proposed work 
RVUs of 0.60 to CPT code 92537 and 0.30 to CPT code 92538.
    The following is a summary of the comments we received on our 
proposals.
    Comment: Several specialty societies stated their disappointment 
that CMS did not accept the RUC-recommended work RVUs for CPT codes 
92537 and 92538. Commenters stated their objection to the rationale CMS 
used, stating that the rationale ignored the cogent, methodical, and 
thorough approach utilized by the RUC.
    Response: We appreciate the commenters' feedback. However, we 
reiterate that CPT code 67606 has nearly identical intra-service and 
total times as CPT code 92537 and given the similarity in services we 
continue to believe the direct crosswalk from CPT code 97606 to CPT 
code 92537 to be the most accurate. Also, CPT code 92538 describes two 
irrigations which is half the work involved in furnishing the service 
of CPT code 92537. For that reason, we continue to believe it is 
appropriate to establish 92538 with half of the work RVUs of 92537. 
Therefore, for CY 2016 we are finalizing a work RVU of 0.60 for 92537 
and 0.30 for 92538.
(20) Instrument-Based Ocular Screening (CPT Codes 99174 and 99177)
    For CY 2015, the CPT Editorial Panel created a new code, CPT code 
99177, to describe instrument-based ocular screening with on-site 
analysis and also revised existing CPT code 99174, which describes 
instrument-based ocular screening with remote analysis and report. In 
the proposed rule, we stated that CPT code 99174 was currently assigned 
a status indicator of N (non-covered service) which we proposed should 
remain unchanged since this is a screening service. After review of CPT 
code 99177, we proposed that this service was also a screening service 
and should be assigned a status indicator of N (non-covered service). 
Therefore, for CY 2016, we proposed to assign a PFS status indicator of 
N (non-covered service) for CPT codes 99174 and 99177.
    The following is a summary of the comments we received on our 
proposals.
    Comment: A few commenters, including the RUC, stated their 
disagreement with CMS' proposal to assign a status indicator of ``N'' 
(non-covered service). Commenters stated there is a long-standing 
precedent that status indicator ``N,'' codes have had their RUC-
recommended values published in the PFS.
    Response: We continue to believe CPT codes 99174 and 99177 are 
screening

[[Page 70974]]

services and are therefore non-covered services under the Medicare 
program. Therefore, for CY 2016, we are finalizing our proposed 
assignment of a PFS status indicator of N (non-covered service) for CPT 
codes 99174 and 99177. Because we have not reviewed the recommended 
values for these services, we do not believe that we should develop or 
display RVUs for these services. In some cases in the past, we have 
developed and displayed RVUs for codes not separately payable by 
Medicare. However, we note that this practice has not been consistently 
applied and we have concerns about this practice since it is not 
apparent in the display itself that the resulting RVUs do not reflect 
our review or assessment of the recommendations nor do they reflect the 
influence of updated Medicare claims data. However, we understand that, 
for PFS nonpayable services, displaying RVUs that are based solely on 
recommendations may serve an interest for the public. Therefore, we 
will consider for the future how we might reconcile that interest with 
our interest in maintaining a clear distinction between the RVUs that 
result from our established methodology and RVUs that result solely 
from recommended input values.
(21) Lung Cancer Screening Counseling and Shared Decision Making Visit 
and Lung Cancer Screening With Low Dose Computed Tomography (CPT Codes 
G0296 and G0297)
    We issued national coverage determination (NCD) for Medicare 
coverage of a lung cancer screening counseling and shared decision 
making visit, and for appropriate beneficiaries, annual screening with 
low dose computed tomography (LDCT), as an additional preventive 
benefit, effective February 5, 2015. The American College of Radiology 
(ACR) submitted recommendations for work and direct PE inputs.
    We proposed to value CPT code G0296 (Counseling visit to discuss 
need for lung cancer screening (LDCT) using low dose CT scan (service 
is for eligibility determination and shared decision making)) using a 
crosswalk from the work RVU for G0443 (Brief face-to-face counseling 
for alcohol misuse, 15 minutes) which has a work RVU of 0.45. We added 
2 minutes of pre-service time, and one minute post-service time which 
we valued at 0.0224 RVU per minute yielding a total of 0.062 additional 
RVUs which we then added to 0.45, bringing the total proposed work RVUs 
for G0296 to 0.52. The direct PE input recommendations from the ACR 
were refined according to CMS standard refinements and appear in the CY 
2016 proposed direct PE input database.
    For CPT code G0297 (Low dose CT scan (LDCT) for lung cancer 
screening), the ACR recommended that CMS crosswalk CPT code G0297 to 
CPT code 71250 (computed tomography, thorax; without contrast material) 
with additional work added to account for the added intensity of the 
service. After reviewing this recommendation, we stated in our proposal 
that the work (time and intensity) was identical for both CPT code 
G0297 and CPT code 71250. Therefore, we proposed a work RVU of 1.02 for 
CPT code G0297. The following is a summary of the comments we received 
on our proposals.
    Comment: Several commenters stated that the CMS-proposed crosswalk 
for G0296 (Counseling visit to discuss need for lung cancer screening 
(LDCT) using low dose CT scan (service is for eligibility determination 
and shared decision making)) did not accurately reflect the time and 
intensity of furnishing this service. Some commenters suggested that 15 
minutes is not enough time for the practitioner to engage in a 
meaningful conversation with the patient and that the work and time for 
the shared decision making visit should reflect this.
    Response: Because we continue to believe that the cognitive work 
for G0296 is comparable to G0443 and that there is no additional work 
associated with fulfilling the requirements of the NCD, we believe that 
the work and time for the counseling and shared decision making visit 
is included in the values associated with the crosswalk code.
    Comment: For CPT code G0297 (Low dose CT scan (LDCT) for lung 
cancer screening), a few commenters expressed support for our proposed 
work RVUs of 1.02. Several commenters were concerned that the proposed 
crosswalks and work valuations did not adequately reflect the time and 
intensity involved in furnishing these services. The American College 
of Radiology suggested that a lung cancer screening low dose CT 
required greater technical skill and mental effort to make the correct 
diagnosis, and that the baseline increase of malignancy caused greater 
psychological stress for the provider and the additional requirements 
of the NCD add to the intensity of performing these services.
    Response: Reading radiologists that meet the eligibility 
requirements of the NCD have extensive experience interpreting chest 
CTs. For example, the NCD states that among other things, an eligible 
reading radiologist must have been involved in the supervision and 
interpretation of at least 300 chest CT acquisitions in the past 3 
years. Therefore, we do not believe that extra work is involved in 
furnishing the low-dose CT, as compared to CPT code 71250.
    Comment: Several commenters requested CMS clarify that a medically 
necessary E/M visit can be billed on the same day as the lung cancer 
screening counseling and shared decision making visit. Some commenters 
also requested that the shared decision making visit be considered part 
of, or complementary to, the annual wellness visit. Several commenters 
also asked CMS to clarify that the lung cancer LDCT screening and the 
counseling and shared decision making visit are not subject to cost 
sharing since they are preventive services.
    Response: As long as the NCD requirements for the counseling and 
shared decision making visit are met, the counseling visit may be 
billed on the same day as a medically necessary E/M visit or an annual 
wellness visit with the -25 modifier. Practitioners should refer to the 
NCD for information regarding the Medicare coverage requirements for 
the counseling and shared decision making visit. Lung cancer screening 
with LDCT, including a lung cancer screening counseling and shared 
decision making visit, is covered as an additional preventive benefit, 
identified for Medicare coverage through the NCD process. Therefore, 
this benefit meets the criteria in sections 1833(a)(1) and (b)(1) of 
the Act for nonapplication of the deductibles and coinsurance.
    Comment: Many commenters were concerned with the fact that, 
although the NCD was issued in February of 2015, there are no 
instructions for billing services performed prior to 2016.
    Response: CMS is in the process of developing claims processing, 
coding and billing instructions. This information is forthcoming.
    Comment: One commenter asked if the imaging facility would be 
subject to recoupment for a CT if a hospital performed a CT believing 
that the required counseling had occurred, and later it was determined 
that it had not.
    Response: We appreciate this comment. While we acknowledge the 
commenter's concern, we believe that this comment is outside the scope 
of this rulemaking.
    Comment: One commenter requested that the shared decision making 
visit be added to the list of telehealth services.
    Response: We refer readers to section II.I. of this final rule with 
comment period, where we discuss the process for adding services to the 
list of Medicare

[[Page 70975]]

telehealth services. In addition, we note that information about how to 
submit a request to add a service to the telehealth list is available 
on the CMS Web site at www.cms.gov/telehealth.
    Comment: Commenters were concerned that there was a discrepancy in 
reimbursement between the PFS and the OPPS.
    Response: Payments made under the PFS and the OPPS are established 
under different statutory provisions using different bases and 
methodologies, and therefore often result in differential payment 
amounts for similar services.
    Comment: Several commenters pointed out that there were no 
malpractice or PE inputs for G0296 and G0297 in the downloads available 
with the proposed rule.
    Response: We appreciate commenters' attention to detail and we have 
corrected these values in this final rule with comment period.
    After consideration of the comments received, we are finalizing the 
work RVUs for G0296 and G0297 as proposed.
7. Direct PE Input-Only Recommendations
    In CY 2014, we proposed to limit the nonfacility PE RVUs for 
individual codes so that the total nonfacility PFS payment amount would 
not exceed the total combined amount that Medicare would pay for the 
same code in the facility setting. In developing the proposal, we 
sought a reliable means for Medicare to set upper payment limits for 
office-based procedures given our several longstanding concerns 
regarding the accuracy of certain aspects of the direct PE inputs, 
including both items and procedure time assumptions, and prices of 
individual supplies and equipment (78 FR 74248 through 74250). After 
considering the many comments we received regarding our proposal, the 
majority of which urged us to withdraw the proposal for a variety of 
reasons, we decided not to finalize the policy. However, we continue to 
believe that using PE data that are auditable, comprehensive, and 
regularly updated would contribute to the accuracy of PE calculations.
    Subsequent to our decision not to finalize the proposal, the RUC 
forwarded direct PE input recommendations for a subset of codes with 
nonfacility PE RVUs that would have been limited by the policy. Some of 
these codes also include work RVUs, but the RUC recommendations did not 
address the accuracy of those values.
    We generally believe that combined reviews of work and PE for each 
code under the potentially misvalued codes initiative leads to more 
accurate and appropriate assignment of RVUs. We also believe, and have 
previously stated, that our standard process for evaluating potentially 
misvalued codes is unlikely to be the most effective means of 
addressing our concerns regarding the accuracy of some aspects of the 
direct PE inputs (79 FR 74248).
    However, we also believe it is important to use the most accurate 
and up-to-date information available to us when developing PFS RVUs for 
individual services. Therefore, we reviewed the RUC-recommended direct 
PE inputs for these services and proposed to use them, with the 
refinements addressed in this section. However, we also identified 
these codes as potentially misvalued because their direct PE inputs 
were not reviewed alongside review of their work RVUs and time. We 
considered not addressing these recommendations until such time as 
comprehensive reviews could occur, but we recognized the public 
interest in using the updated recommendations regarding the PE inputs 
until such time as the work RVUs and time can be addressed. Therefore, 
we noted that while we proposed adjusted PE inputs for these services 
based on these recommendations, we would anticipate addressing any 
corresponding change to direct PE inputs once the work RVUs and time 
are addressed.
a. Repair of Nail Bed (CPT Code 11760)
    The RUC recommendation for CPT code 11760 included 22 minutes 
assigned to clinical labor task ``Assist physician in performing 
procedure.'' Because CPT code 11760 has 33 minutes of work intraservice 
time, we believe that this clinical labor input was intended to be 
calculated at 67 percent of work time. However, the equipment times 
were also calculated based on the 22 minutes of intraservice time. We 
proposed to use the RUC-recommended equipment times while we solicited 
comments on whether or not it would be appropriate to include the full 
33 minutes of work intraservice time for the equipment.
    Comment: A commenter clarified that the 22 minutes of time for 
clinical labor task ``Assist physician in performing procedure'' was 
indeed intended to represent 67 percent of the physician intraservice 
time of 33 minutes. The commenter agreed that it is appropriate to 
include the full 33 minutes of intraservice time in the equipment time 
calculation.
    Response: We appreciate the clarification of this issue from the 
commenter. After consideration of comments received, we will refine the 
equipment times for CPT code 11760 by adding 11 minutes to each item, 
to reflect the entire intraservice period of 33 minutes.
    Comment: One commenter disagreed with the CMS decision to remove 
pre-service clinical labor time in the non-facility setting. The 
commenter stated that the service is performed more than 33 percent of 
the time in a facility setting, and suggested that CMS should adopt the 
RUC recommendation.
    Response: We continue to believe that this clinical labor task 
would not be performed on a typical basis, as the procedure is most 
frequently done on an emergent basis. We also do not believe that time 
should be allotted for clinical labor task ``Provide pre-service 
education/obtain consent'' in the preservice period, since CPT code 
11760 also includes time for the same clinical labor task in the 
service period. We note that information about the percentage of time a 
service is performed in one setting versus another is not factored into 
our assessment of PE inputs for each setting. After consideration of 
comments received, we are finalizing the direct PE inputs as proposed 
for CPT code 11760, with the additional refinements to equipment time 
discussed above.
b. Simple Repair of Superficial Wounds (CPT Codes 12005, 12006, 12007, 
12013, 12014, 12015, and 12016)
    We refined the time for clinical labor task ``Check dressings & 
wound/home care instructions'' to 3 minutes for each code in this 
family to reflect the standard time for this clinical labor task.
    Comment: One commenter stated that the commenter was unaware that 
there was a standard time for this clinical labor task. The commenter 
stated that a reduction to 3 minutes was not warranted absent an 
identified standard in this regard.
    Response: Three minutes is the generally applied number of minutes 
assigned to the clinical labor task ``Check dressings & wound/home care 
instructions''. In general, we continue to believe that this is the 
most accurate time for this clinical labor task.
    After consideration of comments received, we are finalizing the 
direct PE inputs as proposed for CPT codes 12005, 12006, 12007, 12013, 
12014, 12015, and 12016.
c. Intermediate Repair of Wounds (CPT Codes 12041, 12054, 12055, and 
12057)
    We refined the preservice clinical labor time in the non-facility 
setting to zero minutes, and the information in the proposed rule 
indicated that this refinement was because these codes are emergent 
procedures where certain

[[Page 70976]]

clinical labor tasks would not typically be performed. We also removed 
one of the two suture packs (SA054) from the recommended list of 
supplies, and adjusted the equipment time formulas to reflect the 
established standards.
    Comment: A commenter disagreed with the CMS decision to remove the 
preservice clinical labor time in the non-facility setting. The 
commenter stated that neither the site of service nor the diagnosis 
codes for these services indicate that these are emergency procedures, 
and they are most commonly performed in a non-emergent setting. The 
commenter urged CMS to accept the RUC-recommended times for these 
clinical labor tasks.
    Response: We appreciate the commenter bringing this issue to our 
attention. After reviewing these clinical labor activities again, we 
continue to believe that time for these preservice activities should 
not be included in the non-facility setting. However, our stated 
rationale for this refinement, that this is due to the emergent nature 
of these procedures, was incorrectly stated due to a clerical error. We 
intended to explain that we refined these preservice activities to zero 
minutes because the standard preservice clinical labor for 10-day 
global codes in the non-facility setting is zero minutes for all five 
preservice activities, and there was no additional justification to 
increase the value for this group of codes. We are maintaining this 
refinement to zero minutes.
    Comment: One commenter indicated that CMS incorrectly reduced the 
quantity of suture packs (SA054) from two to one for CPT codes 12055 
and 12057 in the facility setting. CMS stated that there was no 
rationale for the increase in the quantity of this supply and that 
sutures would only be removed one time, but the commenter stated that 
suture removal takes place twice for these procedures, with some of the 
sutures being removed at each of the two office visits. The commenter 
requested that CMS accept the RUC-recommended supply inputs.
    Response: We appreciate the additional information regarding the 
use of suture packs for this procedure. After consideration of comments 
received and based on this presentation of new information, we agree 
that the second suture pack would typically be used in these 
procedures, and we are restoring the quantity of SA054 to two for CPT 
codes 12055 and 12057 in the facility setting.
    After consideration of comments received, we are finalizing the 
direct PE inputs as proposed for CPT codes 12041, 12054, 12055, and 
12057, with the additional refinement to SA054 discussed above.
d. Nasal or Sinus Surgical Endoscopy (CPT Codes 31295, 31296, and 
31297)
    We refined some of the preservice clinical labor times to align 
with standard values, as well as the fact that the decision for surgery 
would have been made on the previous day. We also refined the time for 
clinical labor task ``Sedate/apply anesthesia'' to reflect the 
established standard, refined the quantity of the Afrin nasal spray 
(SJ037) to the amount typical for the procedures, and refined the 
equipment times to conform to our standard policies.
    Comment: A commenter disagreed with the decision by CMS to refine 
the time for clinical labor task ``Sedate/apply anesthesia'' from 5 
minutes to 2 minutes. The commenter stated that 5 minutes would be 
typical for these procedures, since a topical anesthesia requires 
additional time to be applied, the staff typically applies a local 
anesthetic after the initial topical form, and a second application is 
necessary in the majority of patients.
    Response: We continue to believe that the established standard of 2 
minutes for clinical labor task ``Sedate/apply anesthesia'' is the most 
accurate value for these procedures. The RUC recommendations for these 
codes did not provide a rationale for anesthesia times in excess of the 
standard value.
    After consideration of comments received, we are finalizing the 
direct PE inputs for CPT codes 31295, 31296, and 31297 as proposed.
e. Removal of Embedded Foreign Body From Mouth and Pharynx (CPT Codes 
40804 and 42809)
    In the proposed rule, we stated that the ENT suction and pressure 
cabinet (EQ234) would not typically be used during an office visit, and 
we refined the equipment times to remove the minutes associated with 
the office visit. We also refined the quantity of supply item ``suction 
canister'' (SD009) from two to one to reflect the amount typically used 
during these procedures.
    Comment: One commenter indicated that the suction and pressure 
cabinet would be standard in ENT rooms, and would be used to store 
items and equipment to keep them clean. The commenter urged CMS to 
accept the RUC-recommended equipment time for the suction and pressure 
cabinet.
    Response: We include direct PE inputs for items and services that 
are typically involved in furnishing a particular service. The presence 
of the suction and pressure cabinet in the same room where the 
procedure is being performed does not provide sufficient rationale for 
its inclusion in this service since it is not typically used in 
furnishing the service. We continue to believe that the suction and 
pressure cabinet would only be utilized during the intraservice portion 
of CPT codes 40804 and 42809, and not during the follow-up office 
visits.
    Comment: The same commenter stated that these procedures required 
the use of two suction canisters. The commenter explained that one 
suction canister would be used during the intraservice portion of the 
procedure, and the other suction canister would be used during a 
follow-up office visit.
    Response: We continue to believe that the use of a suction and 
pressure cabinet would not be typical for an office visit, and 
therefore there is only a need for one suction canister for these 
procedures. Furthermore, the RUC considered this issue in making its 
recommendations, and found that no suction canister is needed in the 
follow-up visit for the service when furnished in the facility setting. 
We therefore do not believe that the suction and pressure cabinet, with 
a corresponding suction canister, would be typically used during a 
follow-up visit when the procedure is furnished in the non-facility 
setting.
    After consideration of comments received, we are finalizing the 
direct PE inputs as proposed for CPT Codes 40804 and 42809.
f. Cytopathology Fluids, Washings or Brushings and Cytopathology 
Smears, Screening, and Interpretation (CPT Codes 88104, 88106, 88108, 
88112, 88160, 88161, and 88162)
    We proposed to update the price for supply item ``Millipore 
filter'' (SL502) based on stakeholder submission of new information 
following the RUC's original recommendation. As requested, we proposed 
to crosswalk the price of SL502 from the cytology specimen filter 
(Transcyst) supply (SL041) and assign a price of $4.15. The proposed 
direct PE inputs are included in the proposed CY 2016 direct PE input 
database, which is available on the CMS Web site under downloads for 
the CY 2016 PFS final rule with comment period at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html. We also refined the time for clinical 
labor task ``Order, restock, and distribute specimen containers with 
requisition forms'' to zero minutes due to our belief that this task 
was not allocable to individual services and therefore an

[[Page 70977]]

indirect PE under our established methodology.
    As discussed in the proposed rule, we are concerned that there is a 
lack of clarity and the possibility for confusion contained in the CPT 
descriptors of CPT codes 88160 and 88161. The CPT descriptor for the 
first code refers to the ``screening and interpretation'' of 
cytopathology smears, while the descriptor for the second code refers 
to the ``preparation, screening and interpretation'' of cytopathology 
smears. We believe that there is currently the potential for 
duplicative counting of direct PE inputs due to the overlapping nature 
of these two codes. We are concerned that the same procedure may be 
billed multiple times under both CPT code 88160 and 88161. We believe 
that these codes are potentially misvalued, and we are seeking a full 
review of this family of codes for both work and PE, given the 
potential for overlap. We recognize that the ideal solution may involve 
revisions by the CPT Editorial Panel.
    With regard to the current direct PE input recommendations, we 
proposed to remove the clinical labor minutes recommended for ``Stain 
air dried slides with modified Wright stain'' for CPT code 88160 since 
staining slides would not be a typical clinical labor task if no slide 
preparation is taking place, as the descriptor for this code suggests.
    We proposed to update supply item ``protease solution'' (SL506) 
based on stakeholder submission of new information following the RUC's 
original recommendation. As requested, we proposed to change the name 
of the supply to ``Protease'', alter the unit of measurement from 
milliliters to milligrams, change the quantity assigned to CPT code 
88182 from 1 to 1.12, and update the price from $0.47 to $0.4267. These 
changes are reflected in the direct PE input database, which is 
available on the CMS Web site under downloads for the CY 2016 final 
rule with comment period at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.
    Subsequent to receiving these recommendations, we received 
additional recommendations from the RUC for this family of procedures 
following the publication of the CY 2016 PFS proposed rule. We will 
address both recommendations here.
    Comment: A commenter provided an invoice for supply item 
``Millipore filter'' (SL502) to replace the current supply crosswalk to 
the cytology specimen filter (SL041).
    Response: We appreciate the submission of this supply invoice. 
After consideration of comments received, we will update the price of 
supply item ``Millipore filter'' (SL502) in our direct PE inputs 
database from the current value of $4.15 to the submitted invoice price 
of $0.75.
    Comment: A commenter stated that the clinical labor task ``Order, 
restock, and distribute specimen containers with requisition forms'' is 
a direct PE as it is a variable clinical labor task. The commenter 
stated that this task depends on the typical laboratory volume mix for 
each service, and any blanket categorization cannot be justified.
    Response: We continue to believe that the clinical labor task 
``Order, restock, and distribute specimen containers with requisition 
forms'' is an indirect PE, as it is not allocated to any individual 
service. We have defined direct PE inputs as clinical labor, medical 
supplies, or medical equipment that are individually allocable to a 
particular patient for a particular service. For a detailed explanation 
of the direct PE methodology, including examples, we refer readers to 
the CY 2007 PFS final rule with comment period (71 FR 69629). 
Therefore, whether a particular cost is fixed or variable does not 
determine whether it is a direct PE input under the methodology. We 
have removed the recommended 0.5 minutes of time for clinical labor 
task ``Order, restock, and distribute specimen containers with 
requisition forms'' from all seven of these procedures. However, we 
have maintained 0.5 minutes of time for clinical labor task ``Prepare 
specimen containers/preload fixative/label containers/distribute 
requisition form(s) to physician'' from the previous recommendations 
for CPT codes 88160, 88161, and 88162, and added this 0.5 minutes to 
the other four codes in the family to conform with the other codes in 
the family.
    Comment: Several commenters disagreed that there is a lack of 
clarity and possibility for confusion within the cytopathology smears, 
screening and interpretation family. These commenters stated that in 
CPT code 88160, the slide is received in the laboratory typically as a 
spray-fixed and air-dried slide that has not been stained. The slide is 
then stained in the laboratory with the appropriate stain per fixation 
prior to review and interpretation. For CPT code 88161, the laboratory 
must first put the patient material on the slide (that is, prepare the 
slide) then stain it in the laboratory with the appropriate stain per 
fixation prior to review and interpretation. Both codes therefore 
include staining, review and interpretation in the laboratory. 
Commenters did not agree that there was any provider confusion 
concerning these specialized, low volume codes, and stressed that these 
codes did not need to be added to the potentially misvalued code list.
    Response: We appreciate the additional information clarifying the 
nature of the work that takes place during these two procedures.
    Comment: The same commenters did not agree with the refinement to 
the time for clinical labor task ``Stain air dried slides with modified 
Wright stain'' from 5 minutes to 0 minutes for CPT code 88160 and from 
5 minutes to 3 minutes for CPT code 88161. Commenters explained that 
for CPT code 88160, the slides are received in the laboratory typically 
as spray-fixed and air-dried slides that have not been stained. They 
must be stained prior to review and interpretation. For CPT code 88161, 
the laboratory must put the patient material on the slide, followed by 
staining for review and interpretation. Both codes therefore include 
staining, review and interpretation in the laboratory.
    Response: We appreciate the submission of this additional 
information regarding the staining of slides in these procedures. After 
consideration of comments received and based on the submission of this 
additional information, we agree that there should be time for 
allocated for clinical labor task ``Stain air dried slides with 
modified Wright stain'' in CPT code 88160. We later received additional 
recommendations from the RUC that suggested a time of 2 minutes for the 
clinical labor task. We are therefore accepting the time for clinical 
labor task ``Stain air dried slides with modified Wright stain'' at the 
value of 2 minutes in the most recent set of RUC recommendations for 
all seven procedures; we believe that 2 minutes is an accurate standard 
for this clinical labor task.
    Comment: One commenter disagreed with the CMS refinement to the 
clinical labor task ``Prepare automated stainer with solutions and load 
microscopic slides.'' The commenter stated that 4 minutes were 
recommended for this task, which applied specifically to these 
particular CPT codes based on the typical laboratory and efficiency 
assumptions.
    Response: We agree with the commenter that 4 minutes is an accurate 
value for this clinical labor task, but note that we refined the value 
to 4 minutes during our initial review.
    Comment: A commenter recommended that CMS refine the

[[Page 70978]]

equipment time of the solvent recycling system to 2 minutes. The 
commenter expressed the opinion that the use of this equipment is not 
dependent on clinical labor time.
    Response: We continue to believe that the solvent recycling system 
is an indirect PE cost used across numerous services and not 
individually allocated to particular procedures. We have removed the 
clinical labor time associated with the solvent recycling system from 
all seven codes.
    In addition, we have removed the time associated with clinical 
labor task ``Recycle xylene from stainer'' from all of the codes for 
similar reasons. We also noticed what appeared to be an error in the 
amount of non-sterile gloves (SB022), impermeable staff gowns (SB027), 
and eye shields (SM016) assigned to CPT codes 88108 and 88112. The 
recommended value of these supplies was a quantity of 0.2, which we 
believe was intended to be a quantity of 2. We are therefore refining 
the value of these supplies to 2 for CPT codes 88108 and 88112. After 
consideration of comments received, we are finalizing the direct PE 
inputs as proposed for CPT Codes 88104, 88106, 88108, 88160, 88161, and 
88162 with the exception of the refinements to the clinical labor, 
supplies, and equipment described above.
g. Flow Cytometry, Cell Cycle or DNA Analysis (CPT Code 88182)
    We refined many of the clinical labor activities in this procedure 
to align with the typical times included for other recently reviewed 
pathology codes. We requested additional information regarding the use 
of the desktop computer with monitor (ED021) since the RUC 
recommendation did not specify how it is used.
    Comment: One commenter disagreed with the eight refinements that 
CMS made to the clinical labor time for CPT code 88182, and with the 
rationale of using clinical labor standards for pathology activities in 
general. The commenter stated that the time for these clinical labor 
tasks varies for each CPT code, and the RUC-recommended times only 
reflect the time associated with each particular CPT code. The times 
associated with pathology clinical labor activities vary by typical 
laboratory-specific efficiencies, such as batch size. The commenter 
stated that it was inappropriate for CMS to establish standard clinical 
labor times for these clinical labor activities, and urged CMS to 
accept the RUC recommendation for these inputs.
    Response: We refer the reader to section II.A. of this final rule 
for our discussion about clinical labor standards for pathology codes. 
We continue to believe that clinical labor tasks with the same 
description are comparable across different pathology CPT codes. We 
continue to believe that our refinements to clinical labor time ensure 
the most accurate values for these activities, based on a comparison 
with other pathology codes that share these same clinical labor 
activities.
    Comment: Several commenters provided additional information 
concerning the use of the desktop computer with monitor. These 
commenters explained that CPT code 88182 is performed using ploidy 
analysis, by comparing the tumor curve to normal cells. These analyses 
are performed using a dedicated desktop computer with a monitor, which 
is located in the same room and is dedicated to the patient for each 
use.
    Response: We appreciate the submission of additional information 
regarding the use of the desktop computer with monitor. After 
consideration of comments received, we believe that the use of this 
equipment item is typical during this service and will retain this 
equipment item for CPT code 88182. After consideration of comments 
received, we are finalizing the direct PE inputs as proposed for CPT 
Code 88182.
h.. Flow Cytometry, Cytoplasmic Cell Surface (CPT Codes 88184 and 
88185)
    We refined many of the clinical labor activities in these 
procedures to align with the times typically included in other recently 
reviewed pathology codes. We also requested additional information 
regarding the specific use of the desktop computer with monitor (ED021) 
for CPT codes 88184 and 88185 since the recommendation does not specify 
how it is used.
    Comment: Many commenters disagreed with the decrease in direct PE 
inputs for these codes. Commenters emphasized that the CMS proposal for 
these codes reflected reductions in the PE RVUs of 38 percent to CPT 
code 88184 and 69 percent to CPT code 88185. Commenters stated that 
these reductions are unreasonable and could jeopardize patient access 
to care. Several commenters requested that these codes be re-reviewed 
by the RUC process because certain inputs were not considered in the 
original RUC deliberations.
    Response: We agree with the commenters that there were major 
changes to the direct PE inputs for these two procedures. We note that 
almost all of the change in direct PE inputs resulted from RUC 
recommendations. With the exception of the equipment time for the dye 
sublimation color photo printer and the clinical labor activities that 
we refined to bring into accordance with pathology standards, we used 
the RUC-recommended values to develop proposed PE inputs for these 
codes and we believe that they provide the most accurate valuation for 
these services.
    Comment: Several commenters indicated that the pathology 
specialties inadvertently left an equipment item out of their 
recommendation, Flow Cytometry Analytics Software. The commenters 
stated that this software is typically used for both CPT codes 88184 
and 88185, and recommended adding 10 minutes of equipment time to CPT 
code 88184 along with 2 minutes of equipment time for CPT code 88185.
    Response: Equipment time for flow cytometry analytics software is 
not currently included in CPT codes 88184 and 88185, and equipment time 
for this software was not included in the RUC recommendation for these 
procedures. We believe that if there are new direct PE inputs for these 
procedures, the commenter should publicly nominate CPT codes 88184 and 
88185 for further review through the potentially misvalued code 
initiative.
    Comment: Multiple commenters disagreed with the CMS decision to 
refine the time for clinical labor task ``Other Clinical Activity: Load 
specimen into flow cytometer, run specimen, monitor data acquisition, 
and data modeling, and unload flow cytometer.'' The commenters 
requested adding 10 minutes to this clinical labor task for CPT code 
88184 and 2 minutes for CPT code 88185. This additional time would 
reflect the Cytotechnician's time spent using the Cytometry Analytics 
Software to analyze the data generated from the service on a designated 
desktop computer, w-monitor (ED021). The commenters also requested 
adding these additional minutes to the equipment time for the desktop 
computer.
    Response: We continue to believe that 7 minutes is the most 
accurate time for this clinical labor task for CPT code 88184 based on 
a comparison with CPT code 88182, which is another flow cytometry code 
in the same family where we included the recommended 7 minutes of time 
for the same clinical labor task. Since we do not believe that this 
clinical labor time would be typical, we also do not believe that an 
additional 10 minutes would be typical for use of the desktop computer 
with monitor. We continue to believe that the recommended 20 minutes of 
equipment time for the desktop computer with monitor, which is shared 
by CPT code

[[Page 70979]]

88182, is the most accurate value for CPT code 88184.
    Comment: Several commenters stated that the pathology specialties 
inadvertently miscalculated the amount of supply item ``antibody, flow 
cytometry'' (SL186) that are necessary for CPT codes 88184 and 88185. 
The commenters recommended a revised supply quantity of 1.6 for both 
codes instead of the quantity of 1 included in the RUC recommendation.
    Response: CPT codes 88184 and 88185 currently use 1 unit of supply 
SL186, and the recommendation for these procedures also indicated that 
1 unit of supply SL186 is typical. We continue to agree with the RUC 
recommendation that 1 unit of supply SL186 is the most accurate amount 
for these procedures. If the commenter believes that these codes are 
potentially misvalued, then we suggest the submission of a public 
comment following the publication of the CY2016 final rule with comment 
period to nominate CPT codes 88184 and 88185 as a potentially misvalued 
code that could facilitate development of new recommended values.
    Comment: A commenter explained that the equipment time for the dye 
sublimation color photo printer (ED031) is independent of clinical 
labor time. The commenter suggested that CMS should therefore accept 
the RUC recommendation of 5 minutes of equipment time for CPT code 
88184 and 2 minutes for CPT code 88185, instead of the CMS refinement 
of 1 minute chosen to reflect the clinical labor time assigned to 
printing in each procedure.
    Response: We appreciate the commenter bringing this issue to our 
attention. Although we agree with the general principle that equipment 
time for printers may not align with clinical labor time assigned to 
printing, we do not agree that 5 minutes of equipment time would be the 
most accurate value for the dye sublimation color photo printer 
assigned to CPT code 88184. However, we did notice that we 
inadvertently set the equipment time of this printer to 1 minute, when 
it should have been 2 minutes to align with the time for clinical labor 
task ``Print out histograms.'' After consideration of comments 
received, we are refining the equipment time of the dye sublimation 
color photo printer to 2 minutes for CPT code 88184, and maintaining an 
equipment time of 1 minute for the dye sublimation color photo printer 
for CPT code 88185.
    Comment: Several commenters disagreed with the CMS refinement to 
the time for clinical labor task ``Enter data into laboratory 
information system, multiparameter analyses and field data entry, 
complete quality assurance documentation.'' The commenters stated that 
entering this information takes additional time, that these are 
extremely important tasks that require technical skill, and assigning 
zero minutes to this clinical labor task is illogical for a service 
like flow cytometry.
    Response: We have not recognized the laboratory information system 
as an equipment item that can be allocated to an individual service. We 
continue to believe that this is a form of indirect PE, and therefore 
we do not recognize the laboratory information system as a direct PE 
input, as we do not believe this task is typically performed by 
clinical labor for each service.
    Comment: One commenter stated that CMS should accept the RUC 
recommendation of 5 minutes of clinical labor for ``Print out 
histograms, assemble materials with paperwork to pathologists, review 
histograms and gating with pathologists.'' The commenter stated that it 
is not reasonable to expect a cytotechnologist to print out histograms, 
assemble the documents and deliver them to a pathologist, and review 
the histograms with a pathologist, all in the span of 2 minutes. The 
commenter stated that a technologist would not be able to produce a 
high quality product and ensure its accuracy in the clinical labor time 
assigned to this task by CMS.
    Response: We believe that in order to maintain relativity, it is 
important to apply standards to ensure consistency in the time for the 
same clinical labor task among similar procedures. In refining the time 
for this clinical labor task, we examined procedures that included the 
same task, such CPT code 88182, which include 2 minutes for this task. 
Therefore, we continue to believe that 2 minutes is the appropriate 
value for this clinical labor task.
    Comment: A commenter requested that CMS maintain the current 
quantity of supply item ``lysing reagent'' (SL089). The commenter 
indicated that there are increased supply costs associated with the 
newer, more automated flow cytometers, such as additional costs for 
tandem conjugates and other fluorochromes. Although the commenter 
agreed that the new technology may require less lysing reagent 
supplies, they urged CMS to maintain the current supply quantity of 
SL089.
    Response: We believe that the increasing use of new technology 
reduces the need for the same quantity of lysing reagent used in the 
past for these procedures. Since the commenter did not provide a 
rationale for us to maintain the current quantity for supply item SL089 
relative to the actual use of that quantity in furnishing the service, 
we continue to agree that the RUC-recommended quantities of 5 ml for 
CPT code 88184 and 2 ml for CPT code 88185 are the most accurate 
amounts of lysing reagent typically required for these procedures.
    After consideration of comments received, we are finalizing the 
direct PE inputs as proposed for CPT codes 88184 and 88185, with the 
additional refinements to equipment time discussed above.
i. Consultation on Referred Slides and Materials (CPT Codes 88321, 
88323, and 88325)
    We proposed to remove the time for clinical labor task ``Accession 
specimen/prepare for examination'' for CPT codes 88321 and 88325. These 
codes do not involve the preparation of slides, so this clinical labor 
task is duplicative with the labor carried out under ``Open shipping 
package, remove and sort slides based on outside number.'' We proposed 
to maintain the recommended 4 minutes for this clinical labor task for 
CPT code 88323, since it does require slide preparation.
    We proposed to refine the time for clinical labor task ``Register 
the patient in the information system, including all demographic and 
billing information'' from 13 minutes to 5 minutes for all three codes. 
As indicated in Table 6, our standard time for clinical labor task 
``entering patient data'' is 4 minutes for pathology codes, and we 
believe that the extra tasks involving label preparation described in 
this clinical labor task would typically require an additional 1 minute 
to complete. We also believe that the additional recommended time 
likely reflects administrative tasks that are appropriately accounted 
for in the allocation of indirect PE under our established methodology.
    We proposed to refine the time for clinical labor task ``Receive 
phone call from referring laboratory/facility with scheduled procedure 
to arrange special delivery of specimen procurement kit, including 
muscle biopsy clamp as needed. Review with sender instructions for 
preservation of specimen integrity and return arrangements. Contact 
courier and arrange delivery to referring laboratory/facility'' from 7 
minutes to 5 minutes. Based on the description of this task, we 
indicated that we believe that this task would typically take 5 minutes 
to be performed by the Lab Technician.
    We proposed to remove supply item ``eosin solution'' (SL063) from 
CPT code

[[Page 70980]]

88323. We do not agree that this supply would typically be used in this 
procedure, since the eosin solution is redundant when used together 
with supply item ``hematoxylin stain supply'' (SL135). We also refined 
the quantity of SL135 from 32 to 8 for CPT code 88323, to be consistent 
with its use in related procedures.
    We proposed to remove many of the inputs for clinical labor, 
supplies, and equipment for CPT code 88325. The descriptor for this 
code indicates that it does not involve slide preparation, and 
therefore we proposed to refine the labor, supplies, and equipment 
inputs to align with the inputs recommended for CPT code 88321, which 
also does not include the preparation of slides.
    Comment: One commenter disagreed with the CMS refinements and urged 
CMS to accept the RUC recommendations. The commenter stated that the 
clinical labor task ``Accession specimen/prepare for examination'' is 
actually far more time consuming for outside cases than accessioning 
inside cases, due to the need to individually identify and enter each 
slide and block. The commenter disagreed with the CMS proposal to 
remove this clinical labor time for CPT codes 88321 and 88325.
    Response: According to the code descriptors, there is no slide 
preparation taking place in CPT codes 88321 and 88325. These services 
consist of the consultation and review of specimens prepared by another 
practitioner. We continue to believe that accession of specimens would 
not be typical for these procedures, and we therefore maintain that 
time should not be allocated for this clinical labor task. In addition, 
any clinical labor required for preparation of the referred slides is 
already included in the descriptions for other clinical labor tasks 
included for these codes, such as:
     Register the patient in the information system, including 
all demographic and billing information. In addition to standard 
accessioning, enter contributing physician name and address, number of 
slides and the outside case number, etc., into the laboratory 
information system. Print labels for slides, and affix labels to 
slides.
     Print label for outside block and affix to block.
     List and label all accompanying material (imaging on a 
disk, portion of chart, etc.)
    Comment: The commenter also disagreed with the CMS refinement to 
the time for clinical labor task ``Register the patient in the 
information system, including all demographic and billing 
information.'' The commenter stated that these tasks are performed in 
addition to accessioning the specimen and preparing for examination.
    Response: We continue to believe that the typical time for the 
clinical labor task ``accession of specimen'' is 4 minutes, based on 
comparison to other pathology services. We refined the time for this 
clinical labor task to 5 minutes based on our belief that the 
additional tasks involving label preparation would typically take 1 
minute. We also continue to believe that the additional recommended 
time for CPT codes 88321, 88323, and 88325 likely reflects 
administrative tasks that are appropriately accounted for in the 
indirect PE methodology.
    Comment: A commenter disagreed with the proposal to remove the time 
for clinical labor tasks ``Assemble and deliver slides with paperwork 
to pathologists'' and ``Clean equipment while performing service'' for 
CPT code 88323. The commenter stated that the assembling of slides in 
this task was a separate task from the clinical labor associated with 
preparation of materials associated with the non-frozen section 
processing of the specimen. The commenter also stated that for the 
typical laboratory setting, specific equipment must be cleaned and 
maintained immediately after use.
    Response: We continue to believe that these are duplicative 
clinical labor activities. CPT code 88323 already includes time for 
clinical labor task ``Complete workload recording logs. Collate slides 
and paperwork. Deliver to pathologist'' and ``Clean room/equipment 
following procedure.'' We do not believe that there it would be typical 
to assemble slides or clean the room twice.
    Comment: The commenter disagreed with the removal of the eosin 
solution (SL063) from CPT code 88323. The commenter stated that the 
eosin solution would be used for the hematoxylin stain (SL135), and 
elimination of this supply item would likely compromise patient care. 
The commenter also indicated that 32 ml of the hematoxylin stain is 
typical for these services in the typical laboratory setting.
    Response: We appreciate the additional information regarding this 
supply and its importance for staining in this procedure. After 
consideration of comments received, we believe that this is the most 
accurate type of eosin supply for use in this type of slide staining 
because it is most similar to the eosin supply previously used in CPT 
code 88323. Therefore, we are replacing supply SL063 with supply SL201 
(stain, eosin) and restoring a quantity of 8 ml for CPT code 88323. We 
are also refining our proposed quantity of 8 ml of the hematoxylin 
stain to 16 ml for CPT code 88323. The current supply inputs for CPT 
code 88323 have twice the amount of hematoxylin stain compared to 
eosin, 4.8 compared to 2.4, and we are maintaining the same 2:1 ratio.
    Comment: The commenter disagreed with the removal of time for many 
clinical labor tasks in CPT code 88325, such as ``Dispose of remaining 
specimens'', ``Prepare, pack and transport specimens and records for 
in-house storage and external storage'', and several other activities 
related to slide preparation. The commenter objected to the 
standardization of clinical labor tasks across differing pathology 
codes, and stated that these are necessary and integral tasks for this 
service that cannot be eliminated without compromising standards of 
care.
    Response: As the code descriptor indicates for CPT code 88325, we 
continue to believe that there is no slide preparation taking place in 
this procedure. Therefore, we do not believe that clinical labor tasks 
related to the preparation of slides or the disposal of hazardous waste 
materials would typically be performed.
    Comment: The commenter also disagreed with the CMS decision to 
remove supplies and equipment unassociated with slide preparation from 
CPT code 88325. The commenter wrote to indicate that when hematoxylin 
and eosin (H&E) slides are prepared from referred blocks, all technical 
services are performed. The commenter urged that the recommended 
supplies and equipment be restored to CPT code 88325.
    Response: We do not agree that referred materials require the same 
clinical labor, supplies, and equipment as materials prepared locally. 
The vignette for CPT code 88325 states that the pathologist performing 
the service is receiving prepared slides from another laboratory; 
therefore, we do not believe that the use of these supplies and 
equipment associated with slide preparation would be typical for the 
second pathologist performing this consultation.
    After consideration of comments received, we are finalizing the 
direct PE inputs as proposed for CPT Codes 88321, 88323, and 88325, 
with the additional refinement to the eosin stain and hematoxylin stain 
supplies discussed above in CPT code 88323.

[[Page 70981]]

j. Pathology Consultation During Surgery (CPT Codes 88329, 88331, 
88332, 88333, and 88334)
    We refined many of the clinical labor activities in these 
procedures to align with the typical times included in recently 
reviewed pathology codes, in particular the clinical labor times for 
CPT code 88305. We also removed supply item ``H&E stain kit supply'' 
(SL231) and replaced it with supply item ``H&E frozen section stain 
supply'' (SL134) and refined the quantity of the microscope slides 
(SL122) for CPT codes 88333 and 88334.
    Comment: A commenter disagreed with the CMS refinement of these 
clinical labor activities. The commenter stated that clinical labor 
times should not be standardized for pathology services, and that 
although standards may be used as a starting point, the work for 
pathology codes varies depending on the pathology task that is being 
done.
    Response: We refer the reader to our earlier discussion about 
clinical labor standards for pathology codes. We continue to believe 
that clinical labor tasks with the same description are comparable 
across different pathology CPT codes. For these pathology consultation 
codes, we have refined the clinical labor times to bring them into 
accordance with other similar codes, in particular CPT code 88305. For 
example, we do not believe that the time for clinical labor task 
``Assist pathologist with gross specimen examination'' for a 
consultation procedure (as in CPT code 88331) should require more 
clinical labor time than the identical clinical labor task in a tissue 
biopsy procedure (as in CPT code 88305).
    Comment: The same commenter stated that 3 minutes of time for 
clinical labor task ``Clean room/equipment following procedure'' is the 
standard for surgical procedures, and the same clinical labor time 
should be applied to pathology procedures.
    Response: We do not believe that clinical labor times for surgical 
procedures are typically applicable to pathology procedures. We believe 
that it is more accurate to compare clinical labor times for pathology 
procedures to other pathology procedures that utilize the same clinical 
labor tasks. In the case of the clinical labor for ``Clean room/
equipment following procedure'', we continue to believe that 1 minute 
is the standard time for these services, based on a comparison to other 
recently reviewed pathology codes.
    Comment: The commenter stated that the H&E stain supply kit removed 
by CMS is needed to perform the procedure for CPT codes 88331 and 
88332, as the kit is needed to prepare the slides (that is, xylene, 
alcohol, bluing agent, etc). The commenter also stated that the 
preamble text in the CY 2016 PFS proposed rule did not state anything 
specific about this substitution, and that CMS must supply a better 
rational for this proposed change.
    Response: We appreciate the opportunity to clarify our position 
regarding the replacement of the H&E stain supply kit with an H&E 
frozen section stain. We noticed that these procedures had previously 
been performed using 1 H&E frozen section stain, which was removed by 
the RUC in favor of a quantity of 0.1 of supply item ``H&E stain supply 
kit''. Because the RUC recommendation did not explain why the use of an 
H&E stain supply kit would be typical, we believed that it would be 
more accurate to maintain the quantity of 1 for supply item ``H&E 
frozen section stain'' as is currently included in these codes. We 
believe that this maintains relativity with other codes in the family, 
and maintains consistency with other related pathology procedures.
    Comment: A different commenter disagreed with the CMS decision to 
remove the time for clinical labor task ``Prepare room. Filter and 
replenish stains and supplies.'' The commenter stated that this 
dedicated room must be prepared for the next immediate consultation 
after each service; stains must be filtered and changed, while 
cryostats and chucks must be cleaned. The commenter requested the 
restoration of the RUC recommended clinical labor time.
    Response: We continue to believe that the preparation in this 
clinical labor task is duplicative with the clinical labor assigned for 
``Clean room/equipment following procedure.'' We also continue to 
believe that the labor involved in replenishing stains and supplies is 
not allocated to an individual service, and therefore comprises an 
indirect PE.
    After consideration of comments received, we are finalizing the 
direct PE inputs as proposed for CPT Codes 88329, 88331, 88332, 88333, 
and 88334.
k. Morphometric Analysis (CPT Code 88355)
    We refined many of the clinical labor activities in these 
procedures to align with the standard times used by other recently 
reviewed pathology codes, in particular the clinical labor times for 
CPT code 88305. We also removed the equipment time for the ultradeep 
freezer (EP046), as we believe that items used for storage such as 
freezers are more accurately classified as indirect PE.
    Comment: One commenter disagreed with the CMS removal of the 
equipment time for the ultradeep freezer. The commenter stated that the 
use of the ultradeep freezer is specific to CPT code 88355. While other 
specimens may be stored in the same freezer, freezer space is 
unavailable for other specimens or items during storage. Freezer space 
is therefore a variable direct expense dependent upon patient specimen 
caseloads, and should be considered a direct expense for pathology 
services.
    Response: As we stated in the CY 2016 PFS proposed rule (80FR 
41699), we do not believe that minutes should be allocated to items 
such as freezers since the storage of any particular specimen in a 
freezer for any given length of time would be unlikely to make the 
freezer unavailable for storing other specimens. We continue to believe 
that the ultradeep freezer is most accurately classified as an indirect 
PE since freezers can be used for many specimens at once. We refer 
readers to our discussion of direct PE inputs earlier in this section.
    Comment: The same commenter objected to the CMS refinements to 
standard pathology times for clinical labor tasks ``Assemble and 
deliver slides with paperwork to pathologist'', ``Clean room/equipment 
following procedure,'' and ``Receive phone call from referring 
laboratory/facility with scheduled procedure to arrange special 
delivery of specimen procurement kit.'' The commenter indicated their 
disagreement with these refinements and the standardization of 
pathology clinical labor tasks more generally, as the time for these 
tasks varies for each unique service.
    Response: We refer the reader to our earlier discussion about 
clinical labor standards for pathology codes. We continue to believe 
that clinical labor tasks with the same description are comparable 
across different pathology CPT codes. For this morphometric analysis of 
the skeletal muscle procedure, we have refined the clinical labor times 
to bring them into accordance with other similar procedures.
    Comment: The commenter disagreed with the CMS refinement to the 
time for clinical labor task ``Prepare specimen containers/preload 
fixative/label containers/distribute requisition form(s) to 
physician.'' The commenter explained that nerves and muscle typically 
arrive in the laboratory on saline soaked gauze held in a clamp, and 
the tissue requires specialized knowledge to further prepare and

[[Page 70982]]

process it. The commenter stressed that the specimen preparation for 
these services is vastly different than for routine surgical pathology 
specimens where large numbers of specimen containers are prepared at 
one time, and therefore the typical batch size for this type of 
specimen would be one, necessitating the increased time.
    Response: We appreciate the additional description of the clinical 
labor tasks taking place in CPT code 88355 provided by the commenter. 
Based on this presentation of further clinical information and after 
consideration of comments, we believe that additional time for clinical 
labor task ``Prepare specimen containers/preload fixative/label 
containers/distribute requisition form(s) to physician.'' is 
appropriate. We note that the original RUC recommendation included 9 
minutes for this clinical labor task. However, this clinical labor task 
is related to clinical labor task ``Accession specimen/prepare for 
examination''. To avoid duplicative preparation labor, we have assigned 
an additional 4.5 minutes relative to our proposal, for a total of 5 
minutes, of time for clinical labor task ``Prepare specimen containers/
preload fixative/label containers/distribute requisition form(s) to 
physician'' for CPT code 88355.
    Comment: The commenter requested that CMS adopt the RUC-recommended 
time of 4 minutes for clinical labor task for ``Prepare, pack and 
transport specimens and records for storage.'' The commenter explained 
that these specimens are quite unique and require special care and 
handling and the time allocated to this task is typically longer than 
other pathology specimens.
    Response: We appreciate the commenter submission of additional 
information regarding this clinical labor task. After consideration of 
comments received, we believe that it would be more accurate to 
increase the time for this clinical labor task to 3 minutes for CPT 
code 88355, to reflect the additional preparation taking place over the 
typical storage of specimens in other pathology procedures.
    Comment: The commenter disagreed with the CMS decision to remove 
the recommended time for clinical labor task ``Prepare specimen for -70 
degree storage.'' The commenter stated that this task was not on the 
table of standard times for clinical labor tasks associated with 
pathology services included in the CY 2016 PFS proposed rule, and this 
specimen preparation task is unique to CPT code 88355.
    Response: We believe that the resource costs associated with 
storage preparation are accurately accounted for under the minutes 
assigned to the clinical labor tasks ``Prepare, pack and transport 
specimens and records for storage'' for CPT code 88355. We believe that 
the clinical labor associated with preparation for -70 degree storage 
would be duplicative of this clinical labor task. We have also added 
additional time for clinical labor task ``slide storage preparation'' 
under the clinical labor task ``Prepare, pack and transport specimens 
and records for storage'' to reflect the extra storage requirements of 
this procedure.
    Comment: The commenter also disagreed with the CMS decision to 
refine the time for clinical labor task ``Assist pathologist with gross 
examination.'' The commenter wrote that specialty knowledge is required 
to further process the tissue. The tag of nerve or muscle outside the 
clamp must be carefully trimmed by hand with the trimmings going to 
formalin containers. Clinical labor staff is needed to collaborate with 
the pathologist often to prepare the specimen and process the specimen. 
Tissue must be examined and, if too thick, must be further trimmed to 
allow penetration by glutaraldehyde. The properly trimmed, clamped 
tissue can then be transferred to a glutaraldehyde container, which is 
then transferred to a refrigerator for at least 24 hours when it can 
then be processed with further consultation with the pathologist.
    Response: We appreciate the submission of additional clinical 
information regarding the clinical labor utilized in the performance of 
CPT code 88355. However, we do not agree that all of this labor would 
take place during the ``Assist pathologist with gross examination'' 
task. We believe that the information provided by the commenter 
describes several other steps in the procedure, such as ``Measure 
specimen and fix on muscle/nerve clamp'' and ``Process specimen for 
slide preparation'', each task having its own respective clinical labor 
time. In order to avoid the potential for duplicative clinical labor, 
we are maintaining the CMS refinement to 3 minutes for clinical labor 
task for ``Assist pathologist with gross examination'' for CPT code 
88355.
    After consideration of comments received, we are finalizing the 
direct PE inputs as proposed for CPT code 88355, with the additional 
clinical labor refinements discussed above.
l. Morphometric Analysis, Tumor Immunohistochemistry (CPT Codes 88360 
and 88361)
    We refined many of the clinical labor activities in these 
procedures to align with the typical times included in recently 
reviewed pathology codes. We also proposed to update the pricing for 
the Benchmark ULTRA automated slide preparation system (EP112) and the 
E-Bar II Barcode Slide Label System (EP113). Based on stakeholder 
submission of information subsequent to the original RUC 
recommendation, we proposed to reclassify these two pieces of equipment 
as a single item with a price of $150,000, which will use equipment 
code EP112. CPT codes 88360 and 88361 have been valued using this new 
price. The equipment minutes remain unchanged.
    The RUC recommendation for CPT codes 88360 and 88361 included an 
invoice for supply item ``Antibody Estrogen Receptor monoclonal'' 
(SL493). The submitted invoice had a price of $694.70 per box of 50, or 
$13.89 per test. We sought publicly available information regarding 
this supply and identified numerous monoclonal antibody estrogen 
receptors that appear to be consistent with those recommended by the 
specialty society, at publicly available lower prices, which we believe 
are more likely to be typical since we assume that the practitioner 
would seek the best price available to the public. One example is 
Estrogen Receptor Antibody (h-151) [DyLight 405], priced at 100 tests 
per box for $319. Therefore, we proposed to establish a new supply code 
for ``Antibody Estrogen Receptor monoclonal'' and price that item at 
$3.19 each. We welcomed comments from stakeholders regarding this 
supply item.
    Comment: Several commenters disagreed with the CMS refinements to 
the time for clinical labor task ``Enter patient data, computational 
prep for antibody testing, generate and apply bar codes to slides, and 
enter data for automated slide stainer'', ``Verify results and complete 
work load recording logs'', and ``Recycle xylene from tissue processor 
and stainer.'' The commenters stated that entering patient data 
requires far longer than the 1 minute proposed by CMS, and that 
removing the time for clinical labor tasks related to verifying results 
and recycling xylene could result in laboratory disaccreditation or 
errors that are harmful to patients.
    Response: We refer the reader to our earlier discussion about 
clinical labor standards for pathology codes. We continue to believe 
that clinical labor

[[Page 70983]]

tasks with the same description are comparable across different 
pathology CPT codes. We continue to believe it is most accurate to 
allocate zero minutes of time for the task ``Verify results and 
complete work load recording logs'', and ``Recycle xylene from tissue 
processor and stainer'', as we believe that these are indirect PE tasks 
not allocated to any individual service.
    Comment: One commenter provided a list of eight additional clinical 
labor activities for CPT code 88360 and one additional clinical labor 
task for CPT code 88361. The commenter suggested that CMS should 
consider adding these tasks, which were not included in the RUC 
recommendations, into its labor estimates for the two procedures.
    Response: We appreciate the suggestion from the commenter of 
additional tasks that can aid in the performance of IHC special stains. 
We believe that the tasks associated with furnishing particular PFS 
services could be described and categorized in various ways. We believe 
that particular tasks should be considered in the context of 
comprehensive review that allows for an assessment of overall number of 
minutes involved in furnishing the service. If the commenter examines 
the list of clinical labor tasks used by the RUC to develop 
recommendations for these services and finds that many tasks are 
missing, then we believe that the commenter may want to consider 
submitting the codes through the public nomination process of the 
misvalued code initiative to improve the accuracy of the valuations.
    Comment: Another commenter disagreed with CMS' refinement to the 
equipment time of the compound microscope (EP024). The commenter stated 
that this refinement was not discussed in the preamble text, and that 
the time involves 35 minutes of work time plus 1 minute of clinical 
labor time, as described in the RUC recommendation. The commenter asked 
for CMS to accept the RUC recommended equipment time of 36 minutes.
    Response: We note that we did not fully explain our rationale for 
the refinement of equipment time for the compound microscope equipment 
time. We observed that the description of the intraservice work for the 
physician includes many tasks that do not use the microscope. As a 
result, we do not believe that use of the compound microscope would be 
typical for the entire intraservice period. We continue to believe that 
the most accurate equipment time for the compound microscope is 25 
minutes: 24 Minutes for the work time (66 percent of 35 minutes) plus 1 
minute for the technician.
    Comment: Many commenters disagreed with the CMS proposal to price 
supply item ``monoclonal antibody estrogen receptor'' (SL493) at $3.19. 
Commenters stated that this was substantially lower than the submitted 
invoice of $13.89; CMS instead referenced the Estrogen Receptor 
Antibody (h-151) [DyLight 405] for its price of $3.19. Commenters 
stated that this supply is for research use only, and that it is not 
approved for use in humans or in clinical diagnosis. According to the 
commenters, this item is not an alternate reagent for CPT codes 88360 
and 88361, and would not be used for these services.
    Response: We appreciate all of the additional information provided 
by the commenter. The only pricing information that we received for 
SL493 was an invoice that included a hand-written price over redacted 
information. We were unable to verify the accuracy of this invoice. In 
order to price SL493 appropriately, we believe that we need additional 
information. We will use the publicly available price of $3.19 as a 
proxy value pending the submission of additional pricing information. 
We welcome the submission of updated pricing information regarding 
SL493 through valid invoices from commenters and other stakeholders.
    After consideration of comments received, we are finalizing the 
direct PE inputs as proposed for CPT Codes 88360 and 88361.
m. Nerve Teasing Preparations (CPT Code 88362)
    We proposed to refine the recommended time for clinical labor task 
``Assist pathologist with gross specimen examination including the 
following; Selection of fresh unfixed tissue sample; selection of 
tissue for formulant fixation for paraffin blocking and epon blocking. 
Reserve some specimen for additional analysis'' from 10 minutes to 5 
minutes. We noted that the 5 minutes includes 3 minutes for assisting 
the pathologist with the gross specimen examination (as listed in Table 
6 of the proposed rule (80 FR 41698) and an additional 2 minutes for 
the additional tasks due to the work taking place on a fresh specimen.
    Comment: Several commenters disagreed with the CMS decision to 
refine the time for clinical labor task ``Assist pathologist with gross 
specimen examination'' from 10 minutes to 5 minutes. The commenters 
stated that the pathologist must work together with clinical labor 
staff during the gross specimen work, and the clinical labor could not 
be performed in 5 minutes due to the number of specimens involved.
    Response: We continue to believe that the 5 minutes for this 
clinical labor task included 3 minutes for assisting the pathologist 
with the gross specimen examination and an additional 2 minutes for the 
additional tasks due to the work taking place on a fresh specimen. We 
also continue to believe that this is the most accurate value for this 
clinical labor task in the absence of additional data supporting an 
increase in the time for this clinical labor task.
    Comment: These commenters also expressed their disagreement with 
the CMS removal of the recommended time for clinical labor task 
``Consult with pathologist regarding representation needed, block 
selection and appropriate technique.'' Commenters stated that clinical 
labor staff must collaborate with the pathologist in the preservice 
time, and the unique technical protocols required for nerve teasing 
pathology services requires the clinical labor staff to have a complete 
understanding of what is necessary for each individual specimen case. 
Commenters emphasized that nerve teasing pathology services cannot be 
batched as they are complex, low volume unusual studies requiring 
special handling, preparation, and storage.
    Response: We continue to believe that the clinical labor described 
in this clinical labor task constitutes basic knowledge for a 
practicing Histotechnologist. We noted that this clinical labor task 
appears to be unique to CPT code 88362, and does not appear in other 
pathology services. We do not believe it maintains relativity to 
include increasingly specialized clinical labor tasks that are not 
included in similar procedures. We also do not believe that it would be 
typical for the Histotechnologist to require this kind of extensive 
consultation with the pathologist before performing each individual 
procedure, since the technician would have prior knowledge of what he 
or she will be doing.
    Comment: One commenter disagreed with the CMS refinements to 
clinical labor tasks associated with slide preparation. For the 
clinical labor tasks ``Assemble and deliver cedar mounted slides with 
paperwork to pathologists'', ``Assemble other light microscopy slides, 
epon nerve biopsy slides, and clinical history, and present to 
pathologist to prepare clinical pathologic interpretation'', and 
``Dispose of remaining specimens, spent chemicals/other consumables, 
and hazardous waste'', the commenter indicated that there are less 
batch size

[[Page 70984]]

efficiencies with these specimens compared to other typical surgical 
pathology services, and the recommendation for extra clinical labor 
time reflected the need for careful handling of materials.
    Response: We refer the reader to our earlier discussion about 
clinical labor standards for pathology codes. We continue to believe 
that clinical labor tasks with the same description are comparable 
across different pathology CPT codes. The proposed refinement to 0.5 
minutes for these clinical labor tasks reflects the time typically 
included for slide preparation established across many different 
pathology procedures.
    Comment: The same commenter disagreed with the CMS refinement to 
the time for clinical labor tasks ``Preparation: labeling of blocks and 
containers and document location and processor used'' and ``Accession 
specimen and prepare for examination.'' The commenter stated that 
although they agreed with the reduction in time, they disagreed with 
the refinement rationale and the standardization of pathology clinical 
labor tasks, as the time for each task varies for each CPT code.
    Response: We appreciate that the commenter's support for our 
proposal to reduce the clinical labor for these activities. We continue 
to believe that clinical labor tasks with the same description are 
comparable across different pathology CPT codes assuming similar batch 
sizes, and we appreciate further comments as we work to establish 
clinical labor standards across pathology services.
    Comment: The commenter did not agree with the CMS refinement to the 
time for clinical labor task ``Prepare specimen containers preload 
fixative label containers distribute requisition form(s) to 
physician.'' The commenter explained that nerves and muscle typically 
arrive in the laboratory on saline soaked gauze for this procedure. 
Specialty knowledge is required to further prepare and process the 
tissue, and as a result the specimen preparation for CPT code 88362 is 
different from routine surgical pathology specimens where large numbers 
of specimen containers are prepared at one time. The commenter stated 
that the typical batch size for this type of specimen would be one, 
which necessitates the increased time.
    Response: We appreciate the additional description of the clinical 
labor taking place in CPT code 88362 provided by the commenter. Based 
on this presentation of further clinical information, and in order to 
maintain consistency with our refinements to CPT code 88355, we believe 
that additional clinical labor time is appropriate. Since this is the 
same clinical labor task taking place in CPT code 88355, we will also 
assign 5 minutes for ``Prepare specimen containers/preload fixative/
label containers/distribute requisition form(s) to physician'' for CPT 
code 88362 using the same rationale as described for 88355.
    Comment: The commenter also disagreed with the CMS refinements to 
the time for clinical labor task ``Prepare, pack and transport 
specimens and records for in-house storage and external storage'' and 
``Prepare, pack and transport cedar oiled glass slides and records for 
in-house special storage.'' The commenter stressed that the specimens 
used in these labor tasks were unique to CPT code 88362, and therefore 
they cannot be standardized as part of a wider set of clinical labor 
activities for the field of pathology. However, the commenter did agree 
that the clinical labor task ``Prepare, pack and transport specimens 
and records for in-house storage and external storage'' would typically 
take 1 minute, although the typical time in the commenter's specialized 
laboratory would be higher.
    Response: We appreciate the commenter's support for our proposal to 
refine the time for clinical labor task ``Prepare, pack and transport 
specimens and records for in-house storage and external storage''. We 
continue to believe that this and other pathology clinical labor tasks 
more generally, can be standardized across different services. We do 
not believe that there should be time allocated for clinical labor task 
``Prepare, pack and transport cedar oiled glass slides and records for 
in-house special storage'' for this procedure, since there is already 
time for clinical labor tasks related to preparing, packing, and 
transportation of materials.
    Comment: The commenter also did not agree with the CMS removal of 
the recommended time for clinical labor task ``Storage remaining 
specimen. (Osmicated nerve strands, potential for additional teased 
specimens).'' The commenter stated that this clinical labor task was 
not listed anywhere in the proposed rule to explain why CMS believes 
this is a standard clinical labor task. This storage clinical labor 
task is unique to CPT code 88362 and its removal could potentially 
compromise patient care.
    Response: We appreciate this opportunity to clarify our rationale 
regarding the refinement to this clinical labor task. We believe that 
the clinical labor described in this clinical labor task is duplicative 
of the clinical labor described in the task ``Prepare, pack and 
transport specimens and records for in-house storage and external 
storage.'' We do not believe that the use of three different clinical 
labor activities for storage of specimens would be typical for CPT code 
88362.
    After consideration of comments received, we are finalizing the 
direct PE inputs as proposed for CPT code 88362, with the additional 
clinical labor refinements discussed above.
n. Nasopharyngoscopy With Endoscope (CPT Code 92511)
    We proposed to remove the endosheath (SD070) from this procedure, 
because we indicated that we do not believe it would be typically used 
and it was not included in the recommendations for any of the other 
related codes in the same tab. If the endosheath were included as a 
supply with the presentation of additional clinical information, then 
we stated we believed it would be appropriate to remove all of the 
clinical labor and equipment time currently assigned to cleaning the 
scope. We sought public comment regarding the proper use of the 
endosheath supply and the clinical labor associated with scope 
cleaning.
    Comment: Several commenters agreed that the endosheath is not 
typically used for CPT code 92511 and was inadvertently included from 
past direct PE inputs for the service. The commenters stated that after 
removing the endosheath, it was appropriate to retain all the clinical 
labor and equipment time assigned to cleaning the scope. In addition, 
in order to clean the equipment and to be consistent with other codes 
in the family, commenters requested adding four supplies to the code 
associated with scope cleaning, which were excluded previously because 
the endosheath was retained.
    Response: We appreciate the additional clarification from the 
commenters regarding the use of supply item ``endosheath'' for this 
procedure. After consideration of comments received, we agree that it 
is appropriate to retain the clinical labor and equipment time assigned 
to cleaning the scope, as well as include the additional requested 
cleaning supplies. Based on this additional information, we are 
refining the direct PE inputs to include the following supply items: 2 
Endoscope cleaning brushes (SM010), 4 oz. of enzymatic detergent 
(SM015), 4 oz. of glutaraldehyde 3.4% (SM018), and 1 glutaraldehyde 
test strip (SM019).
    Comment: One commenter disagreed with the CMS decision to remove 
the recommended surgical masks,

[[Page 70985]]

impervious staff gowns, and non-sterile drape sheet from the procedure. 
The commenter stated that these supplies were necessary, with one mask 
and gown needed for the physician and one mask and gown needed for the 
staff, since the procedure produces a lot of secretion transmission. 
Therefore, these were not duplicative supplies.
    Response: We appreciate the additional clarification regarding the 
use of these supplies. After consideration of comments received, we are 
restoring these supplies and adding 2 surgical masks (SB033), 2 
impervious staff gowns (SB027), and 1 non-sterile sheet drape (SB006) 
to CPT code 92511 in the non-facility setting.
    After consideration of comments received, we are finalizing the 
direct PE inputs for CPT code 92511, with the additional supply 
refinements described above.
o. EEG Extended Monitoring (CPT Codes 95812 and 95813)
    We refined several of the clinical labor times for CPT codes 95812 
and 95813 to align them with our proposed standards, including refining 
the time for clinical labor task ``Assist physician in performing 
procedure'' to align with the intraservice time of each procedure. We 
also removed the service period time for clinical labor task ``Provide 
pre-service education/obtain consent'' to avoid duplicative clinical 
labor with the same task in the preservice period, and refined several 
of the equipment times to align with the standard equipment times for 
non-highly technical equipment.
    Comment: Some commenters did not agree with the CMS refinement of 
the time for clinical labor task ``Assist physician in performing 
procedure.'' The commenters stated that the practitioner reads the 
patient record subsequently without the technologist present, and that 
the intraservice work time is not temporally equivalent with the tech's 
assist physician clinical labor time. The line ``Assist physician in 
performing procedure'' was used as a surrogate data entry line for 
where to place the technologist's service in performing the testing, 
and it was not meant to be taken literally. The commenter therefore 
requested that CMS adopt the RUC-recommended time for both procedures.
    Response: The RUC recommendation for these procedures explicitly 
stated that CPT code 95812 requires 50 minutes of time for clinical 
labor task ``EEG recording'', and CPT code 95813 requires 80 minutes of 
clinical labor time for the same clinical labor task. We do not believe 
that existing clinical labor tasks should be used as data entry 
surrogates for other tasks, and we do not believe that clinical labor 
time should be allocated to tasks that are not described in the 
submitted recommendations. We continue to believe that this represents 
the clinical labor time which would be spent assisting the physician in 
performing the procedure.
    After consideration of comments received, we are finalizing the 
direct PE inputs as proposed for CPT codes 95812 and 95813.
p. Testing of Autonomic Nervous System Function (CPT Code 95923)
    We proposed to reduce the quantity of supply item ``iontophoresis 
electrode kit'' (SA014) from 4 to 3. According to the description of 
this code, the procedure typically uses 2-4 electrodes, and we 
indicated that we therefore believe that a supply quantity of 3 would 
better reflect the typical case. We requested further information 
regarding the typical number of electrodes used in this procedure; if 
the maximum of 4 electrodes is in fact typical for the procedure, then 
we recommended that the code descriptor be referred to CPT for further 
clarification.
    Comment: Several commenters pointed out that CMS incorrectly 
labeled this section of the CY 2016 PFS proposed rule under the heading 
of ``Needle Electromyography'' with associated CPT codes 95863, 95864, 
95869, and 95870. Commenters inferred that CMS intended to reference 
CPT code 95923 instead of the needle electromyography procedures.
    Response: The commenters are correct, and we agree that we included 
the wrong heading for this part of the CY 2016 PFS proposed rule (80 FR 
41781). We apologize for any confusion caused by this error.
    Comment: The commenters also explained that the use of 4 
iontophoresis electrode kits would be typical for CPT code 95923. 
According to the commenters, several experts in the field of autonomic 
testing confirmed that when providing this service they always, without 
exception, used at least 4 sites of iontophoresis: forearm, proximal 
leg, distal leg, and foot. The commenters therefore maintained that 4 
units of the iontophoresis electrode kit would be the appropriate 
quantity.
    Response: We appreciate the submission of this additional clinical 
information regarding the use of the iontophoresis electrodes. After 
consideration of comments received, we are increasing the quantity of 
the iontophoresis electrode kit (SA014) to 4 for CPT code 95923 in line 
with the recommended value.
    After consideration of comments received, we are finalizing the 
direct PE inputs as proposed for CPT Code 95923, with the additional 
refinement to SA014 discussed above.
q. Central Motor Evoked Study (CPT Codes 95928 and 95929)
    We refined portions of the clinical labor time for CPT codes 95928 
and 95929 as duplicative with other tasks, and refined the time for 
clinical labor task ``Assist physician in performing procedure'' to 
align with the intraservice work duration. We also removed a minimum 
multi-specialty visit pack (SA048) from CPT code 95928 due to the fact 
that it is typically billed with a same-day E/M service, and we refined 
some of the equipment times for both procedures to conform to the 
standard equipment formulas.
    Comment: One commenter disagreed with the CMS decision to refine 
the time for clinical labor task ``Assist physician in performing 
procedure'' to align with the intraservice work time. This commenter 
stated that the technologist sets up the service without the physician 
present, after which the physician enters the room for the main portion 
of the testing. Afterwards, the physician leaves the room and the 
technologist completes the last portion of the procedure without the 
physician present. The commenter indicated that the time for clinical 
labor task ``Assist physician in performing procedure'' and the 
physician intraservice work time were not temporally equivalent, and 
that this clinical labor task was only used as a surrogate data entry 
line for where to place the technologist's service in performing the 
testing, not meant to be taken literally.
    Response: The RUC recommendation for CPT codes 95928 and 95929 
states that the technologist will ``Assist physician in conducting the 
test.'' As a result, we do not believe that the clinical labor assigned 
to ``Assist physician in performing procedure'' was merely a surrogate 
data entry line that was not meant to be taken literally. We do not 
agree that existing clinical labor tasks should be used as data entry 
surrogates for other tasks, and we do not believe that clinical labor 
time should be allocated to tasks that are not described in the 
submitted recommendations. We continue to believe that this clinical 
labor task should align with the intraservice work time, and we are 
maintaining durations of 40 minutes for CPT code 95928 and 95929.

[[Page 70986]]

    After consideration of comments received, we are finalizing the 
direct PE inputs as proposed for CPT codes 95928 and 95929.
r. Blink Reflex Test (CPT Code 95933)
    We added 2 minutes of time for clinical labor task ``Prepare room, 
equipment, supplies'' to CPT code 95933 and refined the time for 
clinical labor task ``Clean room/equipment by physician staff'' to 3 
minutes, in both cases conforming to the established standards for 
these clinical labor tasks.
    Comment: One commenter indicated that the CY 2016 PFS proposed rule 
summary showed a net reduction in PE relative value units for CPT code 
95933, from a 2015 PE RVU of 1.75 to a proposed 2016 PE RVU of 1.50. 
The commenter disagreed with this reduction and stated that they were 
unable identify the source for the proposed reductions.
    Response: To clarify the proposed change in PE for CPT code 95933, 
we note that we believe this reduction is due to two changes in the 
recommended values. We accepted the RUC recommendation to reduce the 
time for clinical labor task ``Assist physician in cleaning area, 
relaxing patient. Take notes from physician'' from 30 minutes to 25 
minutes. We also accepted the RUC recommendation to reduce the quantity 
of supply item ``electrode skin prep gel (NuPrep)'' (SJ022) from 100 ml 
to 10 ml. These two reductions likely account for the reduction in PE 
RVUs.
    After consideration of comments received, we are finalizing the 
direct PE inputs as proposed for CPT code 95933.
8. CY 2015 Interim Final Codes
    In this section, we discuss each code for which we received a 
comment on the CY 2015 interim final work RVU or work time during the 
comment period for the CY 2015 final rule or for which we are modifying 
the CY 2015 interim final work RVU, work time or procedure status 
indicator for CY 2016. If a code in Table 15 is not discussed in this 
section, we did not receive any comments on that code or received only 
comment(s) in support of the CY 2015 interim final status; for those, 
we are finalizing the interim final work RVU and time without 
modification for CY 2016.
    A comprehensive list of all interim final values for which public 
comments were sought in the comment period for the CY 2015 PFS final 
rule is contained in Addendum C to the CY 2015 PFS final rule with 
comment period. We note that the values for some codes with interim 
final values were addressed in the CY 2016 PFS proposed rule (see: 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html), and therefore, are addressed in section 
II.H. of this final rule with comment period. A comprehensive list of 
all CY 2016 RVUs is in Addendum B. All Addenda to the PFS final rule 
with comment period are available on the CMS Web site under downloads 
at http://www.cms.gov/physicianfeesched/PFSFederalRegulationNotices.html/. The time values and direct PE inputs 
for all codes are listed files called ``CY 2016 PFS Work Time,'' and 
``CY 2016 Direct PE Inputs,'' available on the CMS Web site under 
downloads for the CY 2016 PFS final rule with comment period at http://www.cms.gov/physicianfeesched/downloads/.

                       Table 13--CY 2016 Actions on Codes With CY 2015 Interim Final RVUs
----------------------------------------------------------------------------------------------------------------
                                                           CY 2015 interim    CY 2016 work
          HCPCS code                 Long descriptor        final work RVU        RVU           CY 2016 action
----------------------------------------------------------------------------------------------------------------
11980........................  Subcutaneous hormone                  1.10             1.10   Finalize.
                                pellet implantation
                                (implantation of
                                estradiol and/or
                                testosterone pellets
                                beneath the skin).
20604........................  Arthrocentesis, aspiration            0.89             0.89   Finalize.
                                and/or injection, small
                                joint or bursa (e.g.,
                                fingers, toes); with
                                ultrasound guidance, with
                                permanent recording and
                                reporting.
20606........................  Arthrocentesis, aspiration            1.00             1.00   Finalize.
                                and/or injection,
                                intermediate joint or
                                bursa (e.g.,
                                temporomandibular,
                                acromioclavicular, wrist,
                                elbow or ankle, olecranon
                                bursa); with ultrasound
                                guidance, with permanent
                                recording and reporting.
20611........................  Arthrocentesis, aspiration            1.10             1.10   Finalize.
                                and/or injection, major
                                joint or bursa (e.g.,
                                shoulder, hip, knee,
                                subacromial bursa); with
                                ultrasound guidance, with
                                permanent recording and
                                reporting.
20983........................  Ablation therapy for                  7.13             7.13   Finalize.
                                reduction or eradication
                                of 1 or more bone tumors
                                (e.g., metastasis)
                                including adjacent soft
                                tissue when involved by
                                tumor extension,
                                percutaneous, including
                                imaging guidance when
                                performed; cryoablation.
21811........................  Open treatment of rib                10.79            10.79   Finalize.
                                fracture(s) with internal
                                fixation, includes
                                thoracoscopic
                                visualization when
                                performed, unilateral; 1-
                                3 ribs.
21812........................  Open treatment of rib                13.00            13.00   Finalize.
                                fracture(s) with internal
                                fixation, includes
                                thoracoscopic
                                visualization when
                                performed, unilateral; 4-
                                6 ribs.
21813........................  Open treatment of rib                17.61            17.61   Finalize.
                                fracture(s) with internal
                                fixation, includes
                                thoracoscopic
                                visualization when
                                performed, unilateral; 7
                                or more ribs.
22510........................  Percutaneous                          8.15             8.15   Finalize.
                                vertebroplasty (bone
                                biopsy included when
                                performed), 1 vertebral
                                body, unilateral or
                                bilateral injection,
                                inclusive of all imaging
                                guidance; cervicothoracic.
22511........................  Percutaneous                          7.58             7.58   Finalize.
                                vertebroplasty (bone
                                biopsy included when
                                performed), 1 vertebral
                                body, unilateral or
                                bilateral injection,
                                inclusive of all imaging
                                guidance; lumbosacral.
22512........................  Percutaneous                          4.00             4.00   Finalize.
                                vertebroplasty (bone
                                biopsy included when
                                performed), 1 vertebral
                                body, unilateral or
                                bilateral injection,
                                inclusive of all imaging
                                guidance; each additional
                                cervicothoracic or
                                lumbosacral vertebral
                                body (List separately in
                                addition to code for
                                primary procedure).
22513........................  Percutaneous vertebral                8.90             8.90   Finalize.
                                augmentation, including
                                cavity creation (fracture
                                reduction and bone biopsy
                                included when performed)
                                using mechanical device
                                (e.g., kyphoplasty), 1
                                vertebral body,
                                unilateral or bilateral
                                cannulation, inclusive of
                                all imaging guidance;
                                thoracic.

[[Page 70987]]

 
22514........................  Percutaneous vertebral                8.24             8.24   Finalize.
                                augmentation, including
                                cavity creation (fracture
                                reduction and bone biopsy
                                included when performed)
                                using mechanical device
                                (e.g., kyphoplasty), 1
                                vertebral body,
                                unilateral or bilateral
                                cannulation, inclusive of
                                all imaging guidance;
                                lumbar.
22515........................  Percutaneous vertebral                4.00             4.00   Finalize.
                                augmentation, including
                                cavity creation (fracture
                                reduction and bone biopsy
                                included when performed)
                                using mechanical device
                                (e.g., kyphoplasty), 1
                                vertebral body,
                                unilateral or bilateral
                                cannulation, inclusive of
                                all imaging guidance;
                                each additional thoracic
                                or lumbar vertebral body
                                (List separately in
                                addition to code for
                                primary procedure).
22856........................  Total disc arthroplasty              24.05            24.05   Finalize.
                                (artificial disc),
                                anterior approach,
                                including discectomy with
                                end plate preparation
                                (includes osteophytectomy
                                for nerve root or spinal
                                cord decompression and
                                microdissection); single
                                interspace, cervical.
22858........................  Total disc arthroplasty               8.40             8.40   Finalize.
                                (artificial disc),
                                anterior approach,
                                including discectomy with
                                end plate preparation
                                (includes osteophytectomy
                                for nerve root or spinal
                                cord decompression and
                                microdissection); second
                                level, cervical (List
                                separately in addition to
                                code for primary
                                procedure).
27279........................  Arthrodesis, sacroiliac               9.03             9.03   See II.J.5.a.
                                joint, percutaneous or
                                minimally invasive
                                (indirect visualization),
                                with image guidance,
                                includes obtaining bone
                                graft when performed, and
                                placement of transfixing
                                device.
29200........................  Strapping; thorax.........            0.39             0.39   Finalize.
29240........................  Strapping; shoulder (e.g.,            0.39             0.39   Finalize.
                                Velpeau).
29260........................  Strapping; elbow or wrist.            0.39             0.39   Finalize.
29280........................  Strapping; hand or finger.            0.39             0.39   Finalize.
29520........................  Strapping; hip............            0.39             0.39   Finalize.
29530........................  Strapping; knee...........            0.39             0.39   Finalize.
31620........................  Endobronchial ultrasound              1.40   ...............  Deleted.
                                (EBUS) during
                                bronchoscopic diagnostic
                                or therapeutic
                                intervention(s) (List
                                separately in addition to
                                code for primary
                                procedure[s]).
33215........................  Repositioning of                      4.92             4.92   Finalize.
                                previously implanted
                                transvenous pacemaker or
                                implantable defibrillator
                                (right atrial or right
                                ventricular) electrode.
33216........................  Insertion of a single                 5.87             5.87   Finalize.
                                transvenous electrode,
                                permanent pacemaker or
                                implantable defibrillator.
33217........................  Insertion of 2 transvenous            5.84             5.84   Finalize.
                                electrodes, permanent
                                pacemaker or implantable
                                defibrillator.
33218........................  Repair of single                      6.07             6.07   Finalize.
                                transvenous electrode,
                                permanent pacemaker or
                                implantable defibrillator.
33220........................  Repair of 2 transvenous               6.15             6.15   Finalize.
                                electrodes for permanent
                                pacemaker or implantable
                                defibrillator.
33223........................  Relocation of skin pocket             6.55             6.55   Finalize.
                                for implantable
                                defibrillator.
33224........................  Insertion of pacing                   9.04             9.04   Finalize.
                                electrode, cardiac venous
                                system, for left
                                ventricular pacing, with
                                attachment to previously
                                placed pacemaker or
                                implantable defibrillator
                                pulse generator
                                (including revision of
                                pocket, removal,
                                insertion, and/or
                                replacement of existing
                                generator).
33225........................  Insertion of pacing                   8.33             8.33   Finalize.
                                electrode, cardiac venous
                                system, for left
                                ventricular pacing, at
                                time of insertion of
                                implantable defibrillator
                                or pacemaker pulse
                                generator (e.g., for
                                upgrade to dual chamber
                                system) (List separately
                                in addition to code for
                                primary procedure).
33240........................  Insertion of implantable              6.05             6.05   Finalize.
                                defibrillator pulse
                                generator only; with
                                existing single lead.
33241........................  Removal of implantable                3.29             3.29   Finalize.
                                defibrillator pulse
                                generator only.
33243........................  Removal of single or dual            23.57            23.57   Finalize.
                                chamber implantable
                                defibrillator
                                electrode(s); by
                                thoracotomy.
33244........................  Removal of single or dual            13.99            13.99   Finalize.
                                chamber implantable
                                defibrillator
                                electrode(s); by
                                transvenous extraction.
33249........................  Insertion or replacement             15.17            15.17   Finalize.
                                of permanent implantable
                                defibrillator system,
                                with transvenous lead(s),
                                single or dual chamber.
33262........................  Removal of implantable                6.06             6.06   Finalize.
                                defibrillator pulse
                                generator with
                                replacement of
                                implantable defibrillator
                                pulse generator; single
                                lead system.
33263........................  Removal of implantable                6.33             6.33   Finalize.
                                defibrillator pulse
                                generator with
                                replacement of
                                implantable defibrillator
                                pulse generator; dual
                                lead system.
33270........................  Insertion or replacement              9.10             9.10   Finalize.
                                of permanent subcutaneous
                                implantable defibrillator
                                system, with subcutaneous
                                electrode, including
                                defibrillation threshold
                                evaluation, induction of
                                arrhythmia, evaluation of
                                sensing for arrhythmia
                                termination, and
                                programming or
                                reprogramming of sensing
                                or therapeutic
                                parameters, when
                                performed.
33271........................  Insertion of subcutaneous             7.50             7.50   Finalize.
                                implantable defibrillator
                                electrode.
33272........................  Removal of subcutaneous               5.42             5.42   Finalize.
                                implantable defibrillator
                                electrode.

[[Page 70988]]

 
33273........................  Repositioning of                      6.50             6.50   Finalize.
                                previously implanted
                                subcutaneous implantable
                                defibrillator electrode.
33418........................  Transcatheter mitral valve           32.25            32.25   Finalize.
                                repair, percutaneous
                                approach, including
                                transseptal puncture when
                                performed; initial
                                prosthesis.
33419........................  Transcatheter mitral valve            7.93             7.93   Finalize.
                                repair, percutaneous
                                approach, including
                                transseptal puncture when
                                performed; additional
                                prosthesis(es) during
                                same session (List
                                separately in addition to
                                code for primary
                                procedure).
33946........................  Extracorporeal membrane               6.00             6.00   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; initiation,
                                veno-venous.
33947........................  Extracorporeal membrane               6.63             6.63   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; initiation,
                                veno-arterial.
33949........................  Extracorporeal membrane               4.60             4.60   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; daily
                                management, each day,
                                veno-arterial.
33951........................  Extracorporeal membrane               8.15             8.15   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; insertion
                                of peripheral (arterial
                                and/or venous)
                                cannula(e), percutaneous,
                                birth through 5 years of
                                age (includes
                                fluoroscopic guidance,
                                when performed).
33952........................  Extracorporeal membrane               8.15             8.15   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; insertion
                                of peripheral (arterial
                                and/or venous)
                                cannula(e), percutaneous,
                                6 years and older
                                (includes fluoroscopic
                                guidance, when performed).
33953........................  Extracorporeal membrane               9.11             9.11   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; insertion
                                of peripheral (arterial
                                and/or venous)
                                cannula(e), open, birth
                                through 5 years of age.
33954........................  Extracorporeal membrane               9.11             9.11   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; insertion
                                of peripheral (arterial
                                and/or venous)
                                cannula(e), open, 6 years
                                and older.
33955........................  Extracorporeal membrane              16.00            16.00   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; insertion
                                of central cannula(e) by
                                sternotomy or
                                thoracotomy, birth
                                through 5 years of age.
33956........................  Extracorporeal membrane              16.00            16.00   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; insertion
                                of central cannula(e) by
                                sternotomy or
                                thoracotomy, 6 years and
                                older.
33957........................  Extracorporeal membrane               3.51             3.51   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; reposition
                                peripheral (arterial and/
                                or venous) cannula(e),
                                percutaneous, birth
                                through 5 years of age
                                (includes fluoroscopic
                                guidance, when performed).
33958........................  Extracorporeal membrane               3.51             3.51   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; reposition
                                peripheral (arterial and/
                                or venous) cannula(e),
                                percutaneous, 6 years and
                                older (includes
                                fluoroscopic guidance,
                                when performed).
33959........................  Extracorporeal membrane               4.47             4.47   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; reposition
                                peripheral (arterial and/
                                or venous) cannula(e),
                                open, birth through 5
                                years of age (includes
                                fluoroscopic guidance,
                                when performed).
33962........................  Extracorporeal membrane               4.47             4.47   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; reposition
                                peripheral (arterial and/
                                or venous) cannula(e),
                                open, 6 years and older
                                (includes fluoroscopic
                                guidance, when performed).
33963........................  Extracorporeal membrane               9.00             9.00   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; reposition
                                of central cannula(e) by
                                sternotomy or
                                thoracotomy, birth
                                through 5 years of age
                                (includes fluoroscopic
                                guidance, when performed).
33964........................  Extracorporeal membrane               9.50             9.50   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; reposition
                                central cannula(e) by
                                sternotomy or
                                thoracotomy, 6 years and
                                older (includes
                                fluoroscopic guidance,
                                when performed).
33965........................  Extracorporeal membrane               3.51             3.51   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; removal of
                                peripheral (arterial and/
                                or venous) cannula(e),
                                percutaneous, birth
                                through 5 years of age.
33966........................  Extracorporeal membrane               4.50             4.50   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; removal of
                                peripheral (arterial and/
                                or venous) cannula(e),
                                percutaneous, 6 years and
                                older.
33969........................  Extracorporeal membrane               5.22             5.22   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; removal of
                                peripheral (arterial and/
                                or venous) cannula(e),
                                open, birth through 5
                                years of age.

[[Page 70989]]

 
33984........................  Extracorporeal membrane               5.46             5.46   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; removal of
                                peripheral (arterial and/
                                or venous) cannula(e),
                                open, 6 years and older.
33985........................  Extracorporeal membrane               9.89             9.89   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; removal of
                                central cannula(e) by
                                sternotomy or
                                thoracotomy, birth
                                through 5 years of age.
33986........................  Extracorporeal membrane              10.00            10.00   Finalize.
                                oxygenation (ECMO)/
                                extracorporeal life
                                support (ECLS) provided
                                by physician; removal of
                                central cannula(e) by
                                sternotomy or
                                thoracotomy, 6 years and
                                older.
33987........................  Arterial exposure with                4.04             4.04   Finalize.
                                creation of graft conduit
                                (e.g., chimney graft) to
                                facilitate arterial
                                perfusion for ECMO/ECLS
                                (List separately in
                                addition to code for
                                primary procedure).
33988........................  Insertion of left heart              15.00            15.00   Finalize.
                                vent by thoracic incision
                                (e.g., sternotomy,
                                thoracotomy) for ECMO/
                                ECLS.
33989........................  Removal of left heart vent            9.50             9.50   Finalize.
                                by thoracic incision
                                (e.g., sternotomy,
                                thoracotomy) for ECMO/
                                ECLS.
34839........................  Physician planning of a                  B                B   Finalize.
                                patient-specific
                                fenestrated visceral
                                aortic endograft
                                requiring a minimum of 90
                                minutes of physician time.
34841........................  Endovascular repair of                    C                C  Finalize.
                                visceral aorta (e.g.,
                                aneurysm, pseudoaneurysm,
                                dissection, penetrating
                                ulcer, intramural
                                hematoma, or traumatic
                                disruption) by deployment
                                of a fenestrated visceral
                                aortic endograft and all
                                associated radiological
                                supervision and
                                interpretation, including
                                target zone angioplasty,
                                when performed; including
                                one visceral artery
                                endoprosthesis (superior
                                mesenteric, celiac or
                                renal artery).
34842........................  Endovascular repair of                    C                C  Finalize.
                                visceral aorta (e.g.,
                                aneurysm, pseudoaneurysm,
                                dissection, penetrating
                                ulcer, intramural
                                hematoma, or traumatic
                                disruption) by deployment
                                of a fenestrated visceral
                                aortic endograft and all
                                associated radiological
                                supervision and
                                interpretation, including
                                target zone angioplasty,
                                when performed; including
                                two visceral artery
                                endoprostheses (superior
                                mesenteric, celiac and/or
                                renal artery[s]).
34843........................  Endovascular repair of                    C                C  Finalize.
                                visceral aorta (e.g.,
                                aneurysm, pseudoaneurysm,
                                dissection, penetrating
                                ulcer, intramural
                                hematoma, or traumatic
                                disruption) by deployment
                                of a fenestrated visceral
                                aortic endograft and all
                                associated radiological
                                supervision and
                                interpretation, including
                                target zone angioplasty,
                                when performed; including
                                three visceral artery
                                endoprostheses (superior
                                mesenteric, celiac and/or
                                renal artery[s]).
34844........................  Endovascular repair of                    C                C  Finalize.
                                visceral aorta (e.g.,
                                aneurysm, pseudoaneurysm,
                                dissection, penetrating
                                ulcer, intramural
                                hematoma, or traumatic
                                disruption) by deployment
                                of a fenestrated visceral
                                aortic endograft and all
                                associated radiological
                                supervision and
                                interpretation, including
                                target zone angioplasty,
                                when performed; including
                                four or more visceral
                                artery endoprostheses
                                (superior mesenteric,
                                celiac and/or renal
                                artery[s]).
34845........................  Endovascular repair of                    C                C  Finalize.
                                visceral aorta and
                                infrarenal abdominal
                                aorta (e.g., aneurysm,
                                pseudoaneurysm,
                                dissection, penetrating
                                ulcer, intramural
                                hematoma, or traumatic
                                disruption) with a
                                fenestrated visceral
                                aortic endograft and
                                concomitant unibody or
                                modular infrarenal aortic
                                endograft and all
                                associated radiological
                                supervision and
                                interpretation, including
                                target zone angioplasty,
                                when performed; including
                                one visceral artery
                                endoprosthesis (superior
                                mesenteric, celiac or
                                renal artery).
34846........................  Endovascular repair of                    C                C  Finalize.
                                visceral aorta and
                                infrarenal abdominal
                                aorta (e.g., aneurysm,
                                pseudoaneurysm,
                                dissection, penetrating
                                ulcer, intramural
                                hematoma, or traumatic
                                disruption) with a
                                fenestrated visceral
                                aortic endograft and
                                concomitant unibody or
                                modular infrarenal aortic
                                endograft and all
                                associated radiological
                                supervision and
                                interpretation, including
                                target zone angioplasty,
                                when performed; including
                                two visceral artery
                                endoprostheses (superior
                                mesenteric, celiac and/or
                                renal artery[s]).
34847........................  Endovascular repair of                    C                C  Finalize.
                                visceral aorta and
                                infrarenal abdominal
                                aorta (e.g., aneurysm,
                                pseudoaneurysm,
                                dissection, penetrating
                                ulcer, intramural
                                hematoma, or traumatic
                                disruption) with a
                                fenestrated visceral
                                aortic endograft and
                                concomitant unibody or
                                modular infrarenal aortic
                                endograft and all
                                associated radiological
                                supervision and
                                interpretation, including
                                target zone angioplasty,
                                when performed; including
                                three visceral artery
                                endoprostheses (superior
                                mesenteric, celiac and/or
                                renal artery[s]).

[[Page 70990]]

 
34848........................  Endovascular repair of                    C                C  Finalize.
                                visceral aorta and
                                infrarenal abdominal
                                aorta (e.g., aneurysm,
                                pseudoaneurysm,
                                dissection, penetrating
                                ulcer, intramural
                                hematoma, or traumatic
                                disruption) with a
                                fenestrated visceral
                                aortic endograft and
                                concomitant unibody or
                                modular infrarenal aortic
                                endograft and all
                                associated radiological
                                supervision and
                                interpretation, including
                                target zone angioplasty,
                                when performed; including
                                four or more visceral
                                artery endoprostheses
                                (superior mesenteric,
                                celiac and/or renal
                                artery[s]).
36475........................  Endovenous ablation                   5.30             5.30   See II.J.5.a
                                therapy of incompetent
                                vein, extremity,
                                inclusive of all imaging
                                guidance and monitoring,
                                percutaneous,
                                radiofrequency; first
                                vein treated.
36476........................  Endovenous ablation                   2.65             2.65   See II.J.5.a
                                therapy of incompetent
                                vein, extremity,
                                inclusive of all imaging
                                guidance and monitoring,
                                percutaneous,
                                radiofrequency; second
                                and subsequent veins
                                treated in a single
                                extremity, each through
                                separate access sites
                                (List separately in
                                addition to code for
                                primary procedure).
36478........................  Endovenous ablation                   5.30             5.30   See II.J.5.a.
                                therapy of incompetent
                                vein, extremity,
                                inclusive of all imaging
                                guidance and monitoring,
                                percutaneous, laser;
                                first vein treated.
36479........................  Endovenous ablation                   2.65             2.65   See II.J.5.a.
                                therapy of incompetent
                                vein, extremity,
                                inclusive of all imaging
                                guidance and monitoring,
                                percutaneous, laser;
                                second and subsequent
                                veins treated in a single
                                extremity, each through
                                separate access sites
                                (List separately in
                                addition to code for
                                primary procedure).
36818........................  Arteriovenous anastomosis,           12.39            12.39   Finalize.
                                open; by upper arm
                                cephalic vein
                                transposition.
36819........................  Arteriovenous anastomosis,           13.29            13.29   Finalize.
                                open; by upper arm
                                basilic vein
                                transposition.
36820........................  Arteriovenous anastomosis,           13.07            13.07   Finalize.
                                open; by forearm vein
                                transposition.
36821........................  Arteriovenous anastomosis,           11.90            11.90   Finalize.
                                open; direct, any site
                                (e.g., Cimino type)
                                (separate procedure).
36825........................  Creation of arteriovenous            14.17            14.17   Finalize.
                                fistula by other than
                                direct arteriovenous
                                anastomosis (separate
                                procedure); autogenous
                                graft.
36830........................  Creation of arteriovenous            12.03            12.03   Finalize.
                                fistula by other than
                                direct arteriovenous
                                anastomosis (separate
                                procedure); nonautogenous
                                graft (e.g., biological
                                collagen, thermoplastic
                                graft).
36831........................  Thrombectomy, open,                  11.00            11.00   Finalize.
                                arteriovenous fistula
                                without revision,
                                autogenous or
                                nonautogenous dialysis
                                graft (separate
                                procedure).
36832........................  Revision, open,                      13.50            13.50   Finalize.
                                arteriovenous fistula;
                                without thrombectomy,
                                autogenous or
                                nonautogenous dialysis
                                graft (separate
                                procedure).
36833........................  Revision, open,                      14.50            14.50   Finalize.
                                arteriovenous fistula;
                                with thrombectomy,
                                autogenous or
                                nonautogenous dialysis
                                graft (separate
                                procedure).
37218........................  Transcatheter placement of           15.00            15.00   Finalize.
                                intravascular stent(s),
                                intrathoracic common
                                carotid artery or
                                innominate artery, open
                                or percutaneous antegrade
                                approach, including
                                angioplasty, when
                                performed, and
                                radiological supervision
                                and interpretation.
43180........................  Esophagoscopy, rigid,                 9.03             9.03   Finalize.
                                transoral with
                                diverticulectomy of
                                hypopharynx or cervical
                                esophagus (e.g., Zenker's
                                diverticulum), with
                                cricopharyngeal myotomy,
                                includes use of telescope
                                or operating microscope
                                and repair, when
                                performed.
45399........................  Unlisted procedure, colon.               I                 C  Finalize.
47383........................  Ablation, 1 or more liver             9.13             9.13   Finalize.
                                tumor(s), percutaneous,
                                cryoablation.
52441........................  Cystourethroscopy, with               4.50             4.50   Finalize.
                                insertion of permanent
                                adjustable transprostatic
                                implant; single implant.
52442........................  Cystourethroscopy, with               1.20             1.20   Finalize.
                                insertion of permanent
                                adjustable transprostatic
                                implant; each additional
                                permanent adjustable
                                transprostatic implant
                                (List separately in
                                addition to code for
                                primary procedure).
55840........................  Prostatectomy, retropubic            21.36            21.36   Finalize.
                                radical, with or without
                                nerve sparing.
55842........................  Prostatectomy, retropubic            21.36            21.36   Finalize.
                                radical, with or without
                                nerve sparing; with lymph
                                node biopsy(s) (limited
                                pelvic lymphadenectomy).
55845........................  Prostatectomy, retropubic            25.18            25.18   Finalize.
                                radical, with or without
                                nerve sparing; with
                                bilateral pelvic
                                lymphadenectomy,
                                including external iliac,
                                hypogastric, and
                                obturator nodes.
58541........................  Laparoscopy, surgical,               12.29            12.29   Finalize.
                                supracervical
                                hysterectomy, for uterus
                                250 g or less.
58542........................  Laparoscopy, surgical,               14.16            14.16   Finalize.
                                supracervical
                                hysterectomy, for uterus
                                250 g or less; with
                                removal of tube(s) and/or
                                ovary(s).
58543........................  Laparoscopy, surgical,               14.39            14.39   Finalize.
                                supracervical
                                hysterectomy, for uterus
                                greater than 250 g.
58544........................  Laparoscopy, surgical,               15.60            15.60   Finalize.
                                supracervical
                                hysterectomy, for uterus
                                greater than 250 g; with
                                removal of tube(s) and/or
                                ovary(s).
58570........................  Laparoscopy, surgical,               13.36            13.36   Finalize.
                                with total hysterectomy,
                                for uterus 250 g or less.

[[Page 70991]]

 
58571........................  Laparoscopy, surgical,               15.00            15.00   Finalize.
                                with total hysterectomy,
                                for uterus 250 g or less;
                                with removal of tube(s)
                                and/or ovary(s).
58572........................  Laparoscopy, surgical,               17.71            17.71   Finalize.
                                with total hysterectomy,
                                for uterus greater than
                                250 g.
58573........................  Laparoscopy, surgical,               20.79            20.79   Finalize.
                                with total hysterectomy,
                                for uterus greater than
                                250 g; with removal of
                                tube(s) and/or ovary(s).
62284........................  Injection procedure for               1.54             1.54   Finalize.
                                myelography and/or
                                computed tomography,
                                lumbar (other than C1-C2
                                and posterior fossa).
62302........................  Myelography via lumbar                2.29             2.29   Finalize.
                                injection, including
                                radiological supervision
                                and interpretation;
                                cervical.
62303........................  Myelography via lumbar                2.29             2.29   Finalize.
                                injection, including
                                radiological supervision
                                and interpretation;
                                thoracic.
62304........................  Myelography via lumbar                2.25             2.25   Finalize.
                                injection, including
                                radiological supervision
                                and interpretation;
                                lumbosacral.
62305........................  Myelography via lumbar                2.35             2.35   Finalize.
                                injection, including
                                radiological supervision
                                and interpretation; 2 or
                                more regions (e.g.,
                                lumbar/thoracic, cervical/
                                thoracic, lumbar/
                                cervical, lumbar/thoracic/
                                cervical).
62310........................  Injection(s), of                      1.91             1.91   Finalize.
                                diagnostic or therapeutic
                                substance(s) (including
                                anesthetic,
                                antispasmodic, opioid,
                                steroid, other solution),
                                not including neurolytic
                                substances, including
                                needle or catheter
                                placement, includes
                                contrast for localization
                                when performed, epidural
                                or subarachnoid; cervical
                                or thoracic.
62311........................  Injection(s), of                      1.54             1.54   Finalize.
                                diagnostic or therapeutic
                                substance(s) (including
                                anesthetic,
                                antispasmodic, opioid,
                                steroid, other solution),
                                not including neurolytic
                                substances, including
                                needle or catheter
                                placement, includes
                                contrast for localization
                                when performed, epidural
                                or subarachnoid; lumbar
                                or sacral (caudal).
62318........................  Injection(s), including               2.04             2.04   Finalize.
                                indwelling catheter
                                placement, continuous
                                infusion or intermittent
                                bolus, of diagnostic or
                                therapeutic substance(s)
                                (including anesthetic,
                                antispasmodic, opioid,
                                steroid, other solution),
                                not including neurolytic
                                substances, includes
                                contrast for localization
                                when performed, epidural
                                or subarachnoid; cervical
                                or thoracic.
62319........................  Injection(s), including               1.87             1.87   Finalize.
                                indwelling catheter
                                placement, continuous
                                infusion or intermittent
                                bolus, of diagnostic or
                                therapeutic substance(s)
                                (including anesthetic,
                                antispasmodic, opioid,
                                steroid, other solution),
                                not including neurolytic
                                substances, includes
                                contrast for localization
                                when performed, epidural
                                or subarachnoid; lumbar
                                or sacral (caudal).
64486........................  Transversus abdominis                 1.27             1.27   Finalize.
                                plane (TAP) block
                                (abdominal plane block,
                                rectus sheath block)
                                unilateral; by
                                injection(s) (includes
                                imaging guidance, when
                                performed).
64487........................  Transversus abdominis                 1.48             1.48   Finalize.
                                plane (TAP) block
                                (abdominal plane block,
                                rectus sheath block)
                                unilateral; by continuous
                                infusion(s) (includes
                                imaging guidance, when
                                performed).
64488........................  Transversus abdominis                 1.60             1.60   Finalize.
                                plane (TAP) block
                                (abdominal plane block,
                                rectus sheath block)
                                bilateral; by injections
                                (includes imaging
                                guidance, when performed).
64489........................  Transversus abdominis                 1.80             1.80   Finalize.
                                plane (TAP) block
                                (abdominal plane block,
                                rectus sheath block)
                                bilateral; by continuous
                                infusions (includes
                                imaging guidance, when
                                performed).
64561........................  Percutaneous implantation             5.44             5.44   Finalize.
                                of neurostimulator
                                electrode array; sacral
                                nerve (transforaminal
                                placement) including
                                image guidance, if
                                performed.
66179........................  Aqueous shunt to                     14.00            14.00   Finalize.
                                extraocular equatorial
                                plate reservoir, external
                                approach; without graft.
66180........................  Aqueous shunt to                     15.00            15.00   Finalize.
                                extraocular equatorial
                                plate reservoir, external
                                approach; with graft.
66184........................  Revision of aqueous shunt             9.58             9.58   Finalize.
                                to extraocular equatorial
                                plate reservoir; without
                                graft.
66185........................  Revision of aqueous shunt            10.58            10.58   Finalize.
                                to extraocular equatorial
                                plate reservoir; with
                                graft.
67036........................  Vitrectomy, mechanical,              12.13            12.13   Finalize.
                                pars plana approach;.
67039........................  Vitrectomy, mechanical,              13.20            13.20   Finalize.
                                pars plana approach; with
                                focal endolaser
                                photocoagulation.
67040........................  Vitrectomy, mechanical,              14.50            14.50   Finalize.
                                pars plana approach; with
                                endolaser panretinal
                                photocoagulation.
67041........................  Vitrectomy, mechanical,              16.33            16.33   Finalize.
                                pars plana approach; with
                                removal of preretinal
                                cellular membrane (e.g.,
                                macular pucker).

[[Page 70992]]

 
67042........................  Vitrectomy, mechanical,              16.33            16.33   Finalize.
                                pars plana approach; with
                                removal of internal
                                limiting membrane of
                                retina (e.g., for repair
                                of macular hole, diabetic
                                macular edema), includes,
                                if performed, intraocular
                                tamponade (i.e., air, gas
                                or silicone oil).
67043........................  Vitrectomy, mechanical,              17.40            17.40   Finalize.
                                pars plana approach; with
                                removal of subretinal
                                membrane (e.g., choroidal
                                neovascularization),
                                includes, if performed,
                                intraocular tamponade
                                (i.e., air, gas or
                                silicone oil) and laser
                                photocoagulation.
67255........................  Scleral reinforcement                 8.38             8.38   Finalize.
                                (separate procedure);
                                with graft.
70486........................  Computed tomography,                  0.85             0.85   See II.J.5.a.
                                maxillofacial area;
                                without contrast material.
70487........................  Computed tomography,                  1.13             1.13   See II.J.5.a.
                                maxillofacial area; with
                                contrast material(s).
70488........................  Computed tomography,                  1.27             1.27   See II.J.5.a.
                                maxillofacial area;
                                without contrast
                                material, followed by
                                contrast material(s) and
                                further sections.
70496........................  Computed tomographic                  1.75             1.75   Finalize.
                                angiography, head, with
                                contrast material(s),
                                including noncontrast
                                images, if performed, and
                                image postprocessing.
70498........................  Computed tomographic                  1.75             1.75   Finalize.
                                angiography, neck, with
                                contrast material(s),
                                including noncontrast
                                images, if performed, and
                                image postprocessing.
71275........................  Computed tomographic                  1.82             1.82   Finalize.
                                angiography, chest
                                (noncoronary), with
                                contrast material(s),
                                including noncontrast
                                images, if performed, and
                                image postprocessing.
72191........................  Computed tomographic                  1.81             1.81   Finalize.
                                angiography, pelvis, with
                                contrast material(s),
                                including noncontrast
                                images, if performed, and
                                image postprocessing.
72240........................  Myelography, cervical,                0.91             0.91   Finalize.
                                radiological supervision
                                and interpretation.
72255........................  Myelography, thoracic,                0.91             0.91   Finalize.
                                radiological supervision
                                and interpretation.
72265........................  Myelography, lumbosacral,             0.83             0.83   Finalize.
                                radiological supervision
                                and interpretation.
72270........................  Myelography, 2 or more                1.33             1.33   Finalize.
                                regions (e.g., lumbar/
                                thoracic, cervical/
                                thoracic, lumbar/
                                cervical, lumbar/thoracic/
                                cervical), radiological
                                supervision and
                                interpretation.
74174........................  Computed tomographic                  2.20             2.20   Finalize.
                                angiography, abdomen and
                                pelvis, with contrast
                                material(s), including
                                noncontrast images, if
                                performed, and image
                                postprocessing.
74175........................  Computed tomographic                  1.82             1.82   Finalize.
                                angiography, abdomen,
                                with contrast
                                material(s), including
                                noncontrast images, if
                                performed, and image
                                postprocessing.
74230........................  Swallowing function, with             0.53             0.53   Finalize.
                                cineradiography/
                                videoradiography.
76641........................  Ultrasound, breast,                   0.73             0.73   Finalize.
                                unilateral, real time
                                with image documentation,
                                including axilla when
                                performed; complete.
76642........................  Ultrasound, breast,                   0.68             0.68   Finalize.
                                unilateral, real time
                                with image documentation,
                                including axilla when
                                performed; limited.
76700........................  Ultrasound, abdominal,                0.81             0.81   Finalize.
                                real time with image
                                documentation; complete.
76705........................  Ultrasound, abdominal,                0.59             0.59   Finalize.
                                real time with image
                                documentation; limited
                                (e.g., single organ,
                                quadrant, follow-up).
76770........................  Ultrasound,                           0.74             0.74   Finalize.
                                retroperitoneal (e.g.,
                                renal, aorta, nodes),
                                real time with image
                                documentation; complete.
76775........................  Ultrasound,                           0.58             0.58   Finalize.
                                retroperitoneal (e.g.,
                                renal, aorta, nodes),
                                real time with image
                                documentation; limited.
76856........................  Ultrasound, pelvic                    0.69             0.69   Finalize.
                                (nonobstetric), real time
                                with image documentation;
                                complete.
76857........................  Ultrasound, pelvic                    0.50             0.50   Finalize.
                                (nonobstetric), real time
                                with image documentation;
                                limited or follow-up
                                (e.g., for follicles).
76930........................  Ultrasonic guidance for               0.67             0.67   Finalize.
                                pericardiocentesis,
                                imaging supervision and
                                interpretation.
76932........................  Ultrasonic guidance for               0.85             0.67   Finalize.
                                endomyocardial biopsy,
                                imaging supervision and
                                interpretation.
76942........................  Ultrasonic guidance for               0.67             0.67   Finalize.
                                needle placement (e.g.,
                                biopsy, aspiration,
                                injection, localization
                                device), imaging
                                supervision and
                                interpretation.
76948........................  Ultrasonic guidance for               0.38             0.38   Finalize.
                                aspiration of ova,
                                imaging supervision and
                                interpretation.
77055........................  Mammography; unilateral...             0.7             0.70   Finalize.
77056........................  Mammography; bilateral....            0.87             0.87   Finalize.
77057........................  Screening mammography,                 0.7             0.70   Finalize.
                                bilateral (2-view film
                                study of each breast).
77061........................  Digital breast                           I                I   Finalize.
                                tomosynthesis; unilateral.
77062........................  Digital breast                           I                I   Finalize.
                                tomosynthesis; bilateral.
77063........................  Screening digital breast              0.60             0.60   Finalize.
                                tomosynthesis, bilateral
                                (List separately in
                                addition to code for
                                primary procedure).
77080........................  Dual-energy X-ray                     0.20             0.20   Finalize.
                                absorptiometry (DXA),
                                bone density study, 1 or
                                more sites; axial
                                skeleton (e.g., hips,
                                pelvis, spine).
77085........................  Dual-energy X-ray                     0.30             0.30   Finalize.
                                absorptiometry (DXA),
                                bone density study, 1 or
                                more sites; axial
                                skeleton (e.g., hips,
                                pelvis, spine), including
                                vertebral fracture
                                assessment.

[[Page 70993]]

 
77086........................  Vertebral fracture                    0.17             0.17   Finalize.
                                assessment via dual-
                                energy X-ray
                                absorptiometry (DXA).
77300........................  Basic radiation dosimetry             0.62             0.62   See II.J.5.a.
                                calculation, central axis
                                depth dose calculation,
                                TDF, NSD, gap
                                calculation, off axis
                                factor, tissue
                                inhomogeneity factors,
                                calculation of non-
                                ionizing radiation
                                surface and depth dose,
                                as required during course
                                of treatment, only when
                                prescribed by the
                                treating physician.
77306........................  Teletherapy isodose plan;             1.40             1.40   See II.J.5.a.
                                simple (1 or 2 unmodified
                                ports directed to a
                                single area of interest),
                                includes basic dosimetry
                                calculation(s).
77307........................  Teletherapy isodose plan;             2.90             2.90   See II.J.5.a.
                                complex (multiple
                                treatment areas,
                                tangential ports, the use
                                of wedges, blocking,
                                rotational beam, or
                                special beam
                                considerations), includes
                                basic dosimetry
                                calculation(s).
77316........................  Brachytherapy isodose                 1.40             1.40   Finalize.
                                plan; simple
                                (calculation[s] made from
                                1 to 4 sources, or remote
                                afterloading
                                brachytherapy, 1
                                channel), includes basic
                                dosimetry calculation(s).
77317........................  Brachytherapy isodose                 1.83             1.83   Finalize.
                                plan; intermediate
                                (calculation[s] made from
                                5 to 10 sources, or
                                remote afterloading
                                brachytherapy, 2-12
                                channels), includes basic
                                dosimetry calculation(s).
77318........................  Brachytherapy isodose                 2.90             2.90   Finalize.
                                plan; complex
                                (calculation[s] made from
                                over 10 sources, or
                                remote afterloading
                                brachytherapy, over 12
                                channels), includes basic
                                dosimetry calculation(s).
88341........................  Immunohistochemistry or               0.53             0.53   See II.I.5.d.
                                immunocytochemistry, per
                                specimen; each additional
                                single antibody stain
                                procedure (List
                                separately in addition to
                                code for primary
                                procedure).
88342........................  Immunohistochemistry or               0.70             0.70   Finalize.
                                immunocytochemistry, per
                                specimen; initial single
                                antibody stain procedure.
88344........................  Immunohistochemistry or               0.77             0.77   Finalize.
                                immunocytochemistry, per
                                specimen; each multiplex
                                antibody stain procedure.
88348........................  Electron microscopy,                  1.51             1.51   Finalize.
                                diagnostic.
88356........................  Morphometric analysis;                2.80             2.80   Finalize.
                                nerve.
88364........................  In situ hybridization                 0.67             0.67   See II.I.5.d
                                (e.g., FISH), per
                                specimen; each additional
                                single probe stain
                                procedure (List
                                separately in addition to
                                code for primary
                                procedure).
88365........................  In situ hybridization                 0.88             0.88   Finalize.
                                (e.g., FISH), per
                                specimen; initial single
                                probe stain procedure.
88366........................  In situ hybridization                 1.24             1.24   Finalize.
                                (e.g., FISH), per
                                specimen; each multiplex
                                probe stain procedure.
88369........................  Morphometric analysis, in             0.67             0.67   See II.I.5.d.
                                situ hybridization
                                (quantitative or semi-
                                quantitative), manual,
                                per specimen; each
                                additional single probe
                                stain procedure (List
                                separately in addition to
                                code for primary
                                procedure).
88373........................  Morphometric analysis, in             0.43             0.43   Finalize.
                                situ hybridization
                                (quantitative or semi-
                                quantitative), using
                                computer-assisted
                                technology, per specimen;
                                each additional single
                                probe stain procedure
                                (List separately in
                                addition to code for
                                primary procedure).
88374........................  Morphometric analysis, in             0.93             0.93   See II.I.5.d.
                                situ hybridization
                                (quantitative or semi-
                                quantitative), using
                                computer-assisted
                                technology, per specimen;
                                each multiplex probe
                                stain procedure.
88377........................  Morphometric analysis, in             1.40             1.40   Finalize.
                                situ hybridization
                                (quantitative or semi-
                                quantitative), manual,
                                per specimen; each
                                multiplex probe stain
                                procedure.
88380........................  Microdissection (i.e.,                1.14             1.14   See II.J.5.a.
                                sample preparation of
                                microscopically
                                identified target); laser
                                capture.
88381........................  Microdissection (i.e.,                0.53             0.53   See II.J.5.a.
                                sample preparation of
                                microscopically
                                identified target);
                                manual.
91200........................  Liver elastography,                   0.30             0.27   See II.J.5.a.
                                mechanically induced
                                shear wave (e.g.,
                                vibration), without
                                imaging, with
                                interpretation and report.
92145........................  Corneal hysteresis                    0.17             0.17   Finalize.
                                determination, by air
                                impulse stimulation,
                                unilateral or bilateral,
                                with interpretation and
                                report.
92540........................  Basic vestibular                      1.50             1.50   Finalize.
                                evaluation, includes
                                spontaneous nystagmus
                                test with eccentric gaze
                                fixation nystagmus, with
                                recording, positional
                                nystagmus test, minimum
                                of 4 positions, with
                                recording, optokinetic
                                nystagmus test,
                                bidirectional foveal and
                                peripheral stimulation,
                                with recording, and
                                oscillating tracking
                                test, with recording.
92541........................  Spontaneous nystagmus                 0.40             0.40   Finalize.
                                test, including gaze and
                                fixation nystagmus, with
                                recording.
92542........................  Positional nystagmus test,            0.48             0.48   Finalize.
                                minimum of 4 positions,
                                with recording.
92543........................  Caloric vestibular test,              0.10   ...............  Deleted.
                                each irrigation
                                (binaural, bithermal
                                stimulation constitutes 4
                                tests), with recording.
92544........................  Optokinetic nystagmus                 0.27             0.27   Finalize.
                                test, bidirectional,
                                foveal or peripheral
                                stimulation, with
                                recording.
92545........................  Oscillating tracking test,            0.25             0.25   Finalize.
                                with recording.

[[Page 70994]]

 
93260........................  Programming device                    0.85             0.85   Finalize.
                                evaluation (in person)
                                with iterative adjustment
                                of the implantable device
                                to test the function of
                                the device and select
                                optimal permanent
                                programmed values with
                                analysis, review and
                                report by a physician or
                                other qualified health
                                care professional;
                                implantable subcutaneous
                                lead defibrillator system.
93261........................  Interrogation device                  0.74             0.74   Finalize.
                                evaluation (in person)
                                with analysis, review and
                                report by a physician or
                                other qualified health
                                care professional,
                                includes connection,
                                recording and
                                disconnection per patient
                                encounter; implantable
                                subcutaneous lead
                                defibrillator system.
93282........................  Programming device                    0.85             0.85   Finalize.
                                evaluation (in person)
                                with iterative adjustment
                                of the implantable device
                                to test the function of
                                the device and select
                                optimal permanent
                                programmed values with
                                analysis, review and
                                report by a physician or
                                other qualified health
                                care professional; single
                                lead transvenous
                                implantable defibrillator
                                system.
93283........................  Programming device                    1.15             1.15   Finalize.
                                evaluation (in person)
                                with iterative adjustment
                                of the implantable device
                                to test the function of
                                the device and select
                                optimal permanent
                                programmed values with
                                analysis, review and
                                report by a physician or
                                other qualified health
                                care professional; dual
                                lead transvenous
                                implantable defibrillator
                                system.
93284........................  Programming device                    1.25             1.25   Finalize.
                                evaluation (in person)
                                with iterative adjustment
                                of the implantable device
                                to test the function of
                                the device and select
                                optimal permanent
                                programmed values with
                                analysis, review and
                                report by a physician or
                                other qualified health
                                care professional;
                                multiple lead transvenous
                                implantable defibrillator
                                system.
93287........................  Peri-procedural device                0.45             0.45   Finalize.
                                evaluation (in person)
                                and programming of device
                                system parameters before
                                or after a surgery,
                                procedure, or test with
                                analysis, review and
                                report by a physician or
                                other qualified health
                                care professional;
                                single, dual, or multiple
                                lead implantable
                                defibrillator system.
93289........................  Interrogation device                  0.92             0.92   Finalize.
                                evaluation (in person)
                                with analysis, review and
                                report by a physician or
                                other qualified health
                                care professional,
                                includes connection,
                                recording and
                                disconnection per patient
                                encounter; single, dual,
                                or multiple lead
                                transvenous implantable
                                defibrillator system,
                                including analysis of
                                heart rhythm derived data
                                elements.
93312........................  Echocardiography,                     2.55             2.55   Finalize.
                                transesophageal, real-
                                time with image
                                documentation (2D) (with
                                or without M-mode
                                recording); including
                                probe placement, image
                                acquisition,
                                interpretation and report.
93313........................  Echocardiography,                     0.51             0.51   Finalize.
                                transesophageal, real-
                                time with image
                                documentation (2D) (with
                                or without M-mode
                                recording); placement of
                                transesophageal probe
                                only.
93314........................  Echocardiography,                     2.10             2.10   Finalize.
                                transesophageal, real-
                                time with image
                                documentation (2D) (with
                                or without M-mode
                                recording); image
                                acquisition,
                                interpretation and report
                                only.
93315........................  Transesophageal                       2.94             2.94   Finalize.
                                echocardiography for
                                congenital cardiac
                                anomalies; including
                                probe placement, image
                                acquisition,
                                interpretation and report.
93316........................  Transesophageal                       0.85             0.85   Finalize.
                                echocardiography for
                                congenital cardiac
                                anomalies; placement of
                                transesophageal probe
                                only.
93317........................  Transesophageal                       2.09             2.09   Finalize.
                                echocardiography for
                                congenital cardiac
                                anomalies; image
                                acquisition,
                                interpretation and report
                                only.
93318........................  Echocardiography,                     2.40             2.40   Finalize.
                                transesophageal (TEE) for
                                monitoring purposes,
                                including probe
                                placement, real time 2-
                                dimensional image
                                acquisition and
                                interpretation leading to
                                ongoing (continuous)
                                assessment of
                                (dynamically changing)
                                cardiac pumping function
                                and to therapeutic
                                measures on an immediate
                                time basis.
93320........................  Doppler echocardiography,             0.38             0.38   Finalize.
                                pulsed wave and/or
                                continuous wave with
                                spectral display (List
                                separately in addition to
                                codes for
                                echocardiographic
                                imaging); complete.
93321........................  Doppler echocardiography,             0.15             0.15   Finalize.
                                pulsed wave and/or
                                continuous wave with
                                spectral display (List
                                separately in addition to
                                codes for
                                echocardiographic
                                imaging); follow-up or
                                limited study (List
                                separately in addition to
                                codes for
                                echocardiographic
                                imaging).
93325........................  Doppler echocardiography              0.07             0.07   Finalize.
                                color flow velocity
                                mapping (List separately
                                in addition to codes for
                                echocardiography).

[[Page 70995]]

 
93355........................  Echocardiography,                     4.66             4.66   Finalize.
                                transesophageal (TEE) for
                                guidance of a
                                transcatheter
                                intracardiac or great
                                vessel(s) structural
                                intervention(s) (e.g.,
                                TAVR, transcatheter
                                pulmonary valve
                                replacement, mitral valve
                                repair, paravalvular
                                regurgitation repair,
                                left atrial appendage
                                occlusion/closure,
                                ventricular septal defect
                                closure) (peri-and intra-
                                procedural), real-time
                                image acquisition and
                                documentation, guidance
                                with quantitative
                                measurements, probe
                                manipulation,
                                interpretation, and
                                report, including
                                diagnostic
                                transesophageal
                                echocardiography and,
                                when performed,
                                administration of
                                ultrasound contrast,
                                Doppler, color flow, and
                                3D.
93644........................  Electrophysiologic                    3.29             3.29   Finalize.
                                evaluation of
                                subcutaneous implantable
                                defibrillator (includes
                                defibrillation threshold
                                evaluation, induction of
                                arrhythmia, evaluation of
                                sensing for arrhythmia
                                termination, and
                                programming or
                                reprogramming of sensing
                                or therapeutic
                                parameters).
93880........................  Duplex scan of                        0.80             0.80   Finalize.
                                extracranial arteries;
                                complete bilateral study.
93882........................  Duplex scan of                        0.50             0.50   Finalize.
                                extracranial arteries;
                                unilateral or limited
                                study.
93886........................  Transcranial Doppler study            0.91             0.91   Finalize.
                                of the intracranial
                                arteries; complete study.
93888........................  Transcranial Doppler study            0.50             0.50   Finalize.
                                of the intracranial
                                arteries; limited study.
93895........................  Quantitative carotid                     N                N   Finalize.
                                intima media thickness
                                and carotid atheroma
                                evaluation, bilateral.
93925........................  Duplex scan of lower                  0.80             0.80   Finalize.
                                extremity arteries or
                                arterial bypass grafts;
                                complete bilateral study.
93926........................  Duplex scan of lower                  0.50             0.50   Finalize.
                                extremity arteries or
                                arterial bypass grafts;
                                unilateral or limited
                                study.
93930........................  Duplex scan of upper                  0.80             0.80   Finalize.
                                extremity arteries or
                                arterial bypass grafts;
                                complete bilateral study.
93931........................  Duplex scan of upper                  0.50             0.50   Finalize.
                                extremity arteries or
                                arterial bypass grafts;
                                unilateral or limited
                                study.
93970........................  Duplex scan of extremity              0.70             0.70   Finalize.
                                veins including responses
                                to compression and other
                                maneuvers; complete
                                bilateral study.
93971........................  Duplex scan of extremity              0.45             0.45   Finalize.
                                veins including responses
                                to compression and other
                                maneuvers; unilateral or
                                limited study.
93975........................  Duplex scan of arterial               1.16             1.16   Finalize.
                                inflow and venous outflow
                                of abdominal, pelvic,
                                scrotal contents and/or
                                retroperitoneal organs;
                                complete study.
93976........................  Duplex scan of arterial               0.80             0.80   Finalize.
                                inflow and venous outflow
                                of abdominal, pelvic,
                                scrotal contents and/or
                                retroperitoneal organs;
                                limited study.
93978........................  Duplex scan of aorta,                 0.80             0.80   Finalize.
                                inferior vena cava, iliac
                                vasculature, or bypass
                                grafts; complete study.
93979........................  Duplex scan of aorta,                 0.50             0.50   Finalize.
                                inferior vena cava, iliac
                                vasculature, or bypass
                                grafts; unilateral or
                                limited study.
93990........................  Duplex scan of                        0.50             0.50   Finalize.
                                hemodialysis access
                                (including arterial
                                inflow, body of access
                                and venous outflow).
95971........................  Electronic analysis of                0.78             0.78   Finalize.
                                implanted neurostimulator
                                pulse generator system
                                (e.g., rate, pulse
                                amplitude, pulse
                                duration, configuration
                                of wave form, battery
                                status, electrode
                                selectability, output
                                modulation, cycling,
                                impedance and patient
                                compliance measurements);
                                simple spinal cord, or
                                peripheral (i.e.,
                                peripheral nerve, sacral
                                nerve, neuromuscular)
                                neurostimulator pulse
                                generator/transmitter,
                                with intraoperative or
                                subsequent programming.
95972........................  Electronic analysis of                0.80             0.80   Finalize.
                                implanted neurostimulator
                                pulse generator system
                                (e.g., rate, pulse
                                amplitude, pulse
                                duration, configuration
                                of wave form, battery
                                status, electrode
                                selectability, output
                                modulation, cycling,
                                impedance and patient
                                compliance measurements);
                                complex spinal cord, or
                                peripheral (i.e.,
                                peripheral nerve, sacral
                                nerve, neuromuscular)
                                (except cranial nerve)
                                neurostimulator pulse
                                generator/transmitter,
                                with intraoperative or
                                subsequent programming,
                                up to 1 hour.
95973........................  Electronic analysis of                0.49   ...............  Deleted.
                                implanted neurostimulator
                                pulse generator system
                                (e.g., rate, pulse
                                amplitude, pulse
                                duration, configuration
                                of wave form, battery
                                status, electrode
                                selectability, output
                                modulation, cycling,
                                impedance and patient
                                compliance measurements);
                                complex spinal cord, or
                                peripheral (i.e.,
                                peripheral nerve, sacral
                                nerve, neuromuscular)
                                (except cranial nerve)
                                neurostimulator pulse
                                generator/transmitter,
                                with intraoperative or
                                subsequent programming,
                                each additional 30
                                minutes after first hour
                                (List separately in
                                addition to code for
                                primary procedure).
97605........................  Negative pressure wound               0.55             0.55   Finalize.
                                therapy (e.g., vacuum
                                assisted drainage
                                collection), utilizing
                                durable medical equipment
                                (DME), including topical
                                application(s), wound
                                assessment, and
                                instruction(s) for
                                ongoing care, per
                                session; total wound(s)
                                surface area less than or
                                equal to 50 square
                                centimeters.

[[Page 70996]]

 
97606........................  Negative pressure wound               0.60             0.60   Finalize.
                                therapy (e.g., vacuum
                                assisted drainage
                                collection), utilizing
                                durable medical equipment
                                (DME), including topical
                                application(s), wound
                                assessment, and
                                instruction(s) for
                                ongoing care, per
                                session; total wound(s)
                                surface area greater than
                                50 square centimeters.
97607........................  Negative pressure wound                   C                C  Finalize.
                                therapy, (e.g., vacuum
                                assisted drainage
                                collection), utilizing
                                disposable, non-durable
                                medical equipment
                                including provision of
                                exudate management
                                collection system,
                                topical application(s),
                                wound assessment, and
                                instructions for ongoing
                                care, per session; total
                                wound(s) surface area
                                less than or equal to 50
                                square centimeters.
97608........................  Negative pressure wound                   C                C  Finalize.
                                therapy, (e.g., vacuum
                                assisted drainage
                                collection), utilizing
                                disposable, non-durable
                                medical equipment
                                including provision of
                                exudate management
                                collection system,
                                topical application(s),
                                wound assessment, and
                                instructions for ongoing
                                care, per session; total
                                wound(s) surface area
                                greater than 50 square
                                centimeters.
97610........................  Low frequency, non-                   0.35             0.35   Finalize.
                                contact, non-thermal
                                ultrasound, including
                                topical application(s),
                                when performed, wound
                                assessment, and
                                instruction(s) for
                                ongoing care, per day.
99183........................  Physician or other                    2.11             2.11   Finalize.
                                qualified health care
                                professional attendance
                                and supervision of
                                hyperbaric oxygen
                                therapy, per session.
99184........................  Initiation of selective               4.50             4.50   Finalize.
                                head or total body
                                hypothermia in the
                                critically ill neonate,
                                includes appropriate
                                patient selection by
                                review of clinical,
                                imaging and laboratory
                                data, confirmation of
                                esophageal temperature
                                probe location,
                                evaluation of amplitude
                                EEG, supervision of
                                controlled hypothermia,
                                and assessment of patient
                                tolerance of cooling.
99188........................  Application of topical                   N                N   Finalize.
                                fluoride varnish by a
                                physician or other
                                qualified health care
                                professional.
99487........................  Complex chronic care                     B                B   Finalize.
                                management services, with
                                the following required
                                elements: Multiple (two
                                or more) chronic
                                conditions expected to
                                last at least 12 months,
                                or until the death of the
                                patient; chronic
                                conditions place the
                                patient at significant
                                risk of death, acute
                                exacerbation/
                                decompensation, or
                                functional decline;
                                establishment or
                                substantial revision of a
                                comprehensive care plan;
                                moderate or high
                                complexity medical
                                decision making; 60
                                minutes of clinical staff
                                time directed by a
                                physician or other
                                qualified health care
                                professional, per
                                calendar month.
99490........................  Chronic care management               0.61             0.61   Finalize.
                                services, at least 20
                                minutes of clinical staff
                                time directed by a
                                physician or other
                                qualified health care
                                professional, per
                                calendar month, with the
                                following required
                                elements: Multiple (two
                                or more) chronic
                                conditions expected to
                                last at least 12 months,
                                or until the death of the
                                patient; chronic
                                conditions place the
                                patient at significant
                                risk of death, acute
                                exacerbation/
                                decompensation, or
                                functional decline;
                                comprehensive care plan
                                established, implemented,
                                revised, or monitored.
G0277........................  Hyperbaric oxygen under               0.00             0.00   Finalize.
                                pressure, full body
                                chamber, per 30 minute
                                interval.
G0279........................  Diagnostic digital breast             0.60             0.60   Finalize.
                                tomosynthesis, unilateral
                                or bilateral (list
                                separately in addition to
                                G0204 or G0206).
G0389........................  Ultrasound b-scan and/or              0.58             0.58   Finalize.
                                real time with image
                                documentation; for
                                abdominal aortic aneurysm
                                (AAA) screening.
G0473........................  Face-to-face behavioral               0.23             0.23   Finalize.
                                counseling for obesity,
                                group (2-10), 30 minutes.
----------------------------------------------------------------------------------------------------------------

a. Specific Issues for Codes With CY 2015 Interim Final Values
(1) Ablation Therapy (CPT Code 20983)
    In CY 2015 we established the RUC-recommended work RVU for CPT code 
20983 and made minor refinements to the RUC-recommended direct PE 
inputs.
    Comment: A commenter stated that the total clinical labor times in 
the direct PE input database are inconsistent with the RUC-recommended 
values. The commenter mentioned that some of the service period 
activity time was assigned to the total post-service clinical labor 
time.
    Response: We reviewed the direct PE input database and confirmed 
the time for clinical labor task ``Assist Physician'' was missing for 
labor type L046A. We will restore the missing labor time as we intended 
to establish as interim final the RUC recommendation for the clinical 
labor times without refinement.
(2) Automatic Fixation of Rib Fracture (CPT Codes 21811, 21812, and 
21813)
    For CY 2015, the CPT Editorial Panel deleted CPT code 21810 
(Treatment of rib fracture requiring external fixation) and replaced it 
with CPT codes 21811, 21812, and 21813 to address internal fixation of 
rib fracture. As described in the CY 2015 PFS final rule with comment 
period, the RUC recommended that we value these procedures with 90-day 
global periods. We indicated that we believed it would be more 
appropriate to value these

[[Page 70997]]

procedures with 0-day global periods. We valued each of these services 
by subtracting the work RVU related to postoperative care from the 
total work RVU. We also refined the RUC-recommended time by subtracting 
the time associated with the postoperative visits, and removed direct 
PE inputs associated with the postoperative visits.
    In the CY 2015 PFS final rule with comment period, we considered 
whether certain pre-service clinical labor tasks would typically be 
performed given that these procedures are frequently furnished on an 
emergency basis. We reviewed other emergency procedures valued under 
the PFS to determine whether pre-service clinical labor activities were 
typically included in the PE worksheets and found that the 
recommendations for these procedures were inconsistent. Therefore, in 
the CY 2015 PFS final rule with comment period, we did not remove the 
time allocated for certain clinical labor activities, but sought public 
comment on this issue.
    Comment: One commenter expressed concerns with the methodology 
employed by CMS. The commenter stated that CMS staff had attended the 
RUC meeting where these codes were reviewed and were aware that a 
building block methodology (BBM) was not used to build the work RVUs 
for these codes. Therefore, the commenter suggested it was incorrect 
for CMS to use a reverse BBM to calculate a new value.
    Response: We are committed to establishing the most accurate 
valuation possible for each procedure. In this case, we examined the 
results of the reverse BBM and determined that it was the most 
appropriate approach to value these services. Due to the emergency 
nature of these procedures, we believe that they are more accurately 
valued using a 0-day global period.
    Comment: Another commenter reminded CMS that the specialty 
societies surveyed these three codes based on a 90-day global period 
and that CMS had ample opportunity to inform the RUC and the 
specialties of an impending change in the global assignment prior to 
the development of recommended RVUs.
    Response: We understand that the specialties surveyed the codes 
under the assumption that they would be valued with a 90-day global 
period, prior to our determination that these services would be more 
accurately valued as 0-day globals due to their emergency nature. We 
believe that in the case of these emergent services, it may not be 
typical for the individual performing the initial procedure to be 
responsible for providing the follow-up care. Therefore, we believe 
that the 0-day global period to more accurately reflect the care 
furnished. This is precisely why it was necessary for us to account for 
the change in global period when establishing interim final work RVUs 
for the codes. To do so, we employed a reverse BBM to establish 
separate work RVUs for the individual procedure in each case. As we 
have previously stated, we believe that the best way to improve the 
valuation of codes that describe multiple services over long periods of 
time (for example, 90 days) is to develop discrete values for the 
component services. We agree that survey results are likely to be most 
useful when there is consistency between the global period as surveyed 
and the global period in the final valuation of the code. However, 
because we did not have such survey data in this case, we used another 
established methodology to develop a potential work RVUs. In this case, 
we believe that the reverse building block methodology establishes the 
most accurate value for this group of codes. Although the RUC 
recommends global periods for individual services and often consults 
with CMS staff regarding the typical global periods for such services, 
we believe that it is appropriate to establish global period for 
particular codes through rulemaking. If stakeholders are concerned 
about the final values for services surveyed based on a presumed global 
period that is not ultimately applied to the individual code, then we 
encourage stakeholders to consider nominating such codes as potentially 
misvalued through the public nomination process.
    Comment: One commenter suggested that CMS did not provide reference 
codes with 0-day global periods to support the new interim final work 
RVUs. The commenter disagreed with the work RVUs established by CMS and 
suggested that all three of the codes in question were undervalued. The 
commenter provided information about other codes with 0-day global 
periods that had similar work time. The commenter urged CMS to 
reinstate the 90-day global period and accept the RUC recommendations 
for work RVUs, similar to other trauma codes.
    Response: After reviewing the codes provided by the commenter, we 
believe that the values of other existing codes support our valuation 
of these procedures. For CPT code 21811, we note that CPT code 93650 
(Intracardiac catheter ablation of atrioventricular node function) 
shares the same intraservice time of 120 minutes and has a higher total 
time (240 minutes compared to 220 minutes for CPT code 21811), but a 
lower work RVU of 10.49. We believe that the work RVU assigned to CPT 
code 21811 fits well within the work RVUs for the group of codes that 
have 0-day global periods and 120 intraservice minutes. For CPT code 
21812, we note that 92997 (Percutaneous transluminal pulmonary artery 
balloon angioplasty), which has 5 additional minutes of intraservice 
time (155 minutes compared to 150 minutes for 21812) and a higher total 
time (275 minutes compared to 250 minutes for 21812), has a lower work 
RVU of 11.98. We believe that our valuation of CPT code 21812 maintains 
relativity within this group of 0-day global codes with times of 
approximately 150 intraservice minutes.
    For CPT code 21813, we agree with the commenter that there is a 
lack of 0-day global codes with comparable intraservice times. We also 
agree with the commenter's suggestion that CPT codes 93654 and 93656 
provide the best references available. These codes share an 
intraservice time of 240 minutes compared to the 210 minutes of 
intraservice time for CPT code 21813. However, we disagree with the 
commenter that CPT code 21813 is undervalued based on a comparison of 
these intraservice times. Applying the ratio between the 210 minutes 
for CPT code 21813 and the 240 minutes for the reference CPT code 93654 
(0.875) to the work RVU of 20.00 for CPT code 93654, results in a work 
RVU of 17.50. This is similar to our valuation for CPT code 21813 of 
17.61. We believe that this intraservice time ratio further supports 
our valuation of CPT code 21813, which maintains relativity with 
similar 0-day global codes. After consideration of comments received, 
we are finalizing the interim final work RVUs for CPT codes 21811, 
21812, and 21813 for CY 2016.
(3) Percutaneous Vertebroplasty and Augmentation (CPT Codes 22510, 
22511, 22512, 22513, 22514, and 22515)
    In CY 2015, we established the RUC-recommended work RVUs as interim 
final for all of the codes in this family except CPT code 22511 because 
we did not agree with its RUC-recommended crosswalk. To value this 
code, we took the difference between the work RVUs for the predecessor 
codes for CPT codes 22510 and 22511, CPT codes 22520 (Percutaneous 
vertebroplasty (bone biopsy included when performed), one vertebral 
body, unilateral or bilateral injection; thoracic)) and 22521 
(Percutaneous vertebroplasty (bone biopsy included when performed), one 
vertebral body, unilateral or bilateral injection; thoracic; lumbar)) 
and applied

[[Page 70998]]

that to the work RVU we established for CPT code 22510. We believed 
that increment established the appropriate rank order in the family, 
and thus, assigned an interim final work RVU of 7.58 for CPT code 
22511.
    Comment: A commenter disagreed with the methodology CMS used for 
valuing CPT code 22511 because they believed CMS' approach was 
arbitrary and invalidated the RUC process of using new survey data. The 
commenter urged CMS to accept the RUC-recommended work RVU of 8.05 for 
this code.
    Another commenter requested that CMS reconsider the RVUs for these 
codes. The commenter believed that, due to the bundling of these 
imaging codes for CY 2015, additional PE costs were added to the 
service. The commenter expressed concerns that practitioners might find 
it infeasible to furnish these services in the non-facility setting if 
payment continues to be based on the interim final values we adopted 
for CY 2015.
    Additionally, several commenters alerted CMS to missing clinical 
labor times for ``assist physician'' for all of the codes in this 
family. Some commenters also stated that clinical labor time was 
missing for the post-operative visit in CPT codes 22510, 22511, 22513, 
and 22514.
    Response: Unlike other codes in this family for which the RUC-
recommended work RVU was based on the 25th percentile in the survey, 
the RUC established its recommended work RVU for CPT code 22511 by 
crosswalking the service to CPT code 39400 (Mediastinoscopy, includes 
biopsy(ies), when performed), which has a work RVU of 8.05. Because the 
level of work performed by a practitioner in the two services differs, 
we continue to believe that this crosswalk is inaccurate. We maintain 
that a more accurate comparison is found in the difference between the 
work RVUs for the predecessor codes for CPT codes 22510 and 22511 and 
that applying this differential leads to appropriate valuation.
    We agree with the commenters that there were inconsistencies in the 
clinical labor times for these codes as entered in our direct PE 
database. We direct the reader to section II.B. of this final rule with 
comment period for a discussion of these clinical labor input 
inconsistencies.
    Therefore, we are finalizing our CY 2015 work valuation for CPT 
codes 22510, 22511, 22512, 22513, 22514, and 22515.
(4) Total Disc Arthroplasty (CPT code 22856)
    In the CY 2015 PFS final rule with comment period, we maintained 
the CY 2014 work RVU for CPT code 22856, consistent with the RUC 
recommendation.
    Comment: One commenter suggested that CPT code 22856 has been 
undervalued since 2009. The commenter believed CMS should value this 
service relative to several other codes that together comprise standard 
anterior cervical discectomy and fusion which the commenter believes is 
appropriately valued. The commenter stated that a higher valuation 
would be consistent with higher procedure operating room time included 
for CPT code 22856 in six clinical trials.
    Response: We appreciate the submission of this additional 
information about the current practice of cervical disc replacement 
from the commenter. However, for the purpose of valuation, we typically 
compare a procedure against a broad range of other procedures across 
the PFS to help maintain relativity, rather than a single related 
procedure. In addition to intraservice operating time, other resource 
costs are included in the work RVU, such as the clinical intensity of 
the procedure and the time and intensity of the pre- and post-work, 
including post-operative visits.
    After consideration of comments received, we are finalizing the CY 
2015 interim final work RVU for CY 2016 without modification, 
consistent with the RUC recommendation.
(5) Sacroiliac Joint Fusion (CPT code 27279)
    In the CY 2015 PFS final rule with comment period, we maintained 
the CY 2014 work RVU for CPT code 27279, consistent with the RUC 
recommendation.
    Comment: Several commenters stated that the RUC survey data were 
not reliable because the reference service (CPT code 62287, 
Percutaneous discectomy) with a work RVU of 9.03 is not comparable. One 
of the commenters, a professional association, recommended a work RVU 
of 14.36 based upon its own survey or a work RVU of 13.18 based on a 
comparison with CPT code 63030 (Low back disk surgery). This commenter 
requested that CMS refer CPT code 27279 to the multispecialty 
refinement panel.
    Response: CPT code 27279 was referred to the CY 2015 Multi-
Specialty Refinement Panel per the commenter's request. The outcome of 
the refinement panel was a median of 9.03 work RVUs. After 
consideration of the comments and the results of the refinement panel, 
we are finalizing our interim final work RVU of 9.03 for CPT code 
27279.
(6) Subcutaneous Implantable Defibrillator Procedures (CPT Codes 33270, 
33271, 33272, 33273, 93260, 93261 and 93644)
    For CY 2015, the CPT Editorial Panel added the word ``implantable'' 
to the descriptors for several codes in this family and created several 
new codes (CPT codes 33270, 33271, 33272, 33273, 93260, 93261, and 
93644). We established as interim final the RUC-recommended work RVUs 
for all of the codes in this family except CPT code 93644. The RUC-
recommended times for CPT code 93644 included an intraservice time of 
20 minutes and a total time of 84 minutes. We disagreed with the RUC-
recommended direct crosswalk for CPT code 93644 because the code that 
serves as the source for the crosswalk had greater intraservice time 
(29 minutes) and total time (115 minutes). We believed that a crosswalk 
to CPT code 32551 was more accurate since the intraservice time for CPT 
code 32551 was 20 minutes, total time was 83 minutes, and intensity was 
comparable. Therefore, we established a CY 2015 interim final work RVU 
of 3.29 for CPT code 93644.
    Comment: Two commenters expressed disappointment that CMS did not 
accept the RUC recommendation for CPT code 93644. The commenters 
disagreed with the decision to crosswalk the work RVU for CPT code 
93644 from CPT code 32551 because they believed that the services were 
not similar in nature. Commenters suggested that CMS accept the RUC 
recommendation with a crosswalk from CPT code 15002, due to a similar 
intraservice time. The commenters also requested that CPT code 93644 be 
referred to the multispecialty refinement panel.
    Response: We continue to believe that crosswalking the value for 
CPT code 93644 from CPT code 32551 is the best way to value this 
service due to the codes' similar intraservice and total times and 
similar intensity. We believe that the difference in time values for 
the RUC-recommended crosswalk is too great to serve as a direct 
crosswalk for overall work. We did not receive any new clinical 
information needed for referral of this code to the multispecialty 
refinement panel. Therefore, we are finalizing our CY 2015 valuation.

[[Page 70999]]

(7) Fenestrated Endovascular Repair (FEVAR) Endograft Planning (CPT 
Codes 34839-34848)
    For CY 2015, we examined several FEVAR codes. CPT code 34839 was 
created to report the planning that occurs prior to the work included 
in the global period for a FEVAR. We accepted the RUC recommendation 
for all of the codes in this family except CPT code 34839. We believed 
the planning that occurs prior to the work was included in the global 
period for FEVAR and should be bundled with the underlying service. We 
did not believe bundling was inappropriate in this case. Accordingly, 
we assigned a PFS procedure status indicator of B (Bundled Code) to CPT 
code 34839.
    Comment: One commenter requested that CMS issue coding guidance 
regarding with which codes the FEVAR co-surgeon modifier can be used.
    Response: We appreciate the commenter's feedback. We will take this 
comment into consideration in developing guidance for use of the co-
surgeon modifier.
(8) Endovenous Ablation Therapy (CPT Codes 36475-36479)
    For CY 2015, we examined several endovenous ablation therapy codes 
and used the RUC-recommended work RVUs to establish interim final work 
RVUs. We made minor refinements to the RUC recommended direct PE inputs 
to establish interim final direct PE inputs for this family of codes.
    Comment: A commenter requested that CMS review the difference in PE 
inputs between CPT codes 36475 and 36478. The commenter stated that 
they believed CPT code 36478 was missing supplies which are commonly 
used in the procedure, and that this difference in reimbursement could 
only be explained by errors in the supply and staff inputs. The 
commenter also provided clinical information suggesting that the laser 
technique of endovenous ablation therapy described in CPT code 36478 is 
more effective than the radiofrequency treatment described in CPT code 
36475.
    Response: We thank the commenter for bringing this issue to our 
attention. We agree that there are errors in the direct PE database 
regarding these two codes. After consideration of comments received, we 
are making the following refinements. For CPT code 36475, we are adding 
one unit of supply item ``needle, spinal 18-26g'' (SC028) and one unit 
of supply item ``syringe 20 ml'' (SC053). For CPT code 36478, we are 
adding 5 minutes of clinical labor time of staff type L037D for ``Apply 
multi-layer comprehensive dressing'' and adding 3 minutes of clinical 
labor time of the same type for ``Check dressings & wounds.'' We are 
also removing 2 minutes of clinical labor time of staff type L054A for 
``Patient clinical information and questionnaire reviewed by 
technologist'', as this time was inadvertently included in the direct 
PE database. This results in identical clinical labor inputs for the 
two procedures, as the commenter correctly pointed out should be the 
case.
    With regards to the commenter's feedback regarding the supplies 
allocated to CPT codes 36475 and 36478, we reviewed the direct PE 
inputs as recommended by the RUC and agree that they represent the 
typical inputs used in furnishing these procedures.
    Comment: One commenter disagreed with all of the PE refinements 
made in this family. The commenter stated that 30 minutes was typical 
recovery time for input code EF019 (stretcher chair) and that 32 
minutes is the time the room is unavailable to other patients for input 
codes EL015 (room, ultrasound, general), EQ215 (radiofrequency 
generator (vascular)), and EQ160 (laser, endovascular ablation (ELVS)). 
The commenter also stated that additional images are inherent to the 
add-on codes which justify the extra minute in input code L054A 
(vascular technologist). Another commenter expressed support for CMS' 
acceptance of the RUC-recommended RVUs and times for these services.
    Response: In establishing interim final times for the direct 
equipment inputs, we followed our standard methodologies that resulted 
in the allocated equipment times for EL015, EL215, and EQ160 for these 
codes in the direct PE input database. We believe that adherence to 
these standard methodologies maintains relativity within the 
development of PE RVUs and is likely to reflect the typical case. We 
disagree with commenters regarding the equipment times for EL015, 
El215, and EQ160. However, we agree additional images are inherent in 
the add-on codes, which supports the additional minute of clinical 
labor time. Therefore, we are finalizing the interim final values for 
these services, with the exception of the refinements to the clinical 
labor, supplies, and equipment described above.
(9) Cryoablation of Liver Tumor (CPT Code 47383)
    For CY 2015, we proposed the RUC-recommended work RVU of 9.13 for 
CPT code 47383 and made several refinements to the recommended clinical 
labor and equipment times.
    Comment: A commenter stated that the clinical labor time associated 
with the 99212 postoperative visit did not appear in the CMS direct PE 
public use files.
    Response: We appreciate the assistance from the commenter in 
bringing this issue to our attention. We have corrected this error in 
the CMS direct PE public use files; we note that this issue was limited 
to the public use files and had no impact on the calculation of PE 
RVUs. For further information, please see the Identification of 
Database Errors in section II.H. of this final rule with comment 
period.
    After consideration of comments received, we are finalizing the CY 
2015 interim final work RVU and direct PE inputs as proposed for CPT 
code 47383.
(10) Transprostatic Implant Procedures (TIP) (CPT Codes 52441 and 
52442)
    In CY 2015, we established the RUC-recommended work RVUs and direct 
PE inputs as interim final for CPT codes 52441 and 52442.
    Comment: One commenter agreed with the list and total cost of 
direct PE supplies established by CMS.
    Response: We appreciate the commenter's supportive comments. We are 
finalizing our CY 2015 valuation for CPT codes 52441 and 52442.
(11) Laparoscopic Hysterectomy (CPT codes 58541, 58542, 58543, 58544, 
58570, 58571, 58572, and 58573)
    In the CY 2015 final rule with comment period, we established as 
interim final the RUC-recommended work RVUs and direct PE inputs for 
these codes.
    Comment: Two commenters requested that these codes be sent to the 
multispecialty refinement panel prior to finalizing their work RVUs for 
CY 2016. Commenters stated that gynecologic oncologists were not 
offered the chance to participate in the RUC surveys for these 
procedures. As a result, the survey results did not reflect the typical 
patients that receive these procedures from practitioners of that 
specialty, who have complex medical needs with co-morbid conditions and 
complications. Commenters also indicated that the Food and Drug 
Administration (FDA) recently discouraged the use of morcellation 
during these procedures, which increases the amount of time it takes to 
perform the procedure and remove the fibroids prior to removing the 
uterus. The commenters stated that these changes need to be taken into 
account with new data prior to finalizing these work RVUs.

[[Page 71000]]

    Response: We received and granted a request for multispecialty 
refinement panel review based on the presentation of new clinical 
information. However, the specialty groups making the original request 
later chose not to present these procedures at the 2015 Multi-Specialty 
Refinement Panel. After consideration of comments received and the lack 
of review by the multispecialty refinement panel, we are finalizing the 
CY 2015 interim final work RVUs for CPT codes 58541, 58542, 58543, 
58544, 58570, 58571, 58572, and 58573 for CY 2016.
(12) Myelography (CPT Codes 62284, 62302, 62303, 62304, 62305, 72240, 
72255, 72265, and 72270)
    In the CY 2015 PFS final rule with comment period, we accepted the 
RUC-recommended work RVU for these nine codes on an interim final 
basis. We made refinements to the clinical labor and equipment time for 
the non-radiological codes in the family.
    Comment: A commenter stated that the RUC recommended only a single 
staff type for the myelography codes, with clinical labor L041B for the 
radiological codes and L037D for the non-radiological ones. The 
commenter stated that they did not believe it would be typical to have 
two staff types involved in the procedure, and suggest allocating all 
minutes for the non-radiological codes to L037D.
    Response: We agree with the commenter that assigning all of the 
clinical labor to a single staff type for each of the two types of 
procedure in the myelography family would be more typical for these 
services. Therefore we are changing the clinical labor type from L041B 
to L037D for the clinical labor activities ``Availability of prior 
images confirmed'', ``Patient clinical information and questionnaire 
reviewed by technologist, order from physician confirmed and exam 
protocoled by radiologist'' and ``Assist physician in performing 
procedure'' for CPT codes 62302, 62303, 62304, and 62305. This ensures 
a single staff type for each of the nine codes in this family.
    After consideration of comments received, we are finalizing these 
codes as proposed, with the change in clinical staff type detailed 
above.
(13) Maxillofacial Computed Tomography (CT) (CPT Codes 70486, 70487 and 
70488)
    In the CY 2015 PFS final rule with comment period, we used the RUC-
recommended work RVU to establish an interim final work RVU of 0.85 for 
CPT code 70486 (Computed tomography, maxillofacial area; without 
contrast material). The RUC arrived at this value by crosswalking CPT 
code 70486 to CPT code 70460 (Computed tomography, head or brain; with 
contrast material(s)), which is the equivalent code in the head and 
brain CT family. To maintain rank order within and across CT families, 
we crosswalked the work RVU for CPT code 70487 (Computed tomography, 
maxillofacial area; with contrast material(s)) from CPT code 70460 
(Computed tomography, head or brain; with contrast material(s)). We 
also crosswalked the work RVU for CPT code 70488 (Computed tomography, 
maxillofacial area; without contrast material, followed by contrast 
material(s) and further sections) from CPT code 70470 (Computed 
tomography, head or brain; without contrast material, followed by 
contrast material(s) and further sections). Therefore, we established 
interim final work RVUs of 1.13 for CPT code 70487 and 1.27 for CPT 
code 70488.
    Comment: For CPT codes 70487 and 70488, commenters suggested that 
the CMS crosswalks did not accurately reflect the intensity of 
maxillofacial CT. Commenters suggested that CPT codes 70487 and 70488 
require a thinner CT slice technique than the CMS crosswalks of CPT 
codes 70460 and 70470, and that the volume of images to be interpreted 
is greater. Commenters suggested that maxillofacial CTs were 
instrumental in imaging potentially dangerous conduits, which could be 
damaged due to maxillofacial disease.
    Response: We continue to believe that since the lowest of the brain 
CT code family was an accurate crosswalk for CPT code 70486, the other 
two codes in the brain CT family are also accurate crosswalks for CPT 
codes 70487 and 70488. The procedures are similar in terms of both 
intraservice time and complexity of the anatomical region. While 
commenters requested that these codes be addressed by the 
multispecialty refinement panel, the request did not include 
information reflecting new clinical evidence, and therefore, did not 
meet the established criteria for review by the multispecialty 
refinement panel.
    Comment: For CPT codes 70487 and 70488, commenters requested 3 
minutes for the clinical labor task ``Provide pre-service education and 
obtain consent.''
    Response: Upon review of the task ``provide pre-service education 
and obtain consent,'' we agree with commenters that 3 minutes is an 
accurate estimate for the amount of time required to discuss the risks 
involved in these procedures. Three minutes also maintains consistency 
within the code family. Therefore, we are including 3 minutes for 
``provide pre-service education and obtain consent in the direct PE 
input database.
(14) Abdominal Ultrasound (CPT Codes 76700, 76705, 76770, 76775, 76856, 
and 76857)
    For CY 2015, we used the RUC-recommended work RVUs and PE inputs to 
establish interim final values for six codes in the abdominal 
ultrasound family.
    Comment: Commenters noted that CPT codes 76700 and 76705 were 
missing from the direct PE input database.
    Response: We appreciate the commenters' attention to detail and we 
have included these codes in the updated direct PE input database.
(15) Breast Ultrasound (CPT Codes 76641 and 76642)
    For CY 2015, the CPT Editorial Panel replaced CPT code 76645 
(Ultrasound, breast(s) (unilateral or bilateral), real time with image 
documentation) with two codes: CPT codes 76641 (Ultrasound, breast, 
unilateral, real time with image documentation, including axilla when 
performed; complete) and 76642 (Ultrasound, breast, unilateral, real 
time with image documentation, including axilla when performed; 
limited). We used the RUC-recommended work RVUs of 0.73 and 0.68 to 
establish interim final work RVUs for CPT codes 76641 and 76642, 
respectively.
    Comment: A few commenters encouraged CMS to refine the input for 
ultrasound room from 27 minutes to 29 minutes for CPT code 76641 and 
from 20 to 22 minutes for CPT code 76642 because ultrasound uses 
distinctive imaging equipment. All clinical labor tasks require usage 
of the machine, making the room unavailable during that time.
    Response: The number of minutes assigned to the ultrasound room for 
both codes conforms to established times for highly technical 
equipment. We believe that adherence to these standard methodologies 
maintains relativity within the development of PE RVUs. Therefore, we 
are finalizing the interim final direct PE inputs for these services.
(16) CT Angiography (CTA) Head (CPT Codes 70496 and 70498)
    In the CY 2015 PFS final rule with comment period, we used the RUC-
recommended work and direct PE input recommendations without refinement 
to establish interim final values for these codes.
    Comment: Some stakeholders stated that clinical staff time for 
confirming prior images and reviewing patient

[[Page 71001]]

clinical information was erroneously allocated to Rad Tech (L041B) 
instead of CT tech (L046A) and that CMS removed 2 minutes from clinical 
labor task ``technologist QC''. Commenters suggested that both actions 
were inconsistent with other codes in the CTA family.
    Response: We reviewed the interim final direct PE inputs as well as 
the ``PE worksheet'' that accompanied the RUC recommendation. We noted 
that the values in ``CMS code'' and ``staff type'' columns were 
discrepant for the two clinical labor tasks noted by the commenters. 
While the CMS code indicated L041B, the Staff Type indicated CT Tech. 
We have therefore corrected the CMS code from L041B to L046A to 
correspond to the clinical staff type. We reviewed the direct PE 
database and confirmed that clinical labor task ``Technologist QC's 
images in PACS, checking for all images, reformats, and dose page'' is 
included for these codes. We are finalizing the interim final values 
for these services, with the additional correction of the staff type 
discrepancy.
(17) Breast Tomosynthesis (CPT Codes 77061, 77062, and 77063)
    In the CY 2015 PFS final rule with comment period, we assigned a 
PFS indicator of ``I'' to CPT codes 77061 and 77062 on an interim basis 
while awaiting recommendations from the RUC for all mammography 
services. Since CPT code 77063 is an add-on code and did not have an 
equivalent CY 2014 code, we believed it was appropriate to value it on 
an interim final basis in advance of receiving the RUC recommendations 
for other mammography services. We assigned it a CY 2015 interim final 
work RVU of 0.60 as recommended by the RUC. We also removed the 
equipment time for the PACS Workstation proxy from all three codes, and 
removed the time for task ``Federally Mandated MQSA Activities 
Allocated To Each Mammogram'' from CPT code 77063.
    Comment: A commenter indicated that the direct PE input files 
included a PACS Workstation proxy for CPT code 77063, but did not 
allocate clinical staff time to this proxy.
    Response: We removed the 4 minutes of clinical labor associated 
with ``Federally Mandated MQSA Activities Allocated To Each Mammogram'' 
due to the fact that CPT code 77063 is an add-on code, and this task 
would already have been performed previously with another mammography 
service. We did not assign equipment time for the PACS Workstation as 
we do not believe that its use would be typical for this procedure.
    After consideration of comments received, we are finalizing the PFS 
indicator ``I'' for CPT codes 77061 and 77062, the interim final work 
RVU of 0.60 for CPT code 77063, and the interim final direct PE inputs 
for all three codes.
(18) Dosimetry (CPT Codes 77300, 77306, and 77307)
    To establish interim final RVUs for these codes, we used the RUC-
recommend work and direct PE inputs for these codes with PE 
refinements, with the refinement of consideration of the ``record and 
verify system'' as an indirect PE.
    Comment: A few commenters expressed support for CMS' adoption of 
the RUC-recommended work RVUs for CPT codes 77306 and 77307. Other 
commenters requested that CMS consider equipment item ED011 (record and 
verify) as a direct PE input because it is typically used during the 
procedures.
    Response: We appreciate the commenters' feedback related to these 
services. We reviewed the ``record and verify'' equipment item and 
agree with commenters that ``record and verify'' should be included as 
a direct PE to maintain consistency with other services in the direct 
PE database, and have updated the direct PE input database accordingly.
(19) Brachytherapy Isodose Plan (CPT Codes 77316, 77317, and 77318)
    For CY 2015, the CPT Editorial Panel replaced six CPT codes (77305, 
77310, 77315, 77326, 77327, and 77328) with five new CPT codes to 
bundle basic dosimetry calculation(s) with teletherapy and 
brachytherapy isodose planning. We established interim final work RVUs 
based on the RUC-recommended work RVUs for CY 2015 for all of the codes 
in this family except CPT code 77316. Instead of using the RUC-
recommended work RVU for CPT code 77316, a simple isodose planning 
code, we developed an interim final work RVU based on a direct 
crosswalk from the corresponding simple isodose planning code in the 
same family, CPT code 77306. Therefore, for CY 2015 we established an 
interim final work RVU of 1.40 for CPT code 77316. This approach is 
similar to the crosswalk the RUC used to develop the recommended work 
RVUs for CPT code 77318.
    Comment: Commenters disagreed with CMS' refinements to CPT code 
77316 and stated that although CPT code 77316 is the simple isodose 
planning code in the family, the CMS-recommended crosswalk to CPT code 
77306 does not accurately capture the intensity of the procedure. 
Commenters suggested that CPT code 77316 is typically used for HDR 
brachytherapy with a single channel and more than four dwell positions. 
This requires more work than CPT code 77306, which is for external beam 
radiation planning. Commenters requested that CPT code 77316 be 
referred to the multispecialty refinement panel.
    Response: Commenters did not provide new clinical information and, 
therefore we did not refer the codes to the multispecialty refinement 
panel. The RUC recommended a crosswalk for CPT code 77318 to CPT code 
77307. We believe that if the work resources for the complex isodose 
planning codes are comparable between the two families, then the work 
resources between the simple isodose planning codes are also 
comparable. Therefore, we believe that the most accurate work RVU for 
CPT code 77316 is 1.40, based on a crosswalk to CPT code 77306.
    Comment: Several commenters thanked CMS for adopting the RUC-
recommended work RVUs for CPT codes 77317 and 77318.
    Response: We appreciate the commenters' support. We are finalizing 
the CY 2015 interim final work RVUs as established.
(20) Electron Microscopy (CPT Code 88348)
    We received PE-only recommendations for CPT code 88348 following 
the October 2013 RUC meeting. After reviewing these recommendations, we 
used the RUC recommendations without refinement to establish interim 
final values for CY 2015.
    Comment: One commenter wrote to express their disagreement with the 
79 percent reduction in the technical component of the procedure 
following the publication of the CY 2015 final rule. The commenter 
suggested that there was an error in evaluating the value and cost of 
this service, and provided additional information regarding the direct 
costs associated with providing electron microscopy to patients. The 
commenter stated that continued reduction in the value for CPT code 
88348 will result in a reduction in the availability of tests which 
will provide impaired service to many patients with treatable 
conditions and salvageable kidney function.
    Response: We concur with the commenter on the importance of 
providing patient access to quality testing. However, we do not believe 
that there was an error in evaluating the value and cost of this 
service. We agreed with the RUC recommendations for

[[Page 71002]]

direct PE inputs for CPT code 88348, and we continue to believe that 
these represent the most accurate values for this procedure.
(21) Microdissection (CPT Codes 88380 and 88381)
    In reviewing the RUC recommendations for CPT code 88380, the work 
vignette indicated that the microdissection is performed by the 
pathologist. However, the PE worksheet also included several subtasks 
of ``Microdissect each stained slide sequentially while reviewing H and 
E stained slide'' that are performed by the cytotechnologist. Since we 
did not believe that both the pathologist and the cytotechnologist were 
completing these tasks, we did not allocate clinical labor time for the 
specific tasks we believe are completed by the pathologist. Table 31 of 
the CY 2015 final rule (FR 79 67697-67698) detailed our refinements to 
these clinical labor tasks. We accepted the RUC-recommended work RVU of 
1.14 for CPT code 88380 and 0.53 for CPT code 88381 on an interim final 
basis for CY 2015.
    Comment: A commenter urged CMS to accept and implement the practice 
expense inputs recommended by the RUC for CPT code 88380. For the 
clinical labor task ``Dispose of razor blade, Cap tube and vortex 
specimens'', the commenter stated that the recommended 3 minutes for 
blade disposal tube capping is part of the processing of the individual 
specimen. The commenter suggested that the word ``blade disposal'' may 
have been confusing since it is not a cleaning function. The commenter 
requested that CMS restore the RUC-recommended 3 minutes for this task.
    Response: We do not believe that clinical labor time should be 
assigned for this task, as CPT code 88380 uses a laser to perform the 
same activity. We do not believe that the use of a razor blade, and 
associated clinical labor, would be typical for this procedure.
    Comment: One commenter stated that the RUC recommended 18 minutes 
for the clinical labor task ``Turn on dissecting microscope, place 
slide on scope, remove razor blade from box. Microdissect tissue within 
etched area, while viewing slide under dissecting scope, place tissue 
into cap of collection tube with blade. Repeat this step for seven 
other slides.'' The commenter indicated that the cytotechnologist and 
pathologist are working together during this task, and the assistance 
of the cytotechnologist is necessary during these ancillary tasks for 
the efficiency of the dissection process. The work survey results 
indicated that some of the work time has shifted to the clinical labor 
time for this particular task.
    Response: We continue to believe that the pathologist is the 
individual performing this clinical labor task, not the 
cytotechnologist.
    Comment: One commenter disagreed with the CMS refinement to the 
equipment time for the Veritas microdissection instrument (EP087). The 
commenter stated that the equipment time associated with EP087 is the 
sum of time to prepare the instrument for use, plus the time the 
pathologist and cytotechnologist are using it, plus the time the room 
and equipment are cleaned. The commenter suggested that while 
microdissection is taking place, the equipment cannot be used for any 
other purpose. The commenter indicated that the sum of these time 
increments equals 34 minutes, not the 32 minutes as refined by CMS.
    Response: We appreciate the commenter's assistance in providing 
clarification regarding the appropriate equipment time for EP087. After 
consideration of comments received, we agree that the Veritas 
microdissection instrument would typically be in use for 33 minutes of 
intraservice time, plus 3 minutes for laser preparation, plus one 
minute for room cleaning following equipment use. Therefore, we are 
refining the equipment time for EP087 to 37 minutes for CPT code 88380, 
to match the standard equipment time formula, and finalizing all other 
direct PE inputs as established as interim final.
(22) Electro-Oculography (EOG VNG) (CPT Code 92543)
    We established a work RVU of 0.10 for CPT code 92543 as interim 
final for CY 2015. Several commenters disagreed with our interim final 
values. However, the CPT Editorial Panel deleted CPT code 92543 for CY 
2016; we refer readers to section II.H. of this final rule with comment 
period, where we discuss CPT codes 9254A and 9254B, used to report 
related services.
(23) Doppler Echocardiography (CPT Codes 93320, 93321 and 93325)
    As detailed in the CY 2015 PFS final rule with comment period, we 
maintained the CY 2014 work RVUs for CPT codes 93320, 93321 and 93325, 
based upon the RUC-recommended work RVUs. In establishing interim final 
direct PE inputs for CY 2015, we refined the RUC's recommendations for 
CPT codes 93320, 93321 and 93325 by removing the minutes associated 
with equipment item ED021 (computer, desktop, w/monitor) since a 
computer is included in the other equipment inputs associated with 
codes.
    Comment: One commenter supported CMS' adopting the work RVUs and 
times recommended by the RUC for these services (CPT codes 93320, 
93321, and 93325).
    Response: We appreciate the commenters support. We are finalizing 
the CY 2015 interim final work RVUs as established.
    Comment: One commenter stated that ED021 is not included in the 
room.
    Response: We disagree that ``computer, desktop w/monitor'' (ED021) 
is not included in the equipment room ``room, vascular ultrasound.'' 
The PE reference materials submitted by the RUC indicate that 
``ultrasound room, vascular'' includes a computer (Vascoguard II, main 
station with cart, keyboard, LCD monitor, deskjet printer, Doppler, and 
probe holder). Therefore, we are finalizing the direct PE inputs for 
CPT codes 93320, 93321, and 93225 as established as interim final.
(24) Interventional Transesophageal Echocardiography (TEE) (CPT Codes 
93312, 93313, 93314, 93315, 93316, 93317, 93318 and 93355)
    For CY 2015, we used the RUC-recommended work RVU of 2.40 to 
establish an interim final value for CPT code 93318 and 4.66 for CPT 
code 93355. Based on a crosswalk from CPT code 75573, we assigned CPT 
code 93312 a CY 2015 interim final work RVU of 2.55. We noted that 
based on the CPT descriptor for CPT code 93315, we believed that the 
appropriate work for this service was reflected in the combined work of 
CPT codes 93316 and 93317, resulting in a CY 2015 interim final work 
RVU of 2.94. For CPT codes 93313, 93314, 93316 and 93317, we assigned 
CY 2015 interim final work RVUs that corresponded to the 25th 
percentile survey result. Each of these codes had a significant 
reduction in intraservice time since the last valuation. We noted that 
we believe the 25th percentile survey values better describe the work 
and time involved in these procedures than the RUC recommendations, and 
that it helps maintain appropriate relativity in the family. 
Additionally, we refined the preservice and intraservice times for CPT 
codes 93314 and 93317 to 10 and 20 minutes, respectively, to maintain 
relativity among the interim final work RVUs and times.
    Comment: Some commenters disagreed with CMS' decision to value the 
work RVU for CPT code 93312 by crosswalking it from CPT code 75573, 
rather than the RUC-recommended work

[[Page 71003]]

RVU based on a crosswalk from CPT code 43247 
(Esophagogastroduodenoscopy).
    Response: The RUC-recommended crosswalk code, CPT code 43247, is a 
0-day global service, whereas CPT code 75573 has no global period. 
Since CPT code 75573 and CPT code 93312 do not have global periods, 
while 43247 has a global period, we do not believe that the latter code 
can serve as an appropriate crosswalk. Therefore, we are finalizing the 
CY 2015 work RVUs as established for CPT code 93312.
    Comment: A few commenters disagreed with CMS' refinement of the 
work RVUs for CPT codes 93313 and 93314. The commenters stated that the 
work RVU that corresponds to the 25th percentile survey result fails to 
account for changes in technique, technology, and knowledge.
    Response: After review of the comments, we continue to believe that 
the RUC-recommended work RVUs do not adequately reflect the significant 
reduction in intraservice time, and that our corresponding refinements 
to the work RVUs are appropriate. We do not believe that the work RVUs 
corresponding to the survey 25th percentile result fail to account for 
typical changes in technique, technology, and knowledge. Therefore, we 
are finalizing the CY 2015 work RVUs as established for CPT codes 93313 
and 93314.
    Comment: A few commenters disagreed with the time refinement made 
to CPT codes 93314 and 93317.
    Response: To maintain consistency with the work RVUs, we continue 
to believe that these time refinements are appropriate. Therefore, we 
are finalizing the times for CPT codes 93314 and 93317 as established 
for CY 2015.
    Comment: Some commenters disagreed with CMS' use of the BBM to 
determine a work RVU for CPT code 93315, suggesting that it did not 
incorporate updated service times and changes in technique, technology, 
and knowledge.
    Response: After consideration of the comments received, we continue 
to believe that the appropriate work RVU for CPT code 93315 is 
reflected in the combined work of CPT codes 93316 and 93317, resulting 
in a CY 2015 interim final work RVU of 2.94. We are finalizing the 
interim final work RVUs for these codes as established.
    Comment: A commenter requested that this family of codes be 
referred to the multispecialty refinement panel.
    Response: The request for referral to the multispecialty refinement 
panel did not include new clinical information; therefore, the request 
did not meet the criteria for review by the multispecialty refinement 
panel.
    Commen One commenter questioned why the TC codes within the 
congenital TEE family are contractor-priced.
    Response: We did not receive recommendations for the direct PE 
inputs for CPT codes 93315, 93317, and 93318. Without such 
recommendations, we did not have sufficient information about the 
resource costs necessary to establish national pricing and we therefore 
assigned a contractor-priced status to the technical component of these 
codes. We are finalizing the contractor-priced status for the technical 
component of CPT codes 93315, 93317, and 93318.
    Comment: One commenter supported CMS' proposal to adopt the RUC-
recommended work RVU and times for CPT code 93355.
    Response: We appreciate the commenter's feedback, and we are 
finalizing the CY 2015 work RVUs and direct PE inputs as established as 
interim final.
(25) Duplex Scans (CPT Codes 93880, 93882, 93886, 93888, 93926, 93975, 
93976, 93977, 93978, and 93979)
    For CY 2014, we maintained the CY 2013 RVUs for CPT codes 93880 and 
93882. As we stated in the CY 2014 PFS final rule with comment period 
(78 FR 74342), we were concerned that the RUC-recommended work RVUs for 
CPT codes 93880 and 93882, as well as our final work RVUs for CPT codes 
93925 (Duplex scan of lower extremity arteries or arterial bypass 
grafts; complete bilateral study) and 93926 (Duplex scan of lower 
extremity arteries or arterial bypass grafts; unilateral or limited 
study) did not maintain the appropriate relativity within the family. 
We referred the entire family to the RUC to assess relativity among the 
codes and to recommend appropriate work RVUs. We also requested that 
the RUC consider CPT codes 93886 (Transcranial Doppler study of the 
intracranial arteries; complete study) and 93888 (Transcranial Doppler 
study of the intracranial arteries; limited study) in conjunction with 
the duplex scan codes to assess the relativity between and among the 
codes. In the CY 2015 PFS final rule with comment period, we used the 
RUC-recommended work RVUs for CPT codes 93880, 93882, 93925, and 93926 
while making several standard PE refinements consistent with standard 
inputs for digital imaging and our policies for not allocating quality 
assurance documentation to individual services as a direct expense.
    Comment: Some commenters stated that quality assurance (QA) 
documentation is an integral part of the procedure, so it should be 
included as a direct PE input clinical labor task.
    Response: We consider QA documentation to be an indirect PE since 
it is not generally allocated to a single patient during an individual 
procedure. Instead, we believe QA activities are undertaken through 
different means across a wide range of practices.
    Comment: One commenter disagreed with the minutes assigned to the 
vascular ultrasound room (EL016) for CPT code 93880. The commenter 
disagreed with the CMS refinement from 68 minutes of equipment time to 
51 minutes, and objected to the removal of equipment time for 
preservice tasks not typically associated with highly technical 
equipment. The commenter stated that there was no data to support the 
CMS rationale, and presented survey data suggesting that preservice 
activities are routinely carried out in the vascular ultrasound room.
    Response: We continue to believe that certain highly technical 
pieces of equipment and equipment rooms are less likely to be used 
during all of the pre-service or post-service tasks performed by 
clinical labor staff on the day of the procedure and are typically 
available for other patients even when one member of the clinical staff 
may be occupied with a pre-service or post-service task related to the 
procedure. We refer readers to our extensive discussion in response to 
those objections in the CY 2012 PFS final rule with comment period (76 
FR 73182) and the CY 2015 PFS final rule with comment period (79 FR 
67639).
    Comment: A few commenters stated that a desktop computer is a 
necessary PE input for these codes.
    Response: We believe that computer processing functionality is 
inherent in the ultrasound system included in the general ultrasound 
room. We refer readers to Table 14 for the items and associated prices 
that constitute the ultrasound rooms.

          Table 14--Items That Constitute the Ultrasound Rooms
------------------------------------------------------------------------
 
------------------------------------------------------------------------
$369,945...........................  General Ultrasound Room, General.

[[Page 71004]]

 
    $220,000.......................     GE Logic 9 ultrasound system
                                         (H4902SG).
    $18,000........................     transducer, 3-8MHz matrix array
                                         convex (H40412LC).
    $650...........................     probe starter kit for H40412LD:
                                         bracket, needle guides, probe
                                         covers (E8385RF).
    $18,000........................     transducer, 5-13MHz linear
                                         matrix array (H40412LD).
    $650...........................     probe starter kit for H40412LD:
                                         bracket, needle guides, probe
                                         covers (E8385RF).
    $12,000........................     transducer, 4-10MH micro convex
                                         probe (H40412LE).
    $11,000........................     transducer, 4-10MHz probe
                                         (H40412LG).
    $10,000........................     transducer, 2-5MHz probe
                                         (H4901PE).
    $12,500........................     software, B-flow (H4901BF).
    $5,500.........................     software, DICOM (H4901DM).
    $8,000.........................     software, LOGIQ View (h4901LW).
    $4,900.........................     VHS video recorder (Sony SVO-
                                         9500MD/2).
    $6,500.........................     digital printer (Sony UPD21).
    $1,995.........................     monochrome thermal printer (Sony
                                         UPD895).
    $5,250.........................     ultrasound table (E8375F).
    $35,000........................     compound imaging.
    $466,492.......................     Ultrasound Room, Vascular.
                                        General Ultrasound Room,
                                         General.
                                        Nicojet VasoGuard P84 (PPG &
                                         lower extremity):
                                           Nicolet Pioneer TC 8080
                                            (transcranial).
                                           Atrium Medical Vaslab--
                                            software add-on for data
                                            collection, database
                                            maintenance, and
                                            accreditation processing.
------------------------------------------------------------------------

    In the CY 2014 PFS final rule with comment period (78 FR 74342), we 
requested that the RUC assess the relativity among the entire family of 
duplex scans codes and recommend appropriate work RVUs. We also 
requested that the RUC consider CPT codes 93886 (Transcranial Doppler 
study of the intracranial arteries; complete study) and 93888 
(Transcranial Doppler study of the intracranial arteries; limited 
study) in conjunction with the duplex scan codes to assess the 
relativity between and among those codes. For CY 2015, we established 
the RUC-recommended work RVUs as interim final for all of the codes in 
the family except CPT codes 93886, 93888, 93926, 93975, 93976, 93977, 
93978, and 93979. For several codes in this family with 10 minutes of 
intraservice time, the RUC recommended 0.50 work RVUs. CPT code 93926 
(Duplex scan of lower extremity arteries or arterial bypass grafts; 
unilateral or limited study), CPT code 93979 (Duplex scan of aorta, 
inferior vena cava, iliac vasculature, or bypass grafts; unilateral or 
limited study,) and CPT code 93888 all have 10 minutes intraservice 
time and we assigned them an interim final work RVU of 0.50. For 
several codes in this family with 15 minutes of intraservice time, the 
RUC recommended work RVUs that corresponded to the 25th percentile 
survey result. We found this to appropriately reflect the work involved 
and applied the same logic to other codes with 15 minutes of 
intraservice time. We established the work RVUs for CPT codes 93975, 
93976, and 93978 that corresponded to the 25th percentile survey 
result, which all have 15 minutes of intraservice time. Therefore, for 
CY 2015 we established the following interim final work RVUs: 1.16 for 
CPT code 93975; 0.80 for CPT code 93976; 0.80 for CPT code 93978; and 
0.50 for CPT code 93979.
    Comment: Several commenters disagreed with the allocation of 0.50 
RVUs to codes with 10 minutes of intraservice time across the Doppler/
duplex code family. The commenters suggested that 0.50 RVUs does not 
reflect the relationship between the codes based on their time, 
intensity, rank order, and complexity. Commenters stated that 
transcranial Doppler studies are more intense than Doppler studies of 
other body parts and thus should be valued with higher RVUs. Commenters 
requested that CPT codes 93886 and 93888 be referred to the 
multispecialty refinement panel.
    Response: When valuing these codes, we used the RUC recommendation 
of 0.80 RVUs for CPT code 93880, which has an intraservice time of 15 
minutes. Applying the work RVU-to-time ratio of CPT code 93880 to CPT 
code 93886, which has an intraservice time of 17 minutes, results in 
our interim final work RVU of 0.91 for CPT code 93886. For CPT code 
93888, we noted that it had an identical time and similar intensity to 
code 93882; therefore, we found an RVU of 0.50 to be appropriate. The 
commenters did not include any new clinical information in their 
requests for referral of CPT codes 93886 and 93888. Therefore, the 
requests did not meet the criteria for referral to the multispecialty 
refinement panel.
    Comment: Several commenters encouraged CMS to adopt the RUC 
recommendation for CPT code 93926, stating that, although CPT code 
93926 has 10 minutes of intraservice time, the intensity is greater 
than 0.50 RVUs.
    Response: We appreciate the commenters' feedback. However, we 
believe that 0.50 is the accurate work RVU for CPT code 93926 based on 
a crosswalk from CPT code 93880. We believe that because the intensity 
is similar and the overall time is the same, the overall work is 
comparable.
    Comment: Several commenters pointed out that CPT code 93975 has 20 
minutes of intraservice time, and should not have the same RVU as a 
code with 15 minutes of intraservice time. A few commenters suggested 
that CPT code 93976 involves arterial and venous blood flow and is 
therefore more intense than other procedures in the code family. 
Commenters requested that CPT codes 93975 and 93976 be referred to the 
multispecialty refinement panel.
    Response: When valuing code 93965, we noted that we did not think 
the RVU that resulted in application of the intraservice ratio to 93880 
accurately reflected the work involved in furnishing the procedure. 
Therefore, we used the work RVU that corresponded to the 25th 
percentile survey result to establish the RVU. For code 93976, we noted 
that the intraservice time is identical to CPT code 93880, which has a 
work RVU of 0.50. This value also corresponds to the 25th percentile 
survey result.
    Comment: A commenter commended CMS for accepting the RUC-
recommended work RVU for CPT code 93931.
    Response: We appreciate the commenter's feedback and support.
    After considering these comments, we are finalizing the CY 2015 
interim final values as established.
(26) Carotid Intima-Media Thickness Ultrasound (CPT Code 93895)
    For CY 2015, the CPT Editorial Panel created new CPT code 93895 to 
describe the work of using carotid ultrasound to measure 
atherosclerosis and quantify the intima-media thickness. After review 
of this code, we determined that

[[Page 71005]]

it was used only for screening, and therefore, we assigned a PFS 
procedure status indicator of N (Noncovered service) to CPT code 93895.
    Comment: Two commenters were dissatisfied with our designation of 
this service as a noncovered screening tool. One commenter stated that 
``other methods for atherosclerosis imaging are already approved for 
coverage under Medicare local coverage determination policies and are 
directly comparable to carotid atherosclerosis imaging in terms of 
their purpose and clinical application.'' Another commenter suggested 
that the test was ``designed to be used in patients with cardiovascular 
risk to enhance care and assist physicians in selection and intensity 
of risk reducing therapies.'' All commenters encouraged CMS to 
reconsider its decision to classify CPT code 93895 as a noncovered 
screening service.
    Response: While we appreciate the commenter's feedback, we are 
unaware of other carotid atherosclerosis imaging services for which we 
provide payment when used for patients without signs or symptoms of 
disease. Information that we received from the RUC and specialty 
societies indicated that the typical patient would be one without signs 
or symptoms of carotid disease. Therefore, this test does not meet the 
statutory definition of a diagnostic test and as such, is not covered 
under Medicare.
(27) Negative Pressure Wound Therapy (CPT Codes 97605, 97606, 97607 and 
97608)
    Prior to CY 2013, CPT codes 97605 and 97606 were both used to 
report negative pressure wound therapy, which were typically reported 
in conjunction with durable medical equipment that was separately 
payable. In the CY 2013 final rule with comment period, we created two 
HCPCS codes to provide a payment mechanism for negative pressure wound 
therapy services furnished to beneficiaries using equipment that is not 
paid for as durable medical equipment: G0456 (Negative pressure wound 
therapy, (for example, vacuum assisted drainage collection) using a 
mechanically powered device, not durable medical equipment, including 
provision of cartridge and dressing(s), topical application(s), wound 
assessment, and instructions for ongoing care, per session; total 
wound(s) surface area less than or equal to 50 square centimeters) and 
G0457 (Negative pressure wound therapy, (for example, vacuum assisted 
drainage collection) using a mechanically-powered device, not durable 
medical equipment, including provision of cartridge and dressing(s), 
topical application(s), wound assessment, and instructions for ongoing 
care, per session; total wound(s) surface area greater than 50 sq. cm).
    For CY 2015, the CPT Editorial Panel created CPT codes 97607 and 
97608 to describe negative pressure wound therapy with the use of a 
disposable system. In addition, CPT codes 97605 and 97606 were revised 
to specify the use of durable medical equipment. Based upon the revised 
coding scheme for negative pressure wound therapy, we deleted the G-
codes. We contractor-priced CPT codes 97607 and 97608 for CY 2015 and 
the CPT codes were designated ``Sometimes Therapy'' on our Therapy Code 
List, consistent with the G-codes.
    Comment: One commenter was disappointed with CMS' decision to 
contractor price CPT Codes 97607 and 97608, since CMS originally 
created G-codes to provide a payment mechanism for negative pressure 
wound therapy services furnished to beneficiaries through means 
unrelated to the durable medical equipment benefit. They expressed 
concern that practitioners who utilize the new disposable device will 
be paid amounts derived from crosswalks from the DME-related codes (CPT 
codes 97605 and 97606), which include more work time and work.
    Response: We agree that the codes are intended to provide a payment 
mechanism for negative pressure wound therapy services furnished to a 
beneficiary using equipment that is not paid for as durable medical 
equipment. However, we do not agree that contractor pricing the codes 
is unlikely to result in accurate payment amounts for the services. 
There are several obstacles to developing accurate payment rates for 
these services within the PE RVU methodology, including the indirect PE 
allocation for the typical practitioners who furnish these services and 
the diversity of the products used in furnishing these services. Since 
our methodology values services based on the typical case, and the cost 
structure differs among a variety of products, we believe that 
contractor pricing allows for more accurate payment than national 
prices that would be based on the cost structure of a single product. 
Thus, contractor pricing these codes allows for flexibility in the 
products used, pending additional information about what product is 
typically involved in furnishing these services.
    Comment: One commenter expressed disappointment that CMS had 
adjusted the equipment and staff time downward for CPT codes 97605 and 
97606. The commenter expressed that the timing of the publication of 
this rule does not allow adequate time to evaluate the impact these 
changes will have on operating expenses and noted that the complicated 
nature of the formula used to calculate PE RVUs limits their ability to 
predict the impact of these changes.
    Response: The intraservice clinical labor time already included 
time for wound checking. As a result, the 5 minutes in the post-service 
period were refined to 2 minutes. Accordingly, equipment times were 
refined to conform to the changes in clinical labor time. After 
consideration of the comment, we are finalizing the direct PE inputs 
for CPT codes 97605 and 97606 as established. In response to the 
commenter's concerns regarding the timing of changes in values for 
particular PFS services, we note that beginning in rulemaking for CY 
2017, we anticipate that most changes in payment based on review of 
individual codes will be proposed in the annual PFS proposed rule 
instead of established as interim final in the annual final rule. We 
also note that we display the resulting PE RVUs for each code in 
Addendum B for each proposed and final rule. This allows stakeholders 
to see the PE RVUs that result from any changes in input assumptions 
for particular codes.
(28) Hyperbaric Oxygen Therapy (HBOT) (CPT Code 99183 and HCPCS Code 
G0277)
    For CY 2015, we received RUC recommendations for CPT code 99183 
that included significant increases to the direct PE inputs, which 
assumed a treatment time of 120 minutes. Prior to CY 2015, CPT code 
99183 was used to report both the professional attendance and 
supervision, and the costs associated with treatment delivery were 
included in nonfacility direct PE inputs for the code. We created HCPCS 
code G0277 to be used to report the treatment delivery separately, 
consistent with the OPPS coding mechanism, to allow the use of the same 
coding structure across settings. In establishing interim final direct 
PE inputs for HCPCS code G0277, we used the RUC-recommended direct PE 
inputs for CPT code 99183 and adjusted them to align with the 30-minute 
treatment interval. We observed that the quantity of oxygen increased 
significantly relative to the previous value. To better understand this 
change, we reviewed the instruction manual for the most commonly used 
HBOT chamber, which provided guidance regarding the quantity of oxygen 
used. Based on our review, we determined that 12,000, rather than 
47,000, was the typical number of units. Therefore, in

[[Page 71006]]

aligning the direct PE inputs as described above, we first adjusted the 
units of oxygen to 12,000 for the recommended 120-minute time, and 
subsequently adjusted it to align with the 30 minute G-code.
    Comment: Several commenters disagreed with the volume of oxygen 
consumed for a 120 minute treatment time cited in the final rule and 
some recommended adopting 42,000-47,000 liters or units for a typical 
120-minute HBO2 profile. We also received a few additional comments on 
these services during the comment period for the proposed rule. The 
commenters reiterated that they support the change from C1300 to G0277 
as the 30 minute interval for hyperbaric oxygen therapy; however, they 
suggested that the methodology used by the RUC more accurately reflects 
the amount of oxygen that is used in a hyperbaric oxygen treatment. 
They stated, ``the provision of a hyperbaric oxygen treatment requires 
a pressure of greater than 1.4 ATA and a therapeutic dose of as close 
to 100 percent oxygen as can be achieved in the monoplace environment. 
This level of oxygen delivery must be reached and maintained for the 
duration of the designated treatment time. Therefore, a treatment of 
2.4 ATA for 120 minutes will require that the target chamber oxygen 
concentration must be achieved at the same time as the designated 
pressure.'' The commenter additionally requested that CMS not finalize 
the proposed CY 2016 reduction in PE RVUs.
    Response: We thank the commenters for their feedback and have 
considered the materials submitted. We agree that a high purge flow 
rate is needed in order to reach maximum pressure/O2; however, we still 
have not seen data that demonstrates the need to continue a maximum 
flow rate throughout the entire session. The RUC forwarded an invoice 
for the Sechrist Model 3600E Hyperbaric Chamber for use in pricing the 
capital equipment for this service. According to the manufacturer's 
manual for this model, ``once the nitrogen has been purged from the 
chamber and the internal oxygen concentration has exceeded 95 percent, 
high flows are no longer needed to maintain the patient's saturation 
level.'' The manual also states that ``the plateau purge flow can be 
set to 80 lpm.'' We calculated that 13 minutes at 400 lpm plus 120 
minutes at 80 lpm equals 14,800 liters of oxygen. Based on the current 
publicly available information in the manufacturer's manual, we believe 
that this represents the typical usage for a 120 minute treatment. This 
amount represents an increase from the interim final amount of 12,000. 
As we described in the CY 2015 final rule, we aligned this total oxygen 
requirement to the 30 minute G-code. Following that principle here, we 
are updating the direct PE inputs to 3,700 liters of oxygen for HCPCS 
code G0277. In response to the commenter's request regarding a 
reduction in the PE RVUs in the CY 2016 PFS proposed rule, any changes 
from the CY 2015 PE RVUs for HCPCS code G0277 to values displayed in 
association with the CY 2016 proposed rule resulted from overall 
changes in PE relativity and PFS budget neutrality and did not result 
from a change in the direct PE inputs.
9. CY 2016 Interim Final Codes
    For recommendations regarding any new or revised codes received 
after the February 10, 2015 deadline, including updated recommendations 
for codes included in the CY 2016 proposed rule, we are establishing 
interim final values in this final rule with comment period, consistent 
with previous practice.
    We note that in the CY 2016 PFS proposed rule, we inadvertently 
published work RVUs for several CPT codes in Addendum B that were not 
explicitly discussed in the text. Those CPT codes include 88341, 88364, 
and 88369; these codes had previously been proposed on an interim basis 
in the CY 2015 PFS final rule with comment period. While these codes 
were not discussed in the proposed rule because our files displayed 
incorrect work RVUs for these codes due to the data error, some 
commenters raised questions about these codes' displayed work RVUs. To 
allow public comment on the correct valuations, we are therefore 
establishing interim final work RVUs for these codes for CY 2016 and 
requesting comment on those interim final values in this final rule. We 
will respond to comments on these values in CY 2017 rulemaking.

            Table 15--CY 2016 Interim Final Work RVUs for New/Revised or Potentially Misvalued Codes
----------------------------------------------------------------------------------------------------------------
                                                                      RUC/HCPAC
           HCPCS Code               Long descriptor     CY 2015      recommended     CMS 2016       CMS time
                                                          WRVU        work RVU       work RVU      refinement
----------------------------------------------------------------------------------------------------------------
10035...........................  Placement of soft           NEW            1.70         1.70  No.
                                   tissue
                                   localization
                                   device(s) (e.g.,
                                   clip, metallic
                                   pellet, wire/
                                   needle,
                                   radioactive
                                   seeds),
                                   percutaneous,
                                   including imaging
                                   guidance; first
                                   lesion.
10036...........................  Placement of soft           NEW            0.85         0.85  No.
                                   tissue
                                   localization
                                   device(s) (e.g.,
                                   clip, metallic
                                   pellet, wire/
                                   needle,
                                   radioactive
                                   seeds),
                                   percutaneous,
                                   including imaging
                                   guidance; each
                                   additional lesion.
26356...........................  Repair or                 10.62           10.03         9.56  No.
                                   advancement,
                                   flexor tendon, in
                                   zone 2 digital
                                   flexor tendon
                                   sheath (e.g., no
                                   man's land);
                                   primary, without
                                   free graft, each
                                   tendon.
26357...........................  Repair or                  8.77           11.50        10.53  No.
                                   advancement,
                                   flexor tendon, in
                                   zone 2 digital
                                   flexor tendon
                                   sheath (e.g., no
                                   man's land);
                                   secondary,
                                   without free
                                   graft, each
                                   tendon.
26358...........................  Repair or                  9.36           13.10        12.13  No.
                                   advancement,
                                   flexor tendon, in
                                   zone 2 digital
                                   flexor tendon
                                   sheath (e.g., no
                                   man's land);
                                   secondary, with
                                   free graft
                                   (includes
                                   obtaining graft),
                                   each tendon.
41530...........................  Submucosal                 4.51            3.50         3.50  No.
                                   ablation of the
                                   tongue base,
                                   radiofrequency, 1
                                   or more sites,
                                   per session.
43210...........................  Esophagogastroduod          NEW            9.00         7.75  Yes.
                                   enoscopy,
                                   flexible,
                                   transoral; with
                                   esophagogastric
                                   fundoplasty,
                                   partial or
                                   complete,
                                   includes
                                   duodenoscopy when
                                   performed.
47531...........................  Injection                   NEW            1.80         1.80  No.
                                   procedure for
                                   cholangiography,
                                   percutaneous,
                                   complete
                                   diagnostic
                                   procedure
                                   including imaging
                                   guidance (e.g.,
                                   ultrasound and/or
                                   fluoroscopy) and
                                   all associated
                                   radiological
                                   supervision and
                                   interpretation;
                                   existing access.

[[Page 71007]]

 
47532...........................  Injection                   NEW            4.25         4.25  No.
                                   procedure for
                                   cholangiography,
                                   percutaneous,
                                   complete
                                   diagnostic
                                   procedure
                                   including imaging
                                   guidance (e.g.,
                                   ultrasound and/or
                                   fluoroscopy) and
                                   all associated
                                   radiological
                                   supervision and
                                   interpretation;
                                   new access (e.g.,
                                   percutaneous
                                   transhepatic
                                   cholangiogram).
47533...........................  Placement of                NEW            6.00         6.00  No.
                                   biliary drainage
                                   catheter,
                                   percutaneous,
                                   including
                                   diagnostic
                                   cholangiography
                                   when performed,
                                   imaging guidance
                                   (e.g., ultrasound
                                   and/or
                                   fluoroscopy) and
                                   all associated
                                   radiological
                                   supervision and
                                   interpretation;
                                   external.
47534...........................  Placement of                NEW            8.03         8.03  No.
                                   biliary drainage
                                   catheter,
                                   percutaneous,
                                   including
                                   diagnostic
                                   cholangiography
                                   when performed,
                                   imaging guidance
                                   (e.g., ultrasound
                                   and/or
                                   fluoroscopy) and
                                   all associated
                                   radiological
                                   supervision and
                                   interpretation;
                                   internal-external.
47535...........................  Placement of                NEW            4.50         4.50  No.
                                   biliary drainage
                                   catheter,
                                   percutaneous,
                                   including
                                   diagnostic
                                   cholangiography
                                   when performed,
                                   imaging guidance
                                   (e.g., ultrasound
                                   and/or
                                   fluoroscopy) and
                                   all associated
                                   radiological
                                   supervision and
                                   interpretation;
                                   internal-external.
47536...........................  Exchange of                 NEW            2.88         2.88  No.
                                   biliary drainage
                                   catheter (e.g.,
                                   external,
                                   internal-
                                   external, or
                                   conversion of
                                   internal-external
                                   to external
                                   only),
                                   percutaneous,
                                   including
                                   diagnostic
                                   cholangiography
                                   when performed,
                                   imaging guidance
                                   (e.g.,
                                   fluoroscopy) and
                                   all associated
                                   radiological
                                   supervision and
                                   interpretation.
47537...........................  Removal of biliary          NEW            1.83         1.83  No.
                                   drainage
                                   catheter,
                                   percutaneous,
                                   requiring
                                   fluoroscopic
                                   guidance (e.g.,
                                   with concurrent
                                   indwelling
                                   biliary stents),
                                   including
                                   diagnostic
                                   cholangiography
                                   when performed,
                                   imaging guidance
                                   (e.g.,
                                   fluoroscopy) and
                                   all associated
                                   radiological
                                   supervision and
                                   interpretation.
47538...........................  Placement of                NEW            6.60         6.60  No.
                                   stent(s) into a
                                   bile duct,
                                   percutaneous,
                                   including
                                   diagnostic
                                   cholangiography,
                                   imaging guidance
                                   (e.g.,
                                   fluoroscopy and/
                                   or ultrasound),
                                   balloon dilation,
                                   catheter exchange
                                   or removal when
                                   performed, and
                                   all associated
                                   radiological
                                   supervision and
                                   interpretation,
                                   each stent;
                                   existing access.
47539...........................  Placement of                NEW            9.00         9.00  No.
                                   stent(s) into a
                                   bile duct,
                                   percutaneous,
                                   including
                                   diagnostic
                                   cholangiography,
                                   imaging guidance
                                   (e.g.,
                                   fluoroscopy and/
                                   or ultrasound),
                                   balloon dilation,
                                   catheter exchange
                                   or removal when
                                   performed, and
                                   all associated
                                   radiological
                                   supervision and
                                   interpretation,
                                   each stent; new
                                   access, without
                                   placement of
                                   separate biliary
                                   drainage catheter.
47540...........................  Placement of                NEW           12.00        10.75  No.
                                   stent(s) into a
                                   bile duct,
                                   percutaneous,
                                   including
                                   diagnostic
                                   cholangiography,
                                   imaging guidance
                                   (e.g.,
                                   fluoroscopy and/
                                   or ultrasound),
                                   balloon dilation,
                                   catheter exchange
                                   or removal when
                                   performed, and
                                   all associated
                                   radiological
                                   supervision and
                                   interpretation,
                                   each stent; new
                                   access, with
                                   placement of
                                   separate biliary
                                   drainage catheter
                                   (e.g., external
                                   or internal-
                                   external ).
47541...........................  Placement of                NEW            5.61         5.61  No.
                                   access through
                                   the biliary tree
                                   and into small
                                   bowel to assist
                                   with an
                                   endoscopic
                                   biliary procedure
                                   (e.g., rendezvous
                                   procedure),
                                   percutaneous,
                                   including
                                   diagnostic
                                   cholangiography
                                   when performed,
                                   imaging guidance
                                   (e.g., ultrasound
                                   and/or
                                   fluoroscopy) and
                                   all associated
                                   radiological
                                   supervision and
                                   interpretation;
                                   new access.
47542...........................  Balloon dilation            NEW            3.28         2.50  No.
                                   of biliary
                                   duct(s) or of
                                   ampulla
                                   (sphincteroplasty
                                   ), percutaneous,
                                   including imaging
                                   guidance (e.g.,
                                   fluoroscopy) and
                                   all associated
                                   radiological
                                   supervision and
                                   interpretation,
                                   each duct.
47543...........................  Endoluminal                 NEW            3.51         3.07  No.
                                   biopsy(ies) of
                                   biliary tree,
                                   percutaneous, any
                                   method(s) (e.g.,
                                   brush, forceps
                                   and/or needle),
                                   including imaging
                                   guidance (e.g.,
                                   fluoroscopy) and
                                   all associated
                                   radiological
                                   supervision and
                                   interpretation,
                                   single or
                                   multiple.
47544...........................  Removal of calculi/         NEW            4.74         4.29  No.
                                   debris from
                                   biliary duct(s)
                                   and/or
                                   gallbladder,
                                   percutaneous,
                                   including
                                   destruction of
                                   calculi by any
                                   method (e.g.,
                                   mechanical,
                                   electrohydraulic,
                                   lithotripsy) when
                                   performed,
                                   imaging guidance
                                   (e.g.,
                                   fluoroscopy) and
                                   all associated
                                   radiological
                                   supervision and
                                   interpretation
                                   (List separately
                                   in addition to
                                   code for primary
                                   procedure).
49185...........................  Sclerotherapy of a          NEW            2.78         2.35  No.
                                   fluid collection
                                   (e.g.,
                                   lymphocele, cyst,
                                   or seroma),
                                   percutaneous,
                                   including
                                   contrast
                                   injection(s),
                                   sclerosant
                                   injection(s),
                                   diagnostic study,
                                   imaging guidance
                                   (e.g.,
                                   ultrasound,
                                   fluoroscopy) and
                                   radiological
                                   supervision and
                                   interpretation
                                   when performed.

[[Page 71008]]

 
50606...........................  Endoluminal biopsy          NEW            3.16         3.16  No.
                                   of ureter and/or
                                   renal pelvis, non-
                                   endoscopic,
                                   including imaging
                                   guidance (e.g.,
                                   ultrasound and/or
                                   fluoroscopy) and
                                   all associated
                                   radiological
                                   supervision and
                                   interpretation.
50705...........................  Ureteral                    NEW            4.03         4.03  No.
                                   embolization or
                                   occlusion,
                                   including imaging
                                   guidance (e.g.,
                                   ultrasound and/or
                                   fluoroscopy) and
                                   all associated
                                   radiological
                                   supervision and
                                   interpretation.
50706...........................  Balloon dilation,           NEW            3.80         3.80  No.
                                   ureteral
                                   stricture,
                                   including imaging
                                   guidance (e.g.,
                                   ultrasound and/or
                                   fluoroscopy) and
                                   all associated
                                   radiological
                                   supervision and
                                   interpretation.
55866...........................  Laparoscopy,              32.06           26.80        21.36  No.
                                   surgical
                                   prostatectomy,
                                   retropubic
                                   radical,
                                   including nerve
                                   sparing, includes
                                   robotic
                                   assistance, when
                                   performed.
61645...........................  Percutaneous                NEW           17.00        15.00  Yes.
                                   arterial
                                   transluminal
                                   mechanical
                                   thrombectomy and/
                                   or infusion for
                                   thrombolysis,
                                   intracranial, any
                                   method, including
                                   diagnostic
                                   angiography,
                                   fluoroscopic
                                   guidance,
                                   catheter
                                   placement, and
                                   intraprocedural
                                   pharmacological
                                   thrombolytic
                                   injection(s).
61650...........................  Endovascular                NEW           12.00        10.00  Yes.
                                   intracranial
                                   prolonged
                                   administration of
                                   pharmacologic
                                   agent(s) other
                                   than for
                                   thrombolysis,
                                   arterial,
                                   including
                                   catheter
                                   placement,
                                   diagnostic
                                   angiography, and
                                   imaging guidance;
                                   initial vascular
                                   territory.
61651...........................  Endovascular                NEW            5.50         4.25  No.
                                   intracranial
                                   prolonged
                                   administration of
                                   pharmacologic
                                   agent(s) other
                                   than for
                                   thrombolysis,
                                   arterial,
                                   including
                                   catheter
                                   placement,
                                   diagnostic
                                   angiography, and
                                   imaging guidance;
                                   each additional
                                   vascular
                                   territory (List
                                   separately in
                                   addition to the
                                   primary code).
64461...........................  Paravertebral               NEW            1.75         1.75  No.
                                   block (PVB)
                                   (paraspinous
                                   block), thoracic;
                                   single injection
                                   site (includes
                                   imaging guidance,
                                   when performed).
64462...........................  Paravertebral               NEW            1.10         1.10  No.
                                   block (PVB)
                                   (paraspinous
                                   block), thoracic;
                                   second and any
                                   additional
                                   injection
                                   site(s),
                                   (includes imaging
                                   guidance, when
                                   performed).
64463...........................  Paravertebral               NEW            1.90         1.81  No.
                                   block (PVB)
                                   (paraspinous
                                   block), thoracic;
                                   continuous
                                   infusion by
                                   catheter
                                   (includes imaging
                                   guidance, when
                                   performed).
64553...........................  Percutaneous               2.36            2.36         2.36  No.
                                   implantation of
                                   neurostimulator
                                   electrode array;
                                   cranial nerve.
64555...........................  Percutaneous               2.32            2.32         2.32  No.
                                   implantation of
                                   neurostimulator
                                   electrode array;
                                   peripheral nerve
                                   (excludes sacral
                                   nerve).
64566...........................  Posterior tibial           0.60            0.60         0.60  No.
                                   neurostimulation,
                                   percutaneous
                                   needle electrode,
                                   single treatment,
                                   includes
                                   programming.
65778...........................  Placement of               1.19            1.00         1.00  No.
                                   amniotic membrane
                                   on the ocular
                                   surface; without
                                   sutures.
65779...........................  Placement of               3.92            2.50         2.50  Yes.
                                   amniotic membrane
                                   on the ocular
                                   surface; single
                                   layer, sutured.
65780...........................  Ocular surface            10.73            8.80         7.81  No.
                                   reconstruction;
                                   amniotic membrane
                                   transplantation,
                                   multiple layers.
65855...........................  Trabeculoplasty by         3.99            3.00         2.66  No.
                                   laser surgery.
66170...........................  Fistulization of          15.02           13.94        11.27  No.
                                   sclera for
                                   glaucoma;
                                   trabeculectomy ab
                                   externo in
                                   absence of
                                   previous surgery.
66172...........................  Fistulization of          18.86           14.81        12.57  No.
                                   sclera for
                                   glaucoma;
                                   trabeculectomy ab
                                   externo with
                                   scarring from
                                   previous ocular
                                   surgery or trauma
                                   (includes
                                   injection of
                                   antifibrotic
                                   agents).
67107...........................  Repair of retinal         16.71           16.00        14.06  No.
                                   detachment;
                                   scleral buckling
                                   (such as lamellar
                                   scleral
                                   dissection,
                                   imbrication or
                                   encircling
                                   procedure),
                                   including, when
                                   performed,
                                   implant,
                                   cryotherapy,
                                   photocoagulation,
                                   and drainage of
                                   subretinal fluid.
67108...........................  Repair of retinal         22.89           17.13        15.19  No.
                                   detachment; with
                                   vitrectomy, any
                                   method,
                                   including, when
                                   performed, air or
                                   gas tamponade,
                                   focal endolaser
                                   photocoagulation,
                                   cryotherapy,
                                   drainage of
                                   subretinal fluid,
                                   scleral buckling,
                                   and/or removal of
                                   lens by same
                                   technique.
67110...........................  Repair of retinal         10.25           10.25         8.31  No.
                                   detachment; by
                                   injection of air
                                   or other gas
                                   (e.g., pneumatic
                                   retinopexy).
67113...........................  Repair of complex         25.35           19.00        19.00  No.
                                   retinal
                                   detachment (e.g.,
                                   proliferative
                                   vitreoretinopathy
                                   , stage C-1 or
                                   greater, diabetic
                                   traction retinal
                                   detachment,
                                   retinopathy of
                                   prematurity,
                                   retinal tear of
                                   greater than 90
                                   degrees), with
                                   vitrectomy and
                                   membrane peeling,
                                   including, when
                                   performed, air,
                                   gas, or silicone
                                   oil tamponade,
                                   cryotherapy,
                                   endolaser
                                   photocoagulation,
                                   drainage of
                                   subretinal fluid,
                                   scleral buckling,
                                   and/or removal of
                                   lens.

[[Page 71009]]

 
67227...........................  Destruction of             7.53            3.50         3.50  No.
                                   extensive or
                                   progressive
                                   retinopathy
                                   (e.g., diabetic
                                   retinopathy),
                                   cryotherapy,
                                   diathermy.
67228...........................  Treatment of              13.82            4.39         4.39  No.
                                   extensive or
                                   progressive
                                   retinopathy
                                   (e.g., diabetic
                                   retinopathy),
                                   photocoagulation.
72170...........................  Radiologic                 0.17            0.17         0.17  No.
                                   examination,
                                   pelvis; 1 or 2
                                   views.
73501...........................  Radiologic                  NEW            0.18         0.18  No.
                                   examination, hip,
                                   unilateral, with
                                   pelvis when
                                   performed; 1 view.
73502...........................  Radiologic                  NEW            0.22         0.22  No.
                                   examination, hip,
                                   unilateral, with
                                   pelvis when
                                   performed; 2-3
                                   views.
73503...........................  Radiologic                  NEW            0.27         0.27  No.
                                   examination, hip,
                                   unilateral, with
                                   pelvis when
                                   performed;
                                   minimum of 4
                                   views.
73521...........................  Radiologic                  NEW            0.22         0.22  No.
                                   examination,
                                   hips, bilateral,
                                   with pelvis when
                                   performed; 2
                                   views.
73522...........................  Radiologic                  NEW            0.29         0.29  No.
                                   examination,
                                   hips, bilateral,
                                   with pelvis when
                                   performed; 3-4
                                   views.
73523...........................  Radiologic                  NEW            0.31         0.31  No.
                                   examination,
                                   hips, bilateral,
                                   with pelvis when
                                   performed;
                                   minimum of 5
                                   views.
73551...........................  Radiologic                  NEW            0.16         0.16  No.
                                   examination,
                                   femur; 1 view.
73552...........................  Radiologic                  NEW            0.18         0.18  No.
                                   examination,
                                   femur; minimum 2
                                   views.
74712...........................  Magnetic resonance          NEW            3.00         3.00  No.
                                   (e.g., proton)
                                   imaging, fetal,
                                   including
                                   placental and
                                   maternal pelvic
                                   imaging when
                                   performed; single
                                   or first
                                   gestation.
74713...........................  Magnetic resonance          NEW            1.85         1.78  No.
                                   (e.g., proton)
                                   imaging, fetal,
                                   including
                                   placental and
                                   maternal pelvic
                                   imaging when
                                   performed; each
                                   additional
                                   gestation.
77778...........................  Interstitial              11.32            8.78         8.00  No.
                                   radiation source
                                   application,
                                   complex, includes
                                   supervision,
                                   handling, loading
                                   of radiation
                                   source, when
                                   performed.
77790...........................  Supervision,               1.05            0.00         0.00  No.
                                   handling, loading
                                   of radiation.
78264...........................  Gastric emptying           0.80            0.80         0.74  No.
                                   imaging study
                                   (e.g., solid,
                                   liquid, or both).
78265...........................  Gastric emptying            NEW            0.98         0.98  No.
                                   imaging study
                                   (e.g., solid,
                                   liquid, or both);
                                   with small bowel
                                   transit, up to 24
                                   hours.
78266...........................  Gastric emptying            NEW            1.08         1.08  No.
                                   imaging study
                                   (e.g., solid,
                                   liquid, or both);
                                   with small bowel
                                   and colon
                                   transit, multiple
                                   days.
88104...........................  Cytopathology,             0.56            0.56         0.56  No.
                                   fluids, washings
                                   or brushings,
                                   except cervical
                                   or vaginal;
                                   smears with
                                   interpretation.
88106...........................  Cytopathology,             0.37            0.37         0.37  No.
                                   fluids, washings
                                   or brushings,
                                   except cervical
                                   or vaginal;
                                   simple filter
                                   method with
                                   interpretation.
88108...........................  Cytopathology,             0.44            0.44         0.44  No.
                                   concentration
                                   technique, smears
                                   and
                                   interpretation
                                   (e.g., Saccomanno
                                   technique).
88112...........................  Cytopathology,             0.56            0.56         0.56  No.
                                   selective
                                   cellular
                                   enhancement
                                   technique with
                                   interpretation
                                   (e.g., liquid
                                   based slide
                                   preparation
                                   method), except
                                   cervical or
                                   vaginal.
88160...........................  Cytopathology,             0.50            0.50         0.50  No.
                                   smears, any other
                                   source; screening
                                   and
                                   interpretation.
88161...........................  Cytopathology,             0.50            0.50         0.50  No.
                                   smears, any other
                                   source;
                                   preparation,
                                   screening and
                                   interpretation.
88162...........................  Cytopathology,             0.76            0.76         0.76  No.
                                   smears, any other
                                   source; extended
                                   study involving
                                   over 5 slides and/
                                   or multiple
                                   stains.
91200...........................  Liver                      0.30            0.27         0.27  No.
                                   elastography,
                                   mechanically
                                   induced shear
                                   wave (e.g.,
                                   vibration),
                                   without imaging,
                                   with
                                   interpretation
                                   and report.
93050...........................  Arterial pressure           NEW            0.17         0.17  No.
                                   waveform analysis
                                   for assessment of
                                   central arterial
                                   pressures,
                                   includes
                                   obtaining
                                   waveform(s),
                                   digitization and
                                   application of
                                   nonlinear
                                   mathematical
                                   transformations
                                   to determine
                                   central arterial
                                   pressures and
                                   augmentation
                                   index, with
                                   interpretation
                                   and report, upper
                                   extremity artery,
                                   non-invasive.
95971...........................  Electronic                 0.78            0.78         0.78  No.
                                   analysis of
                                   implanted
                                   neurostimulator
                                   pulse generator
                                   system (e.g.,
                                   rate, pulse
                                   amplitude, pulse
                                   duration,
                                   configuration of
                                   wave form,
                                   battery status,
                                   electrode
                                   selectability,
                                   output
                                   modulation,
                                   cycling,
                                   impedance and
                                   patient
                                   compliance
                                   measurements);
                                   simple spinal
                                   cord, or
                                   peripheral (i.e.,
                                   peripheral nerve,
                                   sacral nerve,
                                   neuromuscular)
                                   neurostimulator
                                   pulse generator/
                                   transmitter, with
                                   intraoperative or
                                   subsequent
                                   programming.

[[Page 71010]]

 
95972...........................  Electronic                 0.80            0.80         0.80  No.
                                   analysis of
                                   implanted
                                   neurostimulator
                                   pulse generator
                                   system (e.g.,
                                   rate, pulse
                                   amplitude, pulse
                                   duration,
                                   configuration of
                                   wave form,
                                   battery status,
                                   electrode
                                   selectability,
                                   output
                                   modulation,
                                   cycling,
                                   impedance and
                                   patient
                                   compliance
                                   measurements);
                                   complex spinal
                                   cord, or
                                   peripheral (i.e.,
                                   peripheral nerve,
                                   sacral nerve,
                                   neuromuscular)
                                   (except cranial
                                   nerve)
                                   neurostimulator
                                   pulse generator/
                                   transmitter, with
                                   intraoperative or
                                   subsequent
                                   programming.
G0416...........................  Surgical                   3.09            3.09         3.09  No.
                                   pathology, gross
                                   and microscopic
                                   examinations, for
                                   prostate needle
                                   biopsy, any
                                   method.
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       Table 17--CY 2016 Interim Final Codes With Direct PE Input
              Recommendations Accepted Without Refinements
------------------------------------------------------------------------
           HCPCS code                           Description
------------------------------------------------------------------------
26356...........................  Repair finger/hand tendon.
26357...........................  Repair finger/hand tendon.
26358...........................  Repair/graft hand tendon.
43210...........................  Egd esophagogastrc fndoplsty.
47543...........................  Endoluminal bx biliary tree.
55866...........................  Laparo radical prostatectomy.
64461...........................  Pvb thoracic single inj site.
64462...........................  Pvb thoracic 2nd+ inj site.
64463...........................  Pvb thoracic cont infusion.
64566...........................  Neuroeltrd stim post tibial.
65778...........................  Cover eye w/membrane.
65780...........................  Ocular reconst transplant.
65855...........................  Trabeculoplasty laser surg.
66172...........................  Incision of eye.
67107...........................  Repair detached retina.
67108...........................  Repair detached retina.
67227...........................  Dstrj extensive retinopathy.
72170...........................  X-ray exam of pelvis.
73501...........................  X-ray exam hip uni 1 view.
73502...........................  X-ray exam hip uni 2-3 views.
73503...........................  X-ray exam hip uni 4/> views.
73521...........................  X-ray exam hips bi 2 views.
73522...........................  X-ray exam hips bi 3-4 views.
73551...........................  X-ray exam of femur 1.
73552...........................  X-ray exam of femur 2.
74712...........................  Mri fetal sngl/1st gestation.
74713...........................  Mri fetal ea addl gestation.
77778...........................  Apply interstit radiat compl.
77790...........................  Radiation handling.
88104...........................  Cytopath fl nongyn smears.
91200...........................  Liver elastography.
93050...........................  Art pressure waveform analys.
95971...........................  Analyze neurostim simple.
95972...........................  Analyze neurostim complex.
G0416...........................  Prostate biopsy, any mthd.
------------------------------------------------------------------------


                                  Table 18--Invoices Received for New Direct PE Inputs for CY 2016 Interim Final Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                          Estimated non-
                                                                                                                                             facility
                                                                                                                                              allowed
             CPT/HCPCS codes                           Item name                       CMS code            Average price     Number of     services for
                                                                                                                             invoices       HCPCS codes
                                                                                                                                            using this
                                                                                                                                               item
--------------------------------------------------------------------------------------------------------------------------------------------------------
41530, 43229, 43270......................  radiofrequency generator (Gyrus    EQ374.....................      $10,000.00               1           2,932
                                            ENT G3 workstation).
47534, 47535, 47536, 47538, 47539, 47540.  internal/external biliary          SD312.....................          162.80               1             220
                                            catheter.
47538, 47539, 47540......................  Viabil covered biliary stent.....  SD313.....................        2,721.00               2              26
47543....................................  Radial Jaw.......................  SD314.....................           94.20               1               0
47543....................................  stone basket.....................  SD315.....................          417.00               1               0
64463....................................  Catheter securement device.......  SD316.....................  ..............               0             514
76377....................................  computer workstation, 3D           ED014.....................       45,926.00               1          67,296
                                            reconstruction CT-MR.
77778....................................  Applicator (TPV-200)/Kit.........  EQ373.....................        9,770.00               1             517
77778....................................  reentrant well ionization chamber  EP117.....................        5,180.00               2             517
77778, 77790.............................  L-block (needle loading shield)..  EP118.....................        1,195.00               1           1,848
78264, 78265, 78266......................  Bread............................  SK121.....................            0.16               1           9,735
78264, 78265, 78266......................  Egg Whites.......................  SK122.....................            0.16               1           9,735
78264, 78265, 78266......................  Jelly............................  SK123.....................            0.06               1           9,735
78264, 78265, 78266......................  paper plate......................  SK124.....................            0.17               1           9,735
93050....................................  Central Blood Pressure Monitoring  EP119.....................       14,700.00               2          25,000
                                            Equipment (XCEL PWA & PWV
                                            System).
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                Table 19--Invoices Received for Existing Direct PE Inputs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                          Estimated non-
                                                                                                                                             facility
                                                                                                                                              allowed
              CPT/HCPCS codes                         Item name              CMS code      Current price   Updated price     % Change      services for
                                                                                                                                            HCPCS codes
                                                                                                                                            using this
                                                                                                                                               item
--------------------------------------------------------------------------------------------------------------------------------------------------------
10035, 10036, 19081, 19082, 19083, 19084,   clip, tissue marker.........           SD037          $75.00          $98.20              31          58,640
 19085, 19086, 19285, 19286, 19287, 19288.
20982, 32998, 50592, 64600, 64605, 64610,   radiofrequency generator               EQ214     $ 10,000.00      $32,900.00             229         262,846
 64633, 64634, 64635, 64636.                 (NEURO).
65778.....................................  human amniotic membrane                SD248         $895.00         $949.00               6           8,807
                                             allograft mounted on a non-
                                             absorbable self-retaining
                                             ring.
65779.....................................  human amniotic membrane                SD247         $595.00         $670.00              13             104
                                             allograft.
88106.....................................  Millipore filter............           SL502           $4.15           $0.75             -82           1,204

[[Page 71052]]

 
95018.....................................  benzylpenicilloyl polylysine           SH103          $83.00          $86.00               4          60,683
                                             (e.g., PrePen) 0.25ml uou.
--------------------------------------------------------------------------------------------------------------------------------------------------------

(1) Repair Flexor Tendon (CPT Codes 26356, 26357, and 26358)
    The RUC recommended a work RVU of 10.03 for CPT code 26356. 
Although the RUC-recommended work RVU represents a reduction from the 
current work RVU of 10.62, we believe that the decrease in resource 
costs as reflected in the survey data (specifically in the intraservice 
time, the total time, and the change in the office visits) are not 
adequately reflected in the recommended work RVU. The intraservice time 
decreased from 90 minutes to 60 minutes (33 percent) while the RUC-
recommended work RVU decreased from 10.62 to 10.03, a reduction of less 
than 6 percent. The total time and the number of office visits were 
also reduced by about 25 percent in each case, which is significantly 
greater than the 6 percent decrease in the recommended work RVU. We 
examined CPT code 25607 (Open treatment of distal radial extra-
articular fracture), which has an intraservice time of 60 minutes and a 
total time of 275 minutes, which closely approximates the 60 minutes 
and 277 minutes reflected in the survey results for CPT code 26356. We 
also believe that these procedures have similar intensity based on 
their clinical profiles. We are therefore establishing an interim final 
work RVU of 9.56 for CPT code 26356 after considering both its 
similarity in time to CPT code 25607 and the reduction in time relative 
to the current times included for this procedure.
    The RUC recommended a work RVU of 11.50 for CPT code 26357. We 
refined the RUC-recommended work RVU, employing a similar methodology 
to the one we used in valuing CPT code 26356. While we agree that the 
value of this code should increase from its current work RVU of 8.77, 
we believe that the RUC-recommended work RVU of 11.50 does not 
accurately reflect the change in time for this code. The RUC-
recommended work RVU is an increase of 31 percent from the current work 
RVU of the code, while the total time increases from 256 minutes to 302 
minutes, an increase of only 18 percent. The intraservice time for CPT 
code 26357 decreases from 89 minutes to 85 minutes, which does not 
suggest that a significant increase to the work RVU is accurate. 
Therefore, we considered CPT code 27654, (Repair, secondary, Achilles 
tendon, with or without graft) which has a similar intraservice time of 
90 minutes, a total time of 283 minutes, a similar intensity, and a 
work RVU of 10.53. We are establishing an interim final work RVU of 
10.53 for CPT code 26357 based on this direct crosswalk from CPT code 
27654, as we believe this work RVU better reflects the changes in time 
for this procedure.
    The RUC recommended a work RVU of 13.10 for CPT code 26358. We do 
not believe that this value accurately reflects the change in the 
intraservice time and the total time for this code. The RUC-recommended 
work RVU is an increase of 40 percent over the current work RVU of 
9.36, while the total time only increases from 286 minutes to 327 
minutes, an increase of 14 percent, and the intraservice time only 
increases from 108 minutes to 110 minutes, an increase of 2 percent. We 
do not believe that the RUC-recommended work RVU of 13.10, which 
corresponds to the survey median result, accurately reflects the 
increase in time. In the interest of preserving relativity among the 
codes in this family, we are maintaining the RUC-recommended increment 
of 1.6 work RVUs between CPT codes 26257 and 26358. Therefore, we are 
establishing an interim final work RVU of 12.13 for CPT code 26358, 
based on an increase of 1.6 work RVUs relative to CPT code 26357.
(2) Submucosal Ablation of Tongue Base (CPT Code 41530)
    In the proposed rule, we proposed CPT code 41530 as potentially 
misvalued based on a public nomination. The nominator stated that CPT 
code 41530 is misvalued because there have been changes in the direct 
PE inputs used in furnishing the service. In the CY 2015 PFS Final Rule 
(79 FR 67575), we noted that the RUC submitted PE recommendations and 
stated that, under our usual process, we value work and PE at the same 
time and would expect to receive RUC recommendations for both before we 
revalued this service. Subsequently, the RUC submitted recommendations 
for both. The RUC recommended a work RVU of 3.50 for CPT code 41530, 
which we are establishing as the interim final work RVU for the code. 
To address the concerns raised by CMS in the CY 2015 PFS Final Rule, 
the PE Subcommittee reviewed minor revisions submitted by the specialty 
society. The RUC determined that this service should not be performed 
in the office setting and recommended removing the nonfacility direct 
PE inputs from the direct PE input database. However, 2014 Medicare 
claims data indicate that this service is furnished in the office 
setting 95 percent of the time, and that this service is frequently 
furnished multiple times to a beneficiary. Due to this discrepancy, we 
are seeking comment about the typical site of service and whether 
changes to the coding are needed to clarify this issue. For CY 2016, we 
have established interim final nonfacility direct PE inputs based on 
the current direct PE inputs for the code.
(3) Esophagogastric Fundoplasty Trans-Oral Approach (CPT Code 43210)
    The CPT Editorial Panel established CPT code 43210 to describe 
trans-oral esophagogastric fundoplasty. The RUC recommended a work RVU 
of 9.00 for CPT code 43210. We were unable to identify CPT codes with 
an intraservice time of 60 minutes that have an RVU of 9.00 or greater. 
We were also unable to identify esophago gastro duoden os copy (EGD) 
codes with an RVU of 9.00 or greater. We compared this code to CPT code 
43240 (Drainage of cyst of the esophagus, stomach, and/or upper small 
bowel using an endoscope), which has similar total work time and a work 
RVU of 7.25. We believe a work RVU of 7.75, which corresponds to the 
25th percentile survey result, more accurately reflects the resources 
used in furnishing the service. Therefore, for CY 2016 we are 
establishing an interim final work RVU of 7.75 for CPT code

[[Page 71053]]

43210. Additionally, in accordance with our established policy, as 
described in the CY 2012 PFS Final Rule (76 FR 73119), we removed the 
subsequent observation visit (99224) included in the RUC recommended 
value for this code and adjusted the total work time accordingly, by 
including the intraservice time of the inpatient hospital visit in the 
immediate post-service time of the code.
(4) Percutaneous Biliary Procedures (CPT Codes 47531, 47532, 47533, 
47534, 47535, 47536, 47537, 47538, 47539, 47540, 47541, 47542, 47543, 
and 47544)
    Several percutaneous biliary catheter and related image guidance 
procedures were identified through a misvalued code screen of codes 
reported together more than 75 percent of the time. For CY 2016, the 
CPT Editorial Panel deleted six existing biliary catheter codes (47500, 
47505, 47510, 47511, 47525, and 47530) and five related image-guidance 
codes (74305, 74320, 74327, 75980, and 75982) and created 14 new codes, 
CPT codes 47531 through 47544, to describe percutaneous biliary 
procedures and to bundle inherent imaging services. We are establishing 
the RUC recommended work RVUs as interim final for CY 2016 for all of 
the percutaneous biliary procedures with the exception of CPT codes 
47540, 47542, 47543, and 47544.
    The RUC recommended a work RVU of 12.00 for CPT code 47540 
(Placement of stent(s) into a bile duct, percutaneous, including 
diagnostic cholangiography, imaging guidance (e.g., fluoroscopy and/or 
ultrasound), balloon dilation, catheter exchange or removal when 
performed, and all associated radiological supervision and 
interpretation, each stent; new access, with placement of separate 
biliary drainage catheter (e.g., external or internal-external)) 
corresponding to the survey median result. We believe that a work RVU 
of 10.75, which corresponds to the 25th percentile survey result, more 
accurately reflects the work associated with this service. The RUC used 
magnitude estimation to value CPT code 47540, considering reference 
codes CPT code 37226 (Revascularization, endovascular, open or 
percutaneous, femoral, popliteal artery(s), unilateral; with 
transluminal stent placement(s), includes angioplasty within the same 
vessel, when performed) and CPT code 37228 (Revascularization, 
endovascular, open or percutaneous, tibial, peroneal artery, 
unilateral, initial vessel; with transluminal angioplasty). These codes 
have work RVUs of 10.49 and 11.00 RVUs respectively; both less than the 
RUC-recommended work RVU of 12.00 for CPT code 47540. In reviewing CPT 
codes with 90 minutes of intraservice times and a 0-day global period, 
we found that the majority of codes had a work RVU of less than 12.00. 
As such, we believe that a work RVU of 10.75 better aligns this service 
with other 0 day global codes with similar intraservice times and 
maintains appropriate relativity among the codes in this family. We are 
establishing a CY 2016 interim final work RVU of 10.75 for CPT code 
47540.
    The RUC recommended a work RVU of 3.28 for 47542. We believe that a 
work RVU of 2.50 more accurately reflects the work associated with this 
service. In valuing CPT code 47542, the RUC used a direct crosswalk 
from CPT code 37185 (Primary percutaneous transluminal mechanical 
thrombectomy, noncoronary, arterial or arterial bypass graft, including 
fluoroscopic guidance and intraprocedural pharmacological thrombolytic 
injection(s); second and all subsequent vessel(s) within the same 
vascular family), which has an intraservice time of 40 minutes. We 
believe that a more appropriate direct crosswalk is CPT code 15116 
(Epidermal autograft, face, scalp, eyelids, mouth, neck, ears, orbits, 
genitalia, hands, feet, or multiple digits) because it shares an 
intraservice time of 35 minutes. Therefore, we are establishing an 
interim final work RVU of 2.50 for CPT code 47542 for CY 2016.
    The RUC recommended work RVUs of 3.51 and 4.74 for CPT codes 47543 
and 47544, respectively. We do not believe the RUC-recommended work 
RVUs accurately reflect the work involved in furnishing these 
procedures. To value the work described in these procedures, we used 
the intraservice time ratio to identify values. We used CPT code 47542 
as the base code, and calculated an intraservice time ratio by dividing 
the intraservice time of CPT code 47543 (43 minutes) by the 
intraservice time of CPT code 47542 (35 minutes); we then applied that 
ratio (1.228) to the interim final work RVU of 2.50 for CPT code 47542. 
This resulted in a work RVU of 3.07 for CPT code 47543. We used the 
same intraservice time ratio approach to calculate the interim final 
work RVU for CPT code 47544. We divided the intraservice time for CPT 
code 47544 (60 minutes) by the intraservice time for CPT code 47542 (35 
minutes), and then applied that ratio (1.714) to the interim final work 
RVU of 2.50 for CPT code 47542, which results in a work RVU of 4.29. We 
are establishing an interim final work RVU of 3.07 for CPT code 47543 
and 4.29 for CPT code 47544 for CY 2016.
    We also refined a series of RUC-recommended direct PE inputs. We 
are replacing supply item ``catheter, balloon, PTA'' (SD152) with 
supply item ``catheter, balloon ureteral (Dowd)'' (SD150) on an interim 
final basis. We believe that the use of this balloon catheter, which is 
specifically designed for catheter and image guidance procedures, would 
be more typical than the use of a PTA balloon catheter.
    We are also refining the RUC-recommended malpractice crosswalks for 
most of the codes in this family to align with the specialty mix that 
furnishes these procedures; we believe that these better reflect the 
malpractice risk associated with these procedures. We are establishing 
as interim final the malpractice crosswalks listed in Table 20.

       Table 20--MP Crosswalks for Biliary and Catheter Procedures
------------------------------------------------------------------------
                                                           CMS interim
             HCPCS code                RUC recommended      final MP
                                        MP crosswalk        crosswalk
------------------------------------------------------------------------
47531...............................             49450             49450
47532...............................             49407             49407
47533...............................             37191             47510
47534...............................             36247             47511
47535...............................             36247             47505
47536...............................             49452             49452
47537...............................             49451             47505
47538...............................             37191             47556
47539...............................             37226             47556
47540...............................             37226             47556

[[Page 71054]]

 
47541...............................             36247             47500
47542...............................             37222             47550
47543...............................             22515             47550
47544...............................             37235             47630
------------------------------------------------------------------------

(5) Percutaneous Image Guided Sclerotherapy (CPT Code 49185)
    The CPT Editorial Panel created CPT code 49185 (Sclerotherapy of a 
fluid collection (eg, lymphocele, cyst, or seroma), percutaneous, 
including contrast injection(s), sclerosant injection(s)) to describe 
percutaneous image-guided sclerotherapy of fluid collections. These 
services were previously reported using CPT code 20500 (Injection of 
sinus tract; therapeutic (separate procedure)). To develop recommended 
work RVUs for CPT code 49185, the RUC used a direct crosswalk from 
reference code 31622 (Bronchoscopy, rigid or flexible, including 
fluoroscopic guidance, when performed; diagnostic, with cell washing, 
when performed), which has an intraservice time of 30 minutes and work 
RVU of 2.78. Although CPT code 31622 is clinically similar to CPT code 
49185, we do not believe CPT code 31622 has a similar intensity to CPT 
code 49185. To establish the CY 2016 interim final work RVU for CPT 
code 49185, we instead used a direct crosswalk from CPT code 62305 
(injection, radiologic supervision and interpretation), which shares an 
intraservice time of 30 minutes and is clinically similar, as it also 
includes an injection, radiologic supervision, and interpretation. We 
are establishing an interim final work RVU of 2.35 for CPT code 49185.
    The RUC recommended including 300 ml of supply item ``sclerosing 
solution injection'' (SHO62) for CPT code 49185, which is priced at 
$2.29 per millimeter. The predecessor code included supply item 
``obupivacaine (0.25% inj (Marcaine)'' (SH021)), which is priced at 
25.4 cents per millimeter. We are concerned that supply item SH062 may 
not be used in the typical case for this procedure. We note that other 
CPT codes that include supply item SH062 include between 1 and 10 ml. 
We request that stakeholders review this supply item and provide 
invoices to improve the accuracy of pricing. We are also requesting 
information regarding the price of supply item SH062 given the 
significant increase in volume used in this procedure relative to other 
procedures.
(6) Genitourinary Catheter Procedures (CPT Codes 50606, 50705, and 
50706)
    We are establishing as interim final the RUC-recommended work RVUs 
for all three codes.
    For CPT code 50706, we are replacing the RUC-recommended supply 
item ``catheter, balloon, PTA'' (SD152) with a ``catheter, balloon, 
ureteral-GI (strictures)'' (SD019) in the nonfacility setting. We 
believe that the latter balloon catheter, which is specifically 
designed for ureteral procedures, would be more typically used for 
these procedures than a PTA balloon catheter. We welcome further 
comment regarding the appropriate catheter supply for CPT code 50706, 
including any objective data regarding which supply item is more 
typically used for these procedures.
    The RUC recommended the inclusion of ``room, angiography'' (EL011) 
for this family of codes. As discussed in section II.H.d.8. of this 
final rule with comment period, we do not believe that an angiography 
room would be used in the typical case for these procedures, and are 
therefore replacing the recommended equipment item ``room, 
angiography'' with equipment item ``room, radiographic-fluoroscopic'' 
(EL014) for all three codes on an interim final basis. Since the 
predecessor procedure codes generally did not include an angiography 
room and we do not have a reason to believe that the procedure would 
have shifted to an angiography room in the course of this coding 
change, we do not believe that the use of an angiography room would be 
typical for these procedures.
    We are refining the RUC-recommended MP crosswalks for the codes in 
this family, as we do not believe that the source codes, which are 
cardiovascular services, are representative of the specialty mix that 
would typically furnish the genitourinary catheter procedures. Instead, 
we are establishing interim final MP crosswalks from codes with a 
specialty mix similar to the expected mix of those furnishing the 
services described by the new codes. We are therefore establishing the 
following MP crosswalks as interim final for 2016: CPT code 50606 from 
50955, CPT code 50705 from 50393, and CPT code 50706 from 50395.
(7) Laparoscopic Radical Prostatectomy (CPT Code 55866)
    For CPT code 55866, the RUC recommended a work RVU of 26.80. This 
is significantly higher than the work RVU for CPT code 55840 
(Prostatectomy, retropubic radical, with or without nerve sparing), the 
key reference code selected by the specialty society's survey 
participants. This reference code shares an intraservice time of 180 
minutes as well as similar total time (442 minutes for CPT code 55866, 
relative to 448 minutes for CPT code 55840). We believe that these 
codes are medically similar and would require similar work resources, 
and CPT code 55840 was recently reviewed in CY 2014. However, CPT code 
55840 has a work RVU of 21.36 while the RUC-recommended work RVU for 
CPT code 55866 is 26.80. We do not believe that difference in intensity 
between CPT code 55840 and CPT code 55866 is significant enough to 
warrant the difference of 5.50 work RVUs.
    In addition to CPT code 55840, we also examined CPT code 55845 as 
another medically similar and recently RUC-reviewed procedure. CPT code 
55845 is an open procedure that involves a lymphadenectomy, while CPT 
code 55866 is a laparoscopic procedure without a lymphadenectomy. In 
the CY 2014 PFS Final Rule with Comment Period, CMS requested review of 
CPT codes 55845 and 55866 as potentially misvalued because the work RVU 
for the laparoscopic procedure (55866) was higher than for the open 
procedure (55845). In general, we do not believe that a laparoscopic 
procedure would require greater resources than the open procedure. 
However, the RUC-recommended work RVU for CPT code 55866 is 26.80, 
which is still higher than the work RVU of 25.18 for CPT code 55845. We 
do not believe that the rank order of these work RVUs accurately 
reflects the relative resources

[[Page 71055]]

typically required to furnish these procedures, and believe that the 
work RVU for CPT code 55866 should be lower than that of CPT code 
55845. Therefore, we are establishing an interim final work RVU of 
21.36 for CPT code 55866 based on a crosswalk from CPT code 55840.We 
believe that this is an appropriate valuation based on the procedure 
time and the resources typically used to furnish the procedure.
(8) Intracranial Endovascular Intervention (CPT Codes 61645, 61650 and 
61651)
    The CPT Editorial Panel created three new codes to describe 
percutaneous intracranial endovascular intervention procedures and to 
bundle inherent imaging services. These services were previously 
reported using CPT codes 61640-61642 (Balloon dilatation of 
intracranial vasospasm). In establishing interim final values for these 
services, we are refining the RUC-recommended work RVUs for all of the 
codes in this family. The RUC recommended a work RVU of 17.00 for CPT 
code 61645 (Percutaneous arterial transluminal mechanical thrombectomy 
and/or infusion for thrombolysis, intracranial), referencing CPT code 
37231 (Revascularization, endovascular, open or percutaneous, tibial, 
peroneal artery, unilateral, initial vessel; with transluminal stent 
placement(s) and atherectomy, includes angioplasty within the same 
vessel, when performed) and CPT code 37182 (Insertion of transvenous 
intrahepatic portosystemic shunt(s) (TIPS)). We believe that CPT code 
37231 is an appropriate direct crosswalk because the overall work is 
similar to that of CPT code 61645. Therefore, we are establishing an 
interim final work RVU of 15.00 for CPT code 61645. Additionally, in 
reviewing the work time for CPT code 61645, we noted that it includes 
postservice work time associated with postoperative visit CPT code 
99233 (level 3 subsequent hospital care, per day). As we stated in the 
CY 2010 PFS proposed rule (74 FR 33557) and affirmed in the CY 2011 PFS 
proposed rule (75 FR 40072), we believe that for the typical patient, 
these services would be considered hospital outpatient services, not 
inpatient services. We believe that we should treat the valuation of 
the work time in the same manner as discussed previously, that is, by 
valuing the intraservice time of the hospital observation care service 
in the immediate post service time of the 23-hour stay code being 
valued. Therefore, we refined the work time for CPT code 61645 by 
removing the 55 minutes of work time associated with CPT code 99233 
(subsequent hospital care) and instead included the 30 minutes of 
intraservice time from CPT code 99233 in the immediate postservice time 
of the procedure. This reduces the total work time from 266 minutes to 
241 minutes and increases the immediate post service time from 53 
minutes to 83 minutes.
    The RUC recommended a work RVU of 12.00 for CPT code 61650 
(Endovascular intracranial prolonged administration of pharmacologic 
agent(s) other than for thrombolysis, arterial, including catheter 
placement, diagnostic angiography, and imaging guidance; initial 
vascular territory). We believe the RUC-recommended work RVU 
overestimates the work involved in furnishing this procedure. To 
establish an interim final work RVU for CPT code 61650, we are using a 
direct crosswalk from CPT code 37221 (Revascularization, endovascular, 
open or percutaneous, iliac artery, unilateral, initial vessel; with 
transluminal stent placement(s), includes angioplasty within the same 
vessel, when performed), which shares an intraservice time of 90 
minutes with similar intensity. Therefore, we are establishing an 
interim final work RVU of 10.00 for CPT code 61650.
    For CY 2016, we are also establishing interim final work time by 
removing the 55 minutes total time associated with CPT code 99233 
(subsequent hospital care) as recommended by the RUC and instead 
allocating the intraservice time of 30 minutes to the immediate 
postservice time of the procedure. This reduces the total time from 231 
minutes to 206 minutes and the immediate post service time from 45 
minutes to 75 minutes.
    The RUC recommended a work RVU of 5.50 for CPT code 61651 
(Endovascular intracranial prolonged administration of pharmacologic 
agent(s) other than for thrombolysis, arterial, including catheter 
placement, diagnostic angiography, and imaging guidance; each 
additional vascular territory (List separately in addition to the 
primary code)). We believe that a direct crosswalk from CPT code 37223 
(Revascularization, endovascular, open or percutaneous, iliac artery, 
each additional ipsilateral iliac vessel; with transluminal stent 
placement(s), includes angioplasty within the same vessel, when 
performed (List separately in addition to code for primary procedure)), 
more accurately reflects the work described by CPT code 61651. We 
believe that CPT code 37223 is an appropriate crosswalk because it 
shares intraservice time, has similar intensity, and is clinically 
similar to CPT code 61651. Therefore, we are establishing an interim 
final work RVU of 4.25 for CPT code 61651.
    We have also refined the RUC-recommended malpractice crosswalks for 
this family of codes to align with the specialty mix that furnish the 
services in this family. We are establishing the following interim 
final malpractice crosswalks in place of the RUC-recommended 
malpractice crosswalks: CPT code 37218 to CPT code 61645; and CPT code 
37202 to CPT codes 61650 and 61651.
(9) Paravertebral Block Injection (CPT Codes 64461, 64462, and 64463)
    In CY 2015, the CPT Editorial Panel created three new codes to 
describe paravertebral block injections at single or multiple levels, 
as well as for continuous infusion for the administration of local 
anesthetic for post-operative pain control and thoracic and abdominal 
wall analgesia. We are establishing as interim final the RUC-
recommended work RVUs for CPT codes 64461 and 64462. For CPT code 64463 
(Paravertebral block (PVB) (paraspinous block), thoracic continuous 
infusion by catheter (includes imaging guidance, when performed) the 
RUC recommended a work RVU of 1.90, which corresponds to the 25th 
percentile survey result. After considering similar injection codes 
with identical intra-service time and longer total times, we believe 
the RUC recommendation for CPT code 64463 overestimates the work 
involved in furnishing the service. We believe a direct crosswalk from 
three other injection codes which all have a work RVU of 1.81 (CPT 
codes 64461, 64446, and 64449) more accurately reflects the work 
involved in furnishing this service. Therefore, for CY 2016, we are 
establishing an interim final work RVU of 1.81 for CPT code 64463.
(10) Ocular Surface Membrane Placement (CPT Codes 65778 and 65779)
    These services were identified through the New Technology/New 
Services List in February 2010. For CY 2015, the RUC's Relativity 
Assessment Workgroup noted there may have been diffusion in technology 
for these services and requested that the specialty society survey 
these codes for work and direct PE inputs. While we are establishing 
the RUC-recommended work RVUs for CPT code 65778 and 65779 as interim 
final, we removed the work time associated with the half-day discharge 
management from CPT code 65779.

[[Page 71056]]

(11) Ocular Reconstruction Transplant (CPT Code 65780)
    The RUC identified 65780 as potentially misvalued through a 
misvalued code screen of 90-day global services (based on 2012 Medicare 
utilization data) reported at least 1,000 times per year that included 
more than 6 office visits. The RUC recommended a direct work RVU 
crosswalk from CPT code 27829 (Open treatment of distal tibiofibular 
joint (syndesmosis) disruption, includes internal fixation, when 
performed). After examining comparable codes, we believe the RUC-
recommended work RVU of 8.80 for CPT code 65780 overstates the work 
involved in the procedures given the reduction in intraservice and 
total times. We believe that the ratio of the total times (230/316) 
applied to the work RVU (10.73) more accurately reflects the work 
involved in this procedure. Therefore, we are establishing an interim 
final work RVU of 7.81 to CPT code 65780.
(12) Trabeculoplasty by Laser Surgery (CPT Code 65855)
    The RUC identified CPT code 65855 (Trabeculoplasty by laser 
surgery, 1 or more sessions (defined treatment series)) as potentially 
misvalued through the review of 10-day global services with more than 
1.5 postoperative visits. The RUC noted that the code was changed from 
a 90-day to a 10-day global period when it was last valued in 2000. 
However, the descriptor was not updated to reflect that change. CPT 
code 65855 describes multiple laser applications to the trabecular 
meshwork through a contact lens to reduce intraocular pressure. The 
current practice is to perform only one treatment session of the laser 
for glaucoma during a 10-day period and then wait for the effect on the 
intraocular pressure. The descriptor for CPT code 65855 has been 
revised and removes the language ``1 or more sessions'' to clarify this 
change in practice.
    The RUC recommended a work RVU of 3.00. While the RUC-recommended 
value represents a reduction from the CY 2015 work RVU of 3.99, we 
believe that significant reductions in the intraservice time, the total 
time, and the change in the office visits represent a more significant 
change in the work resources involved in furnishing the typical 
service. The intraservice and total times were decreased by 
approximately 33 percent while the elimination of two post-operative 
visits (CPT code 99212) alone would reduce the overall work RVU by at 
least 24 percent under the reverse BBM. However, the recommended work 
RVU only represents a 25 percent reduction relative to the previous 
value. To develop an interim final work RVU for this service, we 
calculated an intraservice time ratio between the CY 2015 intraservice 
time, 15 minutes, and the RUC-recommended intraservice time, 10 
minutes, and applied this ratio to the current work RVU of 3.99 to 
arrive at a work RVU of 2.66 for CPT code 65855. Therefore, for CY 
2016, we are establishing an interim final work RVU of 2.66 for CPT 
code 65855.
(13) Glaucoma Surgery (CPT Codes 66170 and 66172)
    The RUC identified CPT codes 66170 and 66172 as potentially 
misvalued through a 90-day global post-operative visits screen 
(services reported at least 1,000 times per year that included more 
than 6 office visits). We believe the RUC-recommended work RVU of 13.94 
for CPT code 66170 (fistulization of sclera for glaucoma; 
trabeculectomy ab externo in absence of previous surgery) does not 
accurately account for the reductions in time. Specifically, the survey 
results indicated reductions of 25 percent in intraservice time and 28 
percent in total time. These reductions suggest that the RUC-
recommended work RVU for CPT code 66170 overstates the work involved in 
furnishing the service, since the recommended value only represents a 
reduction of approximately seven percent. We believe that applying the 
intraservice time ratio, as described above, to the current work RVU 
results in a more appropriate work RVU. Therefore, for CY 2016, we are 
establishing an interim final work RVU of 11.27 for CPT code 66170.
    For CPT code 66172 (fistulization of sclera for glaucoma; 
trabeculectomy ab externo with scarring from previous ocular surgery or 
trauma (includes injection of antifibrotic agents)), the RUC 
recommended a work RVU of 14.81. After comparing the RUC-recommended 
work RVUs for this code to the work RVUs of similar codes (for example, 
CPT code 44900 (Incision and drainage of appendiceal abscess, open) and 
CPT code 59100 (Hysterotomy, abdominal (eg, for hydatidiform mole, 
abortion)), we believe the RUC-recommended work RVU of 14.81 overstates 
the work involved in this procedure. For the same reasons and following 
the same valuation methodology utilized above, we applied the 
intraservice time ratio between the CY 2015 intraservice time and the 
survey intraservice time, 60/90, to the CY 2015 work RVU of 18.86. This 
results in a work RVU of 12.57 for CPT code 66172. Therefore, for CY 
2016, we are establishing an interim final work RVU of 12.57 for CPT 
code 66172.
(14) Retinal Detachment Repair (CPT Codes 67107, 67108, 67110, and 
67113)
    CPT codes 67107, 67108, 67110 and 67113 were identified as 
potentially misvalued through the 90-day global post-operative visit 
screen (either directly or indirectly as being part of the same 
family). The RUC recommended a work RVU of 16.00 for CPT code 67107, 
which corresponds to the 25th percentile survey result. While the RUC 
recommendation represents a 5 percent reduction from the current work 
RVU of 16.71, we believe the RUC recommendation still overvalues the 
service given the 15 percent reduction in intraservice time and 25 
percent reduction in total time. Using the methodology previously 
described, we used the intraservice time ratio to arrive at an interim 
final work RVU of 14.06. We believe this value more accurately reflects 
the work involved in this service and is comparable to other codes that 
have the same global period and similar intraservice time and total 
time. For CY 2016, we are establishing an interim final work RVU of 
14.06 for CPT code 67107.
    For CPT code 67108, the RUC recommended a work RVU of 17.13 based 
on the 25th percentile survey result, which reflects a 25 percent 
reduction from the current work RVU. The survey results reflect a 53 
percent reduction in intraservice time and a 42 percent reduction in 
total time. We believe the RUC-recommended work RVU overstates the 
work, given the significant reductions in intraservice time and total 
time and does not maintain relativity among the codes in this family. 
To determine the appropriate value for this code and maintain 
relativity within the family, we preserved the 1.13 increment 
recommended by the RUC, between this code and CPT code 67107, and 
applied that increment to the interim final work RVU of 14.06 for CPT 
code 67107. Therefore, we are establishing an interim final work RVU of 
15.19 for CPT code 67108.
    For CPT code 67110, the RUC recommended maintaining the current 
work RVU of 10.25. To maintain appropriate relativity with the work 
RVUs established for the other services within this family, we are 
using the RUC-recommended -5.75 RVU differential between CPT code 67107 
and CPT code 67110 to establish the CY 2016 interim final work RVU of 
8.31 for CPT code 67110.

[[Page 71057]]

    (15) Fetal MRI (CPT Codes 74712 and 74713)
    For CY 2016, the CPT Editorial Panel established two new codes to 
describe fetal MRI services, which were previously billed using CPT 
codes 72195 (Magnetic resonance (eg, proton) imaging, pelvis; without 
contrast material(s)), 72196 (with contrast material(s)) and 72197 
(without contrast material(s), followed by contrast material(s) and 
further sequences). For CY 2016, we are establishing as interim final 
the RUC-recommended work RVU of 3.00 for 74712. The RUC recommended a 
work RVU of 1.85 for add-on code 74713, with an intra-service time of 
35 minutes. Based on the ratio of work to time for these codes, we 
believe that the add-on code should approximate the relationship 
between work and time in the base code; therefore, we are establishing 
as interim final a work RVU of 1.78 for CPT code 74713, which 
corresponds to the 25th percentile survey result.
(16) Interstitial Radiation Source Codes (CPT Codes 77778 and 77790)
    The RUC identified CPT code 77778 (interstitial radiation source 
application, complex, includes supervision, handling, loading of 
radiation source, when performed) and CPT code 77790 (supervision, 
handling, loading of radiation source) through a misvalued code screen 
of codes reported together more than 75 percent of the time. After 
reviewing the entire code family (CPT codes 77776, 77777, 77778, and 
77790), the CPT Editorial Panel deleted the interstitial radiation 
source codes (CPT codes 77776 and 77777) and revised CPT code 77778 to 
incorporate the supervision and handling of brachytherapy sources 
previously reported with CPT code 77790. The RUC recommended that CPT 
code 77790 be valued without work, and recommended a work RVU of 8.78 
for CPT code 77778. We are establishing an interim final value for CPT 
code 77790 without a work RVU, consistent with the RUC's 
recommendation.
    The specialty society's survey indicated that the total service 
time for CPT code 77778 was 220 minutes and the median work RVU was 
8.78; however, the RUC recommended a total work time of 145 minutes. In 
reviewing that recommendation, we cannot reconcile how the RUC 
determined that the same survey results that overestimated the time by 
over 50 percent at the same time accurately estimated the work, given 
that time is a component of overall work. We believe that the 25th 
percentile survey result is more likely to represent the typical 
overall work in a survey in which time is overestimated. Therefore, we 
are establishing an interim final work RVU of 8.00 for CPT code 77778 
based on the 25th percentile survey. However, we are also seeking 
comment regarding the accuracy of the survey results given the 
significant disparity between the survey results and the considered 
judgment of the RUC regarding the amount of overall time required to 
furnish this service.
(17) Colon Transit Imaging (CPT Codes 78264, 78265, and 78266)
    For CY 2016, the CPT Editorial Panel revised CPT code 78264 
(gastric emptying study) to describe gastric emptying procedure, and 
also created two new add-on codes, CPT code 78265 (gastric emptying 
imaging study (eg, liquid, solid, or both); with small bowel transit up 
to 24 hours) and CPT code 78266 (gastric emptying study (eg, liquid, 
solid, or both with small bowel and colon transit for multiple days)). 
The RUC recommendation indicates that the base CPT code 78264 was 
previously used to report three distinct procedural variations. The new 
codes were created to describe the services in the procedures.
    We are establishing as interim final the RUC-recommended work RVUs 
for CPT codes 78265 and 78266. However, we believe the RUC-recommended 
work RVU of 0.80 overstates the work involved in CPT code 78264. We 
note that CPT code 78264 has a higher recommended work RVU and a 
shorter intraservice time relative to the other codes in the family. 
Additionally, the CY 2016 RUC survey result showed a two minute 
decrease, from 12 to 10 minutes, in the intraservice time for CPT code 
78264. We considered reference CPT code 78226 (Hepatobiliary system 
imaging, including gallbladder when present), as it shares the same 
intraservice time of 10 minutes and has similar intensity, and we are 
using a direct crosswalk from the work RVU of 0.74. We are establishing 
an interim final work RVU of 0.74 for CPT code 78264.
    We received invoices for several new supply and equipment items for 
colon transit imaging services, as listed in Table 21. We have accepted 
the invoices for these items and added them to the direct PE input 
database. However, we are concerned that these invoice prices may not 
be reflective of the typical costs associated with the submitted supply 
items. We request that stakeholders review these prices and provide 
invoices or other information to improve the accuracy of pricing for 
these and other items in the direct PE database. Additionally, as 
discussed in section II.A of the proposed rule, we remind stakeholders 
that due to the relativity inherent in the development of RVUs, 
reductions in existing prices for any items in the direct PE database 
increase the pool of direct PE RVUs available to all other PFS 
services.
(18) Liver Elastography (CPT Code 91200)
    For CY 2015, we used the RUC recommendation of 0.30 RVUs and direct 
PE inputs without refinement to establish interim final values for CPT 
code 91200. For CY 2016, we received an updated RUC recommendation of 
0.27 RVUs; we have established the RUC-recommended work RVU and direct 
PE inputs as interim final.
    Comment: One commenter stated a concern about the assumption that 
CMS used regarding the proportion of the total Medicare utilization 
furnished in nonfacility and facility settings. The commenter suggested 
that the assumption CMS used had a significant negative impact on the 
PE RVUs so drastic as to not allow for the procedure to be furnished in 
nonfacility settings.
    Another commenter requested reconsideration for the nonfacility 
payment rates stating the PE RVUs for the comparison codes CPT code 
76700 (Ultrasound, abdominal, real time with image documentation; 
complete) and CPT code 76102 (Radiologic examination, complex motion 
(ie, hypercycloidal) body section (eg, mastoid polytomography), other 
than with urography; bilateral) are significantly higher than CPT code 
91200. The commenter also stated the nonfacility payment was lower than 
the OPPS rate while the equipment costs are the same.
    Response: We note that the proportion of services in the non-
facility setting versus the facility setting in our utilization has no 
direct impact on the development of PE RVUs for each setting. We also 
note that the comparison codes, CPT code 76700 and CPT code 76102 have 
higher work RVUs; 0.81 for 76700 and 0.58 for 76102; since work is a 
portion of the indirect PE allocator, the comparison codes would be 
expected to have higher PE RVUs. Also, the capital equipment included 
as a direct PE input for CPT code 76700 is more expensive and is used 
for twice as long. While we agree with commenters that 76102 includes 
similarly priced equipment to 91200, we note that this equipment is 
used for more than 6 times as long (104 minutes vs. 16 minutes), and 
the clinical labor staff time is also 6 times as long. These 
differences in direct PE inputs and work result in a PE RVUs for the 
comparison

[[Page 71058]]

codes suggested by the commenter that are far higher than the PE RVU 
for 91200.
    With respect to the commenter's statement about the comparison of 
the PFS payment amount to the OPPS payment amount, we note that OPPS 
payments for individual services are grouped into rates that reflect 
the cost of a range of services. We also note that for services newly 
priced under the OPPS, the APC assignment is based on that of the 
predecessor codes and clinical similarity to other services. As such, 
the payment rates for newly priced services may not be reflective of 
the rates that will be assigned once claims data for these services 
becomes available.
    As stated above, we are establishing an interim final work RVU and 
direct PE inputs; we will accept comments during the comment period for 
this final rule with comment period.
(19) Electronic Analysis of Implanted Neurostimulator (CPT Codes 95971 
and 95972)
    For CY 2015, the RUC reviewed CPT codes 95971 and 95972 because 
they were identified by the High Volume Growth Services Screen which 
identifies services in which Medicare utilization increased by at least 
100 percent from 2006 to 2011 screen. In the CY 2015 final rule with 
comment period, we stated that the lack of survey data for CPT code 
95973, along with the confusing descriptor language and intraservice 
time for CPT code 95972, suggested the need for these services to be 
described through revised codes. However, to facilitate more accurate 
payment for these services pending such revisions, we adopted the RUC-
recommended intraservice time of 20 minutes and work RVU of 0.78 for 
CPT code 95971. For CPT code 95972, we refined the RUC-recommended work 
RVU of 0.90 to establish an interim final value of 0.80 and adopted the 
RUC-recommended intraservice time of 23 minutes.
    Comment: A commenter was disappointed that CMS did not accept the 
RUC recommendation for CPT code 95972. The commenter stated support for 
the RUC's determination of the work of CPT code 95972, based on its 
similarity to CPT code 62370. The commenter also stated that the CMS 
valuation for these services was arbitrary because CMS did not fully 
detail its methodology. The commenter recommended that CMS adopt the 
RUC recommendation for CPT code 95972 and continue to use the work RVU 
value of 0.92 for 95973 until the RUC is able to conduct a survey of 
95973 and provide an updated recommendation of the work RVU value for 
this code.
    Response: We appreciate the commenter's feedback and will consider 
it in finalizing values for these codes. We note that in the CY 2015 
final rule with comment period (79 FR 67670), we described our use of 
the instraservice time ratio methodology to develop the work RVU for 
95972. Additionally, we note that for CY 2016 the RUC recommended work 
RVU is the same as the work RVU CMS established in the CY 2015 final 
rule with comment period.
    For CY 2016, the CPT Editorial Panel deleted CPT code 95973 and 
modified the descriptor for CPT code 95972. The RUC again reviewed CPT 
codes 95971 and 95972 and recommended no change to the work RVU of 0.78 
with an intraservice time of 20 minutes for CPT code 95971. Because the 
survey for CPT code 95972 had used the older descriptor, the RUC 
recommended that the code be resurveyed with the correct descriptor and 
that the current RVU of 0.80 with an intraservice time of 23 minutes be 
maintained until the new survey is complete. We agree with the RUC that 
we should use these values for these codes on an interim final basis 
pending new recommendations from the RUC for the CY 2017 rule based on 
a new survey for CPT code 95972. We look forward to receiving 
recommendations from the AMA RUC, and intend to consider both codes 
using the most recent survey data available.
(20) Prostate Biopsy, Any Method (HCPCS Code G0416)
    For CY 2014, we finalized interim final work RVUs and direct PE 
inputs for the surgical pathology services described by CPT codes 
88300-88309 (Surgical Pathology, Levels I through VI). In conjunction 
with the revaluation of these procedures, we modified the code 
descriptors of G0416 through G0419 so that they described any method of 
prostate needle biopsy services, rather than only saturation biopsies. 
To simplify the coding, for CY 2014, we revised the descriptor for 
G0416 on an interim final basis to reflect all prostate biopsies, 
regardless of the number of specimens taken or the method used, and we 
deleted the remaining G-codes. We also maintained the existing RVUs for 
G0416, pending additional information, including recommendations from 
the RUC, about the typical resource costs associated with prostate 
biopsies. For CY 2016, we received and will be establishing as interim 
final, the RUC's recommended direct PE inputs to use in valuing G0416. 
However, we also received comments suggesting that the typical number 
of blocks used in these services can be significantly lower than what 
is assumed in the RUC recommendations. Given our consideration of those 
comments and our anticipation of a RUC-recommended work RVU for CY 2017 
rulemaking, we emphasize that we are seeking evidence of the typical 
batch and block size used in furnishing this service.
    We also note that the RUC recommended that, for purposes of 
calculating overall PFS budget neutrality, we assume that more 
practitioners will report these services accurately in the future than 
did so in prior years. For purposes of calculating budget neutrality, 
we generally assume that the Medicare utilization data reflect the 
accurate reporting of PFS services in compliance with Medicare payment 
rules. Therefore, we did not incorporate an anticipated shift toward 
compliant coding as recommended by the RUC. The utilization crosswalk 
used in setting rates for CY 2016 is available on the CMS Web site 
under downloads for the CY 2016 PFS Final Rule at http://www.cms.gov/physicianfeesched/PFSFederalRegulationNotices.html/.

                              Table 21--Invoices Received for New Direct PE Inputs
----------------------------------------------------------------------------------------------------------------
                                                                                                  Estimated non-
                                                                                                     facility
                                                                                                      allowed
         CPT/HCPCS codes               Item name         CMS code     Average price   Number of    services for
                                                                                       invoices     HCPCS codes
                                                                                                    using this
                                                                                                       item
----------------------------------------------------------------------------------------------------------------
41530, 43229, 43270.............  radiofrequency             EQ374      $ 10,000.00            1           2,932
                                   generator (Gyrus
                                   ENT G3
                                   workstation).

[[Page 71059]]

 
47534, 47535, 47536, 47538,       internal/external          SD312           162.80            1             220
 47539, 47540.                     biliary catheter.
47538, 47539, 47540.............  Viabil covered             SD313         2,721.00            2              26
                                   biliary stent.
47543...........................  Radial Jaw.........        SD314            94.20            1               0
47543...........................  stone basket.......        SD315           417.00            1               0
64463...........................  Catheter securement        SD316   ..............            0             514
                                   device.
76377...........................  computer                   ED014        45,926.00            1          67,296
                                   workstation, 3D
                                   reconstruction CT-
                                   MR.
77778...........................  Applicator (TPV-           EQ373         9,770.00            1             517
                                   200)/Kit.
77778...........................  reentrant well             EP117         5,180.00            2             517
                                   ionization chamber.
77778, 77790....................  L-block (needle            EP118         1,195.00            1           1,848
                                   loading shield).
78264, 78265, 78266.............  Bread..............        SK121             0.16            1           9,735
78264, 78265, 78266.............  Egg Whites.........        SK122             0.16            1           9,735
78264, 78265, 78266.............  Jelly..............        SK123             0.06            1           9,735
78264, 78265, 78266.............  paper plate........        SK124             0.17            1           9,735
93050...........................  Central Blood              EP119        14,700.00            2          25,000
                                   Pressure
                                   Monitoring
                                   Equipment (XCEL
                                   PWA & PWV System).
----------------------------------------------------------------------------------------------------------------

I. Medicare Telehealth Services

1. Billing and Payment for Telehealth Services
    Several conditions must be met for Medicare to make payments for 
telehealth services under the PFS. The service must be on the list of 
Medicare telehealth services and meet all of the following additional 
requirements:
     The service must be furnished via an interactive 
telecommunications system.
     The service must be furnished by a physician or other 
authorized practitioner.
     The service must be furnished to an eligible telehealth 
individual.
     The individual receiving the service must be located in a 
telehealth originating site.
    When all of these conditions are met, Medicare pays a facility fee 
to the originating site and makes a separate payment to the distant 
site practitioner furnishing the service.
    Section 1834(m)(4)(F)(i) of the Act defines Medicare telehealth 
services to include consultations, office visits, office psychiatry 
services, and any additional service specified by the Secretary, when 
furnished via a telecommunications system. We first implemented this 
statutory provision, which was effective October 1, 2001, in the CY 
2002 PFS final rule with comment period (66 FR 55246). We established a 
process for annual updates to the list of Medicare telehealth services 
as required by section 1834(m)(4)(F)(ii) of the Act in the CY 2003 PFS 
final rule with comment period (67 FR 79988).
    As specified at Sec.  410.78(b), we generally require that a 
telehealth service be furnished via an interactive telecommunications 
system. Under Sec.  410.78(a)(3), an interactive telecommunications 
system is defined as multimedia communications equipment that includes, 
at a minimum, audio and video equipment permitting two-way, real-time 
interactive communication between the patient and distant site 
physician or practitioner.
    Telephones, facsimile machines, and stand-alone electronic mail 
systems that are not integrated into an electronic health record system 
do not meet the definition of an interactive telecommunications system. 
An interactive telecommunications system is generally required as a 
condition of payment; however, section 1834(m)(1) of the Act allows the 
use of asynchronous ``store-and-forward'' technology when the 
originating site is part of a federal telemedicine demonstration 
program in Alaska or Hawaii. As specified in Sec.  410.78(a)(1), 
asynchronous store-and-forward is the transmission of medical 
information from an originating site for review by the distant site 
physician or practitioner at a later time.
    Medicare telehealth services may be furnished to an eligible 
telehealth individual notwithstanding the fact that the practitioner 
furnishing the telehealth service is not at the same location as the 
beneficiary. An eligible telehealth individual is an individual 
enrolled under Part B who receives a telehealth service furnished at a 
telehealth originating site.
    Practitioners furnishing Medicare telehealth services are reminded 
that these services are subject to the same non-discrimination laws as 
other services, including the effective communication requirements for 
persons with disabilities of section 504 of the Rehabilitation Act and 
language access for persons with limited English proficiency, as 
required under Title VI of the Civil Rights Act of 1964. For more 
information, see http://www.hhs.gov/ocr/civilrights/resources/specialtopics/hospitalcommunication.
    Practitioners furnishing Medicare telehealth services submit claims 
for telehealth services to the MACs that process claims for the service 
area where their distant site is located. Section 1834(m)(2)(A) of the 
Act requires that a practitioner who furnishes a telehealth service to 
an eligible telehealth individual be paid an amount equal to the amount 
that the practitioner would have been paid if the service had been 
furnished without the use of a telecommunications system.
    Originating sites, which can be one of several types of sites 
specified in the statute where an eligible telehealth individual is 
located at the time the service is being furnished via a 
telecommunications system, are paid a facility fee under the PFS for 
each Medicare telehealth service. The statute specifies both the types 
of entities that can serve as originating sites and the geographic 
qualifications for originating sites. With regard to geographic 
qualifications, Sec.  410.78(b)(4) limits originating sites to those 
located in rural health professional shortage areas (HPSAs) or in a 
county that is not included in a metropolitan statistical area (MSA).

[[Page 71060]]

    Historically, we have defined rural HPSAs to be those located 
outside of MSAs. Effective January 1, 2014, we modified the regulations 
regarding originating sites to define rural HPSAs as those located in 
rural census tracts as determined by the Office of Rural Health Policy 
(ORHP) of the Health Resources and Services Administration (HRSA) (78 
FR 74811). Defining ``rural'' to include geographic areas located in 
rural census tracts within MSAs allows for broader inclusion of sites 
within HPSAs as telehealth originating sites. Adopting the more precise 
definition of ``rural'' for this purpose expands access to health care 
services for Medicare beneficiaries located in rural areas. HRSA has 
developed a Web site tool to provide assistance to potential 
originating sites to determine their geographic status. To access this 
tool, see the CMS Web site at https://www.cms.gov/Medicare/Medicare-General-Information/Telehealth/index.html.
    An entity participating in a federal telemedicine demonstration 
project that has been approved by, or received funding from, the 
Secretary as of December 31, 2000 is eligible to be an originating site 
regardless of its geographic location.
    Effective January 1, 2014, we also changed our policy so that 
geographic status for an originating site would be established and 
maintained on an annual basis, consistent with other telehealth payment 
policies (78 FR 74400). Geographic status for Medicare telehealth 
originating sites for each calendar year is now based upon the status 
of the area as of December 31 of the prior calendar year.
    For a detailed history of telehealth payment policy, see 78 FR 
74399.
2. Adding Services to the List of Medicare Telehealth Services
    As noted previously, 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. Under this process, we assign any qualifying request 
to make additions to the list of telehealth services to one of two 
categories. Revisions to criteria that we use to review requests in the 
second category were finalized in the November 28, 2011 Federal 
Register (76 FR 73102). The two categories are:
     Category 1: Services that are similar to professional 
consultations, office visits, and office psychiatry services that are 
currently on the list of telehealth 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, a practitioner who is present 
with the beneficiary in the originating site. 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 service is accurately described by the 
corresponding code when furnished via telehealth and whether the use of 
a telecommunications system to deliver the service produces 
demonstrated clinical benefit to the patient. Submitted evidence should 
include both a description of relevant clinical studies that 
demonstrate the service furnished by telehealth to a Medicare 
beneficiary improves the diagnosis or treatment of an illness or injury 
or improves the functioning of a malformed body part, including dates 
and findings, and a list and copies of published peer reviewed articles 
relevant to the service when furnished via telehealth. Our evidentiary 
standard of clinical benefit does not include minor or incidental 
benefits.
    Some examples of clinical benefit include the following:
     Ability to diagnose a medical condition in a patient 
population without access to clinically appropriate in-person 
diagnostic services.
     Treatment option for a patient population without access 
to clinically appropriate in-person treatment options.
     Reduced rate of complications.
     Decreased rate of subsequent diagnostic or therapeutic 
interventions (for example, due to reduced rate of recurrence of the 
disease process).
     Decreased number of future hospitalizations or physician 
visits.
     More rapid beneficial resolution of the disease process 
treatment.
     Decreased pain, bleeding, or other quantifiable symptom.
     Reduced recovery time.
    For the list of telehealth services, see the CMS Web site at 
https://www.cms.gov/Medicare/Medicare-General-Information/Telehealth/index.html.
    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, qualifying requests submitted before the end of CY 2015 will 
be considered for the CY 2017 proposed rule. Each request to add a 
service to the list of Medicare telehealth services must include any 
supporting documentation the requester wishes 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 public 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, see the 
CMS Web site at https://www.cms.gov/Medicare/Medicare-General-Information/Telehealth/index.html.
3. Submitted Requests to the List of Telehealth Services for CY 2016
    Under our existing policy, we add services to the telehealth list 
on a category 1 basis when we determine that they are similar to 
services on the existing telehealth list for the roles of, and 
interactions among, the beneficiary, physician (or other practitioner) 
at the distant site and, if necessary, the telepresenter. As we stated 
in the CY 2012 final rule with comment period (76 FR 73098), we believe 
that the category 1 criteria not only streamline our review process for 
publicly requested services that fall into this category, the criteria 
also expedite our ability to identify codes for the telehealth list 
that resemble those services already on this list.
a. Submitted Requests
    We received several requests in CY 2014 to add various services as 
Medicare telehealth services effective for CY 2016. The following 
presents a discussion of these requests, and our proposals for 
additions to the CY 2016 telehealth list. Of the requests received, we 
found that the following services were sufficiently similar to 
psychiatric diagnostic procedures or office/outpatient visits currently 
on the telehealth list to qualify on a category 1 basis. Therefore, we 
proposed to add the following services to the telehealth list on a 
category 1 basis for CY 2016:
     CPT code 99356 (prolonged service in the inpatient or 
observation setting, requiring unit/floor time beyond the usual 
service; first hour (list separately in addition to code for inpatient 
evaluation and management service)); and 99357 (prolonged service in 
the inpatient or observation setting, requiring unit/floor time beyond 
the

[[Page 71061]]

usual service; each additional 30 minutes (list separately in addition 
to code for prolonged service)).
    The prolonged service codes can only be billed in conjunction with 
hospital inpatient and skilled nursing facility evaluation & management 
(E/M) codes, and of these, only subsequent hospital and subsequent 
nursing facility visit codes are on list of Medicare telehealth 
services. Therefore, CPT codes 99356 and 99357 would only be reportable 
with codes for which limits of one subsequent hospital visit every 
three days via telehealth, and one subsequent nursing facility visit 
every 30 days, would continue to apply.
     CPT codes 90963 (end-stage renal disease (ESRD) related 
services for home dialysis per full month, for patients younger than 2 
years of age to include monitoring for the adequacy of nutrition, 
assessment of growth and development, and counseling of parents); 90964 
(end-stage renal disease (ESRD) related services for home dialysis per 
full month, for patients 2-11 years of age to include monitoring for 
the adequacy of nutrition, assessment of growth and development, and 
counseling of parents); 90965 (end-stage renal disease (ESRD) related 
services for home dialysis per full month, for patients 12-19 years of 
age to include monitoring for the adequacy of nutrition, assessment of 
growth and development, and counseling of parents); and 90966 (end-
stage renal disease (ESRD) related services for home dialysis per full 
month, for patients 20 years of age and older).
    Although these services are for home-based dialysis, and a 
patient's home is not an authorized originating site for telehealth, we 
recognize that many components of these services could be furnished 
when a patient is located at a telehealth originating site and, 
therefore, can be furnished via telehealth.
    The required clinical examination of the catheter access site must 
be furnished face-to-face ``hands on'' (without the use of an 
interactive telecommunications system) by a physician, certified nurse 
specialist (CNS), nurse practitioner (NP), or physician's assistant 
(PA). An interactive telecommunications system may be used to provide 
additional visits required under the 2-to-3 visit Monthly Capitation 
Payment (MCP) code and the 4-or-more visit MCP code. See the final rule 
for CY 2005 (69 FR 66276) for further information on furnishing ESRD 
services via telehealth.
    We also received requests to add services to the telehealth list 
that do not meet our criteria for Medicare telehealth services. We did 
not propose to add the following procedures for the reasons noted:
     All E/M services; telerehabilitation services; and 
palliative care, pain management and patient navigation services for 
cancer patients.
    None of these requests identified the specific codes that were 
being requested for addition as telehealth services, and two of the 
requests did not include evidence of any clinical benefit when the 
services are furnished via telehealth. Since we did not have 
information on the specific codes requested for addition or evidence of 
clinical benefit for these requests, we cannot evaluate whether the 
services are appropriate for addition to the Medicare telehealth 
services list.
     CPT codes 99291 (critical care, evaluation and management 
of the critically ill or critically injured patient; first 30-74 
minutes); and 99292 (critical care, evaluation and management of the 
critically ill or critically injured patient; each additional 30 
minutes (list separately in addition to code for primary service).
    We previously considered and rejected adding these codes to the 
list of Medicare telehealth services in the CY 2009 PFS final rule (74 
FR 69744) on a category 1 basis because, due to the acuity of 
critically ill patients, we did not consider critical care services 
similar to any services on the current list of Medicare telehealth 
services. In that rule, we said that critical care services must be 
evaluated as category 2 services. Because we would consider critical 
care services under category 2, we needed to evaluate whether these are 
services for which telehealth can be an adequate substitute for a face-
to-face encounter, based on the category 2 criteria at the time of that 
request. We had no evidence suggesting that the use of telehealth could 
be a reasonable surrogate for the face-to-face delivery of this type of 
care.
    The American Telemedicine Association (ATA) submitted a new request 
for CY 2016, which cited several studies to support adding these 
services on a category 2 basis. To qualify under category 2, we would 
need evidence that the service produces a clinical benefit for the 
patient. However, in reviewing the information provided by the ATA and 
a study entitled, ``Impact of an Intensive Care Unit Telemedicine 
Program on Patient Outcomes in an Integrated Health Care System,'' 
published July 2014 in JAMA Internal Medicine, which found no evidence 
that the implementation of ICU telemedicine significantly reduced 
mortality rates or hospital length of stay, we do not believe that the 
submitted evidence demonstrates a clinical benefit to patients. 
Therefore, we did not propose to add these services on a category 2 
basis to the list of Medicare telehealth services for CY 2016.
     CPT code 99358 (prolonged evaluation and management 
service before and/or after direct patient care; first hour) and 99359 
(prolonged evaluation and management service before and/or after direct 
patient care; each additional 30 minutes (list separately in addition 
to code for prolonged service)).
    As we indicated in the CY 2015 PFS final rule with comment period 
(79 FR 67600), these services are not separately payable by Medicare. 
It would be inappropriate to include a service as a telehealth service 
when Medicare does not otherwise make a separate payment for it. 
Therefore, we did not propose to add these nonpayable services to the 
list of Medicare telehealth services for CY 2016.
     CPT code 99444 (online evaluation and management service 
provided by a physician or other qualified health care professional who 
may report an evaluation and management service provided to an 
established patient or guardian, not originating from a related E/M 
service provided within the previous 7 days, using the internet or 
similar electronic communications network).
    As we indicated in the CY 2014 PFS final rule with comment period 
(78 FR 74403), we assigned a status indicator of ``N'' (Noncovered 
service) to this service because: (1) This service is non-face-to-face; 
and (2) the code descriptor includes language that recognizes the 
provision of services to parties other than the beneficiary and for 
whom Medicare does not provide coverage (for example, a guardian). 
Under section 1834(m)(2)(A) of the Act, Medicare pays the physician or 
practitioner furnishing a telehealth service an amount equal to the 
amount that would have been paid if the service was furnished without 
the use of a telecommunications system. Because CPT code 99444 is 
currently noncovered, there would be no Medicare payment if this 
service was furnished without the use of a telecommunications system. 
Since this service is noncovered under Medicare, we are not proposing 
to add it to the list of Medicare telehealth services for CY 2016.
     CPT code 99490 (chronic care management services, at least 
20 minutes of clinical staff time directed by a physician or other 
qualified health care professional, per calendar month, with the 
following required elements: multiple (two or more) chronic conditions 
expected to last at least 12

[[Page 71062]]

months, or until the death of the patient; chronic conditions place the 
patient at significant risk of death, acute exacerbation/
decompensation, or functional decline; comprehensive care plan 
established, implemented, revised, or monitored).
    This service is one that can be furnished without the beneficiary's 
face-to-face presence, and using any number of non-face-to-face means 
of communication. Therefore, the service is not appropriate for 
consideration as a Medicare telehealth service. It is unnecessary to 
add this service to the list of Medicare telehealth services. 
Therefore, we did not propose to add it to the list of Medicare 
telehealth services for CY 2016.
     CPT codes 99605 (medication therapy management service(s) 
provided by a pharmacist, individual, face-to-face with patient, with 
assessment and intervention if provided; initial 15 minutes, new 
patient); 99606 (medication therapy management service(s) provided by a 
pharmacist, individual, face-to-face with patient, with assessment and 
intervention if provided; initial 15 minutes, established patient); and 
99607 (medication therapy management service(s) provided by a 
pharmacist, individual, face-to-face with patient, with assessment and 
intervention if provided; each additional 15 minutes (list separately 
in addition to code for primary service)).
    These codes are noncovered services for which no payment may be 
made under the PFS. Therefore, we did not propose to add these services 
to the list of Medicare telehealth services for CY 2016.
    In summary, we proposed to add the following codes to the list of 
Medicare telehealth services beginning in CY 2016 on a category 1 
basis: Prolonged service inpatient CPT codes 99356 and 99357 and ESRD-
related services 90963 through 90966. As indicated above, the prolonged 
service codes can only be billed in conjunction with subsequent 
hospital and subsequent nursing facility codes. Limits of one 
subsequent hospital visit every three days, and one subsequent nursing 
facility visit every 30 days, would continue to apply when the services 
are furnished as telehealth services. For the ESRD-related services, 
the required clinical examination of the catheter access site must be 
furnished face-to-face ``hands on'' (without the use of an interactive 
telecommunications system) by a physician, CNS, NP, or PA.
4. Proposal to amend Sec.  410.78 to Include Certified Registered Nurse 
Anesthetists as Practitioners for Telehealth Services
    Under section 1834(m)(1) of the Act, Medicare makes payment for 
telehealth services furnished by physicians and practitioners. Section 
1834(m)(4)(E) of the Act specifies that, for purposes of furnishing 
Medicare telehealth services, the term ``practitioner'' has the meaning 
given that term in section 1842(b)(18)(C) of the Act, which includes a 
certified registered nurse anesthetist (CRNA) as defined in section 
1861(bb)(2) of the Act.
    We initially omitted CRNAs from the list of distant site 
practitioners for telehealth services in the regulation because we did 
not believe these practitioners would furnish any of the service on the 
list of Medicare telehealth services. However, CRNAs in some states are 
licensed to furnish certain services on the telehealth list, including 
E/M services. Therefore, we proposed to revise the regulation at Sec.  
410.78(b)(2) to include a CRNA, as described under Sec.  410.69, to the 
list of distant site practitioners who can furnish Medicare telehealth 
services.
    The following is a summary of the comments we received on proposals 
related to telehealth services.
    Comment: All commenters supported one or more of our proposals to 
add prolonged service inpatient procedures (CPT codes 99356 and 99357) 
and ESRD-related services for home dialysis procedures (CPT codes 
90963, 90964, 90965 and 90966) to the list of Medicare telehealth 
services for CY 2016.
    Response: We appreciate the commenters' support for the proposed 
additions to the list of Medicare telehealth services. After 
consideration of the public comments received, we are finalizing our CY 
2016 proposal to add these services to the list of telehealth services 
for CY 2016 on a category 1 basis.
    Comment: Concerning our proposal to add prolonged services in the 
inpatient or observation setting (CPT codes 99356 and 99357) to the 
telehealth list, a few commenters questioned the need for CMS to 
establish a limit on the frequency with which these services can be 
provided, since there is no such limit when they are provided in-
person. The commenter suggested that the criteria should be whether the 
services are reasonable and necessary, safe and effective, medically 
appropriate, and provided in accordance with accepted standards of 
medical practice. The commenter concluded that care provided via 
telemedicine should be paid as other physician services and that the 
technology used to deliver the services should not be the primary 
consideration.
    Response: In the PFS final rule for CY 2011 (75 FR 73317), we 
concluded that subsequent hospital care visits by a patient's admitting 
practitioner may sufficiently resemble follow-up inpatient consultation 
services to add these subsequent hospital care services on a category 1 
basis for the telehealth list. Although we still believed the potential 
acuity of hospital inpatients is greater than those patients likely to 
receive currently approved Medicare telehealth services, we also 
believed that it would be appropriate to permit some subsequent 
hospital care services to be furnished through telehealth to ensure 
that hospitalized patients have frequent encounters with their 
admitting practitioner. However, we also believed that the majority of 
these visits should be in-person to facilitate the comprehensive, 
coordinated, and personal care that medically volatile, acutely ill 
patients require on an ongoing basis.
    Therefore, we added subsequent hospital care services, specifically 
CPT codes 99231, 99232, and 99233, to the list of telehealth services 
on a category 1 basis in CY 2011, but with some limitations on the 
frequency with which these services may be furnished through 
telehealth. Because of our concerns regarding the potential acuity of 
hospital inpatients, we limited the provision of subsequent hospital 
care services through telehealth to once every 3 days. We were 
confident that admitting practitioners would continue to make 
appropriate in-person visits to all patients who need such care during 
their hospitalization.
    Likewise, for CY 2011, we concluded that subsequent nursing 
facility visits by a patient's admitting practitioner sufficiently 
resemble follow-up inpatient consultation services to consider them on 
a category 1 basis for the telehealth list. We concluded that it would 
be appropriate to permit some subsequent nursing facility care services 
to be furnished through telehealth to ensure that complex nursing 
facility patients have frequent encounters with their admitting 
practitioner, although we continued to believe that the federally 
mandated visits should be in-person to facilitate the comprehensive, 
coordinated, and personal care that these complex patients require on 
an ongoing basis.
    Therefore, we added subsequent nursing facility care services, 
specifically CPT codes 99307, 99308, 99309, and 99310, to the list of 
Medicare telehealth services on a

[[Page 71063]]

category 1 basis in CY 2011, with some limitations on furnishing these 
services through telehealth. Because of our concerns regarding the 
potential acuity and complexity of SNF inpatients, we limited the 
provision of subsequent nursing facility care services furnished 
through telehealth to once every 30 days.
    We believe the concerns that we addressed in the cases discussed in 
this section continues to hold for CPT codes 99356 and 99357, and that 
frequency limits are appropriate to ensure that patients continue to 
receive appropriate and high-quality care.
    We note that section 1834(m) of the Act requires Medicare to make 
the same payment for services furnished via telehealth as is made for 
face-to-face services. In addition, it provides for payment of an 
originating site facility fee. However, the statute does not require 
that all conditions for payment for telehealth services be the same as 
for the services when furnished without the use of an interactive 
telecommunications system. We continue to believe the established 
frequency limits are appropriate and will leave them in place for these 
services.
    Comment: Some commenters supported and others disagreed with our 
decision not to add critical care services (CPT codes 99291 and 99292) 
to the list of telehealth services. One commenter questioned why 
intensive care unit (ICU) telemedicine (TM) must demonstrate 
significantly reduced mortality rates or hospital length of stay for 
Medicare coverage. The commenter further noted that CMS covers new 
codes and procedures routinely without any evidence that they 
significantly reduce mortality rates or hospital length of stay. The 
commenter suggested that the criteria should be whether the proposed 
telehealth services are reasonable and necessary, safe and effective, 
medically appropriate, and provided in accordance with accepted 
standards of medical practice. The commenter believes CMS is applying a 
comparative effectiveness standard to coverage of telehealth services 
that it does not apply elsewhere in its coverage and payment for 
physician services, resulting in a double standard for coverage.
    Another commenter questioned our statement that there is ``no 
evidence that the implementation of ICU TM significantly reduce[s] 
mortality rates or hospital length of stay,'' noting that these are not 
category 2 criteria and that telemedicine for critical care services 
clearly meets the following three criteria for adding services on a 
category 2 basis:
     Ability to diagnose a medical condition in a patient 
population without access to clinically appropriate in-person 
diagnostic services.
     Treatment option for a patient population without access 
to clinically appropriate in-person treatment options.
     Reduced rate of complications.
    The commenter maintained that telemedicine is safe and feasible for 
all patients. The commenter further maintained that advances in today's 
technology enable health care providers to deliver a focused, critical 
intervention no matter where the patient may be situated and/or what 
services are delivered.
    Another commenter questioned the relevance of the ``JAMA Internal 
Medicine Study'' we cited because it involved VA hospitals whose 
patients do not represent the Medicare patient population. Finally, a 
commenter indicated that adding these services to the telehealth list 
would support the clinical stabilization of such patients awaiting 
critical care and/or surgical intervention or transport, in which a 
specialist may not be available to support the immediate clinical needs 
of the patient.
    Response: We disagree that we have applied a comparative 
effectiveness standard to the coverage of telehealth. As noted, in 
reviewing requests to add services on a category 2 basis, we look for 
evidence indicating that the use of a telecommunications system in 
furnishing the candidate telehealth service produces clinical benefit 
to the patient. In this circumstance of ICU critical care, we did not 
review the evidence to determine if the evidence demonstrated that the 
benefit of in-person ICU critical care was greater than in a 
telemedicine setting. We limited our review to the evidence of benefit 
of telemedicine in ICU critical care.
    As noted in the proposed rule (80 FR 41783), we reviewed the 
information provided by the ATA. We also reviewed a study entitled, 
``Impact of an Intensive Care Unit Telemedicine Program on Patient 
Outcomes in an Integrated Health Care System,'' published July 2014 in 
JAMA Internal Medicine that addressed potential clinical benefits of 
these kinds of services furnished via telehealth. The two studies had 
contradictory conclusions. In any evidentiary review, valid conclusions 
must be made based upon the totality of the available evidence. One 
must look at the quality of the study, the study hypothesis, 
appropriate study design, appropriate inclusion/exclusion factors, 
appropriate statistical analyses, and many other factors to adequately 
address the validity of the data. These factors are then used to draw 
conclusions about the totality of the evidence. In doing so for this 
service, we concluded that the totality of the evidence did not 
demonstrate a benefit for ICU telemedicine. This conclusion does not 
mean that a benefit does not exist. This conclusion only states that 
the totality of the evidence is not sufficient to reach a conclusion 
that a benefit exists. Although our proposal not to add these codes to 
the telehealth list did not specifically address whether or not the 
critical care service is accurately described by the requested codes 
when furnished via telehealth, we also reconsidered that portion of the 
category 2 criteria when we reconsidered our assessment in the context 
of the comments on the proposed rule. Based on our review of the code 
descriptors and CPT prefatory language, we do not believe that the 
services described by the critical care codes accurately describe the 
full range of services required by patients in need of that level of 
care. Instead, we believe that the kinds of services furnished to these 
patients via telehealth are more accurately described by the inpatient/
emergency department telehealth consultation codes, which are already 
on the list of Medicare telehealth services. Specifically, we believe 
that the kinds of telehealth services commenters describe as effective 
in the clinical stabilization of patients awaiting critical care and/or 
surgical intervention or transport, and in which a specialist may not 
be available to support the immediate clinical needs of the patient, 
are more accurately described and paid through the telehealth g-codes 
than through the critical care E/M CPT codes that describe in-person 
services.
    In Response to commenters who suggested that we are applying a 
``double standard'' for coverage of telehealth services, we note that 
section 1834(m)(4)(F) of the Act initially provided a payment mechanism 
for services furnished via telehealth for professional consultations, 
office visits, and office psychiatry services. The statute further 
required the Secretary to establish a process for annual additions or 
deletions to the telehealth list to be paid under particular 
circumstances. The statute does not suggest that any service that 
potentially could be furnished via telehealth should be included. 
Rather, the statute specifies a consideration process by CMS before 
making changes to the list of Medicare telehealth services. Since 
establishing the process in 2002, we have added codes to the telehealth 
list on a regular

[[Page 71064]]

basis and we will continue to do so, as appropriate, using the 
established process.
    Comment: A few commenters objected to our decision not to add 
online E/M service, chronic care management services, and medication 
therapy management services to the telehealth services list.
    Response: As noted, online E/M service (CPT code 99444) is 
currently noncovered; there would be no Medicare payment if this 
service was furnished without the use of a telecommunications system. 
Chronic care management services (CPT code 99490) can be furnished 
without the beneficiary's face-to-face presence and using any number of 
non-face-to-face means of communication. Therefore, it is unnecessary 
to add this service to the list of Medicare telehealth services. The 
chronic care management service can inherently be furnished using a 
wide range of remote communication technologies. Medication therapy 
management services (CPT codes 99605-99607) are noncovered services for 
which no payment may be made under the PFS. Therefore, we did not 
propose to add these services to the list of Medicare telehealth 
services for CY 2016.
    Comment: Concerning our decision to add ESRD services (CPT codes 
90963 through 90764) which includes counseling of parents, a commenter 
requested adding counseling of caregiver and family as all patients may 
not have parents as their only caregiver.
    Response: Although the CPT code descriptor specifies only parents, 
we believe that legal guardians would be recognized in lieu of parents.
    Comment: Commenters requested that:
     A patient's home, a dialysis facility, and an assisted 
living facility serve as originating sites for telehealth services.
     Originating site restrictions to rural areas be 
eliminated.
     Home health providers, registered nurses (RNs), Certified 
Pediatric Nurse Practitioners (CPNPs) and Certified Family Nurse 
Practitioners (CFNPs) be included in the list of eligible providers 
telehealth.
     The ability of NPs and PAs in a retail clinic setting to 
furnish telehealth services be clarified and that payment be 
commensurate with furnishing an in-person service.
    Response: Section 1834(m)(4)(C) of the Act does not include a 
patient's home, a dialysis facility, or an assisted living facility as 
an originating site. Additionally, an originating site must be in a 
rural HPSA; in a county that is not in an MSA; or a participant in a 
federal telemedicine demonstration project approved as of December 31, 
2000.
    Section 1834(m)(4)(E) of the Act defines a practitioner for 
telehealth services per section 1842(b)(18)(C), which does not include 
home health providers or RNs. CPNPs or CFNPS are authorized to furnish 
telehealth services if they meet the conditions for NPs in section 
1861(a)(a)(5) of the Act. NPs and PAs can furnish telehealth service as 
distant site practitioners. There are no specific criteria for a 
distant site. Therefore, there are no telehealth rules that would 
prohibit eligible distant site practitioners from furnishing telehealth 
services from a retail clinic, assuming the telehealth individual 
(beneficiary) is located at a telehealth originating site. Section 
1834(m)(2)(A) of the Act provides that payment for a service furnished 
via telehealth equals the payment that would be made for an in-person 
service. Because these requirements are specified in the statute, we do 
not have discretion to revise the telehealth rules as desired by the 
commenters.
    Comment: Many commenters supported, and one commenter opposed, our 
proposal to revise Sec.  410.78(b)(2) to include a CRNA, as described 
under Sec.  410.69, to the list of distant site practitioners who can 
furnish Medicare telehealth services. One commenter expressed concern 
that CRNAs furnish only services they are qualified to furnish.
    Response: We appreciate the commenters' support for the proposal to 
revise the regulation. We note that section 1834(m)(4)(E) of the Act 
defines a practitioner for telehealth services per section 
1842((b)(18)(C) of the Act, which includes CRNAs. We also note that 
CRNAs can only furnish services they are legally authorized to perform 
in the state in which the services are performed. After consideration 
of the public comments received, we are finalizing our proposal to 
revise Sec.  410.78(b)(2) to include a CRNA.
    We wish to inform stakeholders of the following initiatives to 
promote telehealth:
    The CMS Innovation Center is responsible for developing and testing 
new payment and service delivery models to lower costs and improve 
quality for Medicare, Medicaid, and CHIP beneficiaries. As part of that 
authority, the CMS Innovation Center can consider potential new payment 
and service delivery models to test changes to Medicare's telehealth 
payment policies. For example, the Next Generation Accountable Care 
Organization (ACO) Model is an Innovation Center initiative for ACOs 
that are experienced in coordinating care for populations of patients. 
It will allow these provider groups to assume higher levels of 
financial risk and reward than are available under the current Pioneer 
ACO Model and Medicare Shared Savings Program (Shared Savings Program). 
The goal of the Model is to test whether strong financial incentives 
for ACOs, coupled with tools to support better patient engagement and 
care management, can improve health outcomes and lower expenditures for 
Medicare fee-for-service (FFS) beneficiaries. Central to the Next 
Generation ACO Model are several benefit enhancement tools to help ACOs 
improve engagement with beneficiaries. ACOs participating in this Model 
have the opportunity to provide aligned beneficiaries with access to 
home visits and telehealth services that exceed what is currently 
covered under the Medicare program, and CMS will make reward payments 
to aligned beneficiaries who receive a high percentage of their care 
from the ACO and from certain providers and suppliers that have agreed 
to participate in the ACO's network as ACO Participants or Preferred 
Providers under this Model.
    The Fed-Tel Committee is comprised of employees from various 
federal agencies whose purpose is to facilitate telehealth education 
and information sharing, as well as coordinate funding opportunity 
announcements and other programmatic materials.
    We reminded all interested stakeholders that we are currently 
soliciting public requests to add services to the list of Medicare 
telehealth services. To be considered during PFS rulemaking for CY 
2017, these requests must be submitted and received by December 31, 
2015. Each request to add a service to the list of Medicare telehealth 
services must include any supporting documentation the requester 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 mail these requests, we refer readers to 
the CMS Web site at https://www.cms.gov/Medicare/Medicare-General-Information/Telehealth/index.html.
5. Telehealth Originating Site Facility Fee Payment Amount Update
    Section 1834(m)(2)(B) of the Act establishes the Medicare 
telehealth originating site facility fee for telehealth services 
furnished from October 1, 2001 through December 31 2002, at $20.00. For 
telehealth services furnished on or after January 1 of each subsequent

[[Page 71065]]

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 2016 is 1.1 percent. 
Therefore, for CY 2016, the payment amount for HCPCS code Q3014 
(Telehealth originating site facility fee) is 80 percent of the lesser 
of the actual charge or $25.10. The Medicare telehealth originating 
site facility fee and the MEI increase by the applicable time period is 
shown in Table 22.

 Table 22--The Medicare Telehealth Originating Site Facility Fee and MEI
                 Increase by the Applicable Time Period
------------------------------------------------------------------------
               Time period                 MEI increase    Facility fee
------------------------------------------------------------------------
10/01/2001-12/31/2002...................             N/A          $20.00
01/01/2003-12/31/2003...................               3           20.60
01/01/2004-12/31/2004...................             2.9           21.20
01/01/2005-12/31/2005...................             3.0           21.86
01/01/2006-12/31/2006...................             2.8           22.47
01/01/2007-12/31/2007...................             2.1           22.94
01/01/2008-12/31/2008...................             1.8           23.35
01/01/2009-12/31/2009...................             1.6           23.72
01/01/2010-12/31/2010...................             1.2           24.00
01/01/2011-12/31/2011...................             0.4           24.10
01/01/2012-12/31/2012...................             0.6           24.24
01/01/2013-12/31/2013...................             0.8           24.43
01/01/2014-12/31/2014...................             0.8           24.63
01/01/2015-12/31/2015...................             0.8           24.83
01/01/2016-12/31/2016...................             1.1           25.10
------------------------------------------------------------------------

J. Incident to Proposals: Billing Physician as the Supervising 
Physician and Ancillary Personnel Requirements

1. Background
    Section 1861(s)(2)(A) of the Act establishes the benefit category 
for services and supplies furnished as ``incident to'' the professional 
services of a physician. The statute specifies that services and 
supplies furnished as an incident to a physician's professional service 
(hereinafter ``incident to services'') are ``of kinds which are 
commonly furnished in physicians' offices and are commonly either 
rendered without charge or included in physicians' bills.'' In addition 
to the requirements of the statute, the regulation at Sec.  410.26 sets 
forth specific requirements that must be met for physicians and other 
practitioners to bill Medicare for incident to services. Section 
410.26(a)(7) limits ``incident to'' services to those included under 
section 1861(s)(2)(A) of the Act and that are not covered under another 
benefit category. Section 410.26(b) specifies (in part) that for 
services and supplies to be paid as incident to services under Medicare 
Part B, the services or supplies must be:
     Furnished in a noninstitutional setting to 
noninstitutional patients.
     An integral, though incidental, part of the service of a 
physician (or other practitioner) in the course of diagnosis or 
treatment of an injury or illness.
     Furnished under supervision (as specified under Sec.  
410.26(a)(2) and Sec.  410.26(b)(5)) of a physician or other 
practitioner eligible to bill and directly receive Medicare payment.
     Furnished by a physician, a practitioner with an incident 
to benefit, or auxiliary personnel.
    In addition to Sec.  410.26, there are regulations specific to each 
type of practitioner who is allowed to bill for incident to services as 
specified in Sec.  410.71(a)(2) (clinical psychologist services), Sec.  
410.74(b) (PAs' services), Sec.  410.75(d) (NPs' services), Sec.  
410.76(d) (CNSs' services), and Sec.  410.77(c) (certified nurse-
midwives' services). Incident to services are treated as if they were 
furnished by the billing physician or other practitioner for purposes 
of Medicare billing and payment. Consistent with this terminology, when 
referring in this discussion to the physician or other practitioner 
furnishing the service, we are referring to the physician or other 
practitioner who is billing for the incident to service. When we refer 
to the ``auxiliary personnel'' or the person who ``provides'' the 
service, we are referring to an individual who is personally performing 
the service or some aspect of it as distinguished from the physician or 
other practitioner who bills for the incident to service.
    Since we treat incident to services as services furnished by the 
billing physician or other practitioner for purposes of Medicare 
billing and payment, payment is made to the billing physician or other 
practitioner under the PFS, and all relevant Medicare rules apply 
including, but not limited to, requirements regarding medical 
necessity, documentation, and billing. Those practitioners who can bill 
Medicare for incident to services are paid at their applicable Medicare 
payment rate as if they personally furnished the service. For example, 
when incident to services are billed by a physician, they are paid at 
100 percent of the fee schedule amount, and when the services are 
billed by a nurse practitioner or clinical nurse specialist, they are 
paid at 85 percent of the fee schedule amount. Payments are subject to 
the usual deductible and coinsurance amounts.
    In the CY 2014 PFS final rule with comment period, we amended Sec.  
410.26 by adding a paragraph (b)(7) to require that, as a condition for 
Medicare Part B payment, all incident to services must be furnished in 
accordance with applicable state law. Additionally, we amended the 
definition of auxiliary personnel at Sec.  410.26(a)(1) to require that 
the individual who provides the incident to services must meet any 
applicable requirements to provide such services (including licensure) 
imposed by the state in which the services are furnished. These 
requirements for compliance with applicable state laws apply to any 
individual providing incident to services as a means to protect the 
health and safety of Medicare beneficiaries in the delivery of health 
care services, and to provide the Medicare program with additional 
recourse for denying or recovering Part B payment for incident to 
services that are not furnished in compliance with state law (78 FR 
74410). Revisions to Sec.  410.26(a)(1) and (b)(7) were intended to 
clarify the longstanding payment policy of paying only for services 
that are furnished in compliance with any

[[Page 71066]]

applicable state or federal requirements. The amended regulations also 
provide the Medicare program with additional recourse for denying or 
recovering Part B payment for incident to services that are not 
furnished in compliance with applicable requirements.
2. Billing Physician as the Supervising Physician
    In addition to the CY 2014 revisions to the regulations for 
incident to services, we believe that additional requirements for 
incident to services should be explicitly and unambiguously stated in 
the regulations. As described in this final rule with comment period, 
incident to a physician's or other practitioner's professional services 
means that the services or supplies are furnished as an integral, 
although incidental, part of the physician's or other practitioner's 
personal professional services in the course of diagnosis or treatment 
of an injury or illness (Sec.  410.26(b)(2)). Incident to services 
require direct supervision of the auxiliary personnel providing the 
service by the physician or other practitioner (Sec.  410.26(b)(5)) 
with the exception that allows care management services and 
transitional care management services (other than the required face-to-
face visit) to be furnished under the general supervision of the 
physician (or other practitioner).)
    We proposed to revise the regulations specifying the requirements 
for which physicians or other practitioners can bill for incident to 
services. In the CY 2002 PFS final rule (66 FR 55267), in response to a 
comment seeking clarification regarding what physician billing number 
should be used on the claim form for an incident to service, we stated 
that when a claim is submitted to Medicare under the billing number of 
a physician or other practitioner for an incident to service, the 
physician or other practitioner is stating that he or she performed the 
service or directly supervised the auxiliary personnel performing the 
service. Additionally, in Transmittal 148, which was published on April 
23, 2004, effective May 24, 2004, we specifically instructed 
practitioners as to how claim forms should be completed to account for 
the fact that the supervising physician or other practitioner is 
responsible for the incident to service. Section 410.26(b)(5) currently 
states that the physician (or other practitioner) supervising the 
auxiliary personnel need not be the same physician (or other 
practitioner) upon whose professional service the incident to service 
is based. To be certain that the incident to services furnished to a 
beneficiary are in fact an integral, although incidental, part of the 
physician's or other practitioner's personal professional service that 
is billed to Medicare, we believe that the physician or other 
practitioner who bills for the incident to service must also be the 
physician or other practitioner who directly supervises the service. It 
has been our position that billing practitioners should have a personal 
role in, and responsibility for, furnishing services for which they are 
billing and receiving payment as an incident to their own professional 
services. This is consistent with the requirements that all physicians 
and billing practitioners attest on each Medicare claim that he or she 
``personally furnished'' the services for which he or she is billing. 
Without this requirement, there could be an insufficient nexus with the 
physician's or other practitioner's services being billed on a claim to 
Medicare as incident to services and the actual services being 
furnished to the Medicare beneficiary by the auxiliary personnel. 
Therefore, we proposed to amend Sec.  410.26(b)(5), consistent with 
previous preamble discussion and subregulatory guidance, that the 
physician or other practitioner who bills for incident to services must 
also be the physician or other practitioner who directly supervises the 
auxiliary personnel who provide the incident to services. Also, to 
further clarify the meaning of the proposed amendment to this 
regulation, we proposed to remove the last sentence from Sec.  
410.26(b)(5), which specified that the physician (or other 
practitioner) supervising the auxiliary personnel need not be the same 
physician (or other practitioner) upon whose professional service the 
incident to service is based.
3. Auxiliary Personnel Who Have Been Excluded or Revoked From Medicare
    As a condition of Medicare payment, auxiliary personnel who, under 
the direct supervision of a physician or other practitioner, provide 
incident to services to Medicare beneficiaries must comply with all 
applicable federal and state laws. This includes not having been 
excluded from Medicare, Medicaid and all other federally funded health 
care programs. We proposed to amend the regulation to explicitly 
prohibit auxiliary personnel from providing incident to services who 
have either been excluded from Medicare, Medicaid and all other 
federally funded health care programs by the Office of Inspector 
General (OIG) or who have had their enrollment revoked for any reason. 
These excluded or revoked individuals are already prohibited from 
providing services to Medicare beneficiaries, so this proposed revision 
is an additional safeguard to ensure that these excluded or revoked 
individuals are not providing incident to services and supplies under 
the direct supervision of a physician or other authorized supervising 
practitioner. These proposed revisions to the incident to regulations 
will provide the Medicare program with additional recourse for denying 
or recovering Part B payment for incident to services and supplies that 
are not furnished in compliance with our program requirements.
4. Compliance and Oversight
    We recognize that there are many ways in which compliance with 
these requirements could be consistently and fairly assured across the 
Medicare program. In considering implementation of these proposals, we 
wish to be mindful of the need to minimize or eliminate any 
practitioner administrative burden while at the same time ensuring that 
practitioners are not subjected to unnecessary audits or placed at risk 
of being inadvertently deemed non-compliant. Therefore, while we 
believe that the initial responsibility of compliance rests with the 
practitioner, we invited comments through this final rule with comment 
period about possible approaches we could take to improve our ability 
to ensure that incident to services are provided to beneficiaries by 
qualified individuals in a manner consistent with Medicare statute and 
regulations. We invited commenters to consider the options we 
considered, such as creating new categories of enrollment, implementing 
a mechanism for registration short of full enrollment, requiring the 
use of claim elements such as modifiers to identify the types of 
individuals providing services, or relying on post-payment audits, 
investigations and recoupments by CMS contractors such as Recovery 
Auditors or Program Integrity Contractors. We considered these comments 
in the course of finalizing proposals for CY 2016, and will continue to 
consider these comments should we decide in the future that additional 
regulations or guidance will be necessary to monitor compliance with 
these or other requirements surrounding incident to services.
    The following is a summary of the comments we received regarding 
our proposals on ``incident to'' services.
    Comment: Many commenters sought clarification on whether CMS's 
proposal requires that a physician or other practitioner who furnishes 
the initial care and/or orders or refers incident to services must also 
be the same

[[Page 71067]]

individual who also directly supervises and bills Medicare for incident 
to services. These commenters urged CMS to clarify that the proposed 
change would not require that the physician or other practitioner who 
orders, refers, develops a treatment plan, or initiates treatment must 
also directly supervise all incident to services.
    Response: We understand these comments, and in making our proposal, 
we intended to amend the current incident to regulations to state 
explicitly that only the physician or other practitioner who directly 
supervises the auxiliary personnel who provide the incident to services 
may bill Medicare for the incident to services. The proposed policy was 
not intended to require that the supervising physician or other 
practitioner must be the same individual as the physician or other 
practitioner who orders or refers the beneficiary for the services, or 
who initiates treatment. Rather, we intended to clarify that under 
circumstances where the supervising practitioner is not the same as the 
referring, ordering, or treating practitioner, only the supervising 
practitioner may bill Medicare for the incident to service. As stated 
in the CY 2002 PFS final rule at 66 FR 55267 in response to a comment 
seeking clarification regarding what physician billing number should be 
used on the claim form for an incident to service, we stated that the 
Medicare billing number of the ordering physician or other practitioner 
should not be used if that person did not directly supervise the 
auxiliary personnel. When the billing number of the physician or other 
practitioner is reported on the claim form, the physician or 
practitioner is stating that he or she directly performed the service, 
or supervised the auxiliary personnel performing the service consistent 
with the required level of supervision. Accordingly, we believe that an 
explicit statement in the regulations text further strengthens our 
intent that only the physician or other practitioner directly 
supervising the incident to services may bill Medicare for the incident 
to services.
    Comment: While some commenters supported our proposal to amend 
regulatory text regarding incident to services, the majority of 
commenters opposed our proposal to remove the last sentence from Sec.  
410.26(b)(5) to clarify our proposal to require that the billing 
physician or other practitioner for incident to services must have 
directly supervised the auxiliary personnel who provided incident to 
services. This sentence in the current incident to regulations states 
that the physician (or other practitioner) supervising the auxiliary 
personnel need not be the same physician (or other practitioner) upon 
whose professional service the incident to service is based. Most of 
these commenters believe that the removal of this sentence represents a 
change in longstanding policy regarding how incident to services are 
furnished and billed, especially by group practices and multispecialty 
clinics, rather than a clarification about who the program requires to 
bill for incident to services. Other commenters stated that we should 
maintain the final sentence of Sec.  410.26(b)(5), in current 
regulations because they believe the policy, as expressed in the 
sentence allows for situations where incident to services may be 
furnished during an extended course of care under the supervision of a 
different physician or other practitioner than the one that is 
ordering, referring, diagnosing, or initially treating the patient. 
Still other commenters suggested that our proposal to remove the 
sentence will severely impact patient care in terms of access, creating 
delays in care and in some cases restricting care for patients--
particularly those in rural areas and low-income populations, when the 
same physician or other practitioner who orders services and/or 
initiates care is not also available and present to directly supervise 
the incident to services. Additionally, many of these commenters urged 
us to restore the sentence that we proposed to remove, or to not 
finalize the proposal, because they believe it would be overly 
burdensome to group practices and multispecialty clinics to impose the 
proposed billing and supervision requirements. These commenters 
indicated that, for these types of practices or for anything other than 
a solo practice, our proposal creates a financial burden, requires 
extensive restructuring, and imposes operational and staff coverage 
difficulties particularly in locum tenens situations, scheduling 
vacations and, in situations where the same physician or other 
practitioner does not practice daily at the same location.
    Response: We appreciate the concerns of commenters who urged us not 
to delete the final sentence in regulation at Sec.  410.26(b)(5). Since 
we believe the incident to services provided by auxiliary personnel are 
based on the professional services of the directly supervising 
physician or other practitioner (who has a personal role in, and 
responsibility for, furnishing services for which they are billing and 
receiving payment), we thought our regulations would be made clearer by 
removing the final sentence of the regulation at Sec.  410.26(b)(5). We 
have considered the extensive and insightful comments expressing 
concern about how the removal of the subject sentence might be 
construed to be a change in policy that would require that the 
physician (or other practitioner) supervising the auxiliary personnel 
must be the same physician (or other practitioner) who is treating the 
patient more generally. We also considered the comments from 
stakeholders who suggested the change in the regulatory language would 
adversely impact the physician community, particularly group practices 
and multispecialty clinics. Given the concerns that have been 
expressed, we are not finalizing our proposal to delete the final 
sentence of the regulatory language. Instead, we will revise this 
sentence to reflect our policy that the physician (or other 
practitioner) supervising the auxiliary personnel need not be the same 
physician (or other practitioner) treating the patient more broadly. In 
addition to this revised sentence, we will add clarifying regulation 
text specifying that only the physician or other practitioner under 
whose supervision the incident to service(s) are being provided is 
permitted to bill the Medicare program for the incident to services.
    Comment: One commenter disagreed with our proposal to specify that 
only the directly supervising physician or other practitioner is 
permitted to bill for incident to services. The commenter advised that, 
in single specialty groups, to require that incident to services must 
be billed by the directly supervising physician or other practitioner 
who is present at the time the incident to services are furnished, 
rather than the ordering physician or other practitioner who is also 
present, creates an unnecessary tracking, accounting, and scheduling 
burden on the practice. The commenter suggested that in situations 
where the ordering physician or other practitioner and the directly 
supervising physician or other practitioner are in the same single 
specialty group, and both are present at the time that auxiliary 
personnel are providing incident to services, either the ordering or 
supervising physician or other practitioner should be permitted to bill 
for the incident to services.
    Response: Although the physician or practitioner who orders or 
refers a beneficiary for a service has a connection to the services, we 
believe the physician or other practitioner directly supervising the 
incident to service assumes responsibility and accountability for the 
care of the patient that is provided by auxiliary personnel.

[[Page 71068]]

Hence, we maintain that it is appropriate to limit billing for incident 
to services to the physician or practitioner who supervises the 
provision of those services. Although we understand that individual 
practitioners or practices may need to improve the tracking and 
accounting regarding the supervision and billing of incident to 
services, we do not agree with the commenter that such tracking or 
accounting is unnecessary. Instead, we believe that such tracking and 
accounting is necessary to ensure that practitioners bill appropriately 
for services furnished incident to their professional services.
    Comment: Some commenters supported our proposal to amend the 
current regulations to state explicitly that only the directly 
supervising physician or other practitioner can bill the program for 
incident to services, and to remove the sentence under current 
regulations indicating that the physician or other practitioner 
directly supervising the auxiliary personnel need not be the same 
physician or other practitioner upon whose professional service the 
incident to service is based. These commenters interpreted our proposal 
to promote clear direction on the appropriate billing practices for 
incident to services in that the proposals are transparent and impose 
accountability. Additionally, one of these commenters characterized our 
proposals as clarifications that will allow small primary care 
practices to continue providing high quality and coordinated care.
    Response: We appreciate these comments, which indicate that the 
commenters understood the intent of our proposals and did not interpret 
them as requiring changes in the way incident to services are furnished 
and billed.
    Comment: Most commenters that addressed our proposal regarding 
auxiliary personnel who have been excluded or revoked from the Medicare 
program supported our approach. The commenters stated that since 
excluded or revoked individuals are already prohibited from furnishing 
incident to services to Medicare patients, our proposal will provide 
the Medicare program with additional recourse for denying or recovering 
Part B payment for incident to services that are not furnished in 
compliance with program requirements. The commenters believe that our 
proposed prohibition will improve the quality of incident to services 
overall because it offers an additional safeguard against the 
possibility of auxiliary personnel who have been excluded or revoked 
from the Medicare program continuing to provide services to 
beneficiaries by obscuring them as incident to the services of another 
practitioner. However, one commenter opposed the proposal because the 
commenter believed that it would prevent marriage and family therapists 
from providing incident to services as auxiliary personnel since the 
commenter believed these therapists are excluded from the Medicare 
program.
    Response: We appreciate the support for our proposal and are 
finalizing our proposal. We clarify that the term ``excluded'' in this 
context does not refer to the kinds of practitioners who do not have a 
benefit, and are not permitted to bill independently for their services 
under Medicare law.
    Comment: In addition to the comments discussed above that are 
specifically related to our proposals, we received several comments in 
response to our solicitation of comments regarding future potential 
compliance and oversight considerations for incident to services. We 
also received several comments on the incident to benefit that are 
outside the scope of our specific proposal or solicitation. These 
comments addressed issues such as: Developing a list of CPT codes to 
distinguish therapeutic services that can be billed on an incident to 
basis from diagnostic tests that cannot be billed incident to; an 
explicit determination about whether CPT codes representing services 
that contain both a technical component and a professional component 
can be billed incident to; or whether CPT codes representing services 
with only a technical component can be billed incident to; and how 
transition care management and chronic care management services are 
affected by incident to requirements.
    Response: We thank commenters for their feedback. We will consider 
these comments in the context of developing future improvements to 
guidance regarding incident to services.
    After considering the comments that we received on incident to 
services under our proposed rule, we are finalizing the changes to our 
regulation at Sec.  410.26(a)(1) without modification, and we are 
finalizing the proposed change to the regulation at Sec.  410.26(b)(5) 
with a clarifying modification. Specifically, we are amending the 
definition of the term, ``auxiliary personnel'' at Sec.  410.26(a)(1) 
that are permitted to provide ``incident to'' services to exclude 
individuals who have been excluded from the Medicare program or have 
had their Medicare enrollment revoked. Additionally, we are amending 
Sec.  410.26(b)(5) by revising the final sentence to make clear that 
the physician (or other practitioner) directly supervising the 
auxiliary personnel need not be the same physician (or other 
practitioner) that is treating the patient more broadly, and adding a 
sentence to specify that only the physician (or other practitioner) 
that supervises the auxiliary personnel that provide incident to 
services may bill Medicare Part B for those incident to services.

K . Portable X-Ray: Billing of the Transportation Fee

    Part B's payment to portable X-ray suppliers includes a 
transportation fee for transporting portable X-ray equipment to the 
location where portable X-rays are taken. If more than one patient at 
the same location is X-rayed during the course of the visit, the 
portable X-ray transportation fee is prorated to reflect this. We have 
received feedback that some portable X-ray suppliers have been 
operating under the assumption that when multiple patients receive 
portable X-ray services in this manner, the transportation fee would 
only be prorated among a subset of those patients. The Medicare Claims 
Processing Manual (Pub. 100-4, Chapter 13, Section 90.3) currently 
states:

    Carriers shall allow only a single transportation payment for 
each trip the portable X-ray supplier makes to a particular 
location. When more than one Medicare patient is X-rayed at the same 
location, e.g., a nursing home, prorate the single fee schedule 
transportation payment among all patients receiving the services. 
For example, if two patients at the same location receive X-rays, 
make one-half of the transportation payment for each.

    In some jurisdictions, Medicare contractors have been allowing the 
portable X-ray transportation fee to be allocated only among Medicare 
Part B beneficiaries. In other jurisdictions, Medicare contractors have 
required the transportation fee to be allocated among all Medicare 
patients (Parts A and B). We believe it would be more appropriate to 
determine the transportation fee attributable to Medicare Part B by 
allocating it among all patients who receive portable X-ray services in 
a single trip. Medicare Part B should not pay for more than its share 
of the transportation costs for portable X-ray services.
    For CY 2016, we proposed to revise the Medicare Claims Processing 
Manual (Pub. 100-4, Chapter 13, Section 90.3) to remove the word 
``Medicare'' before ``patient'' in section 90.3. We also proposed to 
clarify that this subregulatory guidance means that, when more than one 
patient is X-rayed at the same location, the transportation payment 
under the PFS for the Part B

[[Page 71069]]

patient(s) is to be prorated by allocating the trip among all patients 
(Medicare Parts A and B, and non-Medicare) receiving portable X-ray 
services during that trip, regardless of their insurance status. For 
example, for portable X-ray services furnished during a single trip to 
a skilled nursing facility (SNF), we believe that the transportation 
fee should be allocated among all patients receiving services during 
the trip, irrespective of whether the patient is in a Part A stay, a 
Part B patient, or not a Medicare beneficiary at all. Thus, for a 
Medicare Part B patient, the prorated transportation fee made under 
Part B would appropriately reflect the share of the trip that is 
actually attributable to that patient. The following is a summary of 
the comments we received on our proposal to clarify the subregulatory 
guidelines to determine Medicare Part B's portion of the portable X-ray 
services' transportation fee.
    Comment: Some commenters supported our proposal to clarify the 
current subregulatory guidance for the portable X-ray transportation 
fee. The commenters believe that this proposal will ensure consistent 
treatment of the payment for transportation among the different MACs 
and will eliminate the overpayment of portable X-ray transportation 
services. Other commenters supported our proposal, but advised CMS not 
to implement the proposal without also including a transportation fee 
proration policy for payers under Medicare Part A, Medicare Advantage, 
and Medicaid to pay an amount for transportation that is equal to the 
proportion of their covered patients receiving an X-ray on that trip to 
the facility. If CMS implements the proration of the transportation fee 
for Medicare Part B only, the commenters stated that the result will be 
reduced payment to the portable X-ray transportation suppliers.
    Response: We appreciate the commenters' support for our proposal. 
With regard to the commenters that asked CMS to consider requiring 
Medicare Part A and non-Medicare payers to pay a prorated 
transportation fee amount for their covered patients receiving portable 
X-ray services during the same trip, we note that such requirements 
generally are beyond the scope of this rule. However, with regard to 
payment under Medicare Part A, as we noted in the SNF prospective 
payment system (PPS) final rule for CY 2016 (80 FR 46408, August 4, 
2015), under the SNF PPS, a SNF's global per diem payment for its 
resident's covered Part A stay specifically includes the portable X-
ray's transportation and setup. Further guidance on arrangements 
between SNFs and their suppliers is contained in CY 2016 SNF 
prospective payment system (PPS) final rule with comment period, which 
is available online at http://www.gpo.gov/fdsys/pkg/FR-2015-08-04/pdf/2015-18950.pdf.
    Comment: Another commenter disagreed with the proposal and 
indicated that the proration among Part B patients may discourage 
community-based services if portable X-ray suppliers reduce their 
services in light of the potential reduction in the payment they 
previously received for the transportation fee. The commenter is 
concerned that if portable X-ray suppliers do not provide X-ray 
services in SNFs or other places where Medicare Part B beneficiaries 
reside, that the beneficiaries would be required to receive X-ray 
services in a hospital or other facility. The commenter suggested CMS 
consider the negative impact of the proposal in the context of the 
improved care and lowered cost of services in the community as compared 
to facility-based care. The commenter also expressed concern about how 
this would affect non-Medicare patients since third party payers often 
end up paying more to offset reduced Medicare payments levels.
    Response: We appreciate the commenter's feedback, and understand 
the concerns raised regarding the implications of our proposal. We 
agree that Medicare payment for services should encourage access to 
care for Medicare beneficiaries. However, we do not believe that the 
consistent application of payment policies that permit Medicare Part B 
to make payment only for costs attributable to services furnished to 
Medicare Part B patients is likely to discourage community-based care 
such as portable X-ray services provided to individuals residing in a 
SNF.
    After consideration of the comments we received, we are finalizing 
our proposed change to the subregulatory guidance in the Medicare 
Claims Processing Manual (Pub. 100-4, Chapter 13, Section 90.3) to 
clarify the portable X-ray transportation fee proration policy, 
effective January 1, 2016. We believe the revision to the Manual 
provides consistent direction to all MACs in the payment of portable X-
ray transportation for Medicare Part B claims. In addition, we believe 
the revision strengthens program integrity under Medicare Part B 
because Medicare will no longer pay for more than its share of the 
portable X-ray transportation costs.
    We received several comments that are not within the scope of our 
proposal to clarify the subregulatory guidance in Sec.  90.3 of the 
Medicare Claims Processing Manual, which pertains to portable X-ray 
transportation fee proration policy. The topics addressed by commenters 
included recommendations that CMS:
     Update regulations which govern conditions for coverage of 
portable x-ray services.
     Consider allowing certain services to be performed in a 
mobile setting.
     Clarify and/or change the consolidated billing payment 
policy of diagnostic tests including portable X-ray.
     Use multiple transportation codes that describe costs 
attributable to different imaging modalities.
    Response: We appreciate these comments, but they are beyond the 
scope of this rule. However, we will review all recommendations 
provided and consider them in the development of future policy.

L. Technical Correction: Waiver of Deductible for Anesthesia Services 
Furnished on the Same Date as a Planned Screening Colorectal Cancer 
Test

    Section 1833(b)(1) of the Act waives the deductible for colorectal 
cancer screening tests regardless of the code that is billed for the 
establishment of a diagnosis as a result of the test, or the removal of 
tissue or other matter or other procedure that is furnished in 
connection with, as a result of, and in the same clinical encounter as 
the screening test. To implement this statutory provision, we amended 
Sec.  410.160 to add to the list of services to which the deductible 
does not apply, beginning January 1, 2011, a surgical service furnished 
in connection with, as a result of, and in the same clinical encounter 
as a planned colorectal cancer screening test. A surgical service 
furnished in connection with, as a result of, and in the same clinical 
encounter as a colorectal cancer screening test means a surgical 
service furnished on the same date as a planned colorectal cancer 
screening test as described in Sec.  410.37.
    In the CY 2015 PFS final rule with comment period, we modified the 
regulatory definition of colorectal cancer screening test with regard 
to colonoscopies to include anesthesia services whether billed as part 
of the colonoscopy service or separately. (See Sec.  410.37(a)(1)(iii)) 
In the preamble to the final rule, we stated that the statutory waiver 
of deductible would apply to anesthesia services furnished in 
conjunction with a colorectal cancer screening test even when a polyp 
or other tissue is removed during a

[[Page 71070]]

colonoscopy (79 FR 67731). We also indicated that practitioners should 
report anesthesia services with the PT modifier in such circumstances. 
The final policy was implemented for services furnished during CY 2015. 
Although we modified the definition of colorectal cancer screening 
services in Sec.  410.37(a)(1)(iii) to include anesthesia furnished 
with a screening colonoscopy, we did not make a conforming change to 
our regulations to expressly reflect the inapplicability of the 
deductible to those anesthesia services.
    To better reflect our policy in the regulations, we proposed a 
technical correction to amend Sec.  410.160(b)(8) to expressly 
recognize anesthesia services. Specifically, we proposed to amend Sec.  
410.160(b)(8) to add ``and beginning January 1, 2015, for an anesthesia 
service,'' following the first use of the phrase ``a surgical service'' 
and to add ``or anesthesia'' following the word ``surgical'' each time 
it is used in the second sentence of Sec.  410.160(b)(8). This 
amendment to our regulation will ensure that both surgical or 
anesthesia services furnished in connection with, as a result of, and 
in the same clinical encounter as a colorectal cancer screening test 
will be exempt from the deductible requirement when furnished on the 
same date as a planned colorectal cancer screening test as described in 
Sec.  410.37.
    Comment: A few commenters thanked us for modifying the definition 
of colorectal cancer screening services to include anesthesia care and 
for making the conforming change to regulations, noting that this will 
help to increase access to screening colonoscopies. The commenters also 
stated that the coinsurance should be waived in instances where the 
screening becomes diagnostic, but noted that they understand that CMS 
may not have the statutory authority to make this change. Commenters 
also stated that if CMS were to receive such authority, they hope CMS 
would make the associated regulatory change as quickly as possible so 
that beneficiaries would be further encouraged to seek the screening.
    One commenter urged CMS to identify a way a way under the existing 
authority to redefine colorectal cancer screening to include 
colonoscopy with removal of polyp or abnormal growth during the 
screening encounter. The commenter stated that nearly half of all 
patients who undergo screening colonoscopy have a polyp or other tissue 
removed, and believed that the current policy is unfair and 
disproportionately affects lower income beneficiaries. The commenter 
also stated that there are various types of colorectal cancer 
screenings, including fecal occult blood test, double contrast barium 
enema, and CT colonography, and urged CMS to cover these other 
screening tests without cost-sharing obligations for the beneficiary.
    Response: We thank the commenters for their feedback and will 
consider the issues that are within our authority for future 
rulemaking. After consideration of these comments, we are finalizing 
our proposed technical correction to amend Sec.  410.160(b)(8).

M. Therapy Caps

1. Outpatient Therapy Caps for CY 2016
    Section 1833(g) of the Act requires application of annual per 
beneficiary limitations on the amount of expenses that can be 
considered as incurred expenses for outpatient therapy services under 
Medicare Part B, commonly referred to as ``therapy caps.'' There is one 
therapy cap for outpatient occupational therapy (OT) services and 
another separate therapy cap for physical therapy (PT) and speech-
language pathology (SLP) services combined.
    The therapy caps apply to outpatient therapy services furnished in 
all settings, including the previously exempted hospital setting 
(effective October 1, 2012) and critical access hospitals (CAHs) 
(effective January 1, 2014).
    The therapy cap amounts under section 1833(g) of the Act are 
updated each year based on the Medicare Economic Index (MEI). 
Specifically, the annual caps are calculated by updating the previous 
year's cap by the MEI for the upcoming calendar year and rounding to 
the nearest $10.00. Increasing the CY 2015 therapy cap of $1,940 by the 
CY 2016 MEI of 1.1 percent and rounding to the nearest $10.00 results 
in a CY 2016 therapy cap amount of $1,960.
    An exceptions process for the therapy caps has been in effect since 
January 1, 2006. Originally required by section 5107 of the Deficit 
Reduction Act of 2005 (DRA), which amended section 1833(g)(5) of the 
Act, the exceptions process for the therapy caps has been extended 
multiple times through subsequent legislation as described in the CY 
2015 PFS final rule with comment period (79 FR 67730) and most recently 
extended by the Medicare Access and CHIP Reauthorization Act of 2015 
(MACRA) (Pub. L. 114-10). The Agency's current authority to provide an 
exceptions process for therapy caps expires on December 31, 2017.
    CMS tracks each beneficiary's incurred expenses annually and counts 
them towards the therapy caps by applying the PFS rate for each service 
less any applicable multiple procedure payment reduction (MPPR) amount. 
As required by section 1833(g)(6)(B), added by section 603(b) of the 
American Taxpayer Relief Act of 2012 (ATRA) (Pub. L. 112-240) and 
extended by subsequent legislation, the PFS-rate accrual process is 
applied to outpatient therapy services furnished by CAHs even though 
they are paid on a cost basis. After expenses incurred for the 
beneficiary's outpatient therapy services for the year have exceeded 
one or both of the therapy caps, therapy suppliers and providers use 
the KX modifier on claims for subsequent services to request an 
exception to the therapy caps. By use of the KX modifier, the therapist 
is attesting that the services above the therapy caps are reasonable 
and necessary and that there is documentation of medical necessity for 
the services in the beneficiary's medical record. Claims for outpatient 
therapy services over the caps without the KX modifier are denied.
    Since October 1, 2012, under section 1833(g)(5)(C) of the Act, we 
have been required to apply a manual medical review process to therapy 
claims when a beneficiary's incurred expenses for outpatient therapy 
services exceed a threshold amount of $3,700. There are two separate 
thresholds of $3,700, just as there are two separate therapy caps, one 
for OT services and one for PT and SLP services combined; and incurred 
expenses are counted towards the thresholds in the same manner as the 
caps. Now, under section 1833(g)(5) of the Act as amended by section 
202(b) of the MACRA, claims exceeding the therapy thresholds are no 
longer automatically subject to a manual medical review process as they 
were before. Rather, CMS is permitted to do a more targeted medical 
review on these claims using factors specified in section 
1833(g)(5)(E)(ii) of the Act as amended by section 202(b) of the MACRA, 
including targeting those therapy providers with a high claims denial 
rate for therapy services or with aberrant billing practices compared 
to their peers. The statutorily-required manual medical review process 
required under section 1833(g)(5)(C) of the Act expires at the same 
time as the exceptions process for therapy caps on December 31, 2017.
    For information on the manual medical review process, go to https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Medical-Review/TherapyCap.html.

[[Page 71071]]

2. Applying Therapy Caps to Maryland Hospitals
    Since October 1, 2012, the therapy caps and related provisions have 
applied to the outpatient therapy services furnished by hospitals as 
recognized under section 1833(a)(8)(B) of the Act. Before then, 
outpatient therapy services furnished by hospitals had been exempted 
from the statutory therapy caps. Since 1999, hospitals have been paid 
for the outpatient therapy services they furnish at PFS rates--the 
applicable fee schedule established under section 1834(k)(3) of the 
Act.
    Beginning October 1, 2012, CMS has been required to apply the 
therapy caps and related provisions to outpatient therapy services 
under section 1833(g) of the Act furnished in hospitals. As with other 
statutory provisions on therapy caps, this provision has been extended 
several times by additional legislation. Most recently, section 202(a) 
of the MACRA extended this broadened application of the therapy caps to 
include outpatient therapy services furnished by hospitals through 
December 31, 2017.
    When we first implemented the statutory provision that extended 
application of the therapy caps to outpatient therapy services 
furnished by hospitals, we did not apply the therapy caps to most 
hospitals in Maryland. Originally, this omission was linked to our 
longstanding waiver policy under section 1814(b) of the Act, which 
allowed Maryland to set the payment rates for hospital services, 
including those for the outpatient therapy services they furnish. Since 
2014, most hospitals in Maryland are paid at rates determined under the 
Maryland All-Payer Model, which is being tested under the authority of 
section 1115A of the Act.
    To correct this oversight, we recently issued instructions through 
Change Request 9223 (available online at https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R3367CP.pdf) 
to our Maryland MAC to revise our systems to ensure the application of 
the therapy caps and related provisions to the outpatient therapy 
services provided in all Maryland hospitals. These instructions 
included the direction to use the rates established under the Maryland 
All-Payer Model rather than the PFS rates to accrue towards the per-
beneficiary therapy caps and thresholds. We believe using the Maryland 
All-Payer Model rates rather than the PFS rates is consistent with the 
statute at sections 1833(g)(1) and (3) of the Act that requires us to 
count the actual expenses incurred in any calendar year towards the 
beneficiary's therapy caps. These instructions will become effective 
January 1, 2016.

III. Other Provisions of the Final Rule With Comment Period

A. Provisions Associated With the Ambulance Fee Schedule

1. Overview of Ambulance Services
a. Ambulance Services
    Under the ambulance fee schedule, the Medicare program pays for 
ambulance transportation services for Medicare beneficiaries when other 
means of transportation are contraindicated by the beneficiary's 
medical condition and all other coverage requirements are met. 
Ambulance services are classified into different levels of ground 
(including water) and air ambulance services based on the medically 
necessary treatment provided during transport.
    These services include the following levels of service:

 For Ground--
++ Basic Life Support (BLS) (emergency and non-emergency)
++ Advanced Life Support, Level 1 (ALS1) (emergency and non-emergency)
++ Advanced Life Support, Level 2 (ALS2)
++ Paramedic ALS Intercept (PI)
++ Specialty Care Transport (SCT)
 For Air--
++ Fixed Wing Air Ambulance (FW)
++ Rotary Wing Air Ambulance (RW)
b. Statutory Coverage of Ambulance Services
    Under sections 1834(l) and 1861(s)(7) of the Act, Medicare Part B 
(Supplemental Medical Insurance) covers and pays for ambulance 
services, to the extent prescribed in regulations, when the use of 
other methods of transportation would be contraindicated by the 
beneficiary's medical condition.
    The House Ways and Means Committee and Senate Finance Committee 
Reports that accompanied the 1965 Social Security Amendments suggest 
that the Congress intended that--
     The ambulance benefit cover transportation services only 
if other means of transportation are contraindicated by the 
beneficiary's medical condition; and
     Only ambulance service to local facilities be covered 
unless necessary services are not available locally, in which case, 
transportation to the nearest facility furnishing those services is 
covered (H.R. Rep. No. 213, 89th Cong., 1st Sess. 37 and Rep. No. 404, 
89th Cong., 1st Sess. Pt 1, 43 (1965)).
    The reports indicate that transportation may also be provided from 
one hospital to another, to the beneficiary's home, or to an extended 
care facility.
c. Medicare Regulations for Ambulance Services
    Our regulations relating to ambulance services are set forth at 42 
CFR part 410, subpart B and 42 CFR part 414, subpart H. Section 
410.10(i) lists ambulance services as one of the covered medical and 
other health services under Medicare Part B. Therefore, ambulance 
services are subject to basic conditions and limitations set forth at 
Sec.  410.12 and to specific conditions and limitations included at 
Sec.  410.40 and Sec.  410.41. Part 414, subpart H, describes how 
payment is made for ambulance services covered by Medicare.
2. Ambulance Extender Provisions
a. Amendment to Section 1834(l)(13) of the Act
    Section 146(a) of the MIPPA amended section 1834(l)(13)(A) of the 
Act to specify that, effective for ground ambulance services furnished 
on or after July 1, 2008 and before January 1, 2010, the ambulance fee 
schedule amounts for ground ambulance services shall be increased as 
follows:
     For covered ground ambulance transports that originate in 
a rural area or in a rural census tract of a metropolitan statistical 
area, the fee schedule amounts shall be increased by 3 percent.
     For covered ground ambulance transports that do not 
originate in a rural area or in a rural census tract of a metropolitan 
statistical area, the fee schedule amounts shall be increased by 2 
percent.
    The payment add-ons under section 1834(l)(13)(A) of the Act have 
been extended several times. Most recently, section 203(a) of the 
Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 114-10, 
enacted on April 16, 2015) amended section 1834(l)(13)(A) of the Act to 
extend the payment add-ons through December 31, 2017. Thus, these 
payment add-ons apply to covered ground ambulance transports furnished 
before January 1, 2018. We proposed to revise Sec.  414.610(c)(1)(ii) 
to conform the regulations to this statutory requirement. (For a 
discussion of past legislation extending section 1834(l)(13) of the 
Act, please see the CY 2014 PFS final rule with comment period (78 FR 
74438 through 74439) and the CY 2015 PFS final rule with comment period 
(79 FR 67743)).

[[Page 71072]]

    This statutory requirement is self-implementing. A plain reading of 
the statute requires only a ministerial application of the mandated 
rate increase, and does not require any substantive exercise of 
discretion on the part of the Secretary. We received several comments 
regarding this proposal. The following is a summary of the comments we 
received and our response.
    Comment: Several commenters supported the implementation of the 
extension of the ambulance payment add-ons. These commenters also 
agreed that these provisions are self-implementing. One commenter 
encouraged CMS to seek to make these add-on payments permanent.
    Response: We appreciate the commenters' support of these 
provisions, but we do not have the authority to make these provisions 
permanent.
    After consideration of the public comments received, we are 
finalizing our proposal to revise Sec.  414.610(c)(1)(ii) to conform 
the regulations to this statutory requirement.
b. Amendment to Section 1834(l)(12) of the Act
    Section 414(c) of the Medicare Prescription Drug, Improvement and 
Modernization Act of 2003 (Pub. L. 108-173, enacted on December 8, 
2003) (MMA) added section 1834(l)(12) to the Act, which specified that, 
in the case of ground ambulance services furnished on or after July 1, 
2004, and before January 1, 2010, for which transportation originates 
in a qualified rural area (as described in the statute), the Secretary 
shall provide for a percent increase in the base rate of the fee 
schedule for such transports. The statute requires this percent 
increase to be based on the Secretary's estimate of the average cost 
per trip for such services (not taking into account mileage) in the 
lowest quartile of all rural county populations as compared to the 
average cost per trip for such services (not taking into account 
mileage) in the highest quartile of rural county populations. Using the 
methodology specified in the July 1, 2004 interim final rule (69 FR 
40288), we determined that this percent increase was equal to 22.6 
percent. As required by the MMA, this payment increase was applied to 
ground ambulance transports that originated in a ``qualified rural 
area,'' that is, to transports that originated in a rural area included 
in those areas comprising the lowest 25th percentile of all rural 
populations arrayed by population density. For this purpose, rural 
areas included Goldsmith areas (a type of rural census tract). This 
rural bonus is sometimes referred to as the ``Super Rural Bonus'' and 
the qualified rural areas (also known as ``super rural'' areas) are 
identified during the claims adjudicative process via the use of a data 
field included in the CMS-supplied ZIP code file.
    The Super Rural Bonus under section 1834(l)(12) of the Act has been 
extended several times. Most recently, section 203(b) of the Medicare 
Access and CHIP Reauthorization Act of 2015 amended section 
1834(l)(12)(A) of the Act to extend this rural bonus through December 
31, 2017. Therefore, we are continuing to apply the 22.6 percent rural 
bonus described in this section (in the same manner as in previous 
years) to ground ambulance services with dates of service before 
January 1, 2018 where transportation originates in a qualified rural 
area. Accordingly, we proposed to revise Sec.  414.610(c)(5)(ii) to 
conform the regulations to this statutory requirement. (For a 
discussion of past legislation extending section 1834(l)(12) of the 
Act, please see the CY 2014 PFS final rule with comment period (78 FR 
74439 through 74440) and the CY 2015 PFS final rule with comment period 
(79 FR 67743 through 67744)).
    This statutory provision is self-implementing. It requires an 
extension of this rural bonus (which was previously established by the 
Secretary) through December 31, 2017, and does not require any 
substantive exercise of discretion on the part of the Secretary. We 
received several comments regarding this proposal. The following is a 
summary of the comments we received and our response.
    Comment: Several commenters supported the continued implementation 
of the percent increase in the base rate of the fee schedule for 
transports in areas defined as super rural. These commenters also 
agreed with CMS that these provisions are self-implementing. One 
commenter encouraged CMS to seek to make these add-on payments 
permanent.
    Response: We appreciate the commenters' support of these 
provisions, but we do not have the authority to make these provisions 
permanent.
    After consideration of the public comments received, we are 
finalizing our proposal to revise Sec.  414.610(c)(5)(ii) to conform 
the regulations to this statutory requirement.
3. Changes in Geographic Area Delineations for Ambulance Payment
a. Background
    In the CY 2015 PFS final rule with comment period (79 FR 67744 
through 67750) as amended by the correction issued December 31, 2014 
(79 FR 78716 through 78719), we adopted, beginning in CY 2015, the 
revised OMB delineations as set forth in OMB's February 28, 2013 
bulletin (No. 13-01) and the most recent modifications of the Rural-
Urban Commuting Area (RUCA) codes for purposes of payment under the 
ambulance fee schedule. With respect to the updated RUCA codes, we 
designated any census tracts falling at or above RUCA level 4.0 as 
rural areas. In addition, we stated that none of the super rural areas 
would lose their status upon implementation of the revised OMB 
delineations and updated RUCA codes. After publication of the CY 2015 
PFS final rule with comment period and the correction, we received 
feedback from stakeholders expressing concerns about the implementation 
of the new geographic area delineations finalized in that rule (as 
corrected). In response to these concerns, in the CY 2016 PFS proposed 
rule (80 FR 41788 through 41792), we clarified our implementation of 
the revised OMB delineations and the updated RUCA codes in CY 2015, and 
reproposed the implementation of the revised OMB delineations and 
updated RUCA codes for CY 2016 and subsequent calendar years. We 
requested public comment on our proposals, which comments are further 
discussed in section III A.3.b. of this final rule with comment period.
b. Provisions of the Final Rule With Comment Period
    Under section 1834(l)(2)(C) of the Act, the Secretary is required 
to consider appropriate regional and operational differences in 
establishing the ambulance fee schedule. Historically, the Medicare 
ambulance fee schedule has used the same geographic area designations 
as the acute care hospital inpatient prospective payment system (IPPS) 
and other Medicare payment systems to take into account appropriate 
regional (urban and rural) differences. This use of consistent 
geographic standards for Medicare payment purposes provides for 
consistency across the Medicare program.
    The geographic areas used under the ambulance fee schedule 
effective in CY 2007 were based on OMB standards published on December 
27, 2000 (65 FR 82228 through 82238), Census 2000 data, and Census 
Bureau population estimates for 2007 and 2008 (OMB Bulletin No. 10-02). 
For a discussion of OMB's delineation of Core-Based Statistical Areas 
(CBSAs) and our implementation of the CBSA definitions under the 
ambulance fee schedule, we refer readers to the preamble of the CY

[[Page 71073]]

2007 Ambulance Fee Schedule proposed rule (71 FR 30358 through 30361) 
and the CY 2007 PFS final rule with comment period (71 FR 69712 through 
69716). On February 28, 2013, OMB issued OMB Bulletin No. 13-01, which 
established revised delineations for Metropolitan Statistical Areas 
(MSAs), Micropolitan Statistical Areas, and Combined Statistical Areas, 
and provided guidance on the use of the delineations of these 
statistical areas. A copy of this bulletin may be obtained at http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf. 
According to OMB, this bulletin provides the delineations of all 
Metropolitan Statistical Areas, Metropolitan Divisions, Micropolitan 
Statistical Areas, Combined Statistical Areas, and New England City and 
Town Areas in the United States and Puerto Rico based on the standards 
published in the June 28, 2010 Federal Register (75 FR 37246-37252) and 
Census Bureau data. OMB defines an MSA as a CBSA associated with at 
least one urbanized area that has a population of at least 50,000, and 
a Micropolitan Statistical Area (referred to in this discussion as a 
Micropolitan Area) as a CBSA associated with at least one urban cluster 
that has a population of at least 10,000 but less than 50,000 (75 FR 
37252). Counties that do not qualify for inclusion in a CBSA are deemed 
``Outside CBSAs.'' We note that, when referencing the new OMB 
geographic boundaries of statistical areas, we are using the term 
``delineations'' consistent with OMB's use of the term (75 FR 37249).
    Although the revisions OMB published on February 28, 2013 were not 
as sweeping as the changes made when we adopted the CBSA geographic 
designations for CY 2007, the February 28, 2013 OMB bulletin did 
contain a number of significant changes. For example, there are new 
CBSAs, urban counties that became rural, rural counties that became 
urban, and existing CBSAs that were split apart. As we stated in the CY 
2015 PFS final rule with comment period (79 FR 67745), we reviewed our 
findings and impacts relating to the new OMB delineations, and found no 
compelling reason to further delay implementation. We stated in the CY 
2015 final rule with comment period, and in the CY 2016 PFS proposed 
rule (80 FR 41788), that it is important for the ambulance fee schedule 
to use the latest labor market area delineations available as soon as 
reasonably possible to maintain a more accurate and up-to-date payment 
system that reflects the reality of population shifts.
    Additionally, in the FY 2015 IPPS/LTCH PPS final rule (79 FR 
49952), we adopted OMB's revised delineations to identify urban areas 
and rural areas for purposes of the IPPS wage index. For the reasons 
discussed in this section, we believe that it was appropriate to adopt 
the same geographic area delineations for use under the ambulance fee 
schedule as are used under the IPPS and other Medicare payment systems. 
Thus, in the CY 2016 PFS proposed rule (80 FR 41788), we proposed to 
continue implementation of the new OMB delineations as described in the 
February 28, 2013 OMB Bulletin No. 13-01 for CY 2016 and subsequent CYs 
to more accurately identify urban and rural areas for ambulance fee 
schedule payment purposes. We stated in the CY 2016 PFS proposed rule 
(80 FR 41788) that we continue to believe that the updated OMB 
delineations more realistically reflect rural and urban populations, 
and that the use of such delineations under the ambulance fee schedule 
would result in more accurate payment. Under the ambulance fee 
schedule, consistent with our current definitions of urban and rural 
areas (Sec.  414.605), in CY 2016 and subsequent CYs, MSAs would 
continue to be recognized as urban areas, while Micropolitan and other 
areas outside MSAs, and rural census tracts within MSAs (as discussed 
below in this section), would continue to be recognized as rural areas. 
We invited public comments on this proposal.
    In addition to the OMB's statistical area delineations, the current 
geographic areas used in the ambulance fee schedule also are based on 
rural census tracts determined under the most recent version of the 
Goldsmith Modification. These rural census tracts within MSAs are 
considered rural areas under the ambulance fee schedule (see Sec.  
414.605). For certain rural add-on payments, section 1834(l) of the Act 
requires that we use the most recent version of the Goldsmith 
Modification to determine rural census tracts within MSAs. In the CY 
2007 PFS final rule with comment period (71 FR 69714 through 69716), we 
adopted the most recent (at that time) version of the Goldsmith 
Modification, designated as RUCA codes. RUCA codes use urbanization, 
population density, and daily commuting data to categorize every census 
tract in the country. For a discussion about RUCA codes, we refer the 
reader to the CY 2007 PFS final rule with comment period (71 FR 69714 
through 69716), the CY 2015 PFS final rule with comment period (79 FR 
67745 through 67746) and the CY 2016 PFS proposed rule (80 FR 41788 
through 41789). As stated previously, on February 28, 2013, OMB issued 
OMB Bulletin No. 13-01, which established revised delineations for 
MSAs, Micropolitan Statistical Areas, and Combined Statistical Areas, 
and provided guidance on the use of the delineations of these 
statistical areas. Several modifications of the RUCA codes were 
necessary to take into account updated commuting data and the revised 
OMB delineations. We refer readers to the U.S. Department of 
Agriculture's Economic Research Service Web site for a detailed listing 
of updated RUCA codes found at http://www.ers.usda.gov/data-products/rural-urban-commuting-area-codes.aspx. The updated RUCA code 
definitions were introduced in late 2013 and are based on data from the 
2010 decennial census and the 2006-2010 American Community Survey. 
Information regarding the American Community Survey can be found at 
http://www.ers.usda.gov/data-products/rural-urban-commuting-area-codes.aspx and at http://www.census.gov/programs-surveys/acs/guidance/training-presentations/acs-basics.html. We stated in the CY 2016 PFS 
proposed rule (80 FR 41789) that we believe the most recent RUCA codes 
provide more accurate and up-to-date information regarding the rurality 
of census tracts throughout the country. Accordingly, we proposed to 
continue to use the most recent modifications of the RUCA codes for CY 
2016 and subsequent CYs, to recognize levels of rurality in census 
tracts located in every county across the nation, for purposes of 
payment under the ambulance fee schedule. We stated that if we continue 
to use the most recent RUCA codes, many counties that are designated as 
urban at the county level based on population would continue to have 
rural census tracts within them that would be recognized as rural areas 
through our use of RUCA codes.
    As we stated in the CY 2015 PFS final rule with comment period (79 
FR 67745) and in the CY 2016 PFS proposed rule (80 FR 41789), the 2010 
Primary RUCA codes are as follows:
    (1) Metropolitan area core: Primary flow with an urbanized area 
(UA).
    (2) Metropolitan area high commuting: Primary flow 30 percent or 
more to a UA.
    (3) Metropolitan area low commuting: Primary flow 10 to 30 percent 
to a UA.
    (4) Micropolitan area core: Primary flow within an Urban Cluster of 
10,000 to 49,999 (large UC).

[[Page 71074]]

    (5) Micropolitan high commuting: Primary flow 30 percent or more to 
a large UC.
    (6) Micropolitan low commuting: Primary flow 10 to 30 percent to a 
large UC.
    (7) Small town core: Primary flow within an Urban Cluster of 2,500 
to 9,999 (small UC).
    (8) Small town high commuting: Primary flow 30 percent or more to a 
small UC.
    (9) Small town low commuting: Primary flow 10 to 30 percent to a 
small UC.
    (10) Rural areas: Primary flow to a tract outside a UA or UC.
    Based on this classification, and consistent with our current 
policy as set forth in the CY 2015 PFS final rule with comment period 
(79 FR 67745), we proposed to continue to designate any census tracts 
falling at or above RUCA level 4.0 as rural areas for purposes of 
payment for ambulance services under the ambulance fee schedule. As 
discussed in the CY 2007 PFS final rule with comment period (71 FR 
69715), the CY 2015 PFS final rule with comment period (79 FR 67745), 
and the CY 2016 PFS proposed rule (80 FR 41789), the Office of Rural 
Health Policy within the Health Resources and Services Administration 
(HRSA) determines eligibility for its rural grant programs through the 
use of the RUCA code methodology. Under this methodology, HRSA 
designates any census tract that falls in RUCA level 4.0 or higher as a 
rural census tract. In addition to designating any census tracts 
falling at or above RUCA level 4.0 as rural areas, under the updated 
RUCA code definitions, HRSA has also designated as rural census tracts 
those census tracts with RUCA codes 2 or 3 that are at least 400 square 
miles in area with a population density of no more than 35 people. We 
refer readers to HRSA's Web site at ftp://ftp.hrsa.gov/ruralhealth/Eligibility2005.pdf for additional information. Consistent with the 
HRSA guidelines discussed above and the policy we adopted in the CY 
2015 PFS final rule with comment period (79 FR 67750), we proposed for 
CY 2016 and subsequent CYs, to designate as rural areas those census 
tracts that fall at or above RUCA level 4.0. We stated that we continue 
to believe that this HRSA guideline accurately identifies rural census 
tracts throughout the country, and thus, would be appropriate to apply 
for ambulance fee schedule payment purposes.
    Also, consistent with the policy we finalized in the CY 2015 PFS 
final rule with comment period (79 FR 67749), we did not propose in the 
CY 2016 PFS proposed rule (80 FR 41789) to designate as rural areas 
those census tracts that fall in RUCA levels 2 or 3 that are at least 
400 square miles in area with a population density of no more than 35 
people. We stated in the CY 2016 PFS proposed rule (80 FR 41789) that 
it is not feasible to implement this guideline due to the complexities 
of identifying these areas at the ZIP code level. We stated that we do 
not have sufficient information available to identify the ZIP codes 
that fall in these specific census tracts. Also, payment under the 
ambulance fee schedule is based on ZIP codes; therefore, if the ZIP 
code is predominantly metropolitan but has some rural census tracts, we 
do not split the ZIP code areas to distinguish further granularity to 
provide different payments within the same ZIP code. We stated that we 
believe payment for all ambulance transportation services at the ZIP 
code level provides for a more consistent and administratively feasible 
payment system. For example, there are circumstances where ZIP codes 
cross county or census tract borders and where counties or census 
tracts cross ZIP code borders. Such overlaps in geographic designations 
would complicate our ability to appropriately assign ambulance 
transportation services to geographic areas for payment under the 
ambulance fee schedule if we were to pay based on ZIP codes for some 
areas and counties or census tracts for other areas. Therefore, we 
stated in the proposed rule (80 FR 41789) that, under the ambulance fee 
schedule, we would not designate as rural areas those census tracts 
that fall in RUCA levels 2 or 3 that are at least 400 square miles in 
area with a population density of no more than 35 people.
    We invited public comments on our proposals, as discussed in in the 
CY 2016 PFS proposed rule, to continue to use the revised OMB 
delineations and updated RUCA codes under the ambulance fee schedule 
for CY 2016 and subsequent CYs.
    As we stated in the CY 2015 PFS final rule with comment period (79 
FR 67746) and the CY 2016 PFS proposed rule (80 FR 41789 through 
41790), the adoption of the most current OMB delineations and the 
updated RUCA codes would affect whether certain areas are recognized as 
rural or urban. The distinction between urban and rural is important 
for ambulance payment purposes because urban and rural transports are 
paid differently. The determination of whether a transport is urban or 
rural is based on the point of pick-up for the transport; thus, a 
transport is paid differently depending on whether the point of pick-up 
is in an urban or a rural area. During claims processing, a geographic 
designation of urban, rural, or super rural is assigned to each claim 
for an ambulance transport based on the point of pick-up ZIP code that 
is indicated on the claim.
    The continued implementation of the revised OMB delineations and 
the updated RUCA codes would continue to affect whether or not 
transports would be eligible for rural adjustments under the ambulance 
fee schedule statute and regulations. For ground ambulance transports 
where the point of pick-up is in a rural area, the mileage rate is 
increased by 50 percent for each of the first 17 miles (Sec.  
414.610(c)(5)(i)). For air ambulance services where the point of pick-
up is in a rural area, the total payment (base rate and mileage rate) 
is increased by 50 percent (Sec.  414.610(c)(5)(i)).
    Section 1834(l)(12) of the Act (as amended most recently by section 
203(b) of the Medicare Access and CHIP Reauthorization Act of 2015) 
specifies that, for services furnished during the period July 1, 2004 
through December 31, 2017, the payment amount for the ground ambulance 
base rate is increased by a ``percent increase'' (Super Rural Bonus) 
where the ambulance transport originates in a ``qualified rural area,'' 
which is a rural area that we determine to be in the lowest 25th 
percentile of all rural populations arrayed by population density (also 
known as a ``super rural area''). We implement this Super Rural Bonus 
in Sec.  414.610(c)(5)(ii). As discussed in section III.A.2.b. of this 
final rule with comment period, we are revising Sec.  414.610(c)(5)(ii) 
to conform the regulations to this statutory requirement. As we stated 
in the CY 2015 PFS final rule with comment period (79 FR 67746) and the 
CY 2016 PFS proposed rule (80 FR 41790), adoption of the revised OMB 
delineations and the updated RUCA codes would have no negative impact 
on ambulance transports in super rural areas, as none of the current 
super rural areas would lose their status due to the revised OMB 
delineations and the updated RUCA codes. Furthermore, under section 
1834(l)(13) of the Act (as amended most recently by section 203(a) of 
the Medicare Access and CHIP Reauthorization Act of 2015), for ground 
ambulance transports furnished through December 31, 2017, transports 
originating in rural areas are paid based on a rate (both base rate and 
mileage rate) that is 3 percent higher than otherwise is applicable. 
(See also Sec.  414.610(c)(1)(ii)). As discussed in section III.A.2.a. 
of this final rule with comment period, we are revising Sec.  
414.610(c)(1)(ii) to conform the

[[Page 71075]]

regulations to this statutory requirement.
    Similar to our discussion in the CY 2015 PFS final rule with 
comment period (79 FR 67746) and the CY 2016 PFS proposed rule (80 FR 
41790), if we continue to use OMB's revised delineations and the 
updated RUCA codes for CY 2016 and subsequent CYs, ambulance providers 
and suppliers that pick up Medicare beneficiaries in areas that would 
be Micropolitan or otherwise outside of MSAs based on OMB's revised 
delineations or in a rural census tract of an MSA based on the updated 
RUCA codes (but were within urban areas under the geographic 
delineations in effect in CY 2014) would continue to experience 
increases in payment for such transports (as compared to the CY 2014 
geographic delineations) because they may be eligible for the rural 
adjustment factors discussed in this section. In addition, those 
ambulance providers and suppliers that pick up Medicare beneficiaries 
in areas that would be urban based on OMB's revised delineations and 
the updated RUCA codes (but were previously in Micropolitan Areas or 
otherwise outside of MSAs, or in a rural census tract of an MSA under 
the geographic delineations in effect in CY 2014) would continue to 
experience decreases in payment for such transports (as compared to the 
CY 2014 geographic delineations) because they would no longer be 
eligible for the rural adjustment factors discussed in this section.
    The continued use of the revised OMB delineations and the updated 
RUCA codes for CY 2016 and subsequent CYs would mean the continued 
recognition of urban and rural boundaries based on the population 
migration that occurred over a 10-year period, between 2000 and 2010. 
As discussed in this section, we proposed to continue to use the 
updated RUCA codes to identify rural census tracts within MSAs, such 
that any census tracts falling at or above RUCA level 4.0 would 
continue to be designated as rural areas. To determine which ZIP codes 
are included in each such rural census tract, we proposed to continue 
to use the ZIP code approximation file developed by HRSA. This file 
includes the 2010 RUCA code designation for each ZIP code and can be 
found at http://www.ers.usda.gov/data-products/rural-urban-commuting-area-codes.aspx. If ZIP codes are added over time to the USPS ZIP code 
file (and thus are not included in the 2010 ZIP code approximation file 
provided to us by HRSA) or if ZIP codes are revised over time, we 
stated that we would determine the appropriate urban/rural designation 
for such ZIP code based on any updates provided on the HRSA and OMB Web 
sites, located at http://www.ers.usda.gov/data-products/rural-urban-commuting-area-codes.aspx and http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf.
    Based on the August 2015 USPS ZIP code file that we are using in 
this final rule with comment period to assess the impacts of the 
revised geographic delineations, there are a total of 42,927 ZIP codes 
in the U.S. Table 23 sets forth an analysis of the number of ZIP codes 
that changed urban/rural status in each U.S. state and territory after 
CY 2014 due to our implementation of the revised OMB delineations and 
the updated RUCA codes beginning in CY 2015, using the August 2015 USPS 
ZIP code file, the revised OMB delineations, and the updated RUCA codes 
(including the RUCA ZIP code approximation file discussed above). Based 
on this data, the geographic designations for approximately 95.22 
percent of ZIP codes are unchanged by OMB's revised delineations and 
the updated RUCA codes. Similar to the analysis set forth in the CY 
2015 PFS final rule with comment period, as corrected (79 FR 78716 
through 78719), and the CY 2016 PFS proposed rule (80 FR 41790 through 
41791), as reflected in Table 23, more ZIP codes have changed from 
rural to urban (1,600 or 3.73 percent) than from urban to rural (451 or 
1.05 percent). In general, it is expected that ambulance providers and 
suppliers in 451 ZIP codes within 42 states may continue to experience 
payment increases under the revised OMB delineations and the updated 
RUCA codes, as these areas have been redesignated from urban to rural. 
The state of Ohio has the most ZIP codes that changed from urban to 
rural with a total of 54, or 3.63 percent of all zip codes in the 
state. Ambulance providers and suppliers in 1,600 ZIP codes within 44 
states and Puerto Rico may continue to experience payment decreases 
under the revised OMB delineations and the updated RUCA codes, as these 
areas have been redesignated from rural to urban. The state of West 
Virginia has the most ZIP codes that changed from rural to urban (149 
or 15.92 percent of all zip codes in the state). As discussed in this 
section, these findings are illustrated in Table 23.

                                 Table 23--ZIP Code Analysis Based on OMB's Revised Delineations and Updated RUCA Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                           Percentage of
                                             Total ZIP       Total ZIP     Percentage of     Total ZIP     Percentage of     Total ZIP       total ZIP
           State/ territory *                  Codes       Codes changed     total ZIP     Codes changed     total ZIP       Codes not       Codes not
                                                          rural to urban       Codes      urban to rural       Codes          changed         changed
--------------------------------------------------------------------------------------------------------------------------------------------------------
AK......................................             276               0            0.00               0            0.00             276          100.00
AL......................................             854              43            5.04               8            0.94             803           94.03
AR......................................             725              19            2.62               9            1.24             697           96.14
AS......................................               1               0            0.00               0            0.00               1          100.00
AZ......................................             569              21            3.69               7            1.23             541           95.08
CA......................................           2,723              85            3.12              43            1.58           2,595           95.30
CO......................................             677               4            0.59               9            1.33             664           98.08
CT......................................             445              37            8.31               0            0.00             408           91.69
DC......................................             303               0            0.00               0            0.00             303          100.00
DE......................................              99               6            6.06               0            0.00              93           93.94
EK......................................              63               0            0.00               0            0.00              63          100.00
EM......................................             857              35            4.08               4            0.47             818           95.45
FL......................................           1,513              69            4.56               9            0.59           1,435           94.84
FM......................................               4               0            0.00               0            0.00               4          100.00
GA......................................           1,032              47            4.55               4            0.39             981           95.06
GU......................................              21               0            0.00               0            0.00              21          100.00
HI......................................             143               9            6.29               3            2.10             131           91.61
IA......................................           1,080              20            1.85               3            0.28           1,057           97.87
ID......................................             335               0            0.00               0            0.00             335          100.00
IL......................................           1,629              68            4.17               7            0.43           1,554           95.40

[[Page 71076]]

 
IN......................................           1,000              33            3.30              20            2.00             947           94.70
KY......................................           1,030              30            2.91               5            0.49             995           96.60
LA......................................             739              69            9.34               1            0.14             669           90.53
MA......................................             751               8            1.07               9            1.20             734           97.74
MD......................................             630              69           10.95               0            0.00             561           89.05
ME......................................             505               5            0.99              12            2.38             488           96.63
MH......................................               2               0            0.00               0            0.00               2          100.00
MI......................................           1,185              22            1.86              21            1.77           1,142           96.37
MN......................................           1,043              31            2.97               7            0.67           1,005           96.36
MP......................................               3               0            0.00               0            0.00               3          100.00
MS......................................             541              14            2.59               1            0.18             526           97.23
MT......................................             411               0            0.00               3            0.73             408           99.27
NC......................................           1,102              87            7.89              10            0.91           1,005           91.20
ND......................................             419               2            0.48               0            0.00             417           99.52
NE......................................             632               7            1.11               6            0.95             619           97.94
NH......................................             292               0            0.00               2            0.68             290           99.32
NJ......................................             748               1            0.13               2            0.27             745           99.60
NM......................................             438               4            0.91               2            0.46             432           98.63
NV......................................             257               1            0.39               2            0.78             254           98.83
NY......................................           2,246              84            3.74              42            1.87           2,120           94.39
OH......................................           1,487              23            1.55              54            3.63           1,410           94.82
OK......................................             791               5            0.63               7            0.88             779           98.48
OR......................................             496              26            5.24               9            1.81             461           92.94
PA......................................           2,244             129            5.75              38            1.69           2,077           92.56
PR......................................             177              21           11.86               0            0.00             156           88.14
PW......................................               2               0            0.00               0            0.00               2          100.00
RI......................................              91               2            2.20               1            1.10              88           96.70
SC......................................             544              47            8.64               2            0.37             495           90.99
SD......................................             418               0            0.00               1            0.24             417           99.76
TN......................................             814              52            6.39              12            1.47             750           92.14
TX......................................           2,726              64            2.35              32            1.17           2,630           96.48
UT......................................             360               2            0.56               0            0.00             358           99.44
VA......................................           1,277              98            7.67              19            1.49           1,160           90.84
VI......................................              16               0            0.00               0            0.00              16          100.00
VT......................................             309               3            0.97               0            0.00             306           99.03
WA......................................             744              17            2.28               6            0.81             721           96.91
WI......................................             919              19            2.07               5            0.54             895           97.39
WK......................................             711              11            1.55               7            0.98             693           97.47
WM......................................             342               2            0.58               3            0.88             337           98.54
WV......................................             936             149           15.92               3            0.32             784           83.76
WY......................................             198               0            0.00               1            0.51             197           99.49
                                         ---------------------------------------------------------------------------------------------------------------
    Totals..............................          42,927           1,600            3.73             451            1.05          40,876           95.22
--------------------------------------------------------------------------------------------------------------------------------------------------------
* ZIP code analysis includes U.S. States and Territories (FM--Federated States of Micronesia, GU--Guam, MH--Marshall Islands, MP--Northern Mariana
  Islands, PW--Palau, AS--American Samoa; VI--Virgin Islands; PR--Puerto Rico). Missouri is divided into east and west regions due to work distribution
  of the Medicare Administrative Contractors (MACs): EM--East Missouri, WM--West Missouri. Johnson and Wyandotte counties in Kansas were changed as of
  January 2010 to East Kansas (EK) and the rest of the state is West Kansas (WK).

    For more detail on the impact of these changes, in addition to 
Table 23, the following files are available through the Internet on the 
Ambulance Fee Schedule Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AmbulanceFeeSchedule/index.html, 
Downloads, CY 2016 Final Rule; ZIP Codes By State Changed From Urban To 
Rural; ZIP Codes By State Changed From Rural To Urban; List of ZIP 
Codes With RUCA Code Designations; and Complete List of ZIP Codes.
    We stated in the CY 2015 PFS final rule with comment period (79 FR 
67750) and in the CY 2016 PFS proposed rule (80 FR 41792) that we 
believe the most current OMB statistical area delineations, coupled 
with the updated RUCA codes, more accurately reflect the contemporary 
urban and rural nature of areas across the country, and thus we believe 
the use of the most current OMB delineations and RUCA codes under the 
ambulance fee schedule will enhance the accuracy of ambulance fee 
schedule payments. As we discussed in the CY 2015 PFS final rule with 
comment period (79 FR 67750), we considered, as alternatives, whether 
it would be appropriate to delay the implementation of the revised OMB 
delineations and the updated RUCA codes, or to phase in the 
implementation of the new geographic delineations over a transition 
period for those ZIP codes losing rural status. We determined that it 
would not be appropriate to implement a delay or a transition period 
for the revised geographic delineations for the reasons set forth in 
the CY 2015 PFS final rule. Similarly, we considered whether a delay in 
implementation or a transition period would be appropriate for CY 2016 
and subsequent CYs. We stated in the CY 2016 PFS proposed rule (80 FR 
41792) that we continue to believe it is important to use the most 
current OMB delineations and RUCA codes available as soon as reasonably 
possible to maintain a more accurate and up-to-date payment system that 
reflects the reality

[[Page 71077]]

of population shifts. Because we believe the revised OMB delineations 
and updated RUCA codes more accurately identify urban and rural areas 
and enhance the accuracy of the Medicare ambulance fee schedule, we 
stated that we do not believe a delay in implementation or a transition 
period would be appropriate for CY 2016 and subsequent CYs. Areas that 
have lost their rural status and become urban have become urban because 
of recent population shifts. We believe it is important to base payment 
on the most accurate and up-to-date geographic area delineations 
available. Furthermore, we stated in the proposed rule that a delay in 
implementation of the revised OMB delineations and the updated RUCA 
codes would be a disadvantage to the ambulance providers or suppliers 
experiencing payment increases based on these updated and more accurate 
OMB delineations and RUCA codes. Thus, we did not propose a delay in 
implementation or a transition period for the revised OMB delineations 
and updated RUCA codes for CY 2016 and subsequent CYs.
    We invited public comments on our proposals to continue 
implementation of the revised OMB delineations as set forth in OMB's 
February 28, 2013 bulletin (No. 13-01) and the most recent 
modifications of the RUCA codes as discussed above for CY 2016 and 
subsequent CYs for purposes of payment under the ambulance fee 
schedule. In addition, we invited public comments on any alternative 
methods for implementing the revised OMB delineations and the updated 
RUCA codes.
    We received several comments from ambulance providers and suppliers 
and associations representing ambulance providers and suppliers on our 
proposals to continue implementation of the revised OMB delineations 
and the most recent modifications of the RUCA codes as discussed above 
for CY 2016 and subsequent CYs. The following is a summary of those 
comments along with our responses.
    Comment: A commenter supported our proposal to continue 
implementation of the new OMB delineations for CY 2016 and subsequent 
CYs to more accurately identify urban and rural areas for ambulance fee 
schedule payment purposes.
    Response: We appreciate the commenter's support of our proposal.
    Comment: Several commenters agreed with CMS that it is appropriate 
to adjust the geographic area designations periodically so that the 
ambulance fee schedule reflects population shifts. These commenters 
remain concerned, however, because they contend that the modifications 
finalized last year have led to some rural ZIP codes being designated 
as urban. Several commenters urged CMS to refine the modified 
geographic area designations to restore rural status to those ZIP codes 
the commenters contended were improperly classified as urban last year. 
Specifically, commenters urged CMS to adopt HRSA's rural designations 
of 132 census tracts with RUCA codes of 2 and 3 that are at least 400 
square miles in area with a population density of no more than 35 
people per square mile. According to the commenters, the discrepancy 
between CMS and HRSA in the application of RUCA codes appears to result 
from the fact that HRSA designates rural areas for its programs by 
focusing on the Census tract, while CMS focuses on a U.S. Department of 
Agriculture (USDA) ZIP code list. The commenters stated that it is 
important for these 132 Census tract areas to be taken into account for 
making geographic designations. The commenters suggested that CMS adopt 
a methodology to adjust the RUCA code status for the 132 census tracts 
recognized by HRSA as rural to RUCA code status 4 before cross walking 
the ZIP codes. According to the commenters, when the analysis is re-
run, the resulting ZIP codes would be appropriately designated as 
rural. The commenters stated that by recognizing the 132 census tracts 
as rural, CMS's policy would align with HRSA's policy and address the 
concerns raised by ambulance providers and suppliers. According to the 
commenters, this approach would avoid the concerns that CMS has raised 
about splitting ZIP codes.
    Response: We appreciate the commenters' support for adjusting the 
geographic area designations periodically to reflect population shifts. 
As discussed in this section and in the CY 2016 PFS proposed rule (80 
FR 41788 through 41792), we believe that the most current OMB 
delineations, coupled with the updated RUCA codes, more accurately 
reflect the urban and rural nature of areas across the country, and 
thus we believe the use of the most current OMB delineations and RUCA 
codes under the ambulance fee schedule enhances the accuracy of 
ambulance fee schedule payments. Further, as discussed previously, we 
believe that our methodology of designating rural geographic areas by 
using OMB's delineations, and by using RUCA codes of 4 and above to 
identify rural census tracts within MSAs, is appropriate for ambulance 
fee schedule payment purposes.
    We have concerns with the methodology proposed by the commenters to 
identify as rural certain census tracts with RUCA codes of 2 and 3. The 
132 census tracts recognized as rural by HRSA have RUCA code 
designations of 2 or 3, indicating that the census tracts are 
predominantly urban. To assign these entire census tracts a RUCA code 
of 4 before cross walking the ZIP codes could result in inappropriate 
classifications of urban areas as rural. Payment under the ambulance 
fee schedule is based on ZIP codes (Sec.  414.610(e)). We would require 
a list of ZIP codes assigned to the 132 census tracts with RUCA codes 
of 2 and 3 that are at least 400 square miles in area with a population 
density of no more than 35 people per square mile to appropriately 
identify these areas as rural. As we previously discussed, we do not 
have sufficient information available to identify the ZIP codes that 
fall in these specific census tracts. We do not believe it would be 
prudent at this time to implement the commenters' suggested methodology 
absent the data and methodology to precisely identify the ZIP codes for 
the census tracts with RUCA codes of 2 and 3 that are at least 400 
square miles in area with a population density of no more than 35 
people per square mile. We will consider further evaluating for CY 2017 
these additional census tracts that HRSA has designated as rural and 
the feasibility of identifying the ZIP codes that are assigned to those 
areas.
    Comment: Several commenters requested that CMS issue an Advanced 
Notice of Proposed Rulemaking (ANPRM) prior to the CY 2017 rulemaking 
cycle to seek input from all interested stakeholders about whether a 
new urban-rural data set should be used or other policy modifications 
should be adopted to apply the RUCA designations. According to the 
commenters, the data to determine the levels for RUCAs are no longer 
collected through the long-form census, which had a high response rate. 
The commenters contend that the RUCA data are now based on a response 
rate in the single digits which is not high enough to accurately 
identify urban-rural areas when it comes to access to vital ambulance 
services. The commenters stated that an ANPRM would allow CMS to hear 
from all interested parties at an early stage in the process and 
provide CMS with the information it needs to fully evaluate the current 
policy and to identify options for addressing the issues that have been 
raised by commenters with

[[Page 71078]]

RUCA being used as the data set for identifying rural census tracts 
within urban areas.
    Response: The updated RUCA code definitions are based on data from 
the 2010 decennial census and the 2006-2010 American Community Survey 
(ACS). According to the United States Census Bureau's Web site, http://www.census.gov/programs-surveys/acs/guidance/training-presentations/acs-basics.html, ACS is a nationwide survey that provides 
characteristics of the population and housing throughout the country, 
similar to the long-form questionnaire used in Census 2000. The ACS 
produces estimates of these characteristics for small areas and small 
population groups throughout the country.
    According to the Census Bureau's Web site, the content collected by 
the ACS can be grouped into four main types of characteristics--social, 
economic, demographic, and housing. For example, economic 
characteristics include such topics as health insurance coverage, 
income, benefits, employment status, occupation, industry, commuting to 
work, and place of work. This is the same information that was 
collected by the 2010 Census.
    The ACS is a continuous survey, in which, each month, a sample of 
housing unit addresses receives a questionnaire. For the ACS, the 
Census Bureau selects a random sample of addresses where workers reside 
to be included in the survey, and the sample is designed to ensure good 
geographic coverage. About 3.5 million addresses are surveyed each 
year. The ACS collects data from the 50 states, the District of 
Columbia, and Puerto Rico. The survey had the following response rates 
at the state level for 2006-2010: 91.1 percent to 99.0 percent in 2006, 
91.7 percent to 99.3 percent in 2007, 91.4 percent to 99.4 percent in 
2008, 94.9 percent to 99.4 percent in 2009, and 95.3 percent to 99.0 
percent in 2010. The ACS collects survey information continuously and 
then aggregates the results over a specific period of time--1 year, 3 
years, or 5 years. The ACS period estimates describe the average 
characteristics of the population or housing over a specified period of 
time. For smaller geographic areas, such as the census tracts, 5 year 
estimates are used. As mentioned in this section, the most recent 
update of the RUCA codes was developed using data collected from the 
2006, 2007, 2008, 2009, and 2010 ACS. According to the Census Bureau, 
the estimates that they published based on the ACS had a 90 percent 
confidence interval.
    According to the USDA's Web site, http://www.ers.usda.gov/data-products/rural-urban-commuting-area-codes.aspx, the RUCA codes were 
based on a special tabulation for the Department of Transportation, 
Census Transportation Planning Products, Part 3, Worker Home-to-Work 
Flow Tables (http://www.fhwa.dot.gov/planning/census_issues/ctpp/data_products/2006-2010_table_list/sheet04.cfm). According to the USDA, 
as with all survey data, ACS estimates are not exact because they are 
based on a sample. Nevertheless, we believe that the ACS provides the 
most recent comprehensive source of data on the population and is 
robust enough for use for purposes of determining the rural status of 
census tracts throughout the country.
    We do not believe it is necessary to issue an ANPRM prior to the CY 
2017 rulemaking cycle. In the CY 2016 PFS proposed rule and in past 
rules, we have discussed the implementation of the OMB delineations and 
the RUCA codes for purposes of payment under the ambulance fee 
schedule, and we believe that the public has had ample opportunity to 
provide comments and suggestions about other methodologies for 
designating geographic areas or other policy modifications that should 
be adopted to apply the RUCA code designations. We note that the public 
did not provide any suggestions for any alternative data sources for 
designating rural geographic areas.
    We note that we utilize the ACS data in other Medicare payment 
systems as well. In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49501), 
we finalized our proposal that the out-migration adjustments be based 
on commuting data compiled by the Census Bureau that were derived from 
a custom tabulation of the ACS, an official Census Bureau survey, 
utilizing 2008 through 2012 (5-Year) Microdata. (See also the FY 2016 
IPPS/LTCH PPS proposed rule (80 FR 24471)). Furthermore, the physician 
fee schedule uses the 2008-2010 ACS data for calculating the office 
rent component of the PE of the geographic practice cost index (78 FR 
74390).
    After consideration of the public comments received and for the 
reasons discussed in this section and in the CY 2016 PFS proposed rule, 
we are finalizing without modification our proposal to continue 
implementation of the revised OMB delineations as set forth in OMB's 
February 28, 2013 bulletin (No. 13-01) and the most recent 
modifications of the RUCA codes, as discussed in this section, for CY 
2016 and subsequent CYs for purposes of payment under the ambulance fee 
schedule. As we proposed, using the updated RUCA code definitions, we 
will continue to designate any census tracts falling at or above RUCA 
code 4.0 as rural areas. In addition, as discussed in this section, 
none of the current super rural areas will lose their super rural 
status upon implementation of the revised OMB delineations and the 
updated RUCA codes.
4. Proposed Changes to the Ambulance Staffing Requirements
    Under section 1861(s)(7) of the Act, Medicare Part B covers 
ambulance services when the use of other methods of transportation is 
contraindicated by the individual's medical condition, but only to the 
extent provided in regulations. Section 410.41(b)(1) requires that a 
vehicle furnishing ambulance services at the Basic Life Support (BLS) 
level must be staffed by at least two people, one of whom must meet the 
following requirements: (1) Be certified as an emergency medical 
technician by the state or local authority where the services are 
furnished; and (2) be legally authorized to operate all lifesaving and 
life-sustaining equipment on board the vehicle.
    Section 410.41(b)(2) states that, for vehicles furnishing ambulance 
services at the Advanced Life Support (ALS) level, ambulance providers 
and suppliers must meet the staffing requirements for vehicles 
furnishing services at the BLS level, and, additionally, that one of 
the two staff members must be certified as a paramedic or an emergency 
medical technician, by the state or local authority where the services 
are being furnished, to perform one or more ALS services. These 
staffing requirements are further explained in the Medicare Benefit 
Policy Manual (Pub. No. 100-02), Chapter 10 (see sections 10.1.2 and 
30.1.1)
    In its July 24, 2014 Management Implication Report, 13-0006, 
entitled ``Medicare Requirements for Ambulance Crew Certification,'' 
the Office of Inspector General (OIG) discussed its investigation of 
ambulance suppliers in a state that requires a higher level of training 
than Medicare requires for ambulance staff. In some instances, OIG 
found that second crew members: (1) Possessed a lower level of training 
than required by state law, or (2) had purchased or falsified 
documentation to establish their credentials. The OIG expressed its 
concern that our current regulations and manual provisions do not set 
forth licensure or certification requirements for the second crew 
member. The OIG was informed by federal prosecutors that prosecuting

[[Page 71079]]

individuals who had purchased or falsified documentation to establish 
their credentials would be difficult because Medicare had no 
requirements regarding the second ambulance staff member and the 
ambulance transports complied with the relevant Medicare regulations 
and manual provisions for ambulance staffing.
    As we stated in the CY 2016 PFS proposed rule (80 FR 41792), the 
OIG recommended that Medicare revise its regulations and manual 
provisions related to ambulance staffing to parallel the standard used 
for vehicle requirements at Sec.  410.41(a), which requires that 
ambulances be equipped in ways that comply with state and local laws. 
Specifically, the OIG recommended that our regulation and manual 
provisions addressing ambulance vehicle staffing should indicate that, 
for Medicare to cover ambulance services furnished to a Medicare 
beneficiary, the ambulance crew must meet the requirements currently 
set forth in Sec.  410.41(b) or the state and local requirements, 
whichever are more stringent. Currently, Sec.  410.41(b) does not 
require that ambulance vehicle staff comply with all applicable state 
and local laws. In the CY 2016 PFS proposed rule, we stated that we 
agree with OIG's concerns and believe that requiring ambulance staff to 
also comply with state and local requirements would enhance the quality 
and safety of ambulance services furnished to Medicare beneficiaries.
    Accordingly, in the CY 2016 PFS proposed rule (80 FR 41792), we 
proposed to revise Sec.  410.41(b) to require that all Medicare-covered 
ambulance transports must be staffed by at least two people who meet 
both the requirements of applicable state and local laws where the 
services are being furnished, and the current Medicare requirements 
under Sec.  410.41(b). We believe that this would, in effect, require 
both of the required ambulance vehicle staff to also satisfy any 
applicable state and local requirements that may be more stringent than 
those currently set forth at Sec.  410.41(b), consistent with OIG's 
recommendation. In addition, we proposed to revise the definition of 
Basic Life Support (BLS) in Sec.  414.605 to include the proposed 
revised staffing requirements discussed above for Sec.  410.41(b) (80 
FR 41793). We stated that these revisions to Sec.  410.41(b) and Sec.  
414.605 would account for differences in individual state or local 
staffing and licensure requirements, better accommodating state or 
local laws enacted to ensure beneficiaries' health and safety. 
Likewise, these revisions would strengthen the federal government's 
ability to prosecute violations associated with such requirements and 
recover inappropriately or fraudulently received funds from ambulance 
companies found to be operating in violation of state or local laws. 
Furthermore, we stated in the proposed rule that we believe these 
proposals would enhance the quality and safety of ambulance services 
provided to Medicare beneficiaries.
    In addition, we proposed to revise Sec.  410.41(b) and the 
definition of Basic Life Support (BLS) in Sec.  414.605 to clarify 
that, for BLS vehicles, at least one of the staff members must be 
certified, at a minimum, as an emergency medical technician--basic 
(EMT-Basic), which we believe would more clearly state our current 
policy (80 FR 41793). Currently, these regulations require that, for 
BLS vehicles, one staff member be certified as an EMT (Sec.  410.41(b)) 
or EMT-Basic (Sec.  414.605). These revisions to the regulations do not 
change our current policy, but clarify that one of the BLS vehicle 
staff members must be certified at the minimum level of EMT-Basic, but 
may also be certified at a higher level, for example, EMT-intermediate 
or EMT paramedic.
    Finally, we proposed to revise the definition of Basic Life Support 
(BLS) in Sec.  414.605 to delete the last sentence, which sets forth 
examples of certain state law provisions (80 FR 41793). This sentence 
has been included in the definition of BLS since the ambulance fee 
schedule was finalized in 2002 (67 FR 9100, Feb. 27, 2002). Because 
state laws may change over the course of time, we are concerned that 
this sentence may not accurately reflect the status of the relevant 
state laws over time. Therefore, we proposed to delete the last 
sentence of this definition. Furthermore, we do not believe that the 
examples set forth in this sentence are necessary to convey the 
definition of BLS for Medicare coverage and payment purposes.
    We invited public comments on our proposals to revise the ambulance 
vehicle staffing requirements in Sec.  410.41(b) and the definition of 
Basic Life Support (BLS) in Sec.  414.605, as discussed in this 
section. We also stated that, if we finalized these proposals, we would 
revise our manual provisions addressing ambulance vehicle staffing as 
appropriate, consistent with our finalized policy.
    We received approximately 21 comments from ambulance providers and 
suppliers and associations representing such entities. The following is 
a summary of the comments we received along with our responses.
    Comment: Several commenters supported the proposed changes to the 
ambulance staffing requirements. Commenters also requested that CMS 
support efforts to designate ambulance services as providers under the 
Medicare program (rather than having some designated as suppliers).
    Response: We appreciate the commenters' support of our proposals. 
Comments requesting us to support efforts to designate ambulance 
services as providers are outside the scope of this final rule with 
comment period.
    Comment: One commenter requested additional clarification on 
whether the proposed revision would require both ambulance medical 
technicians to be certified by the state as EMTs. This same commenter 
requested clarification on whether both technicians would need to be 
legally authorized to operate lifesaving and life-sustaining equipment 
on board the vehicle.
    Two commenters opposed the proposed changes to the ambulance 
staffing requirements, expressing concern that the proposed changes 
would require both crew members to be certified as EMTs, a change they 
believed would negatively impact ambulance services in rural 
communities. One of these commenters stated that such a change would 
(1) not increase the level of care provided to the patient being 
transported, and (2) make it more difficult for volunteer Emergency 
Medical Services (EMS) providers to be properly reimbursed for their 
work. The commenters also stated that this requirement would limit 
access in rural communities, and that it would be difficult for 
volunteer EMS staff to meet such requirements.
    Response: We believe that these commenters misinterpreted our 
proposal. We did not propose to require that both ambulance crew 
members be certified as EMTs or that both ambulance crew members be 
legally authorized to operate all lifesaving and life-sustaining 
equipment on board the vehicle. The only change we proposed to our 
current policy was to require both ambulance vehicle staff to meet the 
requirements of state and local laws where the services are being 
furnished. Thus, our proposed policy would require that both ambulance 
vehicle staff be certified as EMTs only when this is required by the 
state or local laws where the services are being furnished. As we 
stated in the CY 2016 PFS proposed rule (80 FR 41942), because we 
expect that ambulance providers and suppliers already comply with their 
state and local laws, we expect that this requirement would have a 
minimal

[[Page 71080]]

impact on ambulance providers and suppliers.
    Comment: Several commenters supported the proposed revision to the 
definition of Basic Life Support (BLS) in Sec.  414.605 to delete the 
last sentence, which sets forth examples of certain state law 
provisions.
    Response: We appreciate the commenters' support for our proposed 
revision to the definition of Basic Life Support (BLS) in Sec.  
414.605.
    After consideration of the public comments received, and for the 
reasons discussed in this section, we are finalizing without 
modification our proposals to revise (1) Sec.  410.41(b) and the 
definition of Basic Life Support (BLS) in Sec.  414.605, as discussed 
in this section, to require that all Medicare-covered ambulance 
transports be staffed by at least two people who meet both the 
requirements of state and local laws where the services are being 
furnished, and the current Medicare requirements, (2) Sec.  410.41(b) 
and the definition of Basic Life Support (BLS) in Sec.  414.605 to 
clarify that for BLS vehicles, one of the staff members must be 
certified at a minimum as an EMT-Basic, and (3) the definition of Basic 
Life Support (BLS) in Sec.  414.605 to delete the last sentence, which 
sets forth examples of certain state law provisions. We will also 
revise our manual provisions addressing ambulance vehicle staffing, as 
appropriate, to be consistent with these finalized policies.

B. Chronic Care Management (CCM) Services for Rural Health Clinics 
(RHCs) and Federally Qualified Health Centers (FQHCs)

1. Background
a. Primary Care and Care Coordination
    Over the last several years, we have been increasing our focus on 
primary care, and have explored ways in which care coordination can 
improve health outcomes and reduce expenditures.
    In the CY 2012 PFS proposed rule (76 FR 42793 through 42794, and 
42917 through 42920), and the CY 2012 PFS final rule (76 FR 73063 
through 73064), we discussed how primary care services have evolved to 
focus on preventing and managing chronic disease, and how refinements 
for payment for post-discharge care management services could improve 
care management for a beneficiary's transition from the hospital to the 
community setting. We acknowledged that the care coordination included 
in services such as office visits does not always describe adequately 
the non-face-to-face care management work involved in primary care, and 
may not reflect all the services and resources required to furnish 
comprehensive, coordinated care management for certain categories of 
beneficiaries, such as those who are returning to a community setting 
following discharge from a hospital or skilled nursing facility (SNF) 
stay. We initiated a public discussion on primary care and care 
coordination services, and stated that we would consider payment 
enhancements in future rulemaking as part of a multiple year strategy 
exploring the best means to encourage primary care and care 
coordination services.
    In the CY 2013 PFS proposed rule (77 FR 44774 through 44775), we 
noted several initiatives and programs designed to improve payment for, 
and encourage long-term investment in, care management services. These 
include the Medicare Shared Savings Program; testing of the Pioneer 
Accountable Care Organization (ACO) model and the Advance Payment ACO 
model; the Primary Care Incentive Payment (PCIP) Program; the patient-
centered medical home model in the Multi-payer Advanced Primary Care 
Practice (MAPCP) Demonstration; the Federally Qualified Health Center 
(FQHC) Advanced Primary Care Practice demonstration; the Comprehensive 
Primary Care (CPC) initiative; and the HHS Strategic Framework on 
Multiple Chronic Conditions. We also noted that we were monitoring the 
progress of the AMA Chronic Care Coordination Workgroup in developing 
codes to describe care transition and care coordination activities, and 
proposed refinement of the PFS payment for post discharge care 
management services.
    In the CY 2013 PFS final rule (77 FR 68978 through 68994), we 
finalized policies for payment of Transitional Care Management (TCM) 
services, effective January 1, 2013. We adopted two CPT codes (99495 
and 99496) to report physician or qualifying nonphysician practitioner 
care management services for a patient following a discharge from an 
inpatient hospital or SNF, an outpatient hospital stay for observation 
or partial hospitalization services, or partial hospitalization in a 
community mental health center. As a condition for receiving TCM 
payment, a face-to-face visit was required.
    In the CY 2014 PFS proposed rule (78 FR 43337 through 43343), we 
proposed to establish separate payment under the PFS for chronic care 
management (CCM) services and proposed a scope of services and 
requirements for billing and supervision. In the CY 2014 PFS final rule 
(78 74414 through 74427), we finalized policies to establish separate 
payment under the PFS for CCM services furnished to patients with 
multiple chronic conditions that are expected to last at least 12 
months or until the death of the patient, and that place the patient at 
significant risk of death, acute exacerbation/decompensation, or 
functional decline. In the CY 2015 PFS final rule (79 FR 67715 through 
67730), additional billing requirements were finalized, including the 
requirement to furnish CCM services using a certified electronic health 
record or other electronic technology. Payment for CCM services was 
effective beginning on January 1, 2015, for physicians billing under 
the PFS.
b. RHC and FQHC Payment Methodologies
    A RHC or FQHC visit must be a face-to-face encounter between the 
patient and a RHC or FQHC practitioner (physician, nurse practitioner, 
physician assistant, certified nurse midwife, clinical psychologist, or 
clinical social worker, and under certain conditions, an RN or LPN 
furnishing care to a homebound RHC or FQHC patient) during which time 
one or more RHC or FQHC services are furnished. A TCM service can also 
be a RHC or FQHC visit. A Diabetes Self-Management Training (DSMT) 
service or a Medical Nutrition Therapy (MNT) service furnished by a 
certified DSMT or MNT provider may also be a FQHC visit.
    RHCs are paid an all-inclusive rate (AIR) for medically-necessary 
medical and mental health services, and qualified preventive health 
services furnished on the same day (with some exceptions). In general, 
the A/B MAC calculates the AIR for each RHC by dividing total allowable 
costs by the total number of visits for all patients. Productivity, 
payment limits, and other factors are also considered in the 
calculation. Allowable costs must be reasonable and necessary and may 
include practitioner compensation, overhead, equipment, space, 
supplies, personnel, and other costs incident to the delivery of RHC 
services. The AIR is subject to a payment limit, except for those RHCs 
that have an exception to the payment limit. Services furnished 
incident to a RHC professional service are included in the per-visit 
payment and are not billed separately.
    FQHCs have also been paid under the AIR methodology; however, on 
October 1, 2014, FQHCs began to transition to a FQHC PPS system in 
which they are paid based on the lesser of a national encounter-based 
rate or their total adjusted charges. The FQHC PPS rate is adjusted for 
geographic differences in the cost of services by the FQHC

[[Page 71081]]

geographic adjustment factor. It is also increased by 34 percent when a 
FQHC furnishes care to a patient that is new to the FQHC or to a 
beneficiary receiving an Initial Preventive Physical Examination (IPPE) 
or an Annual Wellness Visit (AWV). Both the AIR and FQHC PPS payment 
rates were designed to reflect all the services that a RHC or FQHC 
furnishes in a single day, regardless of the length or complexity of 
the visit or the number or type of practitioners seen.
c. Payment for CCM Services
    To address the concern that the non-face-to-face care management 
work involved in furnishing comprehensive, coordinated care management 
for certain categories of beneficiaries is not adequately paid for as 
part of an office visit, beginning on January 1, 2015, practitioners 
billing under the PFS are paid separately for CCM services under CPT 
code 99490 when CCM service requirements are met.
    RHCs and FQHCs cannot bill under the PFS for RHC or FQHC services 
and individual practitioners working at RHCs and FQHCs cannot bill 
under the PFS for RHC or FQHC services while working at the RHC or 
FQHC. Although many RHCs and FQHCs coordinate services within their own 
facilities, and may sometimes help to coordinate services outside their 
facilities, the type of structured care management services that are 
now payable under the PFS for patients with multiple chronic 
conditions, particularly for those who are transitioning from a 
hospital or SNF back into their communities, are generally not included 
in the RHC or FQHC payment. We proposed to provide an additional 
payment for the costs of CCM services that are not already captured in 
the RHC AIR or the FQHC PPS payment, beginning on January 1, 2016. 
Services that are currently being furnished and paid under the RHC AIR 
or FQHC PPS payment methodology will not be affected by the ability of 
the RHC or FQHC to receive payment for additional services that are not 
included in the RHC AIR or FQHC PPS.
d. Solicitation of Comments on Payment for CCM Services in RHCs and 
FQHCs
    In the May 2, 2014 final rule, ``Medicare Program: Prospective 
Payment System for Federally Qualified Health Centers; Changes to 
Contracting Policies for Rural Health Clinics; and Changes to Clinical 
Laboratory Improvement Amendments of 1988 Enforcement Actions for 
Proficiency Testing Referral Final Rule'' (79 FR 25447), we discussed 
ways to achieve the Affordable Care Act goal of furnishing integrated 
and coordinated services, and specifically noted the CCM services 
program beginning in 2015 for physicians billing under the PFS. We 
encouraged RHCs and FQHCs to review the CCM services information in the 
CY 2014 PFS final rule with comment period and submit comments to us on 
how the CCM services payment could be adapted for RHCs and FQHCs to 
promote integrated and coordinated care in RHCs and FQHCs.
    All of the comments we received in response to this request were 
strongly supportive of payment to RHCs and FQHCs for CCM services. Some 
commenters were concerned that the requirements for electronic exchange 
of information and interoperability with other providers would be 
difficult for some entities, and that some patients do not have the 
resources to receive secure messages via the internet. One commenter 
suggested that the additional G-codes for CCM services should be 
sufficient to cover the associated costs of documenting care 
coordination in FQHCs, and another commenter suggested that we develop 
a risk-adjusted CCM services fee. We also received subsequent 
recommendations from the National Association of Rural Health Clinics 
on various payment options for CCM services in RHCs. These comments 
were very helpful in forming the basis for this proposal, and we thank 
the commenters for their comments.
2. Payment Methodology and Billing for CCM Services in RHCs and FQHCs
a. Payment Methodology and Billing Requirements
    The requirements we proposed for RHCs and FQHCs to receive payment 
for CCM services are consistent with those finalized in the CY 2015 PFS 
final rule with comment period for practitioners billing under the PFS 
and are summarized in Table 24. We proposed to establish payment, 
beginning on January 1, 2016, for RHCs and FQHCs that furnish a minimum 
of 20 minutes of qualifying CCM services during a calendar month to 
patients with multiple (two or more) chronic conditions that would be 
expected to last at least 12 months or until the death of the patient, 
and that would place the patient at significant risk of death, acute 
exacerbation/decompensation, or functional decline. The CPT code 
descriptor sets forth the eligibility guidelines for CCM services and 
would serve as the basis for potential medical review. In accordance 
with both the CPT instructions and Medicare policy, only one 
practitioner can bill this code per month, and there are restrictions 
regarding the billing of other overlapping care management services 
during the same service period. The following section discusses these 
aspects of our proposal in more detail and additional information will 
be communicated in sub-regulatory guidance.
    We proposed that a RHC or FQHC could bill for CCM services 
furnished by, or incident to, the services of a RHC or FQHC physician, 
NP, PA, or certified nurse midwife (CNM) for a RHC or FQHC patient once 
per month, and that only one CCM payment per beneficiary per month 
could be paid. If another practice furnishes CCM services to a 
beneficiary, the RHC or FQHC could not bill for CCM services for the 
same beneficiary for the same service period. We also proposed that TCM 
and any other program that provided additional payment for care 
management services (outside of the RHC AIR or FQHC PPS payment) cannot 
be billed during the same service period.
    For purposes of meeting the minimum 20-minute requirement, the RHC 
or FQHC could count the time of only one practitioner or auxiliary 
staff (for example, a nurse, medical assistant, or other individual 
working under the supervision of a RHC or FQHC physician or other 
practitioner) at a time, and could not count overlapping intervals such 
as when two or more RHC or FQHC practitioners are meeting about the 
patient. Only conversations that fall under the scope of CCM services 
would be included towards the time requirement.
    We noted that for billing under the PFS, the care coordination 
included in services such as office visits do not always describe 
adequately the non-face-to-face care management work involved in 
primary care. We also noted that payment for office visits may not 
reflect all the services and resources required to furnish 
comprehensive, coordinated care management for certain categories of 
beneficiaries, such as those who are returning to a community setting 
following discharge from a hospital or SNF stay. We proposed CCM 
payment for RHCs and FQHCs because we believe that the non-face-to-face 
time required to coordinate care is not captured in the RHC AIR or the 
FQHC PPS payment, particularly for the rural and/or low-income 
populations served by RHCs and FQHCs. Allowing separate payment for CCM 
services in RHCs and FQHCs is intended to reflect the additional 
resources necessary for the unique components of CCM services.

[[Page 71082]]

    We proposed that payment for CCM services be based on the PFS 
national average non-facility payment rate when CPT code 99490 is 
billed alone or with other payable services on a RHC or FQHC claim. 
(For the first quarter of 2015, the national average payment rate was 
$42.91 per beneficiary per calendar month.) This rate would not be 
subject to a geographic adjustment. CCM payment to RHCs and FQHCs would 
be based on the PFS amount, but would be paid as part of the RHC and 
FQHC benefit, using the CPT code to identify that the requirements for 
payment are met and a separate payment should be made. We also proposed 
to waive the RHC and FQHC face-to-face requirements when CCM services 
are furnished to a RHC or FQHC patient. Coinsurance would be applied as 
applicable to FQHC claims, and coinsurance and deductibles would apply 
to RHC claims as applicable. RHCs and FQHCs would continue to be 
required to meet the RHC and FQHC Conditions of Participation and any 
additional RHC or FQHC payment requirements.
b. Other Options Considered
    We considered adding CCM services as a RHC or FQHC covered stand-
alone service and removing the RHC/FQHC policy requiring a face-to-face 
visit requirement for this service. Under this option, payment for RHCs 
would be at the AIR, payment for FQHCs would be the lesser of total 
charges or the PPS rate, and if CCM services are furnished on the same 
day as another payable medical visit, only one visit would be paid. We 
did not propose this payment option because it would result in a 
significant overpayment if no other services were furnished on the same 
day, and would result in no additional payment if furnished on the same 
day as another medical visit.
    We also considered allowing RHCs and FQHCs to carve out CCM 
services and bill them separately to the PFS. We did not propose this 
payment option because CCM services are a RHC and FQHC service and only 
non-RHC/FQHC services can be billed through the PFS.
    We also considered developing a modifier that could be added to the 
claim for additional payment when CCM services are furnished. We did 
not propose this option because it would require that payment for CCM 
services be made only when furnished along with a billable service that 
qualifies as an RHC or FQHC service.
    We also considered establishing payment for CCM costs on a 
reasonable cost basis through the cost report. We did not propose this 
option because payment for CCM services through the cost report would 
complicate coinsurance and/or deductible accountability, whereas it is 
more administratively feasible to apply coinsurance and/or deductible 
on a RHC/FQHC claim, as applicable. For example, section 1833(a)(3) of 
the Act specifies that influenza and pneumococcal vaccines and their 
administration are exempt from payment at 80 percent of reasonable 
costs and payment to RHCs and FQHCs for such services is at 100 percent 
of reasonable cost. Since influenza and pneumococcal vaccines and their 
administration are not subject to copayment, it is administratively 
feasible to pay these services through the cost report.
3. Requirements for CCM Payment in RHCs and FQHCs
a. Beneficiary Eligibility for CCM Services
    Consistent with beneficiary eligibility requirements under the PFS, 
we proposed that RHCs and FQHCs receive payment for furnishing CCM 
services to patients with multiple chronic conditions that are expected 
to last at least 12 months or until the death of the patient, as 
determined by the RHC or FQHC practitioner, and that place the patient 
at significant risk of death, acute exacerbation/decompensation, or 
functional decline. We encouraged RHCs and FQHCs to focus on patients 
with high acuity and high risk when furnishing CCM services to eligible 
patients, including those who would be returning to a community setting 
following discharge from a hospital or SNF.
b. Beneficiary Agreement Requirements
    Not all patients who are eligible for separately payable CCM 
services may necessarily want these services to be provided, and some 
patients who receive CCM services may wish to discontinue them. A 
beneficiary who declines to receive CCM services from the RHC or FQHC, 
or who accepts the services and then chooses to revoke his/her 
agreement, would continue to be able to receive care from the RHC or 
FQHC and receive any care management services that were being furnished 
under the RHC AIR or FQHC PPS payment system.
    Consistent with beneficiary notification and consent requirements 
under the PFS, we proposed that the following requirements be met 
before the RHC or FQHC can furnish or bill for CCM services:
     The eligible beneficiary must be informed about the 
availability of CCM services from the RHC or FQHC and provide his or 
her written agreement to have the services provided, including the 
electronic communication of the patient's information with other 
treating providers as part of care coordination. This would include a 
discussion with the patient about what CCM services are, how they 
differ from any care management services the RHC or FQHC currently 
offers, how these services are accessed, how the patient's information 
will be shared among others, that a non RHC or FQHC cannot furnish or 
bill for CCM services during the same calendar month that the RHC or 
FQHC furnishes CCM services, the applicability of coinsurance even when 
CCM services are not delivered face-to-face in the RHC or FQHC, and 
that any care management services that are currently provided will 
continue even if the patient does not agree to have CCM services 
provided.
     The RHC or FQHC must document in the patient's medical 
record that all of the CCM services were explained and offered to the 
patient, and note the patient's decision to accept these services.
     At the time the agreement is obtained, the eligible 
beneficiary must be informed that the agreement for CCM services could 
be revoked by the beneficiary at any time either verbally or in 
writing, and the RHC or FQHC practitioner must explain the effect of a 
revocation of the agreement for CCM services. If the revocation occurs 
during a CCM calendar month, the revocation would be effective at the 
end of that period. The eligible beneficiary must also be informed that 
the RHC or FQHC is able to be separately paid for these services during 
the 30-day period only if no other practitioner or eligible entity, 
including another RHC or FQHC that is not part of the RHC's or FQHC's 
organization, has already billed for this service. Since only one CCM 
payment can be paid per beneficiary per month, the RHC or FQHC would 
need to ask the patient if they are already receiving CCM services from 
another practitioner. Revocation by the beneficiary of the agreement 
must also be noted by recording the date of the revocation in the 
beneficiary's medical record and by providing the beneficiary with 
written confirmation that the RHC or FQHC would not be providing CCM 
services beyond the current 30-day period. A beneficiary who has 
revoked the agreement for CCM services from a RHC or FQHC may choose 
instead to receive these services from a different practitioner 
(including another RHC or

[[Page 71083]]

FQHC), beginning at the conclusion of the 30-day period.
     The RHC or FQHC must provide a written or electronic copy 
of the care plan to the beneficiary and record this in the 
beneficiary's electronic medical record.
c. Scope of CCM Services in RHCs and FQHCs
    We proposed that all of the following scope of service requirements 
must be met to bill for CCM services:
     Initiation of CCM services during a comprehensive 
Evaluation/Management (E/M), AWV, or IPPE visit. The time spent 
furnishing these services would not be included in the 20 minute 
monthly minimum required for CCM billing.
     Continuity of care with a designated RHC or FQHC 
practitioner with whom the patient is able to get successive routine 
appointments.
     Care management for chronic conditions, including 
systematic assessment of a patient's medical, functional, and 
psychosocial needs; system-based approaches to ensure timely receipt of 
all recommended preventive care services; medication reconciliation 
with review of adherence and potential interactions; and oversight of 
patient self-management of medications.
     A patient-centered plan of care document created by the 
RHC or FQHC practitioner furnishing CCM services in consultation with 
the patient, caregiver, and other key practitioners treating the 
patient to assure that care is provided in a way that is congruent with 
patient choices and values. The plan would be a comprehensive plan of 
care for all health issues based on a physical, mental, cognitive, 
psychosocial, functional and environmental (re)assessment and an 
inventory of resources and supports. It would typically include, but 
not be limited to, the following elements: Problem list, expected 
outcome and prognosis, measurable treatment goals, symptom management, 
planned interventions, medication management, community/social services 
ordered, how the services of agencies and specialists unconnected to 
the practice will be directed/coordinated, the individuals responsible 
for each intervention, requirements for periodic review and, when 
applicable, revision, of the care plan. A complete list of problems, 
medications, and medication allergies would be in the electronic health 
record to inform the care plan, care coordination, and ongoing clinical 
care.
     The electronic care plan would be available 24 hours a day 
and 7 days a week to all practitioners within the RHC or FQHC who are 
furnishing CCM services whose time counts towards the time requirement 
for billing the CCM code, and to other practitioners and providers, as 
appropriate, who are furnishing care to the beneficiary, to address a 
patient's urgent chronic care needs. No specific electronic solution or 
format is required to meet this scope of service element. However, we 
encourage RHCs and FQHCs to review the care plan criterion for health 
information technology (IT) finalized in the 2015 Edition of Health 
Information Technology Certification Criteria, 2015 Edition Base 
Electronic Health Record (EHR) Definition, and ONC Health IT 
Certification Program Modifications final rule (80 FR 62648), which 
aims to enable users of certified health IT to create and receive care 
plan information in accordance with the C-CDA Release 2.1 standard.
     Management of care transitions within health care 
including referrals to other clinicians, visits following a patient 
visit to an emergency department, and visits following discharges from 
hospitals and SNFs. The RHC or FQHC must be able to facilitate 
communication of relevant patient information through electronic 
exchange of a summary care record with other health care providers 
regarding these transitions. The RHC or FQHC must also have qualified 
personnel who are available to deliver transitional care services to a 
patient in a timely way to reduce the need for repeat visits to 
emergency departments and readmissions to hospitals and SNFs.
     Coordination with home and community based clinical 
service providers required to support a patient's psychosocial needs 
and functional deficits. Such communication to and from home- and 
community-based providers regarding these clinical patient needs must 
be documented in the RHC's or FQHC's medical record system.
     Secure messaging, internet or other asynchronous non-face-
to-face consultation methods for a patient and caregiver to communicate 
with the provider regarding the patient's care in addition to the use 
of the telephone. We would note that the faxing of information would 
not meet this requirement. These methods would be required to be 
available, but would not be required to be used by every practitioner 
or for every patient receiving CCM services.
d. Electronic Health Records (EHR) Requirements
    We believe that the use of EHR technology that allows data sharing 
is necessary to assure that RHCs and FQHCs can effectively coordinate 
services with other practitioners for patients with multiple chronic 
conditions. Therefore, we proposed the following requirements:
     Certified health IT must be used for the recording of 
demographic information, health-related problems, medications, and 
medication allergies; a clinical summary record; and other scope of 
service requirements that reference a health or medical record.
     RHCs and FQHCs must use technology certified to the 
edition(s) of certification criteria that is, at a minimum, acceptable 
for the EHR Incentive Programs as of December 31st of the year 
preceding each CCM payment year to meet the following core technology 
capabilities: Structured recording of demographics, problems, 
medications, medication allergies, and the creation of a structured 
clinical summary. For example, technology used to furnish CCM services 
beginning on January 1, 2016, would be required to meet, at a minimum, 
the requirements included in the 2014 Edition certification criteria. 
For the purposes of the scope of services, we refer to technology 
meeting these requirements as ``CCM Certified Technology.''
     Applicable HIPAA standards would apply to electronic 
sharing of patient information.

[[Page 71084]]



     Table 24--Summary of CCM Scope of Service Elements and Billing
                              Requirements
------------------------------------------------------------------------
      CCM scope of service/billing
              requirements                    Health IT requirements
------------------------------------------------------------------------
Initiation of CCM services at an AWV,    None.
 IPPE, or a comprehensive E/M visit.
Structured recording of demographics,    Structured recording of
 problems, medications, medication        demographics, problems,
 allergies, and the creation of a         medications, medication
 structured clinical summary record. A    allergies, and creation of
 full list of problems, medications and   structured clinical summary
 medication allergies in the EHR must     records using CCM certified
 inform the care plan, care               technology.
 coordination, and ongoing clinical
 care.
Access to CCM services 24/7 (providing   None.
 the beneficiary with a means to make
 timely contact with the RHC or FQHC to
 address his or her urgent chronic care
 needs regardless of the time of day or
 day of the week).
Continuity of care with a designated     None.
 RHC or FQHC practitioner with whom the
 beneficiary is able to get successive
 routine appointments.
CCM services for chronic conditions      None.
 including systematic assessment of the
 beneficiary's medical, functional, and
 psychosocial needs; system-based
 approaches to ensure timely receipt of
 all recommended preventive care
 services; medication reconciliation
 with review of adherence and potential
 interactions; and oversight of
 beneficiary self-management of
 medications.
Creation of a patient-centered care      Must at least electronically
 plan based on a physical, mental,        capture care plan information;
 cognitive, psychosocial, functional      make this information
 and environmental (re)assessment and     available on a 24/7 basis to
 an inventory of resources and            all practitioners within the
 supports; a comprehensive care plan      RHC or FQHC whose time counts
 for all health issues. Share the care    towards the time requirement
 plan as appropriate with other           for the practice to bill for
 practitioners and providers.             CCM services; and share care
                                          plan information
                                          electronically (other than by
                                          fax) as appropriate with other
                                          practitioners, providers, and
                                          caregivers.
Provide the beneficiary with a written   Document provision of the care
 or electronic copy of the care plan      plan as required to the
 and document its provision in the        beneficiary in the EHR using
 electronic medical record.               CCM certified technology.
Management of care transitions between   Format clinical summaries
 and among health care providers and      according to CCM certified
 settings, including referrals to other   technology. Not required to
 clinicians; follow-up after an           use a specific tool or service
 emergency department visit; and follow-  to exchange/transmit clinical
 up after discharges from hospitals,      summaries, as long as they are
 skilled nursing facilities or other      transmitted electronically
 health care facilities.                  (other than by fax).
Coordination with home and community     Communication to and from home
 based clinical service providers.        and community based providers
                                          regarding the patient's
                                          psychosocial needs and
                                          functional deficits must be
                                          documented in the patient's
                                          medical record using CCM
                                          certified technology.
Enhanced opportunities for the           None.
 beneficiary and any caregiver to
 communicate with the RHC or FQHC
 regarding the beneficiary's care
 through not only telephone access, but
 also through the use of secure
 messaging, internet or other
 asynchronous non face-to-face
 consultation methods.
Beneficiary consent--Inform the          ...............................
 beneficiary of the availability of CCM
 services and obtain his or her written
 agreement to have the services
 provided, including authorization for
 the electronic communication of his or
 her medical information with other
 treating providers.
Document in the beneficiary's medical    ...............................
 record that all of the CCM services
 were explained and offered, and note
 the beneficiary's decision to accept
 or decline these services.
Document the beneficiary's written       Document the beneficiary's
 consent and authorization in the EHR     written consent and
 using CCM certified technology.          authorization in the EHR using
                                          CCM certified technology.
Beneficiary consent--Inform the          None.
 beneficiary of the right to stop the
 CCM services at any time (effective at
 the end of the calendar month) and the
 effect of a revocation of the
 agreement on CCM services.
Beneficiary consent--Inform the          None.
 beneficiary that only one practitioner
 can furnish and be paid for these
 services during a calendar month.
------------------------------------------------------------------------

    We invited public comments on all aspects of the proposed payment 
methodology and billing for CCM services in RHCs and FQHCs, the 
proposed CCM requirements for RHCs and FQHCs, and any other aspect of 
our proposal. The following is a summary of the comments we received 
and our responses.
    Most of the comments we received were very supportive of our 
proposal to establish payment for CCM services in RHCs and FQHCs. 
Several commenters agreed that allowing separate payment for CCM 
services in RHCs and FQHCs will better reflect the additional resources 
necessary for the unique services that are required to furnish CCM 
services to the populations served by RHCs and FQHCs. Many commenters 
appreciated that the proposed methodology would enable RHCs and FQHCs 
to be paid for these services even if there was no billable visit. A 
few commenters had concerns regarding health information technology 
requirements or beneficiary copayment requirements. One commenter had 
concerns about potential duplication in payment and increased Medicare 
spending. Several commenters requested clarification on specific 
aspects of the program. A few commenters asked questions that were 
beyond the scope of the proposal.

[[Page 71085]]

    Comment: One commenter noted that in a few instances, our proposal 
alternately used ``a CCM 30-day period'' and ``only one CCM payment can 
be paid per beneficiary per month.'' The commenter stated that under 
the Medicare PFS and the definition of CPT code 99490, CCM services are 
based on a calendar month, not a 30-day period.
    Response: The commenter is correct that the CCM period is based on 
a calendar month, not a 30-day period.
    Comment: A few commenters were concerned that charging a 
beneficiary coinsurance for non-face-to-face services will be confusing 
to the beneficiary and create a barrier to receiving care. One 
commenter recommended that we waive coinsurance for CCM services, and 
another recommended that we waive the applicable coinsurance and 
deductible through CMMI's waiver authority.
    Response: We do not have the statutory authority to waive 
coinsurance for CCM services, and CMMI waiver authority is only 
applicable to CMMI demonstration programs. Although there may be 
potential for confusion on the part of the beneficiary who receives a 
bill for services that were conducted on their behalf but not furnished 
directly to them, this should be fully explained to the beneficiary 
during the consent process and in subsequent patient interactions as 
necessary. We suggest that when practitioners explain the benefits of 
receiving CCM, they include the possibility that it may help the 
beneficiary to avoid the need for more costly face-to-face visits that 
would entail greater cost sharing.
    Comment: A commenter was concerned that many beneficiaries and 
their caregivers will not fully understand the beneficiary consent for 
CCM services requirements, including what they are being asked to 
accept or decline, or why they are being asked to approve in writing 
the provision of certain services and not others. The commenter 
recommended that CMS take steps to ensure that beneficiaries will have 
a proper understanding of CCM and its value, as well as their right to 
decline enrollment in CCM, and that family caregivers be included in 
these conversations, whenever possible.
    Response: We agree with the commenter regarding the importance of 
the beneficiary's understanding of CCM services and their right to 
accept or decline this service. Beneficiary education on CCM services, 
including information on the value of this service and the 
beneficiary's right to accept or decline it, is a required component of 
CCM services and must be provided to beneficiaries as part of the 
consent process. We also agree that these discussions should include 
the caregiver, when applicable.
    Comment: A commenter urged CMS to ensure that communication methods 
are conducted in a culturally and linguistically appropriate manner. 
The commenter suggested that notices and agreements regarding CCM 
services should be written in plain language and in their patients' 
preferred languages, and be accessible to those with visual, hearing, 
cognitive, and communication impairments.
    Response: RHCs and FQHCs serve diverse populations, and we thank 
the commenter for this important reminder that written and oral 
communication materials should be accessible and understandable to the 
patient population being served.
    Comment: Some commenters expressed concerns with the proposed 
technological requirements for CCM services. They noted that 
interoperability and electronic exchange of medical information is 
costly and there are technological barriers that may prevent the 
seamless transmission and recording of patient information. One 
commenter stated that since RHCs and FQHCs were not eligible for 
Meaningful Use incentives, they may not have the health information 
technology in place to support some of the requirements, and that those 
RHCs and FQHCs that cannot meet the health information technology 
requirements will be excluded from payment for CCM services. Other 
commenters were concerned that some patients served by RHCs and FQHCs 
may not have the resources to receive secure messages via the Internet. 
These commenters recommended that the electronic health record 
requirements, and the electronic exchange of information and 
interoperability with other providers, be encouraged but not required 
for CCM payment.
    Response: We appreciate the concern regarding the cost and 
challenges inherent in adopting new technological requirements and 
understand that not all RHCs or FQHCs may be able to meet the 
technological requirements at this time. RHCs and FQHCs that do not 
have an EHR system in place, or are not able to meet the CCM 
interoperability requirements, will not be able to furnish and bill for 
CCM services. However, based on recent surveys, we believe that many, 
if not most, RHCs and FQHCs have the capability to meet the 
technological requirements now or in the near future. For example, a 
recent survey showed that nearly 72 percent of RHCs have an operational 
EHR system, with 63 percent indicating use by 90 percent or more of 
their staff. The same study showed that slightly over 17 percent of 
RHCs without an EHR plan to implement one within 6 months, and 27 
percent plan to do so within 7 to 12 months.\1\ A 2014 study showed 
that 93 percent of FQHCs have an EHR system, and that 76 percent 
reported meeting the criteria to qualify for meaningful use incentive 
payments.\2\ We would also note that eligible professionals working in 
RHCs and FQHCs are eligible to receive payment under the EHR Incentive 
Programs.
---------------------------------------------------------------------------

    \1\ Adoption and Use of Electronic Health Recoreds by Rural 
Health Clinics Results of a National Survey; Maine Rural Health 
Research Center, Research and Policy Brief, September 2015.
    \2\ The Adoption and Use of Health Information Technology by 
Community Health Centers, 2009-2013; The Commonwealth Fund; Issue 
Brief; May 2014.
---------------------------------------------------------------------------

    We are aware that not all patients, particularly those served by 
RHCs and FQHCs, may be able to receive secure messages via the 
Internet, and they are not required to do so. However, to furnish and 
bill for CCM services, RHCs and FQHCs must have the capability to 
communicate with the beneficiary and any caregiver, not only through 
telephone access, but also through the use of secure messaging, 
Internet, or other asynchronous non face-to-face consultation methods. 
Beneficiaries are not required to have this capability to receive CCM 
services.
    Comment: One commenter disagreed with the proposed requirement that 
an electronic care plan be made available 24 hours a day, 7 days a 
week, and believes that this unrealistically fails to account for 
``system maintenance, down-time, change in EHR vendor, or the event of 
technological glitches and cyber-attacks''. The commenter recommended 
that at a minimum, CMS should provide for exceptions in the event of 
any of these circumstances.
    Response: RHCs and FQHCs that choose to furnish and bill CCM 
services must have a system that supports 24 hours a day, 7 days a 
week, access to the electronic care plan. We understand that there may 
be times when the system is not operable, but we expect that this will 
not be a frequent occurrence.
    Comment: A commenter stated that they were worried that adding very 
prescriptive technological requirements may stifle innovation and 
prevent the use of technology that is more appropriate and tailored for 
chronically ill patients. The commenter recommended that any 
technological requirements for CCM services should be broadly drafted 
to allow for future changes and advancements over time.

[[Page 71086]]

    Response: We appreciate the commenter's concerns about the need to 
avoid stifling innovation. In including these technology requirements, 
we are seeking to ensure that all RHCs and FQHCs furnishing CCM 
services have the technological capabilities that are needed to deliver 
high-quality services while allowing the flexibility needed to adopt 
appropriate technology solutions. By proposing the adoption of a 
minimal set of certified health IT capabilities, and allowing 
flexibility around more advanced capabilities such as shared care 
planning, we believe that these goals will be met.
    Comment: A commenter stated that physicians have significant 
problems and usability concerns with the clinical care summaries, and 
recommended that these summaries not be required for CCM services.
    Response: We respectfully disagree with this commenter's 
recommendation that clinical care summaries not be required for CCM 
services. We believe that the transmission of clinical care summaries 
is an important component of supporting effective care transitions and 
should be available electronically to effectively furnish CCM services.
    Comment: A commenter stated that the proposed care plan for CCM 
services in RHCs and FQHCs, which includes the patient's medical, 
functional, and psychosocial needs and has system-based approaches for 
receipt of services, provides a comprehensive definition of care 
management that should be used in other CPT codes to assure consistency 
across programs and settings.
    Response: We appreciate the comment, but the description of ``care 
management'' utilized in other CPT codes is outside the scope of this 
rule.
    Comment: A commenter requested that CMS provide an optional 
patient-centered plan of care document template that can be used as an 
example to create a comprehensive care plan that is compliant with CCM 
requirements. Another commenter asked for clarification on the 
documentation requirements for billing CCM services, and another stated 
that physicians are likely to need assistance from CMS in providing 
educational materials for their patients regarding CCM. A commenter 
urged CMS to expand the use of CCM codes to all Medicare beneficiaries.
    Response: While we have not provided a template for RHCs and FQHCs 
to use in developing care plans, we would refer these commenters to the 
CMS Web site at https://www.cms.gov/Outreach-and-Education/Outreach/NPC/National-Provider-Calls-and-Events-Items/2015-02-18-Chronic-Care-Management-new.html for general information on CCM, including 
educational materials.
    Comment: A commenter requested that auxiliary personnel, including 
pharmacists, be allowed to provide CCM services in RHCs and FQHCs, 
including furnishing the AWV. Another commenter asked for clarification 
of what positions qualify as auxiliary staff.
    Response: The CMS Benefit Policy Manual, Chapter 9, describes 
auxiliary personnel in RHCs and FQHCs as a nurse, medical assistant, or 
anyone acting under the supervision of the physician. Auxiliary 
personnel are not RHC or FQHC practitioners and cannot bill for a visit 
in a RHC or FQHC. However, the time spent by auxiliary personnel in 
furnishing CCM services could be counted towards meeting the 20 minute 
minimum requirement for billing a CCM visit.
    Comment: A commenter urged CMS to recognize occupational therapy 
practitioners as RHC and FQHC practitioners, and to include 
occupational therapy in all CMS's efforts to ensure beneficiary care is 
appropriately provided and managed. The commenter states that this 
would assist in promoting patient self-management, reduce caregiver 
burden, decrease hospitalizations, increase effective resource 
utilization, and contribute to improved beneficiary and population 
health.
    Response: We agree that occupational therapists can be a valuable 
and important part of the health care team and can contribute to 
improved outcomes and reduced costs. The full list of statutorily-
defined RHC and FQHC practitioners is set out at section 1861(aa)(2) of 
the Act, and includes physicians, NPs, PAs, CNMs, CPs, or CSWs. Other 
qualified practitioners, such as occupational therapists, may furnish 
services incident to a RHC or FQHC practitioner's services. For 
additional information on the provision of occupational therapy in RHCs 
and FQHCs, see the CMS Benefit Policy Manual, Chapter 13, on the CMS 
Web site at https://www.cms.gov/Center/Provider-Type/Rural-Health-Clinics-Center.html, or https://www.cms.gov/Center/Provider-Type/Federally-Qualified-Health-Centers-FQHC-Center.html.
    Comment: A commenter questioned what specific tasks can be counted 
toward the 20 minute CCM requirement.
    Response: The tasks comprising CCM services are described in the 
scope of service requirements in section III.B. of this final rule with 
comment period.
    Comment: A commenter urged CMS to emphasize and reiterate the scope 
of services that are expected, including 24-7 access to care 
management, continuity with a designated provider, and creation of a 
patient-centered care plan document.
    Response: The scope of services that are required for CCM payment, 
including 24-7 access to care management, continuity of care with a 
designated provider, and creation of a patient-centered care plan 
document, are all required components of CCM services.
    Comment: A commenter asked what would be considered the date of 
service for CCM if multiple days per month are used to get to the 20-
minute mark.
    Response: The service period for billing CCM services is one 
calendar month, and we expect the RHC or FQHC to continue furnishing 
services during a given month as applicable even after the 20-minute 
time threshold to bill the service is met. The RHC or FQHC could bill 
for the CCM service after completion of at least 20 minutes of 
qualifying CCM services during the service period, or any time after 
that until the end of the month. Additional billing information will be 
provided in subregulatory guidance.
    Comment: A commenter was concerned that CMS's proposed 
reimbursement level for CCM services in RHCs and FQHCs is low, and 
asked that we re-evaluate the time and effort needed for the 
appropriate provision of these important services.
    Response: We proposed that payment for CCM services be based on the 
PFS national average non-facility payment rate when CPT code 99490 is 
billed alone or with other payable services on a RHC or FQHC claim. 
Since the commenter did not provide any rationale or additional data 
supporting an increase in the payment rate for RHCs or FQHCs, we cannot 
address this comment.
    Comment: A commenter was concerned that separate payment for CCM 
services in RHCs and FQHCs may lead to duplicative payments because the 
FQHC PPS payment reflects the costs for all services associated with a 
comprehensive primary care visit, even if not all the services occur on 
the same day. The commenter also suggested that separate payment for 
CCM services could lead to duplicative payment for FQHCs that receive a 
Public Health Service grant because the grant already requires the 
provision of health services that are available and accessible promptly 
and in a manner which will assure continuity of service to the 
residents of the center's catchment area.
    Response: We would like to alleviate any concerns that separate 
payment for CCM services is a duplication of RHC

[[Page 71087]]

and FQHC payment. Although the FQHC PPS payment, and the RHC AIR, do 
reflect the costs for all services associated with a comprehensive 
primary care visit, even if not all the services occur on the same day, 
it does not generally include the costs of the services required for 
CCM payment. For example, FQHCs are required to provide case management 
that includes an assessment of factors affecting health (for example, 
medical, social, housing, or educational), counseling and referrals to 
address identified needs and periodic follow-up of services. They are 
not required to create a structured recording of demographics, 
problems, medications, medication allergies, and structured clinical 
summary records using CCM certified technology, or to share the care 
plan as appropriate with other practitioners and providers. FQHCs are 
required to have an on-call provider for after-hours care, but they are 
not required to have the 24/7 case management services that the CCM 
billing code requires. RHCs do not have these requirements for primary 
care visits.
    In general, although a few of the services required for CCM payment 
may be provided by some RHCs and FQHCs on occasion, the systematic 
provision of care management, the level and intensity of care 
coordination, and the interoperability of care plans with external 
providers is not typically found in RHCs or FQHCs.
    Comment: A commenter noted that the increase Medicare expenditures 
for CCM services in RHCs and FQHCs would not trigger a budget-
neutrality adjustment, even though the estimated increase in spending 
is material.
    Response: The commenter is correct that payment for RHC and FQHC 
services is not subject to budget neutrality. We believe that the 
additional cost for furnishing CCM services in RHCs and FQHCs is an 
investment in comprehensive and coordinated care that is likely to be 
offset by reduced hospitalizations and readmissions. We would also note 
that, based on the current utilization under the PFS, we have revised 
our original estimate to reflect the expected phased in rate of CCM 
utilization.
    Comment: A commenter stated that FQHCs should not be required to 
exclude any activities related to CCM from their Medicare cost reports.
    Response: Any cost incurred as a result of the provision of CCM 
services (as defined in the task list in section III.B.) is an 
allowable cost and should be included in the Medicare cost report.
    Comment: A commenter requested that CMS clarify in the final rule 
that Medicare Advantage (MA) enrollees are entitled to the same CCM 
services as non-MA enrollees, and that MA-contracted FQHCs are entitled 
to the same payment for CCM services as FQHCs providing qualifying CCM 
services to non-MA enrollees.
    Response: In addition to Medicare Part A and Part B services, MA 
organizations (MAOs) are required to furnish care coordination services 
that are substantially similar to the Original Medicare CCM services. 
They have flexibility in terms of how to furnish care coordination 
services to ensure ongoing continuity of care and care management for 
all enrollees. MA regulations at Sec.  422.256(a)(2)(ii) expressly 
preclude CMS from interfering in payment rates agreed to by an MA plan 
and its contracted providers. Whether or not a MAO pays its providers 
for furnishing care coordination services through use of the CPT code 
or some other mechanism can vary depending on the contract agreement in 
place. Thus, the amount the MA plan will pay the contracted FQHC 
depends on the terms of the contract. We note that MA PPO enrollees 
have the option to obtain covered services from non-contracted 
providers. Thus, if a PPO enrollee chooses an out-of-network provider 
to furnish chronic care management services and all criteria for 
billing the CCM code is met, the MAO must pay for those services 
consistent with Original Medicare payment rules. In this scenario, 
enrollees are responsible for any plan established out-of-network cost 
sharing. Additionally, although not coordinated care plans, Medicare 
PACE Organizations, MA private fee-for-service plans and MA Medicare 
Savings Account plans are required to cover Medicare Part A and Part B 
services, which include coverage of the CCM services consistent with 
Medicare coverage and payment rules.
    Comment: A commenter stated that RHCs and FQHCs cannot bill for an 
IPPE or AWV visit in addition to the AIR and that RHCs and FQHCs are 
doing this work at their own expense and without compensation. The 
commenters stated that CMS has proposed the ability for RHCs to bill 
for CCM in addition to the AIR in the CY 2016 PFS, and asked that this 
RHCs and FQHCs also be allowed to bill separately for the IPPE and AWV.
    Response: It is unclear why the commenter stated that the IPPE and 
AWV are uncompensated, since these services are billable visits. 
Although we do not agree that RHCs and FQHCs are furnishing IPPEs and 
AWVs at their own expense and without compensation, payment for IPPEs 
and AWVs in RHCs and FQHCs is outside of the scope of this proposal.
    Comment: A commenter expressed concern that the unique RHC and FQHC 
billing structures may preclude them from receiving payment for newly 
developed care coordination payment codes, and suggested that RHCs and 
FQHCs be guaranteed care coordination payments. The commenter stated 
that including RHCs and FQHCs in ensuring better care coordination is 
vital, and suggested that CMS make payments for care coordination 
services available to RHCs and FQHCs through ``crosswalk'' procedures 
or similar technical allowances,
    Response: We agree that care coordination in RHCs and FQHCs is 
extremely important, and would note that the payment methodology 
proposed for RHCs and FQHCs is due to the non-face-to-face nature of 
this benefit. As the commenter did not provide any specific suggestions 
on ``crosswalk procedures or similar technical allowances,'' we cannot 
address this comment.
    Comment: A commenter requested that PAs in RHCs be allowed to bill 
for laboratory, X-rays, and other services using a methodology similar 
to what was proposed for CCM services.
    Response: This comment is outside the scope of this rule.
    Comment: A few commenters requested that an exception to the direct 
supervision requirements be made for CCM and TCM services that are 
furnished incident to physician services in RHCs and FQHCs. The 
commenters suggested that the regulatory language be amended to be 
consistent with the provisions in Sec.  410.26(b)(5), which state that 
CCM and TCM services (other than the required face-to-face visit) can 
be furnished under general supervision of the physician (or other 
practitioner) when they are provided by clinical staff incident to the 
services of a physician (or other practitioner). The physician (or 
other practitioner) supervising the auxiliary personnel need not be the 
same physician (or other practitioner) upon whose professional service 
the incident to service is based.
    Response: We believe that due to their different model of care and 
payment structure, requiring direct supervision for ``incident to'' 
services is appropriate for RHCs and FQHCs at this time. However, we 
will consider this for future rulemaking if RHCs and FQHCs find that 
requiring direct supervision presents a barrier to furnishing CCM 
services.
    Comment: A commenter stated that the limitation of one CCM payment 
per month per beneficiary does not support

[[Page 71088]]

the scope of services that beneficiaries often need.
    Response: We are not sure if this commenter is suggesting that CCM 
payments be made more frequently to the same RHC or FQHC (or other 
practitioner), or if more than one entity (for example, RHC, FQHC, a 
physician's office, etc.) should be able to bill for CCM services 
within the month. For either of these situations, we respectfully 
disagree with this commenter. We believe that a minimum of 20 minutes 
of CCM services over a one-month period is required to achieve the 
benefits of CCM services, and that there should be a single and 
consistent point of contact for these services.
    Comment: A commenter recommended the creation of a modifier for 
services furnished by a specialist to establish a link between a 
primary care referral and the specialist for CCM.
    Response: Since services furnished directly by a primary care 
practitioner or a specialist are separately billable services, we 
believe this commenter may be suggesting a way to document referrals to 
specialist services that result from CCM services. We thank the 
commenter for the suggestion but do not believe this would be necessary 
or beneficial.
    As a result of the comments, we are finalizing these provisions as 
proposed, except to change ``30-day period'' to ``calendar month'' 
wherever it was used in the proposed rule.

C. Healthcare Common Procedure Coding System (HCPCS) Coding for Rural 
Health Clinics (RHCs)

1. RHC Payment Methodology and Billing Requirements
    RHCs are paid an all-inclusive rate (AIR) per visit for medically 
necessary primary health services and qualified preventive health 
services furnished face-to-face by a RHC practitioner to a Medicare 
beneficiary. The all-inclusive payment system was designed to minimize 
reporting requirements, and as such, the rate includes all costs 
associated with the services that a RHC furnishes in a single day to a 
Medicare beneficiary, regardless of the length or complexity of the 
visit or the number or type of RHC practitioners seen. Except for 
certain preventive services that are not subject to coinsurance 
requirements, it has not been necessary for RHCs to report medical and 
procedure codes, such as level I and level II of the HCPCS, on claims 
for services that were furnished during the visit to determine Medicare 
payment. Generally, the services reported using the appropriate site of 
service revenue code on a RHC claim receives payment under the AIR, 
with coinsurance and deductible applied based upon the associated 
charges on that line, notwithstanding other Medicare requirements.
    Historically, billing instructions for RHCs and Federally Qualified 
Health Centers (FQHCs) have been similar. Beginning on April 1, 2005, 
through December 31, 2010, RHCs and FQHCs were no longer required to 
report HCPCS when billing for RHC and FQHC services rendered during an 
encounter, absent a few exceptions. CMS Transmittal 371, dated November 
19, 2004, eliminated HCPCS coding for FQHCs and eliminated the 
additional line item reporting of preventive services for RHCs and 
FQHCs for claims with dates of service on or after April 1, 2005. CMS 
Transmittal 1719, dated April 24, 2009, effective October 1, 2009, 
required RHCs and FQHCs to report HCPCS codes for a few services, such 
as certain preventive services eligible for a waiver of deductible, 
services subject to frequency limits, and services eligible for 
payments in addition to the all-inclusive rate.
    Section 1834(o)(1)(B) of the Act, as added by the Affordable Care 
Act, required that FQHCs begin reporting services using HCPCS codes to 
develop and implement the FQHC PPS. Since January 1, 2011, FQHCs have 
been required to report all services furnished during an encounter by 
specifically listing the appropriate HCPCS code(s) for each line item, 
along with the site of service revenue code(s), when billing Medicare. 
As of October 1, 2014, HCPCS coding is used to calculate payment for 
FQHCs that are paid under the FQHC PPS.
    Section 4104 of the Affordable Care Act waived the coinsurance and 
deductible for the initial preventive physical examination (IPPE), the 
annual wellness visit (AWV), and other Medicare covered preventive 
services recommended by the United States Preventive Services Task 
Force (USPSTF) with a grade of A or B. Since January 1, 2011, RHCs have 
been required to report HCPCS coding for these preventive services, for 
which coinsurance and deductible are waived. When billing for an 
approved preventive service, RHCs must report an additional line with 
the appropriate site of service revenue code with the approved 
preventive service HCPCS code and the associated charges. Although 
HCPCS coding is currently required for approved preventive services on 
RHC claims, HCPCS coding is not used to determine RHC payment.
2. Requirement for Reporting of HCPCS Coding for All Services Furnished 
by RHCs during a Medicare Visit
    For payment under Medicare Part B, the statute requires health 
transactions to be exchanged electronically, subject to certain 
exceptions, using standards specified by the Secretary. Specifically, 
section 1862(a)(22) of the Act requires that no payment may be made 
under part A or part B for any expenses incurred for items or services, 
subject to exceptions under section 1862(h), for which a claim is 
submitted other than in an electronic form specified by the Secretary. 
Further, section 1173(1)(a) of the Act, added by section 262 of the 
Health Insurance Portability and Accountability Act of 1996 (HIPAA), 
requires the Secretary to adopt standards for transactions, and data 
elements for such transactions, to enable health information to be 
exchanged electronically, that are appropriate for transactions. These 
include but are not limited to health claims or equivalent encounter 
information. As a result of the HIPAA amendments, HHS adopted 
regulations pertaining to data standards for health care related 
transactions. The regulations at 45 CFR 160.103 define a covered entity 
to include a provider of medical or health services (as defined in 
section 1861(s) of the Act), and define the types of standard 
transactions. When conducting a transaction, under 45 CFR 162.1000, a 
covered entity must use the applicable medical data code sets described 
in Sec.  162.1002 that are valid at the time the health care is 
furnished, and these regulations define the standard medical data code 
sets adopted by the Secretary as HCPCS and CPT (Current Procedural 
Terminology--Fourth Edition) for physician services and other health 
care services.
    Under section 1861(s)(2)(E) of the Act, a RHC is a supplier of 
medical or health services. As such, our regulations require these 
covered entities to report a standard medical code set for electronic 
health care transactions, although our program instructions have 
directed RHCs to submit HCPCS codes only for preventive services. We 
believe reporting of HCPCS coding for all services furnished by a RHC 
would be consistent with the health transactions requirements, and 
would provide useful information on RHC patient characteristics, such 
as level of acuity and frequency of services furnished, and the types 
of services being furnished by RHCs. This information would also allow 
greater oversight of the program and inform policy decisions.
    We proposed that all RHCs must report all services furnished during 
an

[[Page 71089]]

encounter using standardized coding systems, such as level I and level 
II of the HCPCS, for dates of service on or after January 1, 2016. In 
accordance with section 1862(h) of the Act, in limited situations RHCs 
that are unable to submit electronic claims and RHCs with fewer than 10 
full time equivalent employees are exempt from submitting claims 
electronically. We proposed that RHCs exempt from electronic reporting 
under section 1862(h) of the Act must also report all services 
furnished during an encounter using HCPCS coding via paper claims for 
dates of services on or after January 1, 2016. This proposal would 
necessitate new billing practices for such RHCs, but we believe there 
would be no significant burden for the limited number of RHCs exempt 
from electronic billing.
    Under this proposal, a HCPCS code would be reported along with the 
presently required Medicare revenue code for each service furnished by 
the RHC to a Medicare patient. Although HCPCS coding is currently used 
to determine FQHC payment under the FQHC PPS, under this proposal, RHCs 
would continue to be paid under the AIR and there would be no change in 
their payment methodology.
    Accordingly, we proposed to remove the requirement at Sec.  
405.2467(b) pertaining to HCPCS coding for FQHCs and redesignate 
paragraphs (c) and (d) as paragraphs (b) and (c), respectively. We also 
proposed to add a new paragraph (g)(3) to Sec.  405.2462 to require 
FQHCs and RHCs, whether or not exempt from electronic reporting under 
Sec.  424.32(d)(3), to report on Medicare claims all service(s) 
furnished during each FQHC and RHC visit (as defined in Sec.  405.2463) 
using HCPCS and other codes as required.
    We proposed to require reporting of HCPCS coding for all services 
furnished by RHCs to Medicare beneficiaries effective for dates of 
service on or after January 1, 2016. We are aware that many RHCs 
already record this information through their billing software or 
electronic health record systems; however, we recognize there may be 
some RHCs that need to make changes in their systems. We invited RHCs 
to submit comments on the feasibility of updating their billing systems 
to meet this implementation date of January 1, 2016.
    As part of the implementation of the HCPCS coding requirement, we 
plan to provide instructions on how RHCs are to report HCPCS and other 
coding and clarify other appropriate billing procedures through program 
instruction.
    The following is a summary of the comments we received and our 
responses.
    Comment: We received a few comments on our proposal and all were 
supportive of requiring RHCs to report HCPCS for all services 
furnished. Most commenters agreed with our assertions that the data 
could potentially inform future policy decisions by providing useful 
information on individual patient attributes and the types of services/
procedures furnished by RHCs. One commenter supported this proposal 
because currently all other providers such as hospitals, physicians, 
and FQHCs report HCPCS on claims to Medicare. Another commenter 
expressed interest in reporting HCPCS to enable participation in PQRS 
and other quality reporting programs. A commenter stated that HCPCS 
could be determined from the services recorded in the electronic 
medical record system and office systems that generate claim forms 
could be modified easily to bill all services furnished. A commenter 
believed that the majority of RHCs would experience minimal burden 
fulfilling this requirement. Although all commenters supported the 
requirement, a few commenters raised concerns about operational 
challenges of the requirement. One commenter stated, ``The operational 
challenge for providers will be capturing the appropriate charge for 
`all' services provided.'' Another commenter was concerned about 
whether CMS and the MACs would be ready by January 1, 2016 to process 
RHC claims under the proposed requirement.
    Response: We appreciate the support for our proposal to require 
RHCs to report HCPCS on RHC claims for Medicare services. We want to 
clarify that the reporting of HCPCS does not necessarily convey 
eligibility to participate in PQRS and other value-based payments since 
these programs have additional eligibility requirements that RHCs may 
be unable to meet. We do not believe there will be an operational 
challenge for providers to capture the charge for all services 
provided. There is no change to the methodology for reporting charges 
under this requirement. We acknowledge the commenter's concerns about 
the system's readiness to process claims under the requirement and we 
have been working with the MACs to implement the required updates. We 
are finalizing the reporting requirement as proposed with an effective 
date of April 1, 2016 to allow the MACs additional time to implement 
the necessary claims processing systems changes completely.

D. Payment to Grandfathered Tribal FQHCs That Were Provider-Based 
Clinics on or Before April 7, 2000

1. Background
a. Health Services to American Indians and Alaskan Natives (AI/AN)
    There is a special government-to-government relationship between 
the federal government and federally recognized tribes based on U.S. 
treaties, laws, Supreme Court decisions, Executive Orders and the U.S. 
Constitution. This government-to-government relationship forms the 
basis for federal health services to American Indians/Alaska Natives 
(AI/AN) in the U.S.
    In 1976, the Indian Health Care Improvement Act (IHCIA, Pub. L. 94-
437) amended the statute to permit payment by Medicare and Medicaid for 
services provided to AI/ANs in Indian Health Service (IHS) and tribal 
health care facilities that meet the applicable requirements. Under 
this authority, Medicare services to AI/ANs may be furnished by IHS 
operated facilities and programs and tribally-operated facilities and 
programs under Title I or Title V of the Indian Self Determination 
Education Assistance Act, as amended (ISDEAA, Pub. L 93-638).
    According to the IHS Year 2015 Profile, the IHS healthcare delivery 
system currently consists of 46 hospitals, with 28 of those hospitals 
operated by the IHS and 18 of them operated by tribes under the ISDEAA.
    Payment rates for inpatient and outpatient medical care furnished 
by the IHS and tribal facilities is set annually by the IHS under the 
authority of sections 321(a) and 322(b) of the Public Health Service 
(PHS) Act (42 U.S.C. 248 and 249(b)), Pub. L. 83-568 (42 U.S.C. 
2001(a)), and the IHCIA, based on the previous year's cost reports from 
federal and tribal hospitals. The 1976 IHCIA provided the authority for 
CMS (then HCFA) to pay IHS for its hospital services to Medicare 
eligible patients, and in 1978 CMS agreed to use a Medicare all-
inclusive payment rate for IHS hospitals and IHS hospital-based 
clinics.
    There is an outpatient visit rate for Medicare visits in Alaska and 
an outpatient visit rate for Medicare visits in the lower 48 States. 
The Medicare outpatient rate is only applicable for those IHS or tribal 
facilities that meet the definition of a provider-based department as 
described at Sec.  413.65(a), or a ``grandfathered'' facility as 
described at Sec.  413.65(m). For CY 2015, the Medicare outpatient 
encounter rate is $564 for Alaska and $307 for the rest

[[Page 71090]]

of the country (80 FR 18639, April 7, 2015).
b. Provider-Based Entities and the ``Grandfathering'' Provision
    In 2000, we adopted regulations at Sec.  413.65 that established 
criteria for facilities to be considered provider-based to a hospital 
for Medicare payment purposes. The provider-based rules apply to 
facilities located both on and off the main hospital campus for which 
provider-based status is sought.
    In the CY 2001 Hospital Outpatient PPS final rule with comment 
period (65 FR 18507), we addressed comments on the proposed provider-
based rules. In regard to IHS facilities, commenters expressed concern 
that the proposed rule would undermine the ISDEAA contracting and 
compacting relationships between the IHS and tribes because provider-
based clinics must be clinically and administratively integrated into 
the hospital, and a tribe that assumes the operation of a provider-
based clinic but not the operation of the hospital would not be able to 
meet this requirement. Commenters were also concerned that the proposed 
proximity requirements would threaten the status of many IHS and tribal 
facilities that frequently were located in distant remote areas.
    In response to these comments and the special provisions of law 
referenced above governing health care for IHS and the tribes, we 
recognized the special relationship between tribes and the United 
States government, and did not apply the general provider-based 
criteria to IHS and tribally-operated facilities. The regulations 
currently include a grandfathering provision at Sec.  413.65(m) for IHS 
and tribal facilities that were provider-based to a hospital on or 
prior to April 7, 2000. This section states that facilities and 
organizations operated by the IHS or tribes will be considered to be 
departments of hospitals operated by the IHS or tribes if, on or before 
April 7, 2000, they furnished only services that were billed as if they 
had been furnished by a department of a hospital operated by the IHS or 
a tribe and they are:
     Owned and operated by the IHS;
     Owned by the tribe but leased from the tribe by the IHS 
under the ISDEAA in accordance with applicable regulations and policies 
of the IHS in consultation with tribes; or
     Owned by the IHS but leased and operated by the tribe 
under the ISDEAA in accordance with applicable regulations and policies 
of the IHS in consultation with tribes.
    Under the authority of the ISDEAA, a tribe may assume control of an 
IHS hospital and the provider-based clinics affiliated with the 
hospital, or may only assume responsibility of the provider-based 
clinic. On August 11, 2003, we issued a letter to Trailblazer Health 
Enterprises, LLC, stating that changes in the status of a hospital or 
facility from IHS to tribal operation, or vice versa, or the 
realignment of a facility from one IHS or tribal hospital to another 
IHS or tribal hospital, would not affect the facility's grandfathered 
status if the resulting configuration is one which would have qualified 
for grandfathering under Sec.  413.65(m) if it had been in effect on 
April 7, 2000.
    However, the Medicare Conditions of Participation (CoPs) for 
Medicare-participating hospitals at Sec.  482.12 require administrative 
and clinical integration between a hospital and its provider-based 
clinics, departments, and locations. A tribal clinic billing under an 
IHS hospital's CMS Certification Number (CCN), without any additional 
administrative or clinical relationship with the IHS hospital, could 
put that hospital at risk for non-compliance with the CoPs.
    Consequently, it became apparent that a different structure was 
needed to maintain access to care for AI/AN populations served by these 
hospitals and clinics, while also ensuring that these facilities are in 
compliance with our health and safety rules. We believed that the FQHC 
program may provide an alternative structure that met the needs of 
these tribal clinics and the populations they served, while also 
ensuring the IHS hospitals were not at risk of being cited for non-
compliance with the requirements in their CoPs.
c. Federally Qualified Health Centers (FQHCs)
    FQHCs were established in 1990 by section 4161 of the Omnibus 
Budget Reconciliation Act of 1990 (Pub. L. 101-508, enacted on November 
5, 1990) (OBRA 90), and were effective beginning on October 1, 1991. 
They are facilities that furnish services that are typically furnished 
in an outpatient clinic setting.
    The statutory requirements that FQHCs must meet to qualify for the 
Medicare benefit are in section 1861(aa)(4) of the Act. All FQHCs are 
subject to Medicare regulations at 42 CFR part 405, subpart X, and 42 
CFR part 491. Based on these provisions, the following three types of 
organizations that are eligible to enroll in Medicare as FQHCs:
     Health Center Program grantees: Organizations receiving 
grants under section 330 of the PHS Act (42 U.S.C. 254b).
     Health Center Program ``look-alikes'': Organizations that 
have been identified by the Health Resources and Services 
Administration as meeting the requirements to receive a grant under 
section 330 of the PHS Act, but which do not receive section 330 grant 
funding.
     Outpatient health programs or facilities operated by a 
tribe or tribal organization under the ISDEAA, or by an urban Indian 
organization receiving funds under Title V of the IHCIA.
    FQHCs are also entities that were treated by the Secretary for 
purposes of Medicare Part B as a comprehensive federally funded health 
center as of January 1, 1990 (see section 1861(aa)(4)(C) of the Act).
    Section 1834 of the Act was amended by section 10501(i)(3)(A) of 
the Affordable Care Act by adding a new subsection (o), ``Development 
and Implementation of Prospective Payment System'' for FQHCs. Section 
1834(o)(1)(A) of the Act requires that the system include a process for 
appropriately describing the services furnished by FQHCs, and establish 
payment rates based on such descriptions of services, taking into 
account the type, intensity, and duration of services furnished by 
FQHCs. It also stated that the new system may include adjustments (such 
as geographic adjustments) as determined appropriate by the Secretary. 
Section 1833(a)(1)(Z), as added by the Affordable Care Act, requires 
that Medicare payment for FQHC services under section 1834(o) of the 
Act be 80 percent of the lesser of the actual charge or the PPS amount 
determined under section 1834(o) of the Act.
    In accordance with the requirements in the statute, as amended by 
the Affordable Care Act, beginning on October 1, 2014, payment to FQHCs 
is based on the lesser of the national encounter-based FQHC PPS rate, 
or the FQHC's total charges, for primary health services and qualified 
preventive health services furnished to Medicare beneficiaries. The 
FQHC PPS rate is adjusted by the FQHC geographic adjustment factor 
(GAF), which is based on the Geographic Practice Cost Index used under 
the PFS. The FQHC PPS rate is also adjusted when the FQHC furnishes 
services to a patient that is new to the FQHC, and when the FQHC 
furnishes an IPPE or an AWV. The FQHC PPS base rate for the period from 
October 1, 2014, to December 31, 2015 is $158.85. The rate will be 
adjusted in CY 2016 by the MEI, as defined at section 1842(i)(3) of the 
Act, and subsequently by either the MEI or a

[[Page 71091]]

FQHC market basket (which would be determined under CMS regulations).
    To assure that FQHCs receive appropriate payment for services 
furnished, we established a new set of five HCPCS G-codes for FQHCs to 
report Medicare visits. These G-codes include all the services in a 
typical bundle of services that would be furnished per diem to a 
Medicare patient at the FQHC. The five FQHC G-codes are:
     G0466-FQHC visit, new patient.
     G0467-FQHC visit, established patient.
     G0468-FQHC visit, IPPE or AWV.
     G0469-FQHC visit, mental health, new patient.
     G0470-FQHC visit, mental health, established patient.
    FQHCs establish charges for the services they furnish to FQHC 
patients, including Medicare beneficiaries, and charges must be uniform 
for all patients, regardless of insurance status. The FQHC would 
determine the services that are included in each of the 5 FQHC G-codes, 
and the sum of the charges for each of the services associated with the 
G-code would be the G-code payment amount. Payment to the FQHC for a 
Medicare visit is the lesser of the FQHC's charges (as established by 
the G-code), or the PPS rate.
2. Payment Methodology and Requirements
    We proposed that IHS and tribal facilities and organizations that 
met the conditions of Sec.  413.65(m) on or before April 7, 2000, and 
have a change in their status on or after April 7, 2000 from IHS to 
tribal operation, or vice versa, or the realignment of a facility from 
one IHS or tribal hospital to another IHS or tribal hospital such that 
the organization no longer meets the CoPs, may seek to become certified 
as grandfathered tribal FQHCs. To help avoid any confusion, we referred 
to these tribal FQHCs as ``grandfathered tribal FQHCs'' to distinguish 
them from freestanding tribal FQHCs that are currently being paid the 
lesser of their charges or the adjusted national FQHC PPS rate of 
$158.85, and from provider-based tribal clinics that may have begun 
operations subsequent to April 7, 2000.
    Under the authority in 1834(o) of the Affordable Care Act to 
include adjustments determined appropriate by the Secretary, we 
proposed that these grandfathered tribal FQHCs be paid the lesser of 
their charges or a grandfathered tribal FQHC PPS rate of $307, which 
equals the Medicare outpatient per visit payment rate paid to them as a 
provider-based department, as set annually by the IHS, rather than the 
FQHC PPS per visit base rate of $158.85, and that coinsurance would be 
20 percent of the lesser of the actual charge or the grandfathered 
tribal FQHC PPS rate. These grandfathered tribal FQHCs would be 
required to meet all FQHC certification and payment requirements. This 
FQHC PPS adjustment for grandfathered tribal clinics would not apply to 
a currently certified tribal FQHC, a tribal clinic that was not 
provider-based as of April 7, 2000, or an IHS-operated clinic that is 
no longer provider-based to a tribally operated hospital. This 
provision would also not apply in those instances where both the 
hospital and its provider-based clinic(s) are operated by the tribe or 
tribal organization.
    Since we proposed that these grandfathered tribal FQHCs would be 
paid based on the IHS payment rates and not the FQHC PPS payment rates, 
we also proposed that the payment rate would not be adjusted by the 
FQHC PPS GAF, or be eligible for the special payment adjustments under 
the FQHC PPS for new patients, patients receiving an IPPE or an AWV. 
They would also not be eligible for the exceptions to the single per 
diem payment that is available to FQHCs paid under the FQHC PPS. As the 
IHS outpatient rate for Medicare is set annually, we also proposed not 
to apply the MEI or a FQHC market basket adjustment that is applied 
annually to the FQHC PPS base rate. We proposed that these adjustments 
not be applied because we believe that the special status of these 
grandfathered tribal clinics, and the enhanced payment they would 
receive under the FQHC PPS system, would make further adjustments 
unnecessary and/or duplicative of adjustments already made by IHS in 
deriving the rate. We will monitor future costs and claims data of 
these tribal clinics and reconsider options as appropriate.
    Grandfathered tribal FQHCs would be paid for services included in 
the FQHC benefit, even if those services are not included in the IHS 
Medicare outpatient all-inclusive rate. Services that are included in 
the IHS outpatient all-inclusive rate but not in the FQHC benefit would 
not be paid. Information on the FQHC benefit is available in Chapter 13 
of the Medicare Benefit Policy Manual. Grandfathered tribal FQHCs will 
be subject to Medicare regulations at part 405, subpart X, and part 
491, except as noted in section III.D.2. of this final rule with 
comment period. Therefore, we proposed to revise Sec.  405.2462, Sec.  
405.2463, Sec.  405.2464, and Sec.  405.2469 to specify the 
requirements for payment as a grandfathered tribal FQHC, and to specify 
payment provisions, adjustments, rates, and other requirements for 
grandfathered tribal FQHCs.
3. Transition
    To become certified as a FQHC, an eligible tribe or tribal 
organization must submit a Form 855A and all required accompanied 
documentation, including an attestation of compliance with the Medicare 
FQHC Conditions for Coverage at part 491, to the Jurisdiction H 
Medicare Administrative Contractor (A/B MAC). After reviewing the 
application and determining that it was complete and approvable, the 
MAC would forward the application with its recommendation for approval 
to the CMS Regional Office (RO) that has responsibility for the 
geographic area in which the tribal clinic is located. The RO would 
issue a Medicare FQHC participation agreement to the tribal FQHC, 
including a CCN, and would advise the MAC of the CCN number, to 
facilitate the MAC's processing of FQHC claims submitted by the tribal 
FQHC. Payment to grandfathered tribal FQHCs would begin on the first 
day of the month in the first quarter of the year subsequent to receipt 
of a Medicare CCN.
4. Conforming Changes
    In addition, to the changes proposed in Sec.  405.2462, Sec.  
405.2463, Sec.  405.2464, and Sec.  405.2469, we proposed to remove 
obsolete language from Sec.  405.2410 regarding FQHCs that bill on the 
basis of the reasonable cost system, add a section heading to Sec.  
405.2415, and remove obsolete language from Sec.  405.2448 regarding 
employment requirements.
    We invited public comments on all aspects of our proposal to allow 
IHS and tribal facilities and organizations that met the conditions of 
Sec.  413.65(m) on or before April 7, 2000, and have a change in their 
status on or after April 7, 2000 from IHS to tribal operation, or vice 
versa, or the realignment of a facility from one IHS or tribal hospital 
to another IHS or tribal hospital such that the organization no longer 
meets the CoPs, to become certified as grandfathered tribal FQHCs.
    We received comments on this proposal from the Alaska Native Health 
Board, Alaska Native Tribal Health Consortium, Citizen Potawatomi 
Nation, Southern Ute Indian Tribe, Southcentral Foundation, and the 
Tribal Technical Advisory Group (TTAG). All the commenters were 
strongly opposed to the proposal and requested that it be either 
withdrawn or revised.
    The following is a summary of the comments we received and our 
responses.

[[Page 71092]]

    Comment: Commenters questioned the necessity of changing the 
payment system for grandfathered tribal outpatient clinics that are no 
longer provider-based to a hospital, and cited our history of 
interpreting and applying the provider-based regulations in a manner 
which granted provider-based status to these clinics even though they 
do not meet the provider-based requirements.
    Response: In the proposed rule, we stated several reasons for 
proposing that these grandfathered tribal outpatient clinics transition 
to grandfathered tribal FQHC status. First, a grandfathered tribal 
outpatient clinic billing under an IHS hospital's CCN, without any 
administrative or clinical relationship with the IHS hospital, violates 
our hospital CoPs, which as noted, requires a hospital to function as 
one integrated entity, no matter how many off campus locations it may 
have. This would include having one governing body, one organized 
medical staff, one organized nursing department, one quality assessment 
and improvement program, and so forth. Non-compliance with any CoP 
requirement is cited as non-compliance for the entire hospital (Sec.  
482.12). Serious noncompliance in any part of the hospital puts the 
entire hospital at risk for termination of its Medicare agreement, 
which would impact not just the hospital, but also the community it 
serves.
    Second, a hospital may be legally liable for actions that occur by 
any part of their organization, which would include a clinic that is 
billing for Medicare services under the hospital's CCN, even if the 
hospital exercises no control over the clinic. We believe this puts a 
hospital in the untenable position of being legally responsible for 
actions over which it has no control.
    Finally, under the current practice, grandfathered tribal 
outpatient clinics receive Medicare payment for services to Medicare 
beneficiaries and are subject to the hospital's CoPs. The Medicare CoPs 
are sets of requirements for acceptable quality in the operation of 
health care entities that must be met in order to bill Medicare, and an 
entity cannot participate in Medicare unless it meets every Condition. 
Because the facility would no longer be associated with a hospital, we 
believe that the FQHC CoPs would be an appropriate standard that all of 
these clinics would be able to meet.
    For these reasons, we believe it is prudent for grandfathered 
tribal outpatient clinics to be directly responsible for their 
operations and held to Medicare CoPs that are reasonable and 
achievable, and that the option to become grandfathered tribal FQHCs 
will achieve these goals.
    Comment: Commenters stated that provider-based status is already 
guaranteed under existing law and does not jeopardize the Medicare 
certification of IHS hospitals.
    Response: As discussed in the previous response, a hospital that is 
not in compliance with its Medicare hospital CoPs is at risk for 
termination of its Medicare certification. The CoPs at Sec.  482.12 and 
Sec.  485.627, as applicable, require that each hospital have a 
governing body legally responsible for its operations, and do not 
provide an exception where a tribal clinic is billing as an outpatient 
department of the hospital but otherwise has no clinical or 
administrative relationship with that hospital. As we discussed in the 
proposed rule, a letter was issued to Trailblazer Health Enterprises, 
LLC, on August 11, 2003, stating that changes in the status of a 
hospital or facility from IHS to tribal operation, or vice versa, or 
the realignment of a facility from one IHS or tribal hospital to 
another IHS or tribal hospital, would not affect the facility's 
grandfathered status if the resulting configuration is one which would 
have qualified for grandfathering under Sec.  413.65(m) if it had been 
in effect on April 7, 2000. This letter has been interpreted by some as 
the basis for allowing tribal clinics that no longer meet the provider-
based requirements to maintain their provider-based status and continue 
to be paid as an outpatient department of a hospital. We would note 
that although this letter acknowledged the continued provider-based 
status of some tribal clinics, no statute guarantees provider-based 
status to outpatient departments of hospitals that have changed their 
status such that they are no longer integrated with the hospital under 
whose Medicare CCN they are billing.
    Comment: Commenters stated although they believe no clarification 
is needed, CMS could amend the regulations to state that (1) IHS and 
tribal facilities qualify for grandfathered provider-based status 
solely by virtue of satisfying Sec.  413.65(m) and that (2) changes in 
the IHS or tribal status of a hospital or facility's operation will not 
lead to the loss of provider-based status, or jeopardize the associated 
hospital's Medicare certification, if the resulting configuration would 
have qualified as a grandfathered provider-based tribal facility as of 
April 7, 2000. Alternately, CMS could reaffirm its longstanding reading 
of the regulations as stated in the preamble to the CY 2000 PFS final 
rule.
    Response: We appreciate the suggestion, but neither of these 
approaches would relieve the hospital from liability for CoP violations 
found in a grandfathered tribal provider-based clinic using the 
hospital's CCN, or, in the alternative, address the lack of applicable 
CoPs for tribal clinics claiming to operate as outpatient departments 
of a hospital with which they do not otherwise have an administrative 
or clinical relationship.
    Comment: Commenters requested that CMS withdraw the proposed rule, 
or make the grandfathered tribal FQHC status optional for eligible 
tribal facilities and allow them time to compare the alternatives and 
make an informed choice.
    Response: We stated in the proposal that IHS and tribal facilities 
and organizations that met the conditions of Sec.  413.65(m) on or 
before April 7, 2000, and have a change in their status on or after 
April 7, 2000, from IHS to tribal operation, or vice versa, or the 
realignment of a facility from one IHS or tribal hospital to another 
IHS or tribal hospital such that the organization no longer meets the 
CoPs, may seek to become certified as grandfathered tribal FQHCs. 
Although we would encourage all facilities that qualify for this status 
to become certified as grandfathered tribal FQHCs as soon as possible, 
they are not required to do so. We do, note, however, that CMS has an 
obligation to enforce compliance with the hospital CoPs at Sec.  
482.12. Thus, if CMS were to survey a hospital, and find Medicare being 
billed for hospital outpatient services by a provider-based department 
that was not in compliance with the hospital CoPs, the hospital would 
have to submit an acceptable plan of correction consistent with 
provisions of Sec.  488.28 and demonstrate compliance via an on-site 
survey or risk termination of its Medicare certification. Such an 
action could potentially lead to an interruption in Medicare Part B 
payments for the tribal facility. It is for this reason that we would 
encourage all facilities that meet the requirements to be grandfathered 
tribal FQHCs to transition to this status at the soonest possible time.
    Comment: Commenters stated that the proposed change would disrupt 
operations at the affected tribal facilities and potentially disqualify 
them from receiving any Medicare payments between the time they lose 
their grandfathered provider-based status and the time they qualify for 
the grandfathered tribal FQHC certification. Commenters stated that CMS 
has not indicated when a currently grandfathered tribal provider-based

[[Page 71093]]

clinic will be deemed to lose that status, or how they should bill and 
be paid during the interim period between submitting the Form 855A and 
ultimately receiving their first payment as a grandfathered tribal 
FQHC.
    Response: We recognize that any change, especially one as 
significant as a change in a payment system, can be disruptive. We have 
taken numerous steps to assure that there would be no gap in Medicare 
payments between the time that one of these clinics ceases billing as a 
grandfathered tribal outpatient clinic and begins billing as a 
grandfathered tribal FQHC. We contacted the tribal clinics that would 
be eligible for grandfathered tribal FQHC certification and held 
several training calls to explain the proposed changes. We pledged to 
work closely with the tribes and affected clinics throughout the 
process to assure that the transition proceeds as smoothly as possible. 
We also note that other clinics have gone through similar transitions 
in payment systems, and we expect that this one would also be 
implemented with minimum disruption.
    Comment: Commenters expressed concern regarding tribal preparedness 
to transition to a new payment system and the lack of technical 
assistance to date. The commenters noted that tribal facilities are 
unfamiliar with the FQHC rules and are apprehensive about what this 
change will entail in terms of reimbursement rates and covered 
services, as well as the legal and technical costs associated with the 
transition. Commenters stated that the lack of technical assistance 
will discourage tribes from transitioning to grandfathered tribal FQHC 
status. The commenters requested that CMS provide extensive and ongoing 
technical assistance to facilitate this transition, including practical 
training for tribal billing offices and financial officers and 
associated legal analysis for tribal attorneys and technical advisors. 
Commenters also requested a ``reasonable transition period'' and a 
``generous grace period'' for any facility that must change to 
grandfathered tribal FQHC status, and suggested that these clinics be 
allowed twelve months before they are required to submit an application 
to become a grandfathered tribal FQHC.
    Response: We understand the apprehension associated with changes 
that may impact the financial operations of a clinic. Following the 
issuance of the CY 2016 PFS proposed rule, we held several public calls 
to further explain the grandfathered tribal FQHC proposal. An ``All 
Tribes Call'' was held on July 29, 2015, to review the proposed rule, 
including eligibility, certification and billing requirements, and 
transitioning to the new system for grandfathered tribal FQHCs. This 
was followed by an August 12, 2015, call with the Northeast Tribal 
Health Consortium, and an August 26, 2015, call with the Osage Nation, 
and a call on September 30 with the Southern Ute and Alaska tribes. 
Members of and advisors to the TTAG also participated on all of these 
calls. A slide presentation was provided to outline key components of 
the proposed rule and we were available to answer any questions. During 
these calls, we reaffirmed our commitment to assisting these clinics in 
the transition and providing technical assistance as appropriate and 
necessary.
    We also held calls with the CMS Regional Office Survey and 
Certification staff in the regions that have clinics eligible for this 
transition, and with the MAC responsible for the processing of claims 
and payment to these clinics, to ensure that they are aware of the 
proposal and are prepared to assist clinics as necessary in the 
transition. Subregulatory guidance on payment policies and claims 
processing will be available following publication of the final rule 
with comment period.
    We intend to continue to provide technical assistance to affected 
clinics to facilitate the transition to grandfathered tribal FQHC, but 
we cannot provide training for financial officers or legal analysis.
    Comment: Commenters were concerned that once a clinic self-attests 
or is informed by CMS that it no longer satisfies grandfathered 
provider-based tribal clinic status, it would not be able to bill 
Medicare at all until the clinic receives its Medicare CCN as new 
grandfathered tribal FQHC. Commenters also requested assurance that 
Medicare payments made to a grandfathered provider-based tribal clinic 
for services it provides between the date CMS determines it has lost 
provider-based status, and the date it begins billing as a 
grandfathered tribal FQHC, will not be treated as overpayments.
    Response: We will assist eligible tribal outpatient departments 
with the transition to status as grandfathered tribal FQHCs so that 
there will be no overlap or gap in Medicare certification or payment. 
Further instructions on billing and claims processing will be provided 
in subregulatory guidance.
    Comment: Commenters stated that the proposed change would 
dramatically lower their reimbursement rates.
    Response: We respectfully disagree with this comment. We proposed 
to set the grandfathered tribal FQHC PPS rate at the same rate that the 
clinics are currently billing as grandfathered tribal outpatient 
clinics, subject to the FQHC PPS statutory requirement of paying 80 
percent of the lesser of actual charges or the PPS rate. We note that 
this rate is significantly higher than the FQHC PPS rate and higher 
than payments made under the PFS. Although we have designed the 
proposal such that it continues to pay the same rate per encounter, we 
also note that services covered under the FQHC benefit differ from 
those covered under the hospital outpatient benefit, so an exact 
comparison is not possible. For example, the IHS hospital outpatient 
department's AIR includes technical services such as lab and X-rays. 
Under the FQHC PPS, these services are separately billable by the 
facility. The FQHC's per-diem payment includes practitioner services, 
and these services are separately billable under the IHS hospital 
outpatient department's AIR. The final payment under both systems is a 
result of the clinic's charges and the mix of services that are 
furnished by the particular clinic. Both IHS hospital outpatient 
departments and grandfathered tribal FQHCs are paid a single per diem 
visit for Medicare beneficiaries.
    Comment: Commenters stated that grandfathered tribal FQHCs would 
see a reduction in their Medicare reimbursement because they would be 
paid ``the lesser of'' their charges or the grandfathered tribal FQHC 
PPS rate, and because the FQHC PPS rates include the professional 
services for which provider-based tribal facilities receive separate 
reimbursement in addition to their Medicare outpatient per-visit 
payment. Commenters stated that the grandfathered tribal FQHC will only 
be paid at the IHS hospital outpatient department's AIR if the G-code-
based charges are higher than the AIR, and that this will result in a 
cap on their payment instead of a floor or a guarantee, as it is under 
the provider-based payment methodology. The commenters also stated that 
the proposed payment methodology will result in lost revenue for 
facilities assumed by tribes under the ISDEAA and would hamper the 
financial feasibility of tribes assuming the responsibility to carry 
out IHS programs. The commenters believe that this would contradict 
congressional intent to encourage self-determination and self-
governance by tribes through the exercise of their rights under the 
ISDEAA.
    Response: Grandfathered tribal FQHCs, like all FQHCs, would be paid 
the lesser of their charges or the grandfathered tribal FQHC PPS rate.

[[Page 71094]]

This is in accordance with section 1833(a)(1)(Z) of the Affordable Care 
Act, which requires that Medicare payment for FQHC services under 
section 1834(o) of the Act shall be 80 percent of the lesser of the 
actual charge or the PPS amount determined under section 1834(o) of the 
Act.
    As noted in the previous response, the services included in the 
FQHC benefit are different than the services included in the IHS 
hospital outpatient department AIR, and a direct comparison in Medicare 
payments cannot be made without factoring in the clinic's charges and 
the mix of services that are furnished. We have no reason to believe 
that there will be a significant increase or decrease in Medicare 
payments to those clinics that become grandfathered tribal FQHCs.
    We fully support the rights of tribes to take over IHS facilities 
under the ISDEAA, and believe that the proposed payment system will 
enable tribes to continue to exercise self-determination and self-
governance of their health care services. These clinics currently have 
the option of billing for Medicare services as a standard FQHC which 
has a 2015 PPS payment rate of $158.85, or billing for Medicare 
services separately under the PFS. We believe the proposed 
grandfathered tribal FQHC PPS rate, with an adjusted 2015 PPS rate of 
$307, will enable these clinics to provide Medicare services and bill 
at approximately the same rate.
    Comment: Commenters stated that the proposed G code system is 
vague, and that little guidance has been provided as to how tribal 
health programs should go about determining the charge levels for their 
G codes. The commenters cited a July 29, 2015 ``All Tribes Call'' where 
CMS explained that charges must be ``reasonable'' and ``uniform for all 
patients, regardless of insurance status.'' The commenters stated that 
what constitutes a ``reasonable medical charge'' is highly context-
specific, and usually includes some combination of analyzing the 
relevant market for hospital services, the usual and customary rate the 
hospital charges, the hospital's internal cost structure, the nature of 
the services provided, the average payment the provider would have 
accepted as full payment from third-parties, and the price an average 
patient would agree to pay for the service at issue. Commenters stated 
that it would be difficult for tribal facilities to know whether or not 
they are devising charge rates that would withstand judicial scrutiny 
if challenged as unreasonable, that tribes will have to devote 
additional time, resources, and legal analysis to devising G codes, and 
the G codes will likely vary from tribe to tribe for providing 
identical services to the same patient population. Commenters requested 
consultation to develop uniform standards as to what constitutes 
reasonable charges for the purposes of grandfathered tribal FQHC 
payments. The commenters also noted their preference to eliminate the 
charge-based ``lesser of'' G-code standard and instead authorize 
grandfathered tribal FQHCs to be paid as if they were provider-based 
outpatient hospital departments.
    Response: Eliminating the charge-based ``lesser of'' G-code 
standard and instead authorizing grandfathered tribal FQHCs to bill as 
if they were provider-based hospital outpatient departments is not 
legally permissible. As previously noted, section 1833(a)(1)(Z) of the 
Affordable Care Act requires that Medicare payment for FQHC services 
under section 1834(o) of the Act shall be 80 percent of the lesser of 
the actual charge or the PPS amount determined under section 1834(o) of 
the Act.
    As discussed in the proposed rule, there are five FQHC G codes 
(G0466-FQHC visit, new patient; G0467-FQHC visit, established patient; 
G0468-FQHC visit, IPPE or AWV; G0469-FQHC visit, mental health, new 
patient, and G0470-FQHC visit, mental health, established patient). 
Each grandfathered tribal FQHC would determine which services to 
include in each G code, based on the services typically furnished per 
diem by that grandfathered tribal FQHC to their Medicare patients. Once 
the typical bundle of services in each G code is established, the 
grandfathered tribal FQHC would total their normal charges for those 
services. The sum of the charges for the services included in the 
bundle of services is the G code amount. Since grandfathered tribal 
outpatient clinics already have established charges for their services, 
it should not be difficult for them to establish their G codes.
    Consistent with longstanding policy, the use of these payment codes 
does not dictate to providers how to set their charges. A grandfathered 
tribal FQHC would set the charge for a specific payment code pursuant 
to its own determination of what would be appropriate for the services 
normally provided and the population served at that grandfathered 
tribal FQHC, based on the description of services associated with the G 
code. The charge for a specific payment code would reflect the sum of 
regular rates charged to both beneficiaries and other paying patients 
for a typical bundle of services that would be furnished per diem to a 
Medicare beneficiary.
    In setting its charges, a grandfathered tribal FQHC would have to 
comply with established cost reporting rules in Sec.  413.53 which 
specify that charges must reflect the regular rates for various 
services that are charged to both beneficiaries and other paying 
patients who receive the services. Each grandfathered tribal FQHC would 
establish charges for Medicare visits that reflect the sum of regular 
rates charged to both beneficiaries and other paying patients for a 
typical bundle of services that the FQHC would furnish per diem to a 
Medicare beneficiary. We note that establishing Medicare per diem rates 
that are substantially in excess of the usual rates charged to other 
paying patients for a similar bundle of services could be subject to 
section 1128(b)(6) of the Act, as codified at 42 CFR 1001.701.
    Comment: Commenters objected to withdrawing grandfathered provider-
based status for certain tribal facilities and replacing it with a new 
status that is untested and poorly understood and may not fit their 
administrative and clinical operations.
    Response: FQHCs began transitioning from an AIR payment system to 
the FQHC PPS on October 1, 2014. The system was thoroughly tested prior 
to implementation, and FQHCs have been submitting claims and receiving 
payment under this system without disruption. The proposed 
grandfathered tribal FQHC payment is an adjustment under the FQHC PPS 
to maintain the same payment rate that these clinics previously billed 
Medicare. Therefore, we do not agree that the system is untested or 
poorly understood, although we understand that it would be new for 
those clinics that choose to transition to become grandfathered tribal 
FQHCs. We created this option because we believe that the FQHC model 
most closely aligns with the operations of tribal outpatient clinics, 
and being included in this benefit category would enable these tribal 
clinics to continue their services and meet the Medicare CoPs.
    Comment: Commenters requested that CMS extend grandfathered 
provider-based status to certain tribal facilities in Oklahoma, and 
perhaps other locations, which were denied that status because of 
errors committed by federal agencies.
    Response: This comment is beyond the scope of this rule.
    Comment: Commenters stated that the proposed rule is unclear 
whether Alaska clinics that become grandfathered tribal FQHCs would be 
paid at the $564 Alaska Medicare outpatient rate, or at the $307 rate 
that applies in the lower 48 states, and stated that if the proposal is 
finalized, Alaska facilities should be paid at the higher Medicare 
outpatient

[[Page 71095]]

hospital rate that reflects their higher cost of services.
    Response: At this time, it is our understanding that there are no 
IHS or tribal facilities in Alaska that are eligible to become 
grandfathered tribal FQHCs. However, it is our intention that the 
reference to the payment rate in Sec.  405.2462(d)(4) would include the 
rates specific to facilities in Alaska pursuant to the IHS 
reimbursement rates. In the event that any Alaska facilities are 
eligible and convert to a grandfathered tribal FQHC, the specific rates 
for facilities in Alaska would apply.
    Comment: Some commenters were concerned that CMS might propose 
further reimbursement reductions for these clinics because the proposed 
rule states that CMS ``will monitor future costs and claims data of 
these tribal clinics and reconsider options as appropriate.''
    Response: We have a responsibility to assure that Medicare Trust 
funds are utilized in accordance with Congressional intent and make 
adjustments to payments as necessary. Any changes to the payment 
methodology would be made through notice and rulemaking and with 
appropriate tribal consultation.
    Comment: A commenter was concerned that the proposed regulation may 
impose more stringent physician supervision requirements than those 
that apply to provider-based clinics under the Medicare Part A and B 
rules and that it may be difficult or impossible for some affected 
clinics to meet these more stringent requirements, particularly those 
in remote locations where there are few or no physicians and services 
are provided primarily by mid-level practitioners or through the use of 
telemedicine. The commenter requested that grandfathered tribal FQHCs 
be exempt from physician supervision and other clinical requirements 
that are more stringent than those that apply to grandfathered 
provider-based programs.
    Response: Grandfathered tribal outpatient clinics that choose to 
transition to become a grandfathered tribal FQHC will be required to be 
in compliance with the Medicare CoPs and other Medicare FQHC 
requirements and policies, unless such provisions are in conflict with 
applicable Federal law. Medicare requires most hospital outpatient 
services to be furnished under direct supervision as a condition of 
payment, including services furnished in a location that is a provider-
based department of the hospital. FQHC practitioners practice under 
general supervision requirements and in accordance with state licensure 
requirements. However, state-specific licensure requirements are 
exempted for IHS and tribal programs under section 25 U.S.C. 1647a of 
the IHCIA. General supervision means the procedure is furnished under 
the physician's overall direction and control, but the physician's 
presence is not required during the furnishing of the service. We also 
note that the FQHC conditions for coverage generally impose 
significantly fewer regulatory burdens on facilities than the hospital 
CoPs that would otherwise apply.
    Further instructions on Medicare CoPs for participation for 
grandfathered tribal outpatient clinics will be provided in 
subregulatory guidance.
    Comment: A commenter requested confirmation that the governing 
board exception for tribes under section 330 of the PHS Act (42 U.S.C. 
254b) would apply to grandfathered tribal FQHCs.
    Response: We believe that the commenter is referring to section 
330(k)(3)(H) of the PHS Act, and specifically to the exception to the 
requirements in section 330(k)(3)(H)(i)-(iii) of the PHS Act for 
entities operated by an Indian tribe or tribal or Indian organization 
under the ISDEAA or an urban Indian organization under the IHCIA. A 
grandfathered tribal FQHC that is operated by one of the aforementioned 
entities would not be required to meet the governing board requirements 
in section 330(k)(3)(H) of the PHS Act. The governing board exemption 
would not apply to an IHS clinic operating as a FQHC look-alike that 
meets the requirements for a grandfathered tribal FQHC.
    Comment: Commenters expressed disappointment with the extent and 
quality of tribal consultation that has occurred and believe that CMS 
should have consulted with the TTAG prior to issuing the proposed rule. 
The commenters referenced a letter sent to CMS on July 9, 2015, in 
response to a request for more information regarding the grandfathered 
provider-based status of tribal clinics and why their associated 
hospitals maintain Medicare certification absent administrative or 
clinical integration. Commenters stated that they expected CMS to study 
the letter and give it due consideration before issuing a proposed 
rule, but CMS released the proposed rule without prior tribal 
consultation or consideration of the TTAG's analysis, despite their 
request for further discussion prior to any action.
    Response: On February 18, 2015, CMS representatives met with the 
TTAG to discuss the concerns regarding outpatient tribal clinics 
billing Medicare as provider-based clinics to IHS hospitals. In 
response to comments made during the discussion, we requested that the 
TTAG send additional information that explains the TTAG's understanding 
of the provider-based rules and how they apply to these clinics.
    We appreciate the detailed and thoughtful information that was 
provided by the TTAG in their July 9, 2015 letter. We regret that the 
letter was not provided in time to be addressed in the CY 2016 PFS 
proposed rule that was issued on July 8, 2015.
    Comment: Commenters stated that CMS should have consulted with the 
TTAG and tribes nationwide prior to issuing the proposed rule. 
Commenters requested that CMS withdraw the proposal and engage in 
further tribal consultation before releasing a proposal. The commenters 
requested that CMS consult with the TTAG and other tribal stakeholders 
in the future before issuing proposed changes to regulations that 
affect tribes.
    Response: We have a long history of tribal consultation on issues 
pertaining to tribes, and the discussions that have occurred have had a 
significant and beneficial influence on our policies. We believe that 
the tribal consultation that occurred prior to the publication of the 
proposed rule was both adequate and informative. We are subject to the 
provisions of the Administrative Procedure Act (APA) (5 U.S.C.), and 
external discussions on the development of proposed rules are limited 
during the regulatory process. We met with the TTAG before developing 
the proposed rule, and have had several national calls (as noted above) 
since the proposed rule became public. We look forward to continuing 
our dialogue with the TTAG and the tribes regarding this and any other 
Medicare issue that affects tribes.
    Comment: Commenters requested the formation of a Tribal-CMS 
provider-based status workgroup prior to CMS issuing a final rule, as 
well as nationwide tribal consultation concerning CMS's interpretation 
of the proposed rule and applicable requirements. The commenters stated 
that consultation must go beyond providing comments on a proposed rule.
    Response: Formation of a Tribal-CMS workgroup is not in the purview 
of this final rule. We suggest that the commenters make this request 
through the CMS Division of Tribal Affairs. As noted above, the process 
for regulatory notice and comment is in accordance with the APA.
    Comment: Commenters requested that the proposed revisions at Sec.  
405.2462(d)(1)(ii) that defines a

[[Page 71096]]

grandfathered tribal FQHC be revised to ensure that grandfathered 
provider-based tribal facilities qualify for the new tribal FQHC status 
so long as they fulfilled the applicable grandfathering requirements as 
of the relevant date.
    They also suggested that because eligibility for becoming a 
grandfathered tribal FQHC applies to clinics that had provider-based 
status on or before April 7, 2000, tribal clinics that were provider-
based before but not on April 7, 2000, should be eligible for 
grandfathered tribal FQHC status.
    Response: The proposed rule stated that grandfathered tribal FQHC 
status would not apply to a currently certified tribal FQHC, a tribal 
clinic that was not provider-based on or before April 7, 2000, or an 
IHS-operated clinic that is no longer provider-based to a tribally 
operated hospital, and that this provision would also not apply in 
those instances where both the hospital and its provider-based 
clinic(s) are operated by the tribe or tribal organization. We believe 
the eligibility criteria are clear and no revisions are needed.
    As a result of the comments, we are finalizing this rule as 
proposed.

E. Part B Drugs

1. Payment for Biosimilar Biological Products Under Section 1847A of 
the Act
    Section 3139 of the Affordable Care Act amended section 1847A of 
the Act to define a biosimilar biological product and a reference 
biological product, and to provide for Medicare payment of biosimilar 
biological products using the average sale price (ASP) methodology.
    Section 1847A(c)(6)(H) of the Act, as added by section 3139 of the 
Affordable Care Act, defines a biosimilar biological product as a 
biological product approved under an abbreviated application for a 
license of a biological product that relies in part on data or 
information in an application for another biological product licensed 
under section 351 of the Public Health Service Act (PHSA). Section 
1847A(c)(6)(I) of the Act, also added by section 3139 of the Affordable 
Care Act, defines the reference biological product for a biosimilar 
biological product as the biological product licensed under such 
section 351 of the PHSA that is referred to in the application of the 
biosimilar biological product.
    Section 3139 of the Affordable Care Act also amended section 
1847A(b) of the Act by adding a new paragraph (8) to specify that the 
payment amount for a biosimilar biological product will be the sum of 
the following two amounts: (1) The ASP as determined using the 
methodology described under section 1847A(b)(6) of the Act applied to a 
biosimilar biological product for all National Drug Codes (NDCs) 
assigned to such product in the same manner as such paragraph is 
applied to drugs described in such paragraph; and (2) 6 percent of the 
payment amount determined using the methodology in section 1847A(b)(4) 
of the Act for the corresponding reference biological product. The 
effective date for section 3139 of the Affordable Care Act regarding 
payment for biosimilars under the ASP system was July 1, 2010. Separate 
sections of the Affordable Care Act also established a licensing 
pathway for biosimilar biological products.
    To implement these provisions, we published the CY 2011 PFS final 
rule with comment period (75 FR 73393 and 73394) in the November 29, 
2010 Federal Register. The relevant regulation text is found at Sec.  
414.902 and Sec.  414.904. At the time that the CY 2011 PFS final rule 
with comment period was published, it was not apparent when biosimilar 
products would be approved for marketing in the United States. The FDA 
approved the first biosimilar product under the new biosimilar approval 
pathway required by the Affordable Care Act on March 6, 2015.
    Since 2010, we have continued to monitor the implementation of the 
FDA biosimilar approval process and the emerging biosimilar 
marketplace. As biosimilars now begin to enter the marketplace, we have 
also reviewed the existing guidance on Medicare payment for these 
products. Our review has revealed a potential inconsistency between our 
interpretation of the statutory language at section 1847A(b)(8) of the 
Act and regulation text at Sec.  414.904(j). To make the regulation 
text more consistent with our interpretation of the statutory language, 
we proposed to amend Sec.  414.904(j) to make clear that the payment 
amount for a biosimilar biological product is based on the ASP of all 
NDCs assigned to the biosimilar biological products included within the 
same billing and payment code consistent with section 1847A(b)(8) of 
the Act), which directs the Secretary to use the weighted average 
payment methodology that is applied to drugs. We also proposed to amend 
Sec.  414.914(j) to update the effective date of this provision from 
July 1, 2010 to January 1, 2016, the anticipated effective date of the 
CY 2016 PFS final rule with comment period. We welcomed comments about 
these proposals.
    We also took this opportunity to discuss and clarify some other 
details of Part B biosimilar payment policy. First, we plan to use a 
single ASP payment limit for biosimilar products that are assigned to a 
specific HCPCS code. In general, this means that products that rely on 
a common reference product's biologics license application (BLA) will 
be grouped into the same payment calculation for determining the single 
ASP payment limit. This approach, which is similar to the ASP 
calculation for multiple source drugs, is authorized by section 
1847A(b)(8)(A) of the Act, which states that the payment for a 
biosimilar biological product is determined using the methodology in 
section 1847A(b)(6) of the Act applied to a biosimilar biological 
product for all NDCs assigned to such product in the same manner as 
such paragraph is applied to drugs described in such paragraph.
    Second, we described how payment for newly approved biosimilars 
will be determined. As we stated in the CY 2011 PFS final rule with 
comment period (75 FR 73393 and 73394), we anticipate that as 
subsequent biosimilar biological products are approved, we will receive 
manufacturers' ASP sales data through the ASP data submission process 
and publish national payment amounts in a manner that is consistent 
with our current approach to other drugs and biologicals that are paid 
under section 1847A of the Act and set forth in 42 CFR part 414, 
subpart J. Until we have collected sufficient sales data as reported by 
manufacturers, payment limits will be determined in accordance with the 
provisions in section 1847A(c)(4) of the Act. If no manufacturer data 
is collected, prices will be determined by local contractors using any 
available pricing information, including provider invoices. As with 
newly approved drugs and biologicals (including biosimilars), Medicare 
Part B payment would be available once the product is approved by the 
FDA. Payment for biosimilars (and other drugs and biologicals that are 
paid under Part B) may be made before a HCPCS code has been released, 
provided that the claim is reasonable and necessary, and meets 
applicable coverage and claims submission criteria.
    We also clarified how wholesale acquisition cost (WAC) data may be 
used by CMS for Medicare payment of biosimilars in accordance with the 
provisions in section 1847A(c)(4) of the Act. Section 1847A(c)(4) of 
the Act authorizes the use of a WAC-based payment amount in cases where 
the ASP during the first quarter of sales is not sufficiently available 
from the manufacturer to compute an ASP-based payment amount. Once the 
WAC data is available from the pharmaceutical

[[Page 71097]]

pricing compendia and when WAC-based payment amounts are utilized by 
CMS to determine the national payment limit for a biosimilar product, 
the payment limit will be 106 percent of the WAC of the biosimilar 
product; the reference biological product will not be factored into the 
WAC-based payment limit determination. This approach is consistent with 
partial quarter pricing that was discussed in rulemaking in the CY 2011 
PFS final rule with comment period (75 FR 73465 and 73466) and with 
statutory language at section 1847A(c)(4) of the Act. Once ASP 
information is available for a biosimilar product, and when partial 
quarter pricing requirements no longer apply, the Medicare payment 
limit for a biosimilar product will be determined based on ASP data.
    The following is a summary of the comments we received regarding 
our proposals and related discussion in the proposed rule. In general, 
a number of commenters opposed a single payment amount for all 
biosimilars that rely on a common reference product. Commenters 
included individuals, pharmaceutical manufacturers, patient advocate 
groups, providers, and members of the House of Representatives. Most of 
these commenters stated that the CMS proposal will create access 
issues, and that grouping payment for biosimilar biological products is 
inconsistent with the statute. Other concerns included a belief that as 
a result of the proposal, prescribers' choices will be limited, that 
tracking or pharmacovigilance activities will be impaired, and that 
innovation and product development will be harmed, leading to increased 
costs for biosimilar products. Many of these commenters suggested that 
CMS determine a payment amount for each biosimilar. However, several 
commenters also supported CMS's proposal to amend the regulation text 
effective January 1, 2016. Commenters who supported the proposal also 
suggested that CMS remain mindful of its policy as the biosimilar 
marketplace evolves. However, several commenters asked that policy 
decisions be delayed while issues such as naming conventions and 
interchangeability standards are finalized by the FDA.
    We would also like to remind readers about the scope of CMS's 
proposals. The proposals and additional discussion encompass payment 
policy under Medicare Part B; they do not encompass claims processing 
instructions, coverage policies, clinical decision making and the 
clinical use of biosimilars, FDA policies, or payments made by other 
payers. However, some of these issues overlap with payment policy and 
we have mentioned them as they pertain to payment policy or specific 
comments in the more detailed comment responses below.
    Comment: Some commenters stated that the proposed rule did not 
include sufficient explanation of the reasoning behind the proposed 
change to the regulation text.
    Response: Our proposal would amend Sec.  414.904(j) to be 
consistent with a biosimilar payment approach that groups biosimilars 
with a common reference product. We believe that the proposed change to 
Sec.  414.904(j) would more accurately reflect our interpretation of 
section 1847A(b)(8)(A) of the Act, which states that the payment for a 
biosimilar biological product is determined using the methodology in 
section 1847A(b)(6) of the Act applied to a biosimilar biological 
product for all NDCs assigned to such product in the same manner as 
such paragraph is applied to the multiple source drugs described in 
such paragraph.
    Our rationale for this clarification arises from our understanding 
of both the abbreviated approval pathway for biosimilars and the 
amendments to section 1847A of the Act to address payment for 
biosimilars. As further explained below, we believe the approach we are 
finalizing in this rule is consistent with our statutory authority.
    The Affordable Care Act contains two provisions for biosimilars: 
one setting forth a Medicare Part B payment methodology (section 3139); 
and one setting forth an approval pathway (section 7002). Our proposal 
addressed Part B payment policy, and therefore, focused on section 
3139, but section 7002 is also relevant.
    Section 3139 of the Affordable Care Act amends section 1847A of the 
Act to define the term ``biosimilar biological product'' to mean ``a 
biological product approved under an abbreviated application for a 
license of a biological product that relies in part on data or 
information in an application for another biological product licensed 
under section 351 of the Public Health Service Act (PHSA).'' Section 
7002 of the Affordable Care Act defines the terms biosimilar and 
biosimilarity for purposes of section 351 of the PHSA to mean (A) that 
the biological product is highly similar to the reference product 
notwithstanding minor differences in clinically inactive components; 
and (B) there are no clinically meaningful differences between the 
biological product and the reference product in terms of the safety, 
purity, and potency of the product.
    This statutory definition establishes that biosimilar products and 
their corresponding reference products share a number of significant 
similarities. That is, the biosimilar biological product and reference 
product must rely on data from a single biologics license application 
(BLA)--the BLA of the reference product; they share high degree of 
similarity in the active component; and have no clinically meaningful 
differences in safety, purity, and potency. While we have not stated, 
nor are we suggesting now, that these similarities must (or even 
should) drive clinical decision making for an individual patient, they 
persuade us that our proposed payment policy approach is reasonable.
    Because of the degree of similarity that biosimilars share with 
their reference products, we believe it is appropriate to price 
biosimilar products in groups in a manner similar to how we price 
multiple source or generic drugs. In other words, it is reasonable to 
look to our payment policy for multiple source drugs to guide our 
policy on payment for biosimilars because multiple source drugs are 
biosimilars' closest analogues compared to the other categories of 
drugs and biologicals for which we make payment under section 1847A of 
the Act, such as single source drugs. Of course, we acknowledge the 
comparison between biosimilars and multiple source drugs is not a 
perfect one because of the distinct approval processes, statutory 
definitions, and potentially, the differences in molecular complexity 
between drugs and biologicals. From the perspective of part B drug 
payment policy, however, we believe that, the abbreviated pathway for 
biosimilar approval and the abbreviated pathway for generic drug 
approval have relevant parallels--such as the approval of a predecessor 
product (a reference product for biosimilars; an innovator product for 
drugs) and the comparison of a product that is being approved through 
an abbreviated pathway to the predecessor. Further, we believe that 
biosimilar products and multiple source drugs will have similar 
marketplace attributes. Although lack of statutory authority prevents 
us from pricing a biosimilar reference product with biosimilar 
products, like multiple source drugs, we see biosimilars competing for 
market share with each other, as well as competing with the reference 
or innovator product.
    Finally, how the payment provision in section 3139 of the 
Affordable Care Act addresses interchangeability also supports the 
position that biosimilars

[[Page 71098]]

can be treated like multiple source drugs. Under section 1847A of the 
Act, the potential for interchangeability does not factor into how 
payment is determined for a biosimilar. Neither the definitions in 
section 1847A, nor the requirements for how payment amounts are 
calculated treat biosimilars that are interchangeable (and could be 
potentially be substituted much like generic drugs) differently from 
other biosimilars. This suggests that Congress contemplated that we 
should group all biosimilars with a common reference product (in a 
manner that is similar to multiple source drugs).
    Thus, in light of our belief that biosimilars with a common 
reference product are--for payment policy purposes--analogous to 
multiple source drugs, we believe that our biosimilars payment policy 
should mirror payment policy for multiple source drugs to the extent 
possible. We further believe, as described below, that the statute 
supports such an approach. We would like to make clear that although 
our payment policy approach for biosimilars is analogous to our payment 
policy for multiple source drugs as described in this response, we take 
no position on whether a biosimilar is completely or partially 
analogous to its biologic reference product as a clinical matter.
    Comment: Many commenters believe that the proposal is inconsistent 
with the statute and with the regulation text at Sec.  414.904(j). Most 
commenters who provided specific concerns believe that that the use of 
the singular form of ``product'' when used to describe payment for 
biosimilars in section 1847A of the Act requires that CMS determine 
separate ASP-based payment amounts for each manufacturer's biosimilar 
product. Commenters who provided specific concerns quoted some or all 
of section 1847A(b)(8) of the Act to support their argument that the 
statute requires that there be a single billing code and payment rate 
for each biosimilar product. The commenters focused use of the singular 
form of ``product,'' and said they believe it is a clear indication 
that the statute requires separate payment for each individual 
biosimilar product.
    Response: We disagree with the commenters and believe that the 
proposed biosimilar payment approach is consistent with section 1847A 
of the Act.
    We do not believe the use of the singular is dispositive of the 
issue. The statute directs CMS to apply the payment approach for a 
given biosimilar biological product in the same manner as such 
paragraph is applied to drugs described in such paragraph. ``Such 
paragraph'' is paragraph (b)(6) of section 1847A of the Act. Section 
1847A(b)(6)(A) of the Act states that it applies to all drug products 
included within the same multiple source drug billing and payment code 
before setting forth the methodology for determining a volume weighted 
average sales price for multiple source drugs. The statute also 
specifies the use of this methodology for determining the average sales 
prices for single source drugs (under section 1847A(b)(4) of the Act) 
and biosimilars (under section 1847A(b)(8) of the Act). However, 
sections 1847A(b)(4) and 1847A(b)(8) of the Act differ in one 
significant respect; namely, that only section 1847A(b)(8) of the Act 
includes language that directs the payment determination in paragraph 
(b)(6) to be carried out in the same manner as paragraph (b)(6) is 
applied to drugs that are described in paragraph (b)(6). Because all 
drugs and biologicals paid for under section 1847A of the Act have 
their ASP-based payment allowances calculated using the methodology set 
forth in section 1847A(b)(6) of the Act, to give meaning to the phrase 
that directs that the payment determination be made in the same manner 
as paragraph (b)(6) is applied to drugs described in paragraph (b)(6), 
we concluded that the statute authorizes us to develop coding and 
pricing for biosimilars in the same manner as for multiple source 
drugs. Our conclusion is based on the language in section 
1847A(b)(6)(A) of the Act, which clearly refers to drug products that 
are within the same multiple source drug billing code. The paragraph 
also states that the amount specified (or determined by this approach) 
is the amount determined using the mathematical calculation in section 
1847A(b)(6) of the Act that is applied to all drugs and biologicals 
paid for under section 1847A of the Act.
    We further note that the commenters have emphasized use of the 
singular form ``biosimilar product'' to support their statutory 
interpretation. However, we do not believe whether ``product'' is used 
in the singular or plural is the critical point for determining coding 
and pricing of biosimilars. Rather, we believe the critical point is 
that Congress is directing us to use the methodology specified in 
section 1847A(b)(6) of the Act for all drug products that are included 
with the same multiple source drug billing and payment code to 
determine coding and pricing for biosimilars.
    We believe it is reasonable to interpret the phrase that directs 
the pricing to be carried out in the same manner as such paragraph 
(that is, paragraph (b)(6)) is applied to drugs described in paragraph 
(b)(6), to mean that we have the discretion to calculate an ASP-based 
payment methodology for grouped biosimilars in the same way that we 
have discretion to calculate an ASP-based payment methodology for 
grouped multiple source drugs. CMS's historical practices have been to 
develop coding and pricing for programmatic purposes. This approach is 
consistent with the provisions of the Health Insurance Portability and 
Accountability Act of 1996 (HIPAA), which required CMS to adopt 
standards for coding systems that are used for reporting health care 
transactions, and in October of 2003, the Secretary of HHS delegated 
authority under the HIPAA legislation to CMS to maintain and distribute 
HCPCS Level II Codes (the alphanumeric codes that are typically used in 
part B drug claims) (Source: https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/Downloads/HCPCSLevelIICodingProcedures7-2011.pdf. We 
believe it is reasonable to believe that Congress is aware of this 
longstanding policy and that the policy would apply for the pricing and 
payment of biosimilars. Indeed, had Congress intended a specific and 
different result than the one we proposed, it could have required a 
separate payment allowance for each biosimilar biological product. 
Section 3139 of the Affordable Care Act could have explicitly stated 
that payment for a biosimilar biological product be determined as 
provided in section 1847A(b)(4) of the Act. We note that Congress did 
not specify in the statute how CMS must assign biosimilars to a HCPCS 
billing and payment code other than direct us to section 1847A(b)(6) of 
the Act and do so in the same manner as we do for all drug products 
included with the same multiple source drug billing and payment code.
    For these reasons, we disagree with commenters that a proposal to 
group biosimilar products together for Part B payment purposes and the 
associated coding approach are inconsistent with the statute. While 
other interpretations of the statute may be possible, we believe our 
interpretation is consistent with the statute. We also note that the 
proposed revised regulation text would not preclude CMS from separating 
some, or all, of a group of biosimilars for payment (and the creation 
of one or more separate HCPCS codes) should a program need to do so 
arise.
    Comment: One commenter stated that if Congress had intended that 
the multiple source drug approach could be used to pay for biosimilars, 
it would have so specified. This commenter further stated that the 
detailed direction

[[Page 71099]]

in the statute that describes the payment for multiple source drugs, 
including the use of Therapeutic Equivalency ratings, suggests that 
Congress would have included the same amount of detail for biosimilars 
had Congress intended for payment to be grouped.
    Response: We disagree with this comment. Therapeutic equivalency 
ratings for drugs have been published by the FDA in the ``Orange Book'' 
since 1980 (source: http://www.fda.gov/Drugs/InformationOnDrugs/ucm129662.htm). The Medicare Modernization Act, which authorized the 
use of the ASP payment methodology and defined multiple source drugs 
for purposes of the ASP payment methodology, was enacted in 2003. We 
believe that the level of detail in statutory provisions for the 
payment of multiple source drugs reflects 23 years of experience that 
Congress could draw on as it carefully crafted a payment approach. 
Also, the ``Orange Book'' limits its scope to approved drug products; 
we would not expect ratings for biological products to be included in 
this publication.
    In contrast, the Affordable Care Act was enacted in 2010, when 
there was no interchangeability or equivalency pathway available for 
biosimilar biological products. The ``Purple Book'', a list of 
biosimilar and interchangeable biological products licensed by FDA, was 
published in 2014. However, no interchangeable products are currently 
on the market, nor are any expected to enter the marketplace in the 
next year, and interchangeability standards have not yet been 
finalized.
    We attribute this contrast to the fact that there is insufficient 
experience or information at this time to create an approach for 
biosimilars that is as specific as that which exists for multiple 
source drugs, and therefore, do not believe that the lack of 
specificity upon which the commenter relies is indicative of 
Congressional intent to limit CMS's ability to group biosimilars 
together for coding and payment purposes.
    Comment: Several commenters also cited Senate Committee language 
that they believe indicates clear Congressional intent to pay for 
biosimilars separately. (See Senate Committee Report 111-089, pages 
225-226 located at http://www.gpo.gov/fdsys/pkg/CRPT-111srpt89/pdf/CRPT-111srpt89.pdf.) Commenters focused on the final paragraph of the 
Committee language as the basis for their opinion about Congressional 
intent. Specifically, commenters noted that the committee report states 
that the Committee Bill would allow a Part B biosimilar product 
approved by the Food and Drug Administration and assigned a separate 
billing code to be reimbursed at the ASP of the biosimilar plus 6 
percent of the ASP of the reference product. A biosimilar biological 
product would mean a product approved under an abbreviated application 
for a license of a biological product that relies in part on data or 
information in an application for another biological product licensed 
under the Public Health Service Act. The term reference biological 
product means the licensed biological product that is referred to in 
the application for the biosimilar product.
    Commenters contended that this report's reference to assigning a 
separate billing code for a biosimilar biological product shows that 
Congress intended that CMS make separate payment for each biosimilar 
biological product.
    Response: We disagree with these comments for two reasons. First, 
we believe that the statements commenters characterize as inconsistent 
with our interpretation of the statute are actually consistent with our 
interpretation. Second, although commenters focused on one statement in 
particular, a review of the entire relevant section of the report 
further indicates our interpretation seems to be consistent with the 
committee's views.
    As noted above, commenters believe that the report indicates that 
Congress intended biosimilar biological products each to have their own 
ASP-based payment allowance. However, a closer look at the relevant 
language indicates that instead, Congress was acknowledging CMS's 
current coding discretion: ``The Committee Bill would allow a Part B 
biosimilar product approved by the Food and Drug Administration and 
assigned a separate billing code to be reimbursed at the ASP of the 
biosimilar plus 6 percent of the ASP of the reference product'' 
(emphasis added). This statement's use of the phrase ``would allow'' 
(as opposed to ``would require'') indicates that CMS has discretion, 
rather than the obligation, to price biosimilars separately. Moreover, 
the statement appears to acknowledge that such separate payment would 
occur only when the biosimilar is assigned its own billing and payment 
code.
    Similarly, the rest of this section of the report supports the 
notion that biosimilars are analogous to multiple source drugs. The 
report indicates the committee's view that the approval pathway to be 
enacted for biosimilars would be comparable to the approval process for 
generic drugs, stating:

[t]he new [abbreviated biological] regulatory pathway would be 
analogous to the FDA's existing authority for approving generic 
chemical drugs under the Drug Price Competition and Patent Term 
Restoration Act of 1984 (P.L. 98-417). Often referred to as the 
Hatch-Waxman Act, this law allows the generic company to establish 
that its drug product is chemically the same as the already approved 
innovator drug, and thereby its application for FDA approval relies 
on FDA's previous finding of safety and effectiveness for the 
approved drug.

    For these reasons, we believe that contrary to commenters' 
assertions, our proposed approach to coding and payment for biosimilar 
biological products is consistent with the Senate Committee report.
    Comment: One commenter also suggested that the proposal would be 
contrary to a 2009 court decision (Hays v. Sebelius) which does not 
allow Medicare drug payments to be based on the least costly item in a 
group.
    Response: We do not believe that the proposed approach is 
inconsistent with the Hays v Sebelius ruling on least costly 
alternatives. In that case, the Court ruled that the Secretary could 
not rely on section 1862(a)(1)(A) of the Act to pay for one drug 
product in a given HCPCS code using the lower price for a drug product 
in a different HCPCS code because it was the ``least costly 
alternative.'' Instead, the court ruled that the Secretary must either 
cover or deny payment altogether if the service or item is not 
reasonable and necessary. As we have explained earlier, we believe that 
the statutory authority to group biosimilars for payment exists in 
section 1847A of the Act. Payment for groups of biosimilars will be 
made under the statutory provision that requires the determination of a 
weighted average price. Since the approach is consistent with statutory 
authority for grouping biosimilars and the use of a weighted average 
calculation (not a partial payment), we believe that our approach is 
consistent with Hays v. Sebelius.
    Comment: Several commenters stated that the proposed Part B payment 
policy is not consistent with Medicare Part D and particularly Medicaid 
requirements. Some commenters also stated that the inconsistencies 
would impact rebate calculations.
    Response: Medicare Part B groups and pays for drugs and biologicals 
differently from Medicare Part D and Medicaid. Drug payment under these 
programs is authorized by three different parts of the statute, and 
although they share some similarities, for the most part these payment 
approaches do not overlap. The different statutory and operational

[[Page 71100]]

requirements of each program can lead to differences between how drugs 
and biologicals are treated under each program. The biosimilar payment 
policies we are finalizing in this rule relate only to the Part B 
payment requirements described in section 1847A of the Act.
    Comment: Some commenters stated that blending of biosimilar product 
payment amounts is an indication that CMS believes that biosimilars are 
generic drugs. Commenters expressed concerns about a range of issues 
related to this position. These concerns focused on provider impact, 
including negative effects on prescribers' choice, medical record 
keeping and billing. Some commenters also mentioned that effects on 
prescribers' choice would include a greater emphasis on cost rather 
than clinical considerations. Other commenters expressed concerns that 
brands of biosimilars that may be approved for fewer than all 
indications approved for the reference product would lead to confusion 
about the identity of which product was administered to the patient, 
and make adherence to billing and coverage requirements difficult.
    Response: We appreciate that there are differences between multiple 
source small molecule drugs and biosimilar biological products. The 
proposals and related discussion in the proposed rule relate only to 
payment and coding for biosimilar biological products. Thus, although 
our payment policy for biosimilars is analogous to our payment policy 
for multiple source drugs, we take no position on whether a biosimilar 
is completely or partially analogous to its biologic reference product 
as a clinical matter.
    Issues such as the clinical use of drugs and medical recordkeeping 
are outside the scope of this rule.
    We are aware of situations where products with different 
indications share a HCPCS code; \3\ however, we are not aware of 
significant instances of provider confusion resulting from these 
groupings and therefore, we do not believe that this concern should 
drive the current policy approach for biosimilars.
---------------------------------------------------------------------------

    \3\ For examples: J3489 zoledronic acid injection includes 
Reclast[supreg] (indicated for osteoporosis and Paget's disease of 
the bone), Zometa[supreg] (indicated for hypercalcemia of 
malignancy, and the treatment of multiple myeloma and bone 
metastases of solid tumors) and generic versions of both zoledronic 
acid products; J0153 adenosine injection includes Adenocard[supreg] 
(indicated for the treatment of certain types of supraventricular 
tachycardia), Adenoscan[supreg] (indicated as an adjunct to thallium 
stress tests for patients who cannot exercise adequately) and 
generic versions of both adenosine products. Also, certain 
lyophilized versions of intravenous immunoglobulins (IVIG) have been 
paid using the HCPCS code J1566 (and its predecessor codes); at this 
time, the biological products in this HCPCS code do not have the 
same indications.
---------------------------------------------------------------------------

    Comment: Many commenters discussed how CMS could approach 
interchangeability between biosimilar products. Positions varied; for 
example, some commenters suggested grouping interchangeable biosimilars 
together, others suggested paying interchangeable biosimilars 
separately. Some commenters also asked that CMS consider blending the 
biosimilar payment calculation so that the reference product is 
included in the ASP calculation.
    Response: CMS' proposals and related discussion about how 
biosimilar product ASPs would be grouped did not encompass clinical 
interchangeability, substitution of biosimilar products or clinical 
decision making when prescribing these products. While section 7002 of 
the Affordable Care Act (the Biologics Price Competition and Innovation 
Act of 2009) outlines specific criteria for a determination of 
interchangeability, at this point, there are no interchangeable 
biosimilars products on the market. Thus, we are not addressing whether 
a product's interchangeability status should be the basis for a 
different approach to Part B payment in this rule at this time. To the 
contrary, our proposed approach, which we are finalizing in this rule, 
would preserve our discretion to group interchangeable biosimilars 
together for payment purposes in the same manner we will code and pay 
for biosimilars that do not have a designation of interchangeability 
under section 7002 of the Affordable Care Act. However, given that no 
interchangeable biosimilars are currently available, we will consider 
whether further refinements to our biosimilar payment policy may be 
necessary as the market develops in the future.
    In response to comments recommending that CMS include the reference 
product in the ASP payment calculation for biosimilars, we note that 
such an approach is not consistent with section 1847A of the Act.
    Comment: Some commenters stated that the payment policy approach 
may encourage inappropriate interchange between biosimilar products.
    Response: We disagree with this comment. We understand that groups 
of biosimilar products may not have all of the same indications as the 
reference product in common, all the same indications as other 
biosimilars within that group, or may have other clinical differences 
such as fewer than all routes of administration as the reference 
product. We are not aware of situations where providers have assumed 
that biological products grouped together for payment purposes are 
clinically equivalent, or that confusion regarding coverage, billing, 
coding, or medical records has been a problem.
    Comment: A number of commenters also expressed concern about how 
grouping biosimilar products for payment purposes when they have a 
common reference product would affect the marketplace. Commenters 
stated that CMS's proposal would discourage product development and 
innovation and would affect this new segment for the drug and 
biological marketplace in a negative manner. Commenters also cited the 
high risk for biosimilar product manufacturers because of factors such 
as high product development costs and long product development 
timelines for biosimilars (compared to small molecule drugs), and 
suggested that grouping biosimilar products into a single payment code 
could lead to a competitive environment that decreases profit margin, 
forcing manufacturers to leave the marketplace, resulting in less 
competition, access problems for patients and higher prices. Some of 
this information appears to have been extrapolated from experience with 
(small molecule) Part B drugs. However, several commenters who 
discussed potential differences between biosimilars and drugs suggested 
that assessing the proposed policy's impact as the market develops and 
actual experience with this new category of products is gained is a 
reasonable approach. One commenter believed that the size of the 
biosimilar marketplace and the regulatory environment created less risk 
for biosimilar manufacturers than for reference product manufacturers 
and that CMS's proposed approach would be an incentive for price 
competition. One commenter suggested that separate pricing of 
biosimilars was comparable to price protection and that separate 
pricing is not supported by actual facts. Another commenter stated that 
separate pricing would reduce competition and would result in a market 
where biosimilars were sold as branded drugs with small discounts.
    Response: We do not agree that our approach to Medicare Part B 
payment policy will stifle or damage the marketplace. Biological 
products are heavily utilized in Part B and account for a significant 
share of spending compared to drugs. According to a GAO report dated 
October 12, 2012 (GAO-13-46R High Expenditure Part B Drugs, http://www.gao.gov/products/GAO-13-46R, pages 6 and 7), Medicare and its 
beneficiaries spent $19.5 billion on Part

[[Page 71101]]

B drugs and biologicals in 2010. The 10 most expensive products 
accounted for about $9.1 billion of that amount and 8 of 10 of the 
highest expenditure Part B drugs were biologicals. Given the robust 
marketplace for biologicals, we do not believe that a payment policy 
that encourages greater competition will drive manufacturers out of the 
market. To the contrary, we believe there is a strong need for lower 
cost alternatives to high cost biologicals, and the statute provides an 
incentive for the development of the biosimilars market by providing 
for reimbursement that includes a 6 percent add-on of the more 
expensive reference product's ASP. Competition fosters innovations that 
redefine markets. Overall, the availability of generic drugs, in 
competition with each other and with branded products, has improved 
price and availability of drugs. Competition among biosimilars can do 
the same for Medicare beneficiaries--improving the quality, price, and 
access. We agree that it is desirable to have fair reimbursement in a 
healthy marketplace that encourages product development, and we agree 
with commenters who support future refinements to policy as needed 
based on actual experience with this new segment of the market.
    Comment: Several commenters suggested that CMS consider delaying 
action on the proposals to allow for FDA policies on issues like naming 
and interchangeability standards to be developed, and to allow the 
marketplace to develop.
    Response: We disagree with this comment. Issues such as the naming 
convention and specific interchangeability standards are complicated, 
may require some time to finalize, and are not directly relevant to 
Medicare Part B payment policy. Rather, we believe it is important to 
implement a payment policy for biosimilars now, before the second 
biosimilar for any reference product becomes available, in order to 
provide certainty for providers and suppliers who will be billing 
Medicare for these products in the near term.
    Comment: Several commenters stated that the proposed approach is 
consistent with savings for the beneficiary and sustainability of the 
Medicare program.
    Response: We thank the commenters for their support.
    Comment: Commenters stated that the proposed approach would 
negatively impact tracking and safety monitoring because products could 
not be distinguished on claims. Commenters stated that separate codes 
are necessary to track the safety of biosimilars and to conduct 
effective pharmacovigilance efforts, and a few commenters also 
expressed concerns that clinical outcomes studies would be difficult to 
conduct. These commenters expressed concern that obtaining data about 
potential differences in safety and efficacy would be difficult if 
Medicare paid for all biosimilars that are related to a common 
reference product the same amount and used a single HCPCS billing code 
to indicate that a biosimilar product was administered. However, 
several commenters suggested other possible mechanisms for using claims 
data to track biosimilar products, including the use of modifiers.
    Response: Pharmacovigilance and the postmarketing assessment of the 
safety and efficacy of drugs and biologicals are frequently conducted 
by the FDA. Coding determinations, including the assignment of HCPCS 
codes, are a part of Medicare payment policy. The FDA's determinations 
are outside the scope of this rule. However, we agree that it is 
desirable to have the ability to track biosimilars. We also agree with 
commenters who suggested that alternative means of tracking biosimilar 
are possible. We will provide guidance on mechanisms for tracking drug 
use through information on claims in the near future. Specifically, we 
are developing an approach for using manufacturer-specific modifiers on 
claims to assist with pharmacovigilance.
    Final Decision: After considering the comments, we are finalizing 
our proposal to amend the regulation text at Sec.  414.904(j) to make 
clear that the payment amount for a biosimilar biological product is 
based on the ASP of all NDCs assigned to the biosimilar biological 
products included within the same billing and payment code. We are also 
finalizing the proposal's effective date: January 1, 2016.
    Comment: Several commenters also acknowledged or agreed with the 
use of WAC-based pricing during the initial period of sales while an 
ASP is not available. One commenter understood CMS' discussion to mean 
that a greater reliance on invoice pricing would result.
    Response: We are not changing how pricing determinations by 
contractors (MACs) are made in situations where national pricing data 
is not available. We appreciate the comments on our discussion about 
how biosimilar products will be paid before an ASP is available.
    In addition to the comments on biosimilars discussed, we received 
comments about specific issues pertaining to HCPCS coding and 
descriptor development such as the use of J codes and Q codes, claims 
submission and medical record keeping (including the use of NDCs on 
Medicare Part B claims), notification of substitution to providers and 
pharmacy dispensing and substitution activities, coverage policies for 
biosimilars, effects on other payers, Therapeutic Equivalency 
determinations based on either the Orange Book or interchangeability 
determinations based on the Purple Book, and the FDA approval process 
for biosimilars. Comments on these issues are outside the scope of this 
rule. Therefore, these comments are not addressed in this final rule 
with comment period.

F. Productivity Adjustment for the Ambulance, Clinical Laboratory, and 
DMEPOS Fee Schedules

    Section 3401 of the Affordable Care Act requires that the update 
factor under certain payment systems be annually adjusted by changes in 
economy-wide productivity. The year that the productivity adjustment is 
effective varies by payment system. Specifically, section 3401 of the 
Affordable Care Act requires that in CY 2011 (and in subsequent years) 
update factors under the ambulance fee schedule (AFS), the clinical 
laboratory fee schedule (CLFS) and the DMEPOS fee schedule be adjusted 
by changes in economy-wide productivity. Section 3401(a) of the 
Affordable Care Act amends section 1886(b)(3)(B) of the Act to add 
clause (xi)(II), which sets forth the definition of this productivity 
adjustment. The statute defines the productivity adjustment to be equal 
to the 10-year moving average of changes in annual economy-wide private 
nonfarm business multifactor productivity (MFP) (as projected by the 
Secretary for the 10-year period ending with the applicable fiscal 
year, year, cost reporting period, or other annual period). Historical 
published data on the measure of MFP is available on the Bureau of 
Labor Statistics (BLS) Web site at http://www.bls.gov/mfp.
    MFP is derived by subtracting the contribution of labor and capital 
inputs growth from output growth. The projection of the components of 
MFP are currently produced by IHS Global Insight, Inc. (IGI), a 
nationally recognized economic forecasting firm with which we contract 
to forecast the components of MFP. To generate a forecast of MFP, IGI 
replicates the MFP measure calculated by the BLS using a series of 
proxy variables derived from IGI's U.S. macroeconomic models. In the CY 
2011 and CY 2012 PFS final rules with comment period (75 FR 73394 
through 73396, 76 FR 73300 through 73301), we set forth the current

[[Page 71102]]

methodology to generate a forecast of MFP. We identified each of the 
major MFP component series employed by the BLS to measure MFP as well 
as provided the corresponding concepts determined to be the best 
available proxies for the BLS series. Beginning with CY 2016, for the 
AFS, CLFS and DMEPOS fee schedule, the MFP adjustment is calculated 
using a revised series developed by IGI to proxy the aggregate capital 
inputs. Specifically, IGI has replaced the Real Effective Capital Stock 
used for Full Employment GDP with a forecast of BLS aggregate capital 
inputs recently developed by IGI using a regression model. This series 
provides a better fit to the BLS capital inputs, as measured by the 
differences between the actual BLS capital input growth rates and the 
estimated model growth rates over the historical time period. 
Therefore, we are using IGI's most recent forecast of the BLS capital 
inputs series in the MFP calculations beginning with CY 2016. A 
complete description of the MFP projection methodology is available on 
our Web site at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html. Although we discussed the IGI changes to the 
MFP proxy series in the CY 2016 PFS proposed rule (80 FR 41802) and in 
this final rule with comment period, in the future, when IGI makes 
changes to the MFP methodology, we will announce them on our Web site 
rather than in the annual rulemaking.

G. Appropriate Use Criteria for Advanced Diagnostic Imaging Services

    Section 218(b) of the PAMA amended Title XVIII of the Act to add 
section 1834(q) directing us to establish a program to promote the use 
of appropriate use criteria (AUC) for advanced diagnostic imaging 
services. This rule outlines the initial component of the new Medicare 
AUC program and our plan for implementing the remaining components.
1. Background
    In general, AUC are a set of individual criteria that present 
information in a manner that links a specific clinical condition or 
presentation, one or more services, and an assessment of the 
appropriateness of the service(s). Evidence-based AUC for imaging can 
assist clinicians in selecting the imaging study that is most likely to 
improve health outcomes for patients based on their individual context.
    We believe the goal of this statutory AUC program is to promote the 
evidence-based use of advanced diagnostic imaging to improve quality of 
care and reduce inappropriate imaging services. Professional medical 
societies, health systems, and academic institutions have been 
designing and implementing AUC for decades. Experience and published 
studies alike show that results are best when AUC are built on an 
evidence base that considers patient health outcomes, weighing the 
benefits and harms of alternative care options, and are integrated into 
broader care management and continuous quality improvement (QI) 
programs. Successful QI programs in turn have provider-led 
multidisciplinary teams that collectively identify key clinical 
processes and then develop bottom-up, evidence-based AUC or guidelines 
that are embedded into clinical workflows, and become the organizing 
principle of care delivery (Aspen 2013). Feedback loops, an essential 
component, compare provider performance and patient health outcomes to 
individual, regional and national benchmarks.
    There is also consensus that AUC programs built on evidence-based 
medicine and applied in a QI context are the best method to identify 
appropriate care and eliminate inappropriate care, and are preferable 
to across-the-board payment reductions that do not differentiate 
interventions that add value from those that cause harm or add no 
value.
2. Previous AUC Experience
    The first CMS experience with AUC, the Medicare Imaging 
Demonstration (MID), was required by section 135(b) of the Medicare 
Improvements for Patients and Providers Act of 2008 (MIPPA). Designed 
as an alternative to prior authorization, the MID's purpose was to 
examine whether provider exposure to appropriateness guidelines would 
reduce inappropriate utilization of advanced imaging services. In the 
2-year demonstration which began in October 2011, nearly 4,000 
physicians, grouped into one of five conveners across geographically 
and organizationally diverse practice settings, ordered a total of 
nearly 50,000 imaging studies.\4\
---------------------------------------------------------------------------

    \4\ Timbie J, Hussey P, Burgette L, et al. Medicare Imaging 
Demonstration Final Evaluation: Report to Congress. 2014 The Rand 
Corporation.
---------------------------------------------------------------------------

    In addition to the outcomes of the MID (http://www.rand.org/content/dam/rand/pubs/research_reports/RR700/RR706/RAND_RR706.pdf), we 
considered others' experiences and results from implementation of 
imaging AUC and other evidence-based clinical guidelines at healthcare 
organizations such as Brigham & Women's, Intermountain Healthcare, 
Kaiser, Massachusetts General Hospital, and Mayo, and in states such as 
Minnesota. From these experiences, and analyses of them by medical 
societies and others, general agreement on at least two key points has 
emerged. First, AUC, and the clinical decision support (CDS) mechanisms 
through which providers access AUC, must be integrated into the 
clinical workflow and facilitate, not obstruct, evidence-based care 
delivery. Second, the ideal AUC is an evidence-based guide that starts 
with a patient's specific clinical condition or presentation (symptoms) 
and assists the provider in the overall patient workup, treatment and 
follow-up. Imaging would appear as key nodes within the clinical 
management decision tree. The end goal of using AUC is to improve 
patient health outcomes. In reality, however, many providers may 
encounter AUC through a CDS mechanism for the first time at the point 
of image ordering. The CDS would ideally bring the provider back to 
that specific clinical condition and work-up scenario to ensure and 
simultaneously document the appropriateness of the imaging test.
    However, there are different views about how best to roll out AUC 
into clinical practice. One opinion is that it is best to start with as 
comprehensive a library of individual AUC as possible to avoid the 
frustration, experienced and voiced by many practitioners participating 
in the MID, of spending time navigating the CDS tool only to find that, 
about 40 percent of the time, no AUC for their patient's specific 
clinical condition existed. A second opinion is that, based on decades 
of experience rolling out AUC in the context of robust QI programs, it 
is best to focus on a few priority clinical areas (for example, low 
back pain) at a time, to ensure that providers fully understand the AUC 
they are using, including when they do not apply to a particular 
patient. This same group also believes, based on experience with the 
MID, that too many low-evidence alerts or rules simply create ``alert 
fatigue.'' They envision that, rather than navigating through a CDS to 
find relevant AUC, providers would simply enter the patient's condition 
and a message would pop up stating whether AUC existed for that 
condition.
    We believe there is merit to both approaches, and it has been 
suggested to us that the best approach may depend on the particular 
care setting. The second, ``focused'' approach may work better for a 
large health system that produces and uses its own AUC. The first, 
``comprehensive'' approach may in turn work better for a smaller 
practice with broad image ordering patterns and

[[Page 71103]]

fewer resources that wants to simply adopt and start using from day one 
a complete AUC system developed elsewhere. We believe a successful 
program would allow flexibility, and under section 1834(q) of the Act, 
we foresee a number of sets of AUC developed by different provider-led 
entities, and an array of CDS mechanisms, from which providers may 
choose.
3. Statutory Authority
    Section 218(b) of the PAMA amended Title XVIII of the Act by adding 
a new section 1834(q) entitled, ``Recognizing Appropriate Use Criteria 
for Certain Imaging Services,'' which directs us to establish a new 
program to promote the use of AUC. In section 1834(q)(1)(B) of the Act, 
AUC are defined as criteria that are evidence-based (to the extent 
feasible) and assist professionals who order and furnish applicable 
imaging services to make the most appropriate treatment decision for a 
specific clinical condition for an individual.
4. Discussion of Statutory Requirements
    There are four major components of the AUC program under section 
1834(q) of the Act, each with its own implementation date: (1) 
Establishment of AUC by November 15, 2015 (section 1834(q)(2)); (2) 
mechanisms for consultation with AUC by April 1, 2016 (section 
1834(q)(3)); (3) AUC consultation by ordering professionals and 
reporting on AUC consultation by furnishing professionals by January 1, 
2017 (section 1834(q)(4)); and (4) annual identification of outlier 
ordering professionals for services furnished after January 1, 2017 
(section 1834(q)(5)). In the proposed rule, we primarily addressed the 
first component under section 1834(q)(2)--the process for establishment 
of AUC, along with relevant aspects of the definitions under section 
1834(q)(1).
    Section 1834(q)(1) of the Act describes the program and provides 
definitions of terms. The program is required to promote the use of AUC 
for applicable imaging services furnished in an applicable setting by 
ordering professionals and furnishing professionals. Section 1834(q)(1) 
of the Act provides definitions for AUC, applicable imaging service, 
applicable setting, ordering professional, and furnishing professional. 
An ``applicable imaging service'' under section 1834(q)(1)(C) of the 
Act must be an advanced imaging service as defined in section 
1834(e)(1)(B) of the Act, which defines ``advanced diagnostic imaging 
services'' to include diagnostic magnetic resonance imaging, computed 
tomography, and nuclear medicine (including positron emission 
tomography); and other diagnostic imaging services we may specify in 
consultation with physician specialty organizations and other 
stakeholders, but excluding x-ray, ultrasound and fluoroscopy services.
    Section 1834(q)(2)(A) of the Act requires the Secretary to specify 
applicable AUC for applicable imaging services, through rulemaking and 
in consultation with physicians, practitioners and other stakeholders, 
by November 15, 2015. Applicable AUC may be specified only from among 
AUC developed or endorsed by national professional medical specialty 
societies or other provider-led entities. Section 1834(q)(2)(B) of the 
Act identifies certain considerations the Secretary must take into 
account when specifying applicable AUC including whether the AUC have 
stakeholder consensus, are scientifically valid and evidence-based, and 
are based on studies that are published and reviewable by stakeholders. 
Section 1834(q)(2)(C) of the Act requires the Secretary to review the 
specified applicable AUC each year to determine whether there is a need 
to update or revise them, and to make any needed updates or revisions 
through rulemaking. Section 1834(q)(2)(D) of the Act specifies that, if 
the Secretary determines that more than one AUC applies for an 
applicable imaging service, the Secretary shall apply one or more AUC 
for the service.
    The PAMA was enacted into law on April 1, 2014. Implementation of 
many aspects of the amendments made by section 218(b) of the PAMA 
requires consultation with physicians, practitioners, and other 
stakeholders, and notice and comment rulemaking. We believe the PFS 
calendar year rulemaking process is the most appropriate and 
administratively feasible implementation vehicle. Given the timing of 
the PFS rulemaking process, we were not able to include proposals in 
the PFS proposed rule to begin implementation in the same year the PAMA 
was enacted. The PFS proposed rule is published in late June or early 
July each year. For the new Medicare AUC program to have been a part of 
last year's rule (CY 2015), we would have had to interpret and analyze 
the new statutory language, and develop proposed plans for 
implementation in under one month. Additionally, given the complexity 
of the program to promote the use of AUC for advanced imaging services 
established under section 1834(q) of the Act, we believed it was 
imperative to consult with physicians, practitioners and other 
stakeholders in advance of developing proposals to implement the 
program. In the time since the legislation was enacted, we have met 
extensively with stakeholders to gain insight and hear their comments 
and concerns about the AUC program. Having this open door with 
stakeholders has greatly informed our proposed policy. In addition, 
before AUC can be specified as directed by section 1834(q)(2)(A) of the 
Act, there is first the need to define what AUC are and to specify the 
process for developing them. To ensure transparency and meet the 
requirements of the statute, we proposed to implement section 
1834(q)(2) of the Act by first establishing through rulemaking a 
process for specifying applicable AUC and proposing the requirements 
for AUC development. Under our proposal, the specification of AUC under 
section 1834(q)(2)(A) of the Act will flow from this process.
    We also proposed to define the term, ``provider-led entity,'' which 
is included in section 1834(q)(1)(B) of the Act so that the public had 
an opportunity to comment, and entities meeting the definition are 
aware of the process by which they may become qualified under Medicare 
to develop or endorse AUC. Under our proposed process, once a provider-
led entity (PLE) is qualified (which includes rigorous AUC development 
requirements involving evidence evaluation, as provided in section 
1834(q)(2)(B) of the Act and proposed in the CY 2016 PFS proposed rule) 
the AUC that are developed or endorsed by the entity would be 
considered to be specified applicable AUC under section 1834(q)(2)(A) 
of the Act.

[[Page 71104]]

    The second major component of the Medicare AUC program is the 
identification of qualified CDS mechanisms that could be used by 
ordering professionals for consultation with applicable AUC under 
section 1834(q)(3) of the Act. We envision a CDS mechanism for 
consultation with AUC as an interactive tool that communicates AUC 
information to the user. The ordering professional would input 
information regarding the clinical presentation of the patient into the 
CDS tool, which may be a feature of or accessible through an existing 
system, and the tool would provide immediate feedback to the ordering 
professional on the appropriateness of one or more imaging services. 
Ideally, multiple CDS mechanisms would be available that could 
integrate directly into, or be seamlessly interoperable with, existing 
health information technology (IT) systems. This would minimize burden 
on provider teams and avoid duplicate documentation.
    Section 1834(q)(3)(A) of the Act states that the Secretary must 
specify qualified CDS mechanisms in consultation with physicians, 
practitioners, health care technology experts, and other stakeholders. 
This paragraph authorizes the Secretary to specify mechanisms that 
could include: CDS modules within certified EHR technology; private 
sector CDS mechanisms that are independent of certified EHR technology; 
and a CDS mechanism established by the Secretary.
    However, all CDS mechanisms must meet the requirements under 
section 1834(q)(3)(B) of the Act which specifies that a mechanism must: 
Make available to the ordering professional applicable AUC and the 
supporting documentation for the applicable imaging service that is 
ordered; where there is more than one applicable AUC specified for an 
applicable imaging service, indicate the criteria it uses for the 
service; determine the extent to which an applicable imaging service 
that is ordered is consistent with the applicable AUC; generate and 
provide to the ordering professional documentation to demonstrate that 
the qualified CDS was consulted by the ordering professional; be 
updated on a timely basis to reflect revisions to the specification of 
applicable AUC; meet applicable privacy and security standards; and 
perform such other functions as specified by the Secretary (which may 
include a requirement to provide aggregate feedback to the ordering 
professional). Section 1834(q)(3)(C) of the Act specifies that the 
Secretary must publish an initial list of specified mechanisms no later 
than April 1, 2016, and that the Secretary must identify on an annual 
basis the list of specified qualified CDS mechanisms.
    We did not include proposals to implement section 1834(q)(3) of the 
Act in the CY 2016 PFS proposed rule. We needed to first establish, 
through notice and comment rulemaking, the process for specifying 
applicable AUC. Specified applicable AUC would serve as the inputs to 
any qualified CDS mechanism; therefore, these must first be identified 
so that prospective tool developers are able to establish relationships 
with AUC developers. In addition, we intend that in PFS rulemaking for 
CY 2017, we will provide clarifications, develop definitions, and 
establish the process by which we will specify qualified CDS 
mechanisms. The requirements for qualified CDS mechanisms set forth in 
section 1834(q)(3)(B) of the Act will also be vetted through PFS 
rulemaking for CY 2017 so that mechanism developers have a clear 
understanding and notice regarding the requirements for their tools. 
The CY 2017 proposed rule would be published at the end of June or in 
early July of 2016, be open for a period of public comment, and then 
the final rule would be published by November 1, 2016. We anticipate 
that the initial list of specified applicable CDS mechanisms will be 
published sometime after the CY 2017 PFS final rule. If we were to 
follow a similar process for CDS as we have for specifying AUC, the 
initial list of CDS mechanisms would be available in the summer of 
2017. In advance of these actions, we will continue to work with 
stakeholders to understand how to ensure that appropriate mechanisms 
are available, particularly with respect to standards for certified 
health IT, including EHRs, that can enable interoperability of AUC 
across systems.
    The third major component of the AUC program is in section 
1834(q)(4) of the Act, Consultation with Applicable Appropriate Use 
Criteria. This section establishes, beginning January 1, 2017, the 
requirement for an ordering professional to consult with a listed 
qualified CDS mechanism when ordering an applicable imaging service 
that would be furnished in an applicable setting and paid for under an 
applicable payment system; and for the furnishing professional to 
include on the Medicare claim information about the ordering 
professional's consultation with a qualified CDS mechanism. The statute 
distinguishes between the ordering and furnishing professional, 
recognizing that the professional who orders the imaging service is 
usually not the same professional who bills Medicare for the test when 
furnished. Section 1834(q)(4)(C) of the Act provides for certain 
exceptions to the AUC consultation and reporting requirements including 
in the case of certain emergency services, inpatient services paid 
under Medicare Part A, and ordering professionals who obtain a hardship 
exemption. Section 1834(q)(4)(D) of the Act specifies that the 
applicable payment systems for the AUC consultation and reporting 
requirements are the PFS, hospital outpatient prospective payment 
system, and the ambulatory surgical center payment system.
    We did not include proposals to implement section 1834(q)(4) of the 
Act in the CY 2016 PFS proposed rule. Again, it is important that we 
first establish through notice and comment rulemaking the process by 
which applicable AUC will be specified as well as the CDS mechanisms 
through which ordering providers would access them. We anticipate 
including further discussion and adopting policies regarding claims-
based reporting requirements in the CY 2017 and CY 2018 rulemaking 
cycles. Therefore, we do not intend to require that ordering 
professionals meet this requirement by January 1, 2017.
    The fourth component of the AUC program is in section 1834(q)(5) of 
the Act, Identification of Outlier Ordering Professionals. The 
identification of outlier ordering professionals under this paragraph 
facilitates a prior authorization requirement for outlier professionals 
beginning January 1, 2020, as specified under section 1834(q)(6) of the 
Act. Although, we did not include proposals to implement these sections 
in the CY 2016 PFS proposed rule, we proposed to identify outlier 
ordering professionals from within priority clinical areas. Prior 
clinical areas will be identified through subsequent rulemaking.
    The concept of priority clinical areas allows CMS to implement an 
AUC program that combines two approaches to implementation. Under our 
proposed policy, while potentially large volumes of AUC (as some 
eligible PLEs have large libraries of AUC) would become specified 
across clinical conditions and advanced imaging technologies, we 
believe this rapid roll out of specified AUC should be balanced with a 
more focused approach to identifying outlier ordering professionals. We 
believe this will provide an opportunity for physicians and 
practitioners to become familiar with AUC in identified priority 
clinical areas prior to Medicare claims for those services being part 
of the input for calculating outlier ordering professionals.

[[Page 71105]]

    In the CY 2017 PFS rulemaking process, with the benefit of public 
comments, we will begin to identify priority clinical areas and expand 
them over time. Also in future rulemaking, we will develop and clarify 
our policy to identify outlier ordering professionals.
5. Proposals for Implementation
    We proposed to amend our regulations to add a new Sec.  414.94, 
``Appropriate Use Criteria for Certain Imaging Services.''
a. Definitions
    In Sec.  414.94(b), we proposed to codify and add language to 
clarify some of the definitions provided in section 1834(q)(1) of the 
Act as well as define terms that were not defined in statute but for 
which a definition would be helpful for program implementation. In this 
section we provide a description of the terms we proposed to codify to 
facilitate understanding and encourage public comment on the AUC 
program.
    Due to circumstances unique to imaging, it is important to note 
that there is an ordering professional (the physician or practitioner 
that orders that the imaging service be furnished) and a furnishing 
professional (the physician or practitioner that actually performs the 
imaging service and provides the interpretation of the imaging study) 
involved in imaging services. In some cases the ordering professional 
and the furnishing professional are the same.
    This AUC program only applies in applicable settings as defined in 
section 1834(q)(1)(D) of the Act. An applicable setting would include a 
physician's office, a hospital outpatient department (including an 
emergency department), an ambulatory surgical center, and any provider-
led outpatient setting determined appropriate by the Secretary. The 
inpatient hospital setting, for example, is not an applicable setting. 
Further, the program only applies to applicable imaging services as 
defined in section 1834(q)(1)(C) of the Act. These are advanced 
diagnostic imaging services for which one or more applicable AUC apply, 
one or more qualified CDS mechanisms is available, and one of those 
mechanisms is available free of charge.
    We proposed to clarify the definition for appropriate use criteria, 
which is defined in section 1834(q)(2)(B) of the Act to include only 
criteria developed or endorsed by national professional medical 
specialty societies or other PLEs, to assist ordering professionals and 
furnishing professionals in making the most appropriate treatment 
decision for a specific clinical condition for an individual. To the 
extent feasible, such criteria shall be evidence-based. To further 
describe AUC, we proposed to add the following language to this 
definition: AUC are a collection of individual appropriate use 
criteria. Individual criteria are information presented in a manner 
that links: A specific clinical condition or presentation; one or more 
services; and, an assessment of the appropriateness of the service(s).
    For the purposes of implementing this program, we proposed to 
define new terms in Sec.  414.94(b). A PLE would include national 
professional medical specialty societies (for example the American 
College of Radiology and the American Academy of Family Physicians) or 
an organization that is comprised primarily of providers and is 
actively engaged in the practice and delivery of healthcare (for 
example hospitals and health systems).
    Applicable AUC become specified when they are developed or modified 
by a qualified PLE, or when a qualified PLE endorses AUC developed by 
another qualified PLE. A PLE is not considered qualified until CMS 
makes a determination via the qualification process finalized in this 
CY 2016 PFS final rule with comment period. We introduced priority 
clinical areas to inform ordering professionals and furnishing 
professionals of the clinical topics alone, clinical topics and imaging 
modalities combined or imaging modalities alone that may be identified 
by the agency through annual rulemaking and in consultation with 
stakeholders which may be used in the identification of outlier 
ordering professionals.
    The definitions in Sec.  414.94 are important in understanding 
implementation of the program. Only AUC developed, modified or endorsed 
by organizations meeting the definition of PLE would be considered 
specified applicable AUC. As required by the statute, specified 
applicable AUC must be consulted and such consultation must be reported 
on the claim for applicable imaging services. To assist in 
identification of outlier ordering professionals, we proposed to focus 
on priority clinical areas. Priority clinical areas would be associated 
with a subset of specified AUC.
b. AUC Development by Provider-Led Entities
    In Sec.  414.94, we proposed to include regulations to implement 
the first component of the Medicare AUC program--specification of 
applicable AUC. We first proposed a process by which PLEs (including 
national professional medical specialty societies) become qualified by 
Medicare to develop or endorse AUC. The cornerstone of this process is 
for PLEs to demonstrate that they engage in a rigorous evidence-based 
process for developing, modifying, or endorsing AUC. It is through this 
demonstration that we proposed to meet the requirements of section 
1834(q)(2)(B) of the Act to take into account certain considerations 
for specifying AUC. Section 1834(q)(2)(B) specifies that the Secretary 
must consider whether AUC have stakeholder consensus, are 
scientifically valid and evidence-based, and are based on studies that 
are published and reviewable by stakeholders. It is not feasible for us 
to review every individual criterion of an AUC. Rather, we proposed to 
establish a qualification process and requirements for qualified PLEs 
to ensure that the AUC development or endorsement processes used by a 
PLE result in high quality, evidence-based AUC in accordance with 
section 1834(q)(2)(B). Therefore, we proposed that AUC developed, 
modified, or endorsed by qualified PLEs will constitute the specified 
applicable AUC that ordering professionals would be required to consult 
when ordering applicable imaging services.
    To become and remain a qualified PLE, we proposed to require a PLE 
to demonstrate adherence to specific requirements when developing, 
modifying or endorsing AUC. The first proposed requirement is related 
to the evidentiary review process for individual criteria. Entities 
must engage in a systematic literature review of the clinical topic and 
relevant imaging studies. We would expect the literature review to 
include evidence on analytical validity, clinical validity, and 
clinical utility of the specific imaging study. In addition, the PLE 
must assess the evidence using a formal, published, and widely 
recognized methodology for grading evidence. Consideration of relevant 
published evidence-based guidelines and consensus statements by 
professional medical specialty societies must be part of the evidence 
assessment. Published consensus statements may form part of the 
evidence base of AUC and would be subject to the evidentiary grading 
methodology as any other evidence identified as part of a systematic 
review.
    In addition, we proposed that the PLE's AUC development process 
must be led by at least one multidisciplinary team with autonomous 
governance that is accountable for developing, modifying, or endorsing 
AUC. At a minimum, the team must be composed of three members including 
one with

[[Page 71106]]

expertise in the clinical topic related to the criterion and one with 
expertise in imaging studies related to the criterion. We encourage 
such teams to be larger, and include experts in each of the following 
domains: Statistical analysis (such as biostatics, epidemiology, and 
applied mathematics); clinical trial design; medical informatics; and 
quality improvement. A given team member may be the team's expert in 
more than one domain. These experts should contribute substantial work 
to the development of the criterion, not simply review the team's work.
    Another important area to address that provides additional 
assurance regarding quality and evidence-based AUC development is the 
disclosure of conflicts of interest. We believe it is appropriate to 
impose relatively stringent requirements for public transparency and 
disclosure of potential conflicts of interest for anyone participating 
with a PLE in the development of AUC. We proposed that the PLE must 
have a publicly transparent process for identifying and disclosing 
potential conflicts of interest of members on the multidisciplinary AUC 
development team. The PLE must disclose any direct or indirect 
relationships, as well as ownership or investment interests, among the 
multidisciplinary team members or immediate family members and 
organizations that may financially benefit from the AUC that are being 
considered for development, modification or endorsement. In addition, 
the information must be made available to the public, if requested, in 
a timely manner.
    For individual criteria to be available for practitioners to review 
prior to incorporation into a CDS mechanism, we proposed that the PLE 
must maintain on its Web site each criterion that is part of the AUC 
that the entity has considered or is considering for development, 
modification, or endorsement. This public transparency of individual 
criteria is critical not only to ordering and furnishing professionals, 
but also to patients and other health care providers who may wish to 
view all available AUC.
    Although evidence should be the foundation for the development, 
modification, and endorsement of AUC, we recognized that not all 
aspects of a criterion will be evidence-based, and that a criterion 
does not exist for every clinical scenario. We believe it is important 
for AUC users to understand which aspects of a criterion are evidence-
based and which are consensus-based. Therefore, we proposed that key 
decision points in individual criteria be graded in terms of strength 
of evidence using a formal, published, and widely recognized 
methodology. This level of detail must be part of each AUC posted to 
the entity's Web site.
    It is critical that as PLEs develop large collections of AUC, they 
have a transparent process for the timely and continual review of each 
criterion, as there are sometimes rapid changes in the evidence base 
for certain clinical conditions and imaging studies.
    Finally, we proposed that a PLE's process for developing, 
modifying, or endorsing AUC (which would be inclusive of the 
requirements being proposed in this rule) must be publicly posted on 
the entity's Web site.
    We believe it is important to fit AUC to local circumstances and 
populations, while also ensuring a rigorous due process for doing so. 
Under our AUC program, local adaptation of AUC will happen in three 
ways. First, compatibility with local practice is something that 
ordering professionals can assess when selecting AUC for consultation. 
Second, professional medical societies (many of which have state 
chapters) and large health systems (which incorporate diverse practice 
settings, both urban and rural) that become qualified PLEs can get 
local feedback at the outset and build alternative options into the 
design of their AUC. Third, local PLEs can themselves become qualified 
to develop, modify, or endorse AUC.
c. Process for Provider-Led Entities To Become Qualified To Develop, 
Endorse, or Modify AUC
    We proposed that PLEs must apply to CMS to become qualified. We 
proposed that entities that believed they met the definition of 
provider-led, submit applications to us that document adherence to each 
of the qualification requirements. The application must include a 
statement as to how the entity meets the definition of a PLE. 
Applications will be accepted each year but must be received by January 
1. A list of all applicants that we determine to be qualified PLEs will 
be posted to our Web site by the following June 30 at which time all 
AUC developed or endorsed by that PLE will be considered to be 
specified AUC. We proposed all qualified PLEs must re-apply every 6 
years and their applications must be received by January 1 during the 
5th year of their approval. Note that the application is not a CMS 
form; rather it is created by the applicant entity.
d. Identifying Priority Clinical Areas
    Section 1834(q)(4) of the Act requires that, beginning January 1, 
2017, ordering professionals must consult applicable AUC using a 
qualified CDS mechanism when ordering applicable imaging services for 
which payment is made under applicable payment systems and provide 
information about the CDS mechanism consultation to the furnishing 
professional, and that furnishing professionals must report the results 
of this consultation on Medicare claims. Section 1834(q)(5) of the Act 
further provides for the identification of outlier ordering 
professionals based on a low adherence to applicable AUC. We proposed 
to identify priority clinical areas of AUC that we will use in 
identifying outlier ordering professionals. Although there is no 
consequence to being identified as an outlier ordering professional 
until January 2020, it is important to allow ordering and furnishing 
professionals as much time as possible to use and familiarize 
themselves with the specified applicable AUC that will eventually 
become the basis for identifying outlier ordering professionals.
    To identify these priority clinical areas, we may consider 
incidence and prevalence of diseases, as well as the volume, 
variability of utilization, and strength of evidence for imaging 
services. We may also consider applicability of the clinical area to a 
variety of care settings, and to the Medicare population. We proposed 
to annually solicit public comment and finalize clinical priority areas 
through the PFS rulemaking process beginning in CY 2017. To further 
assist us in developing the list of proposed priority clinical areas, 
we proposed to convene the Medicare Evidence Development and Coverage 
Advisory Committee (MEDCAC), a CMS FACA compliant committee, as needed 
to examine the evidence surrounding certain clinical areas.
    Specified applicable AUC falling within priority clinical areas may 
factor into the low-adherence calculation when identifying outlier 
ordering professionals for the prior authorization component of this 
statute, which is slated to begin in 2020. Future rulemaking will 
address further details.
e. Identification of Non-Evidence-Based AUC
    Despite our proposed PLE qualification process that should ensure 
evidence-based AUC development, we remain concerned that non-evidence-
based criteria may be developed or

[[Page 71107]]

endorsed by qualified PLEs. Therefore, we proposed a process by which 
we would identify and review potentially non-evidence-based criteria 
that fall within one of our identified priority clinical areas. We 
proposed to accept public comment through annual PFS rulemaking so that 
the public can assist in identifying AUC that potentially are not 
evidence-based. We foresee this being a standing request for comments 
in all future rules regarding AUC. We proposed to use the MEDCAC to 
further review the evidentiary basis of these identified AUC, as 
needed. The MEDCAC has extensive experience in reviewing, interpreting, 
and translating evidence. If through this process, a number of criteria 
from an AUC library are identified as being insufficiently evidence-
based, and the PLE that produced the library does not make a good faith 
attempt to correct these in a timely fashion, this information could be 
considered when the PLE applies for re-qualification.
6. Summary
    Section 1834(q) of the Act includes rapid timelines for 
establishing a new Medicare AUC program for advanced imaging services. 
The number of clinicians impacted by the scope of this program is 
massive as it will apply to every physician and practitioner who orders 
applicable diagnostic imaging services. This crosses almost every 
medical specialty and could have a particular impact on primary care 
physicians since their scope of practice can be quite vast.
    We believe the best implementation approach is one that is 
diligent, maximizes the opportunity for public comment and stakeholder 
engagement, and allows for adequate advance notice to physicians and 
practitioners, beneficiaries, AUC developers, and CDS mechanism 
developers. It is for these reasons we proposed a stepwise approach, 
adopted through rulemaking, to first define and lay out the process for 
the Medicare AUC program. However, we also recognize the importance of 
moving expeditiously to accomplish a fully implemented program.
    In summary, we proposed definitions of terms necessary to implement 
the AUC program. We were particularly seeking comment on the proposed 
definition of PLE as these are the organizations that have the 
opportunity to become qualified to develop, modify, or endorse 
specified AUC. We also proposed an AUC development process which allows 
some flexibility for PLEs but sets standards including an evidence-
based development process and transparency. In addition, we proposed 
the concept and definition of priority clinical areas and how they may 
contribute to the identification of outlier ordering professionals. 
Lastly, we proposed to develop a process by which non-evidence-based 
AUC will be identified and discussed in the public domain. We invited 
the public to submit comments on these proposals.
    The following is a summary of the comments we received regarding 
our proposals.
    Comment: There was disagreement among commenters regarding the 
proposed definition of PLE. Numerous commenters supported finalization 
of the proposed definition for PLE. One commenter noted that national 
professional medical specialty societies were specified in PAMA as an 
example of a PLE and therefore the definition should encompass such 
societies. Another commenter requested the agency provide a definition 
of national professional medical specialty societies. Some commenters 
requested the definition ensure that provider groups, physicians, and 
alliances of provider organizations are included. Some commenters 
requested that the definition of PLE be expanded to include radiology 
benefit management (RBM) or similar companies, health plans and 
manufacturers. These commenters stated that providers, physicians and 
other practitioners are integrally involved if not in control of their 
AUC development processes. They stated that by including these entities 
in the definition of PLE, there would be more AUC available in the 
market (which they believe would yield healthy competition). They also 
indicated that these entities can move more quickly to update AUCs. 
Commenters in support of RBMs stated that national professional medical 
specialty societies had potential conflicts of interest when developing 
AUC for use by their own medical specialty as some specialties are paid 
by performing imaging services. Commenters in support of national 
professional medical specialty societies state that RBMs had potential 
conflicts of interest and were incentivized to control costs. 
Commenters also expressed conflicting opinions regarding the intent of 
the term ``provider-led entities'' as used in section 218(b) of the 
PAMA.
    Response: We agree with the commenter that national professional 
medical societies were identified in the statute as an example of the 
entities that should fall within the definition of PLE. The proposed 
definition of PLE explicitly included national professional medical 
specialty societies, as well as organizations comprised primarily of 
providers and actively engaged in the practice and delivery of health 
care. The way that national professional medical societies and other 
similar organizations are structured, many would not have been 
considered ``actively engaged in the practice and delivery of 
healthcare'' under the proposed definition. This is because national 
professional medical specialty societies and other similar entities do 
not, as an organization, deliver care to patients. Therefore, we are 
modifying the proposed definition of PLE to finalize a definition that 
focuses on the practitioners and providers that comprise an 
organization and not on whether the organization, as an entity, 
delivers care. This approach subsumes national professional medical 
specialty societies whose members are actively engaged in delivering 
care in the community and eliminates the need to establish a separate 
definition for national professional medical specialty societies as 
they are now an example of a PLE. This will also include alliances and 
collaboratives of hospitals and hospital system.
    Some commenters suggested that physicians and other practitioners 
are involved in the AUC development process and, therefore, should be 
considered PLEs. However, we believe the AUC development process 
typically would be embedded within a larger organization, and the 
organization as a whole may not be primarily comprised of 
practitioners. We continue to believe that the statute is intended to 
focus on the structure of the entire organization, and to require that 
it be ``provider-led.'' We believe that the PLE definition must apply 
to the organization as a whole, as processes that are embedded within 
the organization are not the same as a separately identifiable entity. 
We do not believe the modified definition of PLE that we are finalizing 
will limit the AUC market or the participation of third parties (such 
as RBMs) in the AUC development process. There may be opportunity for 
third parties to collaborate with PLEs to develop AUC.
    Comment: Some commenters expressed concerns that the process to 
become a qualified PLE is more restrictive than section 218(b) of the 
PAMA requires and could prohibit some organizations with evidence-based 
AUC from participating in the program, which could limit physician and 
practitioner choice for AUC consultation.
    Response: Section 1834(q)(2)(A) of the Act, as added by section 
218(b) of the PAMA, requires that we specify AUC for applicable imaging 
services only from among AUC developed or endorsed by

[[Page 71108]]

national professional medical specialty societies or other PLEs. 
Section 1834(q)(2)(B) of the Act requires that, in specifying these 
AUC, we must take into account whether the AUC have stakeholder 
consensus, are scientifically valid and evidence-based, and are based 
on published studies that are reviewable by stakeholders. We believe 
the process we proposed to identify qualified PLEs is essential to 
ensuring that we take into account the factors described in the 
statute.
    Comment: Regarding our proposal to require that, in order to be 
considered a qualified PLE, the PLE's AUC development process be led by 
a multidisciplinary team with specific characteristics, some commenters 
requested that the multidisciplinary team should include more than the 
minimum three members we had proposed, with some commenters suggesting 
upwards of 15 members. Other commenters suggested the requirements for 
the team should not restrict the participation of any qualified 
participants; in other words, expertise should not be dictated entirely 
by CMS and teams should have the option to add whomever they determine 
appropriate. Still other commenters suggested that CMS should require 
representation on the multidisciplinary team from primary care, 
industry, patient advocates and insurers and experts on the imaging 
study and clinical topic.
    Response: We agree that the multidisciplinary team would benefit 
from additional representation and, more specifically, from 
representation by primary care practitioners, because a large 
proportion of imaging orders will be made by primary care 
practitioners. In response to these comments, we are modifying our 
proposal to instead require that the multidisciplinary team must have 
at least seven members including a primary care practitioner. We are 
also modifying the requirements to clearly state that the required 
expertise in the clinical topic and imaging service related to the AUC 
that are being developed must be provided by practicing physicians. 
These modifications to the multidisciplinary team requirements align 
with many of the commenters' support for more representation from 
practitioners in the field.
    We agree with the commenters' suggestions that the team should be 
required to include more members, and that the types of experts 
required on the team should also be expanded. In addition to primary 
care, we are also modifying our proposal to require that experts in 
clinical trial design and statistical analysis be required members of 
the team. While we do not agree that involvement from industry or 
patient advocates should be required on the team, we do believe that 
teams could benefit from dialogue with such stakeholders. In response 
to the commenters that expressed concern about CMS restricting team 
participation, we encourage teams to be inclusive and seek members with 
any other relevant expertise.
    Comment: Some commenters expressed concerns regarding the burden 
associated with the evidence review process we proposed to require for 
qualified PLEs in the AUC development process. Commenters indicated 
that the evidence review process that we proposed to require would be 
expensive, as commissioned systematic reviews are costly, and the 
process would require a significant amount of time which would be 
burdensome especially for smaller organizations. Some commenters 
suggested replacing ``systematic'' with ``thorough'' in describing the 
evidence review process to avoid unintentionally requiring a 
commissioned systematic review, and to account for specific methods 
included in systematic reviews that may not be applicable to all 
advanced diagnostic imaging studies. One commenter recommended that the 
cost of systematic reviews and the costs associated with AUC 
development should be at least partially mitigated by government 
organizations like CMS, and tax incentives or grant money should be 
available to medical specialty societies to help offset the costs.
    Response: While we understand the commenters' concerns about the 
cost and time necessary to comply with the proposed evidence review 
requirement for developing AUC, we believe that this is a fundamental 
to ensuring that AUC are evidence-based to the extent feasible as 
required by section 1834(q)(1)(B) of the Act. We also believe the 
proposed evidence review process is essential to ensuring that the AUC 
that are developed can serve their purpose, as indicated in section 
1834(q)(1)(B) of the Act, to assist ordering professionals in making 
the most appropriate treatment decision for specific clinical 
conditions for individual patients. However, we believe some commenters 
might have misinterpreted the reference in the proposed rule to a 
``systematic'' review. To clarify, we did not intend to require that 
the evidence review process must be accomplished by commissioning 
external systematic evidence reviews or technology assessments. We 
expect PLEs to undertake evidence reviews of sufficient depth and 
quality to ensure that all relevant evidence-based publications on 
trials, studies and consensus statements are identified, considered and 
evaluated; and that such reviews are reproducible. In response to the 
commenter that requested financial support in the development of AUC, 
we note that section 218(b) of the PAMA included no provisions 
authorizing funding tax incentives, grants, or other financial 
assistance to PLEs developing AUC.
    Comment: Commenters requested clarification on the requirements for 
modifying and endorsing AUC. Some commenters suggested that qualified 
PLEs that modify or endorse AUC should be required to go through the 
same process required for initial AUC development while other 
commenters recommended different requirements for modification or 
endorsement of AUC. Other commenters stated that modification of AUC 
should not be permitted, and that evidence-based AUC should not be 
changed to fit local scenarios.
    Response: We believe the same process and requirements should apply 
to the AUC development process for all qualified PLEs, and that 
modification of AUC should be accomplished using the same process and 
requirements that apply to the development of AUC. This will ensure 
that there is documented evidence for the modification. In the proposed 
rule, we did not intend to differentiate between the process and 
requirements for AUC development, modification, and endorsement by 
qualified PLEs. We are clarifying in this rule that this is because a 
PLE must be qualified to endorse another qualified PLE's AUC. Both 
entities would have followed the process to become qualified and both 
entities would be listed on the CMS Web site as such. Endorsement is 
not intended to be duplicative. In other words it is not necessary for 
the endorsing qualified PLE to duplicate the extensive evidence review 
process performed by the qualified PLE that developed the AUC set or 
individual criterion.
    Regarding local adaption, we believe it is important to fit AUC to 
local circumstances, while also ensuring application of a rigorous 
process in doing so. However, only AUC modified by qualified PLEs can 
become specified applicable AUC.
    Comment: Some commenters recommended that CMS identify specific 
evidence grading methodologies that AUC developers are required to use, 
for example the GRADE, AHRQ and USPSTF grading systems.
    Response: We believe that evidence grading is an essential 
component of the

[[Page 71109]]

AUC development process and that AUC developers should have flexibility 
when working within the requirements we have set forth. In addition, 
one grading system may be more appropriate for AUC development for a 
certain clinical condition while another grading system may be best for 
another condition. Therefore, we will not require the use of specific 
grading mechanisms.
    Comment: Some commenters requested clarification regarding the 
meaning of ``autonomous governance'' specific to the multidisciplinary 
team.
    Response: In proposing that, in order to be a qualified PLE, the 
PLE's AUC development process must be led by at least one 
multidisciplinary team with autonomous governance, we intended to 
highlight the need for the multidisciplinary team to be independent in 
its work from influence and oversight by components of the PLE not 
involved or associated with the multidisciplinary team.
    Comment: Some commenters requested the inclusion of a requirement 
for public comment and/or stakeholder feedback on AUC developed, 
modified or endorsed by qualified PLEs.
    Response: We recognize that some AUC development processes could 
invite public comment. While we believe this would be appropriate, we 
do not believe we should establish this as a requirement for the 
development of AUC by a qualified PLE. We do however believe that 
public transparency of the resulting AUC and the corresponding evidence 
base is critical to this program. In order to be a qualified PLE, the 
PLE must post AUC on their Web site in the public domain that allows 
all developed AUC to be reviewed by all stakeholders.
    Comment: Some commenters requested further clarification regarding 
the requirement for AUC to be reviewed and updated. Many had concerns 
that some PLEs would not update AUC on a frequent enough basis to 
capture changes in the medical literature. One commenter agreed with 
requiring regular reviews and updating, and another commenter suggested 
that review be continuous and should occur on a cycle shorter than 1 
year.
    Response: We agree that AUC should be reviewed and updated 
frequently and have included a requirement for qualified PLEs to go 
through this process at least annually. We believe that qualified PLEs 
that produce quality AUC should have a process in place to evaluate the 
state of the medical literature on an annual basis. These annual 
reviews will not always result in changes to the AUC, rather, it will 
ensure that the AUC reflect the current body of evidence.
    Comment: Some commenters recommended including processes approved 
by the National Guidelines Clearinghouse (NGC) as examples of a 
rigorous evidence-based process, and that we grant provisional approval 
as qualified to PLEs that have met the NGC inclusion criteria and whose 
AUC are posted to the NGC.
    Response: While the NGC serves as an important repository for 
clinical practice guidelines, we believe that the CMS application 
process for qualified PLE status is not overly burdensome as a stand-
alone process. We believe our application process is appropriate to 
assure key aspects of AUC development. We also recognize that PLEs that 
have their AUC posted to the NGC may find that they are at an advantage 
in the application process to become a qualified PLE because they have 
already prepared a package with some similar information.
    Comment: One commenter stressed the importance of allowing expert 
opinion in the AUC development process, especially when relevant 
studies are limited or lacking in available literature. The commenter 
also noted the importance of transparency and disclosure of conflict of 
interest for experts.
    Response: The process of AUC development allows for the opportunity 
for expert opinion, especially as we expect the multidisciplinary team 
to be populated with such experts. In addition, in the literature 
review we would expect published consensus papers and similar documents 
to be identified and be part of the evidentiary review. AUC developers 
may choose to put their draft AUC into the public domain for comment 
and receive expert opinion in that manner.
    Comment: One commenter recommended that CMS should initiate the AUC 
development process and use public comment, qualified PLEs and 
multidisciplinary committees to develop AUC.
    Response: Section 1834(q)(7) of the Act clarifies that section 
1834(q) of the Act does not authorize the Secretary to develop or 
initiate the development of clinical practice guidelines or AUC. 
Additionally, under section 1834(q)(1)(B) of the Act, AUC are defined 
as criteria only developed or endorsed by national professional medical 
specialty societies or other PLEs. As such, we do not believe it would 
be appropriate for us to develop or initiate the development of AUC for 
purposes of the program under section 1834(q) of the Act.
    Comment: One commenter recommended that CMS create a concise list 
of AUC development requirements or create a template for entities to 
use for their application and post the list or template to the CMS Web 
site.
    Response: At least for the first round of applications for 
qualified PLEs, we will not be making available templates or 
applications. CMS might consider developing such templates or 
applications in the future if we find it would be useful, efficient or 
necessary.
    Comment: Some commenters expressed their confusion with the AUC 
terminology used in the proposed rule. One commenter recommended, for 
the sake of clarity, using the terms ``AUC'', ``AUC set'' and 
``required AUC'' in the final rule and to revise the definition of AUC 
accordingly.
    Response: We understand that there might have been some confusion, 
and we have revised the terminology used in this final rule with 
comment period to provide greater clarity. In general, when we refer to 
AUC we mean a set or library of AUC, and when we use the term 
``individual criterion'' we are referring to a single appropriate use 
criterion.
    Comment: Some commenters opposed our proposal to specify applicable 
AUC by first identifying qualified PLEs, and recommended instead that 
we specify a small group of AUC in order to meet the timeline specified 
under section 218(b) of the PAMA, and then expanding the list of AUC 
over time. Other commenters requested that we adopt a phased approach 
with a focus on AUC for a limited number of clinical conditions that 
would be used first in larger hospitals and health systems with gradual 
expansion to smaller practices.
    Response: We believe some of these concerns will be addressed by 
clarifying our expected timeline which allows additional time for all 
impacted providers and practitioners to prepare for the AUC 
consultation program specified under section 1834(q) of the Act. There 
will be a delay in not only specifying applicable AUC and identifying 
qualifying CDS mechanisms, but these delays will necessarily result in 
a delay of the date when ordering practitioners will be expected to 
report on the Medicare claim form information on their consultation 
with CDS mechanisms.
    Specified AUC must first exist prior to being loaded into CDS 
mechanisms, and qualified CDS mechanisms must exist prior to 
consultation by ordering professionals.
    We fully anticipate that we will be able to finalize rules and 
requirements around the CDS mechanism and approve mechanisms through

[[Page 71110]]

rulemaking in 2017. This timeline will significantly impact when we 
would expect practitioners to begin using those CDS mechanisms to 
consult AUC and report on those consultations. We do not anticipate 
that the consultation and reporting requirements will be in place by 
the January 1, 2017 deadline established in section 218(b) of the PAMA. 
Again, we are not in a position to predict the exact timing of this 
deliverable; however, we do not anticipate that it will take place, 
conservatively, until CDS mechanisms are established through 
rulemaking. We do not agree that the requirement to consult with 
specified AUC should be limited to certain topics or program areas as 
we believe such consultation will help to improve appropriate 
utilization across-the-board. We believe that section 218(b) of the 
PAMA can be rolled out in a stepwise manner to allow adequate time for 
all providers and practitioners to prepare.
    Comment: Some commenters recommended that priority clinical areas 
be established prior to AUC development and physicians and other 
practitioners be required to consult AUC only within these areas. 
Commenters stated priority clinical areas should focus on areas with 
AUC for which there are consistently available appropriateness ratings 
and improved practices resulting from AUC consultation. Other 
commenters recommended placing limitations on specified AUC, for 
example limiting the number specified for each clinical condition and 
limiting specified AUC to those developed by national professional 
associations.
    Response: We do not agree that we should limit the areas in which 
AUC may be specified. We believe it is more advantageous to specify 
libraries of AUC because this program is intended to assist ordering 
professionals in making the most appropriate treatment decisions for a 
specific clinical condition for an individual with reference to 
ordering practices for all advanced diagnostic imaging services. 
However, we believe that the identification of priority clinical areas 
will allow for physicians and other practitioners to focus their 
efforts on clinical areas for which there is strong evidence and which 
may have high impact on patients and society. Our goal is to tie 
outlier calculations to these high impact clinical areas.
    Comment: One commenter requested that we include a process by which 
AUC developed by national professional medical specialty societies that 
do not seek to be qualified PLEs can be considered specified applicable 
AUC and, thereby, incorporated into CDS mechanisms (for example, PLEs 
with small, specific AUC libraries).
    Response: We do not believe it would be appropriate either to allow 
AUC to be specified that do not meet the development criteria we have 
established, or to presume that AUC developed by a national 
professional medical specialty society would meet the requirements of 
this rule or to develop a separate process for specifying individual 
appropriate use criterion other than through the PLE qualification 
process. The requirements for the AUC developed process logically apply 
whether the PLE is producing only a few subspecialty criteria or 
hundreds of criteria to covering a large portion of all advanced 
diagnostic imaging services.
    Comment: Some commenters suggested that CMS ensure that PLEs 
provide all specified AUC to any developers of CDS mechanisms and do so 
in a similar manner in order to allow ordering professionals to choose 
any AUC and any CDS mechanism, and to promote innovation. Other 
commenters recommended requiring standardization of AUC for the 
purposes of CDS mechanism integration.
    Response: While we are not able to respond fully to these comments 
in this rule, we believe comments regarding standardization of AUC and 
CDS mechanisms for purposes of interoperability are very important, and 
we intend to further consider these comments and address this issue 
through rulemaking next year.
    Comment: One commenter requested that CMS ensure that AUC 
developers do not use the process to restrict the scope of practice and 
limit a CRNA's ability to provide comprehensive pain management care.
    Response: We are not aware of AUC developed with the goal of 
limiting the scope of practice for any practitioners. However, should 
this become a concern, especially to the extent that the limitations 
might not be evidence-based, then we would take measures to review 
these AUC, possibly including a review by the MEDCAC of their 
evidentiary basis.
    Comment: One commenter recommended that qualified PLEs that develop 
AUC for a priority clinical area should be required to produce AUC that 
reasonably encompass the entire scope of that priority clinical area, 
so as to ensure that ordering professionals cannot use only a very 
small number of criteria with the goal of participating in the program 
as little as possible.
    Response: We agree that for a qualified PLE to identify their AUC 
as addressing a priority clinical area, the AUC must address the area 
comprehensively; and we are revising our regulations to include 
language that addresses this concern.
    Comment: Some commenters requested clarification about the AUC 
consultation process. For example, commenters questioned whether 
ordering professionals are expected to consult all AUC developed by 
qualified PLEs or just the AUC incorporated into the CDS mechanism they 
use. Some commenters supported the former approach. Other commenters 
recommended that ordering professionals would only be required to 
consult and report on AUC included in priority clinical areas.
    Response: Additional details regarding how this new program will be 
operationalized and what will appear on the Medicare claim form will be 
forthcoming in future rulemaking. However, section 218(b) of the PAMA 
does not expressly limit consultation to only a subset (priority 
clinical area) of AUC; rather, it is clear that AUC must be consulted 
for all advanced imaging services. Section 218(b) of the PAMA also 
recognizes the possibility that ordering practitioners could consult 
CDS and find no corresponding AUC. We anticipate that more details 
regarding consultation with CDS mechanisms and claims-based reporting 
will be released through rulemaking in CY 2017.
    Comment: Some commenters expressed concern regarding conflicting 
AUC and conflicts between AUC and other policies (such as national 
coverage determinations). Some commenters requested clarification as to 
a reconciliation process for conflicting AUC and other commenters 
suggested that specialty societies work together to publish information 
regarding conflicting AUC.
    Response: While we believe that qualified PLEs will be using an 
evidence-based AUC development process that will reduce the likelihood 
and frequency of conflicting AUC, we agree that conflicting AUC may be 
of concern. Conflicting AUC are now highlighted in our rule as an 
example of situations in which it might be appropriate for CMS and the 
MEDCAC to review the evidence base. Dramatically conflicting AUC may be 
a signal that one of them is not evidence-based. The MEDCAC could 
review the underlying evidence and the committee could discuss whether 
that evidence supports the conclusions of the AUC thereby exposing any 
non-evidence-based AUC.

[[Page 71111]]

    Comment: Some commenters recommended including a mechanism to 
suspend or remove qualification for PLEs before the periodic 
requalification process in the event that the PLE has non-evidence-
based AUC and does not take steps to remediate or remove those 
criteria. Concerns from commenters included that a qualified PLE might 
fail to follow the process, but continue to have their AUC specified 
and used by ordering practitioners. Further, there was concern by 
commenters that non-evidence-based AUC would continue to be used by 
ordering practitioners for an extended period of time since 
requalification only occurs every 5 years.
    Response: We agree with this comment and have added language to 
enable us to take steps to remove the qualified status of qualified 
PLEs that have non-evidence-based AUC within their AUC libraries and do 
not take prompt measures to resolve or remove the criteria. In addition 
to this scenario of non-evidence-based AUC, it is important that we 
have the ability to remove the qualified status from a PLE that fails 
to meet any of the other requirements set forth in our regulations 
under Sec.  414.94(c) relating to AUC development processes and 
transparency.
    Comment: One commenter suggested that CMS accept applications to 
become a qualified PLE until March of 2016 rather than requiring them 
to be submitted by January 1, 2016. Other commenters request a further 
extension of the deadline, or postponement altogether of the PLE 
application process.
    Response: We are finalizing the proposed deadline of January 1, 
2016 for PLEs to apply to become qualified PLEs because we believe it 
is important that we avoid further delay of AUC specification and 
program implementation. We note that PLEs will have an annual 
opportunity to apply to become qualified.
    Comment: Some commenters disagreed with our proposal to require 
qualified PLEs to reapply for qualification every 6 years, and were 
instead in favor of a shorter time frame for review.
    Response: We carefully reviewed the timeline for reapplication and 
have determined that an application submitted by January of the 5th 
year of approval will receive a determination prior to the start of the 
qualified PLE's 6th year. Therefore, the cycle of approval for 
qualified PLEs is every 5 years. This is different than what was 
proposed as we had originally proposed a cycle that was every 6 years. 
As finalized, a PLE that becomes qualified for the first 5-year cycle 
beginning July 2016 would be required to submit an application for 
requalification by January 2021. A determination would be made by June 
2021 and, if approved, the second 5-year cycle would begin in July 
2021. For example:

Year 1 = July 2016 to June 2017
Year 2 = July 2017 to June 2018
Year 3 = July 2018 to June 2019
Year 4 = July 2019 to June 2020
Year 5 = July 2020 to June 2021 (reapplication is due by January 1, 
2021)

    We believe the reapplication timeline is appropriate and allows for 
PLEs, CDS mechanism developers and ordering practitioners to enter into 
longer term agreements without the constant concern that the PLE will 
lose its qualified status. We will assess whether a qualified PLE 
consistently has developed evidence-based AUC and met our other 
requirements at the time of requalification. We note, however, that if 
it appears that qualified PLEs are not maintaining compliance with our 
requirements for AUC development, we could reevaluate the 
requalification timeline in future rulemaking.
    Comment: One commenter recommended listing all qualified PLEs on 
the CMS Web site.
    Response: We agree with this comment and will list all qualified 
PLEs on the CMS Web site.
    Comment: One commenter recommended a limit to the number of PLEs 
that can be qualified.
    Response: We do not, at this time, believe it is necessary to limit 
the number of PLEs that can be qualified. If a PLE becomes qualified 
and is developing evidence-based AUC we believe they should have the 
opportunity for their AUC to become specified.
    Comment: We received numerous comments regarding how to identify 
priority clinical areas. Some commenters recommended that CMS initially 
focus on a small number of high volume services. One commenter 
recommended limiting the priority clinical areas to only those with a 
strong evidence base rather than areas reliant on consensus opinions. 
Another commenter recommended including areas where a large gap exists 
between currently available AUC and studies that are ordered in the 
Medicare program (for example muscular-skeletal conditions, abdominal 
conditions). One commenter recommended that the priority clinical areas 
should clearly define cohorts of patients with common disease processes 
or symptom complexes. One commenter recommended that qualified PLEs 
identify the priority clinical areas or that CMS should accept 
proposals from qualified PLEs when identifying these areas. One 
commenter suggested that CMS consider imaging studies that have had 
high utilization rates over the past 10 years, conditions for which AUC 
have been most recently adopted where significant inappropriate use may 
still exist, and simple, common conditions.
    Response: We appreciate these recommendations and believe that the 
proposals that we are finalizing will allow for consideration of 
varying elements in identifying priority clinical areas. We expect to 
propose the first priority clinical areas in next year's PFS rule based 
on stakeholder consultation, and hope to receive further, more specific 
public comments at that time.
    Comment: Some commenters suggested that CMS identify a substantial 
number of priority clinical areas to ensure enough data are available 
to calculate outlier ordering professionals with statistical 
significance. One commenter recommended that, for the purpose of 
outlier identification, these areas should include those where there is 
wide clinical variance in appropriate ordering patterns.
    Response: We appreciate these suggestions and will consider them 
when identifying proposed priority clinical areas.
    Comment: Many comments strongly supported the proposed transparency 
requirements for qualified PLEs. Commenters supported the public 
posting of AUC, references to the information considered in developing 
AUC and AUC development, and the review and updating processes to 
qualified PLE Web sites. One commenter recommended posting all AUC 
development information to a Web site hosted by CMS. Another commenter 
requested clarification about acceptance of alternate means of making 
the information public (for example, hard copies upon request, 
electronically upon request, but not posted in full to the Web site).
    Response: We agree that the transparency requirements are important 
and essential to this program. Public posting of the AUC and other 
required information to each PLE's Web site is required; and it will 
not suffice to make the information available in other, less accessible 
and transparent ways. It is our goal that the information be easily 
accessible and reviewable by all stakeholders. We do not anticipate 
posting this information on a CMS Web site as each qualified PLE 
retains

[[Page 71112]]

responsibility for public posting of the required information.
    Comment: Most commenters supported our proposed policies on 
transparency and conflicts of interest for multidisciplinary team 
members. Some commenters recommended further strengthening these 
requirements to incorporate references to AUC-related activities or 
relationships specific to commercial, non-commercial, intellectual, 
institutional, patient/public arenas. Other commenters recommended 
requiring the exclusion of team members with any significant conflicts 
of interest. Some commenters recommended that we impose transparency 
requirements for individuals and organizations at the commercial level 
specific to CDS mechanism sales/marketing, licensing relationships and 
advisory board memberships. One commenter requested clarification 
regarding conflict of interest requirements for entities that endorse 
AUC.
    Response: We agree that transparency and disclosure of conflicts of 
interest is essential for multidisciplinary team members, and we are 
clarifying in this final rule with comment period that these 
requirements apply to the team and to any other party involved in 
developing AUC including the qualified PLE itself. We disagree with the 
commenter's suggestion to categorically exclude through our regulations 
team members for whom there is a conflict of interest as those 
individuals may also have the greatest knowledge base for particular 
issues. Some conflicts may be unavoidable, and we believe transparency 
and disclosure will go far toward promoting objectivity. We believe 
that qualified PLEs should use their judgment to establish thresholds 
where certain conflicts would result in recusal or removal of an 
individual from the multidisciplinary team. We are aware that there are 
a number of existing templates, thresholds, and mechanisms that might 
reasonably apply to address conflicts of interest. We might address 
this issue further, and standardization of the treatment of conflicts 
could evolve through our annual rulemaking process. At this time we 
believe it is appropriate for conflicts to be disclosed and for the PLE 
to have a reasonable process in place to identify and address them. The 
final rule with comment period also provides for the information to be 
documented and available to the public upon request for a period of 5 
years.
    Comment: One commenter requested that transparency requirements 
specific to AUC and AUC development processes be balanced with 
``intellectual property protection for evidence-based content produced 
by commercial entities . . .'' which could involve a process by which 
interested parties request access to criteria while intellectual 
property is protected. One commenter stated that CMS should not require 
public release of evidence-based content published under copyright 
protection.
    Response: We support and have received strong support for the 
required public disclosure of these processes and resulting content. 
Transparency is essential to ensure all patients and stakeholders can 
review and understand how and why AUC are developed, and to which types 
of patients they do and do not apply. Making this information public is 
particularly important for ordering professionals when they are 
selecting the qualified PLEs and CDS mechanisms that best address their 
practice needs. CDS mechanism developers and qualified PLEs may need to 
enter into agreements for AUC to be loaded into the mechanisms and used 
by ordering professionals.
    Comment: One commenter recommended that we adopt a requirement for 
AUC developers to disclose any participating medical specialty 
societies that do not endorse the AUC being developed and the rationale 
for their not endorsing.
    Response: PLEs may choose to list which medical specialties 
societies agree with their AUC and which ones do not. However, we do 
not believe it would be appropriate for us to require this disclosure 
or explanation. By having AUC in the public domain, any organization 
may respond to the AUC and state their agreement or disagreement in any 
format they determine is appropriate.
    Comment: Many commenters expressed significant concerns regarding 
the implementation timeline set forth in section 218(b) of the PAMA. 
Commenters questioned whether it is feasible or reasonable to meet the 
January 1, 2017 deadline to require consultation by ordering 
professionals with CDS mechanisms given that we do not anticipate 
finalizing requirements for CDS mechanisms until rulemaking for the CY 
2017 PFS and CDS mechanism developers and ordering professionals will 
need 12-18 months to incorporate the requirements into clinical 
practice.
    Response: We understand these concerns and agree that the timeline 
set forth in section 218(b) of the PAMA is difficult to meet. As such, 
we will delay implementation of certain AUC program components 
including the requirement for consultation with CDS mechanisms. 
Consultation with a CDS mechanism will not be required on January 1, 
2017 because we do not expect to have approved CDS mechanisms by that 
date. Although we will develop our plans through further rulemaking, at 
this time, we do not expect to have approved CDS mechanisms until 
approximately summer of 2017. In that event, consultations with CDS 
mechanisms could not take place on January 1, 2017.
    Comment: Some commenters supported maintaining the timeline set 
forth in the PAMA for AUC program implementation. One commenter stated 
that their organization was able to comply with the timeline. Some 
commenters also recommended using subregulatory guidance and requests 
for information (RFIs) outside of rulemaking to meet the timeline set 
forth in the PAMA.
    Response: We appreciate the willingness and enthusiasm of these 
stakeholders in moving quickly forward in AUC program implementation; 
however, we believe that it is important to take a stepwise approach to 
implementation and to establish the components of this program as 
proposed through notice and comment rulemaking. This approach will 
ensure that we fully comply with requirements set forth in PAMA for 
stakeholder consultation, and that we develop a sound implementation 
plan. We will continue to engage with stakeholders to inform 
development of future AUC program components and we will consider using 
an RFI to help inform the next rulemaking cycle.
    Comment: Many commenters encouraged CMS to engage in continued 
stakeholder interactions and dialogue for all aspects of the AUC 
program. Commenters particularly advocated for continued stakeholder 
involvement as we develop CDS mechanism requirements during the CY 2017 
rulemaking cycle. Some commenters recommended more engagement with 
professional societies representing ordering physicians and one 
commenter suggested representation of ordering and primary care 
physicians if a MEDCAC is convened.
    Response: We will continue to have an open-door policy and engage 
all stakeholders to develop and refine the AUC program. Not only is 
stakeholder consultation a requirement of PAMA, but we have found these 
interactions to be highly informative and critical in building this 
program.
    Comment: Many commenters offered suggestions regarding the CDS 
component of the AUC program. Commenters identified specific areas of 
importance for CMS to focus on such as

[[Page 71113]]

interoperability of CDS mechanisms and electronic health records (EHRs) 
and the relationship between AUC developers and CDS mechanisms. 
Commenters also cautioned against a roll out of this component that 
would not allow sufficient time for CDS mechanisms to comply with the 
requirements yet to be established in rulemaking or the incorporation 
of AUC consultation through approved CDS mechanisms into clinical 
practice. Commenters further requested that CMS address the CDS 
mechanisms as soon as possible, potentially via avenues outside of the 
rulemaking process, to account for the short implementation timeline 
specified in section 218(b) of the PAMA. Commenters provided important 
and thoughtful recommendations and feedback regarding the CDS component 
of this program.
    Response: We understand the interest in, and concerns expressed 
about the need for more information and details regarding the CDS 
mechanism requirements and incorporation into clinical practice; 
however, as discussed in our proposal, we anticipate that details 
regarding CDS mechanisms will be the focus of rulemaking during 2016 
for the CY 2017 PFS. We appreciate these comments and will use them to 
inform development of future proposals. We will also continue to 
consult and interact with stakeholders. We note again that we do not 
expect that the AUC consultation through approved CDS mechanisms could 
be required on January 1, 2017.
    Comment: Some commenters expressed concern regarding the burden 
placed on furnishing professionals in reporting on ordering 
professionals' compliance with AUC consultation. One commenter 
recommended that the furnishing professional should only be required to 
report on the claim whether or not the ordering professional consulted 
AUC.
    Response: Under section 1834(q)(4)(B) of the Act, the furnishing 
professional is required by statute to include information on the claim 
(for an applicable imaging service furnished in an applicable setting 
and paid under an applicable payment system) that identifies what 
qualified CDS mechanism was consulted by the ordering professional, 
whether the service ordered would or would not adhere to that AUC, or 
was not applicable to the service, and the NPI of the ordering 
professional.
    Comment: Some commenters requested clarification about allowing 
variations in AUC based on local populations and circumstances and 
cautioned that allowing exceptions to specified AUC could work against 
the goal of the AUC program. Many commenters supported flexibility in 
allowing variations based on local populations and circumstances, but 
some commenters suggested that processes for variations should still 
meet the AUC program requirements and should be rare.
    Response: We believe that allowing for variations in AUC based on 
local circumstances is important to ensure that AUC consultation can be 
incorporated into clinical practice throughout the country. We agree 
that local variations should still meet the program requirements to 
ensure that the evidence to support modification is evaluated and 
graded and only performed by qualified PLEs.
    Comment: Some commenters noted that section 218(b) of the PAMA 
allows for an exception to the requirement to consult AUC in the case 
of certain emergency services, but our proposal states that AUC applies 
to various settings including the Emergency Department. Commenters 
stated that this ambiguity could cause a delay in the delivery of 
emergency services to patients and requested clarification on the 
application of the AUC program in emergency departments and exceptions 
for certain emergency services.
    Response: We understand the confusion and will take these comments 
into account as we further develop our policies on exceptions in the 
case of certain emergency services. We anticipate addressing this issue 
in rulemaking for the CY 2017 PFS.
    Comment: One commenter requested clarification on whether mobile, 
free-standing high tech radiology units are subject to this program.
    Response: Whether the equipment is mobile or fixed, the requirement 
to consult AUC is based on whether the service at issue is an 
applicable imaging service ordered by an ordering professional that 
would be furnished in an applicable setting and paid for under an 
applicable payment system. Applicable imaging services include, in 
general, advanced diagnostic imaging services for which AUC are 
publicly available without charge. Applicable settings include a 
physician's office, hospital outpatient department (including an 
emergency department), an ambulatory surgical center, and any other 
provider-led outpatient setting determined appropriate by the 
Secretary. Applicable payment systems include the PFS, the hospital 
outpatient prospective payment system, and the ambulatory surgical 
center payment system. Although we anticipate developing further 
details regarding these specifications through future rulemaking, we 
believe the statutory specifications are fairly clear as to the 
services for which ordering professionals will be required to consult, 
and report on their consultation of, AUC. We believe the commenter can 
make a good preliminary assessment as to whether its services fall 
within these specifications.
    Comment: One commenter stated that the proposed AUC program will 
have unintended consequences on ordering professionals and creates a 
burden for these practices without the promise of improved care. This 
commenter stated that some professional societies were not consulted in 
development of section 218(b) of the PAMA.
    Response: AUC consultation by all advanced diagnostic imaging 
ordering professionals is a requirement under section 218(b) of the 
PAMA. We are developing this program with extensive stakeholder 
consultation and input to ensure that the program is implemented in a 
manner that does not create excessive burden for ordering 
professionals; yet we recognize that there unavoidably will be some 
underlying burden for ordering professionals in consulting AUC and 
reporting on that consultation.
    Comment: Some commenters recommended that physicians and hospitals 
already involved in payment reform models be exempt from reporting 
requirements for ordering professionals under this program.
    Response: Section 218(b) of the PAMA does not include a provision 
for exceptions for participants in payment reform models. We will 
consider whether there is authority within the context of such models 
to consider developing exceptions for model participants.
    Comment: Some commenters requested clarification regarding the use 
of non-evidence-based AUC, particularly when evidence-based AUC are 
available. Commenters suggested that non-evidence-based AUC may be more 
prevalent in the everyday practice of medicine.
    Response: Section 218(b) of the PAMA requires that, to the extent 
feasible, AUC must be evidence-based; and we are including that 
requirement in the AUC development process. However, the process allows 
for the spectrum of the hierarchy of evidence to be used as part of the 
systematic review. AUC based on lower levels of evidence will be 
apparent as each appropriate use criterion posted to the PLE Web site 
would include the level of evidence for each of the decision node.

[[Page 71114]]

    Comment: Some commenters expressed support for our proposal to 
identify non-evidence-based AUC through annual rulemaking and encourage 
public and stakeholder input in the process. One commenter suggested 
requiring all non-evidence-based AUC to be reviewed by the MEDCAC. One 
commenter recommended that CMS define and implement an additional 
auditing process that could be used to identify abuses and systematic 
failures.
    Response: We are finalizing this proposal with additional language 
stating that conflicting AUC will be incorporated into the process for 
addressing non-evidence-based AUC. The MEDCAC may be convened to review 
these AUC. If a non-evidence-based appropriate use criterion is 
identified by the MEDCAC and the qualified PLE fails to revise the 
criterion to reflect the evidence then we may take action regarding the 
qualified PLE's status. In other words, we may determine that 
qualification should be reconsidered outside the 5 year reapplication 
process. We have not created additional auditing processes beyond those 
that we already possess. We could consider this in future rulemaking if 
the agency and MEDCAC become overwhelmed by the volume of non-evidence-
based AUC.
    Comment: One commenter requested incorporation of a process for 
hardship exemptions to consider factors that might prevent or delay 
institutions from meeting the requirements of the AUC program.
    Response: We will address the significant hardship exemption 
(section 1834(q)(4)(C)(iii) of the Act) in future rulemaking, and 
anticipate doing so in rulemaking for the CY 2017 PFS.
    Comment: Some commenters recommended that ordering professionals 
who follow AUC that are developed by internationally-accepted 
methodologies should not have to complete prior authorizations related 
to that treatment. One commenter cautioned against including new care 
improvements in the identification of outliers as clinical practice 
will continue to change. One commenter requested that the CMS 
definition for outliers and mechanisms used to identify and penalize 
outliers must have the necessary flexibility to account for differences 
in volume of advanced imaging studies due to the composition of a 
physician's practice.
    Response: We will address outlier identification and the prior 
authorization component of this program in future rulemaking.
    Comment: Many commenters expressed concerns about the absence of 
claims processing instructions and reporting requirements for AUC 
consultation in our proposal, and the short time frame between 
publication of the CY 2017 PFS and the PAMA deadline for consultation 
with CDS mechanisms. Some of these commenters included suggestions for 
these instructions and reporting requirements.
    Response: As discussed in the proposal, we anticipate addressing 
claims reporting requirements during the CY 2017 PFS rulemaking 
process. The deadline for consulting CDS mechanisms and reporting such 
consultations on Medicare claims will be delayed for a year consistent 
with our proposals in the proposed rule.
    Comment: Some commenters believed that our proposal addressed 
problems encountered in the MID. One commenter specifically noted that 
the proposal accomplished this by: (a) Expanding on the AUC definition 
to identify AUC as link between presenting clinical conditions and 
appropriate imaging services, not just based on imaging service; (b) 
correctly stressing the importance of integration of the CDS into 
clinical workflow; and (c) recognizing the importance of flexibility in 
implementing best practices given local circumstances. Other commenters 
stated that the proposal ignored some recommendations from the MID, 
specifically the recommendation to include guidelines from entities 
other than national specialty societies as the MID noted that societies 
``have a vested interest in advising that imaging be ordered.''
    Response: We have attempted to balance the findings of the MID with 
the statutory requirements by specifying libraries of AUC as opposed to 
individual criteria, and we hope that our transparency and conflict of 
interest requirements will address concerns that commenters had 
regarding conflict of interest of AUC developers. We also believe that 
lessons learned in the MID will benefit CDS mechanism development, and 
we encourage additional comments in that regard in the future.
    Comment: One commenter requested confirmation that the AUC program 
will only be applicable to Medicare FFS, and not Medicare Advantage.
    Response: This program is applicable only to services for which 
payment is made under the PFS, the hospital outpatient prospective 
payment system, and the ambulatory surgical center payment system.
    Comment: One commenter suggested that AUC should fit under the 
Merit-Based Incentive Payment System and should not be a stand-alone 
program.
    Response: We do not believe, at this time, that it would be 
feasible for this program to be incorporated under other quality or 
value-based programs. However, we could explore whether there are 
opportunities for consolidation in the future.
    In response to comments, we are making some changes to our 
proposals as well as finalizing most aspects of the policies as they 
were proposed in the CY 2016 PFS proposed rule.
    We are finalizing the majority of definitions as they were 
proposed. However, based on public comments, we are changing the 
definitions of AUC, PLE and priority clinical area.
    We proposed to define AUC as criteria only developed or endorsed by 
national professional medical specialty societies or other provider-led 
entities, to assist ordering professionals in making the most 
appropriate treatment decision for a specific clinical condition for an 
individual. To the extent feasible, such criteria must be evidence-
based. AUC are a collection of individual appropriate use criteria. 
Individual criteria are information presented in a manner that links: A 
specific clinical condition or presentation; one or more services; and, 
an assessment of the appropriateness of the service(s). We are revising 
the last two sentences of the definition in response to public comments 
that expressed confusion regarding the AUC terminology used in our 
proposal. We have also revised related language throughout the final 
regulation accordingly.
    We proposed to define PLE as a national professional medical 
specialty society, or an organization that is comprised primarily of 
providers and is actively engaged in the practice and delivery of 
healthcare. We are revising the definition of PLE to refer to 
organizations comprised primarily of providers or practitioners who, 
either within the organization or outside of the organization, 
predominantly provide direct patient care. The definition of PLE will 
retain the direct reference to national professional medical specialty 
societies, and other organizations like them are now subsumed within 
the definition.
    This definition of PLE will include health care collaboratives and 
other similar organizations such as the National Comprehensive Cancer 
Network and the High Value Healthcare Collaborative. While this is not 
a dramatic change from the proposed rule, the focus is now on the role 
of the members that comprise the organization and not the function of 
the organization

[[Page 71115]]

itself. This definition aligns with the statute in that national 
professional medical specialty societies are given as an example of a 
PLE. Under the proposed definition, these societies were expressly 
specified as PLEs. It is not the function of the society to deliver 
care but rather their members are actively engaged in practicing 
medicine in the field. This final definition appropriately encompasses 
these organizations and others that are comprised of providers or 
practitioners who care for patients.
    We are also modifying our proposed definition of priority clinical 
area. We proposed to define priority clinical area as clinical topics, 
clinical topics and imaging modalities, or imaging modalities 
identified by CMS through annual rulemaking and in consultation with 
stakeholders which may be used in the determination of outlier ordering 
professionals. We are changing the language to better describe the 
breadth of clinical areas that may be the focus of priority clinical 
areas. The finalized definition better reflects that priority clinical 
areas may identify clinical conditions, diseases or symptom complexes 
and their associated advanced diagnostic imaging services. This 
definition will allow the priority clinical areas to better align with 
the variety of clinical situations for which a patient may present to 
the ordering practitioner.
    In response to the comments we received regarding the role of 
endorsement of AUC, we are adding a new Sec.  414.94(d) to the 
regulations. This new section clearly describes the role of 
endorsement. We note that only a qualified PLE may provide endorsement 
of AUC. Further, qualified PLEs may only endorse the AUC of other 
qualified PLEs. Independently, each organization must have been 
qualified, and therefore, we do not envision participation by CMS in 
the endorsement relationship. The primary function of endorsement is 
for qualified PLEs to combine their AUC to create a larger, more 
clinically encompassing library. For example, one qualified PLE may 
focus on developing AUC related to neuroimaging, another may focus on 
developing AUC related to abdominal imaging. The endorsement 
relationship gives recognition to this type of collaboration.
    While we are finalizing the requirements for developing or 
modifying AUC as proposed (with the exception of grammatical, non-
substantive changes for regulatory consistency) in Sec.  414.94(c)(1), 
we provide clarification in this final rule with comment period around 
what is expected regarding a systematic literature review as public 
commenters did not indicate a consistent understanding of this concept. 
To clarify, the evidence review requirement does not mean that PLEs 
must commission external systematic evidence reviews or technology 
assessments. We expect many organizations will undertake their own 
systematic evidence review to ensure all relevant evidence-based 
information is considered and evaluated. The literature review must be 
systematic, reproducible and encompass all relevant literature related 
to the specific imaging study. Ideally, the review would include 
evidence on analytical validity, clinical validity, and clinical 
utility of the specific imaging study. In addition, the PLE must assess 
the evidence using a formal, published, and widely recognized 
methodology for grading evidence. We do not require that a particular 
methodology be used as there may be certain methodologies better suited 
to some evidentiary assessments than others.
    For consistency with regulatory structure, we have revised the 
proposed language throughout Sec.  414.94(c) to more clearly represent 
the responsibility of the PLEs seeking qualification in demonstrating 
adherence to AUC development requirements under this section.
    Based on public comments, we are changing the requirements for the 
multidisciplinary team that must be used in the AUC development 
process. We proposed at least one multidisciplinary team with 
autonomous governance, decision making and accountability for 
developing, modifying or endorsing AUC. At a minimum the team must be 
comprised of three members including one with expertise in the clinical 
topic related to the criterion and one with expertise in the imaging 
modality related to the criterion. While we proposed to require a 
smaller team, we are finalizing Sec.  414.94(c)(1)(ii) to state that a 
qualified PLE must utilize at least one multidisciplinary team with 
autonomous governance, decision making and accountability for 
developing or modifying AUC. At a minimum the team must be comprised of 
seven members including at least one practicing physician with 
expertise in the clinical topic related to the appropriate use 
criterion being developed or modified, at least one practicing 
physician with expertise in the imaging studies related to the 
appropriate use criterion, at least one primary care physician or 
practitioner (as defined in sections 1833(u)(6), 1833(x)(2)(A)(i)(I), 
and 1833(x)(2)(A)(i)(II) of the Act), one expert in statistical 
analysis and one expert in clinical trial design. A given team member 
may be the team's expert in more than one domain. A team comprised in 
this manner and at this size better encompasses the expertise and the 
dedication needed to develop quality AUC. We encourage such teams to be 
larger where appropriate, and to include experts in medical informatics 
and quality improvement. These experts should contribute substantial 
work to the development of the criteria, not simply review the team's 
work. Teams may also consider involving other stakeholders.
    Based on public comments in support of frequent review of AUC, we 
are adding language to Sec.  414(c)(1)(vii) to require at least annual 
review by qualified PLEs of their AUC.
    In addition, since new Sec.  414.94(d) has been added to clarify 
the role of qualified PLE endorsement, the term endorsement has been 
removed from Sec.  414(c)(1)(ii) as it relates to the multidisciplinary 
team. Since only qualified PLEs can provide endorsement, these 
qualified PLEs have already demonstrated they meet the requirements of 
Sec.  414.94(c)(1)(ii).
    We have added language to the conflict of interest disclosure 
requirement in Sec.  414.94(c)(1)(iii) to make clear that the conflict 
of interest processes and disclosures would apply not only to members 
of the multidisciplinary team but also the PLE and any entity that 
participated in the development of AUC.
    In addition, and in response to comments, we have included that the 
conflict of interest process put in place by the PLE must also include 
processes to recuse or exclude members of the multidisciplinary team 
where appropriate. This language was not included in the proposed 
language of Sec.  414.94(c)(1)(iii). We are finalizing conflict of 
interest language in Sec.  414.94(c)(1)(iii) and Sec.  
414.94(c)(1)(iii)(A) and Sec.  414.94(c)(1)(iii)(B).
    We are finalizing language to clarify that CMS will perform a 
review of each PLE's application for qualification. We have added ``for 
review'' to Sec.  414.94(c)(2)(i) to make it clear that PLEs must 
submit an application to CMS for review that documents adherence to 
each of the AUC development requirements outlined in paragraph (c)(1) 
of this section.
    We proposed the requalification timeline in Sec.  414.94(c)(2)(v). 
We revised the language and finalized two sections to clarify the 
requirements related to qualified PLE reapplication.

[[Page 71116]]

    In the proposed rule we stated that PLEs, on their Web site, must 
identify when they have AUC that address a priority clinical area. 
Section 414.94(c)(1)(iv) included that, if relevant to a CMS identified 
priority clinical area, such a statement must be included. We have 
expanded this requirement and created Sec.  414.94(c)(1)(v) to include 
this requirement. This ensures that the AUC are broad enough in scope 
that an ordering professional could use those AUC to satisfy the 
priority clinical area.
    Section 414.94(f)(3) has been added to clearly specify that CMS 
will consider information related to a PLE's failure to correct non-
evidence-based AUC to determine whether CMS should terminate the PLE's 
qualified status, and that the information would be used during the 
PLE's re-qualification review.
    To broaden the scope of which potentially non-evidence-based AUC 
may be reviewed by the MEDCAC, we have revised the language so as not 
to be limited to reviewing AUC that correspond to priority clinical 
areas. We proposed Sec.  414.94(e)(1) to state that CMS will accept 
public comment to facilitate identification of individual or groupings 
of AUC that fall within a priority clinical area and are not evidence-
based. CMS may also independently identify AUC of concern. We have 
added language to Sec.  414.94(f)(1) that gives priority to AUC that 
correspond to priority clinical areas but does not limit review to 
such. In this section, we have also identified that conflicting AUC may 
receive priority in MEDCAC review.
    We thank the public for their comments and believe the changes 
based on these comments have improved the requirements and process that 
we will follow to specify AUC under this program for advanced 
diagnostic imaging services. Following the publication of this final 
rule with comment period, we will post information on our Web site for 
this program accessible at www.cms.gov/Medicare/Quality-Initiatives/Patient-Assessment-Instruments/Appropriate-Use-Criteria-Program.

H. Physician Compare Web Site

1. Background and Statutory Authority
    As required by section 10331(a)(1) of the Affordable Care Act, by 
January 1, 2011, we developed a Physician Compare Internet Web site 
with information on physicians enrolled in the Medicare program under 
section 1866(j) of the Act, as well as information on other eligible 
professionals (EPs) who participate in the Physician Quality Reporting 
System (PQRS) under section 1848 of the Act. We launched the first 
phase of Physician Compare on December 30, 2010 (http://www.medicare.gov/physiciancompare). In the initial phase, we posted the 
names of EPs that satisfactorily submitted quality data for the 2009 
PQRS, as required by section 1848(m)(5)(G) of the Act.
    We also implemented, consistent with section 10331(a)(2) of the 
Affordable Care Act, a plan for making publicly available through 
Physician Compare information on physician performance that provides 
comparable information on quality and patient experience measures for 
reporting periods beginning no earlier than January 1, 2012. We met 
this requirement in advance of the statutory deadline of January 1, 
2013, as outlined below, and plan to continue addressing elements of 
the plan through rulemaking.
    To the extent that scientifically sound measures are developed and 
are available, we are required to include, to the extent practicable, 
the following types of measures for public reporting:
     Measures collected under the Physician Quality Reporting 
System (PQRS).
     An assessment of patient health outcomes and functional 
status of patients.
     An assessment of the continuity and coordination of care 
and care transitions, including episodes of care and risk-adjusted 
resource use.
     An assessment of efficiency.
     An assessment of patient experience and patient, 
caregiver, and family engagement.
     An assessment of the safety, effectiveness, and timeliness 
of care.
     Other information as determined appropriate by the 
Secretary.
    In developing and implementing the plan, section 10331(b) requires 
that we include, to the extent practicable, the following:
     Processes to ensure that data made public are 
statistically valid, reliable, and accurate, including risk adjustment 
mechanisms used by the Secretary.
     Processes for physicians and EPs whose information is 
being publicly reported to have a reasonable opportunity, as determined 
by the Secretary, to review their results before posting to Physician 
Compare. We have established a 30-day preview period for all 
measurement performance data that will allow physicians and other EPs 
to view their data as it will appear on the Web site in advance of 
publication on Physician Compare (77 FR 69166, 78 FR 74450, and 79 FR 
67770). Details of the preview process will be communicated directly to 
those with measures to preview and will also be published on the 
Physician Compare Initiative page (http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/physician-compare-initiative/) in advance of the preview period.
     Processes to ensure the data published on Physician 
Compare provides a robust and accurate portrayal of a physician's 
performance.
     Data that reflects the care provided to all patients seen 
by physicians, under both the Medicare program and, to the extent 
applicable, other payers, to the extent such information would provide 
a more accurate portrayal of physician performance.
     Processes to ensure appropriate attribution of care when 
multiple physicians and other providers are involved in the care of the 
patient.
     Processes to ensure timely statistical performance 
feedback is provided to physicians concerning the data published on 
Physician Compare.
     Implementation of computer and data infrastructure and 
systems used to support valid, reliable and accurate reporting 
activities.
    Section 10331(d) of the Affordable Care Act requires us to consider 
input from multi-stakeholder groups, consistent with sections 
1890(b)(7) and 1890A of the Act, when selecting quality measures for 
Physician Compare. We also continue to get general input from 
stakeholders on Physician Compare through a variety of means, including 
rulemaking and different forms of stakeholder outreach (for example, 
Town Hall meetings, Open Door Forums, webinars, education and outreach, 
Technical Expert Panels, etc.).
    We submitted a report to the Congress in advance of the January 1, 
2015 deadline, as required by section 10331(f) of the Affordable Care 
Act, on Physician Compare development, including information on the 
efforts and plans to collect and publish data on physician quality and 
efficiency and on patient experience of care in support of value-based 
purchasing and consumer choice.
    We believe section 10331 of the Affordable Care Act supports our 
overarching goals of providing consumers with quality of care 
information that will help them make informed decisions about their 
health care, while encouraging clinicians to improve the quality of 
care they provide to their patients. In accordance with section 10331 
of the Affordable Care Act, we plan to continue to publicly report 
physician performance information on Physician Compare.

[[Page 71117]]

2. Public Reporting of Performance and Other Data
    Since the initial launch of the Web site, we have continued to 
build on and improve Physician Compare, including a full redesign in 
2013. Currently, Web site users can view information about approved 
Medicare professionals such as name, primary and secondary specialties, 
practice locations, group affiliations, hospital affiliations that link 
to the hospital's profile on Hospital Compare as available, Medicare 
Assignment status, education, residency, and American Board of Medical 
Specialties (ABMS) board certification information. In addition, for 
group practices, users can view group practice names, specialties, 
practice locations, Medicare assignment status, and affiliated 
professionals.
    We received several comments about the enhancements made to the 
Physician Compare Web site and the data currently on the Web site.
    Comment: Several commenters noted the improvements made to the 
Physician Compare Web site, as well as appreciation for the 
transparency and easy-to-use, comprehensive information available on 
the site to aid consumers in making informed health care decisions. 
Some commenters suggested CMS make continued improvements to the 
Intelligent Search functionality particularly around finding 
professionals other than physicians and including additional specialty 
labels for Advanced Practice Registered Nurses (APRNs) and allied 
health professionals. One commenter encouraged CMS to continue its 
discussions on how to make the Web site fully accessible and useable by 
persons with a wide range of disabilities, including vision, sight, and 
cognitive challenges.
    Some commenters provided suggestions for additional information to 
publicly report on Physician Compare, including whether a health care 
professional offers patients online access to their health information, 
specialist-specific training and certification data, and other 
qualifications, such as the Certified Medical Director designation and 
the Certificate of Added Qualifications in Geriatric Medicine, 
testimony of enhanced comprehensive care services, expanded access or 
non-traditional hours, and care management and coordination 
information. One commenter urged CMS to include information about 
accessibility.
    Response: We are committed to continuing to improve the site and 
its functionality to ensure it is a useful resource for Medicare 
consumers, including information that can help these consumers make 
informed health care decisions. We appreciate the recommendations for 
specific information to consider for inclusion on the Web site and the 
recommendations regarding usability. CMS works to ensure the Web site 
is accessible to all users and we will continue to ensure Physician 
Compare meets accessibility standards. Also, we will be sure to 
consider the specific recommendations received for possible information 
to add for future inclusion, if appropriate. We are continually working 
to improve and enhance the Intelligent Search functionality, and we 
will continue to do so. Currently, APRNs are searchable on the Web site 
through this functionality, but we will continue to work with 
stakeholders to further improve upon this option.
    Comment: Some commenters expressed concerns with the accuracy of 
demographic data including addresses, education, and hospital 
affiliation. Several commenters urged CMS to continue to work to 
correct any demographic data errors prior to expanding public reporting 
on the Web site. Other commenters requested we implement a streamlined 
process by which professionals can confirm or correct their information 
in a timely manner. Some commenters urged CMS to ensure that updates 
made in PECOS are reflected on Physician Compare within 30 days. One 
commenter suggested a new mechanism for real-time address updates on 
the Web site and several other commenters suggested a process that 
allows stakeholders to review and correct information on the site.
    Response: We appreciate the commenters' feedback regarding concerns 
over the accuracy of the demographic information currently available on 
Physician Compare. We are committed to including accurate and up-to-
date information on Physician Compare and continue to work to make 
improvements to the information presented.
    The underlying database for Physician Compare is generated from 
PECOS, as well as fee-for-service (FFS) claims, and therefore, it is 
critical that physicians, other health care professionals, and group 
practices ensure that their information is up-to-date and as complete 
as possible in the national PECOS database. Currently, the most 
immediate way to address inaccurate PECOS data on Physician Compare is 
by updating information via Internet-based PECOS at https://pecos.cms.hhs.gov/pecos/login.do. Please note that the specialties as 
reported on Physician Compare are those specialties reported to 
Medicare when a physician or other health care professional enrolls in 
Medicare and are limited to the specialties noted on the 855i 
Enrollment Form. Also, all addresses listed on Physician Compare must 
be entered in and verified in PECOS. There is a lag between when an 
edit is made in PECOS and when that edit is processed by the MAC and 
available in the PECOS data pulled for Physician Compare. This is time 
necessary for data verification. Unfortunately, this means there is a 
delay. We are continually working to find ways to minimize this delay, 
and, in the past year we reduced the data refresh cycle from monthly to 
bi-weekly to further improve data timeliness.
    To update information not found in PECOS, such as hospital 
affiliation, professionals should contact the Physician Compare support 
team directly at [email protected]. Information regarding how 
to keep your information current is also on the Physician Compare 
Initiative page on CMS.gov (//westat.com/dfs/PHYSCOMPARE/Proposed Rule 
and Public Comment/2016 PFS Rule/Final Rule/CMS.gov).
    We appreciate the suggestions for alternative ways to update 
demographic data. However, PECOS is the sole verified source of 
Medicare information, and thus, some information must come to Physician 
Compare through PECOS. We are aware of PECOS' limitations and recognize 
that PECOS' primary purpose is not to provide up-to-the-minute 
information for a consumer Web site. For these reasons, we completely 
overhauled the underlying database and began using Medicare claims data 
to verify the information in PECOS in 2013. Because of this, the data 
are significantly better today than they were prior to the 2013 
redesign and we will continue to work to find ways to further improve 
the data and the process of receiving and updating the data. We 
strongly encourage all professionals and group practices listed on the 
site to regularly check their data and to contact the support team with 
any questions or concerns. Together, we can continue to make the Web 
site better.
    In addition, there is a section on each Medicare professional's 
profile page indicating with a green check mark the quality programs 
under which the EP satisfactorily or successfully reported. The Web 
site will continue to post annually the names of individual EPs who 
satisfactorily report under PQRS, EPs who successfully participate in 
the Medicare Electronic Health Record (EHR) Incentive Program as 
authorized by section 1848(o)(3)(D) of the Act, and

[[Page 71118]]

EPs who report PQRS measures in support of Million Hearts (79 FR 
67763). A proposed change to the Million Hearts indicator for 2016 data 
is discussed below.
    With the 2013 redesign of the Physician Compare Web site, we added 
a quality programs section to each group practice profile page, as 
well. We will continue to indicate which group practices are 
satisfactorily reporting in the Group Practice Reporting Option (GPRO) 
under PQRS (79 FR 67763). The Physician Compare Web site also contains 
a link to the Physician Compare downloadable database (https://data.medicare.gov/data/physician-compare), including information on 
this quality program participation. We received comments regarding this 
previously finalized policy related to quality program participation.
    Comment: A commenter urged CMS to reconsider publicly reporting 
participation in the Medicare EHR Incentive Program due to ongoing 
issues related to the program. Some commenters suggested adding 
indicators for individual health care professionals or group practices 
who participate in a QCDR, participate in a quality improvement 
registry for other services, or participate in other voluntary quality 
improvement initiatives. One commenter requested that quality program 
participation be reported at an aggregated level rather than by each 
program. Another commenter noted that consumers are not familiar with 
quality initiatives, so an indicator should be tested with consumers.
    Response: We appreciate the commenters' feedback, and we will take 
the suggestions provided regarding indicators into consideration for 
possible future enhancements. However, since participation in the EHR 
Incentive Program is currently included on Physician Compare, as 
previously finalized, and consumers find this information interesting 
and helpful, we are going to continue including an indicator for 
participation in the EHR Incentive Program on the Web site. Quality 
initiatives include a variety of programs with distinct goals. 
Therefore, we will continue to include an indicator for each program. 
We also understand that explanatory language helps inform health care 
consumers as they use the Web site. We currently test all information 
included on the Web site with consumers to ensure they understand the 
information provided. We recently focused testing on the quality 
initiative indicators. Plain language updates are forthcoming as a 
result of this testing. We will continue to work to ensure that the 
language included on Physician Compare helps users understand these 
quality initiatives and use the information provided appropriately and 
accurately.
    We continue to implement our plan for a phased approach to public 
reporting performance information on the Physician Compare Web site. 
Under the first phase of this plan, we established that GPRO measures 
collected under PQRS through the Web Interface for 2012 would be 
publicly reported on Physician Compare (76 FR 73419 through 73420). We 
further expanded the plan by including on the Physician Compare Web 
site, the 2013 group practice-level PQRS measures for Diabetes Mellitus 
(DM) and Coronary Artery Disease (CAD) reported via the Web Interface, 
and planned to report composite measures for DM and CAD in 2014, as 
well (77 FR 69166).
    The 2012 GPRO measures were publicly reported on Physician Compare 
in February 2014. The 2013 PQRS GPRO DM and GPRO CAD measures collected 
via the Web Interface that met the minimum sample size of 20 patients 
and proved to be statistically valid and reliable were publicly 
reported on Physician Compare in December 2014.
    Comment: We received one comment commending CMS for including 
Diabetes quality measures.
    Response: We appreciate the commenter's support, and will continue 
to publicly report relevant quality measures that meet the public 
reporting standards.
    The composite measures were not reported, however, as some items 
included in the composites were no longer clinically relevant. If the 
minimum threshold is not met for a particular measure, or the measure 
is otherwise deemed not to be suitable for public reporting, the 
performance rate on that measure is not publicly reported. On the 
Physician Compare Web site, we only publish those measures that are 
statistically valid and reliable, and therefore, most likely to help 
consumers make informed decisions about the Medicare professionals they 
choose to meet their health care needs. In addition, we do not publicly 
report first year measures, meaning new PQRS and non-PQRS measures that 
have been available for reporting for less than one year, regardless of 
reporting mechanism. After a measure's first year in use, we will 
evaluate the measure to see if and when the measure is suitable for 
pubic reporting.
    Measures must be based on reliable and valid data elements to be 
useful to consumers. Therefore, for all measures available for public 
reporting, including both group and individual EP level measures--
regardless of reporting mechanism, only those measures that prove to be 
valid, reliable, and accurate upon analysis and review at the 
conclusion of data collection and that meet the established public 
reporting criteria of a minimum sample size of 20 patients and that 
prove to resonate with consumers will be included on Physician Compare. 
For information on how we determine the validity and reliability of 
data and other statistical analyses we perform, refer to the CY 2015 
PFS final rule with comment period (79 FR 67764 through 79 FR 67765).
    We received several comments regarding the public reporting 
standards we have established for Physician Compare. The following is a 
summary of the comments received about the public reporting standards.
    Comment: Many commenters supported only publishing on Physician 
Compare those measures that meet the public reporting standards. 
Several commenters urged CMS to carefully assess if all measure data 
are sufficiently reliable and valid for public reporting before posting 
the data. One commenter requested CMS to publish the results of 
validity and reliability studies, as well as the methodology for 
choosing measures prior to posting on Physician Compare. Several 
commenters are concerned that measures related to patient behavior, 
preferences, or abilities do not provide a statistically valid 
portrayal of a physician's performance and should not be published 
unless the data is appropriately risk adjusted. Several other 
commenters also strongly urge CMS to move forward with expanding its 
risk adjustment methodology to account for these patient behavior, 
preferences, or abilities that may influence quality and performance 
measurement. Many commenters supported not publicly reporting first 
year measures. Several commenters requested flexibility, noting that 
some measures may be appropriate for public reporting immediately while 
others may need additional time to mature. A few commenters recommended 
a three-year delay in public reporting of all new measures to enable 
professionals to accurately report the measures and to account for 
measure testing and validity.
    Response: We appreciate the commenters' feedback, and understand 
the various concerns raised. As required under section 10331(b) of the 
Affordable Care Act, in developing and implementing the plan to include

[[Page 71119]]

performance data on Physician Compare, we must include, to the extent 
practicable, processes to ensure that the data posted on the Web site 
are statistically valid, reliable, and accurate, including risk 
adjustment mechanisms used by the Secretary. We understand that this 
information is complex, and are committed to providing data on 
Physician Compare that are useful to beneficiaries in assisting them in 
making informed health care decisions, while being accurate, valid, 
reliable, and complete. We will closely evaluate all quality measures 
under consideration for public reporting on the Web site to ensure they 
are meeting these standards. We will also only post data that meet this 
standard of reliability regardless of threshold, and regardless of 
measure type. Should we find a measure meeting the minimum threshold to 
be invalid or unreliable for any reason, the measure will not be 
reported. We will also not publicly report first year measures to allow 
health care professionals to learn from the first year of reporting and 
to account for measure testing and validity. After a measure's first 
year in use, we will evaluate the measure to see if and when the 
measure is suitable for pubic reporting. We also continue to encourage 
measure developers to build in risk adjustment at this level. We will 
continue to analyze the measures available for public reporting to 
ensure that risk adjustment concerns are taken into consideration. This 
is true for all measures, clinical quality, and patient experience. 
Again, all measures must meet the public reporting standards 
established for Physician Compare to be included on the Web site.
    As mentioned above, in previous rulemaking, we have outlined some 
of the types of reliability studies that are conducted for measures (79 
FR 67764 through 79 FR 67765). Additional information is also shared 
annually via our Technical Expert Panel (TEP) summaries which can be 
found on the Physician Compare Initiative page on www.CMS.gov. We will 
evaluate the feasibility of the request to share additional 
information.
    Comment: Several commenters supported a minimum sample size of 20 
patients. However, the majority of commenters find a patient threshold 
of 20 to be too low to be statistically valid, which may result in 
inaccurate quality scores based on one outlier, and some commenters 
recommended increasing the threshold to 30 patients. Commenters 
recommended CMS use a higher threshold to ensure validity. Several 
commenters also urged CMS to provide an opportunity for the public to 
review reliability and validity tests.
    Response: We appreciate the commenters' feedback regarding the 20 
patient minimum sample size; however, it is important to note that all 
measures considered for public reporting are subject to additional 
validity and reliability tests prior to being publicly reported even if 
the minimum sample threshold is met. Therefore, we believe this 
threshold of 20 patients is sufficient. In addition, it is a large 
enough sample to protect patient privacy for reporting on the Web site, 
and it is the threshold previously finalized for both the physician 
value-based payment modifier (VM) for most measures and the PQRS 
criteria for reporting measure groups (77 FR 69166). As mentioned, we 
will evaluate the feasibility of sharing additional information about 
the testing done. We will also continue to include an indicator of 
which reporting mechanism was used and to only include on the site 
measures deemed statistically comparable.\5\
---------------------------------------------------------------------------

    \5\ By statistically comparable. CMS means that the quality 
measures are analyzed and proven to measure the same phenomena in 
the same way regardless of the mechanism through which they were 
collected.
---------------------------------------------------------------------------

    Comment: Some commenters expressed concern with the comparability 
of measures reported through different reporting mechanisms and support 
an indicator specifying the differences.
    Response: Though we understand concerns regarding including 
measures collected via different mechanisms, analyses are conducted to 
ensure that the consistencies and inconsistencies across reporting 
mechanisms are understood. Only those measures that are proven to be 
comparable and most suitable for public reporting will be included on 
Physician Compare and made publicly available. Comparability is one of 
the public reporting standards established for Physician Compare that 
must be met. Therefore, we will continue to report data from the 
available reporting mechanisms and make public a notation of which 
reporting mechanism was used.
    We will continue to publicly report all measures submitted and 
reviewed and found to be statistically valid and reliable in the 
Physician Compare downloadable file. However, not all of these measures 
will necessarily be included on the Physician Compare profile pages. 
Consumer testing has shown profile pages with too much information and 
measures that are not well understood by consumers can negatively 
impact a consumer's ability to make informed decisions. Our analysis of 
the collected measure data, along with consumer testing and stakeholder 
feedback, will determine specifically which measures are published on 
Web site profile pages. Statistical analyses, like those specified 
above, will ensure the measures included are statistically valid and 
reliable and comparable across data collection mechanisms. Stakeholder 
feedback will help us to ensure that all publicly reported measures 
meet current clinical standards. When measures are finalized in advance 
of the time period in which the data are collected, it is possible that 
clinical guidelines may have changed rendering a measure no longer 
relevant. Publishing that measure can lead to consumer confusion 
regarding what best practices their health care professional should be 
subscribing to. We will continue to reach out to stakeholders in the 
professional community, such as specialty societies, to ensure that the 
measures under consideration for public reporting remain clinically 
relevant and accurate.
    Comment: Commenters encouraged continued involvement of measure 
developers and stakeholders in the public reporting development 
process. Several commenters appreciated the continued collaboration 
with specialty societies via town hall meetings and other mechanisms. 
Several commenters advocated for more transparency by providing the 
opportunity for the public to comment on the deliberations of the 
Physician Compare TEP, regular engagement with interested stakeholders, 
and increased communication about the measure consideration process 
including methods and consumer interpretation of performance. Some 
commenters appreciated that CMS will continue to reach out to 
stakeholders in the professional community to ensure that the measures 
under consideration for public reporting remain clinically relevant and 
accurate.
    Response: As noted, section 10331(d) of the Affordable Care Act 
requires that the Secretary take into consideration input provided by 
multi-stakeholder groups, consistent with sections 1890(b)(7) and 1890A 
of the Act, as added by section 3014 of the Act, in selecting quality 
measures for use on Physician Compare. We are also dedicated to 
providing opportunities for stakeholders to provide input. We will 
continue to identify the best ways to accomplish this so that all 
stakeholders have a voice and we are able to meet the statutory and 
regulatory mandates and deadlines. We will review all recommendations 
provided for future consideration, and we strongly

[[Page 71120]]

encourage all stakeholders to regularly visit the Physician Compare 
Initiative (https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/physician-compare-initiative/) page for 
information about the latest opportunities to engage with the Physician 
Compare team. Stakeholders are also encouraged to reach out with any 
questions and comments at any time via email at 
[email protected].
    The primary goal of Physician Compare is to help consumers make 
informed health care decisions. If a consumer does not properly 
interpret a quality measure and thus misunderstands what the quality 
score represents, the consumer cannot use this information to make an 
informed decision. Through concept testing, we will test with consumers 
how well they understand measures presented using plain language. Such 
consumer testing will help us gauge how measures are understood and the 
kinds of measures that are most relevant to consumers. This will be 
done to help ensure that the information included on Physician Compare 
is as consumer friendly and consumer focused as possible.
    Comment: Most commenters supported consumer testing to ensure only 
meaningful measures are included on the Web site. One commenter urged 
CMS to consult a broader array of stakeholders during concept testing, 
including individuals with disabilities. Some commenters requested that 
CMS share with professional associations or measure developers any 
information obtained through consumer concept testing. A few commenters 
asked for more details on concept testing plans, while another 
recommended CMS use concept testing to evaluate the information 
currently on the Physician Compare site. One commenter would like CMS 
to assess the extent to which Physician Compare is effectively 
fulfilling the Web site's goals.
    Response: We will continue to conduct consumer testing in terms of 
both usability testing--to ensure the site is easy to navigate and 
functioning appropriately--and concept testing--to ensure users 
understand the information included on the Web site and that 
information included resonates with health care consumers and allows 
the Web site to accomplish the goals as stated. We are continually 
working to test the information planned for public reporting with 
consumers and we regularly test the information currently on the Web 
site with site users. Once a set of measures is finalized as available 
for public reporting, we begin planning concept testing of the 
measures. Therefore, the measures finalized in this rule will be tested 
prior to publicly reporting in late 2017. We also continually work to 
ensure that valid, reliable, and meaningful information is included on 
the Web site. We will also continue to work to ensure that all 
stakeholders, including consumers and health care professionals, are 
included in the testing and review process as appropriate and feasible. 
We will review recommendations shared regarding sharing testing results 
for future consideration. It is important to note that many 
stakeholders are already involved in the dissemination of testing 
findings, and we are continually working to ensure the best audience 
for that information.
    Comment: We received several comments that supported including all 
valid and reliable measures in the downloadable database while 
including only a select group of measures on the Web site. Some 
commenters urged CMS not to include data in a downloadable raw data 
file if it has already been deemed unsuitable for profile pages. There 
was concern that these data may be misused or misinterpreted by 
consumers, researchers, and the public.
    Response: We will continue to include all measures that meet all 
stated public reporting standards that include that all measures 
included on Physician Compare must be statistically valid, accurate, 
reliable, and comparable in the downloadable file in order to further 
transparency. However, we will continue to limit the measures available 
on Physician Compare profile pages to those measures that meet these 
public reporting standards and are also of the greatest value to 
consumers. As noted above, consumer testing helps determine which 
information resonates with health care consumers. This will ensure that 
the measures presented on Physician Compare help consumers make 
informed health care decisions without overwhelming them with too much 
information. However, it is very possible that there are strong 
measures that provide valuable clinical information that may be 
difficult for consumers to understand. We believe these are the types 
of measures that are more appropriately accessed in the downloadable 
database, rather than the profile pages. Again, only those measures 
that meet the public reporting standards established for Physician 
Compare will be included in either the downloadable database or the 
profile pages.
    As is the case for all measures published on Physician Compare, 
individual EPs and group practices will be given a 30-day preview 
period to view their measures as they will appear on Physician Compare 
prior to the measures being published. As in previous years, we will 
fully explain the process for the 30-day preview and provide a detailed 
timeline and instructions for preview in advance of the start of the 
preview period. Although the 30-day preview has been previously 
finalized and we were not seeking comment on this, several comments 
were received. The following is a summary of the comments received on 
the 30-day preview period.
    Comment: We received several comments in support of the 30-day 
preview period prior to publicly reporting quality data. Many 
commenters urged CMS to allow physicians and group practices the 
opportunity to correct and/or appeal any errors found in the 
performance information before it is posted on the site. Other 
commenters stated that a 30-day preview period was insufficient and 
requested that CMS extend the period to 45, 60, or 90 days. Several 
commenters stated the preview period should match the Informal Review 
timeline of 60 days. One commenter requested that if there is a pending 
PQRS Informal Review request, then public reporting should be delayed 
until there is a final resolution. Several commenters recommended that 
if an EP or group practice files an appeal and flags their demographic 
data or quality information as problematic, CMS should postpone posting 
their information until the issues are resolved. Some commenters sought 
clarification on how CMS plans to notify EPs of the preview period and 
requested more detail about the process in the event an error is found 
during the preview period.
    Response: As noted in this rule, the details of the 30-day preview 
period are communicated each year via various mechanisms, such as 
listserv announcements, Webinars, and other education and outreach 
opportunities, and information is always available on the Physician 
Compare Initiative page (https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/physician-compare-initiative/). There is currently no appeals process for data made 
public on Physician Compare. If a group practice or individual EP has 
any concerns regarding the data viewed during preview, they are 
provided with multiple options to reach out to the Physician Compare 
support team to report their concern and have the issue investigated. 
Any issue raised would be addressed prior to publicly reporting of the 
data. In addition, the PQRS and VM programs offer an annual Informal

[[Page 71121]]

Review Period following the release of the Quality and Resource Use 
Reports (QRURs). We are currently working with the PQRS and VM programs 
to ensure that if there are data concerns raised during the Informal 
Review period, those concerns are taken into consideration around 
public reporting. Regarding concerns around demographic data, these 
data are driven primarily by the Provider Enrollment Chain and 
Ownership System (PECOS). There is detailed information available on 
the Physician Compare Initiative page about how to address any concerns 
with the demographic data available on Physician Compare. We strongly 
encourage all individual EPs and group practices to regularly review 
their data on Physician Compare and ensure their PECOS records are up 
to date. If there are any concerns, please contact the Physician 
Compare support team at [email protected].
    We also report certain Accountable Care Organization (ACO) quality 
measures on Physician Compare (76 FR 67802, 67948). Because EPs that 
bill under the TIN of an ACO participant are considered to be a group 
practice for purposes of qualifying for a PQRS incentive under the 
Medicare Shared Savings Program (Shared Savings Program), we publicly 
report ACO performance on quality measures on the Physician Compare Web 
site in the same way as we report performance on quality measures for 
group practices participating under PQRS. Public reporting of 
performance on these measures is presented at the ACO level only. The 
first subset of ACO measures was also published on the Web site in 
February 2014. ACO measures can be viewed by following the 
``Accountable Care Organization (ACO) Quality Data'' link on the 
homepage of the Physician Compare Web site at http://medicare.gov/physiciancompare/aco/search.html.
    ACOs will be able to preview their quality data that will be 
publicly reported on Physician Compare through the ACO Quality Reports, 
which are made available to ACOs for review at least 30 days prior to 
the start of public reporting on Physician Compare. The quality reports 
indicate the measures that are available for public reporting. ACO 
measures will be publicly reported in plain language, so a crosswalk 
linking the technical language included in the Quality Report and the 
plain language that will be publicly reported will be provided to ACOs 
at least 30 days prior to the start of public reporting.
    As part of our public reporting plan for Physician Compare, we also 
have available for public reporting patient experience measures, 
specifically reporting the CAHPS for PQRS measures, which relate to the 
Clinician and Group Consumer Assessment of Healthcare Providers and 
Systems (CG-CAHPS) data, for group practices of 100 or more EPs 
reporting data in 2013 under PQRS and for ACOs participating in the 
Shared Savings Program (77 FR 69166 and 69167). The 2013 CAHPS data for 
ACOs were publicly reported on Physician Compare in December 2014.
    We continued to expand our plan for publicly reporting data on 
Physician Compare in 2015. In the CY 2014 PFS final rule with comment 
period, we finalized a decision that all group practice level measures 
collected through the Web Interface for groups of 25 or more EPs 
participating in 2014 under the PQRS and for ACOs participating in the 
Shared Savings Program were available for public reporting in CY 2015 
(78 FR 74450). We also finalized a plan to make available for public 
reporting performance on certain measures that group practices reported 
via registries and EHRs for the 2014 PQRS GPRO (78 FR 74451). 
Specifically, we finalized a decision to make available for public 
reporting on Physician Compare performance on 16 registry measures and 
13 EHR measures in CY 2015 (78 FR 74451). These measures are consistent 
with the measures available for public reporting via the Web Interface. 
After review and analysis of these data, it was determined that neither 
2014 EHR or registry data would be publicly reported in CY 2015. The 
2014 EHR data will not be publicly reported on Physician Compare 
because CMS was unable to determine the accuracy of these data, and 
2014 registry data will not be publicly reported because these data do 
not meet the public reporting standards. However, we will continue to 
analyze EHR and registry data for future inclusion on the Web site in 
2016 and beyond.
    We received comments specifically about EHR measures.
    Comment: Commenters were opposed to publicly reporting EHR measures 
citing the CY 2014 data inaccuracies, specifically given the number of 
errors in the eCQM submission data. Some commenters stated it was too 
soon to publicly report data from eCQMs without additional work to 
verify the validity and accuracy of the measure results. One commenter 
encouraged CMS to develop information to help the public to better 
understand these data.
    Response: We decided not to publicly report 2014 EHR data because 
we were unable to determine the accuracy of these data. Only 
comparable, valid, reliable, and accurate data will be included on 
Physician Compare. In addition, all measures slated for public 
reporting will be consumer tested to ensure they are accurately 
understood prior to public reporting. If concerns surface from this 
testing, we will evaluate the best course forward to ensure only those 
measures that meet the public reporting standards established for 
Physician Compare are included on the site.
    In CY 2015, CAHPS measures for group practices of 100 or more EPs 
who participate in PQRS, regardless of data submission method, and for 
Shared Savings Program ACOs reporting through the Web Interface or 
other CMS-approved tool or interface are available for public reporting 
(78 FR 74452). In addition, twelve 2014 summary survey measures for 
groups of 25 to 99 EPs collected via any certified CAHPS vendor 
regardless of PQRS participation are available for public reporting (78 
FR 74452). For ACOs participating in the Shared Savings Program, the 
patient experience measures that are included in the Patient/Caregiver 
Experience domain of the Quality Performance Standard under the Shared 
Savings Program will be available for public reporting in CY 2015 (78 
FR 74452).
    In late CY 2015, certain 2014 individual PQRS measure data reported 
by individual EPs are also available for public reporting. 
Specifically, we finalized to make 20 individual measures collected 
through a registry, EHR, or claims available for public reporting (78 
FR 74453 through 74454). These are measures that are in line with those 
measures reported by groups via the Web Interface. As noted above, 
however, both the 2014 EHR and registry data are not being publicly 
reported for either group practices or individual EPs who reported 
these data.
    Finally, in support of the HHS-wide Million Hearts initiative, 
performance rates on measures in the PQRS Cardiovascular Prevention 
measures group at the individual EP level for data collected in 2014 
for the PQRS were finalized as available for public reporting in CY 
2015 (78 FR 74454). Again, these data are ultimately not going to be 
publicly reported in late 2015 because they are collected only via 
registry.
    We continue to expand public reporting on Physician Compare by 
making an even broader set of quality measures available for public 
reporting on the Web site in CY 2016. All 2015 group-level PQRS 
measures across all group reporting mechanisms--Web Interface, 
registry, and EHR--are available for public reporting on Physician 
Compare in CY 2016 for

[[Page 71122]]

groups of 2 or more EPs (79 FR 67769). Similarly, we decided that all 
measures reported by ACOs participating in the Shared Savings Program 
will be available for public reporting on Physician Compare.
    Understanding the value of patient experience data for Physician 
Compare, CMS finalized to make twelve 2015 CAHPS for PQRS summary 
survey measures available for public reporting for all group practices 
of two or more EPs, who meet the specified sample size requirements and 
collect data via a CMS-specified certified CAHPS vendor in CY 2016 (79 
FR 67772).
    To provide the opportunity for more EPs to have measures included 
on Physician Compare, and to provide more information to consumers to 
make informed decisions about their health care, we finalized to make 
all 2015 PQRS measures for individual EPs collected through a registry, 
EHR, or claims available for public reporting in CY 2016 on Physician 
Compare (79 FR 67773).
    Furthermore, in support of the HHS-wide Million Hearts initiative, 
four 2015 PQRS measures reported by individual EPs in support of 
Million Hearts will be available for public reporting in CY 2016.
    To further support the expansion of quality measure data available 
for public reporting on Physician Compare and to provide more quality 
data to consumers to help them make informed decisions, CMS finalized 
that 2015 Qualified Clinical Data Registry (QCDR) PQRS and non-PQRS 
measure data collected at the individual EP level are available for 
public reporting in late CY 2016. The QCDR is required to declare 
during their self-nomination if it plans to post data on its own Web 
site and allow Physician Compare to link to it or if it will provide 
data to CMS for public reporting on Physician Compare. Measures 
collected via QCDRs must also meet the established public reporting 
criteria. Both PQRS and non-PQRS measures that are in their first year 
of reporting by a QCDR will not be available for public reporting (79 
FR 67774 through 67775).
    See Table 25 for a summary of our previously finalized policies for 
public reporting data on Physician Compare.

 Table 25--Summary of Previously Finalized Policies for Public Reporting
                          on Physician Compare
------------------------------------------------------------------------
     Data                                           Quality measures and
  collection   Public reporting      Reporting        data for public
     year            year          mechanism(s)          reporting
------------------------------------------------------------------------
2012.........  2013............  Web Interface     Include an indicator
                                  (WI), EHR,        for satisfactory
                                  Registry,         reporters under
                                  Claims.           PQRS, successful e-
                                                    prescribers under
                                                    eRx Incentive
                                                    Program, and
                                                    participants in the
                                                    EHR Incentive
                                                    Program.
2012.........  February 2014...  WI..............  5 Diabetes Mellitus
                                                    (DM) and Coronary
                                                    Artery Disease (CAD)
                                                    measures collected
                                                    via the WI for group
                                                    practices reporting
                                                    under PQRS with a
                                                    minimum sample size
                                                    of 25 patients and
                                                    Shared Savings
                                                    Program ACOs.
2013.........  2014............  WI, EHR,          Include an indicator
                                  Registry,         for satisfactory
                                  Claims.           reporters under
                                                    PQRS, successful e-
                                                    prescribers under
                                                    eRx Incentive
                                                    Program, and
                                                    participants in the
                                                    EHR Incentive
                                                    Program. Include an
                                                    indicator for EPs
                                                    who earn a PQRS
                                                    Maintenance of
                                                    Certification
                                                    Incentive and EPs
                                                    who report the PQRS
                                                    Cardiovascular
                                                    Prevention measures
                                                    group in support of
                                                    Million Hearts.
2013.........  December 2014...  WI..............  3 DM and 1 CAD
                                                    measures collected
                                                    via the WI for
                                                    groups of 25 or more
                                                    EPs with a minimum
                                                    sample size of 20
                                                    patients.
2013.........  December 2014...  Survey Vendor...  6 CAHPS for ACO
                                                    summary survey
                                                    measures for Shared
                                                    Savings Program
                                                    ACOs.
2014.........  Expected to be    WI, EHR,          Include an indicator
                2015.             Registry,         for satisfactory
                                  Claims.           reporters under PQRS
                                                    and participants in
                                                    the EHR Incentive
                                                    Program. Include an
                                                    indicator for EPs
                                                    who earn a PQRS
                                                    Maintenance of
                                                    Certification
                                                    Incentive and EPs
                                                    who report the PQRS
                                                    Cardiovascular
                                                    Prevention measures
                                                    group in support of
                                                    Million Hearts.
2014.........  Expected to be    WI..............  14 measures reported
                late 2015.                          via the WI for group
                                                    practices of 2 or
                                                    more EPs reporting
                                                    under PQRS with a
                                                    minimum sample size
                                                    of 20 patients.
2014.........  Expected to be    WI, Survey        All Web Interface
                late 2015.        Vendor.           measures reported by
                                                    Shared Savings
                                                    Program ACOs, and
                                                    CAHPS for ACO
                                                    measures.
2014.........  Expected to be    WI, Certified     8 CAHPS for PQRS
                late 2015.        Survey Vendor.    summary measures for
                                                    groups of 100 or
                                                    more EPs reporting
                                                    via the WI and group
                                                    practices of 25 to
                                                    99 EPs reporting via
                                                    a CMS-approved
                                                    certified survey
                                                    vendor.
2014.........  Expected to be    Claims..........  A sub-set of 6 PQRS
                late 2015.                          measures submitted
                                                    by individual EPs
                                                    that align with
                                                    those available for
                                                    group reporting via
                                                    the WI and that are
                                                    collected through
                                                    claims with a
                                                    minimum sample size
                                                    of 20 patients.
2015.........  Expected to be    WI, EHR,          Include an indicator
                late 2016.        Registry,         for satisfactory
                                  Claims.           reporters under PQRS
                                                    and participants in
                                                    the EHR Incentive
                                                    Program. Include an
                                                    indicator for EPs
                                                    who report 4
                                                    individual PQRS
                                                    measures in support
                                                    of Million Hearts.
2015.........  Expected to be    WI, EHR,          All PQRS measures for
                late 2016.        Registry.         group practices of 2
                                                    or more EPs.
2015.........  Expected to be    WI, Survey        All measures reported
                late 2016.        Vendor,           by Shared Savings
                                  Administrative    Program ACOs,
                                  Claims.           including CAHPS for
                                                    ACOs and claims
                                                    based measures.
2015.........  Expected to be    Certified Survey  All CAHPS for PQRS
                late 2016.        Vendor.           measures reported
                                                    for groups of 2 or
                                                    more EPs who meet
                                                    the specified sample
                                                    size requirements
                                                    and collect data via
                                                    a CMS-specified
                                                    certified CAHPS
                                                    vendor.

[[Page 71123]]

 
2015.........  Expected to be    Registry, EHR,    All PQRS measures for
                late 2016.        or Claims.        individual EPs
                                                    collected through a
                                                    registry, EHR, or
                                                    claims.
2015.........  Expected to be    QCDR............  All individual EP
                late 2016.                          QCDR measures,
                                                    including PQRS and
                                                    non-PQRS measures.
------------------------------------------------------------------------

3. Final Policies for Public Data Disclosure on Physician Compare
    We are expanding public reporting on Physician Compare by 
continuing to make a broad set of quality measures available for public 
reporting on the Web site. We started the phased approach with a small 
number of possible PQRS GPRO Web Interface measures for 2012 and have 
been steadily building on this to provide Medicare consumers with more 
information to help them make informed health care decisions. As a 
result, we proposed (80 FR 41811-41814) to add new data elements to the 
individual EP and/or group practice profile pages and to continue to 
publicly report a broad set of quality measures on the Web site. We 
received several comments on the phased approach to public reporting. A 
summary of the comments received follows.
    Comment: While many commenters supported continuing the phased 
approach to public reporting of quality data, several commenters noted 
concern with what they perceive is an aggressive timeline for publicly 
reporting physician performance data. Commenters supported a more 
gradual approach to public reporting to allow time to evaluate the 
public response to data prior to widespread implementation, ensure 
accuracy, and permit data to be presented in a format that is easy to 
understand, meaningful, and actionable for both patients and 
physicians. Some commenters opposed the extensive expansion until 
existing Web site problems are addressed. Several commenters suggested 
focusing on educating and implementing the Merit-based Incentive 
Payment System (MIPS) program before expanding public reporting.
    Response: We believe that public reporting of quality data has been 
a measured, phased approach which started with publicly reporting just 
five 2012 PQRS GPRO measures collected via the Web Interface for 66 
group practices and 141 ACOs (76 FR 73417) and continued with a 
similarly limited set of 2013 PQRS GPRO Web Interface measures (77 FR 
69166). We started to build on this plan with the CY 2014 PFS final 
rule with comment period (78 FR 74446). In that rulemaking, we adopted 
additional PQRS measures available for public reporting, including a 
subset of individual EP PQRS measures. Therefore, the proposals put 
forth this year are just the next step in the process to realize the 
goals of Physician Compare. We are confident that taking this phased 
approach has afforded us the opportunity to prepare for this 
significant expansion.
    Throughout this process, we have been engaging with consumers and 
stakeholders and regularly testing the site and the information to be 
included to ensure it is accurately presented and understood. We are 
also continually working to improve the Web site and the administrative 
and demographic information included. We continue to encourage 
physicians, other health care professionals, and group practices to 
ensure their information is updated in PECOS so that we can ensure the 
most accurate information is available on Physician Compare. We also 
encourage individuals and groups to reach out to the Physician Compare 
support team at [email protected] for any questions or 
concerns regarding the information included on the Web site.
    We are committed to public reporting to provide consumers with 
information to help them make informed health care decisions. Even 
though we will be moving to MIPS as required by the Medicare Access and 
CHIP Reauthorization Act (MACRA), we are committed to continue 
providing this useful information to consumers and to continue to be 
transparent so that health care professionals can evaluate their own 
performance and the performance of their peers. As we move towards 
implementation of the new MIPS program, we will continue to engage and 
educate our stakeholders.
a. Value Modifier
    The first goal of the HHS Strategic Plan is to strengthen health 
care. One of the ways to do this is to reduce the growth of health care 
costs while promoting high-value, effective care (Objective D, 
Strategic Goal 1).\6\ We proposed (80 FR 41811) to expand the section 
on each individual EP and group practice profile page that indicates 
Medicare quality program participation with a green check mark to 
include the names of those individual EPs and group practices who 
received an upward adjustment for the physician value-based payment 
modifier (VM). This VM indicator can help consumers identify higher 
quality care provided at a lower cost. The VM upward adjustment 
indicates that a physician or group has achieved one of the following: 
Higher quality care at a lower cost; higher quality care at an average 
cost; or average quality care at a lower cost. This means this type of 
quality information may be very useful to consumers as they work to 
choose the best possible health care available to them. Including the 
check mark is a way to share what can be a very complex concept in a 
user-friendly, easy-to-understand format. We proposed to include this 
on Physician Compare annually. For the 2018 VM, this information would 
be based on 2016 data and included on the site no earlier than late 
2017. We solicited comments on this proposal.
---------------------------------------------------------------------------

    \6\ http://www.hhs.gov/strategic-plan/goal1.html.
---------------------------------------------------------------------------

    The following is a summary of the comments we received on our 
proposal to include a green check mark indicator of the names of those 
individual EPs and group practices who receive the VM upward adjustment 
on profile pages on Physician Compare.
    Comment: We received both positive and negative comments on this 
proposal. Supporters noted that the addition of VM data supports 
transparency, encourages improvement, and provides important 
information to the public. One commenter suggested adding additional VM 
performance information to the Web site. Several commenters urged CMS 
to include educational information about the VM for consumers or an 
explanation for physicians who are not eligible for the VM. Another 
commenter urged CMS to clarify which performance year data will be 
published on Physician Compare to ensure the information is accurately

[[Page 71124]]

understood. One commenter suggested collaborating with consumer 
advocacy groups to educate consumers about VM data if the visual 
indicator is included.
    However, several commenters had significant concerns that the VM is 
not well-understood by the public, may be misinterpreted, or does not 
provide value to consumers. Many commenters were also opposed to this 
proposal due to concerns with the VM calculation methodology and the 
resulting proportion of health care professionals that will receive 
``average'' scores for the cost and/or quality composite. One commenter 
recommended that EPs who participate in programs that exempt them from 
VM should receive a checkmark because without this indicator, they 
would appear lower quality. Several commenters opposed these data being 
added on the profile page, but supported inclusion in a downloadable 
database. Some commenters also noted that the VM program will sunset 
after 2018, and suggested waiting to publicly report cost data until 
the MIPS is implemented. One commenter suggested an indicator for 
participating in a QCDR is a better indicator of physician quality and 
overall value than the VM.
    Response: We appreciate the commenters' feedback, and we appreciate 
the concerns raised. We do believe that in time, information such as 
this can provide consumers with valuable information to help them make 
informed health care decisions and help CMS advance our overall quality 
strategy. We agree that this or similar information needs to be 
presented on profile pages in a way that will ensure it is accurately 
understood and interpreted and is seen as valuable information from the 
consumer perspective. We also appreciate that because the VM adjustment 
will end after CY 2018, it may be confusing to consumers to add a new 
indicator for only a short period of time followed by potentially 
another indicator related to the MIPS in later years. As a result, we 
are not finalizing this proposal, and therefore, will not be including 
a visual indicator of the VM upward adjustment on profile pages at this 
time. Regarding the recommendation to add an indicator for 
participation in a QCDR, that is not something currently being 
considered as we appreciate this is not a concept consumers are 
familiar with. However, we will take it into consideration for 
potential future evaluation.
b. Million Hearts
    In support of the HHS-wide Million Hearts initiative, we included 
an indicator for individual EPs who choose to report on specific 
``ABCS'' (Appropriate Aspirin Therapy for those who need it, Blood 
Pressure Control, Cholesterol Management, and Smoking Cessation) 
measures (79 FR 67764). Based on available measures the criteria for 
this indicator have evolved over time. In 2015, an indicator was 
included if EPs satisfactorily reported four individual PQRS 
Cardiovascular Prevention measures. In previous years, the indicator 
was based on satisfactory reporting of the Cardiovascular Prevention 
measures group, which was not available via PQRS for 2015. To further 
support this initiative, we proposed (80 FR 41811) to include on 
Physician Compare annually in the year following the year of reporting 
(for example, 2016 data will be included on Physician Compare in 2017) 
an indicator for individual EPs who satisfactorily report the new 
Cardiovascular Prevention measures group that was proposed (and is 
being finalized in this final rule) under PQRS. The Million Hearts 
initiative's primary goal is to improve cardiovascular heart health, 
and therefore, we believe it is important to continue supporting the 
program and acknowledging those physicians and other health care 
professionals working to excel in performance on the ABCS. We solicited 
comments on this proposal.
    The following is a summary of the comments we received on our 
proposal to include an indicator on profile pages for EPs who 
satisfactorily report the Cardiovascular Prevention measures group in 
support of Million Hearts.
    Comment: Commenters supported including an indicator on profile 
pages for individual EPs who satisfactorily report the new PQRS 
Cardiovascular Prevention measures group in support of Million Hearts. 
One commenter suggested adding context and information about the 
program to help consumers better understand the information. One 
commenter recommended that the final rule reference the Million Hearts 
measures by the PQRS number rather than the short name. Another 
commenter suggested recognizing EPs that report other cardiovascular 
PQRS measures in addition to those who report the specific measure 
group.
    Response: We are committed to supporting the Million Hearts 
initiative and we believe that recognizing EPs who report this measures 
group is aligned with promoting the Million Heats initiative. We 
appreciate that some commenters would like additional measures to be 
considered in support of the initiative, and we will review this 
suggestion for potential future rulemaking. We are also working on a 
Web site update that will provide more plain language descriptions and 
context of all quality programs represented on the site to ensure 
consumers have the context and understanding commenters noted is 
important. We are also consumer testing this information on an ongoing 
basis to ensure consumers are getting the most out of this information. 
As a result, we are finalizing this proposal to include a visual 
indicator on EP profile pages in support of the Million Hearts 
initiative as it is deemed valuable by consumers and including this 
information may incentivize health care professionals to focus on the 
Million Hearts measures.
c. PQRS GPRO and ACO Reporting
    Understanding the importance of including quality data on Physician 
Compare to support the goals of section 10331(a) of the Affordable Care 
Act, we finalized in the CY 2015 PFS final rule with comment period (79 
FR 67547) a policy to make available for public reporting on Physician 
Compare all PQRS GPRO measures collected in 2015 via the Web Interface, 
registry, or EHR. In the proposed rule, we proposed (80 FR 41811) to 
continue to make available for public reporting on Physician Compare on 
an annual basis all PQRS GPRO measures across all PQRS group practice 
reporting mechanisms--Web Interface, registry, and EHR--for groups of 2 
or more EPs available in the year following the year the measures are 
reported. Similarly, all measures reported by Shared Savings Program 
ACOs, including CAHPS for ACO measures, would be available for public 
reporting on Physician Compare annually in the year following the year 
the measures are reported. For group practice and ACO measures, the 
measure performance rate would be represented on the Web site. We 
solicited comments on this proposal.
    The following is a summary of the comments we received on our 
proposal to make PQRS GPRO measures across all reporting mechanisms for 
groups of 2 or more EPs and Shared Savings Program ACO measures 
available for public reporting.
    Comment: We received both positive and negative comments regarding 
our group practice proposal. Commenters in support noted that publicly 
reporting quality measures is helpful to consumers and supports 
transparency. In general, commenters were more supportive of publicly 
reporting group level measures over individual EP level measures. Some 
commenters, however, opposed the continued public reporting of PQRS 
data generally, noting concerns

[[Page 71125]]

such as the accuracy of current data reported via an EHR, the potential 
for consumer misinterpretation, and the limited measures available for 
some specialists to report. One commenter suggested CMS focus on 
preparing for MIPS rather than continuing with the current public 
reporting plan.
    Response: We are committed to public reporting to provide consumers 
with information to help them make informed health care decisions. We 
are also working to fulfill the public reporting requirements of the 
Affordable Care Act. Even though we will be moving to MIPS as a result 
of the MACRA, we are committed to continuing our phased approach to 
public reporting and providing this useful information to consumers 
consistently year to year, as possible. We are also committed to 
supporting transparency so that health care professionals can evaluate 
their own performance and the performance of their peers. We understand 
that there are concerns with the available data. As noted above, all 
data must meet the public reporting standards outlined in this rule and 
in previous rulemaking in order to be publicly reported. For instance, 
because the accuracy of the 2014 data reported via an EHR could not be 
determined, these data will not be publicly reported. Data that do 
prove to be valid, reliable, accurate, comparable, and that resonate 
with consumers, however, will be publicly reported.
    Regarding concerns about potential consumer misinterpretation of 
the data, we do conduct regular consumer testing to address this issue. 
In general, consumers find this information interesting and beneficial 
in their decision making process. If a measure is not accurately 
interpreted or well understood, or if consumers do not find it to be 
valuable, that measure is not considered for public reporting on 
Physician Compare profile pages. We do appreciate that PQRS does not 
contain a similar number of measures for all possible specialties; we 
are working on strategies to help fill this gap. One strategy is 
looking toward QCDRs, which are better able to address the needs of 
specific specialties with relevant measures.
    After considering the issues raised by commenters and for the 
reasons we articulated, we are finalizing our proposal to continue to 
make all PQRS group practice level and ACO Shared Savings Program 
measures available for public reporting annually, including making the 
2016 PQRS group practice and ACO data available for public reporting on 
Physician Compare in late 2017.
d. Individual EP PQRS Reporting
    Consumer testing indicates that consumers are looking for measures 
regarding individual doctors and other health care professionals above 
all other data. As a result, we decided to make individual EP level 
measure data available for public reporting on Physician Compare 
starting with a subset of 2014 PQRS measures (78 FR 74451). We expanded 
this plan by making all 2015 individual EP level PQRS measures 
collected through a registry, EHR, or claims available for public 
reporting (79 FR 67773). Through stakeholder outreach and consumer 
testing we have learned that these PQRS quality data provide the public 
with useful information to help consumers make informed decisions about 
their health care. As a result, we proposed to continue to make all 
PQRS measures across all individual EP reporting mechanisms available 
for public reporting on Physician Compare annually in the year 
following the year the measures are reported (for example, 2016 data 
would be included on Physician Compare in 2017). For individual EP 
measures, the measure performance rate would be represented on the Web 
site. We solicited comments on this proposal.
    The following is a summary of the comments we received on our 
proposal to make all individual EP level PQRS measures available for 
public reporting on Physician Compare.
    Comment: As with the group practice level PQRS measures, we 
received both positive and negative comments regarding this proposal. 
Commenters in support again noted that quality measures are helpful to 
consumers and support transparency. Several commenters that supported 
publicly reporting group level measures did not support reporting 
individual EP level measures noting that individual level reporting may 
be subject to more data accuracy issues and suffer from small sample 
sizes. Another commenter asked for clarification about which 
performance score is publicly reported if an EP reports PQRS data 
through multiple reporting mechanisms.
    Response: We appreciate the commenters' feedback on individual EP 
PQRS measures. Again, as is the case with all measures under 
consideration for inclusion on Physician Compare, the public reporting 
standards established for Physician Compare must be met for the measure 
to be publicly reported. As a result, if analyses show that the data 
are not accurate, valid, reliable, comparable, or do not resonate with 
consumers, they will not be publicly reported on Physician Compare 
profile pages. Regarding concerns around small sample sizes, only those 
measures that are reported for the accepted sample size of 20 patients 
and that meet all stated public reporting standards will be publicly 
reported. We understand that it may be harder to meet this minimum 
sample size at the individual EP level. However, that will simply mean 
the measure is not listed on the individual EP's profile page and no 
performance rate is reported. PQRS does encourage EPs to report via a 
single reporting mechanism. If data from multiple reporting mechanisms 
are deemed eligible for public reporting and an individual EP reports 
through more than one of the available mechanisms, we will look at the 
reporting mechanism that is used to determine PQRS satisfactory 
reporting and work to use the performance rate consistent with that 
mechanism.
    As a result of the comments received and the importance of 
individual EP level quality measure data to consumers, we are 
finalizing our proposal to continue to make all PQRS individual EP 
level PQRS measures available for public reporting annually, including 
making the 2016 PQRS individual EP level data available for public 
reporting on Physician Compare in late 2017.
e. Individual EP and Group Practice QCDR Measure Reporting
    As previously stated, stakeholder outreach and consumer testing 
have repeatedly shown that consumers find individual EP quality 
measures valuable and helpful when making health care decisions. 
Consumers want to know more about the individual EPs when deciding who 
they should make an appointment to see for their health care needs, and 
expanding group practice-level public reporting ensures that more 
quality data are available to assist consumers with their decision 
making. We do appreciate, however, that not all specialties have a full 
complement of available quality measures specific to the work they do 
currently available through PQRS. As a result, we decided to make 
individual EP level Qualified Clinical Data Registry (QCDR) measures--
both PQRS and non-PQRS measures--available for public reporting 
starting with 2015 data (79 FR 67774 through 67775). To further support 
the availability of quality measure data most relevant for all 
specialties, we proposed to continue to make available for public 
reporting on Physician Compare all individual EP level QCDR PQRS and 
non-PQRS measure data that have been collected for at least a full year 
(80 FR

[[Page 71126]]

41812). In addition, we proposed to also make group practice level QCDR 
PQRS and non-PQRS measure data that have been collected for at least a 
full year available for public reporting (80 FR 41812). Previously, the 
PQRS program only included QCDR data at the individual EP level. In 
section III.I.2.a. of this final rule with comment period, we are 
finalizing, under the PQRS, a decision to expand QCDR reporting to 
group practices as well. In this case, group practice refers to a group 
of 2 or more EPs billing under the same Tax Identification Number 
(TIN). We proposed to publicly report these data annually in the year 
following the year the measures are reported. For both EP and group 
level measures, the measure performance rate would be represented on 
the Web site. We solicited comments on these proposals.
    The following is a summary of the comments we received on our 
proposal to make both group practice and individual EP level QCDR data 
available for public reporting on Physician Compare.
    Comment: Many commenters support publicly reporting QCDR measures 
for group practices, as well as individual EPs, noting that it promotes 
flexibility in reporting, provides additional information to consumers, 
and addresses sample size concerns. One commenter requested that CMS 
explore ways for quality reporting to be publicly available at the 
level of the entire care team. Another commenter expressed concern that 
attributing group practice data to an individual physician does not 
provide the necessary information to allow the consumer to determine 
how the individual EP performed on those measures.
    There were also some general concerns about QCDR data including 
concerns that QCDR data are too new, not comparable to PQRS measures, 
not accurate and reliable, and potentially confusing to consumers. One 
commenter suggested holding public reporting of QCDR data until more 
specialties are able to report via QCDRs.
    Response: We appreciate the commenters' feedback on these QCDR 
proposals. We agree that making QCDR data, both PQRS and non-PQRS 
measures, available for public reporting helps fill potential gaps left 
by the currently available PQRS data. We also believe these measures 
add great value for consumers as they provide a greater diversity of 
quality information at both the group practice and individual EP 
levels, and thus, further help consumers make informed decisions about 
their health care. At this time, it is only possible for CMS to 
consider measures attributed to either the group practice level or the 
individual EP level. Other attribution options are not possible at this 
time, but will be taken under consideration for the future.
    It is important to note that data collected at the individual EP 
level, whether through a QCDR or through other PQRS reporting mechanism 
will only be publicly reported at the individual EP level, and data 
collected at the group practice level will only be reported at the 
group practice level. Group practice data will never be publicly 
reported on an individual EP profile page because it would not be 
accurate to attribute the group's performance rates to only one EP.
    Regarding the general concerns raised about publicly reporting QCDR 
data, it is important to emphasize that data submitted by QCDRs must 
meet the same public reporting standards as all other data submitted to 
CMS. If a QCDR submits a PQRS measure and that measure data is not 
deemed comparable to data submitted via other PQRS reporting 
mechanisms, the data will not be publicly reported because all data 
publicly reported must be comparable to ensure one measure is 
evaluating each EP or group in the same way regardless of how the data 
were collected and submitted to CMS.
    It is expected that non-PQRS measures submitted via QCDRs are 
likely to be unique from the available PQRS data. This is considered 
one of the greatest benefits of the QCDR data. These measures are 
likely to be more specific to specialties otherwise less represented in 
PQRS and to be a strong fit for those reporting them. Considering the 
measures are relevant to the group or EP they are representing, we 
believe this provides a benefit to consumers reviewing the data. We 
appreciate that not all groups or EPs may have the opportunity to 
participate in a QCDR, but we see significant value in making the data 
that are now accessible available for public reporting for these 
reasons. Again, as with all data under consideration for public 
reporting, consumer testing will be done to ensure measures included on 
Physician Compare are accurately interpreted and deemed valuable by 
consumers.
    Understanding the value of these data, the opportunity for these 
data to fill gaps currently in the PQRS program, and the relevancy of 
these data to many specialties, we are finalizing this proposal to make 
group practice and individual EP level QCDR data, both PQRS and non-
PQRS measures, available for public reporting on Physician Compare 
annually, including making 2016 data available for public reporting in 
late 2017.
    Each QCDR will be required to declare during its self-nomination if 
it plans to post data on its own Web site and allow Physician Compare 
to link to it or if the QDCR plans to provide data to us for public 
reporting on Physician Compare. After a QCDR declares a public 
reporting method, that decision is final for the reporting year. If a 
declaration is not made, the data will be considered available for 
public reporting on Physician Compare.
f. Benchmarking
    We previously proposed (79 FR 40389) a benchmark that aligned with 
the Shared Savings Program ACO benchmark methodology finalized in the 
November 2011 Shared Savings Program final rule (76 FR 67898) and 
amended in the CY 2014 PFS final rule with comment period (78 FR 
74759). Benchmarks are important to ensuring that the quality data 
published on Physician Compare are accurately understood. A benchmark 
will allow consumers to more easily evaluate the information published 
by providing a point of comparison between groups and between 
individuals. However, given shortcomings when trying to apply the 
Shared Savings Program methodology to the group practice or individual 
EP setting, this proposal was not finalized. We noted we would discuss 
more thoroughly potential benchmarking methodologies with our 
stakeholders and evaluate other programs' methodologies to identify the 
best possible option for a benchmark for Physician Compare (79 FR 
67772). To accomplish this, we reached out to stakeholders, including 
specialty societies, consumer advocacy groups, physicians and other 
health care professionals, measure experts, and quality measure 
specialists, as well as other CMS Quality Programs. Based on this 
outreach and the recommendation of our TEP, we proposed (80 FR 41812-
41813) to publicly report on Physician Compare an item, or measure-
level, benchmark derived using the Achievable Benchmark of Care 
(ABCTM) \7\ methodology annually based on the PQRS 
performance rates most recently available. For instance, in 2017 we 
would publicly report a benchmark derived from the 2016 PQRS 
performance rates. The specific measures the benchmark would be derived 
for would be determined once

[[Page 71127]]

the data are available and analyzed. We proposed the benchmark would 
only be applied to those measures deemed valid and reliable and that 
are reported by enough EPs or group practices to produce a valid result 
(see 79 FR 67764 through 79 FR 67765 for a more detailed discussion 
regarding the types of analysis done to ensure data are suitable for 
public reporting).
---------------------------------------------------------------------------

    \7\ Kiefe CI, Weissman NW, Allison JJ, Farmer R, Weaver M, 
Williams OD. Identifying achievable benchmarks of care: Concepts and 
methodology. International Journal of Quality Health Care. 1998 Oct; 
10(5):443-7.
---------------------------------------------------------------------------

    As explained, ABCTM is a well-tested, data-driven 
methodology that allows us to account for all of the data collected for 
a quality measure, evaluate who the top performers are, and then use 
that to set a point of comparison for all of those groups or individual 
EPs who report the measure.
    ABCTM starts with the pared-mean, which is the mean of 
the best performers on a given measure for at least 10 percent of the 
patient population--not the population of reporters. To find the pared-
mean, we will rank order physicians or groups (as appropriate per the 
measure being evaluated) in order from highest to lowest performance 
score. We will then subset the list by taking the best performers 
moving down from best to worst until we have selected enough reporters 
to represent 10 percent of all patients in the denominator across all 
reporters for that measure.
    We proposed to derive the benchmark by calculating the total number 
of patients in the highest scoring subset receiving the intervention or 
the desired level of care, or achieving the desired outcome, and 
dividing this number by the total number of patients that were measured 
by the top performing doctors. This would produce a benchmark that 
represents the best care provided to the top 10 percent of patients.
    An Example: A doctor reports which of her patients with diabetes 
have maintained their blood pressure at a healthy level. There are four 
steps to establishing the benchmark for this measure.
    (1) We look at the total number of patients with diabetes for all 
doctors who reported this diabetes measure.
    (2) We rank doctors that reported this diabetes measure from 
highest performance score to lowest performance score to identify the 
set of top doctors who treated at least 10 percent of the total number 
of patients with diabetes.
    (3) We count how many of the patients with diabetes who were 
treated by the top doctors also had blood pressure at a healthy level.
    (4) This number is divided by the total number of patients with 
diabetes who were treated by the top doctors, producing the 
ABCTM benchmark.
    To account for low denominators, ABCTM calls for the 
calculation of an adjusted performance fraction (AFP), a Bayesian 
Estimator. The AFP is calculated by dividing the actual number of 
patients receiving the intervention or the desired level of care plus 1 
by the total number of patients in the total sample plus 2. This 
ensures that very small sample sizes do not over influence the 
benchmark and allows all data to be included in the benchmark 
calculation. To ensure that a sufficient number of cases are included 
by mean performance percent, ABCTM provides a minimum 
sufficient denominator (MSD) for each performance level. Together this 
ensures that all cases are appropriately accounted for and adequately 
figured in to the benchmark.
    The ABCTM methodology for a publicly reported benchmark 
on Physician Compare would be based on the current year's data, so the 
benchmark would be appropriate regardless of the unique circumstances 
of data collection or the measures available in a given reporting year. 
We also proposed (80 FR 41813) to use the ABCTM methodology 
to generate a benchmark which could be used to systematically assign 
stars for the Physician Compare 5 star rating. ABCTM has 
been historically well received by the health care professionals and 
entities it is measuring because the benchmark represents quality while 
being both realistic and achievable; it encourages continuous quality 
improvement; and, it is shown to lead to improved quality of 
care.8 9 10
---------------------------------------------------------------------------

    \8\ Kiefe CI, Weissman NW, Allison JJ, Farmer R, Weaver M, 
Williams OD. Identifying achievable benchmarks of care: concepts and 
methodology. International Journal of Quality Health Care. 1998 Oct; 
10(5):443-7.
    \9\ Kiefe CI, Allison JJ, Williams O, Person SD, Weaver MT, 
Weissman NW. Improving Quality Improvement Using Achievable 
Benchmarks for Physician Feedback: A Randomized Controlled Trial. 
JAMA. 2001; 285(22):2871-2879.
    \10\ Wessell AM, Liszka HA, Nietert PJ, Jenkins RG, Nemeth LS, 
Ornstein S. Achievable benchmarks of care for primary care quality 
indicators in a practice-based research network. American Journal of 
Medical Quality 2008 Jan-Feb; 23(1):39-46.
---------------------------------------------------------------------------

    To summarize, we proposed to publicly report on Physician Compare 
an item or measure-level benchmark derived using the Achievable 
Benchmark of Care (ABCTM) methodology annually based on the 
PQRS performance rates most recently available (that is, in 2017 we 
would publicly report a benchmark derived from the 2016 PQRS 
performance rates), and use this benchmark to systematically assign 
stars for the Physician Compare 5 star rating. We solicited comments on 
this proposal.
    The following is a summary of the comments we received on our 
proposal to publicly report on Physician Compare an item, or measure-
level, benchmark derived using the Achievable Benchmark of Care 
(ABCTM) methodology annually based on the PQRS performance 
rates most recently available.
    Comment: Many commenters supported the use of benchmarks to help 
consumers make informed health care decisions and specifically the 
proposed ABCTM methodology, noting this is a valuable and 
useful tool for consumers and a valid and reliable way to approach a 
benchmark and star ratings. However, some commenters stated it was too 
soon to publicly report a benchmark and suggested phasing in or testing 
and sharing the benchmark privately with EPs and group practices for 
internal improvement first prior to making the benchmark publicly 
available. Some commenters asked for up to 2 years of internal use 
prior to public reporting. Other commenters would like CMS to wait to 
apply a benchmark until MIPS is implemented in order to understand how 
the methodology would be applied in the context of MIPS.
    Some commenters noted concern that measures are currently not risk-
adjusted and that the proposed methodology may not be appropriate for 
all measures. Multiple commenters, both those who support and do not 
support the specific proposal, noted concerns about the need to 
stratify any benchmark developed by specialty, stratify by reporting 
mechanism, and risk-adjust the benchmark. Some commenters urged CMS to 
educate physicians and consumers on the benchmark methodology. Several 
commenters appreciated the stakeholder engagement conducted by the 
Physician Compare team regarding the benchmark methodology selection 
and encouraged continued engagement in the future.
    Several commenters also asked for clarification on how the pared-
mean was determined and how this method can be applied to both process 
measures and outcome measures. Some commenters suggested increasing the 
pared-mean to 25 percent and commenters suggested other benchmark 
methodologies, including an approach that recognizes self-improvement 
over time and peer-to-peer performance. One commenter asked for the 
opportunity to review the database and provide a clear demonstration of 
the benchmark's validity. Additional commenters noted that benchmarks 
using the ABCTM methodology is too complex and will be 
difficult for consumers to understand,

[[Page 71128]]

and encouraged consumer testing to remedy this potential problem. 
Several commenters urged CMS to use consistent benchmarking across its 
programs to promote consistency and minimize confusion. Several 
commenters urged CMS to allow QCDRs to determine their own benchmark 
approach.
    Response: We are particularly appreciative of the collaborative 
effort of the many stakeholders who took the initiative to participate 
in the stakeholder outreach process conducted to determine a suitable 
benchmark methodology to propose for public reporting on Physician 
Compare. We look forward to continuing this collaborative approach. We 
also appreciate the concerns raised. Although we see the reasons why 
some commenters would first like the benchmark to be viewed privately, 
we reiterate the significant value in adding a benchmark to Physician 
Compare now. Consumers need tools to best understand the data and to 
make accurate and appropriate comparisons. A benchmark such as this can 
provide this valuable tool. We are committed to continually working to 
make the information on Physician Compare as easy to understand and 
consumer friendly as possible, and adding a benchmark is a critical 
next step in this process.
    Regarding the commenters' concerns about risk adjustment, we agree 
that risk adjustment will become increasingly important as we move to 
more outcome measures, specifically at the individual EP level. We 
actively encourage measure developers to produce measures that are risk 
adjusted. We believe that it is most appropriate to approach risk 
adjustment at the measure development level versus trying to adjust 
after the fact at the benchmarking stage, especially when data are 
submitted via reporting mechanisms that do not provide the necessary 
information to risk adjust after data collection is complete. We will 
continue to conduct analyses to ensure all data, including the 
benchmarks, meet the stated public reporting criteria, and therefore, 
are showing variation in performance and not in other factors, such as 
region or population of care.
    Regarding stratifying the benchmark, one consideration is the 
negative effect of over-stratification. At this stage in public 
reporting, looking to stratify by too many criteria can lead to data 
groupings so small that there can be no meaningful or statistically 
relevant comparisons made. Also, it is important to remember that 
searches on Physician Compare are conducted by location and specialty. 
In this way, when a consumer is evaluating data on the Physician 
Compare Web site, they are generally looking at health care 
professionals in the same location practicing in similar or the same 
specialties. Understanding the limitations to stratifying at this time, 
there is one stratification consideration that we believe is not only 
valuable but necessary as we work to ensure data included on the Web 
site are comparable.
    We are in favor of stratifying by reporting mechanism at this time, 
which would mean creating a benchmark by measure by reporting 
mechanism. This would help remove the complexity and potential 
differences between the same measure collected via multiple reporting 
mechanisms and help solve some of the concerns raised about the 
available PQRS data. It would also remove the burden of interpretation 
across mechanisms from consumers. It is important to note that this 
benchmark proposal does only apply to PQRS data. QCDRs are free to 
develop their own benchmark methodology and submit their methodology 
and benchmark rates to Physician Compare for public reporting 
consideration for non-PQRS measures when and where appropriate.
    One of the benefits of the ABCTM methodology is that it 
has been tested in a number of scenarios and the pared-mean has been 
found to be statistically reliable, valid, and accurate when producing 
a truly achievable benchmark that can be used to measure and improve 
quality performance. We appreciate the recommendation to look at a 
pared-mean that includes more than the top 10 percent of patients 
served by the top performers. However, we believe that increasing this 
percentage is likely to dilute the benchmark and overstate quality 
performance on a given measure. That said, we are conducting ongoing 
testing evaluating this methodology as applied to the available PQRS 
data, and we will actively reach out to stakeholders to share 
information about the results of this statistical analysis, as well as 
ongoing consumer testing, to ensure stakeholders are aware of the 
specific application of the benchmark and the reliability, validity, 
and accuracy of the benchmark for the available PQRS process and 
outcome measures. We will use the most current data to ensure the 
benchmark is the best measure of timely quality care. Therefore, 
additional specifics about the application of the benchmark in terms of 
the specific star attribution, including but not limited to statistical 
analysis of the 2016 data, star display, and consumer testing, will 
depend on data that have not been collected yet. We will provide this 
information as it is available but in advance of publicly reporting the 
benchmark. It is important to note that initial consumer testing 
indicated an ABCTM derived benchmark could be well received 
and understood by consumers on Physician Compare.
    We do appreciate the comments that requested that CMS evaluate 
using a consistent benchmark methodology across programs. We are 
continually evaluating ways to align where and as possible, and will 
take this recommendation into consideration for the future. One benefit 
of the ABCTM methodology is that it is potentially 
applicable across care settings and measure types.
    After considering the comments and stakeholder and expert feedback, 
as well as testing conducted to date, and for the reasons we noted, we 
are finalizing our proposal to publicly report on Physician Compare an 
item, or measure-level, benchmark derived using the ABCTM 
methodology annually based on the PQRS performance rates most recently 
available stratified by reporting mechanism for both group practice and 
individual EP level measures.
    In addition to receiving comments about using the ABCTM 
methodology to derive the benchmark, we also received comments on our 
proposal to use the ABCTM derived benchmark to 
systematically assign stars for the Physician Compare 5 star rating. 
The following is a summary of these comments.
    Comment: Several commenters supported the systematic assigning of a 
star rating based on the proposed benchmark methodology. Other 
commenters opposed star ratings, generally, noting that they are 
concerned such ratings oversimplify performance data. These commenters 
also raised concerns that disparate quality scores could result in 
inappropriate distinctions of quality for physicians whose performance 
scores are not statistically different. Several commenters asked for 
additional details on how the stars will be assigned and urged CMS to 
provide clear explanations to the public about how to interpret the 
star ratings.
    Response: We are committed to moving to a star rating system on 
Physician Compare as this is a consumer friendly way to share such 
complex information as the quality measure data being made available. 
As with all information available for public reporting on Physician 
Compare, the benchmark information and the resulting star ratings need 
to meet the public reporting standards of statistically valid, 
accurate, reliable, and

[[Page 71129]]

comparable data. The goal of using a benchmark such as one derived from 
the ABCTM methodology is to have a star rating system that 
distinguishes statistically significant quality differences. Using this 
methodology can help us ensure that five star performance is 
statistically different than four star performance, etc. As noted in 
this section, additional details based on ongoing analysis with the 
most recently available data will be shared with stakeholders. In 
addition, information about how stars will be specifically assigned 
using the ABCTM methodology, star display, and plain 
language will be shared when the relevant data are available. Finally, 
we will continue to work to ensure that the star rating system used is 
accurately understood and interpreted by consumers. Consumer testing is 
therefore ongoing.
    Understanding the value of a star rating system for consumers, we 
are finalizing our proposal to use the ABCTM derived 
benchmark to systematically assign stars for the Physician Compare 5 
star rating.
g. Patient Experience of Care Measures
    In the CY 2015 PFS final rule with comment period (79 FR 67547), we 
adopted a policy to publicly report patient experience data for all 
group practices of two or more EPs. Consumer testing shows that other 
patients' assessments of their experience resonate with consumers 
because it is important to them to hear about positive and negative 
experiences others have with physicians and other health care 
professionals. As a result, these patient experience data help them 
make an informed health care decision. Understanding the value 
consumers place on patient experience data and our commitment to 
reporting these data on Physician Compare, we proposed (80 FR 41813) to 
continue to make available for public reporting all patient experience 
data for all group practices of two or more EPs, who meet the specified 
sample size requirements and collect data via a CMS-specified certified 
CAHPS vendor, annually in the year following the year the measures are 
reported (for example, 2016 CAHPS for PQRS reported data will be 
included on the Web site in 2017). The patient experience data 
available that we proposed to make available for public reporting are 
the CAHPS for PQRS measures, which include the CG-CAHPS core measures. 
For group practices, we proposed to annually make available for public 
reporting a representation of the top box performance rate \11\ for 
these 12 summary survey measures:
---------------------------------------------------------------------------

    \11\ Top Box score refers to the most favorable response 
category for a given measure. If the measure has a scale of 
``always,'' ``sometimes,'' ``never,'' the Top Box score is 
``always'' if this represents the most favorable response. For the 
CAHPS for PQRS doctor rating, the Top Box score is a rating of 9 or 
10.
---------------------------------------------------------------------------

     Getting Timely Care, Appointments, and Information.
     How Well Providers Communicate.
     Patient's Rating of Provider.
     Access to Specialists.
     Health Promotion & Education.
     Shared Decision Making.
     Health Status/Functional Status.
     Courteous and Helpful Office Staff.
     Care Coordination.
     Between Visit Communication.
     Helping You to Take Medication as Directed.
     Stewardship of Patient Resources.
    We solicited comments on this proposal.
    The following is a summary of the comments we received on our 
proposal to publicly report CAHPS for PQRS data for group practices of 
2 or more EPs that meet all stated public reporting criteria.
    Comment: Many commenters supported expanding public reporting of 
CAHPS for PQRS measures, noting that patient experience data is highly 
relevant to consumers. Commenters stated that other patients' 
assessments of their experience with a given group practice or health 
care professional are no doubt helpful in the health care decision 
making process. Some commenters supported including a benchmark for the 
CAHPS summary measures. Several commenters also urge CMS to collect and 
report individual EP level patient experience data. Some commenters 
opposed the proposal, citing concerns around consumer interpretation of 
patient reported data and that these data may not capture patient 
experience related to all specialties, such as hospitalists, other 
hospital-based professionals, and surgical practices. One commenter had 
concerns with the ``Stewardship of Patient Resources'' measure because 
the measure does not address the numerous barriers to patients 
accessing to care. Several commenters supported adding other types of 
patient experience data to Physician Compare, including Surgical 
CAHPS[supreg] and experience data collected via other sources. Another 
commenter suggested reporting patient experience data for primary care 
physicians and only clinical quality performance for specialists.
    Response: We agree that these patient experience data are very 
valuable to consumers, and as noted, consumer testing has consistently 
shown that these measures aid decision making and are wanted by 
consumers. Consumer testing has also shown that these measures are 
generally well understood and accurately interpreted by consumers. 
CAHPS measures are extensively tested and proven to be statistically 
valid. We are confident these measures are an appropriate and 
statistically relevant indicator of patient satisfaction.
    We do appreciate the comments regarding other types of patient 
experience data, as well as the inclusion of a CAHPS benchmark, and 
will consider these recommendations for the future. We do understand 
that not all measures under consideration for public reporting equally 
apply to all types of professionals included on Physician Compare. 
However, we do believe that the CAHPS for PQRS measures apply to the 
large majority of professionals currently represented on the site. We 
also appreciate the request for CAHPS for PQRS measures at the 
individual EP level. This is something consumers have also requested in 
testing. Unfortunately, at this time, CAHPS for PQRS measures are only 
available and tested at the group practice level.
    Again, as with all measures available for inclusion on Physician 
Compare, the measures must meet the stated public reporting standards. 
Any concerns about specific measures are reviewed against these 
criteria prior to consideration for public reporting.
    After considering the comments received and given that CAHPS for 
PQRS data are highly valued by consumers, we are finalizing our 
proposal to make all twelve summary survey CAHPS for PQRS measures 
available for public reporting on Physician Compare annually for groups 
of 2 or more EPs reporting via a CMS certified CAHPS vendor.
h. Downloadable Database
(a) Addition of VM Information
    To further aid in transparency, we also proposed (80 FR 41813-
41814) to add new data elements to the Physician Compare downloadable 
database at https://data.medicare.gov/data/physician-compare. 
Currently, the downloadable database includes all quality information 
publicly reported on Physician Compare, including quality program 
participation. In addition, the downloadable database includes all 
measures submitted and reviewed and found to be statistically valid and 
reliable. We proposed (80 FR 41813) to add to the Physician Compare 
downloadable database for group

[[Page 71130]]

practices and individual EPs the 2018 VM quality tiers for cost and 
quality, based on the 2016 data, noting if the group practice or EP is 
high, low, or average on cost and quality per the VM. We also proposed 
(80 FR 41813) to include a notation of the payment adjustment received 
based on the cost and quality tiers, and an indication if the 
individual EP or group practice was eligible to but did not report 
quality measures to CMS. The profile pages on Physician Compare are 
meant to provide information to average Medicare consumers that can 
help them identify quality health care and choose a quality clinician, 
while this database is geared toward health care professionals, 
industry analysts, and researchers who are familiar with more complex 
data. Therefore, adding this information to the downloadable database 
promotes transparency and provides useful data to the public while we 
conduct consumer testing to ensure VM data can be packaged and 
explained in such a way that it is accurately interpreted, understood, 
and useful to average consumers. We solicited comments on this 
proposal.
    The following is a summary of the comments we received on our 
proposal to include this additional VM data to the Physician Compare 
downloadable database.
    Comment: Several commenters expressed significant concerns about 
adding this VM data to the Physician Compare downloadable database for 
group practices and individual EPs because the VM is not well-
understood by the public, and is perceived as not providing value to 
the consumer or accurately portraying quality and cost. One commenter 
noted that consumers can still access this data in the downloadable 
database. Several commenters were concerned that this data could be 
misused by researchers or media. One commenter suggested that VM 
information should be shared with specialty societies rather than 
publicly reported. Many commenters were also opposed to this proposal 
due to concerns with the VM calculation methodology and the portion of 
group practices and health care professionals that will receive 
``average'' scores for the cost and/or quality composite. One commenter 
urged CMS to put in place a 30-day period for EPs and group practices 
to review any VM information that will be added to the downloadable 
database. Conversely, several commenters supported adding VM 
information to the downloadable database, noting that it promotes 
transparency and provides useful data to the public. Some commenters 
also noted that these data support research and generate further 
learnings about the VM methodology.
    Response: We do understand the concerns raised about making VM data 
publicly available. Our experience shows that average consumers are not 
the primary audience for the downloadable database. In fact, testing 
has shown that most average consumers do not want or believe they know 
what to do with that level of detailed data. Therefore, we are not 
concerned that adding these data to the downloadable database will 
disadvantage consumers. We do appreciate that these or any data 
provided in the downloadable database could be misused. However, we do 
believe that the benefits of transparency and potential learnings for 
health care professionals, specialty societies, researchers, and other 
stakeholders, as noted by some commenters, outweigh these concerns. As 
noted by commenters, making these data available to the informed public 
could lead to improvements in the methodology and greater understanding 
of cost and quality. Regarding the request for these data to be made 
available for preview, we do not currently provide a preview period for 
the downloadable database, but the cost and quality scores included 
will match those provided in existing feedback reports. These reports 
are generally made available for private review more than 30 days prior 
to publicly reporting the data on Physician Compare.
    As a result of our commitment to increased transparency and the 
other reasons we noted, and after considering the public comments, we 
are finalizing this proposal to add cost and quality tier, as well as 
adjustment, information to the Physician Compare downloadable database 
for the 2018 VM based on 2016 quality and cost data.
(b) Addition of Utilization Data
    In addition, we proposed (80 FR 4183-4184) to add utilization data 
to the Physician Compare downloadable database. Utilization data is 
information generated from Medicare Part B claims on services and 
procedures provided to Medicare beneficiaries by physicians and other 
health care professionals; and are currently available at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/Physician-and-Other-Supplier.html. It provides counts of services and procedures rendered 
by health care professionals by Health care Common Procedure Coding 
System (HCPCS) code. Under section 104(e) of the Medicare Access and 
CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10, enacted April 
16, 2015), beginning with 2016, the Secretary shall integrate 
utilization data information on Physician Compare. This section of the 
law discusses data that can help empower people enrolled in Medicare by 
providing access to information about physician services. These data 
are very useful to the health care industry and to health care 
researchers and other stakeholders who can accurately interpret these 
data and use them in meaningful analysis. These data are less 
immediately useable in their raw form by the average Medicare consumer. 
As a result, we proposed that the data be added to the downloadable 
database versus the consumer-focused Web site profile pages. Including 
these data in the Physician Compare downloadable database provides 
transparency without taking away from the information of most use to 
consumers on the main Web site. We solicited comments on this proposal.
    The following is a summary of the comments we received on our 
proposal to include utilization data in the Physician Compare 
downloadable database.
    Comment: Some commenters supported the addition of utilization data 
to the public downloadable database, noting that these data support 
transparency and may be useful to researchers for analysis. They do 
however note that these data are not intended for the average Medicare 
consumer. Several commenters expressed concern with the accuracy of 
these data and the potential for misinterpretation or misuse of the 
data. Some commenters request that these data include disclaimers about 
the limitations of utilization data and request that physicians be 
allowed to submit corrections where the data are inaccurate or 
outdated. Several commenters also felt that utilization data are not 
only not intended for consumer use but do not align with Physician 
Compare's goals. Some commenters noted that utilization data are 
already available on a different CMS Web site. One commenter suggested 
developing a profile based on patient characteristics from the data. 
Another commenter requests safeguards or summary conclusions from the 
claims data that would be meaningful for consumers. One commenter urged 
CMS to limit the release of these data to professional societies and 
work to determine the most appropriate use.
    Response: We agree that these data are not intended for or well 
understood by the average Medicare consumer. This has been illustrated 
in consumer testing

[[Page 71131]]

to date. Again, it is important to note that consumers are not a 
primary audience for the downloadable data file. These data are 
potentially of great value to many stakeholders. The data are already 
public on another CMS Web site, as mentioned, but including them with 
the other Physician Compare data could help provide useful context that 
could better ensure more appropriate use of the data. As noted above, 
all data shared publicly could potentially be misused. But, again, we 
believe the benefits of transparency outweigh these concerns and we 
will work to determine the best method for displaying the data. We 
appreciate the recommendations for alternative ways to use or include 
these data on the consumer-facing site or ways additional context could 
be added to these data. We will review these recommendations for the 
future.
    Given that section 104(e) of MACRA mandates integration of these 
data on Physician Compare and because we believe that adding these data 
to the downloadable database advances our transparency goals, we are 
finalizing our proposal to include utilization data in the Physician 
Compare downloadable database. Not all available data will be included. 
The specific HCPCS codes included will be determined based on analysis 
of the available data, focusing on the most used codes. Additional 
details about the specific HCPCS codes that will be included in the 
downloadable database will be provided to stakeholders.
(i) Board Certification
    Finally, we proposed (80 FR 41813) adding additional Board 
Certification information to the Physician Compare Web site. Board 
Certification is the process of reviewing and certifying the 
qualifications of a physician or other health care professional by a 
board of specialists in the relevant field. We currently include 
American Board of Medical Specialties (ABMS) data as part of individual 
EP profiles on Physician Compare. We appreciate that there are 
additional, well respected boards that are not included in the ABMS 
data currently available on Physician Compare that represent EPs and 
specialties represented on the Web site. Such board certification 
information is of interest to consumers as it provides additional 
information to use to evaluate and distinguish between EPs on the Web 
site, which can help in making an informed health care decision. The 
more data of immediate interest that is included on Physician Compare, 
the more users will come to the Web site and find quality data that can 
help them make informed decisions. Specifically, we proposed to add to 
the Web site board certification information from the American Board of 
Optometry (ABO) and American Osteopathic Association (AOA). Please note 
we are not endorsing any particular boards. These two specific boards 
showed interest in being added to the Web site and have demonstrated 
that they have the data to facilitate inclusion of this information on 
the Web site. These two boards also fill a gap, as the ABMS does not 
certify Optometrists and only certain types of DOs are covered by ABMS 
Osteopathic certification. In general, we reviewed interest from boards 
as it was brought to our attention, and if the necessary data were 
available and appropriate arrangements and agreements could be made to 
share the needed information with Physician Compare, additional board 
information could be added to the Web site in future. At this time, 
however, we specifically proposed to include ABO and AOA Board 
Certification information on Physician Compare. We solicited comments 
on this proposal.
    The following is a summary of the comments we received on our 
proposal to adding additional Board Certification information to 
Physician Compare, specifically adding ABO and AOA Certification.
    Comment: Commenters supported adding ABO and AOA Board 
Certification to Physician Compare. One commenter recommended that the 
name of the certifying board be included on the site so it is clear 
whether the certificate is issued by an ABMS Member Board or another 
board. Another commenter urged CMS to consider multiple certifications 
within a specialty and to develop a tool for Medicare beneficiaries and 
other health care consumers to view a comparison of the multiple 
certifications on the site. Several commenters requested the addition 
of other boards, including the American Board of Audiology (ABA), a 
Certificate of Clinical Competence in Audiology (CCC-A), American Board 
of Physician Specialties (ABPS), American Board of Physical Therapy 
Specialties (ABPTS), ASHA Certificate of Clinical Competence in Speech-
Language Pathology (CCC-SLP), Board Certified Specialist in Child 
Language and Language Disorders, Board Certified Specialist in Fluency 
and Fluency Disorders, Board Certified Specialist in Swallowing and 
Swallowing Disorders, and Board Certified Specialist in Intraoperative 
Monitoring from ASHA. One commenter noted that there is no category for 
specialized certifications for professionals other than physicians on 
Physician Compare and requested the opportunity to provide input should 
such a category be under consideration. Another commenter requested 
that the site include information about hospitalists who choose to 
pursue a Focused Practice in Hospital Medicine (FPHM) Maintenance of 
Certification (MOC).
    Response: We particularly appreciate the many suggestions provided 
for additional Boards to consider for inclusion on the Web site and for 
additional suggestions regarding how to display this information on the 
Web site. We also appreciate the comment regarding the need to evaluate 
including information for EPs beyond physicians. All of these 
recommendations will be taken under consideration for the future to 
evaluate if they are feasible and/or considered a value added through 
consumer testing. For those Boards that have specifically requested 
being considered for inclusion on the Web site, we will work with each 
Board to assess if the Board has the data available and comparable 
information needed to include the Certification information on the Web 
site and consider whether such boards would be appropriate for 
consideration in future rulemaking.
    As a result of the overall support for adding additional Board 
Certification information to Physician Compare and for the reasons we 
specified above, we are finalizing our proposal to add this 
specifically ABO and AOA Board Certification information.
    Table 26 summarizes the Physician Compare measure and participation 
data proposals finalized in this final rule.

[[Page 71132]]



               Table 26--Summary of Measure and Participation Data Finalized for Public Reporting
----------------------------------------------------------------------------------------------------------------
                                                                                          Quality measures and
 Data collection year    Publication year *        Data type       Reporting mechanism     data finalized for
          *                                                                                 public reporting
----------------------------------------------------------------------------------------------------------------
2016.................  2017.................  PQRS, PQRS GPRO,     Web Interface, EHR,  Include an indicator for
                                               EHR, and Million     Registry, Claims.    satisfactory reporters
                                               Hearts.                                   under PQRS,
                                                                                         participants in the EHR
                                                                                         Incentive Program, and
                                                                                         EPs who satisfactorily
                                                                                         report the
                                                                                         Cardiovascular
                                                                                         Prevention measures
                                                                                         group under PQRS in
                                                                                         support of Million
                                                                                         Hearts.
2016.................  2017.................  PQRS GPRO..........  Web Interface, EHR,  All PQRS GPRO measures
                                                                    Registry.            reported via the Web
                                                                                         Interface, EHR, and
                                                                                         registry that are
                                                                                         available for public
                                                                                         reporting for group
                                                                                         practices of 2 or more
                                                                                         EPs.
                                                                                        Publicly report an item-
                                                                                         level benchmark, as
                                                                                         appropriate.
2016.................  2017.................  ACO................  Web Interface,       All measures reported by
                                                                    Survey Vendor        Shared Savings Program
                                                                    Claims.              ACOs, including CAHPS
                                                                                         for ACOs.
2016.................  2017.................  CAHPS for PQRS.....  CMS-Specified        All CAHPS for PQRS
                                                                    Certified CAHPS      measures for groups of
                                                                    Vendor.              2 or more EPs who meet
                                                                                         the specified sample
                                                                                         size requirements and
                                                                                         collect data via a CMS-
                                                                                         specified certified
                                                                                         CAHPS vendor.
2016.................  2017.................  PQRS...............  Registry, EHR, or    All PQRS measures for
                                                                    Claims.              individual EPs
                                                                                         collected through a
                                                                                         registry, EHR, or
                                                                                         claims.
                                                                                        Publicly report an item-
                                                                                         level benchmark, as
                                                                                         appropriate.
2016.................  2017.................  QCDR data..........  QCDR...............  All individual EP and
                                                                                         group practice QCDR
                                                                                         measures.
2016.................  2017.................  Utilization data...  Claims.............  Utilization data for
                                                                                         individual EPs in the
                                                                                         downloadable database.
2016.................  2017.................  PQRS, PQRS GPRO....  Web Interface, EHR,  The following data for
                                                                    Registry, Claims.    group practices and
                                                                                         individual EPs in the
                                                                                         downloadable database:
                                                                                         The VM quality
                                                                                         tiers for cost and
                                                                                         quality, noting if the
                                                                                         group practice or EP is
                                                                                         high, low, or neutral
                                                                                         on cost and quality per
                                                                                         the VM.
                                                                                         A notation of
                                                                                         the payment adjustment
                                                                                         received based on the
                                                                                         cost and quality tiers.
                                                                                         An indication if the
                                                                                         individual EP or group
                                                                                         practice was eligible
                                                                                         to but did not report
                                                                                         quality measures to
                                                                                         CMS.
----------------------------------------------------------------------------------------------------------------
* Note that these data are finalized to be reported annually. The table only provides the first year in which
  these data would begin on an annual basis, and such dates also serve to illustrate the data collection year in
  relation to the publication year. Therefore, after 2016, 2017 data would be publicly reported in 2018, 2018
  data would be publicly reported in 2019, etc.
 

4. Public Comment Solicited on Issues for Possible Future Rulemaking
a. Quality Measures
    In addition to the proposals we made in the proposed rule, we 
solicited comment on several new data elements for possible inclusion 
on the individual EP and group profile pages of Physician Compare 
through future rulemaking. In future years, we will consider expanding 
public reporting to include additional quality measures. We know there 
are gaps in the measures currently available for public reporting on 
Physician Compare. Understanding this, we stated that we would like to 
hear from stakeholders about the types of quality measures that will 
help us fill these gaps and meet the needs of consumers and 
stakeholders. Therefore, we sought comment on potential measures that 
would benefit future public reporting on Physician Compare. We are 
working to identify possible data sources and we sought comment on the 
measure concepts, as well as potential specific measures of interest. 
The quality measures that would be considered for future posting on 
Physician Compare are those that have been comprehensively vetted and 
tested, and are trusted by the physician community.
    The following is a summary of the comments we received on our 
request for comment on future quality measure needs.
    Comment: We received comments on potential measures to report on 
Physician Compare in the future. Commenters supported including outcome 
measures, including clinical outcomes and patient-reported outcomes. 
One commenter noted that outcome measures must include a risk 
adjustment methodology. Other commenters supported patient safety, care 
coordination, cross-cutting, and patient and family experience of care 
measures. Commenters suggested specialty specific measures, including 
audiology, urology, and neurology measures. One commenter recommended 
the continued partnership with the professional associations, 
contractors, and CMS for future measure determination, and noted that 
measures used for Physician Compare should be included in the proposed 
rule for public comment. One commenter suggested measures for 
appropriate access to the health care professional/group practice 
offices, culturally and linguistically competent services including 
successful trainings attended, availability of appropriate 
transportation with equipment, geriatrics specialty/training, patient 
experience measures with qualitative data, and patient reported 
measures, including ones that capture patient activation. One commenter 
suggested a common set of EP level performance measures that would 
apply across all payment programs, and another urged CMS to incorporate 
the Core Quality Measures Collaborative's aligned

[[Page 71133]]

measure sets. One commenter opposed the future public reporting of 
performance information for any quality measures that are not reported 
under federally required quality reporting programs.
    Response: We will review all comments and consider these 
suggestions for possible future rulemaking.
b. Medicare Advantage
    We also sought comment on adding Medicare Advantage information to 
Physician Compare individual EP and group practice profile pages. 
Specifically, we sought comment on adding information on the relevant 
EP and group practice profile pages about which Medicare Advantage 
health plans the EP or group accepts and making this information a link 
to more information about that plan on the Medicare.gov Plan Finder Web 
site. An increasing number of Medicare clinicians provide services via 
Medicare Advantage. Medicare Advantage quality data is reported via 
Plan Finder at the plan level. As a result, physicians and other health 
care professionals who participate in Medicare Advantage do not have 
quality measure data available for public reporting on Physician 
Compare. Adding a link between Physician Compare clinicians 
participating in Medicare Advantage plans and the associated quality 
data available for those plans on Plan Finder could help ensure that 
consumers have access to all of the quality data available to make an 
informed health care decision.
    The following is a summary of the comments we received on our 
request about possibly integrating Medicare Advantage information with 
Physician Compare information in the future.
    Comment: Several commenters supported adding Medicare Advantage 
information to the Physician Compare individual EP and group practice 
profile pages, noting that it would further assist consumers with 
health care decision making and fill a current gap in the available 
data. One commenter noted that certain services are provided outside of 
the scope of benefits under traditional FFS Medicare, so it is critical 
that Physician Compare incorporate the full scope of performance.
    However, many commenters opposed adding Medicare Advantage data due 
to concerns with data accuracy and comparison to FFS quality data. One 
commenter suggested alignment of physician and physician group quality 
measures across traditional FFS Medicare, Medicare ACOs, and Medicare 
Advantage. Another commenter asked where information on Medicare 
Advantage professionals would be obtained and how often the database 
would be updated. Commenters were concerned that adding Medicare 
Advantage data to Physician Compare would be complicated and difficult 
for both consumers and health care professionals to understand. One 
commenter asked for additional information on how this information 
would be messaged to the consumer.
    Response: We appreciate that there are many health care 
professionals providing services through Medicare Advantage, and 
consumers have regularly indicated an interest in knowing which 
Medicare Advantage plans, if any, health care professionals on 
Physician Compare are associated. However, we also appreciate the 
concerns raised regarding data access and the technical concerns 
regarding the ability to appropriately link to Plan Finder. We will 
further evaluate all of the information shared and questions asked 
concerning the inclusion of Medicare Advantage data, and we will 
consider these issues for potential future rulemaking.
c. Value Modifier
    We also sought comment on including additional VM cost and quality 
data on Physician Compare. Specifically, we sought comment on including 
in future years an indicator for a downward and neutral VM adjustment 
on group practice and individual EP profile pages. We also sought 
comment on including the VM quality composite or other VM quality 
performance data on Physician Compare group practice and individual EP 
profile pages and/or the Physician Compare downloadable database. 
Similarly, we sought comment on including the VM cost composite or 
other VM cost measure data on Physician Compare group practice and 
individual EP profile pages and/or the downloadable database. These VM 
quality and cost measures ultimately help determine the payment 
adjustment and are an indication of whether the individual or group is 
meeting the Affordable Care Act goals of improving quality while 
lowering cost. Specifically, including this cost data is consistent 
with the section 10331(a)(2) of the Affordable Care Act as it is an 
assessment of efficiency. However, these data are complex and we needed 
time to establish the best method for public reporting and to ensure 
this information is accurately understood and interpreted by consumers. 
Therefore, we only sought comment at this time.
    The following is a summary of the comments we received regarding 
potentially including additional VM information on Physician Compare in 
the future.
    Comment: A few commenters supported potentially including an 
indicator of downward and neutral adjustments under the VM on physician 
profile pages in the future. Several commenters opposed including 
additional VM data on profile pages because of concerns around the 
current VM methodology, the complexity of the program, and concerns 
about the meaningfulness of the cost and quality composite scores to 
consumers. One commenter noted that the VM cost and quality composites 
will be of limited future utility due to the movement towards MIPS.
    Response: As noted above, we appreciate the concerns raised about 
sharing VM data with consumers, and we acknowledge that the payment 
adjustment under the VM end after CY 2018. We will further review all 
comments and suggestions regarding this data and consider for potential 
future rulemaking.
d. Open Payments Data
    We currently make Open Payments data available at http://www.cms.gov/openpayments/. Consumer testing has indicated that these 
data are of great interest to consumers. Consumers have indicated that 
this level of transparency is important to them and access to this 
information on Physician Compare increases their ability to find and 
evaluate the information. We sought comment about including Open 
Payments data on individual EP profile pages. Although these data are 
already publicly available, consumer testing has also indicated that 
additional context, wording, and data display considerations can help 
consumers better understand the information. We sought comment on 
adding these data to Physician Compare, to the extent it is feasible 
and appropriate. Prior to considering a formal proposal, we continue to 
test these data with consumers to establish the context and framing 
needed to best ensure these data are accurately understood and 
presented in a way that assists decision making. Therefore, we only 
sought comment at this time.
    The following is a summary of the comments we received regarding 
possible future inclusion of Open Payments data on Physician Compare.
    Comment: Commenters both supported and opposed making Open Payments 
data available on Physician Compare. Some commenters supported

[[Page 71134]]

public access to Open Payments data, but opposed adding it to Physician 
Compare. Some commenters supported linking to the existing Open 
Payments Web site, and others noted that the data are already publicly 
available so adding these data to Physician Compare is redundant. 
Several commenters urged CMS to provide context for the data to ensure 
the data are interpreted correctly or to include general information 
regarding Open Payments rather than the actual Open Payments data. A 
commenter urged CMS should make clear that manufacturers are not 
responsible for Physician Compare data and physicians can only log 
complaints about Open Payments data through the dispute and correction 
process applicable to the Open Payments program. One commenter 
suggested establishing additional nature of payment categories for (i) 
stock option buy outs and (ii) transfers of value not otherwise covered 
by the existing nature of payment categories. Many commenters noted 
that Physician Compare serves a different purpose than the Open 
Payments Web site and it would be misleading to include this 
information on Physician Compare as it is unrelated to the quality of 
care. Commenters were also concerned with the accuracy of Open Payments 
data.
    Response: We understand that Open Payments data are different from 
the quality of care data included on Physician Compare, and we 
appreciate that these data require context to be fully understood. As 
noted, we do continue to test these data with consumers, and we will 
take the comments and recommendations provided under consideration and 
if appropriate, address in possible future rulemaking.
e. Measure Stratification
    Finally, we sought comments on including individual EP and group 
practice level quality measure data stratified by race, ethnicity, and 
gender on Physician Compare, if feasible and appropriate (that is, 
statistically appropriate, etc.). By stratification, we mean that we 
would report quality measures for each group of a given category. For 
example, if we were to report a measure for blood pressure control 
stratified by sex, we would report a performance score for women and 
one for men. We also sought comment on potential quality measures, 
including composite measures, for future postings on Physician Compare 
that could help consumers and stakeholders monitor trends in health 
equity. Inclusion of data stratified by race and ethnicity and gender, 
as well as the inclusion of other measures of health equity, would help 
ensure that HHS is beginning to work to fulfill one of the Affordable 
Care Act goals of reporting data on race, ethnicity, sex, primary 
language, and disability status through public postings on HHS Web 
sites and other dissemination strategies (see section 4302 of the 
Affordable Care Act).
    The following is a summary of the comments we received about 
including individual EP and group practice level quality measure data 
stratified by race, ethnicity, and gender on Physician Compare.
    Comment: Commenters who supported stratifying measures noted that 
this information is important in determining and tracking health 
equity, increasing transparency and accountability, and helping 
identify and reduce known and persistent health care disparities. Some 
commenters also noted this would allow consumers to make informed 
choices based on their preferences and give stakeholders valuable 
information on gaps and trends in the system based on demographics. 
Several commenters suggested including primary language, disability 
status, gender identity, and sexual orientation could also add value. 
Commenters who opposed stratification noted that consumers may 
misinterpret the data. Other concerns included over-diluting the data, 
data collection burden, and privacy issues. One commenter noted that it 
is not the function of Physician Compare to ``monitor trends in health 
equity.'' Another commenter noted that calculation of stratified 
quality data would require significant research to ensure that the 
information provided was both meaningful and accurate.
    Response: As with all items presented for comment only, we will 
review the comments and suggestions and consider whether these data 
sets are appropriate for inclusion on Physician Compare. Any data 
recommended in these areas and found suitable for public disclosure on 
Physician Compare would be addressed through separate notice-and-
comment rulemaking.
5. Additional Comments Received
    We received additional comments which are summarized and addressed 
below.
    Comment: Commenters noted that the absence of measure data on 
Physician Compare due to limited available or meaningful measures may 
mislead consumers. Commenters requested disclaimers be added or 
additional education be conducted to explain that there could be the 
absence of measure data due to measure limitations and not poor 
quality. Some commenters added that these explanations should be in 
plain language at a 6th grade reading level. Several commenters 
expressed concern with publicly reporting any data until measure 
limitations can be analyzed or addressed. A few commenters recommended 
language explaining the significance of QCDR reporting.
    Response: We understand that the limited availability of PQRS 
measures may make it difficult for some specialties to report. We hope 
that the introduction of additional measures, such as QCDR measures and 
patient experience measures, will help mitigate concerns regarding 
quality data availability in the short term. It is important to realize 
that most searches on Physician Compare are specialty based. If a given 
specialty does not have measures, users will only evaluate physicians 
or other health care professionals that do not have measures. This 
specialty based search can mitigate some of these concerns. Finally, we 
also understand that disclaimers and other types of explanatory 
language are necessary to help inform health care consumers as they use 
the Web site. We will continue to work to ensure that the language 
included on Physician Compare addresses the concerns raised and helps 
users understand that there are a number of reasons a physician or 
other health care professional may not have quality data on the Web 
site. We are continually working to update all language on the Web site 
to ensure it is plain language that can be easily understood.
    Comment: Several commenters are concerned with the use of 
physician-centric language in the proposed rule and on Physician 
Compare, noting that the name of the Web site could be more inclusive 
of all eligible health care professionals. One commenter suggested 
providing information throughout the Web site about the full array of 
qualified professionals included on the Web site. One commenter asked 
CMS to assure that audiologists are meaningfully represented and can be 
easily identified by other professionals and patients.
    Response: The name of the site is generally specified in section 
10331(a)(1) the Affordable Care Act. Throughout the site we do note 
that both physicians and other health care professionals are available 
to search and view. If a professional is in approved status in PECOS 
and has submitted Medicare FFS claims in their name in the last 12 
months, they will be included on Physician Compare. They will be listed 
by the specialty or other

[[Page 71135]]

health care professional designation that they enrolled under when 
joining Medicare.

I. Physician Payment, Efficiency, and Quality Improvements--Physician 
Quality Reporting System

    This section contains the requirements for the Physician Quality 
Reporting System (PQRS). The PQRS, as set forth in sections 1848(a), 
(k), and (m) of the Act, is a quality reporting program that provides 
incentive payments (which ended in 2014) and payment adjustments (which 
began in 2015) to eligible professionals (EPs) and group practices 
based on whether they satisfactorily report data on quality measures 
for covered professional services furnished during a specified 
reporting period or to individual EPs based on whether they 
satisfactorily participate in a qualified clinical data registry 
(QCDR). Please note that section 101(b)(2)(A) of the Medicare Access 
and CHIP Reauthorization Act of 2015 (Pub. L. 114-10, enacted on April 
16, 2015) (MACRA) amends section 1848(a)(8)(A) by striking ``2015 or 
any subsequent year'' and inserting ``each of 2015 through 2018.'' This 
amendment authorizes the end of the PQRS in 2018 and beginning of a new 
program, which may incorporate aspects of the PQRS, the Merit-based 
Incentive Payment System (MIPS).
    The requirements primarily focus on our proposals related to the 
2018 PQRS payment adjustment, which will be based on an EP's or a group 
practice's reporting of quality measures data during the 12-month 
calendar year reporting period occurring in 2016 (that is, January 1 
through December 31, 2016). Please note that, in developing these 
proposals, we focused on aligning our requirements, to the extent 
appropriate and feasible, with other quality reporting programs, such 
as the Medicare Electronic Health Record (EHR) Incentive Program for 
EPs, the Physician Value-Based Payment Modifier (VM), and the Medicare 
Shared Savings Program. In previous years, we have made various strides 
in our ongoing efforts to align the reporting requirements in CMS' 
quality reporting programs to reduce burden on the EPs and group 
practices that participate in these programs. We continued to focus on 
alignment as we developed our proposals for the 2018 PQRS payment 
adjustment.
    In addition, please note that, in our quality programs, we have 
begun to emphasize the reporting of certain types of measures, such as 
outcome measures, as well as measures within certain NQS domains. 
Indeed, in its March 2015 report (available at http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=79068) the Measure Applications 
Partnership (MAP) suggested that CMS place an emphasis on higher 
quality measures, such as functional outcome measures. For example, in 
the PQRS, we placed an emphasis on the reporting of the Consumer 
Assessment of Healthcare Providers and Systems (CAHPS) for PQRS survey 
and cross-cutting measures that promote the health of larger 
populations and that are applicable to a larger number of patients. As 
discussed further in this section, we proposed to require the reporting 
of the CAHPS for PQRS survey for groups of 25 or more EPs who register 
to participate in the PQRS Group Practice Reporting Option (GPRO) and 
select the Web Interface as the reporting mechanism. In addition, we 
proposed to continue to require the reporting of at least 1 applicable 
cross-cutting measure if an EP sees at least 1 Medicare patient. When 
reporting measures via a QCDR, we emphasized the reporting of outcome 
measures, as well as resource use, patient experience of care, 
efficiency/appropriate use, or patient safety measures.
    Furthermore, we note that our proposals related to the 2018 PQRS 
payment adjustment are similar to the requirements we previously 
established for the 2017 PQRS payment adjustment. We received comments 
in previous years, as well as during the comment period for the 
proposed rule, requesting that CMS not make any major changes to the 
requirements for PQRS, and we believe these final requirements address 
these commenters' desire for stable requirements. Indeed, we received 
many comments related to our proposals for the 2018 PQRS payment 
adjustment, and we will address those comments with specificity below. 
Please note, however, that we received comments on the PQRS that were 
outside the scope of the proposed rule, as they were not related to our 
specific proposals for the 2018 PQRS payment adjustment. While we will 
take these comments into consideration, primarily when we begin to 
develop policies and requirements for the Merit-based Incentive Payment 
System (or MIPS), we will not specifically respond to those comments 
here.
    The PQRS regulations are specified in Sec.  414.90. The program 
requirements for the 2007 through 2014 PQRS incentives and the 2015 
through 2017 PQRS payment adjustments that were previously established, 
as well as information on the PQRS, including related laws and 
established requirements, are available at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/index.html. In 
addition, the 2013 PQRS and eRx Experience Report, which provides 
information about EP participation in PQRS, is available for download 
at http://cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/Downloads/2013_PQRS_eRx_Experience_Report_zip.zip.
1. The Definition of EP for Purposes of Participating in the PQRS
    CMS implemented the first PQRS payment adjustment on January 1, 
2015. Specifically, EPs who did not satisfactorily report data on 
quality measures during the 12-month calendar year reporting period 
occurring in 2013 are receiving a 1.5 percent negative adjustment 
during CY 2015 on all of the EPs' Part B covered professional services 
under the Medicare Physician Fee Schedule (PFS). The 2015 PQRS payment 
adjustment applies to payments for all of the EPs' Part B covered 
professional services furnished under the PFS. We received many 
questions surrounding who must participate in the PQRS to avoid the 
PQRS payment adjustment. As such, we sought to clarify here who is 
required to participate in the PQRS for purposes of the payment 
adjustments in this rule.
    Please note that there are no hardship or low-volume exemptions for 
the PQRS payment adjustment. All EPs who furnish covered professional 
services must participate in the PQRS each year by meeting the criteria 
for satisfactory reporting--or, in lieu of satisfactory reporting, 
satisfactory participation in a QCDR--to avoid the PQRS payment 
adjustments.
    The PQRS payment adjustment applies to EPs who furnish covered 
professional services. The definition of an EP for purposes of 
participating in the PQRS is specified in section 1848(k)(3)(B) of the 
Act. Specifically, the term ``eligible professional'' (EP) means any of 
the following: (i) A physician; (ii) a practitioner described in 
section 1842(b)(18)(C); (iii) a physical or occupational therapist or a 
qualified speech-language pathologist; or (iv) beginning with 2009, a 
qualified audiologist (as defined in section 1861(ll)(3)(B)). The term 
``covered professional services'' is defined in section 1848(k)(3)(A) 
of the Act to mean services for which payment is made under, or is 
based on, the Medicare PFS established under section 1848 and which are 
furnished by an EP.
    EPs in Critical Access Hospitals Billing under Method II (CAH-IIs): 
We

[[Page 71136]]

note that EPs in critical access hospitals billing under Method II 
(CAH-IIs) were previously not able to participate in the PQRS. Due to a 
change we made in the manner in which EPs in CAH-IIs are reimbursed by 
Medicare, it is now feasible for EPs in CAH-IIs to participate in the 
PQRS. EPs in CAH-IIs may participate in the PQRS using ALL reporting 
mechanisms available, including the claims-based reporting mechanism.
    EPs Who Practice in Rural Health Clinics (RHCs) and/or Federally 
Qualified Health Centers (FQHCs): Services furnished at RHCs and/or 
FQHCs for which payment is not made under, or based on, the Medicare 
PFS, or which are not furnished by an EP, are not subject to the PQRS 
negative payment adjustment. With respect to EPs who furnish covered 
professional services at RHCs and/or FQHCs that are paid under the 
Medicare PFS, we note that we are currently unable to assess PQRS 
participation for these EPs due to the way in which these EPs bill for 
services under the PFS. Therefore, EPs who practice in RHCs and/or 
FQHCs would not be subject to the PQRS payment adjustment.
    EPs Who Practice in Independent Diagnostic Testing Facilities 
(IDTFs) and Independent Laboratories (ILs): We note that due to the way 
IDTF and IL suppliers and their employee EPs are enrolled with Medicare 
and claims are submitted for services furnished by these suppliers and 
billed by the IDTF or IL, we are unable to assess PQRS participation 
for these EPs. Therefore, claims submitted for services performed by 
EPs who perform services as employees of, or on a reassignment basis 
to, IDTFs or ILs would not be subject to the PQRS payment adjustment.
2. Requirements for the PQRS Reporting Mechanisms
    The PQRS includes the following reporting mechanisms: Claims; 
qualified registry; EHR (including direct EHR products and EHR data 
submission vendor products); the Web Interface; certified survey 
vendors, for CAHPS for PQRS survey measures; and the QCDR. Under the 
existing PQRS regulation, Sec.  414.90(h) through (k) govern which 
reporting mechanisms are available for use by individuals and group 
practices for the PQRS incentive and payment adjustment. This section 
contains our proposals to change the QCDR and qualified registry 
reporting mechanisms. Please note that we did not propose to make 
changes to the other PQRS reporting mechanisms.
    One of our goals, as indicated in the Affordable Care Act, is to 
report data on race, ethnicity, sex, primary language, and disability 
status. A necessary step toward fulfilling this mission is the 
collection and reporting of quality data, stratified by race, 
ethnicity, sex, primary language, and disability status. The agency 
intends to require the collection of these data elements within each of 
the PQRS reporting mechanisms. Although we did not propose to require 
the collection of these data elements, we solicited comments regarding 
the facilitators and obstacles providers and vendors may face in 
collecting and reporting these attributes. Additionally, we solicited 
comments on preference for a phased-in approach, perhaps starting with 
a subset of measures versus a requirement across all possible measures 
and mechanisms with an adequate timeline for implementation.
a. Changes to the Requirements for the QCDR
    We are required, under section 1848(m)(3)(E)(i) of the Act, to 
establish requirements for an entity to be considered a QCDR. Such 
requirements must include a requirement that the entity provide the 
Secretary with such information, at such times, and in such manner as 
the Secretary determines necessary to carry out this subsection. 
Section 1848(m)(3)(E)(iv) of the Act, as added by section 601(b)(1)(B) 
of the American Taxpayer Relief Act of 2012 (ATRA), requires CMS to 
consult with interested parties in carrying out this provision. We 
sought to clarify issues related to QCDR self-nomination, as well as 
propose a change related to the requirements for an entity to become a 
QCDR.
    Who May Apply to Self-Nominate to Become a QCDR: We have received 
many questions related to what entities may participate in the PQRS as 
a QCDR. We noted that Sec.  414.90(b) defines a QCDR as a CMS-approved 
entity that has self-nominated and successfully completed a 
qualification process showing that it collects medical and/or clinical 
data for the purpose of patient and disease tracking to foster 
improvement in the quality of care provided to patients. A QCDR must 
perform the following functions:
     Submit quality measures data or results to CMS for 
purposes of demonstrating that, for a reporting period, its EPs have 
satisfactorily participated in PQRS. A QCDR must have in place 
mechanisms for the transparency of data elements and specifications, 
risk models, and measures.
     Submit to CMS, for purposes of demonstrating satisfactory 
participation, quality measures data on multiple payers, not just 
Medicare patients.
     Provide timely feedback, at least four times a year, on 
the measures at the individual participant level for which the QCDR 
reports on the EP's behalf for purposes of the individual EP's 
satisfactory participation in the QCDR.
     Possess benchmarking capacity that compares the quality of 
care an EP provides with other EPs performing the same or similar 
functions.
    We established further details regarding the requirements to become 
a QCDR in the CYs 2014 and 2015 PFS final rules (78 FR 74467 through 
74473 and 79 FR 67779 through 67782). Please note that the requirements 
we established were not meant to prohibit entities that meet the basic 
definition of a QCDR outlined in Sec.  414.90(b) from self-nominating 
to participate in the PQRS as a QCDR. As long as the entity meets the 
basic definition of a QCDR provided in Sec.  414.90(b), we encourage 
the entity to self-nominate to become a QCDR.
    Self-Nomination Period: We established a deadline for an entity 
becoming a QCDR to submit a self-nomination statement--specifically, 
self-nomination statements must be received by CMS by 8:00 p.m., 
eastern standard time (e.s.t.), on January 31 of the year in which the 
clinical data registry seeks to be qualified (78 FR 74473). However, we 
did not specify when the QCDR self-nomination period opens. We received 
feedback from entities that believed they needed more time to self-
nominate. Typically, we open the self-nomination period on January 1 of 
the year in which the clinical data registry seeks to be qualified. 
Although it is not technically feasible for us to extend the self-
nomination deadline past January 31, we will open the QCDR self-
nomination period on December 1 of the prior year to allow more time 
for entities to self-nominate. This would provide entities with an 
additional month to self-nominate.
    The following is a summary of the comments we received regarding 
this proposal:
    Comment: We received many comments in support of our proposal to 
open the QCDR self-nomination period on December 1 of the prior year to 
allow more time for entities to self-nominate.
    Response: Based on the rationale provided and the positive comments 
we received, we are finalizing this proposal. We will open the QCDR 
self-nomination period on December 1 of the prior year to allow more 
time for entities to self-nominate. This would provide entities with an 
additional month to self-

[[Page 71137]]

nominate. Please note, however, that the deadline for an entity 
becoming a QCDR to submit a self-nomination statement is still 5:00 
p.m., eastern standard time (e.s.t.), on January 31 of the year in 
which the clinical data registry seeks to be qualified (78 FR 74473).
    Proposed Establishment of a QCDR Entity: In the CY 2014 PFS final 
rule (78 FR 74467), we established the requirement that, for an entity 
to become qualified for a given year, the entity must be in existence 
as of January 1 the year prior to the year for which the entity seeks 
to become a QCDR (for example, January 1, 2013, to be eligible to 
participate for purposes of data collected in 2014). We established 
this criterion to ensure that an entity seeking to become a QCDR is 
well-established prior to self-nomination. We have received feedback 
from entities that this requirement is overly burdensome, as it delays 
entities otherwise fully capable of becoming a QCDR from participating 
in the PQRS. To address these concerns while still ensuring that an 
entity seeking to become a QCDR is well-established, beginning in 2016, 
we proposed to modify this requirement to require the following: For an 
entity to become qualified for a given year, the entity must be in 
existence as of January 1 the year for which the entity seeks to become 
a QCDR (for example, January 1, 2016, to be eligible to participate for 
purposes of data collected in 2016). We invited public comment on this 
proposal.
    Comment: Some commenters opposed this proposal. One commenter 
stated this one-year waiting period ensures that the entity is 
established and credible. Another commenter expressed concern that we 
may be including entities that are ``untested'' should we modify this 
requirement.
    Response: While the commenters' concerns regarding modifying this 
requirement are understood, based on our analysis of requests for 
entities to become a QCDR, we believe that a ``waiting period'' is not 
necessary for entities that are in existence as of January 1. From our 
experience, at least some of the newer entities requesting to become a 
QCDR were entities that have had previous experience under a formerly 
existing QCDR. As such, we do not believe a waiting period is 
necessary. Therefore, based on the rationale provided, we are 
finalizing this proposal. Therefore, for an entity to become qualified 
for a given year, the entity must be in existence as of January 1 the 
year for which the entity seeks to become a QCDR (for example, January 
1, 2016, to be eligible to participate for purposes of data collected 
in 2016).
    Attestation Statements for QCDRs Submitting Quality Measures Data 
during Submission: In the CY 2014 PFS final rule, to ensure that the 
data provided by the QCDR is correct, we established the requirement 
that QCDRs provide CMS a signed, written attestation statement via 
email which states that the quality measure results and any and all 
data, including numerator and denominator data, provided to CMS are 
accurate and complete (78 FR 74472). In lieu of submitting an 
attestation statement via email, beginning in 2016, we proposed to 
allow QCDRs to attest during the data submission period that the 
quality measure results and any and all data including numerator and 
denominator data provided to CMS will be accurate and complete using a 
web-based check box mechanism available at https://www.qualitynet.org/portal/server.pt/community/pqri_home/212. We believe it is less 
burdensome for QCDRs to check a box acknowledging and attesting to the 
accuracy of the data they provide, rather than having to email a 
statement to CMS. Please note that, if this proposal is finalized, 
QCDRs will no longer be able to submit this attestation statement via 
email. We invited but received no public comment on this proposal. We 
are finalizing this proposal.
    In addition, we noted in the CY 2015 PFS final rule (79 FR 67903) 
that entities wishing to become QCDRs would have until March 31 of the 
year in which it seeks to become a QCDR to submit measure information 
the entity intends to report for the year, which included submitting 
the measure specifications for non-PQRS measures the QCDR intends to 
report for the year. However, we have experienced issues related to the 
measures data we received during the 2013 reporting year. These issues 
prompt us to more closely analyze the measures for which an entity 
intends to report as a QCDR. Therefore, so that we may vet and analyze 
these vendors to determine whether they are fully ready to be qualified 
to participate in the PQRS as a QCDR, we proposed to require that all 
other documents that are necessary to analyze the vendor for 
qualification be provided to CMS at the time of self-nomination, that 
is, by no later than January 31 of the year in which the vendor intends 
to participate in the PQRS as a QCDR (that is, January 31, 2016 to 
participate as a QCDR for the reporting periods occurring in 2016). 
This includes, but is not limited to, submission of the vendor's data 
validation plan as well as the measure specifications for the non-PQRS 
measures the entity intends to report. In addition, please note that 
after the entity submits this information on January 31, it cannot 
later change any of the information it submitted to us for purposes of 
qualification. For example, once an entity submits measure 
specifications on non-PQRS measures, it cannot later modify the measure 
specifications the entity submitted. Please note that this does not 
prevent the entity from providing supplemental information if requested 
by CMS.
    We solicited and received the following public comment on this 
issue:
    Comment: Commenters generally opposed this proposal. The commenters 
believed that vendors needed more time than proposed to gather its QCDR 
measures information. As such, the commenters believe the proposed 
January 31 date occurs too soon in the year.
    Response: We understand the commenters concerns regarding needing 
more time to gather measures information. However, in order for CMS to 
more closely analyze these potential QCDR measures due to the issues we 
have found in the past, we must finalize our January 31 deadline, as 
proposed. Therefore, we are finalizing our proposal to require that all 
other documents that are necessary to analyze the vendor for 
qualification be provided to CMS at the time of self-nomination, that 
is, by no later than January 31 of the year in which the vendor intends 
to participate in the PQRS as a QCDR (that is, January 31, 2016 to 
participate as a QCDR for the reporting periods occurring in 2016), as 
proposed.
    Data Validation Requirements for QCDRs: A validation strategy 
details how the qualified registry will determine whether EPs and GPRO 
group practices have submitted data accurately and satisfactorily on 
the minimum number of their eligible patients, visits, procedures, or 
episodes for a given measure. Acceptable validation strategies often 
include such provisions as the qualified registry being able to conduct 
random sampling of their participant's 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. 
The current guidance on validation strategy is available at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/Downloads/2015_RegistryVendorCriteria.pdf. In 
analyzing our requirements, we believe adding the following additional 
requirements will help mitigate issues that may occur

[[Page 71138]]

when collecting, calculating, and submitting quality measures data to 
CMS. Therefore, we proposed that, beginning in 2016, a QCDR must 
provide the following information to CMS at the time of self-nomination 
to ensure that QCDR data is valid:
     Organization Name (Specify Sponsoring Organization name 
and qualified registry name if the two are different).
     Program Year.
     Vendor Type (for example, qualified registry).
     Provide the method(s) by which the entity obtains data 
from its customers: claims, web-based tool, practice management system, 
EHR, other (please explain). If a combination of methods (Claims, Web 
Based Tool, Practice Management System, EHR, and/or other) is utilized, 
please state which method(s) the entity utilizes to collect reporting 
numerator and denominator data.
     Indicate the method the entity will use to verify the 
accuracy of each Tax Identification Number (TIN) and National Provider 
Identifier's (NPI) it is intending to submit (that is, National Plan 
and Provider Enumeration System (NPPES), CMS claims, tax 
documentation).
     Describe the method that the entity will use to accurately 
calculate both reporting rates and performance rates for measures and 
measures groups based on the appropriate measure type and 
specification. For composite measures or measures with multiple 
performance rates, the entity must provide us with the methodology the 
entity uses for these composite measures and measures with multiple 
performance rates.
     Describe the process that the entity will use for 
completion of a randomized audit of a subset of data prior to the 
submission to CMS. Periodic examinations may be completed to compare 
patient record data with submitted data and/or ensure PQRS measures 
were accurately reported based on the appropriate Measure 
Specifications (that is, accuracy of numerator, denominator, and 
exclusion criteria).
     If applicable, provide information on the entity's 
sampling methodology. For example, it is encouraged that 3 percent of 
the TIN/NPIs be sampled with a minimum sample of 10 TIN/NPIs or a 
maximum sample of 50 TIN/NPIs. For each TIN/NPI sampled, it is 
encouraged that 25 percent of the TIN/NPI's patients (with a minimum 
sample of 5 patients or a maximum sample of 50 patients) should be 
reviewed for all measures applicable to the patient.
     Define a process for completing a detailed audit if the 
qualified registry's validation reveals inaccuracy and describe how 
this information will be conveyed to CMS.
    QCDRs must perform the validation outlined in the validation 
strategy and send evidence of successful results to CMS for data 
collected in the reporting periods occurring in 2016. The Data 
Validation Execution Report must be sent via email to the QualityNet 
Help Desk at [email protected] by 5:00 p.m. e.s.t. on June 30, 2016. 
The email subject should be ``PY2015 Qualified Registry Data Validation 
Execution Report.''
    We received the following comments on these proposed validation 
requirements:
    Comment: Some commenters opposed these proposed requirements to 
provide the QCDR the above data for auditing purposes. The commenters 
stated that vendors do not have enough time to gather all this 
information currently, as some vendors do not have this full 
information. The commenters therefore requested that vendors be given 
more time to implement these requirements. Commenters also believed 
that EP verification of NPI and TIN information should be considered 
sufficient for purposes of the data validation requirements, because 
QCDRs may have different strategies to meet the data validation 
requirements. Requiring all QCDRs to collect NPI and tax documentation 
from each EP as part of a data validation strategy is unduly 
burdensome.
    Response: We understand the commenters' concerns associated with 
not having received full information from its clients. We note, 
however, that it is important to implement these requirements in order 
for CMS to ensure the accuracy of the data collected by these vendors. 
We also note that, while vendors may not have all this information 
currently, the vendors have several months, until June 30, 2016, to 
obtain this information from its clients. We believe this provides 
vendors with enough time to gather this information. With respect to 
commenters' belief that EP verification of NPI and TIN information 
should be considered sufficient for purposes of the data validation 
requirements, while CMS encourages vendors to check the accuracy of the 
data being submitted to them, we believe it is also necessary for CMS 
to have the ability to validate the data received. Therefore, based on 
the rationale provided, we are finalizing these above requirements for 
data validation, as proposed. Please note that a vendor will, 
therefore, need to collect all necessary information by June 30, 2016.
    Submission of Quality Measures Data for Group Practices: Section 
101(d)(1)(B) of the MACRA amends section 1848(m)(3)(D) of the Act by 
inserting ``and, for 2016 and subsequent years, subparagraph (A) or 
(C)'' after ``subparagraph (A)''. This change authorizes CMS to create 
an option for EPs participating in the GPRO to report quality measures 
via a QCDR. As such, in addition to being able to submit quality 
measures data for individual EPs, we proposed that QCDRs also have the 
ability to submit quality measures data for group practices.
    We received the following comments on this proposal:
    Comment: Commenters were generally supportive of the newly proposed 
group practice reporting option via a QCDR and its proposed 
requirements. Some commenters stressed the importance of maintaining 
and extending use of the QCDR reporting mechanism.
    Response: Based on the positive feedback and the rationale 
provided, we are finalizing this proposal, as proposed.
b. Changes to the Requirements for Qualified Registries
    Attestation Statements for Registries Submitting Quality Measures 
Data: In the CY 2013 PFS final rule, we finalized the following 
requirement to ensure that the data provided by a registry is correct: 
we required that the registry provide CMS a signed, written attestation 
statement via mail or email which states that the quality measure 
results and any and all data including numerator and denominator data 
provided to CMS are accurate and complete for each year the registry 
submits quality measures data to CMS (77 FR 69180). In lieu of 
submitting an attestation statement via email or mail, beginning in 
2016, we proposed to allow registries to attest during the submission 
period that the quality measure results and any and all data including 
numerator and denominator data provided to CMS will be accurate and 
complete using a web-based check box mechanism available at https://www.qualitynet.org/portal/server.pt/community/pqri_home/212. We believe 
it is less burdensome for registries to check a box acknowledging and 
attesting to the accuracy of the data they provide, rather than having 
to email a statement to CMS. Please note that, if this proposal is 
finalized, qualified registries will no longer be able to submit this 
attestation statement via email or mail.

[[Page 71139]]

    We invited and received the following public comment on this 
proposal.
    Comment: Commenters generally supposed our proposal to use a web-
based check box mechanism as a way to allow registries to attest during 
the submission period that the quality measure results and any and all 
data including numerator and denominator data provided to CMS will be 
accurate and complete, because it is an efficient method to attest.
    Response: Based on the comments received and the rationale 
provided, we are finalizing our proposals related to attestation 
statements for registries submitting quality measures data, as 
proposed.
    In addition, so that we may vet and analyze these vendors to 
determine whether they are fully ready to be qualified to participate 
in the PQRS as a qualified registry, we proposed to require that all 
other documents that are necessary to analyze the vendor for 
qualification be provided to CMS at the time of self-nomination, that 
is, by no later than January 31 of the year in which the vendor intends 
to participate in the PQRS as a qualified registry (that is, January 
31, 2016 to participate as a qualified registry for the reporting 
periods occurring in 2016). This includes, but is not limited to, 
submission of the vendor's data validation plan. Please note that this 
does not prevent the entity from providing supplemental information if 
requested by CMS. We invited but received no public comment on this 
proposal. Therefore, we are finalizing this proposal to require that 
all other documents that are necessary to analyze the vendor for 
qualification be provided to CMS at the time of self-nomination, that 
is, by no later than January 31 of the year in which the vendor intends 
to participate in the PQRS as a qualified registry, as proposed.
    Please note that we are finalizing our proposals related to 
attestation statements for registries submitting quality measures data, 
as proposed.
    Data Validation Requirements for Qualified Registries: A validation 
strategy details how the qualified registry will determine whether EPs 
and GPRO group practices have submitted accurately and satisfactorily 
on the minimum number of their eligible patients, visits, procedures, 
or episodes for a given measure. Acceptable validation strategies often 
include such provisions as the qualified registry being able to conduct 
random sampling of their participant's 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. 
The current guidance on validation strategy is available at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/Downloads/2015_RegistryVendorCriteria.pdf. In 
analyzing our requirements, we believe adding the following additional 
requirements will help mitigate issues that may occur when collecting, 
calculating, and submitting quality measures data to CMS. Therefore, we 
proposed that, beginning in 2016, a QCDR must provide the following 
information to CMS at the time of self-nomination to ensure that data 
submitted by a qualified registry is valid:
     Organization Name (specify the sponsoring entity name and 
qualified registry name if the two are different).
     Program Year.
     Vendor Type (for example, qualified registry).
     Provide the method(s) by which the entity obtains data 
from its customers: claims, web-based tool, practice management system, 
EHR, other (please explain). If a combination of methods (Claims, Web 
Based Tool, Practice Management System, EHR, and/or other) is utilized, 
please state which method(s) the entity utilizes to collect its 
reporting numerator and denominator data.
     Indicate the method the entity will use to verify the 
accuracy of each TIN and NPI it is intending to submit (that is, NPPES, 
CMS claims, tax documentation).
     Describe how the entity will verify that EPs or group 
practices report on at least 1 measure contained in the cross-cutting 
measure set if the EP or group practice sees at least 1 Medicare 
patient in a face-to-face encounter. Describe how the entity will 
verify that the data provided is complete and contains the entire 
cohort of data.
     Describe the method that the entity will use to accurately 
calculate both reporting rates and performance rates for measures and 
measures groups based on the appropriate measure type and 
specification.
     Describe the method the entity will use to verify that 
only the measures in the applicable PQRS Claims and Registry Individual 
Measure Specifications (that is, the 2016 PQRS Claims and Registry 
Individual Measure Specifications for data submitted for reporting 
periods occurring in 2016) and applicable PQRS Claims and Registry 
Measures Groups Specifications (that is, the 2016 PQRS Claims and 
Registry Measures Groups Specifications for data submitted for 
reporting periods occurring in 2016) are utilized for submission.
     Describe the process that the entity will use for 
completion of a randomized audit of a subset of data prior to the 
submission to CMS. Periodic examinations may be completed to compare 
patient record data with submitted data and/or ensure PQRS measures 
were accurately reported based on the appropriate Measure 
Specifications (that is, accuracy of numerator, denominator, and 
exclusion criteria).
     If applicable, provide information on the entity's 
sampling methodology. For example, it is encouraged that 3 percent of 
the TIN/NPIs be sampled with a minimum sample of 10 TIN/NPIs or a 
maximum sample of 50 TIN/NPIs. For each TIN/NPI sampled, it is 
encouraged that 25 percent of the TIN/NPI's patients (with a minimum 
sample of 5 patients or a maximum sample of 50 patients) should be 
reviewed for all measures applicable to the patient.
     Define a process for completing a detailed audit if the 
qualified registry's validation reveals inaccuracy and describe how 
this information will be conveyed to CMS.
     Registries must maintain the ability to randomly request 
and receive documentation from providers to verify accuracy of data. 
Registries must also provide CMS access to review the Medicare 
beneficiary data on which the applicable PQRS registry-based 
submissions are based or provide to CMS a copy of the actual data (if 
requested for validation purposes).
    Qualified registries must perform the validation outlined in the 
validation strategy and send evidence of successful results to CMS for 
data collected for the applicable reporting periods. The Data 
Validation Execution Report must be sent via email to the QualityNet 
Help Desk at [email protected] by 5:00 p.m. ET on June 30 of the 
year in which the reporting period occurs (that is, June 30, 2016 for 
reporting periods occurring in 2016). The email subject should be 
``PY2015 Qualified Registry Data Validation Execution Report.''
    Comment: Some commenters opposed these proposed requirements to 
provide the above data for auditing purposes. The commenters stated 
that vendors do not have enough time to gather all this information 
currently, as some vendors do not have this full information. The 
commenters therefore requested that vendors be given more time to 
implement these requirements.
    Response: We understand the commenters concerns associated with the 
registry not having received full information from its clients. We 
note,

[[Page 71140]]

however, that it is important to implement these requirements in order 
for CMS to ensure the accuracy of the data collected by these vendors. 
We also note that, while vendors may not have all this information 
currently, the vendors have several months, until June 30, 2016, to 
obtain and collect this information from its clients. We believe this 
provides vendors with enough time to gather this information. 
Therefore, based on the rationale provided, we are finalizing these 
above requirements for data validation, as proposed.
c. Auditing of Entities Submitting PQRS Quality Measures Data
    We are in the process of auditing PQRS participants, including 
vendors who submit quality measures data. We believe it is essential 
for vendors to cooperate with this audit process. In order to ensure 
that CMS has adequate information to perform an audit of a vendor, we 
proposed that, beginning in 2016, any vendor submitting quality 
measures data for the PQRS (for example, entities participating the 
PQRS as a qualified registry, QCDR, direct EHR, or DSV (data submission 
vendor)) comply with the following requirements:
     The vendor make available to CMS the contact information 
of each EP on behalf of whom it submits data. The contact information 
will include, at a minimum, the EP practice's phone number, address, 
and, if applicable email.
     The vendor must retain all data submitted to CMS for the 
PQRS program for a minimum of seven years.
    We invited public comment on these proposals. The following is a 
summary of the comments we received regarding these proposals.
    Comment: Some commenters opposed these proposed requirements that 
CMS has proposed for auditing purposes. As with the proposed data 
validation requirements for QCDRs and qualified registries, the 
commenters stated that vendors do not have enough time to gather all 
this information currently, as some vendors do not have this full 
information. The commenters therefore requested that vendors be given 
more time to implement these requirements.
    Response: We understand the commenters concerns associated with not 
having received full information from its clients. We note, however, 
that it is important to implement these requirements in order for CMS 
to ensure the accuracy of the data collected by these vendors. We also 
note that, while vendors may not have all this information currently, 
we believe these vendors have enough time to gather this information. 
Therefore, based on the rationale provided, we are finalizing the 
requirements we proposed for auditing purposes, as proposed. Please 
note that, as proposed, these requirements will apply to all vendors 
submitting PQRS data: qualified registries, QCDRs, direct EHR vendors, 
or DSV vendors.
3. Criteria for the Satisfactory Reporting for Individual EPs for the 
2018 PQRS Payment Adjustment
    Section 1848(a)(8) of the Act, as added by section 3002(b) of the 
Affordable Care Act, provides that for covered professional services 
furnished by an EP during 2015 or any subsequent year, if the EP does 
not satisfactorily report data on quality measures for covered 
professional services for the quality reporting period for the year, 
the fee schedule amount for services furnished by such professional 
during the year (including the fee schedule amount for purposes of 
determining a payment based on such amount) shall be equal to the 
applicable percent of the fee schedule amount that would otherwise 
apply to such services. For 2016 and subsequent years, the applicable 
percent is 98.0 percent.
a. Criterion for the Satisfactory Reporting of Individual Quality 
Measures via Claims and Registry for Individual EPs for the 2018 PQRS 
Payment Adjustment
    We finalized the following criteria for satisfactory reporting for 
the submission of individual quality measures via claims and registry 
for 2017 PQRS payment adjustment (see Table 50 at 79 FR 67796): For the 
applicable 12-month reporting period, the EP would report at least 9 
measures, covering at least 3 of the NQS domains, OR, if less than 9 
measures apply to the EP, report on each measure that is applicable, 
AND report each measure for at least 50 percent of the Medicare Part B 
FFS patients seen during the reporting period to which the measure 
applies. Measures with a 0 percent performance rate would not be 
counted. For an EP who reports fewer than 9 measures covering less than 
3 NQS domains via the claims- or registry-based reporting mechanism, 
the EP would be subject to the measure application validity (MAV) 
process, which would allow us to determine whether the EP should have 
reported quality data codes for additional measures. To meet the 
criteria for the 2017 PQRS payment adjustment, we added the following 
requirement: Of the measures reported, if the EP sees at least 1 
Medicare patient in a face-to-face encounter, as we defined that term 
in the proposed rule, the EP would report on at least 1 measure 
contained in the PQRS cross-cutting measure set.
    To be consistent with the satisfactory reporting criterion we 
finalized for the 2017 PQRS payment adjustment, we proposed to amend 
Sec.  414.90(j) to specify the same criterion for individual EPs 
reporting via claims and registry for the 2018 PQRS payment adjustment. 
Specifically, for the 12-month reporting period for the 2018 PQRS 
payment adjustment, the EP would report at least 9 measures, covering 
at least 3 of the NQS domains AND report each measure for at least 50 
percent of the EP's Medicare Part B FFS patients seen during the 
reporting period to which the measure applies. Of the measures 
reported, if the EP sees at least 1 Medicare patient in a face-to-face 
encounter, as we proposed to define that term in this section, the EP 
would report on at least 1 measure contained in the PQRS cross-cutting 
measure set. If less than 9 measures apply to the EP, the EP would 
report on each measure that is applicable, AND report each measure for 
at least 50 percent of the Medicare Part B FFS patients seen during the 
reporting period to which the measure applies. Measures with a 0 
percent performance rate would not be counted.
    For what defines a ``face-to-face'' encounter, for purposes of 
requiring reporting of at least 1 cross-cutting measure, we proposed to 
determine whether an EP had a ``face-to-face'' encounter by assessing 
whether the EP billed for services under the PFS that are associated 
with face-to-face encounters, such as whether an EP billed general 
office visit codes, outpatient visits, and surgical procedures. We 
would not include telehealth visits as face-to-face encounters for 
purposes of the proposal requiring reporting of at least 1 cross-
cutting measure. For our current list of face-to-face encounter codes 
for the requirement to report a cross-cutting measure, please see 
http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/Downloads/FacetoFace_Encounter_CodeList_01302015.zip.
    In addition, we understand that there may be instances where an EP 
may not have at least 9 measures applicable to an EP's practice. In 
this instance, like the criterion we finalized for the 2017 payment 
adjustment (see Table 50 at 79 FR 67796), an EP reporting on less than 
9 measures would still be able to meet the satisfactory reporting 
criterion via claims and registry if the EP reports on each measure 
that is applicable to the EP's practice. If an EP reports on less

[[Page 71141]]

than 9 measures, the EP would be subject to the MAV process, which 
would allow us to determine whether an EP should have reported quality 
data codes for additional measures. In addition, the MAV process will 
also allow us to determine whether an EP should have reported on any of 
the PQRS cross-cutting measures. The MAV process we are proposing to 
implement for claims and registry is the same process that was 
established for reporting periods occurring in 2015 for the 2017 PQRS 
payment adjustment. For more information on the claims and registry MAV 
process, please visit the measures section of the PQRS Web site at 
http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/MeasuresCodes.html.
    We solicited and received the following public comments on our 
proposed satisfactory reporting criteria for individual EPs reporting 
via claims or registry for the 2018 PQRS payment adjustment:
    Comment: Commenters generally supported our proposed reporting 
criteria for individual EPs reporting via claims or registry for the 
2018 PQRS payment adjustment, primarily because commenters did not want 
CMS to propose drastic changes to the criteria for satisfactory 
reporting. Maintaining similar reporting criteria helps EPs and 
vendors, as they are already familiar with the reporting criteria. 
Commenters also generally supported continuing use of the claims-based 
reporting mechanism as an option to meet the criteria for satisfactory 
reporting under the PQRS.
    Response: Based on the rationale provided and the comments 
received, we are finalizing our proposed satisfactory reporting 
criteria for individual EPs reporting via claims or registry for the 
2018 PQRS payment adjustment, as proposed.
b. Criterion for Satisfactory Reporting of Individual Quality Measures 
via EHR for Individual EPs for the 2018 PQRS Payment Adjustment
    We finalized the following criterion for the satisfactory reporting 
for individual EPs reporting individual measures via a direct EHR 
product or an EHR data submission vendor product for the 2017 PQRS 
payment adjustment (see Table 50 at 79 FR 67796): For the applicable 
12-month reporting period, report at least 9 measures covering at least 
3 of the NQS domains. If an EP's direct EHR product or EHR data 
submission vendor product does not contain patient data for at least 9 
measures covering at least 3 domains, then the EP must report all of 
the measures for which there is Medicare patient data. Although all-
payer data may be included in the file, an EP must report on at least 1 
measure for which there is Medicare patient data for their submission 
to be considered for PQRS.
    To be consistent with the criterion we finalized for the 2017 PQRS 
payment adjustment, as well as to continue to align with the final 
criterion for meeting the clinical quality measure (CQM) component of 
achieving meaningful use under the Medicare EHR Incentive Program, we 
proposed to amend Sec.  414.90(j) to specify the criterion for the 
satisfactory reporting for individual EPs to report individual measures 
via a direct EHR product or an EHR data submission vendor product for 
the 2018 PQRS payment adjustment. Specifically, the EP would report at 
least 9 measures covering at least 3 of the NQS domains. If an EP's 
direct EHR product or EHR data submission vendor product does not 
contain patient data for at least 9 measures covering at least 3 
domains, then the EP would be required to report all of the measures 
for which there is Medicare patient data. An EP would be required to 
report on at least 1 measure for which there is Medicare patient data.
    We solicited and received the following public comments on this 
proposal:
    Comment: Some commenters supported our proposed requirement for 
satisfactory reporting for the 2018 PQRS payment adjustment via the EHR 
reporting mechanism. One commenter supported our proposal to keep the 
requirements similar to the requirement for satisfactory reporting for 
the 2017 PQRS payment adjustment, as well as our proposal to align 
reporting options with the CQM component of the EHR Incentive Program.
    Response: We appreciate the commenters' positive feedback on this 
proposal. Based on the rationale provided and the comments received, we 
are finalizing our proposed satisfactory reporting criteria for 
individual EPs reporting via direct EHR product and EHR data submission 
vendor product for the 2018 PQRS payment adjustment, as proposed.
c. Criterion for Satisfactory Reporting of Measures Groups via Registry 
for Individual EPs for the 2018 PQRS Payment Adjustment
    We finalized the following criterion for the satisfactory reporting 
for individual EPs to report measures groups via registry for the 2017 
PQRS payment adjustment (see Table 50 at 79 FR 67796): For the 
applicable 12-month reporting period, report at least 1 measures group 
AND report each measures group for at least 20 patients, the majority 
(11 patients) of which must be Medicare Part B FFS patients. Measures 
groups containing a measure with a 0 percent performance rate will not 
be counted.
    To be consistent with the criterion we finalized for the 2017 PQRS 
payment adjustment, we proposed to amend Sec.  414.90(j) to specify the 
same criterion for the satisfactory reporting for individual EPs to 
report measures groups via registry for the 2018 PQRS payment 
adjustment. Specifically, for the 12-month reporting period for the 
2018 PQRS payment adjustment, the EP would report at least 1 measures 
group AND report each measures group for at least 20 patients, the 
majority (11 patients) of which would be required to be Medicare Part B 
FFS patients. Measures groups containing a measure with a 0 percent 
performance rate would not be counted.
    We solicited and received the following public comment on our 
proposed satisfactory reporting criterion for individual EPs reporting 
measures groups via registry for the 2018 PQRS payment adjustment:
    Comment: Commenters generally supported our proposed satisfactory 
reporting criterion for individual EPs reporting measures groups via 
registry for the 2018 PQRS payment adjustment, primarily because 
commenters did not want CMS to propose drastic changes to the criteria 
for satisfactory reporting. Commenters stated that maintaining similar 
reporting criteria helps EPs and vendors, as they are already familiar 
with the reporting criteria.
    Response: Based on the comments received and for the rationale 
provided, we are finalizing our proposed satisfactory reporting 
criterion for individual EPs reporting measures groups via registry for 
the 2018 PQRS payment adjustment, as proposed.
4. Satisfactory Participation in a QCDR by Individual EPs
    Section 601(b) of the ATRA amended section 1848(m)(3) of the Act, 
by redesignating subparagraph (D) as subparagraph (F) and adding new 
subparagraphs (D) and (E), to provide for a new standard for individual 
EPs to satisfy the PQRS beginning in 2014, based on satisfactory 
participation in a QCDR.
a. Criterion for the Satisfactory Participation for Individual EPs in a 
QCDR for the 2018 PQRS payment adjustment
    Section 1848(m)(3)(D) of the Act, as added by section 601(b) of the 
ATRA,

[[Page 71142]]

authorizes the Secretary to treat an individual EP as satisfactorily 
submitting data on quality measures under section 1848(m)(3)(A) of the 
Act if, in lieu of reporting measures under section 1848(k)(2)(C) of 
the Act, the EP is satisfactorily participating in a QCDR for the year. 
``Satisfactory participation'' is a relatively new standard under the 
PQRS and is an analogous standard to the standard of ``satisfactory 
reporting'' data on covered professional services that EPs who report 
through other mechanisms must meet to avoid the PQRS payment 
adjustment. Currently, Sec.  414.90(e)(2) states that individual EPs 
must be treated as satisfactorily reporting data on quality measures if 
the individual EP satisfactorily participates in a QCDR.
    To be consistent with the number of measures reported for the 
satisfactory participation criterion we finalized for the 2017 PQRS 
payment adjustment (see Table 50 at 79 FR 67796), for purposes of the 
2018 PQRS payment adjustment (which would be based on data reported 
during the 12-month period that falls in CY 2016), we proposed to 
revise Sec.  414.90(k) to use the same criterion for individual EPs to 
satisfactorily participate in a QCDR for the 2018 PQRS payment 
adjustment. Specifically, for the 12-month reporting period for the 
2018 PQRS payment adjustment, the EP would report at least 9 measures 
available for reporting under a QCDR covering at least 3 of the NQS 
domains, AND report each measure for at least 50 percent of the EP's 
patients. Of these measures, the EP would report on at least 2 outcome 
measures, OR, if 2 outcomes measures are not available, report on at 
least 1 of the outcome measures and at least 1 of the following types 
of measures--resource use, patient experience of care, efficiency/
appropriate use, or patient safety.
    We solicited and received the following public comments on this 
proposal:
    Comment: We received many comments generally in support of the QCDR 
reporting mechanism. Commenters also generally supported our proposed 
criterion for individual EPs to satisfactorily participate in a QCDR 
for the 2018 PQRS payment adjustment, as the commenters urged us not to 
propose drastic changes to the criteria for satisfactory participation 
in a QCDR. The commenters were especially concerned with not making 
drastic changes to the QCDR option, as it is the newest reporting 
option available in the PQRS.
    Response: We appreciate the commenters' feedback. Based on the 
comments received and the rationale provided, we are finalizing the 
proposed criterion for individual EPs to satisfactorily participate in 
a QCDR for the 2018 PQRS payment adjustment, as proposed.
5. Criteria for Satisfactory Reporting for Group Practices 
Participating in the GPRO
    In lieu of reporting measures under section 1848(k)(2)(C) of the 
Act, section 1848(m)(3)(C) of the Act provides the Secretary with the 
authority to establish and have in place a process under which EPs in a 
group practice (as defined by the Secretary) shall be treated as 
satisfactorily submitting data on quality measures. Accordingly, this 
section III.I.4 contains our proposed satisfactory reporting criteria 
for group practices participating in the GPRO. Please note that, for a 
group practice to participate in the PQRS GPRO in lieu of participating 
as individual EPs, a group practice is required to register to 
participate in the PQRS GPRO. For more information on GPRO 
participation, please visit http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/Group_Practice_Reporting_Option.html. For more information on 
registration, please visit http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeedbackProgram/Self-Nomination-Registration.html.
a. The CAHPS for PQRS Survey
    Explanation of CAHPS for PQRS: The CAHPS for PQRS survey consists 
of the core CAHPS Clinician & Group Survey developed by AHRQ, plus 
additional survey questions to meet CMS' information and program needs. 
The survey questions are aggregated into 12 content domains called 
Summary Survey Measures (SSMs). SSMs contain one or more survey 
questions. The CAHPS for PQRS survey consists of the following survey 
measures: (1) Getting timely care, appointments, & information; (2) How 
well your providers communicate; (3) Patient's rating of provider; (4) 
Access to specialists; (5) Health promotion and education; (6) Shared 
decision making; (7) Health status & functional status; (8) Courteous & 
helpful office staff; (9) Care coordination; (10) Between visit 
communication; (11) Helping you take medications as directed; and (12) 
Stewardship of patient resources. For the CAHPS for PQRS survey to 
apply to a group practice, the group practice must have an applicable 
focal provider as well as meet the minimum beneficiary sample for the 
CAHPS for PQRS survey.
    Identifying Focal Providers: Which provider does the survey ask 
about? The provider named in the survey provided the beneficiary with 
the plurality of the beneficiary's primary care services delivered by 
the group practice. Plurality of care is based on the number of primary 
care service visits to a provider. The provider named in the survey can 
be a physician (primary care provider or specialist), nurse 
practitioner (NP), physician's assistant (PA), or clinical nurse 
specialist (CNS).
    Exclusion Criteria for Focal Providers: Several specialty types are 
excluded from selection as focal provider such as anesthesiology, 
pathology, psychiatry optometry, diagnostic radiology, chiropractic, 
podiatry, audiology, physical therapy, occupational therapy, clinical 
psychology, diet/nutrition, emergency medicine, addiction medicine, 
critical care, and clinical social work. Hospitalists are also excluded 
from selection as a focal provider.
    Beneficiary Sample Selection: CMS retrospectively assigns Medicare 
beneficiaries to your group practice based on whether the group 
provided a wide range of primary care services. Assigned beneficiaries 
must have a plurality of their primary care claims delivered by the 
group practice. Assigned beneficiaries have at least one month of both 
Part A and Part B enrollment and no months of Part A only enrollment or 
Part B only enrollment. Assigned beneficiaries cannot have any months 
of enrollment in a Medicare Advantage plan. Regardless of the number of 
EPs, some group practices may not have a sufficient number of assigned 
beneficiaries to participate in the CAHPS for PQRS survey.
    We draw a sample of Medicare beneficiaries assigned to a practice. 
For practices with 100 or more eligible providers, the desired sample 
is 860, and the minimum sample is 416. For practices with 25 to 99 
eligible providers, the desired sample is 860, and the minimum sample 
is 255. For practices with 2 to 24 eligible providers, the desired 
sample is 860, and the minimum sample is 125. The following 
beneficiaries are excluded in the practice's patient sample: 
Beneficiaries under age 18 at the time of the sample draw; 
beneficiaries known to be institutionalized at the time of the sample 
draw; and beneficiaries with no eligible focal provider. For more 
information on CAHPS for PQRS, please visit the PQRS Web site at http:/
/www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-

[[Page 71143]]

Instruments/PQRS/CMS-Certified-Survey-Vendor.html.
    Requirements for CAHPS for PQRS for the 2016 Reporting Period: In 
the CY 2015 PFS final rule, we required group practices of 100 or more 
EPs that register to participate in the GPRO for 2015 reporting to 
select a CMS-certified survey vendor to report the CAHPS for PQRS 
survey, regardless of the reporting mechanism the group practice 
chooses (79 FR 67794). We also stated that group practices would bear 
the cost of administering the CAHPS for PQRS survey. To collect CAHPS 
for PQRS data from smaller groups, for purposes of the 2018 PQRS 
payment adjustment (which would be based on data reported during the 
12-month period that falls in CY 2016), we proposed to require group 
practices of 25 or more EPs that register to participate in the GPRO 
and select the Web Interface as the reporting mechanism to select a 
CMS-certified survey vendor to report CAHPS for PQRS. We believe this 
is consistent with our effort to collect CAHPS for PQRS data whenever 
possible. However, we excluded from this proposal group practices that 
report measures using the qualified registry, EHR, and QCDR reporting 
mechanisms, because we have discovered that certain group practices 
reporting through these mechanisms may be highly specialized or 
otherwise unable to report CAHPS for PQRS. Please note that we still 
proposed to keep CAHPS for PQRS reporting as an option for all group 
practices. We noted that all group practices that would be required to 
report or voluntarily elect to report CAHPS for PQRS would need to 
continue to select and pay for a CMS-certified survey vendor to 
administer the CAHPS for PQRS survey on their behalf. We invited and 
received the following public comment on this proposal:
    Comment: One commenter generally supported requiring the 
administration of the CAHPS for PQRS survey. However, the majority of 
commenters were opposed to this requirement. Some commenters oppose 
requiring the reporting of the CAHPS for PQRS survey. One commenter is 
particularly concerned with the timing of the release of the final list 
of vendors approved to administer the CAHPS for PQRS survey for the 
2015 reporting period. The list was not released until after the GPRO 
registration period closed, not providing group practices with enough 
time to make a full business decision on whether to administer CAHPS 
for PQRS prior to the close of GPRO registration. Other commenters are 
concerned with the cost associated with administering the CAHPS for 
PQRS survey, particularly for smaller group practices.
    Response: We understand the commenters' concerns regarding not 
being able to receive the list of CAHPS for PQRS vendors for the 2015 
reporting period until after registration had closed. We will work to 
make this list available earlier next year. We also understand that the 
cost of administering the CAHPS for PQRS survey may be burdensome to 
smaller group practices. Therefore, as a result of the comments, we are 
modifying this proposal.
    First, we are finalizing our proposal to allow all group practices 
to voluntarily elect to administer the CAHPS for PQRS survey.
    Second, regarding our proposal to require group practices of 25 or 
more EPs that register to participate in the GPRO and select the Web 
Interface as the reporting mechanism to select a CMS-certified survey 
vendor to report CAHPS for PQRS, we are not finalizing this proposal 
with respect to group practices of 25-99 EPs. We are, however, 
finalizing this proposal with respect to group practices of 100 or more 
EPs. Thus, we are requiring that, for the reporting periods occurring 
in 2016, all group practices of 100 or more EPs that register to 
participate in the GPRO select a CMS-certified survey vendor to report 
CAHPS for PQRS, regardless of the reporting mechanism the group 
practice uses. We note that, for reporting periods occurring in 2015, 
we currently require all group practices of 100 or more EPs that 
register to participate in the GPRO select a CMS-certified survey 
vendor to report CAHPS for PQRS, regardless of the reporting mechanism 
the group practice uses. Therefore, as it was a previously established 
requirement, and as group practices of 100 or more EPs were logically 
included in our proposal to require group practices of 25 or more EPs 
to report CAHPS for PQRS, we believe it was foreseeable that we would 
finalize this requirement with respect to group practices of 100 or 
more EPs. We also believe that this modification addresses the 
commenters' desire to keep the reporting requirements unchanged. As we 
specify below, since we are not finalizing this proposal with respect 
to group practices of 25-99 EPs, we will modify our proposed criteria 
for satisfactory reporting related to requiring the administering of 
the CAHPS for PQRS survey for group practices of 25-99 EPs.
    In addition, we noted that we finalized a 12-month reporting period 
for the administration of the CAHPS for PQRS survey. However, as group 
practices have until June of the applicable reporting period (that is, 
June 30, 2016 for the 12-month reporting period occurring January 1, 
2016-December 31, 2016) to elect to participate in the PQRS as a GPRO 
and administer CAHPS for PQRS, it is not technically feasible for us to 
collect data for purposes of CAHPS for PQRS until the close of the GPRO 
registration period. As such, the administration of the CAHPS for PQRS 
survey only contains 6-months of data. We do not believe this 
significantly alters the administration of CAHPS for PQRS, as we 
believe that 6-months of data provide an adequate sample of the 12-
month reporting period.
b. Criteria for Satisfactory Reporting on PQRS Quality Measures Via the 
Web Interface for the 2018 PQRS Payment Adjustment
    Under our authority specified for the group practice reporting 
requirements under section 1848(m)(3)(C) of the Act--to be consistent 
with the criterion we finalized for the satisfactory reporting of PQRS 
quality measures for group practices registered to participate in the 
GPRO for the 2017 PQRS payment adjustment using the Web Interface (see 
Table 51 at 79 FR 67797)--we proposed to amend Sec.  414.90(j) to 
specify criteria for the satisfactory reporting of PQRS quality 
measures for group practices registered to participate in the GPRO for 
the 12-month reporting period for the 2018 PQRS payment adjustment 
using the Web Interface for groups practices of 25 or more EPs for 
which the CAHPS for PQRS survey does not apply. Specifically, the group 
practice would report on all measures included in the web interface; 
AND populate data fields for the first 248 consecutively ranked and 
assigned beneficiaries in the order in which they appear in the group's 
sample for each module or preventive care measure. If the pool of 
eligible assigned beneficiaries is less than 248, then the group 
practice would report on 100 percent of assigned beneficiaries. In 
other words, we understand that, in some instances, the sampling 
methodology CMS provides will not be able to assign at least 248 
patients on which a group practice may report, particularly those group 
practices on the smaller end of the range of 25-99 EPs. If the group 
practice is assigned less than 248 Medicare beneficiaries, then the 
group practice would report on 100 percent of its assigned 
beneficiaries. A group practice would be required to report on at least 
1 measure in the Web Interface. Although the criteria proposed above 
are specified for groups practices of 25 or more EPs, please note

[[Page 71144]]

that, given our finalized requirement that group practices of 100 or 
more EPs report the CAHPS for PQRS survey (rather than group practices 
of 25 or more EPs, as originally proposed), the criteria proposed above 
would apply to a group practices of 100 or more EPs only if the CAHPS 
for PQRS survey does not apply to the group practice.
    Comment: We solicited and received support for this reporting 
criterion, mainly because commenters urged us to keep the reporting 
requirements unchanged.
    Response: We appreciate the commenters' feedback, and, based on the 
rationale provided and the comments received, are finalizing this 
proposed criterion, as proposed.
    Furthermore, similar to the criteria we established for the 2017 
PQRS payment adjustment (see Table 51 at 79 FR 67797), as we specified 
in section III.I.4.a., we proposed to require that group practices of 
25 or more EPs who elect to report quality measures via the Web 
Interface report the CAHPS for PQRS survey, if applicable. Therefore, 
similar to the criteria we established for the 2017 PQRS payment 
adjustment in accordance with section 1848(m)(3)(C) of the Act (see 
Table 51 at 79 FR 67797), we proposed to amend Sec.  414.90(j) to 
specify criteria for the satisfactory reporting of PQRS quality 
measures for group practices of 25 or more EPs that registered to 
participate in the GPRO for the 12-month reporting period for the 2018 
PQRS payment adjustment using the Web Interface and for which the CAHPS 
for PQRS survey applies. Specifically, if a group practice chooses to 
use the Web Interface in conjunction with reporting the CAHPS for PQRS 
survey measures, we proposed to specify the following criterion for 
satisfactory reporting for the 2018 PQRS payment adjustment: For the 
12-month reporting period for the 2018 PQRS payment adjustment, the 
group practice would report all CAHPS for PQRS survey measures via a 
certified survey vendor. In addition, the group practice would report 
on all measures included in the Web Interface; AND populate data fields 
for the first 248 consecutively ranked and assigned beneficiaries in 
the order in which they appear in the group's sample for each module or 
preventive care measure. If the pool of eligible assigned beneficiaries 
is less than 248, then the group practice would report on 100 percent 
of assigned beneficiaries. A group practice would be required to report 
on at least 1 measure for which there is Medicare patient data.
    We solicited and received the following public comment on this 
proposal:
    Comment: We did not receive specific comments on this proposed 
criterion. Please note, however, that we received general comments on 
the requirement to report CAHPS for PQRS, as discussed in section 
III.I.5.a. of this final rule with comment period.
    Response: As we stated in section III.I.5.a. of this final rule 
with comment period, because we are finalizing our proposal to require 
group practices to report CAHPS for PQRS only with respect to group 
practices of 100 or more EPs, we are modifying this proposal as 
follows:
    For group practices of 25-99 EPs that registered to participate in 
the GPRO for the 12-month reporting period for the 2018 PQRS payment 
adjustment using the Web Interface and for which the CAHPS for PQRS 
survey applies, administration of the CAHPS for PQRS survey will be 
OPTIONAL for 2016. Therefore, we are finalizing the following criterion 
as an option for these group practices if they voluntarily elect to 
administer the CAHPS for PQRS survey in conjunction with the Web 
Interface: For the 12-month reporting period for the 2018 PQRS payment 
adjustment, the group practice would report all CAHPS for PQRS survey 
measures via a certified survey vendor. In addition, the group practice 
would report on all measures included in the Web Interface; AND 
populate data fields for the first 248 consecutively ranked and 
assigned beneficiaries in the order in which they appear in the group's 
sample for each module or preventive care measure. If the pool of 
eligible assigned beneficiaries is less than 248, then the group 
practice would report on 100 percent of assigned beneficiaries. A group 
practice would be required to report on at least 1 measure for which 
there is Medicare patient data.
    For group practices of 100+ EPs that registered to participate in 
the GPRO for the 12-month reporting period for the 2018 PQRS payment 
adjustment using the Web Interface and for which the CAHPS for PQRS 
survey applies, administration of the CAHPS for PQRS survey will be 
REQUIRED for 2016. Therefore, we are finalizing the following criterion 
for these group practices: For the 12-month reporting period for the 
2018 PQRS payment adjustment, the group practice would report all CAHPS 
for PQRS survey measures via a certified survey vendor. In addition, 
the group practice would report on all measures included in the Web 
Interface; AND populate data fields for the first 248 consecutively 
ranked and assigned beneficiaries in the order in which they appear in 
the group's sample for each module or preventive care measure. If the 
pool of eligible assigned beneficiaries is less than 248, then the 
group practice would report on 100 percent of assigned beneficiaries. A 
group practice would be required to report on at least 1 measure for 
which there is Medicare patient data.
    For assignment of patients for group practices reporting via the 
Web Interface, in previous years, we have aligned with the Medicare 
Shared Savings Program methodology of beneficiary assignment (see 77 FR 
69195). However, for the 2017 PQRS payment adjustment, we used a 
beneficiary attribution methodology utilized within the VM for the 
claims-based quality measures and cost measures that is slightly 
different from the Medicare Shared Savings Program assignment 
methodology that applied in 2015, namely (1) eliminating the primary 
care service pre-step that is statutorily required for the Shared 
Savings Program and (2) including NPs, PAs, and CNSs in step 1 rather 
than in step 2 of the attribution process. We believe that aligning 
with the VM's method of attribution is appropriate, as the VM is 
directly tied to participation in the PQRS (79 FR 67790). Therefore, to 
be consistent with the sampling methodology we used for the 2017 PQRS 
payment adjustment, we proposed to continue using the attribution 
methodology used for the VM for the Web Interface beneficiary 
assignment methodology for the 2018 PQRS payment adjustment and future 
years. We solicited and received the following public comment on this 
proposal:
    Comment: One commenter opposed the use of the VM's attribution 
methodology for purposes of the Web Interface beneficiary assignment 
and methodology. Specifically, the commenter believed that the VM's 
attribution methodology penalizes providers for costs beyond their 
control.
    Response: We do not believe that the VM's attribution methodology 
penalizes providers for costs beyond their control. Please note that 
the cost measures that must be separately reported for the VM are not 
reported for the PQRS. Therefore, cost is not associated with the 
attribution methodology we proposed. Based on the rationale provided, 
we are finalizing our proposal to continue using the attribution 
methodology used for the VM for the Web Interface beneficiary 
assignment methodology for the 2018 PQRS payment adjustment.
    As we clarified in the CY 2015 PFS final rule with comment period 
(79 FR 67790), if a group practice has no Medicare patients for which 
any of the

[[Page 71145]]

GPRO measures are applicable, the group practice will not meet the 
criteria for satisfactory reporting using the Web Interface. Therefore, 
to meet the criteria for satisfactory reporting using the Web 
Interface, a group practice must be assigned and have sampled at least 
1 Medicare patient for any of the applicable Web Interface measures. If 
a group practice does not typically see Medicare patients for which the 
Web Interface measures are applicable, or if the group practice does 
not have adequate billing history for Medicare patients to be used for 
assignment and sampling of Medicare patients into the Web Interface, we 
advise the group practice to participate in the PQRS via another 
reporting mechanism.
c. Criteria for Satisfactory Reporting on Individual PQRS Quality 
Measures for Group Practices Registered To Participate in the GPRO via 
Registry for the 2018 PQRS Payment Adjustment
    We finalized the following satisfactory reporting criteria for the 
submission of individual quality measures via registry for group 
practices of 2-99 EPs in the GPRO for the 2017 PQRS payment adjustment 
(see Table 51 at 79 FR 67797): Report at least 9 measures, covering at 
least 3 of the NQS domains, OR, if less than 9 measures covering at 
least 3 NQS domains apply to the group practice, report up to 8 
measures covering 1-3 NQS domains for which there is Medicare patient 
data, AND report each measure for at least 50 percent of the group 
practice's Medicare Part B FFS patients seen during the reporting 
period to which the measure applies.
    Consistent with the group practice reporting criteria we finalized 
for the 2017 PQRS payment adjustment in accordance with section 
1848(m)(3)(C) of the Act, for those group practices that choose to 
report using a qualified registry, we proposed to amend Sec.  414.90(j) 
to specify satisfactory reporting criteria via qualified registry for 
group practices of 2+ EPs who select to participate in the GPRO for the 
2018 PQRS payment adjustment. Specifically, for the 12-month 2018 PQRS 
payment adjustment reporting period, the group practice would report at 
least 9 measures, covering at least 3 of the NQS domains. Of these 
measures, if a group practice has an EP that sees at least 1 Medicare 
patient in a face-to-face encounter, the group practice would report on 
at least 1 measure in the PQRS cross-cutting measure set. If the group 
practice reports on less than 9 measures covering at least 3 NQS 
domains, the group practice would report on each measure that is 
applicable to the group practice, AND report each measure for at least 
50 percent of the EP's Medicare Part B FFS patients seen during the 
reporting period to which the measure applies. Measures with a 0 
percent performance rate would not be counted.
    In addition, if a group practice of 2+ EPs chooses instead to use a 
qualified registry in conjunction with reporting the CAHPS for PQRS 
survey measures, for the 12-month reporting period for the 2018 PQRS 
payment adjustment, the group practice would report all CAHPS for PQRS 
survey measures via a certified survey vendor, and report at least 6 
additional measures, outside of the CAHPS for PQRS survey, covering at 
least 2 of the NQS domains using the qualified registry. If less than 6 
measures apply to the group practice, the group practice must report on 
each measure that is applicable to the group practice. Of the non-CAHPS 
for PQRS measures, if any EP in the group practice sees at least 1 
Medicare patient in a face-to-face encounter, the group practice would 
be required to report on at least 1 measure in the PQRS cross-cutting 
measure set. We note that this option to report 6 additional measures, 
including at least 1 cross-cutting measure if a group practice sees at 
least 1 Medicare patient in a face-to-face encounter, is consistent 
with the proposed criterion for satisfactory reporting for the 2018 
PQRS payment adjustment via qualified registry.
    As with individual reporting, we understand that there may be 
instances where a group practice may not have at least 9 measures 
applicable to a group practice's practice. In this instance, like the 
criterion we finalized for the 2017 PQRS payment adjustment (see Table 
51 at 79 FR 67797), a group practice reporting on less than 9 measures 
would still be able to meet the satisfactory reporting criterion via 
registry if the group practice reports on each measure that is 
applicable to the group practice's practice. If a group practice 
reports on less than 9 measures, the group practice would be subject to 
the MAV process, which would allow us to determine whether a group 
practice should have reported quality data codes for additional 
measures and/or measures covering additional NQS domains. In addition, 
if a group practice does not report on at least 1 cross-cutting measure 
and the group practice has at least 1 EP who sees at least 1 Medicare 
patient in a face-to-face encounter, the MAV will also allow us to 
determine whether a group practice should have reported on any of the 
PQRS cross-cutting measures. The MAV process we proposed to implement 
for registry reporting is a similar process that was established for 
reporting periods occurring in 2015 for the 2017 PQRS payment 
adjustment. However, please note that the MAV process for the 2018 PQRS 
payment adjustment will now allow us to determine whether a group 
practice should have reported on at least 1 cross-cutting measure. For 
more information on the registry MAV process, please visit http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/Downloads/2014_PQRS_Registry_MeasureApplicabilityValidation_12132013.zip.
    We invited and received the following public comments on these 
proposals.
    Comment: We received general support for the proposed criteria for 
satisfactory reporting on individual PQRS quality measures for group 
practices registered to participate in the GPRO via registry for the 
2018 PQRS payment adjustment. Some commenters specifically supported 
continued use of the registry-based reporting mechanism. With respect 
to reporting CAHPS for PQRS, please note, we received general comments 
on the requirement to report CAHPS for PQRS, as discussed in section 
III.I.5.a. of this final rule with comment period.
    Response: As we stated in section III.I.5.a. of this final rule 
with comment period, because we are finalizing our proposal to require 
group practices to report CAHPS for PQRS only with respect to group 
practices of 100 or more EPs, we are modifying this proposal as 
follows:
    For group practices of 2-99 EPs registered to participate in the 
GPRO via registry for the 2018 PQRS payment adjustment: The 
administration of the CAHPS for PQRS survey is OPTIONAL. Therefore, if 
reporting via registry, these group practices may meet the criteria for 
satisfactory reporting for the 2018 PQRS payment adjustment in one of 
two ways:
    OPTION 1 (group practices that do not voluntarily elect to 
administer the CAHPS for PQRS survey in conjunction with the registry): 
For the 12-month 2018 PQRS payment adjustment reporting period, report 
at least 9 measures, covering at least 3 of the NQS domains. Of these 
measures, if a group practice has an EP that sees at least 1 Medicare 
patient in a face-to-face encounter, the group practice would report on 
at least 1 measure in the PQRS cross-cutting measure set. If the group 
practice reports on less than 9 measures covering at least 3 NQS 
domains, the group practice would report on each measure that is 
applicable to the group practice, AND report each measure for at least 
50 percent of the EP's Medicare Part B FFS patients seen during the

[[Page 71146]]

reporting period to which the measure applies. Measures with a 0 
percent performance rate would not be counted.
    OPTION 2 (group practices that voluntarily elect to administer the 
CAHPS for PQRS survey in conjunction with the registry): For the 12-
month reporting period for the 2018 PQRS payment adjustment, report all 
CAHPS for PQRS survey measures via a certified survey vendor, and 
report at least 6 additional measures, outside of the CAHPS for PQRS 
survey, covering at least 2 of the NQS domains using the qualified 
registry. If less than 6 measures apply to the group practice, the 
group practice must report on each measure that is applicable to the 
group practice. Of the non-CAHPS for PQRS measures, if any EP in the 
group practice sees at least 1 Medicare patient in a face-to-face 
encounter, the group practice would be required to report on at least 1 
measure in the PQRS cross-cutting measure set.
    For group practices of 100+ EPs registered to participate in the 
GPRO via registry for the 2018 PQRS payment adjustment: The 
administration of the CAHPS for PQRS survey is REQUIRED. Therefore, if 
reporting via registry, these group practices must meet the following 
criterion for satisfactory reporting for the 2018 PQRS payment 
adjustment: For the 12-month reporting period for the 2018 PQRS payment 
adjustment, report all CAHPS for PQRS survey measures via a certified 
survey vendor, and report at least 6 additional measures, outside of 
the CAHPS for PQRS survey, covering at least 2 of the NQS domains using 
the qualified registry. If less than 6 measures apply to the group 
practice, the group practice must report on each measure that is 
applicable to the group practice. Of the non-CAHPS for PQRS measures, 
if any EP in the group practice sees at least 1 Medicare patient in a 
face-to-face encounter, the group practice would be required to report 
on at least 1 measure in the PQRS cross-cutting measure set.
d. Criteria for Satisfactory Reporting on Individual PQRS Quality 
Measures for Group Practices Registered To Participate in the GPRO via 
EHR for the 2018 PQRS Payment Adjustment
    For EHR reporting, consistent with the criterion finalized for the 
2017 PQRS payment adjustment (see Table 51 at 79 FR 67797) that aligns 
with the criteria established for meeting the CQM component of 
meaningful use under the Medicare EHR Incentive Program and in 
accordance with the group practice reporting requirements under section 
1848(m)(3)(C) of the Act, for those group practices that choose to 
report using an EHR, we proposed to amend Sec.  414.90(j) to specify 
satisfactory reporting criteria via a direct EHR product or an EHR data 
submission vendor product for group practices of 2+ EPs who select to 
participate in the GPRO for the 2018 PQRS payment adjustment. 
Specifically, for the 12-month reporting period for the 2018 PQRS 
payment adjustment, the group practice would report 9 measures covering 
at least 3 domains. If the group practice's direct EHR product or EHR 
data submission vendor product does not contain patient data for at 
least 9 measures covering at least 3 domains, then the group practice 
must report all of the measures for which there is Medicare patient 
data. A group practice must report on at least 1 measure for which 
there is Medicare patient data.
    In addition, if a group practice of 2+ EPs chooses instead to use a 
direct EHR product or EHR data submission vendor in conjunction with 
reporting the CAHPS for PQRS survey measures, for the 12-month 
reporting period for the 2018 PQRS payment adjustment, the group 
practice would report all CAHPS for PQRS survey measures via a 
certified survey vendor, and report at least 6 additional measures, 
outside of the CAHPS for PQRS survey, covering at least 2 of the NQS 
domains using the direct EHR product or EHR data submission vendor 
product. If less than 6 measures apply to the group practice, the group 
practice must report all applicable measures. Of the non-CAHPS for PQRS 
measures that must be reported in conjunction with reporting the CAHPS 
for PQRS survey measures, a group practice would be required to report 
on at least 1 measure for which there is Medicare patient data. We note 
that this option to report 6 additional measures is consistent with the 
proposed criterion for satisfactory reporting for the 2018 PQRS payment 
adjustment via EHR without CAHPS for PQRS, since both criteria assess a 
total of 3 domains (since CAHPS for PQRS is in one NQS domain). We 
invited and received the following public comments on these proposals:
    Comment: We received general support for the proposed criteria for 
satisfactory reporting on individual PQRS quality measures for group 
practices registered to participate in the GPRO via EHR for the 2018 
PQRS payment adjustment. Some commenters specifically supported 
continued use of the EHR-based reporting mechanism. With respect to 
reporting CAHPS for PQRS, please note, we received general comments on 
the requirement to report CAHPS for PQRS, as discussed in section 
III.I.5.a. of this final rule with comment period.
    Response: As we stated in section III.I.5.a. of this final rule 
with comment period, because we are finalizing our proposal to require 
group practices to report CAHPS for PQRS only with respect to group 
practices of 100 or more EPs, we are modifying this proposal as 
follows:
    For group practices of 2-99 EPs registered to participate in the 
GPRO via EHR for the 2018 PQRS payment adjustment: The administration 
of the CAHPS for PQRS survey is OPTIONAL. Therefore, if reporting via 
EHR, these group practices may meet the criteria for satisfactory 
reporting for the 2018 PQRS payment adjustment in one of two ways:
    OPTION 1 (group practices that do not voluntarily elect to 
administer the CAHPS for PQRS survey in conjunction with EHR): For the 
12-month reporting period for the 2018 PQRS payment adjustment, the 
group practice would report 9 measures covering at least 3 domains. If 
the group practice's direct EHR product or EHR data submission vendor 
product does not contain patient data for at least 9 measures covering 
at least 3 domains, then the group practice must report all of the 
measures for which there is Medicare patient data. A group practice 
must report on at least 1 measure for which there is Medicare patient 
data.
    OPTION 2 (group practices that voluntarily elect to administer the 
CAHPS for PQRS survey in conjunction with EHR): For the 12-month 
reporting period for the 2018 PQRS payment adjustment, report all CAHPS 
for PQRS survey measures via a certified survey vendor, and report at 
least 6 additional measures, outside of the CAHPS for PQRS survey, 
covering at least 2 of the NQS domains using the direct EHR product or 
EHR data submission vendor product. If less than 6 measures apply to 
the group practice, the group practice must report all applicable 
measures. Of the non-CAHPS for PQRS measures that must be reported in 
conjunction with reporting the CAHPS for PQRS survey measures, a group 
practice would be required to report on at least 1 measure for which 
there is Medicare patient data.
    For group practices of 100+ EPs registered to participate in the 
GPRO via EHR for the 2018 PQRS payment adjustment: The administration 
of the CAHPS for PQRS survey is REQUIRED. Therefore, if reporting via 
EHR, these group practices must meet the following criterion for 
satisfactory reporting for the 2018 PQRS payment adjustment: For the 
12-month reporting period for the 2018 PQRS payment adjustment, report 
all CAHPS for PQRS survey measures via a certified survey vendor, and 
report at least 6 additional measures, outside

[[Page 71147]]

of the CAHPS for PQRS survey, covering at least 2 of the NQS domains 
using the direct EHR product or EHR data submission vendor product. If 
less than 6 measures apply to the group practice, the group practice 
must report all applicable measures. Of the non-CAHPS for PQRS measures 
that must be reported in conjunction with reporting the CAHPS for PQRS 
survey measures, a group practice would be required to report on at 
least 1 measure for which there is Medicare patient data.
e. Satisfactory Participation in a QCDR for Group Practices Registered 
To Participate in the GPRO via a QCDR for the 2018 PQRS Payment 
Adjustment
    Section 101(d)(1)(B) of the MACRA amends section 1848(m)(3)(D) of 
the Act by inserting ``and, for 2016 and subsequent years, subparagraph 
(A) or (C)'' after ``subparagraph (A)''. This change requires CMS to 
create an option for EPs participating in the GPRO to report quality 
measures via a QCDR.
    As such, please note that we are modifying Sec.  414.90(k) to 
indicate that group practices may also use a QCDR to participate in the 
PQRS.
f. Reporting Period for the Satisfactory Participation by Group 
Practices in a QCDR for the 2018 PQRS Payment Adjustment
    Section 1848(m)(3)(D) of the Act, as redesignated and added by 
section 601(b) of the America Taxpayer Relief Act of 2012 and further 
amended by MACRA, requires the Secretary to treat a group practice as 
satisfactorily submitting data on quality measures under section 
1848(m)(3)(A) of the Act if the group practice is satisfactorily 
participating in a QCDR for the year. Given that satisfactory 
participation is with regard to the year, and to provide consistency 
with the reporting period applicable to individual EPs who participate 
in the PQRS via a QCDR, we proposed to revise Sec.  414.90(k) to 
specify a 12-month, CY reporting period from January 1, 2016 through 
December 31, 2016 for group practices participating in the GPRO to 
satisfactorily participate in a QCDR for purposes of the 2018 PQRS 
payment adjustment. We proposed a 12-month reporting period. Based on 
our experience with the 12- and 6-month reporting periods for the PQRS 
incentives, we believe that data on quality measures collected based on 
12 months provides a more accurate assessment of actions performed in a 
clinical setting than data collected based on shorter reporting 
periods. In addition, we believe a 12-month reporting period is 
appropriate given that the full calendar year would be utilized with 
regard to the participation by the group practice in the QCDR. We 
invited public comment on the proposed 12-month, CY 2016 reporting 
period for the satisfactory participation of group practices in a QCDR 
for the 2018 PQRS payment adjustment.
    The following is a summary of the comments we received regarding 
our proposal.
    Comment: Commenters generally supported the proposed 12-month 
reporting period from January 1, 2016, through December 31, 2016 for 
group practices participating in the GPRO to satisfactorily participate 
in a QCDR for purposes of the 2018 PQRS payment adjustment, as it is 
consistent with the reporting period for other criteria for 
satisfactory reporting, as well as satisfactory participation in a QCDR 
in the PQRS.
    Response: As a result of the supportive comments, we are finalizing 
this reporting period, as proposed. Therefore, we are revising Sec.  
414.90(k) to specify a 12-month, CY reporting period from January 1, 
2016, through December 31, 2016 for group practices participating in 
the GPRO to satisfactorily participate in a QCDR for purposes of the 
2018 PQRS payment adjustment.
g. Criteria for Satisfactory Participation in a QCDR for Group 
Practices Registered To Participate in the GPRO via a QCDR for the 2018 
PQRS Payment Adjustment
    To be consistent with individual reporting criteria that we 
finalized for the 2017 PQRS payment adjustment (see Table 50 at 79 FR 
67796) as well as our individual reporting criteria for the 2018 PQRS 
payment adjustment, for purposes of the 2018 PQRS payment adjustment 
(which would be based on data reported during the 12-month period that 
falls in CY 2016), we proposed to amend Sec.  414.90(j) to use the same 
criterion for group practices as individual EPs to satisfactorily 
participate in a QCDR for the 2018 PQRS payment adjustment. 
Specifically, for the 12-month reporting period for the 2018 PQRS 
payment adjustment, the group practice would report at least 9 measures 
available for reporting under a QCDR covering at least 3 of the NQS 
domains, AND report each measure for at least 50 percent of the group 
practice's patients. Of these measures, the group practice would report 
on at least 2 outcome measures, OR, if 2 outcomes measures are not 
available, report on at least 1 outcome measures and at least 1 of the 
following types of measures--resource use, patient experience of care, 
efficiency/appropriate use, or patient safety.
    We solicited and received the following public comments on these 
proposals:
    Comment: Commenters generally supported the option to report 
quality measures data via a QCDR as a group practice. One commenter 
opposed the proposal to require group practices using a QCDR to report 
on at least 9 measures. The commenter noted that when the QCDR option 
was first introduced to as a reporting method for individuals, EPs were 
only required to report at least three measures.
    Response: We appreciate the commenters' concerns regarding the 
requirement to report at least 9 measures. However, we believe that 
group practices should be required to report on the same amount of 
measures as an individual EP. Based on the positive feedback and the 
rationale provided, we are finalizing the proposed criterion for 
satisfactory participation in a QCDR for group practices registered to 
participate in the GPRO via a QCDR for the 2018 PQRS payment 
adjustment, as proposed.
    Tables 27 and 28 reflect our criteria for satisfactory reporting--
or, in lieu of satisfactory reporting, satisfactory participation in a 
QCDR--for the 2018 PQRS payment adjustment:

[[Page 71148]]



  Table 27--Summary of Requirements for the 2018 PQRS Payment Adjustment: Individual Reporting Criteria for the
    Satisfactory Reporting of Quality Measures Data via Claims, Qualified Registry, and EHRs and Satisfactory
                                        Participation Criterion in QCDRs
----------------------------------------------------------------------------------------------------------------
                                                       Reporting          Satisfactory reporting/satisfactory
       Reporting period            Measure type        mechanism                participation criteria
----------------------------------------------------------------------------------------------------------------
12-month (Jan 1-Dec 31, 2016)   Individual         Claims...........  Report at least 9 measures, covering at
                                 Measures                              least 3 of the NQS domains AND report
                                                                       each measure for at least 50 percent of
                                                                       the EP's Medicare Part B FFS patients
                                                                       seen during the reporting period to which
                                                                       the measure applies. Of the measures
                                                                       reported, if the EP sees at least 1
                                                                       Medicare patient in a face-to-face
                                                                       encounter, the EP will report on at least
                                                                       1 measure contained in the PQRS cross-
                                                                       cutting measure set. If less than 9
                                                                       measures apply to the EP, the EP would
                                                                       report on each measure that is
                                                                       applicable), AND report each measure for
                                                                       at least 50 percent of the Medicare Part
                                                                       B FFS patients seen during the reporting
                                                                       period to which the measure applies.
                                                                       Measures with a 0 percent performance
                                                                       rate would not be counted.
12-month (Jan 1-Dec 31, 2016)   Individual         Qualified          Report at least 9 measures, covering at
                                 Measures           Registry.          least 3 of the NQS domains AND report
                                                                       each measure for at least 50 percent of
                                                                       the EP's Medicare Part B FFS patients
                                                                       seen during the reporting period to which
                                                                       the measure applies. Of the measures
                                                                       reported, if the EP sees at least 1
                                                                       Medicare patient in a face-to-face
                                                                       encounter, the EP will report on at least
                                                                       1 measure contained in the PQRS cross-
                                                                       cutting measure set. If less than 9
                                                                       measures apply to the EP, the EP would
                                                                       report on each measure that is
                                                                       applicable, AND report each measure for
                                                                       at least 50 percent of the Medicare Part
                                                                       B FFS patients seen during the reporting
                                                                       period to which the measure applies.
                                                                       Measures with a 0 percent performance
                                                                       rate would not be counted.
12-month (Jan 1-Dec 31, 2016)   Individual         Direct EHR         Report 9 measures covering at least 3 of
                                 Measures           Product or EHR     the NQS domains. If an EP's direct EHR
                                                    Data Submission    product or EHR data submission vendor
                                                    Vendor Product.    product does not contain patient data for
                                                                       at least 9 measures covering at least 3
                                                                       domains, then the EP would be required to
                                                                       report all of the measures for which
                                                                       there is Medicare patient data. An EP
                                                                       would be required to report on at least 1
                                                                       measure for which there is Medicare
                                                                       patient data.
12-month (Jan 1-Dec 31, 2016)   Measures Groups    Qualified          Report at least 1 measures group AND
                                                    Registry.          report each measures group for at least
                                                                       20 patients, the majority (11 patients)
                                                                       of which are required to be Medicare Part
                                                                       B FFS patients. Measures groups
                                                                       containing a measure with a 0 percent
                                                                       performance rate will not be counted.
12-month (Jan 1-Dec 31, 2016)   Individual PQRS    Qualified          Report at least 9 measures available for
                                 measures and/or    Clinical Data      reporting under a QCDR covering at least
                                 non-PQRS           Registry (QCDR).   3 of the NQS domains, AND report each
                                 measures                              measure for at least 50 percent of the
                                 reportable via a                      EP's patients. Of these measures, the EP
                                 QCDR                                  would report on at least 2 outcome
                                                                       measures, OR, if 2 outcomes measures are
                                                                       not available, report on at least 1
                                                                       outcome measures and at least 1 of the
                                                                       following types of measures--resource
                                                                       use, patient experience of care,
                                                                       efficiency/appropriate use, or patient
                                                                       safety.
----------------------------------------------------------------------------------------------------------------


  Table 28--Summary of Requirements for the 2018 PQRS Payment Adjustment: Group Practice Reporting Criteria for
                          Satisfactory Reporting of Quality Measures Data via the GPRO
----------------------------------------------------------------------------------------------------------------
                                Group Practice                      Reporting         Satisfactory Reporting
       Reporting Period              Size         Measure Type      Mechanism                Criteria
----------------------------------------------------------------------------------------------------------------
12-month (Jan 1-Dec 31, 2016)  25-99 EPs; 100+  Individual GPRO  Web Interface..  Report on all measures
                                EPs (if *CAHPS   Measures in                       included in the web
                                for PQRS does    the Web                           interface; AND populate data
                                not apply).      Interface.                        fields for the first 248
                                                                                   consecutively ranked and
                                                                                   assigned beneficiaries in the
                                                                                   order in which they appear in
                                                                                   the group's sample for each
                                                                                   module or preventive care
                                                                                   measure. If the pool of
                                                                                   eligible assigned
                                                                                   beneficiaries is less than
                                                                                   248, then the group practice
                                                                                   must report on 100 percent of
                                                                                   assigned beneficiaries. In
                                                                                   other words, we understand
                                                                                   that, in some instances, the
                                                                                   sampling methodology we
                                                                                   provide will not be able to
                                                                                   assign at least 248 patients
                                                                                   on which a group practice may
                                                                                   report, particularly those
                                                                                   group practices on the
                                                                                   smaller end of the range of
                                                                                   25-99 EPs. If the group
                                                                                   practice is assigned less
                                                                                   than 248 Medicare
                                                                                   beneficiaries, then the group
                                                                                   practice must report on 100
                                                                                   percent of its assigned
                                                                                   beneficiaries. A group
                                                                                   practice must report on at
                                                                                   least 1 measure for which
                                                                                   there is Medicare patient
                                                                                   data.

[[Page 71149]]

 
12-month (Jan 1-Dec 31, 2016)  25-99 EPs that   Individual GPRO  Web Interface +  The group practice must have
                                elect CAHPS      Measures in      CMS-Certified    all CAHPS for PQRS survey
                                for PQRS; 100+   the Web          Survey Vendor.   measures reported on its
                                EPs (if CAHPS    Interface +                       behalf via a CMS-certified
                                for PQRS         CAHPS for PQRS.                   survey vendor. In addition,
                                applies).                                          the group practice must
                                                                                   report on all measures
                                                                                   included in the Web
                                                                                   Interface; AND populate data
                                                                                   fields for the first 248
                                                                                   consecutively ranked and
                                                                                   assigned beneficiaries in the
                                                                                   order in which they appear in
                                                                                   the group's sample for each
                                                                                   module or preventive care
                                                                                   measure. If the pool of
                                                                                   eligible assigned
                                                                                   beneficiaries is less than
                                                                                   248, then the group practice
                                                                                   must report on 100 percent of
                                                                                   assigned beneficiaries. A
                                                                                   group practice will be
                                                                                   required to report on at
                                                                                   least 1 measure for which
                                                                                   there is Medicare patient
                                                                                   data.
                                                                                  Please note that, if the CAHPS
                                                                                   for PQRS survey is applicable
                                                                                   to a group practice who
                                                                                   reports quality measures via
                                                                                   the Web Interface, the group
                                                                                   practice must administer the
                                                                                   CAHPS for PQRS survey in
                                                                                   addition to reporting the Web
                                                                                   Interface measures.
12-month (Jan 1-Dec 31, 2016)  2-99 EPs; 100+   Individual       Qualified        Report at least 9 measures,
                                EPs (if CAHPS    Measures.        Registry.        covering at least 3 of the
                                for PQRS does                                      NQS domains. Of these
                                not apply).                                        measures, if a group practice
                                                                                   sees at least 1 Medicare
                                                                                   patient in a face-to-face
                                                                                   encounter, the group practice
                                                                                   would report on at least 1
                                                                                   measure in the PQRS cross-
                                                                                   cutting measure set. If less
                                                                                   than 9 measures covering at
                                                                                   least 3 NQS domains apply to
                                                                                   the group practice, the group
                                                                                   practice would report on each
                                                                                   measure that is applicable to
                                                                                   the group practice, AND
                                                                                   report each measure for at
                                                                                   least 50 percent of the
                                                                                   group's Medicare Part B FFS
                                                                                   patients seen during the
                                                                                   reporting period to which the
                                                                                   measure applies. Measures
                                                                                   with a 0 percent performance
                                                                                   rate would not be counted.
12-month (Jan 1-Dec 31, 2016)  2-99 EPs that    Individual       Qualified        The group practice must have
                                elect CAHPS      Measures +       Registry + CMS-  all CAHPS for PQRS survey
                                for PQRS; 100+   CAHPS for PQRS.  Certified        measures reported on its
                                EPs (if CAHPS                     Survey Vendor.   behalf via a CMS-certified
                                for PQRS                                           survey vendor, and report at
                                applies).                                          least 6 additional measures,
                                                                                   outside of the CAHPS for PQRS
                                                                                   survey, covering at least 2
                                                                                   of the NQS domains using the
                                                                                   qualified registry. If less
                                                                                   than 6 measures apply to the
                                                                                   group practice, the group
                                                                                   practice must report on each
                                                                                   measure that is applicable to
                                                                                   the group practice. Of the
                                                                                   additional measures that must
                                                                                   be reported in conjunction
                                                                                   with reporting the CAHPS for
                                                                                   PQRS survey measures, if any
                                                                                   EP in the group practice sees
                                                                                   at least 1 Medicare patient
                                                                                   in a face-to-face encounter,
                                                                                   the group practice must
                                                                                   report on at least 1 measure
                                                                                   in the PQRS cross-cutting
                                                                                   measure set.
12-month (Jan 1-Dec 31, 2016)  2-99 EPs; 100+   Individual       Direct EHR       Report 9 measures covering at
                                EPs (if CAHPS    Measures.        Product or EHR   least 3 domains. If the group
                                for PQRS does                     Data             practice's direct EHR product
                                not apply).                       Submission       or EHR data submission vendor
                                                                  Vendor Product.  product does not contain
                                                                                   patient data for at least 9
                                                                                   measures covering at least 3
                                                                                   domains, then the group
                                                                                   practice must report all of
                                                                                   the measures for which there
                                                                                   is Medicare patient data. A
                                                                                   group practice must report on
                                                                                   at least 1 measure for which
                                                                                   there is Medicare patient
                                                                                   data.
12-month (Jan 1-Dec 31, 2016)  2-99 EPs that    Individual       Direct EHR       The group practice must have
                                elect CAHPS      Measures +       Product or EHR   all CAHPS for PQRS survey
                                for PQRS; 100+   CAHPS for PQRS.  Data             measures reported on its
                                EPs (if CAHPS                     Submission       behalf via a CMS-certified
                                for PQRS                          Vendor Product   survey vendor, and report at
                                applies).                         + CMS-           least 6 additional measures,
                                                                  Certified        outside of CAHPS for PQRS,
                                                                  Survey Vendor.   covering at least 2 of the
                                                                                   NQS domains using the direct
                                                                                   EHR product or EHR data
                                                                                   submission vendor product. If
                                                                                   less than 6 measures apply to
                                                                                   the group practice, the group
                                                                                   practice must report all of
                                                                                   the measures for which there
                                                                                   is Medicare patient data. Of
                                                                                   the additional 6 measures
                                                                                   that must be reported in
                                                                                   conjunction with reporting
                                                                                   the CAHPS for PQRS survey
                                                                                   measures, a group practice
                                                                                   would be required to report
                                                                                   on at least 1 measure for
                                                                                   which there is Medicare
                                                                                   patient data.

[[Page 71150]]

 
12-month (Jan 1-Dec 31, 2016)  2+ EPs.........  Individual PQRS  Qualified        Report at least 9 measures
                                                 measures and/    Clinical Data    available for reporting under
                                                 or non-PQRS      Registry         a QCDR covering at least 3 of
                                                 measures         (QCDR).          the NQS domains, AND report
                                                 reportable via                    each measure for at least 50
                                                 a QCDR.                           percent of the group
                                                                                   practice's patients. Of these
                                                                                   measures, the group practice
                                                                                   would report on at least 2
                                                                                   outcome measures, OR, if 2
                                                                                   outcomes measures are not
                                                                                   available, report on at least
                                                                                   1 outcome measures and at
                                                                                   least 1 of the following
                                                                                   types of measures--resource
                                                                                   use, patient experience of
                                                                                   care, efficiency/appropriate
                                                                                   use, or patient safety.
----------------------------------------------------------------------------------------------------------------

6. Statutory Requirements and Other Considerations for the Selection of 
PQRS Quality Measures for Meeting the Criteria for Satisfactory 
Reporting for 2016 and Beyond for Individual EPs and Group Practices
    Annually, we solicit a ``Call for Measures'' from the public for 
possible inclusion in the PQRS. During the Call for Measures, we 
request measures for inclusion in PQRS that meet the following 
statutory and other criteria.
    Sections 1848(k)(2)(C) and 1848(m)(3)(C)(i) of the Act, 
respectively, govern the quality measures reported by individual EPs 
and group practices under the PQRS. Under section 1848(k)(2)(C)(i) of 
the Act, the PQRS 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 section 1890(a) of the Act, which 
is currently the National Quality Forum (NQF). However, 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, 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. In 
light of these statutory requirements, we believe that, except in the 
circumstances specified in the statute, each PQRS quality measure must 
be endorsed by the NQF. Additionally, section 1848(k)(2)(D) of the Act 
requires that for each PQRS quality measure, the Secretary shall ensure 
that EPs have the opportunity to provide input during the development, 
endorsement, or selection of measures applicable to services they 
furnish. The statutory requirements under section 1848(k)(2)(C) of the 
Act, subject to the exception noted previously, 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) of the 
Act (that is, the NQF) and are silent as to how the measures that are 
submitted to the NQF for endorsement are developed.
    The steps for developing measures applicable to physicians and 
other EPs 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 special restrictions on the type or make-up of the 
organizations carrying out this process of development of physician 
measures, such as restricting the initial development to physician-
controlled organizations. Any such restriction would unduly limit the 
development of quality measures and the scope and utility of measures 
that may be considered for endorsement as voluntary consensus standards 
for purposes of the PQRS.
    In addition to section 1848(k)(2)(C) of the Act, section 1890A of 
the Act, which was added by section 3014(b) of the Affordable Care Act, 
requires that the Secretary establish a pre-rulemaking process under 
which certain steps occur for the selection of certain categories of 
quality and efficiency measures, one of which is that the entity with a 
contract with the Secretary under section 1890(a) of the Act (that is, 
the NQF) convene multi-stakeholder groups to provide input to the 
Secretary on the selection of such measures. These categories are 
described in section 1890(b)(7)(B) of the Act, and include such 
measures as the quality measures selected for reporting under the PQRS. 
In accordance with section 1890A(a)(1) of the Act, the NQF convened 
multi-stakeholder groups by creating the MAP. Section 1890A(a)(2) of 
the Act requires that the Secretary must make publicly available by 
December 1st of each year a list of the quality and efficiency measures 
that the Secretary is considering for selection through rulemaking for 
use in the Medicare program. The NQF must provide CMS with the MAP's 
input on the selection of measures by February 1st of each year. The 
lists of measures under consideration for selection through rulemaking 
in 2015 are available at http://www.qualityforum.org/map/.
    As we noted above, section 1848(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). We may select measures under this 
exception if there is a specified area or medical topic for which a 
feasible and practical measure has not been endorsed by the entity, as 
long as due consideration is given to measures that have been endorsed 
or adopted by a consensus organization identified by the Secretary. 
Under this exception, aside from NQF endorsement, we requested that 
stakeholders apply the following considerations when submitting 
measures for possible inclusion in the PQRS measure set:
     Measures that are not duplicative of another existing or 
proposed measure.
     Measures that are further along in development than a 
measure concept.
     We are not accepting claims-based-only reporting measures 
in this process.
     Measures that are outcome-based rather than clinical 
process measures.
     Measures that address patient safety and adverse events.
     Measures that identify appropriate use of diagnosis and 
therapeutics.
     Measures that include the NQS domain for care coordination 
and communication.
     Measures that include the NQS domain for patient 
experience and patient-reported outcomes.
     Measures that address efficiency, cost and resource use.
    As such, we may exercise our authority under section 
1848(k)(2)(C)(ii) of the Act to propose and finalize a measure because 
a feasible and practical measure has not been endorsed by the

[[Page 71151]]

NQF for a specified topic, as long as due consideration is given to 
measures that have been endorsed or adopted by a consensus organization 
identified by the Secretary.
a. PQRS Quality Measures
    Taking into consideration the statutory and non-statutory criteria 
we described previously, this section discusses the inclusion or 
removal of measures in PQRS for 2016 and beyond. We classified all 
measures against six domains based on the NQS's six priorities, as 
follows:
    (1) Patient Safety. These are measures that reflect the safe 
delivery of clinical services in all healthcare settings. These 
measures may address a structure or process that is designed to reduce 
risk in the delivery of healthcare or measure the occurrence of an 
untoward outcome such as adverse events and complications of procedures 
or other interventions.
    (2) Person and Caregiver-Centered Experience and Outcomes. These 
are measures that reflect the potential to improve patient-centered 
care and the quality of care delivered to patients. They emphasize the 
importance of collecting patient-reported data and the ability to 
impact care at the individual patient level, as well as the population 
level. These are measures of organizational structures or processes 
that foster both the inclusion of persons and family members as active 
members of the health care team and collaborative partnerships with 
providers and provider organizations or can be measures of patient-
reported experiences and outcomes that reflect greater involvement of 
patients and families in decision making, self-care, activation, and 
understanding of their health condition and its effective management.
    (3) Communication and Care Coordination. These are measures that 
demonstrate appropriate and timely sharing of information and 
coordination of clinical and preventive services among health 
professionals in the care team and with patients, caregivers, and 
families to improve appropriate and timely patient and care team 
communication. They may also be measures that reflect outcomes of 
successful coordination of care.
    (4) Effective Clinical Care. These are measures that reflect 
clinical care processes closely linked to outcomes based on evidence 
and practice guidelines or measures of patient-centered outcomes of 
disease states.
    (5) Community/Population Health. These are measures that reflect 
the use of clinical and preventive services and achieve improvements in 
the health of the population served. They may be measures of processes 
focused on primary prevention of disease or general screening for early 
detection of disease unrelated to a current or prior condition.
    (6) Efficiency and Cost Reduction. These are measures that reflect 
efforts to lower costs and to significantly improve outcomes and reduce 
errors. These are measures of cost, resource use and appropriate use of 
healthcare resources or inefficiencies in healthcare delivery.
    In addition, CMS considers the MAP's recommendations as part of the 
comprehensive assessment of each measure considered for inclusion in 
the program. Additional elements under consideration include a 
measure's fit within the program, if a measure fills clinical gaps, 
changes or updates to clinical guidelines and other program needs. As 
such, while CMS strongly considers the MAP's recommendations, MAP 
support is not required for inclusion in PQRS.
    Please note that the PQRS quality measure specifications for any 
given PQRS individual quality measure may differ from specifications 
for the same quality measure used in prior years. For example, for the 
PQRS quality measures that were selected for reporting in 2016 and 
beyond, please note that detailed measure specifications, including the 
measure's title, for the individual PQRS quality measures for 2016 and 
beyond may have been updated or modified during the NQF endorsement 
process or for other reasons.
    In addition, due to our desire to align measure titles with the 
measure titles that have been finalized for 2013, 2014, 2015 reporting, 
and potentially subsequent years of the Medicare EHR Incentive Program, 
we noted that the measure titles for measures available for reporting 
via EHR-based reporting mechanisms may change. To the extent that the 
Medicare EHR Incentive Program updates its measure titles to include 
version numbers (see 77 FR 13744), we used these version numbers to 
describe the PQRS EHR measures that will also be available for 
reporting for the EHR Incentive Program. We will continue to work 
toward complete alignment of measure specifications across programs 
whenever possible.
    Through NQF's measure maintenance process, NQF-endorsed measures 
are sometimes updated to incorporate changes that we believe do not 
substantively change the nature of the measure. Examples of such 
changes may include updated diagnosis or procedure codes or changes to 
exclusions to the patient population or definitions. While we address 
such changes on a case-by-case basis, we generally believe these types 
of maintenance changes are distinct from substantive changes to 
measures that result in what are considered new or different measures. 
Further, we believe that non-substantive maintenance changes of this 
type do not trigger the same agency obligations under the 
Administrative Procedure Act.
    In the CY 2013 PFS final rule with comment period, we finalized our 
proposal providing that if the NQF updates an endorsed measure that we 
have adopted for the PQRS in a manner that we consider to not 
substantively change the nature of the measure, we would use a 
subregulatory process to incorporate those updates to the measure 
specifications that apply to the program (77 FR 69207). We believe this 
adequately balances our need to incorporate non-substantive NQF updates 
to NQF-endorsed measures in the most expeditious manner possible, while 
preserving the public's ability to comment on updates that change an 
endorsed measure such that it is no longer the same measure that we 
originally adopted. We also noted that the NQF process incorporates an 
opportunity for public comment and engagement in the measure 
maintenance process. We revised the Specifications Manual and posted 
notices to clearly identify the updates and provide links to where 
additional information on the updates can be found. Updates are also 
available on the CMS PQRS Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/index.html.
    We are not the measure steward for most of the measures available 
for reporting under the PQRS. We rely on outside measure stewards and 
developers to maintain these measures. In Table 31, we proposed that 
certain measures be removed from the PQRS measure set due to the 
measure steward indicating that it will not be able to maintain the 
measure. We noted that this proposal is contingent upon the measure 
steward not being able to maintain the measure. Should we learn that a 
certain measure steward is able to maintain the measure, or that 
another entity is able to maintain the measure in a manner that allows 
the measure to be available for reporting under the PQRS for the CY 
2018 PQRS payment adjustment, we proposed to keep the measure available 
for reporting under the PQRS and therefore not finalize our proposal to 
remove the measure. We stated that we would discuss any such instances 
in the CY 2016 PFS final rule with comment period.

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    In addition, we noted that we have received feedback from 
stakeholders, particularly first-time participants who find it 
difficult to understand which measures are applicable to their 
particular practice. In an effort to aide EPs and group practices to 
determine what measures best fit their practice, and in collaboration 
with specialty societies, we began to group our final measures 
available for reporting according to specialty. The current listing of 
our measures by specialty can be found on our Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/index.html. Please note that these groups of measures 
are meant to provide guidance to those EPs seeking to determine what 
measures to report. EPs are not required to report measures according 
to these suggested groups of measures. As measures are adopted or 
revised, we will continue to update these groups to reflect the 
measures available under the PQRS, as well as add more specialties.
b. Cross-Cutting Measures for 2016 Reporting and Beyond
    In the CY 2015 PFS final rule with comment period, we finalized a 
set of 19 cross-cutting measures for reporting in the PQRS for 2015 and 
beyond (see Table 52 at 79 FR 67801). The current PQRS cross-cutting 
measure set is available at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/Downloads/2015_PQRS_CrosscuttingMeasures_12172014.pdf. In Table 29, we proposed 
the following measures to be added to the current PQRS cross-cutting 
measure set. Please note that our rationale for each of these measures 
is found below the measure description. We solicited and received 
public comments on these measures. A summary of the comments, our 
responses, as well as final decisions are in Table 29. Please note that 
these proposed measures in Table 30 are in addition to the 19 
previously finalized cross-cutting measures. As such, for 2016, there 
will be a total of 23 cross-cutting measures in PQRS.

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c. New PQRS Measures Available for Reporting for 2016 and Beyond and 
Changes to Existing PQRS Measures
    Table 30 contains additional measures we proposed to include in the 
PQRS measure set for CY 2016 and beyond. We also indicated the PQRS 
reporting mechanism or mechanisms through which each measure could be 
submitted, as well as the MAP recommendations. Additional comments and 
measure information from the MAP review can be found at http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=78711.
    Please note that, in some cases specified below, we proposed adding 
a measure to the PQRS measure set that the MAP believes requires 
further development prior to inclusion or does not support a measure 
for inclusion in the PQRS measure set. Please note that, although we 
take these recommendations into consideration, in these instances, we 
believe the rationale provided for the addition of a measure outweighs 
the MAP's recommendation.

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    In Table 31, we provided our proposals for a NQS domain change for 
measures that are currently available for reporting under the PQRS.

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    In Table 32, we proposed to remove the following measures from 
reporting under the PQRS.
BILLING CODE 4120-01-P
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    In Table 33, we proposed to change the mechanism(s) by which an EP 
or group practice may report a respective PQRS measure beginning in 
2016.

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BILLING CODE 4120-01-C
d. PQRS Measures Groups
    Section 414.90(b) defines a measures group as a subset of six or 
more PQRS measures that have a particular clinical condition or focus 
in common. The denominator definition and coding of the measures group 
identifies the condition or focus that is shared across the measures 
within a particular measures group.
    We proposed to add the following 3 new measures groups as shown in 
Tables 34, 35 and 36 that will be available for reporting in the PQRS 
beginning in 2016. Please note that, in these tables, we provided the 
PQRS measure numbers for the measures within these measures groups that 
were previously finalized in the PQRS. New measures within these 
measures groups that were proposed to be added, as indicated in Table 
29, do not have a PQRS number. Therefore, in lieu of a PQRS number, an 
``NA'' is indicated. We solicited and received the following public 
comments on these proposed measures groups:
     Multiple Chronic Conditions Measures Group: We proposed to 
add the Multiple Chronic Conditions Measures Group in the CY 2016 
proposed rule. A large proportion of the Medicare population are 
impacted by Multiple Chronic Conditions, and providers that treat this 
population are often not recognized for the complexity of treatment for 
a patient with multiple chronic conditions. The addition of this 
measures group would specifically identify those providers that address 
the exponential complexity of treating the combination of these 
conditions rather than a sum of the individual conditions. This 
measures group addresses the complexity of care that is required for 
patients that may have multiple disease processes that require clinical 
management and treatment.
    Comment: Commenters supported the inclusion of this measure groups 
in PQRS.
    Response: Based on the comments and rationale provided, CMS is 
finalizing its proposal to include this measures group for reporting in 
the PQRS beginning in 2016.
     Cardiovascular Prevention Measures Group (Millions 
Hearts): We proposed to add the Cardiovascular Prevention Measures 
Group in the CY 2016 proposed rule. Prior to 2015, the PQRS included a 
Cardiovascular Prevention Measures Group (Measures 2, 204, 226, 236, 
241 and 317 in 2014 (78 FR 74741)). The measures group was removed for 
2015 PQRS reporting due to clinical guideline changes that affected 
many of the measures. Given the efficacy of cardiovascular prevention 
on cardiovascular health, this measures

[[Page 71209]]

group is being re-considered with an adjustment to align with current 
clinical guidelines. This measures group is also fully supported by the 
Million Hearts Initiative.
    Comment: Commenters supported the inclusion of this measures group 
in PQRS.
    Response: Based on the comments and rationale provided, CMS is 
finalizing its proposal to include this measures group for reporting in 
the PQRS beginning in 2016.
     Diabetic Retinopathy Measures Group: We proposed to add 
the Diabetic Retinopathy Measures Group in the CY 2016 proposed rule. 
An increase in the frequency of Type 2 diabetes in the pediatric age 
group is associated with increased childhood obesity. The implications 
are significantly increased burdens of disability and complications 
associated with diabetes, including diabetic retinopathy, which has a 
projected prevalence of 6 million individuals with diabetic retinopathy 
by the year 2020 in the United States, and a prevalence rate of 28.5% 
in all adults with diabetes aged 40 and older. The addition of the 
Diabetic Retinopathy Measures Group would help to address this 
significant public health problem by allowing for the comprehensive 
evaluation of provider performance and patient outcomes related to a 
disease that threatens the eyesight of a very large population, and by 
supporting improvements in quality of care and outcomes related to 
diabetic retinopathy.
    Comment: Commenters supported the inclusion of this measures group 
in PQRS.
    Response: Based on the comments and rationale provided, CMS is 
finalizing its proposal to include this measures group for reporting in 
the PQRS beginning in 2016.

 Table 34--Cardiovascular Prevention Measures Group for 2016 and Beyond
                            [Millions hearts]
------------------------------------------------------------------------
                                                             Measure
  NQF/ PQRS          Measure title and description          developer
------------------------------------------------------------------------
0419/130.....  Documentation of Current Medications in   Centers for
                the Medical Record: Percentage of         Medicare &
                visits for patients aged 18 years and     Medicaid
                older for which the EP attests to         Services/
                documenting a list of current             Mathematica/
                medications using all immediate           Quality
                resources available on the date of the    Insights of
                encounter. This list must include ALL     Pennsylvania.
                known prescriptions, over-the-counters,
                herbals, and vitamin/mineral/dietary
                (nutritional) supplements AND must
                contain the medications' name, dosage,
                frequency and route of administration.
0028/226.....  Preventive Care and Screening: Tobacco    American
                use: Screening and Cessation              Medical
                Intervention: Percentage of patients      Association--P
                aged 18 years and older who were          hysician
                screened for tobacco use one or more      Consortium for
                times within 24 months AND who received   Performance
                cessation counseling intervention if      Improvement.
                identified as a tobacco user.
0068/204.....  Ischemic Vascular Disease (IVD): Use of   National
                Aspirin or Another Antithrombotic:        Committee for
                Percentage of patients 18 years of age    Quality
                and older who were discharged alive for   Assurance.
                acute myocardial infarction (AMI),
                coronary artery bypass graft (CABG) or
                percutaneous coronary interventions
                (PCI) in the 12 months prior to the
                measurement period, or who had an
                active diagnosis of ischemic vascular
                disease (IVD) during the measurement
                period and who had documentation of use
                of aspirin or another antithrombotic
                during the measurement period.
0018/236.....  Controlling High Blood Pressure:          National
                Percentage of patients 18-85 years of     Committee for
                age who had a diagnosis of hypertension   Quality
                and whose blood pressure was adequately   Assurance.
                controlled (<140/90 mmHg) during the
                measurement period.
N/A/317......  Preventive Care and Screening: Screening  Centers for
                for High Blood Pressure and Follow-Up     Medicare &
                Documented: Percentage of patients aged   Medicaid
                18 years and older seen during the        Services/
                reporting period who were screened for    Mathematica/
                high blood pressure AND a recommended     Quality
                follow-up plan is documented based on     Insights of
                the current blood pressure (BP) reading   Pennsylvania.
                as indicated.
N/A/438......  Statin Therapy for the Prevention and     Centers for
                Treatment of Cardiovascular Disease:      Medicare &
                Percentage of the following patients--    Medicaid
                all considered at high risk of            Services/
                cardiovascular events--who were           Mathematica/
                prescribed or were on statin therapy      Quality
                during the measurement period:.           Insights of
                Adults aged >= 21 years who       Pennsylvania.
                were previously diagnosed with or
                currently have an active diagnosis of
                clinical atherosclerotic cardiovascular
                disease (ASCVD); OR.
                Adults aged >=21 years with a
                fasting or direct low-density
                lipoprotein cholesterol (LDL-C) level
                >= 190 mg/dL; OR.
                Adults aged 40-75 years with a
                diagnosis of diabetes with a fasting or
                direct LDL-C level of 70-189 mg/dL.
               This is a new measure described in Table
                22 above.
------------------------------------------------------------------------


    Table 35--Diabetic Retinopathy Measures Group for 2016 and Beyond
------------------------------------------------------------------------
                                                             Measure
  NQF/ PQRS          Measure title and description          developer
------------------------------------------------------------------------
0059/001.....  Diabetes: Hemoglobin A1c Poor Control:    National
                Percentage of patients 18-75 years of     Committee for
                age with diabetes who had hemoglobin      Quality
                A1c > 9.0% during the measurement         Assurance.
                period.
0088/018.....  Diabetic Retinopathy: Documentation of    American
                Presence or Absence of Macular Edema      Medical
                and Level of Severity of Retinopathy:     Association-
                Percentage of patients aged 18 years      Physician
                and older with a diagnosis of diabetic    Consortium for
                retinopathy who had a dilated macular     Performance
                or fundus exam performed which included   Improvement/
                documentation of the level of severity    National
                of retinopathy and the presence or        Committee for
                absence of macular edema during one or    Quality
                more office visits within 12 months.      Assurance.

[[Page 71210]]

 
0089/019.....  Diabetic Retinopathy: Communication with  American
                the Physician Managing Ongoing Diabetes   Medical
                Care: Percentage of patients aged 18      Association-
                years and older with a diagnosis of       Physician
                diabetic retinopathy who had a dilated    Consortium for
                macular or fundus exam performed with     Performance
                documented communication to the           Improvement/
                physician who manages the ongoing care    National
                of the patient with diabetes mellitus     Committee for
                regarding the findings of the macular     Quality
                or fundus exam at least once within 12    Assurance.
                months.
0055/117.....  Diabetes: Eye Exam: Percentage of         National
                patients 18-75 years of age with          Committee for
                diabetes who had a retinal or dilated     Quality
                eye exam by an eye care professional      Assurance.
                during the measurement period or a
                negative retinal or dilated eye exam
                (no evidence of retinopathy) in the 12
                months prior to the measurement period.
0419/130.....  Documentation of Current Medications in   Centers for
                the Medical Record: Percentage of         Medicare &
                visits for patients aged 18 years and     Medicaid
                older for which the EP attests to         Services/
                documenting a list of current             Quality
                medications using all immediate           Insights of
                resources available on the date of the    Pennsylvania.
                encounter. This list must include ALL
                known prescriptions, over-the-counters,
                herbals, and vitamin/mineral/dietary
                (nutritional) supplements AND must
                contain the medications' name, dosage,
                frequency and route of administration.
0028/226.....  Preventive Care and Screening: Tobacco    American
                Use: Screening and Cessation              Medical
                Intervention: Percentage of patients 18   Association-
                years and older who were screened for     Physician
                tobacco use one or more times within 24   Consortium for
                months AND who received cessation         Performance
                counseling intervention if identified     Improvement.
                as a tobacco user.
N/A/317......  Preventive Care and Screening: Screening  Centers for
                for High Blood Pressure and Follow-Up     Medicare &
                Documented: Percentage of patients aged   Medicaid
                18 years and older seen during the        Services/
                reporting period who were screened for    Mathematica/
                high blood pressure AND a recommended     Quality
                follow-up plan is documented based on     Insights of
                the current blood pressure (BP) reading   Pennsylvania.
                as indicated.
------------------------------------------------------------------------


Table 36--Multiple Chronic Conditions Measures Group for 2016 and Beyond
------------------------------------------------------------------------
                                                             Measure
  NQF/ PQRS          Measure title and description          developer
------------------------------------------------------------------------
0326/047.....  Care Plan: Percentage of patients aged    National
                65 years and older who have an advance    Committee for
                care plan or surrogate decision maker     Quality
                documented in the medical record or       Assurance/
                documentation in the medical record       American
                that an advance care plan was discussed   Medical
                but the patient did not wish or was not   Association-
                able to name a surrogate decision maker   Physician
                or provide an advance care plan.          Consortium for
                                                          Performance
                                                          Improvement.
0041/110.....  Preventive Care and Screening: Influenza  American
                Immunization: Percentage of patients      Medical
                aged 6 months and older seen for a        Association-
                visit between October 1 and March 31      Physician
                who received an influenza immunization    Consortium for
                OR who reported previous receipt of an    Performance
                influenza immunization.                   Improvement.
0421/128.....  Preventive Care and Screening: Body Mass  Centers for
                Index (BMI) Screening and Follow-Up       Medicare &
                Plan: Percentage of patients aged 18      Medicaid
                years and older with a BMI documented     Services/
                during the current encounter or during    Mathematica/
                the previous six months AND with a BMI    Quality
                outside of normal parameters, a follow-   Insights of
                up plan is documented during the          Pennsylvania.
                encounter or during the previous six
                months of the current encounter.
               Normal Parameters: Age 65 years and
                older BMI >= 23 and < 30 kg/m2; Age 18-
                64 years BMI >= 18.5 and < 25 kg/m2.
0419/130.....  Documentation of Current Medications in   Centers for
                the Medical Record: Percentage of         Medicare &
                visits for patients aged 18 years and     Medicaid
                older for which the EP attests to         Services/
                documenting a list of current             Mathematica/
                medications using all immediate           Quality
                resources available on the date of the    Insights of
                encounter. This list must include ALL     Pennsylvania.
                known prescriptions, over-the-counters,
                herbals, and vitamin/mineral/dietary
                (nutritional) supplements AND must
                contain the medications' name, dosage,
                frequency and route of administration.
0420/131.....  Pain Assessment and Follow-Up:            Centers for
                Percentage of visits for patients aged    Medicare &
                18 years and older with documentation     Medicaid
                of a pain assessment using a              Services/
                standardized tool(s) on each visit AND    Quality
                documentation of a follow-up plan when    Insights of
                pain is present.                          Pennsylvania.
0418/134.....  Preventive Care and Screening: Screening  Centers for
                for Clinical Depression and Follow-Up     Medicare &
                Plan: Percentage of patients aged 12      Medicaid
                years and older screened for clinical     Services/
                depression on the date of the encounter   Mathematica/
                using an age appropriate standardized     Quality
                depression screening tool AND if          Insights of
                positive, a follow-up plan is             Pennsylvania.
                documented on the date of the positive
                screen.
0101/154.....  Falls: Risk Assessment: Percentage of     National
                patients aged 65 years and older with a   Committee for
                history of falls who had a risk           Quality
                assessment for falls completed within     Assurance/
                12 months.                                American
                                                          Medical
                                                          Association-
                                                          Physician
                                                          Consortium for
                                                          Performance
                                                          Improvement.

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0101/155.....  Falls: Plan of Care: Percentage of        National
                patients aged 65 years and older with a   Committee for
                history of falls who had a plan of care   Quality
                for falls documented within 12 months.    Assurance/
                                                          American
                                                          Medical
                                                          Association-
                                                          Physician
                                                          Consortium for
                                                          Performance
                                                          Improvement.
0022/238.....  Use of High-Risk Medications in the       National
                Elderly: Percentage of patients 66        Committee for
                years of age and older who were ordered   Quality
                high-risk medications. Two rates are      Assurance.
                reported.
               a. Percentage of patients who were
                ordered at least one high-risk
                medication.
               b. Percentage of patients who were
                ordered at least two different high-
                risk medications.
------------------------------------------------------------------------

    We proposed to amend the following previously finalized measures 
groups (in Table 37 through Table 41) for reporting in the PQRS 
beginning in 2016. Please note that, in these tables, we provided the 
PQRS measure numbers for the measures within these proposed measures 
groups that were previously finalized in the PQRS. New measures within 
these measures groups that were proposed to be added, as indicated in 
Table 29, do not have a PQRS number. Therefore, in lieu of a PQRS 
number, an ``NA'' is indicated.

  Table 37--Coronary Artery Bypass Graft (CABG) Measures Group for 2016
                               and Beyond
------------------------------------------------------------------------
                                                             Measure
  NQF/ PQRS          Measure title and description          developer
------------------------------------------------------------------------
0134/043.....  Coronary Artery Bypass Graft (CABG): Use  Society of
                of Internal Mammary Artery (IMA) in       Thoracic
                Patients with Isolated CABG Surgery:      Surgeons.
                Percentage of patients aged 18 years
                and older undergoing isolated Coronary
                Artery Bypass Graft surgery who
                received an Internal Mammary Artery
                graft.
0236/044.....  Coronary Artery Bypass Graft (CABG):      Centers for
                Preoperative Beta-Blocker in Patients     Medicare &
                with Isolated CABG Surgery: Percentage    Medicaid
                of isolated Coronary Artery Bypass        Services/
                Graft (CABG) surgeries for patients       Quality
                aged 18 years and older who received a    Insights of
                beta-blocker within 24 hours prior to     Pennsylvania.
                surgical incision.
0129/164.....  Coronary Artery Bypass Graft (CABG):      Society of
                Prolonged Intubation: Percentage of       Thoracic
                patients aged 18 years and older          Surgeons.
                undergoing isolated Coronary Artery
                Bypass Graft (CABG) surgery who require
                postoperative intubation > 24 hours.
0130/165.....  Coronary Artery Bypass Graft (CABG):      Society of
                Deep Sternal Wound Infection Rate:        Thoracic
                Percentage of patients aged 18 years      Surgeons.
                and older undergoing isolated Coronary
                Artery Bypass Graft surgery who, within
                30 days postoperatively, develop deep
                sternal wound infection involving
                muscle, bone, and/or mediastinum
                requiring operative intervention.
0131/166.....  Coronary Artery Bypass Graft (CABG):      Society of
                Stroke: Percentage of patients aged 18    Thoracic
                years and older undergoing isolated       Surgeons.
                Coronary Artery Bypass Graft surgery
                who have a postoperative stroke (i.e.,
                any confirmed neurological deficit of
                abrupt onset caused by a disturbance in
                blood supply to the brain) that did not
                resolve within 24 hours.
0114/167.....  Coronary Artery Bypass Graft (CABG):      Society of
                Postoperative Renal Failure: Percentage   Thoracic
                of patients aged 18 years and older       Surgeons.
                undergoing isolated Coronary Artery
                Bypass Graft surgery (without pre-
                existing renal failure) who develop
                postoperative renal failure or require
                dialysis.
0115/168.....  Coronary Artery Bypass Graft (CABG):      Society of
                Surgical Re-Exploration: Percentage of    Thoracic
                patients aged 18 years and older          Surgeons.
                undergoing isolated Coronary Artery
                Bypass Graft surgery who require a
                return to the operating room (OR)
                during the current hospitalization for
                mediastinal bleeding with or without
                tamponade, graft occlusion, valve
                dysfunction, or other cardiac reason.
------------------------------------------------------------------------

    We proposed to amend the Dementia Measures Group for reporting in 
the PQRS beginning in 2016 by adding Preventive Care and Screening: 
Screening for Clinical Depression and Follow-Up Plan (PQRS# 134) and 
removing Dementia: Screening for Depressive Symptoms (PQRS #285). We 
solicited and received the following public comment on this measures 
group.
    Comment: One commenter encouraged CMS to retain the nine dementia-
specific measures included in the Dementia Measures Group for continued 
use in the PQRS program even though measures that are not NQF-endorsed 
are typically removed. The commenter stated that these measures address 
gaps in the PQRS measure set, reflect the services furnished by a 
particular specialty, impact chronic conditions, and have a high impact 
on health care and support CMS' priorities for improved care quality 
and efficiency and should be retained in future program years.
    Response: In response to the comment requesting CMS retain the nine 
measures of the Dementia Measures Group, please note CMS proposed to 
remove only one measure but retain the remaining eight dementia 
measures in this group. CMS is finalizing its proposal to remove PQRS 
#285 ``Dementia: Screening for Depressive Symptoms'' as CMS believes it 
is duplicative of PQRS #134 ``Preventive Care and Screening: Screening 
for Clinical Depression and Follow-up'', which includes screening for 
depression and is a more robust measure. For this reason, we are 
finalizing the proposed changes to this measures group for reporting in 
the PQRS beginning in 2016, as proposed. The final Dementia Measures 
Group is shown on Table 38.

[[Page 71212]]



          TABLE 38--Dementia Measures Group for 2016 and Beyond
  [CMS is finalizing its proposal to add PQRS# 134 Preventive Care and
   Screening: Screening for Clinical Depression and Follow-up Plan and
 delete PQRS #285 Dementia: Screening for Depressive Symptoms from this
                             measures group]
------------------------------------------------------------------------
                                                             Measure
  NQF/ PQRS          Measure title and description          Developer
------------------------------------------------------------------------
0326/047.....  Care Plan: Percentage of patients aged    National
                65 years and older who have an advance    Committee for
                care plan or surrogate decision maker     Quality
                documented in the medical record or       Assurance/
                documentation in the medical record       American
                that an advance care plan was discussed   Medical
                but the patient did not wish or was not   Association-
                able to name a surrogate decision maker   Physician
                or provide an advance care plan.          Consortium for
                                                          Performance
                                                          Improvement.
0418/134.....  Preventive Care and Screening: Screening  Centers for
                for Clinical Depression and Follow-Up     Medicare &
                Plan: Percentage of patients aged 12      Medicaid
                years and older screened for clinical     Services/
                depression on the date of the encounter   Mathematica/
                using an age appropriate standardized     Quality
                depression screening tool AND if          Insights of
                positive, a follow-up plan is             Pennsylvania.
                documented on the date of the positive
                screen.
N.A/280......  Dementia: Staging of Dementia:            American
                Percentage of patients, regardless of     Academy of
                age, with a diagnosis of dementia whose   Neurology/
                severity of dementia was classified as    American
                mild, moderate or severe at least once    Psychological
                within a 12 month period.                 Association.
N/A/281......  Dementia: Cognitive Assessment:           American
                Percentage of patients, regardless of     Medical
                age, with a diagnosis of dementia for     Association-
                whom an assessment of cognition is        Physician
                performed and the results reviewed at     Consortium for
                least once within a 12 month period.      Performance
                                                          Improvement.
N/A/282......  Dementia: Functional Status Assessment:   American
                Percentage of patients, regardless of     Academy of
                age, with a diagnosis of dementia for     Neurology/
                whom an assessment of functional status   American
                is performed and the results reviewed     Psychological
                at least once within a 12 month period.   Association.
N/A/283......  Dementia: Neuropsychiatric Symptom        American
                Assessment: Percentage of patients,       Academy of
                regardless of age, with a diagnosis of    Neurology/
                dementia and for whom an assessment of    American
                neuropsychiatric symptoms is performed    Psychological
                and results reviewed at least once in a   Association.
                12 month period.
N/A/284......  Dementia: Management of Neuropsychiatric  American
                Symptoms: Percentage of patients,         Academy of
                regardless of age, with a diagnosis of    Neurology/
                dementia who have one or more             American
                neuropsychiatric symptoms who received    Psychological
                or were recommended to receive an         Association.
                intervention for neuropsychiatric
                symptoms within a 12 month period.
N/A/286......  Dementia: Counseling Regarding Safety     American
                Concerns: Percentage of patients,         Academy of
                regardless of age, with a diagnosis of    Neurology/
                dementia or their caregiver(s) who were   American
                counseled or referred for counseling      Psychological
                regarding safety concerns within a 12     Association.
                month period.
N/A/287......  Dementia: Counseling Regarding Risks of   American
                Driving: Percentage of patients,          Academy of
                regardless of age, with a diagnosis of    Neurology/
                dementia or their caregiver(s) who were   American
                counseled regarding the risks of          Psychological
                driving and the alternatives to driving   Association.
                at least once within a 12 month period.
N/A/288......  Dementia: Caregiver Education and         American
                Support: Percentage of patients,          Academy of
                regardless of age, with a diagnosis of    Neurology/
                dementia whose caregiver(s) were          American
                provided with education on dementia       Psychological
                disease management and health behavior    Association.
                changes AND referred to additional
                sources for support within a 12 month
                period.
------------------------------------------------------------------------

    We proposed to amend the Diabetes Measures Group for reporting in 
the PQRS beginning in 2016 by adding Diabetes Mellitus: Diabetic Foot 
and Ankle Care, Peripheral Neuropathy--Neurological Evaluation (PQRS 
#126) and removing Diabetes: Foot Exam (PQRS #163). We solicited and 
received the following public comment on this measures group.
    Comment: One commenter supported the proposed changes to the 
Diabetes Measures Group.
    Response: Based on the comments and rationale provided, we are 
finalizing the proposed changes to this measures group for reporting in 
the PQRS beginning in 2016, as proposed. The final Diabetes Measures 
Group is shown in Table 39.

          TABLE 39--Diabetes Measures Group for 2016 and Beyond
   [CMS is finalizing its proposal to add PQRS #126 Diabetes Mellitus:
Diabetic Foot and Ankle Care, Peripheral Neuropathy and delete PQRS #163
              Diabetes: Foot Exam from this measures group]
------------------------------------------------------------------------
                                                             Measure
  NQF/ PQRS          Measure Title and Description          Developer
------------------------------------------------------------------------
0059/001.....  Diabetes: Hemoglobin A1c Poor Control:    National
                Percentage of patients 18-75 years of     Committee for
                age with diabetes who had hemoglobin      Quality
                A1c > 9.0% during the measurement         Assurance.
                period.
0041/110.....  Preventive Care and Screening: Influenza  American
                Immunization: Percentage of patients      Medical
                aged 6 months and older seen for a        Association-
                visit between October 1 and March 31      Physician
                who received an influenza immunization    Consortium for
                OR who reported previous receipt of an    Performance
                influenza immunization.                   Improvement.
0055/117.....  Diabetes: Eye Exam: Percentage of         National
                patients 18-75 years of age with          Committee for
                diabetes who had a retinal or dilated     Quality
                eye exam by an eye care professional      Assurance.
                during the measurement period or a
                negative retinal or dilated eye exam
                (no evidence of retinopathy) in the 12
                months prior to the measurement period.
0062/119.....  Diabetes: Medical Attention for           National
                Neuropathy: The percentage of patients    Committee for
                18-75 years of age with diabetes who      Quality
                had a nephropathy screening test or       Assurance.
                evidence of nephropathy during the
                measurement period.
0417/126.....  Diabetes Mellitus: Diabetic Foot and      American
                Ankle Care, Peripheral Neuropathy--       Podiatric
                Neurological Evaluation: Percentage of    Medical
                patients aged 18 years and older with a   Association.
                diagnosis of diabetes mellitus who had
                a neurological examination of their
                lower extremities within 12 months.

[[Page 71213]]

 
0028/226.....  Preventive Care and Screening: Tobacco    American
                Use: Screening and Cessation              Medical
                Intervention: Percentage of patients 18   Association-
                years and older who were screened for     Physician
                tobacco use one or more times within 24   Consortium for
                months AND who received cessation         Performance
                counseling intervention if identified     Improvement.
                as a tobacco user.
------------------------------------------------------------------------

    We proposed to amend the Preventative Care Measures Group for 
reporting in the PQRS beginning in 2016 by adding Preventive Care and 
Screening: Unhealthy Alcohol Use: Screening & Brief Counseling (NQF 
#2152) and removing Preventive Care and Screening: Unhealthy Alcohol 
Use--Screening (PQRS #173). We solicited and received the following 
public comment on this measures group.
    Comment: One commenter supported the proposed changes to the 
Preventative Care Measures Group.
    Response: Based on the comments and rationale provided, CMS is 
finalizing the proposed changes to this measures group for reporting in 
the PQRS beginning in 2016, as proposed. The final Preventative Care 
Measures Group is shown in Table 40.

      Table 40--Preventive Care Measures Group for 2016 and Beyond
  [TMS is finalizing its proposal to add NQF #2152 Preventive Care and
   Screening: Unhealthy Alcohol Use: Screening & Brief Counseling and
 delete PQRS #173 Preventive Care and Screening: Unhealthy Alcohol Use--
            Screening from this measures group for 2016 PQRS]
------------------------------------------------------------------------
                                                             Measure
   NQF/PQRS          Measure title and description          developer
------------------------------------------------------------------------
0046/039.....  Screening for Osteoporosis for Women      National
                Aged 65-85 Years of Age: Percentage of    Committee for
                female patients aged 65-85 years of age   Quality
                who ever had a central dual-energy X-     Assurance/
                ray absorptiometry (DXA) to check for     American
                osteoporosis. The title and description   Medical
                of this measure has been updated since    Association-
                appearing in the CY 2016 PFS proposed     Physician
                rule (originally entitled ``Screening     Consortium for
                or Therapy for Osteoporosis for Women     Performance
                Aged 65 Years and Older'' in Table 29D    Improvement.
                at 80 FR 41877) and conforms to the
                measure steward's most current measure
                specification.
N/A/048......  Urinary Incontinence: Assessment of       National
                Presence or Absence of Urinary            Committee for
                Incontinence in Women Aged 65 Years and   Quality
                Older: Percentage of female patients      Assurance/
                aged 65 years and older who were          American
                assessed for the presence or absence of   Medical
                urinary incontinence within 12 months.    Association-
                                                          Physician
                                                          Consortium for
                                                          Performance
                                                          Improvement.
0041/110.....  Preventive Care and Screening: Influenza  American
                Immunization: Percentage of patients      Medical
                aged 6 months and older seen for a        Association-
                visit between October 1 and March 31      Physician
                who received an influenza immunization    Consortium for
                OR who reported previous receipt of an    Performance
                influenza immunization.                   Improvement.
0043/111.....  Pneumonia Vaccination Status for Older    National
                Adults: Percentage of patients 65 years   Committee for
                of age and older who have ever received   Quality
                a pneumococcal vaccine.                   Assurance.
2372/112.....  Breast Cancer Screening: Percentage of    National
                women 50 through 74 years of age who      Committee for
                had a mammogram to screen for breast      Quality
                cancer within 27 months.                  Assurance.
0034/113.....  Colorectal Cancer Screening: Percentage   National
                of patients 50-75 years of age who had    Committee for
                appropriate screening for colorectal      Quality
                cancer.                                   Assurance.
0421/128.....  Preventive Care and Screening: Body Mass  Centers for
                Index (BMI) Screening and Follow-Up       Medicare &
                Plan: Percentage of patients aged 18      Medicaid
                years and older with a BMI documented     Services/
                during the current encounter or during    Mathematica/
                the previous six months AND with a BMI    Quality
                outside of normal parameters, a follow-   Insights of
                up plan is documented during the          Pennsylvania.
                encounter or during the previous six
                months of the encounter.
               Normal Parameters: Age 65 years and
                older BMI >= 23 and < 30 kg/m2; Age 18-
                64 years BMI >= 18.5 and < 25 kg/m2.
0418/134.....  Preventive Care and Screening: Screening  Centers for
                for Clinical Depression and Follow-Up     Medicare &
                Plan: Percentage of patients aged 12      Medicaid
                years and older screened for clinical     Services/
                depression on the date of the encounter   Mathematica/
                using an age appropriate standardized     Quality
                depression screening tool AND if          Insights of
                positive, a follow-up plan is             Pennsylvania.
                documented on the date of the positive
                screen.
0028/226.....  Preventive Care and Screening: Tobacco    American
                Use: Screening and Cessation              Medical
                Intervention: Percentage of patients 18   Association-
                years and older who were screened for     Physician
                tobacco use one or more times within 24   Consortium for
                months AND who received cessation         Performance
                counseling intervention if identified     Improvement.
                as a tobacco user.
2152/431.....  Preventive Care and Screening: Unhealthy  American
                Alcohol Use: Screening & Brief            Medical
                Counseling: Percentage of patients aged   Association-
                18 years and older who were screened at   Physician
                least once within the last 24 months      Consortium for
                for unhealthy alcohol use using a         Performance
                systematic screening method AND who       Improvement.
                received brief counseling if identified
                as an unhealthy alcohol user..
               This is a new measure described in Table
                22.
------------------------------------------------------------------------

    We proposed to amend the Rheumatoid Arthritis Measures Group for 
reporting in the PQRS beginning in 2016 by adding Tuberculosis 
Prevention for Psoriasis, Psoriatic Arthritis and Rheumatoid Arthritis 
Patients on a Biological Immune Response Modifier (PQRS #337). We 
solicited and received no public comment on this measures

[[Page 71214]]

group. Therefore, based on the rationale provided, we are finalizing 
the proposed changes to this measures group for reporting in the PQRS 
beginning in 2016, as proposed. The final Rheumatoid Arthritis Measures 
Group is shown in Table 41.

    Table 41--Rheumatoid Arthritis Measures Group for 2016 and Beyond
[CMS is finalizing its proposal to add PQRS #337 Tuberculosis Prevention
 for Psoriasis, Psoriatic Arthritis and Rheumatoid Arthritis Patients on
  a Biological Immune Response Modifier to this measures group for 2016
                                  PQRS]
------------------------------------------------------------------------
                                                             Measure
  NQF/ PQRS          Measure title and description          developer
------------------------------------------------------------------------
0054/108.....  Rheumatoid Arthritis (RA): Disease        National
                Modifying Anti-Rheumatic Drug (DMARD)     Committee for
                Therapy: Percentage of patients aged 18   Quality
                years and older who were diagnosed with   Assurance.
                rheumatoid arthritis and were
                prescribed, dispensed, or administered
                at least one ambulatory prescription
                for a disease-modifying anti-rheumatic
                drug (DMARD).
0421/128.....  Preventive Care and Screening: Body Mass  Centers for
                Index (BMI) Screening and Follow-Up       Medicare &
                Plan: Percentage of patients aged 18      Medicaid
                years and older with a BMI documented     Services/
                during the current encounter or during    Mathematica/
                the previous six months AND with a BMI    Quality
                outside of normal parameters, a follow-   Insights of
                up plan is documented during the          Pennsylvania.
                encounter or during the previous six
                months of the encounter.
               Normal Parameters: Age 65 years and
                older BMI >= 23 and < 30 kg/m2 ; Age 18-
                64 years BMI >= 18.5 and < 25 kg/m2.
0420/131.....  Pain Assessment and Follow-Up:            Centers for
                Percentage of visits for patients aged    Medicare &
                18 years and older with documentation     Medicaid
                of a pain assessment using a              Services/
                standardized tool(s) on each visit AND    Quality
                documentation of a follow-up plan when    Insights of
                pain is present.                          Pennsylvania.
N/A/176......  Rheumatoid Arthritis (RA): Tuberculosis   American
                Screening: Percentage of patients aged    College of
                18 years and older with a diagnosis of    Rheumatology.
                rheumatoid arthritis (RA) who have
                documentation of a tuberculosis (TB)
                screening performed and results
                interpreted within 6 months prior to
                receiving a first course of therapy
                using a biologic disease-modifying anti-
                rheumatic drug (DMARD).
N/A/177......  Rheumatoid Arthritis (RA): Periodic       American
                Assessment of Disease Activity:           College of
                Percentage of patients aged 18 years      Rheumatology.
                and older with a diagnosis of
                rheumatoid arthritis (RA) who have an
                assessment and classification of
                disease activity within 12 months.
N/A/178......  Rheumatoid Arthritis (RA): Functional     American
                Status Assessment: Percentage of          College of
                patients aged 18 years and older with a   Rheumatology.
                diagnosis of rheumatoid arthritis (RA)
                for whom a functional status assessment
                was performed at least once within 12
                months.
N/A/179......  Rheumatoid Arthritis (RA): Assessment     American
                and Classification of Disease             College of
                Prognosis: Percentage of patients aged    Rheumatology.
                18 years and older with a diagnosis of
                rheumatoid arthritis (RA) who have an
                assessment and classification of
                disease prognosis at least once within
                12 months..
N/A/180......  Rheumatoid Arthritis (RA):                American
                Glucocorticoid Management: Percentage     College of
                of patients aged 18 years and older       Rheumatology.
                with a diagnosis of rheumatoid
                arthritis (RA) who have been assessed
                for glucocorticoid use and, for those
                on prolonged doses of prednisone >= 10
                mg daily (or equivalent) with
                improvement or no change in disease
                activity, documentation of
                glucocorticoid management plan within
                12 months.
N/A/337......  Tuberculosis Prevention for Psoriasis,    American
                Psoriatic Arthritis and Rheumatoid        College of
                Arthritis Patients on a Biological        Rheumatology.
                Immune Response Modifier: Percentage of
                patients whose providers are ensuring
                active tuberculosis prevention either
                through yearly negative standard
                tuberculosis screening tests or are
                reviewing the patient's history to
                determine if they have had appropriate
                management for a recent or prior
                positive test.
------------------------------------------------------------------------

e. Measures Available for Reporting in the Web Interface
    We finalized the measures that are available for reporting in the 
Web Interface for 2015 and beyond in the CY 2015 PFS final rule (79 FR 
67893 through 67902). The current measures available for reporting 
under the Web Interface are available at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/Downloads/2014_GPROWebInterface_MeasuresList_NarrativeSpecs_ReleaseNotes_12132013.zip. We proposed to adopt the Statin Therapy for the Prevention and 
Treatment of Cardiovascular Disease measure in Table 42 for reporting 
via the Web Interface beginning in 2016. We solicited and received the 
following comments on this proposal:
    Comment: Several commenters supported the concept of this measure, 
noting it fills an important clinical gap in the program. Two 
commenters were concerned this measure is not NQF endorsed. Other 
commenters noted concern regarding adherence to clinical guidelines, 
the need for additional testing and the potential for a small 
denominator.
    Response: This measure reflects CMS's effort to adhere to current 
clinical guidelines. We are exercising our exception authority under 
section 1848(k)(2)(C)(ii) of the Act to finalize this measure because a 
feasible and practical measure has not been endorsed by the NQF that 
has been submitted to the measures application partnership. Based on 
feedback and guidance from the technical expert panel and measure 
owner, CMS, this measure is the most advantageous and analytically 
feasible way to address the clinical guidelines. We also appreciate the 
commenters concern regarding broadening the measure to include other 
therapies beyond statin; however, current clinical guidelines indicate 
statin therapy is the appropriate standard of care. One commenter also 
expressed concern that this measure requires further testing and may 
not cover all components of the current guidelines. We require that all 
measures included in the program undergo feasibility, validity, and 
reliability testing. Further, we recognize the measure incorporates 
three of the four components of the guidelines. However, for its 
initial implementation, the measure provides an opportunity to fill a 
key clinical gap in the program. After further review, we determined 
this measure is not analytically feasible to

[[Page 71215]]

report through claims. The measure owner, CMS, may consider updating 
this measure in future rulemaking years to address the fourth component 
of the guidelines. Therefore, we are finalizing our proposal to include 
this measure as Web Interface, measures groups and registry reportable 
in 2016 PQRS. In addition, we are finalizing this measure under the 
PREV-13 module. Please note that we do not believe finalizing this 
measure under the PREV-13 module substantively impacts group practices, 
as group practices must report on all measures in the Web Interface 
regardless of the modules in which they are placed. This final change 
is reflected in Table 42.
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C
7. Request for Input on the Provisions Included in the Medicare Access 
and CHIP Reauthorization Act of 2015 (MACRA)
    The Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 
114-10, enacted on April 16, 2015) (MACRA) repealed the Medicare 
sustainable growth rate (SGR) update formula for payments under the 
Medicare physician fee schedule, established the Merit-based Incentive 
Payments System (MIPS) under the physician fee schedule, established 
incentive payments for participation in certain alternative payment 
models (APMS), and made other changes affecting Medicare payments to 
physicians and other eligible professionals. We sought public input on 
the following provisions of the MACRA in the CY 2016 PFS proposed rule 
(80 FR 41879 through 41880):
     Section 101(b): Consolidation of Certain Current Law 
Performance Programs with New Merit-based Incentive Payment System 
(hereinafter MIPS)
     Section 101(c): Merit-based Incentive Payment System
     Section 101(e): Promoting Alternative Payment Models
a. The Merit-based Incentive Payment System (MIPS)
    Section 1848(q) of the Act, added by section 101(c) of the MACRA, 
requires creation of the MIPS, applicable beginning with payments for 
items and services furnished on or after January 1, 2019, under which 
the Secretary shall: (1) Develop a methodology for assessing the total 
performance of each MIPS eligible professional according to performance 
standards for a performance period for a year; (2) using the 
methodology, provide for a composite performance score for each 
eligible professional for each performance period; and (3) use the 
composite performance score of the MIPS eligible professional for a 
performance period for a year to determine and apply a MIPS adjustment 
factor (and, as applicable, an additional MIPS adjustment factor) to 
the professional for the year. In the proposed rule, we sought public 
input on specific provisions related to the MIPS, including (80 FR 
41879):
     What would be an appropriate low-volume threshold for 
purposes of excluding certain eligible professionals (as defined in 
section 1848(k)(3)(B) of the Act) from the definition of a MIPS 
eligible professional.
     Whether CMS should consider establishing a low-volume 
threshold using more than one or a combination of factors or, 
alternatively.
     Whether CMS should focus on establishing a low-volume 
threshold based on one factor.
     Which factors to include, individually or in combination, 
in determining a low-volume threshold.
     Whether a low-volume threshold similar to ones currently 
used in other CMS reporting programs would be an appropriate low-volume 
threshold for the MIPS and the applicability of existing low-volume 
thresholds used in other CMS reporting programs toward MIPs.
     What activities could be classified as clinical practice 
improvement activities according to the definition under section 
1848(q)(2)(C)(v)(III) of the Act.
b. Alternative Payment Models
    Section 101(e) of the MACRA, Promoting Alternative Payment Models, 
introduces a framework for promoting and developing alternative payment 
models (APMs) and providing incentive payments for eligible 
professionals who participate in certain APMs. The statutory amendments 
made by this section have payment implications for eligible 
professionals beginning in 2019. As part of our continued commitment to 
stakeholder engagement, we broadly sought public comments on the 
promotion of alternative payment models (APMs) in the proposed rule (80 
FR 41879 through 41880). Specifically, we sought comment on approaches 
for developing and encouraging APMs and on incentive payments for 
participation in APMs by eligible professionals. We noted that we would 
be requesting more detailed information in a forthcoming RFI on the 
following topics: The criteria for assessing physician-focused payment 
models; the criteria and process for the submission of physician-
focused payment models; eligible APMS; qualifying APM participants; the 
Medicare payment threshold option and the combination all-payer and 
Medicare payment threshold option for qualifying and partial qualifying 
APM participants; the time period to use to calculate eligibility for 
qualifying and partial qualifying APM participants; eligible 
alternative payment entities; quality measures and EHR use 
requirements; and the definition of nominal financial risk for eligible 
alternative payment entities.
    In response to our solicitation, we received over 90 insightful and 
informative public comments suggesting matters to consider in our RFI 
and for

[[Page 71260]]

future rulemaking. In addition to seeking public comment through the 
proposed rule, we published a Request for Information (RFI) on October 
1, 2015, (80 FR 59102-59113) available at https://federalregister.gov/a/2015-24906, asking for additional public comment on more detailed 
questions related to both MIPS and APMs. We appreciate the many 
insights and comments that we received, and look forward to additional 
comments in response to the RFI. We will consider these public comments 
in future rulemaking.

J. Electronic Clinical Quality Measures (eCQM) and Certification 
Criteria; and Electronic Health Record (EHR) Incentive Program-
Comprehensive Primary Care (CPC) Initiative and Medicare Meaningful Use 
Aligned Reporting

1. Background
    The Health Information Technology for Economic and Clinical Health 
(HITECH) Act (Title IV of Division B of the ARRA, together with Title 
XIII of Division A of the ARRA) authorizes incentive payments under 
Medicare and Medicaid for the adoption and meaningful use of certified 
EHR technology (CEHRT). Section 1848(o)(2)(B)(iii) of the Act requires 
that in selecting clinical quality measures (CQMs) for eligible 
professionals (EPs) to report under the EHR Incentive Program, and in 
establishing the form and manner of reporting, the Secretary shall seek 
to avoid redundant or duplicative reporting otherwise required. As 
such, we have taken steps to establish alignments among various quality 
reporting and payment programs that include the submission of CQMs.
    Under section 1848(o)(2)(A)(iii) of the Act and the definition of 
``meaningful EHR user'' under Sec.  495.4, EPs must report on CQMs 
selected by CMS using CEHRT, as part of being a meaningful EHR user 
under the Medicare EHR Incentive Program. For CY 2012 and subsequent 
years, Sec.  495.8(a)(2)(ii) requires an EP to successfully report the 
CQMs selected by CMS to CMS or the states, as applicable, in the form 
and manner specified by CMS or the states, as applicable.
    In the CY 2014 PFS final rule with comment period (78 FR 74756), we 
finalized our proposal to require EPs who seek to report CQMs 
electronically under the Medicare EHR Incentive Program to use the most 
recent version of the electronic specifications for the CQMs and have 
CEHRT that is tested and certified to the most recent version of the 
electronic specifications for the CQMs. We stated that we believe it is 
important for EPs to electronically report the most recent versions of 
the electronic specifications for the CQMs as updated measure versions 
to correct minor inaccuracies found in prior measure versions. We 
stated that to ensure that CEHRT products can successfully transmit CQM 
data using the most recent version of the electronic specifications for 
the CQMs, it is important that the product be tested and certified to 
the most recent version of the electronic specifications for the CQMs.
    In this final rule, we summarize the comments we received based on 
our proposals for the EHR Incentive Program in the CY 2016 PFS proposed 
rule (80 FR 41880) and state our final policies based on these 
proposals and comments. Please note that we received numerous comments 
related generally to the EHR Incentive Program but not related to our 
specific proposals for the EHR Incentive Program in the CY 2016 PFS 
proposed rule. While we may take these comments into consideration when 
developing proposals in the future, we will not address these comments 
with specificity here.
2. Certification Requirements for Reporting Electronic Clinical Quality 
Measures (eCQMs) in the EHR Incentive Program and PQRS
    In the CY 2015 PFS final rule with comment period (79 FR 67906), we 
finalized our proposal for the Medicare EHR Incentive Program that, 
beginning in CY 2015, EPs are not required to ensure that their CEHRT 
products are recertified to the most recent version of the electronic 
specifications for the CQMs. Although we are not requiring 
recertification, EPs must still report the most recent version of the 
electronic specifications for the CQMs if they choose to report CQMs 
electronically for the Medicare EHR Incentive Program.
    In the FY 2016 IPPS proposed rule (80 FR 24611 through 24615), HHS' 
Office of the National Coordinator for Health Information Technology 
(ONC) proposed a certification criterion for ``CQMs--report'' at 45 CFR 
170.315(c)(3). This proposal would require that health information 
technology enable users to electronically create a data file for 
transmission of clinical quality measurement data in accordance with 
the Quality Reporting Document Architecture (QRDA) Category I 
(individual patient-level report) and Category III (aggregate report) 
standards, at a minimum. As part of the ``CQMs--report'' criterion, ONC 
also proposed to offer optional certification for EHRs according to the 
``form and manner'' that CMS requires for electronic submission to 
participate in the EHR Incentive Programs and PQRS. These requirements 
are published annually as the ``CMS QRDA Implementation Guide'' and 
posted on CMS' Web site at http://www.cms.gov/Regulations-and-Guidance/Legislation/EHRIncentivePrograms/eCQM_Library.html. The latest set of 
requirements (2015 CMS QRDA Implementation Guide for Eligible 
Professional Programs and Hospital Quality Reporting) combines the 
requirements for EPs, eligible hospitals, and CAHs. For a complete 
discussion of these proposals, we refer readers to 80 FR 24611 through 
24615.
    In the FY 2016 IPPS proposed rule (80 FR 24323 through 24629), we 
stated that we anticipated proposing to require EPs, eligible 
hospitals, and CAHs seeking to report CQMs electronically as part of 
meaningful use under the EHR Incentive Programs for 2016 to adhere to 
the additional standards and constraints on the QRDA standards for 
electronic reporting as described in the CMS QRDA Implementation Guide. 
We stated that we anticipated proposing to revise the definition of 
``certified electronic health record technology'' at Sec.  495.4 to 
require certification to the optional portion of the 2015 Edition CQM 
reporting criterion (proposed at 45 CFR 170.315(c)(3)) in the CY 2016 
Medicare PFS proposed rule.
    Accordingly, to allow providers to upgrade to 2015 Edition CEHRT 
before 2018, we proposed in the CY 2016 PFS proposed rule (80 FR 41880) 
to revise the CEHRT definition for 2015 through 2017 to require that 
EHR technology is certified to report CQMs, in accordance with the 
optional certification, in the format that CMS can electronically 
accept (CMS' ``form and manner'' requirements) if certifying to the 
2015 Edition ``CQMs--report'' certification criterion at Sec.  
170.315(c)(3). Specifically, this would require technology to be 
certified to Sec.  170.315(c)(3)(i) (the QRDA Category I and III 
standards) and Sec.  170.315(c)(3)(ii) (the optional CMS ``form and 
manner''). We noted that the proposed CEHRT definition for 2015 through 
2017 included in the Stage 3 proposed rule published on March 30, 2015 
(80 FR 16732 through 16804) allows providers to use 2014 Edition or 
2015 Edition certified EHR technology. These proposed revisions would 
apply for EPs, eligible hospitals, and CAHs.
    We also proposed in the CY 2016 PFS proposed rule (80 FR 41880) to 
revise the CEHRT definition for 2018 and subsequent years to require 
that EHR technology is certified to report CQMs, in accordance with the 
optional

[[Page 71261]]

certification, in the format that CMS can electronically accept. 
Specifically, this would require technology to be certified to Sec.  
170.315(c)(3)(i) (the QRDA Category I and III standards) and Sec.  
170.315(c)(3)(ii) (the optional CMS ``form and manner''). These 
proposed revisions would apply for EPs, eligible hospitals, and CAHs.
    We proposed these amendments at Sec.  495.4 to ensure that 
providers participating in PQRS and the EHR Incentive Programs under 
the 2015 Edition possess EHRs that have been certified to report CQMs 
according to the format that CMS requires for submission. We invited 
comment on our proposals. We note that ONC finalized the proposal to 
adopt a 2015 Edition CQM reporting certification (at 45 CFR 
170.315(c)(3)) in its 2015 Edition final rule. The certification 
criterion requires health IT to be certified to report CQMs using the 
QRDA Category I and III standards. It also includes an optional 
provision to report CQMs in the ``form and manner'' that CMS requires 
for submission. We refer readers to 80 FR 62651 through 62652.
    The following is a summary of the comments we received regarding 
these proposals.
    Comment: Commenters were supportive of our proposals to revise the 
CEHRT definition at Sec.  495.4. The commenters stated that if CMS 
intends to require EHR products to be able to submit this data either 
directly or via a certified file format, the proposal to require the 
optional portion of the CQM reporting criterion for the CEHRT 
definition is necessary.
    Response: We appreciate the commenters' support for our proposals. 
Based on the comments received and for the reasons stated previously, 
we are finalizing these proposals made in the CY 2016 PFS proposed 
rule, as proposed. We are revising the regulation text under Sec.  
495.4 to reflect this final policy.
3. Electronic Health Record (EHR) Incentive Program-Comprehensive 
Primary Care (CPC) Initiative Aligned Reporting
    The Comprehensive Primary Care (CPC) initiative, under the 
authority of section 3021 of the Affordable Care Act, is a multi-payer 
initiative fostering collaboration between public and private health 
care payers to strengthen primary care. Under this initiative, we pay 
participating primary care practices a care management fee to support 
enhanced, coordinated services. Simultaneously, participating 
commercial, state, and other federal insurance plans are also offering 
enhanced support to primary care practices that provide high-quality 
primary care. There are approximately 480 CPC practice sites across 
seven health care markets in the U.S.
    Under the CPC initiative, CPC practice sites are required to report 
to CMS a subset of the CQMs that were selected in the EHR Incentive 
Program Stage 2 final rule for EPs to report under the EHR Incentive 
Program beginning in CY 2014 (for a list of CQMs that were selected in 
the EHR Incentive Program Stage 2 final rule for EPs to report under 
the EHR Incentive Program beginning in CY 2014, see 77 FR 54069 through 
54075).
    In the CY 2015 PFS final rule with comment period (79 FR 67906 
through 67907), we finalized a group reporting option for CQMs for the 
Medicare EHR Incentive Program under which EPs who are part of a CPC 
practice site that successfully reports at least 9 electronically 
specified CQMs across 2 domains for the relevant reporting period in 
accordance with the requirements established for the CPC Initiative and 
using CEHRT would satisfy the CQM reporting component of meaningful use 
for the Medicare EHR Incentive Program. If a CPC practice site is not 
successful in reporting, EPs who are part of the site would still have 
the opportunity to report CQMs in accordance with the requirements 
established for the Medicare EHR Incentive Program in the Stage 2 final 
rule. Additionally, only those EPs who are beyond their first year of 
demonstrating meaningful use may use this CPC group reporting option. 
The CPC practice sites must submit the CQM data in the form and manner 
required by the CPC Initiative. Therefore, whether CPC required 
electronic submission or attestation of CQMs, the CPC practice site 
must submit the CQM data in the form and manner required by the CPC 
Initiative.
    In the CY 2016 PFS proposed rule (80 9 FR 41881), we proposed to 
retain the group reporting option for CPC practice sites as finalized 
in the CY 2015 PFS final rule, but for CY 2016, to require CPC practice 
sites to submit at least 9 CPC CQMs that cover 3 domains. In CY 2015, 
the CPC CQM subset was increased from a total of 11 to 13 measures, of 
which 8 measures fall in the clinical process/effectiveness domain, 3 
in the population health domain, and 2 in the safety domain. 
Additionally, the CPC practice sites have had ample time to obtain 
measures from the CPC eCQM subset of meaningful use measures. Given the 
increased number of measures in the CPC eCQM set, the addition of one 
measure to the safety domain, and the sufficient time that CPC practice 
sites have had to upgrade their EHR systems, it is reasonable to expect 
that CPC practice sites would have enough measures to report across the 
3 domains as required for the Medicare EHR Incentive Program CQM 
reporting requirement. If a CPC practice site is not successful in 
reporting, EPs who are part of the site would still have the 
opportunity to report CQMs in accordance with the current requirements 
established for the Medicare EHR Incentive Program. As finalized in the 
Medicare and Medicaid Programs; Electronic Health Record Incentive 
Program-Stage 3 and Modifications to Meaningful Use in 2015 through 
2017 final rule (80 FR 62888), EPs in any year of participation may 
electronically report clinical quality measures for a reporting period 
in 2016. Therefore, we proposed that for CY 2016, EPs who are part of a 
CPC practice site and are in their first year of demonstrating 
meaningful use may also use this CPC group reporting option to report 
their CQMs electronically instead of reporting CQMs by attestation 
through the EHR Incentive Program's Registration and Attestation 
System. However, we noted that EPs who choose this CPC group reporting 
option must use a reporting period for CQMs of one full year (not 90 
days), and that the data must be submitted during the submission period 
from January 1, 2017 through February 28, 2017. This means that EPs who 
elect to electronically report through the CPC practice site cannot 
successfully attest to meaningful use prior to October 1, 2016 (the 
deadline established for EPs who are first-time meaningful users in CY 
2016) and therefore will receive reduced payments under the PFS in CY 
2017 for failing to demonstrate meaningful use, if they have not 
applied and been approved for a significant hardship exception under 
the EHR Incentive Program. We invited public comment on these 
proposals.
    We received several comments in response to the proposed group 
reporting option for CPC practice sites for CY 2016.
    Comment: Several commenters supported the alignment between CPC and 
the Medicare EHR Incentive Program. They also supported the inclusion 
of EPs who are in their first year of participation in the Medicare EHR 
Incentive Program in the proposal to meet the CQM reporting requirement 
of the Medicare EHR Incentive Program through successful reporting to 
CPC. However, a few commenters expressed concern about penalizing first 
year EPs

[[Page 71262]]

who submit 12 months of data rather than 90 days.
    Response: We appreciate the support for this proposal. To clarify, 
we proposed that EPs who are part of a CPC practice site and are in 
their first year of demonstrating meaningful use [in CY 2016] may 
report CQMs through the CPC group reporting option for CY 2016, and if 
submitted successfully in accordance with the requirements established 
by the CPC Initiative and using CEHRT, their CPC reporting would 
satisfy the CQM requirement for the Medicare EHR Incentive Program. 
First-year EPs who successfully report CQMs through the CPC group 
reporting option for the CY 2016 reporting period and meet all other 
requirements for the Medicare EHR Incentive Program would avoid the 
meaningful use payment adjustment under Medicare in CY 2018. We note 
that in the Medicare and Medicaid Programs; Electronic Health Record 
Incentive Program-Stage 3 and Modifications to Meaningful Use in 2015 
through 2017 final rule (80 FR 62905), we established that in CY 2016, 
the EHR reporting period for a payment adjustment year for EPs who are 
new participants is any continuous 90-day period in CY 2016, and an EP 
who successfully demonstrates meaningful use for this period and 
satisfies all other program requirements will avoid the payment 
adjustment in CY 2017 if the EP successfully attests by October 1, 
2016. Therefore, to avoid the meaningful use payment adjustment under 
Medicare in CY 2017, EPs who are demonstrating meaningful use for the 
first time in CY 2016 and report CQMs through the CPC group reporting 
option must also successfully report CQMs by attestation through the 
EHR Incentive Program's Registration and Attestation System for a 90-
day reporting period in CY 2016 by October 1, 2016, or apply for a 
significant hardship exception from the CY 2017 payment adjustment.
    Comment: One commenter expressed concern that CPC practice site 
vendors may not be able to support the CPC CQM reporting requirements.
    Response: We understand that some practices found it challenging to 
meet the CPC CQM reporting requirements due to issues involving their 
vendors. However, the CPC CQM results from program year 2014 
demonstrated that a substantial majority of the CPC practices were able 
to meet the CPC requirements.
    Comment: Two commenters suggested that electronic quality 
measurement should look across longer periods of time, utilize more 
data sources, and consider care in settings other than hospitals and 
ambulatory care such as long-term post-acute care, behavioral health 
and palliative care.
    Response: The Medicare EHR Incentive Program is limited by statute 
to eligible professionals, eligible hospitals, and critical access 
hospitals. There are separate CMS programs, however, that require 
quality reporting from other types of providers. In addition, certain 
measures in the Medicare EHR Incentive Program include information 
about care from other settings or for particular conditions, such as 
behavioral health, and we hope to continue to add measures for a wider 
range of specialties and settings with a focus on outcomes measures.
    After consideration of the comments received, and for the reasons 
stated previously, we are finalizing the proposals for the group 
reporting option for CPC practice sites for CY 2016 as proposed.

K. Discussion and Acknowledgement of Public Comments Received on the 
Potential Expansion of the Comprehensive Primary Care (CPC) Initiative

1. Background
    We have been working to develop and test models of advanced primary 
care under the authority of section 1115A of the Act. Through these 
models, we plan to evaluate whether advanced primary care results in 
higher quality and more coordinated care at a lower cost to Medicare. 
We are currently testing the Comprehensive Primary Care (CPC) 
initiative.
    In the CPC initiative, we are collaborating with commercial payers 
and state Medicaid agencies to test a payment and service delivery 
model that includes the payment of monthly non-visit based per 
beneficiary per month care management fees and shared savings 
opportunities. The model is designed to support the provision by 
practices of the following five comprehensive primary care functions:
    (1) Risk Stratified Care Management: The provision of care 
management of appropriate intensity for high-risk, high-need, high-cost 
patients.
    (2) Access and Continuity: 24/7 access to the care team; use of 
asynchronous communication; designation of a primary care practitioner 
for patients to build continuity of care.
    (3) Planned Care for Chronic Conditions and Preventive Care: 
Proactive, appropriate care based on systematic assessment of patients' 
needs and personalized care plans.
    (4) Patient and Caregiver Engagement: Active support of patients in 
managing their health care to meet their personal health goals; 
establishment of systems of care that include engagement of patients 
and caregivers in goal-setting and decision making, creating 
opportunities for patient and caregiver engagement throughout the care 
delivery process.
    (5) Coordination of Care across the Medical Neighborhood: 
Management by the primary care practice of communication and 
information flow in support of referrals, transitions of care, and when 
care is received in other settings.
    The CPC initiative is testing whether provision of these five 
comprehensive primary care functions by each practice site--supported 
by multi-payer payment reform, the continuous use of data to guide 
improvement, and meaningful use of health information technology--can 
achieve improved care, better health for populations, and lower costs, 
and can inform Medicare and Medicaid policy. More information on the 
CPC initiative can be found on the CMS Center for Medicare and Medicaid 
Innovation's Web site at http://innovation.cms.gov/initiatives/Comprehensive-Primary-Care-Initiative/.
    In the CY 2016 PFS proposed rule (80 FR 41881 through 41884), we 
presented a description of the CPC initiative and solicited public 
comments regarding policy and operational issues related to a potential 
future expansion of the CPC initiative. Section 1115A(c) of the Act, as 
added by section 3021 of the Affordable Care Act, provides the 
Secretary with the authority to expand through rulemaking the duration 
and scope of a model that is being tested under section 1115A(b) of the 
Act, such as the CPC initiative (including implementation on a 
nationwide basis), if the following findings are made, taking into 
account the evaluation of the model under section 1115A(b)(4) of the 
Act: (1) The Secretary determines that the expansion is expected to 
either reduce Medicare spending without reducing the quality of care or 
improve the quality of patient care without increasing spending; (2) 
the CMS Chief Actuary certifies that the expansion would reduce (or 
would not result in any increase in) net Medicare program spending; and 
(3) the Secretary determines that the expansion would not deny or limit 
the coverage or provision of Medicare benefits. The decision of whether 
or not to expand will be made by the Secretary in coordination with CMS 
and the Office of the Chief Actuary based on whether findings about the 
initiative meet the statutory criteria for expansion under section 
1115A(c) of the Act. Given that further evaluation is needed to

[[Page 71263]]

determine its impact on both Medicare cost and quality of care, we did 
not propose an expansion of the CPC initiative in the CY 2016 PFS 
proposed rule.
    Consistent with our continuing commitment to engaging stakeholders 
in CMS's work, we solicited public comments on a variety of issues to 
broaden and deepen our understanding of the important issues and 
challenges regarding primary care payment and transformation in the 
health care marketplace. Among other subject-matter areas, we solicited 
public comments on practice readiness, practice standards and 
reporting, practice groupings, interaction with state primary care 
transformation initiatives, learning activities, payer and self-insured 
employer readiness, Medicaid, quality reporting, interaction with the 
chronic care management code, and provision of data feedback to 
practices. In response to our solicitation, we received over 90 timely 
and informative public comments suggesting matters to consider in a 
potential future expansion of the CPC initiative, including engagement 
of electronic health record vendors, coaching on leadership and change 
management, documentation, beneficiary cost-sharing, care management, 
further testing of the CPC initiative, eligibility for incentive 
payments for participation in Alternative Payment Models under MACRA, 
auditing requirements, aggregation of payer and clinical data, and 
engagement with providers across the broader medical neighborhood. 
These comments, submitted by a variety of stakeholders, broadly 
supported CPC expansion. We appreciate the commenters' views and 
recommendations. We will consider the public comments we received if 
the CPC initiative is expanded in the future through rulemaking.

L. Medicare Shared Savings Program

    Under section 1899 of the Act, we established the Medicare Shared 
Savings Program (Shared Savings Program) to facilitate coordination and 
cooperation among providers to improve the quality of care for Medicare 
Fee-For-Service (FFS) beneficiaries and reduce the rate of growth in 
health care costs. Eligible groups of providers and suppliers, 
including physicians, hospitals, and other health care providers, may 
participate in the Shared Savings Program by forming or participating 
in an Accountable Care Organization (ACO). The final rule establishing 
the Shared Savings Program appeared in the November 2, 2011 Federal 
Register (Medicare Shared Savings Program: Accountable Care 
Organizations Final Rule (76 FR 67802)).
    We addressed the following policies under the Shared Savings 
Program in the CY 2016 PFS proposed rule.
1. Quality Measures and Performance Standard
    Section 1899(b)(3)(A) of the Act requires the Secretary to 
determine appropriate measures to assess the quality of care furnished 
by ACOs, such as measures of clinical processes and outcomes; patient, 
and, wherever practicable, caregiver experience of care; and 
utilization such as rates of hospital admission for ambulatory 
sensitive conditions. Section 1899(b)(3)(B) of the Act requires ACOs to 
submit data in a form and manner specified by the Secretary on measures 
that the Secretary determines necessary for ACOs to report to evaluate 
the quality of care furnished by ACOs. Section 1899(b)(3)(C) of the Act 
requires the Secretary to establish quality performance standards to 
assess the quality of care furnished by ACOs, and to seek to improve 
the quality of care furnished by ACOs over time by specifying higher 
standards, new measures, or both for the purposes of assessing the 
quality of care. Additionally, section 1899(b)(3)(D) of the Act gives 
the Secretary authority to incorporate reporting requirements and 
incentive payments related to the PQRS, EHR Incentive Program and other 
similar initiatives under section 1848 of the Act. Finally, section 
1899(d)(1)(A) of the Act states that an ACO is eligible to receive 
payment for shared savings, if they are generated, only after meeting 
the quality performance standards established by the Secretary.
    In the November 2011 final rule establishing the Shared Savings 
Program and recent CY PFS final rules with comment period (77 FR 69301 
through 69304; 78 FR 74757 through 74764; and 79 FR 67907 through 
67931), we established the quality performance standards that ACOs must 
meet to be eligible to share in savings that are generated. In the CY 
2015 PFS final rule with comment period, we made a number of updates to 
the quality requirements within the program, such as updates to the 
quality measure set, the addition of a quality improvement reward, and 
the establishment of benchmarks that will apply for 2 years. Through 
these previous rulemakings, we worked to improve the alignment of 
quality performance measures, submission methods, and incentives under 
the Shared Savings Program and PQRS. Currently, eligible professionals 
who bill through the TIN of an ACO participant may avoid the downward 
PQRS payment adjustment when the ACO satisfactorily reports the ACO 
GPRO measures on their behalf using the GPRO web interface.
    We identified certain policies related to the quality measures and 
quality performance standard that we proposed in the CY 2016 PFS 
proposed rule. Specifically, we proposed to add a new quality measure 
to be reported through the CMS web interface and to adopt a policy for 
addressing quality measures that no longer align with updated clinical 
guidelines or where the application of the measure may result in 
patient harm.
a. Existing Quality Measures and Performance Standard
    Section 1899(b)(3)(C) of the Act states that the Secretary shall 
establish quality performance standards to assess the quality of care 
furnished by ACOs and ``seek to improve the quality of care furnished 
by ACOs over time by specifying higher standards, new measures, or 
both. . . .'' In the November 2011 Shared Savings Program Final Rule, 
we established a quality performance standard consisting of 33 measures 
across four domains, including patient experience of care, care 
coordination/patient safety, preventive health, and at-risk population. 
In the CY 2015 PFS final rule with comment period, we made a number of 
updates to the quality performance standard, including adding new 
measures that ACOs must report, retiring measures that no longer 
aligned with updated clinical guidelines, reducing the sample size for 
measures reported through the CMS web interface, establishing a 
schedule for the phase in of new quality measures, and establishing an 
additional reward for quality improvement. In the CY 2015 PFS final 
rule with comment period, we finalized an updated measure set of 33 
measures.
    Quality measures are submitted by the ACO through the GPRO web 
interface, calculated by CMS from administrative and claims data, and 
collected via a patient experience of care survey based on the 
Clinician and Group Consumer Assessment of Healthcare Providers and 
Systems (CG-CAHPS) survey. The CAHPS for ACOs patient experience of 
care survey used for the Shared Savings Program includes the core CG-
CAHPS modules, as well as some additional modules. The measures 
collected through the GPRO web interface are also used to determine 
whether eligible professionals participating in an ACO avoid the PQRS 
and automatic Value Modifier payment adjustments for 2015

[[Page 71264]]

and subsequent years. Eligible professionals billing through the TIN of 
an ACO participant may avoid the downward PQRS payment adjustment when 
the ACO satisfactorily reports all of the ACO GPRO measures on their 
behalf using the GPRO web interface. Beginning with the 2017 Value 
Modifier, performance on the ACO GPRO web interface measures and all 
cause readmission measure will be used in calculating the quality 
component of the Value Modifier for eligible professionals 
participating within an ACO (79 FR 67941 through 67947).
    As we previously stated (76 FR 67872), our principal goal in 
selecting quality measures for ACOs has been to identify measures of 
success in the delivery of high-quality health care at the individual 
and population levels with a focus on outcomes. We believe endorsed 
measures have been tested, validated, and clinically accepted, and 
therefore, when selecting the original 33 measures, we had a preference 
for NQF-endorsed measures. However, the statute does not limit us to 
using endorsed measures in the Shared Savings Program. As a result, we 
also exercised our discretion to include certain measures that we 
believe to be high impact but that are not currently endorsed, 
including for example, ACO#11, Percent of PCPs Who Successfully Qualify 
for an EHR Incentive Program Payment.
    In selecting the 33 measure set, we balanced a wide variety of 
important considerations. Our measure selection emphasized prevention 
and management of chronic diseases that have a high impact on Medicare 
FFS beneficiaries, such as heart disease, diabetes mellitus, and 
chronic obstructive pulmonary disease. We believed that the quality 
measures used in the Shared Savings Program should be tested, evidence-
based, target conditions of high cost and high prevalence in the 
Medicare FFS population, reflect priorities of the National Quality 
Strategy, address the continuum of care to reflect the requirement that 
ACOs accept accountability for their patient populations, and align 
with existing quality programs and value-based purchasing initiatives.
    In selecting the set of 33 measures finalized in the CY 2015 PFS 
final rule with comment period, we sought to include both process and 
outcome measures, including patient experience of care (79 FR 67907 
through 67931). We believe it is important to retain a combination of 
both process and outcomes measures, because ACOs are charged with 
improving and coordinating care and delivering high quality care, but 
also need time to form, acquire infrastructure and develop clinical 
care processes. We noted, however, that as other CMS quality reporting 
programs, such as PQRS, move to more outcomes-based measures and fewer 
process measures over time, we might also revise the quality 
performance standard for the Shared Savings Program to incorporate more 
outcomes-based measures and fewer process measures over time.
    In the CY 2015 PFS final rule with comment period, we finalized a 
number of changes to the quality measures used in establishing the 
quality performance standard to better align with PQRS, retire measures 
that no longer align with updated clinical practice, and add new 
outcome measures that support the CMS Quality Strategy and National 
Quality Strategy goals. We are continuing to work with the measures 
community to ensure that the specifications for the measures used under 
the Shared Savings Program are up-to-date. We believe that it is 
important to balance the timing of the release of specifications so 
they are as up-to-date as possible, while also giving ACOs sufficient 
time to review specifications. Our intention is to issue the 
specifications annually, prior to the start of the reporting period for 
which they will apply.
b. New Measure To Be Used in Establishing Quality Standards That ACOs 
Must Meet To Be Eligible for Shared Savings
    Since the November 2011 Shared Savings Program final rule, we have 
continued to review the quality measures used for the Shared Savings 
Program to ensure that they are up to date with current clinical 
practice and are aligned with the GPRO web interface reporting for 
PQRS. Based on these reviews, in the CY 2015 PFS final rule with 
comment period, we retired several measures that no longer aligned with 
updated clinical guidelines regarding cholesterol targets. As a result 
of retiring measures that did not align with updated clinical practice, 
we identified a gap in the Shared Savings Program measure set for 
measures that address treatment for patients at high risk of 
cardiovascular disease due to high cholesterol. Cardiovascular disease 
affects a high volume of Medicare beneficiaries and the prevention of 
cardiovascular disease as well as its treatment is important. Following 
further analysis and coordination with agencies such as the Centers for 
Disease Control and Prevention and the Agency for Healthcare Research & 
Quality, in the CY 2016 PFS proposed rule we proposed to add a new 
statin therapy measure for the Shared Savings Program that has been 
developed to align with the updated clinical guidelines and PQRS 
reporting. We proposed to add a statin therapy measure to the 
Preventive Health domain, which would increase our current total number 
of measures from 33 to 34 measures. Data collection for the new measure 
would occur through the CMS web interface. Table 45 lists the Shared 
Savings Program quality measure set, including the one measure we 
proposed to add, which would be used to assess ACO quality starting in 
2016.
     Statin Therapy for the Prevention and Treatment of 
Cardiovascular Disease
    We proposed to add the Statin Therapy for the Prevention and 
Treatment of Cardiovascular Disease to the Preventive Health domain. 
The measure was developed by CMS in collaboration with other federal 
agencies and the Million Hearts[supreg] Initiative and is intended to 
support the prevention and treatment of cardiovascular disease by 
measuring the use of statin therapies according to the updated clinical 
guidelines for patients with high cholesterol. The measure reports the 
percentage of beneficiaries who were prescribed or were already on 
statin medication therapy during the measurement year and who fall into 
any of the following three categories:
    (1) High-risk adult patients aged greater than or equal to 21 years 
who were previously diagnosed with or currently have an active 
diagnosis of clinical atherosclerotic cardiovascular disease (ASCVD);
    (2) Adult patients aged greater than or equal to 21 years with any 
fasting or direct Low-Density Lipoprotein Cholesterol (LDL-C) level 
that is greater than or equal to 190 mg/dL; or
    (3) Patients aged 40 to 75 years with a diagnosis of diabetes with 
a fasting or direct LDL-C level of 70 to 189 mg/dL who were prescribed 
or were already on statin medication therapy during the measurement 
year.
    The measure contains multiple denominators to align with the 
updated clinical guidelines for cholesterol targets and would replace 
the low-density lipid control measures previously retired from the 
measure set. We proposed this measure to continue Shared Savings 
Program alignment with the PQRS program and Million Hearts[supreg] 
Initiative. We proposed that the multiple denominators would be equally 
weighted when calculating the performance rate. The measure was 
reviewed by the NQF Measure

[[Page 71265]]

Applications Partnership (MAP) and the MAP encouraged further 
development (Measures Under Consideration (MUC) ID: X3729).
    As a result, we solicited public comment on the implementation of 
the measure for the Shared Savings Program. We solicited comment on 
whether the measure should be considered a single measure with weighted 
denominators or three measures given the multiple denominators that 
were developed to adhere to the updated clinical guidelines. In 
addition, the use of multiple denominators raises questions on how the 
measure should be benchmarked for the Shared Savings Program. 
Therefore, we solicited public feedback on the benchmarking approach 
for the measure, such as whether the measure should be benchmarked as a 
single measure or three measures. The measure may require larger sample 
sizes to accommodate exclusions when identifying relevant beneficiaries 
for each of the denominators used for CMS web interface reporting. Due 
to the multiple denominators, there may be a large number of 
beneficiaries who may not meet each denominator for reporting, which 
could result in a low number of beneficiaries meeting the measure 
denominators. Hence, we proposed to increase the size of the oversample 
for this measure from the normal 616 beneficiaries for CMS web 
interface reporting to an oversample of 750 or more beneficiaries. We 
proposed such an oversample size for this measure to account for 
reporting on the multiple denominators and to ensure a sufficient 
number of beneficiaries meet the measure denominators for reporting. 
The consecutive reporting requirement for measures reported through the 
CMS web interface would remain at 248 beneficiaries. We proposed that 
the measure will be pay for reporting for 2 years and then phase into 
pay for performance in the third year of the agreement period, as seen 
in Table 31 of the proposed rule (80 FR 41886 through 41888). 
Previously, we finalized that new measures will have a 2-year 
transition period before being phased in as pay for performance (79 FR 
67910). However, we also solicited comment on whether stakeholders 
believe the measure should be pay for reporting for the entire 
agreement period due to the application of multiple denominators for a 
single measure. In summary, we solicited comment on our proposal to 
include this measure in the Preventive Health domain, whether it should 
be treated as a single or multiple measures for reporting and 
benchmarking, the transition of the measure into pay for performance or 
if the measure should remain pay for reporting for the entire agreement 
period, and the size of the oversample to ensure sufficient 
identification of beneficiaries for reporting.
    The quality scoring methodology is explained in the regulations at 
Sec.  425.502 and in the preamble to the November 2011 final rule with 
comment period (76 FR 67895 through 67900). As a result of this 
proposed addition, each of the four domains will include the following 
number of quality measures (See Table 44 for details.):
     Patient/Caregiver Experience of Care--8 measures.
     Care Coordination/Patient Safety--10 measures.
     Preventive Health--9 measures.
     At Risk Population--7 measures (including 6 individual 
measures and a 2-component diabetes composite measure).
    Table 44 provides a summary of the number of measures by domain and 
the total points and domain weights that would be used for scoring 
purposes with the proposed Statin Therapy measure in the Preventive 
Health domain. Under our proposal, the total possible points for the 
Preventive Health domain would increase from 16 points to 18 points. 
Otherwise, the current methodology for calculating an ACO's overall 
quality performance score would continue to apply. We also solicited 
comment on whether the proposed Statin Therapy measure, with multiple 
denominators, should be scored at more than 2 points if commenters 
believe this measure should be treated as multiple measures within the 
Preventive Health domain instead of a single measure. For instance, the 
measure could be scored as 3 points, 1 point for each of the three 
denominators, due to the clinical importance of prevention and 
treatment of cardiovascular disease and the complexity of the measure.

      Table 44--Number of Measures and Total Points for Each Domain Within the Quality Performance Standard
----------------------------------------------------------------------------------------------------------------
                                             Number of                                     Total
                  Domain                     individual    Total measures for scoring     possible      Domain
                                              measures              purposes               points       weight
----------------------------------------------------------------------------------------------------------------
Patient/Caregiver Experience..............            8  8 individual survey module              16          25%
                                                          measures.
Care Coordination/Patient Safety..........           10  10 measures. Note that the              22          25%
                                                          EHR measure is double-
                                                          weighted (4 points).
Preventive Health.........................            9  9 measures...................           18          25%
At-Risk Population........................            7  6 individual measures, plus a           12          25%
                                                          2-component diabetes
                                                          composite measure, scored as
                                                          one..
                                           ---------------------------------------------------------------------
    Total in all Domains..................           34  33...........................           68         100%
----------------------------------------------------------------------------------------------------------------

    Comment: Most comments we received supported the addition of the 
Statin Therapy measure to the Preventative Health domain, but some 
stakeholders recommended changes to the denominators or suggested 
expanding treatments beyond statins to include other effective 
treatments. An example of a suggested change to the measure that we 
received is a recommendation to modify the denominators to report the 
percentage of the high risk population that is both on a statin and has 
achieved an LDL < 100. In addition, numerous commenters urged CMS to 
seek endorsement of the Statin Therapy measure from the National 
Quality Forum prior to implementation in the Shared Savings Program. 
Many commenters supported increasing the beneficiary oversample for 
reporting the measure, but did not think it would resolve the issue of 
insufficient beneficiaries meeting the multiple denominators and did 
not provide alternative suggestions. Most commenters supported scoring 
the measure as a single measure and retaining the measure as pay-for-
reporting for the entire agreement period due to concerns with the 
measure specifications and lack of NQF endorsement. However, some

[[Page 71266]]

commenters agreed with our proposal and recommended the measure 
transition to pay-for-performance after being pay-for-reporting for 2 
years.
    We also received many comments opposing the addition of the Statin 
Therapy measure, citing concerns about specifications that are not 
publicly available and about adding a process measure that has not been 
tested and still does not conform to the four major statin therapy 
benefit categories from the 2013 ACC/AHA clinical guidelines. 
Commenters suggested CMS move toward replacing process measures with 
health outcome and patient-reported outcome measures.
    Response: After reviewing the comments, we are finalizing our 
proposal for adding the Statin Therapy quality measure to the quality 
measure set for the Shared Savings Program. As is our standard 
practice, we intend to make specifications for this measure available 
prior to the performance year in which it is applicable. We therefore 
anticipate the final specifications for the Statin Therapy measure will 
be made public prior to the 2016 performance year. In response to the 
commenters who expressed concern that this measure requires further 
testing and may not cover all components of the current clinical 
guidelines, we note that CMS requires that all measures included in the 
program undergo feasibility, validity, and reliability testing. CMS 
tested the measure to assess the technical feasibility of the measure, 
as well as the extent to which measure scores are valid and reliable. 
In addition, the measure underwent qualitative testing activities 
across multiple testing sites to assess the feasibility, face validity 
and usability of the measure. The testing was conducted in accordance 
with the processes and principles outlined in CMS's A Blueprint for the 
Measures Management System (https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/MeasuresManagementSystemBlueprint.html). This measure also reflects 
CMS's effort to adhere to current clinical guidelines. The measure 
incorporates three of the four components of the 2013 ACC/AHA clinical 
guidelines, and thus, this initial implementation of the measure 
provides an opportunity to fill a key clinical gap in the program. 
Based on feedback and guidance from the technical expert panel and 
measure owner, this measure is the most advantageous and analytically 
feasible way to address the clinical guidelines. Although, we believe 
the measure conforms to current guidelines, we understand the ACC is 
convening stakeholders to further discuss and review the guidelines. 
CMS will continue to monitor and review updates to guidelines and take 
these into consideration in the future. We appreciate comments 
suggesting the use of an NQF-endorsed measure. However, there is no 
similar, feasible, and practical measure that has been endorsed by the 
NQF and submitted to the Measure Applications Partnership. While some 
commenters suggested expanding the measure to other effective 
treatments, current clinical guidelines indicate statin therapy is the 
appropriate standard of care. We believe that requiring ACOs to report 
on the Statin Therapy measure is important to encourage focus on 
important preventive care and effective treatment for a high prevalence 
condition. Moreover, inclusion of this measure, as outlined previously, 
will enhance alignment with PQRS and the Million Hearts [supreg] 
Initiative, and focus on important preventive care and effective 
treatments for high prevalence conditions.
    We are finalizing our proposal of adding the Statin Therapy measure 
as a single 3-part measure scored as 2 points with an oversample of 750 
beneficiaries. We are increasing the oversample from 616 to 750 
beneficiaries for this measure, but the consecutive reporting 
requirement for measures reported through the CMS web interface will 
remain at 248 beneficiaries. Although we proposed transitioning the 
measure to pay-for-performance in the third year of the agreement 
period, we are finalizing the measure as pay-for-reporting for all 
reporting years because a majority of commenters supported finalizing 
the measure as pay-for-reporting only and because ACC and other experts 
are continuing to discuss non-statin therapy and reducing ASCVD risk. 
These discussions may, in turn, cause modifications in the measure 
specifications. For these reasons, we believe 2 years is too short a 
timeline to transition to pay for performance in accordance with our 
current rules and therefore will finalize this measure as pay for 
reporting for all three years. By finalizing the measure as pay-for-
reporting in all agreement years we hope to provide ACOs and their ACO 
participants and ACO providers/suppliers with an opportunity to gain 
experience and become familiar with the ACC/AHA clinical guidance and 
multiple denominators of the measure. However, we agree with commenters 
that stated support for measures of statin therapy and the importance 
of moving to pay for performance. We therefore intend to revisit this 
measure in future rulemaking to propose a timeline for phasing in pay 
for performance. As a result of adding this measure, the total points 
possible in the Preventive Health domain will increase from 16 points 
to 18 points and the total measures in the Shared Savings Program 
measure set reported by ACOs will increase from 33 measures to 34 
measures.

[[Page 71267]]

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[[Page 71268]]


[GRAPHIC] [TIFF OMITTED] TR16NO15.142


[[Page 71269]]


c. Policy for Measures No Longer Aligning With Clinical Guidelines, 
High Quality Care or Outdated Measure May Cause Patient Harm
    We have encountered circumstances where changes in clinical 
guidelines result in quality measures within the Shared Savings Program 
quality measure set no longer aligning with best clinical practice. For 
instance, in the CY 2015 PFS final rule with comment period we retired 
measures that were no longer consistent with updated clinical 
guidelines for cholesterol targets, but we were unable to finalize 
retirement of the measures for the 2014 reporting year due to the 
timing of the guideline updates and rulemaking cycle. We issued an 
update in the 2014 Shared Savings Program benchmark guidance document 
that maintained these measures as pay-for-reporting for the 2014 
reporting year due to the measures not aligning with updated clinical 
evidence.
    However, given the frequency of changes that occur in scientific 
evidence and clinical practice, in the CY 2016 PFS proposed rule (80 FR 
41889) we proposed to adopt a general policy under which we would 
maintain measures as pay-for-reporting, or revert pay-for-performance 
measures to pay-for-reporting measures, if the measure owner determines 
the measure no longer meets best clinical practices due to clinical 
guideline updates or when clinical evidence suggests that continued 
measure compliance and collection of the data may result in harm to 
patients. This flexibility will enable us to respond more quickly to 
clinical guideline updates that affect measures without waiting until a 
future rulemaking cycle to retire a measure or revert to pay for 
reporting. In the proposed rule, we explained that we expected to 
continue to retire measures through the annual PFS final rule with 
comment period as clinical guidelines change; however, the timing of 
clinical guideline updates may not always correspond with the 
rulemaking cycle. Under this proposal, if a guideline update is 
published during a reporting year and the measure owner determines the 
measure specifications do not align with the updated clinical practice, 
we would have the authority to maintain a measure as pay for reporting 
or revert a pay-for-performance measure to pay for reporting and 
finalize changes in the subsequent PFS final rule with comment period. 
Therefore, we proposed to add a new provision at Sec.  425.502(a)(5) to 
reserve the right to maintain a measure as pay for reporting, or revert 
a pay-for-performance measure to pay for reporting, if a measure owner 
determines the measure no longer meets best clinical practices due to 
clinical guideline updates or clinical evidence suggests that continued 
application of the measure may result in harm to patients. The measure 
owner will inform CMS if a measure's specification does not align with 
updated guidelines or if continued application of the measure may 
result in patient harm. We would then implement any necessary change to 
the measure in the next PFS rulemaking cycle by either retiring the 
measure or maintaining it as pay for reporting. We solicited comment on 
this proposal and whether there may be additional criteria we should 
consider in deciding when it may be appropriate to maintain a measure 
as pay-for-reporting or revert from pay-for-performance back to pay-
for-reporting.
    Comment: Comments supported the proposed policy not to assess ACO 
performance on measures that no longer align with clinical guidelines 
or may cause patient harm; however, many commenters suggested the most 
appropriate method to handle such measures is immediate suspension and 
further evaluation of the measure by stakeholders or NQF rather than 
maintaining the measure as pay-for-reporting.
    Response: We are finalizing our proposal to maintain measures as 
pay-for-reporting, or revert pay-for-performance measures to pay-for-
reporting measures, if the measure owner determines the measure no 
longer meets best clinical practice due to clinical guideline changes 
or clinical evidence suggesting that the continued collection of the 
data may result in harm to patients. We believe that maintaining or 
reverting a measure to pay-for-reporting will ensure ACOs will not be 
scored on their performance on the measure while CMS and the measure 
steward assess the measure specifications. CMS may propose to retire 
such a measure in the next rulemaking cycle, which will offer the 
public an opportunity to comment and will put ACOs on sufficient notice 
about the retirement of the measure. We appreciate the comments 
suggesting immediate suspension and will explore this option further 
and may consider proposing such an approach in the future.
d. Request for Comment Related to Use of Health Information Technology
    In the November 2011 final rule, we included a measure related to 
the use of health information technology under the Care Coordination/
Patient Safety domain: The percent of PCPs within an ACO who 
successfully qualify for an EHR Incentive Program incentive (76 FR 
67878). In finalizing this measure, we included eligible professionals 
that qualified for payments to adopt, implement, or upgrade EHR 
technology, in addition to those receiving a payment for meeting 
Meaningful Use Requirements. We selected this measure as opposed to 
other proposed measures to focus on EHR adoption among the primary care 
physicians within an ACO. Finally, we chose to focus on this measure 
because it represented a structural measure of EHR program 
participation that is not duplicative of measures within the EHR 
Incentive program for which providers may already qualify for incentive 
payments or face penalties. Although this was the only measure we 
finalized related to use of health information technology, we chose to 
double weight this measure for scoring purposes to signal the 
importance of health information technology for ACOs (76 FR 67895).
    In the CY 2015 PFS final rule with comment period, we finalized a 
proposal to change the name and specification of this measure to 
``Percent of PCPs who Successfully Meet Meaningful Use Requirements'' 
to reflect the transition from incentive payments to downward payment 
adjustments in 2015 (79 FR 67912). We believe this name will more 
accurately depict successful use and adoption of EHR technology. In 
addition, we also updated the measure specifications to include 
providers who met meaningful use requirements within the past 2 years 
to account for the changes in meaningful use requirements and to 
support the progression of HIT adoption and use.
    We continue to believe that measures that encourage the effective 
adoption and use of health information technology among participants in 
accountable care initiatives are an important way to signal the 
importance of technology infrastructure in supporting successful ACOs, 
especially as they mature and assume additional risk. Since the initial 
EHR quality measure was finalized in 2011, the EHR Incentive Program 
and Meaningful Use requirements have shifted from an initial focus on 
technology adoption and data capture to interoperable exchange of data 
across systems and the use of more advanced health IT functions to 
support care coordination and quality improvement. In October 2015, 
final rules were issued for ``Stage 3'' of the EHR Incentive program 
(80 FR 62761), as well as the 2015 Edition of ONC certification 
criteria (80 FR 62601). Together, these rules aim to support

[[Page 71270]]

providers' ability to exchange a common clinical dataset across the 
continuum of care. In addition, ONC has released a document entitled 
``Connecting Health and Care for the Nation: A Shared Nationwide 
Interoperability Roadmap (available at https://www.healthit.gov/sites/default/files/hie-interoperability/nationwide-interoperability-roadmap-final-version-1.0.pdf) which focuses on actions that will enable a 
majority of individuals and providers across the care continuum to 
send, receive, find and use a common set of electronic clinical 
information at the nationwide level by the end of 2017.
    We believe that the widespread inclusion of these capabilities 
within health IT systems, and their adoption and effective use by 
providers, will greatly enhance ACOs' ability to coordinate care for 
beneficiaries with practitioners both within and outside their ACO and 
more effectively manage the total cost of care for attributed patients. 
Although we did not propose any changes to the current measure 
``Percent of PCPs who Successfully Meet Meaningful Use Requirements'' 
(ACO-11), we solicited comments on how this measure might evolve in the 
future to ensure we are incentivizing and rewarding providers for 
continuing to adopt and use more advanced health IT functionality as 
described above, and broadening the set of providers across the care 
continuum that have adopted these tools. We welcomed comments on the 
following questions:
     Although the current measure focuses only on primary care 
physicians, should this measure be expanded in the future to include 
all eligible professionals, including specialists?
     How could the current measure be updated to reward 
providers who have achieved higher levels of health IT adoption?
     Should we substitute or add another measure that would 
focus specifically on the use of health information technology, rather 
than meeting overall Meaningful Use requirements, for instance, the 
transitions of care measure required for the EHR Incentives Program?
     What other measures of IT-enabled processes would be most 
relevant to participants within ACOs? How could we seek to minimize the 
administrative burden on providers in collecting these measures?
    We appreciate the numerous thoughtful comments on the questions we 
posed regarding the current measure ``Percent of PCPs who Successfully 
Meet Meaningful Use Requirements'' (ACO-11) and its evolution as a part 
of the Shared Savings Program. We will use the feedback as we determine 
how the measure could be updated and expanded to further incentivize 
and reward providers for using and adopting more advanced health IT. We 
would make any modifications necessary to permit the evolution of the 
measure through future rulemaking.
e. Conforming Changes To Align With PQRS
    Under the Shared Savings Program rules at Sec.  425.504, ACOs, on 
behalf of their ACO providers/suppliers who are eligible professionals, 
must submit quality measures using a CMS web interface (currently the 
CMS Group Practice Reporting Option Web Interface) to satisfactorily 
report on behalf of their eligible professionals for purposes of the 
PQRS payment adjustment under the Shared Savings Program. Under Sec.  
425.118(a)(4), all Medicare enrolled individuals and entities that have 
reassigned their right to receive Medicare payment to the TIN of an ACO 
participant must be included on the ACO provider/supplier list and must 
agree to participate in the ACO and comply with the requirements of the 
Shared Savings Program, including the quality reporting requirements. 
Thus, each eligible professional that bills under the TIN of an ACO 
participant must be included on the ACO provider/supplier list in 
accordance with the requirements in Sec.  425.118.
    The methodology for applying the PQRS adjustment to group practices 
takes into account the services billed by all eligible professionals 
through the TIN of the group practice, however, the references to ``ACO 
providers/suppliers who are eligible professionals'' in Sec.  425.504 
indicate that the ACO provider/supplier list should be used to 
determine the eligible professionals. Our intent and current practice 
is to treat the ACO and its ACO participants the same as any other 
physician group electing to report for purposes of PQRS through the 
GPRO Web Interface. We therefore have determined that it is necessary 
to modify the language in Sec.  425.504 for clarity and to bring it 
into alignment with the methodology used to determine the applicability 
of the payment adjustment under the PQRS GPRO methodology so that it is 
consistently applied to eligible professionals billing through an ACO 
participant TIN. We proposed in the CY 2016 PFS proposed rule (80 FR 
41890) to revise Sec.  425.504(a) to replace the phrase ``ACO 
providers/suppliers who are eligible professionals'' and ``ACO 
providers/suppliers that are eligible professionals'' with the phrase 
``eligible professionals who bill under the TIN of an ACO participant'' 
along with conforming changes anywhere the term ACO providers/suppliers 
appears in Sec.  425.504. We indicated that we believe these changes 
are necessary to clarify that the requirement that the ACO report on 
behalf of these eligible professionals applies in a way that is 
consistent with the PQRS GPRO policies and also addresses mid-year 
updates to and deletions from the ACO provider/supplier list.
    Comment: We received few comments on this proposal, but all 
comments supported the proposed changes because the revisions would 
clarify the reporting requirement and align the policy under the Shared 
Savings Program with PQRS.
    Response: We appreciate the comments in support of our proposal. We 
agree that the proposed revisions to Sec.  425.504(a) to replace the 
phrase ``ACO providers/suppliers who are eligible professionals'' and 
``ACO providers/suppliers that are eligible professionals'' with the 
phrase ``eligible professionals who bill under the TIN of an ACO 
participant,'' along with conforming changes anywhere the term ACO 
providers/suppliers appears in Sec.  425.504, will clarify the 
reporting requirement and align the Shared Savings Program policy with 
PQRS. As a result, we are finalizing our proposed revisions to Sec.  
425.504.
2. Assignment of Beneficiaries to ACOs
    Section 1899(c) of the Act requires the Secretary to ``determine an 
appropriate method to assign Medicare fee-for-service beneficiaries to 
an ACO based on their utilization of primary care services provided 
under this title by an ACO professional described in paragraph 
(h)(1)(A).''
    As we have explained in detail elsewhere (79 FR 72792), we 
established the current list of codes that constitute primary care 
services under the Shared Savings Program at Sec.  425.20 because we 
believed the listed codes represented a reasonable approximation of the 
kinds of services that are described by the statutory language which 
refers to assignment of ``Medicare fee-for-service beneficiaries to an 
ACO based on their utilization of primary care services'' furnished by 
physicians. We proposed the following revisions to the assignment of 
beneficiaries to ACOs under the Shared Savings Program.

[[Page 71271]]

a. Assignment of Beneficiaries Based on Certain Evaluation and 
Management Services in Skilled Nursing Facilities (SNFs)
    As discussed in detail in the November 2014 proposed rule for the 
Shared Savings Program (79 FR 72792 through 72793), we welcomed comment 
from stakeholders on the implications of retaining certain E/M codes 
used for physician services furnished in SNFs and other nursing 
facility settings (CPT codes 99304 through 99318) in the definition of 
primary care services. As we noted in the November 2014 proposed rule, 
in some cases, hospitalists that perform E/M services in SNFs have 
requested that these codes be excluded from the definition of primary 
care services so that their ACO participant TIN need not be exclusive 
to only one ACO based on the exclusivity policy established in the 
November 2011 final rule (76 FR 67810 through 67811). The requirement 
under Sec.  425.306(b) that an ACO participant TIN be exclusive to a 
single ACO applies when the ACO participant TIN submits claims for 
primary care services that are considered in the assignment process. 
However, ACO participant TINs upon which beneficiary assignment is not 
dependent (that is, ACO participant TINs that do not submit claims for 
primary care services that are considered in the assignment process) 
are not required to be exclusive to a single ACO.
    In response to the discussion in the Shared Savings Program 
proposed rule of our policy of including the codes for SNF visits, CPT 
codes 99304 through 99318, in the definition of primary care services, 
some commenters objected to inclusion of SNF visit codes, believing a 
SNF is more of an extension of the inpatient setting rather than a 
component of the community based primary care setting. As a result, 
these commenters believe that ACOs are often inappropriately assigned 
patients who have had long SNF stays but would not otherwise be aligned 
to the ACO and with whom the ACO has no clinical contact after their 
SNF stay. Some commenters draw a distinction between such services 
provided in two different places of service, POS 31 (SNF) and POS 32 
(NF). Although the same CPT visit codes are used to describe these 
services in SNFs (POS 31) and NFs (POS 32), the patient population is 
arguably quite different. These commenters suggested excluding SNF 
visit codes furnished in POS 31 to potentially relieve physicians 
practicing exclusively in skilled nursing facilities from the 
requirement that ACO professionals must be exclusive to a single ACO if 
their services are considered in assignment. Patients in SNFs (POS 31) 
are shorter stay patients who are receiving continued acute medical 
care and rehabilitative services. Although their care may be 
coordinated during their time in the SNF, they are then transitioned 
back in the community. Patients in a SNF (POS 31) require more frequent 
practitioner visits-often from 1 to 3 times a week. In contrast, 
patients in NFs (POS 32) are almost always permanent residents and 
generally receive their primary care services in the facility for the 
duration of their life. Patients in the NF (POS 32) are usually seen 
every 30 to 60 days unless medical necessity dictates otherwise.
    We agree that it would be feasible to use POS 31 to identify claims 
for services furnished in a SNF. Therefore, in the CY 2016 PFS proposed 
rule we proposed to amend our definition of primary care services at 
Sec.  425.20, for purposes of the Shared Savings Program, to exclude 
services billed under CPT codes 99304 through 99318 when the claim 
includes the POS 31 modifier. We recognize that SNF patients are 
shorter stay patients who are generally receiving continued acute 
medical care and rehabilitative services. Although their care may be 
coordinated during their time in the SNF, they are then transitioned 
back in the community to the primary care professionals who are 
typically responsible for providing care to meet their true primary 
needs. We indicated in the proposal that if we finalized this proposal, 
we anticipated applying this revised definition of primary care 
services for purposes of determining ACO eligibility during the 
application cycle for the 2017 performance year, which occurs during 
2016, and the revision would be then be applicable for all ACOs 
starting with the 2017 performance year. This approach would align the 
assignment algorithms for both new ACOs entering the program and 
existing ACOs ensuring that beneficiaries are being assigned to the 
most appropriate ACO and that assigned beneficiary populations are 
determined using consistent assignment algorithms for all ACOs, as well 
as aligning our program operations with the application cycle. We 
proposed to make a conforming change to the definition of primary care 
services in paragraph (2) by indicating that the current definition 
will be in use for the 2016 performance year and to add a new 
definition of primary care services in paragraph (4), which excludes 
SNFs from the definition of primary care services effective starting 
with the 2017 performance year. We believe that excluding services 
furnished in SNFs from the definition of primary care services will 
complement our goal to assign beneficiaries to an ACO based on their 
utilization of primary care services. Further, based on preliminary 
analysis, we do not expect removal of these claims from the assignment 
process would result in a significant reduction in the number of 
beneficiaries assigned to ACOs, although we recognize that assignment 
to some ACOs may be more affected than others, depending on the 
practice patterns of their ACO professionals. ACO participant TINs that 
include only ACO professionals that furnish services exclusively in 
SNFs would not be required to be exclusive to a single ACO. We also 
note, however, that an ACO participant TIN that includes both ACO 
professionals that furnish services exclusively in SNFs as well as 
other ACO professionals that furnish primary care services in non-SNF 
settings would continue to be required to be exclusive to a single ACO 
since such an ACO participant TIN would be submitting claims for 
primary care services that would continue to be used for beneficiary 
assignment.
    The following is a summary of the comments we received regarding 
these proposals:
    Comment: Nearly all commenters that submitted comments supported 
the proposal to exclude services billed under CPT codes 99304 through 
99318 when the claim includes the POS 31 modifier. These commenters 
agreed that it would increase the accuracy of the beneficiary 
assignment methodology. Although beneficiaries' care may be coordinated 
during their time in a SNF, they are then transitioned back in the 
community to the primary care professionals who are typically 
responsible for providing care to meet their true primary care needs. 
Hospitalists and other physicians providing services in SNFs also 
indicated their support for the proposal, agreeing that in some 
circumstances it could relieve them from the requirement that they must 
be exclusive to a single ACO if their services are considered in 
assignment. In addition, a commenter opposed the proposal, believing 
that the proposal fails to recognize the importance in rural areas of 
SNFs as a vital site of primary care services. This commenter reported 
that SNF residents in rural areas often have longer stays for chronic 
conditions requiring intensive maintenance and coordination efforts. As 
a result, the commenter believes the

[[Page 71272]]

proposal would deprive ACO attribution and benefits to a significant 
portion of the rural ``Medicaid'' population and those in most need of 
such patient-centered service delivery. Another commenter questioned 
the validity of excluding SNF visits from the beneficiary assignment 
process while including any cost savings generated by ACOs through 
collaborative affiliation with SNFs.
    Response: We recognize that SNF patients are shorter stay patients 
who are generally receiving continued acute medical care and 
rehabilitative services. While their care may be coordinated during 
their time in the SNF, they are then transitioned back in the community 
to the primary care professionals who are typically responsible for 
providing care to meet their true primary care needs. Further, based on 
our preliminary analysis and input from commenters, we do not believe 
removal of these claims will result in a significant reduction of 
assigned beneficiaries from an ACO, although we recognize that 
assignment to some ACOs may be more affected than others, depending on 
the practice patterns of their ACO provider/suppliers.
    We disagree with the comment that this approach would deprive ACO 
attribution and benefits to a significant portion of the rural Medicaid 
population and those in most need of such patient-centered service 
delivery. While residing in a SNF, patients are primarily receiving 
continued acute medical care and rehabilitative services. Further, 
assignment under the Shared Savings Program is only available to 
Medicare beneficiaries, and the assignment methodology includes primary 
care services furnished in RHCs. We believe that it is more appropriate 
for such patients to be assigned to ACOs based on the primary care 
professionals in the community (including NFs) who are typically 
responsible for providing care to meet their true primary care needs. 
We also disagree with the commenter who questioned the validity of 
excluding the SNF visits from the beneficiary assignment process while 
including the cost savings generated by an ACO through collaborative 
affiliation with SNFs. We believe that including such expenditures as 
part of determining an ACO's shared savings or losses provides an 
appropriate incentive for ACOs to coordinate and manage a patient's 
overall care. We also note this is consistent with the statutory 
requirements in section 1899(c) of the Act, which requires that 
beneficiaries be assigned to ACOs based on their utilization of primary 
care services, and requires that ACOs be accountable for the total cost 
of the beneficiary's care (that is, both part A and B expenditures).
    After considering the comments, we are finalizing the proposal to 
amend paragraph (2) under Sec.  425.20 to exclude from our definition 
of primary care services claims billed under CPT codes 99304 through 
99318 when the claim includes the POS code 31 modifier. We believe that 
excluding these services furnished in SNFs from the definition of 
primary care services will complement our goal of assigning 
beneficiaries to an ACO based on their utilization of primary care 
services. We are also finalizing our proposal to make a conforming 
change to the definition of primary care services by indicating that 
the current definition will be in use for the 2016 performance year and 
to add a new definition of primary care services, which excludes 
services furnished in SNFs from the definition of primary care services 
effective starting with the 2017 performance year. To conform to the 
precedent set by the June 2015 Shared Savings Program final rule (80 FR 
32758), we will adjust all benchmarks at the start of the first 
performance year in which the new assignment rules are applied so that 
the benchmark for an ACO reflects the use of the same assignment rules 
as would apply in the performance year.
b. Assignment of Beneficiaries to ACOs that Include ETA Hospitals
    We have developed special operational instructions and processes 
(79 FR 72801 through 72802) that enable us to include primary care 
services performed by physicians at ETA hospitals in the assignment of 
beneficiaries to ACOs under Sec.  425.402. ETA hospitals are hospitals 
that, under section 1861(b)(7) of the Act and Sec.  415.160, have 
voluntarily elected to receive payment on a reasonable cost basis for 
the direct medical and surgical services of their physicians in lieu of 
Medicare PFS payments that might otherwise be made for these services. 
We use institutional claims submitted by ETA hospitals in the 
assignment process under the Shared Savings Program because ETA 
hospitals are paid for physician professional services on a reasonable 
cost basis through their cost reports and no other claim is submitted 
for such services. However, ETA hospitals bill us for their separate 
facility services when physicians and other practitioners provide 
services in the ETA hospital and the institutional claims submitted by 
ETA hospitals include the HCPCS code for the services provided. To 
determine the rendering physician for ETA institutional claims, we use 
the NPI listed in the ``other provider'' NPI field on the institutional 
claim. Then we use PECOS to obtain the CMS specialty for the NPI listed 
on the ETA institutional claim.
    These institutional claims do not include allowed charges, which 
are necessary to determine where a beneficiary received the plurality 
of primary care services as part of the assignment process. 
Accordingly, we use the amount that would otherwise be payable under 
the PFS for the applicable HCPCS code, in the applicable geographic 
area as a proxy for the allowed charges for the service.
    The definition of primary care services at Sec.  425.20 includes 
CPT codes in the range 99201 through 99205 and 99211 through 99215, and 
certain other codes. For services furnished prior to January 1, 2014, 
we use the HCPCS code included on the institutional claim submitted by 
an ETA hospital to identify whether the primary care service was 
rendered to a beneficiary in the same way as for any other claim. 
However, we implemented a change in coding policy under the Outpatient 
Hospital Prospective Payment System (OPPS) that inadvertently affects 
the assignment of beneficiaries to an ACO when the beneficiary receives 
care at an ETA hospital. Effective for services furnished on or after 
January 1, 2014, outpatient hospitals, including ETA hospitals, were 
instructed to use the single HCPCS code G0463 and to no longer use CPT 
codes in the ranges of 99201 through 99205 and 99211 through 99215. 
(For example, see our Web site at http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM8572.pdf, page 3). In other words, for ETA hospitals, G0463 is a 
replacement code for CPT codes in the ranges of 99201 through 99205 and 
99211 through 99215.
    We continue to believe that it is appropriate to use ETA 
institutional claims for purposes of identifying primary care services 
furnished by physicians in ETA hospitals and to allow these services to 
be included in the stepwise methodology for assigning beneficiaries to 
ACOs. We believe including these claims increases the accuracy of the 
assignment process by helping ensure that beneficiaries are assigned to 
the ACO or other entity that is actually managing the beneficiary's 
care. ETA hospitals are often located in underserved areas and serve as 
providers of primary care for the beneficiaries they serve. Therefore, 
we proposed to consider HCPCS code

[[Page 71273]]

G0463 when submitted by ETA hospitals as a code designated by us as a 
primary care service for purposes of the Shared Savings Program. We 
recently updated our existing operational guidance on this issue so 
that we can continue to consider services furnished in ETA hospitals 
for beneficiary assignment purposes using the new G code until we 
codify a change to our definition of primary care services. This 
approach allows us to continue to accurately assign Medicare FFS 
beneficiaries to ACOs based on their utilization of primary care 
services furnished by ACO professionals, including those ACOs that may 
include ETA hospitals.
    We would note that to promote flexibility for the Shared Savings 
Program and to allow the definition of primary care services used in 
the Shared Savings Program to respond more quickly to HCPCS/CPT coding 
changes made in the annual PFS rulemaking process, we recently adopted 
a policy of making revisions to the definition of primary care service 
codes for the Shared Savings Program through the annual PFS rulemaking 
process, and we amended the definition of primary care services at 
Sec.  425.20 to include additional codes designated by CMS as primary 
care services for purposes of the Shared Savings Program, including new 
HCPCS/CPT codes or revenue codes and any subsequently modified or 
replacement codes. Therefore, we proposed to amend the definition of 
primary care services at Sec.  425.20 by adding HCPCS code G0463 for 
services furnished in an ETA hospital to the definition of primary care 
services that will be applicable for performance year 2016 and 
subsequent performance years.
    We also proposed to revise Sec.  425.402 by adding a new paragraph 
(d) to provide that when considering services furnished by physicians 
in ETA hospitals in the assignment methodology, we would use an 
estimated amount based on the amounts payable under the PFS for similar 
services in the geographic location in which the ETA hospital is 
located as a proxy for the amount of the allowed charges for the 
service. In this case, because G0463 is not payable under the PFS, we 
proposed to use the weighted mean amount payable under the PFS for CPT 
codes in the range 99201 through 99205 and 99211 through 99215 as a 
proxy for the amount of the allowed charges for HCPCS code G0463 when 
submitted by ETA hospitals. The weights needed to impute the weighted 
mean PFS payment rate for HCPCS code G0463 would be derived from the 
relative number of services furnished at the national level for CPT 
codes 99201 through 99205 and 99211 through 99215. This approach is 
consistent with our current practice and guidance and would continue to 
allow for beneficiaries to be attributed to the ACO responsible for 
their care. Additional details regarding computation of the proxy 
amount for G0463 would be provided through sub-regulatory guidance.
    In addition, because we are able to consider claims submitted by 
ETA hospitals as part of the assignment process, we also proposed to 
amend Sec.  425.102(a) to add ETA hospitals to the list of ACO 
participants that are eligible to form an ACO that may apply to 
participate in the Shared Savings Program.
    The following is a summary of the comments we received regarding 
these ETA proposals:
    Comment: We received very few comments on these ETA proposals; all 
these comments supported the proposals.
    Response: We appreciate the support for our proposals. We continue 
to believe that including claims for primary care services furnished in 
ETA hospitals increases the accuracy of the assignment process by 
helping ensure that beneficiaries are assigned to the ACO or other 
entity that is actually managing the beneficiary's care. ETA hospitals 
are often located in underserved areas and serve as providers of 
primary care for the beneficiaries they serve.
    Accordingly, we are finalizing our proposals to codify our current 
practice and guidance regarding the treatment of claims for primary 
care services submitted by ETA hospitals in the assignment process. We 
are amending the definition of primary care services at Sec.  425.20 by 
adding HCPCS code G0463 for services furnished in an ETA hospital to 
the definition of primary care services to codify our current practice 
for performance year 2016 and subsequent performance years. We are 
revising Sec.  425.402 by adding a new paragraph (d) to provide that 
when considering services furnished by physicians in ETA hospitals in 
the assignment methodology, we will use an estimated amount based on 
the amounts payable under the PFS for similar services in the 
geographic location in which the ETA hospital is located as a proxy for 
the amount of the allowed charges for the service. We are also 
finalizing our proposal to amend Sec.  425.102(a) to add ETA hospitals 
to the list of ACO participants that are eligible to form an ACO that 
may apply to participate in the Shared Savings Program. In addition, we 
are also correcting a typographical error in Sec.  425.102(b) by 
revising ``eligible participate'' to read ``eligible to participate.''
3. Technical Correction
    In the 2015 PFS final rule with comment period (79 FR 67931), we 
finalized corrections to a technical error and a typographical error at 
Sec.  425.502(d)(2)(ii) that were not subsequently reflected in the 
regulations text. Specifically, we proposed and finalized a technical 
correction to eliminate the specific reference to paragraph (c) of 
Sec.  425.216. The provision at Sec.  425.216, which addresses the 
actions we may take prior to termination of an ACO from the Shared 
Savings Program, does not include paragraph (c). We also finalized a 
correction to a typographical error in Sec.  425.502(d)(2)(ii) by 
revising ``actions describe'' to read ``actions described.'' In the 
2015 PFS final rule with comment period, we noted that we did not 
receive any objections to correcting the typographical error or the 
other minor technical correction to Sec.  425.502(d)(2)(ii), and stated 
that we intended to finalize them as proposed (79 FR 67931). However, 
we inadvertently neglected to include these corrections in the 
regulations text section of the 2015 PFS final rule. As a result of 
this oversight, the CFR was not updated to reflect our final policies. 
At this time, therefore, we are correcting the oversight by including 
the previously finalized revisions to Sec.  425.502(d)(2)(ii) in this 
final rule as they were finalized in the 2015 PFS final rule with 
comment period.

M. Value-Based Payment Modifier and Physician Feedback Program

1. Overview
    Section 1848(p) of the Act requires that we establish a value-based 
payment modifier (VM) and apply it to specific physicians and groups of 
physicians the Secretary determines appropriate starting January 1, 
2015, and to all physicians and groups of physicians by January 1, 
2017. On or after January 1, 2017, section 1848(p)(7) of the Act 
provides the Secretary discretion to apply the VM to eligible 
professionals (EPs) as defined in section 1848(k)(3)(B) of the Act. 
Section 1848(p)(4)(C) of the Act requires the VM to be budget neutral. 
The VM and Physician Feedback program continue CMS' initiative to 
recognize and reward providers based on the quality and cost of care 
provided to their patients, increase the transparency of health care

[[Page 71274]]

quality information and to assist providers and beneficiaries in 
improving medical decision-making and health care delivery.
2. Governing Principles for VM Implementation
    In the CY 2013 PFS final rule with comment period, we discussed the 
goals of the VM and also established that specific principles should 
govern the implementation of the VM (77 FR 69307). We refer readers to 
that rule for a detailed discussion and list those principles here for 
reference.
     A focus on measurement and alignment. Measures for the VM 
should consistently reflect differences in performance among groups or 
solo practitioners, reflect the diversity of services furnished, and 
should be consistent with the National and CMS Quality Strategies and 
other CMS quality initiatives, including PQRS, the Medicare Shared 
Savings Program (Shared Savings Program), and the Medicare EHR 
Incentive Program.
     A focus on physician and eligible professional choice. 
Physicians and other nonphysician EPs should be able to choose the 
level (individual or group) at which their quality performance will be 
assessed, reflecting EPs' choice over their practice configurations. 
The choice of level should align with the requirements of other 
physician quality reporting programs.
     A focus on shared accountability. The VM can facilitate 
shared accountability by assessing performance at the group level and 
by focusing on the total costs of care, not just the costs of care 
furnished by an individual professional.
     A focus on actionable information. The Quality and 
Resource Use Reports (QRURs) should provide meaningful and actionable 
information to help groups and solo practitioners identify clinical, 
efficiency and effectiveness areas where they are doing well, as well 
as areas in which performance could be improved by providing groups and 
solo practitioners with QRURs on the quality and cost of care they 
furnish to their patients.
     A focus on a gradual implementation. The VM should focus 
initially on identifying high and low performing groups and solo 
practitioners. As we gain more experience with physician measurement 
tools and methodologies, we can broaden the scope of measures assessed, 
refine physician peer groups, create finer payment distinctions, and 
provide greater payment incentives for high performance.
3. Overview of Existing Policies for the Physician VM.
    In the CY 2013 PFS final rule with comment period (77 FR 69310), we 
finalized policies to phase-in the VM by applying it beginning January 
1, 2015, to Medicare PFS payments to physicians in groups of 100 or 
more EPs. A summary of the existing policies that we finalized for the 
CY 2015 VM can be found in the CY 2014 PFS proposed rule (78 FR 43486 
through 43488). Subsequently, in the CY 2014 PFS final rule with 
comment period (78 FR 74765 through 74787), we finalized policies to 
continue the phase-in of the VM by applying it starting January 1, 
2016, to payments under the Medicare PFS for physicians in groups of 10 
or more EPs. Then, in the CY 2015 PFS final rule with comment period 
(79 FR 67931 through 67966), we finalized policies to complete the 
phase-in of the VM by applying it starting January 1, 2017, to payments 
under the Medicare PFS for physicians in groups of 2 or more EPs and to 
physician solo practitioners. We also finalized that beginning in 
January 1, 2018, the VM will apply to nonphysician EPs in groups with 2 
or more EPs and to nonphysician EPs who are solo practitioners.
4. Provisions of This Final Rule With Comment Period
    As a general summary, in the CY 2016 PFS proposed rule (80 FR 41892 
through 41908) we proposed the following VM policies:
     Beginning with the CY 2016 payment adjustment period, a 
TIN's size would be determined based on the lower of the number of EPs 
indicated by the Medicare Provider Enrollment, Chain, and Ownership 
System (PECOS)-generated list or our analysis of the claims data for 
purposes of determining the payment adjustment amount under the VM.
     For the CY 2018 payment adjustment period, to apply the VM 
to nonphysician EPs who are physician assistants (PAs), nurse 
practitioners (NPs), clinical nurse specialists (CNSs), and certified 
registered nurse anesthetists (CRNAs) in groups and those who are solo 
practitioners, and not to other types of professionals who are 
nonphysician EPs.
     For the CY 2018 payment adjustment period, to identify 
TINs as those that consist of nonphysician EPs if either the PECOS-
generated list or our analysis of the claims data shows that the TIN 
consists of nonphysician EPs and no physicians.
     For the CY 2018 payment adjustment period, to not apply 
the VM to groups and solo practitioners if either the PECOS-generated 
list or claims analysis shows that the groups and solo practitioners 
consist only of nonphysician EPs who are not PAs, NPs, CNSs, and CRNAs.
     To continue to apply a two-category approach for the CY 
2018 VM based on participation in the PQRS by groups and solo 
practitioners.
     For the CY 2018 payment adjustment period, to apply the 
quality-tiering methodology to all groups and solo practitioners in 
Category 1. Groups and solo practitioners would be subject to upward, 
neutral, or downward adjustments derived under the quality-tiering 
methodology, with the exception finalized in the CY 2015 PFS final rule 
with comments period (79 FR 67937), that groups consisting only of 
nonphysician EPs and solo practitioners who are nonphysician EPs will 
be held harmless from downward adjustments under the quality-tiering 
methodology in CY 2018.
     Beginning with the CY 2017 payment adjustment period, to 
apply the VM adjustment percentage for groups and solo practitioners 
that participate in two or more ACOs during the applicable performance 
period based on the performance of the ACO with the highest quality 
composite score.
     For the CY 2018 payment adjustment period, to apply the VM 
for groups and solo practitioners that participate in an ACO under the 
Shared Savings Program during the applicable performance period as 
described under Sec.  414.1210(b)(2), regardless of whether any EPs in 
the group or the solo practitioner also participated in an Innovation 
Center model during the performance period.
     For the CY 2018 payment adjustment period, if the ACO does 
not successfully report quality data as required by the Shared Savings 
Program, all groups and solo practitioners participating in the ACO 
will fall in Category 2 for the VM and will be subject to a downward 
payment adjustment.
     Beginning in the CY 2017 payment adjustment period, to 
apply an additional upward payment adjustment of +1.0x to Shared 
Savings ACO Program participant TINs that are classified as ``high 
quality'' under the quality-tiering methodology, if the ACOs in which 
the TINs participated during the performance period have an attributed 
patient population that has an average beneficiary risk score that is 
in the top 25 percent of all beneficiary risk scores nationwide as 
determined under the VM methodology.

[[Page 71275]]

     Beginning with the CY 2017 payment adjustment period, to 
waive application of the VM for groups and solo practitioners, as 
identified by TIN, if at least one EP who billed for PFS items and 
services under the TIN during the applicable performance period for the 
VM participated in the Pioneer ACO Model, CPC Initiative, or other 
similar Innovation Center models during the performance period.
     To set the maximum upward adjustment under the quality-
tiering methodology for the CY 2018 VM to +4.0 times an upward payment 
adjustment factor (to be determined after the performance period has 
ended) for groups with 10 or more EPs; +2.0 times an adjustment factor 
for groups with between 2 to 9 EPs and physician solo practitioners; 
and +2.0 times an adjustment factor for groups and solo practitioners 
that consist of nonphysician EPs who are PAs, NPs, CNSs, and CRNAs.
     To set the amount of payment at risk under the CY 2018 VM 
to 4.0 percent for groups with 10 or more EPs, 2 percent for groups 
with between 2 to 9 EPs and physician solo practitioners, and 2 percent 
for groups and solo practitioners that consist of nonphysician EPs who 
are PAs, NPs, CNSs, and CRNAs.
     To not recalculate the VM upward payment adjustment factor 
after it is made public unless there was a significant error made in 
the calculation of the adjustment factor.
     To use CY 2016 as the performance period for the CY 2018 
VM.
     To align the quality measures and quality reporting 
mechanisms for the CY 2018 VM with those available to groups and 
individuals under the PQRS during the CY 2016 performance period.
     To separately benchmark the PQRS electronic clinical 
quality measures (eCQMs) beginning with the CY 2018 VM.
     To include Consumer Assessment of Healthcare Providers and 
Systems (CAHPS) Surveys in the VM for Shared Savings Program ACOs 
beginning with the CY 2018 VM.
     To apply the VM to groups for which the PQRS program 
removes individual EPs from that program's unsuccessful participants 
list beginning with the CY 2016 VM.
     Beginning with the CY 2017 payment adjustment period, to 
increase the minimum number of episodes for inclusion of the MSPB 
measure in the cost composite to 100 episodes.
     Beginning with the CY 2018 VM, to include hospitalizations 
at Maryland hospitals as an index admission for the MSPB measure for 
the purposes of the VM program.
     Beginning in the CY 2016 payment adjustment period, a 
group or solo practitioner subject to the VM would receive a quality 
composite score that is classified as average under the quality-tiering 
methodology if the group or solo practitioner does not have at least 
one quality measure that meets the minimum number of cases required for 
the measure to be included in the calculation of the quality composite.
     To make technical changes to Sec.  414.1255 and Sec.  
414.1235.
    We also solicited comment on, but made no proposals regarding 
stratifying cost measure benchmarks by beneficiary risk score.
a. Group Size
    The policies to identify groups and solo practitioners that are 
subject to the VM during a specific payment adjustment period are 
described in Sec.  414.1210(c). Our previously-finalized policy is 
that, beginning with the CY 2016 payment adjustment period, the list of 
groups and solo practitioners subject to the VM is based on a query of 
the PECOS that occurs within 10 days of the close of the PQRS group 
registration process during the applicable performance period described 
at Sec.  414.1215. Groups and solo practitioners, respectively, are 
removed from the PECOS-generated list if during the performance period 
for the applicable CY payment adjustment period, based on our analysis 
of claims, the group did not have the required number of EPs that 
submitted claims or the solo practitioner did not submit claims. In the 
CY 2013 PFS final rule with comment period, we stated that for the CY 
2015 payment adjustment period, we will not add groups to the PECOS-
generated list based on the analysis of claims (77 FR 69309 through 
69310). In the CY 2014 PFS final rule with comment period, we finalized 
that we will continue to follow this procedure for the CY 2016 payment 
adjustment period and subsequent adjustment period (78 FR 74767).
    In the CY 2014 PFS final rule with comment period (78 FR 74767 
through 74771), we established different payment adjustment amounts 
under the 2016 VM for (1) groups with between 10 to 99 EPs, and (2) 
groups with 100 or more EPs. Similarly, in the CY 2015 PFS final rule 
with comment period (79 FR 67938 through 67941 and 67951 through 
67954), we established different payment adjustment amounts under the 
2017 VM for: (1) Groups with between 2 to 9 EPs and physician solo 
practitioners; and (2) groups with 10 or more EPs. However, we have not 
addressed how we would handle scenarios where the size of a TIN as 
indicated on the PECOS-generated list is not consistent with the size 
of the TIN based on our analysis of the claims data. Therefore, we 
proposed that, beginning with the CY 2016 payment adjustment period, 
the TIN's size would be determined based on the lower of the number of 
EPs indicated by the PECOS-generated list or by our analysis of the 
claims data for purposes of determining the payment adjustment amount 
under the VM. In the event that our analysis of the claims data 
indicates that a TIN had fewer EPs during the performance period than 
indicated by the PECOS-generated list, and the TIN is still subject to 
the VM based on its size, then we would apply the payment adjustment 
amount under the VM that is applicable to the size of the TIN as 
indicated by our analysis of the claims data. In the event that our 
analysis of the claims data indicates that a TIN had more EPs during 
the performance period than indicated by the PECOS-generated list, then 
we would apply the payment adjustment amount under the VM that is 
applicable to the size of the TIN as indicated by the PECOS-generated 
list.
    For example, for the CY 2016 payment adjustment period, if the 
PECOS list indicates that a TIN had 100 EPs in the CY 2014 performance 
period, but our analysis of claims shows that the TIN had 90 EPs based 
in CY 2014, then we would apply the payment policies to the TIN that 
are applicable to groups with between 10 to 99 EPs, instead of the 
policies applicable to groups with 100 or more EPs. Alternatively, if 
the PECOS list indicates that a TIN had 90 EPs in the CY 2014 
performance period, but our analysis of claims shows that the TIN had 
100 EPs based in CY 2014, then we would apply the payment policies to 
the TIN that are applicable to groups with between 10 to 99 EPs, 
instead of the policies applicable to groups with 100 or more EPs. We 
proposed to update Sec.  414.1210(c) accordingly.
    The following is a summary of the comments we received on these 
proposals.
    Comment: Several commenters supported our proposal to determine a 
TIN's size based on the lower of the number of EPs indicated by the 
PECOS-generated list or by our analysis of the claims data for purposes 
of determining the payment adjustment amount under the VM, recognizing 
that the result would be that the group would be subject to the lower 
amount at risk and also lower possible upward payment adjustment.

[[Page 71276]]

    Response: We appreciate these commenters' support.
    Comment: We received a comment suggesting that we consider 
alternative ways to define ``group'', other than using a single TIN, 
and allow options for groups to define themselves and use both TIN and 
NPI as unique identifiers.
    Response: In the CY 2013 PFS final rule with comment period (77 FR 
69309), we discussed our rationale for identifying a group for purposes 
of the VM by its Medicare-enrolled TIN. We stated that using TINs makes 
it possible for us to take advantage of infrastructure and 
methodologies already developed for PQRS group-level reporting and 
evaluation and affords us flexibility and statistical stability for 
monitoring and evaluating quality and outcomes for beneficiaries 
assigned to the group for quality reporting purposes. As discussed in 
section III.M.4.h. of this final rule with comment period, CY 2018 will 
be the final payment adjustment period under the VM; therefore, we do 
not believe it would be appropriate for us to consider revising how we 
identify groups during the last year of program. We may take these 
comments under consideration as we develop policies for the Merit-based 
Incentive Payment System (MIPS) through future notice and comment 
rulemaking.
    Final Policy: After considering the comments received, we are 
finalizing our proposal that, beginning with the CY 2016 payment 
adjustment period, the TIN's size would be determined based on the 
lower of the number of EPs indicated by the PECOS-generated list or the 
number of EPs indicated by our analysis of the claims data for purposes 
of determining the payment adjustment amount under the VM. We are also 
finalizing the proposed updates to Sec.  414.1210(c) without 
modification.
    In section III.M.4.b. of the proposed rule (80 FR 41895), we 
proposed to apply the VM in the CY 2018 payment adjustment period to 
nonphysician EPs who are PAs, NPs, CNSs, and CRNAs in groups with two 
or more EPs and to those who are solo practitioners. In section 
III.M.4.f. of the proposed rule (80 FR 41901-41903), we proposed to 
apply different payment adjustment amounts under the CY 2018 VM based 
on the composition of a group. Specifically, in that section, we 
proposed that the PAs, NPs, CNSs, and CRNAs in groups that consist of 
nonphysician EPs (that is, groups that do not include any physicians) 
and those who are solo practitioners would be subject to different 
payment adjustment amounts under the CY 2018 VM than would groups 
composed of physicians and nonphysician EPs and physician solo 
practitioners. We proposed to identify TINs that consist of 
nonphysician EPs as those TINs for which either the PECOS-generated 
list or our analysis of the claims data shows that the TIN consists of 
nonphysician EPs and no physicians. We noted that under our proposal 
the VM would only apply to the PAs, NPs, CNSs, and CRNAs who bill under 
these TINs, and not to the other types of nonphysician EPs who may also 
bill under these TINs. We proposed that the VM would not apply to a TIN 
if either the PECOS-generated list or our analysis of the claims data 
shows that the TIN consists of only nonphysician EPs who are not PAs, 
NPs, CNSs, and CRNAs. We provided the following examples to illustrate 
our proposals.
     If the PECOS-generated list shows that a TIN consists of 
physicians and NPs and the claims data show that only NPs billed under 
the TIN, then we would apply the payment adjustments in section 
III.M.4.f. of the proposed rule that are applicable to PAs, NPs, CNSs, 
and CRNAs in TINs that consist of nonphysician EPs.
     If the PECOS-generated list shows that a TIN consists of 
PAs, NPs, CNSs, or CRNAs, and no physicians, and the claims data show 
that the TIN also consists of physicians, then we would still apply the 
payment adjustments applicable to PAs, NPs, CNSs, and CRNAs in TINs 
that consist of nonphysician EPs. This would be consistent with our 
policy to apply the payment adjustments applicable to the lower group 
size when there is a discrepancy in the group size between PECOS and 
claims analysis, in that it would result in the group being subject to 
the lower amount at risk and lower possible upward payment adjustment, 
when there is a difference between the PECOS and claims analyses.
     If the PECOS-generated list shows that a TIN consists of 
physicians and the claims data shows, for example that PAs and 
physicians billed under the TIN then we would apply the payment 
adjustments in section III.M.4.f. of the proposed rule for TINs with 
physicians and nonphysician EPs depending on the size of the TIN.
     If the PECOS-generated list shows, for example, that a TIN 
consists of PAs and the claims data shows that only physical therapists 
billed under the group, then the TIN would not be subject to the VM in 
CY 2018. Conversely, if the PECOS-generated list shows, for example, 
that a TIN consists of physical therapists and the claims data shows 
that only PAs billed under the group, then the TIN would not be subject 
to the VM in CY 2018.
    We welcomed public comment on these proposals. We proposed to 
revise Sec.  414.1210(c) accordingly. The following is a summary of the 
comments we received on these proposals.
    Comment: One commenter supported our proposal to not apply the VM 
in CY 2018 to a TIN if either the PECOS-generated list or our analysis 
of the claims data shows that the TIN consists of only nonphysician EPs 
who are not PAs, NPs, CNSs, and CRNAs, while another commenter 
indicated that the VM should apply to all groups and solo practitioners 
regardless of whether or not the groups and solo practitioners consist 
only of nonphysician EPs.
    Response: In section III.M.4.b. of this final rule with comment 
period, we are finalizing that we will apply the VM in the CY 2018 
payment adjustment period to nonphysician EPs who are PAs, NPs, CNSs, 
and CRNAs in groups with two or more EPs and to those who are solo 
practitioners, and not to other types of nonphysician EPs who bill 
under a group's TIN or who are solo practitioners. Therefore, we do not 
believe it would be consistent with this final policy to apply the VM 
to a TIN if either the PECOS-generated list or our analysis of the 
claims data shows that the TIN consists of only nonphysician EPs who 
are not PAs, NPs, CNSs, and CRNAs. As noted in the proposed rule, this 
would be consistent with our policy to apply the payment adjustments 
applicable to the lower group size when there is a discrepancy in the 
group size between PECOS and claims analysis.
    Final Policy: After considering the comments received, we are 
finalizing our proposal for the CY 2018 payment adjustment period to 
identify TINs that consist of nonphysician EPs as those TINs for which 
either the PECOS-generated list or our analysis of the claims data 
shows that the TIN consists of nonphysician EPs and no physicians. 
Under the policy finalized in section III.M.4.b. of this final rule 
with comment period, the CY 2018 VM will only apply to the PAs, NPs, 
CNSs, and CRNAs who bill under these TINs, and not to the other types 
of nonphysician EPs who may also bill under these TINs. We are also 
finalizing that the VM will not apply to a TIN if either the PECOS-
generated list or our analysis of the claims data shows that the TIN 
consists of only nonphysician EPs who are not PAs, NPs, CNSs, and 
CRNAs. We are also finalizing the proposed revisions to Sec.  
414.1210(c) without modification.

[[Page 71277]]

b. Application of the VM to Nonphysician EPs who are PAs, NPs, CNSs, 
and CRNAs
    Section 1848(p)(7) of the Act provides the Secretary discretion to 
apply the VM on or after January 1, 2017 to EPs as defined in section 
1848(k)(3)(B) of the Act. In the CY 2015 PFS final rule with comment 
period (79 FR 67937), we finalized that we will apply the VM beginning 
in the CY 2018 payment adjustment period to nonphysician EPs in groups 
with two or more EPs and to nonphysician EPs who are solo 
practitioners. We added Sec.  414.1210(a)(4) to reflect this policy. 
Also in that prior rule, we finalized that we will apply the VM 
beginning in CY 2018 to the items and services billed under the PFS by 
all of the physicians and nonphysician EPs, as specified in section 
1848(k)(3)(B) of the Act, that bill under a group's TIN based on the 
TIN's performance during the applicable performance period and that 
during the payment adjustment period, all of the nonphysician EPs who 
bill under a group's TIN will be subject to the same VM that will apply 
to the physicians who bill under that TIN. We finalized the 
modification to the definition of ``group of physicians'' under Sec.  
414.1205 to also include the term ``group'' to reflect these policies. 
Additionally, in the CY 2015 PFS final rule with comment period, we 
finalized that beginning in CY 2018, physicians and nonphysician EPs 
will be subject to the same VM policies established in earlier 
rulemakings and under subpart N. For example, nonphysician EPs will be 
subject to the same amount of payment at risk and quality-tiering 
policies as physicians. We finalized modifications to the regulations 
under subpart N accordingly.
    Subsequent to our having finalized the preceding policies in the CY 
2015 PFS final rule with comment period, the MACRA was enacted on April 
16, 2015. Under section 1848(p)(4)(B)(iii) of the Act, as amended by 
section 101(b)(3) of MACRA, the VM shall not be applied to payments for 
items and services furnished on or after January 1, 2019. Section 
1848(q) of the Act, as added by section 101(c) of MACRA, establishes 
the MIPS that shall apply to payments for items and services furnished 
on or after January 1, 2019. Under section 1848(q)(1)(C)(i)(I) of the 
Act, with regard to payments for items and services furnished in 2019 
and 2020, the MIPS will only apply to:
     A physician (as defined in section 1861(r) of the Act);
     A PA, NP, and CNS (as defined in section 1861(aa)(5) of 
the Act);
     A CRNA (as defined in section 1861(bb)(2) of the Act); and
     A group that includes such professionals.
    Then, under section 1848(q)(1)(C)(i)(II) of the Act, beginning with 
payments for items and services furnished in 2021, the MIPS will apply 
to such other EPs as defined in section 1848(k)(3)(B) of the Act as 
specified by the Secretary. As noted above, section 1848(p)(7) of the 
Act provides the Secretary discretion to apply the VM on or after 
January 1, 2017 to EPs as defined in section 1848(k)(3)(B) of the Act. 
After the enactment of MACRA in April 2015, we believe it would not be 
appropriate to apply the VM in CY 2018 to any nonphysician EP who is 
not a PA, NP, CNS, or CRNA because payment adjustments under the MIPS 
would not apply to them until 2021. Therefore, we proposed (80 FR 
41895) to apply the VM in the CY 2018 payment adjustment period to 
nonphysician EPs who are PAs, NPs, CNSs, and CRNAs in groups with two 
or more EPs and to PAs, NPs, CNSs, and CRNAs who are solo 
practitioners. We proposed to revise Sec.  414.1210(a)(4) to reflect 
this proposed policy. We proposed to define PAs, NPs, and CNSs as 
defined in section 1861(aa)(5) of the Act and to define CRNAs as 
defined in section 1861(bb)(2) of the Act. We proposed to add these 
definitions under Sec.  414.1205.
    Under our proposal, we would apply the VM in CY 2018 to the items 
and services billed under the PFS by all of the PAs, NPs, CNSs, and 
CRNAs who bill under a group's TIN based on the TIN's performance 
during the applicable performance period. We noted that the VM would 
not apply to other types of nonphysician EPs (that is, nonphysician EPs 
who are not PAs, NPs, CNSs, or CRNAs) who may also bill under the TIN.
    As noted above, we finalized in the CY 2015 PFS final rule with 
comment period (79 FR 67937) that beginning in CY 2018, all of the 
nonphysician EPs who bill under a group's TIN will be subject to the 
same VM that will apply to the physicians who bill under that TIN, and 
physicians and nonphysician EPs will be subject to the same VM policies 
established in earlier rulemakings and under subpart N. For example, 
nonphysician EPs who are in groups containing one or more physicians 
will be subject to the same amount of payment at risk and quality-
tiering policies as physicians. We did not propose to revise these 
policies; however, we noted that if a group is composed of physicians 
and nonphysician EPs, only the physicians and the nonphysician EPs who 
are PAs, NPs, CNSs, and CRNAs would be subject to the VM in CY 2018.
    In the CY 2015 PFS final rule with comment period (79 FR 67937), we 
also finalized that we will apply the VM beginning in CY 2018 to groups 
that consist only of nonphysician EPs (for example, groups with only 
NPs or PAs) and to nonphysician EPs who are solo practitioners. 
However, since CY 2018 will be the first year that groups that consist 
only of nonphysician EPs and solo practitioners who are nonphysician 
EPs will be subject to the VM, we finalized a policy to hold these 
groups and solo practitioners harmless from downward adjustments under 
the quality-tiering methodology in CY 2018. We stated that we would add 
regulation text under Sec.  414.1270 to reflect this policy when we 
established the policies for the VM for the CY 2018 payment adjustment 
period in future rulemaking. Accordingly, we proposed (80 FR 41895) to 
add Sec.  414.1270(d) to codify that PAs, NPs, CNSs, and CRNAs in 
groups that consist of nonphysician EPs and PAs, NPs, CNSs, and CRNAs 
who are solo practitioners will be held harmless from downward 
adjustments under the quality-tiering methodology in CY 2018. In 
section III.M.4.f. of this final rule with comment period, we discuss 
the proposed CY 2018 payment adjustment amounts for groups that consist 
of nonphysician EPs and solo practitioners who are nonphysician EPs 
that fall in Category 1 and Category 2 for the CY 2018 VM. As discussed 
above, we proposed to apply the VM in CY 2018 only to nonphysician EPs 
who are PAs, NPs, CNSs, and CRNAs.
    The following is a summary of the comments we received on these 
proposals.
    Comment: Many commenters supported our proposal and agreed that it 
would not be appropriate to apply the VM in CY 2018 to any nonphysician 
EP who is not a PA, NP, CNS, or CRNA. Several commenters noted the 
proposal allows a more coordinated transition from the VM to the MIPS 
in CY 2019 by extending the VM only to the nonphysician EPs who will be 
transitioned into the MIPS directly and ensuring that the remaining 
nonphysician EPs are transitioned to a value-based payment program only 
once (that is, in 2021 under the MIPS).
    Few commenters opposed our proposal and stated that CMS is not 
required by the statute to apply the VM to nonphysician EPs; 
nonphysician practices typically have fewer resources than physician 
practices and struggle to meet reporting requirements; and that 
subjecting the nonphysician EPs to the

[[Page 71278]]

VM for only one year is not a valuable use of their practice time and 
resources since they will need to learn about the MIPS requirements for 
CY 2019. Two commenters urged CMS to exclude all nonphysician EPs from 
the VM in CY 2018.
    Response: We appreciate the comments that supported our proposal to 
apply the VM in the CY 2018 payment adjustment period to nonphysician 
EPs who are PAs, NPs, CNSs, and CRNAs in groups with two or more EPs 
and to PAs, NPs, CNSs, and CRNAs who are solo practitioners. We believe 
that it would be appropriate to apply the VM to PAs, NPs, CNSs, and 
CRNAs in CY 2018, and not to other nonphysician EPs, because PAs, NPs, 
CNSs, and CRNAs are the only nonphysician EPs the MIPS will apply to in 
CY 2019 and CY 2020. With regard to commenters' concerns about 
nonphysician EPs, we note that nonphysician EPs are subject to the 
reporting requirements under the PQRS and must meet the criteria to 
avoid the PQRS payment adjustment in CY 2018, as discussed in section 
III.I. of this final rule with comment period. We are finalizing the 
two-category approach for the CY 2018 VM based on participation in the 
PQRS by groups and solo practitioners (as discussed in section 
III.M.4.c. of this final rule with comment period). We will also hold 
harmless PAs, NPs, CNSs, and CRNAs in groups that consist of 
nonphysician EPs and PAs, NPs, CNSs, and CRNAs who are solo 
practitioners from downward adjustments under the quality-tiering 
methodology in CY 2018 (as discussed in section III.M.4.b. of this 
final rule with comment period). We believe that application of the VM 
to PAs, NPs, CNSs, and CRNAs in CY 2018 would provide them with 
incentives to provide high quality and low cost care similar to the 
incentives offered to physicians under the VM. Consequently, we do not 
agree with the comments that stated that the VM should not apply to 
nonphysician EPs in CY 2018.
    Comment: A few commenters asked for clarification of the impact of 
not applying the CY 2018 VM to nonphysician EPs who are not PAs, NPs, 
CNSs, and CRNAs.
    Response: If the VM were not applied to these nonphysician EPs, 
they would not be subject to any adjustment (upward, downward, or 
neutral) under the VM in CY 2018. However, these nonphysician EPs are 
still subject to the reporting requirements under the PQRS. We 
encourage these EPs to actively participate in the PQRS and become 
familiar with the criteria they must meet to avoid the PQRS payment 
adjustment in CY 2018, as discussed in section III.I. of this final 
rule with comment period. We also encourage these nonphysician EPs to 
review our future rulemaking for the MIPS in anticipation of the 
application of the MIPS to them.
    Comment: One commenter stated that since quality and cost 
benchmarks for NPs must be specific to a NP's specialty, we should 
adopt meaningful specialty designations for NPs.
    Response: The quality and cost benchmarks are based on the national 
mean and are not specialty-specific. Specifically, we finalized in the 
CY 2013 PFS final rule with comment period (77 FR 69322) that the 
benchmark for each quality measure would be the national mean of each 
measure's performance rate during the year prior to the performance 
year and that the benchmark for each cost measure is the national mean 
of each measure's performance rate during the performance year. As 
related to PQRS measures, because we are allowing flexibility on the 
quality measures that groups and solo practitioners can report, we 
believe the most appropriate peer group consists of other groups and 
solo practitioners reporting the same measure regardless of specialty. 
We note that we finalized in the CY 2014 PFS final rule with comment 
period (78 FR 74784) that we will use the specialty adjustment 
methodology to calculate the expected cost for each cost measure, 
beginning with the CY 2016 VM. This methodology takes into account the 
differential costs of specialties in making cost comparisons, and the 
cost measures are also risk adjusted to account for differences in 
patient characteristics not directly related to patient care, but that 
may increase or decrease the costs of care.
    We appreciate the concerns raised by the commenter and encourage 
the commenter to review the procedures for obtaining a CMS specialty 
code, which are available at https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/MedicareProviderSupEnroll/Taxonomy.html. 
As noted above, CY 2018 is the final payment adjustment period for the 
VM. Policies for application of the MIPS to nonphysician EPs in 
subsequent years would be finalized through future notice and comment 
rulemaking.
    Comment. Several commenters supported our policy to hold groups 
that consist of nonphysician EPs and solo practitioners who are 
nonphysician EPs harmless from downward adjustments under the quality-
tiering methodology in CY 2018.
    Response: We appreciate the comments supporting the policy we 
finalized in the CY 2015 PFS final rule with comment period (79 FR 
67937) to hold groups and solo practitioners consisting of nonphysician 
EPs harmless from downward adjustment under the quality-tiering 
methodology in CY 2018. Because we are finalizing that the VM will 
apply in CY 2018 only to those nonphysician EPs who are PAs, NPs, CNSs, 
and CRNAs, we are also finalizing our proposed addition of Sec.  
414.1270(d) to codify that PAs, NPs, CNSs, and CRNAs in groups that 
consist of nonphysician EPs and PAs, NPs, CNSs, and CRNAs who are solo 
practitioners will be held harmless from downward adjustments under the 
quality-tiering methodology in CY 2018.
    In section III.M.4.f. of this final rule with comment period, we 
discuss the final CY 2018 payment adjustment amounts for groups that 
consist of nonphysician EPs and solo practitioners who are nonphysician 
EPs that fall in Category 1 and Category 2 for the CY 2018 VM.
    Final Policy: After considering the comments received, we are 
finalizing our proposal to apply the VM in the CY 2018 payment 
adjustment period to nonphysician EPs who are PAs, NPs, CNSs, and CRNAs 
in groups with two or more EPs and to PAs, NPs, CNSs, and CRNAs who are 
solo practitioners. We are finalizing the proposed revisions to Sec.  
414.1210(a)(4) to reflect this policy without modification. Under this 
policy, we will apply the VM in CY 2018 to the items and services 
billed under the PFS by all of the physicians, PAs, NPs, CNSs, and 
CRNAs who bill under a group's TIN based on the TIN's performance 
during the applicable performance period, which we are finalizing as CY 
2016 in section III.M.4.h. of this final rule with comment period. The 
CY 2018 VM will not apply to other types of nonphysician EPs (that is, 
nonphysician EPs who are not PAs, NPs, CNSs, or CRNAs) who may also 
bill under the TIN.
    We finalized in the CY 2015 PFS final rule with comment period (79 
FR 67937) that, beginning in CY 2018, all of the nonphysician EPs who 
bill under a group's TIN will be subject to the same VM that will apply 
to the physicians who bill under that TIN, and physicians and 
nonphysician EPs will be subject to the same VM policies established in 
earlier rulemakings and under subpart N. Because the CY 2018 VM will 
apply only to certain types of nonphysician EPs, all of the PAs, NPs, 
CNSs, and CRNAs who bill under a group's TIN will be subject to the 
same VM adjustment that will apply to the

[[Page 71279]]

physicians who bill under that TIN in CY 2018, and physicians, PAs, 
NPs, CNSs, and CRNAs billing under the same TIN will be subject to the 
same VM policies established in earlier rulemakings and under subpart 
N. For example, PAs, NPs, CNSs, and CRNAs who are in groups containing 
one or more physicians will be subject to the same amount of payment at 
risk and quality-tiering policies as physicians.
    We are also finalizing our proposal to define PAs, NPs, and CNSs as 
defined in section 1861(aa)(5) of the Act and to define CRNAs as 
defined in section 1861(bb)(2) of the Act. We are codifying these 
definitions under Sec.  414.1205 without modification. We are also 
codifying in Sec.  414.1270(d) without modification that PAs, NPs, 
CNSs, and CRNAs in groups that consist of nonphysician EPs and PAs, 
NPs, CNSs, and CRNAs who are solo practitioners will be held harmless 
from downward adjustments under the quality-tiering methodology in CY 
2018.
c. Approach to Setting the VM Adjustment Based on PQRS Participation
    Section 1848(p)(4)(B)(iii)(II) of the Act requires the Secretary to 
apply the VM to items and services furnished under the PFS beginning 
not later than January 1, 2017, for all physicians and groups of 
physicians. Therefore, in the CY 2015 PFS final rule with comment 
period (79 FR 67936), we established that, beginning with the CY 2017 
payment adjustment period, the VM will apply to physicians in groups 
with two or more EPs and to physicians who are solo practitioners based 
on the applicable performance period. In the CY 2015 PFS final rule 
with comment period (79 FR 67938 to 67939), we adopted a two-category 
approach for the CY 2017 VM based on participation in the PQRS by 
groups and solo practitioners. For purposes of the CY 2017 VM, we 
finalized that Category 1 includes those groups that meet the criteria 
for satisfactory reporting of data on PQRS quality measures via the 
GPRO (through use of the web-interface, EHR, or registry reporting 
mechanism) for the CY 2017 PQRS payment adjustment. We finalized that 
Category 1 also includes groups that do not register to participate in 
the PQRS as a group practice participating in the PQRS GPRO in CY 2015 
and that have at least 50 percent of the group's EPs meet the criteria 
for satisfactory reporting of data on PQRS quality measures as 
individuals (through the use of claims, EHR, or registry reporting 
mechanism) for the CY 2017 PQRS payment adjustment, or in lieu of 
satisfactory reporting, satisfactorily participate in a PQRS-qualified 
clinical data registry (QCDR) for the CY 2017 PQRS payment adjustment. 
Lastly, we finalized that Category 1 includes those solo practitioners 
that meet the criteria for satisfactory reporting of data on PQRS 
quality measures as individuals (through the use of claims, registry, 
or EHR reporting mechanism) for the CY 2017 PQRS payment adjustment, or 
in lieu of satisfactory reporting, satisfactorily participate in a PQRS 
QCDR for the CY 2017 PQRS payment adjustment. We finalized that 
Category 2 includes those groups and solo practitioners that are 
subject to the CY 2017 VM and do not fall within Category 1. The CY 
2017 VM payment adjustment amount for groups and solo practitioners in 
Category 2 is -4.0 percent for groups with 10 or more EPs and -2.0 
percent for groups with between 2 to 9 EPs and solo practitioners.
    We proposed (80 FR 41896) to use a similar two-category approach 
for the CY 2018 VM based on participation in the PQRS by groups and 
solo practitioners. However, we note that during the 2014 PQRS 
submission period, we received feedback from groups who experienced 
difficulty reporting through the reporting mechanism they had chosen at 
the time of 2014 PQRS GPRO registration. For example, some groups 
registered for the group EHR reporting mechanism and were subsequently 
informed that their EHR vendor could not support submission of group 
data for the group EHR reporting mechanism. To address these concerns 
and continue to accommodate the various ways in which EPs and groups 
can participate in the PQRS, for purposes of the CY 2018 VM, we 
proposed that Category 1 would include those groups that meet the 
criteria to avoid the PQRS payment adjustment for CY 2018 as a group 
practice participating in the PQRS GPRO, as proposed in Table 21 of the 
proposed rule. We also proposed to include in Category 1 groups that 
have at least 50 percent of the group's EPs meet the criteria to avoid 
the PQRS payment adjustment for CY 2018 as individuals, as shown in 
Table 20 of the proposed rule. We proposed to add corresponding 
regulation text to Sec.  414.1270(d)(1).
    We note that the proposed criteria for groups to be included in 
Category 1 for the CY 2018 VM differ from the criteria we finalized for 
the CY 2017 VM in the CY 2015 PFS final rule with comment period. Under 
the policy for the CY 2017 VM, we would only consider whether at least 
50 percent of a group's EPs met the criteria to avoid the PQRS payment 
adjustment as individuals if the group did not register to participate 
in a PQRS GPRO. In contrast, under our proposal for the CY 2018 VM, in 
determining whether a group would be included in Category 1, we would 
consider whether the 50 percent threshold has been met regardless of 
whether the group registers for a PQRS GPRO. We believe this proposal 
would allow groups that register for a PQRS GPRO but fail as a group to 
meet the criteria to avoid the PQRS payment adjustment an additional 
opportunity for the quality data reported by individual EPs in the 
group to be taken into account for purposes of applying the CY 2018 VM.
    We also proposed to revise the criteria for groups to be included 
in Category 1 for the CY 2017 VM, if it is operationally feasible for 
our systems to utilize data reported through a mechanism other than the 
one through which a group registered to report under PQRS GPRO. At this 
time of the proposed rule, it was unclear whether CMS systems could 
support this type of assessment as soon as the CY 2017 VM, and thus our 
proposal was contingent upon operational feasibility. For the CY 2017 
VM, we proposed that Category 1 would include those groups that meet 
the criteria to avoid the PQRS payment adjustment for CY 2017 as a 
group practice participating in the PQRS GPRO in CY 2015. We also 
proposed to include in Category 1 groups that have at least 50 percent 
of the group's EPs meet the criteria to avoid the PQRS payment 
adjustment for CY 2017 as individuals. We proposed that if 
operationally feasible, we would apply these criteria to identify which 
groups would fall in Category 1 for the CY 2017 VM regardless of 
whether or how the group registered to participate in the PQRS as a 
group practice in CY 2015. We proposed that, if our systems were not 
able to accomplish this, then we would apply our existing policy for 
the CY 2017 VM, as finalized in the CY 2015 PFS final rule with comment 
period (79 FR 67938 through 67939), to consider whether at least 50 
percent of a group's EPs meet the criteria to avoid the PQRS payment 
adjustment for CY 2017 as individuals only in the event that the group 
did not register to report as a group under the PQRS GPRO.
    We proposed to include in Category 1 for the CY 2018 VM those solo 
practitioners that meet the criteria, in Table 20 of the proposed rule, 
to avoid the CY 2018 PQRS payment adjustment as individuals,
    We proposed that Category 2 would include those groups and solo

[[Page 71280]]

practitioners that are subject to the CY 2018 VM and did not fall 
within Category 1. As discussed in section III.M.4.f. of this final 
rule with comment period, we proposed to apply the following VM 
adjustment to payments for groups and solo practitioners that fall in 
Category 2 for the CY 2018 VM: a -4.0 percent VM to physicians, PAs, 
NPs, CNSs, and CRNAs in groups with 10 or more EPs; a -2.0 percent VM 
to physicians, PAs, NPs, CNSs, and CRNAs in groups with between 2 to 9 
EPs and to physician solo practitioners; and a -2.0 percent VM to PAs, 
NPs, CNSs, and CRNAs in groups that consist of nonphysician EPs and 
solo practitioners who are PAs, NPs, CNSs, and CRNAs. As discussed in 
section III.M.4.b. of this final rule with comment period, we proposed 
to apply the VM in CY 2018 to the nonphysician EPs who are PAs, NPs, 
CNSs, and CRNAs.
    We proposed that for a group or solo practitioner that would be 
subject to the CY 2018 VM to be included in Category 1, the criteria 
for satisfactory reporting (or the criteria for satisfactory 
participation, in the case of solo practitioners and the 50 percent 
option described above for groups) would need to be met during the 
reporting periods occurring in CY 2016 for the CY 2018 PQRS payment 
adjustment. In section III.M.4.h. of the proposed rule, we proposed to 
use CY 2016 as the performance period for the VM adjustments that will 
apply during CY 2018. We solicited comment on these proposals.
    The following is a summary of the comments we received on these 
proposals.
    Comment: One commenter stated that despite being based on PQRS 
data, the VM and PQRS programs would continue to have their own sets of 
regulations, payment adjustments, feedback reports, and deadlines, 
which result in administrative complexity and redundancy across federal 
quality programs.
    Response: As we stated in the CY 2014 PFS final rule with comment 
period (78 FR 74767), one of the principles governing our 
implementation of the VM is to align program requirements to the extent 
possible. Thus, our proposals for the CY 2018 payment adjustment period 
for the VM sought to continue to align the VM with the PQRS program 
requirements and reporting mechanisms to ensure individual EPs s and 
groups report data on quality measures that reflect their practice. 
However, the VM and PQRS were created under different statutory 
authorities and thus must have their own regulations and policies.
    As discussed above, under section 101 of the MACRA, CY 2018 will be 
the final year of the separate PQRS and VM payment adjustments, and the 
MIPS will apply to payments for items and services furnished on or 
after January 1, 2019. We believe the creation of the MIPS may help 
alleviate the concerns raised in the comment, and we encourage the 
commenter to review our future rulemaking for the MIPS.
    Comment: Many commenters supported our proposal to continue to use 
a two-category approach for the CY 2018 VM based on participation in 
the PQRS by groups and solo practitioners. Commenters also supported 
our proposals to consider whether the 50 percent threshold has been met 
regardless of whether the group registers for a PQRS GPRO, in 
determining whether a group would be included in Category 1 for the CY 
2017 and CY 2018 VM.
    Response: We appreciate the commenters' support for our proposals.
    Final Policy: We are finalizing all of the policies as proposed. We 
are finalizing the two-category approach for the CY 2018 VM based on 
participation in the PQRS by groups and solo practitioners. For 
purposes of the CY 2018 VM, Category 1 will include those groups that 
meet the criteria to avoid the PQRS payment adjustment for CY 2018 as a 
group practice participating in the PQRS GPRO, as finalized in Table 28 
of this final rule with comment period. We are also finalizing to 
include in Category 1 groups that have at least 50 percent of the 
group's EPs meet the criteria to avoid the PQRS payment adjustment for 
CY 2018 as individuals, as finalized in Table 27 of this final rule 
with comment period. Under our final policies for the CY 2018 VM, in 
determining whether a group will be included in Category 1, we will 
consider whether the 50 percent threshold has been met regardless of 
whether the group registers for a PQRS GPRO. As noted in the proposed 
rule, we believe this policy will allow groups that register for a PQRS 
GPRO but fail as a group to meet the criteria to avoid the PQRS payment 
adjustment an additional opportunity for the quality data reported by 
individual EPs in the group to be taken into account for purposes of 
applying the CY 2018 VM. Please note that if a group registers for a 
PQRS GPRO and meets the criteria to avoid the PQRS payment adjustment 
as a group, then the group-level quality data reported through the GPRO 
reporting mechanism would be taken into account for purposes of 
applying the CY 2018 VM. Lastly, we are finalizing to include in 
Category 1 for the CY 2018 VM those solo practitioners that meet the 
criteria to avoid the CY 2018 PQRS payment adjustment as individuals, 
as finalized in Table 27 of this final rule with comment period. 
Category 2 will include those groups and solo practitioners that are 
subject to the CY 2018 VM and do not fall within Category 1. We are 
finalizing the corresponding regulation text at Sec.  414.1270(d)(1) 
that reflect these policies without modification.
    For a group or solo practitioner subject to the CY 2018 VM to be 
included in Category 1, the criteria for satisfactory reporting (or the 
criteria for satisfactory participation, in the case of solo 
practitioners and the 50 percent option described above for groups) 
must be met during the reporting periods occurring in CY 2016 for the 
CY 2018 PQRS payment adjustment. As finalized in section III.M.4.h. of 
this final rule with comment period, CY 2016 will be the performance 
period for the VM adjustments that will apply during CY 2018. In 
section III.M.4.f. of this final rule with comment period, we discuss 
the CY 2018 payment adjustment amounts for groups and solo 
practitioners that fall in Category 1 and Category 2 for the CY 2018 
VM.
    We are also finalizing our proposal to revise the criteria for 
groups to be included in Category 1 for the CY 2017 VM. We determined 
that it is operationally feasible for our system to utilize data 
reported through a mechanism other than the one through which a group 
registered to report under PQRS GPRO. Therefore, for the CY 2017 VM, we 
are finalizing that Category 1 will include those groups that meet the 
criteria to avoid the PQRS payment adjustment for CY 2017 as a group 
practice participating in the PQRS GPRO in CY 2015. Category 1 will 
also include groups that have at least 50 percent of the group's EPs 
meet the criteria to avoid the PQRS payment adjustment for CY 2017 as 
individuals. Under our final policies for the CY 2017 VM, in 
determining whether a group will be included in Category 1, we will 
consider whether the 50 percent threshold has been met regardless of 
whether the group registered to participate in the PQRS GPRO in CY 
2015. We believe this policy will allow groups that register for a PQRS 
GPRO, but fail as a group to meet the criteria to avoid the PQRS 
payment adjustment an additional opportunity for the quality data 
reported by individual EPs in the group to be taken into account for 
purposes of applying the CY 2017 VM. Please note that if a group 
registers for a PQRS GPRO and meets the criteria to avoid the PQRS 
payment adjustment as a group, then the quality data reported

[[Page 71281]]

by the group would be taken into account for purposes of applying the 
CY 2017 VM. We are revising Sec.  414.1270(c)(1)(i) to reflect this 
change in policy for the CY 2017 VM.
    In the CY 2015 PFS final rule with comment period (79 FR 67939 to 
67941), we finalized that the quality-tiering methodology will apply to 
all groups and solo practitioners in Category 1 for the VM for CY 2017, 
except that groups with between 2 to 9 EPs and solo practitioners would 
be subject only to upward or neutral adjustments derived under the 
quality-tiering methodology, while groups with 10 or more EPs would be 
subject to upward, neutral, or downward adjustments derived under the 
quality-tiering methodology. That is, groups with between 2 to 9 EPs 
and solo practitioners in Category 1 would be held harmless from any 
downward adjustments derived from the quality-tiering methodology for 
the CY 2017 VM.
    As stated earlier in this final rule with comment period, in CY 
2018, the same VM would apply to all of the physicians, PAs, NPs, CNSs, 
and CRNAs who bill under a TIN. The VM would not apply to other types 
of nonphysician EPs who may also bill under the TIN. For the CY 2018 
VM, we proposed to continue to apply the quality-tiering methodology to 
all groups and solo practitioners in Category 1. We proposed that 
groups and solo practitioners would be subject to upward, neutral, or 
downward adjustments derived under the quality-tiering methodology, 
with the exception finalized in the CY 2015 PFS final rule with comment 
period (79 FR 67937), that groups consisting only of nonphysician EPs 
and solo practitioners who are nonphysician EPs will be held harmless 
from downward adjustments under the quality-tiering methodology in CY 
2018. Based on our proposal to apply the CY 2018 VM only to certain 
types of nonphysician EPs, only the PAs, NPs, CNSs, and CRNAs in groups 
consisting of nonphysician EPs and those who are solo practitioners 
will be held harmless from downward adjustments under the quality-
tiering methodology in CY 2018. We proposed to revise Sec.  414.1270 to 
reflect these proposals. We solicited comments on these proposals. In 
section III.M.4.f. of this final rule with comment period, we discuss 
the CY 2018 payment adjustment amounts for groups and solo 
practitioners that fall in Category 1 and Category 2 for the CY 2018 
VM.
    For groups with between 2 to 9 EPs and physician solo 
practitioners, we stated our belief in the proposed rule that it is 
appropriate to begin both the upward and downward payment adjustments 
under the quality-tiering methodology for the CY 2018 VM. As stated in 
the CY 2015 PFS final rule with comment period (79 FR 67935), in 
September 2014, we made available QRURs based on CY 2013 data to all 
groups of physicians and physicians who are solo practitioners. These 
QRURs contain performance information on the quality and cost measures 
used to calculate the quality and cost composites of the VM and show 
how TINs fare under the policies established for the VM for the CY 2015 
payment adjustment period. As discussed in section III.M.5.a. of this 
final rule with comment period, in April 2015, we made available 2014 
Mid-Year QRURs to groups of physicians and physician solo practitioners 
nationwide. The Mid-Year QRURs provide interim information about 
performance on the claims-based quality outcome measures and cost 
measures that are a subset of the measures that will be used to 
calculate the CY 2016 VM and are based on performance from July 1, 2013 
through June 30, 2014. As we stated that we intended to do, in 
September of 2015, we made annual QRURs, based on CY 2014 data, 
available to all groups and solo practitioners. The reports show TINs 
their performance during CY 2014 on all of the quality and cost 
measures that were used to calculate the CY 2016 VM. Thus, we believe 
groups with between 2 to 9 EPs and physician solo practitioners will 
have had adequate data to improve performance on the quality and cost 
measures that will be used to calculate the VM in CY 2018. We note that 
the quality and cost measures in the QRURs that these groups received 
are similar to the measures that will be used to calculate the CY 2018 
VM. In addition, we believe that these groups and solo practitioners 
have had sufficient time to understand how the VM works and how to 
participate in the PQRS. As a result, we expressed our belief that it 
would be appropriate to apply both upward and downward adjustments 
under the quality-tiering methodology to groups with between 2 to 9 EPs 
and physician solo practitioners in CY 2018.
    We stated that we would continue to monitor the VM program and 
continue to examine in the VM Experience Report the characteristics of 
those groups and solo practitioners that would be subject to an upward 
or downward payment adjustment under our quality-tiering methodology to 
determine whether our policies create anomalous effects in ways that do 
not reflect consistent differences in performance among physicians and 
physician groups.
    The following is a summary of the comments we received on these 
proposals.
    Comment: Some commenters supported our proposal to apply the 
quality-tiering methodology to all groups and solo practitioners that 
are in Category 1 for the CY 2018 VM. However, other commenters were 
opposed to the application of the quality-tiering methodology in 
general. Many commenters had concerns about our proposal to apply the 
downward adjustment to groups with between 2 to 9 EPs and physician 
solo practitioners under the quality-tiering methodology in CY 2018 and 
urged CMS to continue to hold these groups and solo practitioners 
harmless from downward adjustments under the quality-tiering 
methodology in CY 2018. Commenters noted methodological concerns (that 
is, potential small sample size, lack of specialist-specific measures, 
and episode-based cost measures); perceived lack of awareness of or 
resources to interpret the QRURs; and need to become familiar with the 
MIPS requirements after only one year of being subject to downward 
adjustments under the quality-tiering methodology under the VM.
    Response: We appreciate the commenters' support for our proposal to 
apply upward and downward adjustments under quality-tiering for groups 
of two to nine EPs consisting of at least one physician and to 
physician solo practitioners. We disagree that we should not apply 
downward adjustments under the quality-tiering methodology to physician 
groups with between 2 to 9 EPs and physician solo practitioners. We 
believe that applying full quality-tiering to these groups and solo 
practitioners, coupled with the lower adjustment rates and changes to 
improve measure reliability, continues momentum to prepare smaller 
groups and solo practitioners for value-based payment including a 
smoother transition to the MIPS.
    For the comments concerning small sample size, we note that in 
recent analyses based on the measure specifications used for the 2016 
VM and the proposed case sizes for the 2017 VM, average reliabilities 
for TINs with less than 10 EPs for all claims-based measures, except 
the all-cause hospital readmissions measure and the Medicare Spending 
per Beneficiary (MSPB) measure, exceeded the threshold for moderate 
reliability (that is, 0.4). The average reliability for the all-cause 
hospital readmissions measure and MSPB measure were near the threshold

[[Page 71282]]

for moderate reliability. We were, however, persuaded by commenters' 
concerns to perform a reliability analysis at a more granular level 
than the analyses we had previously conducted. We utilized the most 
recently available performance data, CY 2014, for this analysis, and we 
looked not only at groups of fewer than ten EPs, but also further broke 
down the data into a reliability analysis for solo practitioners, 
groups of two to five EPs, and groups of fewer than ten EPs. The 
results of this analysis are displayed in Table 46.

   Table 46--Average Reliability of Claims-Based Measures Used for the 2016 VM Payment Adjustment, by TIN size
----------------------------------------------------------------------------------------------------------------
                                                   Minimum                               Fewer than   10 or more
                    Measure                       Case Size       1 EP       2-5 EPs       10 EPs        EPs
----------------------------------------------------------------------------------------------------------------
ACSC Acute Composite...........................           20         0.64         0.72         0.67         0.78
ACSC Chronic Composite.........................           20         0.67         0.71         0.68         0.79
All-Cause Hospital Readmissions................          200        0.34*        0.37*        0.37*         0.56
Per Capita Costs for All Attributed                       20         0.74         0.71         0.73         0.80
 Beneficiaries.................................
Medicare Spending per Beneficiary..............          125         0.40         0.48         0.48         0.67
Medicare Spending per Beneficiary..............          100         0.37         0.44         0.45         0.64
----------------------------------------------------------------------------------------------------------------
Note: All measures were computed based on 2014 data using measure specifications for the 2016 Value Modifier.

    Our new analysis reveals that, in order for solo practitioners and 
groups with two to five EPs to meet the average reliability threshold 
of 0.4 that we discussed in the CY 2013 PFS rulemaking (77 FR 45009, 
69322), a minimum number of 125 episodes is required for the MSPB 
measure, and even at 200 cases, the reliability of the all-cause 
hospital readmission measure does not meet our threshold for these solo 
practitioners and small groups. Because these measures do not meet the 
threshold for what we consider to be moderate reliability for solo 
practitioners and groups of two to five EPs, we are finalizing our 
proposed policy to apply upward, neutral, and downward adjustments 
under quality-tiering in CY 2018 to all physician solo practitioners 
and groups of physicians, with modifications to address reliability 
concerns for smaller groups and solo practitioners. For the CY 2017 and 
CY 2018 payment adjustment periods, we will increase the minimum number 
of episodes required for inclusion of the MSPB measure in the cost 
composite of the VM to 125 episodes (discussed in section III.M.4.k. of 
this final rule), and we will not include the all-cause hospital 
readmission measure in the calculation of the quality composite of the 
VM for solo practitioners or groups of two to nine EPs. For 2018 VM 
payment adjustments, the policies to increase the minimum number of 
episodes required for inclusion of the MSPB measure to 125 episodes and 
to remove the all-cause hospital readmission measure in the calculation 
of the 2018 VM will also apply for nonphysician Eps who are solo 
practitioners and groups consisting of nonphysician EPs. We continue to 
believe it is important to apply upward, neutral, or downward 
adjustments under quality-tiering to these solo practitioners and 
groups of EPs, in order to maintain the momentum of improving quality 
and to continue to emphasize the importance of quality and cost 
performance under the VM and the upcoming MIPS.
    With regard to comments that there are an insufficient number of 
specialist-specific measures, we do not believe that this would 
disadvantage smaller groups or solo practitioners. We note that our 
current policies for the VM, as well as our proposals for the CY 2018 
payment adjustment period, include all available PQRS reporting 
mechanisms, including registries that may be specialty-focused. We also 
note that the VM methodology includes additional safeguards to guard 
against misclassification--we finalized in the CY 2013 PFS final rule 
with comment period (77 FR 69325) the adoption of the quality-tiering 
model where we classify quality composite scores and cost composite 
scores each into high, average, and low categories based on whether 
these scores are at least one standard deviation from the mean and are 
also statistically significantly different from the mean at the 5.0 
percent level of significance, in order to apply the VM upward or 
downward adjustment only when a group's performance is significantly 
different from the national mean. The result of this focus on outliers 
is that quality-tiering leads to a small percentage of TINs receiving 
downward adjustments based on performance-- for the 2015 VM, out of the 
106 groups that elected quality-tiering and had sufficient data, 11 
groups (10.4 percent) received a downward VM adjustment and 14 groups 
(13.2 percent) received an upward VM adjustment based on performance. 
Cost measures are also risk-adjusted (77 FR 69318) and specialty-
adjusted (78 FR 74784) to account for patient characteristics and 
specialty-composition of the group, respectively.
    As discussed in section III.M.4.m. of this final rule with comment 
period, we are finalizing the policies that, beginning with the CY 2016 
payment adjustment period, a group or solo practitioner subject to the 
VM will receive a quality composite score that is classified as average 
under the quality-tiering methodology if the group or solo practitioner 
does not have at least one quality measure that meets the minimum 
number of cases required for the measure to be included in the 
calculation of the quality composite. This policy is consistent with 
the policy we previously finalized in the CY 2015 PFS final rule with 
comment period (79 FR 67934) that, beginning with the CY 2016 payment 
adjustment period, a group or solo practitioner subject to the VM will 
receive a cost composite score that is classified as average under the 
quality-tiering methodology if the group or solo practitioner does not 
have at least one cost measure that meets the minimum number of cases 
required for the measure to be included in the calculation of the cost 
composite.
    With regard to commenters' concern about lack of episode-based cost 
measures, we believe that the total per capita cost measure, condition-
specific total per capita cost measures, and MSPB measure provide 
sufficient cost performance data for VM cost composite calculation and 
are inclusive of episode cost-based measures.
    In the proposed rule (80 FR 41896-41897), we stated that we believe 
it is appropriate to apply both the upward and the downward payment 
adjustments under the quality-tiering methodology for the CY 2018 VM to 
these groups and solo practitioners and also stated the reasons for our 
belief. We

[[Page 71283]]

noted that the proposal to apply both upward and downward adjustments 
under the quality-tiering methodology to groups with between 2 to 9 EPs 
and physician solo practitioners in CY 2018 is consistent with gradual 
implementation of the VM, wherein groups with between 10 to 99 EPs (79 
FR 67941) and groups with 100 or more EPs (78 FR 74769-74770), 
consecutively were subject to both upward and downward adjustments 
under quality-tiering during the second year that the VM applied to 
them. As discussed in section III.M.4.f. of this final rule with 
comment period, we are finalizing a policy to set the maximum downward 
adjustment under the quality-tiering methodology in CY 2018 to -2.0 
percent for groups with between 2 to 9 EPs and physician solo 
practitioners. We expect this level of payment at risk to not have a 
significant financial impact on small groups and solo practitioners in 
CY 2018 and is consistent with our approach to gradually phase in the 
VM over time and increase the amount at risk.
    With regard to the commenters' suggestion that smaller groups lack 
awareness of the VM program, we believe that they have been given 
sufficient time and data with which to become familiar with the 
program. In September 2015, we made available QRURs based on CY 2014 
data to all groups and solo practitioners. These QRURs contain 
performance information on the quality and cost measures used to 
calculate the quality and cost composites of the VM and show how all 
TINs fare under the policies established for the VM for the CY 2016 
payment adjustment period. As discussed in section III.M.5.a. of this 
final rule with comment period, in April 2015, we made available 2014 
Mid-Year QRURs to groups of physicians and physician solo practitioners 
nationwide. The Mid-Year QRURs provide interim information about 
performance on the claims-based quality outcome measures and cost 
measures that are a subset of the measures that will be used to 
calculate the CY 2016 VM and are based on performance from July 1, 2013 
through June 30, 2014. Then, during spring of 2016, we intend to 
disseminate the 2015 Mid-Year QRURs to all groups and solo 
practitioners. Thus, we believe groups with between 2 to 9 EPs and 
physician solo practitioners will have adequate data to improve 
performance on the quality and cost measures that will be used to 
calculate the VM in CY 2018. We note that the quality and cost measures 
in the QRURs that these groups will receive are similar to the measures 
that will be used to calculate the CY 2018 VM. We strongly encourage 
EPs subject to the VM to proactively educate themselves about the VM 
program and QRURs by visiting the VM/QRUR Web site http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeedbackProgram/index.html. The VM/QRUR Web site contains information on the VM 
policies for each payment adjustment period, including a link to the 
2014 QRURs Web site that contains detailed information on the 
methodology used to calculate the CY 2016 VM shown in the CY 2014 QRURs 
and how to use the information contained in the QRURs.
    We note that we work with medical and specialty associations and 
have National Provider Calls throughout the year to educate physicians 
and other professionals about the VM program and the QRURs. Further 
outreach also will be undertaken by our Quality Improvement 
Organizations (QIOs), which will provide technical assistance to 
physicians and groups of physicians in an effort to help them improve 
quality and consequently, performance under the VM program.
    Final Policy: After considering the comments received, we are 
finalizing that we will apply the quality-tiering methodology to all 
groups and solo practitioners in Category 1 for the CY 2018 VM. We are 
also finalizing our proposal that groups and solo practitioners will be 
subject to upward, neutral, or downward adjustments derived under the 
quality-tiering methodology (with the exception discussed in section 
III.M.4.b. of this final rule with comment period, that PAs, NPs, CNSs, 
and CRNAs in groups that consist of nonphysician EPs and PAs, NPs, 
CNSs, and CRNAs who are solo practitioners will be held harmless from 
downward adjustments under the quality-tiering methodology in CY 2018), 
with the following modifications: We are finalizing an increase to the 
minimum episode number requirement for the MSPB measure in the CY 2017 
and 2018 payment adjustment periods to 125 episodes, for solo 
practitioners and for groups of all sizes, in section III.M.4.k of this 
final rule with comment period. In that section, we discuss our 
proposal in the CY 2016 Medicare PFS proposed rule, to raise the 
episode minimum for inclusion of this measure in the cost composite to 
100 episodes (80 FR 41906) and our final policy to raise the minimum 
number of episodes to 125. We are also finalizing that we will not 
include the all-cause hospital readmissions measure in the quality 
composite for solo practitioners and groups of two to nine EPs for the 
CY 2017 and 2018 payment adjustment periods. We believe that his final 
policy best addresses commenters' concerns with small sample sizes for 
solo practitioners and groups of two to nine EPs, while preserving the 
emphasis on provision of high quality efficient and effective care. We 
are finalizing revisions to Sec. Sec.  414.1230, 414.1270, and 414.1265 
to reflect these final policies.
d. Application of the VM to Physicians and Nonphysician EPs Who 
Participate in ACOs under the Shared Savings Program
    In the CY 2015 PFS final rule with comment period, we finalized a 
policy to apply the VM, beginning with the CY 2017 payment adjustment 
period, to physicians in groups with two or more EPs and physicians who 
are solo practitioners that participate in an ACO under the Shared 
Savings Program, and beginning with the CY 2018 payment adjustment 
period, to nonphysician EPs in groups with two or more EPs and 
nonphysician EPs who are solo practitioners that participate in an ACO 
under the Shared Savings Program. We finalized that the determination 
of whether a group or solo practitioner is considered to be in an ACO 
under the Shared Savings Program would be based on whether that group 
or solo practitioner, as identified by TIN, was an ACO participant in 
the performance period for the applicable payment adjustment period for 
the VM. For groups and solo practitioners determined to be ACO 
participants, we finalized a policy that we would classify the group or 
solo practitioner's cost composite as ``average'' and calculate its 
quality composite based on the quality-tiering methodology using 
quality data submitted by the Shared Savings Program ACO for the 
performance period and apply the same quality composite to all of the 
groups and solo practitioners, as identified by TIN, under that ACO. 
For further explanation of the final policies for applying the VM to 
ACO participants in Shared Savings Program ACOs, we refer readers to 79 
FR 67941 through 67947 and 67956 through 67957.
(1) Application of the VM to groups and solo practitioners who 
participate in multiple Shared Savings Program ACOs
    Under the Shared Savings Program regulations (Sec.  425.306(b)), an 
ACO participant TIN upon which beneficiary assignment is dependent may 
only participate in one Shared Savings Program ACO. ACO participant 
TINs that do not bill for primary care services, however, are not 
required to be exclusive to one Shared Savings

[[Page 71284]]

Program ACO. As a result, there are a small number of TINs that are ACO 
participants in multiple Shared Savings Program ACOs. We did not 
previously address how the VM will be applied to these TINs.
    Beginning with the CY 2017 payment adjustment period, we proposed 
that TINs that participate in multiple Shared Savings Program ACOs in 
the applicable performance period would receive the quality composite 
score of the ACO that has the highest numerical quality composite 
score. For this determination, we will only consider the quality data 
of an ACO that completes quality reporting under the Shared Savings 
Program. We proposed to apply this policy in situations where the VM is 
determined based on quality-tiering or the ACO's failure to 
successfully report quality data as required by the Shared Savings 
Program. We provided several examples to illustrate the proposal.
    We believe our proposed approach is appropriate because it is 
straightforward for TINs participating in multiple Shared Savings 
Program ACOs to understand. The policy is transparent and would allow 
Shared Savings Program ACO participant TINs the ability to compare the 
performance of the highest-performing ACO in which they participate to 
national benchmarks. It also allows us to determine peer group means 
for the purposes of determining statistical significance and 
determining whether a given quality composite score is at least one 
standard deviation from the peer group mean. We proposed to make 
corresponding changes to Sec.  414.1210(b)(2).
    In developing this policy, we considered several alternative 
options. We considered proposing that the above policy would apply as 
long as all ACOs in which the TIN participates complete reporting under 
the Shared Savings Program. If one of the ACOs failed to report, the 
TIN would be categorized as Category 2 even though it participated in 
another ACO that successfully reported. We believe this would create 
unnecessary complexity and would not be fair to TINs that were not made 
aware of this policy prior to the start of the CY 2015 performance 
period for the 2017 payment adjustment period. We also considered 
proposing a policy under which the TIN would be required to indicate 
which ACO it wanted to be associated with for purposes of the VM. We 
did not make this proposal because we believed it created additional 
operational complexity for the TINs and us, and would put the TIN in a 
position of having to predict which ACO would perform better under the 
VM, which we do not believe would be appropriate. We solicited comments 
on our proposal as well as the alternatives we considered.
    The following is a summary of the comments we received on the 
proposal and alternatives considered:
    Comment: We received a few comments in support of our proposal to 
assign practices the highest quality composite score of the multiple 
ACOs in which they participated. One commenter expressed the belief 
that in the instance where a group or individual EP participates in two 
or more ACOs, it is more appropriate and straightforward to compare the 
VM adjustments associated with each ACO and apply the highest VM 
adjustment to the group or individual EP. We received no comments on 
the alternatives we considered.
    Response: We appreciate commenters' support of our proposal to 
assign TINs participating in multiple Shared Savings Program ACOs the 
quality composite score of the ACO with the highest numerical quality 
composite score. We acknowledge the comment that it would be more 
straightforward to apply the highest VM adjustment instead; however, it 
would not be possible to assign the highest VM adjustment to these 
TINs, because movement of a given TIN from one quality designation to 
another (from average to high quality, for example) would result in 
recalculation of the peer group mean against which all other TINs 
subject to the VM are compared, for the purpose of determining their 
quality designations. Such a recalculation would necessitate an 
additional analysis of which Shared Savings Program ACO had the highest 
numerical quality composite score. Likewise, movement of another TIN 
from one quality designation to another would necessitate the same 
recalculation. Thus, it would not be feasible for us to concurrently 
recalculate the VM for every TIN, with each iteration of moving a given 
TIN in and out of a peer group mean.
    Final Policy: After consideration of the comments received, we are 
finalizing our proposal that, beginning with the CY 2017 payment 
adjustment period, TINs that participate in multiple Shared Savings 
Program ACOs in the applicable performance period will receive the 
quality composite score of the ACO that has the highest numerical 
quality composite score. We believe that this is the most 
straightforward and advantageous methodology to acknowledge the highest 
quality performance among the Shared Savings Program ACOs in which 
these TINs participate.
(2) Application of VM to Participant TINs in Shared Savings Program 
ACOs That Also Include EPs who Participate in Innovation Center Models
    Under the Shared Savings Program statute and regulations, ACO 
participants may not participate in another Medicare initiative that 
involves shared savings payments (Sec.  425.114(b)). As noted above, 
ACO participants who do not provide primary care services may 
participate in multiple Shared Savings Program ACOs, but under section 
1899(b)(4) of the Act, providers and suppliers that participate in a 
Shared Savings Program ACO may not participate in an Innovation Center 
model that involves shared savings, or any other program or 
demonstration project that involving shared savings. There are Medicare 
initiatives, including models authorized by the Innovation Center that 
do not involve shared savings payments, and in some cases a TIN that is 
a Shared Savings Program participant may also include EPs who 
participate in an Innovation Center model. Because the Shared Savings 
Program identifies participants by a TIN and many Innovation Center 
models allow some EPs under a TIN to participate in the model while 
other EPs under that TIN do not, we believe it is more appropriate to 
apply the VM policies finalized for Shared Savings Program participants 
to these TINs than to apply the policies for Innovation Center models 
in section III.M.4.e. of this final rule with comment period. We 
proposed that, beginning with the 2017 payment adjustment period for 
the VM, we would determine the VM for groups and solo practitioners (as 
identified by TIN) who participated in a Shared Savings Program ACO in 
the performance period in accordance with the VM policies for Shared 
Savings Program participants under Sec.  414.1210(b)(2), regardless of 
whether any EPs under the TIN also participated in an Innovation Center 
model during the performance period. We proposed to make corresponding 
changes to Sec.  414.1210(b)(2)(i)(E). We solicited comment on this 
proposal.
    The following is a summary of the comments we received on this 
proposal.
    Comment: We received one comment in support of our proposal of 
applying the VM to groups and solo practitioners who participate in the 
Medicare Shared Savings Program, even if they also participate in an 
Innovation Center model. Two commenters were of the opinion that the 
proposed policy would be a barrier to fostering innovation and 
expressed the concern that a TIN's performance might be counted 
multiple

[[Page 71285]]

times if it participates in the Shared Savings Program, an Innovation 
Center initiative, and the VM. Though we made no proposals to do so, 
the majority of comments on proposals surrounding application of the VM 
to Shared Savings Program ACO participant TINs expressed support for 
waiving the VM for these TINs entirely.
    Response: We appreciate the commenter's support for our proposal to 
apply the VM to Shared Savings Program participants, even if they also 
participate in Innovation Center models, as it would incentivize the 
provision of high quality care to assigned beneficiaries. We also note 
that the quality measures used for calculating the VM quality composite 
score for Shared Savings Program ACO participants are the same measures 
under which their quality is measured within the Shared Savings 
Program, and they are assigned a cost composite score of ``average'' 
under the VM. Consequently, they do not face conflicting quality or 
cost performance incentives or increased reporting burden. With regard 
to the comment that application of the VM to Shared Savings Program ACO 
participants would create a barrier to innovation under Innovation 
Center models, we disagree. The quality performance of these TINs under 
the Shared Savings Program is used for purposes of calculating the VM 
quality composite score. No additional requirements related to cost or 
quality reporting are imposed on these TINs for purposes of the VM, 
above what they are already doing under the Shared Savings Program, so 
no additional barriers to innovation would be created by applying the 
VM. A TIN's performance under an Innovation Center model is not 
considered under the VM and is therefore not counted multiple times.
    Final Policy: After consideration of the public comments received, 
we are finalizing our proposal, beginning with the CY 2017 payment 
adjustment period, to determine the VM for groups and solo 
practitioners (as identified by TIN) who participated in a Shared 
Savings Program ACO in the performance period in accordance with the VM 
policies for Shared Savings Program participants under Sec.  
414.1210(b)(2), regardless of whether any EPs under the TIN also 
participated in an Innovation Center model during the performance 
period. We revised Sec.  414.1210(b)(2)(i)(E) to reflect this policy. 
This will avoid the need to create multiple polices for application of 
the VM to Shared Savings Program participant TINs and will continue to 
reinforce the importance of quality performance.
(3) Application of VM to Participant TINs in Shared Savings Program 
ACOs that Do Not Complete Quality Reporting
    In the CY 2015 PFS proposed rule, we did not specifically address 
the scenario in which a Shared Savings Program ACO does not 
successfully report on quality as required under the Shared Savings 
Program during the performance period for the VM. We clarified in the 
CY 2015 PFS final rule with comment period that we intended to adopt 
for groups and solo practitioners that participate in a Shared Savings 
Program ACO the same policy that is generally applicable to groups and 
solo practitioners that fail to satisfactorily report or participate 
under PQRS and thus fall in Category 2 and are subject to an automatic 
downward adjustment under the VM in CY 2017 (79 FR 67946). We stated 
that, consistent with the application of the VM to other groups and 
solo practitioners that report under PQRS, if the ACO does not 
successfully report quality data as required by the Shared Savings 
Program under Sec.  425.504, all groups and solo practitioners 
participating in the ACO will fall in Category 2 for the VM, and 
therefore, will be subject to a downward payment adjustment. We 
finalized this policy for the 2017 payment adjustment period for the VM 
at Sec.  414.1210(b)(2)(i)(C). We proposed to continue this policy in 
the CY 2018 payment adjustment period for all groups and solo 
practitioners subject to the VM, including groups composed of 
nonphysician EPs and solo practitioners who are nonphysician EPs. We 
proposed corresponding revisions to Sec.  414.1210(b)(2)(i)(D). This 
policy is consistent with our policy for groups and solo practitioners 
who are subject to the VM and do not participate in the Shared Savings 
Program, and we believe it would further encourage quality reporting. 
We solicited comment on this proposal.
    The following is a summary of the comments we received on this 
proposal.
    Comment: We received one comment questioning this proposal, in 
which the commenter expressed the belief that the proposal would 
discourage participation in Shared Savings Program ACOs due to the 
potential to earn a downward payment adjustment under the VM.
    Response: We disagree that the proposed policy would discourage 
participation in Shared Savings Program ACOs. Shared Savings Program 
ACOs are required to report on quality on behalf of all participants 
and this provision reinforces that reporting requirement. If these TINs 
did not participate in a Shared Savings ACO, they would be required to 
meet quality reporting requirements for the VM through another 
mechanism. We believe that the proposed policy would emphasize the 
importance of quality performance while treating Shared Savings Program 
participant TINs the same as other TINs with regard to the consequence 
of failing to report quality data.
    Final Policy: After consideration of the comments received, we are 
finalizing our proposal for the CY 2018 payment adjustment period, that 
if a Shared Savings Program ACO does not successfully report quality 
data as required by the Shared Savings Program during the performance 
period for the VM, all groups and solo practitioners participating in 
the ACO will fall in Category 2 for the VM and will be subject to an 
automatic downward payment adjustment. We are finalizing the 
corresponding revisions to Sec.  414.1210(b)(2)(i)(D).
(4) Application of an Additional Upward Payment Adjustment to High 
Quality Participant TINs in Shared Savings Program ACOs for Treating 
High-Risk Beneficiaries
    In the CY 2015 PFS final rule with comment period, we finalized at 
Sec.  414.1275(d)(2) that groups and solo practitioners that are 
classified as high quality/low cost, high quality/average cost, or 
average quality/low cost under the quality-tiering methodology for the 
CY 2017 payment adjustment period would receive an additional upward 
payment adjustment of +1.0x, if their attributed patient population has 
an average beneficiary risk score that is in the top 25 percent of all 
beneficiary risk scores nationwide. We proposed a similar policy for 
the CY 2018 payment adjustment period as discussed in section 
III.M.4.f. of this final rule with comment period.
    Beginning in the CY 2017 payment adjustment period, we proposed to 
apply a similar additional upward adjustment to groups and solo 
practitioners that participated in high performing Shared Savings 
Program ACOs that cared for high-risk beneficiaries (as evidenced by 
the average HCC risk score of the ACO's attributed beneficiary 
population as determined under the VM methodology) during the 
performance period. We finalized in the CY 2015 PFS final rule with 
comment period that the quality composite score for TINs that 
participated in Shared Savings Program ACOs during the performance 
period will be calculated using the quality data

[[Page 71286]]

reported by the ACO through the ACO GPRO Web Interface and the ACO all-
cause hospital readmission measure, and the cost composite will be 
classified as ``average'' (79 FR 67941 through 67947). We believe this 
policy would be appropriate because attribution on the quality measures 
used in the VM calculation for Shared Savings Program ACO TINs is done 
at the ACO level. Further, under the Shared Savings Program ACO 
participants are responsible for coordinating the care of beneficiaries 
assigned to the ACO, so it is appropriate to determine whether those 
beneficiaries are in the highest risk category, at the ACO level. 
Therefore, beginning in the CY 2017 payment adjustment period, we 
proposed to apply an additional upward payment adjustment of +1.0x to 
Shared Savings Program ACO participant TINs that are classified as 
``high quality'' under the quality-tiering methodology, if the 
attributed patient population of the ACO in which the TINs participated 
during the performance period has an average beneficiary risk score 
that is in the top 25 percent of all beneficiary risk scores nationwide 
as determined under the VM methodology. We proposed corresponding 
revisions to Sec.  414.1210(b)(2). We solicited comment on this 
proposal.
    In the CY 2015 PFS proposed rule (79 FR 40500), we proposed that 
groups and solo practitioners participating in ACOs under the Shared 
Savings Program would be eligible for the additional upward payment 
adjustment +1.0x for caring for high-risk beneficiaries; however, the 
proposal was not finalized in the CY 2015 PFS final rule with comment 
period. We noted that our proposal above is based on using the ACO's 
assigned beneficiary population; whereas, our proposal in the CY 2015 
PFS proposed rule was based on using the group or solo practitioner's 
attributed beneficiary population.
    The following is a summary of the comments we received on this 
proposal.
    Comments: Commenters were very supportive of this proposal. One 
commenter encouraged CMS to include aspects of social risk or community 
risk in the calculations, stating that achieving good quality results 
for patients who are socially complex (for example, low income, 
homeless, living alone) or living in unsupportive community 
environments would justify the same kind of enhanced payment that 
achieving similar outcomes for clinically complex patients does, which 
supports the idea of adding an upward payment adjustment in 2017 and 
subsequent years of the VM program to those treating high-risk 
beneficiaries.
    Response: We acknowledge that beneficiaries' social support systems 
could potentially have an impact on quality performance. We did not 
make any proposals to change the definition of high-risk beneficiaries, 
however, and make no changes in this final rule with comment period.
    Final Policy: After consideration of the comments received, we are 
finalizing our proposal beginning in the CY 2017 payment adjustment 
period to apply an additional upward payment adjustment of +1.0x to 
Shared Savings Program ACO participant TINs that are classified as 
``high quality'' under the quality-tiering methodology, if the 
attributed patient population of the ACO in which the TINs participated 
during the performance period has an average beneficiary risk score 
that is in the top 25 percent of all beneficiary risk scores nationwide 
as determined under the VM methodology. We are finalizing corresponding 
revisions at Sec.  414.1210(b)(2). We note that Shared Savings Program 
ACO participant TINs are eligible for the +1.0x adjustment under Sec.  
414.1210(b)(2) based on the average beneficiary risk score of the 
attributed patient population of their ACO; they are not eligible for 
the similar +1.0x adjustment under Sec.  414.1275(d).
e. Application of the VM to Physicians and Nonphysician EPs that 
Participate in the Pioneer ACO Model, the CPC Initiative, or Other 
Similar Innovation Center Models or CMS Initiatives
    We established a policy in the CY 2013 PFS final rule with comment 
period (77 FR 69313) to not apply the VM in the CY 2015 and CY 2016 
payment adjustment periods to groups of physicians that participate in 
Shared Savings Program ACOs, the Pioneer ACO Model, the Comprehensive 
Primary Care (CPC) initiative, or other similar Innovation Center 
models or CMS initiatives. We stated in the CY 2014 PFS final rule with 
comment period (78 FR 74766) that from an operational perspective, we 
will apply this policy to any group of physicians that otherwise would 
be subject to the VM, if one or more physician(s) in the group 
participate(s) in one of these programs or initiatives during the 
relevant performance period (CY 2013 for the CY 2015 payment adjustment 
period, and CY 2014 for the CY 2016 payment adjustment period). In the 
CY 2015 PFS final rule with comment period (79 FR 67949), we finalized 
a policy that for solo practitioners and groups subject to the VM with 
at least one EP participating in the Pioneer ACO Model or CPC 
Initiative during the performance period, we will classify the cost 
composite as ``average cost'' and the quality composite as ``average 
quality'' for the CY 2017 payment adjustment period. We did not 
finalize a policy for any payment adjustment period after CY 2017. We 
believed this policy was appropriate because it would enable groups and 
solo practitioners participating in these Innovation Center models to 
focus on the goals of the models and would minimize the risk of 
potentially creating conflicting incentives with regard to the 
evaluation of the quality and cost of care furnished for the VM and 
evaluation of cost and quality under these models. In addition, given 
that these models include groups in which some EPs participate in the 
model and others do not participate, it is challenging to meaningfully 
evaluate the quality of care furnished by these groups. and the timing 
and availability of that quality data may not be aligned with the 
availability of quality data under PQRS that is used in the VM 
calculations.
(1) Application of the VM to Solo Practitioners and Groups with EPs Who 
Participate in the Pioneer ACO Model and CPC Initiative
    We received many comments on the proposals made in the CY 2015 PFS 
proposed rule indicating that we should exempt Pioneer ACO Model and 
CPC Initiative participants from the VM. As we noted in response to 
comments in the CY 2015 final rule with comment period (79 FR 67947), a 
few commenters also suggested that the application of the VM to 
Innovation Center initiatives should be waived under section 1115A of 
the Act. In considering potential policy options to include in the CY 
2016 PFS proposed rule, and in consideration of comments previously 
received, we believed that it would be appropriate to use the waiver 
authority with regard to the Pioneer ACO Model and CPC Initiative. 
Accordingly, under section 1115A(d)(1) of the Act, we proposed to waive 
application of the VM as required by section 1848(p) of the Act for 
groups and solo practitioners, as identified by TIN, if at least one EP 
who billed for PFS items and services under the TIN during the 
applicable performance period for the VM participated in the Pioneer 
ACO Model or CPC Initiative during the performance period. This policy, 
as well as the use of the waiver authority under section 1115A(d)(1) of 
the Act for this purpose, will no longer apply in CY 2019 when the 
Value Modifier adjustment under section 1848(p) of the Act has ended. 
We believe a waiver is necessary to test these models because their 
effectiveness would be impossible to isolate from the

[[Page 71287]]

confounding variables of quality and cost metrics and contrasting 
payment incentives utilized under the VM. We refer readers to the 
proposed rule (80 FR 41900) for an explanation of our rationale for 
proposing to waive the VM for the CPC Initiative and the Pioneer ACO 
Model.
    We believe we could have waived application of the VM for these 
models with regard to the CY 2017 payment adjustment period, and we 
proposed the waiver would apply beginning with the CY 2017 payment 
adjustment period. We noted that in practice, this proposal would not 
affect a TIN's payments differently as compared with the current policy 
for the CY 2017 payment adjustment period. A TIN that is classified as 
``average cost'' and ``average quality'' would receive a neutral (0 
percent) adjustment, and thus its payments during the CY would not 
increase or decrease as a result of the application of the VM. We also 
noted that we have established a policy to apply the VM at the TIN 
level (77 FR 69308-69310), and as a result, this proposed waiver would 
affect the payments for items and services billed under the PFS for the 
CY 2017 and 2018 payment adjustment periods for the EPs who participate 
in the Pioneer ACO Model and the CPC Initiative during the performance 
period, as well as the EPs who do not participate in one of these 
models but bill under the same TIN as the EPs who do participate. We 
proposed to revise Sec.  414.1210(b)(3) to reflect these proposals and 
sought comment on these proposals.
(2) Application of the VM to Solo Practitioners and Groups with EPs Who 
Participate in Similar Innovation Center Models
    In the CY 2015 PFS final rule with comment period (79 FR 67949-
67950), we finalized criteria that we will use to determine if future 
Innovation Center models or CMS initiatives are ``similar'' to the 
Pioneer ACO Model and CPC Initiative. We finalized that we will apply 
the same VM policies adopted for participants in the Pioneer ACO Model 
and CPC Initiative to groups and solo practitioners who participate in 
similar Innovation Center models and CMS initiatives. The previously 
finalized criteria are: (1) The model or initiative evaluates the 
quality of care and/or requires reporting on quality measures; (2) the 
model or initiative evaluates the cost of care and/or requires 
reporting on cost measures; (3) participants in the model or initiative 
receive payment based at least in part on their performance on quality 
measures and/or cost measures; (4) potential for conflict between the 
methodologies used for the VM and the methodologies used for the model 
or initiative; or (5) other relevant factors specific to a model or 
initiative. We noted that a model or initiative would not have to 
satisfy or address all of these criteria to be considered a similar 
model or initiative.
    We proposed that in the event we finalize our proposal to waive 
application of the VM under section 1115A(d)(1) of the Act for the 
Pioneer ACO Model and CPC Initiative as discussed in the preceding 
section, we would also waive application of the VM for Innovation 
Center models that we determine are similar models based on the 
criteria above and for which we determined such a waiver would be 
necessary for purposes of testing the model in accordance with section 
1115A(d)(1) of the Act. For models that we determine are similar and 
require a waiver, we would waive application of the VM as required by 
section 1848(p) of the Act for groups and solo practitioners, as 
identified by TIN, if at least one EP who billed for PFS items and 
services under the TIN during the applicable performance period for the 
VM participated in the model during the performance period. We noted 
that this policy and use of the waiver authority under section 
1115A(d)(1) of the Act would sunset prior to CY 2019 when the VM is 
replaced by MIPS. We would publish a notice of the waiver in the 
Federal Register and also provide notice to participants in the model 
through the methods of communication that are typically used for the 
model. We proposed to revise Sec.  414.1210(b)(4) to reflect this 
proposal. We solicited comment on this proposal.
    (a) Application of the VM to Solo Practitioners and Groups with EPs 
Who Participate in the Comprehensive ESRD Care Initiative (CEC), 
Oncology Care Model (OCM), and the Next Generation ACO Model.
    There are several new Innovation Center models starting in 2015 or 
2016, including the Comprehensive ESRD Care Initiative, Oncology Care 
Model, and the Next Generation ACO Model. We evaluated these models 
based on the criteria for ``similar'' models and initiatives described 
in the preceding section and determined that they are similar to the 
Pioneer ACO Model and CPC Initiative. We believe a waiver of the VM 
under section 1115A(d)(1) of the Act is necessary to test these models. 
These new models may include groups in which some EPs participate in 
the model and others do not, which will make it challenging to 
meaningfully calculate the quality and cost composite for these TINs 
needed for the application of the VM. We refer readers to the proposed 
rule (80 FR 41901) for an explanation of our determination that these 
models are similar to the Pioneer ACO Model and the CPC Initiative and 
our belief that a waiver is necessary to test these models.
    We proposed that in the event we finalize our proposal to waive 
application of the VM as required by section 1848(p) of the Act under 
section 1115A(d)(1) of the Act for the Pioneer ACO Model and CPC 
Initiative, we would also waive application of the VM for the Next 
Generation ACO Model, the Oncology Care Model, and the Comprehensive 
ESRD Care Initiative as similar models. Specifically, we would waive 
application of the VM for the CY 2018 payment adjustment period for 
groups and solo practitioners, as identified by TIN, if at least one EP 
who billed for PFS items and services under the TIN during the CY 2016 
performance period for the VM participated in the Next Generation ACO 
Model, the Oncology Care Model, or the Comprehensive ESRD Care 
Initiative during the CY 2016 performance period. We solicited comment 
on this proposal.
    The following is a summary of the comments we received on the 
proposals to waive application of the VM for the Pioneer ACO Model; CPC 
Initiative; and other similar Innovation Center models, including the 
Next Generation ACO Model, Oncology Care Model, and Comprehensive ESRD 
Care Initiative.
    Comment: We received many comments on this proposal, all of which 
were in support of waiving the VM if at least one EP participated in 
the Pioneer ACO Model, CPC Initiative, or other similar Innovation 
Center model, such as Next Generation ACO, Oncology Care Model, or the 
Comprehensive ESRD Care Initiative. Though we did not make any proposal 
to do so, several of the commenters also requested that CMS also waive 
the VM for EPs who participate in the Medicare Shared Savings Program. 
A few commenters suggested that the Value Modifier be waived for 
participants in any Alternative Payment Model (APM), even for private 
(non-CMS) demonstrations, and also suggested waiving the Value Modifier 
for the Bundled Payments for Care Improvement (BPCI) initiative.
    Response: We appreciate commenters' support for our proposal to 
waive the VM for these models. With regard to the suggestion that we 
also waive the VM for Shared Savings Program ACO participants, we 
disagree that such a waiver would be appropriate or necessary to carry 
out the Shared Savings Program. As stated in the CY

[[Page 71288]]

2015 final rule with comment period (79 FR 67941), we believe that 
alignment of the VM and the Shared Savings Program emphasizes the 
importance of quality reporting and quality measurement, for 
improvement of the quality of care provided to Medicare beneficiaries. 
The Shared Savings Program requires quality reporting through the PQRS 
GPRO Web Interface, so we have readily available quality data for use 
in calculating a quality composite score for the VM, whereas such data 
may not be available for TINs that participate in Innovation Center 
models. The VM does not impose any different quality performance 
requirements on Shared Savings Program ACO participants, and thus does 
not create conflicting quality performance incentives for them. We 
disagree with the commenters' suggestion that we waive the VM for 
participants in any APM, BPCI or private (non-CMS) demonstrations. If 
the commenters are referring to APMs as defined in section 101(e) of 
MACRA, we note the statutory amendments made by this section have 
payment implications for EPs beginning in 2019, after the VM has 
sunset. We established specific criteria for a model to be considered 
``similar,'' for the purpose of waiving the VM. The VM is an important 
initiative for incentivizing high quality efficient care for Medicare 
beneficiaries. We established specific criteria wherein it could be 
waived and we do not believe that it would be appropriate to waive this 
important adjustment in cases where the criteria do not apply. We do 
not believe BPCI is a ``similar'' model according to the criteria 
established in the CY 2015 PFS final rule with comment period (79 FR 
67949 through 67950), because the model does not require reporting on 
quality measures outside of the PQRS, does not require reporting on 
cost measures, and its methodology is not in conflict with the cost and 
quality metrics used under the VM.
    Final Policy: After considering the public comments received, we 
are finalizing our proposals to waive application of the VM for the 
Pioneer ACO Model; CPC Initiative; and other similar Innovation Center 
models, including the Next Generation ACO Model, the Oncology Care 
Model, and the Comprehensive ESRD Care Initiative, all as proposed 
without modification. We are finalizing the corresponding revisions to 
the regulation text at Sec.  414.1210(E)(3)(i)(ii) (b) Application of 
VM to Similar CMS initiatives that are not Innovation Center models
    In the CY 2015 PFS final rule with comment period (79 FR 67949-
67950), we finalized criteria that we will use to determine if future 
Innovation Center models or CMS initiatives are ``similar'' to the 
Pioneer ACO Model and CPC Initiative. We finalized that we will apply 
the same VM policies adopted for participants in the Pioneer ACO Model 
and CPC Initiative to groups and solo practitioners who participate in 
similar Innovation Center models and CMS initiatives. We are finalizing 
in section III.M.4.e.1. of this final rule with comment period our 
proposal to waive the VM for solo practitioners and groups with at 
least one EP participating in the Pioneer ACO Model or CPC Initiative 
under section 1115A(d)(1) of the Act. The waiver authority under 
section 1115A(d)(1) of the Act does not apply to CMS initiatives that 
are not Innovation Center models. Therefore, we stated in the event 
that we finalize the waiver, we proposed to remove the references to 
``CMS initiatives'' from Sec.  414.1210(b)(4). We solicited comment on 
this proposal, but did not receive comments specific to this proposal.
    Final Policy: As a result, we are finalizing our proposal to remove 
the references to ``CMS initiatives'' from Sec.  414.1210(b)(4).
f. Payment Adjustment Amount
    Section 1848(p) of the Act does not specify the amount of payment 
that should be subject to the adjustment for the VM; however, section 
1848(p)(4)(C) of the Act requires the VM be implemented in a budget 
neutral manner. Budget neutrality means that payments will increase for 
some groups and solo practitioners based on high performance and 
decrease for others based on low performance, but the aggregate 
expected amount of Medicare spending in any given year for physician 
and nonphysician EP services paid under the Medicare PFS will not 
change as a result of application of the VM.
    In the CY 2015 PFS final rule with comment period (79 FR 67952 to 
67954), we finalized that we will apply a -2.0 percent VM to groups 
with between 2 to 9 EPs and physician solo practitioners that fall in 
Category 2 for the CY 2017 VM. We also finalized that the maximum 
upward adjustment under the quality-tiering methodology in CY 2017 for 
groups with between 2 to 9 EPs and physician solo practitioners that 
fall in Category 1 will be +2.0x if a group or solo practitioner is 
classified as high quality/low cost and +1.0x if a group or solo 
practitioner is classified as either average quality/low cost or high 
quality/average cost. These groups and solo practitioners will be held 
harmless from any downward adjustments under the quality-tiering 
methodology in CY 2017, if classified as low quality/high cost, low 
quality/average cost, or average quality/high cost.
    For groups with 10 or more EPs, we finalized for CY 2017 that we 
will apply a ``-4.0'' percent VM to a group that falls in Category 2. 
In addition, we finalized that we will set the maximum downward 
adjustment under the quality-tiering methodology in CY 2017 to ``-4.0'' 
percent for groups with 10 or more EPs classified as low quality/high 
cost and set the adjustment to ``-2.0'' percent for groups classified 
as either low quality/average cost or average quality/high cost. We 
finalized that we will also set the maximum upward adjustment under the 
quality-tiering methodology in CY 2017 to +4.0x for groups with 10 or 
more EPs classified as high quality/low cost and set the adjustment to 
+2.0x for groups classified as either average quality/low cost or high 
quality/average cost. We also finalized that we will continue to 
provide an additional upward payment adjustment of +1.0x to groups with 
two or more EPs and solo practitioners that care for high-risk 
beneficiaries (as evidenced by the average HCC risk score of the 
attributed beneficiary population).
    As noted in section III.M.4.b. of this final rule with comment 
period, under section 1848(p)(4)(B)(iii) of the Act, as amended by 
section 101(b)(3) of MACRA, the VM shall not be applied to payments for 
items and services furnished on or after January 1, 2019. Section 
1848(q) of the Act, as added by section 101(c) of MACRA, establishes 
the MIPS that shall apply to payments for items and services furnished 
on or after January 1, 2019. To maintain stability in the payment 
adjustment amounts applicable under the VM as we transition to the MIPS 
in 2019, we proposed to maintain the payment adjustment amounts in CY 
2018 that we finalized for the CY 2017 VM in the CY 2015 PFS final rule 
with comment period for groups with 2 or more EPs and physician solo 
practitioners, with the exception discussed in section III.M.4.c. of 
this final rule with comment period that in CY 2018 we proposed to 
apply both the upward and downward adjustments under the quality-
tiering methodology to groups with 2 to 9 EPs and physician solo 
practitioners that are in Category 1.
    For CY 2018, we proposed to apply a -4.0 percent VM to physicians, 
PAs, NPs, CNSs, and CRNAs in groups with 10 or more EPs that fall in 
Category 2. In addition, we proposed to set the maximum downward 
adjustment under the quality-tiering methodology in CY

[[Page 71289]]

2018 to -4.0 percent for physicians, PAs, NPs, CNSs, and CRNAs in 
groups with 10 or more EPs classified as low quality/high cost and to 
set the adjustment to -2 percent for groups classified as either low 
quality/average cost or average quality/high cost. We also proposed to 
set the maximum upward adjustment under the quality-tiering methodology 
in CY 2018 to +4.0x for physicians, PAs, NPs, CNSs, and CRNAs in groups 
with 10 or more EPs classified as high quality/low cost and to set the 
adjustment to +2.0x for groups classified as either average quality/low 
cost or high quality/average cost. Table 33 (80 FR 41903) of the 
proposed rule shows the quality-tiering payment adjustment amounts for 
CY 2018 for physicians, PAs, NPs, CNSs, and CRNAs in groups with 10 or 
more EPs. These payment amounts would be applicable to all of the 
physicians, NPs, PAs, CNSs, and CRNAs who bill under a group's TIN in 
CY 2018.
    For CY 2018, we proposed to apply a negative ``-2.0'' percent VM to 
physicians, PAs, NPs, CNSs, and CRNAs in groups with between 2 to 9 EPs 
and physician solo practitioners that fall in Category 2. In addition, 
we propose to set the maximum downward adjustment under the quality-
tiering methodology in CY 2018 to negative ``-2.0'' percent for 
physicians, PAs, NPs, CNSs, and CRNAs in groups with between 2 to 9 EPs 
and physician solo practitioners classified as low quality/high cost 
and to set the adjustment to negative ``-1.0'' percent for groups and 
physician solo practitioners classified as either low quality/average 
cost or average quality/high cost. We also proposed to set the maximum 
upward adjustment under the quality-tiering methodology in CY 2018 to 
+2.0x for physicians, PAs, NPs, CNSs, and CRNAs in groups with between 
2 to 9 EPs and physician solo practitioners classified as high quality/
low cost and to set the adjustment to +1.0x for groups and physician 
solo practitioners classified as either average quality/low cost or 
high quality/average cost. Table 34 of the proposed rule (80 FR 41903) 
shows the quality-tiering payment adjustment amounts for CY 2018 for 
physicians, PAs, NPs, CNSs, and CRNAs in groups with between 2 to 9 EPs 
and physician solo practitioners. These payment adjustment amounts 
would be applicable to all of the physicians, NPs, PAs, CNSs, and CRNAs 
who bill under a group's TIN and to physician solo practitioners in CY 
2018.
    For CY 2018, we proposed to apply a negative ``-2.0'' percent VM to 
PAs, NPs, CNSs, and CRNAs in groups that consist of nonphysician EPs 
and solo practitioners who are PAs, NPs, CNSs, and CRNAs that fall in 
Category 2 for the CY 2018 VM. As noted in section III.M.4.b. of this 
final rule with comment period, the nonphysician EPs to which the CY 
2018 VM payment adjustments would apply are PAs, NPs, CNSs, and CRNAs. 
We also proposed that the maximum upward adjustment under the quality-
tiering methodology in CY 2018 for PAs, NPs, CNSs, and CRNAs in groups 
that consist of nonphysician EPs and solo practitioners who are PAs, 
NPs, CNSs, and CRNAs that fall in Category 1 would be +2.0x if a group 
or solo practitioner is classified as high quality/low cost and +1.0x 
if a group or solo practitioner is classified as either average 
quality/low cost or high quality/average cost. As established in the CY 
2015 PFS final rule with comment period (79 FR 67937), these groups and 
solo practitioners will be held harmless from any downward adjustments 
under the quality-tiering methodology in CY 2018, if classified as low 
quality/high cost, low quality/average cost, or average quality/high 
cost. Table 35 of the proposed rule (80 FR 41903) shows the quality-
tiering payment adjustment amounts for CY 2018 for PAs, NPs, CNSs, and 
CRNAs in groups that consist of nonphysician EPs and PAs, NPs, CNSs, 
and CRNAs who are solo practitioners. These groups and solo 
practitioners will have had less time to become familiar with the QRURs 
since they have received QRURs for the first time in the Fall of 2015; 
whereas, groups consisting of both physicians and nonphysician EPs and 
physician solo practitioners received QRURs in fall of 2014 or in 
previous years, which enable them to understand and improve performance 
on the measures used in the VM. We believe our proposed approach would 
reward groups and solo practitioners that provide high-quality/low-cost 
care. In addition, a smaller increase in the maximum amount of payment 
at risk would be consistent with our stated focus on gradual 
implementation of the VM.
    We also proposed to continue to provide an additional upward 
payment adjustment of +1.0x to groups and solo practitioners that are 
eligible for upward adjustments under the quality-tiering methodology 
and have average beneficiary risk score that is in the top 25 percent 
of all beneficiary risk scores. Lastly, we proposed to revise Sec.  
414.1270 and Sec.  414.1275(c)(4) and (d)(3) to reflect the changes to 
the payment adjustments under the VM for the CY 2018 payment adjustment 
period. We solicited comments on all of these proposals.
    Consistent with the policy adopted in the CY 2013 PFS final rule 
with comment period (77 FR 69324 through 69325), we noted that the 
estimated funds derived from the application of the downward 
adjustments to groups and solo practitioners in Category 1 and Category 
2 would be available to all groups and solo practitioners eligible for 
upward adjustments under the VM. Consequently, the upward payment 
adjustment factor (``x'' in Tables 33, 34, and 35 of the proposed rule) 
would be determined after the performance period has ended based on the 
aggregate amount of downward payment adjustments.
    The following is a summary of the comments we received on these 
proposals.
    Comment: Several commenters expressed appreciation for our efforts 
to maintain stability in the payment adjustment amounts applicable 
under the VM in CY 2018 as we transition to the MIPS in CY 2019 and 
supported our proposal to maintain the payment adjustment amounts in CY 
2018 at the same levels as that for the CY 2017 VM. Some commenters 
suggested alternatives that included maintaining lower downside risk 
while establishing different upward adjustments based on group size; 
keeping adjustments constant, regardless of group size; and 
establishing a 2.0 percent maximum amount at risk for all groups, so 
that combined with the PQRS adjustment, the total would be consistent 
with the 4.0 percent at risk under the first year of the MIPS.
    Response: We appreciate the commenters' support of our proposals. 
We believe that any significant change in the payment adjustment 
amounts under the VM from CY 2017 to CY 2018, which is the final year 
in which the VM will apply to payments, would not be consistent with 
our intention to maintain stability as we transition to the MIPS in CY 
2019.
    Final Policy: As discussed in section III.M.4.c. of this final rule 
with comment period, for the CY 2018 VM, we are finalizing that we will 
continue to apply the quality-tiering methodology to all groups and 
solo practitioners in Category 1. We are also finalizing that groups 
and solo practitioners will be subject to upward, neutral, or downward 
adjustments derived under the quality-tiering methodology, with the 
exception finalized in the CY 2015 PFS final rule with comment period 
(79 FR 67937), that groups consisting of nonphysician EPs and solo 
practitioners who are nonphysician EPs will be held harmless from 
downward adjustments under the quality-tiering methodology in CY 2018. 
We finalized modifications to ensure that the measures used to

[[Page 71290]]

calculate the VM for solo practitioners and groups of all sizes are 
reliable, in sections III.M.4.c. and III.M.4.k. of this final rule with 
comment period.
    For CY 2018, we are finalizing that we will apply a negative ``-
4.0'' percent VM to physicians, PAs, NPs, CNSs, and CRNAs in groups 
with 10 or more EPs that fall in Category 2. In addition, we will set 
the maximum downward adjustment under the quality-tiering methodology 
in CY 2018 to negative ``-4.0'' percent for physicians, PAs, NPs, CNSs, 
and CRNAs in groups with 10 or more EPs classified as low quality/high 
cost and set the adjustment to negative ``-2.0'' percent for groups 
classified as either low quality/average cost or average quality/high 
cost. We will also set the maximum upward adjustment under the quality-
tiering methodology in CY 2018 to +4.0x for physicians, PAs, NPs, CNSs, 
and CRNAs in groups with 10 or more EPs classified as high quality/low 
cost and set the adjustment to +2.0x for groups classified as either 
average quality/low cost or high quality/average cost. Table 47 shows 
the final quality-tiering payment adjustment amounts for CY 2018 for 
physicians, PAs, NPs, CNSs, and CRNAs in groups with 10 or more EPs. 
These payment amounts will be applicable to all of the physicians, NPs, 
PAs, CNSs, and CRNAs who bill under a group's TIN in CY 2018.
    For CY 2018, we are finalizing that we will apply a negative ``-
2.0'' percent VM to physicians, PAs, NPs, CNSs, and CRNAs in groups 
with between 2 to 9 EPs and physician solo practitioners that fall in 
Category 2. In addition, we will set the maximum downward adjustment 
under the quality-tiering methodology in CY 2018 to negative ``-2.0'' 
percent for physicians, PAs, NPs, CNSs, and CRNAs in groups with 
between 2 to 9 EPs and physician solo practitioners classified as low 
quality/high cost and set the adjustment to negative ``-1.0'' percent 
for groups and physician solo practitioners classified as either low 
quality/average cost or average quality/high cost. We will also set the 
maximum upward adjustment under the quality-tiering methodology in CY 
2018 to +2.0x for physicians, PAs, NPs, CNSs, and CRNAs in groups with 
between 2 to 9 EPs and physician solo practitioners classified as high 
quality/low cost and set the adjustment to +1.0x for groups and 
physician solo practitioners classified as either average quality/low 
cost or high quality/average cost. Table 48 shows the final quality-
tiering payment adjustment amounts for CY 2018 for physicians, PAs, 
NPs, CNSs, and CRNAs in groups with between 2 to 9 EPs and physician 
solo practitioners. These payment adjustment amounts will be applicable 
to all of the physicians, NPs, PAs, CNSs, and CRNAs who bill under a 
group's TIN and to physician solo practitioners in CY 2018.
    For CY 2018, we are finalizing that we will apply a negative ``-
2.0'' percent VM to PAs, NPs, CNSs, and CRNAs in groups that consist of 
nonphysician EPs and solo practitioners who are PAs, NPs, CNSs, and 
CRNAs that fall in Category 2 for the CY 2018 VM. As finalized in 
section III.M.4.b. of this final rule with comment period, the 
nonphysician EPs to which the CY 2018 VM payment adjustments would 
apply are PAs, NPs, CNSs, and CRNAs. We are also finalizing that the 
maximum upward adjustment under the quality-tiering methodology in CY 
2018 for PAs, NPs, CNSs, and CRNAs in groups that consist of 
nonphysician EPs and solo practitioners who are PAs, NPs, CNSs, and 
CRNAs that fall in Category 1 will be +2.0x if a group or solo 
practitioner is classified as high quality/low cost and +1.0x if a 
group or solo practitioner is classified as either average quality/low 
cost or high quality/average cost. As established in the CY 2015 PFS 
final rule with comment period (79 FR 67937), these groups and solo 
practitioners will be held harmless from any downward adjustments under 
the quality-tiering methodology in CY 2018, if classified as low 
quality/high cost, low quality/average cost, or average quality/high 
cost. Table 49 shows the final quality-tiering payment adjustment 
amounts for CY 2018 for PAs, NPs, CNSs, and CRNAs in groups that 
consist of nonphysician EPs and PAs, NPs, CNSs, and CRNAs who are solo 
practitioners. Consistent with the policy adopted in the CY 2013 PFS 
final rule with comment period (77 FR 69324 through 69325), we note 
that the estimated funds derived from the application of the downward 
adjustments to groups and solo practitioners in Category 1 and Category 
2 will be available to all groups and solo practitioners eligible for 
upward adjustments under the VM. Consequently, the upward payment 
adjustment factor (``x'' in Tables 47, 48, and 49) will be determined 
after the performance period has ended based on the aggregate amount of 
downward payment adjustments.

 TABLE 47--Final CY 2018 VM Amounts for the Quality-Tiering Approach for
 Physicians, PAs, NPs, CNSs, and CRNAs in Groups of Physicians with Ten
                               or More EPS
------------------------------------------------------------------------
                                                  Average        High
           Cost/quality            Low quality    quality      quality
------------------------------------------------------------------------
Low cost.........................        +0.0%       +2.0x*       +4.0x*
Average cost.....................        -2.0%        +0.0%       +2.0x*
High cost........................        -4.0%        -2.0%        +0.0%
------------------------------------------------------------------------
* Groups eligible for an additional +1.0x if reporting PQRS quality
  measures and average beneficiary risk score is in the top 25 percent
  of all beneficiary risk scores, where `x' represents the upward
  payment adjustment factor.


 TABLE 48--Final CY 2018 VM Amounts for the Quality-Tiering Approach for
 Physicians, PAs, NPs, CNSs, and CRNAs in Groups of Physicians with 2 To
                 9 EPs and Physician Solo Practitioners
------------------------------------------------------------------------
                                                  Average        High
           Cost/quality            Low quality    quality      quality
------------------------------------------------------------------------
Low cost.........................        +0.0%       +1.0x*       +2.0x*
Average cost.....................        -1.0%        +0.0%       +1.0x*
High cost........................        -2.0%        -1.0%        +0.0%
------------------------------------------------------------------------
* Groups and solo practitioners eligible for an additional +1.0x if
  reporting PQRS quality measures and average beneficiary risk score is
  in the top 25 percent of all beneficiary risk scores, where `x'
  represents the upward payment adjustment factor.


[[Page 71291]]


 TABLE 49--Final CY 2018 VM Amounts for the Quality-Tiering Approach for
 PAs, NPS, CNSs, and CRNAs in Groups Consisting of Nonphysician EPs and
          PAs, NPs, CNSs, and CRNAs Who are Solo Practitioners
------------------------------------------------------------------------
                                                  Average        High
           Cost/quality            Low quality    quality      quality
------------------------------------------------------------------------
Low cost.........................        +0.0%       +1.0x*       +2.0x*
Average cost.....................        +0.0%        +0.0%       +1.0x*
High cost........................        +0.0%        +0.0%        +0.0%
------------------------------------------------------------------------
* Groups and solo practitioners are eligible for an additional +1.0x if
  reporting PQRS quality measures and average beneficiary risk score is
  in the top 25 percent of all beneficiary risk scores, where `x'
  represents the upward payment adjustment factor.


    Comment: Commenters supported our proposal to continue to provide 
an additional upward payment adjustment of +1.0x to groups and solo 
practitioners that are eligible for upward adjustments under the 
quality-tiering methodology and treated the most complex beneficiaries. 
One commenter urged CMS to apply the additional upward payment 
adjustment to all providers that serve high-risk patients, and another 
stated that CMS should include aspects of social risk or community risk 
in the determination of whether beneficiaries fall into the highest 
risk category.
    Response: The additional upward payment adjustment is intended to 
be an incentive for groups and solo practitioners that treat high-risk 
beneficiaries to provide them with higher quality of care at lower 
costs. Therefore, we do not believe it would be appropriate to provide 
the additional upward payment adjustment to all groups and solo 
practitioners that treat high-risk beneficiaries. As discussed in 
section III.M.4.d. of this final rule with comment period, we did not 
make proposals to include aspects of social or community risk in the 
determination of whether a beneficiary would be classified as falling 
in the top 25 percent of risk scores, such that a TIN treating the 
beneficiary would be eligible for the additional +1.0X adjustment, and 
thus make no such adjustments in this final rule with comment period.
    Final Policy: We are finalizing our proposal to continue to provide 
an additional upward payment adjustment of +1.0x to groups and solo 
practitioners that are eligible for upward adjustments under the 
quality-tiering methodology and have average beneficiary risk score 
that is in the top 25 percent of all beneficiary risk scores.
    Comment: One commenter noted the following clarification provided 
for the PQRS program in section III.I.1. of the proposed rule: ``With 
respect to EPs who furnish covered professional services at RHCs and/or 
FQHCs that are paid under the Medicare PFS, we note that we are 
currently unable to assess PQRS participation for these EPs due to the 
way in which these EPs bill for services under the PFS. Therefore, EPs 
who practice in RHCs and/or FQHCs would not be subject to the PQRS 
payment adjustment.'' The commenter requested that we also clarify that 
EPs who practice in RHCs and/or FQHCs would not be subject to the VM.
    Response: As discussed in the CY 2013 PFS final rule with comment 
period (77 FR 69309), the VM provides for differential payment to a 
physician or a group of physicians under the Medicare PFS for items and 
services furnished. Groups and solo practitioners who furnish items and 
services paid under the Medicare PFS are subject to the VM for these 
items and services, regardless of whether they practice in RHCs and/or 
FQHCs. However, as explained in section III.I.1. of the proposed rule 
(80 FR 41816), we are currently unable to assess PQRS participation for 
EPs billing under the PFS who practice in RHCs and/or FQHCs and do not 
also practice in other settings, such as in physician offices. Under 
the PQRS, these EPs will be treated as having avoided the PQRS payment 
adjustment if the EP billing under the PFS reports only place of 
service codes 50 (FQHC) and/or 72 (RHC) during the applicable reporting 
period. As discussed in section III.M.4.c. of this final rule with 
comment period, a TIN will be included in Category 1 if the TIN meets 
the criteria to avoid the PQRS payment adjustment as a group or at 
least 50% of the EPs in the TIN meet the criteria to avoid the PQRS 
payment adjustment as individuals. Further, consistent with the policy 
we are finalizing in section III.M.4.m. of this final rule with comment 
period, a group or solo practitioner will receive a quality composite 
score that is classified as average under the quality-tiering 
methodology if the group or solo practitioner does not have at least 
one quality measure that meets the minimum number of cases required for 
the measure to be included in the calculation of the quality composite.
    Comment: One commenter was concerned that there is no process that 
would permit nonparticipating physicians to receive an upward 
adjustment under the VM.
    Response: We refer the commenter to the CY 2015 PFS final rule with 
comment period (79 FR 67950-67951), in which we explained that the VM 
will apply to all assigned claims, including those submitted by both 
participating and non-participating physicians, and nonphysician EPs to 
the extent the VM is applied to them. Therefore, the VM will affect 
nonparticipating physicians to the extent that they submit assigned 
claims, and they may qualify for an upward adjustment under the 
quality-tiering methodology the same as a participating physician. We 
will monitor these issues, but we continue to believe that these 
policies are reasonable. As explained in previous rulemaking (79 FR 
67950-67951), if the VM were to be applied to non-assigned services, 
then the VM would directly affect beneficiary cost sharing and not 
Medicare payments to physicians, contrary to our intent. We further 
note that over 99 percent of Medicare physician services are billed on 
an assignment related basis by both participating and non-participating 
physicians and other suppliers, with the remainder billed as non-
assigned services by non-participating physicians and other suppliers 
(79 FR 40505).
    Final Policy: After considering the comments received, we are 
finalizing all of the policies discussed in section III.M.4.f. of the 
proposed rule. We are also finalizing the revisions at Sec.  414.1270 
and Sec.  414.1275(c)(4) and (d)(3) to reflect these policies without 
modification.
g. Finality of the VM Upward Payment Adjustment Factor
    Beginning with the CY 2015 VM (77 FR 69324 through 69325), we 
established that the upward payment adjustment factor (``x'') would be 
determined after the performance period has ended based on the 
aggregate amount of downward payment adjustments. We also proposed a 
similar

[[Page 71292]]

policy for the CY 2018 VM as discussed in section III.M.4.f. of the 
proposed rule (80 FR 41903). In the interest of providing EPs that are 
eligible for an upward payment adjustment under the VM with finality, 
and to minimize the cost of reprocessing claims, we proposed that we 
would not recalculate the upward payment adjustment factor for an 
applicable payment adjustment period after the adjustment factor is 
made public, unless CMS determines that a significant error was made in 
the calculation of the adjustment factor. We solicited public comment 
on this proposal.
    Final Policy: We did not receive any comments on this proposal. 
Therefore, we are finalizing our proposal and will not recalculate the 
upward payment adjustment factor for an applicable payment adjustment 
period after the adjustment factor is made public, unless CMS 
determines that a significant error was made in the calculation of the 
adjustment factor.
h. Performance Period
    In the CY 2014 PFS final rule with comment period (78 FR 74772), we 
adopted a policy that we will use performance on quality and cost 
measures during CY 2015 to calculate the VM that would apply to items 
and services for which payment is made under the PFS during CY 2017. 
Likewise, we proposed to use CY 2016 as the performance period for the 
VM adjustments that will apply during CY 2018. Accordingly, we proposed 
to add Sec.  414.1215(d) to indicate that the performance period is CY 
2016 for VM adjustments made in the CY 2018 payment adjustment period. 
We solicited comment on this proposal.
    The following is a summary of the comments we received on this 
proposal.
    Comment: One commenter supported our proposal to use CY 2016 as the 
performance period for the 2018 VM, while another commenter objected 
stating that it is difficult for groups to translate how performance 
affects payments two years later and urged CMS to eliminate the gap 
between performance and payment years. One commenter asked that we 
clarify whether CY 2016 will be the last performance period for the VM 
program.
    Response: In the CY 2012 PFS final rule with comment period (76 FR 
73435), CY 2013 PFS final rule with comment period (77 FR 69313-69314), 
and CY 2014 PFS final rule with comment period (78 FR 74771-74772), we 
addressed how we considered shortening the gap between the performance 
period and the payment adjustment period. As we explained in the CY 
2012 PFS final rule with comment period (76 FR 73435), we explored 
different options to close the gap between the performance period and 
the payment adjustment period, but found that none of them would have 
permitted sufficient time for physicians and groups of physicians to 
report measures or have their financial performance measured over a 
meaningful period, or for us to calculate a VM and notify physicians 
and groups of physicians of their quality and cost performance and VM 
prior to the payment adjustment period.
    As discussed in section III.M.5.a. of this final rule with comment 
period, in April 2015, we made available 2014 Mid-Year QRURs to groups 
of physicians and physician solo practitioners nationwide based on 
performance from July 1, 2013, through June 30, 2014. We plan to make 
available the 2015 and 2016 Mid-Year QRURs during the spring of 2016 
and 2017, respectively. The Mid-Year QRURs are intended to provide 
groups and solo practitioners with interim information about their 
performance on the claims-based quality outcome measures and cost 
measures that are a subset of the measures that were used to calculate 
the VM. Therefore, we are finalizing our proposal to use CY 2016 as the 
performance period for the VM adjustments that will apply during CY 
2018.
    As discussed in section III.M.4.b. of this final rule with comment 
period, under section 1848(p)(4)(B)(iii) of the Act, as amended by 
section 101(b)(3) of MACRA, the VM shall not be applied to payments for 
items and services furnished on or after January 1, 2019. Therefore, CY 
2018 will be the final payment adjustment period and CY 2016 will be 
the final performance period under the VM.
    Final Policy: After considering public comments received, we are 
finalizing our proposal to use CY 2016 as the performance period for 
the VM adjustments that will apply during CY 2018 and finalizing the 
addition of Sec.  414.1215(d) without modification.
i. Quality Measures
(1) PQRS Reporting Mechanisms
    In the CY 2016 PFS proposed rule (80 FR 41904), we stated our 
belief that it is important to continue to align the VM for CY 2018 
with the requirements of the PQRS, because quality reporting is a 
necessary component of quality improvement. We also sought to avoid 
placing an undue burden on EPs to report such data. Accordingly, for 
purposes of the VM for CY 2018, we proposed to continue to include in 
the VM all of the PQRS GPRO reporting mechanisms available to groups 
for the PQRS reporting periods in CY 2016 and all of the PQRS reporting 
mechanisms available to individual EPs for the PQRS reporting periods 
in CY 2016. These reporting mechanisms are described in Tables 20 and 
21 of the proposed rule (80 FR, 41825).
(2) PQRS Quality Measures
    We proposed to continue to use all of the quality measures that are 
available to be reported under these various PQRS reporting mechanisms 
to calculate a group or solo practitioner's VM in CY 2018 to the extent 
that a group (or individual EPs in the group, in the case of the ``50 
percent option'') or solo practitioner submits data on these measures. 
These PQRS quality measures are described in Tables 22 through 30 of 
the proposed rule (80 FR 41830).
    The following is the summary of comments we received on these 
proposals.
    Comment: Commenters supported the continued alignment of the VM 
with PQRS requirements. However, some commenters raised concerns about 
the lack of applicable measures for multiple specialties.
    Response: We thank the commenters for their support of our 
continued alignment with PQRS. In previous rulemakings we have 
committed to expanding the specialty measures available in PQRS to more 
accurately measure the performance on quality of care furnished by 
specialists; PQRS now has specialty measure sets (for example; 
Pathology preferred measure set, radiology preferred measure set, and 
ophthalmology preferred measure set) that can be utilized as a guide to 
assist eligible professionals in choosing measures applicable to their 
specialty. We reaffirm our commitment to using measures of performance 
across specialties that are valid and reliable for the VM. As discussed 
in section III.M.4.m. of this final rule with comment period, we are 
finalizing that beginning in the CY 2016 payment adjustment period, a 
group or solo practitioner subject to the VM will receive a quality 
composite score that is classified as average under the quality-tiering 
methodology if the group or solo practitioner does not have at least 
one quality measure that meets the minimum number of cases required for 
the measure to be included in the calculation of the quality composite.
    Final Policy: After consideration of the comments received, we are 
finalizing our proposal for the CY 2018 VM to include all of the PQRS 
GPRO

[[Page 71293]]

reporting mechanisms available to groups for the PQRS reporting periods 
in CY 2016 and all of the PQRS reporting mechanisms available to 
individual EPs for the PQRS reporting periods in CY 2016. These 
reporting mechanisms are described in Tables 27 and 28 of this final 
rule with comment period. Additionally, we are finalizing our proposal 
to use all of the quality measures that are available to be reported 
under these various PQRS reporting mechanisms to calculate a group or 
solo practitioner's VM in CY 2018 to the extent that a group (or 
individual EPs in the group, in the case of the ``50 percent option'') 
or solo practitioner submits data on these measures. These quality 
measures are described in Table 29 through 42 of this final rule with 
comment period.
(3) Benchmarks for eCQMs
    Currently, the VM program utilizes quality of care measure 
benchmarks for a given performance year that are calculated as the 
case-weighted mean of the prior year's performance rates, inclusive of 
all available PQRS reporting mechanisms for that measure (claims, 
registries, Electronic Health Record (EHR), or Web Interface (WI)). We 
finalized this policy in CY 2013 and stated we would consider the 
effects of our policy as we implemented the VM and that we may consider 
changes and refinements in the future (77 FR 69322).
    From experience in utilizing PQRS measures in the VM, we have 
become aware that a given measure may be calculated differently when it 
is collected through an EHR, and made a proposal to address this issue. 
We referred to quality measures collected through EHRs as ``eCQMs.'' We 
noted several variances with eCQMs compared to equivalent measures 
reported via a different reporting mechanism. First, the inclusion of 
all-payer data for the eCQMs differentiates them sufficiently from 
their equivalent measures reported via the other PQRS reporting 
mechanisms, which utilize Medicare FFS data. The inclusion of all-payer 
data may increase the cohort size and incorporate a pool of 
beneficiaries with different characteristics than those captured with 
Medicare FFS data. As our goal is to focus on how groups of EPs or 
individual EPs' performance differs from the benchmark on a measure-by-
measure basis, we recognize the need to utilize separate eCQM 
benchmarks that allow us to compare eCQM measure performance rates to a 
benchmark that better reflects the measures' specifications. Second, 
eCQMs follow a different annual update cycle than do other versions of 
measures, and consequently, they are not always consistent with the 
current version of a measure as it is reported via claims, registries, 
or Web Interface. For example, during a given performance period, an 
eCQM's specifications might require data collection on a different age 
range than the specifications of the same measure reported via other 
reporting mechanisms. This means that the eCQM version of a measure may 
differ from the specifications of the all-mechanism benchmark, to which 
it is currently compared. Because of these differences, we proposed to 
change our benchmark policy to indicate that eCQMs, as identified by 
their CMS eMeasure IDs, which are distinct from the CMS/PQRS measure 
numbers for other reporting mechanisms, will be recognized as distinct 
measures under the VM. As such, we would exclude eCQM measures from the 
overall benchmark for a given measure and create separate eCQM 
benchmarks, based on the CMS eMeasure ID. We proposed to make this 
change beginning with the CY 2016 performance period, for which the 
eCQM benchmarks would be calculated based on CY 2015 performance data.
    We solicited comment on this proposal. The following is a summary 
of the comments we received on this proposal:
    Comment: Commenters were unanimous in their support of this 
proposal. However, while not directly related to this proposal several 
commenters asked for clarification on how benchmarks for quality of 
care measures reported via PQRS QCDRs will be calculated. Specifically, 
they asked whether QCDR measures would only be benchmarked against 
identical measures that are reported via a different QCDR or other 
reporting mechanism. Commenters also requested clarification on whether 
QCDRs will be allowed to develop their own benchmarking methodology or 
if CMS plans to calculate the benchmarks using its current methodology.
    Response: PQRS measures reported via QCDRs will be benchmarked 
according to our current VM benchmarking methodology which is defined 
as follows. The benchmark for quality of care measures reported through 
the PQRS using the claims, registries, QCDR, or web interface is the 
national mean for that measure's performance rate (regardless of the 
reporting mechanism) during the year prior to the performance period. 
Benchmarks for non-PQRS quality of care measures reported via QCDRs 
would also be calculated as the national mean of the measure's 
performance rate across all EPs reporting the measure via different 
QCDRs during the year prior to the performance period. It is important 
to note that measures reported through a QCDR that are new to PQRS 
would not be included in the quality composite for the VM because we 
would not be able to calculate benchmarks for them.
    Final Policy: After consideration of the comments received, we are 
finalizing our proposal to exclude eCQM measures from the overall 
benchmark for a given measure and create separate eCQM benchmarks, 
based on the CMS eMeasure ID beginning with the CY 2016 performance 
period for which the eCQM benchmarks would be calculated based on CY 
2015 performance data. We will finalize corresponding changes to Sec.  
414.1250(a).
(4) CAHPS Reporting
    In our efforts to maintain alignment with the PQRS quality 
reporting requirements, we noted in the proposed rule that the criteria 
for administration of the CAHPS for PQRS survey for the CY 2016 
performance period will contain 6 months of data (80 FR 41904). We 
believe that the CAHPS for PQRS data administered during this 6-month 
period would be sufficiently reliable so that we could meaningfully 
include it in a group's quality composite score under the VM, should 
they elect to have CAHPS for PQRS included in their VM calculation. For 
us to use the data to calculate the score, we would require data for 
each summary survey measure on at least 20 beneficiaries which is the 
reliability standard for the VM (77 FR 69322-69323). We noted that we 
took a similar approach in the CY 2014 PFS final rule with comment 
period (78 FR 74772) with regard to the 6-month reporting period for 
individual eligible professionals reporting via qualified registries 
under PQRS for the CY 2014 PQRS incentive and CY 2016 payment 
adjustment. Additionally, in the CY 2015 PFS final rule with comment 
period (79 FR 67956), we noted that groups with two or more EPs could 
elect to include the patient experience of care measures collected 
through the PQRS CAHPS survey for CY 2015 in their VM for CY 2017. We 
proposed to continue this policy for the CY 2016 performance period for 
the CY 2018 VM. We did not receive comments on this proposal, and 
therefore, are finalizing our policy that groups with 2 or more EPs 
could elect to include the patient experience of care measures 
collected through the PQRS CAHPS survey for the CY 2016 performance 
period for the CY 2018 VM. We note that this policy for the VM is 
separate from the CAHPS reporting requirements under the PQRS.

[[Page 71294]]

(5) Quality Measures for the Shared Savings Program
    In the CY 2015 PFS final rule with comment period (79 FR 67957), we 
finalized a policy to use the ACO GPRO Web Interface measures and the 
Shared Savings Program ACO all-cause readmission measure to calculate a 
quality composite score for groups and solo practitioners who 
participate in an ACO under the Shared Savings Program. Also, we 
finalized a policy to apply the benchmark for quality measures for the 
VM as described under Sec.  414.1250 to determine the standardized 
score for quality measures for groups and solo practitioners 
participating in ACOs under the Shared Savings Program.
    We believe patient surveys are important tools for assessing 
beneficiary experience of care and outcomes. Accordingly, we proposed 
that starting with the CY 2018 payment adjustment period, the ACO CAHPS 
survey will be required as an additional component of the VM quality 
composite for TINs participating in the Shared Savings Program. CAHPS 
surveys for Shared Savings Program ACOs have been collected since 2013, 
for the 2012 reporting period. In the 2014 reporting period, we 
provided two versions of the CAHPS for ACOs survey to assess patient 
experience ACO-8 and ACO-12, with Shared Savings Program ACOs having 
the option to use either survey. We note that under the VM CAHPS for 
PQRS is optional for groups that report it and these groups must elect 
to have their CAHPS performance used in their VM quality composite 
calculations. As both PQRS and Shared Savings Program ACOs report on 
CAHPS for their Medicare FFS populations, there is an overlap between 
the CAHPS survey data collected for both programs and we have 
calculated 2014 performance period prior year benchmarks on 11 of the 
12 ACO CAHPS summary survey measures for the VM. We believe that by the 
CY 2016 performance period, we will have sufficient data and experience 
with calculating these survey measures in the VM, to require the ACO 
CAHPS measures in conjunction with the GPRO WI measures and the all-
cause readmission measure in the calculation of a quality composite 
score for groups and solo practitioners participating in an ACO under 
Shared Savings Program. We proposed to include the CAHPS for ACOs 
survey in the quality composite of the VM for TINs participating in 
ACOs in the Shared Savings Program, beginning with the CY 2016 
performance period and the CY 2018 payment adjustment period. We 
proposed that whichever version of the CAHPS for ACOs survey the ACO 
chooses to administer will be included in the TIN's quality composite 
for the VM. We proposed to make corresponding changes to Sec.  
414.1210(b)(2)(i)(B). We solicited comment on this proposal.
    The following is a summary of the comments we received on this 
proposal.
    Comment: One commenter supported this proposal, and we did not 
receive any opposing comments.
    Response: We thank the commenter for their support.
    Final Policy: After consideration of the comments received, we are 
finalizing our proposal to include the CAHPS for ACOs survey in the 
quality composite of the VM for TINS participating in ACOs in the 
Shared Savings Program, beginning with the CY 2016 performance period 
and the CY 2018 payment adjustment period. We are also finalizing that 
whichever version of the CAHPS for ACOs survey the ACO chooses to 
administer will be included in the TIN's quality composite for the VM. 
We finalized corresponding changes to Sec.  414.1210(b)(2)(i)(B).
j. Expansion of the Informal Inquiry Process To Allow Corrections for 
the Value-Based Payment Modifier
    Section 1848(p)(10) of the Act provides that there shall be no 
administrative or judicial review under section 1869 of the Act, 
section 1878 of the Act, or otherwise of the following:
     The establishment of the VM.
     The evaluation of the quality of care composite, including 
the establishment of appropriate measures of the quality of care.
     The evaluation of the cost composite, including the 
establishment of appropriate measures of costs.
     The dates of implementation of the VM.
     The specification of the initial performance period and 
any other performance period.
     The application of the VM.
     The determination of costs.
    These statutory requirements regarding limitations of review are 
reflected in Sec.  414.1280. We previously indicated in the CY 2013 PFS 
final rule with comment period (77 FR 69326) that we believed an 
informal review mechanism is appropriate for groups of physicians to 
review and to identify any possible errors prior to application of the 
VM, and we established an informal inquiry process at Sec.  414.1285. 
We stated that we intended to disseminate reports containing CY 2013 
data in fall 2014 to groups of physicians subject to the VM in 2015 and 
that we would make a help desk available to address questions related 
to the reports, and we have since followed through on those actions.
    In the CY 2015 final rule with comment period (79 FR 67960), for 
the CY 2015 payment adjustment period, we finalized: (1) a February 28, 
2015, deadline for a group to request correction of a perceived error 
made by CMS in the determination of its VM; and (2) a policy to 
classify a TIN as ``average quality'' in the event we determined that 
we have made an error in the calculation of the quality composite. 
Beginning with the CY 2016 payment adjustment period, (1) we finalized 
a deadline of 60 days that would start after the release of the QRURs 
for the applicable performance period for a group or solo practitioner 
to request a correction of a perceived error related to the VM 
calculation, and (2) we stated we would take steps to establish a 
process for accepting requests from physicians to correct certain 
errors made by CMS or a third-party vendor (for example, PQRS-qualified 
registry). Our intent was to design this process as a means to 
recompute a TIN's quality composite and/or cost composite in the event 
we determine that we initially made an erroneous calculation. We noted 
that if the operational infrastructure was not available to allow this 
recomputation, we would continue the approach for the CY 2015 payment 
adjustment period to classify a TIN as ``average quality'' in the event 
we determine that we have made an error in the calculation of the 
quality composite. We finalized that we would recalculate the cost 
composite in the event that an error was made in the cost composite 
calculation. We noted that we would provide additional operational 
details as necessary in subregulatory guidance.
    Moreover, for both the CY 2015 payment adjustment period and future 
adjustment periods, we finalized a policy to adjust a TIN's quality-
tier if we make a correction to a TIN's quality and/or cost composites 
because of this correction process.
    We further noted that there is no administrative or judicial review 
of the determinations resulting from this expanded informal inquiry 
process under section 1848(p)(10) of the Act.
    In the CY 2015 final rule for the CY 2016 payment adjustment 
period, we noted that if the operational infrastructure is not 
available to allow the recomputation of quality measure data we would 
continue the approach of the initial corrections process to classify a 
TIN as ``average quality'' in the event we determine a third-party 
vendor error or CMS made an error in the calculation of the quality 
composite. We proposed

[[Page 71295]]

to continue this policy for the CY 2017 payment adjustment and future 
adjustment periods or until such a time that the operational 
infrastructure is in place to allow the recomputation of data. We 
solicited comment on this proposal.
    The following is a summary of the comments we received on this 
proposal.
    Comment: Many commenters supported this proposal; however, several 
commenters cautioned about the over-reliance on the automatic ``average 
quality'' designation as it may not accurately reflect the quality of 
truly high performers and may penalize physicians for errors that are 
outside of their control. One commenter also suggested extending the 
review period to ninety days to give practitioners enough time to 
thoroughly review the QRURs.
    Response: We acknowledge commenters' concerns about the ``average 
quality'' designation; however we continue to believe the proposal to 
assign ``average quality'' if it is not possible for us to recompute 
the quality composite is the best alternative in light of the quality 
data that will be available during the informal inquiry process and 
prior to application of the VM adjustments. We believe that a 60-day 
review period allows ample time for practitioners to access and review 
their QRURs. The 60-day timeframe also enables us to make corrections 
prior to the start of the payment adjustment period, reducing 
administrative burden and costs of reprocessing claims for both 
physicians and CMS.
    Final Policy: After consideration of the comments received, for the 
CY 2017 and CY 2018 payment adjustment periods, we are finalizing a 
deadline of 60 days that would start after the release of the QRURs for 
the applicable performance period for a group or solo practitioner to 
request a correction of a perceived error related to the VM 
calculation. We are finalizing the continuation of the process for 
accepting requests from groups and solo practitioners to correct 
certain errors made by CMS or a third-party vendor (for example, PQRS-
qualified registry). We would continue the approach of the initial 
corrections process to classify a TIN as ``average quality'' in the 
event we determine a third-party vendor error or CMS made an error in 
the calculation of the quality composite and the infrastructure was not 
available to allow for recomputation of the quality measure data.
    Our overall approach to the VM is based on participation in the 
PQRS. Beginning with the CY 2016 payment adjustment period for the VM, 
groups of physicians (or individual EPs in the group, in the case of 
the 50 percent option) must meet the criteria to avoid the CY 2016 PQRS 
payment adjustment, to be classified as Category 1 for the VM and avoid 
an automatic downward adjustment under the VM. The payment adjustment 
for the VM is applied at the TIN level whereas the PQRS payment 
adjustment is applied at the TIN/NPI level. We believe that we need a 
policy to address the circumstance in which a group is initially 
determined not to have met the criteria to avoid the PQRS payment 
adjustment and subsequently, through the PQRS informal review process, 
at least 50 percent of its EPs are determined to have met the criteria 
to avoid the PQRS payment adjustment as individuals. We note that the 
PQRS and VM informal review submission periods will occur during the 60 
days following release of the QRURs for the 2016 VM and subsequent 
years. We believe that this will allow us sufficient time to process 
the majority of the requests before finalizing the adjustment factor. 
We proposed to reclassify a TIN as Category 1 when PQRS determines on 
informal review that at least 50 percent of the TIN's EPs meet the 
criteria for satisfactory reporting of data on PQRS quality measures as 
individuals for the relevant CY PQRS payment adjustment, or in lieu of 
satisfactory reporting, satisfactorily participate in a PQRS QCDR for 
the relevant CY PQRS payment adjustment. Moreover, we noted that if the 
group was initially classified as Category 2, then we do not expect to 
have data for calculating their quality composite, in which case they 
would be classified as ``average quality''; however, if the data is 
available in a timely manner, then we would recalculate the quality 
composite.
    We solicited comments on this proposal. The following is a summary 
of the comments we received on this proposal:
    Comment: Commenters were unanimous in their support for this 
proposal.
    Response: We thank the commenters for their support.
    Final Policy: After consideration of the comments received, we are 
finalizing our proposal to reclassify a TIN as Category 1 when PQRS 
determines on informal review that at least 50 percent of the TIN's EPs 
meet the criteria to avoid the PQRS downward payment adjustment for the 
relevant payment adjustment year. If the group was initially classified 
as Category 2, then we would not expect to have data for calculating 
their quality composite, in which case they would be classified as 
``average quality''; however, if the data is available in a timely 
manner, then we would recalculate the quality composite.
k. Minimum Episode Count for the Medicare Spending Per Beneficiary 
(MSPB) Measure
    In the CY 2014 PFS final rule with comment period (78 FR 74780), we 
finalized inclusion of the MSPB measure as proposed in the cost 
composite beginning with the CY 2016 VM, with a CY 2014 performance 
period. We finalized a minimum of 20 MSPB episodes for inclusion of the 
MSPB measure in a TIN's cost composite. We stated that the non-
specialty-adjusted version of the measure using 2011 data had high 
reliability with a 20-episode minimum (79 FR 74779).
    The reliability results presented in the CY 2014 PFS final rule 
with comment period (79 FR 74779), which supported the 20-episode case 
minimum, were based on the non-specialty-adjusted measure instead of 
the specialty-adjusted measure. We refined the methodology to account 
for the change in measure specifications and the results showed that 
the specialty-adjusted measure was more reliable at higher episode case 
minimums. Using a more appropriate methodology for calculating 
reliability, we found that the specialty-adjusted measure did not have 
moderate or high reliability with a 20 episode minimum for many groups 
(80 FR 41906).
    Given that our analysis demonstrated the measure had moderate 
reliability (above 0.4) for only 40.1 percent of all groups and solo 
practitioners and is as low as 18.1 percent for solo practitioners with 
an episode minimum of 20, we proposed to increase the episode minimum 
to 100 episodes beginning with the CY 2017 payment adjustment period 
and CY 2015 performance period. We also noted that we had considered 
revising the case minimum for the MSPB measure beginning with the CY 
2016 payment adjustment period and CY 2014 performance period, but did 
not propose this policy, because this PFS rule will be finalized after 
the 2014 QRURs with the 2016 VM payment adjustment information are 
released. We noted that, using an episode minimum of 20 for the 2016 
VM, the MSPB measure has moderate reliability for the majority of the 
groups that will be subject to the VM in 2016 (60.9 percent of groups 
with 10-24 EPs, 66.5 percent of groups with 25-99 EPs and 89.7 percent 
of groups with 100 or more EPs).

[[Page 71296]]

    We believe that it is important to ensure that only reliable 
measures are included in the VM. We also noted that we had considered 
increasing the episode minimum to 75 instead of 100. This would have 
allowed us to include the MSPB measure in the cost composite for a 
larger number of groups but we stated that we believed that the 
reliability for solo practitioners with a minimum of 100 episodes was 
preferable to the reliability when using a 75 episode minimum.
    Therefore, we proposed to add Sec.  414.1265(a)(2) to reflect a 
case minimum of 100 episodes for the MSPB measure beginning with the CY 
2017 payment adjustment period and CY 2015 performance period. We 
solicited comment on this proposal, as well as on a 75-episode minimum 
or other potential minimum case thresholds for this measure.
    The following is a summary of the comments we received on this 
proposal to establish a case minimum of 100 episodes for the MSPB 
measure.
    Comment: Most commenters that responded to the proposal generally 
supported the proposal to increase the episode minimum to 100 episodes, 
given that the results for the specialty-adjusted measure were more 
reliable at higher episode minimums and that this would result in 
increased accuracy of the MSPB measure. Many commenters that supported 
the proposal also suggested that CMS consider an even higher minimum 
number of episodes (for example, 200 episodes). A few commenters 
opposed the proposal and/or suggested a lower minimum number of 
episodes such as 50. These commenters indicated their concern with a 
scenario we had discussed in the proposed rule in which a group that 
would have performed well on this measure would no longer have this 
measure included in its cost composite as a result of the proposal, 
which could negatively impact their TIN's cost composite score, and 
ultimately their VM adjustment. Some commenters suggested that any 
measures that cannot meet a reliability standard of at least 0.7 should 
be rejected.
    Response: We appreciate the commenters' support for our proposal to 
raise the episode minimum for this measure. As discussed in section 
III.M.4.c. of this final rule with comment period, commenters expressed 
concerns over small sample sizes, as they related to application of 
downward adjustments under quality-tiering for solo practitioners and 
groups of two to nine EPs. In response to those comments, we conducted 
a more granular reliability analysis, based on which we determined a 
minimum of 125 episodes was required in order for this measure to meet 
our average reliability threshold of 0.4 for solo practitioners and 
groups of two to nine EPs (see Table 46 in section III.M.4.c. of this 
final rule with comment period). Based on this new analysis, we believe 
that a minimum of 125 episodes is preferable to the reliability 
associated with the other minimum numbers of episodes suggested by some 
commenters. For example, a 50 or 75 episode minimum would allow us to 
include the MSPB measure in the cost composite for a larger number of 
groups, but we believe that the reliability for solo practitioners and 
groups of two to five EPs with a minimum of 125 episodes is preferable 
to the reliability when using a 50 or 75 episode minimum. As discussed 
in the proposed rule, establishing a higher case minimum reduces the 
number of groups and solo practitioners for whom we would be able to 
include an MSPB calculation in the cost composite. Our latest analysis 
supports this finding, with 6,401 TINs having 125 or more cases for 
MSPB, as compared to the 7,904 TINs had 100 or more cases, based on 
2014 data. However, we do not believe we should use the measure in 
calculating the cost composite if it is not reliable. Further, we 
believe that a minimum of 125 episodes is preferable to a higher 
minimum such as 200 episodes suggested by some other commenters. A 
higher minimum might slightly increase the reliability of the measure 
but would further reduce the number of groups and solo practitioners 
for whom we would be able to include an MSPB calculation in the cost 
composite.
    We acknowledged in the proposed rule (80 FR 41906) that this change 
in policy could create a situation in which a group that would have 
performed well on this measure would no longer have this measure 
included in its cost composite, which could negatively impact their 
cost composite, and ultimately their VM adjustment. However, we 
continue to believe that it would not be appropriate to include this 
measure in the cost composite with a 20-episode minimum at a sample 
size that does not produce reliable results even for those groups that 
performed well. Rather, we believe that it is more important to ensure 
that only reliable measures are included in the VM, and we want to 
avoid a situation in which groups or solo practitioners who may have 
performed poorly on the measure using a 20-episode minimum may receive 
a downward adjustment to payments under the VM as a result of a measure 
that was not reliable.
    Final Policy: After consideration of the comments received, we are 
finalizing an episode minimum of 125 episodes for the MSPB measure 
beginning with the CY 2017 payment adjustment period and CY 2015 
performance period. We are finalizing an addition at Sec.  
414.1265(a)(2) to reflect this final policy.
l. Inclusion of Maryland Hospital stays in definition of Index 
Admissions
    In the CY 2014 PFS final rule with comment period (78 FR 74780), we 
finalized inclusion of the MSPB measure as proposed in the cost 
composite beginning with the CY 2016 VM, with a CY 2014 performance 
period. We indicated in the 2014 proposed rule with comment period (78 
FR 43494) that we would use the MSPB measure as specified for the 
Hospital Inpatient Quality Reporting (IQR) and Hospital Value Based 
Purchasing (VBP) Program with the exception of changes to the 
attribution methodology. The MSPB measure used for the Hospital IQR and 
Hospital VBP Programs does not include hospitalizations at Maryland 
hospitals as an index admission that would trigger an episode because 
Maryland hospitals are not paid under the Inpatient Prospective Payment 
System (IPPS) and do not participate in the Hospital VBP Program. The 
result is that groups and solo practitioners in Maryland would not have 
the MSPB measure included in their cost composite under the Value 
Modifier. We proposed that, beginning with the 2018 VM, we change the 
definition of index admission used for the MSPB measure used in the VM 
program to include inpatient hospitalizations at Maryland hospitals. 
This change would allow CMS to include this measure in the calculation 
of the cost composite for groups and solo practitioners in Maryland, 
consistent with what is done in other states. Under this proposal, we 
would continue to standardize all Medicare claims as described in the 
``CMS Price Standardization'' document, which can be found in the 
``Measure Methodology'' section at http://qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772053996. The standardization methodology is currently used in the 
calculation of the MSPB measure and is continually being reviewed and 
updated to account for payment policy changes and updates; any 
methodological changes made across years are documented in the Appendix 
of the ``CMS Price

[[Page 71297]]

Standardization'' document. We solicited comment on our proposal to, 
beginning with the 2018 VM, include hospitalizations at Maryland 
hospitals as an index admission for the MSPB measure for the purposes 
of the VM program.
    The following is a summary of the comments we received on this 
proposal.
    Comment: One commenter supported the proposal and we did not 
receive any opposing comments.
    Response: We appreciate the commenter's support for the proposal. 
This change will allow us to include this measure in the calculation of 
the cost composite for groups and solo practitioners in Maryland, 
consistent with what is done in other states.
    Final Policy: After consideration of the comments received, we are 
finalizing the proposal to, beginning with the CY 2018 payment 
adjustment period, include hospitalizations at Maryland hospitals as an 
index admission for the MSPB measure for the purposes of the VM.
m. Average Quality and Average Cost Designations in Certain 
Circumstances
    In the CY 2015 PFS final rule with comment period (79 FR 67934), we 
clarified a policy that was finalized at Sec.  414.1270, that beginning 
with the CY 2016 payment adjustment period, a group or solo 
practitioner subject to the VM would receive a cost composite score 
that is classified as average under the quality-tiering methodology if 
the group or solo practitioner does not have at least one cost measure 
with at least 20 cases. We observed that groups that do not provide 
primary care services are not attributed beneficiaries or are 
attributed fewer than 20 beneficiaries, and thus, we are unable to 
calculate reliable cost measures for those groups of physicians (77 FR 
69323). We stated in the CY 2014 PFS final rule with comment period (78 
FR 74780) that we believe this policy is reasonable because we would 
have insufficient information on which to classify the groups' costs as 
``high'' or ``low'' under the quality-tiering methodology. Moreover, we 
believed that to the extent a group's quality composite is classified 
as high or low, the group's VM should reflect that classification. As 
discussed in section III.M.4.k. of this final rule with comment period, 
beginning with the CY 2017 payment adjustment period, we proposed to 
increase the minimum number of episodes for inclusion of the MSPB 
measure in the cost composite to 100 episodes. Therefore, we proposed 
to revise Sec.  414.1265(b) to indicate that a group or solo 
practitioner subject to the VM would receive a cost composite score 
that is classified as average under the quality-tiering methodology if 
the group or solo practitioner does not have at least one cost measure 
that meets the minimum number of cases required for the measure to be 
included in the calculation of the cost composite, as required in Sec.  
414.1265. To improve the organization of the regulation text, we also 
proposed to move the provisions at Sec.  414.1270(b)(5) and (c)(5) to 
Sec.  414.1265(b)(3).
    The quality composite score calculated for each group and solo 
practitioner subject to the VM is based on the PQRS measures reported 
by the group or solo practitioner and three claims-based outcome 
measures, as described in Sec.  414.1225 and Sec.  414.1230, 
respectively. A quality measure must have 20 or more cases to be 
included in the calculation of the quality composite; however, 
beginning with the CY 2017 payment adjustment period, the all-cause 
hospital readmissions measure must have 200 or more cases to be 
included. Section 414.1265(a) describes the minimum number of cases 
required for the quality and cost measures to be included in the 
calculation of the quality and cost composites, respectively. We 
believe it is important to have a policy to determine the designation 
of the quality composite when a quality measure cannot be calculated 
reliably that is similar to the one established for the cost composite. 
Therefore, we proposed that beginning in the CY 2016 payment adjustment 
period, a group or solo practitioner subject to the VM would receive a 
quality composite score that is classified as average under the 
quality-tiering methodology if the group or solo practitioner does not 
have at least one quality measure that meets the minimum number of 
cases required for the measure to be included in the calculation of the 
quality composite, as required at Sec.  414.1265. Consequently, to the 
extent a group or solo practitioner's cost composite is classified as 
high, average, or low, the group or solo practitioner's VM would 
reflect that classification. We proposed to incorporate this proposal 
at Sec.  414.1265(b)(2).
    Current Sec.  414.1265(b) states that in a performance period, if a 
reliable quality of care composite or cost composite cannot be 
calculated, payments will not be adjusted under the VM. In light of our 
proposals discussed in this section of the final rule with comment 
period, we do not believe this policy is necessary beginning with the 
CY 2016 payment adjustment period. As proposed above, the cost 
composite for a group or solo practitioner would be classified as 
average if there is not at least one cost measure that can be 
calculated reliably. Furthermore, we proposed that the quality 
composite for a group or solo practitioner would be classified as 
average if there is not at least one quality measure that can be 
calculated reliably. Therefore, we proposed to specify in Sec.  
414.1265(b)(1) that this policy was applicable only for the CY 2015 
payment adjustment period.
    The following is a summary of the comments we received on this 
proposal.
    Comment: One commenter supported our proposal to classify a quality 
or cost composite as ``average'' if there is not at least one quality 
or cost measure that can be calculated reliably. Some commenters were 
concerned that some practices would be subject to a downward adjustment 
under the quality-tiering methodology if classified as ``average cost 
and low quality'' or ``average quality and high cost'' under the 
proposed policies and recommended that any group or solo practitioner 
that receive an automatic average designation due to a lack of either 
quality or cost measure data should be held harmless from any downward 
payment adjustment under the VM.
    Response: After considering comments we received, we are finalizing 
all of the policies as proposed. We believe that for TINs for which we 
are not able to calculate a reliable quality (or cost) composite score, 
it is appropriate to classify the quality (or cost) composite as 
average under the quality-tiering methodology and determine the VM 
adjustment based on the TIN's available cost (or quality) data.
    In our analysis of the groups that are subject to the 2016 VM 
(without accounting for the informal inquiry process), we found that no 
TIN received a downward adjustment under the quality-tiering 
methodology as a result of being classified as average quality and high 
cost under this policy. We also found that 2 TINs received an upward 
adjustment under the quality-tiering methodology as a result of being 
classified as average quality and low cost under this policy. 
Therefore, we expect these policies to have minimal negative impact on 
groups and solo practitioners.
    Final Policy: As discussed in section III.M.4.k. of this final rule 
with comment period, beginning with the CY 2017 payment adjustment 
period, we are finalizing our proposal to increase the minimum number 
of episodes for inclusion of the MSPB measure in the cost composite to 
125 episodes. Therefore, we are finalizing our

[[Page 71298]]

proposed revisions to Sec.  414.1265(b) to indicate that a group or 
solo practitioner subject to the VM will receive a cost composite score 
that is classified as average under the quality-tiering methodology if 
the group or solo practitioner does not have at least one cost measure 
that meets the minimum number of cases required for the measure to be 
included in the calculation of the cost composite, as required in Sec.  
414.1265. Consequently, to the extent a group or solo practitioner's 
quality composite is classified as high, average, or low, the group or 
solo practitioner's VM will reflect that classification. To improve the 
organization of the regulation text, we are also finalizing our 
proposal to move the provisions at Sec.  414.1270(b)(5) and (c)(5) to 
Sec.  414.1265(b)(3).
    We are finalizing that beginning in the CY 2016 payment adjustment 
period, a group or solo practitioner subject to the VM will receive a 
quality composite score that is classified as average under the 
quality-tiering methodology if the group or solo practitioner does not 
have at least one quality measure that meets the minimum number of 
cases required for the measure to be included in the calculation of the 
quality composite, as required at Sec.  414.1265. Consequently, to the 
extent a group or solo practitioner's cost composite is classified as 
high, average, or low, the group or solo practitioner's VM will reflect 
that classification. We are finalizing the incorporation of this policy 
at Sec.  414.1265(b)(2). This policy is consistent with the policy we 
finalized in the CY 2015 PFS final rule with comment period (79 FR 
67934), that beginning with the CY 2016 payment adjustment period, a 
group or solo practitioner subject to the VM will receive a cost 
composite score that is classified as average under the quality-tiering 
methodology if the group or solo practitioner does not have at least 
one cost measure with at least 20 cases and thus a reliable cost 
composite cannot be calculated for the group or solo practitioner.
    Current Sec.  414.1265(b) states that in a performance period, if a 
reliable quality of care composite or cost composite cannot be 
calculated, payments will not be adjusted under the VM. In light of our 
final policies that the cost composite for a group or solo practitioner 
would be classified as average if there is not at least one cost 
measure that can be calculated reliably and that the quality composite 
for a group or solo practitioner would be classified as average if 
there is not at least one quality measure that can be calculated 
reliably, we are also finalizing our proposal to specify in Sec.  
414.1265(b)(1) that this policy was applicable only for the CY 2015 
payment adjustment period.
n. Technical Changes to the ``Benchmarks for Cost Measures'' section of 
Regulation Text
    In the CY 2014 PFS final rule with comment period (78 FR 74781 to 
74784), we finalized a policy to use the specialty adjustment method to 
create the standardized score for each group's cost measure beginning 
with the CY 2016 VM that refines the peer group methodology to account 
for specialty mix. We also amended Sec.  414.1255 to include this 
policy in the cost composite methodology. We proposed to move Sec.  
414.1255(b) and (c) (describing specialty adjustment of cost measures 
and benchmarks for cost measures) to Sec.  414.1235(c)(4) and (5) (Cost 
measure adjustments) and revise the regulation text to align with the 
specialty adjustment methodology finalized in the CY 2014 PFS final 
rule with comment period. This is a technical change to the regulation 
text only and will not impact how the cost measures will be specialty-
adjusted beginning with the CY 2016 VM.
    For the CY 2015 VM, the peer group for calculating the benchmarks 
for cost measures was all groups of physicians to which beneficiaries 
are attributed and that are subject to the VM (for example, for CY 
2015, the cost measures of groups with 100 or more EPs was compared to 
the cost measures of other groups of 100 or more EPs). About the 
specialty adjustment method, we stated in the CY 2014 PFS final rule 
(78 FR 74783) that this methodology creates one national benchmark for 
each cost measure against which all groups (regardless of size) would 
be assessed in creating the group's standardized score. We did not 
codify this policy in the regulation text in the CY 2014 PFS final rule 
with comment period. We also noted that the benchmark for a cost 
measure includes the performance data for groups and solo practitioners 
that meet the minimum number of cases for that measure as described 
under Sec.  414.1265(a). We believe this policy ensures that only the 
data for measures that are considered statistically reliable are 
included in the benchmarks, in addition to being included in the 
calculation of the cost composite. Therefore, we proposed to codify at 
Sec.  414.1255(b) that beginning with the CY 2016 payment adjustment 
period, the benchmark for each cost measure is the national mean of the 
performance rates calculated for all groups and solo practitioners that 
meet the minimum number cases for that measure under Sec.  414.1265(a). 
We noted that we were not proposing any revisions to the specialty 
adjustment method finalized in the CY 2014 PFS final rule with comment 
period (78 FR 74781 through 74784).
    We did not receive any comments on these proposals, and therefore, 
we are finalizing these technical changes to the regulation text 
without modification.
o. Discussion of Stratification of Cost Measure Benchmarks by 
Beneficiary Risk Score
    In response to our previously-finalized policies, stakeholders have 
suggested that the CMS-hierarchical condition categories (HCC) Risk 
Adjustment methodology used in the total per capita cost measures for 
the VM does not accurately capture the additional costs associated with 
treating the sickest beneficiaries. Some of these commenters stated 
that groups that work exclusively in post-acute and long-term care 
settings would be unable to perform well on cost measures under the 
current methodology. Another commenter stated that beneficiaries who 
receive care at home typically have high HCC scores and higher costs. 
We appreciate the concerns raised by commenters and agree that it is 
important to make adjustments for differences in beneficiary 
characteristics that impact health and cost outcomes and are outside of 
the control of the physician or other eligible professional. We 
continue to believe that our current methodology of using HCC scores 
that include adjustments for Medicare and Medicaid eligibility status 
in addition to diagnoses, and replacing the highest 1 percent of costs 
with the cost of the 99th percentile for the highest cost 
beneficiaries, help address these concerns. To address concerns 
regarding specialties that might routinely treat more complex and 
consequently more costly beneficiaries, we finalized in the CY 2013 PFS 
final rule with comment period that we would apply a specialty 
adjustment to all cost measures used in the VM (78 FR 74776). This 
enables groups' costs to be compared to similarly-comprised groups, 
based on specialty. As discussed in section III.M.4.c. of this final 
rule with comment period, we also note that the VM methodology includes 
additional safeguards to guard against misclassification--we finalized 
in the CY 2013 PFS final rule with comment period (77 FR 69325) the 
adoption of the quality-tiering model where we classify quality 
composite scores and cost composite scores each into high, average, and 
low categories based on

[[Page 71299]]

whether these scores are at least one standard deviation from the mean 
and statistically significantly different from the mean at the 5.0 
percent level of significance, in order to apply the VM bonus or 
penalty only when a group's performance is significantly different from 
the national mean.
    We noted that high costs within the post-acute and long-term care 
settings present a unique opportunity for these professionals to 
improve performance on cost and quality measures. Although we continue 
to encourage professionals to report quality measures for patients in 
these settings and to use the information contained in their QRUR to 
improve and achieve high levels of performance, we stated in the CY 
2015 PFS final rule with comment period (79 FR 67932) that we would 
continue to monitor these groups and solo practitioners' performance 
under the VM and continue to explore potential risk adjustment 
refinements. One option we are considering would be to stratify the 
cost measure benchmarks so that groups and solo practitioners are 
compared to other groups and individual practitioners treating 
beneficiaries with similar risk profiles. In this way, within a given 
grouping (for example, a quartile or decile), there remains an 
opportunity to gain efficiencies in care and lower costs, while 
beneficiary severity of illness and practice characteristics may be 
more fully recognized at a smaller, and likely less-heterogeneous, 
attributed beneficiary level. We did not make any proposals on this 
matter at this time. We solicited feedback on this potential approach, 
as well as other approaches. The following is a summary of the comments 
we received on this potential approach.
    Comment: Nearly all that provided feedback were supportive of 
approaches to stratify the cost measure benchmarks so that groups and 
solo practitioners are compared to other groups and individual 
practitioners treating beneficiaries with similar risk profiles. Many 
of these commenters provided additional suggestions and/or reserve 
final judgment until an evaluation of the impact of this approach is 
made public. Some believe that we should address other methodology 
concerns such as to distinguish between specialists and sub-specialists 
in the same field or between physicians with similar training but very 
different practice profiles such as primary care physicians who are 
office-based versus those who are largely providing care in a hospital, 
skilled nursing facility or patient's home.
    Response: We appreciate the thoughtful suggestions regarding the 
development of ways to stratify the cost measure benchmarks so that 
groups and solo practitioners are compared to other groups and 
individual practitioners treating beneficiaries with similar risk 
profiles.
    After consideration of the comments received, we will continue to 
work with stakeholders to further explore options for risk stratified 
comparisons. If we determine that further changes may be appropriate, 
we will make a proposal through future rulemaking. We will continue to 
learn from and incorporate more information about this issue and 
impacted groups in the annual experience report.
5. Physician Feedback Program
a. CY 2014 Quality and Resource Use Reports (QRURs) Based on CY 2014 
Data and Disseminated in CY 2015
    In fall 2015, we expanded the Physician Feedback Program by making 
QRURs, containing data on cost and quality performance during calendar 
year 2014, available to all solo practitioner EPs and groups of EPs of 
all sizes, as identified by TIN, including nonphysician EP solo 
practitioners and groups comprised of nonphysician EPs. We made the 
2014 QRURs available to Shared Savings Program ACO participant TINs and 
groups that include one or more EPs who participated in a Pioneer ACO 
or the CPC Initiative. The reports contain valuable information about a 
TIN's actual performance during CY 2014 on the quality and cost 
measures that will be used to calculate the CY 2016 VM. For physicians 
in groups of 10 or more, the 2014 QRURs provide information on how a 
group's quality and cost performance will affect their Medicare 
payments in 2016 through the application of the VM based on performance 
in 2014.
    The report provides data on a group's or solo practitioner's 
performance on quality measures they report under the PQRS, as well as 
the three claims-based outcome measures calculated for the VM and 
described at Sec.  414.1230. The 2014 QRUR accommodates new PQRS 
reporting options, including QCDRs and CAHPS for PQRS. In addition, the 
reports present data assessing a group practice's or solo 
practitioner's performance on cost measures and information about the 
services and procedures that contributed most to costs. The cost 
measures in the 2014 QRUR are payment-standardized and risk-adjusted 
and are also specialty-adjusted to reflect the mix of physician 
specialties in a TIN. For the 2014 QRURs, we provided more detailed per 
capita cost of service breakdowns for all six cost measures. The 
reports also contain additional supplementary information on the 
individual PQRS measures for EPs reporting PQRS measures as 
individuals; enhanced drill down tables; and a dashboard with key 
performance measures.
    In response to stakeholder feedback to provide more timely and 
actionable information on outcomes and cost measures, we provided for 
the first time a mid-year report, the 2014 Mid-Year QRUR (MYQRUR) in 
spring 2015. The 2014 MYQRUR was provided to physician solo 
practitioners and groups of physicians nationwide who billed for 
Medicare-covered services under a single TIN over the period of July 1, 
2013, through June 30, 2014. We will disseminate Mid-Year QRURs in the 
spring of each year to provide interim information about performance 
only on those cost and quality outcomes measures that we calculate 
directly from Medicare administrative claims, based on the most recent 
12 months of data that are available. The MYQRURs are for informational 
purposes and do not estimate performance for the calculation of the VM. 
Beginning in spring 2016, we intend to expand the distribution of 
MYQRURs to nonphysician EPs, solo practitioners, and groups composed of 
nonphysician EPs.
    We will continue to refine the QRURs based on stakeholder feedback, 
and we invited comment on which aspects of the QRUR reports have been 
most useful and how we can improve access to and usability of 
performance reports.
    The following is a summary of the comments we received.
    Comment: Commenters were supportive of CMS's intention to make 
QRURs available to all solo practitioner EPs and groups of EPs of all 
sizes, as identified by TIN, including nonphysician EP solo 
practitioners and groups comprised of nonphysician EPs and Shared 
Savings Program ACO participant TINs and groups that include one or 
more EPs who participated in a Pioneer ACO or the CPC Initiative. 
However, commenters expressed concerns about timeliness of reports; the 
accessibility of the reports; the complexity of the reports, and the 
outreach regarding the VM program.
    Response: In response to previous comments about the timeliness of 
reports, this year we disseminated the Mid-Year QRURs, the Annual QRURs 
and the Supplemental QRURs. We believe that these reports provide 
groups and solo practitioners with more timely and actionable 
information on the quality and cost of the care they furnish. We 
acknowledge that there is a

[[Page 71300]]

process that must be followed to access the reports and would note that 
it is important to protect the information contained in the reports. 
These security measures are necessary to protect the data contained in 
the reports and ensure that only authorized users are able to access 
them. We have made strides to simplify the outreach around how to 
access the reports and would direct readers to the step-by-step 
instructions at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeedbackProgram/Obtain-2013-QRUR.html. We also 
acknowledge that the QRUR reports could be perceived as complex. They 
contain a significant amount of valuable data to help physicians and 
other eligible professionals understand and improve the quality and 
efficiency of care they provide. We have added a performance dashboard 
to provide a visual snapshot and summary of performance to the 
beginning of the reports. We encourage all physician groups and solo 
practitioners to access their report and also encourage QRUR users to 
submit feedback to the PV helpdesk at 1-888-734-6433 (select option 3) 
or at [email protected]. We have continued to engage our 
stakeholders and seek input on how best to refine the reports. We 
disagree that CMS does not provide adequate outreach about the VM. We 
conduct National Provider Calls in conjunction with each QRUR release, 
and we provide education and outreach documents that are accessible on 
our Web site related the VM, how to access the QRURs, and how to 
interpret the QRURs. We will continue to engage the stakeholder 
community to determine how best to educate about value-based payment 
programs.
b. Episode Costs and the Supplemental QRURs
    Section 1848(n)(9)(A) of the Act requires CMS to develop an episode 
grouper and include episode-based costs in the QRURs. An episode of 
care consists of medical and/or procedural services that address a 
specific medical condition or procedure that are delivered to a patient 
within a defined time period and are captured by claims data. An 
episode grouper organizes administrative claims data into episodes.
    In summer 2014, we distributed the Supplemental QRUR: Episodes of 
Care based on 2012 data to groups with 100 or more EPs. The 2012 
Supplemental QRUR provided information on 20 episode subtypes and 6 
clinical episode-based measures. In fall 2015, we provided the 2014 
Supplemental QRURs to all groups and solo practitioners nationwide who 
billed for Medicare-covered services under a single TIN in 2014 and for 
whom we were able to calculate at least one episode measure. The 
supplemental QRURs are provided in addition to the Annual and Mid-Year 
QRURs. They provide information on performance on episode-based cost 
measures that are not included in the VM, to help groups and solo 
practitioners understand the cost of care they provide to beneficiaries 
and work toward the provision of more efficient care. The 2014 
Supplemental QRURs included 26 major episode measures and 38 sub types 
of episodes and were made available to over 300,000 groups and solo 
practitioners. We will continue to seek stakeholder input as we develop 
the episode framework.
    Lastly, we direct readers to the Physician Compare policies in this 
rule (section III.H. of this final rule with comment period), which did 
not finalize the proposal to add a green check mark to the profile page 
of the Physician Compare Web site for physicians and other eligible 
professionals receiving an upward adjustment under the VM starting in 
CY 2018. More information is available about Physician Compare on the 
CMS Web site at http://www.medicare.gov/physiciancompare/search.html.

N. Physician Self-Referral Updates

1. Background
a. Statutory and Regulatory History
    Section 1877 of the Act, also known as the physician self-referral 
law: (1) prohibits 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 financial 
relationship (ownership or compensation), unless an exception applies; 
and (2) prohibits the entity from filing claims with Medicare (or 
billing another individual, entity, or third party payer) for those 
referred services. The statute establishes a number of specific 
exceptions, and grants the Secretary the authority to create regulatory 
exceptions for financial relationships that pose no risk of program or 
patient abuse. Section 13624 of the Omnibus Budget Reconciliation Act 
of 1993 (Pub. L. 103-66) (OBRA 1993), entitled ``Application of 
Medicare Rules Limiting Certain Physician Referrals,'' added a new 
paragraph (s) to section 1903 of the Act, to extend aspects of the 
physician self-referral prohibitions to Medicaid. For additional 
information about section 1903(s) of the Act, see 66 FR 857 through 
858.
    Several more recent statutory changes have also affected the 
physician self-referral law. Section 6001 of the Affordable Care Act 
amended section 1877 of the Act to impose additional requirements for 
physician-owned hospitals to qualify for the rural provider and 
hospital ownership exceptions. Section 6409 of the Affordable Care Act 
required the Secretary, in cooperation with the Inspector General of 
the Department of Health and Human Services, to establish a Medicare 
self-referral disclosure protocol (SRDP) that sets forth a process to 
enable providers of services and suppliers to self-disclose actual or 
potential violations of the physician self-referral law.
    This rulemaking follows a history of rulemakings related to the 
physician self-referral law. The following discussion provides a 
chronology of our more significant and comprehensive rulemakings; it is 
not an exhaustive list of all rulemakings related to the physician 
self-referral law. After the passage of section 1877 of the Act, we 
proposed rulemakings in 1992 (related only to referrals for clinical 
laboratory services) (57 FR 8588) (the 1992 proposed rule) and 1998 
(addressing referrals for all DHS) (63 FR 1659) (the 1998 proposed 
rule). We finalized the proposals from the 1992 proposed rule in 1995 
(60 FR 41914) (the 1995 final rule), and issued final rules following 
the 1998 proposed rule in three stages. The first final rulemaking 
(Phase I) was published in the Federal Register on January 4, 2001 (66 
FR 856) as a final rule with comment period. The second final 
rulemaking (Phase II) was published in the Federal Register on March 
26, 2004 (69 FR 16054) as an interim final rule with comment period. 
Due to a printing error, a portion of the Phase II preamble was omitted 
from the March 26, 2004 Federal Register publication. That portion of 
the preamble, which addressed reporting requirements and sanctions, was 
published on April 6, 2004 (69 FR 17933). The third final rulemaking 
(Phase III) was published in the Federal Register on September 5, 2007 
(72 FR 51012) as a final rule.
    In addition to Phase I, Phase II, and Phase III, we issued final 
regulations on August 19, 2008 in the ``Changes to the Hospital 
Inpatient Prospective Payment Systems and Fiscal Year 2009 Rates'' 
final rule with comment period (72 FR 48434) (the FY 2009 IPPS final 
rule). That rulemaking made various revisions to the physician self-
referral regulations, including: (1) revisions to the ``stand in the 
shoes'' provisions; (2) establishment of provisions regarding the 
period of

[[Page 71301]]

disallowance and temporary noncompliance with signature requirements; 
(3) prohibitions on per-unit of service (``per-click'') and percentage-
based compensation formulas for determining the rental charges for 
office space and equipment lease arrangements; and (4) expansion of the 
definition of ``entity.'' We are aware of the recent D.C. Circuit 
decision in Council for Urological Interests v. Burwell, 790 F.3d 212 
(D.C. Cir. 2015), which addressed the prohibition on per-click 
equipment lease payments found in Sec.  411.357(b)(4)(ii)(B). In 
accordance with that decision, the regulation has been remanded to the 
Secretary for further consideration. Accordingly, we are considering 
our options as to how to comply with the court's decision.
    After passage of the Affordable Care Act, we issued final 
regulations on November 29, 2010 in the CY 2011 PFS final rule with 
comment period (75 FR 73170) that codified a disclosure requirement 
established by the Affordable Care Act for the in-office ancillary 
services exception. We also issued final regulations on November 24, 
2010 in the CY 2011 OPPS final rule with comment period (75 FR 71800), 
on November 30, 2011 in the CY 2012 OPPS final rule with comment period 
(76 FR 74122), and on November 10, 2014 in the CY 2015 OPPS final rule 
with comment period (79 FR 66770) that established or revised certain 
regulatory provisions concerning physician-owned hospitals to codify 
and interpret the Affordable Care Act's revisions to section 1877 of 
the Act.
b. Purpose of this Final Rule with Comment Period
    This rule updates the physician self-referral regulations to 
accommodate delivery and payment system reform, to reduce burden, and 
to facilitate compliance. We have learned from stakeholder inquiries, 
review of relevant literature, and self-disclosures submitted to the 
SRDP that additional clarification of certain provisions of the 
physician self-referral law would be helpful. In addition to clarifying 
the regulations, we are also interested in expanding access to needed 
health care services. In keeping with those goals, the final rule with 
comment period expands the regulations to establish two new exceptions 
and clarifies certain regulatory terminology and requirements.
2. Recruitment and Retention (Sec.  411.357(e) and Sec.  411.357(t))
    In the proposed rule, we proposed to establish new policies and 
revise certain existing policies regarding recruitment assistance and 
retention payments. Specifically, we proposed a new exception for 
assistance to physicians to employ nonphysician practitioners (NPPs). 
In addition, we proposed to clarify for federally qualified health 
centers (FQHCs) and rural health clinics (RHCs) how to determine the 
geographic areas that they serve for the purposes of the exception at 
Sec.  411.357(e) and to change the language at Sec.  411.357(e)(1)(iii) 
to ensure the consistency we intend for the ``volume or value'' 
standard found throughout the statute and our regulations. We also 
proposed to lengthen the required record retention period at Sec.  
411.357(e)(4)(iv) from 5 years to 6 years to ensure consistency with 
the proposed exception at Sec.  411.357(x) and other CMS record 
retention policies. For the exception for retention payments to 
physicians in underserved areas, we proposed to clarify how parties 
should calculate the maximum amount for permissible retention payments. 
Those proposals are described in detail below.
a. Assistance To Compensate a Nonphysician Practitioner
(1) Background
    Section 1877(e)(5) of the Act sets forth an exception for 
remuneration provided by a hospital to a physician to induce the 
physician to relocate to the geographic area served by the hospital to 
be a member of the hospital's medical staff, subject to certain 
requirements. This exception is codified at Sec.  411.357(e). In Phase 
III, we declined to expand Sec.  411.357(e) to cover the recruitment of 
NPPs into a hospital's service area, including into an existing group 
practice (72 FR 51049).
    Significant changes in our health care delivery and payment 
systems, as well as alarming trends in the primary care workforce 
shortage projections, have occurred since the publication of Phase III. 
The demand for primary care is increasing, especially in rural and 
underserved areas, because the Affordable Care Act expanded health care 
coverage to the previously uninsured, and because the population is 
growing and aging. The supply of physicians is projected to not keep 
pace with the increasing demand for primary care (see 80 FR 41910). We 
have identified similar trends with respect to mental health care 
services. NPPs, the fastest growing segment of the primary care 
workforce, may help to mitigate these shortages. In addition, new and 
evolving care delivery models, which feature an increased role for NPPs 
(often as care coordination facilitators or in team-based care) have 
been shown to improve patient outcomes while reducing costs, both of 
which are important Department goals as we move further toward quality- 
and value-based purchasing of health care services in the Medicare 
program and the health care system as a whole.
(2) New Exception
    In light of the changes in the health care delivery and payment 
systems since we last considered the issue of NPP recruitment 
assistance to physicians, using the authority granted to the Secretary 
in section 1877(b)(4) of the Act, we proposed a limited exception for 
hospitals, FQHCs, and RHCs that wish to provide remuneration to a 
physician to assist with the employment of an NPP.
    The proposed exception at Sec.  411.357(x) would permit 
remuneration from a hospital, FQHC, or RHC to a physician to assist the 
physician in employing an NPP in the geographic area served by the 
hospital, FQHC, or RHC providing the remuneration. (See 80 FR 41910 
through 41911 for an explanation of how the proposed exception would 
apply to remuneration from a hospital, FQHC, or RHC to a group practice 
or other type of physician practice, both of which qualify as a 
``physician organization,'' as defined at Sec.  411.351.) The exception 
as proposed would have applied only where the NPP is a bona fide 
employee of the physician receiving the remuneration from the hospital 
(or of the physician's practice) and the purpose of the employment is 
to provide primary care services to patients of the physician practice. 
However, we solicited comments regarding whether we should also permit 
remuneration to physicians to assist in attracting NPPs to their 
medical practices in an independent contractor capacity, and, if so, 
what requirements we should include for such arrangements (for example, 
a requirement that the arrangement between the physician and the NPP 
have a minimum term, such as 1 year).
    Because our goal in proposing the exception at Sec.  411.357(x) was 
to promote the expansion of access to primary care services--which we 
consider to include general family practice, general internal medicine, 
pediatrics, geriatrics, and obstetrics and gynecology patient care 
services--we proposed to define ``nonphysician practitioner,'' for the 
purposes of this exception, to include only physician assistants (PAs), 
nurse practitioners (NPs), clinical nurse specialists (CNSs), and 
certified nurse midwives (CNMs). We solicited comments regarding

[[Page 71302]]

whether there is a compelling need to expand the scope of the proposed 
exception to additional types of NPPs who furnish primary care 
services.
    We also proposed at Sec.  411.357(x)(1)(vi) a requirement that the 
NPP provide only primary care services to patients of the physician's 
practice. We solicited comments regarding whether we should consider 
other, more, or fewer types of services to be ``primary care services'' 
for the purposes of proposed Sec.  411.357(x), whether there is a 
compelling need to expand the scope of the proposed exception to NPPs 
who provide services that are not considered ``primary care services'' 
and, if so, safeguards that could be included in a final exception to 
ensure no risk of program or patient abuse. We proposed two 
alternatives for establishing the minimum amount of primary care 
services furnished to patients of the physician's practice by the NPP: 
(1) At least 90 percent of the patient care services furnished by the 
NPP must be primary care services; or (2) substantially all of the 
patient care services furnished by the NPP must be primary care 
services. We proposed to define ``substantially all'' patient care 
services consistent with our regulations. (See Sec.  411.352(d) and 
Sec.  411.356(c)(1).) We solicited comments regarding which of these 
alternatives is most appropriate and the nature of the documentation 
necessary to measure the NPP's services.
    Because we do not intend to permit remuneration to physicians 
through ongoing or permanent subsidies of their NPP's compensation and 
other practice costs, we proposed a cap on the amount of remuneration 
from the hospital to the physician and a requirement that the hospital 
may not provide assistance for a period longer than the first 2 
consecutive years of the NPP's employment by the physician. Under Sec.  
411.357(x)(1)(iii) as proposed, the amount of remuneration from the 
hospital, FQHC, or RHC would have been capped at the lower of: (1) 50 
percent of the actual salary, signing bonus, and benefits paid by the 
physician to the NPP; or (2) an amount calculated by subtracting the 
receipts attributable to services furnished by the NPP from the actual 
salary, signing bonus, and benefits paid to the NPP by the physician. 
We proposed to interpret ``benefits'' to include only health insurance, 
paid leave, and other routine non-cash benefits offered to similarly 
situated employees of the physician's practice. Because the proposed 
exception would protect only remuneration to reimburse a physician for 
amounts actually paid to the NPP, the hospital, FQHC, or RHC providing 
the remuneration could not increase it to account for any tax 
implications to the physician. We solicited comments regarding the cap 
on the amount of remuneration in the proposed exception, including 
whether the offset of receipts attributable to services furnished by 
the NPP should include all receipts for all services furnished by the 
NPP, regardless of payor and regardless of whether the services were 
primary care services. We also solicited comments regarding whether we 
should structure the exception with additional or different safeguards 
to ensure that the remuneration from the hospital, FQHC, or RHC 
directly benefits the NPP and whether it is necessary to address the 
issue of the tax implications that could result from the use of the 
exception to provide remuneration to a physician to assist in the 
employment an NPP. We also solicited comments specifically addressing 
the time limitations set forth in our proposal.
    The proposed exception at Sec.  411.357(x) closely tracked the 
structure and requirements of the exception for physician recruitment 
at Sec.  411.357(e). Similar to the exception at Sec.  411.357(e), the 
proposed exception for assistance to employ NPPs would include 
requirements that reference hospitals, but would apply in the same 
manner to FQHCs and RHCs that wish to provide assistance to physicians 
to employ NPPs.
    We proposed requirements to safeguard against program or patient 
abuse similar to the requirements found in most of our exceptions in 
Sec.  411.357. Specifically, we proposed that an arrangement covered by 
the exception must be set out in writing and signed by the hospital 
providing the remuneration, the physician receiving the remuneration, 
and the NPP. In addition, the arrangement may not be conditioned on the 
physician's or the NPP's referral of patients to the hospital providing 
the remuneration. Further, the proposed exception would require that 
the remuneration from the hospital is not determined (directly or 
indirectly) in a manner that takes into account the volume or value of 
any actual or anticipated referrals by the physician or the NPP (or any 
other physician or NPP in the physician's practice) or other business 
generated between the parties. Because the definition of ``referral'' 
at Sec.  411.351 relates to the request, ordering of, or certifying or 
recertifying the need for DHS by a physician, for the purposes of the 
requirements of the new exception, we proposed at Sec.  411.357(x)(3) a 
definition of the term ``referral'' as it relates to NPPs that is 
modeled closely on the definition of a physician's ``referral'' at 
Sec.  411.351. We also proposed that the arrangement may not violate 
the Federal anti-kickback statute or any Federal or State law or 
regulation governing billing or claims submission. Finally, we proposed 
that records of the actual amount of remuneration provided to the 
physician (and to the NPP) be maintained for a period of at least 6 
years and be made available to the Secretary upon request. We solicited 
comment regarding whether these ``general'' safeguards are sufficient 
to protect against program or patient abuse resulting from arrangements 
to assist with NPP employment, or if additional safeguards are 
necessary.
    We also proposed requirements for the compensation arrangement 
between the physician receiving remuneration and the NPP that the 
remuneration assists the physician to recruit. Specifically, we 
proposed that the aggregate salary, signing bonus, and benefits paid by 
the physician to the NPP must be consistent with fair market value. In 
addition, we proposed a requirement that the physician may not impose 
practice restrictions on the NPP that unreasonably restrict the NPP's 
ability to provide patient care services in the geographic area served 
by the hospital, FQHC, or RHC, and stated that we would interpret this 
provision in the same way that we interpret the requirement at Sec.  
411.357(e)(4)(vi) for physician recruitment arrangements.
    We proposed to include requirements to prevent gaming by 
``rotating'' or ``cycling'' NPPs through multiple physician practices 
located in the geographic area served by the hospital, FQHC, or RHC, an 
abuse that would effectively shift the long-term costs of employing 
NPPs to the hospital, FQHC, or RHC. We noted our concern that parties 
may misuse the exception to shift to a hospital, FQHC, or RHC the costs 
of an NPP who is currently employed by a physician but provides patient 
care services in a medical office of the physician that is located 
outside of the geographic area served by the hospital, FQHC, or RHC. To 
address these concerns, we proposed that the hospital, FQHC, or RHC may 
not provide assistance to a physician to employ an NPP if: (1) the NPP 
has practiced in the geographic area served by the hospital, FQHC, or 
RHC within the 3 years prior to becoming employed by the physician (or 
the physician organization in whose shoes the physician stands); or (2) 
the NPP was employed or otherwise engaged by a physician (or a 
physician organization in whose shoes the physician stands) with a 
medical office in the geographic

[[Page 71303]]

area served by the hospital, FQHC, or RHC within the 3 years prior to 
becoming employed by the physician (or the physician organization in 
whose shoes the physician stands), even if the NPP did not provide 
patient care services in that office. For consistency and to ease 
administrative burden, we proposed to define ``geographic area served 
by the hospital'' to have the same meaning assigned to this term in the 
exception at Sec.  411.357(e) for physician recruitment, and to define 
the term ``geographic area served'' by an FQHC or RHC to have the same 
meaning assigned to this term in proposed Sec.  411.357(e)(6)(ii).
    Finally, we solicited comments regarding whether additional 
safeguards are necessary to protect against program or patient abuse 
that might result from arrangements that would be covered by proposed 
Sec.  411.357(x), including comments addressing whether we should limit 
the number of times a hospital, FQHC, or RHC may assist the same 
physician with the employment of NPPs and, if so, during what time 
period that limitation should apply. We sought comments on whether we 
should limit the use of the exception to no more than once every 3 
years for a particular physician or no more than three times in the 
aggregate (regardless of time period) for a particular physician. We 
sought comments as to whether this type of limitation potentially 
undermines the goal of increased access to primary care in the event 
the NPP(s) employed by the physician receiving the assistance from the 
hospital, FQHC, or RHC left such employment after only a short period 
of time or moved from the geographic area served by the hospital, FQHC, 
or RHC. We were also interested in comments addressing whether the 
exception should include a requirement that there be a documented, 
objective need for additional primary care services in the geographic 
area served by the hospital, FQHC, or RHC. We also solicited comments 
specifically from FQHCs and RHCs regarding whether this exception would 
be useful to such entities and any barriers to its use that they 
perceive.
    With several modifications, described below in response to the 
comments we received, we are finalizing an exception at Sec.  
411.357(x) for remuneration provided by a hospital, FQHC, or RHC to a 
physician to assist the physician with compensating an NPP to provide 
primary care services or mental health care services to patients of the 
physician's practice. The following is a summary of the comments we 
received.
    Comment: Most commenters supported our proposal to permit 
remuneration from hospitals, FQHCs, and RHCs to assist physicians in 
employing NPPs, variously noting that this will increase access to 
quality healthcare nationwide at a time when healthcare workforce 
shortages are projected to increase, particularly in underserved and 
rural areas, and in light of a steadily rising tide of insured 
patients; be of great benefit to institutional providers of services, 
physicians, and NPPs; and benefit patients who would otherwise need to 
travel distances to obtain needed health care services.
    Response: We agree with the commenters that the new exception 
codified at Sec.  411.357(x) will both promote beneficiary access to 
care and remove barriers that could frustrate health care delivery and 
payment system reform efforts. We believe that the exception, as 
finalized, includes appropriate safeguards to insure against program or 
patient abuse, yet is sufficiently flexible to achieve the outcomes 
described by the commenters. As described elsewhere in this section, we 
are expanding the scope of the exception to include remuneration from a 
hospital, FQHC, or RHC to a physician to assist the physician in 
employing or contracting with an NPP. Therefore, we refer to new Sec.  
411.357(x) as an exception for assistance to compensate an NPP. 
However, because the public comments addressed the proposal to 
establish an exception for assistance to ``employ'' an NPP, the comment 
summaries below reflect the use of that terminology. This does not 
affect final Sec.  411.357(x), which is an exception for assistance to 
compensate an NPP.
    Comment: One commenter stated that we could achieve our policy of 
permitting a hospital to provide assistance to a physician to employ an 
NPP simply by permitting NPPs to be included in the existing exception 
for physician recruitment at Sec.  411.357(e).
    Response: We disagree with the commenter. The exception for 
physician recruitment is statutory and covers only remuneration from a 
hospital to a physician to induce the physician to relocate his or her 
medical practice to the geographic area served by the hospital to 
become a member of the hospital's medical staff. The Secretary's 
authority in section 1877(e)(5)(C) of the Act permits her to impose on 
the arrangement between the hospital and the recruited physician other 
requirements that she determines necessary to protect against program 
or patient abuse. This authority does not extend to an expansion of the 
exception to include remuneration to a physician to employ, contract 
with, or otherwise recruit an NPP.
    We are utilizing the authority in section 1877(b)(4) of the Act to 
establish the exception for assistance from a hospital, FQHC, or RHC to 
a physician to compensate an NPP. Because the exception for physician 
recruitment in section 1877(e)(5) of the Act and Sec.  411.357(e) of 
our regulations only permits remuneration to a physician to induce the 
physician to relocate his or her medical practice and join the medical 
staff of the recruiting hospital, we believe that a standalone 
exception addressing recruitment of an NPP is more appropriate.
    Comment: Several commenters, although supportive of CMS' ``efforts 
to think about creative solutions to the severe primary care 
shortage,'' opposed the proposed exception for NPPs. The commenters 
voiced concerns that the proposed exception will be used by hospitals 
to recruit nonphysician providers away from FQHCs, thereby exacerbating 
the primary care workforce shortage and worsening access issues for 
vulnerable safety-net populations.
    Response: After carefully considering all of the comments, we are 
persuaded that the availability of the exception for assistance to 
compensate NPPs will improve access to care by bringing more qualified 
healthcare providers to areas where they are needed. Although we 
understand the commenters' concerns, we are finalizing the exception at 
Sec.  411.357(x) with the modifications described elsewhere in this 
section.
    Comment: Several commenters, using nearly identical language, 
described our proposed exception for payments to assist a physician in 
employing an NPP as protecting ``both direct compensation arrangements 
between the hospital and an individual physician and `indirect' 
compensation arrangements between the hospital and a physician 
`standing in the shoes' of a physician organization to which the 
hospital provided remuneration.''
    Response: As we explained in the proposed rule (80 FR 41910-11), 
the exception at Sec.  411.357(x) is available to protect a direct 
compensation arrangement between a hospital, FQHC, or RHC and a 
physician, including a compensation arrangement deemed to be a direct 
compensation arrangement because the physician stands in the shoes of 
his or her physician organization under Sec.  411.354(c)(1). We do not 
repeat this analysis here. The exception at Sec.  411.357(x) is not 
available for a compensation arrangement that qualifies as an 
``indirect compensation arrangement'' under Sec.  411.354(c)(2). 
Parties wishing to except an indirect

[[Page 71304]]

compensation arrangement from the law's referral and billing 
prohibitions must utilize the exception at Sec.  411.357(p).
    Comment: One commenter urged CMS to expand the scope of the 
exception to permit remuneration to advanced practice registered nurses 
and PAs to employ other advanced practice registered nurses and PAs. 
Another commenter requested that we expand the exception to permit 
``the same incentives'' to a NP practice so that all eligible providers 
have equal opportunity to provide access to high quality, cost-
effective Medicare services. A third commenter suggested that we permit 
the remuneration to flow ``directly to'' the NPP who is joining a 
physician practice or ``through'' the physician practice that he or she 
joins, similar to the exception for physician recruitment at Sec.  
411.357(e).
    Response: In Phase III, we explained that recruitment payments made 
by a hospital directly to an NPP would not implicate the physician 
self-referral law, unless the NPP serves as a conduit for physician 
referrals or is an immediate family member of a referring physician (72 
FR 51049). This is because section 1877 of the Act is implicated only 
by the existence a financial relationship between a physician (or his 
or her immediate family member) and an entity to which the physician 
makes a referral for DHS payable by Medicare. Provided that the NPP is 
neither a conduit for physician referrals nor an immediate family 
member of a referring physician, the compensation arrangements 
described by the first two commenters would not implicate section 1877 
of the Act and no exception to the law's referral and billing 
prohibitions would be necessary. As to the third comment, provided that 
all of the remuneration from the hospital, FQHC, or RHC remained with 
the NPP (that is, the physician practice retained none of the 
remuneration as overhead or other expenses), the arrangement described 
by the commenter should not implicate the physician self-referral law. 
We caution, however, that an arrangement involving remuneration to a 
potential referral source may implicate other laws, including the 
Federal anti-kickback statute (section 1128B(b) of the Act).
    Comment: Three commenters urged CMS to expand the scope of the 
exception to cover the employment of mental health care providers to 
address the acute need for mental health care services. Another 
commenter similarly suggested that we include clinical social workers 
and clinical psychologists within the scope of the exception.
    Response: As described elsewhere in this section, we are finalizing 
the exception at Sec.  411.357(x) to permit remuneration to a physician 
who compensates an NPP to provide either primary care services or 
mental health care services to patients of the physician's practice. 
Accordingly, we are expanding the definition of ``nonphysician 
practitioner'' for the purposes of Sec.  411.357(x) to include clinical 
social workers and clinical psychologists, as well as PAs, NPs, CNSs, 
and CNMs.
    Comment: We received numerous comments regarding the definition of 
``nonphysician practitioner'' for the purposes of the new exception at 
Sec.  411.357(x), which was proposed as including PAs, NPs, CNSs, and 
CNMs. Several commenters expressed support for the proposed definition 
of ``nonphysician practitioner,'' and many others requested that we 
include additional types of NPPs within the scope of the exception. 
Among the NPPs that commenters suggested we include in the definition 
of ``nonphysician practitioner'' are physical therapists, CRNAs, 
registered dieticians, and nutritional professionals. As noted 
elsewhere, commenters that urged us to permit NPPs to furnish mental 
health services in addition to primary care services requested the 
corresponding inclusion of clinical social workers and clinical 
psychologists in the definition of ``nonphysician practitioner.'' In 
contrast, one commenter expressed concern regarding any expansion of 
the exception that would permit assistance to physicians to employ 
other nonphysicians, such as physical therapists.
    In support of its recommended expansion of the definition to 
include registered dieticians and nutritional professionals, the 
commenter asserted that these professionals are an important part of 
the collaborative care system. With respect to expanding the definition 
of ``nonphysician practitioner'' to include CRNAs, a commenter noted 
that CRNAs may be licensed in their jurisdictions to furnish evaluation 
and management (E/M) services, as well as other services that would fit 
the proposed definition of primary care services, and that, because of 
this, elsewhere in the proposed rule CMS proposed to add CRNAs to the 
list of practitioners under section 1834(m)(4)(E) of the Act who may 
provide Medicare telehealth services. The commenter asserted that CMS 
should follow the same policy for CRNAs under the proposed exception at 
Sec.  411.357(x). According to the commenter, CMS has proposed a range 
of safeguards which, when applied to NPPs, including CRNAs, should 
alleviate any concerns regarding risk of fraud and abuse. The 
commenters that supported the inclusion of physical therapists in the 
definition of ``nonphysician practitioner'' for the purposes of the new 
exception claimed that a substantial number of primary care practice 
patients have musculoskeletal complaints.
    Response: Except with respect to clinical social workers and 
clinical psychologists, we decline to expand the definition of 
``nonphysician practitioner'' as requested by the commenters. We 
continue to believe that PAs, NPs, CNSs, and CNMs are the types of NPPs 
who practice in the areas of general family practice, general internal 
medicine, pediatrics, geriatrics, and obstetrics and gynecology, which 
we consider to be primary care services. As discussed elsewhere in this 
section, we are finalizing the exception at Sec.  411.357(x) to permit 
remuneration to a physician who compensates an NPP to provide mental 
health care services to patients of the physician's practice. 
Therefore, we are finalizing the exception to define NPP for the 
purposes of Sec.  411.357(x) as a PA (as defined in section 1861(aa)(5) 
of the Act), a NP or CNS (as defined in section 1861(aa)(5) of the 
Act), a certified nurse-midwife (as defined in section 1861(gg) of the 
Act), a clinical social worker (as defined in section 1861(hh) of the 
Act), or a clinical psychologist (as defined in Sec.  410.71(d)). The 
reasoning for this determination is set forth below.
    Because we are not persuaded that registered dieticians or 
nutritional professionals provide the types of services we consider to 
be primary care services or mental health care services for the 
purposes of the exception, we do not believe that including registered 
dieticians or nutritional professionals in the definition of NPP would 
further the goals of increasing access to primary care services and 
mental health care services. Moreover, the commenters did not 
demonstrate a compelling need to include such practitioners in the 
definition of NPP for the purposes of the exception.
    With respect to CRNAs, the commenter is correct that we proposed to 
revise the regulation at Sec.  410.78(b)(2) to include a CRNA, as 
described under Sec.  410.69, to the list of distant site practitioners 
who may furnish Medicare telehealth services (80 FR 41784). Under 
section 1834(m)(1) of the Act, Medicare makes payment for telehealth 
services furnished by physicians and practitioners. Section 
1834(m)(4)(E) of the Act specifies that, for the purposes

[[Page 71305]]

of furnishing Medicare telehealth services, the term ``practitioner'' 
has the meaning given that term in section 1842(b)(18)(C) of the Act, 
which includes a CRNA as defined in section 1861(bb)(2) of the Act. We 
initially omitted CRNAs from the list of distant site practitioners for 
telehealth services in the regulation because we did not believe these 
practitioners would furnish any of the services on the list of Medicare 
telehealth services, but now recognize that, in some States, CRNAs are 
licensed to furnish certain services on the telehealth list, including 
E/M services. Although we are finalizing our proposal to add CRNAs to 
the list of distant site practitioners for telehealth services in this 
final rule, we do not believe that it is necessary or appropriate to 
include CRNAs in the definition of NPP for the purposes of the 
exception to the physician self-referral law at Sec.  411.357(x).
    Not all E/M services are primary care services. The commenter did 
not provide sufficient information for us to determine whether the 
``other services'' which it claims CRNAs are licensed to furnish in 
certain States would qualify as general family practice, general 
internal medicine, pediatrics, geriatrics, or obstetrics and gynecology 
services. Moreover, although some CRNAs may be licensed to furnish some 
E/M services, we are not convinced that CRNAs generally furnish primary 
care services to the extent that the exception mandates. We are 
similarly not convinced that CRNAs would furnish mental health care 
services under the expanded exception finalized here. Therefore, we see 
no compelling need to include CRNAs in the definition of ``nonphysician 
practitioner'' for the purposes of the exception at Sec.  411.357(x).
    We do not believe that physical therapists furnish primary care 
services or mental health care services to patients. The commenters 
suggested only that physical therapists may serve the needs of patients 
of a primary care practice, not that they furnish primary care services 
themselves. We do not find this a compelling reason to expand the scope 
of the exception to include physical therapists in the definition of 
``nonphysician practitioner.''
    Comment: One commenter urged that we allow the employment of any 
NPP that would qualify as a primary care provider under the definition 
at Sec.  425.20 and Sec.  425.404, which pertain to accountable care 
organizations (ACOs) in the Shared Savings Program.
    Response: Sections 425.20 and 425.404 relate to (1) definitions of 
a ``primary care physician'' (not an NPP) and ``primary care services'' 
(not providers) and (2) special assignment conditions for ACOs that 
include FQHCs and RHCs, respectively. The definition of ``primary care 
services'' at Sec.  425.20 includes a set of services identified by 
certain CPT, HCPCS and revenue center codes. We believe that the 
commenter is suggesting that we include in our definition of NPP for 
the purposes of new Sec.  411.357(x) any practitioner that furnishes 
services denoted by the codes that make up ``primary care services'' 
for the purposes of the Shared Savings Program. We decline to do so 
because we see no reason to condition compliance with the physician 
self-referral law on requirements of the Shared Savings Program. 
However, we note that the primary care ``specialty designations'' of 
internal medicine, general practice, family practice, geriatric 
medicine, or pediatric medicine that qualify a physician as a ``primary 
care physician'' for performance year 2016 under Sec.  425.20 align 
identically with the services we consider to be primary care services 
for the purposes of Sec.  411.357(x).
    Comment: Two commenters urged CMS to identify PAs, NPs, CNSs, and 
CNMs by their properly earned credentials. The commenters stated that 
the use of the term ``nonphysician practitioners'' diminishes the value 
of these professions by identifying them in the negative.
    Response: Our use of the term ``nonphysician practitioner'' is not 
intended to diminish the value of PAs, NPs, CNSs, certified nurse-
midwives, or any other professional who provides services to Medicare 
beneficiaries. In the interest of clarity and to simplify compliance 
with the exception, we are retaining the term ``nonphysician 
practitioner'' to encompass the PAs, NPs, CNSs, CNMs, clinical social 
workers, and clinical psychologists that are covered by the exception.
    Comment: Numerous commenters urged CMS to include independent 
contractors within the scope of the exception for NPP employment. One 
of the commenters noted that, especially in rural areas, primary care 
providers are usually recruited from urban areas as part-time 
independent contractors, as it can be difficult to attract such 
individuals as full-time members of the community. Commenters variously 
maintained that expanding the scope of the exception to independent 
contractor NPPs would promote flexibility, remove a barrier to 
attracting needed practitioners to underserved areas, and help insure 
increased availability of primary care services. Most commenters 
emphasized that the fact of an independent contractor relationship does 
not create or pose any greater potential for fraud and abuse than a 
standard employment relationship. One commenter noted that Medicare 
does not limit reassignment only to situations in which the physician 
organization has employed the NPP, and suggested that we should extend 
the scope of the exception to any arrangement that is lawful and will 
permit the physician organization to obtain payment for the services 
furnished by the NPP.
    Response: We agree with the commenters that expanding the exception 
to permit a hospital, FQHC, or RHC to provide assistance to a physician 
to employ, contract with, or otherwise engage an NPP under a 
compensation arrangement to furnish primary care services or mental 
health care services to patients of the physician's practice would 
support our underlying goal of increasing access to needed care. 
However, we do not believe that a contractual relationship between a 
physician (or a physician organization in whose shoes the physician 
stands) and an NPP would necessarily result in the same nexus or level 
of accountability as an employment relationship between the parties. In 
order to safeguard against program or patient abuse that may arise in 
the absence of the close nexus between employer and employee, we are 
requiring that, where the NPP is an independent contractor, the 
contractual relationship for which assistance is provided by a 
hospital, FQHC, or RHC is directly between the physician (or a 
physician organization in whose shoes the physician stands under Sec.  
411.354(c)) and the NPP. Accordingly, the exception finalized at Sec.  
411.357(x) would permit both (1) a compensation arrangement between a 
physician and an NPP for employment and (2) a compensation arrangement 
directly between a physician and an NPP for contracted services. As 
noted previously, we refer to new Sec.  411.357(x) as an exception for 
assistance to compensate an NPP. An arrangement between a physician and 
a staffing company that has the direct contractual or employment 
arrangement with the NPP that provides services to patients of the 
physician's practice would not be permitted under the new exception.
    Comment: One commenter requested that we expand the exception to 
permit assistance to recruit an NPP to become an owner of a physician 
practice. According to this commenter, given the increasing numbers of 
NPPs, primary care practices are ``resorting to bringing in NPPs as 
owners'' of the practices. The commenter also requested that, if we

[[Page 71306]]

expand the exception to cover ownership interests within its scope, we 
establish a different cap on remuneration where the NPP joins the 
practice as an owner. The commenter did not specify what the 
``ownership'' cap should be.
    Response: We decline to adopt the commenter's suggestion. We are 
unclear whether the commenter is requesting that we establish an 
exception that permits a hospital, FQHC, or RHC to provide remuneration 
directly to an NPP to purchase an ownership interest in a physician 
practice, or whether the commenter is requesting that we expand the 
scope of Sec.  411.357(x) to permit a hospital, FQHC, or RHC to 
reimburse a physician for amounts loaned to an NPP that purchases an 
ownership or investment interest in the physician's practice. As to the 
first alternative, as discussed above, a direct compensation 
arrangement between a DHS entity and an NPP does not implicate the 
physician self-referral law unless the NPP serves as a conduit for 
physician referrals or is an immediate family member of a referring 
physician. However, such an arrangement may implicate other laws, 
including the Federal anti-kickback statute (section 1128B(b) of the 
Act). As to the second alternative, we are not persuaded that 
facilitating ownership in a physician practice poses no risk of program 
or patient abuse.
    Comment: Two commenters also urged us to expand the types of 
services listed as primary care services for the purposes of the 
exception to include mental health care services. In support of this 
request, one of the commenters stressed the well-documented, pressing 
need for mental health care in the United States and decreasing access 
to mental health care. A third commenter noted the compelling need for 
access to mental health care services, referencing a study indicating 
that up to 70 percent of primary care visits stem from psychosocial 
issues; that is, although patients may present with physical health 
complaints, underlying mental health or substance abuse frequently 
triggers these visits. The commenter stated that this problem is 
exacerbated by the fact that many communities have a critical shortage 
of providers to whom patients with mental health needs can be referred. 
The commenter cited in support of its recommendations, Collins, C., 
Hewson, D., Munger, R., Wade, T. (2010), ``Evolving Models of 
Behavioral Health Integration in Primary Care (Milbank Memorial 
Fund),'' August 29, 2015, available at http://www.milbank.org/uploads/documents/10430EvolvingCare/EvolvingCare.pdf.
    Response: We agree with the commenters that there is a severe lack 
of access to mental health care services, and that the exception should 
be expanded to permit financial assistance for the compensation of NPPs 
who furnish mental health care services. We are persuaded by the study 
cited by the commenter, as well several other studies and surveys 
showing a high demand for mental health care services and a substantial 
shortage of providers.
    The demand for mental health services is considerable; one in every 
five adults will suffer from a mental illness or substance abuse 
disorder in a given year. In 2013, national surveyors found that 43.8 
million adults in the United States (18.5 percent of the national 
population) had a mental illness during the year. (Substance Abuse and 
Mental Health Administration, Results from the 2013 National Survey on 
Drug Use and Health). Additionally, surveys indicate there are 12.3 
million adults in the United States who have a substance abuse disorder 
without a concurrent mental illness. (Substance Abuse and Mental Health 
Administration, Results from the 2014 National Survey on Drug Use and 
Health).
    A large portion of those suffering from mental illness are not 
receiving treatment. Of the adults suffering from a mental illness in 
2013, only 19.6 million (44.7 percent) received mental health services. 
(2013 National Survey). One of the most significant barriers to care 
was a lack of mental health care professionals. In fact, 25.5 percent 
of those who were unable to receive services did not know where to go 
for help. (2013 National Survey). This is because, in many areas, there 
are few or no mental health care professionals available. Seventy-seven 
percent of counties in the United States have a severe shortage of 
mental health workers, and 55 percent of counties have no practicing 
psychiatrists, psychologists, or social workers. (Substance Abuse and 
Mental Health Services Administration, Report to Congress on the 
Nation's Substance Abuse and Mental Health Workforce Issues). In 2012, 
HRSA reported that there were 3,669 mental health care professional 
shortage areas that collectively contained 91 million people. (Report 
to Congress). This equates to a shortage of 1,846 psychiatrists and 
5,931 NPPs. (Report to Congress). HRSA projects that by 2020, 16,624 
child and adolescent psychologists will be needed, but the expected 
supply is 8,312 (Report to Congress), and that between 2012 and 2025, 
overall demand will grow by 10 percent while supply will decline by 900 
psychologists. (Health Resources and Service Administration, Health 
Workforce Projections, Psychologists).
    We agree with the commenters that there is a compelling need for 
more mental health care professionals. We believe further that 
permitting hospitals, FQHCs, and RHCs to provide assistance to a 
physician to compensate NPPs to provide mental health care services to 
patients of the physician's practice may improve access to such 
critically needed services. In turn, we anticipate that increased 
access will promote treatment, improve outcomes, and may reduce the 
societal costs of mental illness. We are expanding the scope of the 
exception at Sec.  411.357(x) to permit an NPP for whom a physician 
receives assistance from a hospital, FQHC, or RHC to furnish mental 
health care services to patients of the physician's practice.
    Comment: Some commenters urged CMS to broaden the exception to 
include arrangements under which the NPP furnishes any type of care 
because NPPs contribute to addressing specialty workforce shortages, 
particularly in underserved and rural areas, remove barriers to needed 
care, such as ongoing management of chronic conditions by specialists, 
and address important needs of beneficiaries, including increased 
access to care. One of these commenters suggested that, provided there 
is a demonstrated shortage of specialty providers and where additional 
availability of NPPs may help address the specialty care shortage 
concerns, payments made to a physician to employ an NPP to furnish 
specialty care services should be permissible. A different commenter 
urged us to expand the exception to all specialties because all 
specialties are feeling increased demand for services created by the 
Affordable Care Act.
    Response: In the proposed rule, we solicited comments regarding 
whether there is a compelling need to expand the scope of the exception 
to NPPs who provide services that are not considered primary care 
services and, if so, safeguards that could be included to ensure no 
risk of program or patient abuse (80 FR 41911). Other than the studies 
discussed in a separate comment and response regarding mental health 
care services, none of the commenters that advocated for an expansion 
of the scope of the exception to include services that are not 
considered primary care services provided documentation or other 
evidence of the compelling need for such an expansion. We do not 
believe that an increase in demand for specialty services necessarily 
correlates

[[Page 71307]]

to a barrier to access to those specialty services. Although we 
appreciate the views of these commenters, without support for a 
compelling need to expand the exception to NPPs who furnish services 
that are not considered primary care services or mental health care 
services, we are not inclined to adopt the revisions requested by the 
commenters. The exception at Sec.  411.357(x), as finalized here, is 
limited to NPPs who furnish primary care services or mental health care 
services.
    Comment: Several commenters urged us to expand the scope of the 
exception to permit a hospital, FQHC, or RHC to provide remuneration to 
a physician to employ NPPs who practice in certain other specialties, 
including those who provide neurology, urology, cardiology, surgery, 
and orthopedic services. One commenter stated that there is an acute 
need for NPPs who provide neurology and urology services in many 
community hospitals and, further, that it is not unusual for a surgical 
practice or an anesthesia practice to have the same ``compelling need'' 
for a hospital's assistance as does a primary care practice. Some 
commenters suggested that we permit the NPP to practice in any 
specialty. One commenter recommended that CMS ease the requirement on 
the services furnished by the NPP to include those non-primary care 
services for which the local jurisdiction licenses NPPs. A different 
commenter urged CMS to extend the scope of the proposed exception to 
remuneration provided to physicians who employ NPPs who provide cancer 
care, noting that such NPPs often provide enhanced primary care and 
care coordination services to many of their patients. Yet another 
commenter requested an equal playing field for specialty and 
subspecialty physician organizations, stating that this would be a more 
straightforward way for CMS to encourage access to NPPs and the 
services that they provide as part of care teams.
    Response: For the reasons described in the response to the previous 
comment, we decline to expand the scope of the exception to permit NPPs 
to furnish services other than primary care services or mental health 
care services to patients of the practice of the physician receiving 
the assistance from a hospital, FQHC, or RHC. Moreover, in our view, a 
physician practice's perceived need for financial assistance does not 
equate to or necessarily demonstrate a need for health care services in 
a geographic area. We note that nothing in Sec.  411.357(x) prohibits a 
hospital, FQHC, or RHC from providing remuneration to a specialty 
physician who compensates an NPP to furnish primary care services or 
mental health care services to patients of the physician's practice. We 
remind readers that the purpose of the exception as finalized is to 
remove barriers to care that may frustrate certain goals of health care 
delivery system reform and to promote beneficiary access to primary 
care services and mental health care services, not to promote access to 
the services of particular type of care provider (for example, an NPP).
    Comment: One commenter expressed concerns with expanding the 
exception to permit the employment of NPPs who provide services other 
than primary care services, specifically raising concerns regarding 
physical therapy furnished by therapists employed by a physician or 
physician organization.
    Response: We are expanding Sec.  411.357(x) only to the extent that 
the exception permits the a hospital, FQHC, or RHC to provide 
assistance to a physician to compensate an NPP who furnishes primary 
care services or mental health care services to patients of the 
physician's practice. As finalized, Sec.  411.357(x) would not protect 
assistance to a physician who compensates an NPP to furnish physical 
therapy services to patients of the physician's practice. As described 
above, none of the commenters that advocated for an expansion of the 
scope of the exception to include services that are not considered 
primary care services provided documentation or other evidence of the 
compelling need for such an expansion. Without support for a compelling 
need to expand the exception to NPPs who furnish services that are not 
considered primary care services or mental health care services, 
including physical therapy services, we are not inclined to adopt the 
revisions requested by the commenters.
    Comment: Two commenters urged CMS to expand the exception to 
hospitals that provide remuneration to physicians providing specialty 
care who employ NPPs. One of these commenters suggested specifically 
that we expand the exception to permit the employment of NPPs who 
furnish only primary care services, but furnish such services to the 
patients of a specialty physician practice. The other commenter 
suggested that CMS should not use the physician self-referral 
regulations to support one particular specialty over another, and that 
an expansion poses no risk of program or patient abuse. Another 
commenter went so far as to state that it is an abuse of CMS's 
authority to extend the scope of the exception to only certain 
physician specialties.
    Response: The exception is available to any physician who 
compensates an NPP to furnish primary care services or mental health 
services to patients of the physician's practice. The physician's 
specialty, even if it is not primary care or mental health care, would 
not prohibit a hospital, FQHC, or RHC from providing assistance to the 
physician. However, any assistance to the physician must be for the 
purpose of compensating an NPP to furnish primary care services or 
mental health care services.
    Comment: One commenter sought confirmation that the exception would 
permit hospitals, FQHCs, and RHCs to provide remuneration to physicians 
who practice in hospital-based emergency departments. The commenter 
noted that such physicians provide enhanced primary care and care 
coordination services to many of their patients, particularly those who 
present to the emergency department without a primary care provider or 
those who have limited access to community-based primary care 
providers. The commenter read our proposal to be limited to assistance 
to individual physicians.
    Response: We understand the commenter to be questioning the 
availability of the exception for hospitals, FQHCs, and RHCs that wish 
to provide assistance to private physician practices that specialize in 
emergency medicine and furnish patient care services in hospital 
emergency departments. As such, we reiterate that the physician's 
specialty, even if it is emergency medicine, would not prohibit a 
hospital, FQHC, or RHC from providing assistance to the physician. 
However, any assistance to the physician must be for the purpose of 
compensating an NPP to furnish primary care services or mental health 
care services, and the arrangement must satisfy all of the requirements 
of the exception at Sec.  411.357(x).
    Comment: One commenter urged us to interpret ``primary care 
services'' as broadly as possible because, as health care delivery 
shifts to patient-centered models of care, a greater diversity of 
services will be necessary to meet the needs of patients in the primary 
care setting. Other commenters urged us to broaden the definition of 
``primary care services'' to include services furnished by allergists, 
immunologists, and rheumatologists.
    Response: After careful consideration of these comments and the 
comments urging us to permit assistance to a physician to compensate an 
NPP who furnishes any type of services to patients of the physician's 
practice, we decline to consider any types of services

[[Page 71308]]

other than those in our proposal to be ``primary care services.'' 
General or family practice, general internal medicine, pediatrics, and 
obstetrics and gynecology are the four primary care specialties counted 
by the Health Resources and Services Administration (HRSA) when 
determining primary care health professional shortage areas (HPSAs). 
Further, geriatrics is considered an acceptable primary care specialty 
under the Primary Care Loan program administered by HRSA. We note that 
nothing in this rule or the exception at Sec.  411.357(x) precludes a 
qualified professional, including an NPP, from furnishing general 
family practice, general internal medicine, pediatrics, geriatrics, and 
obstetrics and gynecology services--which we consider ``primary care 
services'' for the purposes of Sec.  411.357(x)--regardless of the 
individual's specialty training or designation.
    Comment: One commenter suggested that the term ``only primary care 
services'' at proposed Sec.  411.357(x)(1)(vi)(B) could generate 
uncertainty and necessitate additional rulemaking. Another commenter 
understood ``only primary care services'' to mean that at least 75 
percent of the services furnished by the NPP must be primary care 
services and found this requirement to be reasonable. Other commenters 
explicitly asked that we adopt a ``substantially all'' test for the 
primary care services furnished by the employed NPP, stating that this 
standard is most appropriate and consistent with other CMS regulations. 
Moreover, according to these commenters, a standard requiring that the 
NPP provide ``only'' primary care services could hamper the impact of 
the exception. We received no comments in support of a different 
standard for the minimum amount of primary care services that an NPP 
must furnish under the exception.
    Response: Proposed Sec.  411.357(x)(1)(vi)(B) set forth a minimum 
amount of primary care services that must be furnished by the NPP for 
whose employment a physician receives assistance from a hospital, FQHC, 
or RHC, and stated that the NPP must provide ``only'' primary care 
services to patients of the physician practice. In our discussion of 
this requirement, we proposed two alternatives for establishing the 
minimum amount of primary care services furnished to patients of the 
physician's practice by the NPP: (1) At least 90 percent of the patient 
care services furnished by the NPP must be primary care services; or 
(2) substantially all of the patient care services furnished by the NPP 
must be primary care services (80 FR 41911). We stated that we would 
define ``substantially all'' patient care services consistent with our 
regulations at Sec.  411.352(d) and Sec.  411.356(c)(1); that is, at 
least 75 percent of the NPP's services to patients of the physician's 
practice must be primary care services.
    We agree with the commenters that a ``substantially all'' standard 
is the appropriate standard for the minimum amount of primary care 
services or mental health care services that an NPP must furnish to 
patients of the physician's practice. Therefore, we are finalizing 
Sec.  411.57(x)(1)(vi) to require that substantially all of the patient 
care services furnished by the NPP must be primary care services or 
mental health care services. We expect that physician organizations 
that qualify as ``group practices'' are familiar with this standard, as 
are rural providers. As we have throughout the physician self-referral 
regulations, we are defining ``substantially all'' patient care 
services to mean at least 75 percent of the NPP's services to patients 
of the physician's practice. To ensure consistency in the 
interpretation of identical terms used in our regulations, we are 
requiring that ``patient care services'' be measured by one of the 
following: (1) The total time the NPP spends on patient care services 
documented by any reasonable means (including, but not limited to, time 
cards, appointment schedules, or personal diaries); or (2) any 
alternative measure that is reasonable, fixed in advance of the 
performance of the services being measured, uniformly applied over 
time, verifiable, and documented. See Sec.  411.352(d)(1). For clarity, 
we are including this requirement in Sec.  411.357(x) as finalized in 
this final rule.
    Comment: Two commenters urged us to adopt only the bright-line test 
of 50 percent of the actual salary, signing bonus, and benefits paid to 
the NPP as the limit on the amount of remuneration that a hospital, 
FQHC, or RHC may provide to a physician to employ an NPP. One of these 
commenters suggested that the remuneration methodology should be as 
simple and straightforward as possible, and that the final rule should 
avoid complicating the exception and exposing hospitals to 
noncompliance due to incomplete or inaccurate documentation related to 
receipts for the NPP's services to patients of the physician's 
practice. Another commenter urged us to permit hospitals to utilize 
either method of determining the maximum amount of permissible 
assistance set forth at Sec.  411.357(x)(1)(iii), without regard to 
which results in the lower amount of remuneration from the hospital, 
FQHC, or RHC to the physician. The commenter stated that the ``payments 
less receipts'' methodology (with payments equal to the salary, signing 
bonus, and benefits paid to the NPP) is speculative at the outset of 
the compensation arrangement and cannot be determined with certainty at 
that time to be lower than 50 percent of the actual salary, signing 
bonus, and benefits paid to the NPP by the physician or physician 
organization. The commenter also raised the complicating issue of 
nonphysician services billed incident to a physician's service rather 
than under the NPI assigned to the NPP. Moreover, having a ``lower of'' 
standard effectively requires parties to use both methodologies to 
determine which results in the lower amount of remuneration, even if 
only one is desired. To avoid ``after-the-fact'' violations of the 
physician self-referral law, the commenter suggested that hospitals, 
FQHCs, and RHCs should be given the choice of selecting either of these 
two methodologies for determining the amount of assistance they will 
provide to the physician or physician organization.
    Response: We agree with the commenters that recommended 
establishing a clear, objective standard for determining the maximum 
amount of assistance that a hospital, FQHC, or RHC may provide to a 
physician would best serve the interests of hospitals, FQHCs, and RHCs 
that provide assistance to a physician to compensate an NPP. Such a 
standard would serve to facilitate compliance with the physician self-
referral law, which is a primary purpose of certain of these updates to 
our regulations. Upon further consideration of the ``receipts minus 
salary, signing bonus, and benefits'' methodology, we are abandoning 
this option in favor of a bright-line approach that permits a hospital, 
FQHC, or RHC to provide assistance to a physician in an amount that 
does not exceed 50 percent of the actual aggregate compensation, 
signing bonus, and benefits paid to the NPP who joins the physician's 
practice. We interpret ``benefits'' to include only health insurance, 
paid leave, and other routine non-cash benefits offered to similarly 
situated employees of the physician's practice. As we stated in the 
proposed rule, we recognize that compensation arrangements may change 
over time, for example, moving from full-time status to part-time 
status or changing a compensation methodology from hourly

[[Page 71309]]

payments to a pre-determined flat, monthly salary. Because of the fair 
market value requirement and because we are finalizing a limit on the 
amount that the hospital may provide to the physician, we do not 
believe that it is necessary to require that the NPP's salary, signing 
bonus, and benefits be set in advance.
    We recognize the challenges posed by a standard under which a 
hospital's, FQHC's, or RHC's compliance with the law depends on precise 
determinations of which services are ``attributable'' to an NPP, 
adequate record keeping of the physician, and the cooperation of the 
physician in sharing information regarding the receipts for services 
furnished by the NPP's services. Compliance challenges would be 
exacerbated where the NPP furnishes services that are incident to a 
physician's service and billed under the name (or NPI) of the 
physician. The third commenter's recommended approach of an ``either/
or'' standard, rather than a ``lower of'' standard, while providing 
flexibility to hospitals, FQHCs, and RHCs, does not alleviate the 
significant compliance challenges posed by the ``receipts minus salary, 
signing bonus, and benefits'' standard, and we are not adopting it. We 
note that our goal in establishing the exception at Sec.  411.357(x) is 
to expand access to critically needed primary care services and mental 
health care services. The exception is not intended to provide a 
physician with the means to increase profit from the services of an NPP 
in his or her practice at the expense of a hospital, FQHC, or RHC. We 
intend to monitor the use and impact of the exception for potential 
program or patient abuse.
    Comment: One commenter requested that we increase the limit on the 
amount of salary, signing bonus and benefits for which a hospital, 
FQHC, or RHC may provide assistance. The commenter stated that 60 
percent would be a more appropriate cap, as that percentage is more 
closely aligned with added overhead associated with adding an NPP to a 
physician practice. The commenter provided no data to support this 
statement. Another commenter recommended that we permit remuneration to 
a physician to cover the cost of the NPP's relocation. This commenter 
suggested that a hospital, FQHC, or RHC should be permitted to cover 
such costs if the NPP was located outside the geographic area served by 
the hospital and moves at least 25 miles to join the physician 
practice, as measured from the physician practice's primary place of 
business (or, if multiple locations, the location where the NPP will 
primarily practice). The commenter did not specify whether the previous 
location of the NPP refers to his or her practice location or whether 
remuneration to cover relocation costs should be subject to the overall 
cap on remuneration provided under the exception.
    Response: Nothing in the exception at Sec.  411.357(x) prohibits a 
hospital, FQHC, or RHC from providing assistance to a physician that 
includes an amount associated with the relocation costs of the NPP 
joining the physician's practice, provided that: (1) The amount is 
included when calculating the aggregate compensation from the physician 
to the NPP; (2) the assistance from the hospital, FQHC, or RHC does not 
exceed the cap established at Sec.  411.357(x)(1)(iii)(A); and (3) the 
compensation to the NPP--including any amount associated with the 
relocation costs--does not exceed fair market value for the patient 
care services furnished by the NPP to patients of the physician's 
practice. In other words, the hospital, FQHC, or RHC may provide 
remuneration to the physician to cover relocation costs of the 
nonphysician provider if the relocation costs are included in the 
calculation of the actual aggregate compensation, signing bonus, and 
benefits paid by the physician to the NPP, and all other requirements 
of the exception are satisfied.
    Comment: One commenter recommended that we replace the cap on 
remuneration in proposed Sec.  411.357(x)(1)(iii)(A) with the analogous 
safeguards in the exception for physician recruitment, namely a 
limitation on remuneration not to exceed the actual additional 
incremental costs attributed to the NPP. The commenter claimed that 
doing so would serve the same goal of limiting any windfall to the 
physician while having the advantage of administrative simplicity. 
Another commenter stated that it failed to see any rationale for 
limiting assistance to only a portion of the additional incremental 
costs attributable to the NPP, such as 50 percent of the actual salary, 
signing bonus, and benefits as set forth in proposed Sec.  
411.357(x)(1)(iii)(A), and suggested that assistance should be limited 
to ``no more than'' the actual additional incremental costs 
attributable to the employed NPP (that is, 100 percent of the actual 
incremental costs attributable to the NPP). The commenter stated in 
support that hospitals have experience in using this methodology, but 
recognized that it could be difficult to determine amounts under an 
income guarantee if the NPP's services were billed incident to a 
physician's service.
    Response: We decline to adopt a standard that would potentially 
permit a hospital, FQHC, or RHC to cover 100 percent of the costs 
attributable to adding an NPP to a physician's practice and thus result 
in a windfall to the physician. We stated in the proposed rule and 
continue to believe that hospitals, FQHCs, or RHCs should not bear the 
full costs of employing (or otherwise compensating) NPPs who work in 
private physician practices (80 FR 41912). We are establishing the 
exception at Sec.  411.357(x) using the Secretary's authority in 
section 1877(b)(4) of the Act, which allows exceptions only for those 
financial relationships that do not pose a risk of program or patient 
abuse. Permitting a physician to shift unlimited overhead costs to the 
hospital, FQHC, or RHC to which he or she refers may pose a risk of 
program or patient abuse. Moreover, the methodology advocated by the 
commenters would not further our goal of facilitating compliance and 
reducing complexity in our regulations.
    Comment: One commenter requested that we increase the permissible 
period for assistance from 2 years to 3 years, noting that it may 
require more than 2 years for an NPP's practice to develop and for the 
physician organization to break even on the NPP's employment. The 
commenter gave the example of a CNM whose services are often not paid 
for until the baby is delivered, resulting in a lengthy period until 
his or her practice develops and for the physician organization to 
realize the revenue for the CNM's services. Another commenter 
recommended that we expand the permissible period for assistance to at 
least 3 years, which, in the commenter's view, will help achieve the 
policy goals of reducing workforce shortages and increasing access to 
quality care. The commenter stated that adding an additional year to 
the permissible period of assistance poses no risk of program or 
patient abuse.
    Response: The purpose of the exception at Sec.  411.357(x) is not 
to permit a hospital, FQHC, or RHC to subsidize a physician until the 
physician ``breaks even'' or earns a profit on the NPP's employment or 
contract. Rather, the exception is intended to promote beneficiary 
access to care and support the goals of health care delivery and 
payment system reform. As we stated in the proposed rule, we do not 
intend to permit remuneration to physicians through ongoing or 
permanent subsidies of their NPP employment (or contracting) and other 
practice costs (80 FR 41911). As

[[Page 71310]]

discussed elsewhere in this section, we are finalizing a 3-year 
limitation on the frequency of a hospital's, FQHC's, or RHC's use of 
the exception for a particular physician. In light of this, we believe 
that the 2-year limit on assistance to employ or contract with an NPP 
is necessary to prevent the program or patient abuse that may result 
from ongoing or permanent subsidies of a physician's NPP employment (or 
contracting) and other practice costs. A 3-year limit on assistance 
effectively would permit permanent subsidies of physician practices. As 
we noted in the proposed rule, ongoing or permanent subsidies could 
serve as a reward for past referrals or an inducement to continue 
making referrals to the hospital, FQHC, or RHC providing the assistance 
(80 FR 41912). We disagree with the commenter that stated that adding 
an additional year to the permissible period of assistance would not 
pose a risk of program or patient abuse.
    Comment: One commenter supported the safeguards we proposed for the 
new exception, noting that they are appropriate to prevent abuse. The 
commenter endorsed a limit on the number of times a hospital, FQHC or 
RHC may assist the same physician with the employment of a 
nonphysician, noting that once every 3 years is reasonable and 
consistent with other physician self-referral regulations, but 
requested that CMS include a waiver of the frequency limit in the event 
the NPP remains employed by the physician or his or her physician 
organization for less than 1 year. Another commenter requested that, if 
we impose a limitation on the frequency of the use of the exception, we 
include an exception for situations where an NPP leaves his or her 
employment or otherwise ceases to meet the requirements of the 
exception. The commenter did not suggest an appropriate time limitation 
for the NPP's departure from the physician practice. In contrast, two 
commenters submitted that the general safeguards proposed for the 
exception are sufficient and that additional safeguards would 
unnecessarily restrict the usefulness or availability of the exception. 
One of these commenters stated that physicians will not hire NPPs 
unnecessarily if doing so will result in a financial loss to the 
practice. The other of these commenters suggested that a limitation on 
the frequency or aggregate use of the exception for a particular 
referring physician is inconsistent with the exception for recruitment 
of a physician. Another commenter stated that a frequency limitation 
could potentially undermine the goal of increased access to primary 
care and also considered it unnecessary to limit the number of times a 
hospital, FQHC, or RHC may assist the same physician.
    Response: We understand the commenters' concerns that a frequency 
limitation could serve to undermine the goal of increased access to 
primary care services and mental health care services, but we are not 
convinced that omitting this safeguard would pose no risk of program or 
patient abuse. As discussed in response to other comments in this final 
rule, we believe that ongoing or permanent subsidies of a physician's 
NPP and other practice costs, which could occur in the absence of a 
limitation on the number of times a hospital, FQHC, or RHC may assist 
the same physician, may serve as an inducement to continue making 
referrals to the hospital, FQHC, or RHC and pose a risk of program or 
patient abuse. Therefore, we are finalizing a requirement in the new 
exception that limits the use of the exception for a particular 
physician to once every 3 years. However, we agree that the goal of 
increased access to primary care services and mental health care 
services could be undermined if this limitation prevented a physician 
from replacing an NPP who left the physician's practice after only a 
short time. To address this, we are making an exception to the 
frequency limitation finalized at Sec.  411.357(x)(8) to permit a 
hospital, FQHC, or RHC to provide assistance to a physician more than 
once every 3 years in the event that an NPP for whom the physician 
received assistance (the original NPP) did not remain with the 
physician's practice for 1 year or more. The 3-year period would begin 
on the date the hospital, FQHC, or RHC initially provided remuneration 
to the physician (to compensate the original NPP). Under final Sec.  
411.357(x)(8), the hospital, FQHC, or RHC may provide assistance to the 
physician to compensate a second (or subsequent) NPP, provided that: 
(1) The aggregate remuneration from the hospital, FQHC, or RHC does not 
exceed 50 percent of the actual aggregate compensation, signing bonus, 
and benefits paid to the replacement NPP; and (2) the assistance is 
limited to the consecutive 2-year period that begins on the date the 
original NPP commenced employment or a contractual arrangement with the 
physician (or physician organization in whose shoes the physician 
stands under Sec.  411.354(c)).
    Comment: One commenter opposed an aggregate limitation on the 
number of times any individual physician could receive assistance. The 
commenter gave the example of a physician with a long-term career in a 
single geographic service area and noted that an absolute limit on the 
use of the exception vis-[agrave]-vis this physician could result in 
failure to meet CMS's goal of facilitating a meaningful increase in 
access to primary care.
    Response: We are not finalizing an aggregate limit on the number of 
times a hospital, FQHC, or RHC may provide assistance to the same 
physician to compensate an NPP to furnish primary care services or 
mental health services to patients of the physician's practice.
    Comment: One commenter referred to the limitation on the 
availability of the exception to situations where the NPP was not 
employed or otherwise engaged to provide patient care services in the 
geographic area served by the hospital, FQHC, or RHC for at least 3 
years prior to the commencement of the compensation arrangement between 
the hospital, FQHC, or RHC and the physician as the 
``disqualification'' period. The commenter expressed its belief that a 
3-year disqualification period is too restrictive and urged CMS to 
reduce the time period for ``disqualification'' to 1 year. For the same 
reason, the commenter urged CMS to remove the limitation on employing 
an NPP who has been employed or otherwise engaged by a physician 
practice that maintains a medical practice site within the geographic 
area served by the hospital, FQHC, or RHC, even if the NPP has not 
provided patient care services at that practice site (or sites). The 
commenter stated that both of these provisions restrict the mobility of 
NPPs and will decrease the effectiveness of the exception.
    Response: The underlying purpose of the exception is to increase 
access to primary care services and mental health care services while 
removing barriers that could frustrate the goals of health care 
delivery and payment system reform. Although we do not wish to restrict 
the mobility of NPPs, we are not convinced that we should remove from 
the exception important requirements that guard against program or 
patient abuse. We believe that prohibiting assistance from a hospital, 
FQHC, or RHC to a physician to compensate an NPP who already furnishes 
patient care services in the geographic area served by the hospital, 
FQHC, or RHC (or furnishes patient care services to patients of a 
physician practice that has a medical office site located in the 
geographic area served by the hospital, FQHC, or RHC) is necessary to 
guard against shifting the long-term costs of employing and contracting 
with NPPs

[[Page 71311]]

from private physician practices to hospitals, FQHCs, and RHCs.
    However, we agree that a 3-year ``disqualification'' period could 
undermine the important goals of the exception and are finalizing Sec.  
411.357(x)(1)(v) to include a 1-year limitation on the NPP's prior 
practice in the geographic area served by the hospital, FQHC, or RHC. 
As finalized, the exception would not be available unless the NPP, 
within 1 year of being compensated by the physician (or the physician 
organization in whose shoes the physician stands under Sec.  
411.354(c)): (1) Has not practiced in the geographic area served by the 
hospital, FQHC, or RHC providing the assistance; and (2) has not been 
employed or otherwise engaged to provide patient care services by a 
physician or physician organization that has a medical practice in the 
geographic area served by the hospital, FQHC, or RHC providing the 
assistance, regardless of whether the NPP furnished services at the 
medical practice site located in the geographic area served by the 
hospital, FQHC, or RHC. We believe that a 1-year ``disqualification'' 
period (to use the commenter's terminology) will serve adequately to 
prevent gaming by rotating or cycling NPPs through multiple physician 
practices located in the geographic area served by the hospital, FQHC, 
or RHC. Similarly, retaining the requirement that the NPP may not have 
been employed or otherwise engaged to provide patient care services by 
a physician or physician organization that has a medical practice in 
the geographic area served by the hospital, FQHC, or RHC providing the 
assistance for at least 1 year prior to the remuneration to the 
physician, regardless of whether the NPP furnished services at the 
medical practice site located in the geographic area served by the 
hospital, FQHC, or RHC, will serve to prevent physicians from shifting 
the cost of currently employed NPPs to hospitals, FQHCs, and RHCs. In 
addition, these limitations may serve to protect against potentially 
competitive practices, such as a physician luring an NPP from another 
physician practice using hospital funding.
    Comment: Two commenters requested that we include relief in the 
exception at Sec.  411.357(x) similar to that at Sec.  411.357(e)(3). 
According to one of these commenters, such an exception to the 
``geographic'' requirement would allow a physician or physician 
practice to employ an NPP who was: (1) Immediately prior to the 
employment, in training or in practice for less than 1 year; or (2) 
employed on a full-time basis by a Federal or State entity for at least 
2 years immediately prior to the employment. The commenter stated that 
such a provision would expand the pool from which NPPs could be 
recruited and open up employment opportunities for NPPs who are either 
transitioning to private practice or beginning their careers without 
creating a risk of program or patient abuse. The other commenter also 
requested that, to recognize that unique circumstances could exist that 
support the availability of assistance in special cases, we provide in 
the exception for a waiver of the ``geographic'' requirement and the 
``temporal'' requirement (that is, the 3-year ``disqualification'' 
period) if the Secretary determines in an advisory opinion that the 
area has a demonstrated need for the NPP.
    Response: We decline to adopt the commenters' recommendations. We 
believe the exception as finalized is sufficiently flexible to achieve 
its purpose. Although it may benefit NPPs in the way the first 
commenter suggested, the purpose of the exception at Sec.  411.357(x) 
is not to facilitate opportunities for NPPs, but rather to increase 
access to primary care services and mental health care services.
    Comment: One commenter urged us not to limit the exception to rural 
or underserved areas, because providers other than those in rural areas 
are experiencing shortages. We received no comments in support of 
limiting the use of the exception to hospitals, FQHCs, and RHCs located 
in rural or underserved areas.
    Response: We did not propose to limit the availability of the 
exception to hospitals, FQHCs, and RHCs that provide assistance to 
physicians who compensate NPPs to furnish services only in rural or 
underserved areas. We are not finalizing such a limitation.
    Comment: One commenter suggested that CMS make clear that the 
definition of ``referral'' in proposed Sec.  411.357(x) applies only to 
the exception for hospital assistance to a physician to employ an NPP, 
and not to the physician self-referral regulations in their entirety.
    Response: As we explained in the proposed rule, the definition of 
``referral'' at Sec.  411.351 relates to the request, ordering of, or 
certifying or recertifying the need for DHS by a physician (80 FR 
41912). This term is used throughout our regulations and is applicable 
when used in reference to the referrals of a physician. Our regulations 
currently do not include a term that references the request, ordering 
of, or certifying or recertifying the need for DHS by an NPP. For this 
reason, solely for the purposes of the requirements of the new 
exception, we proposed to define the term ``referral,'' as it relates 
to NPPs, as a request by an NPP that includes the provision of any DHS 
for which payment may be made under Medicare, the establishment of any 
plan of care by an NPP that includes the provision of such DHS, or the 
certifying or recertifying of the need for such DHS, but not including 
any DHS personally performed or provided by the NPP. We are finalizing 
this definition at Sec.  411.357(x)(4).
Summary of the provisions in the exception for assistance to compensate 
an NPP, as finalized at Sec.  411.357(x)
    After careful consideration of the comments regarding the exception 
for assistance from a hospital, FQHC, or RHC to a physician to 
compensate an NPP, we are finalizing our proposed exception at Sec.  
411.357(x) with the following modifications: (1) We are including in 
the definition of ``nonphysician practitioner,'' for the purposes of 
the exception at Sec.  411.357(x) clinical social workers and clinical 
psychologists; (2) we are expanding the type of services that may be 
furnished by the NPP to patients of the physician's practice to include 
mental health care services; (3) we are including a requirement that 
the NPP furnish substantially all primary care services or mental 
health services (rather than ``only'' such services) to patients of the 
physician's practice; (4) we are not limiting the type of compensation 
arrangement between the physician (or physician organization in whose 
shoes the physician stands) and the NPP, but we are requiring that the 
contractual relationship for which assistance is provided by a 
hospital, FQHC, or RHC is directly between the physician (or a 
physician organization in whose shoes the physician stands under Sec.  
411.354(c)) and the NPP; (5) we are establishing a bright-line approach 
to the amount of permissible remuneration from the hospital, FQHC, or 
RHC to the physician, limiting it to 50 percent of the actual aggregate 
compensation, signing bonus, and benefits paid to the NPP; (6) we are 
finalizing a limit on the frequency with which a hospital, FQHC, or RHC 
may provide assistance to the same physician and setting the limitation 
at no more than once every 3 years, with an exception if the NPP does 
not remain with the physician's practice for at least 1 year; and (7) 
we are shortening from 3 years to 1 year the period of time that the 
NPP must not have practiced in the geographic area served by the 
hospital, FQHC, or RHC providing the assistance.

[[Page 71312]]

b. Geographic Area Served by Federally Qualified Health Centers and 
Rural Health Clinics
    Section 1877(e)(5) of the Act sets forth an exception for 
remuneration provided by a hospital to an individual physician to 
induce the physician to relocate his or her medical practice to the 
geographic area served by the hospital to become a member of the 
hospital's medical staff. This exception was codified in our 
regulations at Sec.  411.357(e) in the 1995 final rule. In Phase II and 
Phase III, we expanded the exception to FQHCs and RHCs, respectively, 
and revised the definitions of ``geographic area served by a 
hospital.'' As we explained at 80 FR 41913, the definition of 
``geographic area served by a hospital'' adopted in Phase III does not 
provide guidance as to the geographic area into which an FQHC or RHC 
may recruit a physician, a concept critical for compliance with the 
exception's requirements. Therefore, we proposed to revise Sec.  
411.357(e)(6) to add a new definition of the geographic area served by 
an FQHC or RHC.
    We proposed two alternative approaches for this policy, which 
aligns closely with the special optional rule for rural hospitals at 
Sec.  411.357(e)(2)(iii) in recognition that rural hospitals, FQHCs, 
and RHCs often serve patients who are dispersed in wider geographic 
areas and may need to recruit physicians into more remote areas to 
achieve their goals of providing needed services to the communities 
that they serve. The first proposed approach closely mirrors our 
current definition of a rural hospital's geographic service area. It 
would define the geographic area served by an FQHC or RHC as the area 
composed of the lowest number of contiguous zip codes from which the 
FQHC or RHC draws at least 90 percent of its patients, as determined on 
an encounter basis. Under our first proposal, if the FQHC or RHC draws 
fewer than 90 percent of its patients from all of the contiguous zip 
codes from which it draws patients, the geographic area served by the 
FQHC or RHC could include noncontiguous zip codes, beginning with the 
noncontiguous zip code in which the highest percentage of its patients 
reside, and continuing to add noncontiguous zip codes in decreasing 
order of percentage of patients. The geographic area served by the FQHC 
or RHC could include one or more zip codes from which it draws no 
patients, provided that such zip codes are entirely surrounded by zip 
codes in the geographic area from which it draws at least 90 percent of 
its patients.
    In the alternative, we proposed to define the geographic area 
served by an FQHC or RHC as the area composed of the lowest number of 
contiguous or noncontiguous zip codes from which the FQHC or RHC draws 
at least 90 percent of its patients, as determined on an encounter 
basis. This would be determined by beginning with the zip code in which 
the highest percentage of the FQHC's or RHC's patients reside, and 
continuing to add zip codes in decreasing order of percentage of 
patients. We solicited comments on each of these alternatives, 
including whether patient encounters is the appropriate measure for 
determining the geographic area served by an FQHC or RHC. Finally, we 
solicited comments specifically from FQHCs and RHCs regarding whether 
the exception at Sec.  411.357(e) for physician recruitment is useful 
to such entities and any barriers to its use that they perceive.
    We are finalizing our proposal to define, for the purposes of the 
exception at Sec.  411.357(e), the geographic area served by an FQHC or 
RHC as the lowest number of contiguous or noncontiguous zip codes from 
which the FQHC or RHC draws at least 90 percent of its patients, as 
determined on an encounter basis. The following is summary of the 
comments we received.
    Comment: Several commenters recommended that CMS use the definition 
for geographic area served by an FQHC or RHC that does not use 
contiguity as a factor. These commenters noted that the prior lack of 
clarity regarding the area into which a physician recruited by an FQHC 
or RHC must move his or her medical practice may have deterred such 
entities from making recruitment payments to attract physicians to 
underserved areas. Another commenter noted concurrence with our 
proposed approach to defining the geographic area served by an FQHC or 
RHC, but requested that we allow the FQHC or RHC to include one or more 
zip codes from which the entity draws no patients, provided that such 
zip codes are entirely surrounded by zip codes in the geographic area 
from which it draws at least 90 percent of its patients. According to 
the commenter, this would allow an FQHC or RHC to take into account 
potential patients. The commenter also suggested that we determine 
service areas based on patients rather than encounters, but gave no 
reason why this measure would be more appropriate than encounters. A 
different commenter agreed that patient encounters are the appropriate 
measure for determining the geographic area served by an FQHC or RHC.
    Response: We are finalizing our alternative proposal to define the 
``geographic area served'' by an FQHC or RHC as the area composed of 
the lowest number of contiguous or noncontiguous zip codes from which 
the FQHC or RHC draws at least 90 percent of its patients, as 
determined on an encounter basis. As stated in the proposed rule, we 
see no potential for program or patient abuse in selecting 
noncontiguous zip codes to identify 90 percent of the patient base as 
long as there are patients in those areas (80 FR 41913). Also, under 
this final rule, the FQHC or RHC is permitted to include one or more 
zip codes from which the FQHC or RHC draws no patients, provided that 
such zip codes are entirely surrounded by zip codes in the geographic 
area from which the FQHC or RHC draws at least 90 percent of its 
patients. Hospitals that provide recruitment assistance to physicians 
are provided this flexibility under Sec.  411.357(e)(2)(i). As 
described at Sec.  411.357(e)(6), the exception applies to remuneration 
provided by an FQHC or RHC in the same manner as it applies to 
remuneration provided by a hospital, provided that the arrangement does 
not violate the Federal anti-kickback statute (section 1128B(b) of the 
Act) or any Federal or State law or regulation governing billing or 
claims submission. We see no risk of program or patient abuse in 
extending the ability to include ``hole'' zip codes (as we described 
them in Phase III (72 FR 51050)) to FQHCs and RHCs when determining the 
geographic areas that they serve. We are not persuaded that 
``patients'' is a more appropriate measure than ``encounters'' for 
determining service areas, and are not adopting the change recommended 
by the commenter who suggested that we determine the geographic area 
served by an FQHC or RHC based on patients of the FQHC or RHC.
    Comment: In response to our solicitation of comments regarding 
whether the exception at Sec.  411.357(e) for physician recruitment is 
useful to FQHCs and RHCs, several commenters noted that, in their 
experience, the existing exception is not widely known or used. The 
commenters encouraged CMS to better publicize the exception to the 
rural health community so that it may take advantage of this 
recruitment tool. Another commenter stated that the exception is of 
limited utility to FQHCs because, as safety net providers, FQHCs 
struggle to pay market salaries to attract clinicians, and incentive 
payments are often financially infeasible for FQHCs.
    Response: We appreciate the input of the commenters and will 
consider ways to provide better outreach to FQHCs and

[[Page 71313]]

RHCs regarding the physician self-referral law and its exceptions.
    After careful consideration of the comments, we are finalizing our 
proposal to define the geographic area served by an FQHC or RHC, for 
the purposes of the exception at Sec.  411.357(e), as the lowest number 
of contiguous or noncontiguous zip codes from which the FQHC or RHC 
draws at least 90 percent of its patients, as determined on an 
encounter basis. We are also permitting FQHCs and RHCs to include one 
or more zip codes from which they draw no patients, provided that such 
zip codes are entirely surrounded by zip codes in the geographic area 
from which the FQHC or RHC draws at least 90 percent of its patients, 
determined on an encounter basis.
c. Conforming Terminology: ``Takes Into Account''
    Several exceptions for compensation arrangements in section 1877(e) 
of the Act contain provisions pertaining to the volume or value of a 
physician's referrals. In each case, the statutory language 
consistently states that compensation cannot be determined in a manner 
that ``takes into account'' the volume or value of a physician's 
referrals. (See sections 1877(e)(1)(A)(iv), (e)(1)(B)(iv), 
(e)(2)(B)(ii), (e)(3)(A)(v), (e)(3)(B)(i), (e)(5)(B), (e)(6)(A), and 
(e)(7)(A)(v).) As we explained in the proposed rule (80 FR 41914), our 
longstanding policy is to interpret the volume or value standard in all 
provisions under section 1877(e) of the Act uniformly.
    Despite our uniform interpretation of the volume or value standard, 
the phrase ``takes into account'' is not used consistently in the 
exceptions for compensation arrangements in Sec.  411.357. In 
particular, the regulatory exception for the recruitment of physicians 
at Sec.  411.357(e) has two provisions relating to the volume or value 
standard, and the provisions use different terms. Current Sec.  
411.357(e)(1)(iii) excepts payments to a recruited physician if the 
hospital does not determine the amount of compensation (directly or 
indirectly) ``based on'' the volume or value of referrals. Where the 
recruited physician joins a physician practice, Sec.  411.357(e)(4)(v) 
provides that the amount of remuneration may not be determined in a 
manner that ``takes into account'' (directly or indirectly) the volume 
or value of any actual or anticipated referrals by the recruited 
physician or the physician practice (or any physician affiliated with 
the physician practice) receiving the direct payments from the 
hospital. Like the physician recruitment exception, the following 
exceptions do not use the phrase ``takes into account'' in reference to 
the volume or value standard: The exception for medical staff 
incidental benefits at Sec.  411.357(m); the exception for obstetrical 
malpractice insurance subsidies at Sec.  411.357(r); and the exception 
for professional courtesy at Sec.  411.357(s). The exception for 
obstetrical malpractice insurance premiums at Sec.  411.357(r) provides 
that the amount of payment cannot be ``based on'' the volume or value 
of actual or anticipated referrals. The exceptions at Sec.  411.357(m) 
and Sec.  411.357(s) require that medical staff incidental benefits and 
professional courtesies, respectively, are offered to physicians 
``without regard to'' the volume or value of referrals.
    We are concerned that the use of different phrases pertaining to 
the volume or value of referrals (``takes into account,'' ``based on,'' 
and ``without regard to'') may cause some to conclude incorrectly that 
there are different volume or value standards in the compensation 
exceptions. See 80 FR 41914. To clarify the regulations, we proposed to 
modify Sec.  411.357(e)(1)(iii) to conform to the exact language in 
section 1877(e)(5)(B) of the Act. Specifically, we proposed to amend 
Sec.  411.357(e) to require that the compensation provided to a 
recruited physician may not take into account (directly or indirectly) 
the volume or value of the recruited physician's referrals to the 
hospital, FQHC, or RHC providing the recruitment remuneration. We also 
proposed to amend Sec.  411.357(r) to require that the amount of 
payment under the arrangement may not take into account the volume or 
value of any actual or anticipated referrals. Lastly, we proposed to 
revise the language of Sec.  411.357(m) and (s) to provide that the 
offer of medical staff incidental benefits or professional courtesy, 
respectively, may not take into account the volume or value of a 
physician's referrals. Taken together, these revisions would make the 
use of the phrase ``takes into account'' consistent throughout the 
compensation exceptions in Sec.  411.357. The consistent terminology 
would reflect our longstanding policy that the volume or value standard 
in the various compensation exceptions should be interpreted uniformly.
    The following is a summary of the comments we received.
    Comment: We received several comments supporting our proposal to 
consistently and uniformly use the phrase ``takes into account'' in 
reference to the volume or value standard in the exceptions for 
compensation arrangements in Sec.  411.357. One commenter asked CMS to 
distinguish between compensation that ``varies with'' the volume or 
referrals and compensation that ``takes into account'' the volume or 
value of referrals. Another commenter asked CMS to include in the 
regulations at Sec.  411.351 a definition of the phrase ``takes into 
account.''
    Response: We are finalizing our proposal to make the use of the 
phrase ``takes into account'' consistent and uniform throughout the 
compensation arrangement exceptions in Sec.  411.357. We did not 
propose to define the term ``takes into account,'' and we decline to do 
so at this time. Nevertheless, we are considering the commenter's 
proposed definition of ``takes into account'' and related discussion as 
part of our solicitation of comments on the perceived need for 
clarification regarding permissible physician compensation. Likewise, 
we decline to discuss the meaning of the phrase ``takes into account'' 
in relation to the phrase ``varies with,'' but we will consider the 
commenter's discussion of the issue as part of our solicitation of 
comments on permissible physician compensation.
    As a result of the comments, we are finalizing the proposed changes 
to the regulations at Sec.  411.357(e), (m), (r), and (s). The revision 
of the regulatory language reflects our policy that the volume or value 
standard is uniform and consistent in the exceptions for compensation 
arrangements in Sec.  411.357.
d. Retention Payments in Underserved Areas
    Our regulation at Sec.  411.357(t) permits certain retention 
payments made to a physician with a practice located in an underserved 
area. This exception was first established in Phase II, and covered 
only retention payments made to a physician who has a bona fide firm, 
written recruitment offer that would require the physician to move his 
or her medical practice at least 25 miles and outside of the geographic 
area served by the hospital or FQHC making the retention payment (69 FR 
16142). In Phase III, we modified the exception to permit a hospital, 
FQHC, or RHC to retain a physician who does not have a bona fide 
written offer of recruitment or employment if the physician certifies 
in writing that he or she has a bona fide opportunity for future 
employment that meets the requirements at Sec.  411.357(t)(2) (72 FR 
51066).
    In Phase III, we explained that a retention payment based on a 
physician

[[Page 71314]]

certification may ``not exceed the lower of the following: (1) An 
amount equal to 25 percent of the physician's current annual income 
(averaged over the previous 24 months) using a reasonable and 
consistent methodology that is calculated uniformly; or (2) the 
reasonable costs the hospital would otherwise have to expend to recruit 
a new physician to the geographic area served by the hospital to join 
the medical staff of the hospital to replace the retained physician'' 
(72 FR 51066). We intended the regulations to mirror the preamble 
language precisely. However, the regulations at Sec.  411.357(t)(2)(iv) 
state that such retention payments may not exceed the lower of: (1) An 
amount equal to 25 percent of the physician's current income (measured 
over no more than a 24-month period), using a reasonable and consistent 
methodology that is calculated uniformly; or (2) the reasonable costs 
the hospital would otherwise have to expend to recruit a new physician. 
Thus, the current regulation text appears to permit entities to make 
retention payments that consider only part of the prior 24-month period 
instead of the entire period as we intended.
    The policy stated in the Phase III preamble is correct and remains 
our policy at this time. Therefore, to avoid confusion due to 
conflicting regulation text, we proposed to modify our regulations at 
Sec.  411.357(t)(2)(iv)(A) to reflect the regulatory intent we 
articulated in Phase III. The following is a summary of the comments we 
received.
    Comment: We received one comment supporting our proposed regulatory 
change to Sec.  411.357(t). However, the commenter also stated that the 
current exception is too narrow, and urged CMS to expand the exception 
to permit retention payments as long as the hospital has a good faith 
belief that the physician is considering relocating his or her 
practice.
    Response: We appreciate the commenter's support, and we are 
finalizing the proposed revision of Sec.  411.357(t). We are not making 
any other changes to the exception at this time.
    After reviewing the comments, we are finalizing our proposal to 
modify our regulations at Sec.  411.357(t)(2)(iv)(A). The revised 
regulatory text clearly states our intention, as formulated in Phase 
III, that entities contemplating retention payments must consider the 
entire 24-month period prior to the payment.
3. Reducing Burden and Improving Clarity Regarding the Writing, Term, 
and Holdover Provisions in Certain Exceptions and Other Regulations
    The SRDP enables providers and suppliers to disclose actual or 
potential violations of the physician self-referral law to CMS and 
authorizes the Secretary to reduce the amount potentially due and owing 
for disclosed violations. Since the SRDP was established, we have 
received numerous submissions to the SRDP disclosing actual or 
potential violations relating to the writing requirement of various 
compensation exceptions (for example, failure to set an arrangement out 
in writing, failure to obtain the signatures of the parties in a timely 
fashion, or failure to renew an arrangement that expired on its own 
terms after at least 1 year). This final rule with comment period 
clarifies the writing requirement of various compensation exceptions by 
making the terminology in the compensation exceptions more consistent 
and by providing policy guidance on the writing and 1-year minimum term 
requirements in many exceptions. In addition, to reduce regulatory 
burden, we proposed to except certain holdover arrangements, provided 
that certain safeguards are met.
a. The Writing Requirement in Certain Compensation Exceptions and Other 
Regulatory Provisions
    The exceptions for the rental of office space and the rental of 
equipment (section 1877(e)(1) of the Act; Sec.  411.357(a) and (b)) 
require that a lease be set out in writing. Several other compensation 
exceptions have a similar writing requirement: The exception at Sec.  
411.357(d) for personal service arrangements; the exception at Sec.  
411.357(e) for physician recruitment; the exception at Sec.  411.357(h) 
for certain group practice arrangements with a hospital; the exception 
at Sec.  411.357(l) for fair market value compensation; the exception 
at Sec.  411.357(p) for indirect compensation arrangements; the 
exception at Sec.  411.357(r) for obstetrical malpractice insurance 
subsidies; the exception at Sec.  411.357(t) for retention payments in 
underserved areas; the exception at Sec.  411.357(v) for electronic 
prescribing items and services; and the exception at Sec.  411.357(w) 
for electronic health records items and services. Through our 
experience administering the SRDP, we have learned that there is 
uncertainty in the provider community regarding the writing requirement 
of the leasing and other compensation exceptions. In particular, we 
have been asked whether an arrangement must be reduced to a single 
``formal'' written contract (that is, a single document that includes 
all material aspects of the arrangement) to satisfy the writing 
requirement of the applicable exception.
    The original exception for the rental of office space required ``a 
written agreement, signed by the parties, for the rental or lease of 
the space . . . .'' (Omnibus Budget Reconciliation Act of 1989, Pub. L. 
101-386, section 6204(e)(1)). In OBRA 1993, the Congress clarified the 
exception for the rental of office space (H. Rept. 103-213 at 812). 
Section 13562(e)(1) of OBRA 1993 (codified at section 1877(e)(1) of the 
Act) provides exceptions for the rental of office space and equipment 
if ``the lease is set out in writing . . . .'' OBRA 1993 also excepted 
personal service arrangements if ``the arrangement is set out in 
writing . . . .'' (OBRA 1993 section 13562(e)(3), codified at section 
1877(e)(3) of the Act). The current regulatory exceptions for the 
rental of office space and the rental of equipment require at Sec.  
411.357(a)(1) and (b)(1), respectively, that an ``agreement'' be set 
out in writing. In contrast, the regulatory exception for personal 
service arrangements requires at Sec.  411.357(d)(1)(i) that the 
``arrangement'' be set out in writing.
    Despite the different terminology in the statutory and regulatory 
exceptions, we believe that the writing requirement for the leasing 
exceptions and the personal service arrangements exception is the same. 
Specifically, we interpret the term ``lease'' in sections 1877(e)(1)(A) 
and (B) of the Act to refer to the lease arrangement. Notably, in the 
statutory scheme of section 1877 of the Act, the exceptions for the 
rental of office space, the rental of equipment, and personal service 
arrangements are classified as ``Exceptions Relating to Other 
Compensation Arrangements.'' The lease arrangement is the underlying 
financial relationship between the parties (that is, payments for the 
use of office space or equipment for a period of time). To satisfy the 
writing requirement, the facts and circumstances of the lease 
arrangement must be sufficiently documented to permit the government to 
verify compliance with the applicable exception. (For a similar 
discussion regarding arrangements among components of an academic 
medical center, see Phase II (69 FR 16110).)
    In most instances, a single written document memorializing the key 
facts of an arrangement provides the surest and most straightforward 
means of establishing compliance with the applicable exception. 
However, there is no requirement under the physician

[[Page 71315]]

self-referral law that an arrangement be documented in a single formal 
contract. Depending on the facts and circumstances of the arrangement 
and the available documentation, a collection of documents, including 
contemporaneous documents evidencing the course of conduct between the 
parties, may satisfy the writing requirement of the leasing exceptions 
and other exceptions that require that an arrangement be set out in 
writing.
    Through the SRDP, we have learned that some stakeholders interpret 
the term ``agreement,'' as it is used at Sec.  411.357(a)(1) and 
(b)(1), to mean that a single written contract is necessary to satisfy 
the writing requirement of the applicable exception. To clarify the 
exceptions for the rental of office space and the rental of equipment, 
we proposed to substitute the term ``lease arrangement'' for the term 
``agreement'' at Sec.  411.357(a)(1) and (b)(1). We believe that this 
revision underscores the fact that the writing requirement at Sec.  
411.357(a)(1) and (b)(1) for the rental of office space and the rental 
of equipment, respectively, is identical to the writing requirement at 
Sec.  411.357(d)(1)(i) for personal service arrangements. Broadly 
speaking, we believe that there is no substantive difference among the 
writing requirements of the various compensation exceptions that 
require a writing. To emphasize the uniformity of the writing 
requirement in the compensation exceptions, we proposed to remove the 
term ``agreement'' from the exception for physician recruitment at 
Sec.  411.357(e)(4)(i), the exception for fair market value 
compensation at Sec.  411.357(l)(1), the special rule on compensation 
that is set in advance at Sec.  411.354(d)(1), and the special rule on 
physician referrals to a particular provider, practitioner, or supplier 
at Sec.  411.354(d)(4)(i).
    In light of our proposal to clarify the writing requirement at 
Sec.  411.354(d)(1), (d)(4)(i), (a)(1), (b)(1), (e)(4)(i), and (1)(1) 
by removing the term ``agreement,'' we proposed to make conforming 
changes where possible to other provisions in the compensation 
exceptions and the special rules on compensation. Specifically, we 
proposed to replace the term ``agreement'' with the term ``lease 
arrangement'' in Sec.  411.357(a)(2), (a)(4), (a)(5), (a)(6), (b)(3), 
(b)(4), and (b)(5). We proposed to replace the term ``agreement'' with 
the term ``arrangement'' in Sec.  411.357(c)(3) (the exception for bona 
fide employment relationships) and Sec.  411.357(f)(2) (exception for 
isolated transactions). Likewise, we proposed to remove the phrase 
``set forth in an agreement'' from the introductory language to the 
exception for fair market value compensation at Sec.  411.357(l). 
Finally, we are also concerned that the words ``contract'' and 
``contracted for,'' like the word ``agreement,'' may suggest that a 
formal contract or other specific kind of writing is required to 
satisfy the applicable exception. To address this issue, we proposed to 
revise Sec.  411.354(d)(4) by replacing the word ``contract'' as it 
relates to personal service arrangements with the word ``arrangement,'' 
and we proposed similar changes to Sec.  411.357(e)(1)(iv) and 
(r)(2)(v), both of which refer back to Sec.  411.354(d)(4). We proposed 
to replace the phrase ``contracted for'' at Sec.  411.357(d)(1)(iii) 
with the phrase ``covered by the arrangement.'' In the exception at 
Sec.  411.357(p)(2) for indirect compensation arrangements, we proposed 
to replace the phrase ``written contract'' with the word ``writing.''
    Certain compensation exceptions use the phrase ``written 
agreement'': The exception at Sec.  411.357(h) for certain group 
practice arrangements with a hospital; the exception at Sec.  
411.357(v) for electronic prescribing items and services; and the 
exception at Sec.  411.357(w) for electronic health records items and 
services. Although these exceptions use the term ``written agreement,'' 
we did not propose any revisions. The exception at Sec.  411.357(h) is 
rarely used, because it only protects arrangements that began before, 
and continued without interruption since, December 19, 1989. The 
exceptions at Sec.  411.357(v) and (w) are aligned with the Federal 
anti-kickback statute safe harbors at Sec.  1001.952(x) and (y) that 
protect the provision of these items and services. To avoid creating 
apparent inconsistencies between the physician self-referral law 
exceptions and the corresponding anti-kickback statute safe harbors, we 
are not modifying Sec.  411.357(v) or (w). However, we believe that the 
principles elucidated above regarding the writing requirement of the 
other compensation exceptions to the physician self-referral law also 
apply to Sec.  411.357(v) and (w).
    We are finalizing the proposed changes to clarify that parties need 
not reduce the key terms of an arrangement to a single formal contract 
to satisfy the writing requirement of the compensation exceptions at 
Sec.  411.357 that require a writing. The following is a summary of the 
comments we received.
    Comment: All the commenters addressing this issue supported our 
statement in the preamble that a collection of documents, including 
contemporaneous documents evidencing the course of conduct between the 
parties, may satisfy the writing requirement of various compensation 
exceptions. Two commenters complained that the writing and signature 
requirements, when interpreted narrowly, elevate form over substance. 
Several commenters requested that CMS confirm that our statement 
regarding a collection of documents is a clarification of existing 
policy, and that parties need not self-disclose arrangements where the 
writing requirement was satisfied by multiple documents (and all other 
requirements of the applicable exception were satisfied), even if the 
conduct occurred prior to the finalization of this rule.
    Response: CMS' existing policy is that a collection of documents, 
including contemporaneous documents evidencing the course of conduct 
between the parties, may satisfy the writing requirement of the 
exceptions for compensation arrangements that require a writing. Our 
proposal to substitute the word ``arrangement'' for ``agreement'' 
throughout the exceptions for compensation arrangements was intended to 
clarify and confirm this existing policy regarding the writing 
requirement. Parties considering submitting self-disclosures to the 
SRDP for conduct that predates the proposed rule may rely on guidance 
provided in the proposed rule to determine whether the party complied 
with the writing requirement of an applicable exception. To determine 
compliance with the writing requirement, the relevant inquiry is 
whether the available contemporaneous documents (that is, documents 
that are contemporaneous with the arrangement) would permit a 
reasonable person to verify compliance with the applicable exception at 
the time that a referral is made.
    Comment: Some commenters stated that State law contract principles 
should determine what constitutes an arrangement ``set out in writing'' 
for the purposes of the physician self-referral law. The commenters 
stated that health care providers and suppliers typically rely on State 
law principles to determine the validity and enforceability of written 
agreements, and that it would reduce the burden on providers and 
suppliers to use the same principles to determine compliance with the 
physician self-referral law.
    Response: We decline to adopt the commenters' recommendation that 
State contract law principles should determine what constitutes an 
arrangement that is ``set out in writing'' for the purposes of the 
physician self-referral law. We are concerned that

[[Page 71316]]

reliance on State contract law would result in different standards for 
compliance for different States and territories. In addition, the 
requirements for a contract to be valid and enforceable under State law 
may differ substantively from the requirements of the physician self-
referral law. For example, in certain instances, a short term service 
contract may be valid and enforceable under State law even if the 
agreement is not reduced to writing. In contrast, if the parties sought 
to protect the arrangement under the exception for fair market value 
compensation at Sec.  411.357(l), the arrangement would have to be set 
out in writing to satisfy the requirements of the exception. Similarly, 
a contract for the provision of items may be enforceable under State 
law even if the price for the items is not in writing. In contrast, if 
the parties sought to protect the arrangement under the exception for 
fair market value compensation at Sec.  411.357(l), the price of the 
items would have to be in writing to satisfy the requirements of the 
exception. Finally, we believe that it may be possible in some 
instances that writings documenting an arrangement may satisfy the 
writing requirement of the physician self-referral law, yet not form an 
enforceable contract under State law. In this context, we are concerned 
that reliance on State law contract principles may unduly narrow the 
scope of permissible arrangements under the physician self-referral 
law.
    Although State law contract principles do not definitively 
determine compliance with the writing requirement of the physician 
self-referral law, the physician self-referral law does not negate or 
preempt State contract law. (See 72 FR 51049). Nothing prevents a party 
from drawing on State law contract principles, as well as other bodies 
of relevant law, to inform the analysis of whether an arrangement is 
set out in writing. The important point is this: What determines 
compliance with the writing requirement of the physician self-referral 
law is not whether the writings form a valid and enforceable contract 
under State law, but rather whether the contemporaneous writings would 
permit a reasonable person to verify that the arrangement complied with 
an applicable exception at the time a referral is made. For this 
reason, a written contract that is enforceable under State law may not 
satisfy the writing requirement if the actual arrangement differed in 
material respects from the terms and conditions of the written 
contract.
    Comment: Two commenters pointed out that the preamble discussion of 
the writing requirement did not address the corresponding signature 
requirement in various compensation arrangement exceptions. The 
commenters noted that the ``collection of documents'' that may satisfy 
the writing requirement would still have to be signed by the parties 
for the arrangement to comply with the applicable exception. The 
commenter indicated that it is not clear to the commenter what is 
required to satisfy the signature requirement when parties are relying 
on a collection of documents to satisfy the writing requirement. Two 
commenters requested confirmation that a party's signature need only be 
included on one of the documents in the collection. Another commenter 
suggested that we draw on State law principles to clarify what 
constitutes a signed writing for the purposes of the physician self-
referral law.
    Response: As explained elsewhere in this section, we do not believe 
that State law principles determine compliance with the physician self-
referral law, including compliance with the signature requirement. 
Regarding the signature requirement as it relates to a collection of 
documents, we note that the proposed rule clarified that a single 
written contract is not necessary to satisfy the writing requirement of 
an applicable exception. We substituted the word ``arrangement'' for 
``agreement'' in the compensation exceptions to underscore the fact 
that it is the arrangement (that is, the underlying financial 
relationship between the parties) that must be set out in writing; 
there is no requirement that this writing take the form a formal 
contract between the parties. Likewise, under the proposed rule--which 
is a clarification of our existing policy--it is the arrangement that 
must be signed by the parties to satisfy the exception. (See, for 
example, the proposed language for Sec.  411.357(a)(1) (``The lease 
arrangement . . . is signed by the parties . . . .'')). For the same 
reason that parties do not need a single formal written contract to 
comply with the writing requirement, parties also do not need to sign a 
single formal written contract to comply with the signature requirement 
of an applicable exception. Nor do we expect every document in a 
collection of documents to bear the signature of one or both parties. 
To satisfy the signature requirement, a signature is required on a 
contemporaneous writing documenting the arrangement. The 
contemporaneous signed writing, when considered in the context of the 
collection of documents and the underlying arrangement, must clearly 
relate to the other documents in the collection and the arrangement 
that the party is seeking to protect.
    Comment: Some commenters asked for concrete examples of the kinds 
of documents (other than formal written agreements) that may satisfy 
the writing requirement of various compensation exceptions. In 
addition, one commenter specifically requested that CMS recognize that 
electronic documents, such as email communications, may be used to 
satisfy the writing requirement.
    Response: Because compliance with the writing requirement is fact-
specific, we decline to give an example of a collection of documents 
that would, taken as a whole, satisfy the writing requirement. However, 
we are providing some examples of individual documents that a party 
might consider as part of a collection of documents when determining 
whether a compensation arrangement complied with the writing 
requirement of an applicable exception: Board meeting minutes or other 
documents authorizing payments for specified services; written 
communication between the parties, including hard copy and electronic 
communication; fee schedules for specified services; check requests or 
invoices identifying items or services provided, relevant dates, and/or 
rate of compensation; time sheets documenting services performed; call 
coverage schedules or similar documents providing dates of services to 
be provided; accounts payable or receivable records documenting the 
date and rate of payment and the reason for payment; and checks issued 
for items, services, or rent. This list of examples is not exhaustive, 
and we emphasize that, depending on the facts and circumstances, a 
party could have documents of each type listed and nevertheless not 
satisfy the writing requirement of an applicable exception. Among other 
things, the documents must clearly relate to one another and evidence 
one and the same arrangement between the parties.
    Comment: One commenter stated that parties should be permitted a 
60- or 90-day grace period for satisfying the writing requirement of 
various compensation exceptions. The commenter stated that such a grace 
period is needed for last minute arrangements between physicians and 
DHS entities.
    Response: We decline to adopt the commenter's suggestion. A grace 
period for the writing requirement would not incent parties to document 
the terms and conditions of the arrangement promptly. For this reason, 
we believe that a grace period for the writing requirement poses a risk 
of program or

[[Page 71317]]

patient abuse. For example, to the extent that the rate of compensation 
is not documented before a physician provides services to a DHS entity, 
the entity could adjust the rate of compensation during the proposed 
grace period in a manner that takes into account the volume or value of 
the physician's referrals. In this context, we note that the special 
rule at Sec.  411.353(g)(1) for temporary noncompliance applies only to 
noncompliance with the signature requirement of an applicable 
exception. All other elements of an applicable exception, including the 
applicable writing requirement, must be satisfied once a compensation 
arrangement between the parties is established (that is, as soon as 
items, services, or compensation under the arrangement passes between 
the parties) and the physician makes referrals to the DHS entity.
    We remind parties that DHS entities have the burden of proof to 
establish that services were not furnished as a result of prohibited 
referrals, and that all requirements of an exception must be met at the 
time a referral is made. (See Sec.  411.353(c)(2)(i) and 73 FR 48703.) 
If an arrangement with a physician fails to comply with the writing 
requirement of an applicable exception when the arrangement commences, 
then the entity is not permitted to bill for DHS furnished as a result 
of the physician's referrals unless and until the arrangement is 
sufficiently documented over the course of the arrangement (and all 
other requirements of the applicable exception are met). 
Contemporaneous documents evidencing the course of conduct between the 
parties cannot be relied upon to protect referrals that predate the 
documents. Likewise, parties cannot meet the set in advance requirement 
from the inception of an arrangement if the only documents stating the 
compensation term of an arrangement were generated after the 
arrangement began; however, depending on the facts and circumstances, 
if parties create contemporaneous documents during the course of the 
arrangement, and the documents set the compensation out in writing, 
then parties may be able to satisfy the set in advance requirement for 
referrals made after the contemporaneous documents are created. We 
reiterate that the surest and most straightforward means of complying 
with the writing requirement of the physician self-referral law is to 
reduce the key facts of an arrangement to a single signed writing 
before either party provides items, services, space, or compensation to 
the other party under the arrangement.
    After careful consideration of the comments, we are finalizing our 
proposal to substitute the word ``arrangement'' for ``agreement'' in 
various provisions of Sec.  411.354 and Sec.  411.357 identified in the 
proposed rule. The revision of the regulatory language reflects our 
existing policy that a single formal contract is not required to 
satisfy the writing requirement of those compensation exceptions at 
Sec.  411.357 that require a writing.
b. Term Requirements in Certain Compensation Arrangements Exceptions
    The exceptions at Sec.  411.357(a), (b), and (d) for the rental of 
office space, the rental of equipment, and personal service 
arrangements, respectively, require that the compensation arrangement 
between an entity furnishing DHS and a referring physician has a term 
of at least 1 year. Parties submitting self-disclosures to the SRDP 
have asked whether the term of the arrangement must be in writing to 
satisfy the requirements of the relevant exceptions. We proposed to 
revise Sec.  411.357(a)(2), (b)(3), and (d)(1)(iv) to clarify the 
documentation requirements related to the term of lease arrangements 
for the rental of office space, lease arrangements for the rental of 
equipment, and personal service arrangements.
    The statutory exceptions for the rental of office space and the 
rental of equipment in sections 1877(e)(1)(A)(iii) and (B)(iii) of the 
Act, respectively, require that the lease arrangement provides for a 
term of rental or lease for at least 1 year. The statutory exception 
for personal service arrangements in section 1877(e)(3)(A)(iv) of the 
Act requires that the term of the arrangement is at least 1 year. 
Although our regulations at Sec.  411.357(d)(1)(iv) (the exception for 
personal service arrangements) use language similar to the statutory 
exception for personal service arrangements, our current regulations at 
Sec.  411.357(a)(2) and (b)(3) (the exceptions for the rental of office 
space and equipment, respectively) use the term ``agreement'' in 
addressing the minimum term requirement. As explained elsewhere in this 
section, we interpreted ``lease'' in section 1877(e)(1) of the Act to 
refer to the lease arrangement between the parties, and we also believe 
that the writing requirement of sections 1877(e)(1)(A) and (B) of the 
Act is identical to the requirement in section 1877(e)(3) of the Act.
    We believe that some stakeholders have interpreted the term 
``agreement'' at Sec.  411.357(a)(2) and (b)(3) to mean that a formal 
written contract or other document with an explicit provision 
identifying the term of the arrangement is necessary to satisfy the 1-
year term requirement of the exceptions. As we noted in the 1998 
proposed rule, the 1-year term requirement is satisfied ``as long as 
the arrangement clearly establishes a business relationship that will 
last for at least 1 year'' (63 FR 1713). An arrangement that lasts as a 
matter of fact for at least 1 year satisfies this requirement. Parties 
must have contemporaneous writings establishing that the arrangement 
lasted for at least 1 year, or be able to demonstrate that the 
arrangement was terminated during the first year and that the parties 
did not enter into a new arrangement for the same space, equipment, or 
services during the first year, as required by Sec.  411.357(a)(2), 
(b)(3), and (d)(1)(iv), as applicable. As is the case with the writing 
requirement in these and other exceptions, depending on the facts and 
circumstances of the arrangement and the available documentation, a 
collection of documents, including contemporaneous documents evidencing 
the course of conduct between the parties, can establish that the 
arrangement in fact lasted for the required period of time. A formal 
contract or other document with an explicit ``term'' provision is 
generally not necessary to satisfy this element of the exception. To 
clarify that a written contract with a formalized ``term'' provision is 
not necessary to satisfy the regulations at Sec.  411.357(a)(2) and 
(b)(3), we proposed to remove the word ``agreement'' and to revise the 
first sentence of these provisions to mirror the 1-year term 
requirement in the personal service arrangements exception at Sec.  
411.357(d)(1)(iv).
    We are finalizing revised regulatory language that clearly reflects 
the policy stated in the proposed rule, namely that an arrangement need 
only last at least 1 year as a matter of fact to satisfy the 1-year 
term requirement at Sec.  411.357(a)(2), (b)(3), and (d)(1)(iv). The 
following is a summary of the comments we received.
    Comment: All those that commented on this issue (38, 50, 68, 73, 
80) supported our statement in the preamble that arrangements that last 
for at least 1 year satisfy the 1-year term requirement. One commenter 
requested that CMS confirm that the statement in the preamble regarding 
the 1-year requirement is a clarification of existing law. Another 
commenter (38) recommended that CMS further revise the regulatory 
language at Sec.  411.357(a)(2), (b)(3), and (d)(1)(iv), to make it 
more clear that arrangements need only last as a matter of fact for at

[[Page 71318]]

least 1 year satisfy the 1-year requirement.
    Response: To clarify that the length of an arrangement need not be 
stated explicitly in a formal contract, we proposed to revise the 1-
year term provisions at Sec.  411.357(a)(2), (b)(3), and (d)(1)(iv), by 
substituting the word ``arrangement'' for the word ``agreement.'' In 
the preamble, we explained that an arrangement that lasts as a matter 
of fact for at least 1 year would satisfy this requirement. We agree 
with the commenter that the proposed regulatory language does not 
unambiguously express our intent, as it was stated in the preamble. 
Specifically, we believe the word ``term'' in the phrase ``the term of 
the lease arrangement is at least 1 year'' is ambiguous. ``Term'' could 
mean either the duration of the arrangement as a matter of fact or the 
formal term provision of the arrangement as prescribed by contract. To 
clarify in the regulatory text that arrangements that last for at least 
1 year as a matter of fact satisfy the requirement, we are further 
modifying Sec.  411.357(a)(2), (b)(3), and (d)(1)(iv). We are removing 
the word ``term'' and simply stating that the duration of the 
arrangement must be at least 1 year. Finally, we are taking this 
opportunity to clarify that our statement in the preamble regarding 
compliance with the 1-year term requirement represents CMS' existing 
policy.
    Comment: One commenter generally supported our proposal, but 
suggested that CMS rely on State law contract principles to determine 
compliance with the 1-year term requirement of the physician self-
referral law.
    Response: As stated elsewhere in this section, we do not believe 
that State law principles are appropriate for determining compliance 
with the physician self-referral law, including the 1-year requirement.
    Upon review and consideration of the comments regarding the 1-year 
term requirement, we are finalizing revised regulatory language for the 
exceptions at Sec.  411.357(a)(2), (b)(3), and (d)(1)(iv). The revised 
language at Sec.  411.357(a)(2) provides that the duration of the lease 
arrangement is at least 1 year. To meet this requirement, if the lease 
arrangement is terminated with or without cause, the parties may not 
enter a new lease arrangement for the same space during the first year 
of the original lease arrangement. We are finalizing similar language 
for Sec.  411.357(b)(3) and (d)(iv). The revised regulatory text 
clearly states our current policy that an arrangement need only last 1 
year to satisfy the 1-year term requirement of the exceptions for the 
rental of office space, the rental of equipment, and personal service 
arrangements.
c. Holdover Arrangements
    The exceptions at Sec.  411.357(a), (b), and (d) currently permit a 
``holdover'' arrangement for up to 6 months if an arrangement of at 
least 1 year expires, the arrangement satisfies the requirements of the 
exception when it expires, and the arrangement continues on the same 
terms and conditions after its stated expiration. We proposed to amend 
the holdover provisions at Sec.  411.357(a)(7), (b)(6), and (d)(1)(vii) 
to permit indefinite holdovers, provided that certain additional 
safeguards are met. In the alternative, we proposed to extend the 
holdover to a definite period that is greater than 6 months (for 
example, 1 year, 2 years, or 3 years), provided that additional 
safeguards are met. Finally, we proposed to revise the exception for 
fair market value compensation at Sec.  411.357(l)(2) to permit 
renewals of arrangements of any length of time, including arrangements 
for 1 year or greater.
    The holdover provisions in Sec.  411.357(a), (b), and (d) developed 
over the course of our rulemaking in Response: to inquiries regarding 
the expiration, termination, and renewal of arrangements. See 80 FR 
41916 through 41917 for a discussion of the development of the holdover 
provisions.
    Through our administration of the SRDP, we have reviewed numerous 
rental and personal service arrangements that failed to satisfy the 
requirements of an applicable exception solely because the arrangement 
expired by its terms and the parties continued the arrangement on the 
same (compliant) terms and conditions after the 6-month holdover period 
ended. In our experience, an arrangement that continues beyond the 6-
month period does not pose a risk of program or patient abuse, provided 
that the arrangement continues to satisfy the specific requirements of 
the applicable exception, including the requirements related to fair 
market value, compensation that does not take into account the volume 
or value of referrals or other business generated between the parties, 
and reasonableness of the arrangement. We reconsidered our previous 
position and proposed to eliminate the time limitations on holdovers 
with safeguards to address two potential sources of program or patient 
abuse: frequent renegotiation of short term arrangements that take into 
account a physician's referrals and compensation or rental changes that 
become inconsistent with fair market value over time.
    To prevent frequent renegotiation of short term arrangements, the 
holdover must continue on the same terms and conditions as the original 
arrangement. If the parties change the original terms and conditions of 
the arrangement during the holdover, we would consider this a new 
arrangement. The new arrangement would be subject to the 1-year term 
requirement at Sec.  411.357(a)(2), (b)(3), or (d)(1)(iv) (or it must 
satisfy the requirements of the exception for fair market value 
compensation at Sec.  411.357(l), if applicable). We believe that these 
safeguards, which are already incorporated into the current exceptions, 
prevent frequent renegotiations of short-term arrangements.
    To ensure that compensation is consistent with or does not exceed 
fair market value, as applicable, the proposed holdover provisions 
require that the holdover arrangement satisfy all the elements of the 
applicable exception when the arrangement expires and on an ongoing 
basis during the holdover. Thus, if office space rental payments are 
fair market value when the lease arrangement expires, but the rental 
amount falls below fair market value at some point during the holdover, 
the lease arrangement would fail to satisfy the requirements of the 
applicable exception at Sec.  411.357(a) as soon as the fair market 
value requirement is no longer satisfied, and DHS referrals by the 
physicians to the entity that is party to the arrangement would no 
longer be permissible. In addition, the entity could not bill the 
Medicare program for DHS furnished as a result of a referral made by 
the physician after the rental charges were no longer consistent with 
fair market value. The requirement that the arrangement is set out in 
writing continues to apply during the holdover. To satisfy this 
requirement, the parties must have documentary evidence that the 
arrangement in fact continued on the same terms and conditions. 
Depending on the facts and circumstances of the arrangement and the 
available documentation, the expired written agreement and a collection 
of documents, including contemporaneous documents evidencing the course 
of conduct between the parties, may satisfy the writing requirement for 
the holdover.
    As noted above, we proposed to revise the holdover provisions at 
Sec.  411.357(a)(7), (b)(6), and (d)(1)(vii) to permit indefinite 
holdovers under certain conditions. Specifically, the arrangement must 
comply with the applicable exception when it expires by its own terms; 
the holdover must be on the same terms and conditions as the

[[Page 71319]]

immediately preceding arrangement; and the holdover must continue to 
satisfy the requirements of the applicable exception. In the 
alternative, we proposed to extend the holdover for a definite period 
(for example, a 1-, 2-, or 3-year holdover period) or for a period of 
time equivalent to the term of the immediately preceding arrangement 
(for example, a 2-year lease arrangement would be considered renewed 
for a new 2-year period). We stated in the proposed rule our belief 
that, if the holdover is extended for a definite period beyond 6 
months, the safeguards outlined above for indefinite holdovers are 
necessary to prevent program or patient abuse. We sought comments on 
what additional safeguards, if any, are necessary to ensure that 
holdovers lasting longer than 6 months do not pose a risk of program or 
patient abuse.
    In addition to our proposals to extend the holdover provisions at 
Sec.  411.357(a)(7), (b)(6), and (d)(1)(vii), we proposed to amend the 
exception at Sec.  411.357(l) for fair market value compensation 
arrangements. Section 411.357(l)(2) currently allows arrangements for 
less than 1 year to be renewed any number of times, provided that the 
terms of the arrangement and the compensation for the same items or 
services do not change. Currently, the renewed arrangement must 
continue to satisfy all the requirements of the exception, including 
the requirement that the compensation is consistent with fair market 
value. We proposed to amend Sec.  411.357(l)(2) to permit arrangements 
of any timeframe, including arrangements for more than 1 year, to be 
renewed any number of times. We believe that the proposal does not pose 
a risk of patient or program abuse, because the arrangement must be 
renewed on the same terms and conditions. In addition, as is the case 
currently, the renewed arrangement must satisfy all the requirements of 
the exception at the time the physician makes a referral for DHS and 
the entity bills Medicare for the DHS. We solicited comments as to 
whether the proposed revision of Sec.  411.357(l)(2) would be necessary 
if we revise Sec.  411.357(d)(1)(vii) to permit indefinite holdovers.
    We are finalizing the proposed indefinite holdover provisions for 
the exceptions at Sec.  411.357(a)(7), (b)(6), and (d)(1)(vii). We are 
also finalizing our proposal to remove the phrase ``made for less than 
1 year'' at Sec.  411.357(l)(2). The following is a summary of the 
comments we received.
    Comment: The majority of commenters supported our proposal to 
permit indefinite holdovers of arrangements that continue on the same 
terms and conditions as an expired arrangement, provided all elements 
of the applicable exception continue to be satisfied during the 
holdover. No commenter suggested that additional safeguards would be 
necessary, and no commenter favored holdover provisions with 
potentially shorter durations, such as 1, 2, or 3 years. One commenter 
stated that additional safeguards for holdovers arrangements are not 
necessary, because, according to the commenter, an arrangement that 
continues after the expiration of a term in a contract, but is 
contemporaneously documented during the ``holdover'' period, may 
satisfy the writing requirement of an exception even if there is no 
special regulatory provision relating to holdovers.
    Response: We appreciate the commenters' support, and we are 
finalizing the proposed indefinite holdover provisions. We agree with 
the commenter that, even without a holdover provision, an arrangement 
that continued after a contract expired on its own terms could 
potentially satisfy the writing requirement of an applicable exception, 
provided that the parties had sufficient contemporaneous documentation 
of the arrangement. Nevertheless, we believe that the proposed holdover 
provision will facilitate compliance without posing a risk of program 
or patient abuse. If a written contract with an explicit term provision 
expires on its own terms, but the parties nevertheless continue the 
arrangement past the expiration, the expired written contract by its 
own terms does not apply to the continued arrangement. For this reason, 
without a holdover provision, an expired written contract, on its own, 
could not satisfy the writing requirement of an applicable exception. 
Without additional supporting documentation, there may be gaps in 
compliance, as it may take some time after the expiration of the 
written contract to generate sufficient documents evidencing the course 
of conduct between the parties after the contract expired. In contrast, 
with a holdover provision, parties can rely in part on the expired 
written contract to satisfy the writing requirement for the holdover 
period. We note, however, that parties relying on the holdover 
provisions must still have contemporaneous documents establishing that 
the holdover continued on the same terms and conditions as the 
immediately preceding arrangement. That is, a party must be able to 
establish that it satisfied the requirements for the holdover 
provisions at Sec.  411.357(a)(7), (b)(6), or (d)(1)(vii) for referrals 
made during the holdover period.
    Comment: One commenter objected to our statement in the proposed 
rule that, if rental amounts fall below fair market value during a 
holdover, the lease arrangement would no longer satisfy the fair market 
value requirement of the exception at Sec.  411.357(a). According to 
the commenter, our statement implies that an arrangement that falls out 
of fair market value during its term loses protection under the 
exception. The commenter suggested that we retract the statement in the 
final rule. Another commenter supported our proposal to require 
holdover arrangements to continue to satisfy the applicable fair market 
value requirement during the holdover, but requested that CMS confirm 
that fair market value is determined at the commencement of the 
arrangement, taking into account the length of the term.
    Response: The statement cited by the commenter regarding rental 
amounts falling below fair market value referred only to the 
application of the relevant fair market value requirement during a 
holdover. We believe that ongoing compliance with the fair market value 
requirement during the holdover is necessary to prevent program or 
patient abuse. Regarding the fair market value requirement during the 
original term, we expect parties to make a determination of fair market 
value at the time the financial relationship is created. (See 73 FR 
48739.) The exception at Sec.  411.357(a)(4) requires rental charges to 
be consistent with fair market value ``over the term of the 
arrangement,'' but we note that fair market value is expressed as a 
range of values. We caution that rental payments may cease to be 
consistent with fair market value in long-term arrangements.
    Comment: One commenter stated that it may be difficult for an 
arrangement to satisfy the fair market value requirement during a 
holdover that lasts for more than 1 year. The commenter requested 
guidance on how the fair market value requirement should be analyzed in 
a multiple year holdover.
    Response: As noted elsewhere in this section, the requirement that 
an arrangement continue to meet the fair market value requirement 
throughout the holdover is necessary to prevent program or patient 
abuse. Parties relying on a holdover provision bear the risk of 
fluctuations in the relevant market that may cause an arrangement to no 
longer satisfy the applicable fair market value requirement. In most 
instances, fair market value is expressed as a range, and minor 
fluctuations in market value may not cause an arrangement to

[[Page 71320]]

become noncompliant. (See 73 FR 48739.) However, as soon as a holdover 
arrangement ceases to meet all the requirements of an applicable 
exception, including the fair market value requirement, referrals for 
DHS by the physician to the entity that is a party to the arrangement 
are no longer permissible. It is up to the parties to determine the 
best way to analyze fair market value during a holdover. The best means 
of ensuring ongoing compliance is to enter into a new agreement in a 
timely manner after a previous contract expires, and to reassess fair 
market value to the extent that is necessary at the time of the 
renewal.
    Comment: One commenter requested that CMS permit changes to the 
terms and conditions of an arrangement during a holdover, provided that 
the changes do not impact compliance with the elements of an applicable 
exception.
    Response: Under the revised regulations, an indefinite holdover 
lease arrangement or personal service arrangement is permitted if the 
arrangement continues on the same terms and conditions as the 
immediately preceding arrangement. As stated in the proposed rule, the 
holdover arrangement must continue on the same terms and conditions 
because frequent renegotiation of short term arrangements poses a risk 
of program or patient abuse. (See 80 FR 41917). If parties were 
permitted to amend the terms and conditions of an arrangement in the 
course of the holdover, then parties would be able to frequently 
renegotiate the terms of the arrangement during the holdover in a 
manner that could take into account the volume or value of referrals. 
Thus, parties are not permitted to amend the terms and conditions of an 
arrangement during a holdover, because such changes pose a risk of 
program or patient abuse.
    Comment: One commenter stated that many leases provide that the 
rental amount will increase if the tenant holds over after the lease 
expires on its own terms. The commenter requested guidance on how the 
fair market value requirement would apply to increased rental amounts 
during the holdover period.
    Response: In Phase III, we stated that lessors can charge a 
holdover premium, ``provided that the amount of the premium was set in 
advance in the lease agreement (or in any subsequent renewal) at the 
time of its execution and the rental rate (including the premium) 
remains consistent with fair market value and does not take into 
account the volume or value of referrals or other business generated 
between the parties.'' (See 72 FR 51045). The same principles apply to 
the indefinite holdover provisions that we are finalizing. The rental 
amount with the holdover premium must satisfy the fair market value 
requirement when the original agreement expires and throughout the 
holdover.
    We caution that, depending on the facts and circumstances, the 
failure to apply a holdover premium that is legally required by the 
original arrangement may constitute a change in the terms and 
conditions of the original arrangement. In such circumstances, the 
``holdover'' arrangement will not meet the requirement at Sec.  
411.357(a)(7)(ii) that the arrangement continue on the same terms and 
conditions as the immediately preceding arrangement. In addition, the 
failure to charge a holdover premium may constitute the forgiveness of 
a debt, thus creating a secondary financial relationship between the 
parties that must satisfy the requirement of an applicable exception.
    Comment: One commenter supported the proposal to allow parties to 
renew arrangements of any duration, including arrangements of 1 year or 
more, under the exception for fair market value compensation at Sec.  
411.357(l). Several other commenters requested that an indefinite 
holdover provision, similar to the proposal for lease arrangements and 
personal service arrangements, be applied to the exception for fair 
market value compensation. The commenters stated that the exception for 
fair market value compensation is similar in many respects to the 
exceptions for lease arrangements and personal service arrangements, 
and therefore, the commenters saw no reason to include an indefinite 
holdover provision in the latter exceptions while not including such a 
provision in the exception for fair market value compensation.
    Response: We believe that permitting parties to renew arrangements 
of any length under the exception for fair market value compensation, 
provided that the terms of the arrangement and the compensation for the 
same items or services do not change, affords parties sufficient 
flexibility without posing a risk of program or patient abuse. For this 
reason, we do not believe that a separate holdover provision is 
necessary for the exception for fair market value compensation. We note 
that nothing in the exception requires parties to renew the arrangement 
in writing. However, the parties must have written documentation 
establishing that the renewed arrangement was on the same terms and 
conditions as the original arrangement.
    Comment: One commenter stated that the exception at Sec.  
411.357(l) as it is currently worded does not prohibit the renewal of 
arrangements with a term of more than 1 year. The commenter stated that 
our proposed revision was unnecessary and requested clarification in 
the final rule that the exception has always permitted the renewal of 
arrangements of more than 1 year.
    Response: The exception as it is currently written permits 
arrangement for less than 1 year to be renewed any number of times if 
the terms of the arrangement and compensation for the same items or 
services do not change. There is no requirement that the arrangement of 
less than 1 year be renewed in writing. The arrangement can be renewed 
by course of conduct, and the writing requirement for the renewal 
period would be satisfied (assuming that it was satisfied for the 
initial term) if the parties had documents establishing that the 
arrangement continued on the same terms and conditions. Under our 
proposed rule, arrangements for 1 year or longer could also be renewed 
by course of conduct, provided that the parties have documentation 
establishing that the terms of the arrangement and the compensation for 
the same items or services do not change during the renewal.
    It is true that the exception as currently written does not 
expressly prohibit parties from renewing arrangements of 1 year or 
longer. Nonetheless, given the purpose of the exception when it was 
first established, we believe the better reading of the exception does 
not rely on reading missing words into the text and, therefore, we are 
not retracting our statement from the proposed rule.
    Comment: One commenter stated that the exception for fair market 
value compensation currently requires that the term of the arrangement 
must be specified in writing. The commenter requested that CMS create a 
``safe harbor'' timeframe of 6 months for arrangements that do not 
specify the timeframe in writing.
    Response: We decline to create a ``safe harbor'' timeframe for the 
exception for fair market value compensation. We note, however, that 
the timeframe can be specified in a collection of documents setting out 
the arrangement in writing.
    After reviewing the comments, we are finalizing the proposed 
indefinite holdover provisions for the exceptions at Sec.  
411.357(a)(7), (b)(6), and (d)(1)(vii). We are also finalizing our 
proposal to remove the phrase ``made for less than 1 year'' at Sec.  
411.357(l)(2). We believe

[[Page 71321]]

that lease arrangements and personal service arrangements that continue 
on the same terms and conditions and satisfy the requirements for the 
new holdover provisions (including ongoing compliance with all the 
requirements of an applicable exception) do not pose a risk of program 
and patient abuse. We also believe that allowing renewals of an 
arrangement of any timeframe under the exception for fair market value 
compensation at Sec.  411.357(l), provided the arrangement is renewed 
on the same terms and conditions, affords DHS entities additional 
flexibility in their arrangements and facilitates compliance, without 
posing a risk of program or patient abuse; we remind stakeholders that 
the renewed arrangement must satisfy all the requirements of the 
exception at the time a referral for DHS is made.
    The indefinite holdover provisions will be available to parties on 
the effective date of this final rule. Parties who are in a valid 
holdover arrangement under the current 6-month holdover provisions on 
the effective date of this final rule may make use of the indefinite 
holdover provisions that we are finalizing, provided that all the 
requirements of the new holdover provisions are met. On the other hand, 
if an arrangement does not qualify for the 6-month holdover under the 
current regulations at Sec.  411.357(a)(7), (b)(6), or (d)(1)(vii) on 
the effective date of this rule (for example, if the holdover has 
lasted for more than 6 months as of the effective date of the rule), 
then the parties cannot make use of the indefinite holdover provisions.
4. Definitions
    In the proposed rule, we proposed to revise several definitions in 
our regulations to improve clarity and ensure proper application of our 
policies. We describe below the specific proposals. We are now 
finalizing the revised definitions as proposed, without additional 
modification.
a. Remuneration (Sec.  411.351)
    A compensation arrangement between a physician (or an immediate 
family member of such physician) and a DHS entity implicates the 
referral and billing prohibitions of the physician self-referral law. 
Section 1877(h)(1)(A) of the Act defines the term ``compensation 
arrangement'' as any arrangement involving any ``remuneration'' between 
a physician (or an immediate family member of such physician) and an 
entity. However, section 1877(h)(1)(C) of the Act identifies certain 
types of remuneration which, if provided, would not create a 
compensation arrangement subject to the referral and billing 
prohibitions of the physician self-referral law. Under section 
1877(h)(1)(C)(ii) of the Act, the provision of the following items, 
devices, or supplies does not create a compensation arrangement between 
the parties: Items, devices, or supplies that are ``used solely'' to 
collect, transport, process, or store specimens for the entity 
providing the items, devices, or supplies, or to order or communicate 
the results of tests or procedures for such entity. Furthermore, under 
our regulations at Sec.  411.351, the provision of such items, devices, 
or supplies is not considered to be remuneration. As explained at 80 FR 
41918, we proposed to revise the definition of ``remuneration'' at 
Sec.  411.351 to make it clear that the provision of an item, device, 
or supply that is used for one or more of the six purposes listed in 
the statute, and no other purpose, does not constitute remuneration.
    We received two comments in support of our proposed revision of the 
definition of ``remuneration.'' We are finalizing the revisions to 
Sec.  411.351 as proposed.
    Although we did not propose regulatory revisions, we noted in the 
proposed rule that we are concerned about potential confusion regarding 
whether remuneration is conferred by a hospital to a physician when 
both facility and professional services are provided to patients in a 
hospital-based department. Following commentary by the Third Circuit 
Court of Appeals in its decision in United States ex rel. Kosenske v. 
Carlisle HMA, 554 F.3d 88 (3d Cir. 2009), we received several written 
inquiries asking whether certain so-called ``split bill'' arrangements 
between physicians and DHS entities involve remuneration between the 
parties that gives rise to a compensation arrangement for the purposes 
of the physician self-referral law. We are taking the opportunity 
afforded by this rulemaking to address this issue.
    In a ``split bill'' arrangement, a physician makes use of a DHS 
entity's resources (for example, examination rooms, nursing personnel, 
and supplies) to treat the DHS entity's patients. The DHS entity bills 
the appropriate payor for the resources and services it provides 
(including the examination room and other facility services, nursing 
and other personnel, and supplies) and the physician bills the payor 
for his or her professional fees only. We do not believe that such an 
arrangement involves remuneration between the parties, because the 
physician and the DHS entity do not provide items, services, or other 
benefits to one another. Rather, the physician provides services to the 
patient and bills the payor for his or her services, and the DHS entity 
provides its resources and services to the patient and bills the payor 
for the resources and services. There is no remuneration between the 
parties for the purposes of section 1877 of the Act.
    In contrast, if a physician or a DHS entity bills a non-Medicare 
payor (that is, a commercial payor or self-pay patient) globally for 
both the physician's services and the hospital's resources and 
services, a benefit is conferred on the party receiving payment. 
Specifically, the party that bills globally receives payment for items 
or services provided by the other party. Such a global billing 
arrangement involves remuneration between the parties that implicates 
the physician self-referral law.
    The following is a summary of the comments we received.
    Comment: The overwhelming majority of those that commented on the 
issue of split billing and remuneration agreed that a physician's use 
of hospital resources when treating hospital patients does not 
constitute remuneration between the parties for the purposes of the 
physician self-referral law, if the hospital bills the appropriate 
payor for the resources and services it provides and the physician 
bills the payor for his or her services. One commenter asked CMS to 
confirm that our statement is a clarification of existing law. Several 
other commenters requested that we codify our position in regulatory 
text. Two commenters requested that we confirm our interpretation by 
amending the definition of ``remuneration'' at Sec.  411.351.
    Response: Our discussions in the preamble to the proposed rule and 
in this final rule regarding remuneration and split bill arrangements 
is a statement of CMS' existing policy. We did not propose any 
regulatory revisions in the proposed rule because we did not think it 
necessary, and therefore, we cannot make revisions to the regulatory 
text at this time.
    Comment: One commenter asked whether a hospital's promise to grant 
a physician organization exclusive use of the hospital's space 
constituted remuneration for the purposes of the physician self-
referral law, if the hospital bills the appropriate payor for the space 
it provides and the physician bills the payor for his or her services. 
According to the commenter, in Kosenske the hospital promised a 
physician group exclusive use of the hospital's space.

[[Page 71322]]

    Response: Our clarification regarding split bill arrangements and 
remuneration applied only to the use of a hospital's space, items, and 
equipment. We are not addressing exclusive use of space in this final 
rule with comment period.
    Following our review of the comments, we are confirming our 
existing policy that a physician's use of a hospital's resources (for 
example, examination rooms, nursing personnel, and supplies) when 
treating hospital patients does not constitute remuneration under the 
physician self-referral law, when the hospital bills the appropriate 
payor for the resources and services it provides (including the 
examination room and other facility services, nursing and other 
personnel, and supplies) and the physician bills the payor for his or 
her professional fees only. We emphasize that this statement reflects 
our interpretation of the term ``remuneration'' and policy on the 
issue.
b. Compensation Arrangements--``Stand in the Shoes'' (Sec.  411.354(c))
    Phase III included provisions under which all physicians would be 
treated as ``standing in the shoes'' of their physician organizations 
for the purposes of applying the rules regarding direct and indirect 
compensation arrangements at Sec.  411.354(c) (72 FR 51026 through 
51030). (Since Phase II, we have considered a referring physician and 
the professional corporation of which he or she is the sole owner to be 
the same for the purposes of the physician self-referral regulations 
(69 FR 16131).) The FY 2009 IPPS final rule amended Sec.  411.354(c) 
to: (1) Treat a physician with an ownership or investment interest in a 
physician organization as standing in the shoes of that physician 
organization; and (2) permit parties to treat a physician who does not 
have an ownership or investment interest in a physician organization as 
standing in the shoes of that physician organization. An exception to 
the mandatory treatment of physicians with ownership or investment 
interests as standing in the shoes of their physician organizations was 
made for physicians with ``titular'' ownership or investment interests 
only (73 FR 48691 through 48700). A ``physician organization'' is 
defined at Sec.  411.351 as a physician, a physician practice, or a 
group practice that complies with the requirements of Sec.  411.352. 
Therefore, as of October 1, 2008, for the purposes of determining 
whether a direct or indirect compensation arrangement exists between a 
physician and an entity to which the physician makes referrals for the 
furnishing of DHS, if the physician has an ownership or investment 
interest in the physician organization that is not merely titular, the 
physician stands in the shoes of the physician organization. The 
physician is considered to have the same compensation arrangements 
(with the same parties and on the same terms) as the physician 
organization in whose shoes he or she stands.
    In Phase III, we established the rule at Sec.  411.354(c)(3)(i), 
which provides that 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 regulation also states 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). Our intent for this provision was to make clear that, 
under the Phase III ``stand in the shoes'' policy (which considered all 
physicians in a physician organization to stand in the shoes of the 
physician organization), each physician in the physician organization 
was considered a ``party'' to an arrangement between the physician 
organization and a DHS entity.
    Following the FY 2009 IPPS final rule changes limiting the ``stand 
in the shoes'' rules only to physicians with ownership or investment 
interests in their physician organizations (other than those with 
merely a titular ownership or investment interests) and physicians who 
voluntarily stand in the shoes of their physician organizations, 
stakeholders inquired whether the change in the ``stand in the shoes'' 
policy meant that, when applying the exceptions in Sec.  411.355 and 
Sec.  411.357, for the purposes of determining whether compensation 
takes into account the volume or value of referrals or other business 
generated between the ``parties,'' the only ``parties'' to consider are 
the physicians with ownership or investment interests in their 
physician organizations. This was not our intent in revising the 
``stand in the shoes'' rules in the FY 2009 IPPS final rule.
    To address the issue raised by the stakeholders, we proposed to 
revise Sec.  411.354(c)(3)(i) so that it is consistent with our work in 
the FY 2009 IPPS final rule. Our intent there was, and currently 
remains, that only physicians who stand in the shoes of their physician 
organization are considered parties to an arrangement for the purposes 
of the signature requirements of the exceptions. For such purposes, we 
do not consider employees and independent contractors to be parties to 
a physician organization's arrangements unless they voluntarily stand 
in the shoes of the physician organization as permitted under Sec.  
411.354(c)(1)(iii) or (c)(2)(iv)(B). Guidance regarding physicians who 
stand in the shoes of their physician organizations may be found on our 
Web site at http://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/FAQs.html. Specifically, consistent with our 
response in Frequently Asked Question #12318, for the purposes of 
satisfying the requirements of an exception to the physician self-
referral prohibition, we consider a physician who is standing in the 
shoes of his or physician organization to have satisfied the signature 
requirement of an applicable exception when the authorized signatory of 
the physician organization has signed the writing evidencing the 
arrangement.
    For purposes other than satisfying the signature requirements of 
the exceptions, we remain concerned about the referrals of all 
physicians who are part of a physician organization that has a 
compensation arrangement with a DHS entity when we analyze whether the 
compensation between the DHS entity and the physician organization 
takes into account the volume or value of referrals or other business 
generated between the parties. If we did not consider the referrals of 
all the physicians in the physician organization, and instead only 
considered the referrals of those physicians who stand in the shoes of 
the physician organization, DHS entities would be permitted to 
establish compensation methodologies that take into account the volume 
or value referrals or other business generated by non-owner physicians 
in a physician organization when entering into a compensation 
arrangement with the physician organization. Therefore, we proposed to 
amend Sec.  411.354(c)(3)(i) to clarify that, for all purposes other 
than the signature requirements, all physicians in a physician 
organization are considered parties to the compensation arrangement 
between the physician organization and the DHS entity.
    The following is a summary of the comments we received.
    Comment: One commenter disliked the proposed revisions to the 
``stand in the shoes'' regulations at Sec.  411.354(c)(3)(i), stating 
that, prior to

[[Page 71323]]

the revision, a physician who did not stand in the shoes of his or her 
physician organization was not a ``party'' to any compensation 
arrangement between the physician organization and a DHS entity. The 
commenter recognized that such a physician's referrals had to be 
considered when determining the compliance of the compensation 
arrangement with the volume or value standard in various exceptions, 
but did not agree that the identifier ``party'' should be applied to a 
physician who does not stand in the shoes of his or her physician 
organization. Another commenter was concerned that this revision would 
create direct compensation arrangements between a DHS entity and the 
physician employees of a physician organization who do not stand in the 
shoes of the physician organization under the current regulations.
    Response: We disagree that the revised regulation at Sec.  
411.354(c)(3)(i) will have the effect of transforming physicians who do 
not stand in the shoes of their physician organizations into 
``parties'' to a compensation arrangement between a DHS entity and the 
physician organization. In many exceptions, the volume or value 
standard (described in detail elsewhere in this section) is expressed 
by prohibiting compensation that is determined in a manner that takes 
into account the volume or value of referrals or other business 
generated ``between the parties.'' Most exceptions also include a 
requirement that the writing evidencing the arrangement be signed by 
the ``parties.'' In interpreting the physician self-referral 
exceptions, we attach the same meaning to a term or phrase wherever it 
is used, unless otherwise specified explicitly in the regulation text. 
To do otherwise would introduce confusion into the regulations, as a 
single term or phrase could have different meanings in different 
exceptions, or even in the same exception if the term or phrase is used 
more than once. Therefore, if a physician is considered a ``party'' for 
the purposes of the volume or value standard, he or she would be 
considered a ``party'' for the purposes of the signature requirement.
    As the commenter correctly recognized, the referrals of all 
physicians in a physician organization--regardless of whether the 
physicians stand in the shoes of the physician organization--must be 
considered when determining compliance with the volume or value 
standard in the exceptions at Sec.  411.355 and Sec.  411.357. Thus, 
the physicians who do not stand in the shoes of the physician 
organization would nonetheless be considered ``parties'' for the 
purposes of analyzing compliance with the volume or value standard. 
Given our uniform interpretation of terms and phrases used in the 
physician self-referral regulations, under our current regulations, 
even physicians who do not stand in the shoes of their physician 
organizations may be required to meet the signature requirements for 
``parties.'' We do not believe there is a need to include these 
physicians as ``parties'' that must sign the writing evidencing the 
arrangement between a DHS entity and a physician organization. The 
revision to Sec.  411.354(c)(3)(i) is merely intended to alleviate the 
burden on physician organizations related to the signature requirements 
in many of the exceptions at Sec.  411.355 and Sec.  411.357 that would 
otherwise require the signatures of physicians who do not stand in the 
shoes of their physician organizations. It does not affect the 
regulations at Sec.  411.354(c)(1)(ii) or (c)(2)(iv), which identify 
physicians who are deemed to stand in the shoes of their physician 
organizations and have the same compensation arrangements as their 
physician organizations. Moreover, we note that our determination of 
which physicians are ``parties'' for the purposes of applying the 
exceptions at Sec.  411.355 and Sec.  411.357 should not affect which 
physicians and entities are considered parties to a contract under 
State or any other law.
    Comment: One commenter requested additional clarification regarding 
our statements in the proposed rule regarding the ``stand in the 
shoes'' provisions at Sec.  411.354(c)(3)(i). Specifically, the 
commenter was concerned that the language in the proposed rule could be 
construed as conflating what it understands to be two separate 
analyses: (1) The analysis of a direct compensation arrangement between 
a DHS entity (and the resulting ``deemed'' direct compensation 
arrangements between the DHS entity and the physicians who stand in the 
shoes of the physician organization); and (2) the potential existence 
of an indirect compensation arrangement between the DHS entity and non-
owner physicians of the physician organization (employees, independent 
contractors, and titular owners). As to the second analysis, the 
commenter recognized that the question of whether aggregate 
compensation to a non-owner physician (that is, one who does not stand 
in the shoes of the physician organization) varies with or takes into 
account the volume or value of referrals or other business generated 
for the DHS entity must be considered for the purposes of identifying 
any indirect compensation arrangements, but questioned why ``downstream 
compensation'' to non-owner physicians would factor into analyzing the 
direct compensation arrangement between the DHS entity and the 
physician organization (and the ``deemed'' direct compensation 
arrangements between the DHS entity and the physicians who stand in the 
shoes of the physician organization).
    Response: Current Sec.  411.354(c)(3)(i) states that 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. Further, when 
applying the exceptions at Sec.  411.355 and Sec.  411.357 to 
arrangements where a physician stands in the shoes of his or her 
physician organization, Sec.  411.354(c)(3)(i) states that the relevant 
referrals and other business generated ``between the parties'' are 
referrals and other business generated between the DHS entity and the 
physician organization, including all members, employees, and 
independent contractor physicians. In the first analysis noted by the 
commenter, the parties must consider whether the compensation under the 
arrangement between the DHS entity and the physician organization takes 
into account the volume or value of referrals or other business 
generated by any physician in the physician organization, regardless of 
whether the physician stands in the shoes of the physician 
organization. Because a physician who stands in the shoes of his or her 
physician organization has the same compensation arrangements as the 
physician organization, the result of this analysis would be the same 
for any ``deemed'' direct compensation arrangement between the DHS 
entity and a physician who stands in the shoes of the physician 
organization. Where no direct or ``deemed'' direct compensation 
arrangement exists between a physician and a DHS entity, parties should 
consider whether an indirect compensation arrangement exists under 
Sec.  411.354(c)(2). Nothing in revised Sec.  411.354(c)(3)(i) impacts 
the analysis regarding whether an indirect compensation arrangement 
exists between a physician and a DHS entity.
    We are uncertain what ``downstream compensation'' the commenter 
believes is factored into the analysis of the direct compensation 
between a DHS entity and the physician organization with which it has a 
compensation arrangement. As noted earlier, compensation between a

[[Page 71324]]

DHS entity and a physician organization may not be determined in a 
manner that takes into account the volume or value of referrals and 
other business generated by any physician in the physician 
organization, including physicians who do not stand in the shoes of the 
physician organization. The compensation from the physician 
organization to its employed or contracted physicians is relevant to 
whether an indirect compensation arrangement exists between the DHS 
entity and a physician.
    Comment: One commenter opposed the proposed revisions to the 
``stand in the shoes'' rules at Sec.  411.354(c)(3)(i), stating that 
the effect of considering all referrals from a physician organization 
when determining whether the compensation under a particular 
compensation arrangement takes into account the volume or value of 
referrals between the parties would be to convert presently lawful 
transactions into a violation of the physician self-referral law.
    Response: The ``stand in the shoes'' regulations, including Sec.  
411.357(c)(3)(i) specifically, were established in Phase III and became 
effective on December 4, 2007 (72 FR 51028). Our Phase III policy 
considered all physicians in a physician organization to stand in the 
shoes of the physician organization, and Sec.  411.354(c)(3)(i) 
originally stated that for the 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). Both the policy and 
Sec.  411.354(c)(3)(i) were amended in the FY 2009 IPPS final rule and 
became effective on October 1, 2008. The regulation currently states 
that 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). Thus, at all times, the regulation at Sec.  
411.354(c)(3)(i) has required parties to consider the referrals of all 
physicians in a physician organization--regardless of whether they 
stand in the shoes of the physician organization--when analyzing 
whether the compensation under a particular compensation arrangement 
takes into account the volume or value of referrals or other business 
generated ``between the parties.'' We do not believe that, under any 
iteration of Sec.  411.354(c)(3)(i) or the regulation finalized in this 
final rule, an arrangement between a DHS entity and a physician 
organization could comply with the volume or value standard in an 
applicable exception if the compensation under the arrangement is 
determined in a manner that takes into account the volume or value of 
referrals or other business generated by the physicians who do not 
stand in the shoes of the physician organization.
    As a result of the comments, we are finalizing our proposed 
revisions to the ``stand in the shoes'' regulations at Sec.  
411.354(c)(3)(i).
c. Locum Tenens Physician (Sec.  411.351)
    The term ``locum tenens physician'' was first defined for the 
purposes of the physician self-referral law in Phase I (66 FR 954). The 
definition of ``locum tenens physician'' adopted in Phase I used the 
phrase ``stand in the shoes.'' (See 80 FR 41919 through 41920.) As 
described in this section, in subsequent rulemaking we established 
certain rules regarding when a physician ``stands in the shoes'' of his 
or her physician organization. The ``stand in the shoes'' provisions 
are specific to compensation arrangements and described in our 
regulations at Sec.  411.354(c).
    We proposed to revise the definition of locum tenens physician to 
remove the reference to ``stand in the shoes.'' We believe that the 
definition of a locum tenens physician is clear without the phrase 
``stands in the shoes.'' We also believe that it is clear that the 
``stand in the shoes'' provisions at Sec.  411.354(c) are specific to 
compensation arrangements and are separate and distinct from the 
definition of a locum tenens physician. However, to eliminate 
unnecessary verbiage and to avoid any potential ambiguity, we proposed 
to revise the definition of locum tenens physician at Sec.  411.351 by 
removing the phrase ``stands in the shoes.''
    We received no comments opposing our proposal to revise the 
definition of locum tenens at Sec.  411.351 by removing the phrase 
``stands in the shoes,'' and we are finalizing the revisions to Sec.  
411.351 as proposed.
5. Exception for Ownership of Publicly Traded Securities
    Section 1877(c)(1) of the Act sets forth an exception for ownership 
in certain publicly traded securities and mutual funds. The exception 
applies to several categories of securities, including securities that 
are traded under the automated interdealer quotation system operated by 
the National Association of Securities Dealers (NASD). This exception 
is codified in our regulations at Sec.  411.356(a), which closely 
mirrors section 1877(c) of the Act.
    Through a question posed to us by a stakeholder, it has come to our 
attention that the NASD no longer exists and that it is no longer 
possible to purchase a publicly traded security traded under the 
automated interdealer quotation system it formerly operated. In 
response, we researched whether we could modernize the exception for 
ownership of publicly traded securities by including currently existing 
systems that are equivalent to the NASD's now-obsolete automated 
interdealer quotation system. (See 80 FR 41920 for a summary of our 
research).
    We proposed to use our authority in section 1877(b)(4) of the Act 
to revise the regulations at Sec.  411.356(a)(1) to include securities 
listed for trading on an electronic stock market or OTC quotation 
system in which quotations are published on a daily basis and trades 
are standardized and publicly transparent. Trades made through a 
physical exchange (such as the NYSE or the American Stock Exchange) are 
standardized and publicly transparent. To protect against risk of 
program or patient abuse, we believe that trades on the electronic 
stock markets and OTC quotation systems that are eligible for this 
exception must also be standardized and publicly transparent. 
Accordingly, we did not propose to include any electronic stock markets 
or OTC quotation systems that trade unlisted stocks or that involve 
decentralized dealer networks. We also believe it is appropriate to 
limit the proposed exception to those electronic stock markets or OTC 
quotation systems that publish quotations on a daily basis, as physical 
exchanges must publish on that basis. We solicited comments regarding 
whether fewer, different, or additional restrictions on electronic 
stock markets or OTC quotation systems are necessary to effectuate the 
Congress' intent and to protect against patient or program abuse.
    We received no comments on our proposal to update the provision at 
Sec.  411.356(a)(1) to except ownership or investment interest in 
securities listed for trading on an electronic stock market or over-
the-counter quotation system, provided that quotations are published on 
a daily basis and trades are standardized and publicly transparent. We 
are finalizing the revisions to Sec.  411.356(a) as proposed.

[[Page 71325]]

6. New Exception for Timeshare Arrangements
a. Statutory and Regulatory Background
    Section 1877(e)(1)(A) of the Act sets forth an exception for the 
rental of office space. Under this exception, lease arrangements must 
satisfy six specific criteria, one of which is that the office space 
rented or leased is used exclusively by the lessee when being used by 
the lessee (and is not shared with or used by the lessor or any other 
person or entity related to the lessor). The exception also permits 
payments by the lessee for the use of space consisting of common areas 
(which do not afford exclusive use to the lessee) if the payments do 
not exceed the lessee's pro rata share of expenses for the space based 
upon the ratio of the space used exclusively by the lessee to the total 
amount of space (other than common areas) occupied by all persons using 
the common areas. The 1995 final rule (60 FR 41959) incorporated the 
provisions of section 1877(e)(1)(A) of the Act into our regulations at 
Sec.  411.357(a).
    Section 1877(e)(8) of the Act sets forth an exception for: (1) 
Payments made by a physician to a laboratory in exchange for the 
provision of clinical laboratory services; and (2) payments made by a 
physician to an entity as compensation for items or services other than 
clinical laboratory services if the items or services are furnished at 
fair market value (the ``payments by a physician exception''). The 1995 
final rule (60 FR 41929) incorporated the provisions of section 
1877(e)(8) of the Act into our regulations at Sec.  411.357(i). In the 
1998 proposed rule (63 FR 1703), we proposed to interpret ``other items 
or services'' to mean any kind of items or services that a physician 
might purchase, but not including clinical laboratory services or those 
specifically excepted under another provision in Sec. Sec.  411.355 
through 411.357. In that proposal, we stated that we did not believe 
that the Congress meant for the payments by a physician exception to 
cover a rental arrangement as a service that a physician might 
purchase, because it had already included in the statute specific 
exceptions, with specific standards for such arrangements, in section 
1877(e)(1) of the Act. In Phase II (69 FR 16099), we responded to 
commenters that disagreed with our position that the exception for 
payments by a physician is not available for arrangements involving 
items and services addressed by another exception, stating that our 
position is consistent with the overall statutory scheme and purpose 
and is necessary to prevent the exception from negating the statute (69 
FR 16099). We made no changes to the exception in Phase II to 
accommodate the commenters' concerns.
    In the 1998 proposed rule (63 FR 1699), we proposed an exception 
for compensation arrangements that are based upon fair market value and 
meet certain other criteria. We finalized the exception at Sec.  
411.357(l) in Phase I, noting that, although it only covered services 
provided by a physician (or an immediate family member of a physician) 
to an entity furnishing DHS, it was available for some arrangements 
that are covered by other exceptions (66 FR 917 through 919). Although 
commenters requested that we expand the exception to cover the 
transfer, lease or license of real property, intangible property, 
property rights, or a covenant not to compete (69 FR 16111), we made no 
substantive changes to the exception for fair market value compensation 
in Phase II. In Phase III, we expanded the exception at Sec.  
411.357(l) for fair market value compensation to include arrangements 
involving compensation from a physician to an entity furnishing DHS. We 
reiterated that the exception for fair market value compensation does 
not protect office space lease arrangements; rather, arrangements for 
the rental of office space must satisfy the requirements of the 
exception at Sec.  411.357(a) (72 FR 51059 through 51060).
    In Phase III, a commenter suggested that ``timeshare'' leasing 
arrangements would be addressed more appropriately in the exception for 
fair market value compensation at Sec.  411.357(l) or the exception for 
payments by a physician at Sec.  411.357(i), instead of the exception 
for the rental of office space at Sec.  411.357(a) (72 FR 51044). The 
commenter described a timeshare lease arrangement under which a 
physician or group practice pays the lessor for the right to use office 
space exclusively on a turnkey basis, including support personnel, 
waiting areas, furnishings, and equipment, during a schedule of time 
intervals for a fair market value rate per interval of time or in the 
aggregate, and urged us to clarify that such timeshare arrangements may 
qualify under Sec.  411.357(i) or (l), the exceptions for payments by a 
physician and fair market value compensation, respectively. We note 
that the commenter specifically described lease arrangements where the 
lessee had exclusive, but only periodic, use of the premises, 
equipment, and personnel. In response, we declined to permit office 
space lease arrangements to be eligible for the fair market value 
exception at Sec.  411.357(l), and stated that we were not persuaded 
that Sec.  411.357(i) should protect office space leases (72 FR 51044 
through 51045).
b. Timeshare Arrangements
    Through our administration of the SRDP, as well as stakeholder 
inquiries, we have been made aware of arrangements for the use of 
another person or entity's premises, equipment, personnel, items, 
supplies, or services by physicians who, for various legitimate 
reasons, do not require or are not interested in a traditional office 
space lease arrangement. For example, in a rural or underserved area, 
there may be a need in the community for certain specialty services but 
that need is not great enough to support the full-time services of a 
physician specialist. Under ``timeshare'' arrangements, a hospital or 
local physician practice may ask a specialist from a neighboring 
community to provide services in space owned by the hospital or 
practice on a limited or as-needed basis. Most often, under such an 
arrangement, the specialist does not establish an additional medical 
practice office by renting office space and equipment, hiring 
personnel, and purchasing services and supplies necessary for the 
operation of a medical practice. Rather, it is common for a hospital or 
local physician practice to make available to the visiting independent 
physician on a ``timeshare'' basis the space, equipment and services 
necessary to treat patients. Under the ``timeshare'' arrangement, the 
hospital or physician practice may provide the physician with a medical 
office suite that is fully furnished and operational. The physician 
does not need to make any improvements to the space or to bring any 
medical or office supplies to begin seeing patients. ``Timeshare'' 
arrangements also may be attractive to a relocating physician whose 
prior medical practice office lease has not expired or to a new 
physician establishing his or her medical practice.
    In general, a license--or permission--to use the property of 
another person differs from a lease in that ownership and control of 
the property remains with the licensor. That is, a lease transfers 
dominion and control of the property from the lessor to the lessee, 
giving the lessee an exclusive ``right against the world'' (including a 
right against the lessor) with respect to the leased property, but a 
license is a mere privilege to act on another's property and does not 
confer a possessory interest in the property. A license may be granted 
in writing or orally, and ordinarily does not convey an exclusive 
right. For a license to convey the right

[[Page 71326]]

to exclusive use, it must be specified in the writing that documents 
the license. As with a license, a ``timeshare'' arrangement, as we use 
the term in this final rule, does not transfer dominion and control 
over the premises, equipment, personnel, items, supplies, and services 
of their owner, but rather confers a privilege to use (during specified 
periods of time) the premises, equipment, personnel, items, supplies, 
and services that are the subject of the arrangement.
c. New Exception
    Under our current regulations, an arrangement that includes the use 
of office space, as timeshare arrangements commonly do, must be 
analyzed under the exception for the rental of office space. The 
exceptions for payments by a physician and fair market value 
compensation arrangements are unavailable under our current regulations 
because of the inclusion of office space in the bundle of items and 
services in a typical timeshare arrangement.
    We believe that timeshare arrangements that permit the use of 
office space, equipment, personnel, items, supplies, or services can be 
structured in a way that does not pose a risk of program or patient 
abuse. To address such arrangements, which we believe are often 
necessary to ensure adequate access to needed health care services 
(especially in rural and underserved areas), we proposed a new 
exception at Sec.  411.357(y) that would have applied to timeshare 
arrangements that meet certain criteria, including that: (1) The 
arrangement is set out in writing, signed by the parties, and specifies 
the premises, equipment, personnel, items, supplies, and services 
covered by the arrangement; (2) the arrangement is between a hospital 
or physician organization (licensor) and a physician (licensee) for the 
use of the licensor's premises, equipment, personnel, items, supplies, 
or services; (3) the licensed premises, equipment, personnel, items, 
supplies, and services are used predominantly to furnish E/M services 
to patients of the licensee; (4) the equipment covered by the 
arrangement, if any: (i) Is located in the office suite where the 
physician performs E/M services, (ii) is used only to furnish DHS that 
is incidental to the physician's E/M services and furnished at the time 
of such E/M services, and (iii) is not advanced imaging equipment, 
radiation therapy equipment, or clinical or pathology laboratory 
equipment (other than equipment used to perform CLIA-waived laboratory 
tests); (5) the arrangement is not conditioned on the licensee's 
referral of patients to the licensor; (6) the compensation over the 
term of the arrangement is set in advance, consistent with fair market 
value, and not determined in a manner that takes into account (directly 
or indirectly) the volume or value of referrals or other business 
generated between the parties; (7) the arrangement would be 
commercially reasonable even if no referrals were made between the 
parties; and (8) the arrangement does not violate the anti-kickback 
statute (section 1128B(b) of the Act) or any Federal or State law or 
regulation governing billing or claims submission.
    The proposed exception at Sec.  411.357(y) would have applied only 
to timeshare arrangements where the licensor is a hospital or physician 
organization; it would not protect arrangements where the licensor is 
another type of DHS entity. We solicited comments regarding whether the 
scope of the exception is sufficiently broad to improve beneficiary 
access to care (especially in rural or underserved areas), whether 
there is a compelling need to allow DHS entities other than hospitals 
and physician organizations to enter into timeshare arrangements with 
referring physicians, and whether the exception should apply if the 
licensor is a physician who is a source of DHS referrals to the 
licensee. We also solicited comments on whether the exception should be 
limited to arrangements in rural and underserved areas.
    We proposed to protect only those timeshare arrangements under 
which the physician uses the licensed premises, equipment, personnel, 
items, supplies, and services predominantly for the E/M of patients. 
The proposed exception at Sec.  411.357(y) would not protect the 
license of office space used by the physician solely or primarily to 
furnish DHS to patients. We solicited comments regarding whether 
``predominant use'' is an appropriate measure of the use of the 
licensed premises and, if so, how we might define this standard, or 
whether we should include a different measure, such as one that would 
require that ``substantially all'' of the services furnished to 
patients on the licensed premises are not DHS. We also proposed to 
limit the type and location of the equipment that may be licensed to 
only that which is used to furnish DHS that is incidental to the 
patient's E/M visit and furnished contemporaneously with that visit. We 
noted that such a requirement would not affect the manner in which the 
DHS is billed (for example, ``incident to'' a physician's service or 
directly by an NPP). Because we believe that DHS that is ``incidental 
to'' the patient's E/M includes a limited universe of diagnostic tests 
and other procedures (such as x-rays, rapid strep tests, and urine 
dipstick tests to diagnose pregnancy) that assist the physician in his 
or her diagnosis and treatment of the patient, we proposed to exclude 
from the protection of the exception the license of advanced imaging 
equipment, radiation therapy equipment, and clinical and pathology 
laboratory equipment (other than that which is used to furnish CLIA-
waived laboratory tests). Finally, we proposed to require that the 
equipment be located on the licensed premises; that is, in the office 
suite. We solicited comments on these requirements and limitations. 
Specifically we solicited comments regarding whether the equipment 
location requirement should be expanded to include equipment located in 
the same building (as defined at Sec.  411.351) as the licensed office 
suite or an off-site location, and whether we should prohibit the 
license of equipment in the absence of a corresponding license of 
office space.
    We also proposed to prohibit certain per unit-of-service and 
percentage compensation methodologies for determining the license fees 
under timeshare arrangements. Under the exception as proposed, parties 
could determine license fees on an hourly, daily, or other time-based 
basis, but would not be permitted to use a compensation methodology 
based on, for example, the number of patients seen. Parties also would 
not be permitted to use a compensation methodology based on the amount 
of revenue raised, earned, billed, collected, or otherwise attributable 
to the services provided by the licensee while using the licensor's 
premises, equipment, personnel, items, supplies or services. We 
solicited comments on whether these limitations on compensation 
methodologies for license fees are necessary and whether a timeshare 
arrangement for the use of a licensor's premises, equipment, personnel, 
items, supplies, or services would pose a risk of program or patient 
abuse in the absence of this prohibition on per-click and percentage 
compensation methodologies for the license fees paid by the licensee to 
the licensor.
    We solicited comments on the proposed new exception for timeshare 
arrangements and any additional criteria that may be necessary to 
safeguard against program or patient abuse.
    We are finalizing an exception at Sec.  411.357(y) for timeshare 
arrangements with several modifications to our proposal. Importantly, 
the exception as

[[Page 71327]]

finalized is not available for arrangements that transfer control--that 
is, a ``right against the world''--over the premises that are the 
subject of the arrangement. Rather, the exception protects only those 
arrangements that grant a right or permission to use the premises, 
equipment, personnel, items, supplies, or services of another person or 
entity without establishing a possessory leasehold interest (akin to a 
lease) in the medical office space that constitutes the premises. 
However, because the public comments addressed the proposal to 
establish an exception for remuneration provided by a licensee to a 
licensor under an arrangement for the use of the licensor's premises, 
equipment, personnel, items, services, or supplies, the comment 
summaries below reflect the use of ``licensor'' and ``licensee'' 
terminology. This does not affect final Sec.  411.357(y), which is an 
exception for ``remuneration provided under an arrangement for the use 
of premises, equipment, personnel, items, supplies, or services,'' and 
does not use the terms ``license,'' ``licensee,'' or ``licensor.'' In 
our responses to the public comments, we refer to the party granting a 
right or permission to use its premises, equipment, personnel, items, 
supplies, or services variously as the ``grantor'' or ``party granting 
permission.''
    The following is a summary of the comments we received.
    Comment: Citing a variety of reasons, the majority of commenters 
supported the establishment of an exception for timeshare arrangements. 
Many commenters stated that the exception for timeshare arrangements 
will promote important policy goals. One commenter commended CMS for 
recognizing the need for arrangements that support specialists who 
would like to provide services in rural areas that cannot maintain a 
full-time specialist. Another commenter expressed a belief that the 
exception will help to provide E/M services that may be needed on only 
a periodic basis to assist a physician in diagnosing or treating his or 
her patients. A third commenter stated that the exception will 
facilitate patient convenience and coordination and continuity of care. 
Two commenters that supported the establishment of the exception 
described how current arrangements for the limited use of space and 
equipment must be structured to fit within some combination of the 
existing exceptions for the rental of office space, rental of 
equipment, personal service arrangements, and fair market value 
compensation, which creates scheduling and other operational 
difficulties. One of these commenters identified certain requirements 
of these exceptions that reduce flexibility and potentially inhibit 
patient access, such as the ``exclusive use'' requirement in the 
exceptions for the rental of office space and the rental of equipment. 
In the commenters' view, the new exception for timeshare arrangement 
offers the promise of simplicity and will allow for much greater 
functionality and creativity in arrangements for patient services. 
However, one of these commenters proclaimed the proposed exception too 
narrow.
    Response: After careful consideration of the comments we received 
in response to the proposed exception, and for the reasons discussed in 
the proposed rule (80 FR 41921-22), we continue to believe that 
timeshare arrangements may serve to ensure adequate access to needed 
health care services. We are finalizing the exception for timeshare 
arrangements at Sec.  411.357(y) with the following modifications: (1) 
Regardless of which party grants and which party receives permission to 
use the premises, equipment, personnel, items, supplies, and services 
of the other party, a timeshare arrangement must be between a physician 
(or the physician organization in whose shoes the physician stands 
under Sec.  411.354(c)) and: (i) A hospital or (ii) a physician 
organization of which the physician is not an owner, employee, or 
contractor; (2) equipment included under the timeshare arrangement may 
be in the same building (as defined at Sec.  411.351) as the office 
suite where E/M services are furnished; and (3) all locations under the 
timeshare arrangement, including the premises where E/M services are 
furnished and the premises where DHS are furnished, must be used on 
identical schedules. In addition, the exception as finalized protects 
only those arrangements that grant a right or permission to use the 
premises, equipment, personnel, items, supplies, or services of another 
person or entity without establishing a possessory leasehold interest 
(akin to a lease) in the medical office space that constitutes the 
premises. We believe that the other safeguards in the exception 
finalized here are necessary at this time to protect against program or 
patient abuse. In order not to inhibit flexibility for parties to 
arrangements involving office space, equipment, personnel, items, 
supplies or services, the existing exceptions to the physician self-
referral law remain available to parties that wish to structure their 
arrangements in a way that satisfies all of the requirements of the 
applicable exception(s).
    Comment: One commenter stated that its clients ``successfully and 
without any type of abuse long utilized `Time Share Agreements' with a 
physician organization either as the landlord (licensor) or as a tenant 
(licensee)'' prior to the publication of Phase III. The commenter 
described a timeshare arrangement as one under which a physician is 
``embedded'' in another party's medical practice with permission to use 
the space, equipment and personnel of the practice for a fair market 
payment. The commenter depicted the Phase III commentary as prohibiting 
such arrangements unless they can be arranged so that the embedded 
physician has the exclusive use of patient care areas and equipment of 
the practice into which the physician is embedded. Based on its reading 
of the Phase III commentary, the commenter welcomed the proposed 
exception for timeshare arrangements, declaring that the new exception 
is warranted because the types of arrangements it would cover are 
different from the lease arrangements described at Sec.  411.357(a) and 
(b).
    Response: The Phase III remarks referenced by this commenter 
related to an arrangement described to CMS in response to the Phase II 
rulemaking as including the exclusive--but only periodic--use of office 
space, personnel, waiting areas, furnishings, and equipment. Based on 
our prior guidance, we declined to permit office space leases to be 
eligible for the exceptions for fair market value compensation at Sec.  
411.357(l) and payments by a physician at Sec.  411.357(i) (72 FR 51044 
through 51045). Our position regarding the availability of the 
exceptions for fair market value compensation at Sec.  411.357(l) and 
payments by a physician at Sec.  411.357(i) for arrangements involving 
the rental of offices space has not changed.
    As we described in the proposed rule, we believe that timeshare 
arrangements may improve access to needed care, especially in rural and 
underserved areas, by facilitating part-time or periodic access to 
physicians in communities where the need for the physician is not great 
enough to support the full-time services of the physician or where 
physicians, for various legitimate reasons, do not require or are not 
interested in a traditional office space lease arrangement (80 FR 
41921). The new exception at Sec.  411.357(y) is intended to promote 
access to needed services and provide parties with an option for 
structuring arrangements in the way that best suits the needs of the 
parties and the community in which the timeshare arrangement is 
located.

[[Page 71328]]

    We note that we do not agree with the commenter's description of a 
timeshare arrangement as one in which a physician is embedded in 
another party's medical practice with permission to use the space, 
equipment, and personnel of the practice for a fair market payment. 
Although such an arrangement may qualify as a timeshare arrangement 
under the new exception depending on the facts and circumstances, we do 
not intend to limit the types of arrangements that may qualify as 
timeshare arrangements to those in which a physician is located within 
another physician's practice.
    Comment: A commenter expressed concern that the use of the terms 
``licensor'' and ``licensee'' could prohibit use of the exception for 
otherwise qualifying arrangements that, through a quirk of State law or 
the arrangement, are something other than a ``license'' under State 
law. Another commenter feared that compliance with the physician self-
referral law could turn on considerations such as how an arrangement 
might be classified under landlord/tenant law or technical ``lease'' 
versus ``license'' considerations.
    Response: Nothing in Sec.  411.357(y) is meant to impact parties' 
rights and obligations as construed under State law. The exception is 
intended to address the challenge of satisfying the requirements of an 
available exception to the physician self-referral law in the case of 
arrangements that merely permit the use of office space without 
conveying a possessory leasehold interest in the premises or a ``right 
against the world'' with respect to the office space that is the 
subject of the arrangement.
    We used the term ``license'' in the proposed exception at Sec.  
411.357(y) to describe the type of arrangement that could qualify for 
the exception. Generally, a license grants permission to do something 
which, without the license, would not be allowable. See Barnett v. 
Lincoln, 162 Wash. 613, 299 P. 392, 394. It is merely a personal 
privilege or permissive use of the licensor's premises, equipment, 
personnel, items, supplies, or services. We contrast this with a 
``tenancy'' or ``possessory leasehold interest'' which implies some 
interest in the office space leased. See Klein v. City of Portland, 106 
Or. 686, 213 P. 147, 150; Vicker v. Byrne, 155 Wis. 281, 143 N.W. 186, 
188. One fundamental way that a license differs from a lease is that 
ownership and control of the property remains with the licensor.
    Upon further reflection and after careful consideration of the 
issues raised by the commenters, we agree that the use of the term 
``license'' without a definition that is specific to the exception at 
Sec.  411.357(y) could introduce unnecessary confusion into the 
regulations and potentially exclude non-abusive arrangements that we 
believe should qualify for the exception. The terminology used by the 
parties in the documentation that describes and supports the timeshare 
arrangement should not control whether the parties can satisfy the 
requirements of the exception. Whether the arrangement is styled as a 
``license'' or otherwise is not dispositive when determining compliance 
with new Sec.  411.357(y). Rather, the facts and circumstances of the 
arrangement are critical to its compliance with the requirements of the 
exception. Therefore, we are not finalizing Sec.  411.357(y) to include 
the terms ``license,'' ``licensor,'' or ``licensee.'' As finalized, 
Sec.  411.357(y) includes a set of requirements for arrangements that 
we consider to be ``timeshare'' arrangements that do not violate the 
physician self-referral law's referral and billing prohibitions.
    Parties wishing to avail themselves of the exception at Sec.  
411.357(y) need not utilize any particular terminology, provided that 
the arrangement itself grants one party the permission to use the 
premises, equipment, personnel, items, supplies, or services of the 
other party to the arrangement. Moreover, the arrangement may qualify 
for protection under the final exception even if the grant of 
permission to use the premises, equipment, personnel, items, supplies, 
or services provides for exclusive use of the premises, equipment, 
personnel, items, supplies, or services or has a duration of 1 year of 
more. However, the timeshare arrangement may not convey a possessory 
leasehold interest in the office space that is the subject of the 
arrangement. Where control over office space is conferred on a party 
such as to give that party a ``right against the world'' (including a 
right against the owner or sub-lessor of the office space), the 
arrangement must qualify for the exception for the rental of office 
space at Sec.  411.357(a) in order not to run afoul of the physician 
self-referral law.
    Again, what is imperative for compliance with the physician self-
referral law when relying on the exception at Sec.  411.357(y) is that 
the timeshare arrangement grant to one party the permission to use the 
premises, equipment, personnel, items, supplies, or services of the 
other party without conveying a possessory leasehold interest in the 
office space that is the subject of the arrangement. Of course, the 
arrangement must also satisfy the other requirements of the exception 
for timeshare arrangements as finalized at Sec.  411.357(y) in this 
final rule. And, regardless of the structure of the arrangement or the 
terminology used by the parties, we do not intend to protect 
potentially abusive arrangements such as exclusive-use timeshare 
arrangements that essentially function as full-time leases for medical 
practice sites; arrangements in which physicians are selected or given 
preferred time slots based on their referrals to the party granting 
permission to use the premises, equipment, personnel, items, supplies, 
or services; or consecutive short-term arrangements that are modified 
frequently in ways that take into account a physician's referrals.
    Comment: One commenter requested clarification that a medical 
foundation model physician practice would be a permitted licensee under 
a timeshare arrangement protected by the new exception.
    Response: A medical foundation model physician practice may utilize 
the new exception at Sec.  411.357(y). Because we are not dictating the 
roles of the parties to a timeshare arrangement, a medical foundation 
model physician practice may qualify as the party granting permission 
to use its premises, equipment, personnel, items, supplies, or 
services, or as the party to whom the permission is granted.
    Comment: Many commenters, although supportive of an exception to 
protect timeshare arrangements, urged CMS not to limit the application 
of the exception for timeshare arrangements to rural or underserved 
areas. One of the commenters noted that non-rural areas and areas not 
determined to be underserved may nonetheless experience a practical 
shortage in certain specialties. Two of the commenters indicated that 
the exception for timeshare arrangements will address a longstanding 
problem that not all physicians are interested in committing to rent or 
accepting ownership or control over the premises, equipment, personnel, 
and supplies of a DHS entity. One of these commenters also stated that, 
although the exception would add much needed flexibility, especially 
for areas where there are shortages of physicians (and, in particular, 
specialists), patients in all areas would benefit from these 
arrangements. This commenter stated its belief that the risk of program 
abuse would be minimal given the proposed safeguards, which should 
adequately address any fraud and abuse concerns.
    Response: We agree with the commenters. We did not propose to limit 
the exception to timeshare

[[Page 71329]]

arrangements in rural or underserved areas, and are not including such 
a limitation in the exception at Sec.  411.357(y) finalized here.
    Comment: A commenter took issue with our statement in the preamble 
to the proposed rule indicating that timeshare arrangements structured 
as licenses ``cannot satisfy the requirements of [the exception for the 
rental of office space] because a license generally does not provide 
for exclusive use of the premises.'' The commenter expressed concern 
that this statement could call into question many existing arrangements 
that are styled as licenses yet satisfy the requirements of the 
exception at Sec.  411.357(a), including the ``exclusive use'' 
requirement. Another commenter recommended that CMS not finalize the 
proposed exception for timeshare arrangements, stating that it is not 
necessary because timeshare leases or ``licenses'' fit within the 
existing exceptions. Both of the commenters were concerned that the 
establishment of a new exception could cast doubt whether longstanding 
arrangements have been in compliance with the physician self-referral 
law. These commenters and a third commenter recommended that we clarify 
that license arrangements may satisfy the requirements of the exception 
for the rental of office space, depending on the facts and 
circumstances of the arrangement.
    Response: The establishment of the new exception for timeshare 
arrangements at Sec.  411.357(y) is not intended to call into question 
the compliance of any prior or existing arrangement or type of 
arrangement involving the use of office space, equipment, personnel, 
items, supplies, or services. Our questioning in the proposed rule of 
whether an arrangement (as it relates to office space) can satisfy the 
requirements of the exception at Sec.  411.357(a) pertained only to 
those arrangements that involve the use of office space on a non-
exclusive basis or for a term of less than 1 year. Although we stated 
our belief that a license generally does not provide for exclusive use 
of the premises (80 FR 41921), we did not rule out the possibility that 
it may.
    A financial relationship between a physician (or immediate family 
member of the physician) and a DHS entity must satisfy the requirements 
of an applicable exception to the physician self-referral law to avoid 
the law's billing and referral prohibitions. Where more than one 
exception is available to protect a financial relationship, we do not 
dictate which exception the parties must use. The exception for 
timeshare arrangements finalized at Sec.  411.357(y) establishes 
another--not a replacement--exception for parties to a timeshare 
arrangement. If a timeshare arrangement includes the exclusive use of 
office space but does not convey a possessory leasehold interest in the 
office space that is the subject of the arrangement, the new exception 
at Sec.  411.357(y) is available to protect the arrangement (provided 
that all other requirements of the exception are satisfied). Depending 
on the facts and circumstances of the arrangement, it may also qualify 
for the exception at Sec.  411.357(a). In short, the parties to a 
timeshare arrangement may elect to use any available exception(s) to 
protect the arrangement. However, where control over office space is 
conferred on a party such as to give that party a ``right against the 
world'' (including a right against the owner or sub-lessor of the 
office space), the arrangement must qualify for the exception for the 
rental of office space at Sec.  411.357(a) in order not to run afoul of 
the physician self-referral law.
    Comment: A commenter requested that we eliminate the proposed 
restriction on the hospital (or other DHS entity) being the licensee in 
a timeshare arrangement. The commenter described a scenario where the 
purpose of the timeshare arrangement is to embed a hospital-employed 
physician in an independent physician practice, which the commenter 
maintained is a convenient practice setting for Medicare beneficiaries. 
The commenter requested that we modify the exception at Sec.  
411.357(y) to accommodate timeshare arrangements in which the physician 
(or a physician organization) is the licensor and the DHS entity is the 
licensee. A few commenters believed that the proposed requirement that 
the licensor be a hospital or a physician organization is overly 
limiting. Two of these commenters noted that hospitals often employ 
physicians and may require timeshare arrangements that include space in 
a physician or physician organization's clinic. These commenters 
requested that we permit hospitals or other entities that employ 
physicians to be the licensee and still qualify for the protection of 
the exception. One of the commenters also requested that we permit 
physician organizations, rather than physicians, to be the licensee 
under a protected timeshare arrangement. This commenter stated that it 
is more common for a physician organization or professional corporation 
to enter into a timeshare arrangement than an individual physician in 
his or her personal capacity. Another of the commenters noted that many 
hospitals have affiliates (such as real estate subsidiaries and 
management service organizations) that act as the licensor in timeshare 
arrangements. The commenter recommended that hospital affiliates be 
included as permissible licensors under the exception.
    Response: After consideration of the commenters' suggestions, we 
believe that it would not pose a risk of program or patient abuse to 
permit timeshare arrangements under which the hospital or physician 
organization is the party using the premises, equipment, personnel, 
items, supplies, or services of a physician (or the physician 
organization in whose shoes the physician stands under Sec.  
411.354(c)), provided that the arrangement satisfies all other 
requirements of the exception. We do not believe, nor did any 
commenters suggest, that it is necessary to permit other types of DHS 
entities, such as independent diagnostic testing facilities or 
laboratories, to be parties to timeshare arrangements to address the 
potential barriers to access to care described in the proposed rule. As 
we stated in the proposed rule, we believe that timeshare arrangements 
offered by independent diagnostic testing facilities or laboratories 
may serve to lock in referral streams from a physician licensee as a 
result of the physician's proximity to the DHS furnished by such 
entities (80 FR 41922). The exception finalized at Sec.  411.357(y) 
only covers timeshare arrangements under which the DHS entity that is a 
party to the arrangement is a hospital or physician organization.
    As to the request that we permit a physician organization, rather 
than a physician in his or her personal capacity, to enter into a 
timeshare arrangement, we refer readers to the discussion in the 
proposed rule regarding the analysis of arrangements between DHS 
entities and physician organizations where physicians may stand in the 
shoes of the physician organizations (80 FR 41911). There, we explained 
that, under our regulations at Sec.  411.354(c), remuneration from an 
entity furnishing DHS to a physician organization would be deemed to be 
a direct compensation arrangement between each physician who stands in 
the shoes of the physician organization and the entity furnishing DHS. 
A ``deemed'' direct compensation arrangement must satisfy the 
requirements of an applicable exception if the physician makes 
referrals to the DHS entity and the DHS entity bills the Medicare 
program for DHS furnished as a result of the physician's referrals. The 
exception at Sec.  411.357(y) would be

[[Page 71330]]

available to protect a direct compensation arrangement between a 
physician and a hospital or physician organization of which the 
physician is not an owner, employee, or contractor, as well as 
``deemed'' direct compensation arrangements between a physician 
standing in the shoes of his or physician organization and a hospital 
or physician organization of which the physician is not an owner, 
employee, or contractor. Parties would also need to apply the rules 
regarding indirect compensation arrangements at Sec.  411.354(c) to any 
chain of financial relationships that runs between the entity 
furnishing DHS and any physician who does not stand in the shoes of the 
physician organization to determine whether an indirect compensation 
arrangement exists. To protect an indirect compensation arrangement 
that exists as a result of remuneration provided by the entity 
furnishing DHS, the arrangement must satisfy the requirements of the 
exception at Sec.  411.357(p) for indirect compensation arrangements.
    Timeshare arrangements between physicians and organizations, such 
as real estate subsidiaries and management service organizations, that 
are not themselves DHS entities should be analyzed under the rules 
regarding indirect compensation arrangements at Sec.  411.354(c). To 
protect an indirect compensation arrangement that exists as a result of 
a chain of financial relationships that runs hospital or physician 
organization--affiliate--physician, the arrangement must satisfy the 
requirements of the exception at Sec.  411.357(p) for indirect 
compensation arrangements.
    Comment: One commenter urged CMS to finalize a bright-line standard 
that includes a precise percentage for the minimum amount of E/M 
services furnished under a timeshare arrangement. The commenter noted 
that, depending on the volume and types of services furnished, 
``predominant'' could be more or less than 50 percent. Another 
commenter recommended that we define ``predominant use'' to require 
that more than 50 percent of patients receive E/M services in the 
timeshare office space.
    Response: We decline to adopt either commenter's suggestion. We 
attribute the common meaning to the term ``predominant'' and an attempt 
to define this standard further could inadvertently narrow the 
exception or constrain parties to a timeshare arrangement. We are not 
prescribing how parties determine compliance with Sec.  411.357(y)(3). 
Parties may determine predominant use through any reasonable, 
objective, and verifiable means, which, depending on the circumstances, 
may include assessing the volume of patients seen, the number of 
patient encounters, the types of CPT codes billed, or the amount of 
time spent using the timeshare premises, equipment, personnel, items, 
supplies, and services. Further, we note that this standard is used in 
the exception at Sec.  411.357(w) for nonmonetary remuneration 
(consisting of items and services in the form of software or 
information technology and training services) that are necessary and 
used predominantly to create, maintain, transmit, or receive electronic 
health records, and we are not aware of any difficulty on the part of 
physicians and entities involved in such arrangements. We remind 
readers that the use of office space by the physician solely or 
primarily to furnish DHS to patients would not be protected by the new 
exception at Sec.  411.357(y).
    Comment: One commenter objected to limiting the DHS furnished on 
the equipment covered by the timeshare arrangement to DHS that is 
incidental to the E/M services furnished by the physician at the time 
of the patient's visit. This commenter gave the example of a 
cardiologist ordering a test during a patient visit that is to be 
performed the following week when the ordering cardiologist is 
elsewhere and another cardiologist from the same physician practice is 
on the timeshare premises to supervise the test and read the results.
    Response: We do not disagree with the commenter that there may be 
circumstances where a patient would benefit from receiving DHS but does 
not need an E/M service at the time of the furnishing of the DHS. 
However, a timeshare arrangement shifts to the party granted the use of 
the premises, equipment, personnel, items, supplies, or services only 
minimal financial risk related to the resources used to furnish DHS, 
and we cannot be certain that a timeshare arrangement would pose no 
risk of program or patient abuse without a limitation on the amount or 
scope of the DHS furnished using the timeshare equipment or in the 
timeshare premises. As we discussed in the proposed rule, our purpose 
in establishing the exception at Sec.  411.357(y) is to improve access 
to care and outcomes for our beneficiaries. It is not to facilitate the 
ability of physicians to furnish a full array of DHS in supplemental 
medical practice sites. Therefore, we are retaining in the final 
exception a requirement that the timeshare equipment is not used to 
furnish DHS other than DHS that are incidental to the patient's E/M 
visit and furnished contemporaneously with that visit. In light of our 
determination to permit hospitals and physician organizations to either 
grant or receive permission to use premises, equipment, personnel, 
items, supplies, or services under the exception, we are modifying the 
regulation text slightly to clarify that the DHS furnished using 
equipment covered by the arrangement must be both: (1) Incidental to 
the E/M service furnished by the physician using the equipment; and (2) 
furnished at the time of the E/M service to which it is incidental. We 
note that the requirement that the DHS be ``incidental'' to E/M 
services is unrelated to and does not affect the ``incident to'' 
billing rules elsewhere in our regulations (80 FR 41922).
    Comment: Two commenters opposed the exclusion of certain DHS, such 
as advanced imaging, radiation therapy, and laboratory equipment, from 
the scope of the exception. One of these commenters stated that 
limiting the equipment permissible under the exception would hamper 
patient access to care and immediate diagnosis. This commenter stated 
that any DHS furnished under a timeshare arrangement would need to 
satisfy the requirements of the in-office ancillary services exception 
and stated that safeguards to address potential risks of program or 
patient abuse from the use of such equipment are already built into 
that exception. The other of these commenters offered that, provided 
that fair market value is paid, a licensee physician should be able to 
use available advanced imaging, radiation therapy, laboratory, or other 
equipment.
    In contrast, two commenters supported our proposal to limit the 
scope of the exception for timeshare arrangements to those arrangements 
that do not include the use of radiation therapy equipment, and another 
supported our proposal to prohibit the use of advanced imaging 
equipment. A different commenter urged us to prohibit the furnishing of 
physical therapy services on the premises protected by the new 
exception.
    Response: We decline to remove from the exception finalized at 
Sec.  411.357(y) the requirement that the equipment covered by the 
timeshare arrangement is not advanced imaging equipment, radiation 
therapy equipment, or clinical or pathology laboratory equipment (other 
than equipment used to perform CLIA-waived laboratory tests). As 
discussed in the preamble to the proposed rule and elsewhere in this 
section, the purpose of the exception for timeshare arrangements is to 
improve access to care and outcomes for our

[[Page 71331]]

beneficiaries. In the case of radiation therapy equipment, we do not 
believe that it is necessary to include the use of such equipment under 
the exception to improve access to care. Radiation therapy equipment 
generally is not portable. Thus, any radiation therapy equipment that 
could be included in a timeshare arrangement would already be available 
to patients in the community. Including it in a timeshare arrangement 
would merely permit a physician to bill for the services that are 
already available to his or her patients from the hospital or physician 
organization granting the physician permission to use the equipment. As 
to advanced imaging equipment and laboratory equipment, we are not 
convinced and the commenter provided no proof that excluding such 
equipment from the scope of a protected timeshare arrangement would 
hamper access to care or delay a patient's diagnosis.
    We also disagree with the first commenter's statement that DHS 
furnished under a timeshare arrangement would need to satisfy the 
requirements of the in-office ancillary services exception and, 
therefore, the safeguards built into that exception are sufficient to 
address any risk of program and patient abuse. Other exceptions, such 
as the exceptions for bona fide employment at Sec.  411.357(c) and 
personal service arrangements at Sec.  411.357(d), may be available to 
protect referrals from the physicians in a group practice to the group. 
Further, not every physician organization that would bill for services 
furnished using premises and equipment under a timeshare arrangement 
will qualify as a ``group practice'' and have access to the in-office 
ancillary services exception.
    We do not believe that it is necessary at this time to prohibit 
additional types of equipment under a timeshare arrangement, including 
equipment that is used to furnish physical therapy services. As 
discussed in the response to a previous comment, we are finalizing the 
requirement that the equipment covered by a timeshare arrangement is 
not used to furnish DHS other than those incidental to the patient's E/
M visit and furnished contemporaneously with that visit. To be 
protected under the exception, physical therapy services furnished 
using timeshare equipment must be incidental to the patient's E/M 
services and furnished at the time of the evaluation and management 
service to which they are incidental. We question whether it would be 
medically necessary for a patient to receive an E/M service at the time 
of each physical therapy visit. Moreover, we doubt that a physician 
furnishes an E/M service prior to each physical therapy session, which 
would be necessary to satisfy the requirement at final Sec.  
411.357(y)(4).
    Finally, we note that parties may use the existing exceptions for 
the rental of office space at Sec.  411.357(a) and the rental of 
equipment at Sec.  411.357(b), which include different safeguards 
against program and patient abuse, if they wish to include advanced 
imaging equipment, radiation therapy equipment, or clinical or 
pathology laboratory equipment (other than equipment used to perform 
CLIA-waived laboratory tests) in their arrangements.
    Comment: Several commenters requested that we not require that 
equipment be located in the office suite where E/M services are 
furnished, suggesting that such a requirement could limit access to 
needed care, as an office suite may not adequately accommodate the 
equipment necessary to furnish DHS. One of these commenters noted that 
permitting the use of equipment in the ``same building'' where the E/M 
services are furnished is consistent with the requirements of the in-
office ancillary services exception. This commenter suggested that, as 
an additional safeguard, where there are two licensed locations (for 
example, an office suite with E/M services and a room in the same 
building with equipment and DHS), CMS could require that the two 
locations be included in a single arrangement and used on identical 
schedules.
    Response: We do not wish to impose restrictions that hinder the 
usefulness of the exception for ensuring access to needed care, but we 
must include requirements sufficient to guard against program or 
patient abuse when utilizing the Secretary's authority under section 
1877(b)(4) of the Act. We agree that the usefulness of the exception 
for timeshare arrangements would be enhanced if we do not limit the 
location of the equipment to the office suite where E/M services are 
furnished to the patient. Accordingly, we are revising the requirement 
regarding the location of the equipment covered by the timeshare 
arrangement to require instead that the equipment is located in the 
same building as the office suite where the E/M services are furnished 
to the patient. To offset any potential increased risk of program or 
patient abuse due to this expansion of the exception, we are adopting 
the commenter's suggestion to include in the exception a requirement 
that all locations under the timeshare arrangement, including the 
premises where E/M services are furnished and the premises where DHS 
are furnished, must be used on identical schedules. A requirement that 
the use of the premises where E/M services are furnished and the use of 
the premises where DHS are furnished must be included in a single 
arrangement would be superfluous because the exception would not 
protect premises used solely or predominantly for the furnishing of 
DHS. An arrangement to use premises, equipment, personnel, items, 
supplies, or services for the furnishing of DHS would satisfy the 
requirements of the new exception for timeshare arrangements only if 
the arrangement also includes permission to use the premises, 
equipment, personnel, items, supplies, or services predominantly for 
the furnishing of E/M services.
    Comment: Three commenters urged us not to limit compensation 
methodologies or prohibit per-unit of service compensation for 
timeshare arrangements, stating that, in light of the substantial 
protections of the other requirements of the exception, a limitation on 
compensation methodologies is unnecessary and burdensome. Another 
commenter sought clarification regarding whether the limitation on 
compensation formulas in the exception would effectively require block 
lease arrangements. The commenter stated that block lease arrangements 
are generally not conducive to either the licensor's or the licensee's 
delivery of services to their respective patients and recommended that 
we not require block lease arrangements.
    Response: We are adopting our proposal to exclude from new Sec.  
411.357(y) any timeshare arrangements that incorporate compensation 
formulas based on: (1) a percentage of the revenue raised, earned, 
billed, collected, or otherwise attributable to the services provided 
while using the timeshare; or (2) per-unit of service fees, to the 
extent that such fees reflect services provided to patients referred by 
the party granting permission to use the timeshare to the party to 
which the permission is granted. We are using the authority at section 
1877(b)(4) of the Act to establish this exception. Because that 
authority permits only those exceptions that present no risk of program 
or patient abuse, we are protecting under new Sec.  411.357(y) only 
those timeshare arrangements that are based on other forms of 
compensation, such as those using flat-fee or time-based formulas. 
Timeshare arrangements that are based on percentage compensation or 
per-unit of service compensation formulas present a risk of program or 
patient abuse because they may incentivize

[[Page 71332]]

overutilization and patient steering. By way of example, we believe 
that a per-patient compensation formula could incentivize the timeshare 
grantor to refer patients (potentially for unnecessary consultations or 
services) to the party using the timeshare because the grantor will 
receive a payment each time the premises, equipment, personnel, items, 
supplies, or services are used. Similarly, a compensation formula that 
uses services as the unit of measure (for example, a per-CPT code 
compensation formula) could incentivize the timeshare grantor to refer 
sicker patients or patients with a likely need for DHS to the party 
using the timeshare, regardless of the preferences or best interests of 
the patients, because the grantor will receive a payment for each 
service furnished in the timeshare premises or using the timeshare 
equipment.
    We recognize that many timeshare arrangements include compensation 
formulas that are set as a pre-determined amount for each hour, half-
day or full-day spent using the premises, equipment, personnel, items, 
supplies, or services that are covered under the arrangement. We do not 
believe such compensation formulas raise the same risks as formulas 
that result in a payment to the party that provides the timeshare 
premises, equipment, personnel, items, supplies, or services each time 
that party refers a patient to the party using the timeshare. Under 
time-based compensation formulas, the ``usage'' fee is paid regardless 
of the number of patients referred by the timeshare grantor or the 
number of services furnished to such patients (or any other patients). 
We do not wish to call into question non-abusive timeshare arrangements 
with time-based compensation terms. Therefore, we are finalizing the 
requirement at Sec.  411.357(y)(6)(ii) to require that compensation 
under a timeshare arrangement is not determined using a formula based 
on per-unit of service fees, and we expressly do not prohibit 
compensation using a formula that is time-based (for example, per-hour 
or per-day). We are not prescribing a minimum amount of time per unit 
for compensation that utilizes a time-based formula and we remind 
readers that a compensation formula based on per-unit of service 
``usage'' fees is prohibited under the exception only to the extent 
that such fees reflect services furnished to patients referred by the 
party granting permission to use its premises, equipment, personnel, 
items, supplies, or services to the party that receives such 
permission.
    Although not addressed by any commenter, we are also aware of the 
recent DC Circuit decision in Council for Urological Interests v. 
Burwell, 790 F.3d 212 (D.C. Cir. 2014), which addressed the prohibition 
on per-click leasing arrangements with respect to the rental-equipment 
exception found in Sec.  411.357(b)(4)(ii)(B). We established this 
prohibition in the FY 2009 IPPS final rule using our authority under 
section 1877(e)(1)(B)(vi) of the Act, which requires an equipment lease 
to meet such other requirements as the Secretary may impose by 
regulation as needed to protect against program or patient abuse in 
order for that lease to qualify for the exception for the rental of 
equipment. In the same rule, we also discussed certain legislative 
history contained in a House Conference Report addressing sections 
1877(e)(1)(A)(iv) and 1877(e)(1)(B)(iv) of the Act, which establish 
requirements that rental charges over the term of a lease for office 
space or rental equipment be set in advance, be consistent with fair 
market value, and not be determined in a manner that takes into account 
the volume or value of any referrals or other business generated 
between the parties. With respect to those statutory conditions, the 
language in the House Conference Report stated that--

    The conferees intend that charges for space and equipment leases 
may be based on . . . time-based rates or rates based on units of 
service furnished, so long as the amount of time-based or units of 
service rates does not fluctuate during the contract period. (H.R. 
Rep. No. 103-213, at 814 (1993).)

    We noted in the FY 2009 IPPS final rule that CMS had previously 
interpreted this legislative history as indicating a view that per-
click leases do not run afoul of section 1877(e)(1)(B)(iv), but we then 
stated that this language could also be interpreted as suggesting the 
Congress's disapproval of per-click leases. We explained, though, that 
our prohibition on per-click leasing arrangements was ultimately based 
on our authority to promulgate ``other requirements'' under section 
1877(e)(1)(B)(vi) of the Act, and not on an interpretation of section 
1877(e)(1)(B)(iv) of the Act.
    In the Council for the Urological Interests case, the Court agreed 
with CMS that it had the authority to prohibit per-click leasing 
arrangements under section 1877(e)(1)(B)(vi) of the Act. The Court 
concluded that--

    The text of the statute does not unambiguously preclude the 
Secretary from using her authority to add a requirement that bans 
per-click leases. (Council for Urological Interests, 790 F.3d at 
219.)

    The Court further concluded that the relevant language in the House 
Conference Report merely interpreted section 1877(e)(1)(B)(iv) of the 
Act, and thus did not preclude CMS from imposing additional 
requirements under section 1877(e)(1)(B)(vi) of the Act. See id. at 222 
(explaining that the legislative history ``simply indicates that, as 
written, the rental-charge clause [in section 1877(e)(1)(B)(iv)] does 
not preclude per-click leases'' and ``[n]othing in the legislative 
history suggests a limit on [CMS's] authority'' to prohibit per-click 
leases under section 1877(e)(1)(B)(vi) of the Act).
    The Court concluded, however, that CMS's revised interpretation of 
the House Conference Report was arbitrary and capricious, and it 
remanded the case to the agency to permit a fuller consideration of the 
legislative history. As previously noted, we are considering options as 
to how to comply with the court's ruling.
    Nonetheless, our current decision to prohibit per-unit of service 
compensation formulas under Sec.  411.357(y) is not affected by the 
Court's decision in Council for Urological Interests. As explained, the 
Court did not hold that the House Conference Report requires us to 
allow per-click arrangements; to the contrary, the Court upheld our 
authority to prohibit per-click arrangements where we determine that 
such a prohibition is necessary to protect against program or patient 
abuse. (See Council for Urological Interests, 790 F.3d at 219-22.) 
Thus, we possess the authority to exclude timeshare arrangements that 
use a compensation formula based on per-unit of service fees from the 
new exception at Sec.  411.357(y), and we employ that authority here to 
ensure that the new exception will not pose a risk of program or 
patient abuse, as section 1877(b)(4) of the Act requires.
    Comment: One commenter recommended that CMS allow the space that is 
used on a timeshare basis to be used as a provider-based department 
when it is not licensed to a physician. The commenter stated that this 
would allow hospitals to use its property and personnel more 
efficiently than currently allowed.
    Response: The commenter's recommendation is outside the scope of 
this regulation.
Summary of the exception for timeshare arrangements as finalized at 
Sec.  411.357(y)
    After careful consideration of the comments we received in response 
to the proposed exception, we are

[[Page 71333]]

finalizing the exception for timeshare arrangements at Sec.  411.357(y) 
with the following modifications: (1) regardless of which party grants 
and which party receives permission to use the premises, equipment, 
personnel, items, supplies, and services of the other party, a 
timeshare arrangement must be between a physician (or the physician 
organization in whose shoes the physician stands under Sec.  
411.354(c)) and: (i) a hospital or (ii) a physician organization of 
which the physician is not an owner, employee, or contractor; (2) 
equipment covered by the timeshare arrangement may be in the same 
building (as defined at Sec.  411.351) as the office suite where E/M 
services are furnished; and (3) all locations under the timeshare 
arrangement, including the premises where E/M services are furnished 
and the premises where DHS are furnished, must be used on identical 
schedules. In addition, the exception as finalized protects only those 
arrangements that grant a right or permission to use the premises, 
equipment, personnel, items, supplies, or services of another person or 
entity without establishing a possessory leasehold interest (akin to a 
lease) in the medical office space that constitutes the premises.
7. Temporary Noncompliance With Signature Requirements (Sec.  
411.353(g))
    Several compensation arrangement exceptions to the physician self-
referral law require that an arrangement be signed by the parties. Our 
current regulations at Sec.  411.353(g) include a special rule for 
arrangements involving temporary noncompliance with signature 
requirements. The regulation permits an entity to submit a claim or 
bill and receive payment for DHS if an arrangement temporarily does not 
satisfy the applicable exception's signature requirement but otherwise 
fully complies with the exception. Under the current rule, if the 
failure to comply with the signature requirement is inadvertent, the 
parties must obtain the required signature(s) within 90 days. If the 
failure to comply is not inadvertent, the parties must obtain the 
required signature(s) within 30 days.
    In the FY 2009 IPPS final rule, we stated that we would evaluate 
our experience with the regulation at Sec.  411.353(g) and propose more 
or less restrictive modifications at a later date (73 FR 48707). In the 
proposed rule, we proposed to modify the current regulation to allow 
parties 90 days to obtain the required signatures, regardless of 
whether or not the failure to obtain the signature(s) was inadvertent. 
We recognize that it is not uncommon for parties who are aware of a 
missing signature to take up to 90 days to obtain all required 
signatures. We also proposed to revise Sec.  411.353(g) to include 
reference to the new regulatory exceptions for payments to a physician 
to employ an NPP and timeshare arrangements that we proposed at new 
Sec.  411.357(x) and Sec.  411.357(y), respectively, to ensure that all 
compensation exceptions with signature requirements are treated 
uniformly. We do not believe that allowing parties 90 days to obtain 
signatures while the arrangement otherwise complies with the physician 
self-referral law poses a risk of program or patient abuse.
    The proposed regulation maintains the safeguards of the current 
rule. Specifically, the proposed regulation applies narrowly to the 
signature requirement only. To make use of the proposed revised 
provisions at Sec.  411.353(g), an arrangement would have to satisfy 
all other requirements of an applicable exception, including the 
requirement that the arrangement be set out in writing. In addition, an 
entity may make use of the proposed regulation only once every 3 years 
for the same referring physician. Given these safeguards, we believe 
that the proposed revision poses no risk of program or patient abuse. 
We are finalizing our proposed revision to the special rule at Sec.  
411.353(g).
    The following is a summary of the comments we received.
    Comment: The vast majority of commenters on this issue supported 
our proposal to allow all parties up to 90 days to obtain required 
signatures, regardless of whether the failure to obtain the signatures 
was inadvertent or not inadvertent. Several commenters requested that 
we remove the provision at Sec.  411.353(g)(2) that limits the use of 
the temporary noncompliance rule to once every 3 years for the same 
referring physician.
    Response: We appreciate the commenters' support, and we are 
finalizing our proposal. However, we decline to remove the limitation 
on the use of the special rule to once every 3 years for the same 
physician. The signature requirement of certain compensation exceptions 
is statutory, and we believe that the requirement plays a role in 
preventing fraud and abuse. Among other things, the signature of the 
parties creates a record of the fact that the parties to an arrangement 
were aware of and assented to the key terms and conditions of the 
arrangement. Requiring parties to sign an arrangement encourages 
parties to monitor and review financial relationships between DHS 
entities and physicians. In contrast, permitting parties to make 
frequent use of the special rule for noncompliance with signature 
requirements would not incent parties to exercise diligence with our 
rules. (See 73 FR 48707). We believe that repeated use of the special 
rule (that is, use more than once in a 3-year period) for the same 
physician may pose a risk of program or patient abuse.
    Comment: One commenter requested clarification that the temporary 
noncompliance provision can be used more than once every 3 years for 
different physicians within the same group practice. According to the 
commenter, a party should be permitted to use the temporary 
noncompliance provision for an arrangement with a group practice for 
the services of one physician without precluding the party from using 
the temporary noncompliance provision within 3 years for another 
arrangement with the same group practice involving the services of a 
different physician.
    Response: The ``stand in the shoes'' provisions at Sec.  411.354(c) 
determine whether a party may use the rule at Sec.  411.353(g)(1) more 
than once in 3 years for physicians associated with a physician 
organization. Assume a physician organization consists of 2 non-titular 
owners (Drs. A and B), and that a DHS entity enters into a compensation 
arrangement with the physician organization for the services of Dr. A 
on January 1, 2014.
    The compensation arrangement with the physician organization is 
deemed to be a compensation arrangement with Dr. A and a compensation 
arrangement with Dr. B. If the parties do not sign the arrangement 
until February 15, 2014, but the arrangement otherwise satisfies the 
requirements of Sec.  411.353(g), the DHS entity may bill the program 
for DHS performed as a result of referrals by both Dr. A and Dr. B for 
the period from January 1, 2014 through February 14, 2014. That is to 
say that the special rule at Sec.  411.353(g) affords the DHS entity 
protection for referrals from each of the physicians who stand in the 
shoes of the physician organization. For precisely this reason, 
however, if the DHS entity enters into a different arrangement with the 
physician organization on March 1, 2015 for Dr. B's services, and the 
parties do not sign the arrangement until May 1, 2015, the entity may 
not rely on the rule at Sec.  411.353(g) for either Dr. A or Dr. B for 
the period of March 1, 2015 through April 30, 2015. The entity already 
made use of the special rule for Dr. A and Dr. B's referrals from 
January 1, 2014 through February 14, 2014. On the other hand, if the 
DHS entity entered into direct compensation

[[Page 71334]]

arrangements with Drs. A and B (that is, arrangements with the 
physicians as opposed to arrangements with the physician organization), 
then the DHS could use the rule at Sec.  411.353(g) to protect 
referrals from Dr. A for the period from January 1, 2014 through 
February 14, 2014, and to protect referrals from Dr. B for the period 
from March 1, 2015 through April 30, 2015.
    Comment: According to two commenters, a contract can be binding 
under State law even if it is missing the signature of one or more 
parties. The commenters urged CMS to adopt a similar rule for the 
physician self-referral law. Specifically, the commenters requested 
that CMS deem an arrangement to be signed, for the purposes of the 
physician self-referral law, even if one or more of the parties did not 
sign the arrangement, as long as the agreement is binding under State 
law. Another commenter asked CMS to establish that clear assent of the 
parties as to the terms of the arrangement is sufficient to satisfy the 
signature requirement.
    Response: As noted elsewhere in this section, State contract law 
principles do not determine compliance with the physician self-referral 
law. The commenters' suggestion illustrates a problem with relying 
exclusively on State law principles, namely that the requirements for a 
contract to be enforceable under State law may differ substantively 
from the requirements of the physician self-referral law. By statute, 
the exceptions for the rental of office space, the rental of equipment, 
and personal service arrangements require an arrangement to be signed 
``by the parties.'' (See section 1877(e) of the Act.) The commenters' 
suggestion that an arrangement should be deemed to comply with the 
signature requirement if one or more of the parties have not signed the 
arrangement is inconsistent with the plain language of the statute. In 
addition, as noted elsewhere in this section, we believe that the 
requirement that the parties sign an arrangement plays a role in 
preventing fraud and abuse. In this context, it is not enough that the 
course of conduct between the parties could support an inference of 
assent to the terms. Rather, a signature is necessary to provide a 
written record of the assent of the parties to the arrangement.
    Comment: One commenter requested clarification as to what would 
satisfy the signature requirement of various compensation exceptions. 
The commenter specifically asked whether any of the following would 
satisfy the requirement that an arrangement be signed by the parties: 
an electronic signature; a typed name; the name of the sender in the 
``from'' line of an email; the signature of the maker of a check; and 
the signature of a person endorsing a check. Another commenter asked 
CMS to explicitly allow electronic signatures. A third commenter 
suggested that State law principles should determine what constitutes a 
signed writing for the purposes of the physician self-referral law.
    Response: As noted elsewhere in this section, State law principles 
do not determine whether a party complies with the physician self-
referral law, including compliance with the signature requirement. 
Nevertheless, parties may look to State law and other bodies of 
relevant law, including Federal and State law pertaining to electronic 
signatures, to inform the analysis of whether a writing is signed for 
the purposes of the physician self-referral law. Given evolving 
technologies, we are concerned that a prescriptive statement on our 
part regarding electronic signatures may unduly limit parties' ability 
to comply with the physician self-referral law in the future.
    We decline to state whether the examples provided by the commenter 
comply with the signature requirement for the following reasons: First, 
the exceptions require the arrangement to be signed by the parties. 
Even a document bearing the handwritten signature of one of the parties 
will not satisfy this requirement if the document, when considered in 
the context of the collection of documents and the underlying 
arrangement, does not clearly relate to the arrangement. Second, the 
intent of the party purportedly ``signing'' the standalone document is 
not clear in certain examples provided. Third, we are concerned that, 
by judging the examples in isolation from their context, we might 
unduly narrow parties' ability to comply with the signature 
requirement. In sum, whether an arrangement is signed by the parties 
depends on the facts and circumstances of the arrangement and the 
writings that document the arrangement.
    After careful consideration of the comments, we are finalizing our 
proposal to remove the distinction between inadvertent and not 
inadvertent failure to obtain a signature at Sec.  411.353(g). Under 
the final regulation, all parties have 90 days to obtain missing 
signatures. The regulation, as finalized, continues to limit the use of 
Sec.  411.353(g) by an entity to once every 3 years for a particular 
physician. At this time, we believe that this limitation is necessary 
to prevent program or patient abuse.
8. Physician-Owned Hospitals
    Section 6001(a) of the Affordable Care Act amended the rural 
provider and hospital ownership or investment interest exceptions to 
the physician self-referral law to impose additional restrictions on 
physician ownership and investment in hospitals. For the purposes of 
these exceptions, the new legislation defined a ``physician owner or 
investor'' as a physician, or immediate family member of a physician, 
who has a direct or indirect ownership or investment interest in a 
hospital. We refer to hospitals with direct or indirect physician 
owners or investors as ``physician-owned hospitals.''
    Section 6001(a)(3) of the Affordable Care Act established new 
section 1877(i) of the Act, which imposes additional requirements for 
physician-owned hospitals to qualify for the rural provider or hospital 
ownership exceptions. In part, section 1877(i) of the Act requires a 
physician-owned hospital to disclose the fact that the hospital is 
partially owned or invested in by physicians on any public Web site for 
the hospital and in any public advertising for the hospital; provides 
that a physician-owned hospital must have had a provider agreement in 
effect as of December 31, 2010; and provides that the percentage of the 
total value of the ownership or investment interests held in a 
hospital, or in an entity whose assets include the hospital, by 
physician owners or investors in the aggregate cannot exceed such 
percentage as of March 23, 2010.
    In the CY 2011 OPPS/ASC final rule with comment period (75 FR 
72240), we addressed many of the additional requirements that were 
established by the Affordable Care Act for a physician-owned hospital 
to avail itself of the rural provider or hospital ownership exceptions. 
In that final rule with comment period, among other things, we 
finalized regulations at Sec.  411.362(b)(3)(ii)(C) that required a 
physician-owned hospital to disclose on any public Web site for the 
hospital and in any public advertising that the hospital is owned or 
invested in by physicians. We also finalized regulations at Sec.  
411.362(b)(1) that required a physician-owned hospital to have had a 
provider agreement in effect on December 31, 2010, and at Sec.  
411.362(b)(4)(i) to provide that the percentage of the total value of 
the ownership or investment interests held in a hospital (or in an 
entity whose assets include the hospital) by physician owners or 
investors in the aggregate cannot exceed such percentage as of

[[Page 71335]]

March 23, 2010. We also revised the rural provider and hospital 
ownership exceptions at Sec.  411.356(c)(1) and Sec.  411.356(c)(3), 
respectively, to provide that a physician-owned hospital must meet the 
requirements in new Sec.  411.362 not later than September 23, 2011, to 
avail itself of the applicable exception.
a. Preventing Conflicts of Interest: Public Web site and Public 
Advertising Disclosure Requirement (Sec.  411.362(b)(3)(ii)(C))
    Following publication of the CY 2011 OPPS/ASC final rule with 
comment period (75 FR 72240), we received numerous inquiries about many 
of the additional requirements that were established by the Affordable 
Care Act for the rural provider and hospital ownership exceptions, 
including the requirement that a physician-owned hospital must disclose 
on any public Web site for the hospital and in any public advertising 
that the hospital is owned or invested in by physicians. Specifically, 
industry stakeholders requested additional guidance to clarify the 
terms ``public Web site for the hospital'' and ``public advertising for 
the hospital,'' the range of statements that constitute a sufficient 
disclosure, and the period of noncompliance for a failure to disclose. 
We also received disclosures through the SRDP where the disclosing 
parties reasonably assessed that, based on existing CMS guidance, they 
could not certify compliance with this disclosure requirement and, 
therefore, the conduct constituted a violation of the law.
    Given the inquiries and disclosures that we received, we have 
carefully considered both the disclosure requirement's purpose and our 
existing regulations addressing the requirement. We believe that, in 
establishing this requirement, the Congress decided that the public 
should be on notice if a hospital is physician-owned because that fact 
may inform an individual's medical decision-making. We do not interpret 
the public Web site and advertising disclosure requirements to be 
prescriptive requirements for the inclusion of specific wording in an 
undefined range of communication. Accordingly, we proposed to provide 
physician-owned hospitals more certainty regarding the forms of 
communication that require a disclosure statement and the types of 
language that would constitute a sufficient statement of physician 
ownership or investment. We believe that our proposals would 
appropriately balance the industry's need for greater clarity with the 
public's need to be apprised of such information. Finally, we note 
that, in the event that a physician-owned hospital discovers that it 
failed to satisfy the public Web site or public advertising disclosure 
requirements, the SRDP is the appropriate means for reporting such 
overpayments. For more information, see the Special Instructions for 
Submissions to the CMS Voluntary Self-Referral Disclosure Protocol for 
Physician-Owned Hospitals and Rural Providers that Failed to Disclose 
Physician Ownership on any Public Web site and in any Public 
Advertisement, available on our Web site at http://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Self_Referral_Disclosure_Protocol.html.
    For the public Web site disclosure requirement, we proposed to 
amend existing Sec.  411.362(b)(3)(ii)(C) to list examples of the types 
of Web sites that do not constitute a ``public Web site for the 
hospital.'' We proposed to revise Sec.  411.362(b)(3)(ii)(C) to specify 
that a ``public Web site for the hospital'' does not include certain 
types of Web sites, even though limited information about the hospital 
may be found on such Web sites. For example, we do not consider social 
media Web sites to be ``public Web sites for the hospital,'' and the 
proposed regulation would clarify this. We do not believe that a 
hospital's communications (such as maintaining an individual page on a 
Web site, posting a video, or posting messages) via a social media Web 
site should be construed as a Web site that is ``for the hospital,'' 
given that the Web site is operated and maintained by a social 
networking service and that a multitude of users typically can become 
members of such a service. Further, we note that social media 
communications, which are used primarily for the development of social 
and professional contacts and for sharing information between 
interested parties, differ in scope from the provision of information 
typically found on a hospital's main Web site, such as the hospital's 
history, leadership and governance structure, mission, and a list of 
staff physicians. We also proposed to specify at Sec.  
411.362(b)(3)(ii)(C) that a ``public Web site for the hospital'' does 
not include electronic patient payment portals, electronic patient care 
portals, or electronic health information exchanges, as these are not 
available to the general public. These portals are for the convenience 
of only those patients who have already been treated at the hospital 
and to whom the hospital's physician ownership likely would have 
already been disclosed. Our proposed examples of Web sites that do not 
constitute a ``public Web site for the hospital'' is not exhaustive. We 
recognize the difficulty in identifying every type of Web site that 
either currently exists or may emerge as technology develops that would 
not require a disclosure statement. We solicited public comments on 
whether our proposed examples are appropriate given the statutory 
language and whether we should include different or additional examples 
of Web sites in the list. We also solicited public comment on whether, 
in the alternative, we should provide an inclusive definition of what 
would be considered a ``public Web site for the hospital'' and, if so, 
we solicited recommendations for such a definition. Finally, we note 
that, even if a Web site does not constitute a public Web site for the 
hospital under our proposal, the online content may, depending on the 
facts and circumstances, constitute public advertising for the hospital 
that would require a disclosure statement.
    For the public advertising disclosure requirement, we proposed to 
define ``public advertising for the hospital'' at Sec.  411.362(a). We 
note that our existing regulations at Sec.  411.362(b)(3)(ii)(C) 
reference ``public advertising'' without explicitly specifying ``for 
the hospital,'' which is different from the statutory language of 
section 1877(i)(1)(C)(iv) of the Act. We proposed to include that 
phrase in the definition and in the disclosure requirement to conform 
our regulations to the statutory language. To determine how best to 
clarify what we consider to be ``public advertising for the hospital,'' 
we consulted numerous sources for definitions of ``advertise'' and 
``advertising.'' After considering the results of our research, we 
proposed to define ``public advertising for the hospital,'' for the 
purposes of the physician self-referral law, as any public 
communication paid for by the hospital that is primarily intended to 
persuade individuals to seek care at the hospital. We proposed that the 
definition of ``public advertising for the hospital'' does not include, 
by way of example, communication made for the primary purpose of 
recruiting hospital staff (or other similar human resources 
activities), public service announcements issued by the hospital, and 
community outreach issued by the hospital. We believe that, as a 
general matter, communications related to recruitment are for the 
primary purpose of fulfilling a hospital's basic need for staff and 
that communications issued via public service announcements and 
community outreach are for the primary purpose of providing the general 
public healthcare-related information.

[[Page 71336]]

Therefore, we proposed to specify in our regulations that these types 
of communications would be excluded from our proposed definition of 
``public advertising for the hospital.'' We note that these types of 
communications do not represent an exhaustive list of what we do not 
consider ``public advertising for the hospital.'' We sought public 
comment on our proposed definition of ``public advertising for the 
hospital'' as well as our proposed list of examples that do not 
constitute ``public advertising for the hospital.''
    We note that a determination as to whether a certain communication 
constitutes public advertising for the hospital depends on the specific 
facts and circumstances of the communication. In the CY 2011 OPPS/ASC 
final rule with comment period, commenters stated that a hospital 
should not be required to include disclosures in certain advertising, 
such as the kind found on billboards, or the kind aired via radio and 
television and that the requirement should be confined to print media 
such as newspapers, magazines, and other internally produced print 
material for public use (75 FR 72248). In response to the commenters, 
we stated that we have no flexibility to exclude certain types of 
advertising media, as the statute was very straightforward in its 
statement that the disclosure appear in ``any public advertising'' for 
the hospital. In the proposed rule, we clarified that the facts and 
circumstances of the communication, rather than the medium by which the 
message is communicated, determine whether a communication constitutes 
``public advertising for the hospital.''
    We also proposed to clarify the types of statements that constitute 
a sufficient statement of physician ownership or investment. 
Specifically, we proposed to amend Sec.  411.362(b)(3)(ii)(C) to 
specify that any language that would put a reasonable person on notice 
that the hospital may be physician-owned is deemed a sufficient 
statement of physician ownership or investment. A statement such as 
``this hospital is owned or invested in by physicians'' or ``this 
hospital is partially owned or invested in by physicians'' would 
certainly meet this standard. However, statements that the hospital is 
``founded by physicians,'' ``managed by physicians,'' ``operated by 
physicians,'' or ``part of a health network that includes physician-
owned hospitals'' would also meet this standard. We also believe that a 
hospital's name, by itself, could constitute language that meets this 
standard. For example, we believe that ``Doctors Hospital at Main 
Street, USA'' would put a reasonable person on notice that the hospital 
may be physician-owned. We sought public comment on our proposed 
revision to the public Web site and advertising disclosure requirements 
and on our proposed examples of language that would satisfy that 
standard. We also invited suggestions regarding alternative standards 
for deeming language sufficient for these requirements.
    For the location and legibility of disclosure statements, we 
continue to believe, as stated in the CY 2011 OPPS/ASC final rule with 
comment period, that the disclosure should be located in a conspicuous 
place on the Web site and on a page that is commonly visited by current 
or potential patients, such as the home page or ``about us'' section 
(75 FR 72248). Further, we believe that the disclosure should be 
displayed in a clear and readable manner and in a size that is 
generally consistent with other text on the Web site. We did not 
propose to prescribe a specific location or font size for disclosure 
statements on either a public Web site or public advertising; rather, 
physician-owned hospitals have flexibility in determining exactly where 
and how to include the disclosure statements, provided that the 
disclosure would put a reasonable person on notice that the hospital 
may be physician-owned.
    For those physician-owned hospitals that have identified non-
compliance with the public Web site disclosure requirement, we are 
taking this opportunity to clarify that the period of noncompliance is 
the period during which the physician-owned hospital failed to satisfy 
the requirement. We note that September 23, 2011 is the date by which a 
physician-owned hospital had to be in compliance with the public Web 
site and advertising disclosure requirements (75 FR 72241), and, 
therefore, would be the earliest possible beginning date for 
noncompliance. For those physician-owned hospitals that have identified 
noncompliance with the public advertising disclosure requirement, we 
are clarifying that the period of noncompliance is the duration of the 
applicable advertisement's predetermined initial circulation, unless 
the hospital amends the advertisement to satisfy the requirement at an 
earlier date. For example, if a hospital pays for an advertisement to 
be included in one issue of a monthly magazine and the hospital fails 
to include the disclosure in the advertisement, the period of 
noncompliance likely would be the applicable month of circulation, even 
if the magazine continued to be available in the archives of the 
publisher, in waiting rooms of physician offices, or other public 
places. We sought public comment on additional guidance that may be 
necessary regarding the periods of noncompliance for both disclosure 
requirements.
    We are finalizing without modification our proposals regarding the 
public Web site and public advertising disclosure requirement at Sec.  
411.362(b)(3)(ii)(C). The following is a summary of the comments we 
received.
    Comment: A few commenters largely supported our proposed 
clarifications and regulations that articulate our existing policy 
concerning the public Web site and public advertising disclosure 
requirements. The commenters agreed that our proposed examples of 
statements that would constitute sufficient disclosure of physician 
ownership or investment interest demonstrate an appropriate approach to 
implementing the disclosure requirements.
    Response: We appreciate the commenters' support. We are finalizing 
our proposal to amend Sec.  411.362(b)(3)(ii)(C) to specify that any 
language that would put a reasonable person on notice that the hospital 
may be physician-owned is deemed a sufficient statement of physician 
ownership or investment, as well as our proposed examples of language 
that would satisfy that standard as specified in the proposed rule (80 
FR 41924). We note that our goal in proposing the examples of 
sufficient disclosure statements was to articulate a common sense 
understanding of what types of statements would satisfy the 
requirements.
    Comment: One commenter supported our proposal to amend Sec.  
411.362(b)(3)(ii)(C) to specify examples of Web sites that, consistent 
with our existing policy, would not constitute ``public Web sites for 
the hospital,'' and therefore, would not require a disclosure of 
physician ownership or investment. However, the commenter requested 
that we revise the phrase ``social media Web sites'' in proposed 
amended Sec.  411.362(b)(3)(ii)(C) to read as ``social media or 
networking Web sites'' and that we include in the regulation specific 
examples of social media or networking Web sites.
    Response: We are finalizing our proposal, without revision, to 
amend Sec.  411.362(b)(3)(ii)(C) to specify that a public Web site for 
the hospital does not include, by way of example: Social media Web 
sites; electronic patient payment portals; electronic patient care 
portals; and electronic health information exchanges. We are not 
persuaded to explicitly include ``networking Web sites'' in

[[Page 71337]]

Sec.  411.362(b)(3)(ii)(C). We believe that it is commonly understood 
that networking Web sites are one form of social media and that our 
discussion of social media Web sites in the proposed rule is broad 
enough to include networking Web sites (80 FR 41924). We do not believe 
that additional guidance is necessary. Furthermore, we are hesitant to 
identify specific names of Web sites, even as examples, given the pace 
at which technology develops.
    Comment: One commenter supported our specific proposal at Sec.  
411.362(b)(3)(ii)(C) to exclude electronic patient payment portals and 
electronic patient care portals from qualifying as public Web sites for 
the hospital, because, according to the commenter, disclosing through 
either type of portal would not meet the disclosure requirement's 
purpose of providing ownership information to the general public.
    Response: We appreciate the commenter's support for our proposal to 
exclude such portals from qualifying as a ``public Web site for the 
hospital.'' We agree with the commenter's reasoning, and are finalizing 
the revisions as proposed.
    Comment: One commenter supported our proposed definition of 
``public advertising for the hospital'' at Sec.  411.362(a), 
particularly our clarification in the definition that the advertisement 
must be ``primarily intended to persuade individuals to seek care at 
the hospital.'' The commenter also supported our proposed list of 
examples that, consistent with our existing policy, would not 
constitute ``public advertising for the hospital'' and therefore would 
not require disclosure of physician ownership or investment. However, 
the commenter urged CMS to add ``search engine results'' and ``online 
listings of area hospitals'' to our proposed list of examples given 
that, according to the commenter, an individual likely would not make a 
medical decision based on the limited information provided through 
either means of communication.
    Response: We are finalizing our proposal, without revision, to add 
our proposed definition of ``public advertising for the hospital'' at 
Sec.  411.362(a). We are not persuaded to add ``search engine results'' 
and ``online listings of area hospitals'' to our list of examples. As 
we noted in the preamble to the proposed rule, our list of examples is 
not exhaustive, and a determination as to whether a specific 
communication qualifies as ``public advertising for the hospital'' will 
depend on the facts and circumstances of the communication (80 FR 
41924). We also note that under our finalized policy the standard for 
whether a communication qualifies as ``public advertising for the 
hospital'' is, in part, whether the communication ``is primarily 
intended to persuade individuals to seek care at the hospital'' and not 
whether an individual is likely to make a medical decision based on the 
information provided in the communication. Finally, as we noted in our 
proposed rule, our existing regulations at Sec.  411.362(b)(3)(ii)(C) 
reference ``public advertising'' without explicitly specifying ``for 
the hospital,'' and we are finalizing our proposal to include the 
phrase ``for the hospital'' in our definition at Sec.  411.362(a) and 
in the disclosure requirement to conform our regulations to the 
statutory language.
    Comment: One commenter requested that we identify a more definitive 
period of noncompliance for a physician-owned hospital's failure to 
satisfy the public advertising disclosure requirement. The commenter 
noted that, as to our example in the proposed rule concerning a 
physician-owned hospital's failure to include a disclosure in a monthly 
magazine advertisement, we stated that the period of noncompliance 
would ``likely'' be the applicable month of circulation despite the 
fact that the magazine may continue to be available (for example, in 
physician waiting rooms) for a period beyond the initial circulation.
    Response: We are finalizing, without revision, our clarifications 
regarding the periods of noncompliance associated with a failure to 
satisfy either the public Web site or public advertising disclosure 
requirements (80 FR 41925). We decline to identify a more definitive 
period of noncompliance for a physician-owned hospital's failure to 
satisfy the public advertising disclosure requirement. We believe that 
determining the period of noncompliance for a hospital's failure to 
disclose will depend on the specific facts and circumstances 
surrounding the hospital's public advertisement. We intended our 
example in the proposed rule to provide only general guidance and not 
to delineate a bright-line rule.
    After careful review and consideration of the comments, we are 
finalizing our proposal, without revision, to amend Sec.  
411.362(b)(3)(ii)(C) to specify that a public Web site for the hospital 
does not include, by way of example: Social media Web sites; electronic 
patient payment portals; electronic patient care portals; and 
electronic health information exchanges. We are finalizing our 
proposal, without revision, to add our proposed definition of ``public 
advertising for the hospital'' at Sec.  411.362(a). We are also 
finalizing, without revision, our clarifications regarding the periods 
of noncompliance associated with a failure to satisfy either the public 
Web site or public advertising disclosure requirements (80 FR 41925).
b. Determining the Bona Fide Investment Level (Sec.  411.362(b)(4)(i))
    As stated above, section 6001(a)(3) of the Affordable Care Act 
established new requirements for physician-owned hospitals to avail 
themselves of either the rural provider or hospital ownership 
exceptions to the physician self-referral law, including the 
requirement that the percentage of the total value of the ownership or 
investment interests held in a hospital, or in an entity whose assets 
include the hospital, by physician owners or investors in the aggregate 
cannot exceed such percentage as of March 23, 2010. In this rule, we 
refer to the percentage of ownership or investment interests held by 
physicians in a hospital as the ``bona fide investment level'' and such 
percentage that was set as of March 23, 2010, as the ``baseline bona 
fide investment level.''
    In the CY 2011 OPPS/ASC final rule with comment period (75 FR 
72251), we codified the bona fide investment requirement at Sec.  
411.362(b)(4)(i). In that final rule we responded to commenters that 
stated that the bona fide investment level should be calculated without 
regard to any ownership or investment interests held by physicians who 
do not make any referrals to the hospital, including physicians who are 
no longer practicing medicine (75 FR 72250). We stated that the 
ownership or investment interests of non-referring physicians need not 
be considered when calculating the baseline physician ownership level. 
In our response, we noted that section 1877(i)(5) of the Act defines 
``physician owner or investor'' for the purposes of that subsection to 
include any physician with a direct or indirect ownership or investment 
interest in the hospital and that, under our definition of ``indirect 
ownership or investment interest'' at Sec.  411.354(b)(5), only 
``referring physicians'' can have an indirect ownership or investment 
interest in a DHS entity. Although we did not explicitly address direct 
ownership or investment interests in our response, we note that only 
referring physicians can have a direct financial relationship under our 
existing regulations at Sec.  411.354(a)(2)(i).
    Following publication of the CY 2011 OPPS/ASC final rule with 
comment period, we received inquiries from

[[Page 71338]]

industry stakeholders regarding our statement that the baseline bona 
fide investment level need not be calculated as including the ownership 
or investment interests of non-referring physicians. First, the 
stakeholders stated that the statutory definition of physician owner or 
investor is broad and that if the Congress had intended to limit the 
definition to only referring physicians, the Congress would have 
included such qualifying language, as it did in a separate requirement 
established by the Affordable Care Act for physician-owned hospitals in 
section 1877(i)(C)(ii) of the Act. Second, the stakeholders stated that 
including only referring physicians in the definition of physician 
owner or investor for the purposes of establishing the baseline bona 
fide investment level frustrates the purpose of an explicit deadline 
set forth in the statute. The stakeholders noted that in the Affordable 
Care Act, the Congress required physician-owned hospitals that seek to 
avail themselves of the rural provider or hospital ownership exceptions 
to have had physician ownership or investment as of March 23, 2010, but 
allowed them until December 31, 2010 to obtain a provider agreement. 
The stakeholders stated that our position makes the March 23, 2010 
deadline meaningless because a pre-operational physician-owned hospital 
that did not have a provider agreement until December 31, 2010 likely 
would not have had physician owners or investors referring to the 
hospital as of the March 23 date. The stakeholders stated that our 
position regarding non-referring physicians in the CY 2011 OPPS/ASC 
final rule with comment period, in effect, precluded pre-operational 
hospitals from satisfying the requirement for physician ownership as of 
March 23, 2010, thus preventing the hospitals from availing themselves 
of the hospital ownership or rural provider exceptions.
    Given the inquiries that we received after publication of the CY 
2011 OPPS/ASC final rule with comment period, we have reconsidered our 
position that our regulations at Sec.  411.354 necessarily limit the 
definition of physician owner or investor for the purposes of 
establishing the baseline bona fide investment level (and any bona fide 
investment level thereafter). As we stated in the CY 2011 OPPS/ASC 
final rule with comment period, we recognize that the statutory 
definition of physician owner or investor is broad (75 FR 72250). 
Further, we understand the concern expressed by the stakeholders that 
our position may frustrate an explicit statutory deadline for certain 
physician-owned hospitals. We believe that the statutory revisions to 
the rural provider and hospital ownership exceptions must be read 
harmoniously and not in a way that makes any provision meaningless. 
Accordingly, we proposed to revise our policy articulated in the CY 
2011 OPPS/ASC final rule with comment period to require that the 
baseline bona fide investment level and the bona fide investment level 
include direct and indirect ownership and investment interests held by 
a physician if he or she satisfies the definition of ``physician'' in 
section 1861(r) of the Act and in Sec.  411.351, regardless of whether 
the physician refers patients to the hospital (and therefore, 
irrespective of whether he or she is a ``referring physician'' for the 
purposes of our regulatory definition of ownership or investment 
interest at Sec.  411.354). Further, under our proposal, the direct or 
indirect ownership interests held by an individual who no longer 
practices medicine, as described in the comment summary above, would be 
counted if he or she satisfies the definition of ``physician'' in 
section 1861(r) of the Act and in Sec.  411.351. We sought public 
comment regarding non-referring physicians and the bona fide investment 
level, including whether our proposal might alleviate the burden that 
some physician-owned hospitals reported when trying to determine 
whether a particular physician was a referring or non-referring 
physician for the purposes of establishing their baseline bona fide 
investment levels and the bona fide investment levels generally.
    To support our proposal and implement the requirements of the 
statute, we proposed to amend our existing regulations to specify that, 
for the purposes of Sec.  411.362 (including for the purposes of 
determining the baseline bona fide investment level and the bona fide 
investment level thereafter), the ownership or investment interests 
held by both referring and non-referring physicians are included. We 
proposed to effectuate this change by establishing a definition of 
ownership or investment interest solely for the purposes of Sec.  
411.362 that would apply to all types of owners or investors, 
regardless of their status as referring or non-referring physicians. 
Specifically, we proposed to define ``ownership or investment 
interest'' at Sec.  411.362(a) as a direct or indirect ownership or 
investment interest in a hospital. Under the proposed revision, a 
direct ownership or investment interest in a hospital exists if the 
ownership or investment interest in the hospital is held without any 
intervening persons or entities between the hospital and the owner or 
investor, and an indirect ownership or investment interest in a 
hospital exists if: (1) Between the owner or investor and the hospital 
there exists an unbroken chain of any number (but no fewer than one) of 
persons or entities having ownership or investment interests; and (2) 
the hospital has actual knowledge of, or acts in reckless disregard or 
deliberate ignorance of, the fact that the owner or investor has some 
ownership or investment interest (through any number of intermediary 
ownership or investment interests) in the hospital. We also proposed 
that an indirect ownership or investment interest in a hospital exists 
even though the hospital does not know, or acts in reckless disregard 
or deliberate ignorance of, the precise composition of the unbroken 
chain or the specific terms of the ownership or investment interests 
that form the links in the chain. As used in Sec.  411.362, the term 
``physician'' would continue to have the meaning set forth in Sec.  
411.351; that is, an individual who meets the definition of 
``physician'' set forth in section 1861(r) of the Act.
    We believe that our proposed revision would make the prohibition 
set forth at Sec.  411.362(b)(4)(i) better align with the statutory 
definition of ``physician owner or investor'' in a hospital without 
unsettling long-standing definitions in our regulations. We solicited 
public comments on our proposed revision to Sec.  411.362, including 
whether such revision would adequately address the concerns expressed 
by the stakeholders after publication of the CY 2011 OPPS/ASC final 
rule with comment period.
    We solicited public comments on an alternate proposal that we 
believe also supports our policy and, thereby, effectuates the 
statute's purpose. Specifically, we solicited public comments on 
whether, in the alternative, we should revise our regulations in an 
even more comprehensive manner and remove the references to a 
``referring physician'' throughout existing Sec.  411.354. We invited 
public comments on whether it would be helpful to retain the references 
to a ``referring physician'' for those specific provisions where the 
concept of a physician's referrals to a DHS entity is essential to the 
provision, such as our definition of an indirect compensation 
arrangement at Sec.  411.354(c)(2)(ii).
    Finally, in the proposed rule we recognized that some physician-
owned hospitals may have relied on the position that was articulated in 
the CY 2011 OPPS/ASC final rule with comment period concerning non-
referring physicians and the baseline bona fide investment level. If we

[[Page 71339]]

finalized one or more of the proposals described in this section of the 
proposed rule, these hospitals may have revised bona fide investment 
levels that exceed the baseline bona fide investment levels calculated 
under our current guidance. Therefore, we proposed to delay the 
effective date of the new regulation until such time as physician-owned 
hospitals would have sufficient time to come into compliance with the 
new policy. For example, we stated that we could delay the effective 
date for 1 year from the date of publication in the Federal Register of 
the rulemaking in which we finalize the new regulation or on a specific 
date, such as January 1, 2017. We solicited comments on how long we 
should delay the effective date. We also solicited comments on the 
impact of our proposed regulatory revisions on physician-owned 
hospitals and on the measures or actions physician-owned hospitals 
would need to undertake to come into compliance with our proposed 
revisions.
    The following is a summary of the comments we received.
    Comment: Four commenters disagreed with the bona fide investment 
level proposal, citing a variety of reasons. For example, two 
commenters stated that requiring the inclusion of ownership and 
investment interests held by non-referring physicians in the baseline 
bona fide investment level and every assessment of the bona fide 
investment level thereafter is inconsistent with the purpose of the 
physician self-referral law. One of these commenters stated that 
requiring the inclusion of ownership and investment interests held by 
non-referring physicians in the bona fide investment levels would 
stifle physician investment in physician-owned hospitals and frustrate 
physician recruitment to communities served by physician-owned 
hospitals. Another commenter asked us to refrain from finalizing the 
proposal until we can articulate the precise risk of fraud or abuse 
that excluding the ownership and investment interests held by non-
referring physicians from the bona fide investment levels would have on 
the Medicare program. One commenter stated that requiring the inclusion 
of ownership and investment interests held by non-referring physicians 
in the baseline bona fide investment level and every assessment of the 
bona fide investment level thereafter impermissibly expands the scope 
of the physician self-referral law because, according to the commenter, 
without a ``referral,'' a physician's ownership or investment interest 
in an entity does not implicate the law and, thus, no applicable 
exception is needed. This commenter stated that we should create a 
special carve out for physician-owned hospitals that did not obtain a 
provider agreement until sometime after March 23, 2010, but by the 
December 31, 2010 deadline, and that these hospitals should include the 
ownership and investment interests held by all physicians, regardless 
of referral status, in the baseline bona fide investment level.
    Response: We continue to believe that the revised policy 
articulated in the proposed rule is the only reading of the statute 
that fully accounts for all relevant provisions of law. We do not 
believe that we have the authority to continue implementing a policy 
that is inconsistent with the statute. Accordingly, we are finalizing 
our proposal, without revision, to require that the baseline bona fide 
investment level and the bona fide investment level include direct and 
indirect ownership and investment interests held by a physician if she 
or she satisfies the definition of ``physician'' in section 1861(r) of 
the Act and in Sec.  411.351, regardless of whether the physician 
refers patients to the hospital (and therefore, irrespective of whether 
he or she is a ``referring physician'' for the purposes of our 
regulatory definition of ownership or investment interest at Sec.  
411.354). We also are finalizing, without revision, our proposed 
definition of ``ownership or investment interest'' in Sec.  411.362 to 
implement our revised policy.
    Comment: One commenter stated that requiring the inclusion of the 
ownership and investment interests held by all physicians, regardless 
of whether each qualifies as a ``referring'' physician, is a more 
faithful interpretation of the statute than the policy that we 
articulated in the CY 2011 OPPS/ASC final rule with comment period (75 
FR 72250). The commenter stated, however, that we should implement the 
statute in a different manner than the proposal set forth in the 
proposed rule. Specifically, the commenter stated that all ownership 
and investment interests held by physicians as of March 23, 2010, 
should be included in a hospital's baseline bona fide investment level 
regardless of whether each physician was referring as of that date, but 
that a physician-owned hospital should be permitted to exclude the 
ownership and investment interests held by non-referring physicians in 
any calculation of the bona fide investment level thereafter. The 
commenter noted that in regulations governing provider agreements at 
Sec.  489.20(u) and (v), CMS chose to not require disclosure of 
physician ownership interests for any physician-owned hospital that 
does not have at least one referring physician.
    Response: We agree with the commenter that the proposal better 
aligns with the statute than the policy articulated in the CY 2011 
OPPS/ASC final rule with comment period. However, we disagree that a 
physician-owned hospital should be permitted to exclude the ownership 
and investment interests held by non-referring physicians in any 
calculation of the bona fide investment level after March 23, 2010. We 
believe that the term ``physician owner or investor'' as used in the 
bona fide investment level requirement has a singular, defined meaning 
and that the Congress provided guidance about that meaning through its 
broad definition of ``physician owner or investor'' at section 
1877(i)(5) of the Act, which is supported by a harmonious reading of 
multiple statutory provisions. Further, as we noted in the proposed 
rule, if the term ``physician owner or investor'' was intended to 
include only referring physicians in the bona fide investment level 
requirement, such qualifying language would have been included in the 
statute, such as in a separate requirement established by the 
Affordable Care Act for physician-owned hospitals in section 
1877(i)(C)(ii) of the Act. Although the commenter's recommended 
approach would resolve the issue concerning pre-operational hospitals 
that we discussed in the proposed rule (80 FR 41925), we do not believe 
that the statute provides sufficient support for concluding that two 
separate standards can apply for calculating the baseline bona fide 
investment level and every bona fide investment level thereafter. 
Finally, as to the commenter's statements regarding Sec.  489.20(u) and 
(v), the regulations that govern provider agreements and our 
regulations concerning the physician self-referral law are two distinct 
regulatory schemes. Although the regulations cited by the commenter 
mention physician-owned hospitals, we are bound by the provisions of 
the physician self-referral law.
    Comment: One commenter requested that we clarify that a physician-
owned hospital did not improperly calculate its baseline bona fide 
investment level by including the ownership and investment interests 
held by all physicians regardless of referral status.
    Response: We confirm that a proper calculation of a physician-owned 
hospital's baseline bona fide investment level includes the ownership 
and investment interests held by all physicians regardless of referral 
status.

[[Page 71340]]

    Comment: Two commenters stated that requiring the inclusion of 
ownership and investment interests held by non-referring physicians in 
the baseline bona fide investment level and the assessment of every 
bona fide investment level thereafter likely would cause financial 
hardship for any non-referring or retiring physicians who would need to 
sell their ownership interests at the current fair market value to 
allow a physician-owned hospital to comply with the new policy. The 
commenters also stated that physician-owned hospitals likely would have 
to restructure their governance, given the necessary ownership changes, 
and that such restructuring likely would be difficult and costly for 
the hospitals.
    Response: We acknowledge the commenters' concerns regarding the 
potential effect that this policy may have on individual physician 
owners, as well as physician-owned hospitals. While we do not have the 
discretion to continue implementing a policy that is inconsistent with 
the statute, we recognize that we need to give physician-owned 
hospitals a reasonable amount of time to come into compliance with the 
revised policy. Accordingly, we are delaying the effective date of this 
revision for one year from the effective date of this final rule to 
January 1, 2017.
    After consideration of the comments, we are amending our existing 
regulations to specify that, for the purposes of Sec.  411.362 
(including for the purposes of determining the baseline bona fide 
investment level and the bona fide investment level thereafter), the 
ownership or investment interests held by both referring and non-
referring physicians are included. We are establishing a definition of 
ownership or investment interest solely for the purposes of Sec.  
411.362 that would apply to all types of owners or investors, 
regardless of their status as referring or non-referring physicians. 
Specifically, we are defining ``ownership or investment interest'' at 
Sec.  411.362(a) as a direct or indirect ownership or investment 
interest in a hospital. Under the final rule, a direct ownership or 
investment interest in a hospital exists if the ownership or investment 
interest in the hospital is held without any intervening persons or 
entities between the hospital and the owner or investor, and an 
indirect ownership or investment interest in a hospital exists if: (1) 
Between the owner or investor and the hospital there exists an unbroken 
chain of any number (but no fewer than one) of persons or entities 
having ownership or investment interests; and (2) the hospital has 
actual knowledge of, or acts in reckless disregard or deliberate 
ignorance of, the fact that the owner or investor has some ownership or 
investment interest (through any number of intermediary ownership or 
investment interests) in the hospital. As used in Sec.  411.362, the 
term ``physician'' would continue to have the meaning set forth in 
Sec.  411.351; that is, an individual who meets the definition of 
``physician'' set forth in section 1861(r) of the Act.
9. Solicitation of Comments: Perceived Need for Regulatory Revisions or 
Policy Clarification Regarding Permissible Physician Compensation
a. Changes in Health Care Delivery and Payment Systems Since the 
Enactment of the Physician Self-referral Law
    Since the enactment of section 1877 of the Act in 1989, significant 
changes in the delivery of health care services and the payment for 
such services have occurred, both within the Medicare and Medicaid 
programs and for non-federal payors and patients. For over a decade, we 
have engaged in efforts to align payment under the Medicare program 
with the quality of the care provided to our beneficiaries. Laws such 
as the Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (MMA), the Deficit Reduction Act of 2005 (DRA), and the 
Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) 
have guided our efforts to move toward health care delivery and payment 
reform. More recently, the Affordable Care Act required significant 
changes to the Medicare program's payment systems and provides the 
Secretary with broad authority to test models to implement these 
reforms. In our proposed rule, we highlighted certain provisions of the 
Affordable Care Act that grant the Secretary broad authority to test 
models implementing health care delivery and payment reform. (See 80 FR 
41927-28.)
    As noted in our proposed rulemaking, we are moving away from 
Medicare payments to providers and suppliers that do not incorporate 
the value of the care provided. The Secretary recently set a goal of 
tying 30 percent of traditional, fee-for-service Medicare payments to 
quality or value through alternative payment models, such as ACOs or 
bundled payment arrangements, by the end of 2016, and 50 percent of 
payments to these models by the end of 2018. The Secretary also set a 
goal of tying 85 percent of all traditional Medicare payments to 
quality or value by 2016, and 90 percent of payments to quality or 
value by 2018, through programs such as the Hospital VBP Program and 
the Hospital Readmissions Reduction Program. (See press release titled 
``Better, Smarter, Healthier: In historic announcement, HHS sets clear 
goals and timeline for shifting Medicare reimbursements from volume to 
value,'' U.S. Department of Health & Human Services (Jan. 26, 2015), 
http://www.hhs.gov/news/press/2015pres/01/20150126a.html.)
b. Financial Relationships in Alternative Delivery and Payment Systems
    The physician self-referral law, by design, separates entities 
furnishing DHS from the physicians who refer Medicare patients to them. 
Evolving health care delivery and payment models, within both the 
Medicare and Medicaid programs and programs sponsored by non-Federal 
payors, are premised on the close integration of a variety of different 
health care providers to achieve the goals of improving the experience 
of care, improving the health of populations, and reducing per capita 
costs of health care, often referred to as the ``three-part aim.'' 
Entities furnishing DHS face the predicament of trying to achieve 
clinical and financial integration with other health care providers, 
including physicians, while simultaneously having to satisfy the 
requirements of an exception to the physician self-referral law's 
prohibitions if they wish to compensate physicians to help them meet 
the three-part aim and avoid financial penalties that may be imposed on 
low-value health care providers. Because all inpatient and outpatient 
services are considered DHS, hospitals must consider each and every 
service referred by a physician in their attempts to ensure that 
compensation paid to a physician does not take into account the volume 
or value of his or her referrals to the hospital. According to 
stakeholders, structuring incentive compensation and other payments can 
be particularly challenging for hospitals, even where the payments are 
to hospital-employed physicians.
    Stakeholders have expressed concern that, outside of the Medicare 
Shared Savings Program or certain Center for Medicare and Medicaid 
Innovation-sponsored care delivery and payment models--for which we 
have issued waivers of the prohibitions of the physician self-referral 
law--the physician self-referral law prohibits financial relationships 
necessary to achieve the clinical and financial integration required 
for successful health care delivery and payment reform. These concerns 
apply equally to the participation of physicians and entities 
furnishing health care services in models sponsored and paid for solely

[[Page 71341]]

by non-federal payors, where care is provided solely to non-federal 
program patients, because the financial arrangements between the 
parties that result from participation in these models must satisfy the 
requirements of an applicable exception to the physician self-referral 
law to avoid the law's referral and billing prohibitions on DHS 
referred for and furnished to Medicare beneficiaries. We also have 
received numerous stakeholder inquiries, unrelated to participation in 
alternative health care delivery or payment models, regarding whether 
certain compensation methodologies would be viewed as taking into 
account the volume or value of a physician's referrals or other 
business generated between the physician and the entity furnishing DHS 
that provides the compensation. Many of these inquiries relate to 
performance-based or incentive compensation. We have not issued any 
formal guidance to date, either through a binding advisory opinion or 
rulemaking.
    The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) 
(Pub. L. 114-10), enacted April 16, 2015, includes certain Medicare 
program integrity and fraud and abuse provisions. Notably, MACRA 
requires the Secretary to undertake two studies relating to the 
promotion of alternative payment models and to provide the Congress 
with a gainsharing study and report.
    Section 101(e)(7) of MACRA requires the Secretary, in consultation 
with the Office of Inspector General (OIG), to study and report to the 
Congress on fraud related to alternative payment models under the 
Medicare program (the APM Report). The Secretary must study the 
applicability of the Federal fraud prevention laws to items and 
services furnished under title XVIII of the Act for which payment is 
made under an alternative payment model, identify aspects of 
alternative payment models that are vulnerable to fraudulent activity, 
and examine the implications of waivers to the fraud prevention laws to 
support alternative payment models. The Secretary must include in the 
APM Report the results of her study and recommendations for actions to 
reduce the vulnerabilities of Medicare alternative payment models, 
including possible changes in Federal fraud prevention laws to reduce 
such vulnerabilities. This report must be issued no later than 2 years 
after the enactment of MACRA.
    Section 512(b) of MACRA requires the Secretary, in consultation 
with OIG, to submit to the Congress a report with options for amending 
existing fraud and abuse laws and regulations through exceptions, safe 
harbors or other narrowly tailored provisions, to permit gainsharing 
arrangements that would otherwise be subject civil money penalties in 
paragraphs (1) and (2) of section 1128A(b) of the Act and similar 
arrangements between physicians and hospitals that improve care while 
reducing waste and increasing efficiency (the Gainsharing Report). The 
Gainsharing Report must address whether the recommended changes should 
apply to ownership interests, compensation arrangements, or other 
relationships. The Gainsharing Report must also describe how the 
recommendations address accountability, transparency, and quality, 
including how best to limit inducements to stint on care, discharge 
patients prematurely, or otherwise reduce or limit medically necessary 
care. Further, the Secretary's Gainsharing Report must consider whether 
a portion of any savings generated by such arrangements should accrue 
to the Medicare program. This report must be issued no later than 12 
months after the enactment of MACRA.
c. Analysis of Comments
    To help inform the APM Report and Gainsharing Report required under 
sections 101(e)(7) and 512(b) of MACRA, respectively, and to aid us in 
determining whether additional rulemaking or guidance is desirable or 
necessary, we solicited comments regarding the impact of the physician 
self-referral law on health care delivery and payment reform. On this 
subject, we specifically solicited comments regarding the ``volume or 
value'' and ``other business generated'' standards, but welcomed 
comments concerning any of our rules for determining physician 
compensation.
    We received a number of thoughtful comments on the issues raised in 
the solicitation. We thank the commenters for their input, and we will 
carefully consider their comments as we prepare the reports to Congress 
required under sections 101(e)(7) and 512(b) of MACRA and determine 
whether additional rulemaking on these issues is necessary. We would 
like to note that our silence in this rule should not be viewed as an 
affirmation of any commenter's interpretations or views.
10. Technical Corrections
    We have become aware that some of the manual citations listed in 
our regulations are no longer correct. We therefore proposed to update 
regulations at Sec.  411.351, definitions of ``entity'', `` `incident 
to' services or services `incident to' '', ``parenteral and enteral 
nutrients, equipment, and supplies'', and ``physician in the group 
practice'', with the correct citations. We also proposed to modernize 
the regulatory text by changing ``Web site'' to ``Web site'' in Sec.  
411.351, definition of ``list of CPT/HCPCS Codes'', Sec.  
411.357(k)(2), (m)(2) through (m)(3), and (m)(5), Sec.  
411.362(c)(2)(iv) through (v) and (c)(5), and Sec.  411.384(b). Lastly, 
we are removing the hyphen from ``publicly-traded'' at Sec.  411.356(a) 
and Sec.  411.361(d), and we are correcting a minor typographical error 
at Sec.  411.357(p)(1)(ii)(A).
    After the proposed rule went on display, the term ``Web site'' was 
inadvertently changed to ``Web site.'' Our intention in the proposed 
rule was to change all instances of the term ``Web site'' to ``Web 
site.'' We are making this change in the final rule.
11. Comments Outside the Scope of This Rulemaking
    Comment: We received several comments, including suggestions on 
policy changes that are outside the scope of this rulemaking. For 
example, one commenter requested revisions to the in-office ancillary 
services exception. Another commenter requested that we make regulatory 
protections for electronic health records permanent. We also received a 
few requests that the physician self-referral law be eliminated 
entirely. In addition, some commenters described their interpretations 
of various physician self-referral issues or asked questions about 
existing regulations.
    Response: Although we appreciate the commenters taking the time to 
present these positions, these comments are beyond the scope of this 
rulemaking and are not addressed in this final rule with comment 
period. We express no view on these issues; our silence should not be 
viewed as an affirmation of any commenter's interpretations or views. 
If these issues are addressed in the future, we will publish a notice 
of proposed rulemaking that will be open to public comment at that 
time. Finally, we refer readers to the final rule regarding our 
exception for electronic health records at Sec.  411.357(w), published 
December 27, 2013 (78 FR 78751).

O. Private Contracting/Opt-out

1. Background
    Effective January 1, 1998, section 1802(b) of the Act permits 
certain physicians and practitioners to opt out of Medicare if certain 
conditions are met, and to furnish through private contracts services 
that would otherwise be covered by Medicare. For those

[[Page 71342]]

physicians and practitioners who opt out of Medicare in accordance with 
section 1802(b) of the Act, the mandatory claims submission and 
limiting charge rules of section 1848(g) of the Act do not apply. As a 
result, if the conditions necessary for an effective opt-out are met, 
physicians and practitioners are permitted to privately contract with 
Medicare beneficiaries and to charge them without regard to Medicare's 
limiting charge rules.
a. Provisions of the Regulation
    The private contracting/opt out provisions at section 1802(b) of 
the Act were recently amended by section 106(a) of the Medicare Access 
and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10). Prior to 
the MACRA amendments, the law specified that physicians and 
practitioners may opt out for a 2-year period. Individuals that wished 
to renew their opt-out at the end of a 2-year opt-out period were 
required to file new affidavits with their MAC. Section 106(a) of the 
MACRA amends section 1802(b)(3) of the Act to require that opt-out 
affidavits filed on or after June 16, 2015, automatically renew every 2 
years. Therefore, physicians and practitioners that file opt-out 
affidavits on or after June 16, 2015, will no longer be required to 
file renewal affidavits to continue their opt-out status. The 
amendments further provide that physicians and practitioners who have 
filed opt-out affidavits on or after June 16, 2015, and who do not want 
their opt-out status to automatically renew at the end of a 2-year opt-
out period may cancel the automatic extension by notifying us at least 
30 days prior to the start of the next 2-year opt-out period.
    We proposed to revise the regulations governing the requirements 
and procedures for private contracts at 42 CFR part 405, subpart D so 
that they conform with these statutory changes. Specifically, we 
proposed to revise the following:
     The definition of ``Opt-out period'' at Sec.  405.400 so 
that opt-out affidavits automatically renew unless the physician or 
practitioner properly cancels opt-out.
     Sections 405.405(b); 405.410(c)(1) and (2); 405.415(h), 
(m), and (o); 405.425; 405.435(a)(4); 405.435(b)(8); 405.435(d); and 
405.445(b)(2) so those sections conform with the revised definition of 
``Opt-out period''.
     Section 405.445(a) so that proper cancellation of opt-out 
requires a physician or practitioner to submit written notice, not 
later than 30 days before the end of the current 2-year opt-out period, 
that the physician or practitioner does not want to extend the 
application of the opt-out affidavit for a subsequent 2-year period.
     Section 405.450(a) so that failure to properly cancel opt-
out is included as an initial determination for purposes of Sec.  
498.3(b).
    To update the terminology in our regulations, we also proposed to 
amend Sec. Sec.  405.410(d), 405.435(d), and 405.445(b)(2) so that the 
term ``carrier'' is replaced with ``Medicare Administrative 
Contractor''.
    We received 13 comments on our private contracting/opt-out 
proposal.
    Comment: Many commenters supported the proposed rule.
    Response: We appreciate the commenters' support.
    Comment: One commenter proposed that the rule be modified to permit 
cancellation of opt-out (with a 30-day notice) any time after the 
physician's or practitioner's initial 2-year opt-out period concludes. 
The commenter stated that a physician who cancels opt-out and later 
chooses to opt-out again should be subject to another initial 2-year 
opt-out period. The commenter contended that such a standard would be 
sufficient to prevent abuse without requiring the perpetual monitoring 
of opt-out renewal dates.
    Response: We appreciate the comment, but note that the commenter's 
proposal is inconsistent with the requirements of section 106(a)(1) of 
MACRA. As noted earlier in this preamble, the MACRA amendments permit 
physicians and practitioners who have filed opt-out affidavits on or 
after June 16, 2015, and who do not want their opt-out status to 
automatically renew at the end of a 2-year opt-out period to cancel the 
automatic extension by notifying us at least 30 days prior to the start 
of the next 2-year opt-out period. The MACRA amendments changed the 
procedures for renewing the opt-out period; it now renews automatically 
unless we receive written notice requesting otherwise. The MACRA 
amendments, however, did not change the requirement that physicians and 
practitioners opt-out in 2-year intervals. Therefore, because MACRA 
does not provide any flexibility to cancel opt-out before the 2 year 
opt-out period actually ends, we are not modifying the rule based on 
this comment.
    To effectuate the changes made by the MACRA, we are finalizing 
these provisions of the rule as proposed with the exception of minor 
editorial changes to Sec.  405.445. These changes clarify this section 
consistent with plain language principles but do not alter the meaning 
of the proposal.

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

1. General
    Section 1877 of the Act prohibits a physician from referring a 
Medicare beneficiary for certain designated health services (DHS) to an 
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.
2. Annual Update to the Code List
a. 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 Level II 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)).

[[Page 71343]]

    The definition of DHS at Sec.  411.351 excludes services for which 
payment is made by Medicare as part of a composite rate (unless the 
services are specifically identified as DHS and are themselves payable 
through a composite rate, such as home health and inpatient and 
outpatient hospital services). Effective January 1, 2011, EPO and 
dialysis-related drugs furnished in or by an ESRD facility (except 
drugs for which there are no injectable equivalents or other forms of 
administration), have been reimbursed under a composite rate known as 
the ESRD prospective payment system (ESRD PPS) (75 FR 49030). 
Accordingly, EPO and any dialysis-related drugs that are paid for under 
ESRD PPS are not DHS and are not listed among the drugs that could 
qualify for the exception at Sec.  411.355(g) for EPO and other 
dialysis-related drugs furnished by an ESRD facility.
    Drugs for which there are no injectable equivalents or other forms 
of administration were scheduled to be paid under ESRD PPS beginning 
January 1, 2014 (75 FR 49044). However, there have been several delays 
of the implementation of payment of these drugs under ESRD PPS. Most 
recently, on December 19, 2014, section 204 of the Achieving a Better 
Life Experience Act of 2014 (ABLE) (Pub. L. 113-295) was enacted and 
delayed the inclusion of these drugs under the ESRD PPS until 2025. 
Until that time, such drugs furnished in or by an ESRD facility are not 
paid as part of a composite rate and thus, are DHS. For purposes of the 
exception at Sec.  411.355(g), only those drugs that are required for 
the efficacy of dialysis may be identified on the List of CPT/HCPCS 
Codes as eligible for the exception. As we have explained previously in 
the CY 2010 PFS final rule with comment period (75 FR 73583), we do not 
believe any of these drugs are required for the efficacy of dialysis. 
Therefore, we have not included any such drugs on the list of drugs 
that can qualify for the exception.
    The Code List was last updated in Tables 90 and 91 of the CY 2015 
PFS final rule with comment period (79 FR 67973-67975).
b. Response to Comments
    We received three public comments relating to the Code List that 
became effective January 1, 2015.
    Comment: All of the commenters requested the removal of two 
disposable negative pressure wound therapy (NPWT) codes, 97607 and 
97608. The commenters stated that the definition of ``referral'' does 
not include services personally performed by the referring/ordering 
physician and that a typical patient provided with a disposal NPWT 
device will require significant clinical interaction from the physician 
to thoroughly clean a wound prior to application of such a device.
    Response: We are aware that there are some circumstances under 
which these codes will not be considered therapy services. The codes in 
question are not considered therapy services when: (1) It is not 
appropriate to bill the service under a therapy plan of care; and (2) 
they are billed by practitioners/providers of services who are not 
therapists, such as physicians, CNSs, NPs and psychologists; or they 
are billed to MACs by hospitals for outpatient services which are 
performed by non-therapists. However, these and certain other codes can 
also be furnished as therapy services, specifically under a physical 
therapy, occupational therapy, or speech-language pathology plan of 
care in accordance with section 1861(p) of the Act. We note that 
determinations should be made on a case-by-case basis with respect to 
whether the physician self-referral law is implicated when using these 
codes. Please refer to the billing rules associated with these codes to 
avoid violating the physician self-referral law.
c. Revisions Effective for CY 2016
    The updated, comprehensive Code List effective January 1, 2016, is 
available on our Web site at http://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/List_of_Codes.html.
    Additions and deletions to the Code List conform it to the most 
recent publications of CPT and HCPCS Level II, and to changes in 
Medicare coverage policy and payment status.
    Tables 50 and 51 identify the additions and deletions, 
respectively, to the comprehensive Code List that become effective 
January 1, 2016. Tables 50 and 51 also identify the additions and 
deletions to the list of codes used to identify the items and services 
that may qualify for the exception in Sec.  411.355(g) (regarding 
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).
    We will consider comments regarding the codes listed in Tables 50 
and 51. 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 definitions in Sec.  411.351.

  Table 50--Additions to the Physician Self-Referral List of CPT1/HCPCS
                                  Codes
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
CLINICAL LABORATORY SERVICES
G0475 HIV combination assay
G0476 HPV combo assay CA screen
PHYSICAL THERAPY, OCCUPATIONAL THERAPY, AND OUTPATIENT SPEECH-LANGUAGE
 PATHOLOGY SERVICES
{No additions{time}
RADIOLOGY AND CERTAIN OTHER IMAGING SERVICES
72081 X-ray exam entire spi 1 vw
72082 X-ray exam entire spi 2/3 vw
72083 X-ray exam entire spi 4/5 vw
72084 X-ray exam entire spi 6/> vw
73501 X-ray exam hip uni 1 view
73502 X-ray exam hip uni 2-3 views
73503 X-ray exam hip uni 4/> views
73521 X-ray exam hips bi 2 views
73522 X-ray exam hips bi 3-4 views
73523 X-ray exam hips bi 5/> views
73551 X-ray exam of femur 1
73552 X-ray exam of femur 2/>
74712 Mri fetal sngl/1st gestation
78265 Gastric emptying imag study
78266 Gastric emptying imag study
C9457 Lumason contrast agent
C9458 Florbetaben F18
C9459 Flutemetamol F18
G0297 LDCT for Lung CA screen
RADIATION THERAPY SERVICES AND SUPPLIES
0394T Hdr elctrnc skn surf brchytx
0395T Hdr elctr ntrst/ntrcv brchtx
77767 Hdr rdncl skn surf brachytx
77768 Hdr rdncl skn surf brachytx
77770 Hdr rdncl ntrstl/icav brchtx
77771 Hdr rdncl ntrstl/icav brchtx
77772 Hdr rdncl ntrstl/icav brchtx
C2645 Brachytx planar, p-103
DRUGS USED BY PATIENTS UNDERGOING DIALYSIS
{No additions{time}
PREVENTIVE SCREENING TESTS, IMMUNIZATIONS AND VACCINES
G0475 HIV combination assay
G0476 HPV combo assay CA screen
------------------------------------------------------------------------
\1\ CPT codes and descriptions only are copyright 2015 AMA. All rights
  are reserved and applicable FARS/DFARS clauses apply.


 Table 51--Deletions From the Physician Self-Referral List of CPT1/HCPCS
                                  Codes
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
CLINICAL LABORATORY SERVICES
0103T Holotranscobalamin
G0431 Drug screen multiple class
G0434 Drug screen multi drug class
PHYSICAL THERAPY, OCCUPATIONAL THERAPY, AND OUTPATIENT
 SPEECH[dash]LANGUAGE PATHOLOGY SERVICES
{No deletions{time}
RADIOLOGY AND CERTAIN OTHER IMAGING SERVICES
72010 X-ray exam of spine
72069 X-ray exam of trunk spine
72090 X-ray exam of trunk spine
73500 X-ray exam of hip
73510 X-ray exam of hip
73520 X-ray exam of hips

[[Page 71344]]

 
73540 X-ray exam of pelvis & hips
73550 X-ray exam of thigh
RADIATION THERAPY SERVICES AND SUPPLIES
0182T HDR elect brachytherapy
77777 Apply interstit radiat inter
77787 HDR brachytx over 12 chan
DRUGS USED BY PATIENTS UNDERGOING DIALYSIS
{No deletions{time}
PREVENTIVE SCREENING TESTS, IMMUNIZATIONS AND VACCINES
90669 Pneumococcal vacc 7 val im
 
------------------------------------------------------------------------
\1\ CPT codes and descriptions only are copyright 2015 AMA. All rights
  are reserved and applicable FARS/DFARS clauses apply.

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), we are required to 
publish a 30-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval.
    To fairly evaluate whether an information collection should be 
approved by OMB, PRA section 3506(c)(2)(A) requires that we solicit 
comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our burden estimates.
     The quality, utility, and clarity of the information to be 
collected.
     Our effort to minimize the information collection burden 
on the affected public, including the use of automated collection 
techniques.
    In the CY 2016 PFS proposed rule (80 FR 41930 through 41937) we 
solicited public comment on each of the section 3506(c)(2)(A)-required 
issues for the following information collection requirements. PRA-
related comments were received as indicated below under section IV.B.

A. Wage Estimates

    To derive average costs, we used data from the U.S. Bureau of Labor 
Statistics' May 2014 National Occupational Employment and Wage 
Estimates for all salary estimates (www.bls.gov/oes/current/oes_nat.htm). In this regard, Table 52 presents the mean hourly wage, 
the cost of fringe benefits, and the adjusted hourly wage.

                                        Table 52--Estimated Hourly Wages
----------------------------------------------------------------------------------------------------------------
                                                          Mean hourly wage    Fringe benefit    Adjusted hourly
          Occupation title             Occupation code         ($/hr)             ($/hr)          wage ($/hr)
----------------------------------------------------------------------------------------------------------------
Billing and Posting Clerks..........            43-3021              17.10             9.58 *              26.68
Business Operations Specialists.....            13-1000              33.69              33.69              67.38
Computer Systems Analysts...........            15-1121              41.98              41.98              83.96
Medical and Health Services Managers            11-9111              49.84              49.84              99.68
Medical Secretaries.................            43-6013              16.12              16.12              32.24
Physicians and Surgeons.............            29-1060              93.71              93.71             187.48
----------------------------------------------------------------------------------------------------------------
* For fringe benefits, we are using the December 2014 Employer Costs for Employee Compensation (http://www.bls.gov/news.release/archives/ecec_03112015.pdf).

    Except where noted, we are adjusting our employee hourly wage 
estimates by a factor of 100 percent. This is necessarily a rough 
adjustment, both because fringe benefits and overhead costs vary 
significantly from employer to employer, and because methods of 
estimating these costs vary widely from study to study. Nonetheless, 
there is no practical alternative and we believe that doubling the 
hourly wage to estimate total cost is a reasonably accurate estimation 
method.

B. Information Collection Requirements (ICRs) Carried Over From the CY 
2016 Proposed Rule

1. ICRs Regarding 42 CFR part 405, subpart D
    Section 106(a) of MACRA indicates that valid opt-out affidavits 
filed on or after June 16, 2015, automatically renew every 2 years. 
Previously, physicians and practitioners wanting to renew their opt-out 
were required to file new valid affidavits with their Medicare 
Administrative Contractors (MACs).
    To be consistent with section 106(a), we revised 42 CFR part 405, 
subpart D, governing the submission of opt-out affidavits. We estimate 
that 150 physicians/practitioners will submit new affidavits at 2 hr 
per submission or 300 hr (total). Previously, we estimated that 600 
physicians/practitioners would submit renewal affidavits at 2 hr per 
submission or 1,200 hr (total). In this regard, the burden will 
decrease by -900 hr (300 hr - 1,200 hr) when physicians and 
practitioners no longer need to submit renewal affidavits starting on 
June 16, 2017. We also estimate that a medical secretary will perform 
this duty at $32.24/hr for a savings of -$29,016 (-900 hr x $32.24/hr).
    Under Sec.  405.445(a), physicians and practitioners that file 
valid opt-out affidavits on or after June 16, 2015 and do not want to 
extend their opt-out status at the end of a 2 year opt-out period may 
cancel by notifying us at least 30 days prior to the start of the next 
2 year opt-out period. The burden associated with this new requirement 
is the time to draft, sign and submit the written request to the MAC. 
We estimate it will take 60 physicians/practitioners approximately 10 
min each for a total of 10 hr. We also estimate that a medical 
secretary will perform this duty at $32.24/hr for a total cost of 
$322.40 (10 hr x $32.24/hr).
    We did not receive any public comments regarding the proposed 
requirements or burden and are adopting them without change. The 
requirements and burden will be submitted to OMB under control number 
0938-0730 (CMS-R-234).
2. ICRs Regarding the Payment for RHC and FQHC Services (Sec.  
405.2462) and What Constitutes a Visit (Sec.  405.2463)
    For a clinic that was billing as if it were provider-based to an 
IHS hospital as of April 7, 2000, and is now a tribally-operated clinic 
contracted or compacted under the ISDEAA, Sec. Sec.  405.2462(d) and 
405.2463(c)(4) provides that the clinic may seek to become certified as 
a grandfathered tribal FQHC. To become certified, an eligible tribe or 
tribal organization must submit an enrollment application (CMS-855A, 
OMB control number 0938-0685) and all required documentation, including 
an attestation of compliance with the Medicare FQHC Conditions for 
Coverage at part 491, to

[[Page 71345]]

the Jurisdiction H Medicare Administrative Contractor (A/B MAC).
    We estimate that between 3 and 5 grandfathered tribal clinics that 
were provider-based to an IHS hospital on or before April 7, 2000, and 
are now tribally-operated clinics contracted or compacted under the 
ISDEAA, will seek to become certified as grandfathered tribal FQHCs. 
Since we estimate fewer than 10 respondents, the information collection 
requirements are exempt (5 CFR 1320.3(c)) from the requirements of the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). We did not 
receive any public comments regarding the exempt information collection 
requirements and are finalizing the policy as proposed.
3. ICRs Regarding the Payment for RHC and FQHC Services (Sec.  
405.2462)
    Section 405.2462(g)(3) requires that RHCs report Healthcare Common 
Procedure Coding System (HCPCS) and other codes as required in 
reporting services furnished to a Medicare beneficiary during a RHC 
visit.
    The ongoing burden associated with the requirements under Sec.  
405.2462(g)(3) is the time and effort it will take each of the 
approximately 4,000 Medicare certified RHCs to report the services 
furnished to a Medicare beneficiary during a RHC visit using HCPCS and 
other codes as required. We believe that most RHCs are already familiar 
with the use of HCPCS coding since RHCs typically record HCPCS coding 
through their billing software or electronic health record systems and 
they could be subject to HCPCS reporting in accordance with the 
National Uniform Billing Committee and Accredited Standards Committee 
X12 standards. In our estimates below, we do not disregard any RHCs 
that may already be reporting HCPCS coding but we do take into the 
account the range of time it will take for inexperienced RHCs compared 
to experienced RHCs. We recognize some RHCs may need to make minor 
updates in their systems, but some RHC billing staff will need training 
in HCPCS coding associated with Medicare payable RHC visits. Due to the 
scope of services payable as a RHC visit, we do not anticipate RHCs 
will face a significant burden in the training of billing staff. We 
plan to provide educational information on how RHCs are to report HCPCS 
and other codes as required and clarify other appropriate RHC billing 
procedures through sub-regulatory guidance.
    We estimate that it will take 2 to 5 additional minutes to report 
HCPCS codes on RHC claims to Medicare and, for most RHCs, we believe 
that billing staff will require closer to 2 min when the RHCs become 
more experienced with including HCPCS coding on Medicare claims. As 
noted previously, for some RHCs, this policy may not require any 
additional coding time since they are already capturing HCPCS coding in 
their billing or electronic health record systems. For those RHCs that 
are not already capturing HCPCS coding in their billing or electronic 
health record systems, they may need up to 5 additional minutes to 
include HCPCS coding on Medicare claims. In this regard, we estimate a 
median of 3.5 additional minutes in the following calculations:

(8,964,208 Medicare claims in 2013 x 3.5 min)/60 min = 522,912.13 hr 
(aggregate)
522,912.13 hr/4,000 RHCs = 130.73 hr (per RHC)
522,912.13 hr x $26.68/hr = $13,951,295.63 additional cost (aggregate)
$13,951,295.63/4,000 RHCs = $3,487.82 per RHC

    In deriving these figures, we analyzed claims data and RHC 
certification data maintained by CMS and used BLS wage data (see Table 
52).
    We did not receive any public comments regarding our proposed 
burden estimates. We are finalizing the reporting requirement as 
proposed with an effective date of April 1, 2016, to allow the MACs 
additional time to implement the necessary claims processing systems 
changes completely. The burden for the aforementioned requirements will 
be submitted to OMB for approval under control number 0938-1287 (CMS-
10568).
4. ICRs Regarding Exceptions to the Referral Prohibition Related to 
Compensation Arrangements (Sec.  411.357)
    Section 411.357 is revised to establish two new exceptions: (1) An 
exception to permit remuneration to independent physicians to assist in 
compensating nonphysician practitioners in the geographic service area 
of the hospital, FQHC, or RHC providing the remuneration, and (2) an 
exception to permit timeshare arrangements for the use of premises, 
equipment, personnel, items, supplies or services. Arrangements covered 
by these new exceptions must be in writing. We have also clarified the 
writing requirements for compensation arrangements in Sec.  411.357(a), 
(b), (d), (e), (l), (p), and (r). The burden associated with these 
requirements is the time and effort necessary to prepare written 
documents and obtain signatures of the parties.
    While these requirements are subject to the PRA, we believe the 
associated burden is exempt from the PRA in accordance with 5 CFR 
1320.3(b)(2). Since financial arrangements are usually and routinely 
documented in writing as a standard good business practice, we believe 
that the time, effort, and financial resources necessary to comply with 
the aforementioned requirements would be incurred by persons during the 
normal course of their activities and, therefore, should be considered 
exempt as a usual and customary business practice.
    We did not receive any public comments regarding our position that 
the burden associated with these requirements is a usual and customary 
business practice that is exempt from the PRA.
5. ICRs Regarding the Physician Quality Reporting System (PQRS) (Sec.  
414.90 and Section III.I. of This Preamble)
    With respect to the PQRS, the burden associated with the 
requirements of this voluntary reporting initiative is the time and 
effort associated with individual eligible professionals and group 
practices (1) identifying applicable quality measures for which they 
can report the necessary information, (2) selecting a reporting option, 
(3) collecting the necessary information, and (4) reporting the 
information on their selected measures or measures group to CMS using 
their selected reporting option. We assume that most eligible 
professionals participating in the PQRS will attempt to meet the 
criteria for satisfactory reporting for the 2018 PQRS payment 
adjustment.
    We believe it is difficult to accurately quantify the burden 
because eligible professionals may have different processes for 
integrating the PQRS into their practice's work flows. 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, and incorporate 
the use of quality data codes into the office work flows 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 nine measures covering at 
least three National Quality Strategy domains criteria for satisfactory 
reporting (or, in lieu of satisfactory reporting, satisfactory 
participation in a QCDR) for the 2018 PQRS payment adjustment, we will 
assume that each eligible professional reports on an average of nine 
measures for this burden analysis.

[[Page 71346]]

    For eligible professionals who are participating in PQRS, we 
estimate that it will take 5 hr for an eligible professional's billing 
clerk to (1) review the PQRS Measures List, (2) review the various 
reporting options, (3) select the most appropriate reporting option, 
(4) identify the applicable measures or measures groups for which they 
can report the necessary information, (5) review the measure 
specifications for the selected measures or measures groups, and (6) 
incorporate reporting of the selected measures or measures groups into 
the office work flows. The measures list contains the measure title 
along with a summary for the eligible professional to review. Assuming 
the eligible professional has received no training from his/her 
specialty society, we estimate it will take an eligible professional's 
billing clerk up to 2 hr to review this list, review the reporting 
options, select a reporting option, and select the measures on which to 
report. If an eligible professional has received training, we believe 
this will take less time. CMS believes that 3 hr is sufficient time for 
an eligible professional to review the measure specifications of nine 
measures or one measures group they select to report for purposes of 
participating in PQRS and to develop a mechanism for incorporating 
reporting of the selected measures or measures groups into the office 
work flows. Therefore, we believe that the start-up cost for an 
eligible professional to report PQRS quality measures data is 5 hr x 
$26.68/hr = $133.40.
    We continue to expect the ongoing cost associated with PQRS 
participation to decline based on an eligible professional's 
familiarity with and understanding of the PQRS, experience with 
participating in the PQRS, and increased efforts by CMS and 
stakeholders to disseminate useful educational resources and best 
practices.
    We believe the burden associated with reporting the quality 
measures will vary depending on the reporting mechanism selected by the 
eligible professional. As such, we break down our burden estimates by 
eligible professionals and group practices participating in the GPRO 
according to the reporting mechanism used.
a. Burden for Reporting by Individual Eligible Professionals: Claims-
Based Reporting Mechanism
    Under the claims-based reporting option, eligible professionals 
must gather the required information, select the appropriate quality 
data codes (QDCs), and include the appropriate QDCs on the claims they 
submit for payment. The PQRS collects QDCs as additional (optional) 
line items on the CMS-1500 claim form or the electronic equivalent 
HIPAA transaction 837-P, approved by OMB under control number 0938-
0999. This rule does not revise either of these forms. We note that the 
claims-based reporting option is only available to individual eligible 
professionals and is not available for group practice reporting under 
the GPRO.
    Based on our experience with the Physician Voluntary Reporting 
Program (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 nine measures) would range from 15 
sec (0.25 min) to over 12 min for complicated cases and/or measures, 
with the median time being 1.75 min. To report nine measures, we 
estimate that it will take approximately 2.25 min (0.25 min x 9) to 108 
min (12 min x 9) to perform all of the necessary steps.
    At an adjusted labor rate of $83.96/hr for a computer systems 
analyst, the per measure cost will range from $0.35 [($83.96/hr/60) x 
0.25 min] to $16.79 [($83.96/hr/60) x 12 min], with a median cost of 
$2.45 [($83.96/hr/60) x 1.75 min]. To report nine measures we estimate 
that the cost will range from $3.15 ($0.35 x 9) to $151.11 ($16.79 x 
9), with a median cost of $22.05 ($2.45 x 9).
    The total estimated annual burden will vary along with the volume 
of claims on which quality data is reported. In previous years, when we 
required reporting on 80 percent of eligible cases for claims-based 
reporting we found that, on average, the median number of reporting 
instances for each of the PQRS measures was nine. Since we reduced the 
required reporting rate by over one-third to 50 percent, we assume that 
an eligible professional or eligible professional in a group practice 
will need to report each selected measure for six reporting instances. 
The actual number of cases on which an eligible professional or group 
practice is required to report quality measures data will vary with the 
eligible professional's or group practice's patient population and the 
types of measures on which the eligible professional or group practice 
chooses to report (each measure's specifications includes a required 
reporting frequency). For the 2018 payment adjustment, eligible 
professionals will also report on one cross-cutting measure if they see 
at least one Medicare patient. However, we do not see any additional 
burden impact as they are still reporting on the same number of 
measures.
    Based on these assumptions, we estimate that the per individual 
eligible professional reporting burden will range from 13.5 min (0.25 
min per measure x 9 measures x 6 cases per measure) to 648 min (12 min 
per measure x 9 measures x 6 cases per measure), with a median burden 
of 94.5 min (1.75 min per measure x 9 measures x 6 cases). We also 
estimate that the cost will range from $18.90 [13.5 min ($83.96/hr/60)] 
to $906.66 [648 min ($83.96/hr/60)], with a median cost of $132.30 
[94.5 min ($83.96/hr/60)].
    Based on the assumptions discussed above, Table 53 summarizes the 
range of total annual burden associated with eligible professionals 
using the claims-based reporting mechanism.

[[Page 71347]]

[GRAPHIC] [TIFF OMITTED] TR16NO15.143

    We received comments related to the estimates in Table 53 and how 
they relate to reporting using other reporting mechanisms, such as the 
registry, EHR, and QCDR reporting mechanisms. Please note that the 
figures in Table 53 only reflect our estimates for reporting via the 
claims-based reporting mechanism, and not the other PQRS reporting 
mechanisms.
b. Burden for Reporting by Individual Eligible Professionals and Group 
Practices: Qualified Registry-based and QCDR-based Reporting Mechanisms
    There is no additional time for individual eligible professionals 
or group practices to report data to a qualified registry since 
eligible professionals and group practices opting for qualified 
registry-based reporting or the use of a QCDR will already be reporting 
data to the qualified registry for other purposes and the qualified 
registry will merely be re-packaging the data for use in the PQRS. 
Little, if any, additional data will need to be reported to the 
qualified registry or QCDR solely for purposes of participation in the 
PQRS.
    Eligible professionals and group practices need to authorize or 
instruct the qualified registry or QCDR to submit quality measures 
results and numerator and denominator data on quality measures to CMS 
on their behalf. We estimate that the time and effort associated with 
this requirement is 5 min per eligible professional or eligible 
professional within a group practice.
    Based on the assumptions discussed above, Table 54 summarizes the 
total annual burden associated with eligible professionals and group 
practices using the qualified registry-based or QCDR-based reporting 
mechanism. Please note that, unlike the claims-based reporting 
mechanism that would require an eligible professional to report data to 
CMS on quality measures on multiple occasions, an eligible professional 
or group practice would not be required to submit this data to CMS 
since the qualified registry or QCDR would perform this function on 
their behalf.

[[Page 71348]]

[GRAPHIC] [TIFF OMITTED] TR16NO15.144

    We did not receive any public comments regarding the proposed 
requirements or burden and are adopting them without change.
c. Burden for Reporting by Individual Eligible Professionals and Group 
Practices: EHR-Based Reporting Mechanism
    For EHR-based reporting, which includes EHR reporting via a direct 
EHR product and an EHR data submission vendor's product, the eligible 
professional or group practice must (1) review the quality measures on 
which we will be accepting PQRS data extracted from EHRs, (2) select 
the appropriate quality measures, (3) extract the necessary clinical 
data from his or her EHR, and (4) submit the necessary data to the CMS-
designated clinical data warehouse.
    Under this reporting mechanism the individual eligible professional 
or group practice may either submit the quality measures data directly 
to CMS from their EHR or utilize an EHR data submission vendor to 
submit the data to CMS on the eligible professional's or group 
practice's behalf. To submit data to CMS directly from their EHR, the 
eligible professional or eligible professional in a group practice must 
have access to a CMS-specified identity management system, such as 
IACS, which we believe takes less than 1 hr to obtain. Once an eligible 
professional or eligible professional in a group practice has an 
account, he or she needs to extract the necessary clinical data from 
his or her EHR and submit the data to the CMS-designated clinical data 
warehouse.
    With respect to submitting the actual data file for the respective 
reporting period, we believe that this will take an eligible 
professional or group practice no more than 2 hr, depending on the 
number of patients on which the eligible professional or group practice 
is submitting. We also believe that once the EHR is programmed by the 
vendor to allow data submission to CMS, the burden for the eligible 
professional or group practice to submit data on quality measures 
should be minimal since the information should already reside in the 
eligible professional's or group practice's EHR.
    In this rule, group practices with 100 or more eligible 
professionals must report on CAHPS for PQRS (the survey is approved by 
OMB under control number 0938-1222, CMS-10450). Therefore, a group 
practice of 100 or more eligible professionals is required to report 
six or more measures covering two domains of their choosing. At this 
point, we do not believe the requirement to report CAHPS for PQRS adds 
or reduces the burden on group practices, as we consider reporting the 
CAHPS for PQRS survey as reporting three measures covering one domain.
    Based on the assumptions discussed above, Table 55 summarizes the 
total annual burden associated with EHR-based reporting for individual 
eligible professionals or group practices. Please note that, unlike the 
claims-based reporting mechanism that would require an eligible 
professional to report data to CMS on quality measures on multiple 
occasions, an eligible professional would not be required to submit 
this data to CMS since the EHR product would perform this function on 
the eligible professional's behalf.

[[Page 71349]]

[GRAPHIC] [TIFF OMITTED] TR16NO15.145

    We did not receive any public comments regarding the proposed 
requirements or burden and are adopting them without change.
d. Burden for Reporting by Group Practices Using the GPRO Web Interface
    With respect to the process for group practices to be treated as 
satisfactorily submitting quality measures data under the PQRS, group 
practices interested in participating in the PQRS through the group 
practice reporting option (GPRO) must complete a self-nomination 
process similar to the self-nomination process required of qualified 
registries. Since a group practice using the GPRO web interface would 
not need to determine which measures to report under PQRS, we believe 
that the self-nomination process is handled by a group practice's 
administrative staff (billing and posting clerk).
    We estimate that the self-nomination process will require 2 hr for 
a group practice to review the PQRS GPRO and decide whether to 
participate as a group or individually. We also estimate an additional 
2 hr for a group practice to draft their 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 hr undergoing the vetting process with CMS 
officials. We assume that the group practice staff involved in the 
self-nomination process (BLS occupation: billing and posting clerks) 
has an adjusted labor rate of $26.68/hr. By projecting 6 hr (per group 
practice) for the self-nomination process, we estimate a total of 3,000 
hr (500 group practices x 6 hr) at a cost of $80,040 (3,000 hr $26.68/
hr).
    The burden associated with the group practice reporting 
requirements under the GPRO mechanism is the time and effort for group 
practices to submit the quality measures data. For physician group 
practices, this is the time for the physician group to complete the web 
interface. We believe that the burden associated with using the GPRO 
web interface is comparable to that of using the Performance Assessment 
Tool (PAT). The PAT was the precursor to the current PQRS GPRO Web 
Interface and was used in several physician pay for performance 
demonstrations. The information collection components of the PAT have 
been reviewed by OMB and are approved under control number 0938-0941 
(CMS-10136) for use in the PGP, MCMP, and EHR demonstrations. As the 
GPRO was only recently implemented in 2010, it is difficult to 
determine the time and effort associated with the group practice 
submitting the quality measures data. As such, we will use the same 
burden estimate for group practices participating in the GPRO as we use 
for group practices participating in the PGP, MCMP, and EHR 
demonstrations using the PAT. We estimate that the burden associated 
with a group practice completing data for PQRS under the web interface 
will be the same as for the group practice to complete the PAT for the 
PGP demonstration. In other words, we estimate that, on average, it 
will take each group practice 79 hr to submit quality measures data via 
the GPRO web interface at a cost of $6,632.84 (79 hr x $83.96/hr). In 
aggregate, we estimate 39,500 hr (500 group practices x 79 hr) and 
$3,316,420 (39,500 hr x $83.96/hr).
    Based on the assumptions discussed above, Table 56 summarizes the 
total annual burden associated with the group practice reporting of 
quality measures.

[[Page 71350]]

[GRAPHIC] [TIFF OMITTED] TR16NO15.146

    We did not receive any public comments regarding the proposed 
requirements or burden and are adopting them without change.
e. Total Estimated Burden of this Information Collection Requirement 
for 2016
    It is difficult to accurately estimate the total annual burden 
associated with the submission of the quality measure data for the 
PQRS. Since there are a number of reporting mechanisms that eligible 
professionals can use to report the PQRS measures, it may be more 
burdensome for certain practices to use a particular reporting 
mechanism to report their PQRS measures and/or electronic prescribing 
measures than others. As indicated, this will vary with each practice. 
We have no way of determining which reporting mechanism an individual 
eligible professional will use in a given year, especially since EHR 
reporting and group practice reporting were new options for the 2010 
PQRS and the QCDR option was new for the 2014 PQRS. Therefore, Table 57 
provides a range of estimates for individual eligible professionals or 
group practices using the claims, qualified registry, or EHR-based 
reporting mechanisms. The upper range represents the sum of the 
estimated maximum hours and cost per eligible professional from Tables 
53, 54, and 55. We are updating our currently approved figures for the 
upper range of estimates provided in Table 57. Changes to the estimated 
burden for 2016 are due to updated BLS wage figures, inclusion of 
benefits and overhead allowance, a change in participation estimates 
for eligible professionals using the qualified registry (QCDR) and EHR-
based reporting mechanisms and a change in reporting requirements in 
the PQRS for the 2018 PQRS payment adjustment.

[[Page 71351]]

[GRAPHIC] [TIFF OMITTED] TR16NO15.147

    For purposes of estimating the burden for group practices, Table 58 
reiterates the burden (see Table 56) to participate in PQRS under the 
group practice reporting option using the GPRO web interface.
[GRAPHIC] [TIFF OMITTED] TR16NO15.148

    The requirements and burden estimates will be submitted to OMB 
under control number 0938-1059 (CMS-10276).
6. ICRs Regarding Appropriate Use Criteria for Advanced Diagnostic 
Imaging Services (Sec.  414.94)
    Consistent with section 1834(q) of Title XVIII of the Act (as 
amended by section 218(b) of the PAMA), we have adopted specific 
requirements for the development of appropriate use criteria (AUC) that 
can be specified under Sec.  414.94 as part of the Medicare program. 
PLEs that use processes that meet certain requirements and want to be 
recognized as qualified PLEs for the purpose of this section may apply 
to CMS.
    Applications must be submitted electronically and demonstrate how 
the organization's processes for developing AUC meet the requirements 
specified in Sec.  414.94(c)(1) which include: A systematic literature 
review of the clinical topic and relevant imaging studies; led by at 
least one multidisciplinary team with autonomous governance; a process 
for

[[Page 71352]]

identifying and resolving conflicts of interest of team members, the 
PLE and any other party participating in AUC development or 
modification; publication of individual appropriate use criterion on 
the qualified PLE's Web site; identification of AUC that are relevant 
to priority clinical areas; identification of key decision points for 
individual criterion as evidence-based or consensus-based and strength 
of evidence grading per a formal, published, and widely recognized 
methodology; a transparent process for the timely and continual 
updating of each criterion (at least annually); a process for 
developing, modifying or endorsing AUC publicly posted on the entity's 
Web site; and the disclosure of external parties involved in the AUC 
development process.
    To be identified as a qualified PLE by CMS, organizations must meet 
the definition of PLE, and demonstrate adherence to the requirements in 
their application for CMS review and use the application process 
identified in Sec.  414.94(c)(2) of the regulations. Applicant PLEs 
must submit applications documenting adherence to each AUC development 
requirement; applications will be accepted annually by January 1; all 
qualified PLEs approved in each year will be posted to the CMS Web site 
by June 30; and all qualified PLEs must re-apply every 5 years and 
applications must be submitted by January 1 during the 5th year after 
the qualified PLE's most recent approval date. If a qualified PLE is 
found to be non-adherent to the requirements identified above, CMS may 
terminate its qualified status or may consider this information during 
re-qualification.
    The one-time burden associated with the requirements under Sec.  
414.94(c)(2) is the time and effort it will take each of the 30 
organizations that have expressed interest in developing AUC to 
compile, review and submit documentation demonstrating adherence to the 
AUC development requirements. We anticipate 30 respondents based on the 
number of national professional medical specialty societies and other 
organizations that have expressed interest in participating in this 
program as well as other entities we have not heard from but would 
expect to participate.
    We estimate it will take 20 hours at $67.38/hr for a business 
operations specialist to compile, prepare and submit the required 
information, 5 hours at $99.68/hr for a medical and health services 
manager to review and approve the submission, and 5 hours at $187.48/hr 
for a physician to review and approve the submission materials. In this 
regard, we estimate 30 hours per submission at a cost of $2,783.40 per 
organization. In aggregate, we estimate 900 hours (30 hr x 30 
submissions) at $83,502 ($2,783.40 x 30 submissions).
    After the anticipated initial 30 respondents, we expect less than 
10 applicants to apply to become qualified PLEs annually. Since we 
estimate fewer than ten respondents, the information collection 
requirements are exempt (5 CFR 1320.3(c)) from the requirements of the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq).
    Qualified PLEs must re-apply every 5 years. Therefore in years 5-
10, we expect that the initial 30 entities will re-apply. The ongoing 
burden for re-applying is expected to be half the burden of the initial 
application process. The PLEs will be able to make modifications to 
their original application which should result in a burden of 10 hours 
at $67.38/hr for a business operations specialist to compile, prepare 
and submit the required information, 2.5 hours at $99.68/hr for a 
medical and health services manager to review and approve the 
submission, and 2.5 hours at $187.48/hr for a physician to review and 
approve the submission materials. Annually, we estimate 15 hours per 
submission at a cost of $1,391.70 per organization. In aggregate, we 
estimate 450 hours (15 hr x 30 submissions) at $41,751 ($1,391.70 x 30 
submissions).
    Section 414.94(f)(3) provides that CMS may terminate the qualified 
status of a PLE if it finds that the PLE is not adherent to the 
requirements in Sec.  414.94(c). In this instance the PLE would need to 
re-qualify to reinstate their status. The requalification requirements 
are associated with an administrative action. In accordance with the 
implementing regulations of the PRA at 5 CFR 1320.4(a)(2) and (c), the 
associated burden is exempt from the requirements of the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501 et seq.). We also estimate that 
the requalification process would apply to fewer than ten respondents 
per year. Consequently, the information collection requirements are 
also exempt under 5 CFR 1320.3(c) of the Paperwork Reduction Act's 
implementing regulations.
    While we received public comments (see below) regarding our 
proposed requirements and burden, we have considered the comments and 
are adopting the proposed provisions with minimal changes. The 
requirements and burden will be submitted to OMB under control number 
0938-New (CMS-10570).
    Comment: Some commenters disagreed with our proposal to require 
qualified PLEs to reapply for qualification every 6 years, and were 
instead in favor of a shorter time frame for review.
    Response: We carefully reviewed the timeline for reapplication and 
have determined that an application submitted by January of the fifth 
year of approval will receive a determination prior to the start of the 
qualified PLE's sixth year. Therefore, the cycle of approval for 
qualified PLEs is every 5 years. This is different than what was 
proposed as we had originally proposed a cycle that was every 6 years. 
As finalized, a PLE that becomes qualified for the first 5-year cycle 
beginning July 2016 would be required to submit an application for 
requalification by January 2021. A determination would be made by June 
2021 and, if approved, the second 5-year cycle would begin in July 
2021. For example:

Year 1 = July 2016 to June 2017.
Year 2 = July 2017 to June 2018.
Year 3 = July 2018 to June 2019.
Year 4 = July 2019 to June 2020.
Year 5 = July 2020 to June 2021 (reapplication is due by January 1, 
2021).

    We believe the reapplication timeline is appropriate and allows for 
PLEs, CDS mechanism developers and ordering practitioners to enter into 
longer term agreements without the constant concern that the PLE will 
lose its qualified status. We will assess whether a qualified PLE 
consistently has developed evidence-based AUC and met our other 
requirements at the time of requalification. We note, however, that if 
qualified PLEs are not maintaining compliance with our requirements for 
AUC development, we may terminate their qualified status.
    Comment: One commenter recommended that CMS create a concise list 
of AUC development requirements or create a template for entities to 
use for their application and post the list or template to the CMS Web 
site.
    Response: At least for the first round of applications for 
qualified PLEs, we will not be making available templates or 
applications. CMS might consider developing such templates or 
applications in the future if we find it would be useful, efficient, or 
necessary.
7. ICRs Regarding the Comprehensive Primary Care (CPC) Initiative and 
the Medicare EHR Incentive Program (Section L of this Preamble)
    Section L outlines an aligned reporting option between the CPC 
initiative and the Medicare EHR

[[Page 71353]]

Incentive Program whereby CPC practice sites are required to report at 
least nine clinical quality measures across 3 domains in accordance 
with the requirements established by the CPC initiative, which also 
satisfies the CQM requirements of the Medicare EHR Incentive Program. 
The aligned reporting between CPC and the Medicare EHR Incentive 
Program also allows first year EPs participating in the Medicare EHR 
Incentive Program to satisfy the CQM requirements of the Medicare EHR 
Incentive Program through successfully meeting CPC CQM reporting 
requirements. While the reporting of quality measures is an information 
collection, the requirement is exempt from the PRA in accordance with 
section 1115A(d)(3) of the Social Security Act.
8. ICRs Regarding the Medicare Shared Savings Program (Section M of 
this Preamble)
    While the proposed measures discussed in section M of this preamble 
is a collection of information, section 3022 of the Affordable Care Act 
exempts any collection of information associated with the Medicare 
Shared Savings Program from the requirements of the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.). Consequently, we are not setting 
out any burden for OMB approval.

C. Summary of Annual Burden Estimates

[[Page 71354]]



                                                                    Table 59--Annual Recordkeeping and Reporting Requirements
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 Section(s) in title 42 of the   OMB No. (CMS ID                                                   Burden per       Total annual burden      Labor rate for
              CFR                      No.)           Respondents        Responses  (total)         response                (hr)           reporting  ($/hr)            Total Cost  ($)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Part 405, subpart D...........  0938-0730 (CMS-R-  -450.............                     -450  2 hr.............                     -900  32.24............                             -29,016
                                 234).
405.445(a)....................  0938-0730 (CMS-R-  60...............                       60  10 min...........                       10  32.24............                                 322
                                 234).
405.2462(g)(3)................  0938-1287 (CMS-    4,000............                8,964,208  3.5 min..........               522,912.13  26.68............                          13,951,296
                                 10568).
                                                   350,000 (claims-                54 (9 x 6)  5.2 hr (5 hr + 12                5,528,488  varies (see Table                         364,021,000
                                                    based reporting).                           min)).                                      53).
414.90 and section K of this    0938-1059 (CMS-    212,000                            212,000  8.083 hr.........                1,713,596  varies (see Table                          83,157,000
 preamble.                       10276).            (qualified                                                                              54).
                                                    registry-based
                                                    and QCDR-based
                                                    reporting).
                                                   50,000 (EHR-based                   50,000  9................                  450,000  varies (see Table                          23,462,000
                                                    reporting).                                                                             55).
                                                   500 (GPRO web                          500  85...............                   42,500  varies (see Table                           3,396,460
                                                    interface).                                                                             56).
414.94(c)(1) and (2)..........  0938-1288 (CMS-    30...............                       30  5 hr.............                      150  187.48...........                              28,122
                                 10570).                                                       5 hr.............                      150  99.68............                              14,952
                                                                                               20 hr............                      600  67.38............                              40,428
                                                                                                                 -------------------------                   -----------------------------------
    Total.....................  .................  .................  .......................  .................                8,257,506  .................                         488,042,564
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 71355]]

D. Submission of PRA-Related Comments

    We have submitted a copy of this rule's information collection and 
recordkeeping requirements to OMB for review and approval. The 
requirements are not effective until they have been approved by the 
OMB.
    To obtain copies of the supporting statement and any related forms 
for the proposed collections discussed above, please visit CMS' Web 
site at www.cms.hhs.gov/[email protected]">www.cms.hhs.gov/[email protected], or call the Reports 
Clearance Office at 410-786-1326.
    We invite public comments on these potential information collection 
requirements. If you wish to comment, please identify the rule (CMS-
1631-FC) and submit your comments to the OMB desk officer via one of 
the following transmissions:
Mail: OMB, Office of Information and Regulatory Affairs, Attention: CMS 
Desk Officer, Fax Number: 202-395-5806 OR, Email: 
[email protected]. ICR-related comments must be received on/
by December 29, 2015.

V. 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.

VI. Waiver of Proposed Rulemaking and Waiver of Delay in Effective Date

A. PFS provisions

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register and invite public comment on 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 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 us to provide prior notice and solicit 
comment on all of 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 and non-
physician practitioners 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. In general, we assign interim 
RVUs to any new codes based on a review of the AMA RUC recommendations 
for valuing these services. We also assign interim RVUs to certain 
codes for which we did not receive specific AMA RUC recommendations, 
but that are components of new combined codes. We set interim RVUs for 
the component codes in order to conform them to the value of the 
combined code. Finally, we assign interim RVUs to certain codes for 
which we received AMA RUC recommendations for only one component (work 
or PE) but not both. By reviewing the AMA 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. We are also able to determine, on an interim 
final basis, whether the codes will be subject other payment policies. 
We also note, as explained in section II.A. of this final rule, that we 
finalized a new process for establishing values for new, revised and 
potentially misvalued codes in the CY 2015 final rule. In rulemaking to 
adopt this new process, we assessed the trade-offs involved and 
determined that, on balance, we should move to a process that involves 
greater transparency and stakeholder input. We also noted our desire to 
work with the RUC to receive recommendations for new, revised and 
potentially misvalued codes within a timeframe to support our new 
process. CY 2016 is a transition year for this new process, and we 
anticipate this will be the last year we will need to establish payment 
for these codes on an interim basis, with the infrequent exception for 
codes that describe wholly new 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 Medicare 
contractor establish a payment rate for these new codes. We believe 
both of these alternatives are 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 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 until 
notice and comment procedures could be completed.
    For the reasons previously outlined 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.H. of this final rule with comment period discusses our 
review and decisions regarding the AMA RUC recommendations. Similar to 
the AMA RUC recommendations for new and revised codes previously 
discussed, due to the timing of the AMA RUC recommendations for the 
services identified as potentially misvalued codes, and because, as 
noted earlier, this is the transition year for the new process for 
establishing values for new, revised and potentially misvalued codes 
that we finalized in the CY 2015 final rule, it is impracticable for 
CMS to provide for notice and comment regarding specific revisions for 
all codes prior to publication of this final rule with comment period. 
Beginning with rulemaking for CY 2017, we will propose values for the 
vast majority of new, revised, and potentially misvalued

[[Page 71356]]

codes and consider public comments before establishing final values for 
the codes, use G-codes as necessary in order to facilitate continued 
payment for most services for which we do not receive RUC 
recommendations in time to propose values; and adopt interim final 
values in the case of wholly new services for which there are no 
predecessor codes or values and for which we do not receive RUC 
recommendations in time to propose values.
    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, on an interim final 
basis for CY 2016. 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 on an interim basis 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 
previously described, we find good cause to waive notice and comment 
procedures with respect to the misvalued codes and to revise RVUs for 
these codes on an interim final basis. We are providing a 60-day public 
comment period.

VI. Regulatory Impact Analysis

A. Statement of Need

    This final rule with comment period makes payment and policy 
changes under the Medicare PFS and makes required statutory changes 
under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) 
and the Achieving a Better Life Experience Act of 2014 (ABLE). This 
final rule with comment period rule also makes changes to Part B 
payment policy and other Part B related policies.

B. Overall Impact

    We examined the impact of this rule as required by Executive Order 
12866 on Regulatory Planning and Review (September 30, 1993), Executive 
Order 13563 on Improving Regulation and Regulatory Review (February 2, 
2013), 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 (March 22, 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 Orders 12866 and 13563 direct 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 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 prepared a RIA 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 
entities. For purposes of the RFA, small entities include small 
businesses, nonprofit organizations, and small governmental 
jurisdictions. Most hospitals, practitioners and most other providers 
and suppliers are small entities, either by nonprofit status or by 
having annual revenues that qualify for small business status under the 
Small Business Administration standards. (For details see the SBA's Web 
site at http://www.sba.gov/content/table-small-business-size-standards 
(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.
    Approximately 95 percent of practitioners, other providers, and 
suppliers are considered to be small entities, based upon the SBA 
standards. There are over 1 million physicians, other practitioners, 
and medical suppliers that receive Medicare payment under the PFS. 
Because many of the affected entities are small entities, the analysis 
and discussion provided in this section as well as elsewhere in this 
final rule with comment period is intended to comply with the RFA 
requirements.
    In addition, section 1102(b) of the Act requires us to prepare an 
RIA if a rule may have a significant impact on the operations of a 
substantial number of small rural hospitals. This analysis must conform 
to the provisions of section 604 of the RFA. For purposes of section 
1102(b) of the Act, we define a small rural hospital as a hospital that 
is located outside of a Metropolitan Statistical Area for Medicare 
payment regulations and has fewer than 100 beds. We did not prepare an 
analysis for section 1102(b) of the Act because we determined, and the 
Secretary certified, that this final rule with comment period would not 
have a significant impact on the operations of a substantial number of 
small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits on State, 
local, or tribal governments or on the private sector before issuing 
any rule whose mandates require spending in any 1 year of $100 million 
in 1995 dollars, updated annually for inflation. In 2015, that 
threshold is approximately $144 million. This final rule with comment 
period would impose no mandates on state, local, or tribal governments 
or on the private sector.
    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. Since this regulation does not impose any costs on state 
or local governments, the requirements of Executive Order 13132 are not 
applicable.
    We 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 would use 
to minimize the burden

[[Page 71357]]

on small entities. As indicated elsewhere in this final rule with 
comment period, we proposed to implement 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, and to implement statutory provisions. 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 final rule with comment period 
contain a description of significant alternatives if applicable.

C. Changes in Relative Value Unit (RVU) Impacts

1. Resource-Based Work, PE, and MP RVUs
    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 by 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 budget neutrality.
    Our estimates of changes in Medicare revenues for PFS services 
compare payment rates for CY 2015 with proposed payment rates for CY 
2016 using CY 2014 Medicare utilization. The payment impacts in this 
final rule with comment period reflect averages by specialty based on 
Medicare utilization. The payment impact for an individual physician 
could vary from the average and would depend on the mix of services the 
practitioner furnishes. The average percentage change in total revenues 
would be less than the impact displayed here because practitioners and 
other entities generally furnish services to both Medicare and non-
Medicare patients. In addition, practitioners and other entities may 
receive substantial Medicare revenues for services under other Medicare 
payment systems. For instance, independent laboratories receive 
approximately 83 percent of their Medicare revenues from clinical 
laboratory services that are paid under the Clinical Lab Fee Schedule.
    The annual update to the PFS conversion factor (CF) was previously 
calculated based on a statutory formula; for details about this 
formula, we refer readers to the CY 2015 PFS final rule with comment 
period (79 FR 67741 through 67742). The Medicare Access and CHIP 
Reauthorization Act (MACRA) of 2015 repealed the previous statutory 
update formula and specified the update adjustment factors for calendar 
years 2015 and beyond.
    We note that section 220(d) of the PAMA added a new paragraph at 
section 1848(c)(2)(O) of the Act to establish an annual target for 
reductions in PFS expenditures resulting from adjustments to relative 
values of misvalued codes. Under section 1848(c)(2)(O)(ii) of the Act, 
if the net reduction in expenditures for the year is equal to or 
greater than the target for the year, reduced expenditures attributable 
to such adjustments shall be redistributed in a budget-neutral manner 
within the PFS in accordance with the existing budget neutrality 
requirement under section 1848(c)(2)(B)(ii)(II) of the Act. Section 
1848(c)(2)(O)(iii) of the Act specifies that, if the estimated net 
reduction in PFS expenditures for the year is less than the target for 
the year, an amount equal to the target recapture amount shall not be 
taken into account when applying the budget neutrality requirements 
specified in section 1848(c)(2)(B)(ii)(II) of the Act. We estimate the 
CY 2016 net reduction in expenditures resulting from adjustments to 
relative values of misvalued codes to be 0.23 percent. Since this does 
not meet the 1 percent target established by the Achieving a Better 
Life Experience Act of 2014 (ABLE), payments under the fee schedule 
must be reduced by the difference between the target for the year and 
the estimated net reduction in expenditures (the ``Target Recapture 
Amount''). As a result, we estimate that the CY 2016 Target Recapture 
Amount will produce a reduction to the CF of -0.77 percent.
    To calculate the conversion factor for the year, we multiply the 
product of the current year conversion factor and the update adjustment 
factor by the budget neutrality adjustment, and then adjust that figure 
by the target recapture amount, if applicable. We estimate the CY 2016 
PFS conversion factor to be $35.8279, which reflects the budget 
neutrality adjustment, the 0.5 percent update adjustment factor 
specified under the MACRA, and the 0.77 percent target recapture amount 
required under Section 1848(c)(2)(O)(iv) of the Act and described 
above. We estimate the CY 2016 anesthesia conversion factor to be 
$22.3309, which reflect the same adjustments, with the addition of 
anesthesia-specific PE and MP adjustments.

       Table 60--Calculation of the CY 2016 PFS Conversion Factor
------------------------------------------------------------------------
 Conversion factor in effect
          in CY 2015                                     35.9335
------------------------------------------------------------------------
Update Factor................  0.5 percent
                                (1.005).
CY 2016 RVU Budget Neutrality  -0.02 percent
 Adjustment.                    (0.9998).
CY 2016 Target Recapture       -0.77 percent
 Amount.                        (0.9923).
CY 2016 Conversion Factor....                                    35.8279
------------------------------------------------------------------------


    Table 61--Calculation of the CY 2016 Anesthesia Conversion Factor
------------------------------------------------------------------------
   CY 2015 National Average
 Anesthesia Conversion Factor                            22.6093
------------------------------------------------------------------------
CY 2016 RVU Budget Neutrality  -0.02 percent
 Adjustment.                    (0.9998).
CY 2016 Anesthesia Fee         -0.445 percent
 Schedule Practice Expense      (0.99555).
 and Malpractice Adjustment.
CY 2016 Target Recapture       -0.79 percent
 Amount.                        (0.9923).
CY 2016 Conversion Factor....                                    22.3309
------------------------------------------------------------------------

    Table 62 shows the payment impact on PFS services of the proposals 
contained in this final rule with comment period. To the extent that 
there are year-to-year changes in the volume and mix of services 
provided by practitioners, the actual impact on total Medicare revenues 
will be different from those shown in Table 62 (CY 2016

[[Page 71358]]

PFS Estimated Impact on Total Allowed Charges by Specialty). The 
following is an explanation of the information represented in Table 62.
     Column A (Specialty): Identifies the specialty for which 
data is shown.
     Column B (Allowed Charges): The aggregate estimated PFS 
allowed charges for the specialty based on CY 2014 utilization and CY 
2015 rates. That is, 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, and 
suppliers within a specialty to arrive at the total allowed charges for 
the specialty.
     Column C (Impact of Work RVU Changes): This column shows 
the estimated CY 2016 impact on total allowed charges of the changes in 
the work RVUs, including the impact of changes due to potentially 
misvalued codes.
     Column D (Impact of PE RVU Changes): This column shows the 
estimated CY 2016 impact on total allowed charges of the changes in the 
PE RVUs.
     Column E (Impact of RVU Changes): This column shows the 
estimated CY 2016 impact on total allowed charges of the changes in the 
MP RVUs, which are primarily driven by the required five-year review 
and update of MP RVUs.
     Column F (Combined Impact): This column shows the 
estimated CY 2016 combined impact on total allowed charges of all the 
changes in the previous columns. Column F may not equal the sum of 
columns C, D, and E due to rounding.

                                     Table 62--CY 2016 PFS Estimated Impact on Total Allowed Charges by Specialty *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Allowed charges     Impact of work    Impact of PE RVU   Impact of MP RVU   Combined  impact
                        Specialty                                (mil)           RVU changes          changes            changes               **
--------------------------------------------------------------------------------------------------------------------------------------------------------
(A)                                                                      (B)                (C)                (D)                (E)                (F)
--------------------------------------------------------------------------------------------------------------------------------------------------------
    TOTAL................................................            $89,020                 0%                 0%                 0%                 0%
ALLERGY/IMMUNOLOGY.......................................               $221                 0%                 0%                 0%                 0%
ANESTHESIOLOGY...........................................             $1,970                 0%                 1%                -2%                 0%
AUDIOLOGIST..............................................                $61                 0%                -1%                 1%                -1%
CARDIAC SURGERY..........................................               $343                 0%                 0%                 0%                 0%
CARDIOLOGY...............................................             $6,498                 0%                 0%                 0%                 0%
CHIROPRACTOR.............................................               $789                 0%                 0%                 0%                 0%
CLINICAL PSYCHOLOGIST....................................               $720                 0%                 0%                 0%                 0%
CLINICAL SOCIAL WORKER...................................               $558                 0%                 0%                 0%                 0%
COLON AND RECTAL SURGERY.................................               $161                -1%                 0%                 0%                -1%
CRITICAL CARE............................................               $296                 0%                 0%                 0%                 0%
DERMATOLOGY..............................................             $3,217                 0%                 0%                 0%                 1%
DIAGNOSTIC TESTING FACILITY..............................               $725                 0%                 0%                 0%                 0%
EMERGENCY MEDICINE.......................................             $3,120                 0%                 0%                 0%                 0%
ENDOCRINOLOGY............................................               $454                 0%                 0%                 0%                 0%
FAMILY PRACTICE..........................................             $6,089                 0%                 0%                 0%                 0%
GASTROENTEROLOGY.........................................             $1,843                -2%                -1%                -1%                -4%
GENERAL PRACTICE.........................................               $478                 0%                 0%                 0%                 0%
GENERAL SURGERY..........................................             $2,210                 0%                 0%                 0%                 0%
GERIATRICS...............................................               $216                 0%                 0%                 0%                 0%
HAND SURGERY.............................................               $169                 0%                 0%                 0%                 0%
HEMATOLOGY/ONCOLOGY......................................             $1,788                 0%                 0%                 0%                 0%
INDEPENDENT LABORATORY...................................               $834                 1%                 7%                 0%                 9%
INFECTIOUS DISEASE.......................................               $660                 0%                 0%                 0%                 0%
INTERNAL MEDICINE........................................            $11,058                 0%                 0%                 0%                 0%
INTERVENTIONAL PAIN MGMT.................................               $720                 0%                 0%                 0%                 0%
INTERVENTIONAL RADIOLOGY.................................               $298                 0%                 1%                 0%                 1%
MULTISPECIALTY CLINIC/OTHER PHYS.........................                $96                 0%                 0%                 0%                 0%
NEPHROLOGY...............................................             $2,199                 0%                 0%                 0%                 0%
NEUROLOGY................................................             $1,524                 0%                -1%                 0%                -1%
NEUROSURGERY.............................................               $776                 0%                 0%                -1%                -1%
NUCLEAR MEDICINE.........................................                $46                 0%                 0%                 0%                -1%
NURSE ANES/ANES ASST.....................................             $1,187                 0%                 2%                -2%                 0%
NURSE PRACTITIONER.......................................             $2,551                 0%                 0%                 0%                 0%
OBSTETRICS/GYNECOLOGY....................................               $669                 0%                 0%                 0%                 0%
OPHTHALMOLOGY............................................             $5,506                 0%                 0%                 0%                -1%
OPTOMETRY................................................             $1,178                 0%                 0%                 0%                 0%
ORAL/MAXILLOFACIAL SURGERY...............................                $47                 0%                 0%                 0%                 0%
ORTHOPEDIC SURGERY.......................................             $3,672                 0%                 0%                 0%                 0%
OTHER....................................................                $25                 0%                 0%                 0%                 0%
OTOLARNGOLOGY............................................             $1,197                 0%                 0%                 0%                 0%
PATHOLOGY................................................             $1,330                 4%                 4%                 0%                 8%
PEDIATRICS...............................................                $59                 0%                 0%                 0%                 0%
PHYSICAL MEDICINE........................................             $1,035                 0%                 0%                 0%                -1%
PHYSICAL/OCCUPATIONAL THERAPY............................             $3,102                 0%                 0%                 0%                 0%
PHYSICIAN ASSISTANT......................................             $1,728                 0%                 0%                 0%                 0%
PLASTIC SURGERY..........................................               $376                 0%                 0%                 0%                 1%
PODIATRY.................................................             $1,999                 0%                 0%                 0%                 0%
PORTABLE X-RAY SUPPLIER..................................               $106                 0%                 1%                 0%                 1%

[[Page 71359]]

 
PSYCHIATRY...............................................             $1,317                 0%                 0%                 0%                 0%
PULMONARY DISEASE........................................             $1,780                 0%                 0%                 0%                 0%
RADIATION ONCOLOGY.......................................             $1,776                 0%                -2%                 0%                -2%
RADIATION THERAPY CENTERS................................                $52                 0%                -2%                 0%                -1%
RADIOLOGY................................................             $4,494                 0%                 0%                 0%                 0%
RHEUMATOLOGY.............................................               $536                 0%                 0%                 0%                 0%
THORACIC SURGERY.........................................               $350                 0%                 0%                 0%                 0%
UROLOGY..................................................             $1,796                 0%                 0%                 0%                 0%
VASCULAR SURGERY.........................................             $1,019                 0%                -1%                 0%                -1%
--------------------------------------------------------------------------------------------------------------------------------------------------------
** Column F may not equal the sum of columns C, D, and E due to rounding.

2. CY 2016 PFS Impact Discussion
a. Changes in RVUs
    The most widespread specialty impacts of the RVU changes are 
generally related to two major factors. The first factor, as discussed 
in section II. of this final rule with comment period, is the number of 
changes to RVUs for specific services resulting from the Misvalued Code 
Initiative, including the establishment of RVUs for new and revised 
codes. Several specialties, including gastroenterology and radiation 
oncology, will experience significant decreases to payments to services 
that they frequently furnish as a result of widespread revisions to the 
structure and the inputs used to develop RVUs for the codes that 
describe particular services. Other specialties, including pathology 
and independent laboratories, will experience significant increases to 
payments for similar reasons.
    The second factor relates to a technical improvement that refines 
the MP RVU methodology, which we proposed to make as part of our annual 
update of malpractice RVUs. This technical improvement will result in 
small negative impacts to the portion of PFS payments attributable to 
malpractice for gastroenterology, colon and rectal surgery, and 
neurosurgery.
b. Combined Impact
    Column F of Table 62 displays the estimated CY 2016 combined impact 
on total allowed charges by specialty of all the RVU changes. Table 63 
(Impact on CY 2016 Payment for Selected Procedures) shows the estimated 
impact on total payments for selected high volume procedures of all of 
the changes. We selected these procedures for sake of illustration from 
among the most commonly furnished by a broad spectrum of specialties. 
The change in both facility rates and the nonfacility rates are shown. 
For an explanation of facility and nonfacility PE, we refer readers to 
Addendum A found on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/.

                                               Table 63--Impact on CY 2016 Payment for Selected Procedures
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Facility                                              Non facility
 CPT/HCPCS     MOD     Short descriptor ----------------------------------------------------------------------------------------------------------------
    \1\                                     CY 2015 \2\        CY 2016 \3\          % Change         CY 2015 \2\        CY 2016 \3\         % Change
--------------------------------------------------------------------------------------------------------------------------------------------------------
11721.....            Debride nail 6 or             $25.15             $25.44                 1%  $45.28...........  $45.50...........  0%
                       more.
17000.....            Destruct premalg              $53.90             $54.46                 1%  $67.20...........  $67.71...........  1%
                       lesion.
27130.....            Total hip                  $1,407.87          $1,404.45                 0%  NA...............  NA...............  NA
                       arthroplasty.
27244.....            Treat thigh                $1,277.80          $1,279.41                 0%  NA...............  NA...............  NA
                       fracture.
27447.....            Total knee                 $1,407.52          $1,404.45                 0%  NA...............  NA...............  NA
                       arthroplasty.
33533.....            Cabg arterial              $1,952.63          $1,952.62                 0%  NA...............  NA...............  NA
                       single.
35301.....            Rechanneling of            $1,203.41          $1,198.80                 0%  NA...............  NA...............  NA
                       artery.
43239.....            Egd biopsy single/           $154.15            $151.19                -2%  $412.52..........  $405.21..........  -2%
                       multiple.
66821.....            After cataract               $316.21            $316.00                 0%  $334.90..........  $334.27..........  0%
                       laser surgery.
66984.....            Cataract surg w/             $650.40            $642.39                -1%  NA...............  NA...............  NA
                       iol 1 stage.
67210.....            Treatment of                 $508.82            $509.47                 0%  $526.79..........  $527.03..........  0%
                       retinal lesion.
71010.....            Chest x-ray 1                     NA                 NA                 NA  $22.64...........  $22.57...........  0%
                       view frontal.
71010.....        26  Chest x-ray 1                  $9.34              $9.32                 0%  $9.34............  $9.32............  0%
                       view frontal.
77056.....            Mammogram both                    NA                 NA                 NA  $116.42..........  $116.44..........  0%
                       breasts.
77056.....        26  Mammogram both                $44.56             $44.43                 0%  $44.56...........  $44.43...........  0%
                       breasts.
77057.....            Mammogram                         NA                 NA                 NA  $83.01...........  $83.12...........  0%
                       screening.

[[Page 71360]]

 
77057.....        26  Mammogram                     $35.93             $35.83                 0%  $35.93...........  $35.83...........  0%
                       screening.
77427.....            Radiation tx                 $187.57            $187.74                 0%  $187.57..........  $187.74..........  0%
                       management x5.
88305.....        26  Tissue exam by                $39.17             $39.77                 2%  $39.17...........  $39.77...........  2%
                       pathologist.
90935.....            Hemodialysis one              $73.66             $73.09                -1%  NA...............  NA...............  NA
                       evaluation.
92012.....            Eye exam                      $53.18             $53.38                 0%  $86.24...........  $85.99...........  0%
                       establish
                       patient.
92014.....            Eye exam&tx estab             $80.85             $80.97                 0%  $124.69..........  $124.68..........  0%
                       pt 1/>vst.
93000.....            Electrocardiogram                 NA                 NA                 NA  $17.25...........  $17.20...........  0%
                       complete.
93010.....            Electrocardiogram              $8.62              $8.60                 0%  $8.62............  $8.60............  0%
                       report.
93015.....            Cardiovascular                    NA                 NA                 NA  $77.26...........  $75.60...........  -2%
                       stress test.
93307.....        26  Tte w/o doppler               $45.99             $45.86                 0%  $45.99...........  $45.86...........  0%
                       complete.
93458.....        26  L hrt artery/                $323.76            $323.88                 0%  $323.76..........  $323.88..........  0%
                       ventricle angio.
98941.....            Chiropract manj 3-            $35.21             $34.75                -1%  $41.32...........  $41.20...........  0%
                       4 regions.
99203.....            Office/outpatient             $77.98             $77.75                 0%  $109.60..........  $109.28..........  0%
                       visit new.
99213.....            Office/outpatient             $51.38             $51.59                 0%  $73.30...........  $73.45...........  0%
                       visit est.
99214.....            Office/outpatient             $79.41             $79.18                 0%  $108.88..........  $108.20..........  -1%
                       visit est.
99222.....            Initial hospital             $139.06            $138.30                -1%  NA...............  NA...............  NA
                       care.
99223.....            Initial hospital             $205.90            $204.22                -1%  NA...............  NA...............  NA
                       care.
99231.....            Subsequent                    $39.53             $39.77                 1%  NA...............  NA...............  NA
                       hospital care.
99232.....            Subsequent                    $73.30             $72.73                -1%  NA...............  NA...............  NA
                       hospital care.
99233.....            Subsequent                   $105.64            $104.98                -1%  NA...............  NA...............  NA
                       hospital care.
99236.....            Observ/hosp same             $220.99            $219.63                -1%  NA...............  NA...............  NA
                       date.
99239.....            Hospital                     $108.88            $108.20                -1%  NA...............  NA...............  NA
                       discharge day.
99283.....            Emergency dept                $62.88             $62.70                 0%  NA...............  NA...............  NA
                       visit.
99284.....            Emergency dept               $119.66            $118.95                -1%  NA...............  NA...............  NA
                       visit.
99291.....            Critical care                $227.46            $226.07                -1%  $279.20..........  $277.67..........  -1%
                       first hour.
99292.....            Critical care                $113.55            $113.22                 0%  $124.33..........  $123.96..........  0%
                       addl 30 min.
99348.....            Home visit est                    NA                 NA                 NA  $84.80...........  $85.27...........  1%
                       patient.
99350.....            Home visit est                    NA                 NA                 NA  $178.95..........  $179.14..........  0%
                       patient.
G0008.....            Immunization                      NA                 NA                 NA  $25.51...........  $25.44...........  0%
                       admin.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ CPT codes and descriptions are copyright 2016 American Medical Association. All Rights Reserved. Applicable FARS/DFARS apply.
\2\ Payments based on the July-December 2015 conversion factor of 35.9335.
\3\ Payments based on the 2016 conversion factor of $35.8279.

D. Effect of Proposed Changes in Telehealth List

    As discussed in section II.I. of this final rule with comment 
period, we proposed to add several new codes to the list of Medicare 
telehealth services. Although we expect these changes to increase 
access to care in rural areas, based on recent utilization of similar 
services already on the telehealth list, we estimate no significant 
impact on PFS expenditures from the additions.

E. Other Provisions of the Proposed Regulation

1. Ambulance Fee Schedule
    As discussed in section III.A.2 of this final rule with comment 
period, section 203 of the Medicare Access and CHIP Reauthorization Act 
of 2015 amended section 1834(l)(12)(A) and (l)(13)(A) of the Act to 
extend the payment add-ons set forth in those subsections through 
December 31, 2017. These statutory ambulance extender provisions are 
self-implementing. As a result, there are no policy proposals 
associated with these provisions or associated impact in this rule. We 
are finalizing our proposal to correct the dates in the Code of Federal 
Regulations (CFR) at Sec.  414.610(c)(1)(ii) and (c)(5)(ii) to conform 
the regulations to these self-implementing statutory provisions.
    As discussed in section III.A.3 of this final rule with comment 
period, we are finalizing our proposal to continue, for CY 2016 and 
subsequent CYs,

[[Page 71361]]

implementation of the revised OMB delineations and the most recent 
modifications of the RUCA codes for purposes of payment under the 
ambulance fee schedule, as originally finalized and implemented in the 
CY 2015 PFS final rule with comment period as corrected (79 FR 67744 
through 67750; 79 FR 78716 through 78719). As discussed previously, the 
continued use of the revised OMB delineations and the updated RUCA 
codes for CY 2016 and subsequent CYs means the continued recognition of 
urban and rural boundaries based on the population migration that 
occurred over a 10-year period, between 2000 and 2010. For the RUCA 
codes, we will continue to designate any census tracts falling at or 
above RUCA level 4.0 as rural areas. In addition, none of the super 
rural areas will lose their status based on our continued 
implementation of the revised OMB delineations and updated RUCA codes. 
As discussed in section III.A.3. of this final rule with comment 
period, the implementation of the revised OMB delineations and updated 
RUCA codes for CY 2016 and subsequent CYs will continue to affect 
whether certain areas are designated as urban or rural, and whether or 
not transports will be eligible for rural adjustments under the 
ambulance fee schedule statute and regulations. Descriptions of our 
final policies and accompanying rationale, as well as our responses to 
comments, are set forth in more detail in section III.A.3. of the final 
rule with comment period. We estimate that our continued implementation 
of the revised OMB delineations and updated RUCA codes for CY 2016 and 
subsequent CYs will result in a minimal fiscal impact on the Medicare 
program as compared to CY 2015. We also estimate that our continued 
implementation of these geographic delineations will result in a 
minimal fiscal impact on ambulance providers and suppliers as compared 
to CY 2015, because we will be continuing implementation of the same 
revised OMB delineations and updated RUCA codes that were in effect in 
CY 2015. We note that there may be minimal impacts due to changes in 
ZIP codes based on updates by the USPS that we receive every two 
months.
    As previously discussed in this section, most providers and 
suppliers, including ambulance companies, are small entities, either by 
their nonprofit status or by having annual revenues that qualify for 
small business status under the Small Business Administration 
standards. Although, we do not believe that the continued 
implementation of the revised OMB delineations and updated RUCA codes 
will have a significant economic impact on ambulance providers and 
suppliers as compared to CY 2015, we have included an analysis in 
section III.A.3. of this final rule with comment period describing 
certain impacts associated with implementation of these geographic 
delineations. As further discussed in section III.A.3. of this final 
rule with comment period, Table 23 sets forth an analysis of the number 
of ZIP codes that changed urban and rural status in each U.S. state and 
territory after CY 2014 due to our implementation of the revised OMB 
delineations and updated RUCA codes, using an updated August 2015 USPS 
ZIP code file, the revised OMB delineations, and the updated RUCA codes 
(including the RUCA ZIP code approximation file discussed in that 
section).
    In addition, as discussed in section III.A.4. of this final rule 
with comment period, we are revising Sec.  410.41(b) to require that 
all Medicare-covered ambulance transports must be staffed by at least 
two people who meet both the requirements of applicable state and local 
laws where the services are being furnished and the current Medicare 
requirements under Sec.  410.41(b). In addition, we are revising the 
definition of Basic Life Support (BLS) in Sec.  414.605 to include the 
revised staffing requirements discussed above for Sec.  410.41(b). 
Since we expect ambulance providers and suppliers are already in 
compliance with their state and local laws, we expect that these 
revisions will have a minimal impact on ambulance providers and 
suppliers. Similarly, we do not expect any significant impact on the 
Medicare program.
    Furthermore, we are revising Sec.  410.41(b) and the definition of 
BLS in Sec.  414.605 to clarify that, for BLS vehicles, at least one of 
the staff members must be certified at a minimum as an EMT-Basic, which 
we believe more clearly states our current policy. Also, for the 
reasons discussed in section III.A.4. of this final rule with comment 
period, we are deleting the last sentence of our definition of BLS in 
Sec.  414.605. Because these revisions do not change our current 
policies, we expect they will have a minimal impact on ambulance 
providers and suppliers and do not expect any significant impact on the 
Medicare program.
2. Chronic Care Management (CCM) Services for Rural Health Clinics 
(RHCs) and Federally Qualified Health Centers (FQHCs)
    As discussed in section III.B. of this final rule with comment 
period, we proposed to establish payment, beginning on January 1, 2016, 
for RHCs and FQHCs who furnish a minimum of 20 minutes of qualifying 
CCM services during a calendar month to patients with multiple (two or 
more) chronic conditions that are expected to last at least 12 months 
or until the death of the patient, and that place the patient at 
significant risk of death, acute exacerbation/decompensation, or 
functional decline. We also proposed that payment for CCM be based on 
the PFS national average non-facility payment rate when CPT code 99490 
is billed alone or with other payable services on a RHC or FQHC claim.
    In the CY 2015 PFS final rule (79 FR 67715 through 67730), we 
estimated that 65 percent of Medicare beneficiaries in fee-for-service 
practices had 2 or more chronic conditions, and that 3.4 percent of 
those beneficiaries would choose to receive CCM services. We also 
estimated that for those patients, there would be an average of 6 CCM 
billable payments per year.
    We do not have the data to determine the percentage of Medicare 
beneficiaries in RHCs or FQHCs with 2 or more chronic conditions, but 
we have no reason to believe that the percentage would be different for 
patients in a RHC or FQHC. We also assume that the rate of acceptance, 
and the number of billable visits per year, would be the same for RHCs 
and FQHCs as it is for practitioners in non-RHC and FQHC settings that 
are billing under the PFS.
    Based on these assumptions, we estimate that the 5-year cost impact 
of CCM payment in RHCs and FQHCs would be $60 million in Part B 
payments. We estimate that the 10-year cost impact of CCM payment in 
RHCs and FQHCs would be $190 million, of which $30 million is the 
premium offset and $160 million is the Part B payment.
    These estimates were derived by first multiplying the number of 
Medicare beneficiaries in RHCs and FQHCs per year by 0.65 percent, (the 
estimated percentage of Medicare beneficiaries with 2 or more chronic 
conditions). This number was then multiplied by 0.034 (the estimated 
percentage of Medicare beneficiaries with 2 or more chronic conditions 
that will choose to receive CCM services). This number was then 
multiplied by $42.91 (the national average payment rate per beneficiary 
per calendar month). Finally, this number

[[Page 71362]]

was multiplied by 6 (the estimated number of CCM payments per 
beneficiary receiving CCM services). This estimate was then phased in 
based on the current utilization under the physician fee schedule. 
Table 64 provides the yearly estimates (figures are in millions):

                                                        TABLE 64--Yearly Estimates (in Millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                      5 Year    10 Year
                                  2016      2017      2018      2019      2020      2021      2022      2023      2024      2025      impact     impact
                                                                                                                                    2016-2020  2016-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY Cash Impact--Part B
Benefits......................                 $10       $10       $20       $20       $20       $20       $30       $30       $30        $60       $190
Premium Offset................                                                                           $(10)     $(10)     $(10)       $ --      $(30)
    Total Part B..............                 $10       $10       $20       $20       $20       $20       $20       $20       $20        $60       $160
--------------------------------------------------------------------------------------------------------------------------------------------------------

3. Healthcare Common Procedure Coding System (HCPCS) Coding for Rural 
Health Clinics (RHCs)
    As discussed in section III.C. of this final rule with comment 
period, we proposed to require HCPCS coding for all services furnished 
by RHCs to Medicare beneficiaries effective for dates of service on or 
after January 1, 2016. We are finalizing the reporting requirement as 
proposed with an effective date of April 1, 2016 to allow the MACs 
additional time to implement the necessary claims processing systems 
changes completely. There will be no cost impact on the Medicare 
program since this requirement does not change the payment methodology 
for RHC services. This requirement would necessitate some RHCs to make 
changes to their billing practices; however, we estimate no significant 
cost impact on RHCs.
4. Payment to Grandfathered Tribal FQHCs That Were Provider-Based 
Clinics on or Before April 7, 2000
    As discussed in section III.D. of this final rule with comment 
period, we proposed that clinics that were provider-based to an IHS 
hospital on or before April 7, 2000, and are now tribally-operated 
clinics contracted or compacted under the ISDEAA, may seek to become 
certified as grandfathered tribal FQHCs. We also proposed that these 
grandfathered tribal FQHCs retain their Medicare outpatient per visit 
payment rate, as set annually by the IHS, rather than the FQHC PPS per 
visit base rate of $158.85. Since we did not propose any changes to 
their payment rate, there will be no cost impact as a result of this 
proposal.
5. Part B Drugs--Payment for Biosimilar Biological Products Under 
Section 1847A
    In section III.E. of this final rule with comment period, we 
discuss the payment of biosimilar biological products under section 
1847A of the Act and the proposal to clarify existing regulation text. 
The updated regulation text states that the payment amount for a 
biosimilar biological product is based on the average sales prices 
(ASP) of all NDCs assigned to the biosimilar biological products 
included within the same billing and payment code.
    We anticipate that biosimilar biological products will have lower 
ASPs than the corresponding reference products, and we expect the 
Medicare Program will realize savings from the utilization of 
biosimilar biological products. However, at the time of writing this 
final rule, we had not yet received ASP data for any biosimilar 
biological products that had been approved under the FDA's biosimilar 
approval pathway. Information from pharmaceutical pricing compendia for 
one approved biosimilar product has become available since the proposed 
rule was written, and a comparison of compendia prices for the 
biosimilar product and its reference product agrees with our 
expectation that the Medicare program will see some degree of savings 
from biosimilars. At this time, it is still not clear how many 
biosimilar products will be approved, when approval and marketing of 
various products will occur, or what the market penetration of 
biosimilars in Medicare will be. It is also not clear what the cost 
differences between the each of the biosimilars will be or what the 
price differences between the biosimilars and the reference products 
will be as the market develops. Therefore, using available data, we are 
not able to quantify with certainty the potential savings to Medicare 
part B. Similarly, we are not able to quantify the impact, if any, on 
physician offices that administer biosimilar biological products.
6. Appropriate Use Criteria for Advanced Diagnostic Imaging Services
    The Appropriate Use Criteria (AUC) development process 
requirements, as well as an application process that organizations must 
comply with to become qualified provider-led entities (PLEs) do not 
impact CY 2016 physician payments under the PFS.
7. Physician Compare
    We do not estimate any impact as a result of the final policies for 
the Physician Compare Web site.
8. Physician Quality Reporting System
a. Burden Estimate for PQRS Reporting by Individual Eligible 
Professionals: Reporting in General
    According to the 2013 Reporting Experience, ``more than 1.25 
million eligible professionals were eligible to participate in the 2013 
PQRS, Medicare Shared Savings Program, and Pioneer ACO Model.'' \12\ In 
this burden estimate, we assume that 1.25 million eligible 
professionals, the same number of eligible professionals eligible to 
participate in the PQRS in 2013, will be eligible to participate in the 
PQRS. Since all eligible professionals are subject to the 2018 PQRS 
payment adjustment, we estimate that ALL 1.25 million eligible 
professionals will participate in the PQRS in 2016 for purposes of 
meeting the criteria for satisfactory reporting (or, in lieu of

[[Page 71363]]

satisfactory reporting, satisfactory participation in a QCDR) for the 
2018 PQRS payment adjustment.
---------------------------------------------------------------------------

    \12\ Centers for Medicare and Medicaid Services, 2012 Reporting 
Experience Including Trends (2007-2013): Physician Quality Reporting 
System and Electronic Prescribing (eRx) Incentive Program, March 14, 
2014, at xiii.
---------------------------------------------------------------------------

    Historically, the PQRS has never experienced 100 percent 
participation in reporting for the PQRS. In the 2013 PQRS and eRx 
Reporting Experience Report more than 1.25 million professionals were 
eligible to participate in the 2013 PQRS (including group practices 
reporting under the GPRO, Medicare Shared Savings Program, and Pioneer 
ACO Model). Therefore, we believe that although 1.25 million eligible 
professionals will be subject to the 2018 PQRS payment adjustment, not 
all eligible participants will actually report quality measures data 
for purposes of the 2018 PQRS payment adjustment. In this burden 
estimate, we will only provide burden estimates for the eligible 
professionals and group practices who attempt to submit quality 
measures data for purposes of the 2018 PQRS payment adjustment.
    In 2013, 641,654 eligible professionals (51 percent) eligible 
professionals (including those who belonged to group practices that 
reported under the GPRO and eligible professionals within an ACO that 
participated in the PQRS via the GPRO) participated in the PQRS, 
Medicare Shared Savings Program, or Pioneer ACO Model. \13\ We expect 
to see a steady increase in participation in reporting for the PQRS in 
2016 than 2013. Eligible professionals have become more familiar with 
the PQRS payment adjustments since eligible professionals are currently 
experiencing the implementation of the first PQRS payment adjustment--
the 2015 PQRS payment adjustment. Therefore, we estimate that we will 
see a 70 percent participation rate in 2016. Therefore, we estimate 
that 70 percent of eligible professionals (or approximately 875,000 
eligible professionals) will report quality measures data for purposes 
of the 2018 PQRS payment adjustment.
---------------------------------------------------------------------------

    \13\ Id. at XV.
---------------------------------------------------------------------------

    With respect to the PQRS, the burden associated with the 
requirements of this voluntary reporting initiative is the time and 
effort associated with individual eligible professionals and group 
practices identifying applicable quality measures for which they can 
report the necessary information, selecting a reporting option, and 
reporting the information on their selected measures or measures group 
to CMS using their selected reporting option. We assume that most 
eligible professionals participating in the PQRS will attempt to meet 
both the criteria for satisfactory reporting for the 2018 PQRS payment 
adjustment.
    We believe the labor associated with eligible professionals and 
group practices reporting quality measures data in the PQRS is 
primarily handled by an eligible professional's or group practice's 
billing clerk or computer analyst trained to report quality measures 
data. Therefore, we will consider the hourly wage of a billing clerk 
and computer analyst in our estimates. For purposes of this burden 
estimate, we will assume that a billing clerk will handle the 
administrative duties associated with participating in the PQRS.
    For individual eligible professionals, the burden associated with 
the requirements of this reporting initiative is the time and effort 
associated with eligible professionals identifying applicable quality 
measures for which they can report the necessary information, 
collecting the necessary information, and reporting the information 
needed to report the eligible professional's measures. We believe it is 
difficult to accurately quantify the burden because eligible 
professionals may have different processes for integrating the PQRS 
into their practice's work flows. 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, and incorporate the use of 
quality data codes into the office work flows 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 9 measures covering at least 3 National 
Quality Strategy domains criteria for satisfactory reporting (or, in 
lieu of satisfactory reporting, satisfactory participation in a QCDR) 
for the 2018 PQRS payment adjustment, we will assume that each eligible 
professional reports on an average of 9 measures for this burden 
analysis.
    For eligible professionals who are participating in PQRS, we will 
assign 5 total hours as the amount of time needed for an eligible 
professional's billing clerk to review the PQRS Measures List, review 
the various reporting options, select the most appropriate reporting 
option, identify the applicable measures or measures groups for which 
they can report the necessary information, review the measure 
specifications for the selected measures or measures groups, and 
incorporate reporting of the selected measures or measures groups into 
the office work flows. The measures list contains the measure title and 
brief summary information for the eligible professional to review. 
Assuming the eligible professional has received no training from his/
her specialty society, we estimate it will take an eligible 
professional's billing clerk up to 2 hours to review this list, review 
the reporting options, and select a reporting option and measures on 
which to report. If an eligible professional has received training, 
then we believe this would take less time. CMS believes 3 hours is 
plenty of time for an eligible professional to review the measure 
specifications of 9 measures or 1 measures group they select to report 
for purposes of participating in PQRS and to develop a mechanism for 
incorporating reporting of the selected measures or measures groups 
into the office work flows. Therefore, we believe that the start-up 
cost for an eligible professional to report PQRS quality measures data 
is 5 hr x $26.68/hr = $127.25.
    We continue to expect the ongoing costs associated with PQRS 
participation to decline based on an eligible professional's 
familiarity with and understanding of the PQRS, experience with 
participating in the PQRS, and increased efforts by CMS and 
stakeholders to disseminate useful educational resources and best 
practices.
    We believe the burden associated with actually reporting the 
quality measures will vary depending on the reporting mechanism 
selected by the eligible professional. As such, we break down the 
burden estimates by eligible professionals and group practices 
participating in the GPRO according to the reporting mechanism used.
b. Burden Estimate for PQRS Reporting by Individual Eligible 
Professionals: Claims-Based Reporting Mechanism
    According to the 2011 PQRS and eRx Experience Report, 229,282 of 
the 320,422 eligible professionals (or 72 percent) of eligible 
professionals used the claims-based reporting mechanism. According to 
the 2012 Reporting Experience, 248,206 eligible professionals 
participated in the PQRS using the claims-based reporting mechanism in 
2012.\14\ According to the 2013 PQRS and eRx Experience Report, 641,654 
eligible professionals participated as individuals or group practices 
through one of the PQRS reporting mechanism, a 47 percent increase from 
those that participated in 2012 (435,931). Through the individual 
claims-based reporting mechanism, 331,668 of those eligible 
professionals

[[Page 71364]]

(or 52 percent) reported using this mechanism. Increased claims based 
reporting to 350,000 (approximately 5 percent increase over 2013). 
Though claims reporting was declining, we did see an increase in 2013 
once the payment adjustment was applied to all participants, so we 
assume a slight increase in 2016.
---------------------------------------------------------------------------

    \14\ Id. at xvi. See Figure 4.
---------------------------------------------------------------------------

    According to the historical data cited above, although the claims-
based reporting mechanism is still the most widely-used reporting 
mechanism, we are seeing a decline in the use of the claims-based 
reporting mechanism in the PQRS. There was a slight increase in 2013, 
which may be reflected by the use of administrative claims-based 
reporting mechanism by individual eligible professionals and group 
practices only for the 2015 PQRS payment adjustment (in CY2013).
    Although these eligible professionals continue to participate in 
the PQRS, these eligible professionals have started to shift towards 
the use of other reporting mechanisms--mainly the GPRO web interface 
(whether used by a PQRS GPRO or an ACO participating in the PQRS via 
the Medicare Shared Savings Program), registry, or the EHR-based 
reporting mechanisms. For purposes of this burden estimate, based on 
PQRS participation using the claims-based reporting mechanism in 2012 
and 2013, we will assume that approximately 350,000 eligible 
professionals will participate in the PQRS using the claims-based 
reporting mechanism.
    For the claims-based reporting option, eligible professionals must 
gather the required information, select the appropriate quality data 
codes (QDCs), and include the appropriate QDCs on the claims they 
submit for payment.
    We estimate the cost for an eligible professional to review the 
list of quality measures or measures groups, identify the applicable 
measures or measures groups for which they can report the necessary 
information, incorporate reporting of the selected measures into the 
office work flows, and select a PQRS reporting option to be 
approximately $419.80 per eligible professional ($83.96 per hour x 5 
hours).
    Based on our experience with the Physician Voluntary Reporting 
Program (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 9 measures measure) would range from 
15 seconds (0.25 minutes) to over 12 minutes for complicated cases and/
or measures, with the median time being 1.75 minutes. To report 9 
measures, we estimate that it would take approximately 2.25 minutes to 
108 minutes to perform all the steps necessary to report 9 measures.
    Per measure, at an average labor cost of $83.96/hour per practice, 
the cost associated with this burden will range from $0.17 in labor to 
about $8.40 in labor time for more complicated cases and/or measures, 
with the cost for the median practice being $1.20. To report 9 
measures, using an average labor cost of $42/hour, we estimated that 
the time cost of reporting for an eligible professional via claims 
would range from $3.15 (2.25 minutes or 0.0375 hours x $83.96/hour) to 
$151.13 (108 minutes or 1.8 hours x $83.96/hour) per reported case.
    The total estimated annual burden for this requirement will also 
vary along with the volume of claims on which quality data is reported. 
In previous years, when we required reporting on 80 percent of eligible 
cases for claims-based reporting, we found that on average, the median 
number of reporting instances for each of the PQRS measures was 9. 
Since we reduced the required reporting rate by over one-third to 50 
percent, then for purposes of this burden analysis we will assume that 
an eligible professional or eligible professional in a group practice 
will need to report each selected measure for 6 reporting instances. 
The actual number of cases on which an eligible professional or group 
practice is required to report quality measures data will vary, 
however, with the eligible professional's or group practice's patient 
population and the types of measures on which the eligible professional 
or group practice chooses to report (each measure's specifications 
includes a required reporting frequency). For the 2018 payment 
adjustment, EPs will also report on 1 cross-cutting measure if they see 
at least 1 Medicare patient. However, we do not see any additional 
burden impact as they are still reporting on the same number of 
measures.
c. Burden Estimate for PQRS Reporting by Individual Eligible 
Professionals and Group Practices: Qualified Registry-based and 
Qualified Clinical Data Registry (QCDR)-based Reporting Mechanisms
    In 2011, approximately 50,215 (or 16 percent) of the 320,422 
eligible professionals participating in PQRS used the qualified 
registry-based reporting mechanism. In 2012, 36,473 eligible 
professionals reported individual measures via the registry-based 
reporting mechanism, and 10,478 eligible professionals reporting 
measures groups via the registry-based reporting mechanism in 2012.\15\ 
According to the 2013 Reporting Experience, approximately 67,896 
eligible professionals participated in the PQRS using the registry-
based reporting mechanism (51,473 for individual measures and 16,423 
for measures groups). Please note that we currently have no data on 
participation in the PQRS via a Qualified Clinical Data Registry 
(QCDR), as 2014 is the first year in which an eligible professional may 
participate in the PQRS via a QCDR.
---------------------------------------------------------------------------

    \15\ Id. at xvi. See Figure 4.
---------------------------------------------------------------------------

    We believe that the rest of the eligible professionals not 
participating in other PQRS reporting mechanisms will use either the 
registry or QCDR reporting mechanisms for the following reasons:
     The PQRS measures set is moving away from use of claims-
based measures and moving towards the use of registry-based measures.
     We believe the number of QCDR vendors will increase as the 
QCDR reporting mechanism evolves.
    Therefore, based on these assumptions, we expect to see a 
significant jump from 47,000 eligible professionals to approximately 
212,000 eligible professionals using either the registry-based 
reporting mechanism or QCDR in 2016. We believe the majority of these 
eligible professionals will participate in the PQRS using a QCDR, as we 
presume QCDRs will be larger entities with more members.
    For qualified registry-based and QCDR-based reporting, there will 
be no additional time burden for eligible professionals or group 
practices to report data to a qualified registry as eligible 
professionals and group practices opting for qualified registry-based 
reporting or use of a QCDR will more than likely already be reporting 
data to the qualified registry for other purposes and the qualified 
registry will merely be repackaging the data for use in the PQRS. 
Little, if any, additional data will need to be reported to the 
qualified registry or QCDR solely for purposes of participation in the 
PQRS. However, eligible professionals and group practices will need to 
authorize or instruct the qualified registry or QCDR to submit quality 
measures results and numerator and denominator data on quality measures 
to CMS on their behalf. We estimate that the time and effort associated 
with this will be approximately 5 minutes per eligible professional or 
eligible professional within a group practice.
    Please note that, unlike the claims-based reporting mechanism that 
would require an eligible professional to report data to CMS on quality 
measures on

[[Page 71365]]

multiple occasions, an eligible professional would not be required to 
submit this data to CMS, as the qualified registry or QCDR would 
perform this function on the eligible professional's behalf.
    For CY 2014, 90 qualified registries and 50 QCDRs were qualified to 
report quality measures data to CMS for purposes of the PQRS.\16\ 
Therefore, a total of 140 entities are currently classified as 
qualified registries and/or QCDRs under the PQRS. Although we believe 
the number of qualified registries will remain the same in 2015, we 
believe we will see a slight increase in the number of entities that 
become a QCDR in 2015. We estimate that an additional 10 entities 
(bringing the total number of QCDRs to 60 in 2015) will become QCDRs in 
2015. We attribute this slight increase to entities that wish to become 
QCDRs but, for some reason (lack of information regarding the QCDR 
option, rejected during the qualification process, the inability to get 
its self-nomination info provided in time, etc.), were not selected to 
be QCDRs in 2014. Therefore, we estimate that a total of 150 entities 
will become qualified registries and/or QCDRs under the PQRS in 2015.
---------------------------------------------------------------------------

    \16\ The full list of qualified registries for 2014 is available 
at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/Downloads/2014QualifiedRegistryVendors.pdf.
---------------------------------------------------------------------------

    Qualified registries or QCDRs interested in submitting quality 
measures results and numerator and denominator data on quality measures 
to CMS on their participants' behalf will need to complete a self-
nomination in order to be considered qualified to submit on behalf of 
eligible professionals or group practices unless the qualified registry 
or clinical data qualified registry was qualified to submit on behalf 
of eligible professionals or group practices for prior program years 
and did so successfully. We estimate that the self-nomination process 
for qualifying additional qualified registries or qualified clinical 
data registries to submit on behalf of eligible professionals or group 
practices for the PQRS will involve approximately 1 hour per qualified 
registry or qualified clinical data registry to draft the letter of 
intent for self-nomination.
    In addition to completing a self-nomination statement, qualified 
registries and QCDRs will need to perform various other functions, such 
as develop a measures flow and meet with CMS officials when additional 
information is needed. In addition, QCDRs must perform other functions, 
such as benchmarking and calculating their measure results. We note, 
however, that many of these capabilities may already be performed by 
QCDRs for purposes other than to submit data to CMS for the PQRS. The 
time it takes to perform these functions may vary depending on the 
sophistication of the entity, but we estimate that a qualified registry 
or QCDR will spend an additional 9 hours performing various other 
functions related to being a PQRS qualified entity.
    We estimate that the staff involved in the qualified registry or 
QCDR self-nomination process will have an average labor cost of $83.96/
hour. Therefore, assuming the total burden hours per qualified registry 
or QCDR associated with the self-nomination process is 10 hours, we 
estimate that the total cost to a qualified registry or QCDR associated 
with the self-nomination process will be approximately $839.60 ($83.96 
per hour x 10 hours per qualified registry).
    The burden associated with the qualified registry-based and QCDR 
reporting requirements of the PQRS will be the time and effort 
associated with the qualified registry calculating quality measures 
results from the data submitted to the qualified registry or QCDR by 
its participants and submitting the quality measures results and 
numerator and denominator data on quality measures to CMS on behalf of 
their participants. We expect that the time needed for a qualified 
registry or QCDR 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 will vary along with the number of eligible 
professionals reporting data to the qualified registry or QCDR and the 
number of applicable measures. However, we believe that qualified 
registries and QCDRs already perform many of these activities for their 
participants. Therefore, there may not necessarily be a burden on a 
particular qualified registry or QCDR associated with calculating the 
measure results and submitting the measures results and numerator and 
denominator data on the quality measures to CMS on behalf of their 
participants. Whether there is any additional burden to the qualified 
registry or QCDR as a result of the qualified registry's or QCDR's 
participation in the PQRS will depend on the number of measures that 
the qualified registry or QCDR intends to report to CMS and how similar 
the qualified registry's measures are to CMS's PQRS measures.
    In this final rule with comment period, we proposed that group 
practices of 25 or more eligible professionals must report on CAHPS for 
PQRS. Therefore, a group practice of 25 or more eligible professionals 
would be required to report on the CAHPS for PQRS, 6 or more measures 
covering 2 domains of their choosing. At this point, we do not believe 
the requirement to report CAHPS for PQRS adds or reduces the burden to 
the group practices, as we consider reporting the CAHPS for PQRS survey 
as reporting 3 measures covering 1 domain.
d. Burden Estimate for PQRS Reporting by Individual Eligible 
Professionals and Group Practices: EHR-Based Reporting Mechanism
    According to the 2011 PQRS and eRx Experience Report, 560 (or less 
than 1 percent) of the 320,422 eligible professionals participating in 
PQRS used the EHR-based reporting mechanism. In 2012 there was a sharp 
increase in reporting via the EHR-based reporting mechanism. 
Specifically, according to the 2012 Reporting Experience, 19,817 
eligible professionals submitted quality data for the PQRS through a 
qualified EHR.\17\ According to the 2013 PQRS and eRx Experience 
Report, 23,194 (3.6 percent) eligible professionals participating in 
PQRS used the EHR-based reporting mechanism.
---------------------------------------------------------------------------

    \17\ Id. at XV.
---------------------------------------------------------------------------

    As can be seen in the 2013 Experience Report, the number of 
eligible professionals and group practices using the EHR-based 
reporting mechanism are steadily increasing as eligible professionals 
become more familiar with EHR products and more eligible professionals 
participate in programs encouraging use of an EHR, such as the EHR 
Incentive Program. In particular, we believe eligible professionals 
will transition from using the claims-based to the EHR-based reporting 
mechanisms. To account for this anticipated increase, we continue to 
estimate that approximately 50,000 eligible professionals, whether 
participating as an individual or part of a group practice under the 
GPRO, would use the EHR-based reporting mechanism in CY 2016.
    For EHR-based reporting, which includes EHR reporting via a direct 
EHR product and an EHR data submission vendor's product, the eligible 
professional or group practice must review the quality measures on 
which we will be accepting PQRS data extracted from EHRs, select the 
appropriate quality measures, extract the necessary clinical data from 
his or

[[Page 71366]]

her EHR, and submit the necessary data to the CMS-designated clinical 
data warehouse.
    For EHR-based reporting for the PQRS, the individual eligible 
professional or group practice may either submit the quality measures 
data directly to CMS from their EHR or utilize an EHR data submission 
vendor to submit the data to CMS on the eligible professional's or 
group practice's behalf. To submit data to CMS directly from their EHR, 
the eligible professional or eligible professional in a group practice 
must have access to a CMS-specified identity management system, such as 
IACS, which we believe takes less than 1 hour to obtain. Once an 
eligible professional or eligible professional in a group practice has 
an account for this CMS-specified identity management system, he or she 
will need to extract the necessary clinical data from his or her EHR, 
and submit the necessary data to the CMS-designated clinical data 
warehouse. With respect to submitting the actual data file for the 
respective reporting period, we believe that this will take an eligible 
professional or group practice no more than 2 hours, depending on the 
number of patients on which the eligible professional or group practice 
is submitting. We believe that once the EHR is programmed by the vendor 
to allow data submission to CMS, the burden to the eligible 
professional or group practice associated with submission of data on 
quality measures should be minimal as all of the information required 
to report the measure should already reside in the eligible 
professional's or group practice's EHR.
    In this final rule with comment period, we are finalizing a policy 
that group practices of 100 or more eligible professionals must report 
on CAHPS for PQRS. Therefore, a group practice of 100 or more eligible 
professionals would be required to report on the CAHPS for PQRS, 6 or 
more measures covering 2 domains of their choosing. At this point, we 
do not believe the requirement to report CAHPS for PQRS adds or reduces 
the burden to the group practices, as we consider reporting the CAHPS 
for PQRS survey as reporting 3 measures covering 1 domain.
    Please note that, unlike the claims-based reporting mechanism that 
would require an eligible professional to report data to CMS on quality 
measures on multiple occasions, an eligible professional would not be 
required to submit this data to CMS, as the EHR product would perform 
this function on the eligible professional's behalf.
e. Burden Estimate for PQRS Reporting by Group Practices Using the GPRO 
Web Interface
    As noted in the 2011 Experience Report, approximately 200 group 
practices participated in the GPRO in 2011. According to the 2012 
Reporting Experience, 66 practices participated in the PQRS GPRO.\18\ 
In addition, 144 ACOs participated in the PQRS GPRO through either the 
Medicare Shared Savings Program (112 ACOs) or Pioneer ACO Model (32 
practices).\19\ These group practices encompass 134,510 eligible 
professionals (or approximately 140,000 eligible professionals).\20\ 
According to the 2013 PQRS and eRx Experience Report, 677 group 
practices self-nominated to participate via the PQRS GPRO (compared to 
68 total that self-nominated in 2012), 550 moved on to become PQRS 
group practices, another 220 practices were approved by CMS to 
participate as Medicare Shared Saving Program ACOs, and 23 were 
eligible under the Pioneer ACO model. The number of eligible 
professionals (from the 2013 Experience Report) participating in one of 
these reporting methods include: 131,690 in PQRS group practices, 
21,678 in Pioneer ACO, and 85,059 in Medicare Shared Savings Program 
ACOs. Group practices participating in PQRS GPRO are increasing each 
year, from roughly 200 group practices in 2011 and 2012, to 860 
eligible practices in 2013 (including all GPRO, Pioneer ACOs, and 
Medicare Shared Savings Program ACOs. However, not all group practices 
use the Web Interface to report. We will assume, based on these numbers 
that 500 group practices (accounting for approximately 228,000 eligible 
professional) will continue to participate in the PQRS using the GPRO 
Web Interface in 2016.
---------------------------------------------------------------------------

    \18\ Id. at xv.
    \19\ Id. at xvi.
    \20\ Id. at 18.
---------------------------------------------------------------------------

    With respect to the process for group practices to be treated as 
satisfactorily submitting quality measures data under the PQRS, group 
practices interested in participating in the PQRS through the group 
practice reporting option (GPRO) must complete a self-nomination 
process similar to the self-nomination process required of qualified 
registries. However, since a group practice using the GPRO web 
interface would not need to determine which measures to report under 
PQRS, we believe that the self-nomination process is handled by a group 
practice's administrative staff. Therefore, we estimate that the self-
nomination process for the group practices for the PQRS involves 
approximately 2 hours per group practice to review the PQRS GPRO 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 has an 
average practice labor cost of $26.68 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 practice associated with the group practice self-nomination 
process to be approximately $160.08 ($26.68 per hour x 6 hours per 
group practice).
    The burden associated with the group practice reporting 
requirements under the GPRO 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 web interface. We estimate that the time and 
effort associated with using the GPRO web interface will be comparable 
to the time and effort associated to using the PAT. As stated above, 
the information collection components of the PAT have been reviewed by 
OMB and was approved under OMB control number 0938-0941- Form 10136, 
with an expiration date of December 31, 2011 for use in the PGP, MCMP, 
and EHR demonstrations. As the GPRO was only recently implemented in 
2010, it is difficult to determine the time and effort associated with 
the group practice submitting the quality measures data. As such, we 
will use the same burden estimate for group practices participating in 
the GPRO as we use for group practices participating in the PGP, MCMP, 
and EHR demonstrations. Since these changes will not have any impact on 
the information collection requirements associated with the PAT and we 
will be using the same data submission process used in the PGP 
demonstration, we estimate that the burden associated with a group 
practice completing data for PQRS under the web interface will be the 
same as for the group practice to complete the PAT for the PGP 
demonstration. In other words, we estimate that, on average, it will 
take each group practice 79 hours to submit quality measures data via 
the GPRO web interface at a cost of $83.96 per hour.

[[Page 71367]]

Therefore, the total estimated annual cost per group practice is 
estimated to be approximately $6,632.84.
9. EHR Incentive Program
    The changes to the EHR Incentive Program in section III.J of this 
final rule with comment period would not impact the current burden 
estimate for the EHR Incentive Program.
10. Comprehensive Primary Care (CPC) Initiative and Medicare EHR 
Incentive Program Aligned Reporting
    The establishment of an aligned reporting option between CPC and 
the Medicare EHR Incentive Program does not impact the CY 2016 payments 
under PFS.
11. Potential Expansion of the Comprehensive Primary Care (CPC) 
Initiative
    The solicitation of public input regarding potential CPC expansion 
does not impact CY2016 payments under the PFS, because no actual 
expansion is being proposed at this time.
12. Medicare Shared Saving Program
    The requirements for participating in the Medicare Shared Saving 
Program and the impacts of these requirements were established in the 
final rule implementing the Medicare Shared Savings Program that 
appeared in the Federal Register on November 2, 2011 (76 FR 67802). In 
this rule, we are finalizing certain conforming changes to align with 
PQRS, including a change to the quality measure set. We also are 
finalizing rules for maintaining a measure as pay for reporting, or 
reverting a pay for performance measure to pay for reporting if a 
measure owner determines the measure no longer meets best clinical 
practices due to clinical guidelines updates or clinical evidence 
suggests that continued application of the measure may result in harm 
to patients. In addition, we are finalizing updates to the assignment 
methodology to include claims submitted by electing teaching amendment 
hospitals and to exclude certain claims for services performed in SNFs. 
Since the finalized policies are not expected to increase the quality 
reporting burden for ACOs participating in the Shared Savings Program 
and their ACO participants or change the financial calculations, there 
is no impact for these proposals.
13. Value-Based Payment Modifier and the Physician Feedback Program
    Section 1848(p) of the Act requires that we establish a value-based 
payment modifier (VM) and apply it to specific physicians and groups of 
physicians the Secretary determines appropriate starting January 1, 
2015 and to all physicians and groups of physicians by January 1, 2017. 
Section 1848(p)(4)(C) of the Act requires the VM to be budget neutral. 
Budget-neutrality means that, in aggregate, the increased payments to 
high performing physicians and groups of physicians equal the reduced 
payments to low performing physicians and groups of physicians as well 
as those groups of physicians and physicians that fail to avoid the 
PQRS payment adjustment as a group or as individuals.
    Unless specified, the changes to the VM in section III.M of this 
final rule with comment period would not impact CY 2016 physician 
payments under the PFS. We finalized the VM policies that would impact 
the CY 2016 physician payments under the PFS in the CY 2013 PFS final 
rule with comment period (77 FR 69306 through 69326) and the CY 2014 
PFS final rule with comment period (78 FR 74764 through 74787).
    In the CY 2013 PFS final rule with comment period, we finalized 
policies to phase-in the VM by applying it starting January 1, 2015 to 
payments under the Medicare PFS for physicians in groups of 100 or more 
eligible professionals (EPs). We identify a group of physicians as a 
single taxpayer identification number (TIN). We apply the VM to the 
items and services billed by physicians under the TIN, not to other EPs 
that also may bill under the TIN. We established CY 2014 as the 
performance period for the VM that will be applied to payments during 
CY 2016 (77 FR 69314). We also finalized that we will not apply the VM 
in CYs 2015 and 2016 to any group of physicians that is participating 
in the Medicare Shared Savings Program, the Pioneer ACO Model, or the 
Comprehensive Primary Care Initiative, or other similar Innovation 
Center or CMS initiatives (77 FR 69313).
    In the CY 2014 PFS final rule with comment period (78 FR 74765-
74770), we finalized a policy to apply the VM in CY 2016 to physicians 
in groups with 10 or more EPs.
    We also adopted a policy to categorize groups of physicians subject 
to the VM in CY 2016 based on a group's participation in the PQRS. 
Specifically, we categorize groups of physicians eligible for the CY 
2016 VM into two categories. Category 1 includes groups of physicians 
that (a) meet the criteria for satisfactory reporting of data on PQRS 
quality measures through the GPRO for the CY 2016 PQRS payment 
adjustment or (b) do not register to participate in the PQRS as a group 
practice in CY 2014 and that have at least 50 percent of the group's 
EPs meet the criteria for satisfactory reporting of data on PQRS 
quality measures as individuals for the CY 2016 PQRS payment 
adjustment, or in lieu of satisfactory reporting, satisfactorily 
participate in a PQRS-qualified clinical data registry for the CY 2016 
PQRS payment adjustment. For a group of physicians that is subject to 
the CY 2016 VM to be included in Category 1, the criteria for 
satisfactory reporting (or the criteria for satisfactory participation, 
if the PQRS-qualified clinical data registry reporting mechanism is 
selected) must be met during the CY 2014 reporting period for the PQRS 
CY 2016 payment adjustment. For the CY 2016 VM, Category 2 includes 
those groups of physicians that are subject to the CY 2016 VM and do 
not fall within Category 1. For those groups of physicians in Category 
2, the VM for CY 2016 is -2.0 percent.
    In addition, for the CY 2016 VM, we adopted that quality-tiering, 
which is the method for evaluating performance on quality and cost 
measures for the VM, is mandatory for groups of physicians with 10 or 
more EPs. In CY 2016, groups of physicians with between 10 and 99 EPs 
would not be subjected to a downward payment adjustment (that is, they 
will either receive an upward or neutral adjustment) determined under 
the quality-tiering methodology, and groups of physicians with 100 or 
more EPs, however, would either receive upward, neutral, or downward 
adjustments under the quality-tiering methodology.
    Under the quality-tiering approach, each group's quality and cost 
composites are classified into high, average, and low categories 
depending upon whether the composites are at least one standard 
deviation above or below the mean and statistically different from the 
mean. We compare the group's quality of care composite classification 
with the cost composite classification to determine the VM adjustment 
for the CY 2016 payment adjustment period according to the amounts in 
Table 65.

                                 TABLE 65: 2016 VM Amounts Under Quality-Tiering
----------------------------------------------------------------------------------------------------------------
             Cost/quality                    Low quality            Average quality            High quality
----------------------------------------------------------------------------------------------------------------
Low Cost.............................  +0.0%..................  +1.0x*.................  +2.0x*
Average Cost.........................  -1.0%..................  +0.0%..................  +1.0x*

[[Page 71368]]

 
High Cost............................  -2.0%..................  -1.0%..................  +0.0%
----------------------------------------------------------------------------------------------------------------
* Groups of physicians eligible for an additional +1.0x if (1) reporting Physician Quality Reporting System
  quality measures and (2) average beneficiary risk score is in the top 25 percent of all beneficiary risk
  scores.

    To ensure budget neutrality, we first aggregate the Category 1 
groups' downward payment adjustments under quality-tiering, in Table 65 
with the Category 2 groups' -2.0 percent automatic downward payment 
adjustments. Using the aggregate downward payment adjustment amount, we 
then calculate the upward payment adjustment factor (x). These 
calculations will be done after the performance period has ended.
    On September 8, 2015, we made the 2014 Annual QRURs available to 
all groups and solo practitioners based on their performance in CY 
2014. We also completed a preliminary analysis (prior to accounting for 
the informal review process) of the impact of the VM in CY 2016 on 
physicians in groups with 10 or more EPs based on their performance in 
CY 2014 and present a summary of the findings below. Please note that 
the impact of the policies for the CY 2018 VM finalized in this final 
rule with comment period will be discussed in the PFS rule for CY 2018.
    Based on the methodology codified in Sec.  414.1210(c), there are 
13,785 groups of 10 or more EPs (as identified by their Taxpayer 
Identification Numbers (TINs)) whose physicians' payments under the 
Medicare PFS will be subject to the VM in the CY 2016 payment 
adjustment period. Of these 13,785 groups subject to the CY 2016 VM, 
preliminary results show that 8,357 groups met the criteria for 
inclusion in Category 1 and are subject to the quality-tiering 
methodology in order to calculate their CY 2016 VM. Of the 8,357 groups 
in Category 1, there are 7,639 groups of physicians with between 10 and 
99 EPs and 718 groups of physicians with 100 or more EPs. As noted in 
this section, these are preliminary numbers and may be subject to 
change as a result of the informal review process. We release the 
actual number of upward and downward adjustments, along with the 
adjustment factor after the conclusion of the informal review process.
    Of the 7,639 groups of physicians with between 10 and 99 EPs, 
preliminary results found that 110 groups are in tiers that will result 
in an upward adjustment of between +1.0x and +3.0x; 42 of those groups 
qualify for the additional +1.0x adjustment to their Medicare payments 
for treating high-risk beneficiaries; and 7,529 groups are in tiers 
that will result in a neutral adjustment to their payments in CY 2016. 
Of the 718 groups of physicians with 100 or more EPs, our preliminary 
results showed that 9 groups are in tiers that will result in an upward 
adjustment of between +1.0x and +3.0x, with 4 of those groups 
qualifying for the additional +1.0x adjustment to their Medicare 
payments for treating high-risk beneficiaries; 54 groups are in tiers 
that will result in a downward adjustment of between -1.0 and -2.0 
percent; and 655 groups are in tiers that will result in a neutral 
adjustment to their payments in CY 2016. We will announce the final 
quality-tiering results along with the upward payment adjustment factor 
(x) in the late 2015 on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeedbackProgram/ValueBasedPaymentModifier.html. Tables 66 shows the preliminary 
distribution of the groups with between 10 and 99 EPs in Category 1 
into the various quality and cost tiers. Tables 67 shows the 
preliminary distribution of the groups with 100 or more EPs in Category 
1 into the various quality and cost tiers.

  Table 66--Preliminary Distribution Using 2014 Data of Quality and Cost Tiers for Groups With Between 10 to 99
                                               EPs (7,639 Groups)
----------------------------------------------------------------------------------------------------------------
             Cost/quality                    Low quality            Average quality            High quality
----------------------------------------------------------------------------------------------------------------
Low Cost.............................  0.0% (6)...............  +[1.0/2.0]x (50).......  +[2.0/3.0]x (1)
Average Cost.........................  0.0% (589).............  0.0% (6,700)...........  +[1.0/2.0]x (59)
High Cost............................  0.0% (32)..............  0.0% (201).............  0.0% (1)
----------------------------------------------------------------------------------------------------------------


  Table 67--Preliminary Distribution Using 2014 Data of Quality and Cost Tiers for Groups With 100 or More EPs
                                                  (718 Groups)
----------------------------------------------------------------------------------------------------------------
             Cost/Quality                    Low Quality            Average Quality            High Quality
----------------------------------------------------------------------------------------------------------------
Low Cost.............................  0.0% (0)...............  +[1.0/2.0]x (6)........  +[2.0/3.0]x (0)
Average Cost.........................  -1.0% (31).............  0.0% (655).............  +[1.0/2.0]x (3)
High Cost............................  -2.0% (0)..............  -1.0% (23).............  0.0% (0)
----------------------------------------------------------------------------------------------------------------

    Of the 13,785 groups subject to the CY 2016 VM, preliminary results 
found that 5,428 groups met the criteria for inclusion in Category 2. 
As noted above, Category 2 includes groups that do not fall within 
Category 1. Groups in Category 2 will be subject to a -2.0 percent 
payment adjustment under the VM during the CY 2016 payment adjustment 
period.
    In CY 2016, only the physicians in groups with 10 or more EPs will 
be subject to the VM.
    We note that in the 2014 QRUR Experience Report, which we intend to 
release in early 2016, we will provide a detailed analysis of the 
impact of the 2016 VM policies on groups of 10 or more EPs subject to 
the VM in CY 2016, including findings based on the data contained in 
the 2014 QRURs for all groups and solo practitioners.
14. Physician Self-Referral Updates
    The physician self-referral update provisions are discussed in 
section III.N. of this final rule with comment period. We did not 
receive any comments on the physician self-referral updates regulatory 
impact section of the proposed rule.
    Physicians and Designated Health Services (DHS) entities have been 
complying with the requirements set forth in the physician self-
referral law for many years, specifically in regard to clinical 
laboratory services since 1992 and to referrals for all other DHS since 
1995. The majority of the physician self-

[[Page 71369]]

referral update provisions in this final rule with comment period will 
reduce burden by clarifying previous guidance. We believe these 
provisions will allow parties to determine with greater certainty 
whether their financial relationships comply with an exception.
    We are also issuing new exceptions and a new definition that will 
accommodate legitimate financial arrangements while continuing to 
protect against program and patient abuse:
     In section III.N.2.a of this final rule with comment 
period, we discuss a limited new exception for hospitals, FQHCs, and 
RHCs that wish to provide remuneration to physicians to assist with the 
compensation of a nonphysician practitioner. This new exception would 
promote access to primary medical and mental health care services, a 
goal of the Secretary and the Affordable Care Act.
     In section III.N.2.b of this final rule with comment 
period, we describe the new definition of the geographic area served by 
an FQHC or RHC we are adding to physician recruitment exception. This 
new definition will provide certainty to FQHCs and RHCs that their 
physician recruitment arrangements satisfy the requirements of the 
exception.
     In section III.N.7 of this final rule with comment period, 
we discuss a new exception that will protect timeshare arrangements 
that meet certain criteria. This new exception will help ensure 
beneficiary access to care, particularly in rural and underserved 
areas.
    To the extent that the new exceptions and definition permit 
additional legitimate arrangements to comply with the law, this rule 
will reduce the potential costs of restructuring such arrangements, and 
the consequences of noncompliance may be avoided entirely.
     In section III.N.9.b of this final rule with comment 
period, we discuss the requirement that the physician-owned hospital 
baseline bona fide investment level and the bona fide investment level 
include direct and indirect ownership and investment interests held by 
a physician regardless of whether the physician refers patients to the 
hospital. We recognize that some physician-owned hospitals may have 
relied on earlier guidance that the ownership or investment interests 
of non-referring physicians need not be considered when calculating the 
baseline bona fide physician ownership level and may have revised bona 
fide investment levels that may exceed the baseline bona fide 
investment levels calculated under our previous guidance. As discussed 
in section III.N.9.b, while we do not have the discretion to continue 
implementing a policy that is inconsistent with the statute, we 
recognize that we need to give physician-owned hospitals a reasonable 
amount of time to come into compliance with the revised policy. 
Accordingly, we are delaying the effective date of this revision for 
one year from the effective date of this final rule to January 1, 2017.
15. Opt Out Change
    We revised the regulations governing the requirements and 
procedures for private contracts at part 405, subpart D so that they 
conform with the statutory changes made by section 106(a) of the MACRA. 
We anticipate no or minimal impact as a result of these revisions.

F. Alternatives Considered

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

G. 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 that many of these changes, including those intended to improve 
accuracy in payment through revisions to the inputs used to calculate 
payments under the PFS will have a positive impact and improve the 
quality and value of care provided to Medicare beneficiaries.
    Most of the aforementioned policy changes could result in a change 
in beneficiary liability as relates to coinsurance (which is 20 percent 
of the fee schedule amount, if applicable for the particular provision 
after the beneficiary has met the deductible). To illustrate this 
point, as shown in Table 63, the CY 2015 national payment amount in the 
nonfacility setting for CPT code 99203 (Office/outpatient visit, new) 
was $109.60, which means that in CY 2015, a beneficiary would be 
responsible for 20 percent of this amount, or $21.92. Based on this 
final rule with comment period, using the CY 2016 CF, the CY 2016 
national payment amount in the nonfacility setting for CPT code 99203, 
as shown in Table 63, is $109.28, which means that, in CY 2016, the 
proposed beneficiary coinsurance for this service would be $21.86.

H. Accounting Statement

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 66 (Accounting 
Statement), we have prepared an accounting statement. This estimate 
includes growth in incurred benefits from CY 2015 to CY 2016 based on 
the FY 2016 President's Budget baseline. Note that subsequent 
legislation changed the updates for 2016 from those shown in the 2016 
President's Budget baseline.

Table 66--Accounting Statement: Classification of Estimated Expenditures
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
CY 2016 Annualized Monetized Transfers.  Estimated increase in
                                          expenditures of $0.0 billion
                                          for PFS CF update.
From Whom To Whom?                       Federal Government to
                                          physicians, other
                                          practitioners and providers
                                          and suppliers who receive
                                          payment under Medicare.
CY 2016 Annualized Monetized Transfers.  Estimated increase in payment
                                          of $0.0 billion.
From Whom To Whom?                       Federal Government to eligible
                                          professionals who
                                          satisfactorily participate in
                                          the Physician Quality
                                          Reporting System (PQRS).
------------------------------------------------------------------------


   Table 67--Accounting Statement: Classification of Estimated Costs,
                          Transfer, and Savings
------------------------------------------------------------------------
                 Category                             Transfer
------------------------------------------------------------------------
CY 2016 Annualized Monetized Transfers of   $0.0 billion
 beneficiary cost coinsurance.
From Whom to Whom?                          Federal Government to
                                             Beneficiaries.
------------------------------------------------------------------------

I. Conclusion

    The analysis in the previous sections, together with the remainder 
of this preamble, provides an initial Regulatory Flexibility Analysis. 
The previous analysis, together with the preceding portion of this 
preamble, provides a Regulatory Impact Analysis.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

[[Page 71370]]

List of Subjects

42 CFR Part 405

    Administrative practice and procedure, Health facilities, Health 
professions, Kidney diseases, Medical devices, Medicare, Reporting and 
recordkeeping requirements, Rural areas, X-rays.

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 
recordkeeping requirements.

42 CFR Part 414

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

42 CFR Part 425

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

42 CFR Part 495

    Administrative practice and procedure, Electronic health records, 
Health facilities, Health professions, Health maintenance organizations 
(HMO), Medicaid, Medicare, Penalties, Privacy, Reporting and 
recordkeeping requirements.
    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services amends 42 CFR chapter IV as set forth below:

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

0
1. The authority citation for part 405 continues to read as follows:

    Authority: Secs. 205(a), 1102, 1861, 1862(a), 1869, 1871, 1874, 
1881, and 1886(k) of the Social Security Act (42 U.S.C. 405(a), 
1302, 1395x, 1395y(a), 1395ff, 1395hh, 1395kk, 1395rr and 
1395ww(k)), and sec. 353 of the Public Health Service Act (42 U.S.C. 
263a).

0
2. Section 405.400 is amended by revising the definition of ``Opt-out 
period'' to read as follows:


Sec.  405.400  Definitions.

* * * * *
    Opt-out period means, with respect to an affidavit that meets the 
requirements of Sec.  405.420, a 2-year period beginning on the date 
the affidavit is signed, as specified by Sec.  405.410(c)(1) or (2) as 
applicable, and each successive 2-year period unless the physician or 
practitioner properly cancels opt-out in accordance with Sec.  405.445.
* * * * *

0
3. Section 405.405 is amended by revising paragraph (b) to read as 
follows:


Sec.  405.405  General rules.

* * * * *
    (b) A physician or practitioner who enters into at least one 
private contract with a Medicare beneficiary under the conditions of 
this subpart, and who submits one or more affidavits in accordance with 
this subpart, opts out of Medicare for the opt-out period described in 
Sec.  405.400 unless the opt-out is terminated early according to Sec.  
405.445.
* * * * *

0
4. Section 405.410 is amended by revising paragraphs (b), (c)(1), 
(c)(2), and (d) to read as follows:


Sec.  405.410  Conditions for properly opting-out of Medicare.

* * * * *
    (b) The physician or practitioner must submit an affidavit that 
meets the specifications of Sec.  405.420 to each Medicare 
Administrative Contractor with which he or she would file claims absent 
the opt-out.
    (c) * * *
    (1) The initial 2-year opt-out period begins the date the affidavit 
meeting the requirements of Sec.  405.420 is signed, provided the 
affidavit is filed within 10 days after he or she signs his or her 
first private contract with a Medicare beneficiary.
    (2) If the physician or practitioner does not timely file the opt-
out affidavit(s) as specified in the previous paragraph, the initial 2-
year opt-out period begins when the last such affidavit is filed. Any 
private contract entered into before the last required affidavit is 
filed becomes effective upon the filing of the last required affidavit, 
and the furnishing of any items or services to a Medicare beneficiary 
under such contract before the last required affidavit is filed is 
subject to standard Medicare rules.
    (d) A participating physician may properly opt-out of Medicare at 
the beginning of any calendar quarter, provided that the affidavit 
described in Sec.  405.420 is submitted to the participating 
physician's Medicare Administrative Contractors at least 30 days before 
the beginning of the selected calendar quarter. A private contract 
entered into before the beginning of the selected calendar quarter 
becomes effective at the beginning of the selected calendar quarter, 
and the furnishing of any items or services to a Medicare beneficiary 
under such contract before the beginning of the selected calendar 
quarter is subject to standard Medicare rules.

0
5. Section 405.415 is amended by revising paragraphs (h), (m), and (o) 
to read as follows:


Sec.  405.415  Requirements of the private contract.

* * * * *
    (h) State the expected or known effective date and the expected or 
known expiration date of the current 2-year opt-out period.
* * * * *
    (m) Be retained (original signatures of both parties required) by 
the physician or practitioner for the duration of the current 2-year 
opt-out period.
* * * * *
    (o) Be entered into for each 2-year opt-out period.

0
6. Section 405.425 is amended by revising the introductory text to read 
as follows:


Sec.  405.425  Effects of opting-out of Medicare.

    If a physician or practitioner opts-out of Medicare in accordance 
with this subpart, the following results obtain during the opt-out 
period:
* * * * *

0
7. Section 405.435 is amended by revising paragraphs (a)(4), (b)(8), 
and (d) to read as follows:


Sec.  405.435  Failure to maintain opt-out.

    (a) * * *
    (4) He or she fails to retain a copy of each private contract that 
he or she has entered into for the duration of the current 2-year 
period for which the contracts are applicable or fails to permit CMS to 
inspect them upon request.
    (b) * * *
    (8) The physician or practitioner may not attempt to once more meet 
the criteria for properly opting-out until the current 2-year period 
expires.
* * * * *
    (d) If a physician or practitioner demonstrates that he or she has 
taken good faith efforts to maintain opt-out (including by refunding 
amounts in excess of the charge limits to beneficiaries with whom he or 
she did not sign a private contract) within 45 days of a notice from 
the Medicare Administrative Contractor of a violation of paragraph (a) 
of this section, then the requirements of paragraphs (b)(1) through (8) 
of this section are not

[[Page 71371]]

applicable. In situations where a violation of paragraph (a) of this 
section is not discovered by the Medicare Administrative Contractor 
during the current 2-year period when the violation actually occurred, 
then the requirements of paragraphs (b)(1) through (8) of this section 
are applicable from the date that the first violation of paragraph (a) 
of this section occurred until the end of the 2-year period during 
which the violation occurred unless the physician or practitioner takes 
good faith efforts, within 45 days of any notice from the Medicare 
Administrative Contractor that the physician or practitioner failed to 
maintain opt-out, or within 45 days of the physician's or 
practitioner's discovery of the failure to maintain opt-out, whichever 
is earlier, to correct his or her violations of paragraph (a) of this 
section. Good faith efforts include, but are not limited to, refunding 
any amounts collected in excess of the charge limits to beneficiaries 
with whom he or she did not sign a private contract.

0
8. Section 405.445 is amended by revising the section heading and 
paragraphs (a) and (b)(2) to read as follows:


Sec.  405.445  Cancellation of opt-out and early termination of opt-
out.

    (a) A physician or practitioner may cancel opt-out by submitting a 
written notice to each Medicare Administrative Contractor to which he 
or she would file claims absent the opt-out, not later than 30 days 
before the end of the current 2-year opt-out period, indicating that 
the physician or practitioner does not want to extend the application 
of the opt-out affidavit for a subsequent 2-year period.
    (b) * * *
    (2) Notify all Medicare Administrative Contractors, with which he 
or she filed an affidavit, of the termination of the opt-out no later 
than 90 days after the effective date of the initial 2-year period.
* * * * *

0
9. Section 405.450 is amended by revising paragraph (a) to read as 
follows:


Sec.  405.450  Appeals.

    (a) A determination by CMS that a physician or practitioner has 
failed to properly opt out, failed to maintain opt-out, failed to 
timely renew opt-out, failed to privately contract, failed to properly 
terminate opt-out, or failed to properly cancel opt-out is an initial 
determination for purposes of Sec.  498.3(b) of this chapter.
* * * * *

0
10. Section 405.2410 is amended by revising paragraphs (b)(1) 
introductory text and (b)(1)(i) to read as follows:


Sec.  405.2410  Application of Part B deductible and coinsurance.

* * * * *
    (b) * * *
    (1) For RHCs that are authorized to bill on the basis of the 
reasonable cost system--
    (i) A coinsurance amount that does not exceed 20 percent of the 
RHC's reasonable customary charge for the covered service; and
* * * * *

0
11. Section 405.2415 is amended by revising the section heading to read 
as follows:


Sec.  405.2415  Incident to services and direct supervision.

* * * * *

0
12. Section 405.2448 is amended by revising paragraph (a)(2) to read as 
follows:


Sec.  405.2448  Preventive primary services.

    (a) * * *
    (2) Are furnished by a or under the direct supervision of a 
physician, nurse practitioner, physician assistant, certified nurse 
midwife, clinical psychologist or clinical social worker employed by or 
under contract with the FQHC.
* * * * *

0
13. Section 405.2462 is amended by--
0
a. Revising paragraph (a) introductory text, the heading of paragraph 
(b), and paragraphs (b)(1) and (c) introductory text.
0
b. Removing in paragraph (b)(2) the reference ``paragraphs (e)(1) and 
(2)'' and adding in its place the reference ``paragraphs (f)(1) and 
(2)''.
0
c. Redesignating paragraphs (d), (e), and (f) as paragraphs (e), (f), 
and (g), respectively.
0
d. Adding paragraph (d).
0
e. Revising newly redesignated paragraphs (e)(1)(i) and (ii).
0
f. Adding paragraph (g)(3).
    The revisions and additions read as follows:


Sec.  405.2462  Payment for RHC and FQHC services.

    (a) Payment to provider-based RHCs that are authorized to bill 
under the reasonable cost system. A RHC that is authorized to bill 
under the reasonable cost system is paid in accordance with parts 405 
and 413 of this subchapter, as applicable, if the RHC is--
* * * * *
    (b) Payment to independent RHCs that are authorized to bill under 
the reasonable cost system. (1) RHCs that are authorized to bill under 
the reasonable cost system are paid on the basis of an all-inclusive 
rate for each beneficiary visit for covered services. This rate is 
determined by the MAC, in accordance with this subpart and general 
instructions issued by CMS.
* * * * *
    (c) Payment to FQHCs that are authorized to bill under the PPS. A 
FQHC that is authorized to bill under the PPS is paid a single, per 
diem rate based on the prospectively set rate for each beneficiary 
visit for covered services. Except as noted in paragraph (d) of this 
section, this rate is adjusted for the following:
* * * * *
    (d) Payment to grandfathered tribal FQHCs. (1) A ``grandfathered 
tribal FQHC'' is a FQHC that:
    (i) Is operated by a tribe or tribal organization under the Indian 
Self-Determination Education and Assistance Act (ISDEAA);
    (ii) Was billing as if it were provider-based to an IHS hospital on 
or before April 7, 2000; and
    (iii) Is not operating as a provider-based department of an IHS 
hospital.
    (2) A grandfathered tribal FQHC is paid at the Medicare outpatient 
per visit rate as set annually by the IHS.
    (3) The payment rate is not adjusted:
    (i) By the FQHC Geographic Adjustment Factor;
    (ii) For new patients, annual wellness visits, or initial 
preventive physical examinations; or
    (iii) Annually by the Medicare Economic Index or a FQHC PPS market 
basket.
    (4) The payment rate is adjusted annually by the IHS under the 
authority of sections 321(a) and 322(b) of the Public Health Service 
Act (42 U.S.C. 248 and 249(b)), Pub. L. 83-568 (42 U.S.C. 2001(a)), and 
the Indian Health Care Improvement Act (25 U.S.C. 1601 et seq.).
    (e) * * *
    (1) * * *
    (i) Eighty (80) percent of the lesser of the FQHC's actual charge 
or the PPS encounter rate for FQHCs authorized to bill under the PPS; 
or
    (ii) Eighty (80) percent of the lesser of a grandfathered tribal 
FQHC's actual charge, or the outpatient rate for Medicare as set 
annually by the IHS for grandfathered tribal FQHCs that are authorized 
to bill at this rate.
* * * * *
    (g) * * *
    (3) HCPCS coding. FQHCs and RHCs are required to submit HCPCS and 
other codes as required in reporting services furnished.

[[Page 71372]]


0
14. Section 405.2463 is amended by revising paragraph (c)(4) 
introductory text to read as follows:


Sec.  405.2463  What constitutes a visit.

* * * * *
    (c) * * *
    (4) For FQHCs billing under the PPS, and grandfathered tribal FQHCs 
that are authorized to bill as a FQHC at the outpatient per visit rate 
for Medicare as set annually by the Indian Health Service--
* * * * *

0
15. Section 405.2464 is amended by--
0
a. Revising the heading of paragraph (a), paragraphs (a)(1), (2), and 
(5), the heading of paragraph (b), and paragraph (b)(1).
0
b. Adding paragraphs (c) and (d).
    The revisions and additions read as follows:


Sec.  405.2464  Payment rate.

    (a) Payment rate for RHCs that are authorized to bill under the 
reasonable cost system. (1) Except as specified in paragraph (c) of 
this section, a RHC that is authorized to bill under the reasonable 
cost system is paid an all-inclusive rate that is determined by the MAC 
at the beginning of the cost reporting period.
    (2) The rate is determined by dividing the estimated total 
allowable costs by estimated total visits for RHC services.
* * * * *
    (5) The RHC may request the MAC to review the rate to determine 
whether adjustment is required.
    (b) Payment rate for FQHCs billing under the prospective payment 
system. (1) Except as specified in paragraph (c) of this section, a per 
diem rate is calculated by CMS by dividing total FQHC costs by total 
FQHC daily encounters to establish an average per diem cost.
* * * * *
    (c) Payment for chronic care management services. Payment to RHCs 
and FQHCs for qualified chronic care management services is at the 
physician fee schedule national average payment rate.
    (d) Determination of the payment rate for FQHCs that are authorized 
to bill as grandfathered tribal FQHCs. This rates is paid at the 
outpatient per visit rate for Medicare as set annually by the Indian 
Health Service for each beneficiary visit for covered services. There 
are no adjustments to this rate.


Sec.  405.2467  [Amended]

0
16. Section Sec.  405.2467 is amended by removing paragraph (b) and 
redesignating paragraphs (c) and (d) as paragraphs (b) and (c), 
respectively.

0
17. Section 405.2469 is amended by revising paragraphs (a) and (b)(2) 
and adding paragraph (b)(3) to read as follows:


Sec.  405.2469  FQHC supplemental payments.

    (a) Eligibility for supplemental payments. FQHCs under contract 
(directly or indirectly) with MA organizations are eligible for 
supplemental payments for FQHC services furnished to enrollees in MA 
plans offered by the MA organization to cover the difference, if any, 
between their payments from the MA plan and what they would receive 
under one of the following:
    (1) The PPS rate if the FQHC is authorized to bill under the PPS; 
or
    (2) The Medicare outpatient per visit rate as set annually by the 
Indian Health Service for grandfathered tribal FQHCs.
    (b)* * *
    (2) Payments received by the FQHC from the MA plan as determined on 
a per visit basis and the FQHC PPS rate as set forth in this subpart, 
less any amount the FQHC may charge as described in section 
1857(e)(3)(B) of the Act; or
    (3) Payments received by the FQHC from the MA plan as determined on 
a per visit basis and the FQHC outpatient rate as set forth in this 
section under paragraph (a)(2) of this section, less any amount the 
FQHC may charge as described in section 1857(e)(3)(B) of the Act.
* * * * *

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

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

    Authority: Secs. 1102, 1834, 1871, 1881, and 1893 of the Social 
Security Act (42 U.S.C. 1302. 1395m, 1395hh, 1395rr, and 1395ddd.

0
19. Section 410.15, paragraph (a), is amended by--
0
a. In the definition of ``First annual wellness visit providing 
personalized prevention plan services'', revising paragraph (x) and 
adding paragraph (xi).
0
b. In the definition of ``Subsequent annual wellness visit providing 
personalized prevention plan services'', revising paragraph (viii) and 
adding paragraph (ix).
    The revisions and additions read as follows:


Sec.  410.15  Annual wellness visits providing Personalized Prevention 
Plan Services: Conditions for and limitations on coverage.

    (a) * * *
First annual wellness visit providing personalized prevention plan 
services * * *
    (x) At the discretion of the beneficiary, furnish advance care 
planning services to include discussion about future care decisions 
that may need to be made, how the beneficiary can let others know about 
care preferences, and explanation of advance directives which may 
involve the completion of standard forms.
    (xi) Any other element determined appropriate through the national 
coverage determination process.
* * * * *
Subsequent wellness visit providing personalized prevention plan 
services * * *
    (viii) At the discretion of the beneficiary, furnish advance care 
planning services to include discussion about future care decisions 
that may need to be made, how the beneficiary can let others know about 
care preferences, and explanation of advance directives which may 
involve the completion of standard forms.
    (ix) Any other element determined appropriate through the national 
coverage determination process.
* * * * *

0
20. Section 410.26 is amended by revising paragraphs (a)(1) and (b)(5) 
to read as follows:


Sec.  410.26  Services and supplies incident to a physician's 
professional services: Conditions.

    (a) * * *
    (1) Auxiliary personnel means any individual who is acting under 
the supervision of a physician (or other practitioner), regardless of 
whether the individual is an employee, leased employee, or independent 
contractor of the physician (or other practitioner) or of the same 
entity that employs or contracts with the physician (or other 
practitioner), has not been excluded from the Medicare, Medicaid and 
all other federally funded health care programs by the Office of 
Inspector General or had his or her Medicare enrollment revoked, and 
meets any applicable requirements to provide incident to services, 
including licensure, imposed by the State in which the services are 
being furnished.
* * * * *
    (b) * * *
    (5) In general, services and supplies must be furnished under the 
direct supervision of the physician (or other practitioner). Services 
and supplies furnished incident to transitional care management and 
chronic care

[[Page 71373]]

management services can be furnished under general supervision of the 
physician (or other practitioner) when these services or supplies are 
provided by clinical staff. The physician (or other practitioner) 
supervising the auxiliary personnel need not be the same physician (or 
other practitioner) who is treating the patient more broadly. However, 
only the supervising physician (or other practitioner) may bill 
Medicare for incident to services
* * * * *

0
21. Section 410.41 is amended by revising paragraph (b) to read as 
follows:


Sec.  410.41  Requirements for ambulance suppliers.

* * * * *
    (b) Vehicle staff. A vehicle furnishing ambulance services must be 
staffed by at least two people who meet the requirements of state and 
local laws where the services are being furnished, and at least one of 
the staff members must, for:
    (1) BLS vehicles. (i) Be certified at a minimum as an emergency 
medical technician-basic by the State or local authority where the 
services are furnished; and
    (ii) Be legally authorized to operate all lifesaving and life-
sustaining equipment on board the vehicle;
    (2) ALS vehicles. (i) Meet the requirements of paragraph (b)(1) of 
this section; and
    (ii) Be certified as a paramedic or an emergency medical 
technician, by the State or local authority where the services are 
being furnished, to perform one or more ALS services.
* * * * *

0
22. Section 410.78 is amended by adding paragraph (b)(2)(ix) to read as 
follows:


Sec.  410.78  Telehealth services.

* * * * *
    (b) * * *
    (2) * * *
    (ix) A certified registered nurse anesthetist as described in Sec.  
410.69.
* * * * *

0
23. Section 410.160 is amended by revising paragraph (b)(8) to read as 
follows:


Sec.  410.160  Part B annual deductible.

* * * * *
    (b) * * *
    (8) Beginning January 1, 2011, for a surgical service, and 
beginning January 1, 2015, for an anesthesia service, furnished in 
connection with, as a result of, and in the same clinical encounter as 
a planned colorectal cancer screening test. A surgical or anesthesia 
service furnished in connection with, as a result of, and in the same 
clinical encounter as a colorectal cancer screening test means--a 
surgical or anesthesia service furnished on the same date as a planned 
colorectal cancer screening test as described in Sec.  410.37.
* * * * *

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

0
24. 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).

0
25. Section 411.351 is amended by--
0
a. In the definition of ``Entity'', revising paragraph (3).
0
b. Revising the definitions of `` `Incident to' services or services 
`incident to' '', ``List of CPT/HCPCS Codes'', and ``Locum tenens 
physician''.
0
c. In the definition of ``Parenteral and enteral nutrients, equipment, 
and supplies'', revising paragraphs (1) and (2).
0
d. Revising the definition of ``Physician in the group practice''.
0
e. In the definition of ``Remuneration'', revising paragraph (2).
    The revisions read as follows:


Sec.  411.351  Definitions.

* * * * *
    Entity * * *
    (3) For purposes of this subpart, ``entity'' does not include a 
physician's practice when it bills Medicare for the technical component 
or professional component of a diagnostic test for which the anti-
markup provision is applicable in accordance with Sec.  414.50 of this 
chapter and Pub. 100-04, Medicare Claims Processing Manual, Chapter 1, 
Section 30.2.9.
* * * * *
    ``Incident to'' services or services ``incident to'' means those 
services and supplies that meet the requirements of section 
1861(s)(2)(A) of the Act, Sec.  410.26 of this chapter, and Pub. 100-
02, Medicare Benefit Policy Manual, Chapter 15, Sections 60, 60.1, 
60.2, 60.3, and 60.4.
* * * * *
    List of CPT/HCPCS Codes means the list of CPT and HCPCS codes that 
identifies those items and services that are DHS under section 1877 of 
the Act or that may qualify for certain exceptions under section 1877 
of the Act. It is updated annually, as published in the Federal 
Register, and is posted on the CMS Web site at http://www.cms.hhs.gov/PhysicianSelfReferral/11_List_of_Codes.asp#TopOfPage.
    Locum tenens physician (or substitute physician) is a physician who 
substitutes in exigent circumstances for another physician, in 
accordance with section 1842(b)(6)(D) of the Act and Pub. 100-04, 
Medicare Claims Processing Manual, Chapter 1, Section 30.2.11.
* * * * *
Parenteral and enteral nutrients, equipment, and supplies * * *
    (1) Parenteral nutrients, equipment, and supplies, meaning those 
items and supplies needed to provide nutriment to a patient with 
permanent, severe pathology of the alimentary tract that does not allow 
absorption of sufficient nutrients to maintain strength commensurate 
with the patient's general condition, as described in Pub. 100-03, 
Medicare National Coverage Determinations Manual, Chapter 1, Section 
180.2, as amended or replaced from time to time; and
    (2) Enteral nutrients, equipment, and supplies, meaning items and 
supplies needed to provide enteral nutrition to a patient with a 
functioning gastrointestinal tract who, due to pathology to or 
nonfunction of the structures that normally permit food to reach the 
digestive tract, cannot maintain weight and strength commensurate with 
his or her general condition, as described in Pub. 100-03, Medicare 
National Coverage Determinations Manual, Chapter 1, Section 180.2.
* * * * *
    Physician in the group practice means a member of the group 
practice, as well as an independent contractor physician during the 
time the independent contractor is furnishing patient care services (as 
defined in this section) for the group practice under a contractual 
arrangement directly with the group practice to provide services to the 
group practice's patients in the group practice's facilities. The 
contract must contain the same restrictions on compensation that apply 
to members of the group practice under Sec.  411.352(g) (or the 
contract must satisfy the requirements of the personal service 
arrangements exception in Sec.  411.357(d)), and the independent 
contractor's arrangement with the group practice must comply with the 
reassignment rules in Sec.  424.80(b)(2) of this chapter (see also Pub. 
100-04, Medicare Claims Processing Manual, Chapter 1, Section 30.2.7, 
as amended or replaced from time to time). Referrals from an

[[Page 71374]]

independent contractor who is a physician in the group practice are 
subject to the prohibition on referrals in Sec.  411.353(a), and the 
group practice is subject to the limitation on billing for those 
referrals in Sec.  411.353(b).
* * * * *
Remuneration * * *
    (2) The furnishing of items, devices, or supplies (not including 
surgical items, devices, or supplies) that are used solely for one or 
more of the following purposes:
    (i) Collecting specimens for the entity furnishing the items, 
devices or supplies;
    (ii) Transporting specimens for the entity furnishing the items, 
devices or supplies;
    (iii) Processing specimens for the entity furnishing the items, 
devices or supplies;
    (iv) Storing specimens for the entity furnishing the items, devices 
or supplies;
    (v) Ordering tests or procedures for the entity furnishing the 
items, devices or supplies; or
    (vi) Communicating the results of tests or procedures for the 
entity furnishing the items, devices or supplies.
* * * * *

0
26. Section 411.353 is amended by revising paragraphs (g)(1)(i) and 
(ii) to read as follows:


Sec.  411.353  Prohibition on certain referrals by physicians and 
limitations on billing.

* * * * *
    (g) * * *
    (1) * * *
    (i) The compensation arrangement between the entity and the 
referring physician fully complies with an applicable exception in 
Sec.  411.355, Sec.  411.356, or Sec.  411.357, except with respect to 
the signature requirement in Sec.  411.357(a)(1), (b)(1), (d)(1)(i), 
(e)(1)(i), (e)(4)(i), (l)(1), (p)(2), (q) (incorporating the 
requirement contained in Sec.  1001.952(f)(4) of this title), 
(r)(2)(ii), (t)(1)(ii) or (t)(2)(iii) (both incorporating the 
requirements contained in Sec.  411.357(e)(1)(i)), (v)(7)(i), 
(w)(7)(i), (x)(1)(i), or (y)(1); and
    (ii) The parties obtain the required signature(s) within 90 
consecutive calendar days immediately following the date on which the 
compensation arrangement became noncompliant (without regard to whether 
any referrals occur or compensation is paid during such 90-day period) 
and the compensation arrangement otherwise complies with all criteria 
of the applicable exception.
* * * * *

0
27. Section 411.354 is amended by revising paragraphs (c)(3)(i), 
(d)(1), (d)(4) introductory text, (d)(4)(i), (d)(4)(iv)(A), and 
(d)(4)(v) 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. Sec.  
411.355 and 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--
    (A) With respect to a signature requirement, the physician 
organization and any physician who ``stands in the shoes'' of the 
physician organization as required under paragraph (c)(1)(ii) or 
(c)(2)(iv)(A) of this section; and
    (B) With respect to all other requirements of the exception, 
including the relevant referrals and other business generated between 
the parties, the entity furnishing DHS and the physician organization 
(including all members, employees, and independent contractor 
physicians).
* * * * *
    (d) * * *
    (1) Compensation is considered ``set in advance'' if the aggregate 
compensation, a time-based or per-unit of service-based (whether per-
use or per-service) amount, or a specific formula for calculating the 
compensation is set out in writing before the furnishing of the items 
or services for which the compensation is to be paid. The formula for 
determining the compensation must be set forth in sufficient detail so 
that it can be objectively verified, and the formula may not be changed 
or modified during the course of the arrangement in any manner that 
takes into account the volume or value of referrals or other business 
generated by the referring physician.
* * * * *
    (4) A physician's compensation from a bona fide employer or under a 
managed care contract or other arrangement for personal services may be 
conditioned on the physician's referrals to a particular provider, 
practitioner, or supplier, provided that the compensation arrangement 
meets all of the following conditions. The compensation arrangement:
    (i) Is set in advance for the term of the arrangement.
* * * * *
    (iv) * * *
    (A) The requirement to make referrals to a particular provider, 
practitioner, or supplier is set out in writing and signed by the 
parties.
* * * * *
    (v) The required referrals relate solely to the physician's 
services covered by the scope of the employment, the arrangement for 
personal services, or the contract, and the referral requirement is 
reasonably necessary to effectuate the legitimate business purposes of 
the compensation arrangement. In no event may the physician be required 
to make referrals that relate to services that are not provided by the 
physician under the scope of his or her employment, arrangement for 
personal services, or contract.

0
28. Section 411.356 is amended by revising paragraphs (a) introductory 
text and (a)(1)(i) and (ii) and adding paragraph (a)(1)(iii) to read as 
follows:


Sec.  411.356  Exceptions to the referral prohibition related to 
ownership or investment interests.

* * * * *
    (a) Publicly traded securities. Ownership of investment securities 
(including shares or bonds, debentures, notes, or other debt 
instruments) that at the time the DHS referral was made could be 
purchased on the open market and that meet the requirements of 
paragraphs (a)(1) and (2) of this section.
    (1) * * *
    (i) Listed for trading on the New York Stock Exchange, the American 
Stock Exchange, or any regional exchange in which quotations are 
published on a daily basis, or foreign securities listed on a 
recognized foreign, national, or regional exchange in which quotations 
are published on a daily basis;
    (ii) Traded under an automated interdealer quotation system 
operated by the National Association of Securities Dealers; or
    (iii) Listed for trading on an electronic stock market or over-the-
counter quotation system in which quotations are published on a daily 
basis and trades are standardized and publicly transparent.
* * * * *

0
29. Section 411.357 is amended by--
0
a. Revising paragraphs (a) introductory text, (a)(1) through (4), 
(a)(5) introductory text, (a)(6) and (7), (b)(1) through (3), (b)(4) 
introductory text, (b)(5) and (6), (c)(3), (d)(1)(iii), (iv)

[[Page 71375]]

and (vii), (e)(1)(iii) and (iv), (e)(4)(i) and (iv), (e)(6), (f)(2), 
(k)(2), (l) introductory text, (l)(1) and (2), (m)(1) through (3), 
(m)(5), (p)(1)(ii)(A), (p)(2), (r)(2)(iv) and (v), (s)(1), 
(t)(2)(iv)(A).
0
b. Adding paragraphs (x) and (y).
    The revisions and additions read as follows:


Sec.  411.357  Exceptions to the referral prohibition related to 
compensation arrangements.

* * * * *
    (a) Rental of office space. Payments for the use of office space 
made by a lessee to a lessor if the arrangement meets the following 
requirements:
    (1) The lease arrangement is set out in writing, is signed by the 
parties, and specifies the premises it covers.
    (2) The duration of the lease arrangement is at least 1 year. To 
meet this requirement, if the lease arrangement is terminated with or 
without cause, the parties may not enter into a new lease arrangement 
for the same space during the first year of the original lease 
arrangement.
    (3) The space rented or leased does not exceed that which is 
reasonable and necessary for the legitimate business purposes of the 
lease arrangement and is used exclusively by the lessee when being used 
by the lessee (and is not shared with or used by the lessor or any 
person or entity related to the lessor), except that the lessee may 
make payments for the use of space consisting of common areas if the 
payments do not exceed the lessee's pro rata share of expenses for the 
space based upon the ratio of the space used exclusively by the lessee 
to the total amount of space (other than common areas) occupied by all 
persons using the common areas.
    (4) The rental charges over the term of the lease arrangement are 
set in advance and are consistent with fair market value.
    (5) The rental charges over the term of the lease arrangement are 
not determined--
* * * * *
    (6) The lease arrangement would be commercially reasonable even if 
no referrals were made between the lessee and the lessor.
    (7) If the lease arrangement expires after a term of at least 1 
year, a holdover lease arrangement immediately following the expiration 
of the lease arrangement satisfies the requirements of paragraph (a) of 
this section if the following conditions are met:
    (i) The lease arrangement met the conditions of paragraphs (a)(1) 
through (6) of this section when the arrangement expired;
    (ii) The holdover lease arrangement is on the same terms and 
conditions as the immediately preceding arrangement; and
    (iii) The holdover lease arrangement continues to satisfy the 
conditions of paragraphs (a)(1) through (6) of this section.
    (b) * * *
    (1) The lease arrangement is set out in writing, is signed by the 
parties, and specifies the equipment it covers.
    (2) The equipment leased does not exceed that which is reasonable 
and necessary for the legitimate business purposes of the lease 
arrangement and is used exclusively by the lessee when being used by 
the lessee (and is not shared with or used by the lessor or any person 
or entity related to the lessor).
    (3) The duration of the lease arrangement is at least 1 year. To 
meet this requirement, if the lease arrangement is terminated with or 
without cause, the parties may not enter into a new lease arrangement 
for the same equipment during the first year of the original lease 
arrangement.
    (4) The rental charges over the term of the lease arrangement are 
set in advance, are consistent with fair market value, and are not 
determined--
* * * * *
    (5) The lease arrangement would be commercially reasonable even if 
no referrals were made between the parties.
    (6) If the lease arrangement expires after a term of at least 1 
year, a holdover lease arrangement immediately following the expiration 
of the lease arrangement satisfies the requirements of paragraph (b) of 
this section if the following conditions are met:
    (i) The lease arrangement met the conditions of paragraphs (b)(1) 
through (5) of this section when the arrangement expired;
    (ii) The holdover lease arrangement is on the same terms and 
conditions as the immediately preceding lease arrangement; and
    (iii) The holdover lease arrangement continues to satisfy the 
conditions of paragraphs (b)(1) through (5) of this section.
    (c) * * *
    (3) The remuneration is provided under an arrangement that would be 
commercially reasonable even if no referrals were made to the employer.
* * * * *
    (d) * * *
    (1) * * *
    (iii) The aggregate services covered by the arrangement do not 
exceed those that are reasonable and necessary for the legitimate 
business purposes of the arrangement(s).
    (iv) The duration of each arrangement is for at least 1 year. To 
meet this requirement, if an arrangement is terminated with or without 
cause, the parties may not enter into the same or substantially the 
same arrangement during the first year of the original arrangement.
* * * * *
    (vii) If the arrangement expires after a term of at least 1 year, a 
holdover arrangement immediately following the expiration of the 
arrangement satisfies the requirements of paragraph (d) of this section 
if the following conditions are met:
    (A) The arrangement met the conditions of paragraphs (d)(1)(i) 
through (vi) of this section when the arrangement expired;
    (B) The holdover arrangement is on the same terms and conditions as 
the immediately preceding arrangement; and
    (C) The holdover arrangement continues to satisfy the conditions of 
paragraphs (d)(1)(i) through (vi) of this section.
* * * * *
    (e) * * *
    (1) * * *
    (iii) The amount of remuneration under the arrangement is not 
determined in a manner that takes into account (directly or indirectly) 
the volume or value of any actual or anticipated referrals by the 
physician or other business generated between the parties; and
    (iv) The physician is allowed to establish staff privileges at any 
other hospital(s) and to refer business to any other entities (except 
as referrals may be restricted under an employment or services 
arrangement that complies with Sec.  411.354(d)(4)).
* * * * *
    (4) * * *
    (i) The writing in paragraph (e)(1) of this section is also signed 
by the physician practice.
* * * * *
    (iv) Records of the actual costs and the passed-through amounts are 
maintained for a period of at least 6 years and made available to the 
Secretary upon request.
* * * * *
    (6)(i) This paragraph (e) applies to remuneration provided by a 
federally qualified health center or a rural health clinic in the same 
manner as it applies to remuneration provided by a hospital, provided 
that the arrangement does not violate the anti-kickback statute 
(section 1128B(b) of the Act), or any Federal or State law or 
regulation governing billing or claims submission.

[[Page 71376]]

    (ii) The ``geographic area served'' by a federally qualified health 
center or a rural health clinic is the area composed of the lowest 
number of contiguous or noncontiguous zip codes from which the 
federally qualified health center or rural health clinic draws at least 
90 percent of its patients, as determined on an encounter basis. The 
geographic area served by the federally qualified health center or 
rural health clinic may include one or more zip codes from which the 
federally qualified health center or rural health clinic draws no 
patients, provided that such zip codes are entirely surrounded by zip 
codes in the geographic area described above from which the federally 
qualified health center or rural health clinic draws at least 90 
percent of its patients.
    (f) * * *
    (2) The remuneration is provided under an arrangement that would be 
commercially reasonable even if the physician made no referrals to the 
entity.
* * * * *
    (k) * * *
    (2) The annual aggregate nonmonetary compensation limit in this 
paragraph (k) is adjusted each calendar year to the nearest whole 
dollar by the increase in the Consumer Price Index--Urban All Items 
(CPI-U) for the 12-month period ending the preceding September 30. CMS 
displays after September 30 each year both the increase in the CPI-U 
for the 12-month period and the new nonmonetary compensation limit on 
the physician self-referral Web site at http://www.cms.hhs.gov/PhysicianSelfReferral/10_CPI-U_Updates.asp.
* * * * *
    (l) Fair market value compensation. Compensation resulting from an 
arrangement between an entity and a physician (or an immediate family 
member) or any group of physicians (regardless of whether the group 
meets the definition of a group practice set forth in Sec.  411.352) 
for the provision of items or services (other than the rental of office 
space) by the physician (or an immediate family member) or group of 
physicians to the entity, or by the entity to the physician (or an 
immediate family member) or a group of physicians, if the arrangement 
meets the following conditions:
    (1) The arrangement is in writing, signed by the parties, and 
covers only identifiable items or services, all of which are specified 
in writing.
    (2) The writing specifies the timeframe for the arrangement, which 
can be for any period of time and contain a termination clause, 
provided that the parties enter into only one arrangement for the same 
items or services during the course of a year. An arrangement may be 
renewed any number of times if the terms of the arrangement and the 
compensation for the same items or services do not change.
* * * * *
    (m) * * *
    (1) The compensation is offered to all members of the medical staff 
practicing in the same specialty (but not necessarily accepted by every 
member to whom it is offered) and is not offered in a manner that takes 
into account the volume or value of referrals or other business 
generated between the parties.
    (2) Except with respect to identification of medical staff on a 
hospital Web site or in hospital advertising, the compensation is 
provided only during periods when the medical staff members are making 
rounds or are engaged in other services or activities that benefit the 
hospital or its patients.
    (3) The compensation is provided by the hospital and used by the 
medical staff members only on the hospital's campus. Compensation, 
including, but not limited to, internet access, pagers, or two-way 
radios, used away from the campus only to access hospital medical 
records or information or to access patients or personnel who are on 
the hospital campus, as well as the identification of the medical staff 
on a hospital Web site or in hospital advertising, meets the ``on 
campus'' requirement of this paragraph (m).
* * * * *
    (5) The compensation is of low value (that is, less than $25) with 
respect to each occurrence of the benefit (for example, each meal given 
to a physician while he or she is serving patients who are hospitalized 
must be of low value). The $25 limit in this paragraph (m)(5) is 
adjusted each calendar year to the nearest whole dollar by the increase 
in the Consumer Price Index--Urban All Items (CPI-I) for the 12 month 
period ending the preceding September 30. CMS displays after September 
30 each year both the increase in the CPI-I for the 12 month period and 
the new limits on the physician self-referral Web site at http://www.cms.hhs.gov/PhysicianSelfReferral/10_CPI-U_Updates.asp.
* * * * *
    (p) * * *
    (1) * * *
    (ii) * * *
    (A) A percentage of the revenue raised, earned, billed, collected, 
or otherwise attributable to the services performed or business 
generated in the office space or to the services performed on or 
business generated through the use of the equipment; or
* * * * *
    (2) The compensation arrangement described in Sec.  
411.354(c)(2)(ii) is set out in writing, signed by the parties, and 
specifies the services covered by the arrangement, except in the case 
of a bona fide employment relationship between an employer and an 
employee, in which case the arrangement need not be set out in writing, 
but must be for identifiable services and be commercially reasonable 
even if no referrals are made to the employer.
* * * * *
    (r) * * *
    (2) * * *
    (iv) The hospital, federally qualified health center, or rural 
health clinic does not determine the amount of the payment in a manner 
that takes into account (directly or indirectly) the volume or value of 
any actual or anticipated referrals by the physician or any other 
business generated between the parties.
    (v) The physician is allowed to establish staff privileges at any 
hospital(s), federally qualified health center(s), or rural health 
clinic(s) and to refer business to any other entities (except as 
referrals may be restricted under an employment arrangement or services 
arrangement that complies with Sec.  411.354(d)(4)).
* * * * *
    (s) * * *
    (1) The professional courtesy is offered to all physicians on the 
entity's bona fide medical staff or in such entity's local community or 
service area, and the offer does not take into account the volume or 
value of referrals or other business generated between the parties;
* * * * *
    (t) * * *
    (2) * * *
    (iv) * * *
    (A) An amount equal to 25 percent of the physician's current annual 
income (averaged over the previous 24 months), using a reasonable and 
consistent methodology that is calculated uniformly; or
* * * * *
    (x) Assistance to compensate a nonphysician practitioner. (1) 
Remuneration provided by a hospital to a physician to compensate a 
nonphysician practitioner to provide patient care services, if all of 
the following conditions are met:
    (i) The arrangement is set out in writing and signed by the 
hospital, the

[[Page 71377]]

physician, and the nonphysician practitioner.
    (ii) The arrangement is not conditioned on--
    (A) The physician's referrals to the hospital; or
    (B) The nonphysician practitioner's referrals to the hospital.
    (iii) The remuneration from the hospital--
    (A) Does not exceed 50 percent of the actual compensation, signing 
bonus, and benefits paid by the physician to the nonphysician 
practitioner during a period not to exceed the first 2 consecutive 
years of the compensation arrangement between the nonphysician 
practitioner and the physician (or the physician organization in whose 
shoes the physician stands); and
    (B) Is not determined in a manner that takes into account (directly 
or indirectly) the volume or value of any actual or anticipated 
referrals by--
    (1) The physician (or any physician in the physician's practice) or 
other business generated between the parties; or
    (2) The nonphysician practitioner (or any nonphysician practitioner 
in the physician's practice) or other business generated between the 
parties.
    (iv) The compensation, signing bonus, and benefits paid to the 
nonphysician practitioner by the physician does not exceed fair market 
value for the patient care services furnished by the nonphysician 
practitioner to patients of the physician's practice.
    (v) The nonphysician practitioner has not, within 1 year of the 
commencement of his or her compensation arrangement with the physician 
(or the physician organization in whose shoes the physician stands 
under Sec.  411.354(c))--
    (A) Practiced in the geographic area served by the hospital; or
    (B) Been employed or otherwise engaged to provide patient care 
services by a physician or a physician organization that has a medical 
practice site located in the geographic area served by the hospital, 
regardless of whether the nonphysician practitioner furnished services 
at the medical practice site located in the geographic area served by 
the hospital.
    (vi)(A) The nonphysician practitioner has a compensation 
arrangement with the physician or the physician organization in whose 
shoes the physician stands under Sec.  411.354(c); and
    (B) Substantially all of the services that the nonphysician 
practitioner furnishes to patients of the physician's practice are 
primary care services or mental health care services.
    (vii) The physician does not impose practice restrictions on the 
nonphysician practitioner that unreasonably restrict the nonphysician 
practitioner's ability to provide patient care services in the 
geographic area served by the hospital.
    (viii) The arrangement does not violate the anti-kickback statute 
(section 1128B(b) of the Act), or any Federal or State law or 
regulation governing billing or claims submission.
    (2) Records of the actual amount of remuneration provided under 
paragraph (x)(1) of this section by the hospital to the physician, and 
by the physician to the nonphysician practitioner, must be maintained 
for a period of at least 6 years and made available to the Secretary 
upon request.
    (3) For purposes of this paragraph (x), ``nonphysician 
practitioner'' means a physician assistant as defined in section 
1861(aa)(5) of the Act, a nurse practitioner or clinical nurse 
specialist as defined in section 1861(aa)(5) of the Act, a certified 
nurse-midwife as defined in section 1861(gg) of the Act, a clinical 
social worker as defined in section 1861(hh) of the Act, or a clinical 
psychologist as defined in Sec.  410.71(d) of this subchapter.
    (4) For purposes of paragraphs (x)(1)(ii)(B) and (x)(1)(iii)(B)(2) 
of this section, ``referral'' means a request by a nonphysician 
practitioner that includes the provision of any designated health 
service for which payment may be made under Medicare, the establishment 
of any plan of care by a nonphysician practitioner that includes the 
provision of such a designated health service, or the certifying or 
recertifying of the need for such a designated health service, but not 
including any designated health service personally performed or 
provided by the nonphysician practitioner.
    (5) For purposes of paragraph (x)(1) of this section, ``geographic 
area served by the hospital'' has the meaning set forth in paragraph 
(e)(2) of this section.
    (6) For purposes of paragraph (x)(1) of this section, a 
``compensation arrangement'' between a physician (or the physician 
organization in whose shoes the physician stands under Sec.  411.354(c) 
and a nonphysician practitioner--
    (i) Means an employment, contractual, or other arrangement under 
which remuneration passes between the parties; and
    (ii) Does not include a nonphysician practitioner's ownership or 
investment interest in a physician organization.
    (7)(i) This paragraph (x) may be used by a hospital, federally 
qualified health center, or rural health clinic only once every 3 years 
with respect to the same referring physician.
    (ii) Paragraph (x)(7)(i) of this section does not apply to 
remuneration provided by a hospital, federally qualified health center, 
or rural health clinic to a physician to compensate a nonphysician 
practitioner to provide patient care services if--
    (A) The nonphysician practitioner is replacing a nonphysician 
practitioner who terminated his or her employment or contractual 
arrangement to provide patient care services with the physician (or the 
physician organization in whose shoes the physician stands) within 1 
year of the commencement of the employment or contractual arrangement; 
and
    (B) The remuneration provided to the physician is provided during a 
period that does not exceed 2 consecutive years as measured from the 
commencement of the compensation arrangement between the nonphysician 
practitioner who is being replaced and the physician (or the physician 
organization in whose shoes the physician stands).
    (8)(i) This paragraph (x) applies to remuneration provided by a 
federally qualified health center or a rural health clinic in the same 
manner as it applies to remuneration provided by a hospital.
    (ii) The ``geographic area served'' by a federally qualified health 
center or a rural health clinic has the meaning set forth in paragraph 
(e)(6)(ii) of this section.
    (y) Timeshare arrangements. Remuneration provided under an 
arrangement for the use of premises, equipment, personnel, items, 
supplies, or services if the following conditions are met:
    (1) The arrangement is set out in writing, signed by the parties, 
and specifies the premises, equipment, personnel, items, supplies, and 
services covered by the arrangement.
    (2) The arrangement is between a physician (or the physician 
organization in whose shoes the physician stands under Sec.  411.354(c) 
and--
    (i) A hospital; or
    (ii) Physician organization of which the physician is not an owner, 
employee, or contractor.
    (3) The premises, equipment, personnel, items, supplies, and 
services covered by the arrangement are used--
    (i) Predominantly for the provision of evaluation and management 
services to patients; and
    (ii) On the same schedule.
    (4) The equipment covered by the arrangement is--
    (i) Located in the same building where the evaluation and 
management services are furnished;

[[Page 71378]]

    (ii) Not used to furnish designated health services other than 
those incidental to the evaluation and management services furnished at 
the time of the patient's evaluation and management visit; and
    (iii) Not advanced imaging equipment, radiation therapy equipment, 
or clinical or pathology laboratory equipment (other than equipment 
used to perform CLIA-waived laboratory tests).
    (5) The arrangement is not conditioned on the referral of patients 
by the physician who is a party to the arrangement to the hospital or 
physician organization of which the physician is not an owner, 
employee, or contractor.
    (6) The compensation over the term of the arrangement is set in 
advance, consistent with fair market value, and not determined--
    (i) In a manner that takes into account (directly or indirectly) 
the volume or value of referrals or other business generated between 
the parties; or
    (ii) Using a formula based on--
    (A) A percentage of the revenue raised, earned, billed, collected, 
or otherwise attributable to the services provided while using the 
premises, equipment, personnel, items, supplies, or services covered by 
the arrangement; or
    (B) Per-unit of service fees that are not time-based, to the extent 
that such fees reflect services provided to patients referred by the 
party granting permission to use the premises, equipment, personnel, 
items, supplies, or services covered by the arrangement to the party to 
which the permission is granted.
    (7) The arrangement would be commercially reasonable even if no 
referrals were made between the parties.
    (8) The arrangement does not violate the anti-kickback statute 
(section 1128B(b) of the Act) or any Federal or State law or regulation 
governing billing or claims submission.
    (9) The arrangement does not convey a possessory leasehold interest 
in the office space that is the subject of the arrangement.

0
30. Section 411.361 is amended by revising paragraph (d) to read as 
follows:


Sec.  411.361  Reporting requirements.

* * * * *
    (d) Reportable financial relationships. For purposes of this 
section, a reportable financial relationship is any ownership or 
investment interest, as defined at Sec.  411.354(b) or any compensation 
arrangement, as defined at Sec.  411.354(c), except for ownership or 
investment interests that satisfy the exceptions set forth in Sec.  
411.356(a) or Sec.  411.356(b) regarding publicly traded securities and 
mutual funds.
* * * * *

0
31. Section 411.362 is amended by--
    a. In paragraph (a):
0
i. Effective January 1, 2017, adding the definition of ``Ownership or 
investment interest'' in alphabetical order; and
0
ii. Adding the definition of ``Public advertising for the hospital'' in 
alphabetical order.
0
b. Revising paragraphs (b)(3)(ii)(C), (c)(2)(iv) and (v), and (c)(5) 
introductory text.
    The additions and revisions read as follows:


Sec.  411.362  Additional requirements concerning physician ownership 
and investment in hospitals.

    (a) * * *
    Ownership or investment interest means for purposes of this 
section, a direct or indirect ownership or investment interest in a 
hospital.
    (1) A direct ownership or investment interest in a hospital exists 
if the ownership or investment interest in the hospital is held without 
any intervening persons or entities between the hospital and the owner 
or investor.
    (2) An indirect ownership or investment interest in a hospital 
exists if--
    (i) Between the owner or investor and the hospital there exists an 
unbroken chain of any number (but no fewer than one) of persons or 
entities having ownership or investment interests; and
    (ii) The hospital has actual knowledge of, or acts in reckless 
disregard or deliberate ignorance of, the fact that the owner or 
investor has some ownership or investment interest (through any number 
of intermediary ownership or investment interests) in the hospital.
    (3) An indirect ownership or investment interest in a hospital 
exists even though the hospital does not know, or acts in reckless 
disregard or deliberate ignorance of, the precise composition of the 
unbroken chain or the specific terms of the ownership or investment 
interests that form the links in the chain.
* * * * *
    Public advertising for the hospital means any public communication 
paid for by the hospital that is primarily intended to persuade 
individuals to seek care at the hospital.
    (b) * * *
    (3) * * *
    (ii) * * *
    (C) Disclose on any public Web site for the hospital and in any 
public advertising for the hospital that the hospital is owned or 
invested in by physicians. Any language that would put a reasonable 
person on notice that the hospital may be physician-owned would be 
deemed a sufficient statement of physician ownership or investment. For 
purposes of this section, a public Web site for the hospital does not 
include, by way of example: social media Web sites; electronic patient 
payment portals; electronic patient care portals; and electronic health 
information exchanges.
* * * * *
    (c) * * *
    (2) * * *
    (iv) Average bed capacity. Is located in a State in which the 
average bed capacity in the State is less than the national average bed 
capacity during the most recent fiscal year for which HCRIS, as of the 
date that the hospital submits its request, contains data from a 
sufficient number of hospitals to determine a State's average bed 
capacity and the national average bed capacity. CMS will provide on its 
Web site State average bed capacities and the national average bed 
capacity. For purposes of this paragraph (c)(2)(iv), ``sufficient 
number'' means the number of hospitals, as determined by CMS that would 
ensure that the determination under this paragraph (c)(2)(iv) would not 
materially change after additional hospital data are reported.
    (v) Average bed occupancy. Has an average bed occupancy rate that 
is greater than the average bed occupancy rate in the State in which 
the hospital is located during the most recent fiscal year for which 
HCRIS, as of the date that the hospital submits its request, contains 
data from a sufficient number of hospitals to determine the requesting 
hospital's average bed occupancy rate and the relevant State's average 
bed occupancy rate. A hospital must use filed hospital cost report data 
to determine its average bed occupancy rate. CMS will provide on its 
Web site State average bed occupancy rates. For purposes of this 
paragraph (c)(2)(v), ``sufficient number'' means the number of 
hospitals, as determined by CMS that would ensure that the 
determination under this paragraph (c)(2)(v) would not materially 
change after additional hospital data are reported.
* * * * *
    (5) Community input and timing of complete request. Upon submitting 
a request for an exception and until the hospital receives a CMS 
decision, the hospital must disclose on any public Web site for the 
hospital that it is requesting an exception and must also provide 
actual notification that it is

[[Page 71379]]

requesting an exception, in either electronic or hard copy form, 
directly to hospitals whose data are part of the comparisons in 
paragraphs (c)(2)(ii) and (c)(3)(ii) of this section. Individuals and 
entities in the hospital's community may provide input with respect to 
the hospital's request no later than 30 days after CMS publishes notice 
of the hospital's request in the Federal Register. Such input must take 
the form of written comments. The written comments must be either 
mailed or submitted electronically to CMS. If CMS receives written 
comments from the community, the hospital has 30 days after CMS 
notifies the hospital of the written comments to submit a rebuttal 
statement.
* * * * *

0
32. Section 411.384 is amended by revising paragraph (b) to read as 
follows:


Sec.  411.384  Disclosing advisory opinions and supporting information.

* * * * *
    (b) Promptly after CMS issues an advisory opinion and releases it 
to the requestor, CMS makes available a copy of the advisory opinion 
for public inspection during its normal hours of operation and on the 
CMS Web site.
* * * * *

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

0
33. 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)).

0
34. Section 414.90 is amended by--
0
a. Adding paragraphs (j)(8) and (9).
0
b. Revising paragraphs (k) introductory text and (k)(2).
0
c. Redesignating paragraphs (l)(4) and (l)(5) as (k)(4) and (l)(4), 
respectively.
0
d. Adding paragraph (k)(5).
    The additions and revisions read as follows:


Sec.  414.90  Physician Quality Reporting System (PQRS).

* * * * *
    (j) * * *
    (8) Satisfactory reporting criteria for individual eligible 
professionals for the 2018 PQRS payment adjustment. An individual 
eligible professional who wishes to meet the criteria for satisfactory 
reporting for the 2018 PQRS payment adjustment must report information 
on PQRS quality measures identified by CMS in one of the following 
manners:
    (i) Via claims. (A) For the 12-month 2018 PQRS payment adjustment 
reporting period--
    (1)(i) Report at least 9 measures, covering at least 3 of the NQS 
domains AND report each measure for at least 50 percent of the eligible 
professional's Medicare Part B FFS patients seen during the reporting 
period to which the measure applies. Of the measures reported, if the 
eligible professional sees at least 1 Medicare patient in a face-to-
face encounter, the eligible professional will report on at least 1 
measure contained in the proposed cross-cutting measure set. If less 
than 9 measures apply to the eligible professional, the eligible 
professional must report on each measure that is applicable, AND report 
each measure for at least 50 percent of the Medicare Part B FFS 
patients seen during the reporting period to which the measure applies. 
Measures with a 0 percent performance rate would not be counted.
    (ii) [Reserved]
    (2) [Reserved]
    (B) [Reserved]
    (ii) Via qualified registry. (A) For the 12-month 2018 PQRS payment 
adjustment reporting period--
    (1)(i) Report at least 9 measures, covering at least 3 of the NQS 
domains AND report each measure for at least 50 percent of the eligible 
professional's Medicare Part B FFS patients seen during the reporting 
period to which the measure applies. Of the measures reported, if the 
eligible professional sees at least 1 Medicare patient in a face-to-
face encounter, the eligible professional will report on at least 1 
measure contained in the proposed cross-cutting measure set. If less 
than 9 measures apply to the eligible professional, the eligible 
professional must report on each measure that is applicable to the 
eligible professional, AND report each measure for at least 50 percent 
of the Medicare Part B FFS patients seen during the reporting period to 
which the measure applies.
    (ii) Report at least 1 measures group and report each measures 
group for at least 20 patients, a majority of which must be Medicare 
Part B FFS patients.
    (2) Measures with a 0 percent performance rate or measures groups 
containing a measure with a 0 percent performance rate will not be 
counted.
    (B) [Reserved]
    (iii) Via EHR direct product. For the 12-month 2018 PQRS payment 
adjustment reporting period, report 9 measures covering at least 3 of 
the NQS domains. If an eligible professional's direct EHR product or 
EHR data submission vendor product does not contain patient data for at 
least 9 measures covering at least 3 domains, then the eligible 
professional must report all of the measures for which there is 
Medicare patient data. An eligible professional must report on at least 
1 measure for which there is Medicare patient data.
    (iv) Via EHR data submission vendor. For the 12-month 2018 PQRS 
payment adjustment reporting period, report 9 measures covering at 
least 3 of the NQS domains. If an eligible professional's direct EHR 
product or EHR data submission vendor product does not contain patient 
data for at least 9 measures covering at least 3 domains, then the 
eligible professional would be required to report all of the measures 
for which there is Medicare patient data. An eligible professional 
would be required to report on at least 1 measure for which there is 
Medicare patient data.
    (9) Satisfactory reporting criteria for group practices for the 
2018 PQRS payment adjustment. A group practice who wishes to meet the 
criteria for satisfactory reporting for the 2018 PQRS payment 
adjustment must report information on PQRS quality measures identified 
by CMS in one of the following manners:
    (i) Via the GPRO web interface. For the 12-month 2018 PQRS payment 
adjustment reporting period, for a group practice of 25 or more 
eligible professionals, report on all measures included in the web 
interface; AND populate data fields for the first 248 consecutively 
ranked and assigned beneficiaries in the order in which they appear in 
the group's sample for each module or preventive care measure. If the 
pool of eligible assigned beneficiaries is less than 248, then the 
group practice must report on 100 percent of assigned beneficiaries. In 
some instances, the sampling methodology will not be able to assign at 
least 248 patients on which a group practice may report, particularly 
those group practices on the smaller end of the range of 25-99 eligible 
professionals. If the group practice is assigned less than 248 Medicare 
beneficiaries, then the group practice must report on 100 percent of 
its assigned beneficiaries. A group practice must report on at least 1 
measure for which there is Medicare patient data.
    (ii) Via qualified registry. For a group practice of 2 or more 
eligible professionals, for the 12-month 2018 PQRS payment adjustment 
reporting period, report at least 9 measures, covering at least 3 of 
the NQS domains. Of these measures, if a group practice sees at least 1 
Medicare patient in a face-to-face encounter, the group practice would 
report on at least 1

[[Page 71380]]

measure in the cross-cutting measure set. If less than 9 measures 
covering at least 3 NQS domains apply to the group practice, the group 
practice would report on each measure that is applicable to the group 
practice, AND report each measure for at least 50 percent of the 
group's Medicare Part B FFS patients seen during the reporting period 
to which the measure applies. Measures with a 0 percent performance 
rate would not be counted.
    (iii) Via EHR direct product. For a group practice of 2 or more 
eligible professionals, for the 12-month 2018 PQRS payment adjustment 
reporting period, report 9 measures covering at least 3 domains. If the 
group practice's direct EHR product or EHR data submission vendor 
product does not contain patient data for at least 9 measures covering 
at least 3 domains, then the group practice must report all of the 
measures for which there is Medicare patient data. A group practice 
must report on at least 1 measure for which there is Medicare patient 
data.
    (iv) Via EHR data submission vendor. For a group practice of 2 or 
more eligible professionals, for the 12-month 2018 PQRS payment 
adjustment reporting period, report 9 measures covering at least 3 
domains. If the group practice's direct EHR product or EHR data 
submission vendor product does not contain patient data for at least 9 
measures covering at least 3 domains, then the group practice must 
report all of the measures for which there is Medicare patient data. A 
group practice must report on at least 1 measure for which there is 
Medicare patient data.
    (v) Via a certified survey vendor in addition to a qualified 
registry. For a group practice of 2 or more eligible professionals that 
elects to report via a certified survey vendor in addition to a 
qualified registry for the 12-month 2018 PQRS payment adjustment 
reporting period, the group practice must have all CAHPS for PQRS 
survey measures reported on its behalf via a CMS-certified survey 
vendor, and report at least 6 additional measures, outside of CAHPS for 
PQRS, covering at least 2 of the NQS domains using the qualified 
registry. If less than 6 measures apply to the group practice, the 
group practice must report on each measure that is applicable to the 
group practice. Of the additional measures that must be reported in 
conjunction with reporting the CAHPS for PQRS survey measures, if any 
eligible professional in the group practice sees at least 1 Medicare 
patient in a face-to-face encounter, the group practice must report on 
at least 1 measure in the cross-cutting measure set.
    (vi) Via a certified survey vendor in addition to a direct EHR 
product or EHR data submission vendor. For a group practice of 2 or 
more eligible professionals that elects to report via a certified 
survey vendor in addition to a direct EHR product or EHR data 
submission vendor for the 12-month 2018 PQRS payment adjustment 
reporting period, the group practice must have all CAHPS for PQRS 
survey measures reported on its behalf via a CMS-certified survey 
vendor, and report at least 6 additional measures, outside of CAHPS for 
PQRS, covering at least 2 of the NQS domains using the direct EHR 
product or EHR data submission vendor product. If less than 6 measures 
apply to the group practice, the group practice must report all of the 
measures for which there is patient data. Of the additional 6 measures 
that must be reported in conjunction with reporting the CAHPS for PQRS 
survey measures, a group practice would be required to report on at 
least 1 measure for which there is Medicare patient data.
    (vii) Via a certified survey vendor in addition to the GPRO web 
interface. (A) For a group practice of 25 or more eligible 
professionals, for the 12-month 2018 PQRS payment adjustment reporting 
period, the group practice must have all CAHPS for PQRS survey measures 
reported on its behalf via a CMS-certified survey vendor. In addition, 
the group practice must report on all measures included in the GPRO web 
interface; AND populate data fields for the first 248 consecutively 
ranked and assigned beneficiaries in the order in which they appear in 
the group's sample for each module or preventive care measure. If the 
pool of eligible assigned beneficiaries is less than 248, then the 
group practice must report on 100 percent of assigned beneficiaries. A 
group practice will be required to report on at least 1 measure for 
which there is Medicare patient data.
    (B) [Reserved]
    (viii) If the CAHPS for PQRS survey is applicable to the practice, 
group practices comprised of 100 or more eligible professionals that 
register to participate in the GPRO must administer the CAHPS for PQRS 
survey, regardless of the GPRO reporting mechanism selected.
    (k) Satisfactory participation requirements for the payment 
adjustments for individual eligible professionals and group practices. 
In order to satisfy the requirements for the PQRS payment adjustment 
for a particular program year through participation in a qualified 
clinical data registry, an individual eligible professional, as 
identified by a unique TIN/NPI combination, or group practice must meet 
the criteria for satisfactory participation as specified in paragraph 
(k)(3) of this section for such year, by reporting on quality measures 
identified by a qualified clinical data registry during a reporting 
period specified in paragraph (k)(1) of this section, using the 
reporting mechanism specified in paragraph (k)(2) of this section.
* * * * *
    (2) Reporting mechanism. An individual eligible professional or 
group practice who wishes to meet the criteria for satisfactory 
participation in a qualified clinical data registry must use the 
qualified clinical data registry to report information on quality 
measures identified by the qualified clinical data registry.
* * * * *
    (5) Satisfactory participation criteria for individual eligible 
professionals and group practices for the 2018 PQRS payment adjustment. 
An individual eligible professional or group practice who wishes to 
meet the criteria for satisfactory participation in a QCDR for the 2018 
PQRS payment adjustment must report information on quality measures 
identified by the QCDR in the following manner:
    (i) For the 12-month 2018 PQRS payment adjustment reporting period, 
report at least 9 measures available for reporting under a QCDR 
covering at least 3 of the NQS domains, and report each measure for at 
least 50 percent of the eligible professional's patients. Of these 
measures, report on at least 3 outcome measures, or, if 3 outcomes 
measures are not available, report on at least 2 outcome measures and 
at least 1 of the following types of measures--resource use, patient 
experience of care, or efficiency/appropriate use.
    (ii) [Reserved]
* * * * *

0
35. Section 414.94 is added to Subpart B to read as follows:


Sec.  414.94  Appropriate use criteria for advanced diagnostic imaging 
services.

    (a) Basis and scope. This section implements the following 
provisions of the Act:
    (1) Section 1834(q)--Recognizing Appropriate Use Criteria for 
Certain Imaging Services.
    (2) Section 1834(q)(1)--Program Established.
    (3) Section 1834(q)(2)--Establishment of Applicable Appropriate Use 
Criteria.
    (b) Definitions. As used in this section unless otherwise 
indicated--
    Advanced diagnostic imaging service means an imaging service as 
defined in section 1834(e)(1)(B) of the Act.

[[Page 71381]]

    Applicable imaging service means an advanced diagnostic imaging 
service (as defined in section 1834(e)(1)(B) of the Act) for which the 
Secretary determines--
    (i) One or more applicable appropriate use criteria apply;
    (ii) There are one or more qualified clinical decision support 
mechanisms listed; and
    (iii) One or more of such mechanisms is available free of charge.
    Applicable setting means a physician's office, a hospital 
outpatient department (including an emergency department), an 
ambulatory surgical center, and any other provider-led outpatient 
setting determined appropriate by the Secretary.
    Appropriate use criteria (AUC) means criteria only developed or 
endorsed by national professional medical specialty societies or other 
provider-led entities, to assist ordering professionals and furnishing 
professionals in making the most appropriate treatment decision for a 
specific clinical condition for an individual. To the extent feasible, 
such criteria must be evidence-based. An AUC set is a collection of 
individual appropriate use criteria. An individual criterion is 
information presented in a manner that links: a specific clinical 
condition or presentation; one or more services; and, an assessment of 
the appropriateness of the service(s).
    Furnishing professional means a physician (as defined in section 
1861(r) of the Act) or a practitioner described in section 
1842(b)(18)(C) of the Act who furnishes an applicable imaging service.
    Ordering professional means a physician (as defined in section 
1861(r) of the Act) or a practitioner described in section 
1842(b)(18)(C) of the Act who orders an applicable imaging service.
    Priority clinical areas means clinical conditions, diseases or 
symptom complexes and associated advanced diagnostic imaging services 
identified by CMS through annual rulemaking and in consultation with 
stakeholders which may be used in the determination of outlier ordering 
professionals.
    Provider-led entity (PLE) means a national professional medical 
specialty society or other organization that is comprised primarily of 
providers or practitioners who, either within the organization or 
outside of the organization, predominantly provide direct patient care.
    Specified applicable appropriate use criteria means any individual 
appropriate use criterion or AUC set developed, modified or endorsed by 
a qualified PLE.
    (c) Qualified provider-led entity. To be qualified by CMS, a PLE 
must adhere to the evidence-based processes described in paragraph 
(c)(1) of this section when developing or modifying AUC. A qualified 
PLE may develop AUC, modify AUC developed by another qualified PLE, or 
endorse AUC developed by other qualified PLEs.
    (1) Requirements for qualified PLEs developing or modifying AUC. A 
PLE must perform all of the following when developing or modifying AUC:
    (i) Utilize an evidentiary review process when developing or 
modifying AUC that includes:
    (A) A systematic literature review of the clinical topic and 
relevant imaging studies; and
    (B) An assessment of the evidence using a formal, published and 
widely recognized methodology for grading evidence. Consideration of 
relevant published consensus statements by professional medical 
specialty societies must be part of the evidence assessment.
    (ii) Utilize at least one multidisciplinary team with autonomous 
governance, decision-making and accountability for developing or 
modifying AUC. At a minimum the team must be comprised of seven members 
including at least one practicing physician with expertise in the 
clinical topic related to the appropriate use criterion being developed 
or modified, at least one practicing physician with expertise in the 
imaging studies related to the appropriate use criterion, at least one 
primary care physician or practitioner as described in sections 
1833(u)(6), 1833(x)(2)(A)(i)(I), and 1833(x)(2)(A)(i)(II) of the Act, 
at least one expert in statistical analysis and at least one expert in 
clinical trial design. A given team member may be the team's expert in 
more than one domain.
    (iii) Utilize a publicly transparent process for identifying 
potential conflicts of interest and for resolving conflicts of interest 
of members on the multidisciplinary team, the PLE and any other party 
participating in AUC development or modification, to include recusal or 
exclusion of individuals as appropriate. The PLE must document the 
following information and make it available in timely fashion to a 
public request, for a period of not less than 5 years after the most 
recent published update of the relevant AUC:
    (A) Direct or indirect financial relationships that exist between 
individuals or the spouse or minor child of individuals who have 
substantively participated in the development of AUC and companies or 
organizations including the PLE and any other party participating in 
AUC development or modification that may financially benefit from the 
AUC. These financial relationships may include, for example, 
compensation arrangements such as salary, grant, speaking or consulting 
fees, contract, or collaboration agreements.
    (B) Ownership or investment interests between individuals or the 
spouse or minor child of individuals who have substantively 
participated in the development of AUC and companies or organizations 
including the PLE or any other party participating in AUC development 
or modification that may financially benefit from the AUC.
    (iv) Publish each individual criterion on the PLE's Web site and 
include an identifying title, authors (at a minimum, all members of the 
multidisciplinary AUC development team must be listed as authors), and 
key references used to establish the evidence.
    (v) Identify each appropriate use criterion or AUC subset that are 
relevant to a priority clinical area with a statement on the PLE's Web 
site. To be identified as being relevant to a priority clinical area, 
the criterion or AUC subset must reasonably address the entire clinical 
scope of the corresponding priority clinical area.
    (vi) Identify key points in an individual criterion as evidence-
based or consensus-based, and grade such key points in terms of 
strength of evidence using a formal, published and widely recognized 
methodology.
    (vii) Utilize a transparent process for the timely and continual 
updating of each criterion. Each criterion must be reviewed and, when 
appropriate, updated at least annually.
    (viii) Publicly post the process for developing or modifying the 
AUC on the PLE's Web site.
    (ix) Disclose parties external to the PLE when such parties have 
involvement in the AUC development process.
    (2) Process to identify qualifying PLEs. PLEs must meet all of the 
following criteria:
    (i) PLEs must submit an application to CMS for review that 
documents adherence to each of the AUC development requirements 
outlined in paragraph (c)(1) of this section;
    (ii) Applications will be accepted by CMS only from PLEs that meet 
the definition of PLE in paragraph (b) of this section;
    (iii) Applications must be received by CMS annually by January 1;
    (iv) All approved qualified PLEs in each year will be included on 
the list of qualified PLEs posted to the CMS Web site by June 30 of 
that year; and
    (v) Approved PLEs are qualified for a period of 5 years.

[[Page 71382]]

    (vi) Qualified PLEs are required to re-apply. The application must 
be received by CMS by January 1 of the 5th year after the PLE's most 
recent approval date.
    (d) Endorsement. Qualified PLEs may endorse the AUC set or 
individual criteria of other qualified PLEs, under agreement by the 
respective parties, in order to enhance an AUC set.
    (e) Identifying priority clinical areas. (1) CMS identifies 
priority clinical areas through annual rulemaking and in consultation 
with stakeholders.
    (2) CMS will consider incidence and prevalence of disease, the 
volume and variability of use of particular imaging services, and 
strength of evidence supporting particular imaging services. We will 
also consider applicability of the clinical area to a variety of care 
settings and to the Medicare population.
    (3) The Medicare Evidence Development & Coverage Advisory Committee 
(MEDCAC) may make recommendations to CMS.
    (4) Priority clinical areas will be used by CMS to identify outlier 
ordering professionals (section 1834(q)(5) of the Act).
    (f) Identification of non-evidence-based AUC or other non-adherence 
to requirements for qualified PLEs. (1) CMS will accept public comment 
to facilitate identification of AUC sets, subsets or individual 
criterion that are not evidence-based, giving priority to AUC 
associated with priority clinical areas and to AUC that conflict with 
one another. CMS may also independently identify AUC of concern.
    (2) The evidentiary basis of the identified AUC may be reviewed by 
the MEDCAC.
    (3) If a qualified PLE is found non-adherent to the requirements in 
paragraph (c) of this section, CMS may terminate its qualified status 
or may consider this information during re-qualification.

0
36. Section 414.605 is amended by revising the definition of ``Basic 
life support (BLS)'' to read as follows:


Sec.  414.605  Definitions.

* * * * *
    Basic life support (BLS) means transportation by ground ambulance 
vehicle and medically necessary supplies and services, plus the 
provision of BLS ambulance services. The ambulance must be staffed by 
at least two people who meet the requirements of state and local laws 
where the services are being furnished. Also, at least one of the staff 
members must be certified, at a minimum, as an emergency medical 
technician-basic (EMT-Basic) by the State or local authority where the 
services are furnished and be legally authorized to operate all 
lifesaving and life-sustaining equipment on board the vehicle. These 
laws may vary from State to State.
* * * * *


Sec.  414.610  [Amended]

0
37. In Sec.  414.610, amend paragraphs (c)(1)(ii) introductory text and 
(c)(5)(ii) by removing the date ``March 31, 2015'' and adding in its 
place the date ``December 31, 2017''.

0
38. Section 414.904 is amended by revising paragraph (j) to read as 
follows:


Sec.  414.904  Average sales price as the basis for payment.

* * * * *
    (j) Biosimilar biological products. Effective January 1, 2016, the 
payment amount for a biosimilar biological drug product (as defined in 
Sec.  414.902) for all NDCs assigned to such product is the sum of the 
average sales price of all NDCs assigned to the biosimilar biological 
products included within the same billing and payment code as 
determined under section 1847A(b)(6) of the Act and 6 percent of the 
amount determined under section 1847A(b)(4) of the Act for the 
reference drug product (as defined in Sec.  414.902).

0
39. Section 414.1205 is amended by adding the definition of ``Certified 
registered nurse anesthetist (CRNA)'' and ``Physician assistant (PA), 
nurse practitioner (NP), and clinical nurse specialist (CNS)'' in 
alphabetical order to read as follows:


Sec.  414.1205  Definitions.

* * * * *
    Certified registered nurse anesthetist (CRNA) has the same meaning 
given this term under section 1861(bb)(2) of the Act.
* * * * *
    Physician assistant (PA), nurse practitioner (NP), and clinical 
nurse specialist (CNS) have the same meanings given these terms under 
section 1861(aa)(5) of the Act.
* * * * *

0
40. Section 414.1210 is amended by--
0
a. Revising paragraph (a)(4), (b)(2)(i)(B), (C), and (D), (b)(3), 
(b)(4), and (c).
0
b. Adding paragraphs (b)(2)(i)(E) and (F).
    The revisions and additions read as follows:


Sec.  414.1210  Application of the value-based payment modifier.

    (a) * * *
    (4) For the CY 2018 payment adjustment period, to nonphysician 
eligible professionals who are physician assistants, nurse 
practitioners, clinical nurse specialists, and certified registered 
nurse anesthetists in groups with 2 or more eligible professionals and 
to physician assistants, nurse practitioners, clinical nurse 
specialists, and certified registered nurse anesthetists who are solo 
practitioners based on the performance period for the payment 
adjustment period as described at Sec.  414.1215.
    (b) * * *
    (2) * * *
    (i) * * *
    (B) The quality composite score is calculated under Sec.  
414.1260(a) using quality data reported by the ACO for the performance 
period through the ACO GPRO Web interface as required under Sec.  
425.504(a)(1) of this chapter or another mechanism specified by CMS and 
the ACO all-cause readmission measure. Groups and solo practitioners 
that participate in two or more ACOs during the applicable performance 
period receive the quality composite score of the ACO that has the 
highest numerical quality composite score. For the CY 2018 payment 
adjustment period, the CAHPS for ACOs survey also will be included in 
the quality composite score.
    (C) For the CY 2017 payment adjustment period, the value-based 
payment modifier adjustment will be equal to the amount determined 
under Sec.  414.1275 for the payment adjustment period, except that if 
the ACO does not successfully report quality data as described in 
paragraph (b)(2)(i)(B) of this section for the performance period, such 
adjustment will be equal to -4% for groups of physicians with 10 or 
more eligible professionals and equal to -2% for groups of physicians 
with two to nine eligible professionals and for physician solo 
practitioners. If the ACO has an assigned beneficiary population during 
the performance period with an average risk score in the top 25 percent 
of the risk scores of beneficiaries nationwide, and a group of 
physician or physician solo practitioner that participates in the ACO 
during the performance period is classified as high quality/average 
cost under quality-tiering for the CY 2017 payment adjustment period, 
the group or solo practitioner receives an upward adjustment of +3 x 
(rather than +2 x) if the group has 10 or more eligible professionals 
or +2 x (rather than +1 x) for a solo practitioner or the group has two 
to nine eligible professionals.
    (D) For the CY 2018 payment adjustment period, the value-based 
payment modifier adjustment will be equal to the amount determined 
under Sec.  414.1275 for the payment adjustment

[[Page 71383]]

period, except that if the ACO does not successfully report quality 
data as described in paragraph (b)(2)(i)(B) of this section for the 
performance period, such adjustment will be equal to the downward 
payment adjustment amounts described at Sec.  414.1270(d)(1). If the 
ACO has an assigned beneficiary population during the performance 
period with an average risk score in the top 25 percent of the risk 
scores of beneficiaries nationwide, and a group or solo practitioner 
that participates in the ACO during the performance period is 
classified as high quality/average cost under quality-tiering for the 
CY 2018 payment adjustment period, the group or solo practitioner 
receives an upward adjustment of +3 x (rather than +2 x) if the group 
of physicians has 10 or more eligible professionals, +2 x (rather than 
+1 x) for a physician solo practitioner or if the group of physicians 
has two to nine eligible professionals, or +2 x (rather than +1 x) for 
a solo practitioner who is a nonphysician eligible professional or if 
the group consists of nonphysician eligible professionals.
    (E) For the CY 2017 payment adjustment period and each subsequent 
calendar year payment adjustment period, the value-based payment 
modifier for groups and solo practitioners that participate in an ACO 
under the Shared Savings Program during the applicable performance 
period is determined as described under paragraph (b)(2) of this 
section, regardless of whether any eligible professionals in the group 
or the solo practitioner also participate in an Innovation Center model 
during the performance period.
    (F) The same value-based payment modifier adjustment will be 
applied in the payment adjustment period to all groups based on size as 
specified under Sec.  414.1275 and solo practitioners that participated 
in the ACO during the performance period.
* * * * *
    (3) Application of the value-based payment modifier to participants 
in the Pioneer ACO Model and the Comprehensive Primary Care Initiative. 
(i) For the CY 2017 payment adjustment period, the value-based payment 
modifier is waived under section 1115A(d)(1) of the Act for physicians 
in groups with 2 or more eligible professionals and for physicians who 
are solo practitioners that participate in the Pioneer ACO Model or the 
Comprehensive Primary Care (CPC) Initiative during the performance 
period for the payment adjustment period as described at Sec.  
414.1215.
    (ii) For the CY 2018 payment adjustment period, the value-based 
payment modifier is waived under section 1115A(d)(1) of the Act for 
physicians and nonphysician eligible professionals in groups with 2 or 
more eligible professionals and for physicians and nonphysician 
eligible professionals who are solo practitioners that participate in 
the Pioneer ACO Model or the Comprehensive Primary Care (CPC) 
Initiative during the performance period for the payment adjustment 
period as described at Sec.  414.1215.
    (iii) For purposes of the value-based payment modifier, a group or 
solo practitioner is considered to be participating in the Pioneer ACO 
Model or CPC Initiative if at least one eligible professional billing 
under the TIN in the performance period for the payment adjustment 
period as described at Sec.  414.1215 is participating in the Pioneer 
ACO Model or CPC Initiative in the performance period.
    (4) Application of the value-based payment modifier to participants 
in other similar Innovation Center models. (i) For the CY 2017 payment 
adjustment period, the value-based payment modifier is waived under 
section 1115A(d)(1) of the Act for physicians in groups with 2 or more 
eligible professionals and for physicians who are solo practitioners 
that participate in other similar Innovation Center models during the 
performance period for the payment adjustment period as described at 
Sec.  414.1215.
    (ii) For the CY 2018 payment adjustment period, the value-based 
payment modifier is waived under section 1115A(d)(1) of the Act for 
physicians and nonphysician eligible professionals in groups with 2 or 
more eligible professionals and for physicians and nonphysician 
eligible professionals who are solo practitioners that participate in 
other similar Innovation Center models during the performance period 
for the payment adjustment period as described at Sec.  414.1215.
    (iii) For purposes of the value-based payment modifier, a group or 
solo practitioner is considered to be participating in a similar 
Innovation Center model if at least one eligible professional billing 
under the TIN in the performance period for the payment adjustment 
period as described at Sec.  414.1215 is participating in the similar 
model in the performance period.
    (c) Group size and composition determination. (1) The list of 
groups of physicians subject to the value-based payment modifier for 
the CY 2015 payment adjustment period is based on a query of PECOS on 
October 15, 2013. For each subsequent calendar year payment adjustment 
period, the list of groups and solo practitioners subject to the value-
based payment modifier is based on a query of PECOS that occurs within 
10 days of the close of the Physician Quality Reporting System group 
registration process during the applicable performance period described 
at Sec.  414.1215. Groups are removed from the PECOS-generated list if, 
based on a claims analysis, the group did not have the required number 
of eligible professionals, as defined in paragraph (a) of this section, 
that submitted claims during the performance period for the applicable 
calendar year payment adjustment period. Solo practitioners are removed 
from the PECOS-generated list if, based on a claims analysis, the solo 
practitioner did not submit claims during the performance period for 
the applicable calendar year payment adjustment period.
    (2) Beginning with the CY 2016 payment adjustment period, the size 
of a group during the applicable performance period will be determined 
by the lower number of eligible professionals as indicated by the 
PECOS-generated list or claims analysis.
    (3) For the CY 2018 payment adjustment period, the composition of a 
group during the applicable performance period will be determined based 
on whether the group includes physicians, physician assistants, nurse 
practitioners, clinical nurse specialists, certified registered nurse 
anesthetists, and/or other types of nonphysician eligible professionals 
as indicated by the PECOS-generated list or claims analysis.

0
41. Section 414.1215 is amended by adding paragraph (d) to read as 
follows:


Sec.  414.1215  Performance and payment adjustment periods for the 
value-based payment modifier.

* * * * *
    (d) The performance period is calendar year 2016 for value-based 
payment modifier adjustments made in the calendar year 2018 payment 
adjustment period.

0
42. Section 414.1230 is amended by revising paragraph (c) to read as 
follows:


Sec.  414.1230  Additional measures for groups and solo practitioners.

* * * * *
    (c) Rates of an all-cause hospital readmissions measure, except for 
groups with between two to nine eligible professionals and solo 
practitioners starting with the CY 2017 payment adjustment period.

0
43. Section 414.1235 is amended by adding paragraphs (c)(4) and (5) to 
read as follows:

[[Page 71384]]

Sec.  414.1235  Cost measures.

* * * * *
    (c) * * *
    (4) Beginning with the CY 2016 payment adjustment period, the cost 
measures of a group and solo practitioner subject to the value-based 
payment modifier are adjusted to account for the group's and solo 
practitioner's specialty mix, by computing the weighted average of the 
national specialty specific expected costs and comparing this to the 
group's actual risk adjusted costs. Each national specialty-specific 
expected cost is weighted by the proportion of Part B payments incurred 
by each specialty within the group.
    (5) The national specialty-specific expected costs referenced in 
paragraph (c)(4) of this section are derived by calculating, for each 
specialty, the weighted average of the risk-adjusted costs computed 
across all groups, where the weight for each group is equal to the 
number of beneficiaries attributed to the group, times the number of 
eligible professionals in the group with the relevant specialty, times 
the proportion of eligible professionals in the group with the relevant 
specialty.

0
44. Section 414.1250 is amended by revising paragraph (a) to read as 
follows:


Sec.  414.1250  Benchmarks for quality of care measures.

    (a) The benchmark for quality of care measures reported through the 
PQRS using the claims, registries, QCDR, or web interface is the 
national mean for that measure's performance rate (regardless of the 
reporting mechanism) during the year prior to the performance period. 
In calculating the national benchmark, solo practitioners' and groups' 
(or individual eligible professionals' within such groups) performance 
rates are weighted by the number of beneficiaries used to calculate the 
solo practitioners' or groups' (or individual eligible professionals' 
within such groups) performance rate. Beginning with the CY 2016 
performance period, eCQMs reported via EHRs are excluded from the 
overall benchmark for quality of care measures and separate eCQM 
benchmarks will be developed. The eCQM benchmark is the national mean 
for the measure's performance rate during the year prior to the 
performance period. In calculating the national benchmark, solo 
practitioners' and groups' (or individual eligible professionals' 
within such groups) performance rates are weighted by the number of 
beneficiaries used to calculate the solo practitioners' or groups' (or 
individual eligible professionals' within such groups) performance 
rate.
* * * * *

0
45. Section 414.1255 is amended by revising paragraph (b) and removing 
paragraph (c) to read as follows:


Sec.  414.1255  Benchmarks for cost measures.

* * * * *
    (b) Beginning with the CY 2016 payment adjustment period, the 
benchmark for each cost measure is the national mean of the performance 
rates calculated among all groups and solo practitioners that meet the 
minimum number of cases for that measure under Sec.  414.1265(a). In 
calculating the national benchmark, groups and solo practitioners' 
performance rates are weighted by the number of beneficiaries used to 
calculate the group or solo practitioner's performance rate.

0
46. Section 414.1265 is amended by adding paragraph (a)(2) and revising 
paragraphs (a)(1) and (b) to read as follows:


Sec.  414.1265  Reliability of measures.

* * * * *
    (a) * * *
    (1) Starting with the CY 2017 payment adjustment period, the 
exception to this paragraph (a) is the all-cause hospital readmissions 
measure described at Sec.  414.1230(c). In a performance period, if a 
group has fewer than 200 cases for this all-cause hospital readmissions 
measure, that measure is excluded from its domain and the remaining 
measures in the domain are given equal weight.
    (2) Starting with the CY 2017 payment adjustment period, the 
Medicare Spending Per Beneficiary measure described at Sec.  
414.1235(a)(6) is an exception to this paragraph (a). In a performance 
period, if a group or a solo practitioner has fewer than 125 episodes 
for this MSPB measure, that measure is excluded from its domain and the 
remaining measures in the domain are given equal weight.
    (b)(1) For the CY 2015 payment adjustment period, if a reliable 
quality of care composite or cost composite cannot be calculated, 
payments will not be adjusted under the value-based payment modifier.
    (2) Beginning with the CY 2016 payment adjustment period, a group 
and a solo practitioner subject to the value-based payment modifier 
will receive a quality composite score that is classified as 
``average'' under Sec.  414.1275(b)(1) if such group and solo 
practitioner do not have at least one quality measure that meets the 
minimum number of cases under paragraph (a) of this section.
    (3) Beginning with the CY 2016 payment adjustment period, a group 
and a solo practitioner subject to the value-based payment modifier 
will receive a cost composite score that is classified as ``average'' 
under Sec.  414.1275(b)(2) if such group and solo practitioner do not 
have at least one cost measure that meets the minimum number of cases 
under paragraph (a) of this section.

0
47. Section 414.1270 is amended by removing paragraphs (b)(5) and 
(c)(5), revising paragraph (c)(1)(i), and adding paragraph (d) to read 
as follows:


Sec.  414.1270  Determination and calculation of Value-Based Payment 
Modifier adjustments.

* * * * *
    (c) * * *
    (1) * * *
    (i) Such group does not meet the criteria as a group to avoid the 
PQRS payment adjustment for CY 2017 as specified by CMS; and
* * * * *
    (d) For the CY 2018 payment adjustment period:
    (1) A downward payment adjustment of -2.0 percent will be applied 
to a group with two to nine eligible professionals and a solo 
practitioner, a downward payment adjustment of -4.0 percent will be 
applied to a group with 10 or more eligible professionals, and a 
downward payment adjustment of -2.0 percent will be applied to a group 
or solo practitioner consisting of nonphysician eligible professionals 
subject to the value-based payment modifier if, during the applicable 
performance period as defined in Sec.  414.1215, the following apply:
    (i) Such group does not meet the criteria as a group to avoid the 
PQRS payment adjustment for CY 2018 as specified by CMS; and
    (ii) Fifty percent of the eligible professionals in such group do 
not meet the criteria as individuals to avoid the PQRS payment 
adjustment for CY 2018 as specified by CMS; or
    (iii) Such solo practitioner does not meet the criteria as an 
individual to avoid the PQRS payment adjustment for CY 2018 as 
specified by CMS.
    (2) For a group composed of 10 or more eligible professionals that 
is not included in paragraph (d)(1) of this section, the value-based 
payment modifier adjustment will be equal to the amount determined 
under Sec.  414.1275(c)(4)(i).
    (3) For a group composed of between two to nine eligible 
professionals and a solo practitioner that are not included in 
paragraph (d)(1) of this section, the value-based payment modifier

[[Page 71385]]

adjustment will be equal to the amount determined under Sec.  
414.1275(c)(4)(ii).
    (4) For a group and a solo practitioner consisting of nonphysician 
eligible professionals that are not included in paragraph (d)(1) of 
this section, the value-based payment modifier adjustment will be equal 
to the amount determined under Sec.  414.1275(c)(4)(iii).
    (5) If at least 50 percent of the eligible professionals in the 
group meet the criteria as individuals to avoid the PQRS payment 
adjustment for CY 2018 as specified by CMS, and all of those eligible 
professionals use a qualified clinical data registry and CMS is unable 
to receive quality performance data for them, the quality composite 
score for such group will be classified as ``average'' under Sec.  
414.1275(b)(1).

0
48. Section 414.1275 is amended by adding paragraphs (c)(4) and (d)(3) 
to read as follows:


Sec.  414.1275  Value-based payment modifier quality-tiering scoring 
methodology.

    (c) * * *
    (4) The following value-based payment modifier percentages apply to 
the CY 2018 payment adjustment period:
    (i) For physicians, physician assistants, nurse practitioners, 
clinical nurse specialists, and certified registered nurse anesthetists 
in groups with 10 or more eligible professionals:

     CY 2018 Value-Based Payment Modifier Amounts for the Quality-Tiering Approach for Physicians, Physician
   Assistants, Nurse Practitioners, Clinical Nurse Specialists, and Certified Registered Nurse Anesthetists in
                           Groups of Physicians With 10 or More Eligible Professionals
----------------------------------------------------------------------------------------------------------------
             Cost/quality                    Low quality            Average quality            High quality
----------------------------------------------------------------------------------------------------------------
Low Cost.............................  +0.0%..................  +2.0x*.................  +4.0x*
Average Cost.........................  -2.0%..................  +0.0%..................  +2.0x*
High Cost............................  -4.0%..................  -2.0%..................  +0.0%
----------------------------------------------------------------------------------------------------------------
*Groups eligible for an additional +1.0x if reporting Physician Quality Reporting System quality measures and
  average beneficiary risk score is in the top 25 percent of all beneficiary risk scores, where `x' represents
  the upward payment adjustment factor.

    (ii) For physicians, physician assistants, nurse practitioners, 
clinical nurse specialists, and certified registered nurse anesthetists 
in groups with two to nine eligible professionals and physician solo 
practitioners:

     CY 2018 Value-Based Payment Modifier Amounts for the Quality-Tiering Approach for Physicians, Physician
   Assistants, Nurse Practitioners, Clinical Nurse Specialists, and Certified Registered Nurse Anesthetists in
          Groups of Physicians With Two to Nine Eligible Professionals and Physician Solo Practitioners
----------------------------------------------------------------------------------------------------------------
             Cost/quality                    Low quality            Average quality            High quality
----------------------------------------------------------------------------------------------------------------
Low Cost.............................  +0.0%..................  +1.0x*.................  +2.0x*
Average Cost.........................  -1.0%..................  +0.0%..................  +1.0x*
High Cost............................  -2.0%..................  -1.0%..................  +0.0%
----------------------------------------------------------------------------------------------------------------
*Groups and solo practitioners eligible for an additional +1.0x if reporting Physician Quality Reporting System
  quality measures and average beneficiary risk score is in the top 25 percent of all beneficiary risk scores,
  where `x' represents the upward payment adjustment factor.

    (iii) For physician assistants, nurse practitioners, clinical nurse 
specialists, and certified registered nurse anesthetists in groups that 
consist of nonphysician eligible professionals, and solo practitioners 
who are physician assistants, nurse practitioners, clinical nurse 
specialists, and certified registered nurse anesthetists:

  CY 2018 Value-Based Payment Modifier Amounts for the Quality-Tiering Approach for Physician Assistants, Nurse
 Practitioners, Clinical Nurse Specialists, and Certified Registered Nurse Anesthetists in Groups Consisting of
 Nonphysician Eligible Professionals, and Solo Practitioners who are Physician Assistants, Nurse Practitioners,
                     Clinical Nurse Specialists, and Certified Registered Nurse Anesthetists
----------------------------------------------------------------------------------------------------------------
             Cost/quality                    Low quality            Average quality            High quality
----------------------------------------------------------------------------------------------------------------
Low Cost.............................  +0.0%..................  +1.0x*.................  +2.0x*
Average Cost.........................  +0.0%..................  +0.0%..................  +1.0x*
High Cost............................  +0.0%..................  +0.0%..................  +0.0%
----------------------------------------------------------------------------------------------------------------
*Groups and solo practitioners eligible for an additional +1.0x if reporting Physician Quality Reporting System
  quality measures and average beneficiary risk score is in the top 25 percent of all beneficiary risk scores,
  where `x' represents the upward payment adjustment factor.

    (d) * * *
    (3) Groups and solo practitioners subject to the value-based 
payment modifier that have an attributed beneficiary population with an 
average risk score in the top 25 percent of the risk scores of 
beneficiaries nationwide and for the CY 2018 payment adjustment period 
are subject to the quality-tiering approach, receive a greater upward 
payment adjustment as follows:
    (i) Classified as high quality/low cost receive an upward 
adjustment of +5x (rather than +4x) if the group has 10 or more 
eligible professionals, +3x (rather than +2x) if a solo practitioner or 
the group has two to nine eligible professionals, or +3x (rather than 
+2x) if a solo practitioner or group consisting of nonphysician 
eligible professionals; and
    (ii) Classified as either high quality/average cost or average 
quality/low cost receive an upward adjustment of +3x (rather than +2x) 
if the group has 10 or more eligible professionals, +2x (rather than 
+1x) if a solo practitioner or the group has two to nine eligible 
professionals, or +2x (rather than +1x) if a solo practitioner or group 
consisting of nonphysician eligible professionals.

PART 425-- MEDICARE SHARED SAVINGS PROGRAM

0
49. The authority citation for part 425 continues to read as follows:

    Authority: Secs. 1102, 1106, 1871, and 1899 of the Social 
Security Act (42 U.S.C. 1302 and 1395hh).

0
50. Section 425.20 is amended in the definition of ``Primary care 
services'' by revising paragraph (2) introductory text and adding 
paragraphs (2)(v) and (4) to read as follows:


Sec.  425.20  Definitions.

* * * * *
    Primary care services * * *
    (2) For performance year 2016 as follows:
* * * * *
    (v) G0463 for services furnished in ETA hospitals.
* * * * *
    (4) For performance years 2017 and subsequent years as follows:
    (i) 99201 through 99215.
    (ii) 99304-99318 (excluding claims including the POS 31 modifier) 
and 99319-99340.
    (iii) 99341 through 99350.
    (iv) 99495, 99496 and 99490.
    (v) G0402 (the code for the Welcome to Medicare visit).
    (vi) G0438 and G0439 (codes for the annual wellness visits).
    (vii) Revenue center codes 0521, 0522, 0524, 0525 submitted by 
FQHCs (for services furnished prior to January 1, 2011), or by RHCs.

[[Page 71386]]

    (viii) G0463 for services furnished in ETA hospitals.
* * * * *

0
51. Section 425.102 is amended by--
0
a. Adding paragraph (a)(8).
0
b. In paragraph (b), removing the phrase ``eligible participate'' and 
adding in its place the phrase ``eligible to participate''.
    The addition reads as follows:


Sec.  425.102  Eligible providers and suppliers.

    (a) * * *
    (8) Teaching hospitals that have elected under Sec.  415.160 of 
this subchapter to receive payment on a reasonable cost basis for the 
direct medical and surgical services of their physicians.
* * * * *

0
52. Section 425.402 is amended by adding paragraph (d) to read as 
follows:


Sec.  425.402  Basic assignment methodology.

* * * * *
    (d) When considering services furnished by ACO professionals in 
teaching hospitals that have elected under Sec.  415.160 of this 
subchapter to receive payment on a reasonable cost basis for the direct 
medical and surgical services of their physicians in the assignment 
methodology under paragraph (b) of this section, CMS uses an estimated 
amount based on the amounts payable under the physician fee schedule 
for similar services in the geographic location of the teaching 
hospital as a proxy for the amount of the allowed charges for the 
service.

0
53. Section 425.502 is amended by--
0
a. Adding paragraph (a)(5)
0
b. In paragraph (d)(2)(ii), removing the reference ``Sec.  425.216(c)'' 
and adding in its place the reference ``Sec.  425.216''.
    The addition reads as follows:


Sec.  425.502  Calculating the ACO quality performance score.

    (a) * * *
    (5) CMS reserves the right to redesignate a measure as pay for 
reporting when the measure owner determines the measure no longer 
aligns with clinical practice or causes patient harm.
* * * * *


Sec.  425.504  [Amended]

0
54. In Sec.  425.504--
0
a. Amend paragraph (a)(1) by removing the phrase ``their ACO provider/
suppliers who are eligible professionals'' and adding in its place the 
phrase ``eligible professionals who bill under the TIN of an ACO 
participant''.
0
b. Amend paragraphs (b)(1) and (c)(1) by removing the phrase ``their 
ACO providers/suppliers who are eligible professionals'' and adding in 
its place the phrase ``eligible professionals who bill under the TIN of 
an ACO participant''.
0
c. Amend paragraphs (a)(2)(ii), (b)(2)(ii), (b)(3), and (c)(3), by 
removing the phrase ``its ACO providers/suppliers who are eligible 
professionals'' and adding in its place the phrase ``eligible 
professionals who bill under the TIN of an ACO participant''.
0
d. Amend paragraphs (a)(2)(i), (b)(2)(i), and (c)(2) by removing the 
phrase ``ACO providers/suppliers that are eligible professionals'' and 
adding in its place the phrase ``Eligible professionals who bill under 
the TIN of an ACO participant''.
0
e. Amend paragraphs (a)(3), (a)(4), and (b)(4), by removing the phrase 
``ACO providers/suppliers who are eligible professionals'' and adding 
in its place the phrase ``eligible professionals who bill under the TIN 
of an ACO participant''.
0
f. Amend paragraph (b)(3) by removing the phrase ``each ACO supplier/
provider who is an eligible professional'' and adding in its place the 
phrase ``each eligible professional who bills under the TIN of an ACO 
participant''.
0
g. Amend paragraph (c)(3) by removing the phrase ``each ACO provider/
supplier who is an eligible professional'' and adding in its place the 
phrase ``each eligible professional who bills under the TIN of an ACO 
participant''.

PART 495--STANDARDS FOR THE ELECTRONIC HEALTH RECORD TECHNOLOGY 
INCENTIVE PROGRAM

0
55. The authority citation for part 495 continues to read as follows:

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

0
56. In Sec.  495.4 the definition of ``Certified electronic health 
record technology (CEHRT)'' is amended by revising paragraphs 
(1)(ii)(B)(3) and (2)(ii)(B) to read as follows:


Sec.  495.4  Definitions.

* * * * *
    Certified electronic health record technology (CEHRT) * * *
    (1) * * *
    (ii) * * *
    (B) * * *
    (3) Clinical quality measure certification criteria that support 
the calculation and reporting of clinical quality measures at 45 CFR 
170.314(c)(2) and (3); or 45 CFR 170.315(c)(3)(i) and (ii); and can be 
electronically accepted by CMS if the provider is submitting 
electronically.
* * * * *
    (2) * * *
    (ii) * * *
    (B) Clinical quality measure certification criteria that support 
the calculation and reporting of clinical quality measures at 45 CFR 
170.315(c)(2) and (c)(3)(i) and (ii), and can be electronically 
accepted by CMS.
* * * * *

    Dated: October 27, 2015.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Dated: October 28, 2015.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2015-28005 Filed 10-30-15; 4:15 pm]
 BILLING CODE 4120-01-P